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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________
Commission file number: 1-14267
REPUBLIC SERVICES, INC.
(Exact Name of Registrant as Specified in its Charter)
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DELAWARE 65-0716904
(State of Incorporation) (I.R.S. Employer Identification No.)
REPUBLIC SERVICES, INC. 33301
110 S.E. 6TH STREET, 28TH FLOOR (Zip Code)
FORT LAUDERDALE, FLORIDA
(Address of Principal Executive Offices)
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Registrant's telephone number, including area code: (954) 769-2400
Securities registered pursuant to Section 12(b) of the Act:
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Title of Each Class Name of Each Exchange on which Registered
COMMON STOCK, PAR VALUE THE NEW YORK STOCK EXCHANGE
$.01 PER SHARE
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Securities registered pursuant to Section 12(g) of the Act: NONE
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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
As of February 28, 2000, the registrant had outstanding 175,481,842 shares
of Common Stock. At such date, the aggregate market value of the shares of the
Common Stock held by non-affiliates of the registrant was approximately
$1,873,854,519.
DOCUMENTS INCORPORATED BY REFERENCE
Part III Portions of the Registrant's Proxy Statement relative to the 2000
Annual Meeting of Stockholders.
Part IV Portions of previously filed reports and registration statements.
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INDEX
TO FORM 10-K
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PAGE NUMBER
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Item 1. Business.................................................... 1
Item 2. Properties.................................................. 16
Item 3. Legal Proceedings........................................... 17
Item 4. Submission of Matters to a Vote of Security Holders......... 17
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters......................................... 18
Item 6. Selected Financial Data..................................... 19
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (including Item 7A)............... 21
Item 8. Financial Statements and Supplementary Data................. 33
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................... 57
Item 10. Directors and Executive Officers of the Registrant.......... 58
Item 11. Executive Compensation...................................... 58
Item 12. Security Ownership of Certain Beneficial Owners and
Management.................................................. 58
Item 13. Certain Relationships and Related Transactions.............. 58
Item 14. Exhibits, Financial Statement Schedule and Reports on Form
8-K......................................................... 59
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PART I
ITEM 1. BUSINESS
COMPANY OVERVIEW
We are a leading provider of services in the domestic non-hazardous solid
waste industry. We provide non-hazardous solid waste collection services for
commercial, industrial, municipal and residential customers through 151
collection companies in 24 states. We also own or operate 81 transfer stations
and 55 solid waste landfills.
We had revenue of $1,838.5 million and $1,369.1 million and operating
income of $390.6 million and $284.3 million for the years ended December 31,
1999 and 1998, respectively. The $469.4 million, or 34.3%, increase in revenue
and the $106.3 million, or 37.4%, increase in operating income from 1998 to 1999
are primarily attributable to our successful execution of our growth and
operating strategies described below.
Our presence in high growth markets throughout the Sunbelt, including
Florida, Georgia, Nevada, Southern California and Texas, and in other domestic
markets that have experienced higher than average population growth during the
past several years supports our internal growth strategy. We believe that our
presence in these markets positions our company to experience growth at rates
that are generally higher than the industry's overall growth rate.
Since 1995, we have acquired numerous solid waste companies with an
aggregate of over $1.7 billion in annual revenue. In September 1998, we agreed
to purchase 16 landfills, 11 transfer stations, 136 commercial collection routes
and related assets from Waste Management, Inc. By June 1999, we completed the
purchase for approximately $479.6 million in cash plus certain properties. In
July 1999, we entered into an agreement with Allied Waste Industries, Inc. to
acquire solid waste assets for approximately $230.0 million in cash. In October
1999, after failing to receive regulatory approval to acquire these assets, we
amended the agreement and agreed to acquire from Allied Waste one landfill
operation, five transfer stations and a subset of small container hauling assets
from four collection operations. In addition, we entered into an agreement with
Allied Waste for the simultaneous purchase and sale of other solid waste assets.
As of December 31, 1999, we have completed the purchase of certain assets for
approximately $19.7 million in cash. The closing of the remainder of the
transactions, which were pending as of December 31, 1999, are subject to
approval by various state and federal agencies, as well as the satisfaction of
customary closing conditions. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Business Combinations."
We believe that we are well positioned to continue to increase our revenue
and operating income in order to enhance stockholder value.
INDUSTRY OVERVIEW
Based on analyst reports and industry trade publications, we believe that
the United States non-hazardous solid waste services industry generated revenue
of approximately $37.0 billion in 1998, of which approximately 58% was generated
by publicly-owned waste companies, and 42% was generated by privately-held waste
companies and municipal and other local governmental authorities. Only four
companies generated the substantial majority of the publicly-owned companies'
total revenue of approximately $21.0 billion in 1998. However, according to
industry data, the domestic non-hazardous waste industry remains highly
fragmented as privately-held companies and municipal and local governmental
authorities generated total annual revenue of approximately $16.0 billion.
We believe that in recent years there has been a trend toward rapid
consolidation in the solid waste collection industry, which has historically
been characterized by numerous small companies. We believe that this trend will
continue as a result of the following factors:
Subtitle D Regulation. Subtitle D of the Resource Conservation and
Recovery Act of 1976, as currently in effect, and similar state regulations
have significantly increased the amount of capital,
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technical expertise, operating costs and financial assurance obligations
required to own and operate a landfill and other solid waste facilities.
Many of the smaller participants in our industry have found these costs
difficult, if not impossible, to bear. Large publicly owned companies, like
our company, have greater access to capital, and a lower cost of capital,
available to finance such increased capital expenditures and costs relative
to many of the privately-owned companies in the industry. Additionally, the
required permits for landfill development, expansion or construction have
become more difficult to acquire. Consequently, many smaller, independent
operators have decided to either close their operations or sell them to
larger operators with greater access to capital.
Integration of Solid Waste Businesses. By being able to control the
waste stream in a market through the collection, transfer and disposal
process, integrated solid waste companies gain a further competitive
advantage over non-integrated operators. The ability of the integrated
companies to both collect and dispose of solid waste, coupled with access
to significant capital resources necessary for acquisitions, has created an
environment in which large publicly owned integrated companies can operate
more cost effectively and competitively than non-integrated operators.
Municipal Privatization. The trend toward consolidation in the solid
waste services industry is further supported by the increasing tendency of
a number of municipalities to privatize their waste disposal operations.
Privatization of municipal waste operations is often an attractive
alternative to funding the changes required by Subtitle D.
These developments, as well as the fact that there are a limited number of
viable exit strategies for many of the owners and principals of numerous
privately held companies in the industry, have contributed to the overall
consolidation trend in the solid waste industry.
GROWTH STRATEGY
Our strategy focuses on increasing revenue, gaining market share and
enhancing stockholder value through internal growth and acquisitions. For
certain risks related to our growth strategy, see "Risk Factors."
- - INTERNAL GROWTH. Our internal growth strategy focuses on retaining existing
customers and obtaining commercial, municipal and industrial customers through
our well-managed sales and marketing activities.
Long-Term Contracts. We seek to obtain long-term contracts for
collecting solid waste in high-growth markets. These include exclusive
franchise agreements with municipalities as well as commercial and industrial
contracts. By obtaining such long-term agreements, we have the opportunity to
grow our contracted revenue base at the same rate as the underlying population
growth in these markets. For example, we have secured exclusive, long-term
franchise agreements in high-growth markets in Los Angeles and Orange
Counties, California, Las Vegas, Nevada, Arlington, Texas and many areas of
Florida. We believe that this positions our company to experience internal
growth rates that are generally higher than our industry's overall growth
rate. In addition, we believe that by securing a base of long-term recurring
revenue in growth markets, we are better able to protect our market position
from competition and our business may be less susceptible to downturns in
economic conditions.
Sales and Marketing Activities. We seek to manage our sales and
marketing activities to enable our company to capitalize on our leading
positions in many of the markets in which we operate. We currently have
approximately 450 sales and marketing employees in the field, who are
incentivized by a commission structure to generate high levels of revenue. For
the most part, these employees directly solicit business from existing and
prospective commercial, industrial, municipal and residential customers. We
emphasize our rate and cost structures when we train new and existing sales
personnel.
- - ACQUISITION GROWTH. As a result of the highly fragmented nature of the solid
waste industry, we have been able to grow significantly through acquisitions.
Our acquisition growth strategy focuses on the approximately $16.0 billion of
revenue generated by privately-held solid waste companies and municipal and
local governmental authorities in 1998. We believe that our ability to acquire
many of the privately-held companies is enhanced by increasing competition in
the solid waste industry, increasing capital require-
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ments as a result of changes in solid waste regulatory requirements and the
limited number of exit strategies for these privately-held companies' owners
and principals. We also seek to acquire operations and facilities from
municipalities that are privatizing, which occurs for many of the same reasons
that privately-held companies sell their solid waste businesses. In addition,
we will continue to evaluate opportunities to acquire operations and
facilities that may be divested by other publicly-owned waste companies. In
sum, our acquisition growth strategy focuses on:
- acquiring businesses that position our company for growth in existing
and new markets,
- acquiring well-managed companies and, when appropriate, retaining local
management,
- acquiring business in existing markets,
- acquiring operations and facilities from municipalities that are
privatizing, and
- acquiring operations and facilities from publicly-owned companies that
are divesting of assets.
For certain risks involved with our acquisition growth strategy, see
"Risk Factors -- We may be unable to execute our acquisition growth strategy,"
" -- We may be unable to manage our growth effectively," and " -- Businesses
we acquire may have undisclosed liabilities."
Acquire Businesses Positioning the Company for Growth. In making
acquisitions, we principally target high quality businesses that will allow
our company to be, or provide our company favorable prospects of becoming, a
leading provider of integrated solid waste services in markets with favorable
demographic growth. Generally, we have acquired, and will continue to seek,
solid waste collection, transfer and disposal companies that:
- have strong operating margins,
- are in growth markets,
- are among the largest or have a significant presence in their local
markets, and
- have long-term contracts or franchises with municipalities and other
customers.
Although we are seeking to expand our operations to selected new markets
where the potential for growth and further integration of operations exists,
our primary focus is on acquisition efforts in our existing markets in the
Sunbelt, including Florida, Georgia, Nevada, Southern California and Texas,
and in other domestic markets that have experienced higher than average
population growth during the past several years. We are, however, not limited
to this target criteria for acquisitions, and may also acquire additional
non-hazardous solid waste operations as opportunities arise. We continuously
review possible acquisition candidates and are in discussions from time to
time with one or more of such candidates. In September 1998, we entered into
an agreement with Waste Management to purchase 16 landfills, 11 transfer
stations and 136 commercial collection routes across the United States, as
well as to obtain disposal agreements at various Waste Management disposal
sites. With the completion of these acquisitions in June 1999, we have
expanded our presence in four existing markets and have entered 16 new
markets. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Business Combinations."
Acquire Well-Managed Companies. We also seek to acquire businesses that
have experienced management teams that are willing to work with our company.
We generally retain the local management of the larger acquired companies in
order to capitalize on their local market knowledge, community relations and
name recognition, and to instill their entrepreneurial drive at all levels of
our operations. By furnishing the local management of such acquired companies
with our financial and marketing resources and technical expertise, we believe
that the acquired companies are better able to secure additional municipal
franchises and other contracts. We believe that this will enable our company
to grow internally acquired businesses at faster rates than the industry
average.
Acquire Business in Existing Markets. Once we have a base of operations
in a particular market, we focus on acquiring trucks and routes of smaller
businesses that also operate in that market and surrounding markets, which are
typically referred to as "tuck-in" acquisitions. We seek to consolidate the
operations of such tuck-in businesses into our existing operations in that
market. In addition, we seek to acquire landfills, transfer stations and
collection companies that operate in markets that we are already servicing in
order to fully integrate our operations from collection to disposal. By doing
so, we are able to increase our revenue
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and market share, lower our cost of operations as a percentage of revenue, and
consolidate duplicative facilities and functions to maximize cost efficiencies
and economies of scale.
Privatize Municipal Operations and Acquire Divested Operations. We also
seek to acquire solid waste collection operations, transfer stations and
landfills that municipalities and other governmental authorities are
privatizing. Many municipalities are seeking to outsource or sell these types
of solid waste operations, as they lack the capital, technical expertise
and/or operational resources necessary to comply with increasingly stringent
regulatory standards and/or to compete effectively with private-sector
companies. In addition, we have acquired, and will continue to seek to
acquire, operations and facilities that may be divested by other
publicly-owned waste companies. Since late 1998, each of Waste Management and
Allied Waste Industries were forced to divest certain of their operations and
facilities due to governmental antitrust reviews of their respective
acquisitions of other large publicly-owned waste companies, and we acquired
many of these divested operations and facilities. We believe that both of
these companies may divest additional operations and facilities for various
reasons, including to raise cash to pay down debt, to eliminate collection
operations where they may lack appropriate disposal capacity or to eliminate
disposal operations where they may lack appropriate collection volumes, or
other reasons. We expect to be able to evaluate and bid on such opportunities
as they may arise from time to time.
OPERATING STRATEGY
We seek to leverage existing assets and revenue growth to increase
operating margins and enhance stockholder value. Our operating strategy to
accomplish this goal is to:
(1) utilize the extensive industry knowledge and experience of our
executive management,
(2) utilize a decentralized management structure in overseeing day-to-day
operations,
(3) integrate waste operations,
(4) improve operating margins through economies of scale, cost efficiencies
and asset utilization, and
(5) achieve high levels of customer satisfaction.
For certain risks related to our operating strategy, see "Risk Factors."
- - EXPERIENCED EXECUTIVE MANAGEMENT TEAM. We believe that we have one of the
most experienced executive management teams in the solid waste industry.
H. Wayne Huizenga, who has served as our Chairman since our initial
public offering in July 1998, has over 25 years of experience in the solid
waste industry. After several years of owning and operating private waste
hauling companies in Florida, he co-founded Waste Management in 1971. From
1971 to 1984, he served in various executive capacities with Waste Management,
including President and Chief Operating Officer. By then, Waste Management had
become the world's largest integrated solid waste services company. From 1987
to 1994, Mr. Huizenga served as Chairman and Chief Executive Officer of
Blockbuster Entertainment Corporation, leading its growth from 19 stores to
the world's largest video rental company. In August 1995, he became Chairman
and Chief Executive Officer of AutoNation, our former parent company, which in
three years has become the largest domestic automotive retailer with over 400
car dealerships in 19 states.
Harris W. Hudson, who has served as our Vice Chairman since our initial
public offering, has over 35 years of experience in the solid waste industry.
Mr. Hudson worked closely with Mr. Huizenga, from 1964 until 1982, at Waste
Management and at the private waste hauling firms they operated prior to the
formation of Waste Management. In 1982, Mr. Hudson retired as Vice President
of Waste Management of Florida, Inc., a subsidiary of Waste Management. In
1983, Mr. Hudson founded Hudson Management Corporation, a solid waste
collection company in Florida, and served as its Chairman and Chief Executive
Officer until it merged with AutoNation in August 1995. By that time, Hudson
Management had grown to over $50.0 million in annual revenue, becoming one of
Florida's largest privately-held solid waste collection
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companies based on revenue. Since August 1995, Mr. Hudson has served in
various capacities with AutoNation, including as Chairman of its Solid Waste
Group.
James E. O'Connor, who has served as our Chief Executive Officer since
December 1998, also worked at Waste Management from 1972 to 1978 and from 1982
to 1998. During that time, he served in various management positions,
including Senior Vice President in 1997 and 1998, and Area President of Waste
Management of Florida, Inc., from 1992 to 1997. Mr. O'Connor has over 24 years
of experience in the solid waste industry.
James H. Cosman, our President and Chief Operating Officer, joined
AutoNation as President of its Solid Waste Group in January 1997. Prior to
joining AutoNation, Mr. Cosman was employed for over 24 years by
Browning-Ferris Industries, Inc., a leading solid waste company that is now
part of Allied Waste. During that time, he served in various management
positions, including Regional Vice President -- Northern Region, from 1993 to
1996.
The other corporate officers with responsibility for our operational
affairs have an average of over 17 years of management experience in the solid
waste industry. Our five Regional Vice Presidents have an average of 19 years
of experience in the industry, and our 19 Area Presidents have an average of
23 years of experience in the industry.
- - DECENTRALIZED MANAGEMENT STRUCTURE. We maintain a relatively small corporate
headquarters staff, relying on a decentralized management structure to
minimize administrative overhead costs and to manage our day-to-day operations
more efficiently. Our local management has extensive industry experience in
growing, operating and managing solid waste companies and has substantial
experience in their local geographic markets. Recently, we added a fifth
region to our field organizational structure which will allow us to more
efficiently and effectively manage the numerous new markets we entered into
during the previous 18 months. The Regional Vice Presidents and Area
Presidents have extensive authority, responsibility and autonomy for
operations within their geographic markets. Compensation for management within
regions and areas is in large part based on the improvement in operating
income produced in each manager's geographic area of responsibility. Starting
January 1, 2000, compensation will also be based upon the cash flow generated
in each manager's geographic area of responsibility. In addition, through
long-term incentive programs, including stock options, we believe we have one
of the lowest turnover levels in the industry for our local management teams.
As a result of retaining experienced managers with extensive local knowledge,
community relations and name recognition, we react rapidly to changes in our
markets. We also seek to implement the best practices of our various regions
and areas throughout our operations to improve operating margins.
- - INTEGRATED OPERATIONS. By controlling waste streams from the point of
collection through disposal, we seek to achieve a high rate of waste
integration. We expect that our fully integrated markets generally will have a
lower cost of operations and more favorable cash flows than our non-integrated
markets. Through acquisitions and other market development activities, we
create market specific, integrated operations typically consisting of one or
more collection companies, transfer stations and landfills. We consider
acquiring companies which own or operate landfills with significant permitted
disposal capacity and appropriate levels of waste volume. We also seek to
acquire solid waste collection companies in markets in which we own or operate
landfills. In addition, we generate internal growth in our disposal operations
by constructing new landfills and expanding our existing landfills from time
to time in markets in which we have significant collection operations or in
markets that we determine lack sufficient disposal capacity. During the three
months ended December 31, 1999, approximately 48% of the total volume of waste
that we collected was disposed of at our own landfills. Because we do not have
landfill facilities for all markets in which we provide collection services,
we believe that through landfill and transfer station acquisitions and
development we have the opportunity to increase our waste internalization rate
and further integrate our operations. By further integrating operations in
existing markets through acquisitions and development of landfills and
transfer stations, we are able to reduce our disposal costs.
- - ECONOMIES OF SCALE AND COST EFFICIENCIES. To improve operating margins, our
management focuses on achieving economies of scale and cost efficiencies. The
consolidation of acquired businesses into existing
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operations reduces costs by decreasing capital and expenses used for routing,
personnel, equipment and vehicle maintenance, inventories and back-office
administration. Generally, we are consolidating our administrative centers to
reduce our general and administrative costs. We have reduced our selling,
general and administrative expenses from 14.2% of revenue in 1996 to 9.6% of
revenue in 1999, on a pro forma basis. In addition, our size allows our
company to negotiate volume discounts for certain purchases, including waste
disposal rates at landfills operated by third parties. Furthermore, we have
taken steps to increase utilization of our assets. For example, to reduce the
number of collection vehicles, drivers are paid incentive wages based upon the
number of customers they service on each route. In addition, routes are
frequently analyzed and rerouted to ensure that the highest number of
customers are efficiently serviced over the fewest possible miles. By using
assets more efficiently, operating expenses are lowered significantly.
- - HIGH LEVELS OF CUSTOMER SATISFACTION. Our goal of maintaining high levels of
customer satisfaction complements our operating strategy. Our personalized
sales process of periodically contacting commercial, industrial and municipal
customers is oriented towards maintaining relationships and ensuring that
service is being properly provided.
OPERATIONS
Our operations primarily consist of the collection and disposal of
non-hazardous solid waste.
Collection Services. We provide solid waste collection services to
commercial, industrial, municipal and residential customers in 24 states through
151 collection companies. In 1999, the revenue we derived from collection
services was approximately one third from services provided to municipal and
residential customers, one third from services provided to commercial customers
and one third from services provided to industrial customers.
Our residential collection operations involve the curbside collection of
refuse from small containers into collection vehicles for transport to transfer
stations or directly to landfills. Residential solid waste collection services
are typically performed under contracts with municipalities, which we generally
secure by competitive bid and which give our company exclusive rights to service
all or a portion of the homes in their respective jurisdictions. These contracts
or franchises usually range in duration from one to five years, although some of
our exclusive franchises are for as long as 20 years. Residential solid waste
collection services may also be performed on a subscription basis, in which
individual households contract directly with our company. The fees received for
subscription residential collection are based primarily on market factors,
frequency and type of service, the distance to the disposal facility and cost of
disposal. In general, subscription residential collection fees are paid
quarterly in advance by the residential customers receiving the service.
In our commercial and industrial collection operations, we supply our
customers with small waste containers or large waste containers commonly known
as "roll-off" containers. We also rent compactors to large waste generators.
Commercial collection services are generally performed under one to three-year
service agreements, and fees are determined by such considerations as:
- market factors,
- collection frequency,
- type of equipment furnished,
- the type and volume or weight of the waste collected,
- the distance to the disposal facility, and
- the cost of disposal.
We also provide waste collection services to industrial and construction
facilities on a contractual basis with terms generally ranging from a single
pickup to as long as one year and we rent waste roll-off containers to
construction sites. We collect the containers or compacted waste and transport
them either to a landfill, where the waste is disposed of, or to a transfer
station.
We own or operate 81 transfer stations. We deposit waste at these stations,
as do other private haulers and municipal haulers, for compaction and transfer
to trailers for transport to landfills, incinerators, recycling facilities or
other disposal sites.
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Also, we currently provide recycling services in certain markets primarily
to comply with local laws or obligations under our franchise agreements. These
services include the curbside collection of residential recyclable waste and the
provision of a variety of recycling services to commercial and industrial
customers.
Disposal Services. As of December 31, 1999, we owned or operated 55
landfills, which had approximately 7,381 permitted acres and total available
permitted disposal capacity of approximately 1.7 billion in-place cubic yards.
The in-place capacity of our landfills is subject to change based on engineering
factors, requirements of regulatory authorities and the ability to expand sites
successfully. Some of our landfills accept non-hazardous special waste,
including utility ash, asbestos and contaminated soils. See "-- Properties."
Most of our existing landfill sites have the potential for expanded
disposal capacity beyond the currently permitted acreage. We monitor the
availability of permitted disposal capacity at each of our landfills and
evaluate whether to pursue expansion at a given landfill based on estimated
future waste volumes and prices, remaining capacity and likelihood of obtaining
expansion. We believe that each of our landfills has adequate permitted
capacity. To satisfy future disposal demand, we are currently seeking to expand
permitted capacity at certain of our landfills, although no assurances can be
made that all future expansions will be permitted as designed.
Other Services. We have materials recovery facilities and other recycling
operations, which are generally required to fulfill our obligations under
long-term municipal contracts for residential collection services. These
facilities primarily sort recyclable paper, aluminum, glass and other materials.
Most of these recyclable materials are internally collected by our residential
collection operations. In some areas, we receive commercial and industrial solid
waste that is sorted at our facilities into recyclable materials and non-
recyclable waste. The recyclable materials are salvaged, repackaged and sold to
third parties and the non-recyclable waste is disposed of at landfills or
incinerators. Wherever possible, our strategy is to reduce our exposure to
fluctuations in recyclable commodity prices by utilizing third party facilities,
thereby minimizing our recycling investment. We use long-term contracts for the
sale of recycling materials to mitigate the impact of commodity price
fluctuations. We also have composting operations at which yard waste is
composted, packaged and sold as mulch.
SALES AND MARKETING
We seek to provide quality services that will enable our company to
maintain high levels of customer satisfaction. We derive our business from a
broad customer base which we believe will enable our company to experience
stable growth. We focus our marketing efforts on continuing and expanding
business with existing customers, as well as attracting new customers.
We employ approximately 450 sales and marketing employees. Our sales and
marketing strategy is to provide high-quality comprehensive solid waste
collection, recycling, transfer and disposal services to our customers at
competitive prices. We target potential customers of all sizes, from small
quantity generators to large "Fortune 500" companies and municipalities.
All our marketing activity is local in nature. We generally do not change
the tradenames of the local businesses we acquire, and therefore we do not
operate nationally under any one mark or tradename. Rather, we rely on the
goodwill associated with the acquired companies' local tradenames as used in
each geographic market in which we operate.
CUSTOMERS
We provide services to commercial, industrial, municipal and residential
customers. No one customer has individually accounted for more than 10% of our
consolidated revenue in any of the last three years.
REGULATION
Our facilities and operations are subject to a variety of federal, state
and local requirements which regulate health, safety, the environment, zoning
and land use. Operating and other permits are generally required for landfills,
certain waste collection vehicles, fuel storage tanks and other facilities that
we own or
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operate, and these permits are subject to revocation, modification and renewal.
Federal, state and local regulations vary, but generally govern wastewater or
stormwater discharges, air emissions, the treatment, storage, transportation and
disposal of hazardous and non-hazardous wastes and the remediation of
contamination associated with the release of hazardous substances. These
regulations provide governmental authorities with strict powers of enforcement,
which include the ability to obtain injunctions and/or impose fines or penalties
in the case of violations, including criminal penalties. The U.S. Environmental
Protection Agency and various other federal, state and local environmental,
health and safety agencies and authorities, including the Occupational Safety
and Health Administration of the U.S. Department of Labor, administer these
regulations.
We strive to conduct our operations in compliance with applicable laws and
regulations. However, in the existing climate of heightened environmental
concerns, from time to time, we have been issued citations or notices from
governmental authorities which have resulted in the need to expend funds for
remedial work and related activities at various landfills and other facilities.
There is no assurance that citations and notices will not be issued in the
future despite our regulatory compliance efforts. We have established a reserve
which we believe, based on currently available information, will be adequate to
cover any potential regulatory costs. However, we cannot assure you that actual
costs will not exceed our reserve.
Federal Regulation. The following summarizes the primary environmental and
safety-related federal statutes of the United States affecting our facilities
and operations:
(1) The Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act. The RCRA and its implementing regulations
establish a framework for regulating the handling, transportation,
treatment, storage and disposal of hazardous and non-hazardous solid
wastes, and require states to develop programs to ensure the safe disposal
of solid wastes in sanitary landfills.
Subtitle D of the RCRA establishes a framework for regulating the
disposal of municipal solid wastes. Regulations under Subtitle D currently
include minimum comprehensive solid waste management criteria and
guidelines, including location restrictions, facility design and operating
criteria, closure and post-closure requirements, financial assurance
standards, groundwater monitoring requirements and corrective action
standards, many of which had not commonly been in effect or enforced in the
past in connection with municipal solid waste landfills. Each state was
required to submit a permit program designed to implement Subtitle D
regulations to the EPA by April 9, 1993. These state permit programs may
include landfill requirements which are more stringent than those of
Subtitle D. Some states have not yet fully implemented permit programs
pursuant to the RCRA and Subtitle D. Once a state has an approved permit
program it is required to review all existing landfill permits to ensure
compliance with the new regulations.
All of our planned landfill expansions or new landfill development
projects have been engineered to meet or exceed Subtitle D requirements.
Operating and design criteria for existing operations have been modified to
comply with these new regulations. Compliance with the Subtitle D
regulations has resulted in increased costs and may in the future require
substantial additional expenditures in addition to other costs normally
associated with our waste management activities.
(2) The Comprehensive Environmental Response, Compensation, and
Liability Act of 1980. CERCLA, among other things, provides for the cleanup
of sites from which there is a release or threatened release of a hazardous
substance into the environment. This Act may impose strict, joint and
several liability for the costs of cleanup and for damages to natural
resources upon current owners and operators of the site, parties who were
owners or operators of the site at the time the hazardous substances were
disposed of, parties who transported the hazardous substance to the site
and parties who arranged for disposal at the site. Under the authority of
this Act and its implementing regulations, detailed requirements apply to
the manner and degree of investigation and remediation of facilities and
sites where hazardous substances have been or are threatened to be released
into the environment. Liability under this Act is not dependent upon the
existence or disposal of "hazardous wastes" but can also be based upon the
existence of small quantities of more than 700 "substances" characterized
by the EPA as "hazardous," many of which may be found in common household
waste.
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<PAGE> 11
Among other things, this Act authorizes the federal government to
investigate and remediate sites at which hazardous substances have been or
are threatened to be released into the environment, or to order (or offer
an opportunity to) persons potentially liable for the cleanup of the
hazardous substances to do so. In addition, the EPA has established a
National Priorities List of sites at which hazardous substances have been
or are threatened to be released and which require investigation or
cleanup.
Liability under CERCLA is not dependent upon the intentional disposal
of hazardous wastes. It can be founded upon the release or threatened
release, even as a result of unintentional, non-negligent or lawful action,
of thousands of hazardous substances, including very small quantities of
such substances. Thus, even if our landfills have never knowingly received
hazardous wastes as such, it is possible that one or more hazardous
substances may have been deposited or "released" at our landfills or at
other properties which we may have owned or operated. Therefore, we could
be liable under CERCLA for the cost of cleaning up such hazardous
substances at such sites and for damages to natural resources, even if
those substances were deposited at our facilities before we acquired or
operated them. The costs of a CERCLA cleanup can be very expensive. Given
the difficulty of obtaining insurance for environmental impairment
liability, such liability could have a material impact on our business and
financial condition. For a further discussion, see "-- Liability Insurance
and Bonding."
(3) The Federal Water Pollution Control Act of 1972. This Act
regulates the discharge of pollutants from a variety of sources, including
solid waste disposal sites, into streams, rivers and other waters. Point
source runoff from our landfills and transfer stations that is discharged
into surface waters must be covered by discharge permits that generally
require us to conduct sampling and monitoring and, under certain
circumstances, reduce the quantity of pollutants in those discharges. Storm
water discharge regulations under this Act require a permit for certain
construction activities, which may affect our operations. If a landfill or
transfer station discharges wastewater through a sewage system to a
publicly owned treatment works, the facility must comply with discharge
limits imposed by that treatment works. In addition, states may adopt
groundwater protection programs under this Act or the Safe Drinking Water
Act that could affect solid waste landfills. Furthermore, development which
alters or affects "wetlands" must generally be permitted prior to such
development commencing, and certain mitigation requirements may be required
by the permitting agencies.
(4) The Clean Air Act. The Clean Air Act imposes limitations on
emissions from various sources, including landfills. In March 1996, the EPA
enacted rules that require large municipal solid waste landfills to install
landfill gas monitoring systems. These regulations apply to landfills that
have been operating since November 1987, and that can accommodate 2.5
million cubic meters or more of municipal solid waste. The regulations
apply whether the landfill is active or closed. The date by which each
affected landfill must have the required gas collection and control system
is dependent upon the adoption of state regulations and the date the EPA
approves the state program. Many state regulatory agencies currently
require monitoring systems for the collection and control of landfill gas.
We do not expect that compliance with any new state regulations will have a
material effect on us.
(5) The Occupational Safety and Health Act of 1970. This act
authorizes the Occupational Safety and Health Administration to promulgate
occupational safety and health standards. Various of these standards,
including standards for notices of hazardous chemicals and the handling of
asbestos, apply to our facilities and operations.
State Regulation. Each state in which we operate has its own laws and
regulations governing solid waste disposal, water and air pollution and, in most
cases, releases and cleanup of hazardous substances and liability for such
matters. States also have adopted regulations governing the design, operation,
maintenance and closure of landfills and transfer stations. Our facilities and
operations are likely to be subject to these types of requirements. In addition,
our solid waste collection and landfill operations may be affected by the trend
in many states toward requiring the development of waste reduction and recycling
programs. For example, several states have enacted laws that require counties or
municipalities to adopt comprehensive plans to reduce, through waste planning,
composting, recycling or other programs, the volume of solid waste deposited in
landfills. Additionally, laws and regulations restricting the disposal of
certain wastes, including yard waste,
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<PAGE> 12
newspapers, beverage containers, unshredded tires, lead-acid batteries and
household appliances in solid waste landfills have been promulgated in several
states and are being considered in others. Legislative and regulatory measures
to mandate or encourage waste reduction at the source and waste recycling also
are under consideration by Congress and the EPA.
In order to construct, expand and operate a landfill, one or more
construction or operating permits, as well as zoning approvals, must be
obtained. These are difficult and time-consuming to obtain, are often opposed by
neighboring landowners and citizens' groups, may be subject to periodic renewal
and are subject to modification and revocation by the issuing agency. In
connection with our acquisition of existing landfills, it may be and on occasion
has been necessary for our company to expend considerable time, effort and money
to bring the acquired facilities into compliance with applicable requirements
and to obtain the permits and approvals necessary to increase their capacity.
Many of our facilities own and operate underground storage tanks which are
generally used to store petroleum-based products. These tanks are generally
subject to federal, state and local laws and regulations that mandate their
periodic testing, upgrading, closure and removal and that, in the event of
leaks, require that polluted groundwater and soils be remediated. We believe
that all our underground storage tanks currently meet federal regulations. If
underground storage tanks we own or operate leak, and the leakage migrates onto
the property of others, we could be liable for response costs and other damages
to third parties. We are unaware of facts indicating that issues of compliance
with regulations related to underground storage tanks will have a material
adverse effect on our business or financial condition.
Finally, with regard to our solid waste transportation operations, we are
subject to the jurisdiction of the Interstate Commerce Commission and are
regulated by the Federal Highway Administration, Office of Motor Carriers and by
regulatory agencies in each state. Various states have enacted, or are
considering enacting, laws and regulations that would restrict the interstate
transportation and processing of solid waste. In 1978, the United States Supreme
Court held similar laws and regulations unconstitutional; however, states have
attempted to distinguish proposed laws and regulations from the laws and
regulations involved in that ruling. In 1994, the Supreme Court ruled that state
and local flow control laws and ordinances, which attempt to restrict waste from
leaving its place of generation, were an impermissible burden on interstate
commerce, and therefore, were unconstitutional. In response to these Supreme
Court rulings, Congress has considered passing legislation authorizing states
and local governments to restrict the free movement of solid waste in interstate
commerce. If federal legislation authorizing state and local governments to
restrict the free movement of solid waste in interstate commerce is enacted,
such legislation could adversely affect our operations.
We have established a reserve for environmental and landfill costs, which
includes landfill site closure and post-closure costs. We periodically reassess
such costs based on various methods and assumptions regarding landfill airspace
and the technical requirements of Subtitle D of the RCRA and adjust our rates
used to expense closure and post-closure costs accordingly. Based on current
information and regulatory requirements, we believe that our reserves for such
environmental and landfill expenditures are adequate. However, environmental
laws may change, and there can be no assurance that our reserves will be
adequate to cover requirements under existing or new environmental regulations,
future changes or interpretations of existing regulations or the identification
of adverse environmental conditions previously unknown to us. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Landfill and Environmental Matters" and "Risk
Factors -- Compliance with environmental regulation may impede our growth."
COMPETITION
We operate in a highly competitive industry, which is changing as a result
of rapid consolidation. Entry into our business and the ability to operate
profitably in the industry requires substantial amounts of capital and
managerial experience.
Competition in the non-hazardous solid waste industry comes from a few
large, national publicly-owned companies, including Waste Management and Allied
Waste, several regional publicly- and privately-owned solid waste companies, and
from thousands of small privately-owned companies in their respective markets.
Some of our competitors have significantly larger operations, and may have
significantly greater financial
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<PAGE> 13
resources, than we do. In addition to national and regional firms and numerous
local companies, we compete with those municipalities that maintain waste
collection or disposal operations. These municipalities may have financial
advantages due to the availability of tax revenues and tax-exempt financing.
We compete for collection accounts primarily on the basis of price and the
quality of our services. From time to time, our competitors may reduce the price
of their services in an effort to expand market share or to win a competitively
bid municipal contract. This may have an impact on our future profitability.
In each market in which we own or operate a landfill, we compete for
landfill business on the basis of disposal costs, geographical location and
quality of operations. Our ability to obtain landfill business may be limited by
the fact that some major collection companies also own or operate landfills to
which they send their waste. There also has been an increasing trend at the
state and local levels to mandate waste reduction at the source and to prohibit
the disposal of certain types of wastes, such as yard wastes, at landfills. This
may result in the volume of waste going to landfills being reduced in certain
areas, which may affect our ability to operate our landfills at their full
capacity and/or affect the prices that we can charge for landfill disposal
services. In addition, most of the states in which we operate landfills have
adopted plans or requirements that set goals for specified percentages of
certain solid waste items to be recycled.
LIABILITY INSURANCE AND BONDING
The nature of our business exposes our company to the risk of liabilities
arising out of our operations, including possible damages to the environment.
Such potential liabilities could involve, for example, claims for remediation
costs, personal injury, property damage and damage to the environment in cases
where we may be held responsible for the escape of harmful materials; claims of
employees, customers or third parties for personal injury or property damage
occurring in the course of our operations; or claims alleging negligence or
professional errors and omissions in the planning or performance of work. We
could also be subject to fines and civil and criminal penalties in connection
with alleged violations of regulatory requirements. Because of the nature and
scope of the possible environmental damages, liabilities imposed in
environmental litigation can be significant. The majority of our solid waste
operations have third party environmental liability insurance with limits in
excess of those required by permit regulations, subject to certain limitations
and exclusions. However, we cannot assure you that the limits of such
environmental liability insurance would be adequate in the event of a major
loss, nor can we assure you that we would continue to carry environmental
liability insurance should market conditions in the insurance industry make such
coverage costs prohibitive.
We have general liability, vehicle liability, employment practices
liability, pollution liability, directors and officer liability, workers
compensation and employer's liability coverage, as well as umbrella liability
policies to provide excess coverage over the underlying limits contained in
these primary policies. We also carry property insurance. Although we try to
operate safely and prudently and while we have, subject to limitations and
exclusions, substantial liability insurance, no assurance can be given that we
will not be exposed to uninsured liabilities which could have a material adverse
effect on our financial condition or results of operations.
Our insurance programs for worker's compensation, general liability,
vehicle liability and employee related health care benefits are effectively
self-insured. Claims in excess of self-insurance levels are fully insured.
Accruals are based on claims filed and estimates of claims incurred but not
reported.
In the normal course of business, we may be required to post performance
bonds, insurance policies, letters of credit and/or cash deposits in connection
with municipal residential collection contracts, the operation, closure or
post-closure of landfills, certain remediation contracts, certain environmental
permits and certain business licenses and permits. Bonds issued by surety
companies operate as a financial guarantee of our performance. To date, we have
satisfied financial responsibility requirements by making cash deposits or by
obtaining bank letters of credit, insurance policies or surety bonds.
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<PAGE> 14
EMPLOYEES
As of December 31, 1999, we employed approximately 12,000 full time
employees, approximately 2,600 of whom were covered by collective bargaining
agreements. Our management believes that we have good relations with our
employees.
CORPORATE HISTORY
We were incorporated as a Delaware corporation in 1998 by our former parent
company, AutoNation, Inc. In 1995, H. Wayne Huizenga, Harris W. Hudson and their
associates made an investment in AutoNation, then known as Republic Waste
Industries, Inc., and AutoNation subsequently acquired businesses in several
industries, including automotive dealerships and car rental businesses in
addition to over 100 non-hazardous solid waste companies. In 1998, AutoNation
separated its non-hazardous solid waste services division from its other
businesses by forming our company and we completed an initial public offering of
shares of our common stock. In 1999, AutoNation sold substantially all of its
remaining interest in our company in a secondary public offering.
RISK FACTORS
This Annual Report on Form 10-K includes "forward-looking statements'
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended, including, in particular, certain statements about our plans,
strategies and prospects. Although we believe that our plans, intentions and
expectations reflected in or suggested by such forward-looking statements are
reasonable, we cannot assure you that such plans, intentions or expectations
will be achieved. Important factors that could cause our actual results to
differ materially from our forward-looking statements include those set forth in
this Risk Factors section. All forward-looking statements attributable to us or
any persons acting on our behalf are expressly qualified in their entirety by
the cautionary statements set forth below. Unless the context requires
otherwise, all references to the "company," "we," "us" or "our" include Republic
Services, Inc. and its subsidiaries.
If any of the following risks, or other risks not presently known to us or
that we currently believe to not be significant, develop into actual events,
then our business, financial condition, results of operations or prospects could
be materially adversely affected.
WE OPERATE IN A HIGHLY COMPETITIVE INDUSTRY AND MAY BE UNABLE TO COMPETE
EFFECTIVELY.
We operate in a highly competitive business environment. Some of our
competitors have significantly larger operations and may have significantly
greater financial resources than we do. In addition, the solid waste industry is
constantly changing as a result of rapid consolidation which may create
additional competitive pressures in our business environment.
We also compete with municipalities that maintain their own waste
collection or disposal operations. These municipalities may have a financial
advantage over us as a result of the availability of tax revenue and tax-exempt
financing.
In each market in which we own or operate a landfill, we compete for solid
waste volume on the basis of disposal or "tipping" fees, geographical location
and quality of operations. Our ability to obtain solid waste volume for our
landfills may be limited by the fact that some major collection companies also
own or operate landfills to which they send their waste. In markets in which we
do not own or operate a landfill, our collection operations may operate at a
disadvantage to fully integrated competitors.
We compete for collection accounts primarily on the basis of price and the
quality of services. From time to time our competitors may reduce the price of
their services in an effort to expand their market share or to win a
competitively bid municipal contract.
As a result of these factors, we may have difficulty competing effectively
from time to time.
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<PAGE> 15
WE MAY BE UNABLE TO EXECUTE OUR ACQUISITION GROWTH STRATEGY.
