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UNITED STATES
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 September 30, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-6805.
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BROWNING-FERRIS INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 74-1673682
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
757 N. ELDRIDGE
HOUSTON, TEXAS 77079
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (713) 870-8100.
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
- ---------------------------- -----------------------------------------
Common Stock, $.16-2/3 New York Stock Exchange, Inc.
par value
Chicago Stock Exchange
Incorporated
The Pacific Stock Exchange
Incorporated
7.25% Automatic Common Exchange New York Stock Exchange, Inc.
Securities
Chicago Stock Exchange
Incorporated
The Pacific Stock Exchange
Incorporated
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6-1/4% Convertible Subordinated New York Stock Exchange, Inc.
Debentures Due 2012
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/
The approximate aggregate market value of common stock held by non-affiliates
of the registrant: $6.0 billion, computed on the basis of $29.00 per share,
closing price of the common stock on the New York Stock Exchange, Inc. on
November 20, 1995.
There were 212,602,218 shares of the registrant's common stock, $.16-2/3 par
value, outstanding as of November 20, 1995.
DOCUMENTS INCORPORATED BY REFERENCE
Items 10, 11, 12 and 13 of Part III (except for information required with
respect to executive officers of the Company, which is set forth under
"Business--Executive Officers of the Company" in Part I of this report) have
been omitted from this report, since the Company will file with the Securities
and Exchange Commission, not later than 120 days after the close of its fiscal
year, a definitive proxy statement, pursuant to Regulation 14A, which involves
the election of directors. The information required by Items 10, 11, 12 and 13
of Part III of this report, which will appear in the definitive proxy
statement, is incorporated by reference into this report.
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PART I.
ITEM 1. BUSINESS.
GENERAL
Browning-Ferris Industries, Inc. is one of the largest publicly-held companies
that engages, through its subsidiaries and affiliates, in providing waste
services. The Company collects, transports, treats and/or processes, recycles
and disposes of commercial, residential and municipal solid waste and
industrial wastes. BFI is also involved in waste-to-energy conversion, medical
waste services, portable restroom services, and municipal and commercial
sweeping operations.
The terms "BFI" and "Company" refer to Browning-Ferris Industries, Inc., a
Delaware corporation incorporated on October 26, 1970, and are used herein to
include its subsidiaries, affiliates and predecessors, unless the context
requires otherwise. BFI's executive offices are located at 757 N. Eldridge,
Houston, Texas 77079. The Company's mailing address is P.O. Box 3151, Houston,
Texas 77253, and its telephone number is (713) 870-8100.
The Company (including unconsolidated affiliates) operates in approximately 450
locations in North America and approximately 320 locations outside North
America and employs approximately 43,000 persons. No single customer or
district accounts for a material amount of BFI's revenue or net income.
The Company's solid waste operating subsidiaries in North America are aligned,
for management oversight purposes, into six regions. Each region is further
divided into a number of divisions and local districts within each division.
Each region is headed by a regional vice president responsible for the
operating and financial performance of that region. Divisional vice presidents
are responsible for managing growth opportunities in their geographic markets,
including acquisitions, business development and municipal contracting
opportunities. Under this management structure, the regional vice president,
divisional vice presidents and staff oversee and assist local district managers
within each region. Regional responsibility for local district operations is
exercised by assisting with the development and approval of each district's
capital budget, the review and implementation of profit, pricing and corporate
development goals, implementation of selective company-wide uniform operating
procedures and the monitoring of performance. Each district's operation is a
distinct, localized service business that is managed, on a day-to-day basis, at
the local level. The Company's regions and operating locations are
responsible, with support and resources provided by the corporate office, for
compliance with all applicable rules and regulations.
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The Company's international operations (excluding Canada), for management
oversight purposes, are aligned into three operational areas, and report to the
Chairman of BFI International, Inc. in Houston. The three operational areas
are Europe, Pacific Rim, and Latin America. BFI Europe, from its regional
office in Utrecht, the Netherlands, oversees Finland, Germany, Israel, Italy,
the Netherlands, Spain, Switzerland and the United Kingdom. Management
oversight for operations in Australia, the Dominican Republic, Hong Kong,
Kuwait and New Zealand and the coordination of expansion into new markets
outside Europe are provided from the corporate office in Houston.
Management of the operations in each country is carried out by a country
manager, and in some cases where the operations are larger or more extensive,
by co-country managers, with one of the co-country managers being an
experienced BFI expatriate employee and the other an experienced national
manager. The Company believes that strong national management in each country
of operation is extremely important, together with support from the corporate
office in Houston and BFI's regional office in Europe, in areas of accounting,
compliance, legal, technical, sales and market development. BFI has
implemented a divisional market structure in several countries which permits
and encourages increased growth opportunities in more localized markets.
The business strategies currently being implemented by BFI's management are
designed to: (i) continue expansion, both domestically and internationally,
through an aggressive acquisition and business development program; (ii)
capitalize on opportunities resulting from regulatory, legislative, competitive
and economic developments; (iii) expand participation and pursue new business
opportunities resulting from the continued segmentation of the municipal and
industrial waste streams; (iv) continue to improve both operating efficiencies
and management of costs while effectively allocating resources; (v) continue to
focus on pricing across all service lines; and (vi) continue to selectively
implement uniform operating procedures when management believes it will improve
operating efficiency.
The Company's business is subject to extensive U.S. and foreign governmental
regulation and legislative initiative. Further, in some jurisdictions, both in
the U.S. and foreign countries, its business is also subject to environmental
regulation, mandatory recycling laws, medical waste regulation, preclusion of
certain waste from landfills and restrictions on the flow of solid waste. Due
to continuing public awareness and influence regarding waste and the
environment, and uncertainty with respect to the enactment and enforcement of
future laws, the Company can not always accurately project the impact any
future regulation or legislative initiative may have on its operations. See
"Regulation" and "Legal Proceedings - Environmental Proceedings" for additional
information.
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The table below reflects the total revenues contributed by the Company's
principal lines of business for each of the three years ended September 30,
1995.
<TABLE>
<CAPTION>
Contribution to
Consolidated Revenues
(in millions)
Year Ended September 30,
---------------------------------------------
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
North American Operations
Collection Services -
Solid Waste $2,758 $2,360 $2,138
Transfer and Disposal -
Solid Waste 1,026 885 787
Recycling Services 675 359 240
Medical Waste Services 189 161 146
Services Group and Other 83 83 79
Elimination of Affiliated
Companies' Revenues (483) (392) (339)
------ ------ ------
Total North American
Operations 4,248 3,456 3,051
International Operations 1,531 859 428
------ ------ ------
Total Company $5,779 $4,315 $3,479
====== ====== ======
</TABLE>
Total assets at September 30, 1995, 1994 and 1993 were $7,460 million, $5,797
million and $4,296 million, respectively.
NORTH AMERICAN OPERATIONS
SOLID WASTE SERVICES
Collection
BFI collects solid waste in approximately 300 operating locations in 45 states,
Puerto Rico and Canada. These operations provide solid waste collection
services for numerous commercial establishments, industrial plants and
governmental and residential units. BFI uses approximately 1.0 million
containers and approximately 10,000 specially equipped collection trucks in its
North American waste collection operations.
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The Company's commercial and industrial solid waste collection services are
typically performed pursuant to service agreements that provide for one-year to
three-year initial terms and specified successive terms thereafter.
Residential collection contracts with individual homeowners, homeowner groups
and municipalities are generally for periods of one to five years, frequently
with renewable terms. Solid waste collection contracts with governmental
units are usually awarded pursuant to a competitive bidding process.
Operating costs, disposal costs and collection fees vary widely throughout the
geographic areas of the Company's operations. Prices for solid waste
collection services are determined locally, principally by the volume, weight
and type of wastes collected, treatment required, risks involved in handling or
disposing of the wastes, collection frequency, disposal costs, distance to
final disposal sites, quantity and type of equipment furnished to the customer
and competitive factors. The Company's ability to pass on cost increases is
often influenced by competitive and other factors. Long-term residential solid
waste collection contracts often include a formula for adjusting fees,
generally based on published price indices, to cover increases in certain
operating costs.
Transfer and Disposal
BFI operates 107 solid waste transfer stations where solid wastes are compacted
for transfer to final disposal facilities. Transfer stations are used for the
purpose of either (i) reducing costs associated with transporting waste to
final disposal sites, or (ii) better utilizing the Company's disposal sites.
Where practical, transfer and recycling functions are combined at the same
transfer station to form "Trancycleries."(TM)
Sanitary landfilling is the primary method employed by the Company for final
disposal of the segment of the solid waste stream that is not recycled. BFI
currently operates 104 solid waste landfill sites in North America, 18 of which
are operated under contracts with municipalities or others. The Company has
approximately 15,000 acres permitted as landfill disposal sites, consisting of
acres in unopened and unlined landfill cells, acres in filled and capped
landfill cells which are in open landfill sites, and acres in open landfill
cells. The acreage shown does not reflect the volume (or "airspace") available
for disposal, which depends on the vertical space as well as the surface acres.
BFI does not currently own or lease a landfill site in every metropolitan area
in which it is engaged in solid waste collection; however, the Company intends
to continue to seek, where advisable, ownership or lease of disposal facilities
in all such areas. To date, the Company has not experienced excessive
difficulty securing the use of disposal facilities owned or operated by others
in those communities in which it does not operate its own landfill sites.
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MEDICAL WASTE
The Company is the largest provider of medical waste services in North America.
Approximately 120 of the Company's operating locations provide medical waste
services involving the collection and disposal of infectious and pathological
waste materials from approximately 140,000 customers. The Company owns or
operates 32 treatment sites using either incineration or autoclaving (steam
sterilization) technology. One additional treatment site is in the permitting
process. The Company is pursuing the development of various healthcare
markets, including clinical and home healthcare markets, shipboard waste
disposal and other related markets. The Company believes that if adopted, the
proposed Clean Air Act guidelines relating to medical waste incinerators could
result in the closure of a number of incineration units, which would have a
positive impact on the Company's medical waste operations.
RECYCLING
The Company provides recycling services in approximately 260 of its North
American operating locations for approximately 6.9 million households,
including curbside customers, and for approximately 250,000 commercial and
industrial customers. Recycling continued as one of the fastest-growing
segments of the Company's business in fiscal 1995. The Company's recycling
business has 125 recycleries in North America. The Company also engages in
organic materials recycling and/or disposal, tire recycling and other
alternative energy concepts such as biomass fuels. The Company currently
operates more than 45 organic processing centers. BFI also produces and
markets decorative bark, mulch, compost and organic soils to secure a market
for organic materials collected. In response to public demand, recycling is
increasingly required through legislation and regulation at all levels of
government. In the case of many recycled materials, these requirements and the
public's interest in recycling have resulted in an excess supply of recovered
materials in some markets. Recognizing that the recycling momentum would
require markets for recovered materials, the Company has developed
relationships with numerous other companies to assure municipalities and other
customers of continuous and diversified markets. In order to reduce the impact
of the price volatility that is inherent in this business segment, the Company
has been successful in securing floor pricing provisions in a majority of its
resale contracts. The Company's contracts with its suppliers often provide for
their participation in price increases on resale of recycled commodities. To
improve the marketing of recycled commodities, the Company operates a
centralized materials marketing group. This group has enhanced the Company's
ability to anticipate changing market conditions and establish longer-term
customer relationships and agreements.
SERVICES GROUP AND OTHER
The Company is also involved in the rental and servicing of portable restroom
facilities and street and parking lot sweeping. These locations are operated
as part of the North American regions.
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The Company may also participate, to a limited extent, in the end-use
development of certain BFI landfills that have reached permitted capacity and
other real and personal property in which it has an interest. From time to
time, the Company sells or otherwise disposes of surplus land and other real or
personal property and reflects any gain or loss from such transactions in the
results of operations for the period in which the transactions occur.
INTERNATIONAL OPERATIONS
The Company is involved in waste collection, processing, disposal and/or
recycling operations in approximately 365 locations (including locations of
unconsolidated affiliates) in Australia, the Dominican Republic, Finland,
Germany, Hong Kong, Italy, Israel, Kuwait, the Netherlands, New Zealand, Spain,
Switzerland and the United Kingdom. European operations comprise the largest
number of operating locations outside North America.
The Company currently collects solid waste in approximately 185 locations and
operates 62 landfill sites in its international operations (including, in each
case, locations of unconsolidated affiliates). The Company also has 52
recycleries and 54 transfer stations in its international operations and uses
approximately 323,000 containers and approximately 4,500 specially equipped
collection trucks in its international waste collection operations.
The Company owns 50% of the stock of Otto Entsorgungsdienstleistungen GmbH
("Otto Waste Services"), which is primarily engaged in providing collection and
recycling services under long-term contracts with municipalities in Germany and
Duales System Deutschland GmbH, the non-governmental organization responsible
for the collection of recyclable materials in Germany. During fiscal 1995, the
Company reported consolidated revenues of approximately $710 million applicable
to Otto Waste Services.
On December 2, 1994, the Company acquired majority control of Attwoods plc
("Attwoods"), a provider of waste services principally in the United States,
the United Kingdom, the Caribbean and mainland Europe (primarily Germany).
Attwoods also had mineral extraction operations in the United Kingdom. During
the second quarter of fiscal 1995 the Company acquired the remaining
outstanding capital stock of Attwoods. The purchase price for all of the
Attwoods capital stock was approximately $580 million. See Note (3) to
Consolidated Financial Statements.
In June 1995 the Company sold the portable sanitation and accommodation
business of Attwoods in continental Europe, primarily Germany, for
approximately $56.8 million, with a potential future contingent payment to the
Company estimated to be approximately $1 million. See Note (3) to Consolidated
Financial Statements.
WASTE-TO-ENERGY
The Company and Air Products and Chemicals, Inc. ("Air Products"),
headquartered in Allentown, Pennsylvania, are each 50% general
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partners in a partnership that designs, builds, owns and operates facilities
that burn solid waste and recover energy and other materials. This partnership
markets its capabilities under the name American Ref-Fuel(R) ("American
Ref-Fuel"). Three of the facilities owned by American Ref-Fuel partnerships
utilize the solid waste mass-burning technology of the German firm, Deutsche
Babcock Industrie AG ("DBA"), for which American Ref-Fuel is the exclusive
licensee in North America. This technology has been utilized successfully for
over 30 years in Europe and elsewhere. The fourth facility, located in Niagara
Falls, New York, utilizes a refuse-derived fuel technology; however, a
significant modification and expansion of the plant to employ the DBA
mass-burning technology is currently under construction. The estimated
construction cost for this project is approximately $150 million and the
plant's capacity is expected to be approximately 2,250 tons per day.
In connection with the existing American Ref-Fuel projects, both the Company
and Air Products have delivered, and in connection with any future projects may
be required to deliver, support agreements for certain project indebtedness of
each of the respective subsidiary partners. See Note (9) of Notes to
Consolidated Financial Statements for information concerning these obligations.
The Company's equity investment in American Ref-Fuel's waste-to-energy projects
was approximately $150 million at September 30, 1995. American Ref-Fuel's
business is very capital intensive and its ability to raise capital is an
important factor in its competitiveness in the waste services industry. When
feasible, American Ref-Fuel attempts to finance its projects with tax exempt
bonds due to the lower interest costs. The Company plans to continue to expand
its investment in American Ref-Fuel in fiscal 1996 in connection with the
significant modification and expansion of the Niagara Falls, New York,
facility, as well as pursuing a number of domestic and international
acquisition opportunities.
All waste-to-energy facilities must meet rigid environmental laws and
regulations. Existing laws and regulations can be changed or administered so
as to affect the design, construction, startup or operation of such facilities.
Management believes that the DBA mass-burning technology is capable of meeting
anticipated future changes in laws and regulations; however, there can be no
assurance that required environmental and other permits will be issued for any
planned project. See "Regulation" and "Waste Disposal Risk Factors."
REGULATION
All of the Company's principal business activities in the U.S. are governed by
federal, state and local laws and regulations pertaining to public health and
the environment, as well as transportation laws and regulations. These
regulatory systems are complex and are subject to change.
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The U.S. Congress and certain states have considered legislation, and some
states are taking action, to ban or otherwise restrict the interstate
transportation of wastes for disposal, to impose discriminatory fees on such
transported wastes, to limit the types of wastes that may be disposed of at
existing disposal facilities, and to mandate waste minimization initiatives,
recycling quotas and composting of yard wastes.
In recent years, a number of communities have instituted "flow control"
requirements, which typically require that waste collected within a particular
area be deposited at a designated facility. In May 1994, the U.S. Supreme
Court ruled that a flow control ordinance was inconsistent with the Commerce
Clause of the Constitution of the United States. A number of lower federal
courts have struck down similar measures. Although the U.S. Senate recently
passed a bill that would partially grant flow control authority under the
Commerce Clause, the U.S. House of Representatives has not yet acted on the
bill. In the future, the U.S. Congress may consider other bills that could at
least partially overturn these court decisions and immunize particular
governmental actions (for example, flow control that results from franchises or
municipal contracts) from Commerce Clause scrutiny.
