SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1999
Commission File Number 0-22417
Waste Industries, Inc.
(exact name of Registrant as specified in its charter)
North Carolina 56-0954929
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3301 Benson Drive, Suite 601
Raleigh, North Carolina
(Address of principal executive offices)
27609
(Zip Code)
(919) 325-3000
(Registrant's telephone number, including area code)
3949 Browning Place
Raleigh, North Carolina
(Former name, former address and former fiscal year,
if changed since last report)
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, No Par Value 13,854,355 shares
(Class) (Outstanding at November 11, 1999)
<PAGE>
PART 1 - Financial Information
Item 1. Financial Statements
WASTE INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1998 1999
-------------------- ---------------------
ASSETS (UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 3,665 $ 917
Accounts receivable - trade, less allowance for uncollectible
accounts (1998-$700 - 1999-$1,358) 16,835 25,491
Inventories 1,334 1,759
Prepaid expenses and other current assets 1,589 3,660
Current deferred income taxes 494 494
-------------------- ---------------------
Total Current Assets 23,917 32,321
-------------------- ---------------------
PROPERTY AND EQUIPMENT, net 88,801 127,559
INTANGIBLE ASSETS, net 63,073 69,620
OTHER NONCURRENT ASSETS 410 456
-------------------- ---------------------
TOTAL ASSETS $ 176,201 $ 229,956
==================== =====================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 1,877 $ 4,698
Accounts payable - trade 10,171 9,242
Federal and state income taxes payable 188 243
Accrued expenses and other liabilities 2,995 4,431
Deferred revenue 1,743 2,450
-------------------- ---------------------
Total current liabilities 16,974 21,064
-------------------- ---------------------
LONG TERM DEBT, net of current maturities 86,465 129,486
NONCURRENT DEFERRED INCOME TAXES 7,838 10,322
DISPOSAL SITE CLOSURE AND LONG-TERM CARE OBLIGATIONS 262 1,435
COMMITMENTS AND CONTINGENCIES (Note 5) - -
SHAREHOLDERS' EQUITY:
Preferred stock, undesignated, shares authorized - 10,000,000 shares
issued and outstanding - none - -
Common stock, no par value, shares authorized - 80,000,000, shares
issued and outstanding: 1998 - 13,380,905; 1999 - 13,854,355 41,148 46,711
Paid-in capital 7,245 7,245
Retained earnings 16,596 25,467
Note receivable - Liberty Waste (11,538)
Shareholders' loans and receivables (327) (236)
-------------------- ---------------------
Total Shareholders' Equity 64,662 67,649
-------------------- ---------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 176,201 $ 229,956
==================== =====================
</TABLE>
See Notes to Unaudited Condensed Consolidated Financial Statements.
2
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WASTE INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------------------------------
1998 1999 1998 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Service $ 44,248 $ 56,023 $ 124,336 $ 155,915
Equipment 556 448 1,335 948
--------- --------- --------- ---------
Total revenues 44,804 56,471 125,671 156,863
--------- --------- --------- ---------
OPERATING COSTS AND EXPENSES:
Operations 28,100 35,354 78,389 97,589
Equipment sales 423 308 924 602
Selling, general and administrative 6,411 8,344 19,132 22,864
Depreciation and amortization 4,220 5,887 11,864 16,349
Merger and start-up 254 102 502 334
--------- --------- --------- ---------
Total operating costs and expenses 39,408 49,995 110,811 137,738
OPERATING INCOME 5,396 6,476 14,860 19,125
Interest expense 1,195 2,316 3,191 6,251
Interest income (7) (392) (79) (918)
Other (137) (142) (401) (293)
--------- --------- --------- ---------
Total other expense, net 1,051 1,782 2,711 5,040
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES 4,345 4,694 12,149 14,085
INCOME TAX EXPENSE 1,470 1,739 4,246 5,214
--------- --------- --------- ---------
NET INCOME $ 2,875 $ 2,955 $ 7,903 $ 8,871
========= ========= ========= =========
Earnings Per Share:
Basic $ 0.22 $ 0.21 $ 0.62 $ 0.65
Diluted $ 0.22 $ 0.21 $ 0.60 $ 0.63
INCOME BEFORE INCOME TAXES $ 4,345 $ 12,149
PRO FORMA INCOME TAX EXPENSE 1,530 4,486
--------- ---------
PRO FORMA NET INCOME $ 2,815 $ 7,663
========= =========
Pro forma - Earnings Per Share:
Basic $ 0.22 $ 0.60
Diluted $ 0.21 $ 0.59
Weighted Average Common Shares:
Basic 12,817 13,854 12,707 13,707
Diluted 13,218 14,203 13,096 14,063
</TABLE>
3
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<TABLE>
<CAPTION>
WASTE INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------
1998 1999
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 7,903 $ 8,871
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 11,864 16,349
Gain on sale of property and equipment (205) (236)
Provision for deferred income taxes 1,300 2,084
Change in closure/post closure liabilities -- 1,172
Changes in assets and liabilities, net of effects from
acquisitions of related businesses:
Accounts receivable - trade (334) (7,021)
Inventories (1,096) (425)
Prepaid and other current assets (388) (2,029)
Accounts payable - trade (609) (1,332)
Income taxes payable (14) 55
Accrued expenses and other liabilities 42 (654)
Deferred revenue (200) 133
---------- ---------
Net cash provided by operating activities 18,263 16,967
---------- ---------
INVESTING ACTIVITIES:
Other noncurrent assets (587) (245)
Acquisition of related business, net of cash acquired (25,913) (27,487)
Proceeds from sale of property and equipment 552 493
Purchases of property and equipment (24,059) (27,685)
---------- ---------
Net cash used in investing activities (50,007) (54,924)
---------- ---------
FINANCING ACTIVITIES:
Proceeds from issuance of long term debt 102,689 96,566
Principal payments of long-term debt (69,225) (53,202)
Repayments of loans and receivables from shareholders 257 91
Net proceeds from common stock issuance 3,250
Net proceeds from exercised options 44
Cash distributions to S-Corporation shareholders (789) --
Loan to Liberty Waste (11,538)
Other 28 (2)
---------- ---------
Net cash provided by financing activities 32,960 35,209
---------- ---------
INCREASE (DECREASE) IN CASH 1,216 (2,748)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,176 3,665
---------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,392 $ 917
---------- ---------
</TABLE>
See Notes to Unaudited Condensed Consolidated Financial Statements.
4
<PAGE>
WASTE INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION
Basis of Presentation
The condensed financial statements included herein have been prepared by the
Company without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. As applicable under such regulations, certain
information and footnote disclosures normally included in annual financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. The Company believes that the presentations and
disclosures in the financial statements included herein are adequate to make the
information not misleading. The financial statements reflect normal adjustments
that are necessary for a fair statement of the results for the interim periods
presented. Operating results for interim periods are not necessarily indicative
of the results for full years or other interim periods.
The condensed financial statements included herein should be read in conjunction
with the financial statements and notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998.
Recent Developments
Purchase Acquisitions:
During the nine months ended September 30, 1999, the Company made the following
acquisitions accounted for as purchases:
o On June 11, 1999, the Company acquired assets from A&S Waste
Services, Inc. related to its solid waste collection and recycling
business located in the Douglas, Georgia area for approximately
$550,000 in cash.
o On June 1, 1999, the Company acquired assets from Keith D. Threet
of Crossville, Tennessee related to his waste collection business
known as Keith's Disposal Service for approximately $200,000 in
cash.
o On May 31, 1999, the Company acquired assets from Elaine Woodard
related to her residential solid waste collection and recycling
business located in the Raleigh, North Carolina area and known as
A&B Sanitation for approximately $320,000 in cash.
o On May 20, 1999, the Company purchased customer routes, containers
and certain other assets of K&S Sanitation, Inc. related to its
residential solid waste collection business located in the
Charlotte, North Carolina area for approximately $550,000 in cash.
o On May 1, 1999, the Company acquired the assets of S&T Haulers,
LLC associated with its solid waste collection and recycling
business located in and around Kennesaw, Georgia for approximately
$1.6 million in cash.
o On May 1, 1999, the Company acquired North Mecklenburg Sanitation,
Inc., which operates a solid waste collection business in and
around Charlotte, North Carolina. The purchase price for this
company was approximately $4.5 million in cash and 281,249
unregistered shares of our common stock which were registered
effective June 1, 1999. This transaction expands the Company's
operations into the Charlotte, North Carolina area.
o On April 30, 1999, the Company made a tuck-in acquisition of
Central Georgia Waste Services, Inc. for $500,000 in cash. This
tuck-in acquisition further expands the Company's existing
operations in and around Atlanta, Georgia.
o On April 1, 1999, the Company acquired Old Kings Road Solid Waste,
Inc., which operates a landfill and a related solid waste
collection business in and around Jacksonville, Florida, for
approximately $5.0 million in cash. This acquisition gives the
Company its fourth landfill and expands its operations into
northeastern Florida, a new market for the Company in the
southeastern U.S.
o On February 12, 1999 the Company purchased equipment and customer
contracts related to the commercial, industrial and residential
solid waste collection and recycling businesses of Clary's
Container Corp., located in Max Meadow, Virginia, for
approximately $1.3 million in cash.
5
<PAGE>
o On January 14, 1999, the Company acquired a regional municipal
solid waste landfill in Decatur County, Tennessee from Waste
Services of Decatur, LLC through Liberty Waste Services, LLC for
approximately $12.9 million in cash.
Components of cash used for the purchase acquisitions reflected in the unaudited
condensed consolidated statement of cash flows for the nine months ended
September 30, 1999 are as follows:
Fair value of tangible assets acquired 27,153,529
Liabilities assumed (5,945,707)
Non-compete agreements and contracts 94,420
Goodwill 10,636,299
----------
Net acquisition costs $31,938,541
===========
Net acquisition costs include the issuance of 281,249 shares of the Company's
common stock with a fair value of $4,451,541 as partial consideration for
certain business acquisitions (see Note 4).
Non-compete agreements and contracts are amortized using the straight-line
method over the lives of the agreements. Goodwill is amortized using the
straight-line method over 25 to 40 years. Such estimated useful lives assigned
to goodwill are based on the period over which management believes that such
goodwill can be recovered through undiscounted future operating cash flows of
the acquired operations.
In accordance with the purchase method of accounting, the purchase price has
been allocated to the underlying assets and liabilities based on their
respective fair values at the dates of acquisition. Such allocation has been
based on preliminary estimates that may be revised at a later date.
The unaudited pro forma results of operations reflecting the effects of the
acquisitions for the three- and nine-month periods ended September 30, 1999 are
not presented because the effects are immaterial.
2. INCOME TAXES
Certain companies acquired in poolings-of-interests transactions were previously
taxed as S corporations. Pro forma net income and earnings per share amounts
have been computed as if the Company was subject to federal and all applicable
state corporate income taxes for each period presented.
3. PRO FORMA EARNINGS PER SHARE
Pro forma basic and diluted earnings per share computations are based on the
weighted-average common stock outstanding and include the dilutive effect of
stock options using the treasury stock method. Common stock outstanding used to
compute the weighted-average shares was retroactively adjusted for the
acquisitions accounted for applying the pooling-of-interests method of
accounting (including four acquisitions of entities under common control during
the three and nine months ended September 30, 1998).
4. SHAREHOLDERS' EQUITY
On May 4, 1999, the Company issued 281,249 shares of common stock to James M.
Williamson and Dwane J. Williamson for approximately $4.5 million in connection
with the acquisition of North Mecklenburg Sanitation, Inc.
On April 1, 1999, pursuant to its 1997 Stock Option Plan, the Company granted
certain employees options to purchase 37,425 shares of common stock at $15.25
per share, the fair market value on the date of grant, and other employees
options to purchase 23,045 shares at $16.775 per share.
On March 1, 1999, the Company received approximately $44,000 in proceeds from
the exercise of options to purchase 9,200 shares of common stock.
On February 4, 1999, the Company issued 183,000 shares of common stock to
Liberty Waste Services, LLC for $3.3 million. Also accounted for in equity is a
loan made to Liberty Waste Services for $11.5 million.
5. CONTINGENCIES
6
<PAGE>
Certain claims and lawsuits arising in the ordinary course of business have been
filed or are pending against the Company. In the opinion of management, all such
matters have been adequately provided for, are adequately covered by insurance,
or are of such kind that if disposed of unfavorably, would not have a material
adverse effect on the Company's financial position or results of operations.
The Company will have material financial obligations relating to closure and
post-closure of landfill facilities which it has acquired through September 30,
1999. The Company provides accruals for future obligations (generally for a term
of 30 to 40 years after final closure of the landfill) based on engineering
estimates of consumption of permitted landfill airspace over the useful life of
the landfill. There can be no assurance that the Company's ultimate financial
obligations for actual closing or post-closing costs will not exceed the amount
accrued and reserved or amounts otherwise receivable pursuant to insurance
policies or trust funds. Such a circumstance could have a material adverse
effect on the Company's financial condition and results of operation.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE COMPANY'S
FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED IN THE ANNUAL REPORT ON FORM
10-K FOR THE YEAR ENDED DECEMBER 31, 1998. CERTAIN MATTERS DISCUSSED IN THIS
MANAGEMENT'S DISCUSSION AND ANALYSIS ARE "FORWARD-LOOKING STATEMENTS" INTENDED
TO QUALIFY FOR THE SAFE HARBORS FROM LIABILITY ESTABLISHED BY THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995. THESE FORWARD-LOOKING STATEMENTS CAN
GENERALLY BE IDENTIFIED AS SUCH BECAUSE THE CONTEXT OF THE STATEMENT WILL
INCLUDE WORDS SUCH AS THE COMPANY "BELIEVES," "ANTICIPATES," "EXPECTS" OR WORDS
OF SIMILAR IMPORT. SIMILARLY, STATEMENTS THAT DESCRIBE THE COMPANY'S FUTURE
PLANS, OBJECTIVES OR GOALS ARE ALSO FORWARD-LOOKING STATEMENTS. SUCH
FORWARD-LOOKING STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CURRENTLY
ANTICIPATED. SUCH RISKS AND UNCERTAINTIES INCLUDE THOSE RELATED TO WEATHER
CONDITIONS, THE ABILITY TO MANAGE GROWTH, THE AVAILABILITY AND INTEGRATION OF
ACQUISITION TARGETS, COMPETITION, GEOGRAPHIC CONCENTRATION, GOVERNMENT
REGULATION AND OTHERS SET FORTH IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K.
SHAREHOLDERS, POTENTIAL INVESTORS AND OTHER READERS ARE URGED TO CONSIDER THESE
FACTORS CAREFULLY IN EVALUATING THE FORWARD-LOOKING STATEMENTS AND ARE CAUTIONED
NOT TO PLACE UNDUE RELIANCE ON SUCH FORWARD-LOOKING STATEMENTS. THE
FORWARD-LOOKING STATEMENTS MADE HEREIN ARE ONLY MADE AS OF THE DATE OF THIS
REPORT AND THE COMPANY UNDERTAKES NO OBLIGATION TO PUBLICLY UPDATE SUCH
FORWARD-LOOKING STATEMENTS TO REFLECT SUBSEQUENT EVENTS OR CIRCUMSTANCES.
OVERVIEW
Waste Industries is a regional, integrated provider of solid waste services. The
Company operates primarily in North Carolina, South Carolina, Virginia,
Tennessee, Mississippi, Alabama, Georgia and Florida, providing solid waste
collection, transfer, recycling, processing and disposal services for
commercial, industrial, municipal and residential customers. We operate 40
collection operations, 22 transfer stations, approximately 100 county
convenience drop-off centers, seven recycling facilities and five landfills in
the southeastern U.S. The Company had revenues of $171.3 million and operating
income of $20.1 million in the year ended December 31, 1998, and revenues of
$156.9 million and operating income of $19.1 million in the nine months ended
September 30, 1999.
The Company's presence in high-growth markets in the southeastern U.S.,
including North Carolina, Georgia and Florida, has supported its internal
growth. In addition, from 1990 through the nine months ended September 30, 1999,
the Company acquired 46 solid waste disposal operations. Current levels of
population growth and economic development in the southeastern U.S. and the
Company's strong market presence in the region should provide the Company an
opportunity to increase its revenues and market share. As the Company adds
customers in existing markets, its density should improve, which the Company
expects will increase its collection efficiencies and profitability.
RESULTS OF OPERATIONS
GENERAL
The Company's branch waste collection operations generate revenues from fees
collected from commercial, industrial and residential collection and transfer
station customers. The Company derives a substantial portion of its collection
revenues from commercial and industrial services that are performed under
one-year to five-year service agreements. The Company's residential collection
services are performed either on a subscription basis with individual
households, or under contracts with municipalities, apartment owners, homeowners
associations or mobile home park operators. Residential customers who receive
services on a subscription basis are billed quarterly in advance and provide the
Company with a stable source of revenues. A liability for future service is
recorded upon billing and revenues are recognized at the end of each month in
which services are actually provided. Municipal contracts in the Company's
existing markets are typically awarded, at least initially, on a competitive bid
basis and thereafter on a bid or negotiated basis, and usually range in duration
from one to five years. Municipal contracts provide consistent cash flow during
the term of the contracts.
The Company's prices for its solid waste services are typically determined by
the collection frequency and level of service, route density, volume, weight and
type of waste collected, type of equipment and containers furnished, the
distance to the disposal or
7
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processing facility, the cost of disposal or processing, and prices charged in
its markets for similar services.
The Company's ability to pass on price increases is sometimes limited by the
terms of its contracts. Long-term solid waste collection contracts typically
contain a formula, generally based on a predetermined published price index, for
automatic adjustment of fees to cover increases in some, but not all, operating
costs.
The Company currently operates approximately 100 convenience sites under
contract with 14 counties in order to consolidate waste in rural areas. These
contracts, which are usually competitively bid, generally have terms of one to
five years and provide consistent cash flow during the term of the contract,
since the Company is paid regularly by the local government. The Company also
operates seven recycling processing facilities as part of its collection and
transfer operations, where it collects, processes, sorts and recycles paper
products, aluminum and steel cans, pallets, certain plastics, glass, and certain
other items. The Company's recycling facilities generate revenues from the
collection, processing and resale of recycled commodities, particularly recycled
wastepaper. Through a centralized effort, the Company resells recycled
commodities using commercially reasonable practices and seeks to manage
commodity pricing risk by spreading the risk among its customers. The Company
also operates curbside residential recycling programs in connection with its
residential collection operations in most of the communities it serves.
Operating expenses for the Company's collection operations include labor, fuel,
equipment maintenance and tipping fees paid to landfills. The Company operates
22 transfer stations that reduce the Company's costs by improving its
utilization of collection personnel and equipment and by consolidating the waste
stream to gain more favorable disposal rates. The Company owns and operates five
landfills. Operating expenses for these landfill operations include labor,
equipment, legal and administrative, ongoing environmental compliance, host
community fees, site maintenance and accruals for closure and post-closure
maintenance. Cost of equipment sales primarily consists of the Company's cost to
purchase the equipment that it resells.
The Company capitalizes certain expenditures related to pending acquisitions or
development projects. Indirect acquisition and project development costs, such
as executive and corporate overhead, public relations and other corporate
services, are expensed as incurred. The Company's policy is to charge against
net income any unamortized capitalized expenditures and advances (net of any
portion that the Company estimates to be recoverable, through sale or otherwise)
relating to any operation that is permanently shut down, any pending acquisition
that is not consummated and any landfill development project that is not
expected to be successfully completed. Engineering, legal, permitting,
construction and other costs directly associated with the acquisition or
development of a landfill, together with associated interest, are capitalized.
At September 30, 1999, the Company had recorded $1.2 million of capitalized land
acquisition costs in connection with the development of a new land clearing and
inner debris ("LCID") landfill.
Selling, general and administrative ("SG&A") expenses include management
salaries, clerical and administrative overhead, professional services, costs
associated with the Company's marketing and sales force and community relations
expense.
Property and equipment is depreciated over the estimated useful life of the
assets using the straight line method.
Other income and expense, which is comprised primarily of interest income and
gains and losses on sales of equipment, has not historically been material to
the Company's results of operations.
To date, inflation has not had a significant impact on the Company's operations.
The following table sets forth for the periods indicated the percentage of
revenues represented by the individual line items reflected in the Company's
unaudited condensed statements of operations:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
1998 1999 1998 1999
---------------------------- ----------------------------
<S> <C> <C> <C> <C>
Total Revenues 100.0% 100.0% 100.0% 100.0%
Service Revenues 98.8% 99.2% 98.9% 99.4%
Equipment Sales 1.2% 0.8% 1.1% 0.6%
---------------------------- ----------------------------
Cost of service operations 62.7% 62.6% 62.4% 62.2%
Cost of equipment sales 0.9% 0.5% 0.7% 0.4%
Selling, general and administrative 14.3% 14.8% 15.2% 14.6%
Depreciation and amortization 9.4% 10.4% 9.4% 10.4%
Merger and start-up costs 0.7% 0.2% 0.5% 0.2%
---------------------------- ----------------------------
Operating income 12.0% 11.5% 11.8% 12.2%
Interest expense 2.6% 3.4% 2.4% 3.4%
Other Income -0.3% -0.2% -0.3% -0.2%
---------------------------- ----------------------------
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Income before income taxes 9.7% 8.3% 9.7% 9.0%
Pro forma income taxes (1) 3.4% 3.1% 3.6% 3.3%
---------------------------- ----------------------------
Pro forma net income 6.3% 5.2% 6.1% 5.7%
============================ ============================
</TABLE>
(1) Certain companies acquired in pooling-of-interests transactions in fiscal
1998 were previously taxed as S corporations. For the three- and nine-month
periods ended September 30, 1998, income taxes have been computed as if the
companies acquired were subject to federal and all applicable state corporate
income taxes for the period presented assuming the tax rate that would have
applied had the companies been taxed as C corporations.
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 VS. THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 1998
REVENUES. Total revenues increased approximately $11.7 million, or 26.0%, and
$31.2 million, or 24.8%, for the three- and nine- month periods ended September
30, 1999, respectively, as compared with the same periods in 1998. These
increases for each 1999 period were attributable primarily to the following
factors: (i) the effect of eight businesses acquired during the year ended
December 31, 1998 and ten businesses acquired during the nine months ended
September 30, 1999; and (ii) to a lesser extent, increased collection volumes
resulting from new municipal and commercial contracts and residential
subscriptions.
COST OF OPERATIONS. Cost of operations increased $7.3 million, or 25.8%, and
$19.2 million, or 24.5%, for the three-and nine-month periods ended September
30, 1999, respectively, as compared to the same periods in 1998. These increases
for each 1999 period were attributable primarily to the following factors: (i)
the effect of eight businesses acquired during the year ended December 31, 1998
and ten businesses acquired during the nine-months ended September 30, 1999; and
(ii) to a lesser extent, increased collection volumes resulting from new
municipal and commercial contracts and residential subscriptions.
SG&A. SG&A increased $1.9 million, or 30.2%, and $3.7 million, or 19.5%, for the
three- and nine-month periods ended September 30, 1999, respectively. As a
percentage of revenues, SG&A increased from 14.3% to 14.8% in the third quarter
of 1999 compared to the third quarter of 1998. This increase was due primarily
to added bad debt expense, including for customers who were adversely affected
by Hurricanes Dennis and Floyd. The decrease from 15.2% to 14.6% for the nine
months ended compared to the same period in 1998, due primarily to synergies
achieved through acquisitions.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased $1.7
million, or 39.5%, and $4.5 million, or 37.8%, for the three- and nine-month
periods ended September 30, 1999, respectively, compared to the same periods in
1998. Depreciation and amortization, as a percentage of revenues, increased to
10.4% from 9.4% for both the three- and nine-month periods ended September 30,
1999, compared to the same periods in 1998. The principal reasons for the
increase were depreciation of additional property and equipment acquired and put
into service because of higher collection volumes, depreciation of assets of
acquired businesses, amortization of landfill costs, and amortization of
intangibles related to acquired businesses.
INTEREST EXPENSE. Interest expense increased $1.1 million, or 93.8%, and $3.1
million, or 95.9%, for the three- and nine-month periods ended September 30,
1999, respectively, compared to the same periods in 1998. These increases for
each 1999 period were primarily due to the higher level of average outstanding
indebtedness related to acquired businesses.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital at September 30, 1999 was $9.5 million compared to
$6.9 million at December 31, 1998. The Company generally finances working
capital requirements from internally generated funds and bank borrowings. After
satisfying working capital and capital expenditure requirements, the Company
applies remaining cash generated from operations to reducing indebtedness under
its bank revolving credit facility, thereby minimizing cash balances.
The Company has in place financing arrangements to satisfy its currently
anticipated working capital needs in 1999. At September 30, 1999, the Company
had a revolving credit facility with Branch Banking & Trust ("BB&T") allowing
the Company to borrow up to $50 million for acquisitions and capital
expenditures and $10 million for working capital, and three $25 million term
loan facilities and a $25 million shelf facility with The Prudential Insurance
Company of America ("Prudential"). Approximately $55 million was outstanding
under the BB&T facility at September 30, 1999, and the Company had fully drawn
down the three Prudential term loan facilities, leaving the Company with an
uncommitted shelf facility of $25 million. Both the BB&T and the Prudential
credit facilities require the Company to maintain certain financial ratios, such
as debt to earnings and fixed charges to earnings, and satisfy other
predetermined requirements, such as minimum net worth, net income and deposit
balances. At September 30, 1999, the Company was in compliance with all
covenants. The 12-month weighted average interest rate on outstanding borrowings
under the BB&T facility was 6.33% at September 30, 1999. Interest on the BB&T
facility is payable monthly based on an adjusting spread to LIBOR. Interest on
the three Prudential term facilities is paid quarterly, based on a fixed rate of
7.28%, 6.96% and 6.84%, respectively. Of the
9
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Company's committed Prudential facilities, $25 million mature in April 2006, $25
million mature in June 2008, and $25 million mature in February 2009, subject to
renewal. As of September 30, 1999, the Company had a compensating balance
arrangement with BB&T for $375,000.
On November 9, 1999, the Company entered into a revolving credit agreement with
a syndicate of lending institutions for which BankBoston, N.A. acts as agent.
