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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 EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD TO
COMMISSION FILE NUMBER 0-9278
GEOWASTE INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
STATE OF INCORPORATION: DELAWARE I.R.S. EMPLOYER ID. NO. 36-2751684
SUITE 700, 100 WEST BAY STREET
JACKSONVILLE, FL 32202
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(904) 353-5033
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes |X| No |_|
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock, $0.10 Par Value, 21,286,549 shares outstanding as of November
7, 1997.
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<PAGE>
TABLE OF CONTENTS
PAGE
PART I: FINANCIAL INFORMATION
ITEM I: FINANCIAL STATEMENTS (Unaudited)
Consolidated Balance Sheets...........................................2-3
Consolidated Statements of Operations...................................4
Consolidated Statements of Cash Flows...................................5
Notes to Consolidated Financial Statements...........................6-10
ITEM 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations........................11-14
PART II: OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS..........................................15
ITEM 2: CHANGES IN SECURITIES......................................15
ITEM 3: DEFAULTS UPON SENIOR SECURITIES............................15
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........15
ITEM 5: OTHER INFORMATION..........................................15
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K...........................15
Signatures...........................................................16
<PAGE>
GEOWASTE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
------------------ -----------------
Assets (UNAUDITED)
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 672,878 $ 3,058,067
Accounts receivable, net 2,095,484 2,214,061
Prepaid expenses 346,338 343,461
Prepaid income taxes 292,859 -
Deferred tax asset 220,488 221,000
-------------- ---------------
Total current assets 3,628,047 5,836,589
-------------- ---------------
Property and equipment:
Land, primarily disposal site 14,747,956 13,205,883
Buildings and improvements 605,148 433,025
Vehicles and equipment 11,502,895 8,830,438
-------------- -------------
26,855,999 22,469,346
Less: accumulated depreciation (11,068,636) (8,613,446)
--------------- -------------
Net property and equipment 15,787,363 13,855,900
---------------- -------------
Other Assets:
Cost in excess of net assets of
acquired businesses, net of
amortization
Funds held in escrow 318,000 318,000
Other 171,547 102,473
------------- -------------
Total other assets 10,720,875 10,925,602
------------- -------------
Total assets $ 30,136,285 $ 30,618,091
============= =============
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<PAGE>
GEOWASTE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
------------------ -----------------
Liabilities and Stockholders' Equity (UNAUDITED)
Current Liabilities:
<S> <C> <C>
Current maturities of long-term obligations $ 4,614,107 $ 4,672,950
Accounts payable 1,252,530 1,573,707
Accounts payable to related party - 400,000
Accrued payroll 281,239 198,619
Accrued fees 114,000 145,008
Accrued income taxes - 700,000
Accrued other 168,905 46,929
Deferred revenue 647,159 876,624
------------ ---------------
Total current liabilities 7,077,940 8,613,837
------------ ---------------
Long-term obligations, less current maturities
Accrued Royalties 782,014 962,061
Closure and post closure obligations 1,988,468 1,787,136
Deferred tax liability 826,596 750,000
-------------- -------------
Total liabilities 14,087,299 14,635,345
-------------- -------------
Stockholders' equity:
Preferred stock, authorized 5,000,000
shares, $.01 par value; none issued or
outstanding
Common stock, authorized 50,000,000 shares,
$.10 par value; issued and
outstanding 21,286,549 shares in 1997
and 21,028,634 shares in
1996 2,128,655 2,102,863
Additional paid-in capital 13,198,202 12,910,437
Retained earnings 722,129 969,446
-------------- -------------
Total stockholders' equity 16,048,986 15,982,746
-------------- -------------
Total Liabilities and Stockholders' Equity $ 30,136,285 $30,618,091
============== =============
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
<PAGE>
GEOWASTE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- -----------------------
1997 1996 1997 1996
----- ----- ----- -----
<S> <C> <C> <C> <C>
Net revenues $4,914,420 $3,776,099 $14,636,612 $9,014,790
Cost and expenses:
Operating 3,320,443 2,281,633 10,044,895 4,959,409
Unusual charges - - 1,083,000 -
Selling, general and administrative 1,012,351 723,445 3,138,818 1,687,245
-------------- ------------- ------------ -----------
Income from operations 581,626 771,021 369,899 2,368,136
Other income (expense):
Other income 2,583 41,252 155,965 224,697
Interest expense (166,529) (109,002) (497,064) (307,445)
-------------- ------------ ----------- -----------
Income from operations before income
taxes 417,680 703,721 28,800 2,285,388
Income tax provision 202,826 240,139 276,117 821,931
--------------- -------------- ---------- -----------
Net income (loss) $ 214,854 $ 463,132 $ (247,317) $1,463,457
=============== ============= ============== ============
Earnings per common and common
equivalent share $ 0.01 $ 0.02 $ (0.01) $ 0.07
================ =============== =============== ============
Weighted average common and
common equivalent shares 23,113,058 21,536,696 21,233,378 21,162,328
============= ============= =============== ===========
The accompanying notes are an integral part of the consolidated
financial statements.
</TABLE>
<PAGE>
GEOWASTE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
SEPTEMBER 30,
-----------------------
1997 1996
------ -----
Cash Flows from operating activities:
<S> <C> <C>
Net income $ (247,317) $ 1,463,457
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 2,700,211 1,748,495
Goodwill writeoff 436,000 -
Impairment of property 201,000 -
Non cash closure costs 201,332 203,961
Loss (Gain) on sale of equipment 2,851 (1,179)
Deferred taxes 77,108 141,931
Gain on sale of business (125,945) -
Changes in assets and liabilities:
Accounts receivable 118,577 (787,105)
Prepaid expenses (295,736) (115,346)
Accounts payable and accrued liabilities (1,648,909) 536,525
Deferred revenue (229,465) (82,838)
-------------- ------------
Net cash provided by operating activities 1,189,707 3,107,901
------------- ------------
Cash flows from investing activities:
Additions to property and equipment (2,545,855) (2,657,247)
Proceeds from the sale of equipment 101,348 11,000
Funds held in escrow and other - 690,010
Cash paid for business acquisitions (291,321) (2,064,922)
Proceeds from the sale of business 204,761 -
------------- ------------
Net cash used in investing activities (2,531,067) (4,021,159)
------------- ------------
Cash flows from financing activities:
Proceeds from exercise of stock options 33,558 -
Payment of debt and capital lease obligations (1,077,387) (722,609)
Net cash used in financing activities (1,043,829) (722,609)
------------- ------------
Decrease in cash and cash equivalents (2,385,189) (1,635,867)
Cash and cash equivalents, beginning of period 3,058,067 3,985,459
------------- -------------
Cash and cash equivalents, end of period $ 672,878 $ 2,349,592
============= =============
The accompanying notes are an integral part of the consolidated statements.
</TABLE>
<PAGE>
GEOWASTE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1) BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited consolidated
financial statements reflect all adjustments, including normally recurring
accruals, necessary to present fairly the financial condition and results of
operations of the Company for and as of the periods and dates indicated. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted in accordance with the rules of the Securities and Exchange
Commission. Operating results for interim periods are not necessarily indicative
of the results that can be expected for a full year. These financial statements
should be read in conjunction with the Company's Annual Report on Form 10-K for
the year ended December 31, 1996.
2) SIGNIFICANT ACCOUNTING POLICIES
EARNINGS PER COMMON SHARE
Net income and loss per common share for the three months and the nine
months ended September 30, 1997 and 1996 are based on the weighted average
number of common and common equivalent shares (stock options and warrants)
outstanding in each period and is computed in accordance with APB Opinion No.
15.
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share." Statement No. 128 will replace APB Opinion No. 15
and is effective for periods ending after December 15, 1997. Earlier application
is not permitted. When effective, Statement No. 128 requires restatement of all
prior period earnings per share ("EPS") data presented.
Statement No. 128 replaces the current EPS presentation with a dual
presentation of basic and diluted EPS for entities with complex capital
structures, such as the Company. Basic EPS includes no dilution and is computed
by dividing income (loss) by the weighted average number of common shares
outstanding during the period. Diluted EPS reflects the potential dilution of
securities, such as stock options, that could share in the earnings of an
entity. If Statement No. 128 had been applied for the three and nine month
periods ended September 30, 1997 and 1996, EPS and shares used in the
computation would have been the following pro forma amounts:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------
1997 1996
------ ----
Pro forma EPS:
<S> <C> <C>
Basic EPS $ 0.01 $ 0.02
============== =============
Diluted EPS $ 0.01 $ 0.02
============== =============
Pro forma shares:
Basic EPS - weighted average common shares
outstanding 21,286,549 20,926,021
Dilutive effect of stock options, warrants and
convertible debentures 1,826,509 5,262,094
-------------- ------------
Diluted EPS 23,113,058 26,118,115
============== ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
----------------------------------
1997 1996
------ -----
Pro forma EPS:
<S> <C> <C>
Basic EPS $ (0.01) $ 0.08
=============== ==============
Diluted EPS $ (0.01) $ 0.06
=============== ==============
Pro forma shares:
Basic EPS - weighted average common shares
outstanding 21,233,378 19,062,229
Dilutive effect of stock options, warrants and
convertible debentures - 4,939,824
Diluted EPS 21,233,378 24,002,053
============ ============
</TABLE>
All options, warrants and convertible debentures outstanding for the nine
months ended September 30, 1997 were not included in the computation of diluted
EPS because the options, warrants and convertible debentures are considered
antidilutive. All convertible debentures outstanding for the three months ended
September 30, 1997 were not included in the computation of diluted EPS because
the convertible debentures were considered antidilutive.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For purposes of reporting cash flows, the Company considers all
certificates of deposit and time deposits with original maturities of three
months or less to be cash equivalents.
The Company paid approximately $761,000 and $445,000 for income taxes and
$497,000 and $198,000 for interest during the nine months ended September 30,
1997 and September 30, 1996, respectively.
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------
Significant non-cash transactions 1997 1996
------ -----
<S> <C> <C>
Purchase of equipment and vehicles financed by
notes payable. $ 1,803,209 -
Assumption of debt associated with purchase of
business 808,751 $ 3,310,647
Capital expenditures included in accounts payable but
not yet paid 313,931 -
Conversion of debentures to stock 280,000
Expenditures related to purchase of business included
in accounts payable but not yet paid 76,982 -
</TABLE>
3) ISSUANCE OF DEBT; CREDIT FACILITY
On March 5, 1992, the Company completed a private placement of $3 million
in Convertible Subordinated Debentures due March 31, 1997 (the "Debentures").
The Debentures had a term of five years and bore interest at the rate of 8.5%
per annum, payable quarterly. Interest was payable in either cash or additional
Debentures at the Company's option. The Company utilized the feature of issuing
additional Debentures in payment of interest for each quarter since the issuance
of the Debentures up to and including the quarter ended March 31, 1995.
Beginning with the second quarter of 1995, the Company chose to pay interest of
$83,000 per quarter rather than issue additional Debentures. Total interest paid
this year through September 30, 1997 on the Debentures amounts to $217,000.
Pursuant to the terms of the Debentures, the Company was obligated to
subordinate certain subsequent issuances of debt to the rights of the holders of
the Debentures. The Debentures subjected the Company to certain covenants,
certain prepayment and conversion obligations and certain restrictions with
respect to the declaration and payment of dividends. The Debentures were
convertible into shares of the Company's common stock at a conversion rate of
$1.40 per share. In March, 1997, the Company and the holder of the Debentures
agreed to extend the due date of the Debentures to September 30, 1997 and the
holder converted $280,000 of convertible debt.
On October 9, 1997 the Company entered into a $5 million revolving credit
facility (the "Credit Facility") with BankBoston, N.A. (the "Bank") and
immediately borrowed $3.8 million under the Credit Facility to repay in full the
principal and accrued interest on the Debentures. Borrowings under the Credit
Facility may be used for working capital, refinancing of outstanding debt,
capital expenditures and other general corporate purposes. Interest on
borrowings under the Credit Facility is payable at a rate of one-quarter of one
percent plus the higher of (i) the Bank's base rate or (ii) one percent above
the overnight federal funds effective rate, as published by the Board of
Governors of the Federal Reserve System, as in effect from time to time.
Borrowings under the Credit Facility mature on October 9, 2000. Under the terms
of the Credit Facility, the Company must maintain certain financial covenants on
a quarterly basis of which the most significant is the interest coverage ratio.
The financial covenant relating to the interest coverage ratio with which the
Company must comply requires the Company not to allow its interest coverage
ratio to be less than 2.25 to 1 through September 30, 1998 or less than 2.50 to
1 thereafter. On November 7, 1997 the Company borrowed $1.0 million under the
Credit Facility to finance its purchase of T. F. Mitchell & Sons, Inc.
Accordingly, as of November 7, 1997, $4.8 million was outstanding under the
Credit Facility.
4) ACQUISITION
On January 10, 1997, the Company acquired the waste related assets of Air
Sweep-A-Lot, Inc. ("ASAL") a solid waste collection and sweeping company located
in Valdosta, GA. The total purchase price of approximately $1,007,000 consisted
of cash in the amount of $200,000, assumption of debt in the amount of $485,000
and the issuance of a promissory note to the owners of ASAL with a principal
amount of $322,000, bearing interest at a rate of 8.0% per annum. This
acquisition was accounted for as a purchase. The value of the non-competition
agreement assigned to this transaction was $85,000 and is being amortized over 5
years. The excess of the purchase price over the net assets acquired of
approximately $348,000 is being amortized over 40 years. The operations of ASAL
are not material to the Company's consolidated operations and has been
integrated into the Company's collection business in Valdosta, Georgia.
On November 7, 1997, the Company purchased the assets of T.F. Mitchell &
Sons, Inc. d/b/a Mitchell Refuse ("Mitchell"), located in Cordele, GA. The total
purchase price of $1,500,000 consisted of cash in the amount of $1,306,000 plus
assumption of $194,000 in debt. This acquisition was accounted for as a
purchase. The Company acquired $597,000 in trucks and equipment. A value of
$150,000 was assigned to Mitchell's customer lists and $100,000 to the
non-competition agreement associated with this transaction. The value of both
the customer lists and the non-competition agreement are being amortized over
five years. The excess of the purchase price over the assets acquired of
approximately $653,000 is being amortized over 40 years. The operations of
Mitchell are not material to the Company's consolidated operations.
SALE OF ASSETS
On June 10, 1997, the Company sold its lawn care and certain of its
sweeping businesses in Florida to Sweeping Corp. of America. The assets sold
included selected lawn care and parking lot sweeping equipment together with
contracts obtained since April, 1996 with the Florida Department of
Transportation for highway sweeping and lawn edging in Dade, Leon, Holmes,
Washington, Jackson, Bay, Gulf, Calhoon, Escambia and Santa Rosa counties. All
of these contracts involved work being performed in geographically dispersed
locations, which were remote to the Company's existing service areas of
South/Central Georgia, Northeast Florida and North Central Florida and which the
Company believed had limited market share growth opportunities in the near
future. The aggregate purchase price of the sale was $210,000 and resulted in a
gain of approximately $120,000.
6) UNUSUAL CHARGES
On March 21, 1996 the Company acquired all of the capital stock of North
Florida Sweeping, Inc. ("NFS"), a street sweeping and roll-off collection
company based in Jacksonville, Florida. On December 31, 1996, the Company filed
suit in the United States District Court for the Middle District of Florida,
Jacksonville Division (the "Court"), against the former shareholders of NFS
seeking recission, abrogation and annulment of the transaction and damages. The
Company settled this suit with the former shareholders of NFS on October 9,
1997. Pursuant to the settlement, on October 14, 1997 the Court entered a
judgment declaring the acquisition of NFS "to be completely abrogated and
annulled, so as to never have had any force and effect whatsoever," including
the merger of NFS and a subsidiary of the Company and the transfer of the
capital stock of NFS to the Company. As part of the settlement, the Company
received a $50,000 cash payment, retained the assets of NFS and cancelled
warrants to purchase 75,000 shares of the Company's common stock at an exercise
price of $1.25 which were issued to the NFS shareholders in connection with the
nullified transaction.
As a result of the remedial actions taken with respect to the operations of
NFS during the first quarter of 1997, the Company: (a) estimated and accrued the
losses on the sweeping contracts; and (b) in accordance with Statement of
Financial Accounting Standard No. 121 - "Accounting for The Impairment of
Long-Lived Assets And For Long-Lived Assets To Be Disposed Of", concluded that
the goodwill associated with the NFS acquisition is not recoverable.
Accordingly, the Company has taken a charge of $436,000 to earnings.
Additionally, during the first quarter, the Company and the City of St.
Augustine, Florida mutually agreed to terminate the existing transfer,
transportation and disposal agreement. In connection with such termination the
Company has agreed to continue to transport and dispose of the solid waste
generated from the City of St. Augustine until October 31, 1997. The Company is
no longer required, however, to construct a permanent transfer station and
accordingly, wrote-off certain design and permitting costs which had been
previously deferred.
All of the above asset write-offs and expenses have been classified as
"Unusal Charges" in the Consolidated Statement of Operations, and are summarized
as follows:
Additional sweeping costs incurred and paid in the $ 68,000
nine months ended September 30, 1997
Legal and consulting expenses 282,000
Accrued Loss on sweeping contracts 96,000
Write-off of NFS goodwill 436,000
Write-down of NFS real estate 110,000
Write-off of transfer station development costs 91,000
--------------
Total $ 1,083,000
==========
7) NEW PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement No.
130, "Reporting Comprehensive Income," and Statement No. 131, "Disclosures about
Segments of an Enterprise and Related Information." Both statements are
effective for fiscal years beginning December 15, 1997. The Company has not yet
determined the effect, if any, of these statements on its financial statements.
<PAGE>
ITEM 2 GEOWASTE INCORPORATED AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net revenues for the quarter ended September 30, 1997 consisted of
collection revenues of $3,175,000, disposal revenues of $782,000, transfer
revenues of $257,000, sweeping revenues of $206,000 and recycling revenues of
$494,000. This compares to third quarter 1996 revenues of $1,624,000,
$1,207,000, $247,000, $522,000 and $176,000 for collection, disposal, transfer,
sweeping and recycling, respectively. Collection revenues increased 96%,
disposal revenues decreased 35%, transfer revenues increased 4%, and sweeping
revenues decreased 60%, as compared to third quarter 1996 results. Prior to the
acquisition of the Spectrum Group, Inc. in August 1996, the Company was not
engaged in the recycling business. Accordingly, the recycling revenues for the
third quarter of 1996 are for a partial quarter. Of the 96% increase in
collection revenues, 43% is attributable to the operations of the companies
acquired in 1996, with the remainder primarily from new collection contracts
entered into during the first quarter of 1996. All of the increase in transfer
revenue is attributable to operations of the acquired companies. The tonnage at
the Pecan Row Landfill decreased to 812 tons per day (TPD) compared to 903 TPD
during the third quarter of 1996, resulting in decreased revenue. Net revenues
for the nine months ended September 30, 1997 consisted of collection revenues of
$8,886,000, disposal revenues of $2,464,000, transfer revenues of $1,004,000,
sweeping revenues of $1,069,000 and recycling revenues of $1,214,000. This
compares with net revenues for the nine months ended September 30, 1996 of
$3,572,000, $3,638,000, $693,000, $936,000 and $176,000 for collection,
disposal, transfer, sweeping and recycling revenues, respectively. All
intercompany activity has been eliminated.