Similarly, the U.S. Supreme Court has consistently held that state and local
measures that seek to restrict the importation of extraterritorial waste or tax
imported waste at a higher rate are unconstitutional. To date, congressional
efforts to enable states to, under certain circumstances, impose differential
taxes on out-of-state waste or restrict waste importation have not been
successful.
In the absence of federal legislation, certain local laws that direct waste
flows to designated facilities may be unenforceable, and discriminatory taxes
and waste importation restrictions should continue to be subject to judicial
invalidation. If the U.S. Congress adopts legislation allowing for certain
types of flow control or restricting the importation of waste, or if
legislation affecting interstate transportation of waste is adopted at the
federal or state level, such legislation could adversely affect the Company's
waste collection, transportation, treatment and disposal operations.
Because a major component of the Company's business is the collection and
disposal of solid waste in an environmentally sound manner, a material amount
of the Company's capital expenditures are related (directly or indirectly) to
environmental protection measures, including compliance with federal, state and
local provisions that have been enacted or adopted regulating the discharge of
materials into the environment. There are costs that are associated with
facility upgrading, corrective actions, facility closure and post-closure care
in addition to other costs normally associated with the Company's waste
management activities. The majority of these expenditures are made in the
normal course of the Company's business, and do not place the Company at any
competitive disadvantage.
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In October 1991, the EPA issued its final regulations under Subtitle D of the
Resource Conservation and Recovery Act of 1976 ("RCRA"), which set forth
minimum federal performance and design criteria for municipal solid waste
landfills. These regulations also incorporate provisions under the Clean Air
Act relating to landfill operations. All Subtitle D regulations are in effect,
except for the ground-water monitoring requirements which are being phased in
over a five-year period and the financial assurance requirements which the EPA
has deferred to April 1997, although many states have already implemented
financial assurance programs. Management of BFI believes that these
regulations will have a favorable long-term impact on its landfill operations,
but meeting these new regulatory requirements is resulting in increased costs.
Under the Clean Air Act, the EPA proposed regulations in May 1991 that require
extensive methane gas collection systems to be installed at many of the
Company's landfills. These regulations, as revised, are expected to be
finalized in early 1996. The Company has proceeded to design, permit and
install gas extraction and control systems at many of its facilities and
believes these systems substantially comply with the current proposed
regulations. The Company is also seeking operating and other applicable
permits for its activities and is pursuing a strategy of reducing emissions
from both mobile and stationary sources. Implementation of certain provisions
of the Clean Air Act will result in additional stringent control for those
areas of the country that are placed in "nonattainment status."
State financial responsibility regulations, adopted in various forms, require
owners or operators of waste disposal facilities and underground storage tanks
to demonstrate the financial ability to respond to and correct for sudden and
accidental pollution occurrences, as well as for non-sudden or gradual
pollution occurrences. To meet these requirements, the Company has secured
Environmental Impairment Liability ("EIL") insurance coverage in amounts the
Company believes are in compliance with federal and state law. Under the
current EIL policy, which is collateralized, the Company must reimburse the
carrier for any losses. It is possible that the Company's net income could be
adversely affected in a specific reporting period in the event of significant
environmental impairment claims.
Many state regulations also require owners or operators of waste disposal
facilities to provide assurance of their financial ability to cover the
estimated costs of proper closure and post-closure monitoring and maintenance
of these facilities. The federal Subtitle D regulations require all states to
adopt financial assurance regulations that meet the federal standards. The
Company has generally relied upon its consolidated financial position to issue
corporate guarantees, or has utilized letters of credit to satisfy these
requirements. The EPA has proposed a financial test and corporate guarantee
for use by private Subtitle D facilities, which, if adopted, would afford the
Company a cost effective method to satisfy the financial assurance
requirements. The Company has also established a captive insurance company
that is being used to
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provide insurance as a recognized means of demonstrating this financial
assurance. The Company is continuing its efforts to get this captive insurance
company admitted in certain states, after which it can serve as an alternative
to certain other forms of financial assurance, including letters of credit.
Some states and local jurisdictions in which the Company operates have enacted
"fitness" statutes that allow agencies having jurisdiction over waste service
contracts or facility permits to refuse to award such contracts or to revoke or
deny such permits on the basis of the applicant's (or permit holder's)
environmental or other legal compliance history. The underlying intent of
these statutes is to ensure that entities which engage in waste management
activities merit and maintain the public's confidence and trust. These statutes
authorize the agencies to make determinations of an applicant's "fitness" to be
awarded the waste service contract or to operate the particular waste facility
and to revoke or deny that facility's operating permit, absent a showing that
the applicant has been rehabilitated through its adoption of various operating
practices, policies and procedures to ensure compliance with all applicable
laws of that jurisdiction. Certain of the Company's subsidiaries with past
violations of environmental or other laws, or affiliates of such subsidiaries,
have to respond to these requirements.
In its international operations, the Company has noted a trend toward increased
environmental regulation. For example, in Europe, policies have been
established to encourage waste reduction, to promote re-use and recycling, to
reduce packaging waste, to strengthen the standards for permitting and
supervision of waste disposal operations and to control crossborder movements
of waste. BFI, with its commitment to sustainable development and the rational
management of all resources, including waste, believes that the continuation of
this trend and enhanced enforcement of increasingly stringent regulations will
benefit its international operations.
COMPETITION
BFI competes with both publicly-held and privately-owned waste services
companies. This competition is intense and has increased in recent years. BFI
believes that neither it nor any other waste services company has a significant
portion of any major aspect of the solid waste services markets. In some
geographic areas, all or part of the solid waste collection, processing and
disposal services offered by BFI may also be provided by municipalities or by
governmental authorities with regional or multi-county jurisdiction.
Generally, however, governmental units do not provide significant commercial or
industrial solid waste collection or disposal services. Because solid waste
services provided by municipal or regional governmental authorities are
generally subsidized by tax revenues and utilize major equipment and facilities
that are financed with proceeds from the sale of tax-exempt bonds, these
authorities may provide such services at lower prices
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(though not necessarily at lower costs) than those of private companies.
Competition is encountered primarily from publicly-held and numerous
locally-owned private solid waste services companies and, to a lesser degree,
from municipalities and other governmental units with respect to residential
solid waste collection and solid waste sanitary landfills. Intense competition
in pricing and type and quality of services offered is encountered. Some
competitors in certain markets have increased competitive pressure by their
willingness to accept lower profit margins to maintain market share.
WASTE DISPOSAL RISK FACTORS
There are serious, sometimes unforeseeable, business risks and potentially
substantial cost exposures associated with the establishment, ownership and
operation of solid waste sanitary landfill sites and other types of waste
processing and disposal facilities. These risk factors include, but are not
limited to: (i) the difficulty of obtaining permits to expand or establish new
sites and facilities and public and private opposition to the location,
expansion and operation of these facilities, (ii) governmental actions at all
levels that seek to restrict the interstate movement of waste for disposal,
which can result in declining volumes of waste available for disposal at some
facilities, (iii) costs associated with liner requirements, groundwater
monitoring, leachate and landfill gas control, surface water control,
post-closure monitoring, site cleanup, other remedial work and maintenance and
long-term care obligations, (iv) the obligation to manage possible adverse
effects on the environment, (v) regulations requiring demonstration of
financial responsibility and conformance to prescribed or changing standards
and methods of operation, (vi) judicial and administrative proceedings
regarding alleged possible adverse environmental and health effects of
landfills or other treatment and disposal facilities, and (vii) reduction in
the volume of solid waste available for direct landfill disposal in certain
states because of governmental incentives to reduce the daily volume of waste
that may be disposed of, initiatives that require waste recycling, minimization
or composting and because of incineration in large waste-to-energy facilities.
See also "Waste-To-Energy", "Regulation" and "Legal Proceedings - Environmental
Proceedings."
Some of the issues faced by the Company and the waste industry generally
include (i) opposition to the siting and operation of new or expanded waste
facilities, (ii) public concern regarding the potential for adverse effects on
public health and the environment attributable to the waste managed at such
facilities, (iii) the cost of complying with complex and changing regulations,
(iv) governmental restraints on interstate shipment of waste or discriminatory
taxes on waste imports, (v) differential enforcement of laws and regulations by
governmental agencies, and (vi) a desire on the part of many waste generators
to maintain or increase
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control over their wastes by managing their wastes. See also "Legal
Proceedings-Environmental Proceedings."
BFI has periodically undertaken or been required, and may in the future
undertake or be required, to cease or to alter substantially its operations at
existing waste disposal sites, to implement new construction standards at
existing facilities and to add additional monitoring, post-closure maintenance
or corrective measures at waste disposal sites. Compliance with the Subtitle D
regulations has required costly expenditures by the Company and may in the
future require substantial additional expenditures, which could have a negative
impact on operations. See "Regulation" for information concerning capital
expenditures relating to environmental and health laws and regulations and
Notes (1) and (6) of Notes to Consolidated Financial Statements.
If the Company is unable to continue disposing of planned volumes of wastes at
existing solid waste landfills or is unable to either expand existing landfills
or establish new sites, it would be required to obtain the rights to use other
disposal facilities or to suspend or curtail solid waste collection or disposal
activities. Any such actions would have an adverse impact on the Company's
collection business and could substantially reduce the Company's revenues and
income from operations and increase the risk of impairing the value of the
Company's investment in existing or proposed facilities. These developments
could also result in accelerating the recognition of closure costs and
post-closure monitoring cost accruals for those landfills, with a corresponding
negative impact on the Company's net income.
The economic viability of certain waste-to-energy facilities may be adversely
affected by (i) the availability of commercially reasonable energy sales
contracts; (ii) the availability of landfills for the disposal of ash residue,
bypass and nonprocessible waste; (iii) existing and proposed governmental
standards applicable to the disposal of ash residue that could limit the number
of sites available for such disposal; (iv) air emission standards applicable to
the facilities, (v) the possible lower cost of other alternatives for waste
disposal and (vi) the recent decision by the U.S. Supreme Court which
invalidates local flow control laws. Waste-to-energy facilities may also be
adversely affected by many of the same factors that are currently impacting
other waste disposal facilities.
Certain geographic regions in the United States have, at times, experienced
shortages of suitable solid waste disposal facilities. Without long term
planning, many private and governmental solid waste collection companies
operating in the affected areas, including BFI, could be required to curtail or
even suspend land disposal operations, or seek other, more distant sites. In
other cases, collection companies, including BFI, may be excluded from
disposing of solid waste in landfills or waste-to-energy facilities either
because of regulation or because of the landfill or facility owners' desire to
preserve the remaining capacity for their own disposal needs.
- 12 -
<PAGE> 15
With respect to international operations, the profitability and risks
associated with these operations can be affected, to a greater or lesser extent
depending on the foreign country in which the operations are located, by
changes in national economies, financial and political policies, war, invasion,
social instability, currency fluctuations and other risk factors associated
with operations in foreign countries.
CORPORATE DEVELOPMENT
The Company's corporate development program will continue to focus on
opportunities to expand its customer base by entering into new domestic and
international markets, by broadening the type of services offered, by pursuing
municipal contracting opportunities, and by acquiring businesses and
properties. Developing suitable new solid waste processing and disposal
facilities will continue to be an important strategy. When investing in
capital-intensive facilities such as landfills, the Company faces the risk that
required permits will not be obtained or renewed. If permits are not
ultimately obtained and maintained, the value of such facilities can be
substantially impaired, which could result in a reduction of future net income.
See "North American Operations -Solid Waste Services - Transfer and Disposal"
and "Regulation." The Company will also pursue project opportunities for its
services in foreign markets. See "International Operations."
The Company has continued to acquire from unaffiliated persons, usually in
negotiated transactions, businesses and properties engaged primarily in or
related to one or more aspects of the solid waste services industry. BFI
intends to continue pursuing opportunities to acquire such businesses, although
there can be no assurance that BFI will be successful in making additional
acquisitions. See "Capital Expenditures."
CAPITAL EXPENDITURES
Capital expenditures were approximately $1.8 billion in fiscal 1995, consisting
of $876 million for acquired businesses, including the acquisition of Attwoods
plc. Approximately $249 million was expended in connection with internal
market development projects, municipal contracts and investment in affiliates
and $659 million related to additions and replacements of capital items for
existing operations, including existing landfill cell development. The capital
expenditures include the fair market value of common stock issued in connection
with an acquisition accounted for as a pooling of interests. See Notes (3) and
(5) of Notes to Consolidated Financial Statements. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources" for additional financing information.
- 13 -
<PAGE> 16
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company, their positions (including their
principal areas of responsibility with the Company) and their respective ages
are as follows:
<TABLE>
<CAPTION>
Name Position Age*
- --------------------------- -------------------------- ----
<S> <C> <C>
Bruce E. Ranck President , 46
Chief Executive Officer
and Director (1)
Norman A. Myers Vice Chairman, Chief 59
Marketing Officer and
Director (1)
Jeffrey E. Curtiss Senior Vice President and 47
Chief Financial Officer
Hugh J. Dillingham, III Senior Vice President 46
(Processing and Disposal)
J. Gregory Muldoon Senior Vice President 41
(Corporate Development)
Rufus Wallingford Senior Vice President 55
and General Counsel
David R. Hopkins Vice President, Controller 52
and Chief Accounting
Officer
Louis A. Waters Chairman and President of 57
BFI International, Inc.
and Director (1)(2)
- ----------------
</TABLE>
*As of November 22, 1995.
(1) Serves on the Executive Committee of the Board of Directors.
(2) Serves on the Finance Committee of the Board of Directors.
Mr. Ranck was elected President and Chief Executive Officer in October 1995,
having served as President and Chief Operating Officer of the Company since
November 1991 and as Executive Vice President (Solid Waste Operations-North
America) from October 1989 to November 1991. Prior to that time, he served the
Company as a Regional Vice President in one of the Company's regions for a
period in excess of five years. Mr. Ranck has been a director of the Company
since March 1990. He also serves as a director of Furon Co. and as a director
or trustee of several educational and charitable organizations.
Mr. Myers was elected a director in 1978, Chief Marketing Officer in March 1981
and Vice Chairman of the Board in December 1982. He was initially elected a
Vice President in December 1970 and became
- 14 -
<PAGE> 17
an Executive Vice President in July 1976. Mr. Myers is a director of My
Friends, a foundation for children in crisis.
Mr. Curtiss became Senior Vice President and Chief Financial Officer of the
Company in January 1992. Before that time, he served from August 1989 to
January 1992 as Executive Vice President, Chief Financial Officer and a
director of Heritage Media Corporation, an American Stock Exchange-listed
company based in Dallas.
Mr. Dillingham was elected Senior Vice President (Processing and Disposal) in
March 1993, having served as Vice President (Disposal Operations) since
December 1991. Prior to his election, he served as Divisional Vice President
of Disposal Operations in one of the Company's regions, and has over eighteen
years of experience with the Company in landfill operations. Mr. Dillingham
serves as a director of the Wildlife Habitat Council.
Mr. Muldoon was elected Senior Vice President (Corporate Development) in
September 1992, having served as Vice President (Operations) since December
1991. He joined the Company in 1980 as a market development representative and
from 1983 to 1988 served as a district manager in several locations. From
early 1989 until October 1990, he served as President of CECOS International,
Inc., a subsidiary of the Company, through the discontinuation of its hazardous
waste business. He then served as Regional Vice President of one of the
Company's regions from October 1990 to November 1991.
Mr. Wallingford became Senior Vice President and General Counsel of the Company
in January 1994. Prior to that time, he was a senior partner with the law firm
of Fulbright & Jaworski L.L.P., Houston, Texas, for a period in excess of five
years. Mr. Wallingford also serves as a director of St. Luke's Episcopal
Hospital and the Children's Museum in Houston, Texas.
Mr. Hopkins, who was a Divisional Vice President and Assistant Controller prior
to becoming Controller of the Company in September 1986, joined the Company in
September 1980. He was elected a Vice President and named Chief Accounting
Officer in December 1986. From September 1991 to January 1992, he served as
acting Chief Financial Officer of the Company.
Mr. Waters has served as Chairman of BFI International, Inc. since May 1991 and
as President of BFI International, Inc. since March 1993. He also serves as
Chairman of the Finance Committee of the Company and as a member of the
Executive Committee of the Company. He served as Chairman of the Executive
Committee from September 1980 until 1988 and as Chairman of the Board of the
Company from August 1969 to September 1980. Mr. Waters serves as a director or
trustee of several business, educational and charitable organizations.
All officers of the Company (including executive officers) are elected by the
Board of Directors, generally at its meeting held
- 15 -
<PAGE> 18
the day of the annual meeting of stockholders or as soon thereafter as
practicable. Each officer is elected to hold office until his successor shall
have been chosen and shall have qualified or until his death or the effective
date of his resignation or removal. Subject to Board of Director approval, the
annual meeting of stockholders is scheduled to be held March 6, 1996 in
Houston, Texas.
ITEM 2. PROPERTIES.