Our ability to execute our growth strategy depends in part on our ability
to identify and acquire desirable acquisition candidates as well as our ability
to successfully consolidate the acquired operations into our business. The
consolidation of our operations with the operations of acquired companies,
including the consolidation of systems, procedures, personnel and facilities,
the relocation of staff, and the achievement of anticipated cost savings,
economies of scale and other business efficiencies, presents significant
challenges to our management, particularly if several acquisitions occur at the
same time. In short, we cannot assure you that:
- desirable acquisition candidates exist or will be identified,
- we will be able to acquire any of the candidates identified,
- we will effectively consolidate companies which are acquired and fully or
timely realize the expected cost savings, economies of scale or business
efficiencies, or
- any acquisitions will be profitable or accretive to our earnings.
Additional factors may negatively impact our acquisition growth strategy.
Our acquisition strategy requires spending significant amounts of capital. If we
are unable to obtain additional needed financing on acceptable terms, we may
need to reduce the scope of our acquisition growth strategy, which could have a
material adverse effect on our growth prospects. The intense competition among
our competitors pursuing the same acquisition candidates may increase purchase
prices for solid waste businesses and increase our capital requirements and/or
prevent us from acquiring certain acquisition candidates. In addition, our
inability to account for acquisitions under the pooling of interests method of
accounting until May 2001 may impede our ability to complete some transactions.
If any of the aforementioned factors force us to alter our growth strategy, our
financial condition, results of operations and growth prospects could be
adversely affected.
WE MAY BE UNABLE TO MANAGE OUR GROWTH EFFECTIVELY.
Our growth strategy places significant demands on our financial,
operational and management resources. In order to continue our growth, we will
need to add administrative and other personnel, and make additional investments
in operations and systems. We cannot assure you that we will be able to find and
train qualified personnel, or do so on a timely basis, or expand our operations
and systems to the extent, and in the time, required.
BUSINESSES WE ACQUIRE MAY HAVE UNDISCLOSED LIABILITIES.
In pursuing our acquisition strategy, our investigations of the acquisition
candidates may fail to discover certain undisclosed liabilities of the
acquisition candidates. If we acquire a company having undisclosed liabilities,
as a successor owner we may be responsible for such undisclosed liabilities. We
typically try to minimize our exposure to such liabilities by obtaining
indemnification from each seller of the acquired companies, by deferring payment
of a portion of the purchase price as security for the indemnification and by
acquiring only specified assets. However, we cannot assure you that we will be
able to obtain indemnifications or that they will be enforceable, collectible or
sufficient in amount, scope or duration to fully offset any undisclosed
liabilities arising from our acquisitions.
WE DEPEND ON KEY PERSONNEL.
Our future success depends on the continued contributions of several key
employees and officers. Most of our officers do not have employment agreements
and we do not maintain key man life insurance policies on any of our officers.
The loss of the services of key employees and officers, whether such loss is
through resignation or other causes, or the inability to attract additional
qualified personnel, could have a material adverse effect on our financial
condition, results of operations and growth prospects.
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<PAGE> 16
COMPLIANCE WITH ENVIRONMENTAL REGULATION MAY IMPEDE OUR GROWTH.
We may need to spend considerable time, effort and capital to keep our
facilities in compliance with federal, state and local requirements regulating
health, safety, environment, zoning and land use. In addition, some of our waste
operations that cross state boundaries could be adversely affected if the
federal government, or the state or locality in which these waste operations are
located, imposes discriminatory fees on, or otherwise limits or prohibits, the
transportation or disposal of solid waste. If environmental laws become more
stringent, our environmental capital expenditures and costs for environmental
compliance may increase in the future. In addition, due to the possibility of
unanticipated events or regulatory developments, the amounts and timing of
future environmental expenditures could vary substantially from those we
currently anticipate. Because of the nature of our operations, we have in the
past, currently are, and may in the future be named as a potentially responsible
party in connection with the investigation or remediation of environmental
conditions. We cannot assure you that the resolution of any such investigations
will not have a material adverse effect on our financial condition or results of
operations. A significant judgment or fine against our company, or our loss of
significant permits or licenses, could have a material adverse effect on our
financial condition, results of operations or prospects.
REGULATORY APPROVAL TO EXPAND OUR LANDFILLS AND TRANSFER STATIONS MAY BE DELAYED
OR DENIED.
Our plans include expanding the disposal and transfer capacities of certain
of our landfills and transfer stations, respectively. Various parties, including
citizens' groups and local politicians, remain active in challenging these
expansions. Responding to these challenges has, at times, increased our costs
and extended the time associated with establishing new facilities and expanding
existing facilities. In addition, failure to receive regulatory approval would
prohibit us from establishing new facilities and expanding existing facilities.
OUR FINANCIAL STATEMENTS ARE BASED UPON ESTIMATES AND ASSUMPTIONS THAT MAY
DIFFER FROM ACTUAL RESULTS.
Our financial statements have been prepared in accordance with generally
accepted accounting principles and necessarily include amounts based on
estimates and assumptions made by us. Actual results could differ from these
amounts. Significant items subject to such estimates and assumptions include the
carrying value of long-lived assets, the depletion and amortization of landfill
development costs, accruals for closure and post-closure costs, valuation
allowances for accounts receivable, liabilities for potential litigation, claims
and assessments, and liabilities for environmental remediation, deferred taxes
and self-insurance.
We currently accrue for landfill closure and post-closure costs based on
consumption of landfill airspace. As of December 31, 1999, assuming that all
available landfill capacity is used, we expect to expense approximately $528.4
million of landfill closure and post-closure costs over the remaining lives of
these facilities. We cannot assure you that our reserves for landfill and
environmental costs will be adequate to cover the requirements of existing
environmental regulations, future changes or interpretations of existing
regulations or the identification of adverse environmental conditions previously
unknown to us.
POTENTIAL YEAR 2000 PROBLEMS MAY ADVERSELY AFFECT OUR BUSINESS.
As of the date of this Annual Report on Form 10-K we believe that all of
our systems are operating and we have not experienced any material issues from
the date change in the year 2000. Also, as of the date of this Annual Report on
Form 10-K, we are unaware of any third party issues from the date change in the
year 2000 that would materially affect our financial condition or results of
operations. Nevertheless, if any issues from the data change in the year 2000
presently unknown to us occur with us or with third party products and business
dependencies, we may experience a delay or disruption in the delivery of
services which could have a material adverse impact on our financial condition
and results of operations including loss of revenue, increased operating costs,
loss of customers or suppliers, or other significant disruptions to our
business.
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SEASONAL CHANGES AND ECONOMIC FLUCTUATIONS MAY ADVERSELY AFFECT OUR BUSINESS AND
OPERATIONS.
Our operations may be adversely affected by periods of inclement weather
which could delay the collection and disposal of waste, reduce the volume of
waste generated or delay the construction or expansion of our landfill sites and
other facilities.
Our commercial and industrial collection operations, and our landfills
which accept construction and demolition debris, may be adversely affected by
periods of economic downturn or declines in the construction industry.
WE MAY BE UNABLE TO EXTEND THE MATURITY OF OUR REVOLVING SHORT-TERM CREDIT
FACILITY.
We have a revolving short-term credit facility in the principal amount of
$500.0 million which expires in July 2000. We anticipate extending the maturity
of this credit facility until July 2001. However, we cannot assure you that we
will receive such extension and, if so, whether such extension will be on terms
as favorable to us as those currently contained in the credit facility.
THE RESOLUTION OF CURRENT AND FUTURE LEGAL PROCEEDINGS MAY ADVERSLY AFFECT OUR
COMPANY.
Our company currently is and will continue to be involved in a various
administrative and legal proceedings in the ordinary course of business. No
assurance can be given with respect to the outcome of these proceedings or the
effect such outcomes may have on us, or that our insurance coverages or reserves
with respect thereto are adequate. A significant judgment against us could have
a material adverse effect on our financial position, results of operations or
cash flows. See "Legal and Administrative Proceedings".
THE OUTCOME OF AN AUDIT BY THE INTERNAL REVENUE SERVICE MAY ADVERSELY AFFECT OUR
COMPANY.
Through the date of our initial public offering in July 1998, we filed
consolidated federal income tax returns with AutoNation. The Internal Revenue
Service is auditing AutoNation's consolidated tax returns for fiscal years 1995
and 1996. In accordance with the tax sharing agreement we have with AutoNation,
we may be liable for certain assessments imposed by the Internal Revenue Service
resulting from this audit. No assurance can be given with respect to the outcome
of this audit or the effect it may have on us, or that our reserves with respect
thereto are adequate. A significant assessment against us could have a material
adverse effect on our financial position, results of operations or cash flows.
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<PAGE> 18
ITEM 2. PROPERTIES
Our corporate headquarters are located in Ft. Lauderdale, Florida in
premises leased from a third party. As of December 31, 1999, we operated
approximately 5,200 collection vehicles. Certain of our property and equipment
are subject to operating leases or liens securing payment of portions of our
indebtedness. We also lease certain of our offices and equipment. We believe
that our facilities are sufficient for our current needs.
The following table provides certain information regarding the 55 landfills
owned or operated by us as of December 31, 1999:
<TABLE>
<CAPTION>
UNUSED
TOTAL PERMITTED PERMITTED
LANDFILL NAME LOCATION ACREAGE ACREAGE ACREAGE
------------- -------- ------- --------- ---------
<S> <C> <C> <C> <C>
Apex................................... Clark County, Nevada 2,285 1,233 1,102
Brazoria............................... Clute, Texas 1,000 195 75
Brent Run.............................. Montrose, Michigan 370 106 67
Broadhurst Landfill(1)................. Jesup, Georgia 900 80 55
C&T Regional........................... Linn, Texas 200 79 17
CWI Florida............................ Winter Haven, Florida 80 58 14
Carleton Farms......................... Detroit, Michigan 495 388 261
Charter Waste.......................... Abilene, Texas 396 300 283
Chiquita Canyon........................ Valencia, California 592 257 103
Cleveland Container/JMN................ Shelby, North Carolina 174 77 40
Countywide............................. East Sparta, Ohio 818 88 10
Dozit Landfill......................... Morganfield, Kentucky 231 47 28
East Carolina Landfill................. Aulander, North Carolina 729 113 63
Elk Run................................ Onaway, Michigan 99 40 33
Epperson Landfill...................... Williamstown, Kentucky 861 100 58
Foothills Landfill(1).................. Lenior, North Carolina 231 78 63
Forest Lawn............................ Three Oaks, Michigan 387 126 22
Front Range............................ Denver, Colorado 602 195 162
Green Ridge............................ Scottdale, Pennsylvania 580 87 44
Green Valley Landfill.................. Ashland, Kentucky 266 37 --
Honeygo Run............................ Perry Hall, Maryland 68 39 31
Kestrel Hawk........................... Racine, Wisconsin 218 125 37
Laughlin(1)............................ Laughlin, Nevada 40 40 --
Mallard Ridge.......................... Delavan, Wisconsin 659 42 9
Modern................................. York, Pennsylvania 716 230 63
National Serv-All...................... Fort Wayne, Indiana 265 204 32
Nine Mile Road......................... St. Augustine, Florida 154 28 --
North County........................... Houston, Texas 100 31 17
Northwest Tennessee.................... Union City, Tennessee 600 120 88
Oak Grove.............................. Winder, Georgia 303 60 26
Ohio County Balefill(1)................ Beaver Dam, Kentucky 908 178 133
Pepperhill............................. North Charleston, SC 37 22 10
Pine Grove............................. Amanda, Ohio 734 112 83
Pine Ridge............................. Griffin, Georgia 871 101 71
Pinellas(1)............................ St. Petersburg, Florida 750 478 200
Presidio(1)............................ Presidio, Texas 10 10 6
Republic/Alpine(1)..................... Alpine, Texas 80 74 67
Republic/CSC........................... Avalon, Texas 298 205 124
Republic/Imperial...................... Imperial, California 250 73 27
Republic/Maloy......................... Campbell, Texas 388 195 130
Safety Lights.......................... Memphis, Tennessee 49 21 --
San Angelo(1).......................... San Angelo, Texas 257 232 109
Savannah Regional...................... Savannah, Georgia 123 56 42
Southern Illinois Regional............. DeSoto, Illinois 249 113 19
Springfield Environmental.............. Mt. Vernon, Indiana 55 25 --
Swiftcreek Landfill.................... Macon, Georgia 830 81 28
Tay-Ban................................ Birch Run, Michigan 90 25 6
Tri-K Landfill......................... Stanford, Kentucky 572 64 49
United Refuse.......................... Fort Wayne, Indiana 305 77 15
Upper Piedmont Environmental........... Roxboro, North Carolina 614 70 46
Uwharrie Landfill(1)................... Mt. Gilead, North Carolina 905 58 26
Valleyview............................. Louisville, Kentucky 663 109 82
Victory Environmental.................. Terre Haute, Indiana 461 260 77
Wabash Valley.......................... Wabash, Indiana 284 69 19
Whitefeather........................... Pinconning, Michigan 105 70 45
------ ----- -----
Total.......................... 24,307 7,381 4,217
====== ===== =====
</TABLE>
- ---------------
(1) Operated but not owned by us.
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ITEM 3. LEGAL PROCEEDINGS
We are and will continue to be involved in various administrative and legal
proceedings in the ordinary course of business. We can give you no assurance
regarding the outcome of these proceedings or the effect their outcomes may
have, or that our insurance coverages or reserves are adequate. A significant
judgment against our company, the loss of significant permits or licenses, or
the imposition of a significant fine could have a material adverse effect on our
financial position, results of operations or prospects.
In September 1999, several lawsuits were filed by certain shareholders
against us and certain of our officers and directors in the United States
District Court for the Southern District of Florida. The plaintiffs in these
lawsuits claim, on behalf of a purported class of purchasers of our common stock
between January 28, 1999 and August 28, 1999, that the defendants violated
Sections 10(b) and 20(a) of the Securities Exchange Act of l934 by, among other
things, allegedly making materially false and misleading statements regarding
our growth and the assets we acquired from Waste Management. On December 29,
1999, the Court consolidated these lawsuits and the consolidated action has been
named In Re: Republic Services, Inc. Securities Litigation. The plaintiffs filed
a consolidated complaint on February 11, 2000. We believe the allegations
contained in the consolidated complaint are without merit and we will vigorously
defend this and any related actions. However, an unfavorable resolution of this
lawsuit could have a material adverse effect on our financial position, results
of operations or cash flow in one or more future periods.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to our stockholders during the fourth quarter of
1999.
17
<PAGE> 20
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
MARKET INFORMATION, HOLDERS AND DIVIDENDS
Our common stock began trading on the New York Stock Exchange on July 1,
1998.
The following table sets forth the range of the high and low sales prices
of our common stock for the periods indicated:
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1999
- -----
First Quarter............................................... $22 3/16 $14 3/8
Second Quarter.............................................. 25 1/2 15 3/4
Third Quarter............................................... 25 3/8 10 1/16
Fourth Quarter.............................................. 14 7/16 8 7/8
</TABLE>
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1998
- -----
Third Quarter............................................... $27 7/16 $13 3/8
Fourth Quarter.............................................. 24 9/16 14
</TABLE>
On February 28, 2000 the last reported sales price of our common stock was
$10 11/16.
There were approximately 92 record holders of our common stock at February
28, 2000.
We do not intend to pay cash dividends on our common stock for the
foreseeable future because we intend to retain all earnings for use in the
operation and expansion of our business. Furthermore, our ability to declare or
pay dividends is limited by the terms of the revolving credit facility which
contains covenants that restrict the payment of cash dividends.
18
<PAGE> 21
ITEM 6. SELECTED FINANCIAL DATA (IN MILLIONS EXCEPT PER SHARE DATA)
The following Selected Financial Data should be read in conjunction with
our Consolidated Financial Statements and notes thereto as of December 31, 1999
and 1998 and for each of the three years in the period ended December 31, 1999
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Annual Report on Form 10-K. The selected
statements of operations data and the other operating data for the years 1996
and 1995 and the selected balance sheet data at December 31, 1996 were derived
from our Consolidated Financial Statements, which have been audited by Arthur
Andersen LLP, independent certified public accountants. Our balance sheet data
at December 31, 1995 were derived from our unaudited consolidated financial
statements, which we believe reflect all adjustments, consisting of only normal
recurring adjustments, necessary for a fair presentation of this data. See Notes
1, 3 and 7 of Notes to our Consolidated Financial Statements for a discussion of
basis of presentation, business combinations and stockholders' equity and their
effect on comparability of year-to-year data.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1999 1998 1997 1996 1995
--------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue..................................................... $ 1,838.5 $1,369.1 $1,127.7 $ 953.3 $ 805.0
Expenses:
Cost of operations........................................ 1,101.1 842.7 723.0 628.3 507.1
Depreciation, amortization and depletion.................. 163.2 106.3 86.1 75.3 63.0
Selling, general and administrative....................... 176.7 135.8 117.3 135.3 137.7
Restructuring and other charges........................... 6.9 -- -- 8.8 3.3
--------- -------- -------- -------- -------
Operating income............................................ 390.6 284.3 201.3 105.6 93.9
Interest expense............................................ (64.2) (44.7) (25.9) (29.7) (19.1)
Interest income............................................. 3.5 1.5 4.9 11.7 4.4
Other income (expense), net................................. (3.4) (.9) 1.8 2.2 1.8
--------- -------- -------- -------- -------
Income from continuing operations before income taxes....... 326.5 240.2 182.1 89.8 81.0
Provision for income taxes.................................. 125.7 86.5 65.9 38.0 31.6
--------- -------- -------- -------- -------
Income from continuing operations........................... 200.8 153.7 116.2 51.8 49.4
Loss from discontinued operations........................... -- -- -- -- (24.8)
--------- -------- -------- -------- -------
Net income.................................................. $ 200.8 $ 153.7 $ 116.2 $ 51.8 $ 24.6
========= ======== ======== ======== =======
Basic and diluted earnings per share(a)..................... $ 1.14 $ 1.13 $ 1.21 $ .54 $ .26
========= ======== ======== ======== =======
Weighted average common and common equivalent shares
outstanding(a)............................................ 175.7 135.6 95.7 95.7 95.7
========= ======== ======== ======== =======
Pro forma basic and diluted earnings per share(b)........... $ 1.18
=========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1999 1998 1997 1996 1995
--------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C>
OTHER OPERATING DATA:
EBITDA (c).................................................. $ 553.8 $ 390.6 $ 287.4 $ 180.9 $ 156.9
EBITDA margin (d)........................................... 30.1% 28.5% 25.5% 19.0% 19.5%
Capital expenditures........................................ $ 289.6 $ 193.0 $ 165.3 $ 146.9 $ 147.9
Cash flows from operating activities........................ 323.8 271.1 279.4 143.5 125.4
Cash flows from investing activities........................ (1,053.7) (607.4) (168.1) (175.7) (110.7)
Cash flows from financing activities........................ 186.4 892.9 (135.5) 20.3 2.8
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------------
1999 1998 1997 1996 1995
--------- -------- -------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 13.1 $ 556.6 $ -- $ 24.2 $ 36.1
Total assets................................................ 3,288.3 2,812.1 1,348.0 1,090.3 838.9
Amounts due to AutoNation (e)............................... -- -- 266.1 254.9 125.0
Total debt.................................................. 1,209.3 1,057.1 75.1 142.7 160.1
Total stockholders' equity.................................. 1,502.7 1,299.1 750.8 494.5 372.2
</TABLE>
- -------------------------
(a) Prior to our initial public offering on July 1, 1998, we had 100 shares of
common stock outstanding, all of which were owned by AutoNation. Historical
share and per share data have been retroactively adjusted for the
recapitalization of our 100 shares of common stock into 95.7 million shares
of common stock in July 1998.
(b) Pro forma basic and dilutive earnings per share exclude a $6.9 million
pre-tax charge for costs related to our separation from AutoNation. They
also exclude a $2.9 million loss on the sale of our only international
operation, a collection and disposal business in Costa Rica.
19
<PAGE> 22
(c) EBITDA represents operating income plus depreciation, amortization and
depletion. While EBITDA data should not be construed as a substitute for
operating income, net income or cash flows from operations in analyzing our
operating performance, financial position and cash flows, we have included
EBITDA data, which is not a measure of financial performance under generally
accepted accounting principles, because we believe that this data is
commonly used by certain investors to evaluate a company's performance in
the solid waste industry. Due to the fact that not all companies calculate
non-GAAP measures in the same manner, the EBITDA presentation herein may not
be comparable to similarly titled measures reported by other companies.
(d) EBITDA margin represents EBITDA divided by revenue.
(e) In July 1998, we repaid all amounts due to AutoNation as of June 30, 1998
through the issuance of common stock and through all proceeds of our initial
public offering.
20
<PAGE> 23
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
You should read the following discussion in conjunction with our
Consolidated Financial Statements and their Notes contained in this Annual
Report on Form 10-K. All references to historical share and per share data of
our common stock have been retroactively adjusted for the recapitalization of
the 100 shares of our common stock into approximately 95.7 million shares of
common stock in July 1998.
OUR BUSINESS
We are a leading provider of non-hazardous solid waste collection and
disposal services in the United States. We provide solid waste collection
services for commercial, industrial, municipal and residential customers through
151 collection companies in 24 states. We also own or operate 81 transfer
stations and 55 solid waste landfills.
We generate revenue primarily from our solid waste collection operations,
and our remaining revenue is from landfill disposal services and other services,
including recycling and composting operations.
The following table reflects our total revenue by source for the year ended
December 31, 1999 (in millions):
<TABLE>
<S> <C> <C>
Collection:
Residential......................................... $ 391.2 21.3%
Commercial.......................................... 548.5 29.8
Industrial.......................................... 432.8 23.5
Other............................................... 46.7 2.6
-------- -----
Total collection............................ 1,419.2 77.2
Transfer and disposal................................. 425.1
Less: Intercompany.................................... (159.1)
--------
Transfer and disposal, net.......................... 266.0 14.5
Other................................................. 153.3 8.3
-------- -----
Total revenue............................... $1,838.5 100.0%
======== =====
</TABLE>
Our revenue from collection operations consists of fees we receive from
commercial, industrial, municipal and residential customers. Our residential and
commercial collection operations in some markets are based on long-term
contracts with municipalities. We generally provide industrial and commercial
collection operations to individual customers under contracts with terms up to
three years. Our revenue from landfill operations is from disposal or tipping
fees charged to third parties. In general, we integrate our recycling operations
with our collection operations and obtain revenue from the sale of recyclable
materials. No one customer has individually accounted for more than 10% of our
consolidated revenue in any of the last three years.
The cost of our collection operations is primarily variable and includes
disposal, labor, fuel and equipment maintenance costs. We try to be more
efficient by controlling the movement of waste streams from the point of
collection through disposal. During the three months ended December 31, 1999,
approximately 48% of the total volume of waste we collected was disposed of at
our landfills.
Our landfill cost of operations includes daily operating expenses, costs of
capital for cell development, accruals for closure and post-closure costs, and
the legal and administrative costs of ongoing environmental compliance. We
expense all indirect landfill development costs as they are incurred. We use
life cycle accounting and the units-of-consumption method to recognize certain
direct landfill costs. In life cycle accounting, certain direct costs are
capitalized and charged to expense based upon the consumption of cubic yards of
available airspace. These costs include all costs to:
- acquire,
- construct,
- close and
- maintain a site during the post closure period.
21
<PAGE> 24
Cost and airspace estimates are developed annually by independent engineers
together with our engineers. These estimates are used by our operating and
accounting personnel to annually adjust our rates used to expense capitalized
costs and accrue closure and post-closure costs. Changes in these estimates
primarily relate to changes in available airspace, inflation rates and
applicable regulations. Changes in available airspace include changes due to the
addition of airspace lying in expansion areas deemed likely to be permitted.
BUSINESS COMBINATIONS
We make decisions to acquire or invest in businesses based on financial and
strategic considerations. We have included businesses that we acquired and which
have been accounted for under the purchase method of accounting in our
consolidated financial statements from the date of acquisition.
In July 1999, we entered into a definitive agreement with Allied Waste
Industries, Inc. to acquire certain solid waste assets for approximately $230.0
million in cash. In October 1999, after failing to receive regulatory approval
relating to the acquisition of certain of the assets, the agreement was amended
for us to acquire certain solid waste assets for a purchase price of $71.0
million in cash. The assets to be acquired under the amended agreement include
one landfill operation, five transfer stations and a subset of small container
hauling assets from four collection operations. By December 31, 1999, we had
completed the purchase of certain assets for approximately $19.7 million in
cash. In addition, we entered into a definitive agreement with Allied Waste for
the simultaneous purchase and sale of certain other solid waste assets. All of
these transactions will be accounted for under the purchase method of
accounting. The portion of these transactions that were not closed by December
31, 1999 were subject to approval by various state and federal agencies as well
as satisfaction of customary closing conditions.
In September 1998, we signed an agreement with Waste Management, Inc. to
acquire assets and to enter into disposal agreements at various Waste Management
facilities. By June 1999, we had completed the purchase of the assets for
approximately $479.6 million in cash plus properties, $292.7 million of which
were acquired during the six months ended June 30, 1999. The assets purchased
included 16 landfills, 11 transfer stations and 136 commercial collection routes
across the United States, and were accounted for under the purchase method of
accounting.
In addition to the acquisitions from Allied Waste and Waste Management, we
also acquired various other solid waste businesses during year ended December
31, 1999, which were accounted for under the purchase method of accounting. The
aggregate purchase price we paid in these transactions was $430.8 million in
cash.
Cost in excess of fair value of net assets acquired for 1999 acquisitions
totaled approximately $415.9 million. As of December 31, 1999, we had intangible
assets, net of accumulated amortization, of $1,297.3 million, which consist
primarily of the cost in excess of fair value of net assets acquired. We
amortize cost in excess of the fair value of net assets acquired over forty
years on a straight-line basis. As of December 31, 1999, the amortization
expense associated with these intangible assets on an annualized basis is
approximately $36.1 million. We believe the forty year life assigned to the cost
in excess of the fair value of net assets acquired is reasonable as the
businesses we acquired are generally well-established companies which have been
in existence for many years and have stable, long-term customer relationships.
During the year ended December 31, 1998, AutoNation acquired various solid
waste businesses which it contributed to our company. The aggregate purchase
price AutoNation paid in transactions accounted for under the purchase method of
accounting was $128.3 million, consisting of cash and approximately 3.4 million
shares of AutoNation common stock. Subsequent to our initial public offering, we
acquired various solid waste businesses. The aggregate purchase price we paid in
transactions accounted for under the purchase method of accounting was $450.5
million consisting of cash and certain properties. Cost in excess of fair value
of net assets acquired for 1998 acquisitions totaled approximately $572.4
million.
During the year ended December 31, 1997, AutoNation acquired various solid
waste businesses which it contributed to our company. The aggregate purchase
price AutoNation paid in transactions accounted for under the purchase method of
accounting was $147.9 million, consisting of cash and approximately 5.7 million
22
<PAGE> 25
shares of AutoNation common stock. Cost in excess of the fair value of net
assets acquired in these acquisitions totaled $149.1 million. In addition,
AutoNation issued an aggregate of approximately 34.1 million shares of
AutoNation common stock in transactions accounted for under the pooling of
interests method of accounting. We have retroactively included significant
businesses that we acquired and accounted for under the pooling of interest
method of accounting in our consolidated financial statements as if the
companies had operated as one entity since inception. Included in the shares of
AutoNation common stock issued in acquisitions accounted for under the pooling
of interests method of accounting are approximately 0.3 million shares issued
for acquisitions that were not material individually or in the aggregate and,
consequently, prior period financial statements were not restated for such
acquisitions.
See Note 3, Business Combinations, of the Notes to our Consolidated
Financial Statements, for further discussion of business combinations.
BACKGROUND
In May 1998, AutoNation announced its intention to separate our company,
which at the time was a wholly owned subsidiary of AutoNation, from AutoNation,
and for our company to complete an initial public offering of common stock. As a
result, we entered into certain agreements with AutoNation providing for the
separation and governing various interim and ongoing relationships between our
company and AutoNation.
As part of the separation, and prior to our initial public offering of
common stock, we declared and paid a $2.0 billion dividend in April 1998 to
AutoNation with a series of promissory notes. In addition, we owed AutoNation
approximately $139.5 million and owed Republic Resources Company, at that time a
subsidiary of ours, approximately $165.4 million, net of an approximate $90.5
million that Resources owed to our company. On June 30, 1998, we repaid $565.4
million of the promissory notes that we owed to AutoNation with cash, assets we
received from Resources and with the receivable that Resources owed to our
company. In addition, we distributed all of our shares of common stock of
Resources to AutoNation. We repaid the approximately $139.5 million we owed to
AutoNation and the approximately $255.9 million we owed to Resources by issuing
approximately 16.5 million shares of our common stock to AutoNation, and we
repaid the remaining balance of the promissory notes due to AutoNation with all
of the net proceeds from our issuance and sale of approximately 63.2 million
shares of common stock in our initial public offering completed in July 1998,
which totalled approximately $1.4 billion.
Following our initial public offering and the repayment of amounts due to
AutoNation, AutoNation owned approximately 63.9% of the outstanding shares of
our common stock. Following the recapitalization of our common stock, repayment
of amounts due to AutoNation and our initial public offering, we had the
following shares of common stock outstanding (in millions):
<TABLE>
<S> <C>
Recapitalization of our common stock........................ 95.7
Repayment of amounts due to AutoNation...................... 16.5
Initial public offering of common stock..................... 63.2
-----
175.4
=====
</TABLE>
In March 1999, AutoNation exercised registration rights that it had with
our company in order to be able to sell its entire interest in our company,
consisting of approximately 112.2 million shares of common stock, and in May
1999, AutoNation sold substantially all of these shares of common stock in a
secondary public offering. We received no proceeds in the secondary public
offering.
Prior to our initial public offering, our employees received options under
AutoNation's stock option plans. In March 1999, options to purchase
approximately 8.0 million shares of AutoNation common stock were cancelled and
were replaced, on a one-for-one basis, with options to purchase shares of our
common stock under our 1998 Stock Incentive Plan. These replacement options
retained the vesting and exercise rights of the original options, subject to
exercise limitations for individuals who signed stock option repricing
agreements with AutoNation. The individual replacement options were priced so
that the unrealized gain or loss on each of the AutoNation options was generally
maintained under the replacement options. The compensation
23
<PAGE> 26
expense related to our granting of replacement options with exercise prices
below the quoted market price of the common stock at the date of grant was
approximately $2.0 million, which we recorded in the first quarter of 1999 as a
one-time charge to earnings.
Prior to our initial public offering, we were a wholly owned subsidiary of
AutoNation. As a result, AutoNation provided us with various services including:
- accounting,
- auditing,
- cash management,
- corporate communications,
- corporate development,
- financial and treasury,
- human resources and benefit plan administration,
- insurance and risk management,
- legal,
- purchasing and
- tax services.
AutoNation also provided our company with the services of a number of its
executives and employees. In consideration for these services, AutoNation
allocated to our company a portion of its general and administrative costs
related to these services. Prior to the separation of the two companies this
allocation had historically been based on the proportion of our invested capital
as a percentage of the consolidated invested capital of AutoNation and its
subsidiaries, including our company. In June 1998, we entered into a services
agreement with AutoNation under which AutoNation agreed to continue to provide
various services to our company in exchange for a monthly fee of $1.25 million.
Effective January 1, 1999, we negotiated a reduction in this fee to $0.9 million
per month. The services agreement expired on June 30, 1999. Our management
believes that the amounts allocated to our company and/or charged under the
services agreement were no less favorable to our company than costs we would
have incurred to obtain such services on our own or from unaffiliated third
parties.
We recorded other charges of $6.9 million for the year ended December 31,
1999. These costs relate to our separation from AutoNation. They consist of $2.0
million of compensation expense related to the granting of certain replacement
employee stock options at exercise prices below the quoted market price of our
common stock at the date of grant. See Note 8, Stock Options, of the Notes to
our Consolidated Financial Statements for further information. They also consist
of $4.9 million of other additional charges directly related to our separation.
We do not anticipate incurring additional costs related to our separation from
AutoNation.
The historical consolidated financial information included in this Annual
Report on Form 10-K does not necessarily reflect what our financial position and
results of operations would have been had we been operated as a separate,
stand-alone entity during the periods presented.
PRO FORMA CONSOLIDATED RESULTS OF OPERATIONS
Our pro forma net income was $206.8 million, or $1.18 per share, for the
year ended December 31, 1999. Our pro forma operating results exclude a $6.9
million pre-tax charge for costs related to our separation from AutoNation. They
also exclude a $2.9 million loss on the sale of our only international
operation, a collection and disposal business in Costa Rica.
See Note 1, Basis of Presentation, of the Notes to our Consolidated
Financial Statements, for further discussion of pro forma operating results.
24
<PAGE> 27
CONSOLIDATED RESULTS OF OPERATIONS
Years Ended December 31, 1999, 1998 and 1997
Our net income was $200.8 million for the year ended December 31, 1999, as
compared to $153.7 million in 1998 and $116.2 million in 1997. Our operating
results for the year ended December 31, 1999 includes other charges further
described below.
The following table summarizes our costs and expenses in millions of
dollars and as a percentage of our revenue for 1997 through 1999:
<TABLE>
<CAPTION>
1999 % 1998 % 1997 %
-------- ----- -------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
Revenue...................................... $1,838.5 100.0% $1,369.1 100.0% $1,127.7 100.0%
Cost of operations........................... 1,101.1 59.9 842.7 61.6 723.0 64.1
Depreciation, amortization and depletion of
property and equipment..................... 130.3 7.1 88.4 6.5 76.1 6.7
Amortization of intangible assets............ 32.9 1.8 17.9 1.3 10.0 .9
Selling, general and administrative
expenses................................... 176.7 9.6 135.8 9.9 117.3 10.4
Other charges................................ 6.9 .4 -- -- -- --
-------- ----- -------- ----- -------- -----
Operating income........................ $ 390.6 21.2% $ 284.3 20.8% $ 201.3 17.9%
======== ===== ======== ===== ======== =====
</TABLE>
Revenue. Revenue was $1,838.5 million, $1,369.1 million and $1,127.7
million for the years ended December 31, 1999, 1998 and 1997, respectively.
Revenue increased by $469.4 million, or 34.3%, from 1998 to 1999. Revenue
increased by $241.4 million, or 21.4%, from 1997 to 1998. The following table
reflects the components of our revenue growth for the years ended December 31,
1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Price....................................................... 2.3% .4%
Volume...................................................... 5.8 6.6
---- ----
Total internal growth.................................. 8.1 7.0
Acquisitions................................................ 26.2 14.4
---- ----
Total revenue growth................................... 34.3% 21.4%
==== ====
</TABLE>
Cost of Operations. Cost of operations was $1,101.1 million, $842.7
million and $723.0, or, as a percentage of revenue, 59.9%, 61.6% and 64.1%, for
the years ended December 31, 1999, 1998 and 1997, respectively. The increases in
aggregate dollars are a result of the expansion of our operations through
acquisitions and internal growth. The decreases in cost of operations as a
percentage of revenue are primarily a result of our improved operating
efficiencies and an increase in higher margin landfill operations primarily due
to acquisitions.
Depreciation, Amortization and Depletion of Property and
Equipment. Depreciation, amortization and depletion expenses for property and
equipment were $130.3 million, $88.4 million and $76.1 million, or, as a
percentage of revenue, 7.1%, 6.5% and 6.7%, for the years ended December 31,
1999, 1998 and 1997, respectively. The increases in aggregate dollars for all
periods presented and the increase as a percentage of revenue during 1999 is
primarily due to acquisitions and capital expenditures.
Amortization of Intangible Assets. Expenses for amortization of intangible
assets were $32.9 million, $17.9 million and $10.0 million, or, as a percentage
of revenue, 1.8%, 1.3% and .9%, for the years ended December 31, 1999, 1998 and
1997, respectively. The increase in aggregate dollars and as a percentage of
revenue is primarily due to an increase in the aggregate dollar amount of
acquisitions accounted for using the purchase method of accounting.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $176.7 million, $135.8 million, $117.3 million, or,
as a percentage of revenue, 9.6%, 9.9% and 10.4%, for the years ended December
31, 1999, 1998 and 1997, respectively. The increases in aggregate dollars are a
result of the expansion of our operations through acquisitions and internal
growth. The decreases in selling, general and
25
<PAGE> 28
administrative expenses as percentages of revenue in each of the years are
primarily due to applying our existing overhead structure over an expanding
revenue base. Included in selling, general and administrative expenses are
allocations of AutoNation's corporate general and administrative costs of $7.5
million and $10.2 million for the years ended December 31, 1998 and 1997,
respectively, and fees paid to AutoNation under the services agreement of $5.3
million and $7.5 million for the years ended December 31, 1999 and 1998,
respectively. See Note 11, Related Party Transactions, of the Notes to our
Consolidated Financial Statements for further information.
Other Charges. We recorded other charges of $6.9 million for the year
ended December 31, 1999. These costs relate to our separation from AutoNation.
They include $2.0 million of compensation expense related to the granting of
certain replacement employee stock options at exercise prices below the quoted
market price of our common stock at the date of grant. See Note 8, Stock
Options, of the Notes to our Consolidated Financial Statements for further
information. They also include $4.9 million of other additional charges directly
related to our separation. We do not anticipate incurring additional costs
related to our separation from AutoNation.
Operating Income. Operating income was $390.6 million, $284.3 million and
$201.3 million, or, as a percentage of revenue, 21.2%, 20.8% and 17.9%, for the
years ended December 31, 1999, 1998 and 1997, respectively.
Interest Expense. We incurred interest expense on our revolving credit
facility, our unsecured notes, amounts due to AutoNation and debt we assumed in
acquisitions. Interest expense was $64.2 million, $44.7 million and $25.9
million for the years ended December 31, 1999, 1998 and 1997, respectively, and
includes interest expense on amounts due to AutoNation of $37.3 million and
$20.2 million for the years ended December 31, 1998 and 1997, respectively. We
repaid in full the amounts due to AutoNation in July 1998 by issuing our common
stock and from the net proceeds of our initial public offering.
Interest and Other Income (Expense), Net. Interest and other income, net
of other expense, was $.1 million, $.6 million and $6.7 million for the years
ended December 31, 1999, 1998 and 1997, respectively. The variances during the
periods are primarily due to fluctuations in cash balances on hand and related
interest income. The amount recorded for the year ended December 31, 1999
includes a $2.9 million loss on the sale of our only international operation, a
collection and disposal business in Costa Rica.
Income Taxes. Our provision for income taxes was $125.7 million, $86.5
million and $65.9 million for the years ended December 31, 1999, 1998 and 1997,
respectively. The effective income tax rate was 38.5%, 36.0% and 36.2% for the
years ended December 31, 1999, 1998 and 1997, respectively.
As of our initial public offering in July 1998, we are no longer included
in AutoNation's federal tax returns.
LANDFILL AND ENVIRONMENTAL MATTERS
Available Airspace
The following table reflects landfill airspace activity for landfills owned
or operated by us for the year ended December 31, 1999:
<TABLE>
<CAPTION>
BALANCE AS OF NEW LANDFILLS CHANGES IN BALANCE AS OF
DECEMBER 31, EXPANSIONS ACQUIRED, NET PERMITS AIRSPACE ENGINEERING DECEMBER 31,
1998 UNDERTAKEN OF DIVESTITURES GRANTED CONSUMED ESTIMATES 1999
------------- ---------- ---------------- ------- -------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Permitted airspace:
Cubic yards (in millions).... 1,145.5 -- 148.0 34.6 (27.1) 3.1 1,304.1
Number of sites.............. 48 7 55
Expansion airspace:
Cubic yards (in millions).... 84.6 184.6 135.1 (34.6) -- -- 369.7
Number of sites.............. 7 11 4 (2) 20
------- ----- ----- ----- ----- --- -------
Total available airspace:
Cubic yards (in millions).... 1,230.1 184.6 283.1 -- (27.1) 3.1 1,673.8
======= ===== ===== ===== ===== === =======
Number of sites.............. 48 7 55
======= ===== =======
</TABLE>
26
<PAGE> 29
As of December 31, 1999, we owned or operated 55 solid waste landfills with
total available disposal capacity estimated to be 1.7 billion in-place cubic
yards. Total available disposal capacity represents the sum of estimated
permitted airspace plus an estimate of airspace deemed by us to be likely to be
permitted. These estimates are developed annually by independent engineers
together with our engineers utilizing information provided by annual aerial
surveys. As of December 31, 1999, total available disposal capacity is estimated
to be 1.3 billion in-place cubic yards of permitted airspace plus .4 billion
in-place cubic yards of expansion airspace which has been determined by us as
likely to be permitted. Before airspace included in an expansion area is
determined as likely to be permitted and, therefore, included in our calculation
of total available disposal capacity, it must meet our expansion criteria. See
Note 4, Landfill and Accrued Environmental Costs, of the Notes to our
Consolidated Financial Statements for further information.
As of December 31, 1999, 20 of our landfills meet the criteria for
including expansion airspace in their total available disposal capacity. At
projected annual volumes, these 20 landfills have an estimated remaining average
site life of 37 years, including the expansion airspace. The average estimated
remaining life of all of our landfills is 38 years.
As of December 31, 1999, three of our landfills that meet the criteria for
including expansion airspace had obtained approval from local authorities and
are proceeding into the state permitting process. Also, as of December 31, 1999,
eight of our 20 landfills that meet the criteria for including expansion
airspace had submitted permit applications to state authorities. The remaining
nine landfills that meet the criteria for including expansion airspace are in
the process of obtaining approval from local authorities and have not identified
any fatal flaws or impediments associated with the expansions at either the
local or state level.