This new credit facility provides up to $200 million through November 2004. The
Company has drawn approximately $55 million on the new facility to terminate and
pay off the BB&T facility. Virtually all of the assets of the Company and its
subsidiaries, including the Company's interest in the equity securities of its
subsidiaries, secure the Company's obligations under the BankBoston credit
facility. Pursuant to an intercreditor agreement with BankBoston, Prudential
shares in the collateral pledged under the BankBoston credit facility. In
addition, the Company's subsidiaries have guarantied the Company's obligations
under the Prudential term loan facilities. The BankBoston credit facility bears
interest at a rate per annum equal to, at the Company's option, either a
BankBoston base rate or at the Eurodollar rate (based on Eurodollar interbank
market rates) plus, in each case, a percentage rate that fluctuates, based on
the ratio of our funded debt to EBITDA, from 0% to 0.5% for base rate borrowings
and 1.5% to 2.5% for Eurodollar rate borrowings. The BankBoston facility
requires the Company to maintain certain financial ratios and satisfy other
predetermined requirements, such as minimum net worth, net income, and limits on
capital expenditures and indebtedness. It also requires the lenders' approval of
acquisitions in some circumstances. As of November 15, 1999, an aggregate of
approximately $75 million was outstanding under the BankBoston credit facility,
and the average interest rate on outstanding borrowings was approximately 8.25%.
Net cash provided by operating activities totaled $17.0 million for the nine
months ended September 30, 1999, compared to $18.2 million for the nine months
ended September 30, 1998. This decrease was caused principally by increases in
outstanding accounts receivable balances that were partially offset by increases
in net income and depreciation and amortization.
Net cash used in investing activities totaled $54.9 million for the nine months
ended September 30, 1999, compared to $50.0 million for the nine months ended
September 30, 1998. This increase was caused principally by (i) a higher level
of acquisitions of related businesses and (ii) an increased level of purchases
of property and equipment.
Capital expenditures for 1999 are currently expected to be approximately $30.0
million, compared to $30.0 million in 1998 which is consistent with 1998 levels.
In 1999, approximately $22.0 million is expected to be utilized for vehicle and
equipment additions and replacements, approximately $1.0 million for expansion
of transfer station services and approximately $7.0 million for facilities,
additions and improvements. The Company intends to fund its planned 1999 capital
expenditures principally through internally generated funds and borrowings under
existing credit facilities. In addition, the Company anticipates that it may
require substantial additional capital expenditures to facilitate its growth
strategy of acquiring solid waste collection and disposal businesses. As an
owner of and potential acquirer of additional new landfill disposal facilities,
the Company may also be required to make significant expenditures to bring such
newly acquired disposal facilities into compliance with applicable regulatory
requirements, obtain permits for these facilities or expand their available
disposal capacity. The amount of these expenditures cannot be currently
determined, since they will depend on the nature and extent of any acquired
landfill disposal facilities, the condition of any facilities acquired and the
permitting status of any acquired sites.
Net cash provided by financing activities totaled $35.2 million for the nine
months ended September 30, 1999, compared to $33.0 million for the nine months
ended September 30, 1998. The increase was primarily attributable to net
increases in long-term debt due to acquisitions.
At September 30, 1999, the Company had approximately $134.2 million of long-term
and short-term borrowings outstanding and approximately $768,000 in letters of
credit. At September 30, 1999, the ratio of the Company's long-term debt to
total capitalization was 65.7% compared to 57.2% at December 31, 1998.
SEASONALITY
The Company's results of operations tend to vary seasonally, with the first
quarter typically generating the least amount of revenues, higher revenues in
the second and third quarters, and a decline in the fourth quarter. This
seasonality reflects the lower volume of waste during the fall and winter
months. Also, certain operating and fixed costs remain relatively constant
throughout the calendar year, which when offset by these revenues results in a
similar seasonality of operating income.
YEAR 2000 TECHNOLOGY ISSUES
The Year 2000 problem is the result of computer programs being written using two
digits rather than four digits to define the applicable year. Any of the
Company's computer programs that have data-sensitive software may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result in
a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices or engage in other routine business
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activities.
As of September 30, 1999, the Company has substantially completed testing of
information technology ("IT") systems with the assistance of software
specialists and consultants. Based on these tests, the Company has determined
that there are no current Year 2000 problems related to processing within these
IT systems. Going forward, the Company will evaluate the need, if any, for
further testing based on both hardware and software additions.
After an inventory of all non-IT systems within the Company, senior management
determined that one non-IT system required an upgrade in order to be Year 2000
ready. The Company has purchased and installed the appropriate upgrade for this
non-IT system and is, therefore, substantially Year 2000 ready with respect to
non-IT systems.
The Company has initiated formal communications with its significant suppliers,
business partners, and customers to determine the extent to which it may be
affected by these third parties' plans to remedy their own Year 2000 issues in a
timely manner. Although there can be no assurances as such, the financial impact
of potential third party Year 2000 issues on the Company is not anticipated to
be material to its financial position or results of operations.
The Company has incurred approximately $10,000 of Year 2000 project expenses to
date for IT and non-IT systems. The expenses were funded by cash generated from
operations. Future expenses are expected to be approximately $1,000 and will be
funded by cash generated from operations. Total Year 2000 expenses are expected
to be approximately 2% of the Company's 1999 IT budget. These expectations are
based on future hardware and software modifications, if any, and the planned
testing of the Company's personal computers. Such testing of the Company's
personal computers was substantially completed during the first half of 1999.
Such cost estimates are based on presently available information and actual
costs may materially differ from such expectations as the Company continues to
evaluate Year 2000 issues. Furthermore, the Company's aggregate cost estimate
does not include time and costs that may be incurred by the Company as a result
of the failure of any third parties, including suppliers, to become Year 2000
ready or costs to implement any contingency plans. Other IT projects within the
Company have not been delayed as a result of the Company's Year 2000 activities.
The Company has identified the two most reasonably likely worst case scenarios
that the Year 2000 problem could have on operations. First, the Company has
identified several large municipal customers whose potential cash payment delay,
in the event of complications with the Year 2000 problem, could adversely impact
the Company's short term cash flow. However, in the event of such a
complication, the Company plans to draw on its existing credit facilities as
necessary. Second, the Company has identified a potential delay in diesel
deliveries as another reasonably likely worst case scenario. However, in the
event of an interruption of short-term diesel supplies as a result of Year 2000
problems, the Company believes that existing bulk storage facilities at each
branch will be adequate to supply diesel for operations.
With regard to risk and contingency plans, due to the nature of the Company's
operations, the Company's management does not believe that the Year 2000 issue
will have a materially adverse effect on its financial condition or results of
operations. Accordingly, the Company has not developed a contingency plan based
on currently obtained knowledge. The Company provides service to a largely
diversified customer base and has a large supplier network. Accordingly, the
Company believes that these factors will mitigate potential adverse Year 2000
impacts. The Company believes, however, that due to the widespread nature of
potential Year 2000 issues, the contingency and risk evaluation process is an
ongoing one which will require further modifications as the Company obtains
future information regarding third party readiness. Furthermore, the Company's
beliefs and expectations, are based on certain assumptions and expectations that
may ultimately prove to be inaccurate. The Company's senior management and the
Board of Directors have received and will continue to receive regular updates on
the status of the Company's Year 2000 readiness.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
During the nine months ended September 30, 1999, the Company's market exposure
was affected by the issuance of $96.6 million principal amount of senior notes
and repayments of $53.2 million aggregate principal amount of senior and
subordinated notes. Total fixed-rate long-term debt increased by the principal
amount issued net of repayments; the average interest rate at September 30, 1999
was 6.82%. The proceeds from the issuance were used to fund acquisitions during
the three and nine months ended September 30, 1999.
The Company also assumed $2.5 million in non-interest bearing debt through
acquisitions.
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PART II
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(a) No material modifications
(b) No material limitations or qualifications
(c) During the nine months ended September 30, 1999, the Company issued
the following unregistered securities, none of which issuances involved
the use of underwriters or the payment of commissions:
(1) On February 1, 1999, the Company issued 183,000 shares of its common
stock to Liberty Waste Services, LLC. These shares were issued in a
transaction intended to qualify as a Section 4(2) exemption from
registration under the Securities Act of 1933.
(2) On May 4, 1999, the Company issued 281,249 shares of its common
stock to James M. Williamson and Dwane J. Williamson. These shares were
registered for resale on a Form S-3 Registration Statement that became
effective June 1, 1999.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits filed with this Form 10-Q report are incorporated herein by
reference to the Exhibit Index accompanying this report.
(b) No reports on Form 8-K were filed during the quarter ended September
30, 1999.
SIGNATURE
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.
Dated: November 15, 1999 Waste Industries, Inc.
(Registrant)
By: /s/ Stephen C. Shaw
-------------------------
Stephen C. Shaw
Vice President, Finance
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WASTE INDUSTRIES, INC.
EXHIBIT INDEX
Third Quarter 1999
Exhibit Number Exhibit Description
-------------- -------------------
10.7 Revolving Credit Agreement dated
as of November 9, 1999 by and
among the Registrant and its
subsidiaries, the lending
institutions party thereto,
BankBoston, N.A. as
Administrative Agent, BancBoston
Robertson Stephens Inc., as
Arranger, and Branch Banking and
Trust Company, as Documentation
Agent.
11 Computations of Earnings Per Share
27 Financial Data Schedule
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED
FINANCIAL STATEMENTS OF WASTE INDUSTRIES, INC. AS OF AND FOR THE THREE MONTHS
ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
13
REVOLVING CREDIT AGREEMENT
Dated as of November 9, 1999
by and among
WASTE INDUSTRIES, INC.
AND ITS SUBSIDIARIES
(THE "BORROWERS")
THE LENDING INSTITUTIONS PARTY THERETO
(THE "BANKS")
AND
BANKBOSTON, N.A., AS ADMINISTRATIVE AGENT
BANCBOSTON ROBERTSON STEPHENS INC.,
AS ARRANGER
BRANCH BANKING AND TRUST COMPANY, AS DOCUMENTATION AGENT
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TABLE OF CONTENTS
<S> <C>
1. DEFINITIONS AND RULES OF INTERPRETATION.....................................................1
1.1. Definitions......................................................................1
1.2. Rules of Interpretation..........................................................17
2. THE REVOLVING CREDIT FACILITY...............................................................18
2.1. Commitment to Lend...............................................................18
2.2. Reduction of Total Commitment....................................................19
2.3. The Revolving Credit Notes.......................................................19
2.4. Interest on Revolving Credit Loans...............................................19
2.5. Election of Eurodollar Rate; Notice of Election; Interest Periods; Minimum
Amounts..........................................................................20
2.6. Requests for Revolving Credit Loans..............................................21
2.7. Funds for Revolving Credit Loans.................................................21
2.8. Swing Line Loans; Settlements....................................................22
2.9. Maturity of the Revolving Credit Loans...........................................25
2.10. Mandatory Repayments of the Revolving Credit Loans and Swing Line Loans and
Reimbursement Obligations........................................................25
2.11. Optional Prepayments of Revolving Credit Loans...................................25
3. LETTERS OF CREDIT...........................................................................26
3.1. Letter of Credit Commitments.....................................................26
3.2. Reimbursement Obligation of the Borrowers........................................27
3.3. Letter of Credit Payments........................................................28
3.4. Obligations Absolute.............................................................28
3.5. Reliance by Issuer...............................................................29
4. CERTAIN GENERAL PROVISIONS..................................................................29
4.1. Fees.............................................................................29
4.2. Payments.........................................................................30
4.3. Computations.....................................................................31
4.4. Capital Adequacy.................................................................31
4.5. Certificate......................................................................32
4.6. Interest on Overdue Amounts......................................................32
4.7. Interest Limitation..............................................................32
4.8. Eurodollar Indemnity.............................................................32
4.9. Illegality; Inability to Determine Eurodollar Rate...............................32
4.10. Additional Costs, Etc............................................................33
4.11. Replacement of Banks.............................................................34
4.12. Concerning Joint and Several Liability of the Borrowers..........................34
5. REPRESENTATIONS AND WARRANTIES..............................................................37
5.1. Corporate Authority..............................................................37
5.2. Governmental Approvals...........................................................38
5.3. Title to Properties; Leases......................................................38
5.4. Financial Statements; Solvency; Fiscal Year......................................38
5.5. No Material Changes, etc.........................................................39
5.6. Permits, Franchises, Patents, Copyrights, etc....................................39
5.7. Litigation.......................................................................39
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5.8. No Materially Adverse Contracts, etc.............................................40
5.9. Compliance with Other Instruments, Laws, etc.....................................40
5.10. Tax Status.......................................................................40
5.11. No Event of Default..............................................................40
5.12. Holding Company and I.nvestment Company Acts.....................................40
5.13. Absence of Financing Statements, etc.............................................40
5.14. Employee Benefit Plans...........................................................40
5.15. Use of Proceeds..................................................................42
5.15.1. General..................................................................42
5.15.2. Regulations U and X......................................................42
5.15.3. Ineligible Securities....................................................42
5.16. Environmental Compliance.........................................................42
5.17. Subsidiaries.....................................................................43
5.18. True Copies of Charter and Other Documents.......................................44
5.19. Disclosure.......................................................................44
5.20. Capitalization...................................................................44
5.21. Year 2000 Compliance.............................................................45
6. AFFIRMATIVE COVENANTS OF THE BORROWERS......................................................45
6.1. Punctual Payment.................................................................45
6.2. Maintenance of Office............................................................45
6.3. Records and Accounts.............................................................45
6.4. Financial Statements, Certificates and Information...............................45
6.5. Corporate Existence and Conduct of Business......................................46
6.6. Maintenance of Properties........................................................47
6.7. Insurance........................................................................47
6.8. Taxes............................................................................47
6.9. Inspection of Properties, Books, and Contracts...................................48
6.10. Compliance with Laws, Contracts, Licenses and Permits; Maintenance of
Material Licenses and Permits....................................................48
6.11. Environmental Indemnification....................................................48
6.12. Further Assurances...............................................................48
6.13. Notice of Potential Claims or Litigation.........................................49
6.14. Notice of Certain Events Concerning Insurance and Environmental Claims...........49
6.15. Notice of Default................................................................50
6.16. New Subsidiaries.................................................................50
6.17. Employee Benefit Plans...........................................................50
7. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS.................................................51
7.1. Restrictions on Indebtedness.....................................................51
7.2. Restrictions on Liens............................................................52
7.3. Restrictions on Investments......................................................53
7.4. Merger, Consolidation and Disposition of Assets..................................54
7.4.1. Mergers and Acquisitions..................................................54
7.4.2. Disposition of Assets.....................................................56
7.5. Sale and Leaseback...............................................................56
7.6. Restricted Distributions and Redemptions.........................................56
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7.7. Debt Modification, etc...........................................................56
7.8. Employee Benefit Plans...........................................................56
7.9. Negative Pledges.................................................................57
7.10. Business Activities..............................................................57
7.11. Transactions with Affiliates.....................................................57
8. FINANCIAL COVENANTS OF THE BORROWERS........................................................57
8.1. Funded Debt to EBITDA............................................................57
8.2. Senior Funded Debt to EBITDA.....................................................58
8.3. Consolidated Net Worth...........................................................58
8.4. Interest Coverage................................................................58
8.5. Profitable Operations............................................................58
8.6. Capital Expenditures.............................................................58
9. CLOSING CONDITIONS..........................................................................58
9.1. Corporate Action.................................................................58
9.2. Loan Documents, etc..............................................................59
9.2.1. Loan Documents............................................................59
9.2.2. Intercreditor Agreement...................................................59
9.2.3. Noteholders' Documents....................................................59
9.3. Certified Copies of Charter Documents............................................59
9.4. Incumbency Certificate...........................................................59
9.5. Validity of Liens................................................................59
9.6. Perfection Certificates and UCC Search Results...................................60
9.7. Certificates of Insurance........................................................60
9.8. Opinion of Counsel...............................................................60
9.9. Permit Certificate...............................................................60
9.10. Payment of Fees..................................................................60
9.11. Payoff Letter....................................................................60
9.12. Disbursement Instructions........................................................60
10. CONDITIONS TO ALL BORROWINGS...............................................................60
10.1. Representations True; No Event of Default.......................................61
10.2. No Legal Impediment.............................................................61
10.3. Governmental Regulation.........................................................61
10.4. Proceedings and Documents.......................................................61
11. COLLATERAL SECURITY........................................................................61
12. EVENTS OF DEFAULT; ACCELERATION; ETC.......................................................61
12.1. Events of Default and Acceleration..............................................61
12.2. Termination of Commitments......................................................65
12.3. Remedies........................................................................65
12.4. Distribution of Collateral Proceeds.............................................65
12.5. Acknowledgement Regarding the Intercreditor Agreement...........................66
13. SETOFF.....................................................................................66
14. THE ADMINISTRATIVE AGENT...................................................................67
14.1. Appointment of Administrative Agent, Powers and Immunities......................67
14.2. Actions By Administrative Agent.................................................68
14.3. INDEMNIFICATION.................................................................68
14.4. Reimbursement...................................................................69
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14.5. Documents.......................................................................69
14.6. Non-Reliance on Administrative Agent and Other Banks............................69
14.7. Resignation of Administrative Agent.............................................70
14.8. Action by the Banks, Consents, Amendments, Waivers, Etc.........................70
14.9. Documentation Agent.............................................................71
15. EXPENSES...................................................................................71
16. INDEMNIFICATION............................................................................72
17. SURVIVAL OF COVENANTS, ETC.................................................................73
18. ASSIGNMENT AND PARTICIPATION...............................................................73
19. PARTIES IN INTEREST........................................................................74
20. NOTICES, ETC...............................................................................74
21. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION..............................................75
21.1. Sharing of Information with Section 20 Subsidiary...............................75
21.2. Confidentiality.................................................................75
21.3. Prior Notification..............................................................76
21.4. Other...........................................................................76
22. MISCELLANEOUS..............................................................................76
23. ENTIRE AGREEMENT, ETC......................................................................76
24. WAIVER OF JURY TRIAL.......................................................................77
25. GOVERNING LAW..............................................................................77
26. SEVERABILITY...............................................................................77
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BD DRAFT
11/08/99
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT is made as of November ___, 1999, by
and among (a) WASTE INDUSTRIES, INC., a North Carolina corporation having its
principal place of business at 3301 Benson Drive, Suite 601, Raleigh, North
Carolina 27609 (the "Parent"), and each of the subsidiaries of the Parent (the
"Subsidiaries" and together with the Parent, the "Borrowers"), (b) BANKBOSTON,
N.A., a national banking association having its principal place of business at
100 Federal Street, Boston, Massachusetts 02110 (acting in its individual
capacity, "BKB"), and the other lending institutions listed on Schedule 1
(collectively, the "Banks"), (c) BANKBOSTON, N.A. as Administrative Agent for
the Banks, the ("Administrative Agent"), and (d) BRANCH BANKING AND TRUST
COMPANY, as Documentation Agent for the Banks (the "Documentation Agent").
1. DEFINITIONS AND RULES OF INTERPRETATION.
1.1. DEFINITIONS. The following terms shall have the meanings set forth
in this ss.1 or elsewhere in the provisions of this Credit Agreement referred to
below:
Accountants. An independent accounting firm of national standing
acceptable to the Administrative Agent and the Banks.
Administrative Agent. As defined in the preamble hereto.
Administrative Agent's Head Office. The Administrative Agent's head
office located at 100 Federal Street, Boston, Massachusetts 02110, or such other
location as the Administrative Agent may designate from time to time.
Administrative Agent's Special Counsel. Bingham Dana LLP or such other
counsel as may be approved by the Administrative Agent.
Affiliate. Any Person that would be considered to be an affiliate of
any of the Borrowers under Rule 144(a) of the Rules and Regulations of the
Securities and Exchange Commission, as in effect on the date hereof, if any of
the Borrowers were issuing securities.
Applicable Commitment Rate. The applicable rate with respect to the
Commitment Fee shall be as set forth in the Pricing Table.
Applicable Base Rate Margin. The Applicable Base Rate Margin on Base
Rate Loans shall be as set forth in the Pricing Table.
Applicable Eurodollar Rate Margin. The Applicable Eurodollar Margin on
Eurodollar Loans shall be as set forth in the Pricing Table.
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Applicable L/C Margin. The Applicable L/C Margin on Letters of Credit
shall be as set forth in the Pricing Table.
Applicable Laws. See ss.6.10.
Arranger. BancBoston Robertson Stephens Inc.
Assignment and Acceptance. See ss.18.
Balance Sheet Date. December 31, 1998.
Banks. As defined in the preamble hereto.
Base Rate. The higher of (a) the annual rate of interest announced from
time to time by the Administrative Agent 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
Administrative Agent) or (b) one-half of one percent (1/2%) 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.
BBT. Branch Banking and Trust Company.
BKB. As defined in the preamble hereto.
Borrowers. As defined in the preamble hereto.
Business Day. Any day on which lending 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 good will); 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 GAAP, or (b) any
item obtained through an acquisition permitted by ss.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 generally accepted accounting principles.
Capitalized Leases. Leases under which any Borrower is the lessee or
obligor, 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 generally accepted accounting principles.
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CEO. See ss.6.4(b).
CERCLA. See the definition of Release.
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 qualifications, that such financial statements
present fairly the financial position of such Person.
CFO. See ss.6.4(b).
Closing Date. The date on which the conditions precedent set forth in
ss.9 are satisfied.
Code. The Internal Revenue Code of 1986.
Collateral. All of the property, rights and interests of the Borrowers
that are or are intended to be subject to the security interests created by the
Security Documents.
Collateral Agent. BKB acting in its role as collateral agent under the
Security Documents for itself and the other Banks and the Noteholders, as set
forth in the Intercreditor Agreement.
Commitment. With respect to each Bank, the amount determined by
multiplying such Bank's Commitment Percentage by the Total Commitment specified
in ss.2.1 hereof, as the same may be reduced from time to time.
Commitment Fee. See ss.4.1(b).
Commitment Percentage. With respect to each Bank, the percentage set
forth beside its name on Schedule 1 attached hereto (subject to adjustment upon
any assignments pursuant to ss.18).
Compliance Certificate. See ss.6.4(c).
Conforming Amendment. That amendment to the Purchase Agreements to
conform the financial covenants and negative covenants therein to the
corresponding covenants hereof, to provide for a cross default with this Credit
Agreement and to provide for a 200 basis point increase in the coupon rate of
the Noteholders' Debt if the Parent shall fail to meet the financial levels
formerly set forth in Section 6(A)(i) or 6(A)(ii) of the Purchase Agreements
prior to any such amendment, in a form reasonably satisfactory to the
Administrative Agent.
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 generally accepted accounting principles.
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Consolidated Earnings Before Interest and Taxes or EBIT. For any
period, the Consolidated Net Income (or Deficit) of the Borrowers, plus (a)
interest expense and (b) income taxes, determined in accordance with GAAP.
Consolidated Earnings Before Interest, Taxes and Amortization or
EBITA. For any period (without duplication), EBIT plus amortization expense, to
the extent that it was deducted in determining Consolidated Net Income (or
Deficit), determined in accordance with GAAP.
For purposes of calculating the financial covenants set forth in ss.8,
the Borrowers may include the EBITA for the prior twelve (12) months of
companies acquired by the Borrowers during the respective reporting period
(without duplication with respect to the adjustments set forth above) only if
(A) the financial statements of such acquired Borrowers have been audited for
the period sought to be included by an independent accounting firm satisfactory
to the Administrative Agent, or (B) the Administrative Agent consents to such
inclusion after being furnished with other acceptable financial statements. Such
acquired EBITA may be further adjusted to add back non-recurring private company
expenses which are discontinued upon acquisition (including, without limitation,
owner's compensation), as approved by the Administrative Agent. Simultaneously
with the delivery of the financial statements referred to in (A) and (B) above,
the CEO or the CFO of the Parent shall deliver to the Administrative Agent a
Compliance Certificate and appropriate documentation certifying the historical
operating results, adjustments and balance sheet of the acquired company.
Consolidated Earnings Before Interest, Taxes, Depreciation and
Amortization or EBITDA. For any period (without duplication), EBITA plus
depreciation expense, to the extent that it was deducted in determining
Consolidated Net Income (or Deficit), determined in accordance with GAAP.
For purposes of calculating the financial covenants set forth in ss.8
and the Pricing Ratio hereof, the Borrowers may include the EBITDA for the prior
twelve (12) months of companies acquired by the Borrowers during the respective
reporting period (without duplication with respect to the adjustments set forth
above) only if (A) the financial statements of such acquired Borrowers have been
audited for the period sought to be included by an independent accounting firm
satisfactory to the Administrative Agent, or (B) the Administrative Agent
consents to such inclusion after being furnished with other acceptable financial
statements. Such acquired EBITDA may be further adjusted to add back
non-recurring private company expenses which are discontinued upon acquisition
(including, without limitation, owner's compensation), as approved by the
Administrative Agent. Simultaneously with the delivery of the financial
statements referred to in (A) and (B) above, the CEO or the CFO of the Parent
shall deliver to the Administrative Agent a Compliance Certificate and
appropriate documentation certifying the historical operating results,
adjustments and balance sheet of the acquired company.
<PAGE>
-5-
Consolidated Net Income. The consolidated net income of the Borrowers
after deduction of all expenses, taxes, and other proper charges, determined in
accordance with GAAP.
Consolidated Net Worth. The excess of Consolidated Total Assets over
Consolidated Total Liabilities.
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 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, whether such interest was or is required to be reflected as an
item of expense or capitalized, including payments consisting of interest in
respect of any Capitalized Lease or any Synthetic Lease and including commitment
fees, agency fees, facility fees, balance deficiency fees and similar fees or
expenses in connection with the borrowing of money plus all non-compete, royalty
and other cash payments due and payable by the Borrowers in connection with the
Target Acquisition.
Consolidated Total Liabilities. All liabilities of the Borrowers
determined on a consolidated basis in accordance with GAAP.
Consulting Engineer. An environmental consulting firm reasonably
acceptable to the Administrative Agent.
Credit Agreement. This Revolving Credit Agreement, including the
Disclosure Letter delivered herewith and the Schedules and Exhibits hereto.
Default. See ss.12.1.
Disclosure Letter. See ss.5.7.
Disposal (or Disposed). See the definition of Release.
Distribution. The declaration or payment of any dividend on or in
respect of any shares of any class of capital stock, any partnership interests
or any membership units 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 interests or
membership units of such Person.