In its operations, the Company uses specially-equipped trucks, containers and
compactors. The Company also owns and/or operates sanitary landfill sites
throughout the United States and Canada, and in the United Kingdom, Germany,
Hong Kong, the Netherlands, New Zealand, Spain, Australia and Italy. See
"Business - North American Operations - Solid Waste Services - Collection" and
"Business - North American Operations - Solid Waste Services - Transfer and
Disposal," and Notes (4) and (6) of Notes to Consolidated Financial Statements.
The Company leases its executive offices which are located at 757 N. Eldridge,
Houston, Texas. The Company also owns real estate, buildings and other
physical properties, which it employs in its daily operations in a large number
of its operating locations. The Company also leases a substantial portion of
its transfer stations, offices, storage and shop space. See Notes (4) and (9)
of Notes to Consolidated Financial Statements.
BFI believes that its property and equipment is well-maintained and adequate
for its current needs, although substantial investments are expected to be made
in additional property and equipment for expansion, for replacement of assets
as they reach the end of their useful lives and in connection with corporate
development activities. See "Business - Corporate Development" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." Certain of the Company's property and equipment is subject to
mortgages and liens securing payment of portions of Company indebtedness. See
Notes (7) and (9) of Notes to Consolidated Financial Statements for information
with respect to mortgage and lease obligations on these properties.
ITEM 3. LEGAL PROCEEDINGS.
On November 7, 1990, a lawsuit styled Leonard Eisner Profit Sharing Plan et al.
v. Browning-Ferris Industries, Inc. et al. was filed in the United States
District Court for the Southern District of Texas. Another purported class
action styled Jerry Krim, on behalf of himself and all others similarly
situated v. Browning-Ferris Industries, Inc., et. al. was filed on September 9,
1991, in the United States District Court for the Southern District of Texas.
It is a purported class action on behalf of those persons who purchased BFI
Common Stock during the period from December 17, 1990 through September 9,
1991. Thereafter, several other purported class actions were also filed.
These cases were consolidated into a lawsuit styled In Re Browning-Ferris
Industries, Inc. Securities
- 16 -
<PAGE> 19
Litigation, in the United States District Court for the Southern District of
Texas. The suit generally alleges violations of Section 10(b) and Section
20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder by
allegedly preparing, issuing and disseminating materially false and misleading
information to the plaintiffs and the investing public. The amended
consolidated suit seeks unquantified damages and attorneys' and other fees. On
June 11, 1993, the trial court certified the class action and two classes of
persons who purchased the Company's common stock. The first class period is
from August 9, 1990 through November 5, 1990, and the second class period is
from November 6, 1990 through September 3, 1991. On March 2, 1995, the Court
entered a final judgment in favor of the Company and all individual defendants.
The plaintiffs appealed the final judgment to the United States Court of
Appeals for the Fifth Circuit, which appeal was dismissed on October 24, 1995,
for failure of the plaintiffs to file their brief.
The case of Gary David Harding, et al. v. Browning-Ferris Industries, Inc., et
al. was filed in the 229th Judicial District Court of Duval County, Texas, on
February 28, 1994. The approximately 356 plaintiffs allege that they reside in
the vicinity of a landfill in San Patricio County, Texas, and they allege that
they have sustained personal injuries and other damages from allegedly
contaminated groundwater and other alleged pathways of exposure. The Company
and the plaintiffs agreed to settle this litigation and the terms of the
settlement were approved by the court on October 12, 1995.
On May 18, 1994, a lawsuit styled Ogden Projects, Inc., et al. v. New Morgan
Landfill Company, Inc. ("New Morgan") was filed in the United States District
Court for the Eastern District of Pennsylvania. The suit alleged that New
Morgan, a subsidiary of the Company, did not obtain a permit to construct and
operate a landfill under provisions of the Clean Air Act. The plaintiffs, who
are private parties without regulatory authority, were seeking a declaratory
judgment, an order enjoining the subsidiary from continuing the construction
and/or operation of the landfill without a permit, and civil penalties of
$25,000 for each day New Morgan has constructed and/or operated the landfill
without a permit under the provisions of the Clean Air Act. On September 21,
1995, the court ruled that, although construction and operation of the landfill
does require a Clean Air Act permit, it would not enjoin New Morgan's operation
of the landfill or impose civil penalties against New Morgan. The ruling was
based upon the court's finding that New Morgan acted in good faith in
concluding that a permit was not required. New Morgan currently has a permit
application pending seeking to obtain the required permit.
In addition to the above-described litigation, the Company is involved in
various other administrative matters or litigation, including original or
renewal permit application proceedings in connection with the establishment,
operation, expansion, closure and post-closure activities of certain landfill
disposal facilities, environmental proceedings relating to governmental
- 17 -
<PAGE> 20
actions resulting from the involvement of various subsidiaries of the Company
with certain waste sites (including Superfund sites) (see "Environmental
Proceedings"), personal injury and other civil actions, as well as other claims
and disputes that could result in additional litigation or other adversary
proceedings.
While the final resolution of any such litigation or such other matters may
have an impact on the Company's consolidated financial results for a particular
reporting period, management believes that the ultimate disposition of such
litigation or such other matters will not have a materially adverse effect upon
the consolidated financial position of the Company.
Environmental Proceedings
The Company strives to conduct its operations in compliance with applicable
laws and regulations, including environmental rules and regulations, and has as
its goal 100% compliance. However, management believes that in the normal
course of doing business, companies in the waste disposal industry, including
the Company, are faced with governmental enforcement proceedings and resulting
fines or other sanctions and will likely be required to pay civil penalties or
to expend funds for remedial work on waste disposal sites. The possibility
always exists that such expenditures could be substantial, which would have a
negative impact on earnings for a particular reporting period. Management of
BFI believes that the existence of these proceedings does not provide an
accurate reflection of the Company's operating policies, procedures and
capabilities, although the Company will have to respond to those issues in
filings required to be made in jurisdictions which have enacted "fitness"
statutes. See "Business - Regulation." In any event, management of the
Company believes that the ultimate resolution of such proceedings will neither
individually nor in the aggregate have a materially adverse effect upon the
consolidated financial position of the Company.
The Company is continuously engaged in various original or renewal permit
application proceedings in connection with the establishment, operation,
expansion, closure and post-closure activities relating to waste treatment and
disposal facilities, properties and activities. These proceedings, which are a
necessary and routine part of waste disposal activities, are held before a
variety of regulatory and judicial agencies at the federal, state and local
level. In these proceedings, legal challenges are routinely raised by private
parties and by the regulatory agencies, alleging a variety of adverse
consequences (including adverse effects on the environment, in some instances
with particular reference to the inequitable distribution of environmental
burdens among various social groups and classes) if the proposed permits are
granted or renewed. Opposition is also routinely encountered in connection
with proposed changes in zoning designations, operating procedures, remedial or
upgrading actions and post-closure activities at waste processing and disposal
facilities. See "Business - Regulation."
- 18 -
<PAGE> 21
The Company is participating in potentially responsible party ("PRP") groups at
95 waste disposal sites listed on the EPA's National Priority List, which sites
may be subject to remedial action under the Comprehensive Environmental
Response, Compensation and Liability Act (also known as "Superfund"). Complete
settlements with other members of the PRP groups and/or the EPA have been
negotiated with respect to 66 of these sites. Partial settlements have been
negotiated with regard to 12 of the sites. These settlements had no material
effect on the Company's results of operations or consolidated financial
position. Further, the Company has received information requests relating to
66 additional sites on the EPA's National Priority List. For 39 of these
sites, the Company has determined that it is not a PRP. The Company's PRP
status at the remaining 27 sites has not yet been determined. The number of
Superfund sites with which the Company is involved may increase or decrease
depending upon the EPA's findings from responses to these information requests
and any future information requests which may be received. Superfund
legislation permits strict joint and several liability to be imposed without
regard to fault, and as a result, one company might be required to bear
significantly more than its proportional share of the cleanup costs if it is
unable to obtain appropriate contributions from other responsible parties.
Management routinely reviews each site requiring corrective action (including
Superfund sites) in which the Company is involved, considers its role with
respect to each site and the relationship to the involvement of other parties
at the site, the quantity and content of the waste with which it was
associated, and the number and financial capabilities of the other parties at
the various sites. Based on reviews of the various sites, currently available
information and management's judgment and significant prior experience related
to similarly situated facilities, expense accruals are provided by the Company
for its share of estimated future costs associated with corrective actions to
be implemented at certain of these sites and existing accruals are revised as
deemed necessary. The final negotiated settlement relating to the large
majority of Superfund sites occurs several years after a party's identification
as a potentially responsible party, due to the many complex issues that must be
addressed in determining the magnitude of the contamination at the site. The
process for addressing contamination at a site usually includes technical
investigations, selection of a remedy and implementation of the remedy
selected. In many cases, the expenditures related to actual corrective action
may be incurred over a number of years. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Environmental
Matters."
Management believes that the ultimate disposition of these environmental
matters will not have a materially adverse effect upon the liquidity, capital
resources or consolidated financial position of the Company, although the
resolution of one or more of these matters could have a significant negative
impact on the Company's consolidated financial results for a particular
reporting period. It can be reasonably expected that the Company will become
- 19 -
<PAGE> 22
involved in additional remedial actions and Superfund sites in the future.
On January 2, 1995, Region IX of the United States Environmental Protection
Agency ("EPA") issued a Finding and Notice of Violation to BFI Medical Waste
Systems of Arizona, Inc. ("BFI Medical Waste"), a subsidiary of the Company,
for alleged opacity and permit violations at a medical waste incinerator BFI
Medical Waste operates in Maricopa County, Arizona. The EPA may seek penalties
of up to $25,000 per day for each violation. The Company is currently
negotiating settlement of this matter with the EPA.
A subsidiary of a Company, CECOS International, Inc. ("CECOS"), is a party to a
consent order with the U.S. Environmental Protection Agency, one aspect of
which concerns a leachate pretreatment system that CECOS agreed to construct at
one of its closed facilities. By letter dated March 16, 1994, the USEPA has
demanded $528,500 in stipulated penalties due to CECOS's alleged failure to
commence timely start-up of the leachate pretreatment system that is presently
operating. CECOS is vigorously defending the imposition of this proposed
penalty. Management of the Company is unable to conclude whether the ultimate
monetary sanction in this matter, if any, will be more than $100,000.
On March 6, 1991, Region VI of the EPA filed an administrative proceeding
entitled In the Matter of Chemical Reclamation Services, Avalon, Texas. The
complaint alleges that Chemical Reclamation Services ("CRS"), a former
subsidiary of the Company, failed to comply with certain notification
requirements under RCRA and under regulations established under the Texas
hazardous waste management program. The complaint seeks a proposed monetary
sanction against CRS in the amount of $229,500. A claim for indemnity has been
made against the Company. Management of the Company is currently unable to
determine whether the ultimate monetary sanction, if any, will be more than
$100,000, and whether the Company will be obligated for any part of the
monetary sanction, if any, that may ultimately be imposed upon CRS.
On March 9, 1991, CECOS was named in a civil administrative complaint, entitled
In the Matter of CECOS International, Inc., initiated by Region II of the EPA.
This complaint alleges that CECOS landfilled certain waste generated by General
Motors Corporation, that by definition contained polychlorinated biphenyls in
excess of the regulatory limit, rather than incinerating such waste, and that
CECOS failed to test the waste in accordance with the requirements of its
permits. The complaint seeks a monetary sanction against CECOS in the amount
of $14,150,000. CECOS is vigorously contesting the allegations in the
complaint. Management of the Company is currently unable to determine whether
the ultimate monetary sanction, if any, will be more than $100,000.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
During the fourth quarter of the fiscal year covered by this report, no matter
was submitted to a vote of security holders.
- 20 -
<PAGE> 23
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
BFI's Common Stock is traded on the New York Stock Exchange, the Chicago Stock
Exchange, the Pacific Stock Exchange and The International Stock Exchange of
the United Kingdom and Republic of Ireland Ltd. The table below sets forth by
fiscal quarter, for the fiscal years ended September 30, 1994 and 1995, the
high and low sales prices of BFI's Common Stock on the New York Stock Exchange-
Composite Transactions, as reported in The Wall Street Journal.
<TABLE>
<CAPTION>
Fiscal Year 1994 Fiscal Year 1995
------------------ ------------------
High Low High Low
------- ------- ------- -------
<S> <C> <C> <C> <C>
First Quarter $27-1/2 $20-7/8 $32-3/8 $25-5/8
Second Quarter 30-1/4 24-1/4 34-1/4 27-1/8
Third Quarter 32-1/4 24-5/8 37-7/8 32-3/4
Fourth Quarter 32-7/8 29 40-5/8 30
</TABLE>
As of November 20, 1995, there were approximately 19,000 holders of record of
BFI Common Stock.
In June 1988, the Company's Board of Directors adopted a Preferred Stock
Purchase Rights Plan and in connection therewith declared a dividend of one
Preferred Stock Purchase Right (a "Right") on each outstanding share of the
Company's Common Stock and on each share subsequently issued until separate
Rights certificates are distributed or the Rights expire or are redeemed. See
Note (11) of Notes to Consolidated Financial Statements for more detailed
information concerning these Rights.
BFI has paid cash dividends on its Common Stock each year since 1950. Cash
dividends are paid quarterly. During each of fiscal 1994 and 1995, 68 cents
was paid in dividends on each share of Common Stock. The most recently
declared quarterly cash dividend on the Common Stock was 17 cents per share.
The payment of dividends or other distributions on, or with respect to, the
Common Stock is limited by provisions of the Company's Multicurrency Revolving
Credit Agreement and Revolving Credit Agreement. See Note (7) of Notes to
Consolidated Financial Statements for a description of these credit agreements.
The amount available for payment of dividends or distributions on or with
respect to Common Stock pursuant to the most restrictive of such limitations
was approximately $1.21 billion on September 30, 1995, after giving effect to
cash dividends paid or declared through September 30, 1995. BFI currently
expects to continue the payment of dividends, although future dividend payments
will depend on BFI's earnings, financial needs and other factors.
Due to the nature of the Company's business, the Company or its competitors
receives unfavorable publicity from time to time, which can result in
aberrational market conditions for the Company's securities.
- 21 -
<PAGE> 24
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
NONE.
PART III.
Items 10, 11, 12 and 13 of Part III (except for information required with
respect to executive officers of the Company which is set forth under "Business
- - Executive Officers of the Company" in Part I of this report) have been
omitted from this report, since the Company will file with the Securities and
Exchange Commission, not later than 120 days after the close of its fiscal
year, a definitive proxy statement, pursuant to Regulation 14A, which involves
the election of directors. The information required by Items 10, 11, 12 and 13
of this report, which will appear in the definitive proxy statement, is
incorporated by reference into Part III of this report.
- 22 -
<PAGE> 25
Item 6. - Selected Financial Data
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
The following is a summary of certain consolidated financial information
regarding the Company for the five years ended September 30, 1995.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Year Ended September 30,
------------------------------------------------------------
1995 1994 1993 1992 1991
- -------------------------------------------------------------------------------
(In Thousands Except for Per Share Amounts)
Income State-
ment Data:
- ----------------
<S> <C> <C> <C> <C> <C>
Revenues $5,779,351 $4,314,541 $3,478,830 $3,277,635 $3,174,899
Income before
special charges
and extraordinary
item $ 384,561 $ 283,973 $ 213,910 $ 175,607 $ 221,642
Income before
extraordinary
item $ 384,561 $ 283,973 $ 197,440 $ 175,607 $ 65,177
Net income $ 384,561 $ 278,710 $ 197,440 $ 175,607 $ 65,177
Income per common
and common
equivalent share -
Income before
extraordinary
item $ 1.93 $ 1.52 $ 1.15 $ 1.11 $ .42
Net income $ 1.93 $ 1.49 $ 1.15 $ 1.11 $ .42
Cash dividends per
common share $ .68 $ .68 $ .68 $ .68 $ .68
</TABLE>
(Continued on Following Page)
-23-
<PAGE> 26
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Year Ended September 30,
------------------------------------------------------------
1995 1994 1993 1992 1991
- -------------------------------------------------------------------------------
(In Thousands Except for Per Share Amounts)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
- ------------------
Property and
equipment, net $3,722,292 $3,049,767 $2,515,709 $2,263,653 $2,140,203
Total assets $7,460,372 $5,796,955 $4,295,642 $4,067,524 $3,655,892
Senior long-term
debt $1,665,804 $ 713,680 $ 333,689 $ 349,183 $ 406,987
Convertible
subordinated
debentures $ 744,944 $ 744,949 $ 744,949 $ 744,949 $ 744,959
Common stock-
holders' equity $2,741,750 $2,391,680 $1,532,603 $1,460,406 $1,114,299
Cash Flow Data:
- --------------
Capital
expenditures -
continuing
operations $ 929,596 $ 694,475 $ 606,240 $ 531,239 $ 477,632
Cash flows from
operating
activities $1,030,489 $ 693,928 $ 613,965 $ 577,007 $ 685,664
</TABLE>
-24-
<PAGE> 27
Item 7. - Management's Discussion and Analysis of Financial
Condition and Results of Operations
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company's 1995 results reflect the highest level of revenues and net
income achieved in the Company's history. Consolidated revenues reached $5.8
billion for fiscal 1995, an increase of 34% or $1.5 billion over the prior
year. Net income was $385 million for fiscal 1995, a 38% increase or $106
million over the prior year. International revenues increased 78% or $672
million over fiscal 1994 and revenues from North American operations increased
23% or $792 million over the prior year. Revenue and net income growth was
primarily attributable to global acquisitions, volume growth, higher commodity
prices in North American post-consumer recycling markets and improved
international operations.