Closure and Post-Closure Costs
During the year ended December 31, 1999, we consumed approximately 27.1
million cubic yards of airspace. During this same period, charges to expense for
closure and post-closure were $17.9 million, or $.66 per cubic yard. As of
December 31, 1999, accrued closure and post-closure costs were $152.3 million.
The current portion of these costs of $23.7 million is reflected in our
Consolidated Balance Sheets in other current liabilities. The long-term portion
of these costs of $128.6 million is reflected in our Consolidated Balance Sheets
in accrued environmental and landfill costs. As of December 31, 1999, assuming
that all available landfill capacity is used, we expect to expense approximately
$528.4 million of additional closure and post-closure costs over the remaining
lives of our facilities.
Our estimates for closure and post-closure do not take into account
discounts for the present value of total estimated costs. If total estimated
costs were discounted to present value, they would be lower. Thus, if we
discounted such costs, assuming closure and post-closure payments were made
ratably over the life of the landfill and the post-closure period, respectively,
and assuming the costs in current dollars are inflated by 2% until the expected
time of payment and then discounted to present value at 6%, closure and
post-closure expense would be reduced to $9.9 million, or $.37 per cubic yard,
for the year ended December 31, 1999, a reduction of $8.0 million, or $.29 per
cubic yard, from recorded expense. In addition, if we discounted such costs, the
present value of the expected future expense related to closure and post-closure
assuming all available landfill capacity is used would decrease to $222.8
million.
27
<PAGE> 30
Investment in Landfills
The following table reflects changes in our investments in landfills for
the year ended December 31, 1999 and the future expected investment as of
December 31, 1999 (in millions):
<TABLE>
<CAPTION>
LANDFILLS
BALANCE AS OF ACQUIRED, TRANSFERS ADDITIONS BALANCE AS OF EXPECTED
DECEMBER 31, CAPITAL NET OF AND CHARGED TO DECEMBER 31, FUTURE
1998 ADDITIONS DIVESTITURES ADJUSTMENTS EXPENSE 1999 INVESTMENT
------------- --------- ------------- ----------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Non-depletable landfill
land.................... $ 55.3 $ 1.9 $ 8.7 $(19.5) $ -- $ 46.4 $ --
Landfill development
costs................... 452.3 25.8 306.5 43.0 -- 827.6 1,041.2
Construction in
progress -- landfill.... -- 32.9 -- 11.4 -- 44.3 --
Accumulated depletion and
amortization............ (90.3) -- .5 (1.0) (44.3) (135.1) --
------ ----- ------ ------ ------ ------- --------
Net investment in landfill
land and development
costs................... $417.3 $60.6 $315.7 $ 33.9 $(44.3) $ 783.2 $1,041.2
====== ===== ====== ====== ====== ======= ========
<CAPTION>
TOTAL
EXPECTED
INVESTMENT
----------
<S> <C>
Non-depletable landfill
land.................... $ 46.4
Landfill development
costs................... 1,868.8
Construction in
progress -- landfill.... 44.3
Accumulated depletion and
amortization............ (135.1)
--------
Net investment in landfill
land and development
costs................... $1,824.4
========
</TABLE>
As of December 31, 1998, we owned or operated 48 solid waste landfills with
total available disposal capacity estimated to be 1.2 billion in-place cubic
yards. Our net investment in these landfills, excluding non-depletable land, was
$362.0 million, or approximately $.29 per cubic yard.
As of December 31, 1999, we owned or operated 55 solid waste landfills with
total available disposal capacity estimated to be 1.7 billion in-place cubic
yards. Our net investment in these landfills, excluding non-depletable land, was
$736.8 million, or $.44 per cubic yard. The $.15 increase in our investment per
cubic yard from December 31, 1998 to December 31, 1999 is primarily due to the
net acquisition of seven landfills during the period. During the year ended
December 31, 1999, our depletion and amortization expense relating to landfills
was $44.3 million, or $1.63 per cubic yard.
As of December 31, 1999, we expect to spend an estimated additional $1.0
billion on existing landfills, primarily related to cell construction and
environmental structures, over their expected remaining lives. Our total
expected gross investment, excluding non-depletable land, estimated to be $1.9
billion, or $1.14 per cubic yard, is used in determining our depletion and
amortization expense based upon airspace consumed using the units-of-consumption
method. Our estimates for expected future investment in landfills do not take
into account discounts for the present value of total estimated costs. For
further information, see "Closure and Post-Closure Costs".
We accrue costs related to environmental remediation activities through a
charge to income in the period such liabilities become probable and can be
reasonably estimated. No material amounts were charged to expense during the
years ended December 31, 1999, 1998 and 1997.
FINANCIAL CONDITION
At December 31, 1999, we had $13.1 million of unrestricted cash. At
December 31, 1998 we had $556.6 million of unrestricted cash, which we used
primarily to fund acquisitions in the first quarter of 1999.
As previously discussed, in July 1998, we completed our initial public
offering of common stock, resulting in net proceeds of approximately $1.4
billion. In July 1998, we repaid all remaining amounts due to AutoNation with
all of the net proceeds of our initial public offering and by issuing additional
shares of our common stock.
Prior to our initial public offering, we obtained working capital and
capital for our general corporate purposes, including acquisitions, from
AutoNation. Since our initial public offering, AutoNation has not provided funds
to finance our operations or acquisitions. In July 1998, we entered into a $1.0
billion unsecured revolving credit facility with a group of banks. $500.0
million of the credit facility had an original term of 364 days and the
remaining $500.0 million expires in July 2003. In July 1999, we extended the
short-term portion of the credit facility for an additional one year term
expiring in July 2000. Borrowings under the credit facility bear interest at
LIBOR-based rates. We use our own operating cash flow and proceeds from our
credit facilities to finance our working capital, capital expenditures,
acquisitions and other requirements. As of
28
<PAGE> 31
December 31, 1999, we had approximately $430.4 million of availability under the
short-term portion of the credit facility.
In May 1999, we sold $600.0 million of unsecured notes in the public
market. $225.0 million of these notes bear interest at 6 5/8% per annum and
mature in 2004. The remaining $375.0 million bear interest at 7 1/8% per annum
and mature in 2009. Interest on these notes is payable semi-annually in May and
November. The $225.0 million and $375.0 million in notes were offered at a
discount of $1.0 million and $.5 million, respectively. Proceeds from the notes
were used to repay our revolving credit facility.
In December 1999, we entered into a $100.0 million operating lease facility
established to finance the acquisition of operating equipment consisting
primarily of revenue-producing vehicles. As of December 31, 1999, $36.1 million
was outstanding under this facility.
At December 31, 1999, we had outstanding interest rate swap agreements
denominated in dollars, maturing in February 2000, with an aggregate notional
amount of $175.0 million. As of December 31, 1999, we received a floating rate
of interest based upon thirty day LIBOR rates or approximately 5.8% and paid a
weighted average fixed rate of interest of 5.9% under these agreements.
We plan to extend the maturity of our revolving short-term credit facility
prior to its expiration in July 2000 to July 2001. We believe that such an
extension would provide us with sufficient financial resources to meet our
anticipated capital requirements and obligations as they come due. We believe
that we would be able to raise additional debt or equity financing, if
necessary, to fund special corporate needs or to complete acquisitions. However,
we cannot assure you that we would be able to obtain additional financing under
favorable terms or to extend the existing short-term credit facility on the same
terms.
SELECTED BALANCE SHEET ACCOUNTS
The following table reflects the activity in our allowance for doubtful
accounts, accrued closure and post-closure, accrued self-insurance and amounts
due to former owners during the year ended December 31, 1999 (in millions):
<TABLE>
<CAPTION>
ALLOWANCE FOR CLOSURE AND AMOUNTS DUE TO
DOUBTFUL ACCOUNTS POST-CLOSURE SELF-INSURANCE FORMER OWNERS
----------------- ------------ -------------- --------------
<S> <C> <C> <C> <C>
Balance, December 31, 1998.............. $ 22.1 $ 73.4 $ 28.0 $ 26.7
Additions charged to expense............ 9.6 17.9 54.8 --
Additions due to acquisitions, net...... 2.3 69.6 2.0 42.2
Usage................................... (19.8) (8.6) (46.4) (21.9)
------ ------ ------ ------
Balance, December 31, 1999.............. 14.2 152.3 38.4 47.0
Current portion......................... 14.2 23.7 21.7 47.0
------ ------ ------ ------
Long-term portion....................... $ -- $128.6 $ 16.7 $ --
====== ====== ====== ======
</TABLE>
Additions to accrued liabilities related to acquisitions are periodically
reviewed during the year subsequent to the acquisition. During such reviews,
accrued liabilities which are considered to be in excess of amounts required for
a specific acquisition are reversed and charged against goodwill (cost in excess
of net fair value of assets acquired).
As of December 31, 1999, accounts receivable were $250.9 million, net of
allowance for doubtful accounts of $14.2 million, resulting in days sales
outstanding of 45, or 34 days net of deferred revenue.
29
<PAGE> 32
Property, Plant and Equipment
The following tables reflect the activity in our property, plant and
equipment accounts for the year ended December 31, 1999 (in millions):
<TABLE>
<CAPTION>
GROSS PROPERTY, PLANT AND EQUIPMENT
---------------------------------------------------------------------------------------
BALANCE AS OF ACQUISITIONS, BALANCE AS OF
DECEMBER 31, CAPITAL NET OF TRANSFERS AND DECEMBER 31,
1998 ADDITIONS RETIREMENTS DIVESTITURES ADJUSTMENTS 1999
------------- --------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Other land.......................... $ 79.6 $ 4.6 $ -- $ 2.0 $ (3.4) $ 82.8
Non-depletable landfill land........ 55.3 1.9 -- 8.7 (19.5) 46.4
Landfill development costs.......... 452.3 25.8 -- 306.5 43.0 827.6
Vehicles and equipment.............. 806.4 138.9 (32.0) 48.5 (.5) 961.3
Buildings and improvements.......... 152.0 8.0 (1.1) 14.9 13.7 187.5
Construction in
progress -- landfill.............. -- 32.9 -- -- 11.4 44.3
Construction in progress -- other... 23.5 46.2 -- (1.7) (43.6) 24.4
-------- ------ ------ ------ ------ --------
Total....................... $1,569.1 $258.3 $(33.1) $378.9 $ 1.1 $2,174.3
======== ====== ====== ====== ====== ========
</TABLE>
<TABLE>
<CAPTION>
ACCUMULATED DEPRECIATION, AMORTIZATION AND DEPLETION
----------------------------------------------------------------------------------------
BALANCE AS OF ADDITIONS ACQUISITIONS, BALANCE AS OF
DECEMBER 31, CHARGED TO NET OF TRANSFERS AND DECEMBER 31,
1998 EXPENSE RETIREMENTS DIVESTITURES ADJUSTMENTS 1999
------------- ---------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Landfill development costs........ $ (90.3) $ (44.3) $ -- $ 0.5 $ (1.0) $ (135.1)
Vehicles and equipment............ (353.5) (80.1) 27.5 3.0 3.2 (399.9)
Buildings and improvements........ (29.2) (5.9) 0.9 0.9 (0.5) (33.8)
-------- ------- ------ ------ ------ --------
Total..................... $ (473.0) $(130.3) $ 28.4 $ 4.4 $ 1.7 $ (568.8)
======== ======= ====== ====== ====== ========
</TABLE>
The tables above exclude $36.1 million of operating equipment consisting
primarily of revenue producing vehicles that were subject to our operating lease
facility as of December 31, 1999.
LIQUIDITY AND CAPITAL RESOURCES
The major components of changes in cash flows for the years ended December
31, 1999, 1998 and 1997 are discussed below.
Cash Flows from Operating Activities. Cash provided by operating
activities was $323.8 million, $271.1 million and $279.4 million for the years
ended December 31, 1999, 1998 and 1997, respectively. The changes in cash
provided by operating activities during the periods are due to expansion of our
business.
Cash Flows from Investing Activities. Cash flows from investing activities
consist primarily of cash used for business acquisitions and capital additions.
Cash used to acquire businesses, net of cash acquired, was $737.8 million and
$425.2 million during the years ended December 31, 1999 and 1998, respectively.
Prior to our initial public offering, business acquisitions were funded by
AutoNation. Capital additions were $289.6 million, $193.0 million and $165.3
million during the years ended December 31, 1999, 1998 and 1997, respectively.
We intend to finance capital expenditures and acquisitions through cash on
hand, cash flow from operations, our $1.0 billion revolving credit facility and
other financing. We expect to use primarily cash for future business
acquisitions.
Cash Flows from Financing Activities. Cash flows from financing activities
during the years ended December 31, 1999, 1998 and 1997 included commercial bank
and affiliate borrowings and repayments of debt, proceeds from our sale of
common stock in our initial public offering in 1998 and proceeds from our sale
of unsecured notes in 1999. In May 1999, we sold unsecured notes with a face
value of $600.0 million at a discounted price of $598.5 million. Proceeds from
the notes were used to repay our revolving credit facility. In December 1999, we
entered into a $100.0 million operating lease facility established to finance
the acquisition of operating equipment consisting primarily of revenue-producing
vehicles. At December 31, 1999, $36.1 million was outstanding under this
facility.
30
<PAGE> 33
We used proceeds from bank facilities, affiliate borrowings and unsecured
notes to fund acquisitions and capital additions, and to repay debt. We used all
of the proceeds from our initial public offering of common stock in 1998 to
repay amounts due to AutoNation.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The table below provides information about our market sensitive financial
instruments and constitutes a "forward-looking statement." Our major market risk
exposure is changing interest rates in the United States and fluctuations in
LIBOR. We intend to manage interest rate risk through the use of a combination
of fixed and floating rate debt. All items described below are non-trading.
<TABLE>
<CAPTION>
EXPECTED MATURITY DATE
-------------------------------------------------------------------------------------------
FAIR VALUE
2000 2001 2002 2003 2004 THEREAFTER TOTAL DECEMBER 31, 1999
------ ------ ------ ------ ------ ---------- ------ -----------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
VARIABLE RATE DEBT:
Amount outstanding........ $ 53.2 $ 1.0 $ .8 $500.8 $ .7 $ 43.2 $599.7 $599.7
Average interest rates.... 6.71% 6.37% 6.08% 6.71% 5.60% 4.53% 6.55%
INTEREST RATE SWAPS:
Notional amount
outstanding............. $175.0 $ -- $ -- $ -- $ -- $ -- $175.0 $ --
Average pay rate.......... 5.94% -- -- -- -- -- 5.94%
Average receive rate...... 5.83% -- -- -- -- -- 5.83%
</TABLE>
The fair value of variable rate debt approximates the carrying value since
interest rates are variable and, thus, approximates current market rates. The
fair value of interest swaps represents the future cash flows through maturity
using rates in effect at December 31, 1999 and is effectively the amount we
would pay or receive to terminate the agreements.
SEASONALITY
Our operations can be adversely affected by periods of inclement weather
which could delay the collection and disposal of waste, reduce the volume of
waste generated or delay the construction or expansion of our landfill sites and
other facilities.
YEAR 2000
As of the date of this Annual Report on Form 10-K we believe that all of
our systems are operating and we have not experienced any material issues from
the date change in the year 2000. Also, as of the date of this Annual Report on
Form 10-K, we are unaware of any third party issues from the date change in the
year 2000 that would materially affect our financial condition or results of
operations. Nevertheless, if any issues from the date change in the year 2000
presently unknown to us occur with us or with third party products and business
dependencies, we may experience a delay or disruption in the delivery of
services which could have a material adverse impact on our financial condition
and results of operations including loss of revenue, increased operating costs,
loss of customers or suppliers, or other significant disruptions to our
business.
During the fourth quarter of 1999, we completed a number of tasks relating
to our preparation for the date change in the year 2000 including:
- testing and validation of industry standard automated applications and
proprietary software applications,
- repairing or replacing hardware with non-compliant embedded chips,
- implementing contingency and business continuation plans and
- validating the readiness of material third parties.
We spent approximately $2.9 million on our efforts related to the date
change in the year 2000. These costs were funded through operating cash flows
and were expensed as incurred during 1999 and 1998. We do not expect to incur
any additional costs in this area.
31
<PAGE> 34
NEW ACCOUNTING PRONOUNCEMENTS
In June 1999, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 137, "Accounting for Derivative Instruments
and Hedging Activities - Deferral of the Effective Date of FASB Statement No.
133". SFAS 137 amends FASB Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities," by deferring the
effective date of SFAS 133 to fiscal years beginning after June 15, 2000. SFAS
133 establishes accounting and reporting standards requiring that every
derivative instrument (including certain derivative instruments embedded in
other contracts) be recorded in the balance sheet as either an asset or
liability measured at its fair value. SFAS 133 requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. We will adopt SFAS 133 beginning January 1,
2001. We do not expect the adoption of this standard to have a material impact
on our consolidated financial position or results of operations.
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS
Certain statements and information included herein constitute
"forward-looking statements" within the meaning of the Federal Private
Securities Litigation Reform Act of 1995 which include, among other things, the
discussions of our growth and operating strategies and expectations concerning
market position, future operations, margins, revenue, profitability, liquidity
and capital resources, as well as statements concerning the integration of the
operations of acquired businesses and achievement of financial benefits and
operational efficiencies in connection therewith. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance, or achievements of our company
to be materially different from any future results, performance, or achievements
expressed or implied, in or by such forward-looking statements. Such factors
include, among other things, whether our estimates and assumptions concerning
our selected balance sheet accounts, closure and post-closure costs, available
airspace, and projected costs and expenses related to our landfills and
property, plant and equipment, turn out to be correct or appropriate, and
various factors that will impact our actual business and financial performance
such as competition in the solid waste industry; our dependence on acquisitions
for growth; our ability to manage growth; compliance with and future changes in
environmental regulations; our ability to obtain approval from regulatory
agencies in connection with expansions at our landfills; the ability to obtain
financing on acceptable terms to finance our operations and growth strategy and
of our company to operate within the limitations imposed by financing
arrangements; our dependence on key personnel; general economic conditions; our
dependence on large, long-term collection contracts; risk associated with
undisclosed liabilities of acquired businesses; the risks and costs associated
with the date change in the year 2000; risks associated with pending legal
proceedings; and other factors contained in this section and under the section
entitled "BUSINESS -- Risk Factors." We assume no duty to update the forward
looking statements.
32
<PAGE> 35
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Certified Public Accountants.......... 34
Consolidated Balance Sheets as of December 31, 1999 and
1998...................................................... 35
Consolidated Statements of Operations for each of the Three
Years Ended December 31, 1999............................. 36
Consolidated Statements of Stockholders' Equity for each of
the Three Years Ended
December 31, 1999......................................... 37
Consolidated Statements of Cash Flows for each of the Three
Years Ended December 31, 1999............................. 38
Notes to Consolidated Financial Statements.................. 39
Financial Statement Schedule II, Valuation and Qualifying
Accounts and Reserves, for Each of the Three Years Ended
December 31, 1999......................................... 62
</TABLE>
33
<PAGE> 36
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To Republic Services, Inc.:
We have audited the accompanying consolidated balance sheets of Republic
Services, Inc. (a Delaware corporation) and subsidiaries as of December 31, 1999
and 1998, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the years in the three-year period ended
December 31, 1999. These financial statements and the schedule referred to below
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and the schedule based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Republic Services, Inc. and
subsidiaries as of December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1999, in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index to
consolidated financial statements is presented for the purpose of complying with
the Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Fort Lauderdale, Florida,
January 24, 2000, except with respect to the
matter discussed in paragraph 2 of Note 10,
as to which the date is February 11, 2000.
34
<PAGE> 37
REPUBLIC SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1999 1998
-------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.............................. $ 13.1 $ 556.6
Restricted cash........................................ 10.3 7.1
Accounts receivable, less allowance for doubtful
accounts of $14.2 and $22.1 at December 31, 1999 and
1998, respectively.................................... 250.9 182.7
Prepaid expenses and other current assets.............. 57.7 37.6
-------- --------
Total Current Assets.............................. 332.0 784.0
PROPERTY AND EQUIPMENT, NET............................... 1,605.5 1,096.1
INTANGIBLE ASSETS, NET.................................... 1,297.3 918.4
OTHER ASSETS.............................................. 53.5 13.6
-------- --------
$3,288.3 $2,812.1
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable....................................... $ 76.1 $ 64.7
Accrued liabilities.................................... 88.3 119.5
Amounts due to former owners........................... 47.0 26.7
Deferred revenue....................................... 64.1 46.6
Notes payable and current maturities of long-term
debt.................................................. 57.2 499.9
Other current liabilities.............................. 52.6 26.4
-------- --------
Total Current Liabilities......................... 385.3 783.8
LONG-TERM DEBT, NET OF CURRENT MATURITIES................. 1,152.1 557.2
ACCRUED ENVIRONMENTAL AND LANDFILL COSTS.................. 129.8 77.3
DEFERRED INCOME TAXES..................................... 94.4 71.4
OTHER LIABILITIES......................................... 24.0 23.3
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, par value $.01 per share; 50,000,000
shares authorized; none issued........................ -- --
Common stock, par value $.01 per share; 750,000,000
shares authorized; 175,481,842 and 175,412,500 issued
and outstanding, respectively......................... 1.8 1.8
Additional paid-in capital............................. 1,206.3 1,203.5
Retained earnings...................................... 294.6 93.8
-------- --------
Total Stockholders' Equity........................ 1,502.7 1,299.1
-------- --------
$3,288.3 $2,812.1
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
35
<PAGE> 38
REPUBLIC SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN MILLIONS, EXCEPT EARNINGS PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
REVENUE..................................................... $1,838.5 $1,369.1 $1,127.7
EXPENSES:
Cost of operations........................................ 1,101.1 842.7 723.0
Depreciation, amortization and depletion.................. 163.2 106.3 86.1
Selling, general and administrative....................... 183.6 135.8 117.3
-------- -------- --------
OPERATING INCOME............................................ 390.6 284.3 201.3
INTEREST EXPENSE............................................ (64.2) (44.7) (25.9)
INTEREST INCOME............................................. 3.5 1.5 4.9
OTHER INCOME (EXPENSE), NET................................. (3.4) (.9) 1.8
-------- -------- --------
INCOME BEFORE INCOME TAXES.................................. 326.5 240.2 182.1
PROVISION FOR INCOME TAXES.................................. 125.7 86.5 65.9
-------- -------- --------
NET INCOME.................................................. $ 200.8 $ 153.7 $ 116.2
======== ======== ========
BASIC AND DILUTED EARNINGS PER SHARE........................ $ 1.14 $ 1.13 $ 1.21
======== ======== ========
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING............................... 175.7 135.6 95.7
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
36
<PAGE> 39
REPUBLIC SERVICES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN MILLIONS)
<TABLE>
<CAPTION>
ADDITIONAL
INVESTMENT BY COMMON PAID-IN RETAINED
AUTONATION STOCK CAPITAL EARNINGS
------------- ------ ---------- --------
<S> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1996........................... $ 493.5 $1.0 $ -- $ --
Net income........................................... 116.2 -- -- --
Business acquisitions contributed by AutoNation...... 148.4 -- -- --
Investment in former subsidiary...................... (17.4) -- -- --
Other................................................ 9.1 -- -- --
--------- ---- -------- ------
BALANCE AT DECEMBER 31, 1997........................... 749.8 $1.0 -- --
Net income........................................... 59.9 -- -- 93.8
Business acquisitions contributed by AutoNation...... 128.3 -- -- --
Dividend to AutoNation............................... (2,000.0) -- -- --
Dividend from former subsidiary...................... 437.3 -- -- --
Transfer to additional paid-in capital............... 624.7 -- (624.7) --
Issuance of common stock to AutoNation............... -- .2 395.2 --
Sale of common stock................................. -- .6 1,433.0 --
--------- ---- -------- ------
BALANCE AT DECEMBER 31, 1998........................... -- 1.8 1,203.5 93.8
Net income........................................... 200.8
Issuance of compensatory stock options............... -- -- 2.0 --
Issuance of common stock............................. -- -- .8 --
--------- ---- -------- ------
BALANCE AT DECEMBER 31, 1999........................... $ -- $1.8 $1,206.3 $294.6
========= ==== ======== ======
</TABLE>
The accompanying notes are an integral part of these statements.
37
<PAGE> 40
REPUBLIC SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1999 1998 1997
--------- --------- -------
<S> <C> <C> <C>
CASH PROVIDED BY OPERATING ACTIVITIES:
Net income................................................ $ 200.8 $ 153.7 $ 116.2
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation, amortization and depletion of property
and equipment........................................ 130.3 88.4 76.1
Amortization of intangible assets...................... 32.9 17.9 10.0
Deferred tax provision................................. 41.9 19.2 36.5
Provision for doubtful accounts........................ 9.6 5.1 4.1
Other non-cash charges................................. 2.8 -- --
Changes in assets and liabilities, net of effects from
business acquisitions:
Accounts receivable.................................. (56.0) (46.9) (19.7)
Prepaid expenses and other assets.................... (12.3) (11.3) 17.4
Accounts payable and accrued liabilities............. (35.4) (14.1) (26.7)
Other liabilities.................................... 9.2 59.1 65.5
--------- --------- -------
323.8 271.1 279.4
--------- --------- -------
CASH USED IN INVESTING ACTIVITIES:
Purchases of property and equipment, net.................. (289.6) (193.0) (165.3)
Cash used in acquisitions, net of cash acquired........... (737.8) (425.2) 2.7
Amounts due former owners................................. (21.9) -- --
Other..................................................... (4.4) 10.8 (5.5)
--------- --------- -------
(1,053.7) (607.4) (168.1)
--------- --------- -------
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Net proceeds from (payments on) revolving credit
facility............................................... (428.0) 980.0 --
Proceeds from issuance of unsecured notes, net of
discount............................................... 598.5 -- --
Proceeds from the sale of common stock.................... -- 1,433.6 --
Proceeds from notes payable and long-term debt............ 181.8 10.6 5.2
Payments of notes payable and long-term debt.............. (202.0) (61.8) (100.2)
Decrease in amounts due to AutoNation..................... -- (1,469.5) (47.3)
Proceeds from operating lease facility.................... 36.1 -- --
Other..................................................... -- -- 6.8
--------- --------- -------
186.4 892.9 (135.5)
--------- --------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS............ (543.5) 556.6 (24.2)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............ 556.6 -- 24.2
--------- --------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 13.1 $ 556.6 $ --
========= ========= =======
</TABLE>
The accompanying notes are an integral part of these statements.
38
<PAGE> 41
REPUBLIC SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL TABLES IN MILLIONS, EXCEPT PER SHARE DATA)
1. BASIS OF PRESENTATION
The accompanying Consolidated Financial Statements include the accounts of
Republic Services, Inc. and its subsidiaries (the "Company"). The Company
provides non-hazardous solid waste collection and disposal services in the
United States. All material intercompany transactions have been eliminated.
The historical Consolidated Financial Statements through the date of the
secondary offering in May 1999 reflect the accounts of the Company as a
subsidiary of AutoNation, Inc., formerly known as Republic Industries, Inc.
(together with its subsidiaries, "AutoNation"), subject to corporate general and
administrative expense allocations or charges under the Services Agreement as
described in Note 11, Related Party Transactions. Such information does not
necessarily reflect the financial position or results of operations of the
Company as a separate, stand-alone entity.
All historical share and per share data of the Company's common stock, par
value $.01 per share ("Common Stock", which was formerly designated as either
"Class A Common Stock" or "Class B Common Stock"), for the year ended December
31, 1998 in the Consolidated Financial Statements and the notes thereto have
been retroactively adjusted for the recapitalization of AutoNation's 100 shares
of Common Stock previously outstanding into 95.7 million shares of Class B
Common Stock in July 1998.
In July 1998, the Company completed an initial public offering of its Class
A Common Stock ("Initial Public Offering") resulting in net proceeds of
approximately $1.4 billion. In addition, in July 1998 the Company repaid in full
all amounts due to AutoNation as of June 30, 1998 through the issuance of 16.5
million shares of Class A Common Stock and through the payment of all proceeds
from the Initial Public Offering. Following the Initial Public Offering and the
repayment of amounts due to AutoNation, approximately 63.9% of the outstanding
shares of Common Stock were owned by AutoNation.
In March 1999, AutoNation converted all 95.7 million shares of its Class B
Common Stock into Class A Common Stock on a one-for-one basis. In April 1999,
AutoNation transferred all of its Class A Common Stock to its indirect,
wholly-owned subsidiary, AutoNation Insurance Company, and the Company
registered all 112.2 million shares of Class A Common Stock owned by AutoNation.
In May 1999, the Company completed a secondary offering, in which AutoNation
sold substantially all of the Class A Common Stock it owned in the Company. In
June 1999, the Company amended its certificate of incorporation to eliminate the
classifications of Common Stock.
Other charges of $6.9 million for the year ended December 31, 1999 are
included in selling, general and administrative expenses in the Consolidated
Financial Statements. These costs relate to the Company's separation from
AutoNation and consist of approximately $2.0 million of compensation expenses
related to the granting of certain replacement employee stock options at
exercise prices below the quoted market price of the Company's Common Stock at
the date of grant (see Note 8, Stock Options) and approximately $4.9 million of
additional charges directly related to the separation. The Company does not
anticipate incurring additional costs relating to its separation from
AutoNation.
The following unaudited pro forma consolidated statement of operations for
the year ended December 31, 1999 excludes the $6.9 million pre-tax charge
resulting from the Company's separation from AutoNation. It
39
<PAGE> 42
REPUBLIC SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
also excludes a $2.9 million loss incurred during the three months ended
December 31, 1999 on the sale of the Company's only international operation, a
collection and disposal operation in Costa Rica.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1999
-----------------
<S> <C>
Revenue..................................................... $1,838.5
Expenses:
Cost of operations........................................ 1,101.1
Depreciation, amortization and depletion.................. 163.2
Selling, general and administrative....................... 176.7
--------
Operating income............................................ 397.5
Interest expense............................................ (64.2)
Interest income............................................. 3.5
Other income (expense), net................................. (.5)
--------
Income before income taxes.................................. 336.3
Provision for income taxes.................................. 129.5
--------
Net income.................................................. $ 206.8
========
Basic and diluted earnings per share........................ $ 1.18
========
Weighted average common and common equivalent shares
outstanding............................................... 175.7
========
</TABLE>
The unaudited pro forma consolidated statement of operations is provided
for informational purposes only and does not project the Company's results of
operations for any future date or period.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The financial statements have been prepared in accordance with generally
accepted accounting principles and necessarily include amounts based on
estimates and assumptions made by management. Actual results could differ from
these amounts. Significant items subject to such estimates and assumptions
include the depletion and amortization of landfill development costs, accruals
for closure and post-closure costs, valuation allowances for accounts
receivable, liabilities for potential litigation, claims and assessments, and
liabilities for environmental remediation, deferred taxes and self-insurance.
RESTRICTED CASH
Restricted cash consists of amounts held in trust as a financial guaranty
of the Company's performance as well as funds restricted for capital
expenditures under certain debt facilities.
PREPAID EXPENSES AND OTHER CURRENT ASSETS
A summary of prepaid expenses and other current assets is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------
1999 1998
----- -----
<S> <C> <C>
Inventory................................................... $20.3 $13.3
Prepaid expenses............................................ 19.7 13.7
Other assets................................................ 17.7 10.6
----- -----
$57.7 $37.6
===== =====
</TABLE>
Inventories totaled approximately $20.3 million and $13.3 million at
December 31, 1999 and 1998, respectively, and consist primarily of equipment
parts, compost materials and supplies that are valued under a method that
approximates the lower of cost (first-in, first-out) or market.
40
<PAGE> 43
REPUBLIC SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Expenditures for major
additions and improvements are capitalized, while maintenance and repairs are
charged to expense as incurred. When property is retired or otherwise disposed
of, the related cost and accumulated depreciation are removed from the accounts
and any resulting gain or loss is reflected in the Consolidated Statements of
Operations.
The Company revises the estimated useful lives of property and equipment
acquired through business acquisitions to conform with its policies regarding
property and equipment. Depreciation is provided over the estimated useful lives
of the assets involved using the straight-line method. The estimated useful
lives are twenty to forty years for buildings and improvements, three to fifteen
years for trucks and equipment, and five to ten years for furniture and
fixtures.
Landfills are stated at cost and are depleted based on consumed airspace.
Landfill improvements include direct costs incurred to obtain a landfill permit
and direct costs incurred to construct and develop the site. These costs are
depleted based on consumed airspace. All indirect landfill development costs are
expensed as incurred. (For further information, see Note 4, Landfill and Accrued
Environmental Costs.)
The Company capitalizes interest on landfill cell construction and other
construction projects in accordance with Statement of Financial Accounting
Standards No. 34, "Capitalization of Interest Cost". Construction projects must
meet the following criteria before interest is capitalized:
1. Total construction costs are $250,000 or greater;
2. The construction phase is three months or longer; and
3. The assets have a useful life of three years or longer.
Interest is capitalized on qualified assets while they undergo activities
to ready them for their intended use. Capitalization of interest ceases once an
asset is placed into service or if construction activity is suspended for more
than a brief period of time. The interest capitalization rate is based upon the
Company's weighted average cost of indebtedness. Interest capitalized was $5.6
million, $.8 million and $.8 million for the years ended December 31, 1999, 1998
and 1997, respectively.
A summary of property and equipment is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1999 1998
-------- --------
<S> <C> <C>
Other land.................................................. $ 82.8 $ 79.6
Non-depletable landfill land................................ 46.4 55.3
Landfill development costs.................................. 827.6 452.3
Vehicles and equipment...................................... 961.3 806.4
Buildings and improvements.................................. 187.5 152.0
Construction-in-progress-landfill........................... 44.3 --
Construction-in-progress-other.............................. 24.4 23.5
-------- --------
2,174.3 1,569.1
-------- --------
Less: Accumulated depreciation, depletion and amortization--
Landfill development costs................................ (135.1) (90.3)
Vehicles and equipment.................................... (399.9) (353.5)
Building and improvements................................. (33.8) (29.2)
-------- --------
(568.8) (473.0)
-------- --------
Property and equipment, net................................. $1,605.5 $1,096.1
======== ========
</TABLE>
The Company periodically evaluates whether events and circumstances have
occurred that may warrant revision of the estimated useful life of property and
equipment or whether the remaining balance of property and equipment should be
evaluated for possible impairment. The Company uses an estimate of the related
undiscounted cash flows over the remaining life of the property and equipment in
assessing their recover-
41
<PAGE> 44
REPUBLIC SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
ability. The Company measures impairment loss as the amount by which the
carrying amount of the asset exceeds the fair value of the assets.
INTANGIBLE AND OTHER ASSETS
Intangible and other assets consist primarily of the cost of acquired
businesses in excess of the fair value of net assets acquired and other
intangible assets. The cost in excess of the fair value of net assets is
amortized over forty years on a straight-line basis. Other intangible assets
include values assigned to customer lists, long-term contracts and covenants not
to compete and are amortized generally over periods ranging from 5 to 25 years.
Accumulated amortization of intangible assets was $100.4 million and $73.0
million at December 31, 1999 and 1998, respectively.
The Company periodically evaluates whether events and circumstances have
occurred that may warrant revision of the estimated useful life of intangible
assets or whether the remaining balance of intangible assets should be evaluated
for possible impairment. The Company uses an estimate of the related
undiscounted cash flows over the remaining life of the intangible assets in
assessing their recoverability. The Company measures impairment loss as the
amount by which the carrying amount of the asset exceeds the fair value of the
assets.
ACCRUED LIABILITIES
A summary of accrued liabilities is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1999 1998
----- ------
<S> <C> <C>
Accrued payroll and benefits................................ $24.1 $ 25.7
Accrued disposal costs...................................... 15.5 16.1
Accrued fees and taxes...................................... 16.3 12.7
Other....................................................... 32.4 65.0
----- ------
$88.3 $119.5
===== ======
</TABLE>
OTHER CURRENT LIABILITIES
A summary of other current liabilities is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------
1999 1998
----- -----
<S> <C> <C>
Accrued environmental and landfill costs, current portion... $23.7 $ 5.6
Self-insurance reserves, current............................ 21.7 12.2
Other....................................................... 7.2 8.6
----- -----
$52.6 $26.4
===== =====
</TABLE>
42
<PAGE> 45
REPUBLIC SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
REVENUE RECOGNITION
Revenue consists primarily of collection fees from commercial, industrial,
residential and municipal customers and transfer and landfill disposal fees
charged to third parties. Collection, transfer and disposal, and other services
accounted for approximately 77.2%, 14.5% and 8.3%, respectively, of consolidated
revenue for the year ended December 31, 1999. Advance billings are recorded as
deferred revenue, and revenue is recognized over the period in which services
are provided. No one customer has individually accounted for more than 10.0% of
the Company's consolidated revenues in any of the past three years.
INCOME TAXES
Effective with the Initial Public Offering in July 1998, the Company is no
longer included in the consolidated federal income tax return of AutoNation. For
the periods prior to the Initial Public Offering, all tax amounts have been
recorded as if the Company filed a separate federal tax return. The Company
accounts for income taxes in accordance with SFAS No. 109, "Accounting for
Income Taxes." Accordingly, deferred income taxes have been provided to show the
effect of temporary differences between the recognition of revenue and expenses
for financial and income tax reporting purposes and between the tax basis of
assets and liabilities and their reported amounts in the financial statements.
COMPREHENSIVE INCOME
The Company has no components of other comprehensive income. Accordingly,
net income equals comprehensive income for all periods presented.
STATEMENTS OF CASH FLOWS
The Company considers all highly liquid investments with purchased
maturities of three months or less to be cash equivalents. The effect of
non-cash transactions related to business combinations, as discussed in Note 3,
Business Combinations, and other non-cash transactions are excluded from the
accompanying Consolidated Statements of Cash Flows.
The Company made interest payments on notes payable and long-term debt of
approximately $53.7 million, $44.0 million and $24.3 million (net of capitalized
interest of $5.6 million, $.8 million and $.8 million) for the years ended
December 31, 1999, 1998 and 1997, respectively. The Company made income tax
payments of approximately $100.3 million, $65.4 million and $29.4 million for
the years ended December 31, 1999, 1998 and 1997, respectively.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash and cash equivalents, restricted cash,
receivables, accounts payable and accrued liabilities approximate fair value due
to the short maturity of these instruments. The fair value of the Company's
fixed rate unsecured notes using an estimate of interest rates currently
available to the Company is $575.8 million at December 31, 1999. The carrying
value of the unsecured notes is $598.5 million at December 31, 1999. The
carrying amounts of the Company's remaining notes payable and long-term debt
approximate fair value because interest rates are primarily variable and,
accordingly, approximate current market rates.
CONCENTRATION OF CREDIT RISK
The Company provides services to commercial, industrial, municipal and
residential customers in the United States. Concentrations of credit risk with
respect to trade receivables are limited due to the wide variety of customers
and markets in which services are provided as well as their dispersion across
many geographic areas in the United States. The Company performs ongoing credit
evaluations of its customers, but
43
<PAGE> 46
REPUBLIC SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
does not require collateral to support customer receivables. The Company
establishes an allowance for doubtful accounts based on various factors
including the credit risk of specific customers, age of receivables outstanding,
historical trends and other information.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1999, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 137, "Accounting for Derivative Instruments
and Hedging Activities -- Deferral of the Effective Date of FASB Statement No.
133". SFAS 137 amends FASB Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities", by deferring the
effective date of SFAS 133 to fiscal years beginning after June 15, 2000. SFAS
133 establishes accounting and reporting standards requiring that every
derivative instrument (including certain derivative instruments embedded in
other contracts) be recorded in the balance sheet as either an asset or
liability measured at its fair value. SFAS 133 requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. The Company will adopt SFAS 133 beginning
January 1, 2001. The Company does not expect the adoption of this standard to
have a material impact on our consolidated financial position or results of
operations.
3. BUSINESS COMBINATIONS
Businesses acquired and accounted for under the purchase method of
accounting are included in the Consolidated Financial Statements from the date
of acquisition.
In July 1999, the Company entered into a definitive agreement with Allied
Waste Industries, Inc. ("Allied") to acquire certain solid waste assets for
approximately $230.0 million in cash. In October 1999, after failing to receive
regulatory approval relating to the acquisition of certain of the assets, the
agreement was amended for the Company to acquire certain solid waste assets for
a purchase price of $71.0 million in cash. The assets to be acquired under the
amended agreement include one landfill operation, five transfer stations and a
subset of small container hauling assets from four collection operations. By
December 31, 1999, the Company had completed the purchase of certain assets for
approximately $19.7 million in cash. In addition, the Company entered into a
definitive agreement with Allied for the simultaneous purchase and sale of
certain other solid waste assets. All of these transactions will be accounted
for under the purchase method of accounting. The portion of these transactions
that were not closed by December 31, 1999, are subject to approval by various
state and federal agencies as well as satisfaction of customary closing
conditions.
In September 1998, the Company entered into a definitive agreement with
Waste Management, Inc. ("Waste Management") to acquire certain assets. The
assets acquired included 16 landfills, 11 transfer stations and 136 collection
routes across the United States as well as disposal agreements at various Waste
Management sites. At December 31, 1998, closings had been completed for 6
landfills, 7 transfer stations and all of the collection routes discussed above,
at a purchase price of approximately $186.9 million in cash plus properties. By
June 1999, the Company had completed the purchases of the remaining assets for
approximately $292.7 million in cash plus properties.
In addition to the acquisitions from Allied and Waste Management, the
Company also acquired various other solid waste businesses during 1999. The
aggregate purchase price paid by the Company in these transactions was $430.8
million in cash.