Documentation Agent. As defined in the preamble hereto.
<PAGE>
-6-
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,
and the date on which any Revolving Credit Loan is converted or continued in
accordance with ss.2.5, or the date that any draft or other form of demand for
payment is honored with respect to a Letter of Credit.
EBIT. See the definition of Consolidated Earnings Before Interest and
Taxes.
EBITA. See the definition of Consolidated Earnings Before Interest,
Taxes and Amortization.
EBITDA. See the definition of Consolidated Earnings Before Interest,
Taxes, Depreciation and Amortization.
Eligible Assignee. Any of (a) a commercial bank organized under the
laws of the United States, or any State thereof or the District of Columbia, and
having total assets in excess of $1,000,000,000; (b) a savings and loan
association or savings bank organized under the laws of the United States, or
any State thereof or the District of Columbia, and having a net worth of at
least $100,000,000, calculated in accordance with generally accepted accounting
principles; (c) an Eligible Foreign Bank; (d) the central bank of any country
which is a member of the OECD; and (e) if, but only if, any Event of Default has
occurred and is continuing, any other bank, insurance company, commercial
finance company or other financial institution or other Person approved by the
Administrative Agent, such approval not to be unreasonably withheld or delayed.
Eligible Foreign Bank. (a) Any commercial bank organized under the
laws of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, provided that such bank is acting through a branch or agency located in
the Cayman Islands, in the country in which it is organized or another country
which is also a member of the OECD; or (b) the central bank of any country which
is a member of the OECD.
Employee Benefit Plan. Any employee benefit plan within the meaning of
ss.3(3) of ERISA maintained or contributed to by the Borrowers or any ERISA
Affiliate, other than a Guaranteed Pension Plan or a Multiemployer Plan.
Environmental Laws. See ss.5.16(a).
EPA. See ss.5.16(b).
Equity Closing. The date following the Closing Date and prior to
December 31, 1999, on which the Parent issues equity securities and/or warrants
or subscription rights for equity securities for net cash equity proceeds in an
aggregate amount of at least $50,000,000.
ERISA. The Employee Retirement Income Security Act of 1974.
<PAGE>
-7-
ERISA Affiliate. Any Person which is treated as a single employer with
any Borrower under ss.414 of the Code.
ERISA Reportable Event. A reportable event with respect to a
Guaranteed Pension Plan within the meaning of ss.4043 of ERISA and the
regulations promulgated thereunder.
Eurodollar Business Day. Any Business Day on which dealings in foreign
currency and exchange are carried on among banks in London, England.
Eurodollar Interest Determination Date. For any Interest Period, the
date two (2) Eurodollar Business Days prior to the first day of such interest
period.
Eurodollar Loans. Loans bearing interest calculated by reference to
the Eurodollar Rate.
Eurodollar Offered Rate. The rate per annum at which Dollar deposits
are offered to the Administrative Agent by prime banks in whatever Eurodollar
interbank market may be selected by the Administrative Agent, in its sole
discretion, acting in good faith, at or about 11:00 a.m. local time in such
interbank market, on the Eurodollar Interest Determination Date for a period
equal to the period of such Interest Period in an amount substantially equal to
the principal amount requested to be loaned or converted to a rate based on the
Eurodollar Rate.
Eurodollar Rate. The rate per annum, rounded upwards to the nearest
1/16 of one percent (1%), determined by the Administrative Agent with respect to
the Interest Period in accordance with the following formula:
Eurodollar Rate = Eurodollar Offered Rate
-----------------------
1 - Reserve Rate
Event of Default. See ss.12.1.
Financial Letter of Credit. A Letter of Credit where the event which
triggers payment is financial, such as the failure to pay money, and not
performance-related, such as failure to ship a product or provide a service, as
set forth in greater detail in the letter dated March 30, 1995 from the Board of
Governors of the Federal Reserve System or in any applicable directive or letter
ruling of the Board of Governors of the Federal Reserve System issued subsequent
thereto.
Funded Debt. Collectively, without duplication, whether classified as
indebtedness, an Investment or otherwise on the Borrowers' consolidated balance
sheet, (a) all indebtedness for borrowed money or credit obtained or other
similar monetary obligations, direct or indirect, (b) all obligations evidenced
by notes, bonds, debentures or other similar debt instruments, (c) the Maximum
Drawing Amount of Financial Letters of Credit and any unpaid reimbursement
obligations under any other letter of credit, (d) all obligations, liabilities
and indebtedness under Capitalized Leases which
<PAGE>
-8-
corresponds to principal, (e) guaranties of the Funded Debt of others referred
to in clauses (a) through (d) above, and (f) the deferred purchase price of
assets and companies (typically known as holdbacks) other than short-term trade
credit incurred in the ordinary course of business.
generally accepted accounting principles or GAAP. When used in
general, generally accepted accounting principles 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, as shall be concurred in by independent
certified public accountants of recognized standing whose report expresses an
unqualified opinion (other than a qualification regarding changes in generally
accepted accounting principles) as to financial statements in which such
principles have been applied; and (b) when used with reference to the Borrowers,
such principles shall include (to the extent consistent with such principles)
the accounting practices reflected in the consolidated financial statements for
the year ended on the Balance Sheet Date.
Guaranteed Pension Plan. Any employee pension benefit plan within the
meaning of ss.3(2) of ERISA maintained or contributed to by the Borrowers or any
ERISA Affiliate the benefits of which are guarantied on termination in full or
in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer
Plan.
Guaranty Agreement. Those guaranties of the Noteholders' Debt by the
Subsidiaries, in the form agreed to by the Administrative Agent.
Hazardous Substances. See ss.5.16(b).
Indebtedness. As to any Person and whether recourse is secured by or
is otherwise available against all or only a portion of the assets of such
Person and whether or not contingent, but without duplication:
(i) every obligation of such Person for money borrowed,
(ii) every obligation of such Person evidenced by bonds,
debentures, notes or other similar instruments, including obligations
incurred in connection with the acquisition of property, assets or
businesses,
(iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of such Person,
(iv) every obligation of such Person issued or assumed as the
deferred purchase price of property or services (including securities
repurchase agreements but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business which are not
overdue or which are being contested in good faith),
<PAGE>
-9-
(v) every obligation of such Person under any Capitalized
Lease,
(vi) every obligation of such Person under any Synthetic Lease,
(vii) all sales by such Person of (A) accounts or general
intangibles for money due or to become due, (B) chattel paper,
instruments or documents creating or evidencing a right to payment of
money or (C) other receivables (collectively "receivables"), whether
pursuant to a purchase facility or otherwise, other than in connection
with the disposition of the business operations of such Person relating
thereto or a disposition of defaulted receivables for collection and
not as a financing arrangement, and together with any obligation of
such Person to pay any discount, interest, fees, indemnities,
penalties, recourse, expenses or other amounts in connection therewith,
(viii) every obligation of such Person (an "equity related
purchase obligation") to purchase, redeem, retire or otherwise acquire
for value any shares of capital stock of any class issued by such
Person, any warrants, options or other rights to acquire any such
shares, or any rights measured by the value of such shares, warrants,
options or other rights,
(ix) every obligation of such Person under any forward
contract, futures contract, swap, option or other financing agreement
or arrangement (including, without limitation, caps, floors, collars
and similar agreements), the value of which is dependent upon interest
rates, currency exchange rates, commodities or other indices (a
"derivative contract"),
(x) every obligation in respect of Indebtedness of any other
entity (including any partnership in which such Person is a general
partner) to the extent that such Person is liable therefor as a result
of such Person's ownership interest in or other relationship with such
entity, except to the extent that the terms of such Indebtedness
provide that such Person is not liable therefor and such terms are
enforceable under applicable law,
(xi) every obligation, contingent or otherwise, of such Person
guarantying, or having the economic effect of guarantying or otherwise
acting as surety for, any obligation of a type described in any of
clauses (i) through (x) (the "primary obligation") of another Person
(the "primary obligor"), in any manner, whether directly or indirectly,
and including, without limitation, any obligation of such Person (A) to
purchase or pay (or advance or supply funds for the purchase of) any
security for the payment of such primary obligation, (B) to purchase
property, securities or services for the purpose of assuring the
payment of such primary obligation, or (C) to maintain working capital,
equity capital or other financial statement condition or liquidity of
the primary obligor so as to enable the primary obligor to pay such
primary obligation.
The "amount" or "principal amount" of any Indebtedness at any time of
determination represented by (u) any Indebtedness, issued at a price that is
less than the
<PAGE>
-10-
principal amount at maturity thereof, shall be the amount of the liability in
respect thereof determined in accordance with generally accepted accounting
principles, (v) any Capitalized Lease shall be the principal component of the
aggregate of the rentals obligation under such Capitalized Lease payable over
the term thereof that is not subject to termination by the lessee, (w) any sale
of receivables shall be the amount of unrecovered capital or principal
investment of the purchaser (other than the Borrowers) thereof, excluding
amounts representative of yield or interest earned on such investment, (x) any
synthetic lease shall be the stipulated loss value, termination value or other
equivalent amount, (y) any derivative contract shall be the maximum amount of
any termination or loss payment required to be paid by such Person if such
derivative contract were, at the time of determination, to be terminated by
reason of any event of default or early termination event thereunder, whether or
not such event of default or early termination event has in fact occurred and
(z) any equity related purchase obligation shall be the maximum fixed redemption
or purchase price thereof inclusive of any accrued and unpaid dividends to be
comprised in such redemption or purchase price.
Ineligible Securities. Securities which may not be underwritten or
dealt in by member banks of the Federal Reserve System under Section 16 of the
Banking Act of 1933 (12 U.S.C. ss.24, Seventh), as amended.
Intercreditor Agreement. The Intercreditor Agreement, dated the
Closing Date, between the Administrative Agent (acting on behalf of itself and
the Banks) and the Noteholders and in form and substance satisfactory to the
Banks and the Administrative Agent.
Interest Period. With respect to each Eurodollar Loan:
(a) initially, the period commencing on the making of a Eurodollar
Loan or the conversion from a Base Rate Loan into a Eurodollar Loan and ending
one (1), two (2), three (3), or six (6) months thereafter, as the case may be,
as the Borrowers may select; and
(b) thereafter, each subsequent Interest Period shall begin on the
last day of the preceding Interest Period and end one (1), two (2), three (3),
or six (6) months thereafter, as the case may be, as the Borrowers may select;
provided, however, that 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 extend to the next succeeding Business Day;
provided that for any Interest Period for any Eurodollar Loan if such next
succeeding Business Day falls in the next succeeding calendar month or after the
Revolving Credit Maturity Date, it shall be deemed to end on the immediately
preceding Business Day.
Interim Balance Sheet Date. June 30, 1999.
<PAGE>
-11-
International Standby Practices. With respect to any Financial Letter
of Credit, International Standby Practices (ISP98) as promulgated by the
Institute of International Banking Law & Practice, Inc., or any successor code
of standby letter of credit practices among banks adopted by either Issuing Bank
in the ordinary course of its business as a standby letter of credit issuer and
in effect at the time of issuance of such Letter of Credit.
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. In determining the aggregate
amount of Investments outstanding at any particular time: (i) the amount of any
Investment represented by a guaranty shall be taken at not less than the
principal amount of the obligations guarantied and still outstanding; (ii) there
shall be included as an Investment all interest accrued with respect to
Indebtedness constituting an Investment unless and until such interest is paid;
(iii) 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); (iv) 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 (ii) may be
deducted when paid; and (v) there shall not be deducted from the aggregate
amount of Investments any decrease in the value thereof.
Issuing Bank(s). BKB and/or BBT.
Letter of Credit Application. Letter of Credit Applications in such
form as may be agreed upon by any Borrower and the Administrative Agent from
time to time which are entered into pursuant to ss.3 hereof, as amended, varied
or supplemental from time to time.
Letter of Credit Fee. See ss.4.1(c).
Letter of Credit Participation. See ss.3.1(b).
Letters of Credit. Standby Letters of Credit issued or to be issued by
the Issuing Banks under ss.3 hereof for the account of the Borrowers.
Letters of Intent. Collectively, the Letters of Intent, each dated as
of July 29, 1999, among Marketing Resource Group, Inc., Waste Industries, Inc.
and the Target.
Loan and Letter of Credit Request. See ss.2.6.
Loan Documents. This Credit Agreement, the Notes, the Letter of Credit
Applications, the Letters of Credit and the Security Documents.
Loans. Collectively, the Revolving Credit Loans and the Swing Line
Loans.
<PAGE>
-12-
Majority Banks. As of any date, the Banks holding at least sixty-six
and two-thirds percent (66 2/3%) of the outstanding principal amount of the
Revolving Credit Loans on such date; and if no such principal is outstanding,
the Banks whose aggregate Commitments constitutes at least sixty-six and
two-thirds percent (66 2/3%) of the Total Commitment.
Material Acquisition. See ss.7.4.1(j).
Maturity Date. November __, 2004September __, 2004.
Maximum Drawing Amount. The maximum aggregate amount that the
beneficiaries may at any time draw under outstanding Letters of Credit, as such
aggregate amount may be reduced from time to time pursuant to the terms of the
Letters of Credit.
Maximum Rate. With respect to each Bank, the maximum lawful
nonusurious rate of interest (if any) which under Applicable Law such Bank may
charge the Borrowers on the Loans and other Obligations from time to time.
Membership Interest Pledge Agreement. The Membership Interest Pledge
Agreement, dated the Closing Date, among certain Borrowers and the Collateral
Agent (on behalf of the Banks and the Noteholders) and in form and substance
satisfactory to the Banks and the Administrative Agent.
Multiemployer Plan. Any multiemployer plan within the meaning of
ss.3(37) of ERISA maintained or contributed to by the Borrowers or any ERISA
Affiliate.
Notes. Collectively, the Revolving Credit Notes and the Swing Line
Note.
Noteholders. Collectively, The Prudential Insurance Company of
America, Pruco Life Insurance Company, Pruco Life Insurance Company of New
Jersey, and U.S. Private Placement Fund and any other holder of the Noteholders'
Debt executing an acknowledgement to the Intercreditor Agreement.
Noteholders' Debt. Indebtedness of the Parent to the Noteholders
evidenced by each of (a) the Note Purchase and Private Shelf Agreement, dated as
of April 3, 1996, pursuant to which $25,000,000 in 7.28% Series A Senior Notes
due April 3, 2006 were issued by the Parent, with an additional $25,000,000
Private Shelf Facility available, and (b) the Note Purchase and Private Shelf
Agreement, dated as of June 30, 1998, pursuant to which $25,000,000 in 6.96%
Series A Senior Notes due June 30, 2008 and $25,000,000 in 6.84% Series B Senior
Notes due February 2, 2009 were issued by the Parent.
Noteholders' Documents. Collectively, (a) the Purchase Agreements, (b)
the Guaranty Agreement, (c) any prior, concurrent or subsequent promissory notes
executed in connection therewith, and (d) any and all guaranties and security
interests, mortgages and other liens directly or indirectly guarantying or
securing any of the Noteholders' Debt (in each case subject to the Intercreditor
Agreement), and any and all
<PAGE>
-13-
other documents or instruments evidencing the Noteholders' Debt, as amended
through the date hereof and as further amended by the Conforming Amendment and
from time to time in accordance with the terms hereof.
Obligations. All indebtedness, obligations and liabilities of the
Borrowers to any of the Banks or the Administrative Agent, individually or
collectively, existing on the date of this Credit 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 any Swap
Contract between the Borrowers and any Bank, under this Credit Agreement or any
of the other Loan Documents or in respect of any of the Loans made or
Reimbursement Obligations incurred or any of the Notes, Letters of Credit or
other instruments at any time evidencing any thereof.
PBGC. The Pension Benefit Guaranty Corporation created by ss.4002 of
ERISA and any successor entity or entities having similar responsibilities.
Perfection Certificate. The Perfection Certificate as defined in the
Security Agreement.
Performance Letter of Credit. A Letter of Credit which is not a
Financial Letter of Credit.
Permitted Liens. Liens, security interests and other encumbrances
permitted by ss.7.2.
Person. Any individual, corporation, partnership, limited liability
company, trust, unincorporated association, business, or other legal entity, and
any government or any governmental agency or political subdivision thereof.
Pledge Agreements. Collectively, the Membership Interest Pledge
Agreement and the Stock Pledge Agreement.
Pricing Ratio. As of the end of any fiscal quarter of the Borrowers
commencing with the fiscal quarter ending December 31, 1999, the ratio of (a)
Funded Debt as at the end of such fiscal quarter to (b) EBITDA for the period of
four (4) consecutive fiscal quarters ending on such date.
<TABLE>
<CAPTION>
Pricing Table:
----------- ------------- ---------------- ---------------- --------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
APPLICABLE APPLICABLE APPLICABLE
EURODOLLAR BASE RATE L/C MARGIN APPLICABLE
MARGIN MARGIN (PER ANNUM) COMMITMENT RATE
PRICING (PER ANNUM) (PER ANNUM) (PER ANNUM)
LEVEL RATIO
----------- ------------- ---------------- ---------------- --------------- --------------------
</TABLE>
<PAGE>
-14-
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1 Less than 1.50% 0% 1.50% 0.375%
2.50 to 1
----------- ------------- ---------------- ---------------- --------------- --------------------
2 Greater 1.75% 0% 1.75% 0.375%
than or
equal to
2.50 and
less than
3.00 to 1
----------- ------------- ---------------- ---------------- --------------- --------------------
3 Greater 2.00% 0% 2.00% 0.50%
than or
equal to
3.00 and
less than
3.50 to 1
----------- ------------- ---------------- ---------------- --------------- --------------------
4 Greater 2.25% 0.25% 2.25% 0.50%
than or
equal to
3.50 and
less than
4.00 to 1
----------- ------------- ---------------- ---------------- --------------- --------------------
5 Greater 2.50% 0.50% 2.50% 0.50%
than or
equal to
4.00 and
less than
4.50 to 1
----------- ------------- ---------------- ---------------- --------------- --------------------
</TABLE>
Any change in the applicable margin shall become effective on the
first day after receipt by the Banks of the financial statements delivered
pursuant to ss.6.4(a) or (b) which indicate a change in the Pricing Ratio. If at
any time such financial statements are not delivered within the time periods
specified in ss.6.4(a) or (b), the applicable margin shall be the highest rate
set forth in the respective column of the Pricing Table, subject to adjustment
upon actual receipt of such financial statements. Notwithstanding the foregoing,
pricing shall not be lower than Level 4 for the first six (6) months following
the Closing Date.
Notwithstanding the foregoing, after the Equity Closing, in the event
the Borrowers agree that the Funded Debt to EBITDA ratio in ss.8.1 shall be
amended for all periods to 3.25:1.00, the Applicable Eurodollar Margin shall be
reduced by 0.25% as of the effective date of such amendment.
Purchase Agreements. The note purchase agreements referenced in the
definition of Noteholders' Debt above.
RCRA. See definition of Release.
<PAGE>
-15-
Real Property. All real property, now or hereafter owned or leased (as
lessee or sublessee) by any of the Borrowers.
Reimbursement Obligation. The Borrowers' obligation to reimburse the
Administrative Agent and the Banks on account of any drawing under any Letter of
Credit as provided in ss.3.2.
Release. Shall have the meaning specified in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
ss.ss.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. ss.ss.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.
Replacement Bank. See ss.4.11.
Replacement Notice. See ss.4.11.
Reserve Rate. The rate, expressed as a decimal, at which the Banks
would be required to maintain reserves under Regulation D of the Board of
Governors of the Federal Reserve System (or any subsequent or similar regulation
relating to such reserve requirements) against "Eurocurrency Liabilities" (as
such term is defined in Regulation D), or against any other category of
liabilities which might be incurred by the Banks to fund Loans bearing interest
based on the Eurodollar Rate, if such liabilities were outstanding.
Revolving Credit Loans. Revolving credit loans made or to be made by
the Banks to the Borrowers pursuant to ss.2.
Revolving Credit Note Record. The grid attached to a Revolving Credit
Note, or the continuation of such grid, or any other similar record, including
computer records, maintained by any Bank with respect to any Revolving Credit
Loan referred to in such Revolving Credit Note.
Revolving Credit Notes. See ss.2.3.
Section 20 Subsidiary. A Subsidiary of the bank holding company
controlling any Bank, which Subsidiary has been granted authority by the Federal
Reserve Board to underwrite and deal in certain Ineligible Securities.
Security Agreement. The Security Agreement, dated the Closing Date,
among the Borrowers and the Collateral Agent (on behalf of the Banks and the
Noteholders) and in form and substance satisfactory to the Banks and the
Administrative Agent.
<PAGE>
-16-
Security Documents. The Security Agreement, the Pledge Agreements and
all other instruments and documents, including without limitation Uniform
Commercial Code financing statements, required to be executed or delivered
pursuant to any Security Document.
Senior Funded Debt. At any time of determination, the result of Funded
Debt minus the aggregate principal amount of Subordinated Debt outstanding as of
such date.
Settlement. The making or receiving of payments, in immediately
available funds, by the Banks to or from the Administrative Agent in accordance
with ss.2.8 hereof to the extent necessary to cause each such Bank's actual
share of the outstanding amount of the Swing Line Loans to be equal to such
Bank's Commitment Percentage of the outstanding amount of such Swing Line Loans,
in any case when, prior to such action, the actual share is not so equal.
Settlement Amount. See ss.2.8(b).
Settlement Date. See ss.2.8(b).
Settling Bank. See ss.2.8(b)
Stock Pledge Agreement. The Stock Pledge Agreement, dated the Closing
Date, among the Borrowers and the Collateral Agent (on behalf of the Banks and
the Noteholders) and in form and substance satisfactory to the Banks and the
Administrative Agent.
Subordinated Debt. Unsecured Indebtedness of the Borrowers that is
expressly subordinated and made junior to the payment and performance in full of
the Obligations, and evidenced as such by a subordination agreement or by
another written instrument containing subordination provisions in form and
substance approved by the Administrative Agent in writing.
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 (by number
of votes) of the outstanding Voting Stock.
Swap Contracts. Any agreement (including any master agreement and any
agreement, whether or not in writing, relating to any single transaction) that
is an interest rate swap agreement, basis swap, forward rate agreement,
commodity swap, commodity option, equity or equity index swap or option, bond
option, interest rate option, forward foreign exchange agreement, rate cap,
collar or floor agreement, currency swap agreement, cross-currency rate swap
agreement, swaption, currency option or other similar agreement (including any
option to enter into any of the foregoing).
Swing Line Bank. BBT.
<PAGE>
-17-
Swing Line Loan(s). See ss.2.8(a).
Swing Line Note. See ss.2.8(a).
Synthetic Lease. Any lease treated as an operating lease under
generally accepted accounting principles and as a loan or financing for U.S.
income tax purposes.
Target Acquisition. The acquisition by the Parent of certain assets of
the target company pursuant to the Target Documents.
Target Documents. The purchase agreement to be entered among the
Parent and certain sellers thereto, including all exhibits and schedules
thereto, and all other agreements and documents required to be entered into or
delivered pursuant thereto or in connection with the Target Acquisition, each in
form and substance satisfactory to the Administrative Agent.
Total Commitment. See ss.2.1.
Uniform Customs. With respect to any Letter of Credit, the Uniform
Customs and Practices for Documentary Credits (1993 Revisions), International
Chamber of Commerce Publication No. 500 or any successor version thereto adopted
by the Issuing Banks in the ordinary course of their business as a letter of
credit issuer and in effect at the time of issuance of such Letter of Credit.
Year 2000 Compliance. The risk that computer applications used by the
Borrowers may be unable to recognize and properly perform date-sensitive
functions involving certain dates prior to, and any date after, December 31,
1999.
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 Credit
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 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.
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(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, with the term "instrument" being
that defined under Article 9 of the Uniform Commercial Code.
(h) Reference to a particular "ss." refers to that section of
this Credit Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of
like import shall refer to this Credit Agreement as a whole and not to
any particular section or subdivision of this Credit Agreement.
(j) Unless otherwise expressly indicated, in the computation
of periods of time from a specified date to a later specified date, the
word "from" means "from and including," the words "to" and "until" each
mean "to but excluding," and the word "through" means "to and
including."
(k) This Credit Agreement and the other Loan Documents may use
several different limitations, tests or measurements to regulate the
same or similar matters. All such limitations, tests and measurements
are, however, cumulative and are to be performed in accordance with the
terms thereof.
(l) This Credit Agreement and the other Loan Documents are the
result of negotiation among, and have been reviewed by counsel to,
among others, the Administrative Agent and the Borrowers and are the
product of discussions and negotiations among all parties. Accordingly,
this Credit Agreement and the other Loan Documents are not intended to
be construed against the Administrative Agent or any of the Banks
merely on account of the Administrative Agent's or any Bank's
involvement in the preparation of such documents.
2. THE REVOLVING CREDIT FACILITY.
2.1. COMMITMENT TO LEND. Subject to the terms and conditions set forth
in this Credit Agreement, each of the Banks severally agrees to lend to the
Borrowers and the Borrowers may borrow, repay, and reborrow from time to time
from the Closing Date up to but not including the Maturity Date upon notice by
the Borrowers to the Administrative Agent given in accordance with ss.2.6, such
sums as are requested by the Borrowers up to a maximum aggregate amount
outstanding (after giving effect to all amounts requested) at any one time equal
to such Bank's Commitment MINUS such Bank's Commitment Percentage of the sum of
the Maximum Drawing Amount and all unpaid Reimbursement Obligations, PROVIDED
that the sum of the outstanding amount of the Revolving Credit Loans, Swing Line
Loans, unpaid Reimbursement Obligations and the Maximum Drawing Amount (after
giving effect to all amounts requested) shall not exceed a maximum aggregate
amount outstanding of $200,000,000 at any time, as such amount may be reduced
pursuant to ss.2.2 hereof (the "Total Commitment"). The
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Revolving Credit Loans shall be made PRO RATA in accordance with each Bank's
Commitment Percentage. Each request for a Loan hereunder shall constitute a
representation and warranty by the Borrowers that the conditions set forth in
ss.9 and ss.10, as the case may be, have been satisfied on the date of such
request.