In the first half of fiscal year 1995, the Company acquired Attwoods p.l.c.
("Attwoods") with estimated annualized revenues of $450 million, net of
divested operations. Approximately 80% of Attwoods' revenues, net of divested
operations, was derived from collection and landfill operations with the
remainder from recycling, medical waste and mineral extraction operations. The
Company paid approximately $580 million to acquire this integrated service
company with operations in the United States, United Kingdom, the Caribbean and
mainland Europe (primarily Germany). In addition, during fiscal 1995, the
Company concluded 103 acquisitions with a combined annual revenue base of
approximately $267 million, including revenues consolidated as a result of the
purchase of the remaining 50% ownership interest outstanding of its joint
venture in Italy.
International revenues grew significantly in fiscal 1995 representing
26.5% of consolidated revenues as compared with 19.9% for fiscal 1994. Almost
80% of fiscal 1995 international revenues was generated from operations in
Germany, the Netherlands and the United Kingdom. These countries had a
combined revenue growth of 90% over their combined fiscal 1994 revenues. This
revenue increase is related to the current year impact of the acquisition in
February 1994 of a 50% interest in a German waste company, Otto Waste Services
("Otto"), the improved performance in the Netherlands associated with internal
growth and acquisitions and the international operations of the Attwoods
acquisition. The consolidation of revenues resulting from increased ownership
of the Company's Italian joint venture also contributed to the current year
revenue increase. International earnings were higher this year than in fiscal
1994 principally due to the Otto acquisition in February 1994 and increased
earnings in the Netherlands. The operating profit margin for international
operations also improved in fiscal year 1995 when compared with the prior year.
Operating profit margins in the International business area continue to trend
lower than North American operations, however, due to several factors,
including (i) the overall mix of international operations which has a lower
concentration of higher margin disposal business, (ii) a higher level of
acquisition-related expenses associated with
-25-
<PAGE> 28
international's annual operating results because these operations have been
acquired more recently and (iii) the difficulties associated with attaining
performance improvement in countries with unique market conditions
(particularly Italy and, to a somewhat lesser extent, Australia) despite the
continued focus by management on improvement in these areas.
North American revenues were $4.2 billion for fiscal year 1995, up 23%
from the prior year. Increased revenues were reported for each of the
Company's business segments in North America. Revenues increased significantly
due to acquisitions, particularly from the Attwoods acquisition which
principally increased the collection and medical waste business revenues. The
increase in revenues was also due to volume growth and improved pricing,
including the higher weighted average commodity prices for recyclable materials
during fiscal 1995. The operating margins in North America improved in fiscal
1995 over the prior year principally as a result of improved margins in the
collection and recycling businesses.
Revenues generated from solid waste collection services provided for North
American commercial/industrial and residential customers represented almost 48%
of the total revenues of the Company in fiscal 1995. Almost 75% of North
American collection revenues are generated from commercial and industrial
customers. North American collection revenues grew 17% in fiscal 1995 to $2.8
billion, reflecting growth from acquisitions, volume and improved pricing.
Operating profit for the North American collection business grew in excess of
20% over 1994 as a result of volume growth (including acquisitions), cost
reduction initiatives and improved pricing. The Company will continue to
identify opportunities throughout the collection customer base to improve
revenues and costs on a per unit of work basis.
In fiscal 1995, North American landfills achieved revenue and volume
increases of 10% and 5%, respectively. Total North American landfill volumes
returned to the 115 million gate yard level, matching the historic high levels
reached in 1989. Non-hazardous industrial processed waste ("special waste")
volumes disposed at the Company's landfills increased at a faster pace during
fiscal 1995 than non-special volumes and represented approximately 13% of total
volumes disposed in the current year. The volume increases were due
principally to the current year impact on new sites opened during fiscal 1994.
However, during the third and fourth quarters of fiscal 1995, volume growth
compared with the same quarters of fiscal 1994 began to flatten as these new
sites added in fiscal 1994 reached expected volume levels. Operating margins
in the landfill business in fiscal 1995 were down slightly from the prior year;
a function of (i) higher per unit amortization costs for newly constructed
airspace resulting from the increased development capital required by Subtitle
D and (ii) higher legal expenses related to the resolution of various
outstanding environmental proceedings at several sites. In fiscal 1996, the
Company will focus its efforts on further controlling variable operating
expenses and improving pricing to provide for the recovery of the higher costs
of airspace capital investment. Additional volume improvement is also
anticipated in fiscal 1996 from the impact of moving a larger percentage of
internal collection disposal volumes
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<PAGE> 29
to Company owned landfills, the continued closure of older municipal landfills
as a result of Subtitle D and higher volumes of special waste (non-hazardous
industrial processed waste) sales being generated by a group of approximately
120 specially trained sales representatives devoted to this effort. Increased
market demands for various recycled commodities may offset this volume growth
somewhat in fiscal 1996.
The Company's North American recycling services operations include
collection and processing of recyclable materials as well as organic materials
recycling and/or disposal, tire recycling and other alternative energy
concepts. During fiscal 1995, over 85% of recycling services revenues were
associated with the collection and processing of recyclable materials.
Revenues from North American recycling operations increased 88% or $316 million
in fiscal year 1995 compared with the prior year. Over 55% of this improvement
was due to commodity pricing increases. Although commodity prices (primarily
paper products) peaked during the third quarter of fiscal 1995 at a weighted
average price for the quarter of $184 per ton, the revenues and earnings of
recycling services were affected unfavorably during the last quarter of the
fiscal year as the average market prices for corrugated, office paper and
newspaper declined from the third quarter historic highs to a weighted average
price of $141 per ton for the fourth quarter. Commodity prices continued to
decline into fiscal 1996. Paper currently represents approximately 85% of the
volumes processed by recycling services. Paper prices have historically been
cyclical. Volume growth during fiscal 1995 was associated with the increasing
demand for recycled materials. Approximately 2.3 million tons of recyclable
materials were sold by the Company during fiscal 1995. The demand for
recyclables has been enhanced by various programs such as the U.S. President's
executive order requiring 20% post-consumer content in federal paper purchased
after December 1994. Many states and local governmental agencies have followed
this order and authorized task forces to establish recycling programs. New
annual mill capacity for reclaimed corrugated cardboard, newspaper and office
paper is projected by the paper industry to increase by 10.9 million tons
between 1995 and 1997, an increase of approximately 35% in annual tons recycled
in 1994. The Company's recycling business infrastructure developed over the
past five years and the aggressive marketing of recycling services to customers
has positioned the Company to capture the increased volumes generated by
increased demand and to enjoy the benefit of robust commodity prices during the
past year. Commodity prices in early fiscal 1996 have declined significantly
from the historic high levels noted in the third quarter of fiscal 1995 but the
demand for recycling services continues to rise. The Company's goal is to
manage this business to ensure appropriate returns, despite the more cyclical
nature of this business, through the continued emphasis on lowering costs,
increasing volumes, maintaining/improving the quality of products and securing
commodity floor price contracts where appropriate. The Company's contracts
with its suppliers often provide for their participation in price increases on
resale of recycled commodities.
In the future, the Company plans to continue to focus on improved
profitability fueled by operational efficiencies, improved pricing and business
development opportunities, including
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<PAGE> 30
acquisitions. Significant acquisition candidates exist in North American and
international markets that are consistent with the Company's strategies. The
Company's goal is to invest where it can achieve appropriate returns on its
invested capital.
Results of Operations
Revenues
Revenues for fiscal 1995 were $5.8 billion, a 34% increase over fiscal 1994
revenues of $4.3 billion and a 66% increase over fiscal 1993 revenues of $3.5
billion. The following table reflects the contribution to total revenue of the
Company's business segments for the last three years (in millions):
<TABLE>
<CAPTION>
Year Ended September 30,
------------------------------
1995 1994 1993
-------- -------- --------
North American Operations (1)
- -----------------------------
<S> <C> <C> <C>
Collection Services -
Solid Waste $2,758 $2,360 $2,138
Transfer and Disposal -
Solid Waste
Unaffiliated customers 543 493 448
Affiliated companies 483 392 339
------ ------ ------
1,026 885 787
Recycling Services 675 359 240
Medical Waste Services 189 161 146
Services Group and Other 83 83 79
Elimination of affiliated
companies' revenues (483) (392) (339)
------ ------ ------
Total North American Operations 4,248 3,456 3,051
------ ------ ------
International Operations
- ------------------------
Germany 710 344 --
The Netherlands 323 237 216
United Kingdom 176 55 48
Other 322 223 164
------ ------ ------
1,531 859 428
------ ------ ------
Total Company $5,779 $4,315 $3,479
====== ====== ======
Percentage Increase from
Prior Year 34% 24% 6%
- ---------------
</TABLE>
(1) Revenues from Canadian operations of $178 million, $162 million and $170
million for fiscal years 1995, 1994 and 1993, respectively, are included in
North American revenues.
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<PAGE> 31
For the second consecutive year, the Company exceeded 20% revenue growth
with increases of 34% and 24% for fiscal years 1995 and 1994, respectively.
Revenue growth in fiscal 1995 was principally attributable to the current year
impact of the acquisition of Otto in February 1994, the Attwoods acquisition
and improvement in recycling business results. Prior year revenue growth was
primarily the result of an aggressive acquisition and market development
program highlighted by the Otto acquisition.
Recycling revenues increased $316 million in 1995, an 88% increase from
fiscal 1994. Recycling volume increased during 1995 and weighted average paper
prices for the year reached an all-time high.
The transfer and disposal services' revenues from unaffiliated customers
increased 10% in the current year principally due to higher weighted average
per unit pricing and increased transfer volumes. Prices for municipal solid
waste disposal have improved at a number of the Company's landfills,
particularly in the midwestern and southern regions of the U.S. special waste
volumes, which demand a higher price than municipal solid waste, represented a
higher percentage of total volumes in fiscal 1995 than in the prior year, which
also favorably affected weighted average per unit landfill pricing.
Medical waste revenues increased 17% in fiscal 1995 over the prior year.
This increase was primarily due to acquisitions, including the Attwoods
acquisition which increased the Company's medical waste operations in Florida
and, to a lesser extent, in other markets.
International revenues increased $672 million in fiscal 1995, a 78%
increase over fiscal 1994. Approximately 55% of the growth in international
revenues occurred in Germany as a result of the current year impact from the
acquisition of Otto in February 1994. International revenues have been
impacted favorably in the United Kingdom by the Attwoods acquisition in the
first half of fiscal 1995, pricing improvements in the Netherlands and other
international acquisitions.
The impact of pricing in fiscal 1995 was much improved over the negligible
increases during the past two years. Although commodity prices for recyclable
materials fell dramatically during the last four months of fiscal 1995,
commodity prices were still the single largest contributor to the overall
increase in price achieved by the Company in the current year. In addition,
over 30% of the pricing improvement occurred in non-recycling businesses.
Significant revenue growth due to volume was achieved in the collection,
recycling and international business areas in fiscal 1995. The most significant
volumes were gained through acquisitions and through recycling segment
expansion where tons of recycled materials sold grew 37%. In the collection
business, residential homes serviced grew 25%, and commercial and industrial
services grew at over 10% from the prior year. Special waste landfill volumes
from unaffiliated customers increased almost 12% in fiscal 1995 over the prior
year which offset partially the approximate 7% decline in non-special waste
landfill volumes from unaffiliated
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<PAGE> 32
customers in the current year. Landfill volumes from unaffiliated customers
have been affected over the past year by the diversion of volumes to recycling
facilities. Every line of business enjoyed strong volume growth in fiscal
1994.
The table below reflects revenue growth for fiscal 1995 from pricing,
volume, acquisitions and foreign currency translation compared with the growth
in fiscal years 1994 and 1993.
<TABLE>
<CAPTION>
Change in Revenues
--------------------------------
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Price 5.9% 0.6% 0.3%
Volume 5.8 7.3 3.9
Acquisitions 19.9 16.6 3.6
Foreign currency translation 2.4 (0.5) (1.5)
---- ---- ----
Total Percentage Increase 34.0% 24.0% 6.3%
==== ==== ====
</TABLE>
Cost of Operations
Cost of operations increased $1,024 million (33%) in fiscal 1995, $598
million (24%) in fiscal 1994 and $152 million (6%) in fiscal 1993 over prior
years. The significant portion of this increase in cost of operations is
directly attributable to the acquisitions of Otto in February 1994 and Attwoods
in the first half of fiscal 1995. Disposal costs, the single largest component
in cost of operations, which also includes landfill and transfer station
operating costs, increased 35%, 23% and 4% over the prior years in fiscal 1995,
1994 and 1993. More than one-half of the increase in fiscal 1995 and 1994
disposal costs occurred in the international area. The fiscal 1995 increase
was due principally to the Attwoods and Otto acquisitions. The fiscal 1994
increase was due principally to the Otto acquisition. The remainder of the
increase in cost of operations is due to increased volumes (including
acquisitions) in the collection, recycling and international businesses.
Fiscal 1995 cost of operations was 71.8% of revenues, down from 72.4% in fiscal
1994 and 72.6% in fiscal 1993.
Selling, General and Administrative Expense (SG&A)
SG&A expenses increased $196 million (30%) in fiscal 1995 and $88 million
(16%) in fiscal 1994 over the prior year. The $196 million increase in SG&A
from fiscal 1994 to fiscal 1995 was related to higher goodwill amortization and
other costs associated with the Company's acquisition activities. A
substantial portion of the increase in SG&A is related to the acquisition of
Otto in February 1994 and Attwoods in the first half of fiscal 1995. The
Company continuously strives to reduce costs in this area through the
consolidation of administrative functions and other cost control measures
resulting from the identification and application of best practices within its
operations.
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<PAGE> 33
Reorganization Charge
A reorganization charge of $27 million (an after-tax charge of
approximately $.10 per share), which was announced in June 1993, was recorded
in the third quarter of fiscal year 1993 to cover the estimated expense of
reorganizing the Company's regional structure in the United States to better
plan and coordinate its business operations, capitalize on new growth
opportunities and more efficiently serve its customers in the Company's major
market areas. The reorganization included the designation of a divisional vice
president with responsibility for each market area, the closing of three
regional offices, the opening of one new regional office and the relocation of
one regional office, which reduced the number of United States regional offices
from seven to five. The reorganization charge included employee severance and
relocation costs and other employee, organization and transition related costs.
Interest Expense and Income
Interest expense and income for the last three fiscal years were as
follows (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Gross interest expense $170,958 $104,759 $ 89,563
Interest capitalized (11,429) (11,600) (18,669)
-------- -------- --------
Interest expense $159,529 $ 93,159 $ 70,894
======== ======== ========
Interest income $ 7,422 $ 11,288 $ 14,633
======== ======== ========
</TABLE>
Fiscal 1995 interest expense was $159.5 million, an increase of $66.4
million when compared to fiscal 1994 interest expense of $93.2 million. The
net increase in gross interest expense in fiscal 1995 was principally the
result of the acquisition of Attwoods in the first half of fiscal year 1995 and
the current year impact of the acquisition of Otto. The increase in gross
interest expense from fiscal 1993 to fiscal 1994 was principally the result of
the acquisition of Otto in February 1994.
Interest capitalized fluctuates from year-to-year depending upon the
number of construction projects and average capitalization rate. The decline
in interest capitalized in fiscal 1994 compared with the prior year was due to
the completion of construction of a number of significant market development
projects late in fiscal 1993 and early in fiscal 1994.
Fiscal year 1995 interest income declined principally as a result of
adjustments in international operations related to interest income accrued in
fiscal year 1994 on notes receivable amounts which the Company has since
determined will not be collected. Fiscal year 1994 interest income declined $3
million from the prior year due to lower weighted average investment balances
outstanding during the year, offset partially by interest
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<PAGE> 34
income associated with the consolidation of Otto.
Equity in Earnings of Unconsolidated Affiliates
Equity in earnings of unconsolidated affiliates increased $17 million from
fiscal 1994 to fiscal 1995 and $21 million from fiscal 1993 to fiscal 1994 due
principally to earnings improvement of American Ref-Fuel and certain
international affiliates which includes the equity in earnings of
unconsolidated affiliates of Otto. The Company acquired a 50% interest in Otto
in February 1994 and consolidated the financial results of Otto, which include
equity in earnings of Otto's unconsolidated affiliates.
Minority Interest in Income of Consolidated Subsidiaries
The increase over the prior year in minority interest in income of
consolidated subsidiaries during fiscal years 1995 and 1994 of $14.6 million
and $15.5 million, respectively, are the result of the Company's acquisition of
a 50% interest in Otto in February 1994 and due to higher earnings reported by
Otto in the current year.