Operating expenses related to the collection, disposal, transfer, sweeping
and recycling activities for the quarter ended September 30, 1997 consisted of
collection expenses of $1,549,000, disposal expenses of $752,000, transfer
expenses of $304,000, sweeping expenses of $349,000 and recycling expenses of
$366,000. This compares to the quarter ended September 30, 1996 operating
expenses of $851,000, $756,000, $106,000, $421,000, and $148,000 for collection,
disposal, transfer, sweeping, and recycling, respectively. Collection expenses
increased 82%, disposal expenses decreased .5%, transfer expenses increased
187%, sweeping expenses decreased 17% and recycling expenses increased 148%, as
compared to the third quarter of 1996. Of the 82% increase in collection
expenses, 58% was attributable to the operations of the companies acquired in
1996. Disposal expenses remained almost constant during the third quarter of
1997, as compared to the third quarter of 1996. All of the increase in transfer
and recycling expenses were attributable to the acquired companies. The decrease
in sweeping expenses resulted from the sale of certain contracts in the second
quarter of 1997. Operating expenses for the nine months ended September 30, 1997
consisted of collection expenses of $4,896,000, disposal expenses of $2,243,000,
transfer expenses of $683,000, sweeping expenses of $1,272,000 and recycling
expenses of $951,000. This compares with operating expenses for the nine months
ended September 30, 1996 of $1,604,000, $2,099,000, $286,000, $822,000, and
$148,000 for collection, disposal, transfer, sweeping and recycling expenses,
respectively.
Unusual charges for the nine months ended September 30, 1997 relate to
litigation and certain developments related to North Florida Sweeping, Inc.
("NFS") in the first quarter of 1997. The Company concluded a review of certain
operating practices of NFS and has determined that NFS (1) had not fully
complied with the performance specifications of its highway and street sweeping
contracts, (2) had not conformed with all applicable requirements in its
disposal of street sweepings, and (3) is required to continue to perform under
the terms of the highway and street sweeping contracts until their expirations.
In the first quarter of 1997 the Company implemented certain remedial actions
with respect to the operations of NFS, including additional, and in some
instances multiple, re-sweeps to meet the performance standards of the contracts
and rectification the waste disposal practices of NFS. As a result of such
remedial actions, the Company has (a) estimated and accrued the losses on the
sweeping contracts and (b) concluded that the goodwill associated with the NFS
acquisition is not recoverable and the land and building of NFS is not
recoverable above its appraised value. Additionally, during the first quarter of
1997, the Company and the City of St. Augustine, Florida mutually agreed to
terminate the existing transfer, transportation and disposal agreement and,
accordingly, wrote off certain design and permitting costs which had been
previously deferred. As a result, the Company recorded $1,083,000 of unusual
charges for the nine months ended September 30, 1997 which consisted of $282,000
of legal and consulting fees, $68,000 additional sweeping costs incurred and
paid in the first quarter of 1997, $96,000 accrued losses on sweeping contracts,
$436,000 write-off of goodwill, $110,000 write-off of land and building and
$91,000 write-off of transfer station development costs.
Selling, general and administrative expenses for collection, disposal,
transfer, sweeping and recycling activities in the third quarter ended September
30, 1997, were $460,000, $65,000, $13,000, $117,000 and $39,000, respectively,
as compared to $296,000, $99,000, $2,000, $102,000 and $1,000 for the third
quarter of 1996. Corporate overhead for the third quarter of 1997 was $318,000
as compared to $223,000 in the third quarter of 1996. Selling, general and
administrative expenses for collection, disposal, transfer and sweeping for the
nine months ended September 30, 1997 were $1,499,000, $212,000, $46,000 and
$334,000 respectively as compared to $501,000, $263,000, $5,000 and $185,000 for
the nine months ended September 30, 1996. Recycling administrative charges for
the nine months ended September 30, 1997 were $136,000 compared to $1,000 for
the nine months ended September 30, 1996. Corporate overhead for the nine months
ended September 30, 1997 and September 30, 1996 were $912,000 and $732,000,
respectively. Selling, general and administrative expenses for the nine months
ended September 30, 1997 have increased due to the full year effect of
acquisitions completed in the third quarter of 1996.
Net income for the quarter ended September 30, 1997 was $215,000, as
compared to net income of $463,000 in the third quarter of 1996. The decrease
was due primarily to increases in operating expenses of companies acquired
during 1996. Due mainly to the unusual charges incurred in the first quarter of
1997 and increased expenses of acquired companies, there is a net loss for the
nine month period ending September 30, 1997 of $247,000, as compared with net
income of $1,463,000 for the same period in 1996.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1997, the Company had negative working capital of
$3,449,893 as compared with a negative $2,777,248 at December 31, 1996. The
decrease in working capital resulted primarily from payment of construction
costs associated with the Pecan Row Landfill coupled with accruals for workers
compensation, past wages and accident deductibles at the Company's United
Sanitation division in Ocala, Florida.
During its three most recent fiscal years and the nine months ended
September 30, 1997, the Company's primary uses of cash have been to finance the
cost of cell construction at the Pecan Row Landfill, acquire additional solid
waste collection companies, provide working capital and make interest payments
on its recently retired convertible debt.
During the nine months ended September 30, 1997, the Company used
$2,385,000 in cash, principally to fund construction activities at the Pecan Row
Landfill and accruals required for the Company's Florida operations.
On October 9, 1997 the Company entered into a $5 million revolving credit
facility (the "Credit Facility") with BankBoston, N.A. (the "Bank"). Borrowings
under the Credit Facility may be used for working capital, refinancing of
outstanding debt, capital expenditures and other general corporate purposes.
Interest on borrowings under the Credit Facility is payable at a rate of
one-quarter of one percent plus the higher of (i) the Bank's base rate or (ii)
one percent above the overnight federal funds effective rate, as published by
the Board of Governors of the Federal Reserve System, as in effect from time to
time. Borrowings under the Credit Facility mature on October 9, 2000. Under the
terms of the Credit Facility, the Company must maintain certain financial
covenants on a quarterly basis of which the most significant is the interest
coverage ratio. The financial covenant relating to the interest coverage ratio
with which the Company must comply requires the Company not to allow its
interest coverage ratio to be less than 2.25 to 1 through September 30, 1998 and
not less than 2.50 to 1 thereafter. On October 9, 1997, the Company borrowed
$3.8 million under the Credit Facility to repay in full the principal and
accrued interest on the Debentures. On November 7, 1997 the Company borrowed
$1.0 million under the Credit Facility to finance its purchase of T. F. Mitchell
& Sons, Inc. Accordingly, as of November 7, 1997, $4.8 million was outstanding
under the Credit Facility.
Prior to the establishment of the Credit Facility, the Company met its cash
needs principally by using cash flow from operations, borrowings for the
purchase of equipment, and the private placement of debt and equity securities.
The Company expects to make capital expenditures on an ongoing basis for
improvements to, and expansion of, its landfill and for equipment purchases. The
Company estimates that the capital expenditures required for its existing
operations will amount to $4,700,000 in 1997, almost half of which will be used
for the construction of a new four acre disposal cell and construction costs
associated with the expected receipt of a permit modification which will
increase the footprint of the Pecan Row Landfill in 1997. The development and
permitting of new disposal facilities requires significant capital expenditures
over an extended period, and any growth of the Company through such permitting
or the lateral expansion of its existing disposal facility would require
substantial capital expenditures. The Company expects that it will fund such
estimated and future capital expenditures from existing cash, cash generated
from operations, equipment lease financing, and other financing. Through the
nine months ended September 30, 1997, capital expenditures have amounted to
$4,128,000.
The Company's business strategy includes the acquisition, on financially
attractive terms, of additional solid waste management companies as well as
related sanitation and infrastructure maintenance businesses. Such acquisitions
may be accomplished through the issuance of the Company's common stock, cash on
hand, or may require cash in excess of the Company's current cash available.
Although the Company's operating results and financial performance are expected
to provide access to any financing which may be necessary to acquire such
businesses, there can be no assurance that such additional financing can be
obtained on terms acceptable to the Company.
The Company believes that its current financing arrangements under the
Credit Facility and its anticipated level of internally generated funds will be
adequate to fund its capital requirements for at least the next 12 to 18 months,
although there can be no assurance that such resources will be sufficient for
such purposes. The Company's capital needs consist of working capital
expenditures relating to operational needs, interest payment on indebtedness and
improvements to its existing landfill and equipment purchases. The Company may
be required to raise substantial additional capital in the future in order to
continue its growth through the acquisition of additional businesses. In
addition, contingencies may arise which require the Company to obtain additional
capital. There can be no assurance that the Company will be able to obtain such
capital on favorable terms or at all.
On January 10, 1997, the Company acquired the waste related assets of ASAL,
a solid waste collection and parking lot sweeping company in Valdosta, Georgia.
The total purchase price of approximately $1,007,000 consisted of cash in the
amount of $200,000, assumption of debt in the amount of $485,000 and the
issuance of a promissory note to the owners of ASAL with a principal amount of
$322,000, bearing interest at a rate of 8.0% per annum. This acquisition was
accounted for as a purchase. The value of the non-competition agreement assigned
to this transaction was $85,000 and is being amortized over 5 years. The excess
of the purchase price over the net assets acquired of approximately $348,000 is
being amortized over 40 years. The operations of ASAL are not material to the
Company's consolidated operations and have been integrated into the Company's
collection business in Valdosta, Georgia.
On November 7, 1997, the Company purchased the assets of T.F. Mitchell &
Sons, Inc. d/b/a Mitchell Refuse ("Mitchell"), located in Cordele, GA. The total
purchase price of $1,500,000 consisted of cash in the amount of $1,306,000 plus
assumption of $194,000 in debt. This acquisition was accounted for as a
purchase. The Company acquired $597,000 in trucks and equipment. A value of
$150,000 was assigned to Mitchell's customer lists and $100,000 to the
non-competition agreement associated with this transaction. The value of both
the customer lists and the non-competition agreement are being amortized over 5
years. The excess of the purchase price over the assets acquired of
approximately $653,000 is being amortized over 40 years. The operations of
Mitchell are not material to the Company's consolidated operations.
On June 10, 1997, the Company sold its lawn care and certain of its
sweeping businesses in Florida to Sweeping Corp. of America. The assets sold
included selected lawn care and parking lot sweeping equipment together with
contracts obtained since April 1996 with the Florida Department of
Transportation for highway sweeping and lawn edging in Dade, Leon, Holmes,
Washington, Jackson, Bay, Gulf, Calhoon, Escambia and Santa Rosa counties. All
of these contracts involved work being performed in geographically dispersed
locations, which were remote to the Company's existing service areas of
South/Central Georgia, Northeast Florida and North Central Florida and which the
Company believed had limited market share growth opportunities in the near
future. The aggregate purchase price of the sale was $210,000 and resulted in a
gain of approximately $120,000.
In June 1997, the Financial Accounting Standards Board issued Statement No.
130, "Reporting Comprehensive Income," and Statement No. 131, "Disclosures about
Segments of an Enterprise and Related Information." Both statements are
effective for fiscal years beginning on or after December 15, 1997. The Company
has not yet determined the effect, if any, of these statements on its financial
statements.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
With the exception of historical information (information relating to the
Company's financial condition and results of operations at historical dates or
for historical periods), the matters discussed in this Management's Discussion
and Analysis of Financial Condition and Results of Operations are
forward-looking statements that necessarily are based on certain assumptions and
are subject to certain risks and uncertainties. These forward-looking statements
are based on management's expectations as of the date hereof, and the Company
does not undertake any responsibility to update any of these statements in the
future. Actual future performance and results could differ from that contained
in or suggested by these forward-looking statements as a result of the factors
set forth in this Management's Discussion and Analysis of Financial Condition
and Results of Operations, the Business Risks described in the Company's Report
on Form 10-K for the year ended December 31, 1996 and elsewhere in the Company's
filings with the Securities and Exchange Commission.
<PAGE>
PART II: OTHER INFORMATION
ITEM 1. Legal Proceedings:
On March 21, 1996 the Company acquired all of the capital stock
of North Florida Sweeping, Inc. ("NFS"), a street sweeping and
roll-off collection company based in Jacksonville, Florida. On
December 31, 1996, the Company filed suit in the United States
District Court for the Middle District of Florida, Jacksonville
Division (the "Court"), against the former shareholders of NFS seeking
recission, abrogation and annulment of the transaction and damages.
The Company settled this suit with the former shareholders of NFS on
October 9, 1997. Pursuant to the settlement, on October 14, 1997 the
Court entered a judgment declaring the acquisition of NFS "to be
completely abrogated and annulled, so as to never have had any force
and effect whatsoever," including the merger of NFS and a subsidiary
of the Company and the transfer of the capital stock of NFS to the
Company. As part of the settlement, the Company received a $50,000
cash payment, retained the assets of NFS and canceled warrants to
purchase 75,000 shares of the Company's common stock at an exercise
price of $1.25 which were issued to the NFS shareholders in connection
with the nullified transaction.
ITEM 2. Changes in Securities:
Not applicable.
ITEM 3. Defaults upon Senior Securities:
Not applicable.
ITEM 4. Submission of matters to a Vote of Security Holders:
Not applicable.
ITEM 5. Other Information:
Not applicable
ITEM 6. Exhibits and Reports on Form 8-K:
(a) Exhibits:
Computation of Net Earnings and Net Loss Per Share:
Exhibit 10.1 - Revolving Credit Agreement by and among
Geowaste Incorporated and its subsidiaries
and BankBoston N.A. dated as of
October 9, 1997
Exhibit 11.1 - Computation of Net Earnings per Share for the
three months ended September 30, 1997
Exhibit 11.2 - Computation of Net loss per share for the
nine months ended September 30, 1997
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K:
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GEOWASTE INCORPORATED
(Registrant)
By: /S/ JOHN W. BALLENTINE
John W. Ballentine
Vice President and Chief Financial Officer
Dated: November 14, 1997
<PAGE>
EXHIBIT INDEX
10.1 Revolving Credit Agreement by and among Geowaste Incorporated
and its subsidiaries and BankBoston N.A. dated as
of October 9, 1997
11.1 Computation of Net Earnings Per Share
for the three months ended September 30, 1997
11.2 Computation of Net Loss Per Share
for the nine months ended September 30, 1997
27 Financial Data Schedule
Exhibit 10.1
REVOLVING CREDIT AGREEMENT
by and among
GEOWASTE INCORPORATED
(the "Parent")
and its Subsidiaries
listed on Schedule 1 hereto
(collectively the "Borrowers")
and
BANKBOSTON, N.A.
(the "Lender")
October 9, 1997
<PAGE>
TABLE OF CONTENTS
PAGE
1. DEFINITIONS AND RULES OF INTERPRETATION...................................1
1.1. Definitions. ..................................................1
1.2. Rules of Interpretation........................................7
2. THE REVOLVING CREDIT FACILITY.............................................8
2.1. Commitment to Lend. ...........................................8
2.2. The Note. .....................................................8
2.3. Requests for Loans. ...........................................9
2.4. Funds for Loans................................................9
2.5. Interest. .....................................................9
2.6. Maturity of the Loans and Reimbursement Obligations............9
2.7. Early Termination Fee..........................................9
2.8. Mandatory Repayments of the Loans. ............................9
2.9. Optional Prepayments or Repayments of Loans...................10
3. LETTERS OF CREDIT........................................................10
3.1. Letter of Credit Commitment...................................10
3.2. Reimbursement Obligation of the Borrowers.....................10
3.3. Letter of Credit Payments.....................................11
3.4. Obligations Absolute..........................................11
3.5. Reliance by Lender............................................11
4. FEES, PAYMENTS, AND COMPUTATIONS; JOINT AND SEVERAL LIABILITY............11
4.1. Fees..........................................................11
4.2. Payments......................................................12
4.3. Computations..................................................12
4.4. Capital Adequacy..............................................12
4.5. Interest on Overdue Amounts...................................13
4.6. Interest Limitation...........................................13
4.7. Additional Costs, Etc.........................................13
4.8. Certificate...................................................14
4.9. Concerning Joint and Several Liability of the Borrowers.......14
4.10. New Borrowers.................................................15
5. REPRESENTATIONS AND WARRANTIES...........................................16
5.1. Corporate Authority...........................................16
5.2. Governmental Approvals........................................16
5.3. Title to Properties; Leases...................................16
5.4. Financial Statements; Solvency................................17
5.5. No Material Changes, Etc......................................17
5.6. Permits, Franchises, Patents, Copyrights, Etc.................17
5.7. Litigation....................................................17
5.8. No Materially Adverse Contracts, Etc..........................17
5.9. Compliance With Other Instruments, Laws, Etc..................18
5.10. Tax Status....................................................18
5.11. No Event of Default...........................................18
5.12. Holding Company and Investment Company Acts...................18
5.13. Absence of Financing Statements, Etc..........................18
5.14. Employee Benefit Plans........................................18
5.15. Use of Proceeds...............................................19
5.16. Environmental Compliance. ....................................20
5.17. Perfection of Security Interests..............................21
5.18. Certain Transactions..........................................21
5.19. Subsidiaries..................................................21
5.20. True Copies of Charter and Other Documents....................21
5.21. Disclosure....................................................21
5.22. Permits and Governmental Authority............................22
5.23. Environmental Reports.........................................22
6. AFFIRMATIVE COVENANTS OF THE BORROWERS....................................22
6.1. Punctual Payment..............................................22
6.2. Maintenance of Office.........................................22
6.3. Records and Accounts..........................................22
6.4. Financial Statements, Certificates and Information............22
6.5. Corporate Existence and Conduct of Business...................23
6.6. Maintenance of Properties.....................................24
6.7. Insurance.....................................................24
6.8. Taxes.........................................................24
6.9. Inspection of Properties, Books, and Contracts................24
6.10. Compliance with Laws, Contracts, Licenses and Permits;
Maintenance of Material Licenses and Permits..................25
6.11. Environmental Indemnification.................................25
6.12. Further Assurances............................................25
6.13. Notice of Potential Claims or Litigation......................25
6.14. Notice of Certain Events......................................26
6.15. Response Actions..............................................26
6.16. Environmental Assessments.....................................26
6.17. Notice of Default.............................................27
6.18. Closure and Post Closure Liabilities..........................27
6.19. Subsidiaries..................................................27
6.20. New Subsidiaries..............................................27
7. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS..............................27
7.1. Restrictions on Indebtedness..................................27
7.2. Restrictions on Liens.........................................28
7.3. Restrictions on Investments...................................29
7.4. Mergers, Consolidations, Sales, Acquisitions..................30
7.5. Sale and Leaseback............................................30
7.6. Restricted Distributions and Redemptions......................30
7.7. Employee Benefit Plans........................................31
7.8. Capital Expenditures..........................................31
7.9. Negative Pledges..............................................31
8. FINANCIAL COVENANTS OF THE BORROWERS.....................................31
8.1. Interest Coverage Ratio.......................................32
8.2. Balance Sheet Leverage Ratio..................................32
8.3. Profitable Operations.........................................32
8.4. Cash Flow Leverage Ratio......................................32
9. CLOSING CONDITIONS.......................................................32
9.1. Corporate Action..............................................32
9.2. Loan Documents, Etc. ........................................32
9.3. Certified Copies of Charter Documents.........................32
9.4. Incumbency Certificate........................................32
9.5. Validity of Liens.............................................33
9.6. UCC Search Results. ..........................................33
9.7. Certificates of Insurance.....................................33
9.8. Opinions of Counsel...........................................33
9.9. Audited Financial Statements; Financial Projections...........33
9.10. Environmental Reports and Certificate Regarding Permits.......33
9.11. Initial Compliance Certificate................................33
10. CONDITIONS TO ALL LOANS.................................................33
10.1. Representations True; No Event of Default.....................33
10.2. Performance; No Event of Default..............................34
10.3. No Legal Impediment...........................................34
10.4. Governmental Regulation.......................................34
10.5. Proceedings and Documents.....................................34
11. COLLATERAL SECURITY.....................................................34
12. EVENTS OF DEFAULT; ACCELERATION; TERMINATION OF COMMITMENT..............34
12.1. Events of Default and Acceleration............................34
12.2. Termination of Commitment.....................................37
12.3. Remedies......................................................37
13. SETOFF..................................................................37
14. EXPENSES................................................................37
15. INDEMNIFICATION.........................................................38
16. SURVIVAL OF COVENANTS, ETC..............................................38
17. PARTIES IN INTEREST.....................................................38
18. NOTICES, ETC............................................................38
19. MISCELLANEOUS...........................................................39
20. ENTIRE AGREEMENT, ETC...................................................39
21. WAIVER OF JURY TRIAL....................................................39
22. GOVERNING LAW...........................................................40
23. SEVERABILITY............................................................40
<PAGE>
TABLE OF CONTENTS
PAGE
SCHEDULES & EXHIBITS
Exhibit A Form of Revolving Credit Note
Exhibit B Form of Revolving Credit Loan Request
Exhibit C Form of Compliance Certificate
Exhibit D Form of Chief Operating Officer's Certificate
Exhibit E Borrowers' Standard Due Diligence Practices
Schedule 1 Subsidiaries of the Parent
Schedule 5.7 Litigation
Schedule 5.16 Environmental Compliance
Schedule 5.18 Certain Transactions
Schedule 5.22 Pending Permits
Schedule 6.7 Insurance Coverage
Schedule 6.10 Negative Pledges
Schedule 7.1(c) Indebtedness with Respect to
Guaranties, Etc.