2.2. REDUCTION OF TOTAL COMMITMENT.
(a) The Borrowers shall have the right at any time and from
time to time upon five (5) Business Days prior written notice to the
Administrative Agent to reduce by $1,000,000 or integral multiples of
$500,000 in excess thereof or terminate entirely the Total Commitment,
whereupon the Commitments of the Banks shall be reduced PRO RATA in
accordance with their respective Commitment Percentages of the amount
specified in such notice or, as the case may be, terminated. The
Administrative Agent will notify the Banks promptly after receiving any
notice of the Borrowers delivered pursuant to this ss.2.2.
(b) No reduction or termination of the Commitments once made
may be revoked; the portion of the Commitments reduced or terminated
may not be reinstated and amounts in respect of such reduced or
terminated portion may not be reborrowed.
2.3. THE REVOLVING CREDIT NOTES. The Revolving Credit Loans shall be
evidenced by separate promissory notes of the Borrowers in substantially the
form of EXHIBIT A hereto (each a "Revolving Credit Note"), dated as of the
Closing Date or date of assignment and completed with appropriate insertions.
One Revolving Credit Note shall be payable to the order of each Bank in a
principal amount equal to such Bank's Commitment or, if less, the outstanding
amount of all Revolving Credit Loans made by such Bank, plus interest accrued
thereon, as set forth below. The Borrowers irrevocably authorize each Bank in
connection with the Drawdown Date of any Revolving Credit Loan or at the time of
receipt of any payment of principal on such Bank's Revolving Credit Note, an
appropriate notation on such Bank's Revolving Credit Note Record reflecting the
making of such Revolving Credit Loan or (as the case may be) the receipt of such
payment. The outstanding amount of the Revolving Credit Loans set forth on such
Bank's Revolving Credit Note Record shall be PRIMA FACIE evidence of the
principal amount thereof owing and unpaid to such Bank, but the failure to
record, or any error in so recording, any such amount on such Bank's Revolving
Credit Note Record shall not limit or otherwise affect the obligations of the
Borrowers hereunder or under any Revolving Credit Note to make payments of
principal of or interest on any Revolving Credit Note when due.
2.4. INTEREST ON REVOLVING CREDIT LOANS. The outstanding principal
amount of the Revolving Credit Loans and Swing Line Loans shall bear interest at
the rate per annum equal to (a) the Base Rate PLUS the Applicable Base Rate
Margin, or (b) at the Borrowers' option as provided herein, the Revolving Credit
Loans may bear interest at the Eurodollar Rate PLUS the Applicable Eurodollar
Margin. Interest shall be payable (x) quarterly in arrears on the first Business
Day of each calendar quarter, with the first such payment commencing January 1,
2000, on Base Rate Loans, (y) on the last day of
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the applicable Interest Period, and if such Interest Period is longer than three
(3) months, also on the last day of the third month following the commencement
of such Interest Period, on Eurodollar Loans, and (z) on the Maturity Date.
2.5. ELECTION OF EURODOLLAR RATE; NOTICE OF ELECTION; INTEREST PERIODS;
MINIMUM AMOUNTS.
(a) At the Borrowers' option, so long as no Default or Event
of Default has occurred and is then continuing, the Borrowers may (i)
elect to convert any Base Rate Loan or a portion thereof or any Swing
Line Loan to a Eurodollar Loan, (ii) at the time of any Loan and Letter
of Credit Request, specify that such requested Revolving Credit Loan
shall be a Eurodollar Loan, or (iii) upon expiration of the applicable
Interest Period, elect to maintain an existing Eurodollar Loan as such,
PROVIDED that the Borrowers give notice to the Administrative Agent
pursuant to ss.2.5(b) hereof. Upon determining any Eurodollar Rate, the
Administrative Agent shall forthwith provide notice thereof to the
Borrowers and the Banks, and each such notice to the Borrowers and the
Banks shall be considered PRIMA FACIE correct and binding, absent
manifest error.
(b) Three (3) Eurodollar Business Days prior to the making of
any Eurodollar Loan or the conversion of any Base Rate Loan to a
Eurodollar Loan, or, in the case of an outstanding Eurodollar Loan, the
expiration date of the applicable Interest Period, the Borrowers shall
give telephonic notice (confirmed by telecopy on the same Eurodollar
Business Day) to the Administrative Agent not later than 11:00 a.m.
(Boston time) of its election pursuant to ss.2.5(a). Each such notice
delivered to the Administrative Agent shall specify the aggregate
principal amount of the Revolving Credit Loans to be borrowed or
maintained as or converted to Eurodollar Loans or the aggregate
principal amount of the Swing Line Loans to be converted to Revolving
Credit Loans which are Eurodollar Loans and the requested duration of
the Interest Period that will be applicable to such Eurodollar Loan,
and shall be irrevocable and binding upon the Borrowers. If the
Borrowers shall fail to give the Administrative Agent notice of their
election hereunder together with all of the other information required
by this ss.2.5(b) with respect to any Revolving Credit Loan, such
Revolving Credit Loan shall be deemed a Base Rate Loan. In the event
that the Borrowers fail to provide any such notice with respect to the
continuation of any Eurodollar Loan as such, then such Eurodollar Loan
shall be automatically converted to a Base Rate Loan at the end of the
then expiring Interest Period relating thereto.
(c) Notwithstanding anything herein to the contrary, the
Borrowers may not specify an Interest Period that would extend beyond
the Maturity Date.
(d) All Eurodollar Loans shall be in a minimum amount of not
less than $1,000,000 and in integral multiples of $500,000 above such
amount. In no event shall the Borrowers have more than eight (8)
different maturities of Eurodollar Loans outstanding at any time.
<PAGE>
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(e) All Base Rate Loans (other than Swing Line Loans) shall be
in a minimum amount of not less than $1,000,000 and in integral
multiples of $500,000 above such amount.
2.6. REQUESTS FOR REVOLVING CREDIT LOANS. The Borrowers shall
give to the Administrative Agent written notice in the form of EXHIBIT B hereto
(or telephonic notice confirmed by telecopy on the same Business Day in the form
of EXHIBIT B hereto) of each Revolving Credit Loan requested hereunder (a "Loan
and Letter of Credit Request") not later than (a) 11:00 a.m. (Boston time) one
(1) Business Day prior to the proposed Drawdown Date of any Loan which is a Base
Rate Loan, or (b) 1:00 p.m. (Boston time) three (3) Eurodollar Business Days
prior to the proposed Drawdown Date of any Eurodollar Loan. Each such notice
shall be given by the Borrowers and shall specify the principal amount of the
Revolving Credit Loan requested, whether such Loan is a Base Rate Loan or a
Eurodollar Loan, the Drawdown Date of such Loan and shall include a current Loan
and Letter of Credit Request reflecting the Maximum Drawing Amount and the
outstanding Loans. Each Loan and Letter of Credit Request shall be irrevocable
and binding on the Borrowers and shall obligate the Borrowers to accept the Loan
requested from the Banks on the proposed Drawdown Date. Each of the
representations and warranties made by or on behalf of the Borrowers to the
Banks or the Administrative Agent in this Credit Agreement or any other Loan
Document shall be true and correct in all material respects when made and shall,
for all purposes of this Credit Agreement, be deemed to be repeated on and as of
the date of the submission of any 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 of changes resulting from transactions contemplated
or permitted by this Credit Agreement and the other Loan Documents and changes
occurring in the ordinary course of business that singly or in the aggregate are
not materially adverse, or to the extent that such representations and
warranties expressly relate solely to an earlier date). The Administrative Agent
shall notify each Bank of each Loan and Letter of Credit received by the
Administrative Agent hereunder within one (1) Business Day of receipt and no
later than 11:00 a.m. (Boston time) on the Drawdown Date of any Base Rate Loan,
and provide, upon request by any Bank, a monthly summary with respect to Letters
of Credit issued hereunder.
2.7. FUNDS FOR REVOLVING CREDIT LOANS
(a) Not later than 1:00 p.m. (Boston time) on the proposed
Drawdown Date of any Revolving Credit Loan, each of the Banks will make
available to the Administrative Agent, at the Administrative Agent's
Head Office, in immediately available funds, the amount of such Bank's
Commitment Percentage of the amount of the requested Revolving Credit
Loan. Upon receipt from each Bank of such amount, and upon receipt of
the documents required by ss.ss.9 and 10 and the satisfaction of the
other conditions set forth therein, to the extent applicable, the
Administrative Agent will make available to the Borrowers in immediately
available funds the aggregate amount of such Revolving Credit Loan made
available to the Administrative Agent by the Banks. The failure or
refusal of any
<PAGE>
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Bank to make available to the Administrative Agent at the aforesaid time
and place on any Drawdown Date the amount of its Commitment Percentage
of the requested Revolving Credit Loan shall not relieve any other Bank
from its several obligation hereunder to make available to the
Administrative Agent the amount of such other Bank's Commitment
Percentage of any requested Revolving Credit Loan.
(b) The Administrative Agent may, unless notified to the
contrary by any Bank prior to a Drawdown Date, assume that such Bank has
made available to the Administrative Agent on such Drawdown Date of
which such Bank has received the notice required hereunder, the amount
of such Bank's Commitment Percentage of the Revolving Credit Loans to be
made on such Drawdown Date, and the Administrative Agent may (but shall
not be required to), in reliance upon such assumption, make available to
the Borrowers a corresponding amount. If any Bank makes available to the
Administrative Agent such amount on a date after such Drawdown Date,
such Bank shall pay to the Administrative Agent on demand an amount
equal to the product of (i) the average computed for the period referred
to in clause (iii) below, of the weighted average interest rate paid by
the Administrative Agent for federal funds acquired by the
Administrative Agent during each day included in such period, TIMES (ii)
the amount of such Bank's Commitment Percentage of such Revolving Credit
Loans, TIMES (iii) a fraction, the numerator of which is the number of
days that elapse from and including such Drawdown Date to the date on
which the amount of such Bank's Commitment Percentage of such Revolving
Credit Loans shall become immediately available to the Administrative
Agent, and the denominator of which is 365. A statement of the
Administrative Agent submitted to such Bank with respect to any amounts
owing under this paragraph shall be PRIMA FACIE evidence, absent
manifest error, of the amount due and owing to the Administrative Agent
by such Bank. If the amount of such Bank's Commitment Percentage of such
Revolving Credit Loans is not made available to the Administrative Agent
by such Bank within three (3) Business Days following such Drawdown
Date, the Administrative Agent shall be entitled to recover such amount
from the Borrowers on demand, with interest thereon at the rate per
annum applicable to the Revolving Credit Loans made on such Drawdown
Date.
2.8. SWING LINE LOANS; SETTLEMENTS.
(a) Solely for ease of administration of the Revolving Credit
Loans, the Swing Line Bank may, upon receipt of a Loan and Letter of
Credit Request no later than 1:00 p.m. (Boston time) on the proposed
date of funding, but shall not be required to, fund Base Rate Loans
made in accordance with the provisions of this Credit Agreement ("Swing
Line Loans"), bearing interest as set forth in ss.2.4.. The Swing Line
Bank may, in its sole discretion and without conferring with the Banks,
make Swing Line Loans to the appropriate Borrowers by entry of credits
to such Borrowers' operating account(s) with the Swing Line Bank to
cover checks which the applicable Borrowers have drawn or made against
such
<PAGE>
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account and shall notify the Administrative Agent of any overdrafts
being advanced as Swing Line Loans. The Borrowers hereby request and
authorize the Swing Line Bank to make from time to time such Swing Line
Loans by means of appropriate entries of such credits sufficient to
cover checks then presented. The Borrowers acknowledge and agree that
the making of such Swing Line Loans shall be subject in all respects to
the provisions of this Credit Agreement as if they were Swing Line Loans
covered by a Loan and Letter of Credit Request, including, without
limitation, the limitations set forth in ss.2.1 and the requirements
that the applicable provisions of ss.9 (in the case of Swing Line Loans
made on the Closing Date) and ss.10 be satisfied. All actions taken by
the Swing Line Bank pursuant to the provisions of this ss.2.8(a) shall
be conclusive and binding on the Borrowers absent manifest error or such
Swing Line Bank's gross negligence or willful misconduct. The Swing Line
Loans shall be evidenced by a note in substantially the form of EXHIBIT
C hereto (the "Swing Line Note"), PROVIDED THAT the outstanding amount
of Swing Line Loans advanced by the Swing Line Bank hereunder shall not
exceed $10,000,000 at any time. Each Bank shall remain severally and
unconditionally liable to fund its pro rata share (based upon each
Bank's Commitment Percentage) of such Swing Line Loans on each
Settlement Date and, in the event the Swing Line Bank chooses not to
fund all Base Rate Loans requested on any date, to fund its Commitment
Percentage of the Base Rate Loans requested, subject to satisfaction of
the provisions hereof relating to the making of Base Rate Loans. Prior
to each Settlement, all payments or repayments of the principal of, and
interest on, Swing Line Loans shall be credited to the account of the
Swing Line Bank. The Borrowers shall have the right, at their election,
to prepay the outstanding amount of the Swing Line Loans, as a whole or
in part, at any time without penalty or premium.
(b) The Banks shall effect Settlements on (i) the Business Day
immediately following any day which the Swing Line Bank gives written
notice to the Administrative Agent to effect a Settlement, (ii) the
Business Day immediately following the Swing Line Bank's or the
Administrative Agent's becoming aware of the existence of any Default
or Event of Default, (iii) the Maturity Date, (iii) any date on which
the Borrowers wish to convert a Swing Line Loan into a Revolving Credit
Loan, and (iv) in any event, on the first Business Day of each calendar
quarter for the immediately preceding calendar quarter (each such date,
a "Settlement Date"). One (1) Business Day prior to each such
Settlement Date, the Administrative Agent shall give notice by
facsimile or telecopier to the Banks of (A) the respective outstanding
amount of Revolving Credit Loans made by each Bank as at the close of
business on the prior day, and (B) the amount that any Bank, as
applicable (a "Settling Bank"), shall pay to effect a Settlement (a
"Settlement Amount"). A statement of the Administrative Agent submitted
to the Banks with respect to any amounts owing hereunder shall be PRIMA
FACIE evidence of the amount due and owing. Each Settling Bank shall,
not later than 1:00 p.m. (Boston time) on each Settlement Date, effect
a wire transfer of immediately available funds to the Administrative
Agent, for the benefit of the
<PAGE>
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Swing Line Bank, at the Administrative Agent's Head Office in the amount
of such Bank's Settlement Amount. All funds advanced by any Bank as a
Settling Bank pursuant to this ss.2.8 shall for all purposes be treated
as a Base Rate Loan to the Borrowers.
(c) Subject to the Settling Bank's receipt of the notice
required pursuant to ss.2.8(b), the Administrative Agent may (unless
notified to the contrary by any Settling Bank by 12:00 noon (Boston
time) one (1) Business Day prior to the Settlement Date) assume that
each Settling Bank has made available (or will make available by the
time specified in ss.2.8(b)) to the Administrative Agent its Settlement
Amount, and the Administrative Agent may (but shall not be required
to), in reliance upon such assumption, effect Settlements. If the
Settlement Amount of such Settling Bank is made available to the
Administrative Agent on a date after such Settlement Date, such
Settling Bank shall pay the Administrative Agent, for the benefit of
the Swing Line Bank, on demand an amount equal to the product of (i)
the average, computed for the period referred to in clause (iii) below,
of the weighted average annual interest rate paid by the Administrative
Agent for federal funds acquired by the Administrative Agent during
each day included in such period TIMES (ii) such Settlement Amount
TIMES (iii) a fraction, the numerator of which is the number of days
that elapse from and including such Settlement Date to but not
including the date on which such Settlement Amount shall become
immediately available to the Administrative Agent, and the denominator
of which is 365. Upon payment of such amount such Settling Bank shall
be deemed to have delivered its Settlement Amount on the Settlement
Date and shall become entitled to interest payable by the Borrowers
with respect to such Settling Bank's Settlement Amount as if such share
were delivered on the Settlement Date. If such Settlement Amount is not
in fact made available to the Administrative Agent by such Settling
Bank within three (3) Business Days of such Settlement Date, the
Administrative Agent shall be entitled to recover such amount from the
Borrowers, with interest thereon at the Base Rate.
(d) After any Settlement Date, any payment by the Borrowers of
Swing Line Loans hereunder shall be allocated PRO RATA among the Banks,
in accordance with such Bank's Commitment Percentage.
(e) If, prior to the making of a Revolving Credit Loan
pursuant to paragraph (b) of this ss.2.8, a Default or Event of Default
has occurred and is continuing, each Bank will, on the date such
Revolving Credit Loan was to have been made, purchase an undivided
participating interest in the outstanding Swing Line Loans in an amount
equal to its Commitment Percentage of such Swing Line Loans. Each Bank
will immediately transfer to the Administrative Agent, for the benefit
of the Swing Line Bank, in immediately available funds, the amount of
its participation and upon receipt thereof the Administrative Agent
will deliver to such Bank a Swing Line participation certificate dated
the date of receipt of such funds and in such amount.
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(f) Whenever, at any time after the Administrative Agent has
received from any Bank such Bank's participating interest in the Swing
Line Loans pursuant to clause (e) above, the Administrative Agent
receives any payment on account thereof, the Administrative Agent will
distribute to such Bank its participating interest in such amount
(appropriately adjusted, in the case of interest payments, to reflect
the period of time during which such Bank's participating interest was
outstanding and funded) in like funds as received; PROVIDED, HOWEVER,
that in the event that such payment received by the Administrative
Agent is required to be returned, such Bank will return to the
Administrative Agent any portion thereof previously distributed by the
Administrative Agent to it in like funds as such payment is required to
be returned by the Administrative Agent.
(g) Each Bank's obligation to purchase participating interests
pursuant to clause (e) above shall be absolute and unconditional and
shall not be affected by any circumstance, including, without
limitation, (i) any set-off, counterclaim, recoupment, defense or other
right which such Bank may have against the Administrative Agent, the
Borrowers or any other Person for any reason whatsoever; (ii) the
occurrence or continuance of a Default or Event of Default; (iii) any
adverse change in the condition (financial or otherwise) of the
Borrowers or any other Person; (iv) any breach of this Credit Agreement
by the Borrowers or any other Bank or the Administrative Agent; or (v)
any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing.
2.9. MATURITY OF THE REVOLVING CREDIT LOANS. The Revolving Credit Loans
and Swing Line Loans shall be due and payable on the Maturity Date. The
Borrowers jointly and severally promise to pay on the Maturity Date all
Revolving Credit Loans and Swing Line Loans outstanding on such date, together
with any and all accrued and unpaid interest thereon.
2.10. MANDATORY REPAYMENTS OF THE REVOLVING CREDIT LOANS AND SWING LINE
LOANS AND REIMBURSEMENT OBLIGATIONS. If at any time the sum of the outstanding
amount of the Revolving Credit Loans plus the Swing Line Loans PLUS the Maximum
Drawing Amount PLUS unpaid Reimbursement Obligations exceeds the Total
Commitment, whether by reduction of the Total Commitment or otherwise, then the
Borrowers shall immediately pay the amount of such excess to the Administrative
Agent for application first, to any Swing Line Loans, second, to unpaid
Reimbursement Obligations, third, to the Revolving Credit Loans, or if no
Revolving Credit Loans shall be outstanding, to be held by the Administrative
Agent as collateral security for the Reimbursement Obligations, PROVIDED,
HOWEVER, that if the amount of cash collateral held by the Administrative Agent
pursuant to this ss.2.10 exceeds the amount of the Reimbursement Obligations,
the Administrative Agent shall return such excess to the Borrowers.
2.11. OPTIONAL PREPAYMENTS OF REVOLVING CREDIT LOANS. The Borrowers
shall have the right, at their election, to prepay the outstanding amount of the
Revolving
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Credit Loans, as a whole or in part, at any time without penalty or premium
(other than the obligation to reimburse the Banks and the Administrative Agent
pursuant to ss.4.8 hereof). The Borrowers shall give written notice to the
Administrative Agent (or telephonic notice confirmed in writing) no later than
(a) 1:00 p.m. (Boston time) on the Business Day of the proposed prepayment of
any Base Rate Loan, (b) 1:00 p.m. (Boston time) three (3) Eurodollar Business
Days prior to the proposed prepayment of any Eurodollar Loan, in each case
specifying the proposed date of prepayment of the Revolving Credit Loans and the
principal amount to be paid. Each such partial repayment of the Revolving Credit
Loans shall be in the amount of $1,000,000 or an integral multiple of $500,000
in excess thereof, and shall be accompanied by the payment of accrued interest
on the principal prepaid to the date of prepayment and shall be applied, in the
absence of instruction by the Borrowers, first to the principal of Base Rate
Loans and then to the principal of Eurodollar Loans. Each partial prepayment of
Revolving Credit Loans shall be allocated among the Banks, in proportion, as
nearly as practicable, to the respective unpaid principal amount of each Bank's
Revolving Credit Loans, with adjustments to the extent practicable to equalize
any prior repayments not exactly in proportion.
3. LETTERS OF CREDIT.
3.1. LETTER OF CREDIT COMMITMENTS.
(a) 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, each
Issuing Bank on behalf of the Banks and in reliance upon the agreement
of the Banks set forth in ss.3.1(b) and 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 Borrowers and agreed to by such Issuing Bank; PROVIDED, HOWEVER,
that, after giving effect to such request, the Maximum Drawing Amount
of all Letters of Credit issued under this Credit Agreement shall not
exceed the lesser of (i) $15,000,000 or (ii) the Total Commitment MINUS
the aggregate outstanding amount of the Revolving Credit Loans and
Swing Line Loans. No Letter of Credit shall have an expiration date
later than fourteen (14) days prior to the Maturity Date and no Letter
of Credit shall have an expiration date later than one (1) year after
the date of issuance of such Letter of Credit (which may incorporate
automatic renewals for periods of up to one (1) year, PROVIDED THAT the
Issuing Bank may, upon thirty (30) days' notice to the beneficiary,
cancel such Letter of Credit which has been renewed beyond its initial
one (1) year term). Each Letter of Credit so issued, extended or
renewed shall (i) provide for the payment of sight drafts for honor
thereunder when presented in accordance with the terms thereof and when
accompanied by the documents described therein and (ii) be subject to
the Uniform Customs or, in the case of a Financial Letter of Credit,
either the Uniform Customs or the International Standby Practices.
Notwithstanding the foregoing, the Issuing Banks shall have no
obligation to
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issue any Letter of Credit to support or secure any Indebtedness of any
Borrower to the extent that such Indebtedness was incurred prior to the
proposed issuance date of such Letter of Credit, unless in any such
case such Borrower demonstrates to the satisfaction of such Issuing
Bank that (x) such prior incurred Indebtedness was then fully secured
by a prior perfected and unavoidable security interest in collateral
provided by such Borrower to the proposed beneficiary of such Letter of
Credit or (y) such prior incurred Indebtedness was then secured or
supported by a letter of credit issued for the account of such Borrower
and the reimbursement obligation with respect to such letter of credit
was fully secured by a prior perfected and unavoidable security
interest in collateral provided to the issuer of such letter of credit
by such Borrower.
(b) Each Bank severally agrees that it shall be absolutely
liable, without regard to the occurrence of any Default or Event of
Default or any other condition precedent whatsoever, to the extent of
such Bank's Commitment Percentage thereof, to reimburse the applicable
Issuing Bank on demand for the amount of each draft paid by such
Issuing Bank under each Letter of Credit to the extent that such amount
is not reimbursed by the Borrowers pursuant to ss.3.2 (such agreement
for a Bank being called herein the "Letter of Credit Participation" of
such Bank).
(c) Each such payment made by a Bank shall be treated as the
purchase by such Bank of a participating interest in the Borrowers'
Reimbursement Obligation under ss.3.2 in an amount equal to such
payment. Each Bank shall share in accordance with its participating
interest in any interest which accrues pursuant to ss.3.2.
(d) All outstanding letters of credit issued by the Issuing
Bank listed on Schedule 3.2 hereto shall constitute Letters of Credit
hereunder, PROVIDED that no Fronting Fee shall be owed with respect to
such Letters of Credit.
3.2. REIMBURSEMENT OBLIGATION OF THE BORROWERS. In order to induce the
Issuing Banks to issue, extend and renew the Letters of Credit and the Banks to
participate therein, the Borrowers hereby agree to reimburse or pay to the
applicable Issuing Bank, for the account of such Issuing Bank or (as the case
may be) the Banks, with respect to each Letter of Credit issued, extended or
renewed by such Issuing Bank hereunder,
(a) on each date that any draft presented under such Letter of
Credit is honored by such Issuing Bank, or such Issuing Bank otherwise
makes a payment with respect thereto, (i) the amount paid by such
Issuing Bank 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 such Issuing Bank or any Bank in connection with
any payment made by such Issuing Bank or any Bank under, or with
respect to, such Letter of Credit, PROVIDED, HOWEVER, that if the
Borrowers do not reimburse such Issuing Bank on the date such Issuing
Bank makes payment with respect to such Letter of Credit, such amount
shall,
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provided that an Event of Default specified in ss.ss.12.1(g) or 12.1(h)
has not occurred, become automatically a Loan which is a Base Rate
Loan; and
(b) upon the Maturity Date or the acceleration of the
Reimbursement Obligations with respect to all Letters of Credit in
accordance with ss.12, an amount equal to the then Maximum Drawing
Amount of all Letters of Credit and any unpaid Reimbursement
Obligations, which amount shall be held by the Administrative Agent for
the benefit of the Banks and the Administrative Agent as cash
collateral for all Reimbursement Obligations.
Each such payment shall be made to the Administrative Agent, for the
benefit of the Issuing Bank, at the Administrative Agent's Head Office in
immediately available funds. Interest on any and all amounts remaining unpaid by
the Borrowers under this ss.3.2 at any time from the date such amounts become
due and payable (whether as stated in this ss.3.2, by acceleration or otherwise)
until payment in full (whether before or after judgment) shall be payable to the
Issuing Bank on demand at the rate specified in ss.4.6 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
applicable Issuing Bank 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. On the date that such draft
is paid or other payment is made by such Issuing Bank, such Issuing Bank shall
promptly notify the Banks of the amount of any unpaid Reimbursement Obligation.