Income Taxes
The Company's effective income tax rates for fiscal years 1995, 1994 and
1993 were 40.0%, 40.0% and 39.6%, respectively. The increase in the income tax
rate in fiscal 1994 over fiscal 1993 was the result of an increase in the U.S.
income tax rate effective January 1, 1993.
Profitability Ratios
These ratios (shown as a percent of revenues) reflect certain
profitability trends for the Company's operations and shows the return on total
assets and ratio of earnings to fixed charges.
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<PAGE> 35
<TABLE>
<CAPTION>
Year Ended September 30,
-------------------------
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Profitability margins:
Gross profit margin 28.2% 27.6% 27.4%
Income from operations
before reorganization charge 13.7% 12.6% 11.3%
Income from operations 13.7% 12.6% 10.6%
Income before income taxes,
minority interest and
extraordinary item 12.0% 11.6% 9.4%
Net income before reorganization
charge and extraordinary item 6.7% 6.6% 6.1%
Net income 6.7% 6.5% 5.7%
Pre-tax, pre-interest return on
average total assets, excluding
reorganization charge 12.2% 11.4% 9.9%
Ratio of earnings to fixed charges 4.04 4.25 3.31
</TABLE>
Profitability ratios improved in fiscal year 1995 principally due to increased
commodity prices and volumes in the Company's recycling business, the continued
focus on cost reductions and, to a lesser extent, improved pricing and volumes
in other business areas. The increase in gross profit margin was driven by the
Company's North American operations. An increase in operating profit margins
was achieved as a result of the higher gross profit margin in North American
operations and due to SG&A expenses increasing at a slower pace than revenues
throughout international operations. Profitability ratios improved in fiscal
year 1994 due principally to increased earnings in the landfill and recycling
businesses, higher operating margins associated with the Otto operations and
the Company's ability to control the growth in SG&A.
During fiscal 1995, total assets of the Company reached $7.5 billion, a
$1.7 billion increase over fiscal 1994, primarily as a result of the
acquisition of Attwoods and other businesses, foreign currency translation and
capital expenditures. During fiscal 1994, total assets of the Company
increased by approximately $1.5 billion, principally a result of acquiring 50%
of Otto, foreign currency translation, the adoption of the new standard related
to accounting for income taxes and capital expenditures. Despite the
significant increase in total assets, pre-tax, pre-interest return on average
total assets for fiscal 1995 and 1994 increased to 12.2% and to 11.4%,
respectively, due to higher profitability. EBITDA (earnings before interest,
taxes, depreciation and amortization and before considering minority interest
in income of consolidated subsidiaries, reorganization charge and extraordinary
items) was $1.40 billion, $1.03 billion and $777 million for fiscal years 1995,
1994 and 1993, respectively.
During fiscal 1996, management's focus on operational efficiencies,
improved pricing and business development opportunities, including
acquisitions, is intended to favorably impact profitability.
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<PAGE> 36
The effect of general inflation, as measured by the average consumer price
index, did not have a material impact on the Company's overall financial
position or results of operations.
Environmental Matters
As of September 30, 1995 and 1994, the Company's balance sheet included
accrued environmental costs of $703 million and $688 million associated with
its obligations for closure and post-closure of its operating and closed
landfills and for remediation and corrective actions at Superfund sites and
other facilities which are discussed in the following paragraphs. See Notes
(1) and (6) of Notes to Consolidated Financial Statements for a discussion of
the Company's environmental and landfill accounting policies and other
financial information related to environmental and landfill accruals.
The Company's landfills are subject to specific operating permit
requirements and the applicable existing regulatory requirements of the
national, state and local jurisdictions in which they are operated. On an
ongoing basis, the Company, based on input from its engineers, estimates its
future cost requirements for closure and post-closure management of its
landfills based on its interpretations of these regulations and standards.
Accruals for these costs are typically provided as the remaining permitted
airspace of these facilities is consumed. Engineering reviews of the future
cost requirements for closure and post-closure monitoring and maintenance for
the Company's operating landfills are performed at least annually and are the
basis upon which the Company's estimates of these future costs and the related
accruals are revised. In its foreign operations, the Company has noted a trend
toward increased landfill regulation, particularly in those countries within
the European Economic Community. While increasing regulation often presents
new business opportunities to the Company, it likewise often results in
increased operating costs in those jurisdictions in which such regulatory
changes occur and could potentially have a negative impact on results of
operations.
The Company is also responsible for a significant number of closed solid
waste landfills, principally in North America, which require varying levels of
inspection, maintenance, environmental monitoring and from time to time
corrective action. An overall program of management has been implemented to
provide a systematic and routine standard of care and maintenance and to ensure
environmental compliance at these closed facilities.
In fiscal year 1990, the Company announced its withdrawal from the
hazardous waste collection, treatment and disposal business principally because
the Company believed its resources would be better utilized if they were
directed toward developing opportunities in the solid waste business.
Anticipated cash expenditures related principally to remediation and
post-closure monitoring at certain closed sites are expected to be required
over a long period of time with no significant amounts anticipated to be paid
in any single year. In addition, these future cash expenditures will be offset
in part by the realization of related income tax benefits.
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<PAGE> 37
Various subsidiaries of the Company are participating in potentially
responsible party ("PRP") groups at 95 waste disposal sites listed on the U.S.
Environmental Protection Agency's National Priority List, which may be subject
to remedial action under Superfund. The Company's association with these sites
is typically attributable to the transportation of waste to the listed sites by
its subsidiaries (or their predecessors). In many cases, these waste disposal
activities were performed by companies prior to their acquisition by the
Company. Certain of the Company's subsidiaries have negotiated settlements
with other members of the PRP groups and the EPA with respect to 66 of these 95
Superfund sites. Partial settlements have been negotiated with regard to 12 of
the remaining sites. These settlements had no material effect on the Company's
liquidity, results of operations or financial position. Further, various
subsidiaries have received information requests relating to 66 additional sites
on the EPA's National Priority List. For 39 of these sites, the Company has
determined it is not a PRP; the Company's PRP status at the remaining 27 sites
has not yet been determined. The number of Superfund sites with which the
Company's subsidiaries are involved may increase or decrease depending upon the
EPA's findings from responses to these information requests and any future
information requests which may be received. Superfund legislation permits
strict joint and several liability to be imposed without regard to fault, and
as a result, one company may be required to bear significantly more than its
proportional share of the cleanup costs if it is unable to obtain appropriate
contributions from other responsible parties. The final negotiated settlement
relating to the large majority of Superfund sites occurs several years after a
company has been identified as a PRP due to the many complex issues that must
be addressed in determining the magnitude of contamination present, the cause
of the contamination and the recommended remedial action to be taken. In many
cases, the expenditures related to actual remediation may also occur over a
number of years.
The Company has implemented programs to promote compliance with the laws,
regulations and permit requirements governing its landfills and has as its goal
100% compliance. Even with these programs, management believes that in the
normal course of doing business, companies in the waste disposal industry are
faced with governmental enforcement proceedings resulting in fines or other
sanctions and will likely be required to pay civil penalties or to expend funds
for remedial work on waste disposal sites. These programs include systematic
site reviews and evaluations of each site requiring corrective action
(including Superfund sites) in which the Company's subsidiaries are involved,
considering each subsidiary's role with respect to each site and the
relationship to the involvement of other parties at the site, the quantity and
content of the waste with which the subsidiary was associated, and the number
and financial capabilities of the other parties at the various sites. Based on
reviews of the various sites, currently available information, and management's
judgment and significant prior experience related to similarly situated
facilities, expense accruals are provided by the Company for its share of
estimated future costs associated with corrective actions to be implemented at
certain of these sites and existing accruals are revised as deemed necessary.
Management also routinely reviews the realization of its investments in
operating landfills and the
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<PAGE> 38
adequacy of its accruals for the future costs of closure and post-closure
monitoring and maintenance at its operating and closed landfills and adjusts
its asset values and accruals as deemed appropriate.
Management believes that the ultimate disposition of these environmental
matters will not have a materially adverse effect upon the liquidity, capital
resources, business or consolidated financial position of the Company, though
resolution of one or more of these matters could have a significant negative
impact on the Company's consolidated financial results for a particular
reporting period. Due to the nature of the Company's business and the
continuing emphasis of government in all jurisdictions and the public on
environmental issues relating to the waste disposal industry, it can be
reasonably expected that various subsidiaries of the Company will become
involved in additional remediation actions and Superfund sites in the future.
Management attempts to anticipate future changes in laws, regulations and
operating permit requirements which may affect its operations; however, there
is no assurance that such future changes will not significantly affect its
operations.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital and related ratios at the end of the last
three years were as follows:
<TABLE>
<CAPTION>
As of September 30,
----------------------------
1995 1994 1993
------- ------- --------
<S> <C> <C> <C>
Working capital (in thousands) $ 7,967 $ 7,104 $ 1,042
Working capital ratios 1.0:1 1.0:1 1.0:1
</TABLE>
The Company's long-term strategy in managing working capital is to
maintain substantial available commitments under bank credit agreements or
other financial agreements to finance short-term capital requirements in excess
of internally generated cash while minimizing working capital.
In connection with the acquisition of Attwoods in December 1994, the
Company and three of its subsidiaries entered into a Multicurrency Revolving
Credit Agreement for a total facility equivalent to 500 million pounds
sterling. This facility matures in December 1997. The Company had repaid the
$550 million in U.S. dollars borrowed under this agreement by March 31, 1995.
In March 1995, the Company issued $300 million of 7 7/8% Senior Notes ("7
7/8% Notes") which mature on March 15, 2005. Net proceeds received by the
Company from the sale of the 7 7/8% Notes were used to repay indebtedness
associated with the acquisition of Attwoods and other working capital
requirements.
During February and March 1995, the Company borrowed a total of $160
million under separate senior note agreements with a number
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<PAGE> 39
of lending institutions. Interest is payable semi-annually on the senior notes
at rates ranging from 7.5 - 8.0%. The senior notes mature between December
1997 and March 1998.
In March 1995, Otto entered into a five-year revolving credit facility in
the amount of 600 million deutsche mark with a group of German and
international banks. Interest is payable on loans under the facility at the
Frankfurt Interbank Offered Rate plus a margin. The agreement requires a
facility fee of .45% per annum (.30% per annum if Otto maintains certain net
worth requirements) on the total facility commitment, whether used or unused.
At September 30, 1995, Otto had outstanding borrowings under this facility of
140 million deutsche mark (approximately U.S. $98.1 million).
In July 1995, the Company issued to the public 11,499,200 7.25% Automatic
Common Exchange Securities with a stated amount of $35.625 per security ($409.7
million in total). Each security consists of (1) a purchase contract under
which (a) the holder will purchase from the Company on June 30, 1998 (earlier
under certain circumstances), for an amount in cash equal to the stated amount
of $35.625, between .8333 of a share (in total approximately 9.6 million
shares) and one share (a maximum of 11,499,200 shares) of the Company's common
stock (depending on the then market value of the common stock) and (b) the
Company will pay the holder contract fees at the rate of 2.125% per annum on
the security, and (2) 5.125% United States Treasury Notes having a principal
amount equal to $35.625 and maturing on June 30, 1998. The Treasury Notes
underlying these securities are pledged as collateral to secure the holder's
obligation to purchase the Company's common stock under the purchase contract.
The principal of the Treasury Notes underlying such securities, when paid at
maturity, will automatically be applied to satisfy in full the holder's
obligation to purchase the Company's common stock. These securities are not
included on the Company's balance sheet; an increase in common stockholders'
equity will be reflected when the cash proceeds totalling over $400 million are
received by the Company.
In September 1995, the Company issued $400 million of 7.40% Debentures due
September 15, 2035. Net proceeds received from the sale of these debentures
were used to repay short-term indebtedness associated with various
acquisitions, including the Attwoods acquisition.
The Company's bank credit agreement provides total committed credit
capacity of $1 billion. The available credit capacity under this facility,
which matures in May 2000, is used principally to support the Company's
commercial paper program, under which up to $1 billion in commercial paper may
be issued. Borrowings under the commercial paper program may not exceed the
available credit under the Company's existing bank credit agreements. There
were approximately $34 million of commercial paper borrowings outstanding as of
September 30, 1995.
As of September 30, 1995, the Company's unused committed borrowing
capacity under its Multicurrency Revolving Credit Agreement and its $1 billion
bank credit agreement was in excess of $1.7 billion. Such capacity may be used
to refinance amounts outstanding under short-term facilities, for financing
requirements
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<PAGE> 40
in connection with foreign exchange contracts or for other capital
requirements. Of the $2.4 billion of the Company's long-term indebtedness
outstanding (including the $745 million of Convertible Subordinated Debentures)
at September 30, 1995, 91% was at fixed interest rates for a period of at least
12 months. Management's long-term objective is to maintain most of its
indebtedness in fixed interest rate obligations, although variable rate debt
has been and will likely continue to be used to meet short-term and certain
longer term financing needs. The Company's weighted average cost of
indebtedness declined to approximately 7.6% for fiscal 1995 from 7.9% for
fiscal year 1994.
Long-term indebtedness (including $519 million of Otto Waste Services
debt, which has not been guaranteed by the Company, and $745 million of
Convertible Subordinated Debentures) as a percentage of total capitalization
increased from 38% at September 30, 1994 to 47% at September 30, 1995,
principally as a result of the acquisition of Attwoods.
The capital appropriations budget for fiscal year 1996 has been
established at $1.3 billion, of which $656 million is intended to provide for
normal replacement requirements and to provide new assets to support planned
revenue growth within all consolidated businesses. The remaining $687 million
is designated for corporate market development activities which principally
include new or expanded solid waste transfer and disposal facilities, recycling
processing centers, acquisitions of solid waste businesses and other
investments in both North American and international operations.
As of September 30, 1995, a number of balance sheet caption amounts have
increased significantly since September 30, 1994, primarily trade receivables,
property and equipment, goodwill, accounts payable, other accrued liabilities,
accrued environmental and landfill costs, other deferred items and long-term
debt. The most significant changes in balance sheet items during the period
were principally due to (i) business combinations, particularly the Attwoods
acquisition, (ii) capital expenditures, (iii) additional indebtedness
associated with business acquisitions, capital spending, dividends and other
corporate requirements and (iv) the net impact of foreign currency translation
which increased the assets and liabilities of the Company when balance sheet
amounts of foreign operations were measured in U.S. dollars.
The Company believes that its cash flows from operations and its access to
cash from banks and other external sources, including the public markets, are
more than sufficient for its financing needs.