During the year ended 1998, AutoNation acquired various solid waste
businesses which were contributed to the Company. The aggregate purchase price
paid by AutoNation in transactions accounted for under the purchase method of
accounting was $128.3 million, consisting of $60.3 million in cash and
approximately 3.4 million shares of AutoNation common stock valued at $68.0
million. Subsequent to the Initial Public Offering, the Company acquired various
solid waste businesses. The aggregate purchase price
44
<PAGE> 47
REPUBLIC SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
paid by the Company in transactions accounted for under the purchase method of
accounting was $450.5 million consisting of cash and certain properties.
During the year ended December 31, 1997, AutoNation acquired various solid
waste businesses which were contributed to the Company. The aggregate purchase
price paid by AutoNation in transactions accounted for under the purchase method
of accounting was $147.9 million consisting of $11.5 million in cash and 5.7
million shares of AutoNation common stock valued at $136.4 million. In addition,
AutoNation issued an aggregate of 34.1 million shares of AutoNation common stock
in transactions accounted for under the pooling of interests method of
accounting. Significant businesses acquired and accounted for under the pooling
of interests method of accounting have been included retroactively in the
Consolidated Financial Statements as if the companies had operated as one entity
since inception. Included in the shares of AutoNation common stock issued in
acquisitions accounted for under the pooling of interests method of accounting
are approximately 0.3 million shares issued for acquisitions that were not
material individually or in the aggregate and, consequently, prior period
financial statements were not restated for such acquisitions.
The following summarizes the preliminary purchase price allocations for
business combinations accounted for under the purchase method of accounting:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
1999 1998 1997
------ ------ -------
<S> <C> <C> <C>
Property and equipment...................................... $383.6 $180.3 $ 36.8
Cost in excess of net assets acquired....................... 415.9 572.4 149.1
Working capital deficit..................................... (48.7) (108.0) (18.0)
Long-term debt assumed...................................... (2.0) (51.7) (26.8)
Other assets (liabilities), net............................. (11.0) (39.5) 4.6
Investment by AutoNation.................................... -- (128.3) (148.4)
------ ------ -------
Cash used in acquisitions, net of cash acquired............. $737.8 $425.2 $ (2.7)
====== ====== =======
</TABLE>
The Company's unaudited pro forma consolidated results of operations
assuming acquisitions accounted for under the purchase method of accounting had
occurred at the beginning of the periods presented are as follows:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
--------------------
1999 1998
-------- --------
<S> <C> <C>
Revenue..................................................... $1,917.0 $1,549.1
Net income.................................................. $ 196.1 $ 132.5
Basic and diluted earnings per share........................ $ 1.12 $ .98
Weighted average common and common equivalent shares
outstanding............................................... 175.7 135.6
</TABLE>
The unaudited pro forma results of operations are presented for
informational purposes only and may not necessarily reflect the future results
of operations of the Company or what the results of operations would have been
had the Company owned and operated these businesses as of the beginning of the
periods presented.
45
<PAGE> 48
REPUBLIC SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. LANDFILL AND ACCRUED ENVIRONMENTAL COSTS
ACCRUED ENVIRONMENTAL AND LANDFILL COSTS
A summary of accrued environmental and landfill costs is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1999 1998
------ -----
<S> <C> <C>
Accrued landfill site closure/post-closure costs............ $152.3 $73.4
Accrued environmental costs................................. 1.2 9.5
------ -----
153.5 82.9
Less: current portion (included in other current
liabilities).............................................. (23.7) (5.6)
------ -----
$129.8 $77.3
====== =====
</TABLE>
LIFE CYCLE ACCOUNTING
The Company uses life cycle accounting and the units-of-consumption method
to recognize certain landfill costs. In life cycle accounting, all costs to
acquire, construct, close and maintain a site during the post-closure period are
capitalized or accrued and charged to expense based upon the consumption of
cubic yards of available airspace. Costs and airspace estimates are developed
annually by independent engineers together with the Company's engineers. These
estimates are used by the Company's operating and accounting personnel to
annually adjust the Company's rates used to expense capitalized costs and accrue
closure and post-closure costs. Changes in these estimates primarily relate to
changes in available airspace, inflation rates and applicable regulations.
Changes in available airspace include changes due to the addition of airspace
lying in expansion areas deemed likely to be permitted.
TOTAL AVAILABLE DISPOSAL CAPACITY
As of December 31, 1999, the Company owned or operated 55 solid waste
landfills with total available disposal capacity of approximately 1.7 billion
in-place cubic yards. Total available disposal capacity represents the sum of
estimated permitted airspace plus an estimate of airspace which is likely to be
permitted.
LIKELY TO BE PERMITTED EXPANSION AIRSPACE
Before airspace included in an expansion area is determined as likely to be
permitted and, therefore, included in the Company's calculation of total
available disposal capacity, the following criteria must be met:
1. The land associated with the expansion airspace is either owned by the
Company or is controlled by the Company pursuant to an option agreement;
2. The Company is committed to supporting the expansion project financially
and with appropriate resources;
3. There are no identified fatal flaws or impediments associated with the
project, including political impediments;
4. Progress is being made on the project;
5. The expansion is attainable within a reasonable time frame; and
6. The Company believes it is likely the expansion permit will be received.
Upon meeting the Company's expansion criteria, the rates used at each
applicable landfill to expense costs to acquire, construct, close and maintain a
site during the post-closure period are adjusted to include
46
<PAGE> 49
REPUBLIC SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
likely to be permitted airspace and all additional costs to be capitalized or
accrued associated with the expansion airspace.
The Company has identified three sequential steps that landfills generally
follow to obtain expansion permits. These steps are as follows:
1. Obtaining approval from local authorities;
2. Submitting a permit application with state authorities; and
3. Obtaining permit approval from state authorities.
Once a landfill meets the Company's expansion criteria, management
continuously monitors each site's progress in obtaining the expansion permit. If
at any point it is determined that an expansion area no longer meets the
required criteria, the likely to be permitted airspace is removed from the
landfill's total available capacity and the rates used at the landfill to
expense costs to acquire, construct, close and maintain a site during the
post-closure period are adjusted accordingly. The Company has never been denied
an expansion permit for a landfill that included likely to be permitted airspace
in its total available disposal capacity, although no assurances can be made
that all future expansions will be permitted as designed.
CAPITALIZED LANDFILL COSTS
Capitalized landfill costs include expenditures for land, permitting costs,
cell construction costs and environmental structures. Capitalized permitting and
cell construction costs are limited to direct costs relating to these
activities, including legal, engineering and construction associated with
excavation, liners and site berms. Interest is capitalized on landfill
construction projects while the assets are undergoing activities to ready them
for their intended use.
Costs related to acquiring land, excluding the estimated residual value of
unpermitted land, and costs related to permitting and cell construction are
depleted as airspace is consumed using the units-of-consumption method.
Environmental structures, which include leachate collection systems, methane
collection systems and groundwater monitoring wells, are charged to expense over
the shorter of their useful life or the life of the landfill.
Capitalized landfill costs may also include an allocation of purchase price
paid for landfills. For landfills purchased as part of a group of several
assets, the purchase price assigned to the landfill is determined based upon the
discounted future expected cash flows of the landfill relative to the other
assets within the group. If the landfill meets the Company's expansion criteria,
the purchase price is further allocated between permitted airspace and expansion
airspace based upon the ratio of permitted versus likely to be permitted
airspace to total available airspace. Landfill purchase price is amortized using
the units-of-consumption method over the total available airspace including
likely to be permitted airspace where appropriate.
CLOSURE AND POST-CLOSURE COSTS
Landfill site closure and post-closure costs include estimated costs to be
incurred for final closure of the landfills and estimated costs for providing
required post-closure monitoring and maintenance of landfills. These costs are
accrued and charged to cost of operations based upon consumed airspace in
relation to total available disposal capacity using the units-of-consumption
method of amortization. The Company estimates future cost requirements for
closure and post-closure monitoring and maintenance for its solid waste
facilities based on the technical standards of the Environmental Protection
Agency's Subtitle D regulations and applicable state and local regulations.
These estimates do not take into account discounts for the present value of
total estimated costs. Accruals for closure and post-closure costs totaled
approximately $17.9 million, $11.4 million and $7.9 million during the years
ended December 31, 1999, 1998 and 1997, respectively.
47
<PAGE> 50
REPUBLIC SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A number of the Company's landfills were previously operated by other
entities. Accordingly, the Company assessed and recorded a closure and
post-closure liability as of the date the landfill was acquired based upon the
estimated total closure and post-closure costs and the percentage of total
available disposal capacity utilized as of such date. Thereafter, the difference
between the closure and post-closure costs accrued and the total estimated
closure and post-closure costs to be incurred are accrued and charged to expense
as airspace is consumed. Estimated aggregate closure and post-closure costs will
be fully accrued for the Company's landfills at the time such facilities cease
to accept waste and are closed. As of December 31, 1999, assuming that all
available landfill capacity is used, the Company expects to expense
approximately $528.4 million of such costs over the remaining lives of these
facilities.
ENVIRONMENTAL COSTS
In the normal course of business, the Company is subject to ongoing
environmental investigations by certain regulatory agencies, as well as other
claims and disputes that could result in litigation. Environmental costs are
accrued by the Company through a charge to income in the period such liabilities
become probable and can be reasonably estimated. No material amounts were
charged to expense during the years ended December 31, 1999, 1998 and 1997.
5. NOTES PAYABLE AND LONG-TERM DEBT
Notes payable and long-term debt are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1999 1998
-------- --------
<S> <C> <C>
$225.0 million unsecured notes, net of unamortized discount
of $1.0 million; interest payable semi-annually in May and
November at 6 5/8%; principal due at maturity in 2004..... $ 224.0 $ --
$375.0 million unsecured notes, net of unamortized discount
of $.5 million; interest payable semi-annually in May and
November at 7 1/8%; principal due at maturity in 2009..... 374.5 --
$1.0 billion unsecured revolving credit facility; interest
payable using LIBOR based rates (6.7% at December 31,
1999); $500.0 million matures July 2000 and $500.0 million
matures July 2003......................................... 552.0 980.0
Bonds payable under loan agreements with California
Pollution Control Financing Authority; interest at
prevailing market rates (4.5% and 4.3% at December 31,
1999 and 1998, respectively).............................. 42.0 42.0
Other notes; secured by real property, equipment and other
assets; interest rates ranging from 5% to 10%; maturing
through 2009.............................................. 16.8 35.1
-------- --------
1,209.3 1,057.1
Less: Current portion....................................... (57.2) (499.9)
-------- --------
$1,152.1 $ 557.2
======== ========
</TABLE>
48
<PAGE> 51
REPUBLIC SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Aggregate maturities of notes payable and long-term debt are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1999
-----------------
<S> <C>
2000........................................................ $ 57.2
2001........................................................ 2.8
2002........................................................ 2.1
2003........................................................ 501.6
2004........................................................ 226.5
Thereafter.................................................. 419.1
--------
$1,209.3
========
</TABLE>
As of December 31, 1999, we had approximately $430.4 million of
availability under the short-term portion of the credit facility.
The unsecured notes, the unsecured revolving credit facility and the loan
agreements with the California Pollution Control Financing Authority require the
Company to maintain certain financial ratios and comply with certain financial
covenants. At December 31, 1999, the Company was in compliance with the
financial covenants under these agreements.
The Company uses interest rate swap agreements to manage its exposure to
interest rate changes. The swaps involve the exchange of fixed and variable
interest rate payments without exchanging the notional principal amount.
At December 31, 1999, the Company had outstanding interest rate swap
agreements denominated in dollars, maturing in February 2000, with an aggregate
notional amount of $175.0 million. As of December 31, 1999, the Company received
a floating rate of interest based upon thirty day LIBOR rates or approximately
5.8% and paid a weighted average fixed rate of interest of 5.9% under these
agreements.
The fair value of these interest rate swap agreements represents the value
of the spread between the interest rate the Company paid and the interest rate
the Company received over the remaining life of the agreement or approximately
$20,000.
Counterparties to the interest rate swap agreements are major financial
institutions who also participate in the Company's revolving credit facility.
6. INCOME TAXES
The components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------ ----- -----
<S> <C> <C> <C>
Current:
Federal.................................................. $ 69.9 $59.8 $20.9
State.................................................... 13.9 7.5 8.5
Federal and state deferred................................. 50.6 23.2 36.5
Change in valuation allowance.............................. (8.7) (4.0) --
------ ----- -----
Provision for income taxes................................. $125.7 $86.5 $65.9
====== ===== =====
</TABLE>
49
<PAGE> 52
REPUBLIC SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A reconciliation of the statutory federal income tax rate to the Company's
effective tax rate is shown below:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Statutory federal income tax rate........................... 35.0% 35.0% 35.0%
Non-deductible expenses..................................... 1.2 1.3 1.5
State income taxes, net of federal benefit.................. 3.5 2.1 2.0
Other, net.................................................. (1.2) (2.4) (2.3)
---- ---- ----
Effective income tax rate................................... 38.5% 36.0% 36.2%
==== ==== ====
</TABLE>
Components of the net deferred income tax liability in the accompanying
Consolidated Balance Sheets are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1999 1998
------ -----
<S> <C> <C>
Book basis in property over tax basis....................... $107.5 $95.7
Accruals not currently deductible........................... (13.1) (33.0)
Valuation allowance......................................... -- 8.7
------ -----
Net deferred income tax liability........................... $ 94.4 $71.4
====== =====
</TABLE>
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The Company adjusts the valuation allowance in the
period management determines it is more likely than not that deferred tax assets
will or will not be realized.
7. STOCKHOLDERS' EQUITY
In April 1998, the Company declared a $2.0 billion dividend to AutoNation
that it paid in the form of notes payable ("Company Notes"). Interest expense on
the Company Notes was $27.6 million for the year ended December 31, 1998.
In June 1998, the Company received a dividend of certain assets from a
former subsidiary totaling approximately $437.3 million. In June 1998, the
Company prepaid a portion of the amounts outstanding under the Company Notes
totaling $565.4 million using this dividend, cash and certain other assets.
In July 1998, the Company amended and restated its Certificate of
Incorporation to authorize capital stock consisting of (a) 50,000,000 shares of
preferred stock, par value $.01 per share (the "Preferred Stock"), and (b)
750,000,000 shares of Common Stock of which 250,000,000 shares were authorized
as Class A Common Stock, 125,000,000 shares were authorized as Class B Common
Stock and 375,000,000 shares may be designated by the Company's Board of
Directors as either Class A Common Stock or Class B Common Stock. In addition,
all 100 shares of common stock previously held by AutoNation were converted into
95.7 million shares of Class B Common Stock. The Class A Common Stock and Class
B Common Stock were identical in all respects, except holders of Class A Common
Stock were entitled to one vote per share while holders of Class B Common Stock
were entitled to five votes per share on all matters submitted to a vote of the
stockholders, including the election of directors.
In July 1998, the Company repaid amounts due to AutoNation totaling $395.4
million through the issuance of approximately 16.5 million shares of Class A
Common Stock.
50
<PAGE> 53
REPUBLIC SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In July 1998, the Company completed the Initial Public Offering of
approximately 63.2 million shares of its Class A Common Stock resulting in net
proceeds of approximately $1.4 billion. All of the proceeds from the Initial
Public Offering were used to repay remaining amounts due under the Company
Notes.
In March 1999, AutoNation converted all 95.7 million shares of its Class B
Common Stock into Class A Common Stock on a one-for-one basis. In May 1999, the
Company completed a secondary offering, in which AutoNation sold substantially
all of the Class A Common Stock it owned in the Company. In June 1999, the
Company amended its certificate of incorporation to eliminate the
classifications of Common Stock.
8. STOCK OPTIONS
In July 1998, the Company adopted the 1998 Stock Incentive Plan ("Stock
Incentive Plan") to provide for grants of options to purchase shares of Common
Stock to employees, non-employee directors and independent contractors of the
Company who are eligible to participate in the Stock Incentive Plan. Options
granted under the Stock Incentive Plan are non-qualified and are granted at a
price equal to the fair market value of the Company's Common Stock at the date
of grant. Generally, options granted have a term of ten years from the date of
grant, and vest in increments of 25% per year over a four year period on the
yearly anniversary date of the grant. Options granted to non-employee directors
have a term of ten years and vest immediately at the date of grant. The Company
has reserved 20.0 million shares of Common Stock for issuance pursuant to
options granted under the Stock Incentive Plan.
Prior to the Initial Public Offering, employees of the Company were granted
stock options under AutoNation stock option plans. As of March 2, 1999, options
to purchase approximately 8.0 million shares of AutoNation common stock held by
the Company's employees were canceled by AutoNation, and the Company's
Compensation Committee granted replacement options on a one-for-one basis
("Replacement Options"). The Replacement Options to purchase shares of Common
Stock retained the vesting and exercise rights of the original options, subject
to certain exercise limitations for individuals who signed stock option
repricing agreements with AutoNation. The exercise prices for individual
replacement options were established to maintain the unrealized gain or loss on
each option for AutoNation stock that was cancelled. Compensation expense
related to the granting of certain replacement options at exercise prices below
the fair market value of the Common Stock at the date of grant was approximately
$2.0 million and has been included in selling, general and administrative
expenses in the Company's Consolidated Statement of Operations for the year
ended December 31, 1999.
In October 1999, the Board of Directors approved the Company's annual grant
of options for fiscal year 2000. This grant allows participants to acquire
approximately 2.8 million shares of Common Stock at an exercise price of $11 7/8
per share, which was the quoted market price as of the grant date.
The following table summarizes stock option activity for the year ended
December 31, 1999:
<TABLE>
<CAPTION>
WEIGHTED-AVERAGE
SHARES EXERCISE PRICE
------ ----------------
<S> <C> <C>
Options outstanding at beginning of year.................... .6 $18.12
Granted to replace AutoNation options....................... 8.0 17.38
Granted, other.............................................. 6.5 15.47
Cancelled................................................... (.1) 17.68
----- ------
Options outstanding at December 31, 1999.................... 15.0 $16.57
===== ======
</TABLE>
51
<PAGE> 54
REPUBLIC SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table summarizes information about the Company's outstanding
and exercisable stock options at December 31, 1999:
<TABLE>
<CAPTION>
OUTSTANDING EXERCISABLE
-------------------------------- ------------------
WEIGHTED-
AVERAGE WEIGHTED- WEIGHTED-
REMAINING AVERAGE AVERAGE
CONTRACTUAL EXERCISE EXERCISE
RANGE OF EXERCISE PRICE SHARES LIFE (YRS.) PRICE SHARES PRICE
- ----------------------- ------ ----------- --------- ------ ---------
<S> <C> <C> <C> <C> <C>
$6.38 -- $17.06........................... 3.8 8.7 $12.75 -- $ --
$17.50.................................... 8.0 6.6 17.50 -- --
$18.06 -- $33.86.......................... 3.2 8.9 18.81 .3 21.04
---- --- ------ -- ------
15.0 7.6 $16.57 .3 $21.04
==== === ====== == ======
</TABLE>
The Company applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees", in accounting for stock-based employee
compensation arrangements whereby no compensation cost related to stock options
is deducted in determining net income. Had compensation cost for stock option
grants under the Company's Stock Incentive Plan been determined pursuant to SFAS
No. 123, "Accounting for Stock-Based Compensation", the Company's net income
would have decreased accordingly. Using the Black-Scholes option pricing model,
the Company's pro forma net income and pro forma weighted average fair value of
options granted, with related assumptions, assuming the Replacement Options were
outstanding during the periods presented, are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Pro forma net income.................................. $ 177.4 $ 122.0 $ 88.9
Pro forma earnings per share.......................... 1.01 .90 .93
Pro forma weighted average fair value of the Company's
stock options granted............................... 7.02 17.16 31.85
Risk free interest rates.............................. 6.34% 4.76% 5.74%
Expected lives........................................ 5 years 5 years 5 years
Expected volatility................................... 40.0% 40.0% 40.0%
</TABLE>
9. EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income by the weighted
average number of common shares outstanding during the period. Diluted earnings
per share is based on the combined weighted average number of common shares and
common share equivalents outstanding which include, where appropriate, the
assumed exercise of employee stock options. In computing diluted earnings per
share, the Company utilizes the treasury stock method.
Earnings per share for the years ended December 31, 1998 and 1997 includes
the retroactive effect of the recapitalization of the 100 shares of Common Stock
held by AutoNation into 95.7 million shares of Common Stock.
52
<PAGE> 55
REPUBLIC SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Earnings per share is calculated as follows (in millions, except per share
data):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Numerator:
Net income................................................ $200.8 $153.7 $116.2
------ ------ ------
Denominator:
Denominator for basic earnings per share.................. 175.4 135.6 95.7
Effect of dilutive securities -- Options to purchase
common stock........................................... .3 -- --
------ ------ ------
Denominator for diluted earnings per share............. 175.7 135.6 95.7
------ ------ ------
Basic and diluted earnings per share................... $ 1.14 $ 1.13 $ 1.21
====== ====== ======
Antidilutive securities not included in the diluted earnings
per share calculation:
Options to purchase common stock....................... 9.0 -- --
Weighted average exercise price........................ $18.23 $ -- $ --
</TABLE>
10. COMMITMENTS AND CONTINGENCIES
LEGAL PROCEEDINGS
The Company is a party to various general legal proceedings which have
arisen in the ordinary course of business. While the results of these matters
cannot be predicted with certainty, the Company believes that losses, if any,
resulting from the ultimate resolution of these matters will not have a material
adverse effect on the Company's consolidated financial position, results of
operations or cash flows. However, unfavorable resolution could affect the
consolidated financial position, results of operations or cash flows for the
quarterly periods in which they are resolved.
In September 1999, several lawsuits were filed by certain shareholders
against the Company and certain of its officers and directors in the United
States Court for the Southern District of Florida. The plaintiffs in these
lawsuits claim, on behalf of a purported class of purchasers of the Company's
common stock between January 28, 1999 and August 28, 1999, that the defendants
violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by,
among other things, allegedly making materially false and misleading statements
regarding the Company's growth and the assets acquired from Waste Management. On
December 29, 1999 the Court consolidated these lawsuits and the consolidated
action has been named In Re: Republic Services, Inc. Securities Litigation. The
plaintiffs filed a consolidated complaint on February 11, 2000. Management
believes the allegations contained in the consolidated complaint are without
merit and will vigorously defend this and any related actions. However, an
unfavorable resolution of this lawsuit could have a material adverse effect on
the Company's consolidated financial position, result of operations or cash
flows in one or more future periods.
LEASE COMMITMENTS
During December 1999, the Company entered into a $100.0 million operating
lease facility established to finance the acquisition of operating equipment
(primarily revenue-producing vehicles). At December 31, 1999, $36.1 million was
outstanding under the lease facility. In addition, the Company and its
subsidiaries lease real property, equipment and software under various other
operating leases with terms from one to twenty-five years.
53
<PAGE> 56
REPUBLIC SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Future minimum lease obligations under noncancelable real property,
equipment and software leases with initial terms in excess of one year at
December 31, 1999 are as follows:
<TABLE>
<S> <C>
Year Ending December 31:
2000........................................................ $ 9.0
2001........................................................ 8.1
2002........................................................ 32.7
2003........................................................ 1.0
2004........................................................ 1.0
Thereafter.................................................. 6.0
-----
$57.8
=====
</TABLE>
LIABILITY INSURANCE
The Company carries general liability, vehicle liability, employment
practices liability, pollution liability, directors and officers liability,
workers compensation and employer's liability coverage, as well as umbrella
liability policies to provide excess coverage over the underlying limits
contained in these primary policies. The Company also carries property
insurance.
The Company's insurance programs for worker's compensation, general
liability, vehicle liability and employee related health care benefits are
effectively self-insured. Claims in excess of self-insurance levels are fully
insured. Accruals are based on claims filed and estimates of claims incurred but
not reported.
The Company's liabilities for unpaid and incurred but not reported claims
at December 31, 1999 was $38.4 million under its current risk management program
and are included in other current and other liabilities in the accompanying
Consolidated Balance Sheets. While the ultimate amount of claims incurred are
dependent on future developments, in management's opinion, recorded reserves are
adequate to cover the future payment of claims. However, it is reasonably
possible that recorded reserves may not be adequate to cover the future payment
of claims. Adjustments, if any, to estimates recorded resulting from ultimate
claim payments will be reflected in operations in the periods in which such
adjustments are known.
OTHER MATTERS
In the normal course of business, the Company is required to post
performance bonds, insurance policies, letters of credit, and/or cash deposits
as a financial guarantee of the Company's performance. To date, the Company has
satisfied financial responsibility requirements for regulatory agencies by
making cash deposits, obtaining bank letters of credit or by obtaining surety
bonds. At December 31, 1999, surety bonds and letters of credit totaling $618.3
million were outstanding, which expire through 2007.
The Company's business activities are conducted in the context of a
developing and changing statutory and regulatory framework. Governmental
regulation of the waste management industry requires the Company to obtain and
retain numerous governmental permits to conduct various aspects of its
operations. These permits are subject to revocation, modification or denial. The
costs and other capital expenditures which may be required to obtain or retain
the applicable permits or comply with applicable regulations could be
significant. Any revocation, modification or denial of permits could have a
material adverse effect on the Company.
Through the date of the Company's initial public offering in July 1998, the
Company filed consolidated federal income tax returns with AutoNation. The
Internal Revenue Service is auditing AutoNation's consolidated tax returns for
fiscal years 1995 and 1996. In accordance with the Company's tax sharing
agreement with AutoNation, the Company may be liable for certain assessments
imposed by the Internal Revenue Service resulting from this audit. Management
believes that the tax liabilities recorded are adequate.
54
<PAGE> 57
REPUBLIC SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
However, a significant assessment in excess of liabilities recorded against the
Company could have a material adverse effect on the Company's financial
position, results of operations or cash flows.
11. RELATED PARTY TRANSACTIONS
The following is an analysis of activity in the due to AutoNation account:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
-----------------
1998 1997
------- ------
<S> <C> <C>
Balance at beginning of period.............................. $ 107.8 $ 49.3
AutoNation overhead allocations............................. 7.5 10.2
Service Agreement fees...................................... 7.5 --
Insurance allocations....................................... 9.7 15.9
Self-insurance reserve allocations.......................... (9.8) (7.3)
Intercompany purchases...................................... 42.4 13.8
Income taxes................................................ 24.0 28.7
Cash transfers.............................................. (49.6) (2.8)
Repayment in shares of Common Stock......................... (139.5) --
------- ------
Balance at end of period.................................... $ -- $107.8
======= ======
</TABLE>
Prior to the Initial Public Offering, due to AutoNation included
allocations of various expenses from AutoNation including general and
administrative expenses, risk management premiums, income taxes and other costs.
Such liabilities were non-interest bearing and had no specified repayment terms.
In July 1998, the Company repaid in full amounts due to AutoNation as of June
30, 1998 through the issuance of approximately 5.8 million shares of Common
Stock. Subsequent to the Initial Public Offering, due to AutoNation consists
primarily of charges under the Services Agreement described below. Such amounts
were non-interest bearing and were repaid periodically using cash.
Prior to the Initial Public Offering, AutoNation's corporate general and
administrative costs not specifically attributable to its operating subsidiaries
were allocated to the Company based upon the ratio of the Company's invested
capital to AutoNation's consolidated invested capital. Such allocations are
included in the Company's selling, general and administrative costs and were
approximately $7.5 million and $10.2 million for the years ended December 31,
1998 and 1997, respectively. These amounts approximate management's estimate of
AutoNation's corporate general and administrative costs required to support the
Company's operations. Management believes that the amounts allocated to the
Company are reasonable and are no less favorable to the Company than the
expenses the Company would have incurred to obtain such services on its own or
from unaffiliated third parties.
In June 1998, the Company and AutoNation entered into a services agreement
(the "Services Agreement") pursuant to which AutoNation provided to the Company
certain accounting, auditing, cash management, corporate communications,
corporate development, financial and treasury, human resources and benefit plan
administration, insurance and risk management, legal, purchasing and tax
services. The Services Agreement expired June 30, 1999. In exchange for the
provision of such services, fees were payable by the Company to AutoNation in
the amount of $1.25 million per month. Effective January 1, 1999, such fees
payable by the Company to AutoNation were reduced to $.9 million per month. The
Company believes that the fees for services provided under the Services
Agreement are no less favorable to the Company than could be obtained by the
Company internally or from unaffiliated third parties. Charges under the
Services Agreement for the years ended December 31, 1999 and 1998 were $5.3
million and $7.5 million and are included in selling, general and administrative
expenses.
55
<PAGE> 58
REPUBLIC SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Prior to the Initial Public Offering, the Company participated in
AutoNation's combined risk management programs for property, casualty and
general liability insurance. The Company was charged annual premiums of $9.7
million and $15.9 million for the years ended December 31, 1998 and 1997,
respectively.
Notes payable to a former subsidiary represent borrowings prior to the
Initial Public Offering under revolving credit facilities to fund the Company's
operations and to repay debt assumed in acquisitions. Borrowings under these
facilities bear interest at prime plus 50 basis points and were payable on
demand. In July 1998, the Company repaid these notes through the issuance of
approximately 10.7 million shares of Common Stock. Interest expense on these
notes was $9.7 million and $20.2 million for the years ended December 31, 1998
and 1997, respectively.
12. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The following is an analysis of certain items in the Consolidated
Statements of Operations by quarter for 1999 and 1998:
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Revenue................................. 1999 $403.5 $455.6 $490.6 $488.8
1998 $300.8 $335.9 $355.0 $377.4
Operating income........................ 1999 $ 79.4 $102.6 $103.5 $105.1
1998 $ 59.0 $ 70.7 $ 75.3 $ 79.3
Net income.............................. 1999 $ 43.4 $ 54.5 $ 52.5 $ 50.4
1998 $ 34.8 $ 25.1 $ 46.2 $ 47.6
Basic and diluted net income per
share................................. 1999 $ .25 $ .31 $ .30 $ .29
1998 $ .36 $ .26 $ .26 $ .27
Weighted average common and common
equivalent shares outstanding......... 1999 175.4 176.5 175.5 175.5
1998 95.7 95.7 175.4 175.4
</TABLE>
56
<PAGE> 59
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
57
<PAGE> 60
PART III
The information required by Items 10, 11, 12 and 13 of Part III of Form
10-K will be set forth in the Proxy Statement of the Company relating to the
2000 Annual Meeting of Stockholders and is incorporated by reference herein.
58
<PAGE> 61
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION OF EXHIBIT
- -------- ----------------------
<S> <C> <C>
3.1 -- Amended and Restated Certificate of Incorporation
(incorporated by reference to Exhibit 3.1 of the Company's
Quarterly Report on Form 10-Q for the period ended June 30,
1998).
3.2 -- Certificate of Amendment to Amended and Restated Certificate
of Incorporation of the Company (incorporated by reference
to Exhibit 4.2 of the Company's Registration Statement on
Form S-8, Registration No. 333-81801, filed with the
Commission on June 29, 1999).
3.3 -- Amended and Restated Bylaws of the Company (incorporated by
reference to Exhibit 3.2 of the Company's Quarterly Report
on Form 10-Q for the period ended June 30, 1998).
4.1 -- The Company's Common Stock Certificate (incorporated by
reference to Exhibit 4.4 of the Company's Registration
Statement on Form S-8, Registration No. 333-81801, filed
with the Commission on June 29, 1999).
4.2 -- Long Term Credit Agreement dated July 10, 1998 among the
Company, Bank of America National Trust and Savings
Association, as Administrative Agent, and the several
financial institutions party thereto (incorporated by
reference to Exhibit 4.1 of the Company's Quarterly Report
on Form 10-Q for the period ended June 30, 1998).
4.3* -- Indenture dated May 24, 1999 between the Company and The
Bank of New York, as trustee.
4.4* -- 6 5/8% Note due May 15, 2004 in the principal amount of
$200,000,000.
4.5* -- 6 5/8% Note due May 15, 2004 in the principal amount of
$25,000,000.
4.6* -- 7 1/8% Note due May 15, 2009 in the principal amount of
$200,000,000.
4.7* -- 7 1/8% Note due May 15, 2009 in the principal amount of
$175,000,000.
10.1 -- Separation and Distribution Agreement dated June 30, 1998 by
and between the Company and AutoNation, Inc. (incorporated
by reference to Exhibit 10.1 of the Company's Quarterly
Report on Form 10-Q for the period ended June 30, 1998).
10.2 -- Amended and Restated Employee Benefits Agreement dated June
30, 1998 by and between the Company and AutoNation, Inc.
(incorporated by reference to Exhibit 10.2 of the Company's
Amendment No. 3 to Registration Statement on Form S-1,
Registration No. 333-73259, filed with the Commission on
April 27, 1999).
10.3 -- Services Agreement dated March 4, 1999 by and between the
Company and AutoNation, Inc. (incorporated by reference to
Exhibit 10.3 of the Company's Quarterly Report on Form 10-Q
for the period ended June 30, 1998).
10.4 -- First Amendment to Services Agreement dated March 4, 1999 by
and between the Company and AutoNation, Inc. (incorporated
by reference to Exhibit 10.4 of the Company's Registration
Statement on Form S-1, Registration No. 333-73259, filed
with the Commission on April 27, 1999).
10.5 -- Tax Indemnification and Allocation Agreement dated June 30,
1998 by and between the Company and AutoNation, Inc.
(incorporated by reference to Exhibit 10.4 of the Company's
Quarterly Report on Form 10-Q for the period ended June 30,
1998).
10.6 -- 1998 Stock Incentive Plan (incorporated by reference to
Exhibit 10.5 of the Company's Registration Statement on Form
S-1/A, Amendment No. 2, dated June 30, 1998).
10.7 -- Employment Agreement dated December 7, 1998 by and between
James E. O'Connor and the Company (incorporated by reference
to Exhibit 10.6 of the Company's Annual Report on Form 10-K
for the year ended December 31, 1998).
</TABLE>
59
<PAGE> 62
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION OF EXHIBIT
- -------- ----------------------
<S> <C> <C>
10.8 -- Employment Agreement dated January 11, 1999 by and between
James H. Cosman and the Company (incorporated by reference
to Exhibit 10.7 of the Company's Annual Report on Form 10-K
for the year ended December 31, 1998).
10.9 -- Employment Agreement dated July 1, 1999 by and between Tod
C. Holmes and the Company (incorporated by reference to
Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q
for the period ended September 30, 1999).
21.1* -- Subsidiaries of the Company.
27.1* -- Financial Data Schedule for the Year Ended December 31, 1999
(for SEC use only).
</TABLE>
- ---------------
* filed herewith
(b) Financial Statement Schedule. The following financial statement
schedule is filed on page 62 herewith:
Financial Statement Schedule II, Valuation and Qualifying Accounts and
Reserves, for Each of the Three Years Ended December 31, 1999.
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.
(c) Reports on Form 8-K:
Form 8-K, filed and dated January 26, 2000, including a press release
announcing the Company's operating results for the three and twelve months ended
December 31, 1999.
60
<PAGE> 63
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
REGISTRANT:
REPUBLIC SERVICES, INC.
By: /s/ H. WAYNE HUIZENGA
------------------------------------
H. Wayne Huizenga
Chairman of the Board
March 13, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- -----------------
<C> <S> <C>
/s/ H. WAYNE HUIZENGA Chairman of the Board March 13, 2000
- -----------------------------------------------------
H. Wayne Huizenga
/s/ HARRIS W. HUDSON Vice Chairman and Director March 13, 2000
- -----------------------------------------------------
Harris W. Hudson
/s/ JAMES E. O'CONNOR Chief Executive Officer and March 13, 2000
- ----------------------------------------------------- Director (principal
James E. O'Connor executive officer)
/s/ TOD C. HOLMES Senior Vice President and March 13, 2000
- ----------------------------------------------------- Chief Financial Officer
Tod C. Holmes (principal financial
officer)
/s/ CHARLES F. SERIANNI Chief Accounting Officer March 13, 2000
- ----------------------------------------------------- (principal accounting
Charles F. Serianni officer)
/s/ JOHN W. CROGHAN Director March 13, 2000
- -----------------------------------------------------
John W. Croghan
/s/ RAMON A. RODRIGUEZ Director March 13, 2000
- -----------------------------------------------------
Ramon A. Rodriguez
/s/ ALLAN C. SORENSEN Director March 13, 2000
- -----------------------------------------------------
Allan C. Sorensen
</TABLE>
61
<PAGE> 64
REPUBLIC SERVICES, INC.
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
SCHEDULE II
(IN MILLIONS)
<TABLE>
<CAPTION>
BALANCE AT ADDITIONS ACCOUNTS BALANCE AT
BEGINNING CHARGED TO WRITTEN END
OF YEAR INCOME OFF OTHER(1) OF YEAR
---------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
CLASSIFICATIONS
Allowance for doubtful accounts:
1999........................................... $22.1 $9.6 $(19.8) $ 2.3 $14.2
1998........................................... 13.6 5.1 (7.2) 10.6 22.1
1997........................................... 8.3 4.1 (4.1) 5.3 13.6
</TABLE>
- ---------------
(1) Allowance of acquired businesses.
62
<PAGE> 65
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION OF EXHIBIT
- -------- ----------------------
<S> <C> <C>
3.1 -- Amended and Restated Certificate of Incorporation
(incorporated by reference to Exhibit 3.1 of the Company's
Quarterly Report on Form 10-Q for the period ended June 30,
1998).
3.2 -- Certificate of Amendment to Amended and Restated Certificate
of Incorporation of the Company (incorporated by reference
to Exhibit 4.2 of the Company's Registration Statement on
Form S-8, Registration No. 333-81801, filed with the
Commission on June 29, 1999).
3.3 -- Amended and Restated Bylaws of the Company (incorporated by
reference to Exhibit 3.2 of the Company's Quarterly Report
on Form 10-Q for the period ended June 30, 1998).
4.1 -- The Company's Common Stock Certificate (incorporated by
reference to Exhibit 4.4 of the Company's Registration
Statement on Form S-8, Registration No. 333-81801, filed
with the Commission on June 29, 1999).
4.2 -- Long Term Credit Agreement dated July 10, 1998 among the
Company, Bank of America National Trust and Savings
Association, as Administrative Agent, and the several
financial institutions party thereto (incorporated by
reference to Exhibit 4.1 of the Company's Quarterly Report
on Form 10-Q for the period ended June 30, 1998).
4.3* -- Indenture dated May 24, 1999 between the Company and The
Bank of New York, as trustee.
4.4* -- 6 5/8% Note due May 15, 2004 in the principal amount of
$200,000,000.
4.5* -- 6 5/8% Note due May 15, 2004 in the principal amount of
$25,000,000.
4.6* -- 7 1/8% Note due May 15, 2009 in the principal amount of
$200,000,000.
4.7* -- 7 1/8% Note due May 15, 2009 in the principal amount of
$175,000,000.
10.1 -- Separation and Distribution Agreement dated June 30, 1998 by
and between the Company and AutoNation, Inc. (incorporated
by reference to Exhibit 10.1 of the Company's Quarterly
Report on Form 10-Q for the period ended June 30, 1998).
10.2 -- Amended and Restated Employee Benefits Agreement dated June
30, 1998 by and between the Company and AutoNation, Inc.
(incorporated by reference to Exhibit 10.2 of the Company's
Amendment No. 3 to Registration Statement on Form S-1,
Registration No. 333-73259, filed with the Commission on
April 27, 1999).
10.3 -- Services Agreement dated March 4, 1999 by and between the
Company and AutoNation, Inc. (incorporated by reference to
Exhibit 10.3 of the Company's Quarterly Report on Form 10-Q
for the period ended June 30, 1998).
10.4 -- First Amendment to Services Agreement dated March 4, 1999 by
and between the Company and AutoNation, Inc. (incorporated
by reference to Exhibit 10.4 of the Company's Registration
Statement on Form S-1, Registration No. 333-73259, filed
with the Commission on April 27, 1999).
10.5 -- Tax Indemnification and Allocation Agreement dated June 30,
1998 by and between the Company and AutoNation, Inc.
(incorporated by reference to Exhibit 10.4 of the Company's
Quarterly Report on Form 10-Q for the period ended June 30,
1998).
10.6 -- 1998 Stock Incentive Plan (incorporated by reference to
Exhibit 10.5 of the Company's Registration Statement on Form
S-1/A, Amendment No. 2, dated June 30, 1998).
10.7 -- Employment Agreement dated December 7, 1998 by and between
James E. O'Connor and the Company (incorporated by reference
to Exhibit 10.6 of the Company's Annual Report on Form 10-K
for the year ended December 31, 1998).
10.8 -- Employment Agreement dated January 11, 1999 by and between
James H. Cosman and the Company (incorporated by reference
to Exhibit 10.7 of the Company's Annual Report on Form 10-K
for the year ended December 31, 1998).
</TABLE>
<PAGE> 66
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION OF EXHIBIT
- -------- ----------------------
<S> <C> <C>
10.9 -- Employment Agreement dated July 1, 1999 by and between Tod
C. Holmes and the Company (incorporated by reference to
Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q
for the period ended September 30, 1999).
21.1* -- Subsidiaries of the Company.
27.1* -- Financial Data Schedule for the Year Ended December 31, 1999
(for SEC use only).
</TABLE>
- ---------------
* filed herewith
<PAGE> 1
EXHIBIT 4.3
REPUBLIC SERVICES, INC., AS ISSUER,
AND
THE BANK OF NEW YORK, AS TRUSTEE
---------------
INDENTURE
DATED AS OF MAY 24, 1999
---------------
6 5/8% NOTES DUE 2004
7 1/8% NOTES DUE 2009
<PAGE> 2
REPUBLIC SERVICES, INC.