No later than 3:00 p.m. (Boston time) on the Business Day next following the
receipt of such notice, each Bank shall make available to the Administrative
Agent, for the benefit of such Issuing Bank, at the Administrative Agent's Head
Office, in immediately available funds, such Bank's Commitment Percentage of
such unpaid Reimbursement Obligation, together with an amount equal to the
product of (i) the average, computed for the period referred to in clause (iii)
below, of the weighted average interest rate paid by such Issuing Bank for
federal funds acquired by such Issuing Bank during each day included in such
period, TIMES (ii) the amount equal to such Bank's Commitment Percentage of such
unpaid Reimbursement Obligation, TIMES (iii) a fraction, the numerator of which
is the number of days that elapse from and including the date such Issuing Bank
paid the draft presented for honor or otherwise made payment to the date on
which such Bank's Commitment Percentage of such unpaid Reimbursement Obligation
shall become immediately available to such Issuing Bank, and the denominator of
which is 360. The responsibility of each Issuing Bank to the Borrowers and the
Banks 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 in all material respects with such Letter of Credit.
3.4. OBLIGATIONS ABSOLUTE. The Borrowers' obligations under this ss.3.4
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 either Issuing Bank, the
Administrative Agent, any Bank or any beneficiary
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of a Letter of Credit. Subject to the obligations of the Banks pursuant to
Article V of the Uniform Commercial Code, the Borrowers further agree with the
Issuing Banks, the Administrative Agent and the Banks that the Issuing Banks,
the Administrative Agent and the Banks shall not be responsible for, and the
Borrowers' Reimbursement Obligations under ss.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 Issuing Banks, the
Administrative Agent and the Banks shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit. The
Borrowers agree that any action taken or omitted by any Issuing Bank, the
Administrative Agent or any Bank under or in connection with any 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
any such Issuing Bank, the Administrative Agent or any Bank to the Borrowers.
3.5. RELIANCE BY ISSUER. To the extent not inconsistent with ss.3.4,
each Issuing Bank 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 such Issuing Bank. Each Issuing Bank shall be fully
justified in failing or refusing to take any action under this Credit Agreement
unless it shall first have received such advice or concurrence of the Majority
Banks as it reasonably deems appropriate or it shall first be indemnified to its
reasonable satisfaction by the Banks against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action. Each Issuing Bank shall in all cases be fully protected in acting, or in
refraining from acting, under this Credit Agreement in accordance with a request
of the Majority Banks, and such request and any action taken or failure to act
pursuant thereto shall be binding upon the Banks and all future holders of the
Revolving Credit Notes or of a Letter of Credit Participation.
4. CERTAIN GENERAL PROVISIONS.
4.1. FEES.
(a) Administrative Agent's Fee. The Borrowers jointly and
severally agree to pay to the Administrative Agent annually in advance,
for the Administrative Agent's own account, a fee (the "Administrative
Agent's Fee") on the dates and in the amounts mutually determined by
the Administrative Agent and the Borrowers.
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(b) Commitment Fee. The Borrowers agree to pay to the
Administrative Agent, for the accounts of the Banks, a fee (the
"Commitment Fee") equal to the Applicable Commitment Rate multiplied by
the amount of the average daily 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). The Commitment Fee shall be payable
quarterly in arrears on the first Business Day of each calendar quarter
for the immediately preceding calendar quarter with the first such
payment commencing on January 1, 2000, and with a final payment on the
Maturity Date.
(c) Letter of Credit Fees. The Borrowers shall pay in advance
on the date of issuance of each Letter of Credit a fronting fee to the
applicable Issuing Bank equal to one eighth of one percent (1/8%) per
annum (the "Fronting Fee") on the Maximum Drawing Amount of each Letter
of Credit, plus a fee (the "Letter of Credit Fee") equal to (a) the
Applicable Eurodollar Margin multiplied by the Maximum Drawing Amount
of each outstanding Financial Letter of Credit, or (b) the Applicable
Eurodollar Margin times 0.50%, multiplied by the Maximum Drawing Amount
of all Performance Letters of Credit. Such Letter of Credit Fee (but
not the Fronting Fee) shall be paid quarterly in arrears on the first
Business Day of each fiscal quarter for the immediately preceding
calendar quarter with the first such payment commencing on January 1,
2000, and shall be for the accounts of the Banks in accordance with
their respective Commitment Percentages. In addition to the Fronting
Fee and the Letter of Credit Fee, the Borrowers shall pay to the
Issuing Banks, for their own accounts, all related customary
administrative fees in accordance with customary practice.
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 (other than with respect to payments to be
made to the Swing Line Bank in accordance with ss.2.8) shall be made on
the due date thereof to the Administrative Agent, for the respective
accounts of the Banks and the Administrative Agent, at the
Administrative Agent's Head Office or at such other place that the
Administrative Agent may from time to time designate, in each case at
or about 11:00 a.m. (Boston, Massachusetts, time or other local time at
the place of payment) and in immediately available funds.
(b) All payments by the Borrowers hereunder and under any of
the other Loan Documents shall be made without recoupment, 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
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payable by them hereunder or under any of the other Loan
Documents, the Borrowers will pay to the Administrative Agent, for the
account of the Banks or (as the case may be) the Administrative Agent,
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 Banks or the Administrative Agent to receive
the same net amount which the Banks or the Administrative Agent would
have received on such due date had no such obligation been imposed upon
the Borrowers. The Borrowers will deliver promptly to the
Administrative Agent certificates or other valid vouchers for all taxes
or other charges deducted from or paid with respect to payments made by
the Borrower hereunder or under such other Loan Document.
(c) Whenever a payment or fee 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 or fee shall be extended to the next
succeeding Business Day, and interest shall accrue during such
extension; PROVIDED THAT any Interest Period for any Eurodollar Loan
which ends on a day that is not a Eurodollar Business Day shall end on
the next succeeding Eurodollar Business Day unless the result of such
extension would be to carry such Interest Period into another calendar
month, in which event such Interest Period shall end on the immediately
preceding Eurodollar Business Day.
4.3. COMPUTATIONS. All computations of interest on Base Rate Loans and
of Commitment Fees, Letter of Credit Fees or other fees shall, unless otherwise
expressly provided herein, be based on a 365-day year (or 366-day year, as
applicable) and paid for the actual number of days elapsed. All computations of
interest on Eurodollar Loans shall, unless otherwise expressly provided herein,
be based on a 360-day year and paid for the actual number of days elapsed.
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 any Bank or the Administrative Agent or any corporation
controlling such Bank or the Administrative Agent, and such Bank or the
Administrative Agent determines that the amount of capital required to be
maintained by it is increased by or based upon the existence of such Bank's or
the Administrative Agent's Loans, Letter of Credit Participations or Letters of
Credit, or commitment with respect thereto, then such Bank or the Administrative
Agent 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 such Bank or (as the case may
be) the Administrative Agent 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 such
Bank or the Administrative Agent in light of these circumstances. If the
Borrowers and such Bank or the Administrative Agent are unable to agree to such
adjustment within thirty (30) days of the date on
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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 such Bank's or the Administrative Agent's reasonable determination, provide
adequate compensation. Each Bank and the Administrative Agent shall allocate
such cost increases among its customers in good faith and on an equitable basis.
4.5. CERTIFICATE. A certificate setting forth any additional amounts
payable pursuant to ss.4.4 and a reasonable explanation of such amounts which
are due, submitted by any Bank or the Administrative Agent to the Borrowers,
shall be conclusive, absent manifest error, that such amounts are due and owing.
4.6. 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 payable on demand at a rate per annum equal to the Base
Rate PLUS the Applicable Base Rate Margin plus two percentage points (2.00%)
until such amount shall be paid in full (after as well as before judgment).
4.7. INTEREST LIMITATION. Notwithstanding any other term of this Credit
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 any Note by any Bank 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 Notes, 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.
4.8. EURODOLLAR INDEMNITY. The Borrowers agree to indemnify the
applicable Banks and the Administrative Agent and to hold them harmless from and
against any loss, cost or expenses (including loss of anticipated profits) that
the Banks and the Administrative Agent may sustain or incur as a consequence of
(a) default by the Borrowers in payment of the principal amount of or any
interest on any Eurodollar Loans as and when due and payable, including any such
loss or expense arising from interest or fees payable by any Bank or the
Administrative Agent to Banks of funds obtained by it in order to maintain its
Eurodollar Loans, or (b) default by the Borrowers in making a borrowing or
conversion after the Borrowers have given (or are deemed to have given) notice
pursuant to ss.2.5 or ss.2.6, the making of any payment of a Eurodollar Loan or
the making of any conversion of any such Eurodollar Loan to a Base Rate Loan on
a day that is not the last day of the applicable Interest Period with respect
thereto, including interest or fees payable by any Bank to Banks of funds
obtained by it in order to maintain any such Loans.
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4.9. ILLEGALITY; INABILITY TO DETERMINE EURODOLLAR RATE.
Notwithstanding any other provision of this Agreement, if (a) the introduction
of, any change in, or any change in the interpretation of, any law or regulation
applicable to the Administrative Agent or any Bank shall make it unlawful, or
any central bank or other governmental authority having jurisdiction thereof
shall assert that it is unlawful, for any Bank or the Administrative Agent to
perform its obligations in respect of any Eurodollar Loans, or (b) if the Banks
or the Administrative Agent shall reasonably determine with respect to
Eurodollar Loans that (i) by reason of circumstances affecting any Eurodollar
interbank market, adequate and reasonable methods do not exist for ascertaining
the Eurodollar Rate which would otherwise be applicable during any Interest
Period, or (ii) deposits of Dollars in the relevant amount for the relevant
Interest Period are not available to the Banks or the Administrative Agent in
any Eurodollar interbank market, or (iii) the Eurodollar Rate does not or will
not accurately reflect the cost to the Banks or the Administrative Agent of
obtaining or maintaining the applicable Eurodollar Loans during any Interest
Period, then the Banks or the Administrative Agent shall promptly give
telephonic, telex or cable notice of such determination to the Borrowers (which
notice shall be conclusive and binding upon the Borrowers). Upon such
notification by the Banks or the Administrative Agent, the obligation of the
Banks or the Administrative Agent to make Eurodollar Loans shall be suspended
until the Banks or the Administrative Agent determine that such circumstances no
longer exist, and the outstanding Eurodollar Loans shall continue to bear
interest at the applicable rate based on the Eurodollar Rate until the end of
the applicable Interest Period, and thereafter shall be deemed converted to Base
Rate Loans in equal principal amounts.
4.10. 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 any Bank by any central bank or other fiscal, monetary or
other authority (whether or not having the force of law), shall impose on any
Bank any tax, levy, impost, duty, charge, fees, deduction or withholdings of any
nature or requirements with respect to this Agreement, the other Loan Documents,
the Loans, such Bank's Commitment, the Letters of Credit or any class of loans
or commitments or letters of credit of which any of the Loans, the Commitment or
the Letters of Credit forms a part, and the result of any of the foregoing is:
(a) to increase the cost to such Bank of making, funding,
issuing, renewing, extending or maintaining the Loans, such Bank's
Commitment, or the Letters of Credit; or
(b) to reduce the amount of principal, interest or other
amount payable to such Bank hereunder on account of such Bank's
Commitment, the Loans, or drawings under the Letters of Credit, or
(c) to require such Bank to make any payment or to forego any
interest or other sum payable hereunder, the amount of which payment or
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foregone interest or other sum is calculated by reference to the gross
amount of any sum receivable or deemed received by such Bank from the
Borrowers hereunder,
then, and in each such case, the Borrowers will, upon demand made by
such Bank, within sixty (60) days after the incurrence of any of the above, as
often as the occasion therefor may arise, pay to such Bank such additional
amounts as will be sufficient to compensate such Bank for such additional cost,
reduction, payment or foregone interest or other sum (after such Bank shall have
allocated the same fairly and equitably among all customers of any class
generally affected thereby).
4.11. REPLACEMENT OF BANKS. If any Bank (an "Affected Bank") (i) makes
demand upon the Borrowers for (or if the Borrowers are otherwise required to
pay) amounts pursuant to ss.ss.4.4 or 4.10 or (ii) is unable to make or maintain
Eurodollar Loans as a result of a condition described in ss.4.9, the Borrowers
may, within ninety (90) days of receipt of such demand or notice (or the
occurrence of such other event causing the Borrowers to be required to pay such
compensation or causing ss.4.9 to be applicable), by notice in writing to the
Administrative Agent and such Affected Bank (a "Replacement Notice") obtain a
replacement Bank satisfactory to the Administrative Agent (the "Replacement
Bank") to assume the Affected Bank's Commitment by (A) requesting the
non-Affected Banks to acquire and assume all of the Affected Bank's Loans and
Commitment, as provided herein, but none of such Banks shall be under an
obligation to do so; or (B) designating a Replacement Bank reasonably
satisfactory to the Administrative Agent. If any satisfactory Replacement Bank
shall be obtained, and/or any of the non-Affected Banks shall agree to acquire
and assume all of the Affected Bank's Loans and Commitment, then such Affected
Bank shall, so long as no Event of Default shall have occurred and be
continuing, assign, in accordance with ss.18, all of its Commitment, Loans,
Notes and other rights and obligations under this Credit Agreement and all other
Loan Documents to such Replacement Bank or non-Affected Banks, as the case may
be, in exchange for payment of the principal amount so assigned and all interest
and fees accrued on the amount so assigned, plus all other Obligations then due
and payable to the Affected Bank; PROVIDED, HOWEVER, that (i) such assignment
shall be without recourse, representation or warranty and shall be on terms and
conditions reasonably satisfactory to such Affected Bank and such Replacement
Bank and/or non-Affected Banks, as the case may be, and (ii) prior to any such
assignment, the Borrowers shall have paid to such Affected Bank all amounts
properly demanded and unreimbursed under ss.ss.4.4, 4.8, 4.9 and 4.10. Upon the
effective date of such assignment, the Borrowers shall issue replacement
Revolving Credit Notes or Swing Line Notes, as applicable, to such Replacement
Bank and/or non-Affected Banks, as the case may be, and such institution shall
become a "Bank" for all purposes under this Credit Agreement and the other Loan
Documents.
4.12. 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 Banks under this
Credit Agreement, for
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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 ss.4.12), it being the intention of the parties hereto that
all of 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 ss.4.12 constitute full recourse Obligations of each
of the Borrowers enforceable against each such Person to the full
extent of its properties and assets, irrespective of the validity,
regularity or enforceability of this Credit Agreement or any other
circumstance whatsoever.
(e) Except as otherwise expressly provided in this Credit
Agreement, each of the Borrowers hereby waives notice of acceptance of
its joint and several liability, notice of any Loans made under this
Credit Agreement, notice of any action at any time taken or omitted by
the Banks 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
Credit Agreement. Each Borrower hereby waives all defenses which may be
available by virtue of any valuation, stay, moratorium law or other
similar law now or hereafter in effect, any right to require the
marshaling of assets of the Borrowers and any other entity or Person
primarily or secondarily liable with respect to any of the Obligations,
and all suretyship defenses generally. 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 Banks 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 Credit Agreement, any and all other
indulgences whatsoever by the Banks 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
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part of the Banks 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
ss.4.12, afford grounds for terminating, discharging or relieving any
of the Borrowers, in whole or in part, from any of its Obligations
under this ss.4.12, 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 ss.4.12 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
ss.4.12 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
Banks. 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 Banks.
(f) To the extent any Borrower makes a payment hereunder in
excess of the aggregate amount of the benefit received by such Borrower
in respect of the extensions of credit under the Credit Agreement (the
"Benefit Amount"), then such Borrower, after the payment in full, in
cash, of all of the Obligations, shall be entitled to recover from each
other Borrower such excess payment, pro rata, in accordance with the
ratio of the Benefit Amount received by each such other Borrower to the
total Benefit Amount received by all Borrowers, and the right to such
recovery shall be deemed to be an asset and property of such Borrower
so funding; PROVIDED, that each of the Borrowers hereby agrees that it
will not enforce any of its rights of contribution or subrogation
against the other Borrowers with respect to any liability incurred by
it hereunder or under any of the other Loan Documents, any payments
made by it to any of the Banks or the Administrative Agent with respect
to any of the Obligations or any collateral security therefor until
such time as all of the Obligations have been irrevocably paid in full
in cash. Any claim which any Borrower may have against any other
Borrower with respect to any payments to the Banks or the
Administrative Agent hereunder or under any other Loan Document are
hereby expressly made subordinate and junior in right of payment,
without limitation as to any increases in the Obligations arising
hereunder or thereunder, to the prior payment in full of the
Obligations and, in the event of any insolvency, bankruptcy,
receivership, liquidation, reorganization or other similar proceeding
under the laws of any jurisdiction relating to any Borrower, its debts
or its assets, whether voluntary or involuntary, all such Obligations
shall be paid in full before any payment or distribution of any
character, whether in cash, securities or other property, shall be made
to any other Borrower therefor.
(g) Each of Borrowers hereby agrees that the payment of any
amounts due with respect to the indebtedness owing by any Borrower to
any other
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Borrower is hereby subordinated to the prior payment in full in cash of
the Obligations. Each Borrower hereby agrees that after the occurrences
and during the continuance of any Default or Event of Default, such
Borrower will not demand, sue for or otherwise attempt to collect any
indebtedness of any other Borrower owing to such Borrower until the
Obligations shall have been paid in full in cash. If, notwithstanding
the foregoing sentence, such Borrower shall collect, enforce or receive
any amounts in respect of such indebtedness, such amounts shall be
collected, enforced, received by such Borrower as trustee for the
Administrative Agent and be paid over to the Administrative Agent for
the PRO RATA accounts of the Banks (in accordance with each Bank's Loan
Percentage) to be applied to repay (or be held as security for the
repayment of) the Obligations.
(h) The provisions of this ss.4.12 are made for the benefit of
the Banks and their successors and assigns, and may be enforced in good
faith by them from time to time against any or all of the Borrowers as
often as the occasion therefor may arise and without requirement on the
part of the Banks first to marshal any of their claims or to exercise
any of their rights against any other Borrower or to exhaust any
remedies available to them 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 ss.4.12 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 Banks upon the insolvency, bankruptcy or reorganization of any of
the Borrowers or is repaid in good faith settlement of a pending or
threatened avoidance claim, or otherwise, the provisions of this
ss.4.12 will forthwith be reinstated in effect, as though such payment
had not been made.
(i) Each of the Borrowers hereby appoints the Parent, and the
Parent hereby agrees, to act as its representative and authorized
signor with respect to any notices, demands, communications or requests
under this Credit Agreement or the other Loan Documents, including,
without limitation, with respect to Loan and Letter of Credit Requests
and Compliance Certificates and pursuant to ss.20 of this Credit
Agreement.
5. REPRESENTATIONS AND WARRANTIES.
The Borrowers jointly and severally represent and warrant to the Banks
that on and as of the date of this Credit Agreement, each Drawdown Date, and the
date of issuance of any Letter of Credit (with any disclosure on a schedule
pursuant to this ss.5 applying to all relevant representations and warranties,
regardless of whether such schedule is referenced in each relevant
representation):
5.1. CORPORATE AUTHORITY.
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(a) INCORPORATION; GOOD STANDING. Each Borrower (i) is a
corporation, limited partnership or limited liability company, as the
case may be, duly organized, validly existing and in good standing
under the laws of its state of incorporation or organization, (ii) has
all requisite 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 or organization and is duly authorized to do
business in each jurisdiction where such qualification is necessary
except where a failure to be so qualified would not have a materially
adverse effect on the business, assets or financial condition of such
Borrower.
(b) AUTHORIZATION. The execution, delivery and performance of
this Credit Agreement and the other Loan Documents and the transactions
contemplated hereby and thereby (i) are within the authority of each
Borrower, (ii) have been duly authorized by all necessary proceedings,
(iii) do not conflict with or result in any breach or contravention of
any provision of law, statute, rule or regulation to which any Borrower
is subject or any judgment, order, writ, injunction, license or permit
applicable to any Borrower so as to materially adversely affect the
assets, business or any activity of the Borrowers taken as a whole, and
(iv) do not conflict with any provision of the corporate charter or
bylaws of any Borrower, or any agreement or other instrument binding
upon them.
(c) ENFORCEABILITY. The execution, delivery and performance of
the Loan Documents will result in valid and legally binding obligations
of each of the Borrowers enforceable against it 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
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 the approval or consent of, or filing with, any
governmental agency or authority other than those already obtained.
5.3. TITLE TO PROPERTIES; LEASES. The Borrowers own all of the assets
reflected in the consolidated balance sheet as at the Interim 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
rights of others, including any mortgages, leases, conditional sales agreements,
title retention agreements, liens or other encumbrances except Permitted Liens.
5.4. FINANCIAL STATEMENTS; SOLVENCY; FISCAL YEAR.
(a) FINANCIAL STATEMENTS. There has been furnished to each of
the Banks audited consolidated financial statements of the Borrowers
dated as at the
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Balance Sheet Date. In addition, there have been furnished to the Banks
consolidated balance sheets of the Borrowers dated as at the Interim
Balance Sheet Date and the related consolidated statements of operation
for the fiscal quarter ending on the Interim Balance Sheet Date. Such
financial statements have been prepared in accordance with GAAP (but,
in the case of any of such financial statements which are unaudited,
only to the extent GAAP is applicable to interim unaudited reports) and
fairly present the financial condition of the Borrowers as at the close
of business on the date thereof and the results of operations for the
fiscal period then ended, subject, in the case of unaudited interim
financial statements, to changes resulting from audit and normal
year-end adjustments and to the absence of complete footnotes. There
are no contingent liabilities of the Borrowers involving material
amounts, known to the officers of the Borrowers, which have not been
disclosed in such balance sheets and the notes related thereto or
otherwise in writing to the Banks.
(b) SOLVENCY. The Borrowers on a consolidated basis (both
before and after giving effect to the transactions contemplated by this
Credit Agreement) are and will be 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.
(c) FISCAL YEAR. Each Borrower has a fiscal year which is the
twelve (12) months ending on December 31 of each calendar year.
5.5. NO MATERIAL CHANGES, ETC. Since the Interim Balance Sheet Date,
there have occurred no materially adverse changes in the financial condition or
businesses of the Borrowers, as shown on or reflected in the consolidated
balance sheet of any of the Borrowers as at the Interim Balance Sheet Date, or
the consolidated statement of income for the fiscal period then ended. Since the
Interim Balance Sheet Date, there have not been any Distributions, other than as
permitted by ss.7.6 hereof.
5.6. PERMITS, FRANCHISES, PATENTS, COPYRIGHTS, ETC. Each Borrower
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. Except as set forth in SCHEDULE 5.7 and SCHEDULE 5.16
of the Disclosure Letter delivered herewith, there are no actions, suits,
proceedings or investigations of any kind pending or, to the knowledge of any
Borrower, threatened against any Borrower before any court, tribunal or
administrative agency or board that, 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 as a whole, or
materially impair the right of the Borrowers, taken as a whole, to carry on
business substantially as now conducted by them, or result in any substantial
liability not adequately covered by insurance, or for which adequate reserves
are not maintained
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on the consolidated balance sheet of the Borrower and its Subsidiaries, or which
question the validity of this Credit Agreement or any of the other Loan
Documents, or any action taken or to be taken pursuant hereto or thereto.
5.8. NO MATERIALLY ADVERSE CONTRACTS, ETC. No Borrower is subject to
any charter, corporate or other legal restriction, or any judgment, decree,
order, rule or regulation that has or is expected in the future to have a
materially adverse effect on the business, assets or financial condition of the
Borrowers. No Borrower is a party to any contract or agreement that has or is
expected, in the judgment of the Borrowers' officers, to have any materially
adverse effect on the business of the Borrowers, taken as a whole.
5.9. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. No Borrower is
violating any provision of its charter documents, bylaws, or any agreement or
instrument to which it may be subject or by which it or any of its properties
may be bound or any decree, order, judgment, statute, license, rule or
regulation, in any of the foregoing cases in a manner that could result in the
imposition of substantial penalties or materially and adversely affect the
financial condition, properties or business of any Borrower.
5.10. TAX STATUS. Each Borrower has 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 is subject (unless and only to the extent that
such Borrower has set aside on its books provisions reasonably adequate for the
payment of all unpaid and unreported taxes, has paid all taxes and other
governmental assessments and charges shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith;
and has set aside on its 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 any material amount 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. No Borrower 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 it an "investment company", or an
"affiliated company" or a "principal underwriter" of an "investment company", as
such terms are defined in the Investment Company Act of 1940.
5.13. ABSENCE OF FINANCING STATEMENTS, ETC. Except with respect to
Permitted Liens, 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, that 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 Borrower or any rights relating thereto.
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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 ss.412
of ERISA. Each Borrower has heretofore delivered to the Administrative
Agent the most recently completed annual report, Form 5500, with all
required attachments, and the actuarial statement required to be
submitted under ss.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 ss.3(1)
or ss.3(2)(B) of ERISA, provides benefit coverage subsequent to
termination of employment, except as required by Title I, Part 6 of
ERISA or the applicable state insurance laws. A 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 ss.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 no Borrower nor any ERISA Affiliate is obligated to
or has posted security in connection with an amendment to a Guaranteed
Pension Plan pursuant to ss.307 of ERISA or ss.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 (other than an ERISA Reportable Event
as to which the requirement of thirty (30) days notice has been
waived), 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 ss.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. No Borrower nor any ERISA Affiliate
has incurred any material liability (including secondary liability) to
any
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Multiemployer Plan as a result of a complete or partial withdrawal from
such Multiemployer Plan under ss.4201 of ERISA or as a result of a sale
of assets described in ss.4204 of ERISA. No Borrower nor any ERISA
Affiliate has been notified that any Multiemployer Plan is in
reorganization or insolvent under and within the meaning of ss.4241 or
ss.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 ss.4041A of ERISA.
5.15. USE OF PROCEEDS.
5.15.1. GENERAL. The proceeds of the Loans shall be used
solely as follows: (a) to refinance existing Senior Indebtedness of the
Borrowers, (b) to finance acquisitions permitted pursuant to ss.7.4,
and (c) for capital expenditures, working capital and general corporate
purposes. The Borrowers will obtain Letters of Credit solely for
working capital and general corporate purposes.
5.15.2. REGULATIONS U AND X. No portion of any Loan is to be
used, and no portion of any Letter of Credit is to be obtained, for the
purpose of purchasing or carrying any "margin security" or "margin
stock" as such terms are used in Regulations U and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224.