Schedule 7.1(d) Landfill Closure Bonds
<PAGE>
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT is made as of the 9th day of October, 1997
by and among GEOWASTE INCORPORATED, a Delaware corporation (the "Parent"), its
Subsidiaries listed on SCHEDULE 1 hereto (the Parent and such Subsidiaries
herein collectively referred to as the "Borrowers" and, individually, as a
"Borrower"), each of which Borrowers (unless otherwise listed on SCHEDULE 1
hereto) having its principal place of business at Suite 700, 100 West Bay
Street, Jacksonville, Florida 32202 and BANKBOSTON, N.A., a national banking
association having its principal place of business at 100 Federal Street,
Boston, Massachusetts 02110 (the "Lender").
1. DEFINITIONS AND RULES OF INTERPRETATION.
1.1. DEFINITIONS. The following terms shall have the meanings set forth in
this section 1 or elsewhere in the provisions of this Agreement referred to
below:
ACCOUNTANTS. See section 5.4(a).
AGREEMENT. This Revolving Credit Agreement, including the Schedules and
Exhibits hereto, as amended and in effect from time to time.
APPLICABLE LAWS. See section.6.10.
BALANCE SHEET DATE. June 30, 1997.
BASE RATE. The higher of (a) the annual rate of interest announced from
time to time by the Lender at its head office in Boston, Massachusetts, as its
"base rate" (it being understood that such rate is a reference rate and not
necessarily the lowest rate of interest charged by the Lender), or (b) one
percent (1%) above the overnight federal funds effective rate, as published by
the Board of Governors of the Federal Reserve System, as in effect from time to
time.
BASE RATE LOANS. Loans bearing interest calculated by reference to the Base
Rate.
BORROWERS. See Preamble.
BUSINESS DAY. Any day on which banking institutions in Boston,
Massachusetts are open for the transaction of banking business.
CAPITAL ASSETS. Fixed assets, both tangible (such as land, buildings,
fixtures, machinery and equipment) and intangible (such as patents, copyrights,
trademarks, franchises and goodwill); PROVIDED THAT Capital Assets shall not
include (a) any item customarily charged directly to expense or depreciated over
a useful life of twelve (12) months or less in accordance with generally
accepted accounting principles, or (b) any item obtained through an acquisition
permitted by section 7.4 hereof.
CAPITAL EXPENDITURES. Amounts paid or indebtedness incurred by the
Borrowers in connection with the purchase or lease of Capital Assets that would
be required to be capitalized and shown on the balance sheet of such Person in
accordance with GAAP.
CAPITALIZED LEASES. Leases, the discounted future rental payment
obligations under which are required to be capitalized on the balance sheet of
the lessee or obligor in accordance with GAAP.
CERTIFIED OR CERTIFIED. With respect to the financial statements of any
Person, such statements as audited by a firm of independent auditors, whose
report expresses the opinion, without qualification, that such financial
statements present fairly the financial position of such Person.
CFO. See section 6.4(b).
CLOSING DATE. The date on which the conditions precedent set forth in
section 9 are satisfied.
CODE. The Internal Revenue Code of 1986, as amended and in effect from time
to time.
COLLATERAL. All of the property, rights and interests of the Borrowers that
are or are intended to be subject to the security interests and mortgages
created by the Security Documents.
COMMITMENT FEE. See section 4.1(a).
COMPLIANCE CERTIFICATE. See section 6.4(c).
CONSOLIDATED or CONSOLIDATED. With reference to any term defined herein,
shall mean that term as applied to the accounts of the Borrowers consolidated in
accordance with GAAP.
CONSOLIDATED EARNINGS BEFORE INTEREST AND TAXES OR EBIT. For any period,
the Consolidated Net Income (or Deficit) of the Borrowers determined in
accordance with GAAP, PLUS (a) interest expense, and (b) income tax expense, to
the extent that each of the same has been deducted in calculating Consolidated
Net Income (or Deficit).
CONSOLIDATED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION
OR EBITDA. For any twelve month period, the Consolidated Net Income (or Deficit)
of the Borrowers determined in accordance with GAAP excluding pooling charges,
PROVIDED THAT, with respect to any Subsidiary acquired within the past twelve
months or to be acquired, the calculation of Consolidated Net Income (or
Deficit) for the period prior to such Subsidiary's acquisition may include
reference to such Subsidiary's historical financial statements as if such
Subsidiary had been owned for those twelve months (PROVIDED THAT such statements
have been audited and approved by the Lender and the Lender has received
appropriate documentation thereof) and in the case of acquisitions occurring
after June 30, 1997, may be further adjusted to add back non-recurring private
company expenses which are discontinued upon such acquisitions to the extent
such adjustments are approved by the Lender, PLUS (a) interest expense, (b)
income taxes, (c) depreciation and landfill depletion expense, and (d)
amortization expense, to the extent that each of the same has been deducted in
calculating such adjusted Consolidated Net Income (or Deficit), as certified by
the CFO in the Compliance Certificate delivered to the Lender pursuant to
section 6.4 hereof.
CONSOLIDATED NET INCOME (OR DEFICIT). The consolidated net income (or
deficit) of the Borrowers after deduction of all expenses, taxes, and other
proper charges, determined in accordance with GAAP, after eliminating therefrom
all extraordinary nonrecurring items of income or loss.
CONSOLIDATED TOTAL ASSETS. All assets of the Borrowers determined on a
consolidated basis in accordance with GAAP.
CONSOLIDATED TOTAL INTEREST EXPENSE. For any period, the aggregate amount
of interest expense required to be paid or accrued by the Borrowers during such
period on all Indebtedness of the Borrowers outstanding during all or any part
of such period, including capitalized interest expense for such period.
CONSOLIDATED TOTAL LIABILITIES. All liabilities of the Borrowers determined
on a consolidated basis in accordance with GAAP.
CONSULTING ENGINEER. An environmental consulting firm acceptable to the
Lender.
DEFAULT. See section 12.
DISPOSAL. See "Release".
DISTRIBUTION. The declaration or payment of any dividend or distribution on
or in respect of any shares of any class of capital stock, any partnership
interests or any membership interests of any Person, other than dividends or
other distributions payable solely in shares of common stock, partnership
interests or membership units of such Person, as the case may be; the purchase,
redemption, or other retirement of any shares of any class of capital stock,
partnership interests or membership units of such Person, directly or indirectly
through a Subsidiary or otherwise; the return of equity capital by any Person to
its shareholders, partners or members as such; or any other distribution on or
in respect of any shares of any class of capital stock, partnership interest or
membership unit of such Person.
DOLLARS or $. Dollars in lawful currency of the United States of America.
DRAWDOWN DATE. The date on which any Loan is made or is to be made.
EBIT. See definition of Consolidated Earnings Before Interest and Taxes.
EBITDA. See definition of Consolidated Earnings Before Interest, Taxes,
Depreciation and Amortization.
EMPLOYEE BENEFIT PLAN. Any employee benefit plan within the meaning of
section 3(3) of ERISA maintained or contributed to by any Borrower, other than a
Guaranteed Pension Plan or a Multiemployer Plan.
ENVIRONMENTAL LAWS. See section 5.16(a).
ERISA. The Employee Retirement Income Security Act of 1974, as amended and
in effect from time to time.
ERISA AFFILIATE. Any Person which is treated as a single employer with any
Borrower under section 414 of the Code.
ERISA REPORTABLE EVENT. A reportable event with respect to a Guaranteed
Pension Plan within the meaning of section 4043 of ERISA and the regulations
promulgated thereunder as to which the requirement of notice has not been
waived.
EVENT OF DEFAULT. See section 12.
FUNDED DEBT. Indebtedness of the Borrowers for borrowed money, PLUS (i)
Indebtedness in respect of Capitalized Leases, (ii) Indebtedness in respect of
letters of credit, and (iii) guarantees of all such Indebtedness listed above.
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES OR GAAP. (i) When used in section 8,
whether directly or indirectly through reference to a capitalized term used
therein, means (A) principles that are consistent with the principles
promulgated or adopted by the Financial Accounting Standards Board and its
predecessors, in effect for the fiscal year ended on the Balance Sheet Date, and
(B) to the extent consistent with such principles, the accounting practice of
the Borrowers reflected in their financial statements for the year ended on the
Balance Sheet Date, and (ii) when used in general, other than as provided above,
means principles that are (A) consistent with the principles promulgated or
adopted by the Financial Accounting Standards Board and its predecessors, as in
effect from time to time, and (B) consistently applied with past financial
statements of the Borrowers adopting the same principles, provided that in each
case referred to in this definition of "generally accepted accounting
principles" a certified public accountant would, insofar as the use of such
accounting principles is pertinent, be in a position to deliver an unqualified
opinion (other than a qualification regarding changes in generally accepted
accounting principles) as to financial statements in which such principles have
been properly applied.
GUARANTEED PENSION PLAN. Any employee pension benefit plan within the
meaning of section 3(2) of ERISA maintained or contributed to by any Borrower or
any ERISA Affiliate the benefits of which are guaranteed on termination in full
or in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer
Plan.
HAZARDOUS SUBSTANCES. See section 5.16(b).
INDEBTEDNESS. Collectively, without duplication, whether classified as
Indebtedness, an Investment or otherwise on the obligor's balance sheet, (a) all
indebtedness for borrowed money or credit obtained or other similar monetary
obligations, direct or indirect, (b) all obligations for the deferred purchase
price of property or services or for future payment to the seller of property or
services (other than trade payables not overdue by more than ninety (90) days
incurred in the ordinary course of business), (c) all obligations evidenced by
notes, bonds, debentures or other similar debt instruments, (d) all obligations
created or arising under any conditional sale or other title retention agreement
with respect to property acquired (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (e) all obligations, liabilities and
indebtedness under Capitalized Leases, (f) all obligations, contingent or
otherwise, under acceptance, letter of credit or similar facilities, (g) all
agreements for indemnification or agreements to guarantee others against losses
of any kind, (h) all liabilities or obligations in respect of judgments or
awards against such Person, (i) all obligations, liabilities or indebtedness
(contingent or otherwise) under landfill closure and post- closure bonds, (j)
all Indebtedness of others referred to in clauses (a) through (i) above which is
guaranteed, or in effect guaranteed, directly or indirectly in any manner,
including through an agreement (A) to pay or purchase such Indebtedness or to
advance or supply funds for the payment or purchase of such Indebtedness, (B) to
purchase, sell or lease (as lessee or lessor) property, or to purchase or sell
services, primarily for the purpose of enabling any Person to make payment of
such Indebtedness or to assure the holder of such Indebtedness against loss, (C)
to supply funds to or in any other manner invest in any Person (including any
agreement to pay for property or services irrespective of whether such property
is received or such services are rendered) or (D) otherwise to assure any Person
against loss, and (k) all Indebtedness referred to in clauses (a) through (j)
above secured or supported by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured or supported by) any
lien or encumbrance on (or other right of recourse to or against) property
(including, without limitation, accounts and contract rights), even though the
owner of the property has not assumed or become liable, contractually or
otherwise, for the payment of such Indebtedness.
INVESTMENTS. All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock or Indebtedness of, or
for loans, advances, capital contributions or transfers of property to, or in
respect of any guaranties (or other commitments as described under
Indebtedness), or obligations of, any Person, or pre-payments for the use of
landfill air space in excess of usual and customary industry practice. In
determining the aggregate amount of Investments outstanding at any particular
time: (a) the amount of any Investment represented by a guaranty shall be taken
at not less than the principal amount of the obligations guaranteed and still
outstanding; (b) there shall be included as an Investment all interest accrued
with respect to Indebtedness constituting an Investment unless and until such
interest is paid; (c) there shall be deducted in respect of each such Investment
any amount received as a return of capital (but only by repurchase, redemption,
retirement, repayment, liquidating dividend or liquidating distribution); (d)
there shall not be deducted in respect of any Investment any amounts received as
earnings on such Investment, whether as dividends, interest or otherwise, except
that accrued interest included as provided in the foregoing clause (b) may be
deducted when paid; and (e) there shall not be deducted from the aggregate
amount of Investments any decrease in the value thereof.
LENDER'S HEAD OFFICE. The Lender's head office at 100 Federal Street,
Boston, Massachusetts 02110, or at such other location as the Lender may
designate from time to time.
LETTERS OF CREDIT. Standby Letters of Credit issued or to be issued by the
Lender under section 3 hereof for the account of the Borrowers.
LETTER OF CREDIT APPLICATIONS. Letter of Credit Applications in such form
as may be agreed upon by the Borrowers and the Lender from time to time which
are entered into pursuant to section 3 hereof as such Letter of Credit
Applications are amended, varied or supplemented from time to time.
LETTER OF CREDIT FEE. See section 4.1(b).
LOAN DOCUMENTS. This Agreement, the Note, the Letter of Credit
Applications, the Letters of Credit, and the Security Documents, each as
amended, modified, or supplemented and in effect from time to time.
LOAN AND LETTER OF CREDIT REQUEST. See section 2.3.
LOANS. Loans made by the Lender to the Borrowers pursuant to section 2.1
hereof.
MATERIAL ACQUISITION. Acquisition for which the sum of the value of the
Stock given by the Borrowers in consideration for the acquisition plus the cash
paid and Indebtedness assumed or incurred (excluding landfill closure and
post-closure bonds) is $2,000,000 or more.
MATURITY DATE. October 9, 2000.
MAXIMUM DRAWING AMOUNT. The maximum aggregate amount from time to time that
the beneficiaries may draw under outstanding Letters of Credit.
MULTIEMPLOYER PLAN. Any multiemployer plan within the meaning of section
3(37) of ERISA maintained or contributed to by any Borrower or any ERISA
Affiliate.
NOTE. See section 2.2.
OBLIGATIONS. All indebtedness, obligations and liabilities of the Borrowers
to the Lender, individually or collectively, existing on the date of this
Agreement or arising thereafter, direct or indirect, joint or several, absolute
or contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise, arising or
incurred under this Agreement or any of the other Loan Documents or in respect
of any of the Loans made or Reimbursement Obligations incurred or the Letters of
Credit, the Note or any other instrument at any time evidencing any thereof.
OVERNIGHT FEDERAL FUNDS EFFECTIVE RATE. The overnight federal funds
effective rate as published by the Board of Governors of the Federal Reserve
System, as in effect from time to time.
PBGC. The Pension Benefit Guaranty Corporation created by section 4002 of
ERISA and any successor entity or entities having similar responsibilities.
PERMITTED LIENS. See section 7.2.
PERSON. Any individual, corporation, partnership, trust, unincorporated
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
PLEDGE AGREEMENT. The Stock Pledge Agreement, dated as of the date hereof,
between the Borrowers and the Lender pledging all of the stock of the
Subsidiaries of the Parent to the Lender, as such agreement may be further
amended, modified, or supplemented from time to time.
REAL PROPERTY. All real property owned or leased by the Borrowers.
REIMBURSEMENT OBLIGATION. The Borrowers' obligation to reimburse the Lender
on account of any drawing under any Letter of Credit as provided in section 3.2.
RELEASE. Shall have the meaning specified in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
sections 9601 ET SEQ. ("CERCLA") and the term "DISPOSAL" (or "DISPOSED") shall
have the meaning specified in the Resource Conservation and Recovery Act of
1976, 42 U.S.C. sections 6901 ET SEQ. ("RCRA") and regulations promulgated
thereunder; provided, that in the event either CERCLA or RCRA is amended so as
to broaden the meaning of any term defined thereby, such broader meaning shall
apply as of the effective date of such amendment and provided further, to the
extent that the laws of a state wherein the property lies establishes a meaning
for "Release" or "Disposal" which is broader than specified in either CERCLA or
RCRA, such broader meaning shall apply.
SECURITY AGREEMENT. The Security Agreement, dated as of the date hereof,
between the Borrowers and the Lender, as such agreement may be further amended,
modified, or supplemented from time to time, in form and substance acceptable to
the Lender.
SECURITY DOCUMENTS. The Security Agreement, the Pledge Agreement and any
additional documents evidencing or perfecting the Lender's lien on the shares of
the Subsidiaries of the Parent, including Uniform Commercial Code financing
statements, each as amended and in effect from time to time.
SUBSIDIARY. Any corporation, association, trust, or other business entity
of which the designated parent shall at any time own directly or indirectly
through a Subsidiary or Subsidiaries at least a majority of the outstanding
capital stock or other interest entitled to vote generally.
TOTAL COMMITMENT. See section 2.1.