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<PAGE> 41
Item 8. - Financial Statements and Supplemental Data
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Browning-Ferris Industries, Inc.:
We have audited the accompanying consolidated balance sheet of Browning-Ferris
Industries, Inc. (a Delaware corporation) and subsidiaries as of September 30,
1995 and 1994, and the related consolidated statements of income, common
stockholders' equity, and cash flows for each of the three years in the period
ended September 30, 1995. 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 Browning-Ferris Industries,
Inc. and subsidiaries as of September 30, 1995 and 1994, and the results of
their operations and their cash flows for each of the three years in the period
ended September 30, 1995, 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. Schedule II listed in the index of
financial statements is presented for purposes 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
Houston, Texas
November 22, 1995
-39-
<PAGE> 42
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
For The Three Years Ended September 30, 1995
(In Thousands Except for Per Share Amounts)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
Year Ended September 30,
------------------------------------
1995 1994 1993
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $5,779,351 $4,314,541 $3,478,830
Cost of operations 4,147,303 3,123,375 2,525,023
---------- ---------- ----------
Gross profit 1,632,048 1,191,166 953,807
Selling, general and
administrative expense 842,861 647,256 559,419
Reorganization charge -- -- 27,000
---------- ---------- ----------
Income from operations 789,187 543,910 367,388
Interest expense 159,529 93,159 70,894
Interest income (7,422) (11,288) (14,633)
Equity in earnings of
unconsolidated affiliates (53,996) (37,084) (16,060)
---------- ---------- ----------
Income before income taxes,
minority interest and
extraordinary item 691,076 499,123 327,187
Income taxes 276,430 199,649 129,726
Minority interest in income
of consolidated subsidiaries 30,085 15,501 21
---------- ---------- ----------
Income before extraordinary
item 384,561 283,973 197,440
Extraordinary item - loss on
early retirement of debt,
net of income tax benefit
of $2,833 -- 5,263 --
---------- ---------- ----------
Net income $ 384,561 $ 278,710 $ 197,440
========== ========== ==========
Number of common and common
equivalent shares used in
computing earnings per share 199,077 187,621 171,496
========== ========== ==========
</TABLE>
(Continued on Following Page)
-40-
<PAGE> 43
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
For The Three Years Ended September 30, 1995
(In Thousands Except for Per Share Amounts)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
Year Ended September 30,
---------------------------------
1995 1994 1993
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Earnings per common and common
equivalent share:
Income before extraordinary item $ 1.93 $ 1.52 $ 1.15
Extraordinary item -- (.03) --
------- ------- -------
Net income $ 1.93 $ 1.49 $ 1.15
======= ======= =======
Cash dividends per common share $ .68 $ .68 $ .68
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 41 -
<PAGE> 44
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
ASSETS
(In Thousands)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
September 30,
--------------------------
1995 1994
- -----------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 92,808 $ 79,131
Short-term investments 104,761 61,993
Receivables -
Trade, net of allowances of $39,777
and $33,284 for doubtful accounts 926,791 752,686
Other 57,015 60,934
Inventories 50,090 32,811
Deferred income taxes 116,871 114,925
Prepayments and other 73,959 83,613
---------- ----------
Total current assets 1,422,295 1,186,093
---------- ----------
PROPERTY AND EQUIPMENT, at cost, less
accumulated depreciation and amortization
of $2,395,795 and $2,046,604 3,722,292 3,049,767
---------- ----------
OTHER ASSETS:
Cost over fair value of net tangible
assets of acquired businesses,
net of accumulated amortization of
$116,369 and $62,527 1,768,391 954,378
Other intangible assets, net of
accumulated amortization of $142,780
and $156,080 116,303 113,059
Deferred income taxes 78,689 97,998
Investments in unconsolidated affiliates 272,205 292,579
Other 80,197 103,081
---------- ----------
Total other assets 2,315,785 1,561,095
---------- ----------
Total assets $7,460,372 $5,796,955
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 42 -
<PAGE> 45
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
(In Thousands Except for Share Amounts)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
September 30,
--------------------------
1995 1994
- -----------------------------------------------------------------------
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of long-term debt $ 62,463 $ 49,841
Accounts payable 515,304 400,177
Accrued liabilities -
Salaries and wages 122,656 101,530
Taxes, other than income 41,960 44,129
Other 434,855 373,978
Income taxes 53,045 53,642
Deferred revenues 184,045 155,692
---------- ----------
Total current liabilities 1,414,328 1,178,989
---------- ----------
DEFERRED ITEMS:
Accrued environmental and landfill
costs 568,644 529,501
Deferred income taxes 104,645 78,678
Other 220,257 159,478
---------- ----------
Total deferred items 893,546 767,657
---------- ----------
LONG-TERM DEBT, net of current portion 1,665,804 713,680
---------- ----------
CONVERTIBLE SUBORDINATED DEBENTURES 744,944 744,949
---------- ----------
COMMITMENTS AND CONTINGENCIES
COMMON STOCKHOLDERS' EQUITY:
Common stock, $.16 2/3 par; 400,000,000
shares authorized; 213,440,672 and
197,084,755 shares issued 35,581 32,854
Additional paid-in capital 1,806,482 1,351,919
Retained earnings 1,323,169 1,009,132
Treasury stock, 1,001,407 and 743,497
shares, at cost (10,494) (2,225)
Stock and Employee Benefit Trust,
13,596,325 shares (412,988) --
---------- ----------
Total common stockholders' equity 2,741,750 2,391,680
---------- ----------
Total liabilities and common
stockholders' equity $7,460,372 $5,796,955
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 43 -
<PAGE> 46
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMMON STOCKHOLDERS' EQUITY
For The Three Years Ended September 30, 1995
(In Thousands)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Year Ended September 30,
----------------------------------
1995 1994 1993
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Shares of common stock:
Beginning of year 197,085 174,232 169,317
Stock option exercises 423 867 1,058
Common stock issuances related to -
Public offering -- 15,525 --
Dividend Reinvestment Plan 38 96 115
BFI Employee Stock Ownership and
Savings Plan 318 597 433
Acquisitions 555 5,708 2,294
Additional investment in Spanish
operations -- -- 1,000
Stock and Employee Benefit Trust 15,000 -- --
Other 22 60 15
---------- ---------- ----------
End of year 213,441 197,085 174,232
========== ========== ==========
Common stock:
Beginning of year $ 32,854 $ 29,044 $ 28,225
Stock option exercises 71 145 176
Common stock issuances related to -
Public offering -- 2,588 --
Dividend Reinvestment Plan 6 16 19
BFI Employee Stock Ownership and
Savings Plan 53 100 72
Acquisitions 93 951 382
Additional investment in Spanish
operations -- -- 167
Stock and Employee Benefit Trust 2,501 -- --
Other 3 10 3
---------- ---------- ----------
End of year 35,581 32,854 29,044
---------- ---------- ----------
</TABLE>
(Continued on Following Page)
-44-
<PAGE> 47
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMMON STOCKHOLDERS' EQUITY
For The Three Years Ended September 30, 1995
(In Thousands)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Year Ended September 30,
----------------------------------
1995 1994 1993
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Additional paid-in capital:
Beginning of year 1,351,919 743,265 656,690
Stock option exercises and related
income tax benefit (933) 17,528 17,584
Common stock issuances related to -
Public offering, net of issuance
costs -- 431,307 --
Dividend Reinvestment Plan 1,137 2,587 2,941
BFI Employee Stock Ownership and
Savings Plan 9,459 16,628 11,041
Acquisitions 8,245 139,788 28,130
Additional investment in Spanish
operations -- -- 25,333
Stock and Employee Benefit Trust 456,874 -- --
Adjustment of Stock and Employee
Benefit Trust to market 2,534 -- --
Dividends on shares held by Stock
and Employee Benefit Trust 5,075 -- --
Issuance costs and present value
of contract fees payable to
holders of Automatic Common
Exchange Securities (27,027) -- --
Other (801) 816 1,546
--------- --------- --------
End of year 1,806,482 1,351,919 743,265
--------- --------- --------
Retained earnings:
Beginning of year 1,009,132 761,325 776,517
Net income 384,561 278,710 197,440
Cash dividends (142,089) (126,818) (116,358)
Foreign currency translation
adjustment 71,565 95,915 (96,274)
--------- --------- --------
End of year 1,323,169 1,009,132 761,325
--------- --------- --------
</TABLE>
(Continued on Following Page)
-45-
<PAGE> 48
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMMON STOCKHOLDERS' EQUITY
For The Three Years Ended September 30, 1995
(In Thousands)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Year Ended September 30,
----------------------------------
1995 1994 1993
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Treasury stock:
Beginning of year (2,225) (1,031) (1,026)
Stock option exercises 27,013 (1,192) (8)
Common stock issuances related to -
Dividend Reinvestment Plan 1,106 -- --
BFI Employee Stock Ownership and
Savings Plan 9,228 -- --
Acquisitions 3,223 -- --
Reimbursement from Stock and
Employee Benefit Trust (48,921) -- --
Other 82 (2) 3
---------- ---------- ----------
End of year (10,494) (2,225) (1,031)
---------- ---------- ----------
Stock and Employee Benefit Trust:
Beginning of year -- -- --
Establishment of trust (459,375) -- --
Reimbursement of treasury stock 48,921 -- --
Adjustment to market (2,534) -- --
---------- ---------- ----------
End of year (412,988) -- --
---------- ---------- ----------
Total common stockholders' equity $2,741,750 $2,391,680 $1,532,603
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-46-
<PAGE> 49
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
For The Three Years Ended September 30, 1995
(In Thousands)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Year Ended September 30,
---------------------------------
1995 1994 1993
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 384,561 $278,710 $197,440
---------- -------- --------
Adjustments to reconcile net income
to cash provided by operating activities:
Depreciation and amortization -
Property and equipment 476,384 391,639 319,619
Goodwill 43,519 19,277 9,003
Other intangible assets 31,967 33,276 37,859
Reorganization charge -- -- 27,000
Deferred income tax expense 23,450 23,458 732
Amortization of deferred investment
tax credit (706) (706) (1,023)
Provision for losses on accounts
receivable 26,620 31,346 18,657
Gains on sales of fixed assets (4,724) (5,167) (667)
Equity in earnings of unconsolidated
affiliates, net of dividends received (28,535) (19,442) (16,060)
Minority interest in income of
consolidated subsidiaries, net of
dividends paid 26,344 15,501 21
Increase (decrease) in cash from
changes in assets and liabilities
excluding effects of acquisitions:
Trade receivables (70,069) (112,586) (46,605)
Inventories (5,466) 2,606 508
Other assets 52,625 (14,563) 13,316
Other liabilities 74,519 50,579 54,165
---------- -------- --------
Total adjustments 645,928 415,218 416,525
---------- -------- --------
Net cash provided by operating activities 1,030,489 693,928 613,965
---------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (929,596) (694,475) (606,240)
Payments for businesses acquired (769,369) (398,734) (83,786)
Investments in unconsolidated affiliates (29,530) (54,342) (52,035)
Proceeds from disposition of assets 159,217 74,797 24,554
Purchases of short-term investments (42,179) -- (30,003)
Sales of short-term investments 201,924 147,424 173,922
Return of investment in unconsolidated
affiliates 38,637 30,431 49,497
---------- -------- --------
Net cash used in investing activities (1,370,896) (894,899) (524,091)
---------- -------- --------
</TABLE>
(Continued on Following Page)
-47-
<PAGE> 50
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
For The Three Years Ended September 30, 1995
(In Thousands)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Year Ended September 30,
----------------------------------
1995 1994 1993
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuances of stock 15,363 450,876 45,337
Proceeds from issuances of
indebtedness 1,062,652 175,111 51,468
Repayments of indebtedness (591,884) (246,761) (76,455)
Dividends paid (134,139) (122,944) (115,519)
---------- -------- --------
Net cash provided by (used in)
financing activities 351,992 256,282 (95,169)
---------- -------- --------
EFFECT OF EXCHANGE RATE CHANGES 2,092 949 (6,516)
---------- -------- --------
NET INCREASE (DECREASE) IN CASH 13,677 56,260 (11,811)
CASH AT BEGINNING OF YEAR 79,131 22,871 34,682
---------- -------- --------
CASH AT END OF YEAR $ 92,808 $ 79,131 $ 22,871
========== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH PAID FOR:
Interest, net of capitalized amounts $ 153,576 $ 97,996 $ 72,960
Income taxes $ 205,544 $174,005 $138,498
</TABLE>
The accompanying notes are an integral part of these financial statements.
-48-
<PAGE> 51
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Summary of significant accounting policies -
Principles of consolidation.
The consolidated financial statements include the accounts of
Browning-Ferris Industries, Inc. and its subsidiaries (the "Company"). All
significant intercompany accounts and transactions have been eliminated.
Entities over which the Company exercises control are consolidated. Other
investments are accounted for under the equity method or the cost method, as
appropriate. Foreign currencies have been translated into United States dollars
at appropriate exchange rates.
Short-term investments.
Short-term investments are carried at cost, which approximates the
aggregate market value. At September 30, 1995 and 1994, short-term investments
included approximately $104.8 million and $61.7 million, respectively, invested
in time deposits.
Inventories.
Inventories consisting principally of equipment parts, materials and
supplies are valued under a method which approximates the lower of cost
(first-in, first-out) or market.
Property and equipment.
Property and equipment are recorded at cost. Capitalized landfill costs
include expenditures for land and related airspace, permitting costs and
preparation costs. Landfill permitting and preparation costs represent only
direct costs related to these activities, including legal, engineering,
construction and the direct costs of Company personnel dedicated for these
purposes. Interest is capitalized on landfill permitting and construction
projects and other projects under development while the assets are undergoing
activities to ready them for their intended use. The interest capitalization
rate is based on the Company's weighted average cost of indebtedness. Interest
capitalized during fiscal years 1995, 1994 and 1993 was $11,429,000, $11,600,000
and $18,669,000, respectively. Management routinely reviews its investment in
operating landfills, transfer stations and other significant facilities to
determine whether the costs of these investments are realizable.
Landfill permitting and acquisition costs, excluding the estimated residual
value of land, are typically amortized as permitted airspace of the landfill is
consumed. For many of the Company's landfills, preparation costs, which include
the costs of construction associated with excavation, liners, site berms and the
installation of leak detection and leachate collection systems, are
-49-
<PAGE> 52
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
also typically amortized as total permitted airspace of the landfill is
consumed. In determining the amortization rate for these landfills, preparation
costs include the total estimated costs to complete construction of the
landfill's permitted capacity. For other landfills, the landfill preparation
costs are generally less significant and are amortized as the airspace for the
particular benefitted phase is consumed. Units-of-production amortization rates
are determined annually for each of the Company's operating landfills. The rates
are based on estimates provided by the Company's engineers and accounting
personnel, and consider the information provided by aerial surveys which are
generally performed annually. Depreciation of property and equipment, other than
landfills, is provided on the straight-line method based upon the estimated
useful lives of the assets, generally estimated as follows: buildings, 20 to 40
years and vehicles and equipment, 3 to 12 years.
Expenditures for major renewals and betterments are capitalized and
expenditures for maintenance and repairs are charged to expense as incurred.
During 1995, 1994 and 1993, maintenance and repairs charged to cost of
operations were $325,658,000, $247,143,000 and $210,673,000, respectively. 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 income.
Intangible assets.
The cost over fair value of net tangible assets of acquired businesses
("goodwill") is amortized on the straight-line method over periods not exceeding
40 years. Other intangible assets, substantially all of which are customer lists
and covenants not to compete, are amortized on the straight-line method over
their estimated lives, typically no more than seven years.
Deferred income taxes.
Effective October 1, 1993, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 109 - "Accounting for Income Taxes". Under
SFAS No. 109, deferred tax assets and liabilities reflect the impact of
temporary differences between the financial reporting basis and tax basis of
assets and liabilities. Such amounts are recorded using presently enacted tax
rates and regulations. Valuation allowances are recorded to reduce deferred tax
assets when it is more likely than not that a tax benefit will not be realized.
As permitted under SFAS No. 109, prior years' financial statements have not been
restated to apply the provisions of SFAS No. 109. The adoption of SFAS No. 109
had no material effect on the Company's results of operations; however, it did
affect the classification of deferred tax assets and liabilities resulting in an
increase in working capital of $90.3 million and increases in both total assets
and liabilities of $128.4 million as of October 1, 1993. In prior years,
deferred income taxes were determined under Accounting Principles Board ("APB")
Opinion No. 11, which required use of the deferral method. Under that method,
-50-
<PAGE> 53
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
deferred income taxes resulted from differences in the timing of the recognition
of certain revenue and expense items for income tax and financial reporting
purposes. Such amounts were recorded using the tax rate in effect when the
timing difference originated.
Deferred revenues.
Amounts billed to customers prior to providing the related services are
deferred and later reported as revenues in the period in which the services are
rendered.
Deferred items.
Accrued environmental and landfill costs -
Accrued environmental and landfill costs includes the non-current portion
of accruals associated with obligations for closure and post-closure of the
Company's operating and closed landfills, corrective actions and remediation at
certain of these landfill facilities and corrective actions at Superfund sites.
The Company, based on input from its engineers, estimates its future cost
requirements for closure and post-closure monitoring and maintenance for solid
waste operating landfills in the United States based on its interpretation of
the technical standards of the U.S. Environmental Protection Agency's Subtitle D
regulations and the proposed air emissions standards under the Clean Air Act as
they are being applied on a state-by-state basis. Closure and post-closure
monitoring and maintenance costs represent the costs related to cash
expenditures yet to be incurred when a landfill facility ceases to accept waste
and closes. Accruals for closure and post-closure monitoring and maintenance
requirements in the U.S. consider final capping of the site, site inspections,
ground-water monitoring, leachate management, methane gas control and recovery,
and operation and maintenance costs to be incurred during the period after the
facility closes. Certain of these environmental costs, principally capping and
methane gas control costs, are also incurred during the operating life of the
site in accordance with the landfill operation requirements of Subtitle D and
the proposed air emissions standards. Future cost requirements for closure and
post-closure monitoring and maintenance of foreign operating landfills are
determined based on the country or local landfill regulations governing the
facility. The Company typically provides accruals for these estimated costs as
the remaining permitted airspace of such facilities is consumed. Engineering
reviews of the future cost requirements for closure and post-closure monitoring
and maintenance for the Company's operating landfills are performed at least
annually and are the basis upon which the Company's estimates of these future
costs and the related accrual rates are revised.
An overall program of management of closed solid waste landfills,
principally in North America, previously owned or operated by the Company has
been implemented to provide a systematic and routine standard of care and
maintenance and to ensure environmental compliance at closed facilities which
require
-51-
<PAGE> 54
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
varying levels of inspection, maintenance, environmental monitoring and
from time to time corrective action. Additionally, the Company routinely reviews
and evaluates each landfill site requiring corrective action (including
Superfund sites) in which the Company's subsidiaries are involved, considering
each subsidiary's role with respect to each site and the relationship to the
involvement of other parties at the site, the quantity and content of the waste
with which the subsidiary was associated and the number and financial
capabilities of the other parties at the various sites. Based on reviews of the
various sites, currently available information, and management's judgment and
significant prior experience related to similarly situated facilities, expense
accruals are provided by the Company for its share of estimated future costs
associated with corrective actions to be implemented at certain of these sites
and existing accruals are revised as deemed necessary. Expense accruals related
to the estimated costs of post-closure care of previously owned or operated
solid waste landfills are also reviewed on a periodic basis and revised as
necessary.