5.15.3. INELIGIBLE SECURITIES. No portion of the proceeds of
any Loan is to be used, and no portion of any Letter of Credit is to be
obtained, for the purpose of (a) knowingly purchasing, or providing
credit support for the purchase of Ineligible Securities from a Section
20 Subsidiary during any period in which such Section 20 Subsidiary
makes a market in such Ineligible Securities, (b) knowingly purchasing
or providing credit support for the purchase of, during the
underwriting or placement period, any Ineligible Securities being
underwritten or privately placed by a Section 20 Subsidiary, or (c)
making, or providing credit support for the making of, payments of
principal or interest on Ineligible Securities underwritten or
privately placed by a Section 20 Subsidiary and issued by or for the
benefit the Borrowers or other affiliates of the Borrowers.
5.16. ENVIRONMENTAL COMPLIANCE. Each Borrower has investigated the past
and present condition and usage of the Real Property and the operations
conducted thereon and, based upon such diligent investigation, has determined
that, except as shown on SCHEDULE 5.16 of the Disclosure Letter delivered
herewith:
(a) No Borrower nor any operator of the Borrowers' properties
is in violation, or alleged violation, of any judgment, decree, order,
law, license, rule or regulation pertaining to environmental matters,
including without limitation, those arising under the CERCLA, the
Superfund Amendments and Reauthorization Act of 1986, the Federal Clean
Water Act, the Federal Clean Air Act, the Toxic Substances Control Act,
or any state or local statute, regulation, ordinance, order or decree
relating to health, safety or the environment (hereinafter
"Environmental Laws"), which violation would have a material
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adverse effect on the business, assets or financial condition of the
Borrowers on a consolidated basis;
(b) no Borrower 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. ss.6903(5), any hazardous
substances as defined by 42 U.S.C. ss.9601(14), any pollutant or
contaminant as defined by 42 U.S.C. ss.9601(33) and any toxic
substances, oil or hazardous materials or other chemicals or substances
regulated by any Environmental Laws ("Hazardous Substances") which any
of the Borrowers 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, or legal or
administrative proceeding (in each case, contingent or otherwise)
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) except where it would not have a material adverse effect
on the value of the Real Property: (i) no portion of the Real Property
has been used for the handling, processing, storage or disposal of
Hazardous Substances; 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; (iii) there
have been no unpermitted releases or threatened Releases of Hazardous
Substances on, upon, into or from the Real Property; (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 any of the Real Property
which, through soil or groundwater contamination, may have come to be
located on such properties; and (v) in addition, when required under
applicable Environmental Laws, 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; and
(d) none of the Real Property is or shall be subject to any
applicable environmental clean-up responsibility law or environmental
restrictive transfer
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law or regulation by virtue of the transactions set forth herein and
contemplated hereby.
5.17. SUBSIDIARIES. Schedule 5.17 of the Disclosure Schedule delivered
herewith sets forth a complete and accurate list of the Subsidiaries of the
Parent, including the name of each Subsidiary, the location of its chief
executive office, its tax identification number, and its jurisdiction of
incorporation or organization, together with the number of authorized and
outstanding shares, partnership interests or membership units, as the case may
be, of each Subsidiary. Each Subsidiary listed on SCHEDULE 5.17 of the
Disclosure Schedule delivered herewith is wholly owned by the Parent or a
Subsidiary of the Parent and is a Borrower hereunder, 100% of the assets (other
than motor vehicle titles and real estate) and stock or other equity interests
of which have been pledged to the Administrative Agent on behalf of the Banks
pursuant to the Security Documents. The Parent has good and marketable title to
all of the shares or other equity interests it purports to own of each such
Subsidiary, free and clear in each case of any lien or encumbrance. All such
shares have been duly issued and are fully paid and non-assessable. None of the
Borrowers is engaged in any joint venture or partnership with any other Person.
5.18. TRUE COPIES OF CHARTER AND OTHER DOCUMENTS. Each Borrower has
furnished the Administrative Agent copies, in each case true and complete as of
the Closing Date, of its (a) charter and other incorporation documents and (b)
by-laws, each including any amendments thereto.
5.19. DISCLOSURE. None of this Credit Agreement, nor any of the other
Loan Documents, nor any document or information furnished by the Borrowers in
connection therewith contains any untrue statement of a material fact or omits
to state a material fact (known to any Borrower in the case of any document or
information not furnished by the Borrowers) necessary in order to make the
statements herein or therein not misleading. There is no fact known to any
Borrower which materially adversely affects, or which is reasonably likely in
the future to materially adversely affect, the business, assets, or financial
condition of any Borrower, exclusive of effects resulting from changes in
general economic conditions, legal standards or regulatory conditions.
5.20. CAPITALIZATION.
(a) As of the Closing Date, the authorized capital stock of
the Parent consists of 80,000,000 shares of common stock (no par value)
of which 13,854,355 shares are outstanding as of the Closing Date, and
10,000,000 shares of preferred stock (par value $.01 per share) of
which no shares are outstanding as of the Closing Date. All of such
outstanding shares are fully paid and non-assessable.
(b) The shares of the capital stock, partnership interests or
membership units, as the case may be, of the Borrowers (other than the
Parent) pledged to the Administrative Agent pursuant to the Pledge
Agreements are held of record as set forth on Annex A to the Pledge
Agreements. Such capital stock, partnership interests or membership
units, as the case may be, constitutes,
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of record, 100% of the outstanding capital stock, partnership interests
or membership units, as the case may be, of each such Subsidiary, and,
to the Borrowers' knowledge, on a fully-diluted basis, 100% of such
outstanding capital stock, partnership interests or membership units,
as the case may be.
5.21. YEAR 2000 COMPLIANCE. The Borrowers have reviewed the areas
within their business and operations which could be adversely affected by, and
have developed or are developing a program to address on a timely basis, the
Year 2000 Compliance. Based on such review and program, the Year 2000 Compliance
will not have a material adverse effect on their business and operations.
6. AFFIRMATIVE COVENANTS OF THE BORROWERS.
The Borrowers jointly and severally covenant and agree that, so long as
any Loan or Note is outstanding or any Bank has any obligation to make any Loans
or any Issuing Bank has any obligation to issue, extend or renew any Letters of
Credit:
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 all other amounts provided for in this Credit Agreement
and the other Loan Documents, all in accordance with the terms of this Credit
Agreement and such other Loan Documents.
6.2. MAINTENANCE OF OFFICE. Each Borrower will maintain its chief
executive office at 3301 Benson Drive, Suite 601, Raleigh, North Carolina 27609,
or at such other place in the United States of America as such Borrower shall
designate upon thirty (30) days prior written notice to the Administrative
Agent.
6.3. RECORDS AND ACCOUNTS. Each Borrower will (i) keep true and
accurate records and books of account in which full, true and correct entries
will be made in accordance with generally accepted accounting principles, (ii)
maintain adequate accounts and reserves for all taxes (including income taxes),
depreciation, depletion, obsolescence and amortization of its properties and the
properties of its Subsidiaries, contingencies, and other reserves, and (iii) at
all times engage the Accountants as the independent certified public accountants
of the Borrowers.
6.4. FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION. The Borrowers
will deliver to each of the Banks:
(a) as soon as practicable, but, in any event not later ninety
(90) days after the end of each fiscal year of the Parent, the
consolidated and consolidating balance sheets of the Parent 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;
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(b) as soon as practicable, but in any event not later than
forty-five (45) days after the end of each fiscal quarter of the
Borrowers, copies of the consolidated and consolidating balance sheets
and statement of operations of the Parent as at the end of such
quarter, subject to year end adjustments, the related statement of cash
flows, all in reasonable detail and prepared in accordance with GAAP,
with a certification by the chief executive officer (the "CEO") or the
principal financial or accounting officer of each Borrower (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 (subject
to year-end adjustments) and the results of operations for the period
then ended;
(c) simultaneously with the delivery of the financial
statements referred to in (a) and (b) above, a statement in the form of
Exhibit D hereto (the "Compliance Certificate") certified by the CEO or
the CFO that the Borrowers are in compliance with the covenants
contained in ss.ss.6, 7 and 8 hereof, as of the end of the applicable
period and setting forth in reasonable detail computations evidencing
such compliance, 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 Lenders a certificate
specifying the nature and period of existence thereof and what action
the Borrowers propose to take with respect thereto;
(d) annually or at such other time as may be requested by the
Administrative Agent, copies of the financial statements, financial
projections, annual budget and business plan concerning the Borrowers
in substantially the same form in which such information is supplied to
the boards of directors of the Borrowers;
(e) contemporaneously with, or promptly following, the filing
or mailing thereof, copies of all material of a financial nature filed
with the SEC or sent to the stockholders of the Borrowers; and
(g) from time to time, such other financial data and other
information (including accountants' management letters) as any Bank may
reasonably request.
The Borrowers hereby authorize the Banks to disclose any information
obtained pursuant to this Credit Agreement to all appropriate governmental
regulatory authorities where required by law; PROVIDED, HOWEVER, that this
authorization shall not be deemed to be a waiver of any rights to object to the
disclosure by the Banks of any such information which the Borrowers have or may
have under the federal Right to Financial Privacy Act of 1978, as in effect from
time to time.
6.5. CORPORATE EXISTENCE AND CONDUCT OF BUSINESS. Each Borrower will do
or cause to be done all things necessary to preserve and keep in full force and
effect its
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corporate or other organizational existence, corporate rights and franchises;
effect and maintain its foreign qualifications, licensing, domestication or
authorization except as terminated by such Borrower's Board of Directors in the
exercise of its reasonable judgment and except where the failure of a Borrower
to remain so qualified would not materially adversely impair the financial
condition of the Borrowers on a consolidated basis; 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 the Borrowers on a
consolidated basis. 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 the Borrowers from
discontinuing the operation and maintenance of any of their properties if such
discontinuance is, in the judgment of the Borrowers, desirable in the conduct of
their business and which does not in the aggregate materially adversely affect
the businesses of the Borrowers on a consolidated basis.
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) and in the relative
proportionate amounts usually carried by reasonable and prudent companies
conducting businesses similar to that of the Borrowers, such insurance to be in
form and substance satisfactory to the Administrative Agent. In addition, the
Borrowers will furnish from time to time, upon the Administrative Agent's
request, a summary of the insurance coverage of each of the Borrowers, which
summary shall be in form and substance satisfactory to the Administrative Agent
and, if requested by the Administrative Agent, will furnish to the
Administrative Agent copies of the applicable policies.
6.8. TAXES. The Borrowers will 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 material 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 material portion of its property, unless such lien is a Permitted Lien;
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
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and if such Borrower shall have set aside on its books adequate reserves with
respect thereto; and PROVIDED, FURTHER, that the Borrowers 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 will
permit any and all of the Banks, the Administrative Agent or any of their
designated representatives, upon reasonable notice and during normal business
hours, to visit and inspect any of their properties, to examine their books of
account (including the making of periodic accounts receivable reviews), or
contracts (and to make copies thereof and extracts therefrom), and to discuss
their affairs, finances and accounts with, and to be advised as to the same by,
their officers, all at such times and intervals as any of the Banks may
reasonably request.
6.10. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES AND PERMITS;
MAINTENANCE OF MATERIAL LICENSES AND PERMITS. The Borrowers will (i) comply with
the provisions of their charter documents and by-laws and all agreements and
instruments by which they or any of their properties may be bound; and (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 in the aggregate
on the consolidated financial condition, properties or businesses of the
Borrowers. If at any time while the Notes, or any Loan or Letter of Credit is
outstanding or any Bank or the Administrative Agent has any obligation to make
Loans or any Issuing Bank has any obligation to 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 the Borrowers may fulfill any of their obligations
hereunder, the Borrowers will immediately take or cause to be taken all
reasonable steps within the power of the Borrowers to obtain such authorization,
consent, approval, permit or license and furnish the Banks with evidence
thereof.
6.11. ENVIRONMENTAL INDEMNIFICATION. Each Borrower covenants and agrees
that it will indemnify and hold the Banks harmless from and against any and all
claims, expense, damage, loss or liability incurred by the Banks (including all
costs of legal representation incurred by the Banks) 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 any Borrower or its predecessors are
alleged to have directly or indirectly disposed of hazardous substances. It is
expressly acknowledged by each Borrower that this covenant of indemnification
shall include all claims, expenses, damages, losses or liabilities incurred by
the Banks relating to the foregoing except those which result from the gross
negligence or willful misconduct of any Bank, and this covenant shall survive
any foreclosure or any modification, release or discharge of the Loan Documents
or the
<PAGE>
-49-
payment of the Loans and shall inure to the benefit of the Banks, their
successors and assigns.
6.12. FURTHER ASSURANCES. The Borrowers will cooperate with the Banks
and execute such further instruments and documents as any of the Banks shall
reasonably request to carry out to the Banks' satisfaction the transactions
contemplated by this Credit Agreement and the Loan Documents.
6.13. NOTICE OF POTENTIAL CLAIMS OR LITIGATION. The Borrowers will
deliver to the Banks, within thirty (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 $250,000, together with a copy of each such notice received by any
Borrower.
6.14. NOTICE OF CERTAIN EVENTS CONCERNING INSURANCE AND ENVIRONMENTAL
CLAIMS.
(a) The Borrowers will provide the Banks with written notice
as to any material cancellation or material change in any insurance of
the Borrowers within ten (10) Business Days after the Borrowers'
receipt of any notice (whether formal or informal) of such cancellation
or change by any of their insurers.
(b) The Borrowers will promptly notify the Banks 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 could have a material
adverse effect on the Real Property or on such Borrower's
operations;
(ii) upon any Borrower obtaining knowledge of any
potential or known Release or threat of Release of any
Hazardous Substance at, from, or into the Real Property which
any Borrower reports in writing or is reportable by it 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
<PAGE>
-50-
Borrower or any of its predecessors is alleged to have
directly or indirectly Disposed of Hazardous Substances, which
violation or Release in any such case could have a material
adverse effect on the Real Property or on any Borrower's
operations; or
(iv) upon any Borrower obtaining knowledge that any
material 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.
6.15. NOTICE OF DEFAULT. The Borrowers will promptly notify the Banks
in writing of the occurrence of any Default or Event of Default. 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 Credit Agreement or
any other note, evidence of Indebtedness, indenture or other obligation
evidencing Indebtedness in excess of $250,000 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 Banks, describing the notice of action and
the nature of the claimed default.
6.16. NEW SUBSIDIARIES.
(a) Any newly-created or acquired Subsidiaries permitted under
ss.7.4 shall become Borrowers hereunder by (i) signing a joinder
agreement or entering into an amendment to this Credit Agreement and
the Security Documents, as applicable, with the other parties hereto
and thereto, in form and substance satisfactory to the Administrative
Agent, providing that such Subsidiary shall become a Borrower
hereunder, 100% of the stock, partnership interests or membership
units, as the case may be, and assets (other than motor vehicle titles
and real estate) of which shall be pledged to the Collateral Agent for
the benefit of the Banks and the Noteholders in accordance with the
Intercreditor Agreement, and (ii) providing such other documentation as
the Banks or the Administrative Agent may reasonably request,
including, without limitation, documentation with respect to the
conditions specified in ss.9 hereof. In such event, the Administrative
Agent is hereby authorized by the parties to amend Schedule 5.17 to
include such new Subsidiary.
(b) The Parent shall at all times directly or indirectly
through a Subsidiary own all of the shares of capital stock,
partnership interests and membership interests of each of the
Subsidiaries, and such shares, partnership interests and membership
interests shall at all times be pledged to the Collateral Agent for the
benefit of the Banks and the Noteholders pursuant to the Pledge
Agreements.
6.17. EMPLOYEE BENEFIT PLANS. The Borrowers will (i) promptly upon
filing the same with the Department of Labor or Internal Revenue Service, upon
request of the Administrative Agent, furnish to the Administrative Agent a copy
of the most recent
<PAGE>
-51-
actuarial statement required to be submitted under ss.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
Administrative Agent any notice, report or demand sent or received in respect of
a Guaranteed Pension Plan under ss.ss.302, 4041, 4042, 4043, 4063, 4065, 4066
and 4068 of ERISA, or in respect of a Multiemployer Plan, under ss.ss.4041A,
4202, 4219, 4242, or 4245 of ERISA.
7. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS.
Each Borrower covenants and agrees that, so long as any Loan or Note is
outstanding or any Bank has any obligation to make any Loans or any Issuing Bank
has any obligation to issue, extend or renew any Letters of Credit:
7.1. RESTRICTIONS ON INDEBTEDNESS. No Borrower 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 Banks and the Administrative Agent
arising under any of the Loan Documents;
(b) incurrence by any Borrower of 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;
(c) Indebtedness of one Borrower to another Borrower;
(d) other Indebtedness existing on the date hereof and listed
and described on Schedule 7.1 of the Disclosure Schedule delivered
herewith;
(e) (i) purchase money Indebtedness incurred in connection
with the acquisition after the Closing Date of any real or personal
property or under equipment leases or equipment chattel, (ii) existing
Indebtedness of any Subsidiary acquired after the Closing Date (the
"Acquired Subsidiary") originally incurred by the Acquired Subsidiary
in connection with the lease or acquisition of property or fixed assets
used in the business of the Acquired Subsidiary; or with respect to
industrial finance bonds issued to finance the purchase of such
property or assets; (iii) Indebtedness with respect to obligations
under Capitalized Leases (iv) other unsecured Indebtedness; and (v)
Indebtedness with respect to Subordinated Debt; PROVIDED that in the
event that after the Closing Date any Subsidiary of the Parent
guaranties any Subordinated Debt, the terms of such guaranty shall
provide for the release of such guaranty upon the sale of stock or all
or substantially all of the assets of such Subsidiary (even if such
sale was made in a foreclosure); PROVIDED THAT the aggregate
amount of such
<PAGE>
-52-
Indebtedness under this subsection (e) shall not exceed .5x EBITDA for
the period of four (4) consecutive fiscal quarters most recently ended;
(f) Indebtedness with respect to landfill closure bonds of the
Borrowers in an aggregate amount not to exceed $5,000,000; and
(g) Noteholders' Debt in principal amount not to exceed
$75,000,000;
PROVIDED THAT if the creation, incurrence, assumption or
existence of any Indebtedness would constitute a default or an event of
default under the Noteholders' Debt, then the creation, incurrence,
assumption or existence of such Indebtedness shall not be permitted
hereunder.
7.2. RESTRICTIONS ON LIENS. No Borrower shall 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 to secure taxes, assessments and other government
charges or claims for labor, material or supplies in respect of
obligations not overdue;
(b) 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;
(c) liens 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 the
applicable 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 such Borrower maintains adequate reserves;
(d) liens of carriers, warehousemen, mechanics and
materialmen, and other like liens on properties other than Mortgaged
Properties, in existence less than 120 days from the date of creation
thereof in respect of obligations not overdue, PROVIDED that such liens
may continue to exist for a period of more than
<PAGE>
-53-
120 days if the validity or amount thereof shall currently be contested
by the applicable Borrower in good faith and if such Borrower shall
have set aside on its books adequate reserves with respect thereto as
required by GAAP, and PROVIDED further that such Borrower will pay any
such claim forthwith upon commencement of proceedings to foreclose any
such lien;
(e) 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 such 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 materially adverse effect on
the business of such Borrower individually or of the Borrowers on a
consolidated basis;
(f) liens existing on the date hereof and listed on SCHEDULE
7.2 of the Disclosure Schedule delivered herewith;
(g) liens in favor of the Collateral Agent for the benefit of
the Banks and the Noteholders under the Security Documents; and
(h) purchase money security interests in or purchase money
mortgages on real or personal property acquired after the date hereof
to secure purchase money Indebtedness of the type permitted by
ss.7.1(e)(i), (ii) and (iii), incurred in connection with the
acquisition of such property, which security interests cover only the
real or personal property so acquired.
7.3. RESTRICTIONS ON INVESTMENTS. No Borrower shall purchase or
acquire, or make any commitment therefor, any capital stock, equity interest, or
other obligations or securities of, or any interest in, any other Person, or
make or commit to make any acquisition under ss.7.4, or make or commit to make
any advance, loan, extension of credit or capital contribution to or any other
investment in, any other Person, other than:
(a) marketable direct or guaranteed obligations of the United
States of America that mature within one (1) year from the date of
purchase;
(b) demand deposits, certificates of deposit, bankers
acceptances and time deposits of United States banks having unimpaired
capital and surplus in excess of $250,000,000;
(c) securities commonly known as "commercial paper" issued by
a corporation organized and existing under the laws of the United
States of America or any state thereof that at the time of purchase
have been rated and the ratings for which are not less than "P 1" if
rated by Moody's Investors Service, Inc., and not less than "A 1" if
rated by Standard and Poor's Rating Group;
<PAGE>
-54-
(d) Investments existing on the date hereof and listed on
Schedule 7.3 of the Disclosure Schedule delivered herewith;
(e) Investments permitted under ss.7.4;
(f) Extensions of credit in the nature of accounts receivable
or notes receivable arising from the sale or lease of goods or surplus
in the ordinary course of business; and
(g) Investments consisting of loans and advances by any
Borrower to another Borrower.
7.4. MERGER, CONSOLIDATION AND DISPOSITION OF ASSETS.
7.4.1. MERGERS AND ACQUISITIONS. The Borrowers will not become
a party to any merger or consolidation, or agree to or effect any asset
acquisition or stock acquisition (other than the acquisition of assets
in the ordinary course of business consistent with past practices)
except the merger or consolidation of, or asset or stock acquisitions
between existing Borrowers and except as otherwise provided in this
ss.7.4.1. The Borrowers may purchase or otherwise acquire all or
substantially all of the assets or stock or other equity interests of
any other Person PROVIDED THAT:
(a) 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 ss.8
hereof on a pro forma historical combined basis as if the
transaction occurred on the first day of the period of
measurement; PROVIDED, THAT, in the case of transactions
involving cash consideration to be paid by the Borrowers
(including cash deferred payments, contingent or otherwise,
and the aggregate amount of all Funded Debt assumed) in excess
of $15,000,000, the Administrative Agent and the Banks shall
have received a Compliance Certificate demonstrating
compliance with ss.8 on a pro forma historical combined basis
as if the transaction occurred on the first day of the period
of measurement;
(b) at the time of such acquisition, no Default or
Event of Default has occurred and is continuing, and such
acquisition will not otherwise create a Default or an Event of
Default hereunder;
(c) the business to be acquired is predominantly in
the same lines of business as the Borrowers, or businesses
reasonably related or incidental thereto (e.g., non-hazardous
solid waste collection, transfer, hauling, recycling, or
disposal);
<PAGE>
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(d) the business to be acquired operates
predominantly in the continental United States;
(e) all of the assets to be acquired shall be owned
by an existing or newly created Subsidiary of the Parent which
Subsidiary shall be a Borrower, 100% of the assets (other than
motor vehicle titles and real estate) and stock or other
equity interests of which have been or, simultaneously with
such acquisition, will be pledged to the Collateral Agent on
behalf of the Banks and the Noteholders in accordance with the
Intercreditor Agreement or, in the case of a stock or other
equity interest acquisition, the acquired company,
simultaneously with such acquisition, shall become a Borrower
or shall be merged with and into a wholly owned Subsidiary
that is a Borrower and such newly acquired or created
Subsidiary shall otherwise comply with the provisions of
ss.6.16 hereof;
(f) not later than seven (7) days prior to the
proposed acquisition date, a copy of the purchase agreement
and financial projections, together with audited (if
available, or otherwise unaudited) financial statements for
any Subsidiary to be acquired or created, for the preceding
two (2) fiscal years or such shorter period of time as such
Subsidiary has been in existence shall have been furnished to
the Administrative Agent, only in cases of Material
Acquisitions or upon request by the Administrative Agent;
(g) not later than seven (7) days prior to the
proposed acquisition date, (1) a summary of the Borrowers'
results of their standard due diligence review, and (2) in the
case of a landfill acquisition, a review by a Consulting
Engineer and a copy of the Consulting Engineer's report shall
have been furnished to the Administrative Agent, only in cases
of Material Acquisitions or upon request by the Administrative
Agent;
(h) 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;
(i) if such acquisition is made by a merger, a
Borrower, or a wholly-owned Subsidiary of the Parent which
shall become a Borrower in connection with such merger, shall
be the surviving entity; and
(j) cash consideration to be paid by such Borrower in
connection with any such acquisition or series of related
acquisitions (including cash deferred payments, contingent or
otherwise, and the aggregate amount of all Funded Debt
assumed), shall not exceed $15,000,000 without the consent of
the Administrative Agent and the Majority Banks (any
acquisition requiring cash consideration in excess of
$15,000,000 being referred to as a "Material Acquisition").
<PAGE>
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Notwithstanding the foregoing, the Target Acquisition shall be
permitted under this Credit Agreement substantially on the terms and
subject to the conditions set forth in the Letters of Intent PROVIDED
that (i) the Borrower has delivered to the Agent not later than seven
(7) days prior to the proposed acquisition date, the Target Documents
and updated financial statements of the Target, (ii) no material
adverse change in the financial condition of the Target from the
financial statements of the Target dated as of December 31, 1998 and
delivered to the Banks prior to the Closing Date shall have occurred,
and (iii) no Default or Event of Default exists or would be created by
the Target Acquisition.
7.4.2. DISPOSITION OF ASSETS. No Borrower will become a party
to or agree to or effect any disposition of assets in excess of
$500,000 in the aggregate (other than the sale of inventory, the
licensing of intellectual property and the disposition of obsolete
assets, in each case in the ordinary course of business consistent with
past practices) without the prior written consent of the Majority Banks
and the Noteholders.
7.5. SALE AND LEASEBACK. The Borrowers shall not 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 Majority Banks.
7.6. RESTRICTED DISTRIBUTIONS AND REDEMPTIONS. The Borrowers shall not
redeem, convert, retire or otherwise acquire shares of any class of its capital
stock or other equity interest, or make any Distributions, except that any
Borrower may make Distributions to another Borrower. In addition, the Borrowers
shall not effect or permit any change in or amendment to any document or
instrument pertaining to the terms of any Borrower's capital stock or other
equity interest. Notwithstanding the foregoing, no Borrower shall make any
Distribution under this ss.7.6 if a Default or Event of Default exists or would
be created by the making of such Distribution.
7.7. DEBT MODIFICATION, ETC. The Borrowers will not amend, supplement
or otherwise modify the terms of any of the Subordinated Debt or the
Noteholders' Debt (other than the Conforming Amendment) or prepay (except
prepayments to the Noteholders under ss.4(A) of the Purchase Agreements in
effect as of the Closing Date or as required pursuant to ss.6 of the
Intercreditor Agreement in connection with a mandatory reduction of the Total
Commitment hereunder), redeem or repurchase any of the Subordinated Debt or the
Noteholders' Debt without the prior consent of the Majority Banks.