RECONCILIATION AND TIE WITH THE TRUST INDENTURE ACT OF 1939
<TABLE>
<CAPTION>
<S> <C>
TRUST INDENTURE ACT SECTION INDENTURE SECTION
Section 310(a)(1).......................................... 609
(a)(2)................................................. 609
(b).................................................... 608, 610
Section 311(a)............................................. 613
Section 312(a)............................................. 701
(b).................................................... 702
(c).................................................... 702
Section 313(a)............................................. 703(a)
(b).................................................... 703(a)
(c).................................................... 703(a)
(d).................................................... 703(b)
Section 314(a)............................................. 704
(a)(4)................................................. 705
(c)(1)................................................. 103
(c)(2)................................................. 103
(e).................................................... 103
Section 315(a)............................................. 601
(b).................................................... 602
(c).................................................... 601(a)
(d).................................................... 601, 603
(e).................................................... 514
Section 316(a)(last sentence).............................. 101 ("Outstanding")
(a)(1)(A).............................................. 502, 512
(a)(1)(B).............................................. 513
(b).................................................... 508
(c).................................................... 105
Section 317(a)(1).......................................... 503
(a)(2)................................................. 504
(b).................................................... 1003
Section 318(a)............................................. 108
</TABLE>
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
-i-
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION..............................................1
SECTION 101. DEFINITIONS......................................................................................1
"AFFILIATE"................................................................................................2
"APPLICABLE PROCEDURES"....................................................................................2
"ATTRIBUTABLE DEBT"........................................................................................2
"BANKRUPTCY LAW"...........................................................................................3
"BOARD OF DIRECTORS".......................................................................................3
"BOARD RESOLUTION".........................................................................................3
"BOOK-ENTRY SECURITY"......................................................................................3
"BUSINESS DAY".............................................................................................3
"CAPITAL STOCK"............................................................................................3
"CODE".....................................................................................................3
"COMMISSION"...............................................................................................3
"COMPANY"..................................................................................................3
"COMPANY REQUEST"OR "COMPANY ORDER"........................................................................3
"COMPARABLE TREASURY ISSUE"................................................................................4
"COMPARABLE TREASURY PRICE"................................................................................4
"CONSOLIDATED NET TANGIBLE ASSETS".........................................................................4
"CONSOLIDATION"............................................................................................4
"CORPORATE TRUST OFFICE"...................................................................................4
"DEFAULT"..................................................................................................5
"DEPOSITARY"...............................................................................................5
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
"EVENT OF DEFAULT".........................................................................................5
"EXCHANGE ACT".............................................................................................5
"EXEMPTED DEBT"............................................................................................5
"FAIR MARKET VALUE"........................................................................................5
"FUNDED DEBT"..............................................................................................5
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES"OR "GAAP"........................................................5
"GLOBAL SECURITIES"........................................................................................5
"GUARANTEE"................................................................................................5
"HOLDER"...................................................................................................6
"INCUR"....................................................................................................6
"INDEBTEDNESS".............................................................................................6
"INDENTURE"................................................................................................6
"INDENTURE OBLIGATIONS"....................................................................................6
"INDEPENDENT INVESTMENT BANKER"............................................................................6
"INTEREST PAYMENT DATE"....................................................................................6
"ISSUE DATE"...............................................................................................7
"LIEN".....................................................................................................7
"MATURITY".................................................................................................7
"MOODY'S"..................................................................................................7
"OFFICERS'CERTIFICATE".....................................................................................7
"OPINION OF COUNSEL".......................................................................................7
"OPINION OF INDEPENDENT COUNSEL"...........................................................................7
"OUTSTANDING"..............................................................................................7
"PAYING AGENT".............................................................................................8
"PERSON"...................................................................................................8
"PREDECESSOR SECURITY".....................................................................................9
"PREFERRED STOCK"..........................................................................................9
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<CAPTION>
<S> <C>
"PRINCIPAL PROPERTY".......................................................................................9
"REDEMPTION DATE"..........................................................................................9
"REDEMPTION PRICE".........................................................................................9
"REFERENCE TREASURY DEALER"................................................................................9
"REFERENCE TREASURY DEALER QUOTATIONS".....................................................................9
"REGULAR RECORD DATE".....................................................................................10
"RESPONSIBLE OFFICER".....................................................................................10
"RESTRICTED SUBSIDIARY"...................................................................................10
"S&P".....................................................................................................10
"SECURITIES ACT"..........................................................................................10
"SENIOR INDEBTEDNESS".....................................................................................10
"SPECIAL RECORD DATE".....................................................................................10
"STATED MATURITY".........................................................................................10
"SUBSIDIARY"..............................................................................................10
"TEMPORARY CASH INVESTMENTS"..............................................................................10
"TREASURY RATE"...........................................................................................11
"TRUSTEE".................................................................................................11
"TRUST INDENTURE ACT".....................................................................................12
"VOTING STOCK"............................................................................................12
SECTION 102. OTHER DEFINITIONS...............................................................................12
SECTION 103. COMPLIANCE CERTIFICATES AND OPINIONS............................................................12
SECTION 104. FORM OF DOCUMENTS DELIVERED TO TRUSTEE..........................................................13
SECTION 105. ACTS OF HOLDERS.................................................................................14
SECTION 106. NOTICES, ETC., TO THE TRUSTEE, THE COMPANY......................................................15
SECTION 107. NOTICE TO HOLDERS; WAIVER.......................................................................16
SECTION 108. CONFLICT WITH TRUST INDENTURE ACT...............................................................16
SECTION 109. EFFECT OF HEADINGS AND TABLE OF CONTENTS........................................................17
</TABLE>
-iv-
<PAGE> 6
<TABLE>
<CAPTION>
<S> <C>
SECTION 110. SUCCESSORS AND ASSIGNS..........................................................................17
SECTION 111. SEPARABILITY CLAUSE.............................................................................17
SECTION 112. BENEFITS OF INDENTURE...........................................................................17
SECTION 113. GOVERNING LAW...................................................................................17
SECTION 114. LEGAL HOLIDAYS..................................................................................17
SECTION 115. INDEPENDENCE OF COVENANTS.......................................................................18
SECTION 116. SCHEDULES AND EXHIBITS..........................................................................18
SECTION 117. COUNTERPARTS....................................................................................18
ARTICLE TWO SECURITY FORMS......................................................................................19
SECTION 201. FORMS GENERALLY.................................................................................19
ARTICLE THREE THE SECURITIES....................................................................................20
SECTION 301. TITLE AND TERMS.................................................................................20
SECTION 302. DENOMINATIONS...................................................................................21
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING..................................................21
SECTION 304. TEMPORARY SECURITIES............................................................................22
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.............................................23
SECTION 306. BOOK ENTRY PROVISIONS FOR GLOBAL SECURITIES.....................................................24
SECTION 307. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES................................................26
SECTION 308. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED..................................................27
SECTION 309. CUSIP NUMBERS...................................................................................28
SECTION 310. PERSONS DEEMED OWNERS...........................................................................28
SECTION 311. CANCELLATION....................................................................................28
SECTION 312. COMPUTATION OF INTEREST.........................................................................29
ARTICLE FOUR DEFEASANCE AND COVENANT DEFEASANCE.................................................................30
SECTION 401. COMPANY'S OPTION TO EFFECT DEFEASANCE OR COVENANT DEFEASANCE....................................30
</TABLE>
-v-
<PAGE> 7
<TABLE>
<CAPTION>
<S> <C>
SECTION 402. DEFEASANCE AND DISCHARGE........................................................................30
SECTION 403. COVENANT DEFEASANCE.............................................................................30
SECTION 404. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.................................................31
SECTION 405. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD IN TRUST; OTHER
MISCELLANEOUS PROVISIONS........................................................................33
SECTION 406. REINSTATEMENT...................................................................................34
ARTICLE FIVE REMEDIES...........................................................................................35
SECTION 501. EVENTS OF DEFAULT...............................................................................35
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT..............................................36
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.................................37
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM................................................................38
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.....................................39
SECTION 506. APPLICATION OF MONEY COLLECTED..................................................................40
SECTION 507. LIMITATION ON SUITS.............................................................................40
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND INTEREST.......................41
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES..............................................................41
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE..................................................................41
SECTION 511. DELAY OR OMISSION NOT WAIVER....................................................................42
SECTION 512. CONTROL BY HOLDERS..............................................................................42
SECTION 513. WAIVER OF PAST DEFAULTS.........................................................................42
SECTION 514. UNDERTAKING FOR COSTS...........................................................................43
SECTION 515. WAIVER OF STAY, EXTENSION OR USURY LAWS.........................................................43
SECTION 516. REMEDIES SUBJECT TO APPLICABLE LAW..............................................................43
ARTICLE SIX THE TRUSTEE.........................................................................................44
SECTION 601. DUTIES OF TRUSTEE...............................................................................44
SECTION 602. NOTICE OF DEFAULTS..............................................................................45
</TABLE>
-vi-
<PAGE> 8
<TABLE>
<CAPTION>
<S> <C>
SECTION 603. CERTAIN RIGHTS OF TRUSTEE.......................................................................45
SECTION 604. TRUSTEE NOT RESPONSIBLE FOR RECITALS, DISPOSITIONS OF SECURITIES OR APPLICATION OF
PROCEEDS THEREOF................................................................................47
SECTION 605. TRUSTEE AND AGENTS MAY HOLD SECURITIES; COLLECTIONS; ETC........................................48
SECTION 606. MONEY HELD IN TRUST.............................................................................48
SECTION 607. COMPENSATION AND INDEMNIFICATION OF TRUSTEE AND ITS PRIOR CLAIM.................................48
SECTION 608. CONFLICTING INTERESTS...........................................................................49
SECTION 609. TRUSTEE ELIGIBILITY.............................................................................49
SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR TRUSTEE.......................................49
SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR..........................................................51
SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.....................................52
SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY...............................................52
ARTICLE SEVEN HOLDERS'LISTS AND REPORTS BY TRUSTEE AND COMPANY..................................................54
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.......................................54
SECTION 702. DISCLOSURE OF NAMES AND ADDRESSES OF HOLDERS....................................................54
SECTION 703. REPORTS BY TRUSTEE..............................................................................54
SECTION 704. REPORTS BY COMPANY..............................................................................55
SECTION 705. STATEMENT AS TO COMPLIANCE......................................................................55
SECTION 706. STATEMENT BY OFFICERS AS TO DEFAULT.............................................................56
ARTICLE EIGHT CONSOLIDATION, MERGER, SALE OF ASSETS.............................................................57
SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS............................................57
SECTION 802. SUCCESSOR SUBSTITUTED...........................................................................58
ARTICLE NINE SUPPLEMENTAL INDENTURES............................................................................59
SECTION 901. SUPPLEMENTAL INDENTURES AND AGREEMENTS WITHOUT CONSENT OF HOLDERS...............................59
SECTION 902. SUPPLEMENTAL INDENTURES AND AGREEMENTS WITH CONSENT OF HOLDERS..................................60
</TABLE>
-vii-
<PAGE> 9
<TABLE>
<CAPTION>
<S> <C>
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES AND AGREEMENTS.............................................61
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES...............................................................62
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.............................................................62
SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES..............................................62
SECTION 907. NOTICE OF SUPPLEMENTAL INDENTURES...............................................................62
ARTICLE TEN COVENANTS...........................................................................................63
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.....................................................63
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY................................................................63
SECTION 1003. MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST................................................63
SECTION 1004. CORPORATE EXISTENCE............................................................................65
SECTION 1005. RESTRICTIONS ON LIENS..........................................................................65
SECTION 1006. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS..................................................67
SECTION 1007. PROVISIONS OF FINANCIAL STATEMENTS.............................................................68
SECTION 1008. WAIVER OF CERTAIN COVENANTS....................................................................68
ARTICLE ELEVEN REDEMPTION OF SECURITIES.........................................................................70
SECTION 1101. RIGHTS OF REDEMPTION...........................................................................70
SECTION 1102. APPLICABILITY OF ARTICLE.......................................................................70
SECTION 1103. ELECTION TO REDEEM; NOTICE TO TRUSTEE..........................................................70
SECTION 1104. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED..............................................70
SECTION 1105. NOTICE OF REDEMPTION...........................................................................71
SECTION 1106. DEPOSIT OF REDEMPTION PRICE....................................................................72
SECTION 1107. SECURITIES PAYABLE ON REDEMPTION DATE..........................................................72
SECTION 1108. SECURITIES REDEEMED OR PURCHASED IN PART.......................................................73
ARTICLE TWELVE SATISFACTION AND DISCHARGE.......................................................................74
SECTION 1201. SATISFACTION AND DISCHARGE OF INDENTURE........................................................74
SECTION 1202. APPLICATION OF TRUST MONEY.....................................................................75
TESTIMONIUM
SIGNATURES
</TABLE>
-viii-
<PAGE> 10
INDENTURE, dated as of May 24, 1999, between Republic
Services, Inc. and The Bank of New York, as trustee (the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of two separate
series of securities under this Indenture: (i) an issue of 6 5/8% Notes due 2004
in the aggregate principal amount of $225 million and (ii) an issue of 7 1/8%
Notes due 2009 in the aggregate principal amount of $375 million (together, the
"Securities"), of substantially the tenor and amount hereinafter set forth, and
to provide therefor the Company has duly authorized the execution and delivery
of this Indenture and the Securities;
This Indenture is subject to, and shall be governed by, the
provisions of the Trust Indenture Act that are required to be part of and to
govern indentures qualified under the Trust Indenture Act;
All acts and things necessary have been done to make (i) the
Securities, when duly issued and executed by the Company and authenticated and
delivered hereunder, the valid obligations of the Company and (ii) this
Indenture a valid agreement of the Company;
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the Securities by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Securities, as
follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. DEFINITIONS.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article, and include the plural as well as the
singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
<PAGE> 11
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(d) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision;
(e) all references to $, US$, dollars or United States dollars
shall refer to the lawful currency of the United States of America; and
(f) all references herein to particular Sections or Articles
refer to this Indenture unless otherwise so indicated.
Certain terms used principally in Article Four are defined in
Article Four.
"Affiliate" means, with respect to any specified Person: (i)
any other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person; (ii) any other
Person that owns, directly or indirectly, 5% or more of such specified Person's
Capital Stock or any officer or director of any such specified Person or other
Person or, with respect to any natural Person, any person having a relationship
with such Person by blood, marriage or adoption not more remote than first
cousin; or (iii) any other Person 5% or more of the Voting Stock of which is
beneficially owned or held directly or indirectly by such specified Person. For
the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Security or beneficial interest therein, the
rules and procedures of the Depositary for such Security to the extent
applicable to such transaction and as in effect at the time of such transfer or
transaction.
"Attributable Debt" means, when used in connection with a sale
and leaseback transaction, at any date of determination, the product of (1) the
net proceeds from such sale and leaseback transaction multiplied by (2) a
fraction, the numerator of which is the number of full years of the term of the
lease relating to the property involved in such sale and leaseback transaction
(without regard to any options to renew or extend such term) remaining at the
date of the making of such computation and the denominator of which is the
number of full years of the term of such lease measured from the first day of
such term.
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"Bankruptcy Law" means Title 11, United States Bankruptcy Code
of 1978, as amended, or any similar United States federal or state law or
foreign law relating to bankruptcy, insolvency, receivership, winding up,
liquidation, reorganization or relief of debtors or any amendment to, succession
to or change in any such law.
"Board of Directors" means either the Board of Directors of
the Company or any duly authorized committee or subcommittee of such Board,
except as the context may otherwise require.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company, as the case may be, to
have been duly adopted by the Board of Directors and to be in full force and
effect on the date of such certification, and delivered to the Trustee.
"Book-Entry Security" means any Global Securities bearing the
legend specified in Exhibits A and B evidencing all or part of a series of
Securities, authenticated and delivered to the Depositary for such series or its
nominee, and registered in the name of such Depositary or nominee.
"Business Day" means any day that is not a Saturday, a Sunday
or a day on which banking institutions or trust companies in New York City and
Fort Lauderdale, Florida are authorized or obligated by law to close.
"Capital Stock" means, with respect to any Person, any and all
shares, interests, rights to purchase, warrants, options, participations or
other equivalents of or interests (including partnership interests) in (however
designated) the equity of such Person, including any Preferred Stock, but
excluding any debt securities convertible into such equity.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act, or if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Securities Act, Exchange Act
and Trust Indenture Act then the body performing such duties at such time.
"Company" means Republic Services, Inc., until a successor
Person shall have become such pursuant to the applicable provisions of this
Indenture, and thereafter "Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request
or order signed in the name of the Company by any one of its Chairman of the
Board, its
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President, its Chief Executive Officer, its Chief Financial Officer or a Vice
President (regardless of Vice Presidential designation), and by any one of its
Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary and
delivered to the Trustee.
"Comparable Treasury Issue" means the United States Treasury
security selected by an Independent Investment Banker as having a maturity
comparable to the remaining term (the "Remaining Life") of the Securities to be
redeemed that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities
of a comparable maturity to the remaining term of such Notes.
"Comparable Treasury Price" means, with respect to any
Redemption Date, (A) the average of five Reference Treasury Dealer Quotations
for such Redemption Date, after excluding the highest and lowest Reference
Treasury Dealer Quotations, or (B) if the Independent Investment Banker obtains
fewer than five such Reference Treasury Dealer Quotations, the average of all
such quotations.
"Consolidated Net Tangible Assets" means, as of any date, the
total amount of assets of the Company and its Restricted Subsidiaries on a
consolidated basis (less applicable reserves and other properly deductible
items) after deducting therefrom (1) all current liabilities (excluding any
current liabilities which are by their terms extendible or renewable at the
option of the obligor thereon to a time more than 12 months after the time as of
which the amount thereof is being computed or which is supported by other
borrowings with a maturity of more than 12 months from the date of calculation,)
(2) all goodwill, trade names, trademarks, patents, unamortized debt discount
and expense and other like intangibles and (3) appropriate adjustments on
account of minority interests of other Persons holding stock of the Company's
Subsidiaries, all as set forth on the most recent balance sheet of the Company
and its consolidated Subsidiaries (but, in any event, as of a date within 120
days of the date of determination) in each case excluding intercompany items and
computed in accordance with generally accepted accounting principles as in
effect from time to time.
"Consolidation" means, with respect to any Person, the
consolidation of the accounts of such Person and each of its subsidiaries if and
to the extent the accounts of such Person and each of its subsidiaries would
normally be consolidated with those of such Person, all in accordance with GAAP.
The term "Consolidated" shall have a similar meaning.
"Corporate Trust Office" means the office of the Trustee or an
affiliate or agent thereof at which at any particular time the corporate trust
business for the purposes of this Indenture shall be principally administered,
which office at the date of execution
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of this Indenture is located at 101 Barclay Street, Floor 21W, New York, New
York 10286.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Depositary" means, with respect to the Securities issued in
the form of one or more Book-Entry Securities, The Depository Trust Company
("DTC"), its nominees and successors, or another Person designated as Depositary
by the Company, which must be a clearing agency registered under the Exchange
Act.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exempted Debt" means the sum, without duplication, of the
following items outstanding as of the date Exempted Debt is being determined:
(1) Indebtedness of Republic Services, Inc. and the Restricted Subsidiaries
Incurred after the date of the Indenture and secured by Liens created, assumed
or otherwise Incurred or permitted to exist pursuant to Section 1005 hereof and
(2) Attributable Debt of Republic Services, Inc. and the Restricted Subsidiaries
in respect of all sale and leaseback transactions with regard to any Principal
Property entered into pursuant to Section 1006 hereof.
"Fair Market Value" means, with respect to any asset or
property, the sale value that would be obtained in an arm's-length free market
transaction between an informed and willing seller under no compulsion to sell
and an informed and willing buyer under no compulsion to buy. Fair Market Value
shall be determined by the Board of Directors of the Company acting in good
faith and shall be evidenced by a resolution of the Board of Directors.
"Funded Debt" means all Indebtedness for money borrowed,
including purchase money indebtedness, having a maturity of more than one year
from the date of its creation or having a maturity of less than one year but by
its terms being renewable or extendible, at the option of the obligor in respect
thereof, beyond one year from its creation.
"Generally Accepted Accounting Principles" or "GAAP" means
generally accepted accounting principles in the United States as in effect on
the Issue Date.
"Global Securities" means Global Securities to be issued as
Book-Entry Securities issued to the Depositary in accordance with Section 306.
"Guarantee" means any obligation, contingent or otherwise, of
any person directly or indirectly guaranteeing any Indebtedness of any other
Person and any
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obligation, direct or indirect, contingent or otherwise, of such Person (1) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness of such other Person (whether arising by virtue of partnership
arrangements, or by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (2) entered into for purposes of assuring in any
other manner the obligee of such Indebtedness of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" will not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Holder" means the registered holder of any Security.
"Incur" means issue, assume, guarantee, incur or otherwise
become liable for. The terms "Incurred," "Incurrence" and "Incurring" shall each
have a correlative meaning.
"Indebtedness" means with respect to any Person at any date of
determination (without duplication), indebtedness for borrowed money or
indebtedness evidenced by bonds, notes, debentures or other similar instruments
given to finance the acquisition of any businesses, properties or assets of any
kind (including, without limitation, capital stock or other equity interests in
any Person).
"Indenture" means this instrument as originally executed
(including all exhibits and schedules thereto) and as it may from time to time
be supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof.
"Indenture Obligations" means the obligations of the Company
and any other obligor under this Indenture or under the Securities, to pay
principal of, premium, if any, and interest when due and payable, and all other
amounts due or to become due under or in connection with this Indenture, the
Securities and the performance of all other obligations to the Trustee and the
Holders under this Indenture and the Securities, according to the respective
terms hereof and thereof.
"Independent Investment Banker" means either Banc of America
Securities LLC or Merrill Lynch, Pierce, Fenner & Smith Incorporated, or, if
both firms are unwilling or unable to select the Comparable Treasury Issue, an
independent investment banking institution of national standing appointed by the
Trustee after consultation with the Company.
"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Securities.
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"Issue Date" means the original issue date of the Securities
under this Indenture.
"Lien" with respect to any property or assets, means any
mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, security interest, lien, charge, easement (other than any easement
not materially impairing usefulness or marketability), encumbrance, preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such property or assets (including,
without limitation, any conditional sale or other title retention agreement
having substantially the same economic effect as any of the foregoing), but not
including the interest of a lessor under a lease that is an operating lease
under GAAP.
"Maturity" means, when used with respect to the Securities,
the date on which the principal of the Securities becomes due and payable as
therein provided or as provided in this Indenture, whether at Stated Maturity or
the Redemption Date and whether by declaration of acceleration, call for
redemption or otherwise.
"Moody's" means Moody's Investors Service, Inc. or any
successor rating agency.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, the President, the Chief Executive Officer, the Chief
Financial Officer or a Vice President (regardless of Vice Presidential
designation), and by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary, of the Company and in form and substance reasonably
satisfactory to, and delivered to, the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who
may be counsel for the Company or the Trustee, unless an Opinion of Independent
Counsel is required pursuant to the terms of this Indenture, and who shall be
reasonably acceptable to the Trustee, and which opinion shall be in form and
substance reasonably satisfactory to the Trustee.
"Opinion of Independent Counsel" means a written opinion of
counsel which is issued by a Person who is not an employee, director or
consultant (other than non-employee legal counsel) of the Company and who shall
be reasonably acceptable to the Trustee, and which opinion shall be in form and
substance reasonably satisfactory to the Trustee.
"Outstanding" when used with respect to Securities means, as
of the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
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(a) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(b) Securities, or portions thereof, for whose payment or
redemption money in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other than the Company or any Affiliate thereof) in
trust or set aside and segregated in trust by the Company or any Affiliate
thereof (if the Company or any Affiliate thereof shall act as its own Paying
Agent) for the Holders of such Securities; PROVIDED that if such Securities are
to be redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor reasonably satisfactory to the Trustee has been
made;
(c) Securities, to the extent provided in Sections 402 and
403, with respect to which the Company has effected defeasance or covenant
defeasance as provided in Article Four; and
(d) Securities in exchange for or in lieu of which other
Securities have been authenticated and delivered pursuant to this Indenture,
other than any such Securities in respect of which there shall have been
presented to the Trustee and the Company proof reasonably satisfactory to each
of them that such Securities are held by a bona fide purchaser in whose hands
the Securities are valid obligations of the Company;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which a Responsible Officer of the Trustee
actually knows to be so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the reasonable satisfaction of the Trustee the pledgee's right so
to act with respect to such Securities and that the pledgee is not the Company
or any other obligor upon the Securities or any Affiliate of the Company or such
other obligor.
"Paying Agent" means any Person (including the Company)
authorized by the Company to pay the principal of, premium, if any, or interest
on, any Securities on behalf of the Company.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
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"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 307 in exchange for a
mutilated Security or in lieu of a lost, destroyed or stolen Security shall be
deemed to evidence the same debt as the mutilated, lost, destroyed or stolen
Security.
"Preferred Stock" means, with respect to any Person, any and
all shares, interests, participations or other equivalents (however designated,
whether voting or nonvoting) of such Person's preferred or preference stock,
whether now outstanding or issued after the date of the Indenture, including,
without limitation, all series and classes of such preferred or preference
stock.
"Principal Property" means any land, land improvements or
building, together with the land upon which it is erected and fixtures
comprising a part thereof, in each case, owned or leased by the Company or any
Restricted Subsidiary and located in the United States, the gross book value
(without deduction of any reserve for depreciation) of which on the date as of
which the determination is being made is an amount which exceeds 2% of
Consolidated Net Tangible Assets but not including such land, land improvements,
buildings or portions thereof which is financed through the issuance of tax
exempt governmental obligations, or any such property that has been determined
by Board Resolution of Republic Services, Inc. not to be of material importance
to the respective businesses conducted by the Company or such Restricted
Subsidiary effective as of the date such resolution is adopted.
"Redemption Date" when used with respect to any Security to be
redeemed pursuant to any provision in this Indenture means the date fixed for
such redemption by or pursuant to this Indenture.
"Redemption Price" when used with respect to any Security to
be redeemed pursuant to any provision in this Indenture means the price at which
it is to be redeemed pursuant to this Indenture.
"Reference Treasury Dealer" means (i) each of Banc of America
Securities LLC and Merrill Lynch, Pierce Fenner & Smith Incorporated, provided,
however, that if either of the foregoing shall cease to be a primary U.S.
Government securities dealer in New York City (a "Primary Treasury Dealer"), the
Company will substitute for such initial purchaser another Primary Treasury
Dealer and (2) any other Primary Treasury Dealer selected by the Independent
Investment Banker after consultation with the Company.
"Reference Treasury Dealer Quotations" mean, with respect to
each Reference Treasury Dealer and any Redemption Date, the average, as
determined by the
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Independent Investment Banker, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Independent Investment Banker at 5:00 p.m., New York
City time, on the third Business Day preceding such Redemption Date.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the May 15th or November 15th (whether or not a Business Day)
next preceding such Interest Payment Date.
"Responsible Officer" when used with respect to the Trustee
means any officer assigned to the Corporate Trust Office or any agent of the
Trustee appointed hereunder, including any vice president, assistant vice
president, assistant secretary or any other officer or assistant officer of the
Trustee or any agent of the Trustee appointed hereunder to whom any corporate
trust matter is referred because of his or her knowledge of and familiarity with
the particular subject and who shall have direct responsibility for the
administration of this Indenture.
"Restricted Subsidiary" means any Subsidiary which, at the
time of determination, owns or is a lessee pursuant to a capital lease of any
Principal Property.
"S&P" means Standard & Poor's Rating Group, a division of
McGraw Hill, Inc. or any successor rating agency.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" means any Indebtedness of the Company
which is not expressly subordinated in right of payment to any other
Indebtedness of the Company.
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section 308.
"Stated Maturity" means, when used with respect to any
Security, the date specified in such Security as the fixed date on which the
payment of principal or interest of such Security is due and payable.
"Subsidiary" of a Person means, with respect to any Person,
any corporation, association, partnership or other business entity of which at
least a majority of the total voting power of the Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by (1) such Person, (2) such Person and one or more
Subsidiaries of such Person or (3) one or more Subsidiaries of such Person.
"Temporary Cash Investments" means (1) any evidence of
Indebtedness, maturing not more than one year after the date of acquisition,
issued by the United States
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of America, or an instrumentality or agency thereof, and guaranteed fully as to
principal, premium, if any, and interest by the United States of America, (2)
any certificate of deposit, maturing not more than one year after the date of
acquisition, issued by, or time deposit of, a commercial banking institution
that is a member of the Federal Reserve System and that has combined capital and
surplus and undivided profits of not less than $500,000,000, whose debt has a
rating, at the time as of which any investment therein is made, of "P-1" (or
higher) according to Moody's or any successor rating agency or "A-1" (or higher)
according to S&P or any successor rating agency, including the Trustee or any of
its affiliates, (3) commercial paper, maturing not more than one year after the
date of acquisition, issued by a corporation (other than an Affiliate or
Subsidiary of the Company) organized and existing under the laws of the United
States of America with a rating, at the time as of which any investment therein
is made, of "P-1" (or higher) according to Moody's or "A-1" (or higher)
according to S&P, including the Trustee or any of its affiliates, and (4) any
money market deposit accounts issued or offered by a domestic commercial bank
having capital and surplus in excess of $500,000,000; PROVIDED that the short
term debt of such commercial bank has a rating, at the time of investment, of
"P-1" (or higher) according to Moody's or "A-1" (or higher) according to S&P.
"Treasury Rate" means, with respect to any Redemption Date,
(1) the yield, under the heading which represents the average for the
immediately preceding week, appearing in the most recently published statistical
release designated "H.15(519)" or any successor publication which is published
weekly by the Board of Governors of the Federal Reserve System and which
establishes yields on actively traded U.S. Treasury securities adjusted to
constant maturity under the caption "Treasury Constant Maturities," for the
maturity corresponding to the comparable Treasury Issue (if no maturity is
within three months before or after the Remaining Life, yields for the two
published Maturities most closely corresponding to the Comparable Treasury Issue
will be determined and the Treasury Rate will be interpolated or extrapolated
from such yields on a straight line basis, rounding to the nearest month) or (2)
if such release (or any successor release) is not published during the week
preceding the calculation date or does not contain such yields, the rate per
annum equal to the semi-annual equivalent yield to maturity of the Comparable
Treasury Issue, calculated using a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such Redemption Date. The Treasury Rate will be calculated on
the third Business Day preceding the Redemption Date.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture, until a successor trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor trustee.
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"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended, or any successor statute.
"Voting Stock" of a Person means Capital Stock of any class or
kind ordinarily having the power to vote for the election of directors of the
Company.
Section 102. OTHER DEFINITIONS.
TERM DEFINED IN SECTION
---- ------------------
"Act" 105
"Agent Members" 306
"CUSIP" 309
"Defaulted Interest" 308
"Defeased Securities" 401
"Securities" Recitals
"Security Register" 305
"Security Registrar" 305
"Special Payment Date" 308
"Successor Company" 801
"U.S. Government Obligations" 404
Section 103. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee
to take any action under any provision of this Indenture, the Company and any
other obligor on the Securities (if applicable) shall furnish to the Trustee an
Officers' Certificate in a form and substance reasonably acceptable to the
Trustee stating that all conditions precedent, if any, provided for in this
Indenture (including any covenant compliance with which constitutes a condition
precedent) relating to the proposed action have been complied with, and an
Opinion of Counsel in a form and substance reasonably acceptable to the Trustee
stating that in the opinion of such counsel all such conditions precedent, if
any, have been complied with, except that, in the case of any such application
or request as to which the furnishing of such certificates or opinions is
specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Every certificate or Opinion of Counsel with respect to
compliance with a condition or covenant provided for in this Indenture shall
include:
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(a) a statement that each individual signing such certificate
or individual or firm signing such opinion has read and understands such
covenant or condition and the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(c) a statement that, in the opinion of each such individual
or such firm, he or it has made such examination or investigation as is
necessary to enable him or it to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual or such firm, such condition or covenant has been complied with.
Section 104. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate of an officer of the Company or other obligor
on the Securities may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless such officer
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such certificate or opinion
may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Company or
other obligor on the Securities stating that the information with respect to
such factual matters is in the possession of the Company or other obligor on the
Securities, unless such officer or counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous. Opinions of Counsel required to be
delivered to the Trustee may have qualifications customary for opinions of the
type required and counsel delivering such Opinions of Counsel may rely on
certificates of the Company or government or other officials customary for
opinions of the type required, including certificates certifying as to matters
of fact, including that various financial covenants have been complied with.
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<PAGE> 23
Any certificate or opinion of an officer of the Company or
other obligor on the Securities may be based, insofar as it relates to
accounting matters, upon a certificate or opinion of, or representations by, an
accountant or firm of accountants in the employ of the Company, unless such
officer knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to the accounting matters
upon which his certificate or opinion may be based are erroneous. Any
certificate or opinion of any independent firm of public accountants filed with
the Trustee shall contain a statement that such firm is independent with respect
to the Company.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
Section 105. ACTS OF HOLDERS.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and conclusive in favor of the Trustee and the Company, if made in the
manner provided in this Section 105.
(b) The ownership of Securities shall be proved by the
Security Register.
(c) Any request, demand, authorization, direction, notice,
consent, waiver or other Act by the Holder of any Security shall bind every
future Holder of the same Security or the Holder of every Security issued upon
the transfer thereof or in exchange therefor or in lieu thereof, in respect of
anything done, suffered or omitted to be done by the Trustee, any Paying Agent
or the Company or any other obligor of the Securities in reliance thereon,
whether or not notation of such action is made upon such Security.
(d) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer
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<PAGE> 24
acting in a capacity other than his individual capacity, such certificate or
affidavit shall also constitute sufficient proof of his authority. The fact and
date of the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other manner which the
Trustee deems sufficient.
(e) If the Company shall solicit from the Holders any request,
demand, authorization, direction, notice, consent, waiver or other Act, the
Company may, at its option, by or pursuant to a Board Resolution, fix in advance
a record date for the determination of such Holders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other Act,
but the Company shall have no obligation to do so. Notwithstanding Trust
Indenture Act Section 316(c), any such record date shall be the record date
specified in or pursuant to such Board Resolution, which shall be a date not
more than 30 days prior to the first solicitation of Holders generally in
connection therewith and no later than the date such first solicitation is
completed.
If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act may be given
before or after such record date, but only the Holders of record at the close of
business on such record date shall be deemed to be Holders for purposes of
determining whether Holders of the requisite proportion of Securities then
Outstanding have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other Act, and for this
purpose the Securities then Outstanding shall be computed as of such record
date; PROVIDED that no such request, demand, authorization, direction, notice,
consent, waiver or other Act by the Holders on such record date shall be deemed
effective unless it shall become effective pursuant to the provisions of this
Indenture not later than six months after such record date.
(f) For purposes of this Indenture, any action by the Holders
which may be taken in writing may be taken by electronic means or as otherwise
reasonably acceptable to the Trustee.
Section 106. NOTICES, ETC., TO THE TRUSTEE, THE COMPANY.
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with:
(a) the Trustee by any Holder or by the Company or any other
obligor on the Securities shall be sufficient for every purpose (except as
provided in Section 501(d), in which case, the notice shall be delivered by
certified mail) hereunder if in writing and mailed, first-class postage prepaid,
or delivered by recognized overnight courier, to or with the Trustee at its
Corporate Trust Office, Attention: Corporate Trust Trustee Administration, or at
any other address previously furnished in writing to the
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Holders or the Company, or any other obligor on the Securities by the Trustee
and shall be deemed given upon actual receipt by the Trustee; or
(b) the Company by the Trustee or any Holder shall be
sufficient for every purpose (except as provided in Section 501(d), in which
case, the notice shall be delivered by certified mail) hereunder if in writing
and mailed, first-class postage prepaid, or delivered by recognized overnight
courier, to the Company addressed to Republic Services, Inc., 110 S.E. 6th
Street, 28th Floor, Fort Lauderdale, Florida 33301, Attention: Chief Financial
Officer, or at any other address previously furnished in writing to the Trustee
by the Company.
Section 107. NOTICE TO HOLDERS; WAIVER.
Where this Indenture provides for notice to Holders of any
event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, or
delivered by recognized overnight courier, to each Holder affected by such
event, at its address as it appears in the Security Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Holders is given by mail, neither
the failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Any notice when mailed to a Holder in the aforesaid manner shall
be conclusively deemed to have been received by such Holder whether or not
actually received by such Holder. Where this Indenture provides for notice in
any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or
by reason of any other cause, it shall be impracticable to mail notice of any
event as required by any provision of this Indenture, then any method of giving
such notice as shall be reasonably satisfactory to the Trustee and reasonably
calculated to reach its destination shall be deemed to be a sufficient giving of
such notice.
Section 108. CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof limits, qualifies or conflicts with
any provision of the Trust Indenture Act or another provision which is required
or deemed to be included in this Indenture by any of the provisions of the Trust
Indenture Act, the provision or requirement of the Trust Indenture Act shall
control. If any provision of this Indenture modifies or excludes any provision
of the Trust Indenture Act that may be so modified or
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excluded, the latter provision shall be deemed to apply to this Indenture as so
modified or to be excluded, as the case may be.
Section 109. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.
Section 110. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company
and the Trustee shall bind their respective successors and assigns, whether so
expressed or not.
Section 111. SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 112. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Securities, express or
implied, shall give to any Person (other than the parties hereto and their
successors hereunder, any Paying Agent and the Holders) any benefit or any legal
or equitable right, remedy or claim under this Indenture.
Section 113. GOVERNING LAW.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
Section 114. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date,
Maturity or Stated Maturity of any Security shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of interest or principal or premium, if any, need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on such Interest Payment Date or Redemption Date, or at
the Maturity or Stated Maturity and no interest shall accrue with respect to
such payment for the period from and after such Interest Payment Date,
Redemption Date, Maturity or Stated Maturity, as the case may be, to the next
succeeding Business Day.
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Section 115. INDEPENDENCE OF COVENANTS.
All covenants and agreements in this Indenture shall be given
independent effect so that if a particular action or condition is not permitted
by any such covenants, the fact that it would be permitted by an exception to,
or be otherwise within the limitations of, another covenant shall not avoid the
occurrence of a Default or an Event of Default if such action is taken or
condition exists.
Section 116. SCHEDULES AND EXHIBITS.
All schedules and exhibits attached hereto are by this
reference made a part hereof with the same effect as if herein set forth in
full.
Section 117. COUNTERPARTS.
This Indenture may be executed in any number of counterparts,
each of which shall be deemed an original; but all such counterparts shall
together constitute but one and the same instrument.
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ARTICLE TWO
SECURITY FORMS
Section 201. FORMS GENERALLY.
The (i) 6 5/8% Notes due 2004 and the Trustee's certificate of
authentication thereon shall be in substantially the form of Exhibit A hereto;
and (ii) the 7 1/8% Notes due 2009 and the Trustee's certification of
authentication thereon shall be in substantially the form of Exhibit B hereto,
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted hereby and may have such letters, numbers or other
marks of identification and such legends or endorsements placed thereon as may
be required to comply with the rules of any securities exchange, any
organizational document or governing instrument or applicable law or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution of the Securities. Any portion of the text of
any Security may be set forth on the reverse thereof, with an appropriate
reference thereto on the face of the Security.
The definitive Securities shall be printed, lithographed or
engraved or produced by any combination of these methods or may be produced in
any other manner permitted by the rules of any securities exchange on which the
Securities may be listed, all as determined by the officers executing such
Securities, as evidenced by their execution of such Securities.
The Securities shall be issued initially in the form of one or
more Global Securities, substantially in the forms set forth on Exhibits A and
B, respectively, deposited upon issuance with the Trustee, as custodian for the
Depositary, registered in the name of the Depositary or its nominee, in each
case for credit to an account of a direct or indirect participant of the
Depositary, duly executed by the Company and authenticated by the Trustee as
hereinafter provided. The aggregate principal amount of the Global Securities
may from time to time be increased (but in no event shall the aggregate
principal amount of the Global Securities exceed $600 million) or decreased upon
the written direction of the Company by adjustments made on the records of the
Trustee, as custodian for the Depositary or its nominee, as hereinafter
provided.
The terms and provisions contained in the form of the
Securities set forth in Exhibits A and B shall constitute, and are hereby
expressly made, a part of this Indenture and, to the extent applicable, the
Company and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.
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ARTICLE THREE
THE SECURITIES
Section 301. TITLE AND TERMS.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to $600,000,000 in
principal amount of Securities, except for Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in lieu of,
other Securities pursuant to Section 303, 304, 305, 307, 906 or 1108.
The Securities shall be known and designated as the "6 5/8%
Notes due 2004" and the "7 1/8% Notes due 2009" of the Company.
The Stated Maturity of the 6 5/8% Notes due 2004 shall be May
15, 2004, and the 6 5/8% Notes due 2004 shall each bear interest at the rate of
6 5/8% per annum, as such interest rate may be adjusted as set forth in the 6
5/8% Notes due 2004, from May 24, 1999, or from the most recent Interest Payment
Date to which interest has been paid, payable semiannually on May 15 and
November 15 in each year, commencing November 15, 1999, until the principal
thereof is paid or duly provided for.
The Stated Maturity of the 7 1/8% Notes due 2009 shall be May
15, 2009, and the 7 1/8% Notes due 2009 shall each bear interest at the rate of
7 1/8% per annum, as such interest rate may be adjusted as set forth in the 7
1/8% Notes due 2009, from April 24, 1999, or from the most recent Interest
Payment Date to which interest has been paid, payable semiannually on May 15 and
November 15 in each year, commencing November 15, 1999, until the principal
thereof is paid or duly provided for.