Accruals for closure, post-closure and certain other liabilities related
to hazardous waste disposal were provided in fiscal 1990 when the Company
discontinued its hazardous waste operations. The Company reviews the adequacy of
these accruals on a periodic basis to determine whether any revisions in the
accruals provided at that time are required.
Other deferred items -
Deferred items as of September 30, 1995 and 1994 were as follows (in
thousands):
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Self-insurance accruals $ 82,508 $ 69,453
Minority interest in consolidated
subsidiaries 44,583 8,877
Accrued pension costs 34,798 42,176
Unamortized investment tax credits 21,099 21,807
Other 37,269 17,165
-------- --------
$220,257 $159,478
======== ========
</TABLE>
The Company amortizes investment tax credits under the deferral method
over the estimated useful lives of the related assets as they are placed in
service. No investment tax credits have been generated since fiscal year 1992.
In addition to the above deferred items, included in other accrued liabilities
at September 30, 1995 and 1994 was the current portion of self-insurance
accruals of $83,971,000 and $64,998,000, respectively, and accrued pension costs
of $20,388,000 and $1,547,000, respectively.
Foreign exchange contracts.
The Company enters into foreign exchange contracts as a hedge
-52-
<PAGE> 55
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
against certain of its net investments in foreign subsidiaries and purchase
commitments from time to time. Realized and unrealized gains and losses on these
contracts and the amortization of any premiums or discounts are deferred and
included with translation adjustments in the separate component of common
stockholders' equity or reflected as a deferred asset or liability associated
with the anticipated purchase commitment. When deemed appropriate, the Company
enters into foreign exchange contracts as a hedge against certain advances to
foreign subsidiaries, which are to be repaid in the foreseeable future. Realized
and unrealized gains and losses associated with these contracts are reflected in
income for each period such contracts are outstanding. There were no significant
foreign exchange contracts outstanding at September 30, 1995 or 1994.
Cash flow information.
The Consolidated Statement of Cash Flows provides information about changes
in cash and excludes the effects of non-cash transactions, principally related
to business combinations discussed in Note (3).
Reclassifications.
Certain reclassifications have been made in prior years' financial
statements to conform to the fiscal year 1995 presentation.
(2) Reorganization charge -
A reorganization charge of $27 million (an after-tax charge of
approximately $.10 per share) was included in fiscal year 1993 results of
operations. The charge, which was announced in June 1993, was recorded to cover
the estimated expense of reorganizing the Company's regional structure in the
United States to better plan and coordinate its business operations, capitalize
on new growth opportunities and more efficiently serve its customers in the
Company's major market areas. The reorganization included the designation of a
divisional vice president with responsibility for each market area, the closing
of three regional offices, the opening of one new regional office and the
relocation of one regional office, which reduced the number of United States
regional offices from seven to five. The reorganization charge included employee
severance and relocation costs and other employee, organizational and transition
related costs.
(3) Business combinations -
On December 2, 1994, the Company acquired majority control of Attwoods plc
("Attwoods"), which was a provider of waste services operating principally in
the United States, the United Kingdom, the Caribbean and mainland Europe
(primarily Germany) and also had mineral extraction operations in the United
Kingdom. The Company increased its ownership from 56.6% of the outstanding
ordinary shares (including ordinary shares represented by American Depository
Shares) and 80.8% of the convertible preference shares
-53-
<PAGE> 56
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
of Attwoods (Finance) N.V., a finance subsidiary of Attwoods, at December 2,
1994 to 94.4% of the outstanding ordinary shares and 83.2% of the convertible
preference shares as of December 31, 1994. The Company acquired the remaining
ordinary shares that it did not own and certain additional preference shares
during the second quarter of fiscal 1995. The Company paid approximately $580
million (in pounds sterling except where requested to pay U.S. dollars by
individual shareholders) to acquire the ordinary and convertible preference
shares of Attwoods as discussed above. Additionally, during the second quarter
of fiscal 1995, the Company redeemed the remaining outstanding convertible
preference shares. In connection with the acquisition, the Company sold in June
1995 the portable sanitation and accommodation business of Attwoods in
continental Europe, primarily Germany. As a result of this transaction, the
Company reduced the purchase price of this acquisition by the 80.5 million in
deutsche mark (U.S. $56.8 million) received and will further adjust the purchase
price to the extent that all or a portion of 2.7 million in deutsche mark (U.S.
$1.9 million) in future contingent payments is ultimately received. The Attwoods
acquisition has been accounted for as a purchase.
In addition to the Attwoods transaction, during the current fiscal year,
the Company paid approximately $258.6 million (including liabilities assumed and
additional amounts payable to former owners of $76.5 million and 262,948 shares
of the Company's common stock valued at $8.1 million) to acquire 102 solid waste
businesses. These businesses were accounted for as purchases and included the
acquisition of the remaining 50% ownership interest outstanding of Servizi
Industriali S.r.l., its 50% owned joint venture in Italy. The Company also
exchanged 397,221 shares of its common stock and assumed liabilities and equity
of $5.6 million in connection with one business combination that met the
criteria to be accounted for as a pooling-of-interests. As the effect of this
business combination was not significant, prior period financial statements were
not restated.
In February 1994, the Company acquired 50% of the share capital of Otto
Waste Services, which has been accounted for as a purchase. Otto Waste Services
is an integrated waste services company operating throughout Germany that is
principally engaged in providing collection and recycling services under
municipal contracts. The Company paid approximately $400 million, consisting of
3,928,075 shares of the Company's common stock valued at $117.4 million and the
remainder in deutsche mark, for its interest in Otto Waste Services. In addition
to the Otto Waste Services transaction, during the prior fiscal year, the
Company paid approximately $179.5 million (including liabilities assumed and
additional amounts payable to former owners of $31.4 million and 752,049 shares
of the Company's common stock valued at $21.4 million) to acquire 111 solid
waste businesses, which were accounted for as purchases. The Company also
exchanged 1,027,721 shares of its common stock and assumed liabilities and
equity of $7.0 million in connection with four business combinations which met
the criteria to be accounted for as poolings-of-interest. As the aggregate
effect of these four business combinations was not
-54-
<PAGE> 57
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
significant, prior period financial statements were not restated.
The results of all businesses acquired in fiscal years 1995 and 1994 have
been included in the consolidated financial statements from the dates of
acquisition. In allocating purchase price, the assets acquired and liabilities
assumed in connection with Attwoods and many of the Company's other acquisitions
have been initially assigned and recorded based on preliminary estimates of fair
value and may be revised as additional information concerning the valuation of
such assets and liabilities becomes available. As a result, the financial
information included in the Company's consolidated financial statements and in
the pro forma information below is subject to adjustment prospectively as
subsequent revisions in estimates of fair value, if any, are necessary.
The Company's consolidated results of operations on an unaudited pro forma
basis, as though the businesses acquired during fiscal years 1995 and 1994 had
been acquired on October 1, 1993, are as follows (in thousands, except per share
amounts):
<TABLE>
<CAPTION>
Year Ended
September 30,
---------------------------
1995 1994
(Unaudited) (Unaudited)
----------- -----------
<S> <C> <C>
Pro forma revenues $5,978,994 $5,294,677
Pro forma income before
extraordinary item $ 387,416 $ 223,028 (1)
Pro forma net income $ 387,416 $ 217,765 (1)
Pro forma income per common and
common equivalent share -
Income before extraordinary
item $ 1.94 $ 1.16 (1)
Net income $ 1.94 $ 1.13 (1)
</TABLE>
- ----------------
(1) Subsequent to July 31, 1994, certain assets of Attwoods were written
down to estimated net recoverable value and certain additional liabilities
were recorded, including additional landfill environmental liabilities and
accruals for loss contracts. These adjustments, net of applicable taxes,
reduced Attwoods' stockholders' equity by approximately $50 million,
thereby increasing the goodwill recorded by the Company at the date of
acquisition. The pro forma results of operations for fiscal 1994 reflects
these adjustments.
These pro forma results are presented for informational purposes only and
do not purport to show the actual results which would have occurred had the
business combinations been consummated on October 1, 1993, nor should they be
viewed as indicative of future results of operations.
-55-
<PAGE> 58
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(4) Property and equipment -
Property and equipment at September 30, 1995 and 1994 was as follows (in
thousands):
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Land and improvements $ 303,848 $ 232,732
Buildings 538,040 425,775
Landfills 1,737,975 1,472,565
Vehicles and equipment 3,387,795 2,847,902
Construction-in-progress 150,429 117,397
---------- ----------
Total property and equipment 6,118,087 5,096,371
Less accumulated depreciation
and amortization 2,395,795 2,046,604
---------- ----------
Property and equipment, net $3,722,292 $3,049,767
========== ==========
</TABLE>
Included in the landfill category of property and equipment, net are
$118,597,000 and $173,353,000 as of September 30, 1995 and 1994, respectively,
related to solid waste landfill market development projects, including landfill
permitting costs, for which amortization has not yet commenced. The Company
reviews the realization of these projects on a periodic basis.
(5) Investments in unconsolidated affiliates -
The Company uses the equity method of accounting for investments in
unconsolidated affiliates over which it exercises control of 20% - 50%. The
summarized combined balance sheet and income statement information presented in
the table below (and the Company's related investments and earnings) includes
amounts primarily related to the following significant equity investees:
American Ref-Fuel Company of Hempstead, Inc. (New York) (50%), American Ref-Fuel
Company of Essex County, Inc. (New Jersey) (50%), American Ref-Fuel Company of
Southeastern Connecticut, Inc. (50%), American Ref-Fuel Company of Niagara, L.P.
(New York) (50%), Servizi Industriali Group (Italy) (50% - for the period
through December 1994, at which time the Company acquired the remaining 50%
ownership interest), Swire BFI Waste Services, Ltd. (Hong Kong) (50%),
Pfitzenmeier & Rau (Germany) (50% - since February 3, 1994) and Congress
Development Company (Chicago, Illinois) (50%) (in thousands).
-56-
<PAGE> 59
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Combined Balance Sheet Information
as of Fiscal Yearend:
Assets -
Current assets $ 241,787 $ 211,382
Noncurrent assets 1,118,959 1,122,711
---------- ----------
1,360,746 $1,334,093
========== ==========
Liabilities and Net Worth -
Current liabilities $ 142,967 $ 155,048
Noncurrent liabilities 913,213 804,544
Net worth 304,566 374,501
---------- ----------
$1,360,746 $1,334,093
========== ==========
Company's Investments in and
Advances to Equity Investees
(including subordinated note
and other receivables of
$81,822 and $61,837,
respectively) $ 239,372 $ 268,404
========== ==========
</TABLE>
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Combined Income Statement
Information for the Fiscal
Year Ended:
Revenues $ 500,989 $ 398,753 $ 330,899
Gross profit $ 211,555 $ 162,870 $ 133,624
Net income $ 94,463 $ 74,804 $ 25,538
Company's Equity in Earnings
of Equity Investees (1) $ 53,996 $ 37,084 $ 16,060
</TABLE>
- ----------------
(1) Differences between the equity in earnings of equity investees reported
by the Company and the Company's proportionate share of the combined
earnings of the related equity investees have resulted principally from
accounting differences in the recognition of income and the elimination of
intercompany transactions.
During fiscal years 1995 and 1994, the Company received $25.5 million and
$17.6 million, respectively, in dividends from unconsolidated affiliates. No
significant dividends were received in fiscal year 1993.
-57-
<PAGE> 60
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(6) Accrued environmental and landfill costs -
Accrued environmental and landfill costs at September 30, 1995 and 1994
were as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Accrued costs associated with open
landfills (including landfills
under expansion) $343,746 $328,920
Accrued costs associated with closed
landfills and corrective action
costs (including Superfund sites) 232,169 197,754
Accrued costs of closure, post-closure
and certain other liabilities associated
with discontinued operations 126,931 161,531
-------- --------
Total 702,846 688,205
Less current portion (included
in other accrued liabilities) 134,202 158,704
-------- --------
Accrued environmental and
landfill costs $568,644 $529,501
======== ========
</TABLE>
For a discussion of the Company's significant accounting policies related
to these environmental and landfill costs, see Note (1) - "Summary of
significant accounting policies" - "Deferred items" - "Accrued environmental and
landfill costs".
Open landfills.
The Company operates 100 solid waste landfills in the United States, 18 of
which are operated under contracts with municipalities or others. The Company
also operates 66 landfills outside of the United States. The Company is
responsible for closure and post-closure monitoring and maintenance costs at
most of these landfills which are currently operating or are engaged in
expansion efforts. Estimated aggregate closure and post-closure costs will be
fully accrued for these landfills at the time that such facilities cease to
accept waste and are closed. Considering existing accruals at the end of fiscal
1995, approximately $300-$325 million of additional accruals are to be provided
over the remaining lives of these facilities, including the facilities acquired
in connection with the Attwoods acquisition. Estimated additional environmental
costs ranging from $475-$500 million, principally related to capping and certain
methane gas control and recovery activities expected to occur during the
operating lives of these sites, are also to be expensed over the remaining lives
of these landfill facilities.
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<PAGE> 61
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Closed landfills and corrective action costs (including Superfund sites).
These costs relate to closure and post-closure activities or corrective
actions at closed solid waste landfills owned or previously operated by the
Company as well as a number of Superfund sites where subsidiaries of the Company
are participating in potentially responsible party groups or are otherwise
involved.
Discontinued operations.
These costs relate to closure and post-closure activities or corrective
actions at hazardous waste landfills owned or previously operated by the Company
as well as a number of Superfund sites where subsidiaries of the Company
previously disposed of hazardous waste and are participating in potentially
responsible party groups or are otherwise involved. The Company discontinued its
hazardous waste operations in April 1990.
(7) Long-term debt -
Long-term debt at September 30, 1995 and 1994 was as follows (in
thousands):
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Senior indebtedness:
7.40% Debentures, net of
unamortized discount of $2,136 $ 397,864 $ --
7 7/8% Senior Notes, net of
unamortized discount of $875 299,125 --
9 1/4% Debentures 100,000 100,000
Solid waste revenue bond
obligations 114,079 114,031
Other notes payable, primarily
5.0%-14.0% 585,211 366,145
---------- ----------
1,496,279 580,176
Commercial paper and short-term
facilities to be refinanced 231,988 183,345
---------- ----------
Total long-term debt 1,728,267 763,521
Less current portion 62,463 49,841
---------- ----------
Long-term debt, net of current
portion $1,665,804 $ 713,680
========== ==========
</TABLE>
The long-term portion of the debt outstanding at September 30, 1995,
matures as follows: 1997, $160,268,000; 1998, $218,257,000; 1999, $39,307,000;
2000, $259,244,000 and in subsequent years, $988,728,000.
-59-
<PAGE> 62
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
7.40% Debentures.
In September 1995, the Company issued $400 million of 7.40% Debentures
due September 15, 2035. These debentures are not subject to any sinking fund and
may be redeemed as a whole or in part, at the option of the Company at any time.
The redemption price is equal to the greater of (i) the principal amount of the
debentures and (ii) the present value of future principal and interest payments
discounted at a rate specified under the terms of the indenture. Net proceeds
received from the sale of these debentures were used to repay short-term
indebtedness associated with various acquisitions, including the Attwoods
acquisition.
7 7/8% Senior Notes.
In March 1995, the Company issued $300 million of 7 7/8% Senior Notes
which mature on March 15, 2005. Net proceeds received by the Company from the
sale were used to repay indebtedness associated with the acquisition of Attwoods
and other working capital requirements.
9 1/4% Debentures.
In May 1991, the Company issued $100 million of 9 1/4% Debentures which
mature on May 1, 2021. The debentures may not be redeemed prior to maturity and
are not subject to any sinking fund.
8 1/2% Sinking Fund Debentures.
In April 1994, the Company called for redemption its $100 million 8 1/2%
Sinking Fund Debentures due 2017 which were originally issued in January 1987.
As a result, the Company recorded an after-tax loss of $5,263,000, which has
been reflected in the Company's consolidated statement of income for fiscal year
1994 as an extraordinary item.
Bank credit agreements.
During May 1995, the Company modified the terms of its existing bank credit
agreement extending the maturity of the facility to May 2000. The agreement
continues to provide total committed credit capacity of $1 billion. This $1
billion credit agreement can be utilized to borrow U.S. domestic dollars or
Eurodollars on a committed basis. At the option of the Company and the
participating banks, U.S. dollar and Eurodollar loans bear a rate of interest
based on the London Interbank Offered Rate ("LIBOR"), the prime rate, the
federal funds rate or a certificate of deposit rate, plus a margin. The $1
billion Revolving Credit Agreement with Texas Commerce Bank National Association
as administrative agent and Credit Suisse First Boston Limited as co-agent for a
group of U.S. and international banks, requires a facility fee of .1% per annum
on the total commitment, whether used or unused. This $1 billion credit
agreement is used primarily to support the Company's commercial paper program.