7.8. EMPLOYEE BENEFIT PLANS. No Borrower nor any ERISA Affiliate will
(a) engage in any "prohibited transaction" within the meaning
of ss.406 of ERISA or ss.4975 of the Code which could result in a
material liability for any Borrower; or
<PAGE>
-57-
(b) permit any Guaranteed Pension Plan to incur an
"accumulated funding deficiency", as such term is defined in ss.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 ss.302(f) or ss.4068 of ERISA; or
(d) amend any Guaranteed Pension Plan in circumstances
requiring the posting of security pursuant to ss.307 of ERISA or
ss.401(a)(29) of the Code; or
(e) permit or take any action which would result in the
aggregate benefit liabilities (with the meaning of ss.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.
7.9. NEGATIVE PLEDGES. Except for Permitted Liens and subject to the
Intercreditor Agreement, no Borrower shall enter into or permit to exist any
arrangement or agreement, enforceable under applicable law, which directly or
indirectly prohibits such Borrower from creating or incurring any lien,
encumbrance, mortgage, pledge, charge, restriction or other security interest in
favor of the Administrative Agent for the benefit of the Banks and the
Administrative Agent under the Loan Documents other than customary
anti-assignment provisions in leases and licensing agreements entered into by
such Borrower in the ordinary course of its business.
7.10. BUSINESS ACTIVITIES. No Borrower will engage directly or
indirectly (whether through Subsidiaries or otherwise) in any type of business
other than the businesses conducted by the Borrowers on the Closing Date and in
related businesses.
7.11. TRANSACTIONS WITH AFFILIATES. No Borrower will engage in any
transaction with any Affiliate (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
such Affiliate or, to the knowledge of the Borrowers, any corporation,
partnership, trust or other entity in which any such Affiliate has a substantial
interest or is an officer, director, trustee or partner, on terms more favorable
to such Person than would have been obtainable on an arm's-length basis in the
ordinary course of business.
8. FINANCIAL COVENANTS OF THE BORROWERS.
The Borrowers agree that, so long as any Obligation is outstanding or
the Banks have any obligation to make Loans or any Issuing Bank has any
obligation to issue, extend or renew any Letters of Credit hereunder:
<PAGE>
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8.1. FUNDED DEBT TO EBITDA. The Borrowers will not permit the ratio of
(x) Funded Debt as at the end of any fiscal quarter to (y) EBITDA for the period
of four (4) consecutive fiscal quarters ending on such date to be greater than
the ratio set forth opposite such fiscal quarter:
<TABLE>
<CAPTION>
<S> <C> <C>
Fiscal Quarters Ending Ratio
--------------------------------------------- -------------------------------
September 30, 1999 - June 30, 2000 4.50:1.00
--------------------------------------------- -------------------------------
September 30, 2000 - June 30, 2001 4.25:1.00
--------------------------------------------- -------------------------------
September 30, 2001 and thereafter 4.00:1.00
--------------------------------------------- -------------------------------
</TABLE>
8.2. SENIOR FUNDED DEBT TO EBITDA. The Borrowers will not permit the
ratio of (x) Senior Funded Debt as at the end of any fiscal quarter to (y)
EBITDA for the period of four (4) consecutive fiscal quarters to be greater than
the ratio set forth opposite such fiscal quarter:
<TABLE>
<CAPTION>
<S> <C> <C>
Fiscal Quarters Ending Ratio
--------------------------------------------- -------------------------------
September 30, 1999 - June 30, 2000 4.00:1.00
--------------------------------------------- -------------------------------
September 30, 2000 - June 30, 2001 3.75:1.00
--------------------------------------------- -------------------------------
September 30, 2001 and thereafter 3.50:1.00
--------------------------------------------- -------------------------------
</TABLE>
8.3. CONSOLIDATED NET WORTH. Commencing with the fiscal quarter ended
September 30, 1999, the Borrowers will not permit their Consolidated Net Worth
at the end of any fiscal quarter to be less than the sum of $62,000,000 PLUS the
sum of (a) 50% of positive Consolidated Net Income for each fiscal quarter,
beginning with the fiscal quarter ended December 31, 1999, and (ii) 100% of the
net proceeds of any sale by the Borrowers of (A) equity securities issued by the
Borrowers or (B) warrants or subscription rights for equity securities issued by
the Borrowers occurring after the Closing Date.
8.4. INTEREST COVERAGE. The Borrowers will not permit the ratio of (x)
EBITA to (y) Consolidated Total Interest Expense to be less than 2.25:1.00 for
any fiscal quarter ending during the period September 30, 1999 through December
31, 2000, or to be less than 2.50:1.00 for any fiscal quarter ending thereafter.
8.5. PROFITABLE OPERATIONS. The Borrowers will not permit Consolidated
Net Income to be less than $1.00 for any fiscal quarter.
8.6. CAPITAL EXPENDITURES. Capital Expenditures for any fiscal year
shall not exceed 2.0 times the sum of (a) actual depreciation expenses PLUS (b)
amortization expense pertaining to landfills for such year.
<PAGE>
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9. CLOSING CONDITIONS.
The obligations of the Banks to make the Loans and of the Issuing Banks
to issue any Letters of Credit on the Closing Date and otherwise be bound by the
terms of this Credit Agreement shall be subject to the satisfaction of the
following conditions precedent:
9.1. CORPORATE ACTION. All corporate action necessary for the valid
execution, delivery and performance by the Borrowers of this Credit Agreement
and the other Loan Documents shall have been duly and effectively taken, and
satisfactory evidence thereof shall have been provided to the Administrative
Agent.
9.2. LOAN DOCUMENTS, ETC.
9.2.1. LOAN DOCUMENTS. Each of the Loan Documents shall have
been duly executed and delivered by the respective parties thereto,
shall be in full force and effect and shall be in form and substance
satisfactory to each of the Banks.
9.2.2. INTERCREDITOR AGREEMENT. The Intercreditor Agreement
shall have been duly executed and delivered by the respective parties
thereto, shall be in full force and effect and shall be in form and
substance satisfactory to the Administrative Agent and the Banks. Each
Bank shall have received copy of the fully executed Intercreditor
Agreement.
9.2.3. NOTEHOLDERS' DOCUMENTS. The Administrative Agent shall
have received copies of the Noteholders' Documents, as amended through
the Closing Date, and the form of the Guaranty Agreements shall be
reasonably satisfactory to the Administrative Agent. The Borrowers
shall have received a Waiver and Consent from the Noteholders, in form
satisfactory to the Administrative Agent.
9.3. CERTIFIED COPIES OF CHARTER DOCUMENTS. Each of the Banks shall
have received from each Borrower a copy, certified by a duly authorized officer
of such Person to be true and complete on the Closing Date, of each of (i) its
charter or other incorporation documents as in effect on such date of
certification, and (ii) its by-laws or operating agreement as in effect on such
date.
9.4. INCUMBENCY CERTIFICATE. Each of the Banks shall have received from
each Borrower an incumbency certificate, dated as of the Closing Date, signed by
a duly authorized officer of such Borrower, and giving the name and bearing a
specimen signature of each individual who shall be authorized: (i) to sign, in
the name and on behalf of such Borrower, each of the Loan Documents to which
such Borrower is or is to become a party; (ii) in the case of the Parent, to
make Loan and Letter of Credit Requests and to apply for Letters of Credit; and
(iii) to give notices and to take other action on its behalf under the Loan
Documents.
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9.5. VALIDITY OF LIENS. The Security Documents shall be effective to
create in favor of the Collateral Agent a legal, valid and enforceable first
(except for Permitted Liens entitled to priority under applicable law) security
interest in and lien upon the Collateral for the benefit of the Banks and the
Noteholders, in accordance with the Intercreditor Agreement. All filings,
recordings, deliveries of instruments and other actions necessary or desirable
in the opinion of the Collateral Agent to protect and preserve such security
interests shall have been duly effected. The Collateral Agent shall have
received evidence thereof in form and substance satisfactory to the Collateral
Agent.
9.6. PERFECTION CERTIFICATES AND UCC SEARCH RESULTS. The Collateral
Agent shall have received from each Borrower a completed and fully executed
Perfection Certificate and the results of UCC searches with respect to the
Collateral, indicating no liens other than Permitted Liens and otherwise in form
and substance satisfactory to the Collateral Agent.
9.7. CERTIFICATES OF INSURANCE. The Administrative Agent shall have
received (a) a certificate of insurance from an independent insurance broker
dated as of the Closing Date, identifying insurers, types of insurance,
insurance limits, and policy terms, and otherwise describing the insurance
obtained in accordance with the provisions of the Security Agreements and (b)
certified copies of all policies evidencing such insurance (or certificates
therefore signed by the insurer or an agent authorized to bind the insurer).
9.8. OPINION OF COUNSEL. Each of the Banks and the Administrative Agent
shall have received a favorable legal opinion from counsel to the Borrowers
addressed to the Banks and the Administrative Agent, dated as of the Closing
Date, in form and substance satisfactory to the Administrative Agent.
9.9. PERMIT CERTIFICATE. The Banks shall have received an environmental
permit certificate in substantially the form of EXHIBIT E from the Borrowers
satisfactory to the Administrative Agent concerning principal operating permits
at the Borrowers' principal operating facilities.
9.10. PAYMENT OF FEES. The Borrowers shall have paid all fees due and
payable on the Closing Date to the Banks, the Administrative Agent, the
Administrative Agent's Special Counsel and the Arranger.
9.11. PAYOFF LETTER. The Administrative Agent shall have received a
payoff letter from BBT, indicating the amount of the loan obligations of the
Borrowers to BBT to be discharged on the Closing Date and an acknowledgment by
each of BBT that upon receipt of such funds it will forthwith execute and
deliver to the Administrative Agent for filing all termination statements and
take such other actions as may be necessary to discharge all mortgages, deeds of
trust and security interests granted by the Borrowers in favor of BBT.
9.12. DISBURSEMENT INSTRUCTIONS. The Administrative Agent shall have
received disbursement instructions from the Borrowers, indicating that a portion
of the proceeds
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of the Loans, in an amount equal to the aggregate loan obligations of the
Borrower to BBT, are paid to BBT.
10. CONDITIONS TO ALL BORROWINGS.
The obligations of the Banks to make any Loan, and of any Issuing Bank
to issue, extend or renew any Letter of Credit, in each case whether on or after
the Closing Date, shall also be subject to the satisfaction of the following
conditions precedent:
10.1. REPRESENTATIONS TRUE; NO EVENT OF DEFAULT. Each of the
representations and warranties of the Borrowers contained in this Credit
Agreement, the other Loan Documents or in any document or instrument delivered
pursuant to or in connection with this Credit 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 such Loan or the issuance, extension or renewal of such Letter of
Credit, 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
Credit Agreement and the other Loan Documents and changes occurring in the
ordinary course of business that 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. NO LEGAL IMPEDIMENT. No change shall have occurred in any law or
regulations thereunder or interpretations thereof that in the reasonable opinion
of any Bank would make it illegal for such Bank to make such Loan or to
participate in the issuance, extension or renewal of such Letter of Credit or in
the reasonable opinion of the Issuing Bank would make it illegal for the Issuing
Bank to issue, extend or renew such Letter of Credit.
10.3. GOVERNMENTAL REGULATION. Each Bank shall have received such
statements in substance and form reasonably satisfactory to such Bank as such
Bank 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.
10.4. PROCEEDINGS AND DOCUMENTS. All proceedings in connection with the
transactions contemplated by this Credit Agreement, the other Loan Documents and
all other documents incident thereto shall be satisfactory in substance and in
form to each of the Banks and to the Administrative Agent and the Administrative
Agent's Special Counsel, including, without limitation, a Loan and Letter of
Credit Request in the form attached hereto as EXHIBIT B, and each of the Banks,
the Administrative Agent and such counsel shall have received all information
and such counterpart originals or certified or other copies of such documents as
the Administrative Agent may reasonably request.
11. COLLATERAL SECURITY.
The Obligations shall be secured by a perfected first priority security
interest (subject only to Permitted Liens entitled to priority under applicable
law) in all of the
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assets of the Borrowers (other than motor vehicle titles and real estate),
whether now owned or hereafter acquired, pursuant to the terms of the Security
Documents and the Intercreditor Agreement.
12. EVENTS OF DEFAULT; ACCELERATION; ETC.
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 or lapse of time, "Defaults") shall
occur:
(a) the Borrowers shall fail to pay any principal of the Loans
or any Reimbursement Obligation when the same shall become due and
payable, whether at the stated date of maturity or any accelerated date
of maturity or at any other date fixed for payment;
(b) the Borrowers shall fail to pay any interest on the Loans,
the fees, or other sums due hereunder or under any of the other Loan
Documents within five (5) Business Days after the same shall become due
and payable, whether at the stated date of maturity or any accelerated
date of maturity or at any other date fixed for payment;
(c) the Borrowers shall fail to comply with any of the
covenants contained inss.ss.6, 7 or 8;
(d) 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 elsewhere in this ss.12.1) for fifteen (15) days
after written notice of such failure has been given to the Borrowers by
the Administrative Agent;
(e) any representation or warranty of the Borrowers in this
Credit Agreement or any of the other Loan Documents or in any other
document or instrument delivered pursuant to or in connection with this
Credit Agreement shall prove to have been false in any material respect
upon the date when made or deemed to have been made or repeated;
(f) the Borrowers shall fail to pay at maturity, or within any
applicable period of grace, any obligation for borrowed money (other
than the Obligations or the Noteholders' Debt) or any guaranty with
respect thereto in an aggregate amount greater than $1,000,000, 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 $1,000,000 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;
(g) any Borrower shall make an assignment for the benefit of
creditors, or admit in writing its inability to pay or generally fail
to pay its debts
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as they mature or become due, or shall petition or apply 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 shall commence 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 shall take any action to
authorize or in furtherance of any of the foregoing, or if any such
petition or application shall be filed or any such case or other
proceeding shall be commenced against any Borrower and any Borrower
shall indicate its approval thereof, consent thereto or acquiescence
therein or such petition or application shall not have been dismissed
within forty-five (45) days following the filing thereof;
(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;
(i) 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 that, with other outstanding
final judgments, undischarged, against any Borrower exceeds in the
aggregate $1,000,000;
(j) if any of the Loan Documents shall be cancelled,
terminated, revoked or rescinded or the Collateral Agent's security
interests, mortgages or liens in a substantial portion of the
Collateral shall cease to be perfected, or shall cease to have the
priority contemplated by the Security Documents, in each case otherwise
than in accordance with the terms thereof or with the express prior
written agreement, consent or approval of the Banks, 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
any Borrower party thereto 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;
(k) 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 $1,000,000; or 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 $1,000,000, 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
ss.302(f)(1) of ERISA), provided that the Administrative Agent
determines in its reasonable discretion that such event (A)
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could be expected to result in liability of any Borrower to the PBGC or
such Guaranteed Pension Plan in an aggregate amount exceeding
$1,000,000 and (B) could constitute grounds for the termination of such
Guaranteed Pension Plan by the PBGC, for the appointment by the
appropriate United States District Court of a trustee to administer
such Guaranteed Pension Plan or for the imposition of a lien in favor
of such Guaranteed Pension Plan; or (ii) the appointment by a United
States District Court of a trustee to administer such Guaranteed
Pension Plan; or (iii) the institution by the PBGC of proceedings to
terminate such Guaranteed Pension Plan;
(l) any Borrower shall be enjoined, restrained or in any way
prevented by the order of any court or any administrative or regulatory
agency from conducting any material part of its business and such order
shall continue in effect for more than thirty (30) days;
(m) there shall occur the loss, suspension or revocation of,
or failure to renew, any license or permit now held or hereafter
acquired by any Borrower if such loss, suspension, revocation or
failure to renew would have a material adverse effect on the business
or financial condition of any Borrower;
(n) any Borrower shall be indicted for a state or federal
crime, or any civil or criminal action shall otherwise have been
brought or threatened against any Borrower, a punishment for which in
any such case could include the forfeiture of any assets of the
Borrowers having a fair market value in excess of $1,000,000;
(o) (i) the Parent shall at any time, legally or beneficially,
directly or indirectly own less than one hundred percent (100%) of the
shares of the common stock, partnership interests or membership units
of each other of the Borrower; or (ii) 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 the Parent or, during any period of twelve (12)
consecutive calendar months, individuals who were directors of the
Parent on the first day of such period shall cease to constitute a
majority of the board of directors of the Parent; or
(p) (i) a default or event of default shall have occurred
under the Noteholders' Debt, or (ii) the holders of all or any part of
the Noteholders' Debt shall accelerate the maturity of all or any part
of the Noteholders' Debt, (iii) the Noteholders' Debt shall be prepaid,
redeemed or repurchased in whole or in part or amended except as
permitted under ss.7.7 hereof without the prior consent of the Majority
Banks and the Administrative Agent, or (iv) the Conforming Amendment
shall fail to be in full force and effect within thirty (30) days after
the Closing Date;
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then, and in any such event, so long as the same may be continuing, the
Administrative Agent may, and upon the request of the Majority Banks shall, by
notice in writing to the Borrowers declare all amounts owing with respect to
this Credit Agreement, the Notes 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 ss.ss.12.1(g), 12.1(h) or
ss.12.1(p)(ii), all such amounts shall become immediately due and payable
automatically and without any requirement of notice from the Administrative
Agent or any Bank.
12.2. TERMINATION OF COMMITMENTS. If any one or more of the Events of
Default specified in ss.ss.12.1(g), 12.1(h) or ss.12.1(p)(ii) shall occur, any
unused portion of the credit hereunder shall forthwith terminate and each of the
Banks shall be relieved of all further obligations to make Loans to the
Borrowers and the Issuing Banks shall be relieved of all further obligations to
issue, extend or renew Letters of Credit. If any other Event of Default shall
have occurred and be continuing, or if on any Drawdown Date or other date for
issuing, extending or renewing any Letter of Credit the conditions precedent to
the making of the Loans to be made on such Drawdown Date or (as the case may be)
to issuing, extending or renewing such Letter of Credit on such other date are
not satisfied, the Administrative Agent may and, upon the request of the
Majority Banks, shall, by notice to the Borrower, terminate the unused portion
of the credit hereunder, and upon such notice being given such unused portion of
the credit hereunder shall terminate immediately and each of the Banks shall be
relieved of all further obligations to make Loans and the Issuing Banks shall be
relieved of all further obligations to issue, extend or renew Letters of Credit.
No termination of the credit hereunder shall relieve the Borrower or any of its
Subsidiaries of any of the Obligations.
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 Banks shall have
accelerated the maturity of the Loans pursuant to ss.12.1, each Bank, if owed
any amount with respect to the Loans or the Reimbursement Obligations, may, with
the consent of the Majority Banks but not otherwise, 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 Credit Agreement and the other Loan Documents or any
instrument pursuant to which the Obligations to such Bank are evidenced,
including 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 other
legal or equitable right of such Bank, subject to the Intercreditor Agreement.
No remedy herein conferred upon any Bank or the Administrative Agent or the
holder of any Note or purchaser of any Letter of Credit Participation 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.
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12.4. DISTRIBUTION OF COLLATERAL PROCEEDS. Subject in all cases to the
requirements of the Intercreditor Agreement to share proceeds of the Collateral
as set forth therein, in the event that, following the occurrence or during the
continuance of any Default or Event of Default, the Administrative Agent or any
Bank, as the case may be, receives any monies in connection with the enforcement
of any the Security Documents, or otherwise with respect to the realization upon
any of the Collateral, such monies shall be distributed for application as
follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of the Administrative Agent for or in respect of all
reasonable costs, expenses, disbursements and losses which shall have
been incurred or sustained by the Administrative Agent in connection
with the collection of such monies by the Administrative Agent, for the
exercise, protection or enforcement by the Administrative Agent of all
or any of the rights, remedies, powers and privileges of the
Administrative Agent under this Credit Agreement or any of the other
Loan Documents or in respect of the Collateral or in support of any
provision of adequate indemnity to the Administrative Agent against any
taxes or liens which by law shall have, or may have, priority over the
rights of the Administrative Agent to such monies;
(b) Second, to all other Obligations in such order or
preference as the Majority Banks may determine; PROVIDED, HOWEVER, that
(i) distributions shall be made (A) PARI PASSU among Obligations with
respect to the Administrative Agent's Fee payable pursuant to ss.4.1
and all other Obligations and (B) with respect to each type of
Obligation owing to the Banks, such as interest, principal, fees and
expenses, among the Banks PRO RATA, and (ii) the Administrative Agent
may in its discretion make proper allowance to take into account any
Obligations not then due and payable;
(c) Third, upon payment and satisfaction in full or other
provisions for payment in full satisfactory to the Banks and the
Administrative Agent of all of the Obligations, to the payment of any
obligations required to be paid pursuant to ss.9-504(1)(c) of the
Uniform Commercial Code of The Commonwealth of Massachusetts; and
(d) Fourth, the excess, if any, shall be returned to the
Borrowers or to such other Persons as are entitled thereto.
12.5. ACKNOWLEDGEMENT REGARDING THE INTERCREDITOR AGREEMENT. Each Bank
hereby acknowledges receipt of the Intercreditor Agreement under which BKB is
appointed as Collateral Agent for the benefit of the Banks and the Noteholders
(and their respective successors and assigns). Each Bank by its execution of
this Agreement or an Assignment and Acceptance Agreement agrees to be bound by
the terms of such Intercreditor Agreement as if such Bank were an original
signatory thereto, including without limitation, the waivers of certain rights
(including a waiver of jury trial) as specified therein and the turnover and
collateral sharing provisions thereof. Furthermore, the Banks acknowledge and
agree that pursuant to the terms of the
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Intercreditor Agreement, this ss.12.5 cannot be amended without the consent of
the Noteholders, and that the Noteholders shall be a third party beneficiary of
the agreements and obligations of the Banks contained in this ss.12.5.
13. SETOFF.
Regardless of the adequacy of any collateral, during the continuance of
any Event of Default, any deposits or other sums credited by or due from any of
the Banks to the Borrowers and any securities or other property of the Borrowers
in the possession of such Bank may be applied to or set off by such Bank against
the payment of 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 such Bank. Each of the Banks agrees with
each other Bank that (i) if an amount to be set off is to be applied to
Indebtedness of the Borrowers to such Bank, other than Indebtedness evidenced by
the Notes held by such Bank or constituting Reimbursement Obligations owed to
such Bank, such amount shall be applied ratably to such other Indebtedness and
to the Indebtedness evidenced by all such Notes held by such Bank or
constituting Reimbursement Obligations owed to such Bank and all such amounts to
be applied to the Notes and Reimbursement Obligations shall be subject to the
Intercreditor Agreement, and (ii) if such Bank shall receive from the Borrowers,
whether by voluntary payment, exercise of the right of setoff, counterclaim,
cross action, enforcement of the claim evidenced by the Notes held by, or
constituting Reimbursement Obligations owed to, such Bank by proceedings against
the Borrowers at law or in equity or by proof thereof in bankruptcy,
reorganization, liquidation, receivership or similar proceedings, or otherwise,
and shall retain and apply to the payment of the Note or Notes held by, or
Reimbursement Obligations owed to, such Bank any amount in excess of its ratable
portion of the payments received by all of the Banks with respect to the Notes
held by, and Reimbursement Obligations owed to, all of the Banks, such Bank will
make such disposition and arrangements with the other Banks with respect to such
excess, either by way of distribution, PRO TANTO assignment of claims,
subrogation or otherwise as shall result in each Bank receiving in respect of
the Notes held by it or Reimbursement Obligations owed it, its proportionate
payment as contemplated by this Credit Agreement; PROVIDED that if all or any
part of such excess payment is thereafter recovered from such Bank, such
disposition and arrangements shall be rescinded and the amount restored to the
extent of such recovery, but without interest.
14. THE ADMINISTRATIVE AGENT.
14.1. APPOINTMENT OF ADMINISTRATIVE AGENT, POWERS AND IMMUNITIES. Each
Bank hereby irrevocably appoints and authorizes the Administrative Agent to act
as its agent hereunder and under the other Loan Documents and the Intercreditor
Agreement, provided, however, the Administrative Agent is hereby authorized by
the Banks to serve only as an administrative and collateral agent for the Banks
and to exercise such powers as are reasonably incidental thereto and as are set
forth in this Credit Agreement and the other Loan Documents and the
Intercreditor Agreement. The Administrative Agent hereby acknowledges that it
does not have the authority to negotiate any agreement which would bind the
Banks or agree to any amendment, waiver or
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modification of any of the Loan Documents Intercreditor Agreement or bind the
Banks except as set forth in this Credit Agreement or the Loan Documents and the
Intercreditor Agreement. Except as provided in this ss.14 and in the other Loan
Documents and the Intercreditor Agreement, the Administrative Agent shall take
action or refrain from acting only upon instructions of the Banks and no action
taken or failure to act without the consent of the Banks shall be binding on any
Bank which has not consented. Each Bank irrevocably authorizes the
Administrative Agent to execute the Security Documents and the Intercreditor
Agreement and all other instruments relating thereto and to take such action on
behalf of each of the Banks and to exercise all such powers as are expressly
delegated to the Administrative Agent under the Loan Documents, the
Intercreditor Agreement, and all related documents, together with such other
powers as are reasonably incidental thereto. It is agreed that the duties,
rights, privileges and immunities of the Administrative Agent, in its capacity
as an Issuing Bank, shall be identical to its duties, rights, privileges and
immunities as a Bank as provided in this ss.14. The Administrative Agent shall
not have any duties or responsibilities or any fiduciary relationship with any
Bank except those expressly set forth in this Credit Agreement. Neither the
Administrative Agent nor any of its affiliates shall be responsible to the Banks
for any recitals, statements, representations or warranties made by the
Borrowers or any other Person whether contained herein or otherwise or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency of
this Credit Agreement, the other Loan Documents, the Intercreditor Agreement or
any other document referred to or provided for herein or therein or for any
failure by the Borrowers or any other Person to perform its obligations
hereunder or thereunder or in respect of the Notes. The Administrative Agent may
employ agents and attorneys-in-fact and shall not be responsible for the
negligence or misconduct of any such agents or attorneys-in-fact selected by it
with reasonable care. The Administrative Agent shall exercise the same care in
administering the Loans and in dealing with the Collateral as it exercises with
respect to similar transactions entered into solely for its own account;
however, neither the Administrative Agent nor any of its directors, officers,
employees or Administrative Agents shall be responsible for any action taken or
omitted to be taken in good faith by it or them hereunder or in connection
herewith or with the Intercreditor Agreement, except for its or their own gross
negligence or willful misconduct. BKB in its separate capacity as a Bank shall
have the same rights and powers hereunder as any other Bank.