The principal of, premium, if any, and interest on, the
Securities shall be payable and the Securities shall be exchangeable and
transferable at an office or agency of the Company in The City of New York
maintained for such purposes (which initially will be the Corporate Trust Office
of the Trustee; PROVIDED, HOWEVER, that payment of interest may be made at the
option of the Company by check mailed to addresses of the Persons entitled
thereto as shown on the Security Register.
The Securities shall be redeemable as provided in Article
Eleven and in the Securities.
The Indebtedness evidenced by the Securities shall rank PARI
PASSU in right of payment with all other Senior Indebtedness.
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At the election of the Company, the entire Indebtedness on the
Securities or certain of the Company's obligations and covenants and certain
Defaults and Events of Default thereunder may be defeased as provided in Article
Four.
Section 302. DENOMINATIONS.
The Securities shall be issuable only in fully registered form
without coupons and only in denominations of $1,000 and any integral multiple
thereof.
Section 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Securities shall be executed on behalf of the Company by
one of its Chairman of the Board, its President, its Chief Executive Officer,
its Chief Financial Officer or one of its Vice Presidents. The signatures of any
of these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signature of an
individual who was at any time the proper officer of the Company shall bind the
Company, notwithstanding that such individual has ceased to hold such office
prior to the authentication and delivery of such Securities or did not hold such
office at the date of such Securities.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such Company Order shall authenticate and deliver such Securities as
provided in this Indenture and not otherwise.
Each Security shall be dated the date of its authentication.
No Security endorsed thereon shall be entitled to any benefit
under this Indenture or be valid or obligatory for any purpose unless there
appears on such Security a certificate of authentication substantially in the
form provided for herein duly executed by the Trustee by manual signature of an
authorized signatory, and such certificate upon any Security shall be conclusive
evidence, and the only evidence, that such Security has been duly authenticated
and delivered hereunder and is entitled to the benefits of this Indenture.
In case the Company, pursuant to Article Eight, shall, in a
single transaction or through a series of related transactions, be consolidated,
amalgamated, combined or merged with or into any other Person or shall sell,
assign, convey, transfer, lease or otherwise dispose of all or substantially all
of its properties and assets to any Person, and the successor Person resulting
from such consolidation, amalgamation, or combination or
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surviving such merger, or into which the Company shall have been merged, or the
successor Person which shall have participated in the sale, assignment,
conveyance, transfer, lease or other disposition as aforesaid, shall have
executed an indenture supplemental hereto with the Trustee pursuant to Article
Eight, any of the Securities authenticated or delivered prior to such
consolidation, amalgamation, combination, merger, sale, assignment, conveyance,
transfer, lease or other disposition may, from time to time, at the request of
the successor Person, be exchanged for other Securities executed in the name of
the successor Person with such changes in phraseology and form as may be
appropriate, but otherwise in substance of like tenor as the Securities
surrendered for such exchange and of like principal amount; and the Trustee,
upon Company Request of the successor Person, shall authenticate and deliver
Securities as specified in such request for the purpose of such exchange. If
Securities shall at any time be authenticated and delivered in any new name of a
successor Person pursuant to this Section 303 in exchange or substitution for or
upon registration of transfer of any Securities, such successor Person, at the
option of the Holders but without expense to them, shall provide for the
exchange of all Securities at the time Outstanding for Securities authenticated
and delivered in such new name.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Securities on behalf of the Trustee. Unless limited
by the terms of such appointment, an authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Security Registrar or Paying
Agent to deal with the Company and its Affiliates.
If an officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates such Security such Security
shall be valid nevertheless.
Section 304. TEMPORARY SECURITIES.
Pending the preparation of definitive Securities, the Company
may execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten or otherwise
produced, in any authorized denomination, substantially of the tenor of the
definitive Securities in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Securities may determine, as conclusively evidenced by their
execution of such Securities.
If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Company designated
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for such purpose pursuant to Section 1002, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Securities, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Securities of authorized
denominations. Until so exchanged, the temporary Securities shall in all
respects be entitled to the same benefits under this Indenture as definitive
Securities.
Section 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
The Company shall cause the Trustee to keep, so long as it is
the Security Registrar, at the Corporate Trust Office of the Trustee, or such
other office as the Trustee may designate, a register (the register maintained
in such office or in any other office or agency designated pursuant to Section
1002 being herein sometimes referred to as the "Security Register") in which,
subject to such reasonable regulations as the Security Registrar may prescribe,
the Company shall provide for the registration of Securities and of transfers of
Securities. The Trustee shall initially be the "Security Registrar" for the
purpose of registering Securities and transfers of Securities as herein
provided. The Company may change the Security Registrar or appoint one or more
co-Security Registrars without prior notice; PROVIDED THAT the Company shall
promptly notify the Trustee if the Company changes the Security Registrar or
appoints a co-Security Registrar.
Upon surrender for registration of transfer of any Security at
the office or agency of the Company designated pursuant to Section 1002, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Securities of
the same series of any authorized denomination or denominations, of a like
aggregate principal amount.
Furthermore, any Holder of the Global Security shall, by
acceptance of such Global Security, agree that transfers of beneficial interests
in such Global Security may be effected only through a book-entry system
maintained by the Holder of such Global Security (or its agent), and that
ownership of a beneficial interest in a Security shall be required to be
reflected in a book entry.
At the option of the Holder, Securities may be exchanged for
other Securities of any authorized denomination or denominations, of a like
aggregate principal amount, upon surrender of the Securities to be exchanged at
such office or agency. Whenever any Securities are so surrendered for exchange,
the Company shall execute, and the Trustee shall authenticate and deliver,
Securities of the same series which the Holder making the exchange is entitled
to receive.
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Company, evidencing
the same Indebtedness, and entitled to the same
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benefits under this Indenture, as the Securities surrendered upon such
registration of transfer or exchange.
Every Security presented or surrendered for registration of
transfer, or for exchange, repurchase or redemption, shall (if so required by
the Company or the Trustee) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar, duly executed by the Holder thereof or his attorney duly authorized
in writing.
No service charge shall be made to a Holder for any
registration of transfer, exchange or redemption of Securities, other than
exchanges pursuant to Sections 305 or 307 not involving any transfer, except for
any tax or other governmental charge that may be imposed in connection
therewith.
The Company shall not be required (a) to issue, register the
transfer of or exchange any Security during a period beginning at the opening of
business 15 days before the mailing of a notice of redemption of the Securities
selected for redemption under Section 1104 and ending at the close of business
on the day of such mailing or (b) to register the transfer of or exchange any
Security so selected for redemption in whole or in part, except the unredeemed
portion of Securities being redeemed in part.
Any Security authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, any Global Security, whether
pursuant to this Section 305, Sections 303, 304, 307, 906 or 1108 or otherwise,
shall also be a Global Security and bear the legend specified in Exhibits A and
B hereto.
Section 306. BOOK ENTRY PROVISIONS FOR GLOBAL SECURITIES.
(a) Each Global Security initially shall (i) be registered in
the name of the Depositary for such Global Security or the nominee of such
Depositary, (ii) be deposited with, or on behalf of, the Depositary or with the
Trustee as custodian for such Depositary and (iii) bear legends as set forth in
Exhibits A and B hereto.
Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depositary, or the Trustee as its
custodian, or under such Global Security, and the Depositary may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or shall impair, as between the Depositary and its Agent Members, the operation
of customary practices governing the exercise of the rights of a holder of any
Security.
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(b) Notwithstanding any other provision in this Indenture, no
Global Security may be exchanged in whole or in part for Securities registered,
and no transfer of a Global Security in whole or in part may be registered, in
the name of any Person other than the Depositary for such Global Security or a
nominee thereof unless (i) such Depositary (A) has notified the Company that it
is unwilling or unable to continue as Depositary for such Global Security or (B)
has ceased to be a clearing agency registered as such under the Exchange Act,
and in either case the Company fails to appoint a successor Depositary, (ii) the
Company, at its option, executes and delivers to the Trustee a Company Order
stating that it elects to cause the issuance of the Securities in certificated
form and that all Global Securities shall be exchanged in whole for Securities
that are not Global Securities (in which case, such exchange shall be effected
by the Trustee) or (iii) there shall have occurred and be continuing an Event of
Default or any Default.
(c) If any Global Security is to be exchanged for other
Securities or canceled in whole, it shall be surrendered by or on behalf of the
Depositary or its nominee to the Trustee, as Security Registrar, for exchange or
cancellation as provided in this Article Three. If any Global Security is to be
exchanged for other Securities or canceled in part, or if another Security is to
be exchanged in whole or in part for a beneficial interest in any Global
Security, then either (i) such Global Security shall be so surrendered for
exchange or cancellation as provided in this Article Three or (ii) the principal
amount thereof shall be reduced or increased by an amount equal to the portion
thereof to be so exchanged or canceled, or equal to the principal amount of such
other Security to be so exchanged for a beneficial interest therein, as the case
may be, by means of an appropriate adjustment made on the records of the
Trustee, as Security Registrar, whereupon the Trustee, in accordance with the
Applicable Procedures, shall instruct the Depositary or its authorized
representative to make a corresponding adjustment to its records. Upon any such
surrender or adjustment of a Global Security, the Trustee shall, subject to this
Section 306(c) and as otherwise provided in this Article Three, authenticate and
deliver any Securities issuable in exchange for such Global Security (or any
portion thereof) to or upon the order of, and registered in such names as may be
directed by, the Depositary or its authorized representative. Upon the request
of the Trustee in connection with the occurrence of any of the events specified
in the preceding paragraph, the Company shall promptly make available to the
Trustee a reasonable supply of Securities that are not in the form of Global
Securities. The Trustee shall be entitled to conclusively rely upon any order,
direction or request of the Depositary or its authorized representative which is
given or made pursuant to this Article Three if such order, direction or request
is given or made in accordance with the Applicable Procedures.
(d) Every Security authenticated and delivered upon
registration of transfer of, or in exchange for or in lieu of, a Global Security
or any portion thereof, whether pursuant to this Article Three or otherwise,
shall be authenticated and delivered
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in the form of, and shall be, a Global Security, unless such Security is
registered in the name of a Person other than the Depositary for such Global
Security or a nominee thereof.
(e) The Depositary or its nominee, as registered owner of a
Global Security, shall be the Holder of such Global Security for all purposes
under this Indenture and the Securities, and owners of beneficial interests in a
Global Security shall hold such interests pursuant to the Applicable Procedures.
Accordingly, any such owner's beneficial interest in a Global Security will be
shown only on, and the transfer of such interest shall be effected only through,
records maintained by the Depositary or its nominee or its Agent Members.
Section 307. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.
If (a) any mutilated Security is surrendered to the Trustee,
or (b) the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, and there is delivered to the
Company and the Trustee, such security or indemnity, in each case, as may be
required by them to save each of them harmless, then, in the absence of notice
to the Company or the Trustee that such Security has been acquired by a bona
fide purchaser, the Company shall execute and upon a Company Request the Trustee
shall authenticate and deliver, in exchange for any such mutilated Security or
in lieu of any such destroyed, lost or stolen Security, a replacement Security
of like tenor and principal amount, bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Company in its discretion
may, instead of issuing a replacement Security, pay or purchase such Security,
as the case may be.
Upon the issuance of any replacement Securities under this
Section, the Company may require the payment of a sum sufficient to pay all
documentary, stamp or similar issue or transfer taxes or other governmental
charges that may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee) connected therewith.
Every replacement Security issued pursuant to this Section in
lieu of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all benefits of this Indenture equally and proportionately with any
and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.
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Section 308. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Security which is payable, and is punctually
paid or duly provided for, on the Stated Maturity of such interest shall be paid
to the Person in whose name the Security (or any Predecessor Securities) is
registered at the close of business on the Regular Record Date for such interest
payment.
Any interest on any Security which is payable, but is not
punctually paid or duly provided for, on the Stated Maturity of such interest,
and interest on such defaulted interest at the then applicable interest rate
borne by the Securities, to the extent lawful (such defaulted interest and
interest thereon herein collectively called "Defaulted Interest"), shall
forthwith cease to be payable to the Holder on the Regular Record Date; and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in Subsection (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities (or any
relevant Predecessor Securities) are registered at the close
of business on a Special Record Date for the payment of such
Defaulted Interest, which shall be fixed in the following
manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each
Security and the date (not less than 30 days after such
notice) of the proposed payment (the "Special Payment Date"),
and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Trustee for such
deposit prior to the Special Payment Date, such money when
deposited to be held in trust for the benefit of the Persons
entitled to such Defaulted Interest as in this Subsection
provided. Thereupon, the Trustee shall fix a Special Record
Date for the payment of such Defaulted Interest which shall be
not more than 15 days and not less than 10 days prior to the
date of the Special Payment Date and shall fix the Special
Record Date not less than 10 days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee
shall promptly notify the Company in writing of such Special
Record Date. In the name and at the expense of the Company,
the Trustee shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be
mailed, first-class postage prepaid, to each Holder at its
address as it appears in the Security Register, not less than
10 days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special
Record Date and Special Payment Date therefor having been so
mailed, such Defaulted Interest shall be paid to the Persons
in whose names the Securities are
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registered on such Special Record Date and shall no longer be
payable pursuant to the following Subsection (b).
(b) The Company may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements
of any securities exchange on which the Securities may be
listed, and upon such notice as may be required by this
Indenture not inconsistent with the requirements of such
exchange, if, after written notice given by the Company to the
Trustee of the proposed payment pursuant to this Subsection,
such payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 308, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security.
Section 309. CUSIP NUMBERS.
The Company in issuing the Securities may use "CUSIP"
numbers (if then generally in use), and the Company, or the Trustee on behalf of
the Company, shall use CUSIP numbers in notices of redemption or exchange as a
convenience to Holders; PROVIDED, HOWEVER, that any such notice shall state that
no representation is made as to the correctness of such numbers either as
printed on the Securities or as contained in any notice of redemption or
exchange and that reliance may be placed only on the other identification
numbers printed on the Securities; and PROVIDED FURTHER, HOWEVER, that failure
to use CUSIP numbers in any notice of redemption or exchange shall not affect
the validity or sufficiency of such notice. The Company will promptly notify the
Trustee of any change in the "CUSIP" numbers.
Section 310. PERSONS DEEMED OWNERS.
Prior to and at the time of due presentment of a Security for
registration of transfer, the Company, the Trustee and any agent of the Company,
or the Trustee may treat the Person in whose name any Security is registered as
the owner of such Security for the purpose of receiving payment of principal of,
premium, if any, and (subject to Section 308) interest on, such Security and for
all other purposes whatsoever, whether or not such Security is overdue, and
neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.
Section 311. CANCELLATION.
All Securities surrendered for payment, purchase, redemption,
registration of transfer or exchange shall be delivered to the Trustee and, if
not already canceled, shall
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be promptly canceled by it. The Company may at any time deliver to the Trustee
for cancellation any Securities previously authenticated and delivered hereunder
which the Company may have acquired in any manner whatsoever, and all Securities
so delivered shall be promptly canceled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities canceled as provided
in this Section 311, except as expressly permitted by this Indenture. All
canceled Securities held by the Trustee shall, upon written request of the
Company, be disposed in accordance with the Trustee's standard procedures,
unless by a Company Order received by the Trustee prior to such disposition, the
Company shall direct that the canceled Securities be returned to it. The Trustee
shall provide the Company a list of all Securities that have been canceled from
time to time as requested by the Company.
Section 312. COMPUTATION OF INTEREST.
Interest on the Securities shall be computed on the basis of a
360-day year comprised of twelve 30-day months.
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ARTICLE FOUR
DEFEASANCE AND COVENANT DEFEASANCE
Section 401. COMPANY'S OPTION TO EFFECT DEFEASANCE OR COVENANT
DEFEASANCE.
The Company may, at its option by Board Resolution, at any
time, with respect to a series of Securities, elect to have either Section 402
or Section 403 be applied to all of the Outstanding Securities of the applicable
series (the "Defeased Securities"), upon compliance with the conditions set
forth below in this Article Four.
Section 402. DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 401 of the option
applicable to this Section 402, the Company and any other obligor upon the
applicable series of Securities, if any, shall be deemed to have been discharged
from its obligations with respect to the Defeased Securities on the date the
conditions set forth in Section 404 below are satisfied (hereinafter,
"defeasance"). For this purpose, such defeasance means that the Company and any
other obligor under this Indenture shall be deemed to have paid and discharged
the entire Indebtedness represented by the Defeased Securities, which shall
thereafter be deemed to be "Outstanding" only for the purposes of Section 405
and the other Sections of this Indenture referred to in (a) and (b) below, and
to have satisfied all its other obligations under such series of Securities and
this Indenture insofar as such series of Securities are concerned (and the
Trustee, at the expense of the Company and upon Company Request, shall execute
proper instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (a) the rights of
Holders of Defeased Securities to receive, solely from the trust fund described
in Section 404 and as more fully set forth in such Section, payments in respect
of the principal of, premium, if any, and interest on, such series of
Securities, when such payments are due, (b) the Company's obligations with
respect to such Defeased Securities under Sections 303, 304, 305, 307, 1002 and
1003, (c) the rights, powers, trusts, duties and immunities of the Trustee
hereunder, including, without limitation, the Trustee's rights under Section
607, and (d) this Article Four. Subject to compliance with this Article Four,
the Company may exercise its option under this Section 402 notwithstanding the
prior exercise of its option under Section 403 with respect to a series of
Securities.
Section 403. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 401 of the option
applicable to this Section 403, the Company shall be released from its
obligations under any covenant or provision contained or referred to in Sections
1005, 1006 and 1007, with respect to the Defeased Securities, on and after the
date the conditions set forth in Section 404 below
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are satisfied (hereinafter, "covenant defeasance"), and the Defeased Securities
shall thereafter be deemed to be not "Outstanding" for the purposes of any
direction, waiver, consent or declaration or Act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "Outstanding" for all other purposes hereunder, and the
Events of Default under Section 501(c) and (d) shall cease to be in full force
and effect with respect to the applicable series of Securities. For this
purpose, such covenant defeasance means that, with respect to the Defeased
Securities, the Company may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such Section,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such Section or by reason of any reference in any such Section to any other
provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 501(c) and (d) but,
except as specified above, the remainder of this Indenture and such Defeased
Securities shall be unaffected thereby.
Section 404. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.
The following shall be the conditions to application of either
Section 402 or Section 403 to the Defeased Securities:
(1) The Company shall irrevocably have deposited or caused to
be deposited with the Trustee as trust funds in trust for the purpose of making
the following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of such series of Securities, (a) cash in
United States dollars in an amount, (b) U.S. Government Obligations which
through the scheduled payment of principal and interest in respect thereof in
accordance with their terms and with no further reinvestment will provide, not
later than one day before the due date of payment, money in an amount, or (c) a
combination thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay and discharge,
and which shall be applied by the Trustee to pay and discharge, the principal
of, premium, if any, and interest on, the Defeased Securities, on the Stated
Maturity of such principal or interest. For this purpose, "U.S. Government
Obligations" means securities that are (i) direct obligations of the United
States of America for the timely payment of which its full faith and credit is
pledged or (ii) obligations of a Person controlled or supervised by and acting
as an agency or instrumentality of the United States of America the timely
payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act), as custodian with respect to any such U.S. Government
Obligation or a specific payment of principal of or interest on any such U.S.
Government Obligation held by such custodian for the account of the holder of
such depository
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receipt, PROVIDED that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in respect of the
U.S. Government Obligation or the specific payment of principal of or interest
on the U.S. Government Obligation evidenced by such depository receipt;
(2) In the case of an election under Section 402, the Company
shall have delivered to the Trustee an Opinion of Independent Counsel in the
United States stating that (A) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (B) since the date
hereof, there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such Opinion of Independent
Counsel in the United States shall confirm that, the Holders of the Outstanding
Securities will not recognize income, gain or loss for federal income tax
purposes as a result of such defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the same times as would have
been the case if such defeasance had not occurred;
(3) In the case of an election under Section 403, the Company
shall have delivered to the Trustee an Opinion of Independent Counsel in the
United States to the effect that the Holders of the Outstanding Securities will
not recognize income, gain or loss for federal income tax purposes as a result
of such covenant defeasance and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would have been the
case if such covenant defeasance had not occurred;
(4) No Default or Event of Default shall have occurred and be
continuing on the date of such deposit or insofar as Section 501(e) is
concerned, at any time during the period ending on the 91st day after the date
of deposit (it being understood that this condition shall not be deemed
satisfied until the expiration of such period);
(5) Such defeasance or covenant defeasance shall not result in
a breach or violation of, or constitute a default under, this Indenture or any
other material agreement or instrument to which the Company or any Restricted
Subsidiary is a party or by which it is bound;
(6) Such defeasance or covenant defeasance shall not result in
the trust arising from such deposit constituting an investment company within
the meaning of the Investment Company Act of 1940, as amended, unless such trust
shall be registered under such Act or exempt from registration thereunder;
(7) The Company shall have delivered to the Trustee an Opinion
of Independent Counsel in the United States to the effect that after the 91st
day following
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the deposit, the trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally;
(8) The Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the Company with
the intent of preferring the holders of the applicable series of Securities over
the other creditors of the Company with the intent of defeating, hindering,
delaying or defrauding creditors of the Company or others;
(9) No event or condition shall exist that would prevent the
Company from making payments of the principal of, premium, if any, and interest
on the applicable series of Securities on the date of such deposit or at any
time ending on the 91st day after the date of such deposit; and
(10) The Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Independent Counsel, each stating that
all conditions precedent provided for relating to either the defeasance under
Section 402 or the covenant defeasance under Section 403 (as the case may be)
have been complied with.
Opinions of Counsel or Opinions of Independent Counsel
required to be delivered under this Section shall be in form and substance
reasonably satisfactory to the Trustee and may have qualifications customary for
opinions of the type required and counsel delivering such opinions may rely on
certificates of the Company or government or other officials customary for
opinions of the type required, which certificates shall be limited as to matters
of fact, including that various financial covenants have been complied with.
Section 405. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD
IN TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to the provisions of the last paragraph of Section
1003, all United States dollars and U.S. Government Obligations (including the
proceeds thereof) deposited with the Trustee pursuant to Section 404 in respect
of the Defeased Securities shall be held in trust and applied by the Trustee, in
accordance with the provisions of such series of Securities and this Indenture,
to the payment, either directly or through any Paying Agent (excluding the
Company or any of its Affiliates acting as Paying Agent), as the Trustee may
determine, to the Holders of such series of Securities of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent required
by law.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 404 or the principal and interest
received in respect thereof other than
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any such tax, fee or other charge which by law is imposed, assessed or for the
account of the Holders of the Defeased Securities.
Anything in this Article Four to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon Company
Request any United States dollars or U.S. Government Obligations held by it as
provided in Section 404 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect defeasance or covenant defeasance.
Section 406. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United
States dollars or U.S. Government Obligations in accordance with Section 402 or
403, as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the
applicable series of Securities shall be revived and reinstated, with present
and prospective effect, as though no deposit had occurred pursuant to Section
402 or 403, as the case may be, until such time as the Trustee or Paying Agent
is permitted to apply all such United States dollars or U.S. Government
Obligations in accordance with Section 402 or 403, as the case may be; PROVIDED,
HOWEVER, that if the Company makes any payment to the Trustee or Paying Agent of
principal of, premium, if any, or interest on any Security of such series
following the reinstatement of its obligations, the Trustee or Paying Agent
shall promptly pay any such amount to the Holders of the Securities of such
series and the Company shall be subrogated to the rights of the Holders of such
series of Securities to receive such payment from the United States dollars and
U.S. Government Obligations held by the Trustee or Paying Agent pursuant to
Section 402 or 403.
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ARTICLE FIVE
REMEDIES
Section 501. EVENTS OF DEFAULT.
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body) with respect to a particular series
of Securities:
(a) there shall be a default in the payment of any installment
of interest on any of the Securities of such series when it becomes due and
payable, and such default shall continue for a period of 30 days;
(b) there shall be a default in the payment of the principal
of (or premium, if any, on) any of the Securities of such series when it becomes
due and payable, whether at Maturity, upon redemption by declaration or
otherwise);
(c) there shall be a default in the performance, or breach, of
any covenant or agreement of the Company applicable to such series of Securities
(other than a default in the performance, or breach, of a covenant or agreement
which is specifically dealt with in clause (a) and (b)) and such default or
breach shall continue for a period of 60 days after written notice to the
Company specifying such failure and requiring the Company or any Restricted
Subsidiary to remedy the same has been given, by certified mail, (x) to the
Company by the Trustee or (y) to the Company and the Trustee by the holders of
at least 25% in aggregate principal amount of the Outstanding Securities of each
affected series, with each affected series voting as a separate class;
(d) any Indebtedness of the Company or any Restricted
Subsidiary of the Company with an aggregate principal amount of at least
$25,000,000 shall not have been paid when due and shall continue not to be paid
for 25 days after written notice by certified mail, (x) to the Company by the
Trustee or (y) to the Company and the Trustee by the holders of at least 25% in
aggregate principal amount of the Outstanding Securities of each series (with
the Holders of all Outstanding Securities voting as one class);
(e) (i) there shall have been the entry by a court of
competent jurisdiction of (A) a decree or order for relief in respect of the
Company or any of its Significant Subsidiaries in an involuntary case or
proceeding under any applicable Bankruptcy Law or (B) a decree or order
adjudging the Company or any Subsidiary bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment or composition of or in respect of the
Company or any Subsidiary under any applicable federal or state
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law, or appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Company or any Subsidiary or of
any substantial part of their respective properties, or ordering the winding up
or liquidation of their affairs, and any such decree or order for relief shall
continue to be in effect, or any such other decree or order shall be unstayed
and in effect, for a period of 60 consecutive days or (ii) (A) the Company or
any Subsidiary commences a voluntary case or proceeding under any applicable
Bankruptcy Law or any other case or proceeding to be adjudicated bankrupt or
insolvent, (B) the Company or any Subsidiary consents to the entry of a decree
or order for relief in respect of the Company or such Subsidiary in an
involuntary case or proceeding under any applicable Bankruptcy Law or to the
commencement of any bankruptcy or insolvency case or proceeding against it, (C)
the Company or any Subsidiary files a petition or answer or consent seeking
reorganization or relief under any applicable federal or state law, (D) the
Company or any Subsidiary (1) consents to the filing of such petition or the
appointment of, or taking possession by, a custodian, receiver, liquidator,
assignee, trustee, sequestrator or similar official of the Company or such
Subsidiary or of any substantial part of their respective properties, (2) makes
an assignment for the benefit of creditors or (3) admits in writing its
inability to pay its debts generally as they become due or (E) the Company or
any Subsidiary takes any corporate action in furtherance of any such actions in
this paragraph (e)(ii).
Section 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default (other than an Event of Default
specified in Sections 501(e)) shall occur and be continuing, unless the
principal and interest with respect to all of the Securities of such series
shall have already become due and payable, the Trustee or the Holders of not
less than 25% in aggregate principal amount of the Securities of all series
affected thereby then Outstanding may, and the Trustee at the request of such
Holders shall, declare all unpaid principal of, premium, if any, and accrued
interest on all Securities of the series affected thereby to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by the Holders of the Securities) and upon any such declaration, such principal,
premium, if any, and interest shall become due and payable immediately. If an
Event of Default specified in clause (e) of Section 501 occurs and is
continuing, unless the principal and interest with respect to the Securities
shall have already become due and payable, then all the Securities shall IPSO
FACTO become and be due and payable immediately in an amount equal to the
principal amount of the Securities, together with accrued and unpaid interest,
if any, to the date the Securities become due and payable, without any
declaration or other act on the part of the Trustee or any Holder. Thereupon,
the Trustee may, at its discretion, proceed to protect and enforce the rights of
the Holders of the Securities by appropriate judicial proceedings.
In the event of a declaration of acceleration because of an
Event of Default set forth in clause (d) of Section 501 has occurred and is
continuing, such declaration
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acceleration shall be automatically rescinded and annulled if the Event of
Default triggering such Event of Default pursuant to clause (d) above shall be
remedied or cured by the Company or the relevant Subsidiary or waived by the
holders of the relevant Indebtedness within 60 days after the declaration of
acceleration with respect thereto.
At any time after a declaration of acceleration with respect
to any of the Securities of any series, but before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the holders of a majority in aggregate principal amount of the
Outstanding Securities of any affected series (with each affected series voting
as a separate class), by written notice to the Company and the Trustee, may
rescind and annul such declaration and its consequences if:
(a) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(i) all sums paid or advanced by the Trustee under
this Indenture and the reasonable compensation, fees and
expenses, disbursements and advances of the Trustee, its
agents and counsel,
(ii) all overdue interest on all Outstanding
Securities of such series,
(iii) the principal of and premium, if any, on any
Outstanding Securities of such series which have become due
otherwise than by such declaration of acceleration and
interest thereon at the rate borne by such series of
Securities, and
(iv) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate borne by
the applicable series of Securities;
(b) the rescission would not conflict with any judgment or
decree of a court of competent jurisdiction; and
(c) all Events of Default, other than the non-payment of
principal of, premium, if any, and interest on the applicable series Securities
which have become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 513. No such rescission shall affect any
subsequent Default or impair any right consequent thereon.
Section 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE.
The Company covenants that if
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(a) default is made in the payment of any interest on any
Security of any series when such interest becomes due and payable and such
default continues for a period of 30 days, or
(b) default is made in the payment of the principal of or
premium, if any, on any Security of any series at the Stated Maturity thereof or
otherwise,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such series of Securities, the whole amount then due and payable on
the Securities of such series for principal and premium, if any, and interest,
with interest upon the overdue principal and premium, if any, and, to the extent
that payment of such interest shall be legally enforceable, upon overdue
installments of interest, at the rate borne by the Securities of such series;
and, in addition thereto, such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and unpaid
and may prosecute such proceeding to judgment or final decree, and may enforce
the same against the Company or any other obligor upon the Securities of such
series and collect the moneys adjudged or decreed to be payable in the manner
provided by law out of the property of the Company or any other obligor upon the
Securities of such series, wherever situated.
If an Event of Default occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights and the rights
of the Holders under this Indenture by such appropriate private or judicial
proceedings as the Trustee shall deem most effectual to protect and enforce such
rights, whether for the specific enforcement of any covenant or agreement in
this Indenture or in aid of the exercise of any power granted herein or therein,
or to enforce any other proper remedy or to enforce any other proper remedy,
subject however to Section 512. No recovery of any such judgment upon any
property of the Company shall affect or impair any rights, powers or remedies of
the Trustee or the Holders.
Section 504. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or any other obligor, upon the
Securities of any series or the property of the Company or of such other obligor
or their creditors, the Trustee (irrespective of whether the principal of such
series of Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether
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the Trustee shall have made any demand on the Company for the payment of overdue
principal or interest) shall be entitled and empowered, by intervention in such
proceeding or otherwise,
(a) to file and prove a claim for the whole amount of
principal, and premium, if any, and interest owing and unpaid in respect of the
Securities of any series and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel) and of the Holders allowed in such judicial
proceeding, and
(b) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable compensation, fees and expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities of any series or the rights of any Holder thereof, or to authorize
the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
For purposes of this Section, the Trustee is hereby designated
as the attorney-in-fact for the Holders.
Section 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
SECURITIES.
All rights of action and claims under this Indenture with
respect to any series of Securities may be prosecuted and enforced by the
Trustee without the possession of any of the Securities of such series or the
production thereof in any proceeding relating thereto, and any such proceeding
instituted by the Trustee shall be brought in its own name and as trustee of an
express trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, fees and expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities of such series in respect of which such judgment
has been recovered.
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Section 506. APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee pursuant to this Article or
otherwise on behalf of the Holders or the Trustee pursuant to this Article or
through any proceeding or any arrangement or restructuring in anticipation or in
lieu of any proceeding contemplated by this Article shall be applied, subject to
applicable law, in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of principal,
premium, if any, or interest, upon presentation of the several Securities and
the notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 607;
SECOND: To the payment of the amounts then due and unpaid upon
the Securities for principal, premium, if any, and interest, in respect of which
or for the benefit of which such money has been collected, on the Securities of
such series in the order of the maturity of the installments of such interest,
such payments to be made ratably to the Persons entitled thereto, without
preference or priority of any kind, according to the amounts due and payable on
such Securities for principal, premium, if any, and interest; and
THIRD: The balance, if any, to the Person or Persons entitled
thereto, including the Company, provided that all sums due and owing to the
Holders and the Trustee have been paid in full as required by this Indenture.
Section 507. LIMITATION ON SUITS.
No Holder of any series of Securities shall have any right to
institute any proceeding, judicial or otherwise, with respect to this Indenture
or any series of Securities, or for the appointment of a receiver or trustee, or
for any other remedy hereunder, unless
(a) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% in aggregate principal
amount of the Outstanding Securities of each affected series (voting as one
class) shall have made written request to the Trustee to institute proceedings
in respect of such Event of Default in its own name as trustee hereunder;
(c) such Holder or Holders have offered to the Trustee
indemnity reasonably satisfactory to it against the costs, fees and expenses and
liabilities to be incurred in compliance with such request;
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(d) the Trustee for 60 days after its receipt of such notice,
request and offer (and, if requested, provision) of indemnity has failed to
institute any such proceeding; and
(e) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a majority
in principal amount of the Outstanding Securities of the affected series (voting
as one class);
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture or any Security of any series to affect, disturb or prejudice the
rights of any other Holders, or to obtain or to seek to obtain priority or
preference over any other Holders or to enforce any right under this Indenture
or any Security of any series, except in the manner provided in this Indenture
and for the equal and ratable benefit of all the Holders.
Section 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM AND INTEREST.
Notwithstanding any other provision in this Indenture, the
Holder of any Security shall have the right based on the terms stated herein,
which is absolute and unconditional, to receive payment of the principal of,
premium, if any, and (subject to Section 308) interest on such Security on the
respective Stated Maturities expressed in such Security (or, in the case of
redemption or repurchase, on the Redemption Date or the repurchase date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
Section 509. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case the Company, any
other obligor on the Securities, the Trustee and the Holders shall, subject to
any determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
Section 510. RIGHTS AND REMEDIES CUMULATIVE.
No right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or
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otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
Section 511. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any
Security to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the Holders,
as the case may be.
Section 512. CONTROL BY HOLDERS.
The Holders of not less than a majority in aggregate principal
amount of the Outstanding Securities of any or all series affected (voting as
one class) shall have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee under this Article Five,
PROVIDED that
(a) such direction shall not be in conflict with any rule of
law or with this Indenture (including, without limitation, Section 507), expose
the Trustee to personal liability or be unduly prejudicial to Holders not
joining therein; and
(b) subject to the provisions of Section 315 of the Trust
Indenture Act, the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
Section 513. WAIVER OF PAST DEFAULTS.
Prior to the acceleration of the maturity of the Securities,
the Holders of not less than a majority in aggregate principal amount of the
Outstanding Securities of any or all series affected may on behalf of the
Holders of all Outstanding Securities of such series waive any past Default or
Event of Default and its consequences, except a Default or Event of Default
(a) in the payment of the principal of, premium, if any, or
interest on any Security (which may only be waived with the consent of each
Holder of Securities affected); or
(b) in respect of a covenant or a provision hereof which under
this Indenture cannot be modified or amended without the consent of the Holder
of each Security Outstanding affected by such modification or amendment.
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Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
Section 514. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any
Security by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for any
action taken, suffered or omitted by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant,
but the provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Securities
(voting as one class), or to any suit instituted by any Holder for the
enforcement of the payment of the principal of, premium, if any, or interest on,
any Security on or after the respective Stated Maturities expressed in such
Security (or, in the case of redemption, on or after the Redemption Date).
Section 515. WAIVER OF STAY, EXTENSION OR USURY LAWS.
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
or any usury or other law wherever enacted, now or at any time hereafter in
force, which would prohibit or forgive the Company from paying all or any
portion of the principal of, premium, if any, or interest on the Securities
contemplated herein or in the Securities or which may affect the covenants or
the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
Section 516. REMEDIES SUBJECT TO APPLICABLE LAW.
All rights, remedies and powers provided by this Article Five
may be exercised only to the extent that the exercise thereof does not violate
any applicable provision of law in the premises, and all the provisions of this
Indenture are intended to be subject to all applicable mandatory provisions of
law which may be controlling in the premises and to be limited to the extent
necessary so that they will not render this
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Indenture invalid, unenforceable or not entitled to be recorded, registered or
filed under the provisions of any applicable law.
ARTICLE SIX
THE TRUSTEE
Section 601. DUTIES OF TRUSTEE.
Subject to the provisions of Trust Indenture Act Sections
315(a) through 315(d):
(a) if a Default or an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture and use the same degree of care and skill in its exercise
thereof as a prudent person would exercise or use under the circumstances in the
conduct of his own affairs;
(b) except during the continuance of a Default or an Event of
Default:
(1) the Trustee need perform only those duties as are
specifically set forth in this Indenture and no covenants or
obligations shall be implied in this Indenture against the
Trustee; and
(2) in the absence of bad faith or willful misconduct
on its part, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this
Indenture. However, the Trustee shall examine the certificates
and opinions which by any provision hereof are required to be
furnished to the Trustee, to determine whether or not they
conform to the requirements of this Indenture (but need not
confirm or investigate the accuracy of mathematical
calculations or other facts stated therein);
(c) the Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) this Subsection (c) does not limit the effect of
Subsection (b) of this Section 601;
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless
it is proved that the Trustee was negligent in ascertaining
the pertinent facts; and
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(3) the Trustee shall not be liable with respect to
any action it takes or omits to take in good faith, in
accordance with a direction of the Holders of a majority in
principal amount of Outstanding Securities relating to the
time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or
power confirmed upon the Trustee under this Indenture;
(d) no provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it;
(e) whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
Subsections (a), (b), (c) and (d) of this Section 601; and
(f) the Trustee shall not be liable for interest on any money
or assets received by it except as the Trustee may agree in writing with the
Company. Assets held in trust by the Trustee need not be segregated from other
assets except to the extent required by law.
Section 602. NOTICE OF DEFAULTS.
Within 90 days after a Responsible Officer of the Trustee
receives actual notice of the occurrence of any Default, the Trustee shall
transmit by mail to all Holders and any other Persons entitled to receive
reports pursuant to Section 313(c) of the Trust Indenture Act, as their names
and addresses appear in the Security Register, notice of such Default hereunder
actually known to the Trustee, unless such Default shall have been cured or
waived; PROVIDED, HOWEVER, that, except in the case of a Default in the payment
of the principal of, premium, if any, or interest on any Security, the Trustee
shall be protected in withholding such notice if and so long as a trust
committee of Responsible Officers of the Trustee in good faith determines that
the withholding of such notice is in the interest of the Holders.
Section 603. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Section 601 hereof and Trust
Indenture Act Sections 315(a) through 315(d):
(a) the Trustee may conclusively rely and shall be protected
in acting or refraining from acting upon receipt by it of any resolution,
certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture,
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note, other evidence of Indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a Board
Resolution;
(c) the Trustee may consult with counsel of its selection and
any advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon in accordance with such
advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such Holders
shall have offered to the Trustee security or indemnity satisfactory to the
Trustee against the costs, expenses and liabilities which might be incurred by
it in compliance with such request or direction;
(e) the Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture other than any
liabilities arising out of the negligence, bad faith or willful misconduct of
the Trustee;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
approval, appraisal, bond, debenture, note, coupon, security or other paper or
document unless requested in writing to do so by the Holders of not less than a
majority in aggregate principal amount of the Securities then Outstanding;
PROVIDED that, if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to the
Trustee by the security afforded to it by the terms of this Indenture, the
Trustee may require reasonable indemnity against such expenses or liabilities as
a condition to proceeding; the reasonable expenses of every such investigation
so requested by the Holders of not less than 25% in aggregate principal amount
of the Securities Outstanding shall be paid by the Company or, if paid by the
Trustee or any predecessor Trustee, shall be repaid by the Company upon demand;
PROVIDED, FURTHER, the Trustee in its discretion may make such further inquiry
or investigation into such facts or matters as it may deem fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it shall
be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney;
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(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed with due care by it
hereunder;
(h) the Trustee shall not be required to take notice, and
shall not be deemed to have notice, of any Default or Event of Default
hereunder, except Events of Default described in paragraphs (a) and (b) of
Section 501 hereof unless the Trustee shall be notified specifically of the
Default or Event of Default on a written instrument or document received by the
Trustee at its Notice Address by the Company or by the Holders of at least 10%
of the aggregate principal amount of the Securities then outstanding and such
notice references the Securities and this Indenture. In the absence of delivery
of notice satisfying those requirements, the Trustee may assume conclusively
that there is no Default or Event of Default, except as noted above;
(i) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, conclusively rely upon an Officers' Certificate; and
(j) the rights, privileges, protections, immunities and
benefits given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and to each agent, custodian and other Person
employed by the Trustee to act hereunder.
Section 604. TRUSTEE NOT RESPONSIBLE FOR RECITALS, DISPOSITIONS OF
SECURITIES OR APPLICATION OF PROCEEDS THEREOF.
The recitals contained herein and in the Securities, except
the Trustee's certificates of authentication, shall be taken as the statements
of the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities, except that the Trustee represents that it is
duly authorized to execute and deliver this Indenture, authenticate the
Securities and perform its obligations hereunder and that the statements made by
it in any Statement of Eligibility and Qualification on Form T-1 to be supplied
to the Company will be true and accurate subject to the qualifications set forth
therein. The Trustee shall not be accountable for the use or application by the
Company of Securities or the proceeds thereof.
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Section 605. TRUSTEE AND AGENTS MAY HOLD SECURITIES; COLLECTIONS; ETC.