1.2. RULES OF INTERPRETATION.
(a) A reference to any document or agreement shall include such document or
agreement as amended, modified or supplemented from time to time in accordance
with its terms and the terms of this Agreement.
(b) The singular includes the plural and the plural includes the singular.
(c) A reference to any law includes any amendment or modification to such
law.
(d) A reference to any Person includes its permitted successors and
permitted assigns.
(e) Accounting terms capitalized but not otherwise defined herein have the
meanings assigned to them by Generally Accepted Accounting Principles applied on
a consistent basis by the accounting entity to which they refer.
(f) The words "include", "includes" and "including" are not limiting.
(g) All terms not specifically defined herein or by Generally Accepted
Accounting Principles, which terms are defined in the Uniform Commercial Code as
in effect in the Commonwealth of Massachusetts, have the meanings assigned to
them therein.
(h) Reference to a particular "section" refers to that section of this
Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of like import
shall refer to this Agreement as a whole and not to any particular section or
subdivision of this Agreement.
2. THE REVOLVING CREDIT FACILITY.
2.1. COMMITMENT TO LEND. Subject to the terms and conditions set forth in
this Agreement, the Lender agrees to lend to the Borrowers and the Borrowers may
borrow, repay, and reborrow from time to time between the Closing Date and the
Maturity Date, upon notice by the Borrowers to the Lender given in accordance
with section 2.3, such sums as are requested by the Borrowers PROVIDED THAT the
sum of the outstanding principal amount of the Loans (giving effect to the
requested Loan) plus the Maximum Drawing Amount shall not exceed a maximum
aggregate amount outstanding of $5,000,000 (the "Total Commitment"). Each
request for a Loan or Letter of Credit hereunder shall constitute a
representation and warranty by the Borrowers that the conditions set forth in
section 9 and section 10, as the case may be, have been satisfied on the date of
such request. Any unpaid Reimbursement Obligation with respect to any Letter of
Credit shall be a Base Rate Loan hereunder.
2.2. THE NOTE. The Revolving Credit Loans shall be evidenced by a
promissory note of the Borrowers in substantially the form of EXHIBIT A hereto
(the "Note"), dated as of the Closing Date and completed with appropriate
insertions. The Note shall be payable to the order of the Lender in an amount
equal to the Total Commitment, and representing the obligation of the Borrowers
to pay the Lender such principal amount or, if less, the outstanding principal
amount of all Loans made by the Lender, plus interest accrued thereon, as set
forth below. The Borrowers irrevocably authorize the Lender to make or cause to
be made, in connection with a Drawdown Date of any Loan or at the time of
receipt of any payment of principal on the Note, an appropriate notation on the
Lender's records reflecting the making of the Loan or the receipt of such
payment (as the case may be) and may, prior to any transfer of the Note, endorse
on the reverse side thereof the outstanding principal amount of Loans evidenced
thereby. The outstanding amount of the Loans set forth on the Lender's record
shall, absent manifest error, be PRIMA FACIE evidence of the principal amount
thereof owing and unpaid to the Lender, but the failure to record, or any error
in so recording, any such amount shall not limit or otherwise affect the
obligations of the Borrowers hereunder or under the Note to make payments of
principal of or interest on the Note when due.
2.3. REQUESTS FOR LOANS. The Parent as agent for the Borrowers shall give
to the Lender written notice in the form of EXHIBIT B hereto (or telephonic
notice confirmed in writing or a telecopy in the form of EXHIBIT B hereto) of
each Loan requested hereunder (a "Loan and Letter of Credit Request") not later
than 11:00 a.m. (Boston time) one Business Day prior to the Drawdown Date of any
Base Rate Loan. Each Loan requested shall be in a minimum amount of $100,000.
Each such request shall specify the principal amount of the Loan requested and
shall reflect the Maximum Drawing Amount of all Letters of Credit outstanding.
Requests for Loans made hereunder shall be irrevocable and binding on the
Borrowers, and shall obligate the Borrowers to accept the Loan requested from
the Lender on the proposed Drawdown Date. Each of the representations and
warranties made by or on behalf of the Borrowers to the Lender in this Agreement
or any other Loan Document shall be true and correct in all material respects
when made and shall, for all purposes of this Agreement, be deemed to be
repeated on and as of the date of the submission of a Loan and Letter of Credit
Request and on and as of the Drawdown Date of such Loan or the date of issuance
of such Letter of Credit (except to the extent (i) of changes resulting from
transactions contemplated or permitted by this Agreement and the other Loan
Documents, (ii) of changes occurring in the ordinary course of business that
singly or in the aggregate are not materially adverse to the business, assets or
financial condition of any Borrower or the Borrowers taken as a whole, (iii) of
changes disclosed to the Lender in writing and accepted by the Lender, or (iv)
that such representations and warranties expressly relate only to an earlier
date).
2.4. FUNDS FOR LOANS. Upon receipt of the documents required by section 9
or section 10, as the case may be, and the satisfaction of the other conditions
set forth therein, to the extent applicable, the Lender will make available to
the Borrowers on the proposed Drawdown Date of any Loan, at the Lender's Head
Office, in immediately available funds, the amount of the requested Loan.
2.5. INTEREST. The outstanding principal amount of the Loans shall bear
interest at the rate per annum equal to the Base Rate PLUS one-quarter percent
(1/4%). Interest shall be payable (a) quarterly in arrears on the last Business
Day of each fiscal quarter for the fiscal quarter ending on such date, and (b)
on the Maturity Date for all Loans.
2.6. MATURITY OF THE LOANS AND REIMBURSEMENT OBLIGATIONS. The Loans and all
unpaid Reimbursement Obligations shall be due and payable on the Maturity Date.
Each of the Borrowers promises to pay on the Maturity Date all Loans and all
unpaid Reimbursement Obligations outstanding on such date, together with any and
all accrued and unpaid interest thereon and any fees and other amounts owing
hereunder.
2.7. EARLY TERMINATION FEE. In the event the Borrowers terminate or
refinance this facility prior to the Maturity Date, other than pursuant to a
refinancing provided by the Lender, the Borrowers shall pay a $50,000 early
termination fee to the Lender.
2.8. MANDATORY REPAYMENTS OF THE LOANS. If at any time the outstanding
amount of the Loans PLUS the Maximum Drawing Amount of all outstanding Letters
of Credit exceeds the Total Commitment, then the Borrowers shall immediately pay
the amount of such excess to the Lender (a) for application to the Loans, or (b)
if no Loans shall be outstanding, to be held by the Lender as collateral
security for the Reimbursement Obligations PROVIDED, HOWEVER, that if the amount
of cash collateral held by the Lender pursuant to this section 2.8(b) exceeds
the Maximum Drawing Amount, the Lender shall return such excess to the
Borrowers.
2.9. OPTIONAL PREPAYMENTS OR REPAYMENTS OF LOANS. Subject to the terms and
conditions of section 2.7, the Borrowers shall have the right, at their
election, to repay or prepay the outstanding amount of the Loans, as a whole or
in part, at any time without penalty or premium. The Borrowers shall give the
Lender, no later than 12:00 noon (Boston time) three (3) Business Days prior to
such proposed prepayment or repayment, written notice (or telephonic notice
confirmed in writing or by telecopy) of any proposed prepayment or repayment
pursuant to this section 2.9, specifying the proposed date of prepayment or
repayment of Loans and the principal amount to be paid (in integral multiples of
$100,000, or, if less, the balance of the Loans).
3. LETTERS OF CREDIT.
3.1. LETTER OF CREDIT COMMITMENT. Subject to the terms and conditions
hereof and the execution and receipt of a Loan and Letter of Credit Request
reflecting the Maximum Drawing Amount of all Letters of Credit (including the
requested Letter of Credit) and a Letter of Credit Application, the Lender, in
reliance upon the representations and warranties of the Borrowers contained
herein, agrees to issue standby letters of credit, in such form as may be
requested from time to time by the Parent as agent for the Borrowers and agreed
to by the Lender; PROVIDED, HOWEVER, THAT, after giving effect to such request,
the aggregate Maximum Drawing Amount of all letters of credit issued at any time
under this section 3.1 (the "Letters of Credit") shall not exceed $1,000,000,
and no Letter of Credit shall have an expiration date later than the earlier of
(i) one year after the date of issuance of the Letter of Credit, or (ii) thirty
(30) days prior to the Maturity Date.
3.2. REIMBURSEMENT OBLIGATION OF THE BORROWERS. In order to induce the
Lender to issue, extend and renew each Letter of Credit, the Borrowers hereby
agree to reimburse or pay to the Lender with respect to each Letter of Credit
issued, extended or renewed by the Lender hereunder as follows:
(a) on each date that any draft presented under any Letter of Credit
is honored by the Lender or the Lender otherwise makes payment with respect
thereto, (i) the amount paid by the Lender under or with respect to such Letter
of Credit, and (ii) the amount of any taxes, fees, charges or other costs and
expenses whatsoever incurred by the Lender in connection with any payment made
by the Lender under, or with respect to, such Letter of Credit; and
(b) upon the Maturity Date or the acceleration of the Reimbursement
Obligations with respect to all Letters of Credit in accordance with section 12,
an amount equal to the then Maximum Drawing Amount of all Letters of Credit,
which amount shall be held by the Lender as cash collateral for all
Reimbursement Obligations.
Each such payment shall be made to the Lender at the Lender's Head Office
in immediately available funds. Interest on any and all amounts remaining unpaid
by the Borrowers under this section 3.2 at any time from the date such amounts
become due and payable (whether as stated in this section 3.2, by acceleration
or otherwise) until payment in full (whether before or after judgment) shall be
payable to the Lender on demand at the rate specified in section 4.5 for overdue
amounts.
3.3. LETTER OF CREDIT PAYMENTS. If any draft shall be presented or other
demand for payment shall be made under any Letter of Credit, the Lender shall
notify the Borrowers of the date and amount of the draft presented or demand for
payment and of the date and time when it expects to pay such draft or honor such
demand for payment. The responsibility of the Lender to the Borrowers shall be
only to determine that the documents (including each draft) delivered under each
Letter of Credit in connection with such presentment shall be in conformity with
such Letter of Credit.
3.4. OBLIGATIONS ABSOLUTE. The Borrowers' obligations under this section 3
shall be absolute and unconditional under any and all circumstances and
irrespective of the occurrence of any Default or Event of Default or any
condition precedent whatsoever or any setoff, counterclaim or defense to payment
which the Borrowers may have or have had against the Lender or any beneficiary
of a Letter of Credit. The Borrowers further agree with the Lender that the
Lender shall not be responsible for, and the Borrowers' Reimbursement
Obligations under section 3.2 shall not be affected by, among other things, the
validity 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,
fraudulent or forged, or any dispute between or among the Borrowers, the
beneficiary of any Letter of Credit or any financing institution or other party
to which any Letter of Credit may be transferred or any claims or defenses
whatsoever of the Borrowers against the beneficiary of any Letter of Credit or
any such transferee. The Lender shall not be liable, if done in good faith and
with due care and in conformity with such laws, regulations, usage of trade or
commercial or banking customs as may be applicable, for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit. The
Borrowers agree that any action taken or omitted by the Lender under or in
connection with each Letter of Credit and the related drafts and documents, if
done in good faith, shall be binding upon the Borrowers and shall not result in
any liability on the part of the Lender to the Borrowers.
3.5. RELIANCE BY LENDER. To the extent not inconsistent with section 3.4,
the Lender shall be entitled to rely, and shall be fully protected in relying
upon, any Letter of Credit, draft, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons
and upon advice and statements of legal counsel, independent accountants and
other experts selected by the Lender.
4. FEES, PAYMENTS, AND COMPUTATIONS; JOINT AND SEVERAL LIABILITY.
4.1. FEES.
(a) COMMITMENT FEE. The Borrowers agree to pay to the Lender a
commitment fee (the "Commitment Fee") at the rate of one-half percent (1/2%) per
annum on the unused portion of the Total Commitment during each calendar quarter
or portion thereof from the Closing Date to the Maturity Date (or to the date of
termination in full of the Total Commitment, if earlier). This Commitment Fee
shall be payable quarterly in arrears on the last day of each fiscal quarter for
the fiscal quarter then ended commencing on the last day of the calendar month
in which the conditions set forth in section 9 hereof are first satisfied, with
a final payment on the Maturity Date.
(b) LETTER OF CREDIT FEE. The Borrowers shall pay a fee (the "Letter
of Credit Fee") to the Lender equal to one and one-half percent (1 1/2%) per
annum on the average Maximum Drawing Amount of Letters of Credit outstanding
during each fiscal quarter, payable quarterly in arrears on the last day of each
fiscal quarter for the fiscal quarter then ended. The Borrowers shall also pay
the customary issuance and administrative fees of the Lender with respect to the
Letters of Credit, including, without limitation, fees for modifying such
Letters of Credit.
4.2. PAYMENTS.
(a) All payments of principal, interest, Reimbursement Obligations,
fees and any other amounts due hereunder or under any of the other Loan
Documents shall be made to the Lender, for the account of the Lender, received
at the Lender's Head Office in immediately available funds by 12:00 noon (Boston
time) on any due date.
(b) All payments by the Borrowers hereunder and under any of the other
Loan Documents shall be made without setoff or counterclaim and free and clear
of and without deduction for any taxes, levies, imposts, duties, charges, fees,
deductions, withholdings, compulsory loans, restrictions or conditions of any
nature now or hereafter imposed or levied by any jurisdiction or any political
subdivision thereof or taxing or other authority therein unless the Borrowers
are compelled by law to make such deduction or withholding. If any such
obligation is imposed upon the Borrowers with respect to any amount payable by
them hereunder or under any of the other Loan Documents, the Borrowers will pay
to the Lender, for the Lender's account, on the date on which such amount is due
and payable hereunder or under such other Loan Document, such additional amount
in Dollars as shall be necessary to enable the Lender to receive the same net
amount which the Lender would have received on such due date had no such
obligation been imposed upon the Borrowers. The Borrowers will deliver promptly
to the Lender certificates or other valid vouchers for all taxes or other
charges deducted from or paid with respect to payments made by the Borrowers
hereunder or under such other Loan Document.
4.3 COMPUTATIONS. All computations of interest on the Loans and of Letter
of Credit Fees or other fees shall be based on a 365- or 366-day year, and shall
be paid for the actual number of days elapsed. Whenever a payment hereunder or
under any of the other Loan Documents becomes due on a day that is not a
Business Day, the due date for such payment shall be extended to the next
Business Day, and interest shall accrue during such extension.
4.4. CAPITAL ADEQUACY. If any present or future law, governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law) or the interpretation thereof by a court or governmental authority with
appropriate jurisdiction affects the amount of capital required or expected to
be maintained by the Lender or any corporation controlling the Lender and the
Lender determines that the amount of capital required to be maintained by it is
increased by or based upon the existence of the Lender's Loans or Letters of
Credit, or commitment with respect thereto, then the Lender may notify the
Borrowers of such fact. To the extent that the costs of such increased capital
requirements are not reflected in the Base Rate (if relating to Base Rate
Loans), the Borrowers and the Lender shall thereafter attempt to negotiate in
good faith, within thirty (30) days of the day on which the Borrowers receive
such notice, an adjustment payable hereunder that will adequately compensate the
Lender in light of these circumstances. If the Borrowers and the Lender are
unable to agree to such adjustment within thirty (30) days of the date on which
the Borrowers receive such notice, then commencing on the date of such notice
(but not earlier than the effective date of any such increased capital
requirement), the fees payable hereunder shall increase by an amount that will,
in the Lender's reasonable determination, provide adequate compensation. The
Lender shall allocate such cost increases among its customers in good faith and
on an equitable basis.
4.5. INTEREST ON OVERDUE AMOUNTS. Overdue principal and (to the extent
permitted by applicable law) interest on the Loans and all other overdue amounts
payable hereunder or under any of the other Loan Documents shall bear interest
compounded monthly and be payable on demand at a rate per annum equal to the
Base Rate plus two and one-quarter percentage points (2.25%) until such overdue
amount shall be paid in full (after as well as before judgment).
4.6. INTEREST LIMITATION. Notwithstanding any other term of this Agreement
or any Note or any other document referred to herein or therein, the maximum
amount of interest which may be charged to or collected from any Person liable
hereunder or under the Note by the Lender shall be absolutely limited to, and
shall in no event exceed, the maximum amount of interest which could lawfully be
charged or collected under applicable law (including, to the extent applicable,
the provisions of Section 5197 of the Revised Statutes of the United States of
America, as amended, 12 U.S.C. Section 85, as amended), so that the maximum of
all amounts constituting interest under applicable law, howsoever computed,
shall never exceed as to any Person liable therefor such lawful maximum, and any
term of this Agreement, the Note, the Letter of Credit Applications, or any
other document referred to herein or therein which could be construed as
providing for interest in excess of such lawful maximum shall be and hereby is
made expressly subject to and modified by the provisions of this paragraph.
4.7. ADDITIONAL COSTS, ETC. If any present or future applicable law, which
expression, as used herein, includes statutes, rules and regulations thereunder
and interpretations thereof by any competent court or by any governmental or
other regulatory body or official charged with the administration or the
interpretation thereof and requests, directives, instructions and notices at any
time or from time to time hereafter made upon or otherwise issued to the Lender
by any central bank or other fiscal, monetary or other authority (whether or not
having the force of law), shall impose on the Lender any tax (other than taxes
imposed by any jurisdiction in which the Lender's head office is located and
based upon or measured by the income or profits of the Lender), levy, impost,
duty, charge fees, deduction or withholdings of any nature or requirements with
respect to this Agreement, the other Loan Documents, the Loans, the Total
Commitment, the Letters of Credit or any class of loans or commitments or
letters of credit of which any of the Loans, the Total Commitment or the Letters
of Credit forms a part, and the result of any of the foregoing is:
(i) to increase the cost to the Lender of making, funding, issuing,
renewing, extending or maintaining the Loans, the Total Commitment, or the
Letters of Credit; or
(ii) to reduce the amount of principal, interest or other amount
payable to the Lender hereunder on account of the Total Commitment, the
Loans, drawings under the Letters of Credit, or
(iii) to require the Lender to make any payment or to forego any
interest or other sum payable hereunder, the amount of which payment or
foregone interest or other sum is calculated by reference to the gross
amount of any sum receivable or deemed received by the Lender from the
Borrowers hereunder,
then, and in each such case, the Borrowers will, upon demand made by the Lender
at any time and from time to time and as often as the occasion therefor may
arise, pay to the Lender such additional amounts as will be sufficient to
compensate the Lender for such additional cost, reduction, payment or foregone
interest or other sum (after the Lender shall have allocated the same fairly and
equitably among all customers of any class generally affected thereby).
4.8. CERTIFICATE. A certificate setting forth any additional amounts
payable pursuant to section 4.7 and a reasonable explanation of such amounts
which are due, submitted by the Lender to the Borrowers, shall be conclusive,
absent manifest error, that such amounts are due and owing.