14.2. ACTIONS BY ADMINISTRATIVE AGENT. The Administrative Agent shall
be fully justified in failing or refusing to take any action under this Credit
Agreement or the Loan Documents as it reasonably deems appropriate unless it
shall first have received such advice or concurrence of the Banks and shall be
indemnified to its reasonable satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Administrative Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this Credit
Agreement or any of the Loan Documents in accordance with a request of the
Banks, and such request and any action taken or failure to act pursuant thereto
shall be binding upon the Banks and all future holders of the Notes or any
Letter of Credit Participation.
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14.3. INDEMNIFICATION. WITHOUT LIMITING THE OBLIGATIONS OF THE
BORROWERS HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT, THE BANKS AGREE TO
INDEMNIFY THE ADMINISTRATIVE AGENT, RATABLY IN ACCORDANCE WITH THEIR RESPECTIVE
COMMITMENT PERCENTAGES, FOR ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS
OF ANY KIND OR NATURE WHATSOEVER (OTHER THAN LOSSES WITH RESPECT TO THE
ADMINISTRATIVE AGENT'S PRO RATA SHARE OF THE OBLIGATIONS) WHICH MAY AT ANY TIME
BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST THE ADMINISTRATIVE AGENT IN ANY
WAY RELATING TO OR ARISING OUT OF THIS CREDIT AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR ANY DOCUMENTS CONTEMPLATED BY OR REFERRED TO HEREIN OR THEREIN OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR THE ENFORCEMENT OF ANY OF THE
TERMS HEREOF OR THEREOF OR OF ANY SUCH OTHER DOCUMENTS; provided, that NO BANK
SHALL BE LIABLE FOR ANY OF THE FOREGOING TO THE EXTENT THEY ARISE FROM THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF THE ADMINISTRATIVE AGENT (OR ANY AGENT
THEREOF), IT BEING THE INTENT OF THE PARTIES HERETO THAT ALL SUCH INDEMNIFIED
PARTIES SHALL BE INDEMNIFIED FOR THEIR ORDINARY SOLE OR CONTRIBUTORY NEGLIGENCE.
14.4. REIMBURSEMENT. Without limiting the provisions of ss.14.3, the
Banks hereby agree that the Administrative Agent shall not be obliged to make
available to any Person any sum which the Administrative Agent is expecting to
receive for the account of that Person until the Administrative Agent has
determined that it has received that sum. The Administrative Agent may, however,
disburse funds prior to determining that the sums which the Administrative Agent
expects to receive have been finally and unconditionally paid to the
Administrative Agent, if the Administrative Agent wishes to do so. If and to the
extent that the Administrative Agent does disburse funds and it later becomes
apparent that the Administrative Agent did not then receive a payment in an
amount equal to the sum paid out, then any Person to whom the Administrative
Agent made the funds available shall, on demand from the Administrative Agent,
refund to the Administrative Agent the sum paid to that Person. If, in the
opinion of the Administrative Agent, the distribution of any amount received by
it in such capacity hereunder or under the Loan Documents might involve it in
liability, it may refrain from making distribution until its right to make
distribution shall have been adjudicated by a court of competent jurisdiction.
If a court of competent jurisdiction shall adjudge that any amount received and
distributed by the Administrative Agent is to be repaid, each Person to whom any
such distribution shall have been made shall either repay to the Administrative
Agent its proportionate share of the amount so adjudged to be repaid or shall
pay over the same in such manner and to such Persons as shall be determined by
such court.
14.5. DOCUMENTS. The Administrative Agent will forward to each Bank,
promptly after the Administrative Agent's receipt thereof, a copy of each notice
or other
<PAGE>
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document furnished to the Administrative Agent for such Bank hereunder or under
the Intercreditor Agreement; PROVIDED, HOWEVER, that, notwithstanding the
foregoing, the Administrative Agent may furnish to the Banks a monthly summary
with respect to Letters of Credit issued hereunder in lieu of copies of the
related Letter of Credit Applications.
14.6. NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER BANKS. Each Bank
represents that it has, independently and without reliance on the Administrative
Agent or any other Bank, and based on such documents and information as it has
deemed appropriate, made its own appraisal of the financial condition and
affairs of the Borrowers and decision to enter into this Credit Agreement and
the other Loan Documents and agrees that it will, independently and without
reliance upon the Administrative Agent or any other Bank, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own appraisals and decisions in taking or not taking action under this
Credit Agreement or any other Loan Document. The Administrative Agent shall not
be required to keep informed as to the performance or observance by the
Borrowers of this Credit Agreement, the other Loan Documents or any other
document referred to or provided for herein or therein or by any other Person of
any other agreement or to make inquiry of, or to inspect the properties or books
of, any Person. Except for notices, reports and other documents and information
expressly required to be furnished to the Banks by the Administrative Agent
hereunder, the Administrative Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning any person
which may come into the possession of the Administrative Agent or any of its
affiliates. Each Bank shall have access to all documents relating to the
Administrative Agent's performance of its duties hereunder at such Bank's
request. Unless any Bank shall promptly object to any action taken by the
Administrative Agent hereunder (other than actions to which the provisions of
ss.14.8 are applicable and other than actions which constitute gross negligence
or willful misconduct by the Administrative Agent), such Bank shall conclusively
be presumed to have approved the same.
14.7. RESIGNATION OF ADMINISTRATIVE AGENT. The Administrative Agent may
resign at any time by giving sixty (60) days prior written notice thereof to the
Banks and the Borrowers. Upon any such resignation, the Banks shall have the
right to appoint a successor Administrative Agent. If no successor
Administrative Agent shall have been so appointed by the Banks and shall have
accepted such appointment within thirty (30) days after the retiring
Administrative Agent's giving of notice of resignation, then the retiring
Administrative Agent may, on behalf of the Banks, appoint a successor
Administrative Agent, which shall be a financial institution having a combined
capital and surplus in excess of $150,000,000. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder. After any retiring Administrative
Agent's resignation, the provisions of this Credit Agreement shall continue in
effect for its benefit in respect of any actions taken or
<PAGE>
-71-
omitted to be taken by it while it was acting as Administrative Agent. Any new
Administrative Agent appointed pursuant to this ss.14.7 shall immediately issue
new Letters of Credit in place of Letters of Credit previously issued by the
Administrative Agent.
14.8. ACTION BY THE BANKS, CONSENTS, AMENDMENTS, WAIVERS, ETC. Except
as otherwise expressly provided in this ss.14.8, any action to be taken
(including the giving of notice) may be taken or any consent or approval
required or permitted by this Credit Agreement or any other Loan Document to be
given by the Banks may be given, and any term of this Credit Agreement, any
other Loan Document or any other instrument, document or agreement related to
this Credit Agreement or the other Loan Documents or mentioned therein may be
amended and the performance or observance by the Borrowers or any other person
of any of the terms thereof and any Default or Event of Default (as defined in
any of the above-referenced documents or instruments) may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only with the written consent of the Majority Banks; PROVIDED, HOWEVER, that no
such consent or amendment which affects the rights, duties or liabilities of the
Administrative Agent (in its capacity as Administrative Agent) shall be
effective without the written consent of the Administrative Agent.
Notwithstanding the foregoing, no amendment, waiver or consent shall do any of
the following unless in writing and signed by ALL of the Banks: (a) increase the
Total Commitments (or subject the Banks to any additional obligations), (b)
reduce the principal of or rate of interest on the Notes (including, without
limitation, interest on overdue amounts) or any fees payable hereunder, (c)
postpone the Maturity Date or any date fixed for any payment in respect of
principal or interest (including, without limitation, interest on overdue
amounts) on the Notes, or any fees payable hereunder; (d) change the definition
of "Majority Banks" or percentage of Banks which shall be required for the Banks
or any of them to take any action under the Loan Documents; (e) amend this 14.8;
(f) change the Commitment Percentage of any Bank, except as permitted under
ss.18 hereof; (g) release any Borrower from its obligations hereunder; or (h)
release or subordinate any Collateral valued in excess of $500,000 in the
aggregate other than with respect to asset dispositions permitted under
ss.7.4.2.
In addition, the Administrative Agent, when acting on behalf of itself
and the Banks pursuant to the Intercreditor Agreement, shall vote on the Banks'
behalf on matters requiring consent and shall agree to amend the Security
Documents only with the consent of the Majority Banks.
14.9. DOCUMENTATION AGENT. The Documentation Agent shall not have any
right, power, obligation, liability, responsibility or duty under this Credit
Agreement other than those applicable to all Banks as such. Without limiting the
foregoing, the Documentation Agent shall not have or be deemed to have any
fiduciary relationship with any Bank. Each Bank acknowledges that it has not
relied, and will not rely, on the Documentation Agent in deciding to enter into
this Credit Agreement or not taking any action hereunder.
<PAGE>
-72-
15. EXPENSES.
Each Borrower agrees to pay (i) the reasonable costs of producing and
reproducing this Credit Agreement, the other Loan Documents and the other
agreements and instruments mentioned herein, (ii) any taxes (including any
interest and penalties in respect thereto) payable by the Administrative Agent
or any of the Banks (other than taxes based upon the Administrative Agent's or
any Bank's net income) on or with respect to the transactions contemplated by
this Credit Agreement (each Borrower hereby agreeing to indemnify the
Administrative Agent and each Bank with respect thereto), (iii) the reasonable
fees, expenses and disbursements of the Administrative Agent's counsel incurred
in connection with the preparation, administration or interpretation of the Loan
Documents and other instruments mentioned herein, each closing hereunder, and
amendments, modifications, approvals, consents or waivers hereto or hereunder,
(iv) the fees, expenses and disbursements of the Administrative Agent, the
Arranger, or any of their affiliates incurred by the Administrative Agent, the
Arranger, or such affiliate in connection with the preparation, administration
or interpretation of the Loan Documents and other instruments mentioned herein,
including all title insurance premiums and surveyor, engineering and appraisal
charges, (v) any fees, costs, expenses and bank charges, including bank charges
for returned checks, incurred by the Administrative Agent in establishing,
maintaining or handling agency accounts, lock box accounts and other accounts
for the collection of any of the Collateral; (vi) all reasonable out-of-pocket
expenses (including without limitation reasonable attorneys' fees and costs,
which attorneys may be employees of any Bank or the Administrative Agent, and
reasonable consulting, accounting, appraisal, investment banking and similar
professional fees and charges) incurred by any Bank or the Administrative Agent
in connection with (A) the enforcement of or preservation of rights under any of
the Loan Documents against the Borrowers or the administration thereof after the
occurrence of a Default or Event of Default and (B) any litigation, proceeding
or dispute whether arising hereunder or otherwise, in any way related to any
Bank's or the Administrative Agent's relationship with the Borrowers and (vii)
all reasonable fees, expenses and disbursements of the Administrative Agent
incurred in connection with UCC searches, UCC filings or mortgage recordings.
The covenants of this ss.15 shall survive payment or satisfaction of all other
Obligations.
16. INDEMNIFICATION.
THE BORROWERS AGREE TO INDEMNIFY AND HOLD HARMLESS THE ADMINISTRATIVE
AGENT, THE DOCUMENTATION AGENT, THE ARRANGER AND THE BANKS, AS WELL AS THEIR
SHAREHOLDERS, DIRECTORS, EMPLOYEES, 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
<PAGE>
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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, EACH BANK, THE ADMINISTRATIVE AGENT, THE DOCUMENTATION AGENT AND THE
ARRANGER, 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 BANKS AND THE
ADMINISTRATIVE AGENT. THE COVENANTS OF THIS ss.16 SHALL SURVIVE PAYMENT OR
SATISFACTION OF PAYMENT OF AMOUNTS OWING WITH RESPECT TO THE NOTES OR ANY OTHER
LOAN DOCUMENT, IT BEING THE INTENT OF THE PARTIES HERETO THAT ALL SUCH
INDEMNIFIED PARTIES SHALL BE INDEMNIFIED FOR THEIR ORDINARY SOLE OR CONTRIBUTORY
NEGLIGENCE.
17. 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 Banks and the
Administrative Agent, notwithstanding any investigation heretofore or hereafter
made by any of them, and shall survive the making by the Banks of the Loans and
the issuance, extension or renewal by the Issuing Banks of any Letters of
Credit, as herein contemplated, and shall continue in full force and effect so
long as any amount due under this Credit Agreement, any Letter of Credit or the
Notes remains outstanding and unpaid or any Bank has any obligation to make any
Loans or the Issuing Banks have any obligation 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.
18. ASSIGNMENT AND PARTICIPATION.
It is understood and agreed that each Bank shall have the right to
assign at any time all or any portion of its Commitment and interests in the
risk relating to the Loans and outstanding Letters of Credit hereunder in an
amount equal to or greater than $2,500,000 (which assignment shall be of an
equal percentage of its Commitment, the Loans and outstanding Letters of Credit
unless otherwise agreed to by the Administrative Agent) to Eligible Assignees
with the prior written approval of the Administrative Agent and, if no Default
or Event of Default exists, the Borrowers, which approvals shall not be
unreasonably withheld or delayed; PROVIDED, HOWEVER, that the Administrative
Agent may assign without the consent of the Borrowers such portion of
<PAGE>
-74-
its Commitment and interests in the risk relating to the Loans and outstanding
Letters of Credit necessary to reach its desired hold level. Any Bank may at any
time, and from time to time, assign to any branch, lending office, or affiliate
of such Bank all or any part of its rights and obligations under the Loan
Documents by notice to the Administrative Agent and the Borrowers. It is further
agreed that each Eligible Assignee which executes and delivers to the
Administrative Agent and the Borrowers hereunder an Assignment and Acceptance
substantially in the form of EXHIBIT F hereto together with an assignment fee in
the amount of $3,500 payable by the assigning Bank to the Administrative Agent,
shall, on the date specified in such Assignment and Acceptance, become a party
to this Credit Agreement and the other Loan Documents for all purposes of this
Credit Agreement and the other Loan Documents, and its portion of the
Commitment, the Loans and Letters of Credit shall be as set forth in such
Assignment and Acceptance. The Bank assignor thereunder shall, to the extent
that rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Credit Agreement. Upon the execution and delivery of such
Assignment and Acceptance, the Borrowers shall issue to the Eligible Assignee a
Note in the amount of such Eligible Assignee's Commitment, dated the date of the
assignment and otherwise completed in substantially the form of EXHIBIT B and to
the extent any assigning Bank has retained a portion of its obligations
hereunder, an appropriate replacement Note to the assigning Bank reflecting its
assignment; (b) the Administrative Agent shall distribute to the Borrowers, the
Banks and such Eligible Assignee a schedule reflecting such changes; and (c)
this Credit Agreement shall be appropriately amended to reflect (i) the status
of the Eligible Assignee as a party hereto and (ii) the status and rights of the
Banks hereunder.
Each Bank shall also have the right to grant participations to one or
more banks or other financial institutions in its Commitment, the Loans and
outstanding Letters of Credit. The documents evidencing any such participation
shall limit such participating bank or financial institutions voting rights
solely to those matters set forth in ss.14.8 which require the vote of all
Banks.
Notwithstanding the foregoing, no assignment or participation shall
operate to increase the Commitment hereunder or otherwise alter the substantive
terms of this Credit Agreement, and no Bank which retains a Commitment hereunder
shall have a Commitment of less than $2,500,000, as such amount may be reduced
upon reductions in the Total Commitment pursuant to ss.2.2 hereof.
Anything contained in this ss.18 to the contrary notwithstanding, any
Bank may at any time pledge, without the consent of the Borrower or the
Administrative Agent, all or any portion of its interest and rights under this
Credit Agreement (including all or any portion of its Notes) to any of the
twelve Federal Reserve Banks organized under ss.4 of the Federal Reserve Act, 12
U.S.C. 341. No such pledge or the enforcement thereof shall release the pledgor
Bank from its obligations hereunder or under any of the other Loan Documents.
<PAGE>
-75-
19. PARTIES IN INTEREST.
All the terms of this Credit 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 Banks.
20. NOTICES, ETC.
Except as otherwise expressly provided in this Credit Agreement, all
notices and other communications made or required to be given pursuant to this
Credit Agreement or the other Loan Documents shall be in writing and shall be
delivered by hand, mailed by United States first-class mail, postage prepaid, or
sent by telegraph, telex or telecopier and confirmed by letter, addressed as
follows:
(a) if to the Borrowers, at Waste Industries, Inc., 3301
Benson Drive, Suite 601, Raleigh, North Carolina 27609, Attention:
Stephen C. Shaw, Vice President of Finance, telecopy number
919-325-3013;
(b) if to the Administrative Agent or BKB, at 100 Federal
Street, Boston, Massachusetts 02110, Attention: Timothy M. Laurion,
Managing Director, telecopy number 617-434-2160; or
(c) if to any Bank, at such Bank's address as provided to the
Administrative Agent;
or at 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 overnight courier or
facsimile to a responsible officer of the party to which it is directed, at the
time of the receipt thereof by such officer or the sending of such facsimile and
(b) if sent by registered or certified first-class mail, postage prepaid, three
(3) Business Days after the mailing thereof.
21. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION.
21.1. SHARING OF INFORMATION WITH SECTION 20 SUBSIDIARY. Each Borrower
acknowledges that from time to time financial advisory, investment banking and
other services may be offered or provided to the Borrowers, in connection with
this Credit Agreement or otherwise, by a Section 20 Subsidiary. Each Borrower
hereby authorizes (a) such Section 20 Subsidiary to share with the
Administrative Agent and each Bank any information delivered to such Section 20
Subsidiary by such Borrower, and (b) the Administrative Agent and each Bank to
share with such Section 20 Subsidiary any information delivered to the
Administrative Agent or such Bank by the Borrowers pursuant to this Credit
Agreement, or in connection with the decision of such Bank to enter into this
Credit Agreement; it being understood, in each case, that any such Section
<PAGE>
-76-
20 Subsidiary receiving such information shall be bound by the confidentiality
provisions of this Credit Agreement. Such authorization shall survive the
payment and satisfaction in full of all of the Obligations.
21.2. CONFIDENTIALITY. Each of the Banks and the Administrative Agent
agrees, on behalf of itself and each of their affiliates, directors, officers
and employees, to use reasonable precautions to keep confidential, in accordance
with their customary procedures for handling confidential information of the
same nature and in accordance with safe and sound commercial lending practices,
any material non-public information supplied to it by the Borrowers pursuant to
this Credit Agreement unless such information is identified by such Person as
not being confidential at the time the same is delivered to the Banks or the
Administrative Agent, PROVIDED THAT nothing herein shall limit the disclosure of
any such information (a) after such information shall have become public other
than through a violation of this ss.21, (b) to the extent required by statute,
rule, regulation or judicial process, (c) to counsel for any of the Banks or the
Administrative Agent, (d) to bank examiners, the National Association of
Insurance Commissioners or any other regulatory authority having jurisdiction
over any Bank or the Administrative Agent, or to auditors or accountants, (e) to
the Administrative Agent, any Bank or any Section 20 Subsidiary, (f) in
connection with any litigation or other proceeding to which any one or more of
the Banks, the Administrative Agent or any Section 20 Subsidiary is a party, or
in connection with the enforcement of rights or remedies hereunder or under any
other Loan Document, (g) to a Subsidiary or affiliate of such Bank or any fund
that invests in loans and is managed by such Bank, or (h) to any assignee or
participant (or prospective assignee or participant) so long as such assignee or
participant agrees to be bound by the provisions of this ss.21.
21.3. PRIOR NOTIFICATION. Unless prohibited by applicable law or court
order, each of the Banks and the Administrative Agent shall, prior to disclosure
thereof, notify the Borrowers of any request for disclosure of any such material
non-public information by any governmental agency or representative thereof
(other than any such request in connection with an examination of such Bank by
such governmental agency) or pursuant to legal process.
21.4. OTHER. In no event shall any Bank or the Administrative Agent be
obligated or required to return any materials furnished to it or any Section 20
Subsidiary by the Borrowers. The obligations of each Bank under this ss.21 shall
supersede and replace the obligations of such Bank under any confidentiality
letter in respect of this financing signed and delivered by such Bank to the
Borrowers prior to the date hereof and shall be binding upon any assignee of, or
purchaser of any participation in, any interest in any of the Loans or
Reimbursement Obligations from any Bank.
22. MISCELLANEOUS.
The rights and remedies herein expressed are cumulative and not
exclusive of any other rights which the Banks or Administrative Agent would
otherwise have. The captions in this Credit Agreement are for convenience of
reference only and shall not define or limit the provisions hereof. This Credit
Agreement and any amendment
<PAGE>
-77-
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
Credit 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.
23. 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 Credit Agreement
nor any term hereof may be changed, waived, discharged or terminated, except as
provided in ss.14.8. 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 Administrative Agent or any Bank 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.
24. 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 CREDIT AGREEMENT, THE NOTES 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. EACH OF THE BORROWERS (a)
CERTIFIES THAT NO REPRESENTATIVE, ADMINISTRATIVE AGENT OR ATTORNEY OF ANY BANK
OR THE ADMINISTRATIVE AGENT HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
BANK OR THE ADMINISTRATIVE AGENT WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVERS AND (b) ACKNOWLEDGES THAT THE ADMINISTRATIVE AGENT
AND THE BANKS HAVE BEEN INDUCED TO ENTER INTO THIS CREDIT AGREEMENT AND THE
OTHER LOAN DOCUMENTS TO WHICH IT IS A PARTY BECAUSE OF, AMONG OTHER THINGS, THE
BORROWERS' WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.
25. GOVERNING LAW.
THIS CREDIT AGREEMENT AND 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
<PAGE>
-78-
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 ANY BANK OR THE ADMINISTRATIVE AGENT UNDER
THIS CREDIT AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
26. SEVERABILITY.
The provisions of this Credit 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 Credit Agreement in any jurisdiction.
<PAGE>
IN WITNESS WHEREOF, the undersigned have duly executed this Credit
Agreement as a sealed instrument as of the date first set forth above.
WASTE INDUSTRIES, INC.
KABCO OF NORTH CAROLINA,INC.
WASTE ENTERPRISES, INC.
WASTE INDUSTRIES EAST, INC.
NORTH MECKLENBURG SANITATION, INC.
WASTE INDUSTRIES SOUTH, INC.
WASTE INDUSTRIES OF GEORGIA, INC.
ECO SERVICES, INC.
WI-ACS, INC.
DUMPSTERS, INC.
RELIABLE TRASH SERVICE, INC.
RAILROAD AVENUE DISPOSAL, INC.
TRANS WASTE SERVICES, INC.
CURB APPEAL NEW HOME SERVICES, INC.
OLD KINGS ROAD SOLID WASTE, INC.
WASTE INDUSTRIES OF TENNESSEE, LLC
WASTE SERVICES OF DECATUR, LLC
LIBERTY WASTE LENDING COMPANY, LLC
WASTE INDUSTRIES OF VIRGINIA, LLC
By: _____________________________________________
Name:
Title:
BANKBOSTON, N.A., individually and as
Administrative Agent
By: _____________________________________________
Name:
BRANCH BANKING AND TRUST COMPANY,
individually and as Documentation Agent
By: _____________________________________________
Name:
COMERICA BANK
By: _____________________________________________
Name:
WACHOVIA BANK, N.A.
By: _____________________________________________
Name:
FIRST UNION NATIONAL BANK
By: _____________________________________________
Name:
USTRUST
By: _____________________________________________
Name:
CENTURA BANK
By: _____________________________________________
Name:
BANK AUSTRIA CREDITANSTALT CORPORATE FINANCE, INC.
By: _____________________________________________
Name:
Exhibit 11
<TABLE>
<CAPTION>
WASTE INDUSTRIES, INC.
COMPUTATION RE: EARNINGS PER SHARE
(In thousands except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1999 1998 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Pro forma net income (B) $2,815 $2,955 $7,663 $8,871
------ ------ ------ ------
Weighted average number of common shares
issued and outstanding (A) 12,817 13,854 12,707 13,707
Incremental shares under stock option plans 401 349 389 356
--- --- --- ---
Weighted average common shares outstanding - Diluted 13,218 14,203 13,096 14,063
------ ------ ------ ------
Basic earnings per share $0.22 $0.21 $0.60 $0.65
===== ===== ===== =====
Diluted earnings per share $0.21 $0.21 $0.59 $0.63
===== ===== ===== =====
</TABLE>
(A) Pro forma basic and diluted earnings per share computations are based on the
weighted-average common stock outstanding and include the dilutive effect of
stock options using the treasury stock method. Common stock outstanding used to
compute the weighted-average shares was retroactively adjusted for the
acquisition of entities under common control during the three and nine months
ended September 30, 1998, and for the merger with entities under the
pooling-of-interests method during 1998.
(B) Certain companies acquired in fiscal 1998 poolings-of-interests transactions
and common control mergers were previously taxed as S corporations. The 1998 pro
forma information has been computed as if the companies were subject to federal
and all applicable state corporate income taxes for each of the periods
presented assuming the tax rate would have applied had the companies been taxed
as C corporations.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 917
<SECURITIES> 0
<RECEIVABLES> 26,849
<ALLOWANCES> (1,358)
<INVENTORY> 1,759
<CURRENT-ASSETS> 32,321
<PP&E> 208,611
<DEPRECIATION> (81,052)
<TOTAL-ASSETS> 229,956
<CURRENT-LIABILITIES> 22,773
<BONDS> 129,486
0
0
<COMMON> 46,711
<OTHER-SE> 20,938
<TOTAL-LIABILITY-AND-EQUITY> 229,956
<SALES> 156,863
<TOTAL-REVENUES> 156,863
<CGS> 97,589
<TOTAL-COSTS> 137,738
<OTHER-EXPENSES> (293)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,333
<INCOME-PRETAX> 14,085
<INCOME-TAX> 5,214
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,871
<EPS-BASIC> 0.65
<EPS-DILUTED> 0.63
</TABLE>