The Trustee, any Paying Agent, Security Registrar or any other
agent of the Company, in its individual or any other capacity, may become the
owner or pledgee of Securities, with the same rights it would have if it were
not the Trustee, Paying Agent, Security Registrar or such other agent and,
subject to Trust Indenture Act Sections 310 and 311, may otherwise deal with the
Company and receive, collect, hold and retain collections from the Company with
the same rights it would have if it were not the Trustee, Paying Agent, Security
Registrar or such other agent.
Section 606. MONEY HELD IN TRUST.
All moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds, except to the extent
required by mandatory provisions of law. Except for funds or securities
deposited with the Trustee pursuant to Article Four, the Trustee shall be
required to invest all moneys received by the Trustee, until used or applied as
herein provided, in Temporary Cash Investments in accordance with the written
directions of the Company.
In the event of a loss on the sale of such investments (after
giving effect to any interest or other income thereon except to the extent
theretofore paid to the Company), the Trustee shall have no responsibility in
respect of such loss except that the Trustee shall notify the Company of the
amount of such loss and the Company shall promptly pay such amount to the
Trustee to be credited as part of the moneys originally invested.
Section 607. COMPENSATION AND INDEMNIFICATION OF TRUSTEE AND ITS PRIOR
CLAIM.
The Company covenants and agrees to pay to the Trustee from
time to time, such compensation as agreed to in writing by the Company and the
Trustee and reasonable compensation for all other services rendered by it
hereunder (which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of all express trust), and the Company
covenants and agrees to pay or reimburse the Trustee and each predecessor
Trustee upon its request for all reasonable fees, expenses, disbursements and
advances incurred or made by or on behalf of the Trustee in accordance with any
of the provisions of this Indenture and as agreed upon in the fee agreement
between the Trustee and the Company (including the reasonable compensation and
the fees, expenses and disbursements of its counsel and of all agents and other
persons not regularly in its employ); except any such expense, disbursement or
advance as may arise from its negligence, bad faith or willful misconduct. The
Company also covenants and agrees to indemnify the Trustee and its directors,
officers, agents and employees and each predecessor Trustee (the "Indemnitees")
for, and to hold them
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harmless against, any claim, loss, liability, damage, tax, assessment or other
governmental charge (other than taxes applicable to the Trustee's compensation
hereunder) or expense incurred without negligence, bad faith or willful
misconduct on its part, arising out of or in connection with the acceptance or
administration of this Indenture or the trusts hereunder and its duties
hereunder, including enforcement of this Section 607 and also including any
liability which the Indemnitees may incur as a result of failure to withhold,
pay or report any tax, assessment, fine, penalty, damages or other governmental
charge, and the costs, fees and expenses of defending itself against or
investigating any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligations of the
Company under this Section 607 to compensate and indemnify the Indemnitees and
each predecessor Trustee and to pay or reimburse the Trustee and each
predecessor Trustee for reasonable fees, expenses, disbursements and advances
shall constitute an additional obligation hereunder and shall survive the
satisfaction and discharge of this Indenture and the resignation or removal of
the Trustee and each predecessor Trustee.
Section 608. CONFLICTING INTERESTS.
The Trustee shall comply with the provisions of Section 310(b)
of the Trust Indenture Act.
Section 609. TRUSTEE ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be
eligible to act as trustee under Trust Indenture Act Section 310(a) and which
shall have a combined capital and surplus of at least $50,000,000, to the extent
there is an institution eligible and willing to serve. If the Trustee does not
have a Corporate Trust Office in The City of New York, the Trustee may appoint
an agent in The City of New York reasonably acceptable to the Company to conduct
any activities which the Trustee may be required under this Indenture to conduct
in The City of New York. If such Trustee publishes reports of condition at least
annually, pursuant to law or to the requirements of federal, state, territorial
or District of Columbia supervising or examining authority, then for the
purposes of this Section 609, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section
609, the Trustee shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
Section 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR TRUSTEE.
(a) No resignation or removal of the Trustee and no
appointment of a successor trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor trustee under
Section 611.
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(b) The Trustee, or any trustee or trustees hereafter
appointed, may at any time resign by giving written notice thereof to the
Company no later than 30 Business Days prior to the proposed date of
resignation. Upon receiving such notice of resignation, the Company shall
promptly appoint a successor trustee by written instrument executed by authority
of the Board of Directors of the Company, a copy of which shall be delivered to
the resigning Trustee and a copy to the successor trustee. If an instrument of
acceptance by a successor trustee shall not have been delivered to the Trustee
within 30 days after the giving of such notice of resignation, the resigning
Trustee may, or any Holder who has been a bona fide Holder of a Security for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
trustee. Such court may thereupon, after such notice, if any, as it may deem
proper, appoint and prescribe a successor trustee.
(c) The Trustee may be removed at any time for any cause or
for no cause by an Act of the Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities, delivered to the Trustee and to
the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the
provisions of Trust Indenture Act Section 310(b) after written
request therefor by the Company or by any Holder who has been
a bona fide Holder of a Security for at least six months,
(2) the Trustee shall cease to be eligible under
Section 609 and shall fail to resign after written request
therefor by the Company or by any Holder who has been a bona
fide Holder of a Security for at least six months, or
(3) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent, or a receiver of
the Trustee or of its property shall be appointed or any
public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any case, (i) the Company by a Board Resolution may remove the Trustee,
or (ii) subject to Section 514, the Holder of any Security who has been a bona
fide Holder of a Security for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor trustee. Such
court may thereupon, after such notice, if any, as it may deem proper and
prescribe, remove the Trustee and appoint a successor trustee.
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(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, the Company, by a Board Resolution, shall promptly appoint a
successor trustee and shall comply with the applicable requirements of Section
611. If, within 60 days after such resignation, removal or incapability, or the
occurrence of such vacancy, the Company has not appointed a successor Trustee, a
successor trustee shall be appointed by the Act of the Holders of a majority in
principal amount of the Outstanding Securities delivered to the Company and the
retiring Trustee. If no successor trustee shall have been so appointed by the
Company or the Holders of the Securities and accepted appointment in the manner
provided herein, the Trustee or the Holder of any Security who has been a bona
fide Holder for at least six months may, subject to Section 514, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor trustee by mailing
written notice of such event by first-class mail, postage prepaid, to the
Holders of Securities as their names and addresses appear in the Security
Register. Each notice shall include the name of the successor trustee and the
address of its Corporate Trust Office or agent hereunder.
Section 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee as if originally named as
Trustee hereunder; but, nevertheless, on the written request of the Company or
the successor trustee, upon payment of its charges pursuant to Section 607 then
unpaid, such retiring Trustee shall pay over to the successor trustee all
moneys, Temporary Cash Investments and other property relating thereto at the
time held by it hereunder and shall execute and deliver an instrument
transferring to such successor trustee all such rights, powers, duties and
obligations. Upon request of any such successor trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor trustee all such rights and powers.
No successor trustee with respect to the Securities shall
accept appointment as provided in this Section 611 unless at the time of such
acceptance such successor trustee shall be eligible to act as trustee under the
provisions of Trust Indenture Act Section 310(a) and this Article Six and shall
have a combined capital and surplus of at least $50,000,000 and have a Corporate
Trust Office or an agent selected in accordance with Section 609.
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Upon acceptance of appointment by any successor trustee as
provided in this Section 611, the Company shall give notice thereof to the
Holders of the Securities, by mailing such notice to such Holders at their
addresses as they shall appear on the Security Register. If the acceptance of
appointment is substantially contemporaneous with the appointment, then the
notice called for by the preceding sentence may be combined with the notice
called for by Section 610. If the Company fails to give such notice within 10
days after acceptance of appointment by the successor trustee, the successor
trustee shall cause such notice to be given at the expense of the Company.
Section 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee (including the trust created by this
Indenture) shall be the successor of the Trustee hereunder, PROVIDED that such
corporation shall be eligible under Trust Indenture Act Section 310(a) and this
Article Six and shall have a combined capital and surplus of at least
$50,000,000 and have a Corporate Trust Office or an agent selected in accordance
with Section 609, without the execution or filing of any paper or any further
act on the part of any of the parties hereto.
In case at the time such successor to the Trustee shall
succeed to the trusts created by this Indenture any of the Securities shall have
been authenticated but not delivered, any such successor to the Trustee may
adopt the certificate of authentication of any predecessor Trustee and deliver
such Securities so authenticated; and, in case at that time any of the
Securities shall not have been authenticated, any successor to the Trustee may
authenticate such Securities either in the name of any predecessor hereunder or
in the name of the successor trustee; and in all such cases such certificate
shall have the full force which it is anywhere in the Securities or in this
Indenture provided that the certificate of the Trustee shall have; PROVIDED that
the right to adopt the certificate of authentication of any predecessor Trustee
or to authenticate Securities in the name of any predecessor Trustee shall apply
only to its successor or successors by merger, conversion or consolidation.
Section 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If and when the Trustee shall be or become a creditor of the
Company (or other obligor under the Securities), the Trustee shall be subject to
the provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor). A Trustee who has resigned or
been removed shall be subject to Trust
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Indenture Act Section 311(a) to the extent indicated therein, as qualified by
Trust Indenture Act Section 311(b).
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ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
The Company will furnish or cause to be furnished to the
Trustee
(a) semiannually, not more than 10 days after each Regular
Record Date, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of such Regular Record Date; and
(b) at such other times as the Trustee may reasonably request
in writing, within 30 days after receipt by the Company of any such request, a
list of similar form and content to that in subsection (a) hereof as of a date
not more than 15 days prior to the time such list is furnished;
PROVIDED, HOWEVER, that if and so long as the Trustee shall be the Security
Registrar, no such list need be furnished.
Section 702. DISCLOSURE OF NAMES AND ADDRESSES OF HOLDERS.
Holders may communicate pursuant to Trust Indenture Act
Section 312(b) with other Holders with respect to their rights under this
Indenture or the Securities, and the Trustee shall comply with Trust Indenture
Act Section 312(b). The Company, the Trustee, the Security Registrar and any
other Person shall have the protection of Trust Indenture Act Section 312(c).
Further, every Holder of Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee or any
agent of either of them shall be held accountable by reason of the disclosure of
any information as to the names and addresses of the Holders in accordance with
Trust Indenture Act Section 312, regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under Trust Indenture
Act Section 312.
Section 703. REPORTS BY TRUSTEE.
(a) Within 60 days after May 1 of each year commencing with
the first May 1 after the issuance of Securities, the Trustee, if so required
under the Trust Indenture Act, shall transmit by mail to all Holders, in the
manner and to the extent provided in Trust Indenture Act Section 313(c), a brief
report dated as of such May 1 in accordance with and with respect to the matters
required by Trust Indenture Act Section 313(a). The Trustee shall also transmit
by mail to all Holders, in the manner and
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to the extent provided in Trust Indenture Act Section 313(c), a brief report in
accordance with and with respect to the matters required by Trust Indenture Act
Section 313(b)(2).
(b) A copy of each report transmitted to Holders pursuant to
this Section 703 shall, at the time of such transmission, be mailed to the
Company and filed with each stock exchange, if any, upon which the Securities
are listed and also with the Commission. The Company will notify the Trustee
promptly if the Securities are listed on any stock exchange.
Section 704. REPORTS BY COMPANY.
The Company shall file with the Trustee and the Commission,
and transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant to such Act; PROVIDED that any such
information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the
Trustee within 15 days after the same is so required to be filed with the
Commission.
The Trustee shall be under no obligation to analyze or make
any credit decision with respect to any financial statements or reports received
by it hereunder, but shall hold such financial statements or reports solely for
the benefit of and/or review by the holders of the Securities.
Delivery of such reports, information and documents to the
Trustee hereunder and under Section 1007 is for informational purposes only and
the Trustee's receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Company's compliance with any of its covenants hereunder
(as to which the Trustee is entitled to rely exclusively on Officers'
Certificates).
Section 705. STATEMENT AS TO COMPLIANCE.
The Company will deliver to the Trustee within 120 days after
the end of each fiscal year of the Company ending after the date hereof, an
Officers' Certificate stating whether or not to the best knowledge of the
signers thereof the Company is in compliance (without regard to periods of grace
or notice requirements) with all conditions and covenants under this Indenture,
and if the Company shall not be in compliance, specifying such non-compliance
and the nature and status thereof of which such signers may have knowledge.
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Section 706. STATEMENT BY OFFICERS AS TO DEFAULT.
The Company shall deliver to the Trustee, as soon as possible
and in any event within five days after the Company becomes aware of the
occurrence of any Event of Default or an event which, with notice or the lapse
of time or both, would constitute an Event of Default, an Officers' Certificate
setting forth the details of such Event of Default or default and the action
which the Company proposes to take with respect thereto.
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ARTICLE EIGHT
CONSOLIDATION, MERGER, SALE OF ASSETS
Section 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
The Company will not, in a single transaction or through a
series of related transactions, consolidate, amalgamate, combine or merge with
or into any other Person or, directly or indirectly, sell, assign, convey,
lease, transfer or otherwise dispose of all or substantially all of its
properties and assets to any Person or group of Persons, or permit any of its
Restricted Subsidiaries to enter into any such transaction or series of
transactions, if such transaction or series of transactions, in the aggregate,
would result in a sale, assignment, conveyance, lease, transfer or disposition
of all or substantially all of the properties and assets of the Company and its
Restricted Subsidiaries on a Consolidated basis to any other Person or group of
Persons, unless at the time and after giving effect thereto:
(i) either (a) the Company will be the continuing
corporation in the case of a merger, combination or
consolidation or (b) the Person (if other than the Company)
formed by such consolidation or the resulting, surviving or
transferee Person, if other than the Company (the "Successor
Company",) will be a corporation duly organized and validly
existing under the laws of the United States of America, any
state thereof or the District of Columbia and such Person
expressly assumes, by a supplemental indenture, in a form
reasonably satisfactory to the Trustee, all the obligations of
the Company under the Securities and this Indenture, and in
each case, the Securities and the Indenture will remain in
full force and effect as so supplemented;
(ii) immediately after giving effect to such
transaction or series of transactions on a PRO FORMA basis,
including, without limitation, any Indebtedness Incurred or
anticipated to be Incurred in connection with or in respect of
such transaction or series of transactions, no Default or
Event of Default will have occurred and be continuing and the
Company will have delivered to the Trustee an Officer's
Certificate to that effect;
(iii) at the time of the transaction the Company or
the Successor Company will have delivered, or caused to be
delivered, to the Trustee, in form and substance reasonably
satisfactory to the Trustee, an Officers' Certificate and an
Opinion of Counsel, each to the effect that such transaction
or series of transactions, and, if a supplemental indenture is
required in connection with such transaction or series of
transactions to
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effectuate such assumption, such supplemental indenture in
respect thereof comply with this covenant and that all
conditions precedent in the Indenture relating to such
transaction have been satisfied.
Notwithstanding the foregoing, any Restricted Subsidiary may
consolidate, amalgamate or combine with or merge with or into or, directly or
indirectly, sell, assign, convey, lease, transfer or otherwise dispose of all or
substantially all of its properties and assets to the Company or, subject to the
condition set forth in clause (ii) in the preceding sentence, to any other
Restricted Subsidiary.
Section 802. SUCCESSOR SUBSTITUTED.
Upon any consolidation, combination, amalgamation or merger,
or any sale, assignment, conveyance, transfer, lease or disposition of all or
substantially all of the properties and assets of the Company, if any, in
accordance with Section 801, the successor Person formed by such consolidation
or into which the Company is merged or the successor Person to which such sale,
assignment, conveyance, transfer, lease or disposition is made shall succeed to,
and be substituted for, and may exercise every right and power of, the Company
under this Indenture and the Securities with the same effect as if such
successor had been named as the Company herein, in the Securities and the
Company shall be discharged from all obligations and covenants under the
Indenture and the Securities; PROVIDED that in the case of a transfer by lease,
the predecessor shall not be released from the payment of principal and interest
on the Securities.
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ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. SUPPLEMENTAL INDENTURES AND AGREEMENTS WITHOUT CONSENT OF
HOLDERS.
Without the consent of any Holders, the Company and any other
obligor under the Securities when authorized by a Board Resolution, and the
Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto or agreements or other instruments with respect
to the Indenture or any series of the Securities, in form satisfactory to the
Trustee, for any of the following purposes:
(a) to evidence the succession of another Person to the
Company pursuant to the provisions of Article Eight and the assumption by such
successor of the covenants, agreements and obligations of the Company in the
Indenture and in the Securities;
(b) to surrender any right or power conferred upon the Company
by the Indenture, to add to the covenants of the Company such further covenants,
restrictions, conditions or provisions for the protection of the Holders as the
Board of Directors of the Company shall consider to be for the protection of the
Holders, and to make the occurrence, or the occurrence and continuance, of a
default in any of such additional covenants, restrictions, conditions, or
provisions a default or an Event of Default under the Indenture (PROVIDED,
HOWEVER, that with respect to any such additional covenant, restriction,
condition, or provision, such supplemental indenture may provide for a period of
grace after default, which may be shorter or longer than that allowed in the
case of other defaults, may provide for an immediate enforcement upon such
default, may limit the remedies available to the Trustee upon such default, or
may limit the right of Holders of a majority in aggregate principal amount of
any series of the Securities to waive such default);
(c) to cure any ambiguity or to correct or supplement any
provision contained in the Indenture, in any supplemental indenture or in the
Securities of any series that may be defective or inconsistent with any other
provision contained herein or therein, to convey, transfer, assign, mortgage or
pledge any property to or with the Trustee, or to make such other provisions in
regard to matters or questions arising under the Indenture as shall not
adversely affect the interests of any Holders;
(d) to modify or amend the Indenture in such a manner as to
permit the qualification of the Indenture or any supplemental indenture under
the Trust Indenture Act as then in effect;
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(e) to comply with the provisions of Article Eight;
(f) to add guarantees with respect to any series of the
Securities of any series or to secure any series of the Securities of any
series;
(g) to make any change that does not adversely affect the
rights of any Holder; and
(h) to evidence and provide for the acceptance of appointment
by a successor or separate Trustee with respect to the Securities of any series
and to add to or change any of the provisions of the Indenture as shall be
necessary to provide for or facilitate the administration of the Indenture by
more than one Trustee.
Section 902. SUPPLEMENTAL INDENTURES AND AGREEMENTS WITH CONSENT OF
HOLDERS.
Except as permitted by Section 901, with the consent of the
Holders of at least a majority in aggregate principal amount of the Outstanding
Securities of all series affected thereby (voting as one class), by Act of said
Holders delivered to the Company and the Trustee, the Company when authorized by
Board Resolutions, and the Trustee may (i) enter into an indenture or indentures
supplemental hereto or agreements in form and substance reasonably satisfactory
to the Trustee, for the purpose of adding any provisions to, amending, modifying
or changing in any manner, or eliminating any of the provisions of the
Indenture, of any supplemental indenture or the Securities of each such series
(including but not limited to, for the purpose of modifying in any manner the
rights of the Holders under this Indenture or the Securities of such series) or
(ii) waive compliance with any provision in the Indenture or the Securities of
such series (other than waivers of past defaults covered by Section 513 and
waivers of covenants covered by Section 1008); PROVIDED, HOWEVER, that no such
supplemental indenture, agreement or instrument shall, without the consent of
the Holder of each Outstanding Security of all series affected thereby:
(a) reduce the percentage in principal amount of the
Outstanding Securities of such series, the consent of whose Holders is required
for any such supplemental indenture, or the consent of whose Holders is required
for any waiver or compliance with certain provisions of this Indenture;
(b) reduce the rate of or extend the time for payment of
interest on the Securities of such series or reduce the amount of any payment of
interest on the Securities of such series;
(c) reduce the principal of or extend the Stated Maturity of
the Securities of such series;
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(d) reduce the premium payable upon the redemption of the
Securities of such series or change the time at which the Securities of such
series may or shall be redeemed;
(e) impair the right to institute suit for enforcement of any
payment of principal, premium, if any, or interest on the Securities of such
series after the Stated Maturity thereof (or in the case of redemption, on or
after the Redemption Date);
(f) make the Securities of such series payable in a currency other than
U.S. dollars;
(g) modify any of the provisions of this Section 902 or
Section 513 or 1008, except to increase the percentage of such Outstanding
Securities of such series required for such actions or to provide that certain
other provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each such Security of such series affected thereby;
(h) amend or modify any of the provisions of this Indenture in
any manner which subordinates the Securities of such series issued hereunder in
right of payment to any other Indebtedness of the Company;
(i) release any security that may have been granted with
respect to the Securities of such series; or
(j) make any change in the provisions of the Indenture
relating to waivers of defaults or amendments that require unanimous consent.
Upon the written request of the Company, accompanied by a copy
of Board Resolutions authorizing the execution of any such supplemental
indenture, and upon the filing with the Trustee of evidence of the consent of
Holders as aforesaid, the Trustee shall join with the Company in the execution
of such supplemental indenture.
It shall not be necessary for any Act of Holders under this
Section 902 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
Section 903. EXECUTION OF SUPPLEMENTAL INDENTURES AND AGREEMENTS.
In executing, or accepting the additional trusts created by,
any supplemental indenture, agreement, instrument or waiver permitted by this
Article Nine or the modifications thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and (subject to Trust
Indenture Act Sections 315(a) through 315(d) and Section 601 hereof) shall be
fully protected in relying upon, an Opinion of Counsel and an Officers'
Certificate stating that the execution of such supplemental indenture,
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agreement or instrument (a) is authorized or permitted by this Indenture and (b)
does not violate the provisions of any agreement or instrument evidencing any
other Indebtedness of the Company or any Restricted Subsidiary. The Trustee may,
but shall not be obligated to, enter into any such supplemental indenture,
agreement or instrument which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Section 904. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder of Securities of the series affected thereby theretofore or
thereafter authenticated and delivered hereunder shall be bound thereby.
Section 905. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article
Nine shall conform to the requirements of the Trust Indenture Act as then in
effect.
Section 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article Nine may, and
shall if required by the Trustee, bear a notation in form approved by the
Trustee as to any matter provided for in such supplemental indenture. If the
Company shall so determine, new Securities so modified as to conform, in the
opinion of the Trustee and the Board of Directors, to any such supplemental
indenture may be prepared and executed by the Company and authenticated and
delivered by the Trustee in exchange for Outstanding Securities of such series.
Section 907. NOTICE OF SUPPLEMENTAL INDENTURES.
Promptly after the execution by the Company and the Trustee of
any supplemental indenture pursuant to the provisions of Section 902, the
Company shall give notice thereof to the Holders of each Outstanding Security of
any series affected, in the manner provided for in Section 106, setting forth in
general terms the substance of such supplemental indenture. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture.
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ARTICLE TEN
COVENANTS
Section 1001. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.
The Company shall duly and punctually pay the principal of,
premium, if any, and interest on each of the series of Securities in accordance
with the terms of the applicable series of the Securities and this Indenture.
Section 1002. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain an office or agency where
Securities may be presented or surrendered for payment. The Company also will
maintain in The City of New York an office or agency where Securities may be
surrendered for registration of transfer, redemption or exchange and where
notices and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The office of the Trustee or its affiliates, at its
corporate trust office initially located at 101 Barclay Street, Floor 21W, New
York, New York 10286, will be such office or agency of the Company, unless the
Company shall designate and maintain some other office or agency for one or more
of such purposes. The Company will give prompt written notice to the Trustee of
the location and any change in the location of any such offices or agencies. If
at any time the Company shall fail to maintain any such required offices or
agencies or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
office of the Trustee or its affiliates and the Company hereby appoints the
Trustee or its affiliates such agent as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may from time to time designate one or more other
offices or agencies (in or outside of The City of New York) where the Securities
may be presented or surrendered for any or all such purposes, and may from time
to time rescind such designation. The Company will give prompt written notice to
the Trustee of any such designation or rescission and any change in the location
of any such office or agency.
The Trustee shall initially act as Paying Agent for the
Securities.
Section 1003. MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST.
If the Company or any of its Affiliates shall at any time act
as Paying Agent, it will, on or before each due date of the principal of,
premium, if any, or interest on any of the Securities, segregate and hold in
trust for the benefit of the Holders entitled thereto a sum sufficient to pay
the principal, premium, if any, or interest so becoming due
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until such sums shall be paid to such Persons or otherwise disposed of as herein
provided, and will promptly notify the Trustee of its action or failure so to
act.
If the Company or any of its Affiliates is not acting as
Paying Agent, the Company will, on or before 10:00 a.m. New York City time of
each due date of the principal of, premium, if any, or interest on any of the
Securities, deposit with a Paying Agent a sum in same day funds sufficient to
pay the principal, premium, if any, or interest so becoming due, such sum to be
held in trust for the benefit of the Persons entitled to such principal, premium
or interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of such action or any failure so to act.
If the Company is not acting as Paying Agent, the Company will
cause each Paying Agent other than the Trustee to execute and deliver to the
Trustee an instrument in which such Paying Agent shall agree with the Trustee,
subject to the provisions of this Section, that such Paying Agent will:
(a) hold all sums held by it for the payment of the principal
of, premium, if any, or interest on the Securities in trust for the benefit of
the Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(b) give the Trustee notice of any Default by the Company (or
any other obligor upon the Securities) in the making of any payment of
principal, premium, if any, or interest on the Securities;
(c) at any time during the continuance of any such Default,
upon the written request of the Trustee, forthwith pay to the Trustee all sums
so held in trust by such Paying Agent; and
(d) acknowledge, accept and agree to comply in all aspects
with the provisions of this Indenture relating to the duties, rights and
liabilities of such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay or by
Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of, premium,
if any, or interest on any Security and remaining unclaimed for two years after
such principal and premium, if
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any, or interest has become due and payable shall promptly be paid to the
Company on Company Request, or (if then held by the Company) shall be discharged
from such trust; and the Holder of such Security shall thereafter, as an
unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; PROVIDED, HOWEVER, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in the NEW YORK TIMES and THE WALL STREET JOURNAL (national
edition), and mail to each such Holder, notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such notification, publication and mailing, any unclaimed
balance of such money then remaining will promptly be repaid to the Company.
Section 1004. CORPORATE EXISTENCE.
Subject to Article Eight, the Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect the
corporate existence and related rights and franchises (charter and statutory) of
the Company and each Restricted Subsidiary; provided, however, that the Company
shall not be required to preserve any such right or franchise or the corporate
existence of any such Restricted Subsidiary or any trademark, trade name or
service mark of the Company or any Restricted Subsidiary if the Board of
Directors of the Company shall determine that the preservation thereof is no
longer necessary or desirable in the conduct or the business of the Company and
its Restricted Subsidiaries taken as a whole and that the loss thereof is not
adverse in any material respect to the ability of the Company to perform its
obligations hereunder.
Section 1005. RESTRICTIONS ON LIENS.
(a) The Company will not, and will not permit any Restricted
Subsidiary of the Company to, Incur any Lien on any shares of stock,
Indebtedness or other obligations of a Subsidiary or any Principal Property of
the Company or a Restricted Subsidiary, whether such shares of stock,
Indebtedness or other obligations of a Subsidiary or Principal Property is owned
at the date of the Indenture or thereafter acquired, without in any such case
effectively providing that all the Securities will be directly secured equally
and ratably with such Lien.
(b) The foregoing restrictions will not apply to:
(1) the Incurrence of any Lien on any shares of stock,
Indebtedness or other obligations of a Subsidiary or any Principal Property
acquired after the date of the Indenture (including acquisitions by way of
merger or consolidation) by the Company or a Restricted Subsidiary
contemporaneously with such acquisition, or within 120 days thereafter, to
secure or provide for the payment or financing of any part of the purchase
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price thereof, or the assumption of any Lien upon any shares of stock,
Indebtedness or other obligations of a Subsidiary or any Principal Property
acquired after the date of the Indenture existing at the time of such
acquisition, or the acquisition of any shares of stock, Indebtedness or other
obligations of a subsidiary or any Principal Property subject to any Lien
without the assumption thereof, PROVIDED that every such Lien referred to in
this clause (1) shall attach only to the shares of stock, Indebtedness or other
obligations of a Subsidiary or any Principal Property so acquired and fixed
improvements thereon;
(2) any Lien on any shares of stock, Indebtedness or other
obligations of a Subsidiary or any Principal Property existing at the date of
the Indenture;
(3) any Lien on any shares of stock, Indebtedness or other
obligations of a Subsidiary or any Principal Property in favor of the Company or
any Restricted Subsidiary;
(4) any Lien on Principal Property being constructed or
improved securing loans to finance such construction or improvements;
(5) any Lien on shares of stock, Indebtedness or other
obligations of a Subsidiary or any Principal Property Incurred in connection
with the issuance of tax exempt government obligations; and
(6) any renewal of or substitution for any Lien permitted by
any of the preceding clauses (1) through (5), PROVIDED, in the case of a Lien
permitted under clause (1), (2) or (4), the debt secured is not increased nor
the Lien extended to any additional assets.
(c) Notwithstanding the foregoing, the Company or any
Restricted Subsidiary may create or assume Liens in addition to those permitted
by clauses (1) through (6), and renew, extend or replace such Liens, provided
that at the time of such creation, assumption, renewal, extension or replacement
of such Lien, and after giving effect thereto, together with any sale and
leaseback transactions permitted under Section 1006(b) hereof, Exempted Debt
does not exceed 20% of Consolidated Net Tangible Assets.
(d) For the purposes of this Section 1005 and Section 1006,
the giving of a guarantee which is secured by a Lien on any shares of stock,
Indebtedness or other obligations of a Subsidiary or any Principal Property, and
the creation of a Lien on any shares of stock, Indebtedness or other obligations
of a Subsidiary or any Principal Property to secure Indebtedness that existed
prior to the creation of such Lien, shall be deemed to involve the creation of
Indebtedness in an amount equal to the principal amount guaranteed or secured by
such Lien.
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Section 1006. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS.
(a) The Company will not, and will not permit any Restricted
Subsidiary to, sell or transfer, directly or indirectly, except to the Company
or a Restricted Subsidiary, any Principal Property as an entirety, or any
substantial portion thereof, with the intention of taking back a lease of such
property, except a lease for a period of two years or less at the end of which
it is intended that the use of such property by the lessee will be discontinued;
PROVIDED that, notwithstanding the foregoing, the Company or any Restricted
Subsidiary may sell any such Principal Property and lease it back for a longer
period:
(1) if the Company or such Restricted Subsidiary would be
entitled, pursuant to Section 1005 hereof, to create a mortgage on the property
to be leased securing Funded Debt in an amount equal to the Attributable Debt
with respect to such sale and leaseback transaction without equally and ratably
securing the outstanding Securities; or
(2) if the Company promptly informs the Trustee of such
transaction, the net proceeds of such transaction are at least equal to the Fair
Market Value (as determined by Board Resolution) of such property, and the
Company causes an amount equal to the net proceeds of the sale to be applied to
the retirement, within 180 days after receipt of such proceeds, of Funded Debt
Incurred or assumed by the Company or a Restricted Subsidiary (including the
Securities); PROVIDED further that, in lieu of applying all or any part of such
net proceeds to such retirement, the Company may, within 75 days after such sale
or transfer, deliver or cause to be delivered to the applicable trustee for
cancellation either debentures or notes evidencing Funded Debt of the Company
(which may include the Outstanding Securities) or of a Restricted Subsidiary
previously authenticated and delivered by the applicable trustee, and not
theretofore tendered for sinking fund purposes or called for a sinking fund or
otherwise applied as a credit against an obligation to redeem or retire such
Notes or debentures. If the Company so delivers debentures or Notes to the
applicable trustee with an Officers' Certificate, the amount of cash that the
Company will be required to apply to the retirement of Funded Debt will be
reduced by an amount equal to the aggregate of the then applicable optional
redemption prices (not including any optional sinking fund redemption prices) of
such debentures or Notes, or if there are no such redemption prices, the
principal amount of such debentures or Notes, provided, that in the case of
debentures or Notes which provide for an amount less than the principal amount
thereof to be due and payable upon a declaration of the maturity thereof, such
amount of cash shall be reduced by the amount of principal of such debentures or
Notes that would be due and payable as of the date of such application upon a
declaration of acceleration of the maturity thereof pursuant to the terms of the
indenture pursuant to which such debentures or Notes were issued; or
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(3) if the Company, within 180 days after the sale or
transfer, applies or causes a Restricted Subsidiary to apply an amount equal to
the greater of the net proceeds of such sale or transfer or Fair Market Value of
the Principal Property so sold and leased back at the time of entering into such
sale and leaseback transaction (in either case as determined by Board Resolution
of the Company) to purchase other Principal Property having a Fair Market Value
at least equal to the Fair Market Value of the Principal Property (or portion
thereof) sold or transferred in such sale and leaseback transaction.
(b) Notwithstanding the foregoing, the Company or any
Restricted Subsidiary may enter into sale and leaseback transactions in addition
to those permitted in this paragraph and without any obligation to retire any
outstanding notes or other Funded Debt, provided that at the time of entering
into such sale and leaseback transactions and after giving effect thereto,
together with any Liens permitted under Section 1005(c) hereof, Exempted Debt
does not exceed 20% of Consolidated Net Tangible Assets.
Section 1007. PROVISIONS OF FINANCIAL STATEMENTS.
Whether or not the Company is subject to Section 13(a) or
15(d) of the Exchange Act, the Company will, to the extent permitted under the
Exchange Act, file with the Commission the annual reports, quarterly reports and
other documents which the Company would have been required to file with the
Commission pursuant to Sections 13(a) or 15(d) if the Company was so subject,
such documents to be filed with the Commission on or prior to the date (the
"Required Filing Date") by which the Company would have been required so to file
such documents if the Company was so subject. The Company will also in any event
(x) within 15 days of each Required Filing Date (i) transmit by mail to all
holders, as their names and addresses appear in the security register, without
cost to such holders and (ii) file with the Trustee copies of the annual
reports, quarterly reports and other documents which the Company would have been
required to file with the Commission pursuant to Sections 13(a) or 15(d) of the
Exchange Act if the Company were subject to either of such Sections and (y) if
filing such documents by the Company with the Commission is not permitted under
the Exchange Act, promptly upon written request and payment of the reasonable
cost of duplication and delivery, supply copies of such documents to any
prospective holder at the Company's cost.
Section 1008. WAIVER OF CERTAIN COVENANTS.
The Company may omit in any particular instance to comply with
any covenant or condition set forth in Sections 1005, 1006 and 1007 if, before
or after the time for such compliance, the Holders of not less than a majority
in aggregate principal amount of the Securities at the time Outstanding of each
series affected thereby (voting as one class) shall, by Act of such Holders,
waive such compliance in such instance with
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such covenant or provision, but no such waiver shall extend to or affect such
covenant or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee in respect of any such covenant or condition shall remain in full
force and effect.
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ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. RIGHTS OF REDEMPTION.
Each series of Securities will be redeemable, as a whole or in
part, at the option of the Company, at any time or from time to time, at a
Redemption Price (a "Redemption Price") equal to the greater of (i) 100% of the
principal amount of the applicable series of Securities to be redeemed and (ii)
the sum of the present values of the remaining scheduled payments of principal
and interest on the applicable series of Securities discounted to the Redemption
Date (the "Redemption Date") on a semiannual basis (assuming a 360-day year
consisting of twelve 30-day months) at the applicable Treasury Rate, plus 15
basis points for the 6 5/8% Notes due 2004 and 20 basis points for the 7 1/8%
Notes due 2009, respectively, plus, in each case, accrued interest thereon to
the Redemption Date.
Section 1102. APPLICABILITY OF ARTICLE.
Redemption of Securities at the election of the Company or
otherwise, as permitted or required by any provision of this Indenture, shall be
made in accordance with such provision and this Article Eleven.
Section 1103. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Securities pursuant
to Section 1101 shall be evidenced by a Company Order and an Officers'
Certificate. In case of any redemption at the election of the Company, the
Company shall, not less than 45 days prior to the Redemption Date fixed by the
Company (unless a shorter notice period shall be satisfactory to the Trustee),
notify the Trustee in writing of such Redemption Date and of the principal
amount of the applicable series of Securities to be redeemed.
Section 1104. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED.
If less than all of the applicable series of Securities are to
be redeemed, the particular Securities or portions thereof to be redeemed shall
be selected not more than 60 nor less than 30 days prior to the Redemption Date.
The Trustee shall select the Securities or portions thereof to be redeemed on a
PRO RATA basis, by lot or by any other method the Trustee shall deem fair and
appropriate. The amounts to be redeemed shall be equal to $1,000 or any integral
multiple thereof.
-70-
<PAGE> 80
The Trustee shall promptly notify the Company and the Security
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount thereof
to be redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to redemption of Securities shall
relate, in the case of any Security redeemed or to be redeemed only in part, to
the portion of the principal amount of such Security which has been or is to be
redeemed.
Section 1105. NOTICE OF REDEMPTION.
Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not less than 30 days nor more than 60 days prior to the
Redemption Date, to each Holder of Securities to be redeemed, at its address
appearing in the Security Register.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) if less than all Outstanding Securities of a series are to
be redeemed, the identification of the particular Securities to be redeemed;
(d) in the case of a Security to be redeemed in part, the
principal amount of such Security to be redeemed and that after the Redemption
Date upon surrender of such Security, new Security or Securities in the
aggregate principal amount equal to the unredeemed portion thereof will be
issued;
(e) that Securities called for redemption must be surrendered
to the Paying Agent to collect the Redemption Price;
(f) that on the Redemption Date, the Redemption Price will
become due and payable upon each such Security or portion thereof to be
redeemed, and that (unless the Company shall default in payment of the
Redemption Price) interest thereon shall cease to accrue on and after said date;
(g) the names and addresses of the Paying Agent and the
offices or agencies referred to in Section 1002 where such Securities are to be
surrendered for payment of the Redemption Price;
(h) the CUSIP number, if any, relating to such Securities; and
-71-
<PAGE> 81
(i) the procedures that a Holder must follow to surrender the
Securities to be redeemed.
Notice of redemption of Securities to be redeemed at the
election of the Company shall be given by the Company or, at the Company's
written request, by the Trustee in the name and at the expense of the Company.
If the Company elects to give notice of redemption, it shall provide the Trustee
with a certificate stating that such notice has been given in compliance with
the requirements of this Section 1105.
The notice if mailed in the manner herein provided shall be
conclusively presumed to have been given, whether or not the Holder receives
such notice. In any case, failure to give such notice by mail or any defect in
the notice to the Holder of any Security designated for redemption as a whole or
in part shall not affect the validity of the proceedings for the redemption of
any other Security.
Section 1106. DEPOSIT OF REDEMPTION PRICE.
On or prior to 10:00 a.m. New York City time on any Redemption
Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if
the Company or any of its Affiliates is acting as Paying Agent, segregate and
hold in trust as provided in Section 1003) an amount of money in same day funds
sufficient to pay the Redemption Price of, and (except if the Redemption Date
shall be an Interest Payment Date or Special Payment Date) accrued interest on,
all the applicable series of Securities or portions thereof which are to be
redeemed on that date. The Paying Agent shall promptly mail or deliver to
Holders of Securities so redeemed payment in an amount equal to the Redemption
Price of the Securities purchased from each such Holder. Subject to Section
601(f), all money, if any, earned on funds held in trust by the Trustee or any
Paying Agent shall be remitted to the Company.
Section 1107. SECURITIES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the
Securities of the series so to be redeemed shall, on the Redemption Date, become
due and payable at the Redemption Price therein specified and from and after
such date (unless the Company shall default in the payment of the Redemption
Price and accrued interest) such Securities of such series shall cease to bear
interest. Upon surrender of any such Security for redemption in accordance with
said notice, such Security shall be paid by the Company at the Redemption Price,
together with accrued interest to the Redemption Date; PROVIDED, HOWEVER, that
installments of interest whose Stated Maturity is on or prior to the Redemption
Date shall be payable to the Holders of such Securities, or one or more
Predecessor Securities, registered as such on the relevant Regular Record Dates
and Special Record Dates according to the terms and the provisions of Section
308.
-72-
<PAGE> 82
If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal and premium, if any, shall,
until paid, bear interest from the Redemption Date at the rate borne by such
Security.
Section 1108. SECURITIES REDEEMED OR PURCHASED IN PART.
Any Security which is to be redeemed or purchased only in part
shall be surrendered to the Paying Agent at the office or agency maintained for
such purpose pursuant to Section 1002 (with, if the Company, the Security
Registrar or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company, the Security
Registrar or the Trustee, as the case may be, duly executed by, the Holder
thereof or such Holder's attorney duly authorized in writing), and the Company
shall execute, and the Trustee shall authenticate and deliver to the Holder of
such Security without service charge, a new Security or Securities, of any
authorized denomination as requested by such Holder in aggregate principal
amount equal to, and in exchange for, the unredeemed portion of the principal of
the Security so surrendered that is not redeemed or purchased.