4.9. CONCERNING JOINT AND SEVERAL LIABILITY OF THE BORROWERS.
(a) Each of the Borrowers is accepting joint and several liability
hereunder and under the other Loan Documents in consideration of the financial
accommodations to be provided by the Lender under this Agreement, for the mutual
benefit, directly and indirectly, of each of the Borrowers and in consideration
of the undertakings of each other Borrower to accept joint and several liability
for the Obligations.
(b) Each of the Borrowers, jointly and severally, hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with the other Borrowers, with respect to the payment and
performance of all of the Obligations (including, without limitation, any
Obligations arising under this section 4.9), it being the intention of the
parties hereto that all the Obligations shall be the joint and several
Obligations of each of the Borrowers without preferences or distinction among
them.
(c) If and to the extent that any of the Borrowers shall fail to make any
payment with respect to any of the Obligations as and when due or to perform any
of the Obligations in accordance with the terms thereof, then in each such event
the other Borrowers will make such payment with respect to, or perform, such
Obligation.
(d) The Obligations of each of the Borrowers under the provisions of this
section 4.9 constitute full recourse Obligations of each of the Borrowers
enforceable against each such corporation to the full extent of its properties
and assets, irrespective of the validity, regularity or enforceability of this
Agreement or any other circumstance whatsoever except as subject to section
5.1(c).
(e) Except as otherwise expressly provided in this Agreement, each of the
Borrowers hereby waives notice of acceptance of its joint and several liability,
notice of any Loans made under this Agreement, notice of any action at any time
taken or omitted by the Lender under or in respect of any of the Obligations,
and, generally, to the extent permitted by applicable law, all demands, notices
and other formalities of every kind in connection with this Agreement. Each of
the Borrowers hereby assents to, and waives notice of, any extension or
postponement of the time for the payment of any of the Obligations, the
acceptance of any payment of any of the Obligations, the acceptance of any
partial payment thereon, any waiver, consent or other action or acquiescence by
the Lender at any time or times in respect of any default by any of the
Borrowers in the performance or satisfaction of any term, covenant, condition or
provision of this Agreement, any and all other indulgences whatsoever by the
Lender in respect of any of the Obligations, and the taking, addition,
substitution or release, in whole or in part, at any time or times, of any
security for any of the Obligations or the addition, substitution or release, in
whole or in part, of any of the Borrowers. Without limiting the generality of
the foregoing, each of the Borrowers assents to any other action or delay in
acting or failure to act on the part of the Lender with respect to the failure
by any of the Borrowers to comply with any of its respective Obligations,
including, without limitation, any failure strictly or diligently to assert any
right or to pursue any remedy or to comply fully with applicable laws or
regulations thereunder, which might, but for the provisions of this section 4.9,
afford grounds for terminating, discharging or relieving any of the Borrowers,
in whole or in part, from any of its Obligations under this section 4.9, it
being the intention of each of the Borrowers that, so long as any of the
Obligations hereunder remain unsatisfied, the Obligations of such Borrowers
under this section 4.9 shall not be discharged except by performance and then
only to the extent of such performance. The Obligations of each of the Borrowers
under this section 4.9 shall not be diminished or rendered unenforceable by any
winding up, reorganization, arrangement, liquidation, re-construction or similar
proceeding with respect to any of the Borrowers or the Lender. The joint and
several liability of the Borrowers hereunder shall continue in full force and
effect notwithstanding any absorption, merger, amalgamation or any other change
whatsoever in the name, membership, constitution or place of formation of any of
the Borrowers or the Lender.
(f) The provisions of this section 4.9 are made for the benefit of the
Lender and its successors and assigns, and may be enforced in good faith by it
from time to time against any or all of the Borrowers as often as occasion
therefor may arise and without requirement on the part of the Lender first to
marshal any of its claims or to exercise any of its rights against any other
Borrower or to exhaust any remedies available to it against any other Borrower
or to resort to any other source or means of obtaining payment of any of the
Obligations hereunder or to elect any other remedy. The provisions of this
section 4.9 shall remain in effect until all of the Obligations shall have been
paid in full or otherwise fully satisfied. If at any time, any payment, or any
part thereof, made in respect of any of the Obligations, is rescinded or must
otherwise be restored or returned by the Lender upon the insolvency, bankruptcy
or reorganization of any of the Borrowers, or otherwise, the provisions of this
section 4.9 will forthwith be reinstated in effect, as though such payment had
not been made.
4.10. NEW BORROWERS. Any newly-created or acquired Subsidiaries shall
become Borrowers hereunder by signing the Note (or, at the option of the Lender,
allonges to the Note), entering into an amendment to this Agreement and the
Security Documents with the other parties hereto providing that such Subsidiary
shall become a Borrower hereunder, and providing such other documentation as the
Lender may reasonably request including, without limitation, documentation with
respect to conditions noted in section 9 hereof. In such event, the Lender is
hereby authorized by the parties to amend SCHEDULE 1 hereto to include each such
Subsidiary as a Borrower hereunder.
5. REPRESENTATIONS AND WARRANTIES. The Borrowers jointly and severally
represent and warrant to the Lender as follows:
5.1. CORPORATE AUTHORITY.
(a) INCORPORATION; GOOD STANDING. Each of the Borrowers (i) is a
corporation duly organized, validly existing and in good standing under the
laws of its respective state of incorporation, (ii) has all requisite
corporate power to own its property and conduct its business as now
conducted and as presently contemplated, and (iii) is in good standing as a
foreign corporation and is duly authorized to do business in each
jurisdiction in which its property or business as presently conducted or
contemplated makes such qualification necessary, except where a failure to
be so qualified would not have a material adverse effect on the business,
assets or financial condition of the Borrowers considered as a whole.
(b) AUTHORIZATION. The execution, delivery and performance of the Loan
Documents and the transactions contemplated hereby and thereby (i) are
within the corporate authority of each of the Borrowers, (ii) have been
duly authorized by all necessary corporate proceedings, (iii) do not
conflict with or result in any material breach or contravention of any
provision of law, statute, rule or regulation to which any of the Borrowers
is subject or any judgment, order, writ, injunction, license or permit
applicable to any of the Borrowers so as to materially adversely affect the
assets, business or any activity of the Borrowers, and (iv) do not conflict
with any provision of the corporate charter or bylaws of the Borrowers or
any agreement or other instrument binding upon the Borrowers.
(c) ENFORCEABILITY. The execution, delivery and performance of the
Loan Documents will result in valid and legally binding obligations of the
Borrowers enforceable against each in accordance with the respective terms
and provisions hereof and thereof, except as enforceability is limited by
bankruptcy, insolvency, reorganization, moratorium or other laws relating
to or affecting generally the enforcement of creditors' rights and except
to the extent that availability of the remedy of specific performance or
injunctive relief or other equitable remedy is subject to the discretion of
the court before which any proceeding therefor may be brought.
5.2. GOVERNMENTAL APPROVALS. The execution, delivery and performance by the
Borrowers of the Loan Documents and the transactions contemplated hereby and
thereby do not require any approval or consent of, or filing with, any
governmental agency or authority other than those already obtained.
<PAGE>
5.3. TITLE TO PROPERTIES; LEASES. The Borrowers own all of the assets
reflected in the consolidated or combined balance sheets as at the Balance Sheet
Date or acquired since that date (except property and assets sold or otherwise
disposed of in the ordinary course of business since that date), subject to no
mortgages, capitalized leases, conditional sales agreements, title retention
agreements, liens or other encumbrances except Permitted Liens.
5.4. FINANCIAL STATEMENTS; SOLVENCY.
(a) There has been furnished to the Lender (i) the consolidated
balance sheet of the Borrowers dated the Balance Sheet Date and
consolidated statements of operations for the fiscal year then ended,
certified by Coopers & Lybrand or such other independent accounting firm
acceptable to the Lender (the "Accountants"), and (ii) a consolidated and
consolidating balance sheet and related consolidated and consolidating
statement of operations of the Borrowers dated the Balance Sheet Date for
the fiscal quarter then ended. Said balance sheets and statements of
operations have been prepared in accordance with GAAP, fairly present in
all material respects the financial condition of the Borrowers on a
consolidated basis, as at the close of business on the date thereof and the
results of operations for the period then ended. There are no contingent
liabilities of the Borrowers as of such date involving amounts of $100,000
or more in the aggregate known to the officers of the Borrowers which have
not been disclosed in said balance sheets and the related notes thereto, as
the case may be.
(b) The Borrowers (both before and after giving effect to the
transactions contemplated by this Agreement) are solvent (I.E., they have
assets having a fair value in excess of the amount required to pay their
probable liabilities on their existing debts as they become absolute and
matured) and have, and expect to have, the ability to pay their debts from
time to time incurred in connection therewith as such debts mature.
5.5. NO MATERIAL CHANGES, ETC. Since the Balance Sheet Date, there have
occurred no material adverse changes in the financial condition or business of
the Borrowers as shown on or reflected in the consolidated balance sheet of such
corporations as at the Balance Sheet Date, or the consolidated statement of
income for the fiscal year then ended other than changes in the ordinary course
of business which have not had any material adverse effect either individually
or in the aggregate on the business or financial condition of any Borrower.
Since the Balance Sheet Date, there has not been any Distribution.
5.6. PERMITS, FRANCHISES, PATENTS, COPYRIGHTS, ETC. Each of the Borrowers
possesses all franchises, patents, copyrights, trademarks, trade names, licenses
and permits, and rights in respect of the foregoing, adequate for the conduct of
its business substantially as now conducted without known conflict with any
rights of others.
5.7. LITIGATION. To the knowledge of the Borrowers, except as shown on
SCHEDULE 5.7 hereto, there are no actions, suits, proceedings or investigations
of any kind pending or threatened against any Borrower before any court,
tribunal or administrative agency or board which, if adversely determined,
might, either in any case or in the aggregate, materially adversely affect the
properties, assets, financial condition or business of the Borrowers considered
as a whole, or materially impair the right of the Borrowers to carry on business
substantially as now conducted, or result in any substantial liability not
adequately covered by insurance, or for which adequate reserves are not
maintained on the consolidated balance sheet or which question the validity of
any of the Loan Documents, or any action taken or to be taken pursuant hereto or
thereto.
5.8. NO MATERIALLY ADVERSE CONTRACTS, ETC. None of the Borrowers is subject
to any charter, corporate or other legal restriction, or any judgment, decree,
order, rule or regulation which in the judgment of the Borrowers' officers has
or is expected in the future to have a materially adverse effect on the
business, assets or financial condition of the Borrowers considered as a whole.
None of the Borrowers is a party to any contract or agreement which in the
judgment of the Borrowers' officers has or is expected to have any materially
adverse effect on the business of the Borrowers considered as a whole, except as
otherwise reflected in adequate reserves.
5.9. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. None of the Borrowers is
violating any provision of its charter documents or by-laws or any agreement or
instrument by which any of them may be subject or by which any of them or any of
their properties may be bound or any decree, order, judgment, or any statute,
license, rule or regulation, in a manner which could result in the imposition of
substantial penalties or materially and adversely affect the financial
condition, properties or business of the Borrowers considered as a whole.
5.10. TAX STATUS. The Borrowers have made or filed all federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which any of them are subject (unless and only to the extent
that any Borrower has set aside on its books provisions reasonably adequate for
the payment of all unpaid and unreported taxes); and have paid all taxes and
other governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith; and have set aside on their books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in an aggregate amount of $100,000 or more claimed to be due by the
taxing authority of any jurisdiction, and the officers of the Borrowers know of
no basis for any such claim.
5.11. NO EVENT OF DEFAULT. No Default or Event of Default has occurred and
is continuing.
5.12. HOLDING COMPANY AND INVESTMENT COMPANY ACTS. None of the Borrowers is
a "holding company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company", as such terms are defined in the Public
Utility Holding Company Act of 1935; nor is any of them a "registered investment
company", or an "affiliated company" or a "principal underwriter" of a
"registered investment company", as such terms are defined in the Investment
Company Act of 1940, as amended.
<PAGE>
5.13. ABSENCE OF FINANCING STATEMENTS, ETC. Except as contemplated by
section 7.2 of this Agreement, there is no financing statement, security
agreement, chattel mortgage, real estate mortgage or other document filed or
recorded with any filing records, registry, or other public office, which
purports to cover, affect or give notice of any present or possible future lien
on, or security interest in, any assets or property of any of the Borrowers or
rights thereunder.
5.14. EMPLOYEE BENEFIT PLANS.
(a) IN GENERAL. Each Employee Benefit Plan and each Guaranteed Pension
Plan has been maintained and operated in compliance in all material
respects with the provisions of ERISA and, to the extent applicable, the
Code, including but not limited to the provisions thereunder respecting
prohibited transactions and the bonding of fiduciaries and other persons
handling plan funds as required by section 412 of ERISA. The Borrowers have
heretofore delivered to the Lender the most recently completed annual
report, Form 5500, with all required attachments, and actuarial statement
required to be submitted under section 103(d) of ERISA, with respect to
each Guaranteed Pension Plan.
(b) TERMINABILITY OF WELFARE PLANS. No Employee Benefit Plan which is
an employee welfare benefit plan within the meaning of section 3(1) or
section 3(2)(B) of ERISA, provides benefit coverage subsequent to
termination of employment except as required by Title I, Part 6 of ERISA or
applicable state insurance laws. Any Borrower may terminate each such Plan
at any time (or at any time subsequent to the expiration of any applicable
bargaining agreement) in the discretion of such Borrower without liability
to any Person other than for claims arising prior to termination.
(c) GUARANTEED PENSION PLANS. Each contribution required to be made to
a Guaranteed Pension Plan, whether required to be made to avoid the
incurrence of an accumulated funding deficiency, the notice or lien
provisions of section 302(f) of ERISA, or otherwise, has been timely made.
No waiver of an accumulated funding deficiency or extension of amortization
periods has been received with respect to any Guaranteed Pension Plan, and
neither any of the Borrowers nor any ERISA Affiliate is obligated to or has
posted security in connection with an amendment of a Guaranteed Pension
Plan pursuant to section 307 of ERISA or section 401(a)(29) of the Code. No
liability to the PBGC (other than required insurance premiums, all of which
have been paid) has been incurred by any Borrower or any ERISA Affiliate
with respect to any Guaranteed Pension Plan and there has not been any
ERISA Reportable Event, or any other event or condition which presents a
material risk of termination of any Guaranteed Pension Plan by the PBGC.
Based on the latest valuation of each Guaranteed Pension Plan (which in
each case occurred within twelve months of the date of this
representation), and on the actuarial methods and assumptions employed for
that valuation, the aggregate benefit liabilities of all such Guaranteed
Pension Plans within the meaning of section 4001 of ERISA did not exceed
the aggregate value of the assets of all such Guaranteed Pension Plans,
disregarding for this purpose the benefit liabilities and assets of any
Guaranteed Pension Plan with assets in excess of benefit liabilities.
(d) MULTIEMPLOYER PLANS. None of the Borrowers nor any ERISA Affiliate
has incurred any material liability (including secondary liability) to any
Multiemployer Plan as a result of a complete or partial withdrawal from
such Multiemployer Plan under section 4201 of ERISA or as a result of a
sale of assets described in section 4204 of ERISA. None of the Borrowers
nor any ERISA Affiliate has been notified that any Multiemployer Plan is in
reorganization or is insolvent under and within the meaning of section 4241
or section 4245 of ERISA or is at risk of entering reorganization or
becoming insolvent, or that any Multiemployer Plan intends to terminate or
has been terminated under section 4041A of ERISA
5.15. USE OF PROCEEDS. The proceeds of the Loans shall be used for
corporate purposes, including to refinance certain existing Indebtedness of the
Borrowers, for working capital purposes, for Capital Expenditures, for Letters
of Credit, and for additional acquisitions permitted by section 7.4 hereof or
otherwise approved in writing by the Lender. No proceeds of the Loans shall be
used in any way that will violate Regulations G, T, U or X of the Board of
Governors of the Federal Reserve System.
5.16. ENVIRONMENTAL COMPLIANCE. The Borrowers have taken all reasonable and
prudent steps to investigate the past and present condition and usage of the
Real Properties and the operations conducted thereon and, based upon such
diligent investigation, have determined that, except as shown on SCHEDULE 5.16:
(a) None of the Borrowers, nor any operator of their properties, is in
violation, or alleged violation, of any judgment, decree, order, law,
permit, license, rule or regulation pertaining to environmental matters,
including without limitation, those arising under the Resource Conservation
and Recovery Act ("RCRA"), the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 as amended ("CERCLA"), the Superfund
Amendments and Reauthorization Act of 1986 ("SARA"), 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 relating to health, safety or the environment (the "Environmental
Laws"), which violation would have a material adverse effect on the
business, assets or financial condition of the Borrowers considered as a
whole.
(b) None of the Borrowers has received notice from any third party
including, without limitation, any federal, state or local governmental
authority, (i) that any one of them has been identified by the United
States Environmental Protection Agency ("EPA") as a potentially responsible
party under CERCLA with respect to a site listed on the National Priorities
List, 40 C.F.R. Part 300 Appendix B; (ii) that any hazardous waste, as
defined by 42 U.S.C. section 6903(5), any hazardous substances as defined
by 42 U.S.C. section 9601(14), any pollutant or contaminant as defined by
42 U.S.C. section 9601(33) and any toxic substance, oil or hazardous
materials or other chemicals or substances regulated by any Environmental
Laws ("Hazardous Substances") which any one of them has generated,
transported or disposed of has been found at any site at which a federal,
state or local agency or other third party has conducted or has ordered
that any Borrower conduct a remedial investigation, removal or other
response action pursuant to any Environmental Law; or (iii) that it is or
shall be a named party to any claim, action, cause of action, complaint,
legal or administrative proceeding arising out of any third party's
incurrence of costs, expenses, losses or damages of any kind whatsoever in
connection with the release of Hazardous Substances.
(c) (i) To the best of Borrower's knowledge, no portion of the Real
Property has been used for the handling, processing, storage or disposal of
Hazardous Substances except in material compliance with applicable
Environmental Laws; and no underground tank or other underground storage
receptacle for Hazardous Substances is located on such properties; (ii) in
the course of any activities conducted by the Borrowers, or operators of
the Real Property, no Hazardous Substances have been generated or are being
used on such properties except in material compliance with applicable
Environmental Laws; (iii) there have been no unpermitted Releases or
threatened Releases of Hazardous Substances on, upon, into or from the Real
Property, which Releases would have a material adverse effect on the value
of such properties; (iv) to the best of the Borrowers' knowledge, there
have been no Releases on, upon, from or into any real property in the
vicinity of the Real Property which, through soil or groundwater
contamination, may have come to be located on, and which would have a
material adverse effect on the value of, such properties; and (v) in
addition, any Hazardous Substances that have been generated on the Real
Property have been transported offsite only by carriers having an
identification number issued by the EPA, treated or disposed of only by
treatment or disposal facilities maintaining valid permits as required
under applicable Environmental Laws, which transporters and facilities, to
the best of the Borrowers' knowledge, have been and are operating in
material compliance with such permits and applicable Environmental Laws.
(d) none of the Real Property is or shall be subject to any applicable
environmental clean-up responsibility law or environmental restrictive
transfer law or regulation, by virtue of the transactions set forth herein
and contemplated hereby.
5.17. PERFECTION OF SECURITY INTERESTS. All filings, assignments, pledges
and deposits of documents or instruments have been made and all other actions
have been taken that are necessary under applicable law, or reasonably requested
by the Lender, to establish and perfect the Lender's security interests in the
Collateral as described in the Security Documents. The Collateral and the
Lender's rights with respect to the Collateral are not subject to any setoff,
claims, withholdings or other defenses, except for Permitted Liens. The
Borrowers are the owners of the Collateral free from any lien, security
interest, encumbrance and any other claim or demand, except for Permitted Liens.
5.18. CERTAIN TRANSACTIONS. Except as set forth on SCHEDULE 5.18 and except
for arm's length transactions pursuant to which the Borrowers make payments in
the ordinary course of business upon terms no less favorable than the Borrowers
could obtain from third parties, none of the officers, directors, or employees
of the Borrowers are presently a party to any transaction with the Borrowers
(other than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any officer, director or such
employee or, to the knowledge of the Borrowers, any corporation, partnership,
trust or other entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner.
5.19. SUBSIDIARIES. SCHEDULE 1 sets forth a complete and accurate list of
the Subsidiaries, including the name of each Subsidiary and its jurisdiction of
incorporation, together with the number of authorized and outstanding shares of
each Subsidiary. Each Subsidiary is directly or indirectly wholly owned by the
Parent. The Parent has good and marketable title to all of the shares it
purports to own of the stock of each Subsidiary, free and clear in each case of
any lien. All such shares have been duly issued and are fully paid and
non-assessable.
5.20. TRUE COPIES OF CHARTER AND OTHER DOCUMENTS. The Borrowers have
furnished the Lender copies, in each case true and complete as of the Closing
Date, of (a) all charter and other incorporation documents (together with any
amendments thereto) and (b) by-laws (together with any amendments thereto).
5.21. DISCLOSURE. No representation or warranty made by the Borrowers in
this Agreement or in any agreement, instrument, document, certificate, statement
or letter furnished to the Lender by or on behalf of or at the request of the
Borrowers in connection with any of the transactions contemplated by the Loan
Documents contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained therein not
misleading in light of the circumstances in which they are made.
5.22. PERMITS AND GOVERNMENTAL AUTHORITY. Except as disclosed in SCHEDULE
5.22 hereto, all permits (other than those the absence of which would not have a
material adverse effect on the business, operations or financial condition of
any Borrower) required for the construction and operation of all landfills
currently owned or operated by the Borrowers have been obtained and remain in
full force and effect and are not subject to any appeals or further proceedings
or to any unsatisfied conditions that may allow material modification or
revocation. None of the Borrowers, nor, to the knowledge of the Borrowers, the
holder of such permits is in violation of any such permits, except for any
violation which would not have a material adverse effect on the business,
operations or financial condition of the Borrowers considered as a whole.
5.23. ENVIRONMENTAL REPORTS. The Borrowers have delivered to the Lender
copies of all environmental reports in their possession (or in the possession of
their Lenders, consultants, or professional advisors) relating to the Real
Property.
6. AFFIRMATIVE COVENANTS OF THE BORROWERS. The Borrowers jointly and
severally covenant and agree that, so long as any Loan, the Note, or any Letter
of Credit is outstanding or the Lender has any obligation to make Loans or to
issue, extend, or renew any Letters of Credit hereunder:
<PAGE>
6.1. PUNCTUAL PAYMENT. The Borrowers will duly and punctually pay or cause
to be paid the principal and interest on the Loans, all Reimbursement
Obligations, fees and other amounts provided for in this Agreement and the other
Loan Documents, all in accordance with the terms of this Agreement and such
other Loan Documents.
6.2. MAINTENANCE OF OFFICE. The Borrowers will maintain their chief
executive offices at Jacksonville, Florida, or at such other place in the United
States of America as the Borrowers shall designate upon 30 days prior written
notice to the Lender.
6.3. RECORDS AND ACCOUNTS. Each of the Borrowers will keep true and
accurate records and books of account in which full, true and correct entries
will be made in accordance with GAAP and with the requirements of all regulatory
authorities and maintain adequate accounts and reserves for all taxes (including
income taxes), depreciation, depletion, obsolescence and amortization of its
properties, all other contingencies, and all other proper reserves.
6.4. FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION. The Borrowers will
deliver to the Lender:
(a) as soon as practicable, but, in any event not later than 95 days
after the end of each fiscal year of the Borrowers, the consolidated and
consolidating balance sheets of Borrowers as at the end of such year,
statements of cash flows, and the related consolidated and consolidating
statements of operations, each setting forth in comparative form the
figures for the previous fiscal year, all such consolidated and
consolidating financial statements to be in reasonable detail, prepared, in
accordance with GAAP and, with respect to the consolidated financial
statements, certified by the Accountants. In addition, simultaneously
therewith, the Borrowers shall use their best efforts to provide the Lender
with a written statement from such Accountants to the effect that the
Borrowers are in compliance with the covenants set forth in section 8
hereof, and that, in making the examination necessary to said
certification, nothing has come to the attention of such Accountants that
would indicate that any Default or Event of Default exists, or, if such
accountants shall have obtained knowledge of any then existing Default or
Event of Default they shall disclose in such statement any such Default or
Event of Default; PROVIDED THAT such Accountants shall not be liable to the
Lender for failure to obtain knowledge of any Default or Event of Default;
(b) as soon as practicable, but in any event not later than 45 days
after the end of each fiscal quarter of the Borrowers commencing with the
fiscal quarter ending September 30, 1997, copies of the consolidated and
consolidating balance sheets and statement of operations of the Borrowers
as at the end of such quarter, subject to year end adjustments, and the
related statement of cash flows, all in reasonable detail and prepared in
accordance with GAAP with a certification by the principal financial or
accounting officer of the Borrowers (the "CFO") that the consolidated
financial statements are prepared in accordance with GAAP and fairly
present the consolidated financial condition of the Borrowers as at the
close of business on the date thereof and the results of operations for the
period then ended, subject to year-end adjustments in accordance with GAAP;
(c) simultaneously with the delivery of the financial statements
referred to in (a) and (b) above, (i) a statement in the form of EXHIBIT C
hereto (the "Compliance Certificate") certified by the CFO that the
Borrowers are in compliance with the covenants contained in sections 6, 7
and 8 hereof as of the end of the applicable period setting forth in
reasonable detail computations evidencing compliance with sections 7.1,
7.3, 7.8, and 8 hereof, PROVIDED THAT if the Borrowers shall at the time of
issuance of such certificate or at any other time obtain knowledge of any
Default or Event of Default, the Borrowers shall include in such
certificate or otherwise deliver forthwith to the Lender a certificate
specifying the nature and period of existence thereof and what action the
Borrowers propose to take with respect thereto, and (ii) a certificate in
the form of EXHIBIT D hereto with respect to the operating permits of the
Borrowers;
(d) contemporaneously with, or promptly following, the filing or
mailing thereof, copies of all material of a financial nature filed with
the Securities and Exchange Commission or sent to the stockholders of the
Parent; and
(e) from time to time such other financial data and other information
(including accountants' management letters) as the Lender may reasonably
request.
The Borrowers hereby authorize the Lender to disclose any information
obtained pursuant to this Agreement to all appropriate governmental regulatory
authorities where required by law.
6.5. CORPORATE EXISTENCE AND CONDUCT OF BUSINESS. Except where the failure
of a Borrower to remain so qualified would not materially adversely impair the
financial condition of such Borrower, each Borrower will do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence, corporate rights and franchises; effect and maintain its foreign
qualifications, licensing, domestication or authorization except as terminated
by its Board of Directors in the exercise of its reasonable judgment; use its
best efforts to comply with all applicable laws; and shall not become obligated
under any contract or binding arrangement which, at the time it was entered into
would materially adversely impair the financial condition of such Borrower. Each
Borrower will continue to engage primarily in the businesses now conducted by it
and in related businesses.
6.6. MAINTENANCE OF PROPERTIES. The Borrowers will cause all material
properties used or useful in the conduct of their businesses to be maintained
and kept in good condition, repair and working order and supplied with all
necessary equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Borrowers may be necessary so that the businesses carried on in connection
therewith may be properly and advantageously conducted at all times; PROVIDED,
HOWEVER, THAT nothing in this section shall prevent any Borrower from
discontinuing the operation and maintenance of any of its properties if such
discontinuance is, in the judgment of such Borrower, desirable in the conduct of
its or their business and which does not in the aggregate materially adversely
affect the business of the Borrowers considered as a whole.
6.7. INSURANCE. The Borrowers will maintain with financially sound and
reputable insurance companies, funds or underwriters' insurance of the kinds,
covering the risks (other than risks arising out of or in any way connected with
personal liability of any officers and directors thereof, which risks may, but
shall not be required by the Lender to be, covered by insurance maintained by
the Borrowers) and in the relative proportionate amounts usually carried by
reasonable and prudent companies conducting businesses similar to that of the
Borrowers (including but not limited to business interruption and, to the extent
such insurance becomes commercially available at reasonable cost, environmental
impairment insurance), but in no event less than the amounts and coverages set
forth in SCHEDULE 6.7 hereto. In addition, the Borrowers will furnish from time
to time, upon the Lender's request, a summary of the insurance coverage of each
of the Borrowers, which summary shall be in form and substance satisfactory to
the Lender and, if requested by the Lender, will furnish to the Lender copies of
the applicable policies.
6.8. TAXES. The Borrowers will each duly pay and discharge, or cause to be
paid and discharged, before the same shall become overdue, all taxes,
assessments and other governmental charges (other than taxes, assessments and
other governmental charges imposed by foreign jurisdictions which in the
aggregate are not material to the business or assets of any Borrower on an
individual basis or of the Borrowers on a consolidated basis) imposed upon it
and its real properties, sales and activities, or any part thereof, or upon the
income or profits therefrom, as well as all claims for labor, materials, or
supplies, which if unpaid might by law become a lien or charge upon any of its
property; PROVIDED, HOWEVER, THAT any such tax, assessment, charge, levy or
claim need not be paid if the validity or amount thereof shall currently be
contested in good faith by appropriate proceedings and if such Borrower shall
have set aside on its books adequate reserves with respect thereto; and
PROVIDED, FURTHER, THAT such Borrower will pay all such taxes, assessments,
charges, levies or claims forthwith upon the commencement of proceedings to
foreclose any lien which may have attached as security therefor.
6.9. INSPECTION OF PROPERTIES, BOOKS, AND CONTRACTS. The Borrowers shall
permit the Lender or any of its designated representatives, upon reasonable
notice, to visit and inspect any of the properties of the Borrowers, to examine
the books of account of the Borrowers (including the making of periodic accounts
receivable reviews), or contracts (and to make copies thereof and extracts
therefrom), and to discuss the affairs, finances and accounts of the Borrowers
with, and to be advised as to the same by, their officers, all at such times and
intervals as the Lender may reasonably request.
6.10. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES AND PERMITS; MAINTENANCE OF
MATERIAL LICENSES AND PERMITS. Each Borrower will (i) comply with the provisions
of its charter documents and by-laws and all agreements and instruments by which
it or any of its properties may be bound; (ii) comply with all applicable laws
and regulations (including Environmental Laws), decrees, orders, judgments,
licenses and permits, including, without limitation, all environmental permits
("Applicable Laws"), except where noncompliance with such Applicable Laws would
not have a material adverse effect singly or in the aggregate on the financial
condition, properties or businesses of the Borrowers considered as a whole;
(iii) comply, except as set forth in SCHEDULE 6.10, in all material respects
with all agreements and instruments by which it or any of its properties may be
bound; (iv) maintain all material operating permits for all landfills now owned
or hereafter acquired; and (v) dispose of hazardous waste only at licensed
disposal facilities operating, to the best of such Borrower's knowledge after
reasonable inquiry, in compliance with Environmental Laws. If at any time while
the Note, or any Loan or Letter of Credit is outstanding or the Lender has any
obligation to make Loans or issue Letters of Credit hereunder, any
authorization, consent, approval, permit or license from any officer, agency or
instrumentality of any government shall become necessary or required in order
that any Borrower may fulfill any of its obligations hereunder, such Borrower
will immediately take or cause to be taken all reasonable steps within the power
of such Borrower to obtain such authorization, consent, approval, permit or
license and furnish the Lender with evidence thereof.
6.11. ENVIRONMENTAL INDEMNIFICATION. The Borrowers covenant and agree that
they will indemnify and hold the Lender harmless from and against any and all
claims, expense, damage, loss or liability incurred by the Lender (including all
reasonable costs of legal representation incurred by the Lender) relating to (a)
any Release or threatened Release of Hazardous Substances on the Real Property;
(b) any violation of any Environmental Laws with respect to conditions at the
Real Property or the operations conducted thereon; or (c) the investigation or
remediation of offsite locations at which the Borrowers, or their predecessors
are alleged to have directly or indirectly Disposed of Hazardous Substances. It
is expressly acknowledged by the Borrowers that this covenant of indemnification
shall survive any foreclosure or any modification, release or discharge of any
or all of the Security Documents or the payment of the Loans and shall inure to
the benefit of the Lender and its successors and assigns.
6.12. FURTHER ASSURANCES. The Borrowers will cooperate with the Lender and
execute such further instruments and documents as the Lender shall reasonably
request to carry out to the Lender's satisfaction the transactions contemplated
by this Agreement.
6.13. NOTICE OF POTENTIAL CLAIMS OR LITIGATION. The Borrowers shall deliver
to the Lender, within 30 days of receipt thereof, written notice of the
initiation of any action, claim, complaint, or any other notice of dispute or
potential litigation (including without limitation any alleged violation of any
Environmental Law), wherein the potential liability is in excess of $100,000,
together with a copy of each such notice received by any Borrower.
6.14. NOTICE OF CERTAIN EVENTS.
(a) The Borrowers will provide the Lender with written notice as to
any cancellation or material change in any insurance of any of the
Borrowers within ten (10) Business Days after such Borrower's receipt of
any notice (whether formal or informal) of such cancellation or change by
any of its insurers.
(b) The Borrowers will promptly notify the Lender in writing of any of
the following events:
(i) upon any Borrower obtaining knowledge of any violation of any
Environmental Law regarding the Real Property or any Borrower's
operations which violation, together with all such other violations,
could result in a fine or penalty of $100,000 or more or which would
reasonably be expected to require expenditures of $100,000 or more to
remedy; (ii) upon any Borrower's obtaining knowledge of any potential
or known Release, or threat of Release, of any Hazardous Substance at,
from, or into the Real Property which it reports in writing or is
required to report in writing to any governmental authority and which
is material in amount or nature or which could materially affect the
value of the Real Property; (iii) upon any Borrower's receipt of any
notice of violation of any Environmental Laws or of any Release or
threatened Release of Hazardous Substances, including a notice or
claim of liability or potential responsibility from any third party
(including without limitation any federal, state or local governmental
officials) and including notice of any formal inquiry, proceeding,
demand, investigation or other action with regard to (A) any
Borrower's, or any Person's operation of the Real Property, (B)
contamination on, from or into the Real Property, or (C) investigation
or remediation of offsite locations at which any Borrower, or any of
their predecessors are alleged to have directly or indirectly Disposed
of Hazardous Substances; (iv) upon any Borrower's obtaining knowledge
that any expense or loss has been incurred by such governmental
authority in connection with the assessment, containment, removal or
remediation of any Hazardous Substances with respect to which any
Borrower may be liable or for which a lien may be imposed on the Real
Property; (v) any setoff, claims (including, with respect to the Real
Estate, environmental claims), withholdings or other defenses to which
any of the Collateral, or the Lender's rights with respect to the
Collateral, are subject; or (vi) any labor dispute or union contract
dispute involving any of the Borrowers.
6.15. RESPONSE ACTIONS. The Borrowers covenant and agree that if any
Release or Disposal of Hazardous Substances shall occur or shall have occurred
on the Real Property, the Borrowers will cause the prompt containment and
removal of such Hazardous Substances and remediation of the Real Property as
necessary to comply with all Environmental Laws or to preserve the value of the
Real Property.
6.16. ENVIRONMENTAL ASSESSMENTS. If the Lender in itS good faith judgment,
after discussion with the Borrowers, has reason to believe that the
environmental condition of the Real Property has deteriorated, after reasonable
notice by the Lender, whether or not an Event of Default shall have occurred,
the Lender may, from time to time, for the purpose of assessing and ensuring the
value of the Real Property, obtain one or more environmental assessments or
audits of the Real Property prepared by a hydrogeologist, an independent
engineer or other qualified consultant or expert approved by the Lender to
evaluate or confirm (i) whether Hazardous Substances are present in the soil or
water at the Real Property in material amounts and (ii) whether the use and
operation of the Real Property is in material compliance with all Environmental
Laws. Environmental assessments may include without limitation detailed visual
inspections of the Real Property including, without limitation, any and all
storage areas, storage tanks, drains, dry wells and leaching areas, and the
taking of soil samples, surface water samples and ground water samples, as well
as such other investigations or analyses as the Lender deems appropriate. All
such environmental assessments shall be at the sole cost and expense of the
Borrower.
<PAGE>
6.17 NOTICE OF DEFAULT. The Borrowers will promptly notify the Lender in
writing of the occurrence of any Default or Event of Default, of which the
Borrowers have or should have knowledge. If any Person shall give any notice or
take any other action in respect of a claimed default (whether or not
constituting an Event of Default) under this Agreement or any other note,
evidence of indebtedness, indenture or other obligation evidencing indebtedness
in excess of $100,000 as to which any Borrower is a party or obligor, whether as
principal or surety, the Borrowers shall forthwith give written notice thereof
to the Lender, describing the notice of action and the nature of the claimed
default.
6.18 CLOSURE AND POST CLOSURE LIABILITIES. The Borrowers shall at all times
adequately accrue, in accordance with GAAP, and fund, as required by applicable
Environmental Laws, all closure and post closure liabilities with respect to the
operations of the Borrowers.
6.19 SUBSIDIARIES. The Parent shall at all times directly or indirectly
through a Subsidiary own all of the shares of the capital stock of each other
Borrower, and such shares shall be pledged to the Lender.
6.20 NEW SUBSIDIARIES. Any Borrower shall, prior to any acquisition or
creation of a new Subsidiary, give notice to the Lender and pledge to the Lender
the capital stock of such new Subsidiary pursuant to the Stock Pledge Agreement
to which such Borrower shall become party to, and such new Subsidiary, as a
Borrower under the Credit Agreement, shall grant to the Lender a perfected first
priority security interest in all of its personal property assets pursuant to
the Security Agreement to which it shall become party to.
7. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS. The Borrowers agree that,
so long as any Loan, the Note, or any Letter of Credit is outstanding or the
Lender has any obligation to make Loans or to issue, extend or renew any Letters
of Credit hereunder:
7.1. RESTRICTIONS ON INDEBTEDNESS. None of the Borrowers nor any of their
Subsidiaries shall become or be a guarantor or surety of, or otherwise create,
incur, assume, or be or remain liable, contingently or otherwise, with respect
to any Indebtedness, or become or be responsible in any manner (whether by
agreement to purchase any obligations, stock, assets, goods or services, or to
supply or advance any funds, assets, goods or services or otherwise) with
respect to any undertaking or Indebtedness of any other Person, or incur any
Indebtedness other than:
(a) Indebtedness to the Lender arising under this Agreement or the
Loan Documents;
(b) Indebtedness of the Borrowers in respect of judgments or awards
which have been in force for less than the applicable period for taking an
appeal so long as execution is not levied thereunder or in respect of which
any Borrower shall at the time in good faith be prosecuting an appeal or
proceedings for review and in respect of which a stay of execution shall
have been obtained pending such appeal or review and in respect of which
the Borrowers have maintained adequate reserves;
(c) Indebtedness of any Borrower with respect to guaranty, suretyship
or indemnification obligations in connection with such Borrower's
performance of services for its respective customers in the ordinary course
of its business, such Indebtedness to be listed on SCHEDULE 7.1(C) hereto;
(d) Indebtedness of the Borrowers incurred with respect to landfill
closure bonds, such bonds to be listed on SCHEDULE 7.1(D) hereto, not to
exceed an aggregate amount of $5,000,000 outstanding at any time.
(e) Other Indebtedness of the Borrowers not to exceed an aggregate
amount of $5,000,000 at any one time; and
7.2. RESTRICTIONS ON LIENS. None of the Borrowers nor any of their
Subsidiaries will create or incur or suffer to be created or incurred or to
exist any lien, encumbrance, mortgage, pledge, charge, restriction or other
security interest of any kind upon any property or assets of any character,
whether now owned or hereafter acquired, or upon the income or profits
therefrom; or transfer any of such property or assets or the income or profits
therefrom for the purpose of subjecting the same to the payment of Indebtedness
or performance of any other obligation in priority to payment of its general
creditors; or acquire, or agree or have an option to acquire, any property or
assets upon conditional sale or other title retention or purchase money security
agreement, device or arrangement; or suffer to exist for a period of more than
thirty (30) days after the same shall have been incurred any Indebtedness or
claim or demand against it which if unpaid might by law or upon bankruptcy or
insolvency, or otherwise, be given any priority whatsoever over its general
creditors; or sell, assign, pledge or otherwise transfer any accounts, contract
rights, general intangibles or chattel paper, with or without recourse, EXCEPT
as follows (the "Permitted Liens"):
(a) Liens securing Indebtedness permitted by section 7.1(e) incurred
in connection with the lease or acquisition of property or fixed assets
useful or intended to be used in carrying on the business of the Borrowers,
provided that such Liens shall encumber only the property or assets so
acquired and shall not exceed the fair market value thereof.
(b) Liens to secure taxes, assessments and other government charges or
claims for labor, material or supplies in respect of obligations not
overdue;
(c) Deposits or pledges made in connection with, or to secure payment
of, workmen's compensation, unemployment insurance, old age pensions or
other social security obligations;
(d) Liens in respect of judgments or awards, the Indebtedness with
respect to which is permitted by section 7.1(b);
(e) Liens of carriers, warehousemen, mechanics and materialmen, and
other like liens, in existence less than 120 days from the date of creation
thereof in respect of obligations not overdue;
(f) Encumbrances consisting of easements, rights of way, zoning
restrictions, restrictions on the use of real property and defects and
irregularities in the title thereto, landlord's or lessor's liens under
leases to which any Borrower is a party, and other minor liens or
encumbrances none of which in the opinion of the respective Borrower
interferes materially with the use of the property affected in the ordinary
conduct of the business of such Borrower, which defects do not individually
or in the aggregate have a material adverse effect on the business of such
Borrower individually or of the Borrowers on a consolidated basis;
(g) Liens granted pursuant to the Security Documents.
7.3. RESTRICTIONS ON INVESTMENTS. Except to the extent provided in section
7.4, none of the Borrowers nor any of their Subsidiaries shall make or permit to
exist or to remain outstanding any other Investment other than the following
Investments made or to be made by the Borrowers:
(a) Investments in obligations of the United States of America and
agencies thereof and obligations guaranteed by the United States of America
that are due and payable within one year from the date of acquisition and
prior to the Maturity Date;
(b) certificates of deposit, time deposits or repurchase agreements
which are fully insured or are issued by commercial banks organized under
the laws of the United States of America or any state thereof and having a
combined capital, surplus, and undivided profits of not less than
$100,000,000;
(c) commercial paper, maturing not more than nine months from the date
of issue, PROVIDED THAT, at the time of purchase, such commercial paper is
not rated lower than "P-1" by Moody's Investors Service, Inc., or "A-1" by
Standard & Poor's Corporation;
(d) Investments associated with insurance policies or surety bonds
required or allowed by state law to be posted as financial assurance for
landfill closure and post-closure liabilities;
(e) Investments by the Parent in any other Borrower and Investments
permitted by section 7.4;
PROVIDED THAT before and after giving effect to any permitted Investment
made after the date hereof, no Default or Event of Default shall exist or
would occur as a result of making such Investment.
7.4. MERGERS, CONSOLIDATIONS, SALES, ACQUISITIONS. None of the Borrowers
shall be a party to any merger, consolidation or exchange of stock, or purchase
or otherwise acquire all or substantially all of the assets or stock of, or any
partnership or joint venture interest in, any other Person except as otherwise
provided in section 7.3 or this section 7.4, or sell, transfer, convey or lease
any stock or assets or group of assets (except sales of equipment in the
ordinary course of business and sales of assets totaling an aggregate from the
date hereof through the Maturity Date of no more than 5% of the Consolidated
Total Assets of the Borrowers) or sell or assign, with or without recourse, any
receivables. A Borrower may purchase or otherwise acquire all or substantially
all of the assets or stock of any class of any Person PROVIDED THAT (a) no Event
of Default has occurred and is continuing and the proposed transaction will not
otherwise create an Event of Default hereunder; (b) the business to be acquired
predominantly involves non-hazardous solid waste disposal, collection, hauling,
recycling or transfer; (c) the business to be acquired operates in the United
States of America; (d) in the case of an asset acquisition, all of the assets to
be acquired shall be owned by an existing or newly created Subsidiary of the
Parent, 100% of the stock of which has been or will be pledged to the Lender and
which is a Borrower or will become a Borrower pursuant to section 4.10 or, in
the case of a stock acquisition or an acquisition by merger, the acquired
company shall become or shall be merged with a wholly-owned Subsidiary of the
Parent that is a Borrower; (e) the aggregate cash consideration to be paid by
the Borrowers in connection with any such acquisition (including the aggregate
amount of all Indebtedness assumed but excluding landfill closure and
post-closure bonds) shall not exceed $5,000,000 without the consent of the
Lender; (f) each acquisition of a landfill shall be preceded by the standard due
diligence practices of the Borrowers as set forth on EXHIBIT E hereto, such due
diligence to include a review by a consulting engineer reasonably acceptable to
the Lender; (g) the board of directors and (if required by applicable law) the
shareholders, or the equivalent thereof, of the business to be acquired has
approved such acquisition; and (h) in the case of a Material Acquisition, the
Lender shall have been provided with (i) a Compliance Certificate demonstrating
that the Borrowers are in current compliance with and, giving effect to the
proposed acquisition (including any borrowings made or to be made in connection
therewith), will continue to be in compliance with, all of the covenants in
section 8 hereof, (ii) a copy of the purchase agreement, together with audited
(if available, or otherwise unaudited) financial statements for any business to
be acquired for the preceding two (2) fiscal years, and (iii) a summary of the
results of the Borrower's due diligence investigations.
7.5. SALE AND LEASEBACK. None of the Borrowers shall enter into any
arrangement, directly or indirectly, whereby any Borrower shall sell or transfer
any property owned by it in order then or thereafter to lease such property or
lease other property which such Borrower intends to use for substantially the
same purpose as the property being sold or transferred, without the prior
written consent of the Lender.
7.6. RESTRICTED DISTRIBUTIONS AND REDEMPTIONS. None of the Borrowers may
make Distributions except as set forth in this section 7.6. Each Borrower may
make distributions payable solely in common stock of such Borrower. Borrowers
other than the Parent may declare or pay Distributions other than Distributions
payable solely in common stock of such Borrowers to the Parent. In addition, the
Borrowers (other than the Parent) shall not redeem, convert, retire or otherwise
acquire shares of any class of capital stock of such Borrowers. The Borrowers
shall not effect or permit any change in or amendment to any document or
instrument pertaining to the terms of the Borrowers' capital stock.
7.7. EMPLOYEE BENEFIT PLANS. None of the Borrowers nor any ERISA Affiliate
will:
(a) engage in any "prohibited transaction" within the meaning of
section 406 of ERISA or section 4975 of the Code which could result in a
material liability for any Borrower; or
(b) permit any Guaranteed Pension Plan to incur an "accumulated
funding deficiency", as such term is defined in section 302 of ERISA,
whether or not such deficiency is or may be waived; or
(c) fail to contribute to any Guaranteed Pension Plan to an extent
which, or terminate any Guaranteed Pension Plan in a manner which, could
result in the imposition of a lien or encumbrance on the assets of any
Borrower pursuant to section 302(f) or section 4068 of ERISA; or
(d) amend any Guaranteed Pension Plan in circumstances requiring the
posting of security pursuant to section 307 of ERISA or section 401(a)(29)
of the Code; or
(e) permit or take any action which would result in the aggregate
benefit liabilities (within the meaning of section 4001 of ERISA) of all
Guaranteed Pension Plans exceeding the value of the aggregate assets of
such Plans, disregarding for this purpose the benefit liabilities and
assets of any such Plan with assets in excess of benefit liabilities.
The Borrowers will (i) promptly upon filing the same with the Department of
Labor or Internal Revenue Service, furnish to the Lender a copy of the most
recent actuarial statement required to be submitted under section 103(d) of
ERISA and Annual Report, Form 5500, with all required attachments, in respect of
each Guaranteed Pension Plan and (ii) promptly upon receipt or dispatch, furnish
to the Lender any notice, report or demand sent or received in respect of a
Guaranteed Pension Plan under sections 302, 4041, 4042, 4043, 4063, 4066 and
4068 of ERISA, or in respect of a Multiemployer Plan, under sections 4041A,
4202, 4219, 4242, or 4245 of ERISA.
7.8. CAPITAL EXPENDITURES. The Borrowers shall not make or commit to make
Capital Expenditures (excluding landfill closure and post-closure expenditures)
in excess of one and one-half (1.5) times the depreciation and landfill
amortization expense of the Borrowers for any fiscal year.
7.9 NEGATIVE PLEDGES. No Borrower will pledge any of its assets to any
Person other than to the Lender, nor will any Borrower grant any negative
pledges on their assets to any Person, nor will any Subsidiary enter any
agreement that would in anyway restrict Distribution to the Parent, other than
expressly permitted hereunder.
8. FINANCIAL COVENANTS OF THE BORROWERS. The Borrowers agree that, so long
as any Loan or any Note or any Letter of Credit is outstanding or the Lender has
any obligation to make Loans or the Lender has any obligation to issue, extend
or renew any Letters of Credit hereunder:
8.1. INTEREST COVERAGE RATIO. As at the end of any fiscal quarter
commencing with the fiscal quarter ending September 30, 1997, the ratio of (a)
EBIT to (b) Consolidated Total Interest Expense shall not be less than the
stated ratio for the respective periods set forth below:
PERIOD RATIO
------ -----
09/30/97 through 09/30/98] 2.25:1
Thereafter 2.50:1
8.2. BALANCE SHEET LEVERAGE RATIO. The ratio of (a) Funded Debt to (b) the
sum of (i) the excess of Consolidated Total Assets over Consolidated Total
Liabilities plus (ii) Funded Debt shall not exceed 0.55:1 at any time.
8.3. PROFITABLE OPERATIONS. The Borrowers will not permit Consolidated Net
Income to be less than $0 for any fiscal quarter.
8.4. CASH FLOW LEVERAGE RATIO. At the time of the making of any Material
Acquisition and at the end of any fiscal quarter commencing September 30, 1997,
the ratio of (a) Funded Debt to (b) EBITDA for the prior four (4) consecutive
fiscal quarters ending on such date shall not exceed 2.50:1.
9. CLOSING CONDITIONS.
The obligations of the Lender to make the Loans and to issue Letters of
Credit on and after the Closing Date and otherwise be bound by the terms of this
Agreement shall be subject to the satisfaction of each of the following
conditions precedent:
9.1. CORPORATE ACTION. All corporate action necessary for the valid
execution, delivery and performance by each Borrower of the Loan Documents shall
have been duly and effectively taken, and evidence thereof satisfactory to the
Lender shall have been provided to the Lender.
9.2. LOAN DOCUMENTS, ETC. Each of the Loan Documents shall have been duly
and properly authorized, executed and delivered by the respective parties
thereto and shall be in full force and effect and in form and substance
satisfactory to the Lender.
9.3. CERTIFIED COPIES OF CHARTER DOCUMENTS. For each Borrower the Lender
shall have received from the Borrowers a copy, certified by a duly authorized
officer of such Borrower to be true and complete on the Closing Date, of each of
(a) its charter or other incorporation documents (including certificates of
merger and name changes) as in effect on such date of certification, and (b) its
by-laws as in effect on such date.
9.4. INCUMBENCY CERTIFICATE. The Lender shall have received an incumbency
certificate, dated as of the Closing Date, signed by duly authorized officers
giving the name and bearing a specimen signature of each individual who shall be
authorized: (a) to sign the Loan Documents on behalf of the Borrowers; (b) to
make Loan and Letter of Credit Requests; and (c) to give notices and to take
other action on the Borrowers' behalf under the Loan Documents.
9.5. VALIDITY OF LIENS. The Security Documents shall be effective to create
in favor of the Lender a legal, valid and enforceable first security interest in
and lien upon the Collateral, subject only to Permitted Liens. All filings,
recordings, deliveries of instruments and other actions necessary or desirable
in the opinion of the Lender to protect and preserve such security interests
shall have been duly effected. The Lender shall have received evidence thereof
in form and substance satisfactory to the Lender.
9.6. UCC SEARCH RESULTS. The Lender shall have received the results of UCC
searches with respect to the assets of all of the Borrowers indicating no liens
other than Permitted Liens and otherwise in form and substance satisfactory to
the Lender.
9.7. CERTIFICATES OF INSURANCE. The Lender shall have received a
certificate of insurance from an independent insurance broker dated as of the
Closing Date, or within 15 days prior thereto, identifying insurers, types of
insurance, insurance limits, and policy terms, and otherwise describing the
insurance obtained in accordance with the provisions hereof.
9.8. OPINIONS OF COUNSEL. The Lender shall have received from outside
counsel to the Borrowers, an opinion addressed to the Lender, dated the date of
the closing, in form and substance satisfactory to the Lender regarding (i)
enforceability and corporate matters; and (ii) such other matters as the Lender
may reasonably request.
9.9. AUDITED FINANCIAL STATEMENTS; FINANCIAL PROJECTIONS. The Lender shall
have received the audited financial statements of the Borrowers for the fiscal
year ended December 31, 1996, and the financial projections of the Borrowers, in
form and substance satisfactory to the Lender.
9.10. ENVIRONMENTAL REPORTS AND CERTIFICATE REGARDING Permits. The Lender
shall have received the environmental reports referred to in section 5.23 and a
certificate in the form of EXHIBIT D hereto regarding operating permits of the
Borrowers.
9.11. INITIAL COMPLIANCE CERTIFICATE. The Lender shall have received a
proforma Compliance Certificate in the form of EXHIBIT C hereto regarding
compliance with the covenants set forth in section 8.2 and section 8.4 hereof as
of September 30, 1997.
10. CONDITIONS TO ALL LOANS.
The obligations of the Lender to make any Loan (including without
limitation the obligation to issue any Letter of Credit) on and subsequent to
the Closing Date is subject to the following conditions precedent:
10.1. REPRESENTATIONS TRUE; NO EVENT OF DEFAULT. Each of the
representations and warranties of the Borrowers contained in this Agreement or
in any document or instrument delivered pursuant to or in connection with this
Agreement shall be true as of the date as of which they were made and shall also
be true at and as of the time of the making of the Loan with the same effect as
if made at and as of that time (except to the extent of changes resulting from
transactions contemplated or permitted by this Agreement, changes disclosed to
the Lender in writing and accepted by the Lender, and changes occurring in the
ordinary course of business which singly or in the aggregate are not materially
adverse, and to the extent that such representations and warranties relate
expressly to an earlier date) and no Default or Event of Default shall have
occurred and be continuing.
10.2. PERFORMANCE; NO EVENT OF DEFAULT. The Borrowers shall have performed
and complied with all terms and conditions herein required to be performed or
complied with by them prior to or at the time of the making of any Loan or the
issuance, extension, or renewal of any Letter of Credit, and at the time of the
making of any Loan or the issuance, extension, or renewal of any Letter of
Credit, there shall exist no Event of Default or condition which would result in
an Event of Default upon consummation of such Loan (including without limitation
any amounts to be drawn under a Letter of Credit). Each request by the Borrowers
for a Loan (including without limitation each request for issuance of a Letter
of Credit) subsequent to the first Loan shall constitute certification by the
Borrowers that the conditions specified in sections 10.1 and 10.2 will be duly
satisfied on the date of such Loan or Letter of Credit issuance.
10.3. NO LEGAL IMPEDIMENT. No change shall have occurred in any law or
regulations thereunder or interpretations thereof which in the reasonable
opinion of the Lender would make it illegal for the Lender to make Loans or to
issue, extend, or renew Letters of Credit hereunder.
10.4. GOVERNMENTAL REGULATION. The Lender shall have received such
statements in substance and form reasonably satisfactory to the Lender as it
shall require for the purpose of compliance with any applicable regulations of
the Comptroller of the Currency or the Board of Governors of the Federal Reserve
System.
10.5. PROCEEDINGS AND DOCUMENTS. All proceedings in connection with the
transactions contemplated by this Agreement and all documents incident thereto
shall have been delivered to the Lender as of the date hereof in substance and
in form satisfactory to the Lender, including without limitation a Loan and
Letter of Credit Request in the form attached hereto as EXHIBIT B, and the
Lender shall have received all information and such counterpart originals or
certified or other copies of such documents as the Lender may reasonably
request.
11. COLLATERAL SECURITY. The Obligations shall be secured by a perfected
security interest (having, with respect to each category of Collateral, the
respective rights and priorities set forth in the Security Documents) in all of
the shares of the Subsidiaries of the Parent, whether now owned or hereafter
acquired, pursuant to the terms of the Security Documents to which the Borrowers
are parties.