-73-
<PAGE> 83
ARTICLE TWELVE
SATISFACTION AND DISCHARGE
Section 1201. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall be discharged and shall cease to be of
further effect (except as to surviving rights of registration of transfer or
exchange of Securities as expressly provided for herein) as to all Outstanding
Securities of any series hereunder, and the Trustee, upon Company Request and at
the expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(a) either
(1) all the Securities of such series theretofore
authenticated and delivered (other than (i) lost, stolen or
destroyed Securities of such series which have been replaced
or paid as provided in Section 308 or (ii) all Securities of
such series for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged
from such trust as provided in Section 1003) have been
delivered to the Trustee for cancellation; or
(2) all such Securities of such series not
theretofore delivered to the Trustee for cancellation (i) have
become due and payable or, (ii) will become due and payable at
their Stated Maturity within one year; and the Company has
irrevocably deposited or caused to be deposited with the
Trustee as trust funds in trust an amount in United States
dollars sufficient (in the opinion of a nationally recognized
firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee) to pay and
discharge (without consideration of any reinvestment and after
payment of all taxes or other charges and assessments in
respect thereof payable by the Trustee) the entire
Indebtedness on the Securities of such series not theretofore
delivered to the Trustee for cancellation, including the
principal of, premium, if any, and accrued interest on, the
Securities of such series at such Maturity, Stated Maturity or
Redemption Date;
(b) the Company has paid or caused to be paid all other sums
payable hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Independent Counsel, in form and substance
satisfactory to the
-74-
<PAGE> 84
Trustee, each stating that (i) all conditions precedent herein relating to the
satisfaction and discharge hereof have been complied with, (ii) no default with
respect to the Securities of such series has occurred and is continuing on the
date of such deposit and (iii) such deposit does not result in a breach or
violation of, or constitute a default under, the Indenture or any other
agreement or instrument to which the Company is a party.
Notwithstanding the satisfaction and discharge hereof, the
obligations of the Company to the Trustee under Section 607 and, if United
States dollars shall have been deposited with the Trustee pursuant to subclause
(2) of subsection (a) of this Section 1201, the obligations of the Trustee under
Section 1202 and the last paragraph of Section 1003 shall survive.
Section 1202. APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph Section 1003,
all United States dollars deposited with the Trustee pursuant to Section 1201
shall be held in trust and applied by it, in accordance with the provisions of
the Securities and this Indenture, to the payment, either directly or through
any Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the principal of,
premium, if any, and interest on, the Securities for whose payment such United
States dollars have been deposited with the Trustee.
* * *
-75-
<PAGE> 85
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the day and year first above written.
REPUBLIC SERVICES, INC.
By: /s/ Edward A. Lang, III
------------------------------------
Name: Edward A. Lang, III
Title: Vice President, Finance and Treasurer
THE BANK OF NEW YORK
By: /s/ Remo J. Reale
------------------------------------
Name: Remo J. Reale
Title: Vice President
<PAGE> 1
EXHIBIT 4.4
(FACE OF NOTE)
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A
SUCCESSOR DEPOSITARY. TRANSFERS OF THIS GLOBAL SECURITY SHALL
BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES
OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTION 306 OF THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT AND ANY SUCH
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
<PAGE> 2
REPUBLIC SERVICES, INC.
------------------
6-5/8% NOTE DUE 2004
CUSIP NO. 760759AB6
No. 1 $200,000,000
Republic Services, Inc., a Delaware corporation (herein called
the "Company," which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to Cede &
Co. or registered assigns, the principal sum of TWO HUNDRED MILLION DOLLARS
($200,000,000) United States dollars on May 15, 2004, at the office or agency of
the Company referred to below, and to pay interest thereon from May 24, 1999, or
from the most recent Interest Payment Date to which interest has been paid or
duly provided for, semiannually on May 15 and November 15 in each year,
commencing November 15, 1999 at the rate of 6 5/8% per annum, in United States
dollars, until the principal hereof is paid or duly provided for. Interest shall
be computed on the basis of a 360-day year comprised of twelve 30-day months.
The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in such Indenture, be paid
to the Person in whose name this Security is registered at the close of business
on the Regular Record Date for such interest, which shall be the May 1 or
November 1 (whether or not a Business Day), as the case may be, next preceding
such Interest Payment Date. Any such interest not so punctually paid, or duly
provided for, and interest on such defaulted interest at the interest rate borne
by the Securities, to the extent lawful, shall forthwith cease to be payable to
the Holder on such Regular Record Date, and may either be paid to the Person in
whose name this Security (or any Predecessor Securities) is registered at the
close of business on a Special Record Date for the payment of such defaulted
interest to be fixed by the Trustee, notice thereof shall be given to Holders of
Securities not less than 10 days prior to such Special Record Date, or be paid
at any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in this
Indenture.
Payment of the principal of, premium, if any, and interest on,
this Security, and exchange or transfer of this Security, will be made at the
office or agency of the Company in The City of New York maintained for such
purpose (which initially will be a corporate trust office of the Trustee or its
affiliate located at 101 Barclay Street, Floor 21W, New York, NY 10286), or at
such other office or agency as may be maintained for
<PAGE> 3
such purpose, in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts;
PROVIDED, HOWEVER, that payment of interest may be made at the option of the
Company by check mailed to the address of the Person entitled thereto as such
address shall appear on the Security Register.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof or by the
authenticating agent appointed as provided in the Indenture by manual signature
of an authorized signer, this Security shall not be entitled to any benefit
under the Indenture, or be valid or obligatory for any purpose.
<PAGE> 4
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed by the manual or facsimile signature of its authorized officer.
REPUBLIC SERVICES, INC.
By: /s/ Edward A. Lang, III
-------------------------------
Name: Edward A. Lang, III
Title: Vice President, Finance and Treasurer
<PAGE> 5
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 6 5/8% Notes due 2004 referred to in the
within-mentioned Indenture.
THE BANK OF NEW YORK, as Trustee
By: /s/ Remo J. Reale
------------------------------------
Authorized Signatory
Dated: May 24, 1999
<PAGE> 6
(REVERSE SIDE OF NOTE)
REPUBLIC SERVICES, INC.
6 5/8% Note due 2004
This Security is one of a duly authorized issue of Securities
of the Company designated as its 6 5/8% Notes due 2004 (herein called the
"Securities"), limited (except as otherwise provided in the Indenture referred
to below) in aggregate principal amount to $200,000,000, issued under and
subject to the terms of an indenture (herein called the "Indenture") dated as of
May 24, 1999, between the Company and The Bank of New York, as trustee (herein
called the "Trustee," which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights, limitations of rights,
duties, obligations and immunities thereunder of the Company, the Trustee and
the Holders of the Securities, and of the terms upon which the Securities are,
and are to be, authenticated and delivered.
The Securities may be redeemed at any time, at the option of
the Company, in whole or in part, at any time and from time to time, upon not
less than 30 and not more than 60 days' notice to the Holders thereof as
provided in the Indenture, at a Redemption Price equal to the greater of (1)
100% of the principal amount of the Securities to be redeemed and (2) the sum of
the present values of the remaining scheduled payments of principal and interest
thereon discounted to the Redemption Date on a semiannual basis (assuming a
360-day year consisting of twelve 30-day months) at the applicable Treasury Rate
plus 15 basis points, plus, in each case, accrued interest to the Redemption
Date (subject to the right of holders of record of such Securities on relevant
record dates to receive interest due on an interest payment date), if any.
If less than all of the Securities are to be redeemed, the
Trustee shall select, not more than 60 nor less than 30 days before the
Redemption Date, the Securities or portions thereof to be redeemed on a pro rata
basis, by lot or by any other method the Trustee shall deem fair and
appropriate.
In the case of any redemption of Securities in accordance with
the Indenture, interest installments whose Stated Maturity is on or prior to the
Redemption Date will be payable to the Holders of such Securities of record as
of the close of business on the relevant Regular Record Date or Special Record
Date referred to on the face hereof. Securities (or portions thereof) for whose
redemption and payment provision is made in accordance with the Indenture shall
cease to bear interest from and after the Redemption Date.
<PAGE> 7
In the event of redemption or repurchase of this Security in
accordance with the Indenture in part only, a new Security or Securities for the
unredeemed portion hereof shall be issued in the name of the Holder hereof upon
the cancellation hereof.
If an Event of Default shall occur and be continuing, the
principal amount of all the Securities may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture contains provisions for defeasance at any time
of (a) the entire Indebtedness on the Securities and (b) certain covenants and
Defaults and Events of Default, in each case upon compliance with certain
conditions set forth therein.
The Indenture permits, with certain exceptions (including
certain amendments permitted without the consent of any Holders and certain
amendments which required the consent of all of the Holders) as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders under the Indenture and
the Securities at any time by the Company and the Trustee with the consent of
the Holders of at least a majority in aggregate principal amount of the
Securities of all series at the time Outstanding that are affected (voting as
one class). The Indenture also contains provisions permitting the Holders of at
least a majority in aggregate principal amount of the Securities (100% of the
Holders in certain circumstances) of all series at the time Outstanding that are
affected (voting as one class), on behalf of the Holders of all the Securities
of such affected series, to waive compliance by the Company with certain
provisions of the Indenture and the Securities of such series and certain past
Defaults and Events of Default under the Indenture and the Securities and their
consequences. Any such consent or waiver by or on behalf of the Holder of this
Security shall be conclusive and binding upon such Holder and upon all future
Holders of this Security and of any Security issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the Company
or any other obligor on the Securities (in the event such other obligor is
obligated to make payments in respect of the Securities), which is absolute and
unconditional, to pay the principal of, and premium, if any, and interest on,
this Security at the times, place, and rate, and in the coin or currency, herein
prescribed.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is registrable in
the Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in the Borough of Manhattan, The
City of New York, duly endorsed by, or accompanied by a
<PAGE> 8
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or its attorney duly
authorized in writing, and thereupon one or more new Securities, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
The Securities in certificated form are issuable only in
registered form without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, the Securities are exchangeable for a like
aggregate principal amount of Securities of a differing authorized denomination,
as requested by the Holder surrendering the same.
Except as indicated in the Indenture, no service charge shall
be made for any registration of transfer or exchange of Securities, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security is overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE TO CONFLICT
OF LAWS PRINCIPLES THEREOF.
All terms used in this Security which are defined in the
Indenture and not otherwise defined herein shall have the meanings assigned to
them in the Indenture.
<PAGE> 1
EXHIBIT 4.5
(FACE OF NOTE)
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A
SUCCESSOR DEPOSITARY. TRANSFERS OF THIS GLOBAL SECURITY SHALL
BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES
OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTION 306 OF THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT AND ANY SUCH
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
<PAGE> 2
REPUBLIC SERVICES, INC.
------------------
6-5/8% NOTE DUE 2004
CUSIP NO. 760759AB6
No. 2 $25,000,000
Republic Services, Inc., a Delaware corporation (herein called
the "Company," which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to Cede &
Co. or registered assigns, the principal sum of TWENTY-FIVE MILLION DOLLARS
($25,000,000) United States dollars on May 15, 2004, at the office or agency of
the Company referred to below, and to pay interest thereon from May 24, 1999, or
from the most recent Interest Payment Date to which interest has been paid or
duly provided for, semiannually on May 15 and November 15 in each year,
commencing November 15, 1999 at the rate of 6 5/8% per annum, in United States
dollars, until the principal hereof is paid or duly provided for. Interest shall
be computed on the basis of a 360-day year comprised of twelve 30-day months.
The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in such Indenture, be paid
to the Person in whose name this Security is registered at the close of business
on the Regular Record Date for such interest, which shall be the May 1 or
November 1 (whether or not a Business Day), as the case may be, next preceding
such Interest Payment Date. Any such interest not so punctually paid, or duly
provided for, and interest on such defaulted interest at the interest rate borne
by the Securities, to the extent lawful, shall forthwith cease to be payable to
the Holder on such Regular Record Date, and may either be paid to the Person in
whose name this Security (or any Predecessor Securities) is registered at the
close of business on a Special Record Date for the payment of such defaulted
interest to be fixed by the Trustee, notice thereof shall be given to Holders of
Securities not less than 10 days prior to such Special Record Date, or be paid
at any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in this
Indenture.
Payment of the principal of, premium, if any, and interest on,
this Security, and exchange or transfer of this Security, will be made at the
office or agency of the Company in The City of New York maintained for such
purpose (which initially will be a corporate trust office of the Trustee or its
affiliate located at 101 Barclay Street, Floor 21W, New York, NY 10286), or at
such other office or agency as may be maintained for
<PAGE> 3
such purpose, in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts;
PROVIDED, HOWEVER, that payment of interest may be made at the option of the
Company by check mailed to the address of the Person entitled thereto as such
address shall appear on the Security Register.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof or by the
authenticating agent appointed as provided in the Indenture by manual signature
of an authorized signer, this Security shall not be entitled to any benefit
under the Indenture, or be valid or obligatory for any purpose.
<PAGE> 4
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed by the manual or facsimile signature of its authorized officer.
REPUBLIC SERVICES, INC.
By: /s/ Edward A. Lang, III
-------------------------------
Name: Edward A. Lang, III
Title: Vice President, Finance and Treasurer
<PAGE> 5
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 6 5/8% Notes due 2004 referred to in the
within-mentioned Indenture.
THE BANK OF NEW YORK, as Trustee
By: /s/ Remo J. Reale
------------------------------------
Authorized Signatory
Dated: May 24, 1999
<PAGE> 6
(REVERSE SIDE OF NOTE)
REPUBLIC SERVICES, INC.
6 5/8% Note due 2004
This Security is one of a duly authorized issue of Securities
of the Company designated as its 6 5/8% Notes due 2004 (herein called the
"Securities"), limited (except as otherwise provided in the Indenture referred
to below) in aggregate principal amount to $25,000,000, issued under and subject
to the terms of an indenture (herein called the "Indenture") dated as of May 24,
1999, between the Company and The Bank of New York, as trustee (herein called
the "Trustee," which term includes any successor trustee under the Indenture),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights, limitations of rights, duties,
obligations and immunities thereunder of the Company, the Trustee and the
Holders of the Securities, and of the terms upon which the Securities are, and
are to be, authenticated and delivered.
The Securities may be redeemed at any time, at the option of
the Company, in whole or in part, at any time and from time to time, upon not
less than 30 and not more than 60 days' notice to the Holders thereof as
provided in the Indenture, at a Redemption Price equal to the greater of (1)
100% of the principal amount of the Securities to be redeemed and (2) the sum of
the present values of the remaining scheduled payments of principal and interest
thereon discounted to the Redemption Date on a semiannual basis (assuming a
360-day year consisting of twelve 30-day months) at the applicable Treasury Rate
plus 15 basis points, plus, in each case, accrued interest to the Redemption
Date (subject to the right of holders of record of such Securities on relevant
record dates to receive interest due on an interest payment date), if any.
If less than all of the Securities are to be redeemed, the
Trustee shall select, not more than 60 nor less than 30 days before the
Redemption Date, the Securities or portions thereof to be redeemed on a pro rata
basis, by lot or by any other method the Trustee shall deem fair and
appropriate.
In the case of any redemption of Securities in accordance with
the Indenture, interest installments whose Stated Maturity is on or prior to the
Redemption Date will be payable to the Holders of such Securities of record as
of the close of business on the relevant Regular Record Date or Special Record
Date referred to on the face hereof. Securities (or portions thereof) for whose
redemption and payment provision is made in accordance with the Indenture shall
cease to bear interest from and after the Redemption Date.
<PAGE> 7
In the event of redemption or repurchase of this Security in
accordance with the Indenture in part only, a new Security or Securities for the
unredeemed portion hereof shall be issued in the name of the Holder hereof upon
the cancellation hereof.
If an Event of Default shall occur and be continuing, the
principal amount of all the Securities may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture contains provisions for defeasance at any time
of (a) the entire Indebtedness on the Securities and (b) certain covenants and
Defaults and Events of Default, in each case upon compliance with certain
conditions set forth therein.
The Indenture permits, with certain exceptions (including
certain amendments permitted without the consent of any Holders and certain
amendments which required the consent of all of the Holders) as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders under the Indenture and
the Securities at any time by the Company and the Trustee with the consent of
the Holders of at least a majority in aggregate principal amount of the
Securities of all series at the time Outstanding that are affected (voting as
one class). The Indenture also contains provisions permitting the Holders of at
least a majority in aggregate principal amount of the Securities (100% of the
Holders in certain circumstances) of all series at the time Outstanding that are
affected (voting as one class), on behalf of the Holders of all the Securities
of such affected series, to waive compliance by the Company with certain
provisions of the Indenture and the Securities of such series and certain past
Defaults and Events of Default under the Indenture and the Securities and their
consequences. Any such consent or waiver by or on behalf of the Holder of this
Security shall be conclusive and binding upon such Holder and upon all future
Holders of this Security and of any Security issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the Company
or any other obligor on the Securities (in the event such other obligor is
obligated to make payments in respect of the Securities), which is absolute and
unconditional, to pay the principal of, and premium, if any, and interest on,
this Security at the times, place, and rate, and in the coin or currency, herein
prescribed.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is registrable in
the Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in the Borough of Manhattan, The
City of New York, duly endorsed by, or accompanied by a
<PAGE> 8
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or its attorney duly
authorized in writing, and thereupon one or more new Securities, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
The Securities in certificated form are issuable only in
registered form without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, the Securities are exchangeable for a like
aggregate principal amount of Securities of a differing authorized denomination,
as requested by the Holder surrendering the same.
Except as indicated in the Indenture, no service charge shall
be made for any registration of transfer or exchange of Securities, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security is overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE TO CONFLICT
OF LAWS PRINCIPLES THEREOF.
All terms used in this Security which are defined in the
Indenture and not otherwise defined herein shall have the meanings assigned to
them in the Indenture.
<PAGE> 1
EXHIBIT 4.6
(FACE OF NOTE)
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A
SUCCESSOR DEPOSITARY. TRANSFERS OF THIS GLOBAL SECURITY SHALL
BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES
OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTION 306 OF THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT AND ANY SUCH
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
<PAGE> 2
REPUBLIC SERVICES, INC.
------------------
7-1/8% NOTE DUE 2009
CUSIP NO. 760759AA8
No. 1 $200,000,000
Republic Services, Inc., a Delaware corporation (herein called
the "Company," which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to Cede &
Co. or registered assigns, the principal sum of TWO HUNDRED MILLION DOLLARS
($200,000,000) United States dollars on May 15, 2009, at the office or agency of
the Company referred to below, and to pay interest thereon from May 24, 1999, or
from the most recent Interest Payment Date to which interest has been paid or
duly provided for, semiannually on May 15 and November 15 in each year,
commencing November 15, 1999 at the rate of 7-1/8% per annum, in United States
dollars, until the principal hereof is paid or duly provided for. Interest shall
be computed on the basis of a 360-day year comprised of twelve 30-day months.
The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in such Indenture, be paid
to the Person in whose name this Security is registered at the close of business
on the Regular Record Date for such interest, which shall be the May 1 or
November 1 (whether or not a Business Day), as the case may be, next preceding
such Interest Payment Date. Any such interest not so punctually paid, or duly
provided for, and interest on such defaulted interest at the interest rate borne
by the Securities, to the extent lawful, shall forthwith cease to be payable to
the Holder on such Regular Record Date, and may either be paid to the Person in
whose name this Security (or any Predecessor Securities) is registered at the
close of business on a Special Record Date for the payment of such defaulted
interest to be fixed by the Trustee, notice thereof shall be given to Holders of
Securities not less than 10 days prior to such Special Record Date, or be paid
at any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in this
Indenture.
Payment of the principal of, premium, if any, and interest on,
this Security, and exchange or transfer of this Security, will be made at the
office or agency of the Company in The City of New York maintained for such
purpose (which initially will be a corporate trust office of the Trustee or its
affiliate located at 101 Barclay Street, Floor 21W, New York, NY 10286), or at
such other office or agency as may be maintained for
<PAGE> 3
such purpose, in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts;
PROVIDED, HOWEVER, that payment of interest may be made at the option of the
Company by check mailed to the address of the Person entitled thereto as such
address shall appear on the Security Register.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof or by the
authenticating agent appointed as provided in the Indenture by manual signature
of an authorized signer, this Security shall not be entitled to any benefit
under the Indenture, or be valid or obligatory for any purpose.
<PAGE> 4
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed by the manual or facsimile signature of its authorized officer.
REPUBLIC SERVICES, INC.
By: /s/ Edward A. Lang, III
-------------------------------
Name: Edward A. Lang, III
Title: Vice President, Finance and Treasurer
<PAGE> 5
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 7 1/8% Notes due 2009 referred to in the
within-mentioned Indenture.
THE BANK OF NEW YORK, as Trustee
By: /s/ Remo J. Reale
------------------------------------
Authorized Signatory
Dated: May 24, 1999
<PAGE> 6
(REVERSE SIDE OF NOTE)
REPUBLIC SERVICES, INC.
7 1/8% Note due 2009
This Security is one of a duly authorized issue of Securities
of the Company designated as its 7 1/8% Notes due 2009 (herein called the
"Securities"), limited (except as otherwise provided in the Indenture referred
to below) in aggregate principal amount to $200,000,000, issued under and
subject to the terms of an indenture (herein called the "Indenture") dated as of
May 24, 1999, between the Company and The Bank of New York, as trustee (herein
called the "Trustee," which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights, limitations of rights,
duties, obligations and immunities thereunder of the Company, the Trustee and
the Holders of the Securities, and of the terms upon which the Securities are,
and are to be, authenticated and delivered.
The Securities may be redeemed at any time, at the option of the
Company, in whole or in part, at any time and from time to time, upon not less
than 30 and not more than 60 days' notice to the Holders thereof as provided in
the Indenture, at a Redemption Price equal to the greater of (1) 100% of the
principal amount of the Securities to be redeemed and (2) the sum of the present
values of the remaining scheduled payments of principal and interest thereon
discounted to the Redemption Date on a semiannual basis (assuming a 360-day year
consisting of twelve 30-day months) at the applicable Treasury Rate plus 20
basis points, plus, in each case, accrued interest to the Redemption Date
(subject to the right of holders of record of such Securities on relevant record
dates to receive interest due on an interest payment date), if any.
If less than all of the Securities are to be redeemed, the
Trustee shall select, not more than 60 nor less than 30 days before the
Redemption Date, the Securities or portions thereof to be redeemed on a pro rata
basis, by lot or by any other method the Trustee shall deem fair and
appropriate.
In the case of any redemption of Securities in accordance with
the Indenture, interest installments whose Stated Maturity is on or prior to the
Redemption Date will be payable to the Holders of such Securities of record as
of the close of business on the relevant Regular Record Date or Special Record
Date referred to on the face hereof. Securities (or portions thereof) for whose
redemption and payment provision is made in accordance with the Indenture shall
cease to bear interest from and after the Redemption Date.
<PAGE> 7
In the event of redemption or repurchase of this Security in
accordance with the Indenture in part only, a new Security or Securities for the
unredeemed portion hereof shall be issued in the name of the Holder hereof upon
the cancellation hereof.
If an Event of Default shall occur and be continuing, the
principal amount of all the Securities may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture contains provisions for defeasance at any time
of (a) the entire Indebtedness on the Securities and (b) certain covenants and
Defaults and Events of Default, in each case upon compliance with certain
conditions set forth therein.
The Indenture permits, with certain exceptions (including
certain amendments permitted without the consent of any Holders and certain
amendments which required the consent of all of the Holders) as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders under the Indenture and
the Securities at any time by the Company and the Trustee with the consent of
the Holders of at least a majority in aggregate principal amount of the
Securities of all series at the time Outstanding that are affected (voting as
one class). The Indenture also contains provisions permitting the Holders of at
least a majority in aggregate principal amount of the Securities (100% of the
Holders in certain circumstances) of all series at the time Outstanding that are
affected (voting as one class), on behalf of the Holders of all the Securities
of such affected series, to waive compliance by the Company with certain
provisions of the Indenture and the Securities of such series and certain past
Defaults and Events of Default under the Indenture and the Securities and their
consequences. Any such consent or waiver by or on behalf of the Holder of this
Security shall be conclusive and binding upon such Holder and upon all future
Holders of this Security and of any Security issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the Company
or any other obligor on the Securities (in the event such other obligor is
obligated to make payments in respect of the Securities), which is absolute and
unconditional, to pay the principal of, and premium, if any, and interest on,
this Security at the times, place, and rate, and in the coin or currency, herein
prescribed.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is registrable in
the Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in the Borough of Manhattan, The
City of New York, duly endorsed by, or accompanied by a
<PAGE> 8
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or its attorney duly
authorized in writing, and thereupon one or more new Securities, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
The Securities in certificated form are issuable only in
registered form without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, the Securities are exchangeable for a like
aggregate principal amount of Securities of a differing authorized denomination,
as requested by the Holder surrendering the same.
Except as indicated in the Indenture, no service charge shall
be made for any registration of transfer or exchange of Securities, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security is overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE TO CONFLICT
OF LAWS PRINCIPLES THEREOF.
All terms used in this Security which are defined in the
Indenture and not otherwise defined herein shall have the meanings assigned to
them in the Indenture.
<PAGE> 1
EXHIBIT 4.7
(FACE OF NOTE)
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A
SUCCESSOR DEPOSITARY. TRANSFERS OF THIS GLOBAL SECURITY SHALL
BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES
OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTION 306 OF THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT AND ANY SUCH
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
<PAGE> 2
REPUBLIC SERVICES, INC.
------------------
7-1/8% NOTE DUE 2009
CUSIP NO. 760759AA8
No. 2 $175,000,000
Republic Services, Inc., a Delaware corporation (herein called
the "Company," which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to Cede &
Co. or registered assigns, the principal sum of ONE HUNDRED SEVENTY-FIVE MILLION
DOLLARS ($175,000,000) United States dollars on May 15, 2009, at the office or
agency of the Company referred to below, and to pay interest thereon from May
24, 1999, or from the most recent Interest Payment Date to which interest has
been paid or duly provided for, semiannually on May 15 and November 15 in each
year, commencing November 15, 1999 at the rate of 7-1/8% per annum, in United
States dollars, until the principal hereof is paid or duly provided for.
Interest shall be computed on the basis of a 360-day year comprised of twelve
30-day months.
The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in such Indenture, be paid
to the Person in whose name this Security is registered at the close of business
on the Regular Record Date for such interest, which shall be the May 1 or
November 1 (whether or not a Business Day), as the case may be, next preceding
such Interest Payment Date. Any such interest not so punctually paid, or duly
provided for, and interest on such defaulted interest at the interest rate borne
by the Securities, to the extent lawful, shall forthwith cease to be payable to
the Holder on such Regular Record Date, and may either be paid to the Person in
whose name this Security (or any Predecessor Securities) is registered at the
close of business on a Special Record Date for the payment of such defaulted
interest to be fixed by the Trustee, notice thereof shall be given to Holders of
Securities not less than 10 days prior to such Special Record Date, or be paid
at any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in this
Indenture.
Payment of the principal of, premium, if any, and interest on,
this Security, and exchange or transfer of this Security, will be made at the
office or agency of the Company in The City of New York maintained for such
purpose (which initially will be a corporate trust office of the Trustee or its
affiliate located at 101 Barclay Street, Floor 21W, New York, NY 10286), or at
such other office or agency as may be maintained for
<PAGE> 3
such purpose, in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts;
PROVIDED, HOWEVER, that payment of interest may be made at the option of the
Company by check mailed to the address of the Person entitled thereto as such
address shall appear on the Security Register.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof or by the
authenticating agent appointed as provided in the Indenture by manual signature
of an authorized signer, this Security shall not be entitled to any benefit
under the Indenture, or be valid or obligatory for any purpose.
<PAGE> 4
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed by the manual or facsimile signature of its authorized officer.
REPUBLIC SERVICES, INC.
By: /s/ Edward A. Lang, III
-------------------------------
Name: Edward A. Lang, III
Title: Vice President, Finance and Treasurer
<PAGE> 5
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 7 1/8% Notes due 2009 referred to in the
within-mentioned Indenture.
THE BANK OF NEW YORK, as Trustee
By: /s/ Remo J. Reale
-----------------------------
Authorized Signatory
Dated: May 24, 1999
<PAGE> 6
(REVERSE SIDE OF NOTE)
REPUBLIC SERVICES, INC.
7 1/8% Note due 2009
This Security is one of a duly authorized issue of Securities
of the Company designated as its 7 1/8% Notes due 2009 (herein called the
"Securities"), limited (except as otherwise provided in the Indenture referred
to below) in aggregate principal amount to $175,000,000, issued under and
subject to the terms of an indenture (herein called the "Indenture") dated as of
May 24, 1999, between the Company and The Bank of New York, as trustee (herein
called the "Trustee," which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights, limitations of rights,
duties, obligations and immunities thereunder of the Company, the Trustee and
the Holders of the Securities, and of the terms upon which the Securities are,
and are to be, authenticated and delivered.
The Securities may be redeemed at any time, at the option of the
Company, in whole or in part, at any time and from time to time, upon not less
than 30 and not more than 60 days' notice to the Holders thereof as provided in
the Indenture, at a Redemption Price equal to the greater of (1) 100% of the
principal amount of the Securities to be redeemed and (2) the sum of the present
values of the remaining scheduled payments of principal and interest thereon
discounted to the Redemption Date on a semiannual basis (assuming a 360-day year
consisting of twelve 30-day months) at the applicable Treasury Rate plus 20
basis points, plus, in each case, accrued interest to the Redemption Date
(subject to the right of holders of record of such Securities on relevant record
dates to receive interest due on an interest payment date), if any.
If less than all of the Securities are to be redeemed, the
Trustee shall select, not more than 60 nor less than 30 days before the
Redemption Date, the Securities or portions thereof to be redeemed on a pro rata
basis, by lot or by any other method the Trustee shall deem fair and
appropriate.
In the case of any redemption of Securities in accordance with
the Indenture, interest installments whose Stated Maturity is on or prior to the
Redemption Date will be payable to the Holders of such Securities of record as
of the close of business on the relevant Regular Record Date or Special Record
Date referred to on the face hereof. Securities (or portions thereof) for whose
redemption and payment provision is made in accordance with the Indenture shall
cease to bear interest from and after the Redemption Date.
<PAGE> 7
In the event of redemption or repurchase of this Security in
accordance with the Indenture in part only, a new Security or Securities for the
unredeemed portion hereof shall be issued in the name of the Holder hereof upon
the cancellation hereof.
If an Event of Default shall occur and be continuing, the
principal amount of all the Securities may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture contains provisions for defeasance at any time
of (a) the entire Indebtedness on the Securities and (b) certain covenants and
Defaults and Events of Default, in each case upon compliance with certain
conditions set forth therein.
The Indenture permits, with certain exceptions (including
certain amendments permitted without the consent of any Holders and certain
amendments which required the consent of all of the Holders) as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders under the Indenture and
the Securities at any time by the Company and the Trustee with the consent of
the Holders of at least a majority in aggregate principal amount of the
Securities of all series at the time Outstanding that are affected (voting as
one class). The Indenture also contains provisions permitting the Holders of at
least a majority in aggregate principal amount of the Securities (100% of the
Holders in certain circumstances) of all series at the time Outstanding that are
affected (voting as one class), on behalf of the Holders of all the Securities
of such affected series, to waive compliance by the Company with certain
provisions of the Indenture and the Securities of such series and certain past
Defaults and Events of Default under the Indenture and the Securities and their
consequences. Any such consent or waiver by or on behalf of the Holder of this
Security shall be conclusive and binding upon such Holder and upon all future
Holders of this Security and of any Security issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the Company
or any other obligor on the Securities (in the event such other obligor is
obligated to make payments in respect of the Securities), which is absolute and
unconditional, to pay the principal of, and premium, if any, and interest on,
this Security at the times, place, and rate, and in the coin or currency, herein
prescribed.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is registrable in
the Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in the Borough of Manhattan, The
City of New York, duly endorsed by, or accompanied by a
<PAGE> 8
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or its attorney duly
authorized in writing, and thereupon one or more new Securities, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
The Securities in certificated form are issuable only in
registered form without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, the Securities are exchangeable for a like
aggregate principal amount of Securities of a differing authorized denomination,
as requested by the Holder surrendering the same.
Except as indicated in the Indenture, no service charge shall
be made for any registration of transfer or exchange of Securities, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security is overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE TO CONFLICT
OF LAWS PRINCIPLES THEREOF.
All terms used in this Security which are defined in the
Indenture and not otherwise defined herein shall have the meanings assigned to
them in the Indenture.
<PAGE> 1
Exhibit 21.1
Subsidiaries of Republic Services, Inc.
Name of Company State of Incorporation
A-Best Disposal, Inc. OH
A.G. Disposal Service, Inc. NY
AAA Disposal of Tennessee, Inc. TN
Ace Disposal Service, Inc. OH
ADAJ Corporation CA
Addington Environmental, Inc. KY
Alameda Associates CA
All Refuse Services, Inc. NY
All Service Refuse Company, Inc. FL
Alpco Waste Systems, Inc. NY
Anderson Refuse Company, Inc. IN
Anderson Solid Waste, Inc. CA
Antler Park, Inc. IN
Arc Disposal Company, Inc. IL
Ariana, LLC DE
ASCO Sanitation MS
Astro Waste Services ME
Atlas Transport, Inc. CA
Barker Brothers Waste Incorporated TN
Barker Brothers, Inc. TN
Berrien County Landfill, Inc. MI
BI-CO Transfer Station, Inc. IN
BLT - REPUBLIC, L.L.C. DE
BLT Enterprises of Oxnard, Inc. CA
Bluegrass Recycling & Transfer Company KY
Boone & Casey Trucking, LLC KY
Bosman Brothers, Inc. IL
Burgess Refuse Removal Service, Inc. NC
Calvert Trash Service Incorporated MD
Calvert Trash Systems Incorporated MD
Capital Waste & Recycling, Inc. NY
Cates Rubbish Removal Services, Inc. NH
Central Pike Demolition Landfill, Inc. TN
Clinton Disposal Services, Inc. NY
Coggins Waste Management, Inc. NJ
Collection Service Company, Inc. NC
Collection Services, Inc. KY
Commercial Waste Disposal , Inc. KY
Compactor Rental Systems of Delaware, Inc. DE
Consolidated Disposal Service, LLC DE
Continental Waste Industries - Gary, Inc. IN
Continental Waste Industries, Inc. DE
Covington Waste, Inc. TN
CWI of FLA, Inc. FL
CWI of Illinois, Inc. IL
CWI of Missouri, Inc. MO
CWI of Northwest Indiana, Inc. IN
D. W. Gutzmer Rubbish Disposal, Inc. NY
Disposal Services, Inc. NY
Dozit Company, Inc. KY
Duncan Disposal, Inc. f/k/a Wes Tex Waste Services TX
E & P Investment Corporation IL
East Carolina Environemtnal, Inc. KY
ECO Services of SC, Inc. & Sea Island Maintenance SC
<PAGE> 2
Subsidiaries of Republic Services, Inc.
Name of Company State of Incorporation
El Centro Sanitation Service, Co. CA
Envirocycle, Inc. FL
Environmental Specialists, Inc. MO
Epperson Waste Disposal, Inc. KY
Fenn-Vac, Inc. SC
Fennell Container Co., Inc. SC
Fisk Environmental Services, Inc. IN
Fisk Sanitation Service, Inc. IN
FLL, Inc. MI
Foothills Environmental Landfill, LLC NC
G.E.M. Environmental Management, Inc. DE
Garbage Disposal Service, Inc. NC
Gilliam Transfer, Inc. MO
Green Disposal, Inc. UT
Green Valley Disposal Company, Inc. WI
Green Valley Environmental Corp. KY
Greenfield Environmental Development Corp. DE
Gulf Coast Waste Service, Inc. FL
Hanks Disposal, Inc. IN
Helpers Hand of America, Inc. IN
Hillside Disposal Service, Inc. IL
Hinkson Container Service, Inc. PA
Honeygo Run Reclamation, Inc. MD
Independent Hauling, Inc. PA
Indiana Recycling LLC - East Chicago Transfer Station IN
Jamax Corporation IN
JMN, Inc. NC
K & K Trash Removal, Inc. MD
Karat Corp. NJ
L.R. Stuart and Son, Inc. VA
M-G Disposal Service, LLC DE
McCusker & Sons Paper Salvage, Inc. PA
McCusker Recycling, Inc. PA
Meyer Mechanical Services, Inc. IN
Meyer Transportation, LLC IN
Meyer Waste Systems, Inc. IN
Mid-East Waste Services, Inc. NC
Midwest Material Management, Inc. IN
National Serv-All, Inc. IN
Noble Risley, Jr. & Sons, Inc. IL
Northwest Tennessee Disposal Corp. TN
NRL, Inc. KY
Oceanside Partnership CA
Ogborne Trash Removal, Inc. DE
Ogborne Waste Removal, Inc. PA
Ohio County Balefill, Inc. KY
Olympic Disposal NY
Peninsula Waste Systems, LLC MD
Pepperhill Development Co., Inc. SC
Perdomo & Sons, Inc. CA
Pinellas Environmental, Inc. KY
Prichard Landfill Corporation WV
Rainbow Disposal, Inc. IN
Raritan Valley Disposal Service Co., Inc. NJ
Raritan Valley Recycling, Inc. NJ
Recycling Concepts, Inc. NC
Reliable Disposal MI
<PAGE> 3
Subsidiaries of Republic Services, Inc.
Name of Company State of Incorporation
Republic Acquisition Company DE
Republic Dumpco, Inc. NV
Republic Enivronmental Technology, Inc. NV
Republic Imperial Acquisition Corp. OK
Republic Servces of Florida GP, Inc. DE
Republic Services Aviation, Inc. FL
Republic Services fo Georgia LP, Inc. DE
Republic Services Group of Pennsylvania Hauling, LLC PA
Republic Services Group of Pennsylvania I, LLC PA
Republic Services Group of Pennsylvania II, LLC PA
Republic Services Group of Pennsylvania III, LLC PA
Republic Services Group of Pennsylvania IV, LLC PA
Republic Services Holding Company, Inc. DE
Republic Services Leasing, Inc. DE
Republic Services of Arizona Hauling, LLC AZ
Republic Services of California Holding Company, Inc. DE
Republic Services of California I, LLC DE
Republic Services of California II, LLC DE
Republic Services of Canada, Inc. Canada
Republic Services of Charlotte, LLC NC
Republic Services of Colorado Hauling, LLC CO
Republic Services of Colorado I, LLC CO
Republic Services of Florida LP, Inc. DE
Republic Services of Florida, Limited Partnership DE
Republic Services of Georgia GP, Inc. DE
Republic Services of Georgia, Limited Partnership DE
Republic Services of Illinois Waukegan, LLC DE
Republic Services of Illinois, LLC DE
Republic Services of Indiana, LLC IN
Republic Services of Kentucky, LLC KY
Republic Services of Maryland, LLC MD
Republic Services of Michigan Hauling, LLC MI
Republic Services of Michigan Holding Company, Inc. DE
Republic Services of Michigan I, LLC MI
Republic Services of Michigan II, LLC MI
Republic Services of Michigan III, LLC MI
Republic Services of Michigan IV, LLC MI
Republic Services of Michigan V, LLC MI
Republic Services of New Jersey, Inc. f/k/a Middlesex NJ
Republic Services of New Jersey, LLC NJ
Republic Services of New York Hauling, LLC NY
Republic Services of New York I, LLC NY
Republic Services of New York II, LLC NY
Republic Services of North Carolina, LLC NC
Republic Services of Ohio Hauling, LLC OH
Republic Services of Ohio I, LLC OH
Republic Services of Ohio II, LLC OH
Republic Services of Ohio III, LLC OH
Republic Services of Ohio IV, LLC OH
Republic Services of Ohio V, LLC OH
Republic Services of Tennessee I, LLC DE
Republic Services of Virginia, LLC VA
Republic Services of Wisconsin GP, Inc. DE
Republic Services of Wisconsin Hauling, LLC WI
Republic Services of Wisconsin I, LLC WI
Republic Services of Wisconsin II, LLC WI
Republic Services of Wisconsin LP, Inc. DE
<PAGE> 4
Subsidiaries of Republic Services, Inc.
Name of Company State of Incorporation
Republic Services of Wisconsin, Limited Partnership DE
Republic Services Vasco Road, LLC DE
Republic Services, Inc. DE
Republic Silverstate Disposal, Inc. NV
Republic Wabash Company DE
Republic Waste Services of Texas LP, Inc. DE
Republic Waste Services of Texas, Ltd. TX
RITM, LLC DE
Robert A. Moor, Jr. Disposal Services, Inc. PA
Rochester Dismantling and Roll-Off, Inc. NY
RS/WM Holding Company, LLC DE
RSI Purchasing and Leasing, Inc. DE
Rubbish Control, LLC DE
Safety Lights, Inc. TN
Sandy Hollow Landfill Corp. WV
Sanifill, Inc. TN
Schofield Corporation of Orlando FL
South Trans, Inc. NJ
Southern Illinois Regional Landfill, Inc. IL
Specialized Waste Systems, Inc. CA
Spector Waste Paper Corp. NY
Springfield Environmental, Inc. IN
Springfield Environmental, Inc. DE
Suburban Disposal Service, Inc. SC
Suburban Sanitation of California, Inc. CA
Suburban Sanitation Services, Inc. AZ
Sunrise Disposal, Inc. IN
Swift Creek Environmental, Inc. GA
Taormina Industries, LLC DE
Tay-Ban Corporation MI
Terre Haute Recycling, Inc. IN
The LETCO Group, Limited Partnership DE
Town & Country Disposal, Inc. NY
Tri-County Refuse Service, Inc. MI
Tri-K Landfill, Inc. KY
Tri-State Ltd. IN
Triple G Landfills, Inc. IN
United Refuse Co., Inc. IN
Upper Piedmont Environmental, Inc. KY
Upstate Disposal Services, Inc. DE
Upstate Disposal Services, LLC NY
Uwharrie Environmental, Inc. KY
Victory Environmental Services, Inc. DE
Victory Waste Incorporated CA
W.R. Lalevee Realty Company, Inc. NJ
Wabash Valley Landfill Company, Ltd. PA
Wabash Valley Refuse Removal Company, L.P. IN
Westchester Investments, Inc. IN
Wilshire Disposal Services, Inc. CA
Wood River Rubbish Company, Inc. ID
WPP Services, Inc. OH
York Waste Disposal, Inc. PA
Zakaroff Services CA
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