12. EVENTS OF DEFAULT; ACCELERATION; TERMINATION OF COMMITMENT.
12.1. EVENTS OF DEFAULT AND ACCELERATION. If any of the followinG events
("Events of Default" or, if the giving of notice or the lapse of time or both is
required, then, prior to such notice and/or lapse of time, "Defaults") shall
occur:
(a) if the Borrowers shall fail to pay any principal of the Loans when
the same shall become due and payable, whether at the Maturity Date or any
accelerated date of maturity or at any other date fixed for payment;
(b) if the Borrowers shall fail to pay any Reimbursement Obligation,
interest, fees or other amounts owing hereunder within five (5) Business
Days after the same shall become due and payable whether at the Maturity
Date or any accelerated date of maturity or at any other date fixed for
payment;
(c) if the Borrowers shall fail to comply with the covenants contained
in sections 6.1, 6.3, 6.4, 6.5, 6.6, 6.7, 6.8, 6.13, 6.14, 6.17, 6.19, 7 or
8 hereof;
(d) if the Borrowers shall fail to perform any term, covenant or
agreement contained herein or in any of the other Loan Documents (other
than those specified in subsections (a), (b), and (c) above) within thirty
(30) days after written notice of such failure has been given to the
Borrowers by the Lender;
(e) if any representation or warranty contained in this Agreement or
in any document or instrument delivered pursuant to or in connection with
this Agreement shall prove to have been false in any material respect upon
the date when made or repeated;
(f) if any Borrower shall fail to pay at maturity, or within any
applicable period of grace, any and all obligations for borrowed money or
any guaranty with respect thereto in an aggregate amount greater than
$100,000, or fail to observe or perform any material term, covenant or
agreement contained in any agreement by which it is bound, evidencing or
securing borrowed money in an aggregate amount greater than $100,000 for
such period of time as would, or would have permitted (assuming the giving
of appropriate notice if required) the holder or holders thereof or of any
obligations issued thereunder to accelerate the maturity thereof; or
(g) if any Borrower makes an assignment for the benefit of creditors,
or admits in writing its inability to pay or generally fails to pay its
debts as they mature or become due, or petitions or applies for the
appointment of a trustee or other custodian, liquidator or receiver of any
Borrower or of any substantial part of the assets of any Borrower or
commences any case or other proceeding relating to any Borrower under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation or similar law of any jurisdiction, now or
hereafter in effect, or takes any action to authorize or in furtherance of
any of the foregoing, or if any such petition or application is filed or
any such case or other proceeding is commenced against any Borrower and or
any Borrower indicates its approval thereof, consent thereto or
acquiescence therein;
(h) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating any Borrower bankrupt or
insolvent, or approving a petition in any such case or other proceeding, or
a decree or order for relief is entered in respect of any Borrower in an
involuntary case under federal bankruptcy laws as now or hereafter
constituted, and such decree or order remains in effect for more than sixty
(60) days, whether or not consecutive;
(i) if there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty (30) days, whether or not consecutive, any
final judgment against any Borrower which, with other outstanding final
judgments, against the Borrowers exceeds in the aggregate $100,000 after
taking into account any undisputed insurance coverage;
(j) any Borrower or any ERISA Affiliate incurs any liability to the
PBGC or a Guaranteed Pension Plan pursuant to Title IV of ERISA in an
aggregate amount exceeding $100,000; any Borrower or any ERISA Affiliate is
assessed withdrawal liability pursuant to Title IV of ERISA by a
Multiemployer Plan requiring aggregate annual payments exceeding $100,000,
or any of the following occurs with respect to a Guaranteed Pension Plan:
(i) an ERISA Reportable Event, or a failure to make a required installment
or other payment (within the meaning of section 302(f)(1) of ERISA),
provided the Lender determines in its reasonable discretion that such event
(A) could be expected to result in liability of such Borrower to the PBGC
or the Plan in an aggregate amount exceeding $100,000 and (B) could
constitute grounds for the termination of such Plan by the PBGC, for the
appointment by the appropriate United States District Court of a trustee to
administer such Plan or for the imposition of a lien in favor of the
Guaranteed Pension Plan; (ii) the appointment by a United States District
Court of a trustee to administer such Plan; or (iii) the institution by the
PBGC of proceedings to terminate such Plan;
(k) unless the Lender approves, any person or group of persons (within
the meaning of Section 13 or 14 of the Securities Exchange Act of 1934, as
amended) shall have acquired beneficial ownership (within the meaning of
Rule 13d-3 promulgated by the Securities and Exchange Commission under said
Act) of 20% or more of the outstanding shares of common stock of any
Borrower; or, during any period of twelve consecutive calendar months,
individuals who were directors of any Borrower on the first day of such
period shall cease to constitute a majority of the board of directors of
such Borrower; or
(l) if any of the Loan Documents shall be canceled, terminated,
revoked or rescinded otherwise than in accordance with the terms thereof or
with the express prior written agreement, consent or approval of the
Lender, or any action at law, suit or in equity or other legal proceeding
to cancel, revoke or rescind any of the Loan Documents shall be commenced
by or on behalf of the Borrowers or any of their respective stockholders,
or any court or any other governmental or regulatory authority or agency of
competent jurisdiction shall make a determination that, or issue a
judgment, order, decree or ruling to the effect that, any one or more of
the Loan Documents is illegal, invalid or unenforceable in accordance with
the terms thereof,
then, and in any such event, so long as the same may be continuing, the Lender
may, by notice in writing to the Borrowers, declare all amounts owing with
respect to this Agreement, the Note and the other Loan Documents and all
Reimbursement Obligations to be, and they shall thereupon forthwith become,
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby expressly waived by the Borrowers; PROVIDED
THAT in the event of any Event of Default specified in section 12.1(g) or
12.1(h), all such amounts shall become immediately due and payable automatically
and without any requirement of notice from the Lender. Upon demand by the Lender
after the occurrence of any Event of Default, the Borrowers shall immediately
provide to the Lender cash in an amount equal to the aggregate Maximum Drawing
Amount of all Letters of Credit outstanding, to be held by the Lender as
collateral security for the Obligations.
12.2. TERMINATION OF COMMITMENT. If any Event of Default shall occur, or if
on any Drawdown Date the conditions precedent to the making of the Loans to be
made on such Drawdown Date or the issuance of any Letters of Credit to be issued
on such date are not satisfied (except as a consequence of a default on the part
of the Lender), the Lender may by notice to the Borrowers, terminate the unused
portion of the Total Commitment hereunder, and upon such Notice being given,
such unused portion of the Total Commitment hereunder shall terminate
immediately and the Lender shall be relieved of all further obligations to make
Loans to or issue Letters of Credit for the account of the Borrowers hereunder
PROVIDED THAT if an Event of Default specified in section 12.1(g) or 12.1(h)
shall have occurred, such unused portion of the Total Commitment shall terminate
immediately and the Lender shall be relieved of all further obligations to make
Loans to or issue Letters of Credit for the account of the Borrowers without the
requirement of notice from the Lender. No termination of any portion of the
Total Commitment hereunder shall relieve the Borrowers of any of their existing
Obligations to the Lender hereunder or elsewhere.
12.3. REMEDIES. In case any one or more of the Events of Default shall have
occurred and be continuing, and whether or not the Lender shall have accelerated
the maturity of the Loans pursuant to section 12.1, the Lender, if owed any
amount with respect to the Loans or the Reimbursement Obligations, may proceed
to protect and enforce its rights by suit in equity, action at law or other
appropriate proceeding, whether for the specific performance of any covenant or
agreement contained in this Agreement and the other Loan Documents or any
instrument pursuant to which the Obligations to the Lender are evidenced,
including, without limitation, as permitted by applicable law the obtaining of
the EX PARTE appointment of a receiver, and, if such amount shall have become
due, by declaration or otherwise, proceed to enforce the payment thereof or any
legal or equitable right of the Lender. No remedy herein conferred upon the
Lender or the holder of the Note or purchaser of any Letter of Credit is
intended to be exclusive of any other remedy and each and every remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity or by statute or any other provision
of law.
13. SETOFF. Regardless of the adequacy of any collateral, during the
continuance of an Event of Default, any deposits or other sums credited by or
due from the Lender to the Borrowers and any securities or other property of the
Borrowers in the possession of the Lender may be applied to or set off against
the payment of the Obligations and any and all other liabilities, direct, or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, of the Borrowers to the Lender. The Lender agrees that if an
amount to be set off is to be applied to Indebtedness of the Borrowers, other
than Indebtedness evidenced by the Note held by the Lender or constituting
Reimbursement Obligations owed to the Lender, such amount shall be applied
ratably to such other Indebtedness and to the Indebtedness evidenced by the Note
held by the Lender or constituting Reimbursement Obligations owed to the Lender.
14. EXPENSES. Whether or not the transactions contemplated herein shall be
consummated, the Borrowers hereby promise to reimburse Lender for all reasonable
out-of-pocket fees and disbursements (including all reasonable attorneys' fees,
collateral evaluation costs and Consulting Engineer's fees), incurred or
expended in connection with the preparation, filing or recording, or
interpretation of this Agreement, the other Loan Documents, or any amendment,
modification, approval, consent or waiver hereof or thereof. The Borrowers
further agree to reimburse the Lender for all such fees and disbursements
expended in connection with the enforcement of any Obligations or the
satisfaction of any indebtedness of the Borrowers hereunder or under any of the
other Loan Documents, or in connection with any litigation, proceeding or
dispute hereunder in any way related to the credit hereunder, including, without
limitation, the so-called "workout" thereof after the occurrence of a Default or
Event of Default. The Borrowers will pay any taxes (including any interest and
penalties in respect thereof) other than the Lender's federal and state income
taxes, payable on or with respect to the transactions contemplated by this
Agreement (the Borrowers hereby agreeing to indemnify the Lender with respect
thereto).
15. INDEMNIFICATION. The Borrowers agree to indemnify and hold harmless the
Lender, as well as the Lender's shareholders, directors, agents, officers,
subsidiaries and affiliates, from and against all damages, losses, settlement
payments, obligations, liabilities, claims, suits, penalties, assessments,
citations, directives, demands, judgments, actions or causes of action, whether
statutorily created or under the common law, and reasonable costs and expenses
incurred, suffered, sustained or required to be paid by an indemnified party by
reason of or resulting from the transactions contemplated hereby, except any of
the foregoing which result from the gross negligence or willful misconduct of
the indemnified party. In any investigation, proceeding or litigation, or the
preparation therefor, the Lender shall be entitled to select its own counsel
and, in addition to the foregoing indemnity, the Borrowers agree to pay promptly
the reasonable fees and expenses of such counsel. In the event of the
commencement of any such proceeding or litigation, the Borrowers shall be
entitled to participate in such proceeding or litigation with counsel of their
choice at their expense, PROVIDED THAT such counsel shall be reasonably
satisfactory to the Lender. The covenants of this section 15 shall survive
payment or satisfaction of payment of amounts owing with respect to the Note or
any other Loan Document.
16. SURVIVAL OF COVENANTS, ETC. Unless otherwise stated herein, all
covenants, agreements, representations and warranties made herein, in the other
Loan Documents or in any documents or other papers delivered by or on behalf of
the Borrowers pursuant hereto shall be deemed to have been relied upon by the
Lender, notwithstanding any investigation heretofore or hereafter made by any of
them, and shall survive the making by the Lender of the Loans and the issuance,
extension or renewal of any Letters of Credit, as herein contemplated, and shall
continue in full force and effect so long as any amount due under this
Agreement, any Letter of Credit or the Note remains outstanding and unpaid or
the Lender has any obligation to make any Loans or to issue any Letters of
Credit hereunder. All statements contained in any certificate or other paper
delivered by or on behalf of the Borrowers pursuant hereto or in connection with
the transactions contemplated hereby shall constitute representations and
warranties by the Borrowers hereunder.
17. PARTIES IN INTEREST. All the terms of this Agreement and the other Loan
Documents shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto and thereto;
PROVIDED THAT no Borrower shall assign or transfer its rights hereunder without
the prior written consent of the Lender.
18. NOTICES, ETC. Except as otherwise expressly provided in this Agreement,
all notices and other communications made or required to be given pursuant to
this Agreement or the other Loan Documents shall be in writing and shall be
delivered in hand, mailed by United States first-class mail, postage prepaid, or
sent by telecopier and confirmed by letter, addressed as follows:
(a) if to the Borrowers, at Suite 700, 100 West Bay Street,
Jacksonville, Florida 32202, USA, Attention: Amy C. MacF. Burbott,
President;
(b) if to the Lender, at 100 Federal Street, Boston, Massachusetts
02110, USA, Attention: Lindsay W. McSweeney, Vice President, telecopy
number 617-434-2160;
or such other address for notice as shall have last been furnished in writing to
the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or
made and to have become effective (a) if delivered by hand to a responsible
officer of the party to which it is directed, at the time of the receipt thereof
by such officer, (b) if sent by registered or certified first-class mail,
postage prepaid, five Business Days after the posting thereof, and (c) if sent
by telecopier, at the time of the dispatch thereof, if in normal business hours
in the place of receipt, or otherwise at the opening of business on the
following Business Day.
19. MISCELLANEOUS. THE RIGHTS AND REMEDIES HEREIN EXPRESSED ARE CUMULATIVE
AND NOT EXCLUSIVE OF ANY OTHER RIGHTS WHICH THE LENDER WOULD OTHERWISE HAVE. THE
CAPTIONS IN THIS AGREEMENT ARE FOR CONVENIENCE OF REFERENCE ONLY AND SHALL NOT
DEFINE OR LIMIT THE PROVISIONS HEREOF. THIS AGREEMENT AND ANY AMENDMENT HEREOF
MAY BE EXECUTED IN SEVERAL COUNTERPARTS AND BY EACH PARTY ON A SEPARATE
COUNTERPART, EACH OF WHICH WHEN SO EXECUTED AND DELIVERED SHALL BE AN ORIGINAL,
BUT ALL OF WHICH TOGETHER SHALL CONSTITUTE ONE INSTRUMENT. IN PROVING THIS
AGREEMENT IT SHALL NOT BE NECESSARY TO PRODUCE OR ACCOUNT FOR MORE THAN ONE SUCH
COUNTERPART SIGNED BY THE PARTY AGAINST WHOM ENFORCEMENT IS SOUGHT.
20. ENTIRE AGREEMENT, ETC. The Loan Documents and any otheR documents
executed in connection herewith or therewith express the entire understanding of
the parties with respect to the transactions contemplated hereby. Neither this
Agreement nor any term hereof may be changed, waived, discharged or terminated,
except as provided. No waiver shall extend to or affect any obligation not
expressly waived or impair any right consequent thereon. No course of dealing or
omission on the part of the Lender in exercising any right shall operate as a
waiver thereof or otherwise be prejudicial thereto. No notice to or demand upon
the Borrowers shall entitle the Borrowers to other or further notice or demand
in similar or other circumstances.
21. WAIVER OF JURY TRIAL. EACH OF THE BORROWERS HEREBY WAIVES ITS RIGHT TO
A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS AGREEMENT, THE NOTE OR ANY OF THE OTHER LOAN DOCUMENTS, ANY
RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS
AND OBLIGATIONS. EXCEPT AS PROHIBITED BY LAW, EACH BORROWER HEREBY WAIVES ANY
RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THE
PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR
ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. THE BORROWERS (A)
CERTIFY THAT NO REPRESENTATIVE, LENDER OR ATTORNEY OF THE LENDER HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE LENDER WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGE THAT THE
LENDER HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS TO WHICH IT IS A PARTY BECAUSE OF, AMONG OTHER THINGS, THE BORROWERS'
WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.
22. GOVERNING LAW. THIS AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY
PROVIDED THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS
OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH (EXCLUDING THE
LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWERS CONSENT TO THE
JURISDICTION OF ANY OF THE FEDERAL OR STATE COURTS LOCATED IN THE COMMONWEALTH
OF MASSACHUSETTS IN CONNECTION WITH ANY SUIT TO ENFORCE THE RIGHTS OF THE LENDER
UNDER THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
23. SEVERABILITY. The provisions of this Agreement arE severable and if any
one clause or provision hereof shall be held invalid or unenforceable in whole
or in part in any jurisdiction, then such invalidity or unenforceability shall
affect only such clause or provision, or part thereof, in such jurisdiction, and
shall not in any manner affect such clause or provision in any other
jurisdiction, or any other clause or provision of this Agreement in any
jurisdiction.
<PAGE>
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement under
seal as of the date first set forth above.
THE BORROWERS:
GEOWASTE INCORPORATED
/S/ GEOWASTE INCORPORATED
By:
Title:
GEOWASTE ACQUISITION CORP.
/S/ GEOWASTE ACQUISITION CORP.
By:
Title:
GEOWASTE OF FL, INC.
/S/ GEOWASTE OF FL, INC.
By:
Title:
GEOWASTE OF GA, INC.
/S/ GEOWASTE OF GA, INC.
By:
Title:
LOW BROOK DEVELOPMENT, INC.
/S/ LOW BROOK DEVELOPMENT, INC.
By:
Title:
NORTH FLORIDA SWEEPING, INC.
/S/ NORTH FLORIDA SWEEPING, INC.
By:
Title:
SPECTRUM GROUP, INC.
/S/ SPECTRUM GROUP, INC.
By:
Title:
THE LENDER:
BANKBOSTON, N.A.,
/S/ BANKBOSTON, N.A.,
By:
Title:
EXHIBIT 11.1
GEOWASTE INCORPORATED AND SUBSIDIARIES
COMPUTATION OF NET EARNINGS PER SHARE
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
Fully
PRIMARY DILUTED
Weighted Average Common Shares
<S> <C> <C>
outstanding............................................................. 21,286,549 21,286,549
Convertible debt......................................................... - 2,574,475
Stock options and warrants outstanding................................... 1,826,509 1,826,509
------------- -------------
Weighted average shares of common shares outstanding..................... 23,113,058 25,687,533
============ ============
Net income .............................................................. $ 214,854 $ 264,638
============= ============
Earnings per share....................................................... $ 0.01 $ 0.01
================ ================
</TABLE>
EXHIBIT 11.2
GEOWASTE INCORPORATED AND SUBSIDIARIES
COMPUTATION OF NET LOSS PER SHARE
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
Fully
PRIMARY DILUTED
Weighted Average Common Shares
<S> <C> <C>
outstanding............................................................. 21,233,378 21,233,378
Convertible debt......................................................... - -
Stock options and warrants outstanding................................... - -
-------------------
Weighted average shares of common shares outstanding..................... 21,233,378 21,233,378
============ ============
Net income .............................................................. $ (247,317) $ (247,317)
============= =============
Earnings per share....................................................... $ (0.01) $ (0.01)
================= ================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 672,878
<SECURITIES> 0
<RECEIVABLES> 2,095,484
<ALLOWANCES> 172,036
<INVENTORY> 0
<CURRENT-ASSETS> 3,628,047
<PP&E> 26,855,999
<DEPRECIATION> 11,068,636
<TOTAL-ASSETS> 30,136,285
<CURRENT-LIABILITIES> 7,077,940
<BONDS> 0
0
0
<COMMON> 2,128,655
<OTHER-SE> 13,920,331
<TOTAL-LIABILITY-AND-EQUITY> 30,136,285
<SALES> 14,636,612
<TOTAL-REVENUES> 14,636,612
<CGS> 10,044,895
<TOTAL-COSTS> 11,127,895
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 497,064
<INCOME-PRETAX> 28,800
<INCOME-TAX> 276,117
<INCOME-CONTINUING> (247,317)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (247,317)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