The agreement contains a net worth requirement of $1.5 billion, which increases
-60-
<PAGE> 63
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
annually after September 30, 1995 by 20% of the consolidated net income of the
preceding year and excludes the effect of any foreign currency translation
adjustments on net worth. At September 30, 1995 and 1994, the Company had no
outstanding borrowings under this bank credit agreement.
In connection with the acquisition of Attwoods in December 1994, the
Company and three of its subsidiaries entered into a Multicurrency Revolving
Credit Agreement for a total facility equivalent to 500 million pounds sterling.
The facility, which matures December 31, 1997, can be utilized to borrow U.S.
dollars, pounds sterling or deutsche mark as determined by the Company. At the
option of the Company, the loans bear a rate of interest, generally for periods
of six months or less, based on the prime rate or the London Interbank Offered
Rate ("LIBOR"), a certificate of deposit rate or the federal funds rate, plus a
margin. The Multicurrency Revolving Credit Agreement with Credit Suisse, as
administrative agent for a group of U.S. and international banks, requires a
facility fee based upon the credit rating of the Company. This agreement
contains a net worth requirement of $1.5 billion which increases annually after
September 30, 1995 by 25% of the consolidated net income of the preceding year
and excludes the effect of any foreign currency translations on net worth. Prior
to March 31, 1995, the Company had repaid the $550 million in U.S. dollars
borrowed during December 1994. Interest was payable on this indebtedness at an
average interest rate of approximately 6.5%. At September 30, 1995, the Company
had no outstanding borrowings under this agreement.
In March 1995, Otto Waste Services entered into a five-year revolving
credit facility in the amount of 600 million deutsche mark with a group of
German and international banks. Interest is payable on loans under the facility
at the Frankfurt Interbank Offered Rate plus a margin. This agreement requires a
facility fee of .45% per annum (.30% per annum if Otto Waste Services maintains
certain net worth requirements) on the total facility commitment, whether used
or unused. At September 30, 1995, Otto Waste Services had outstanding borrowings
under this facility of 140 million deutsche mark (approximately U.S. $98.1
million).
As of September 30, 1995, distributions from retained earnings could not
exceed $1.21 billion under the most restrictive of the Company's net worth
maintenance requirements.
Solid waste revenue bond obligations.
Certain subsidiaries of the Company have entered into agreements under
which they receive proceeds from the sale by government authorities of solid
waste revenue bonds. These subsidiaries are obligated to make payments
sufficient to pay the interest and retire the bonds. The weighted average
interest rate of these issues is approximately 6.4%. These issues mature at
various dates through the year 2027. The solid waste revenue bond obligations of
the subsidiaries are guaranteed by the Company.
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<PAGE> 64
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Other notes payable.
During February and March 1995, the Company borrowed a total of $160
million under separate senior note agreements with a number of lending
institutions. Interest is payable semi-annually on the senior notes at rates
ranging from 7.5 - 8.0%. The senior notes mature between December 1997 and March
1998.
Additionally, notes payable includes mortgages payable and other secured
debt, unsecured debt and capitalized lease obligations of the Company.
Approximately $321 million of this indebtedness relates to a large number of
separate company debt instruments of Otto Waste Services and its consolidated
subsidiaries. A substantial portion of the Otto Waste Services debt is secured
by assets of the related companies and is payable in deutsche mark.
Commercial paper and short-term facilities to be refinanced.
In January 1990, the Company established a commercial paper program,
authorizing the issuance of up to $1 billion in commercial paper through
Goldman, Sachs Money Markets, Inc. and Shearson Lehman (a division of Shearson
Lehman Brothers, Inc.). The Company may use proceeds from borrowings under this
program to refinance existing indebtedness and for general corporate purposes,
including interim financing of business acquisitions and funding working capital
requirements. Borrowings under the commercial paper program may not exceed the
available credit under the Company's $1 billion bank credit agreements. At
September 30, 1995 and 1994, the Company had commercial paper and other
short-term borrowings of $231,988,000 and $183,345,000, respectively, classified
as long-term debt. It is the Company's intention to refinance the commercial
paper and other outstanding borrowings classified as long-term debt through the
use of existing committed long-term bank credit agreements in the event that
alternative long-term refinancing is not arranged. A summary by country of the
commercial paper and other outstanding borrowings to be refinanced as of
September 30, 1995 and 1994 is as follows (amounts in thousands):
<TABLE>
<CAPTION>
1995 1994
-------------------- --------------------
Amount Interest Amount Interest
to be Rate at to be Rate at
Refinanced Yearend Refinanced Yearend
---------- -------- ---------- --------
<S> <C> <C> <C> <C>
United States -
Commercial paper $ 34,317 6% $ 43,482 5%
Germany 197,671 5-10% 139,863 8-12%
-------- --------
$231,988 $183,345
======== ========
</TABLE>
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<PAGE> 65
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(8) Convertible Subordinated Debentures -
In August 1987, the Company issued to the public $345 million of 6 1/4%
Convertible Subordinated Debentures due 2012. Each $1,000.00 debenture is
convertible by the holder, at any time, into the Company's common stock, at a
conversion price of $41.00 per share. On August 15, 1990, the debentures became
redeemable at the option of the Company, in whole or in part, at an initial
redemption price of 104.375% of the principal amount, which decreases in equal
increments annually through August 15, 1997 and remains at 100.0% thereafter.
The debentures are subject to an annual sinking fund obligation in an amount
equal to 5% of the originally issued principal amount beginning on August 15,
1997.
In July 1990, the Company issued $400 million of 6 3/4% Convertible
Subordinated Debentures due 2005. The debentures are convertible by a holder
into shares of the Company's common stock at a conversion price of $52.50 per
share. On July 18, 1993, the debentures became redeemable at the option of the
Company, in whole or in part, at an initial redemption price of 103% of the
principal amount, which decreases in equal increments annually through July 18,
1996 and remains at 100% thereafter.
(9) Commitments and contingencies -
Legal proceedings.
Since early November 1990, several lawsuits were filed against the Company
in the United States District Court for the Southern District of Texas. These
suits, seeking unquantified damages and attorneys' and other fees, were class
actions on behalf of those persons who purchased the Company's common stock
during specified periods beginning August 9, 1990 through September 3, 1991. The
suits generally alleged that the Company violated the Securities Exchange Act of
1934 by allegedly preparing, issuing and disseminating materially false and
misleading information to plaintiffs and the investing public. Two classes
(August 9, 1990 to November 5, 1990 and November 6, 1990 to September 3, 1991)
were certified by the trial court. In March 1995, the United States District
Court for the Southern District of Texas entered a final judgment in favor of
the Company and all other defendants. The plaintiffs' appeal of the final
judgment was dismissed on October 24, 1995, for failure of the plaintiffs to
file their brief.
The Company and certain subsidiaries are involved in various other
administrative matters or litigation, including personal injury and other civil
actions, as well as other claims and disputes that could result in additional
litigation or other adversary proceedings.
While the final resolution of any matter may have an impact on the
Company's consolidated financial results for a particular reporting period,
management believes that the ultimate disposition of these matters will not have
a materially adverse effect upon the
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<PAGE> 66
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
consolidated financial position of the Company.
Environmental proceedings.
California judicial and regulatory authorities suspended the Company's
ability to accept decomposable household waste at certain portions of its Azusa,
California landfill in January 1991. The Company has continued to use the
facility for the disposal of primarily inert waste. Since January 1991, the
Company has sought and received the ability to dispose of certain additional
non- municipal solid waste streams at the facility. The Company's ability to
continue to accept decomposable household waste in a portion of the landfill is
dependent on the satisfaction of certain technical requirements mandated by
California authorities. The ultimate realization of the Company's total
investment of approximately $100 million is dependent upon continued disposal of
current and future acceptable waste streams while continuing to pursue all
possible alternative uses of the property to maximize its value.
The Company and certain subsidiaries are involved in various other
environmental matters or proceedings, including original or renewal permit
application proceedings in connection with the establishment, operation,
expansion, closure and post-closure activities of certain landfill disposal
facilities, and proceedings relating to governmental actions resulting from the
involvement of various subsidiaries of the Company with certain waste sites
(including Superfund sites), as well as other matters or claims that could
result in additional environmental proceedings.
While the final resolution of any matter may have an impact on the
Company's consolidated financial results for a particular reporting period,
management believes that the ultimate disposition of these matters will not have
a materially adverse effect upon the consolidated financial position of the
Company.
Insurance matters.
Under its insurance policies, the Company generally has self-insured
retention limits ranging from $1,000,000 to $5,000,000 and has obtained fully
insured layers of coverage above such self-retention limits. In November 1992, a
wholly-owned insurance subsidiary of the Company received a Certificate of
Authority from the Colorado Division of Insurance to operate as a captive
insurance company. It currently writes insurance to meet financial assurance
obligations related to closure and post-closure of certain landfills of the
Company. At September 30, 1995, no claims had been made relative to this
insurance operation, and no claim reserves had been posted.
In order to meet existing governmental requirements, the Company has been
able to secure an environmental impairment liability insurance policy in amounts
which the Company believes are in compliance with the amounts required by
federal and state law. Under this policy, the Company must reimburse the carrier
for
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<PAGE> 67
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
losses incurred by the Company.
Waste-to-energy projects.
Subsidiaries of the Company and Air Products and Chemicals, Inc. ("Air
Products") each have 50% ownership interests in American Ref-Fuel partnerships
that construct, own and operate facilities which generate and sell electricity
from the incineration of solid waste. The four facilities currently in
commercial operation are located in Hempstead, New York, Essex County in New
Jersey, Preston, Connecticut and Niagara Falls, New York. Financing arrangements
for these projects include agreements with the Company and Air Products to each
severally fund one-half of each partnership's cash deficiencies resulting from
the partnership's failure to perform. In all cases except Niagara Falls, the
Company and Air Products generally will not be required to fund cash
deficiencies associated with waste deliveries by the sponsoring municipality
below certain minimum levels, changes in law or termination of incineration
service for reasons other than default by the respective partnership. In the
event of a partnership default which results in termination of incineration
service, the Company may limit its financial obligations by partnership as
follows:
Hempstead, New York - Funding of 50% of periodic payments related to outstanding
debt. At September 30, 1995, $222 million of total unamortized project debt
was outstanding. Average annual debt service on 50% of the debt over the
next five years is $12 million.
Essex County in New Jersey - Funding of 50% of cash deficiencies including debt
service until facility has passed its acceptance tests. At September 30,
1995, total outstanding debt included unamortized project debt of $173
million and $10 million of additional partnership debt (of which $5 million
is guaranteed by the Company). Upon acceptance of the facility, the Company
will be obligated to fund one-half of cash deficiencies up to $50 to $100
million, depending upon the circumstances. Average annual debt service on
50% of the debt over the next five years is $10 million.
Preston, Connecticut - Funding of 50% of periodic payments related to
outstanding debt. At September 30, 1995, total outstanding debt included
$93 million of unamortized project debt and $44 million of additional
partnership debt (of which $22 million is guaranteed by the Company).
Average annual debt service on 50% of the debt over the next five years is
$5 million.
Niagara Falls, New York - Funding of 50% of partnership cash deficiencies,
including debt service. At September 30, 1995, $125 million of total
unamortized project debt was outstanding. Average annual debt service on
50% of the debt over the next five years is $3 million.
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<PAGE> 68
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Operating leases.
The Company and its subsidiaries lease substantial portions of their office
and other facilities under various lease agreements. At September 30, 1995,
total minimum rental commitments becoming payable under all noncancellable
operating leases are as follows (in thousands):
<TABLE>
<S> <C> <C> <C>
1996 $ 66,093 2000 $ 41,119
1997 $ 59,990 2001 - 2005 $114,098
1998 $ 55,749 2006 - 2010 $ 67,826
1999 $ 47,329 All years thereafter $ 34,395
</TABLE>
Total rental expenses for fiscal years 1995, 1994, and 1993, substantially
all of which related to fixed amount rental agreements, were $95,526,000,
$58,667,000 and $55,667,000, respectively.
(10) Preferred stock -
The Company is authorized by its Restated Certificate of Incorporation to
issue 25 million shares of preferred stock, the terms and conditions to be
determined by the Board of Directors in creating any particular series.
(11) Preferred Stock Purchase Rights Plan -
In June 1988, the Board of Directors of the Company adopted a Preferred
Stock Purchase Rights Plan (the "Plan") and in connection therewith declared a
dividend of one Preferred Stock Purchase Right (a "Right") on each outstanding
share of the Company's common stock and on each share subsequently issued until
separate Rights certificates are distributed, or the Rights expire or are
redeemed. When exercisable, each Right will entitle a holder to purchase one
one-hundredth of a share of a new series of the Company's Preferred Stock at an
exercise price of $110.00, subject to adjustment.
The Plan, as subsequently amended in March 1990, provides that if the
Company is acquired in a business combination transaction on or at any time
after the date on which a person obtains ownership of stock having 10% or more
of the Company's general voting power, provision generally must be made prior to
the consummation of such transaction to entitle each holder of a Right to
purchase at the exercise price a number of the acquiring company's common shares
having a market value at the time of such transactions of two times the exercise
price of the Right. The Plan also provides that upon the occurrence of certain
other specific matters, each holder of a Right will have the right to receive,
upon payment of the exercise price, shares of the new series of Preferred Stock
having a market value of two times the exercise price of a Right. The Company
has a right to redeem the Rights for $.05 per Right (subject to adjustment)
prior to the time they become exercisable. The Rights will expire on June 13,
1998.
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<PAGE> 69
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(12) Common stock -
Earnings per share.
The following table reconciles the number of common shares shown as
outstanding on the consolidated balance sheet with the number of common and
common equivalent shares used in computing primary earnings per share (in
thousands):
<TABLE>
<CAPTION>
Year Ended September 30,
---------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Common shares outstanding, end
of period 212,439 196,341 173,545
Less - Shares held in the Stock
and Employee Benefit Trust (13,596) -- --
------- ------- -------
Common shares outstanding for
purposes of computing primary
earnings per share, end of
period 198,843 196,341 173,545
Effect of using weighted average
common and common equivalent
shares outstanding (1,199) (9,788) (2,962)
Effect of shares issuable under
stock option plans based on
the treasury stock method 1,433 1,068 913
------- ------- -------
Shares used in computing
primary earnings per share 199,077 187,621 171,496
======= ======= =======
</TABLE>
Shares of common stock held in the Stock and Employee Benefit Trust ("the
Trust") are not considered to be outstanding until the shares are utilized at
the Company's option for the purposes for which the Trust was established.
During fiscal year 1995, shares were issued from the Trust generally to
reimburse the treasury stock utilized to fund such obligations.
The difference between shares for primary and fully diluted earnings per
share was not significant in any year. Conversion of the 6 3/4% Convertible
Subordinated Debentures due 2005, which were determined not to be common stock
equivalents, was not assumed in the computation of fully diluted earnings per
share because the debentures had an anti-dilutive effect.
Earnings per common and common equivalent share were computed by dividing
net income by the weighted average number of shares of common stock and common
stock equivalents outstanding during each year. Common stock equivalents include
stock options, the Company's 6 1/4% Convertible Subordinated Debentures due 2012
and the 7.25% Automatic Common Exchange Securities. The effect of the debentures
on earnings per share was not significant or was not
-67-
<PAGE> 70
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
dilutive for each of the years presented and, accordingly, has not been included
in the computations. The 7.25% Automatic Common Exchange Securities had no
effect on the computations for the periods presented.
Stock and Employee Benefit Trust.
In February 1995, the Company established a Stock and Employee Benefit
Trust to which it sold 15,000,000 shares of the Company's newly issued common
stock. This trust was established to provide the Company the option to use the
trust to fund future payments under existing employee compensation and benefit
plans as well as other general corporate purposes for which common stock might
be issued. Shares issued to the trust are valued at market and reflected as a
reduction of common stockholders' equity in the balance sheet.
Automatic Common Exchange Securities.
In July 1995, the Company issued to the public 11,499,200 7.25% Automatic
Common Exchange Securities with a stated amount of $35.625 per security ($409.7
million in total). Each security consists of (1) a purchase contract under which
(a) the holder will purchase from the Company on June 30, 1998 (earlier under
certain circumstances), for an amount in cash equal to the stated amount of
$35.625, between .8333 of a share (in total approximately 9.6 million shares)
and one share (a maximum of 11,499,200 shares) of the Company's common stock
(depending on the then market value of the common stock) and (b) the Company
will pay the holder contract fees at the rate of 2.125% per annum on the
security, and (2) 5.125% United States Treasury Notes having a principal amount
equal to $35.625 and maturing on June 30, 1998. The Treasury Notes underlying
these securities are pledged as collateral to secure the holder's obligation to
purchase the Company's common stock under the purchase contract. The principal
of the Treasury Notes underlying such securities, when paid at maturity, will
automatically be applied to satisfy in full the holder's obligation to purchase
the Company's common stock. These securities are not included on the Company's
balance sheet; an increase in common stockholders' equity will be reflected when
cash proceeds are received by the Company.
Stock incentive plans.
The Company presently maintains five stock option plans affording
employees, directors and other persons affiliated with the Company the right to
purchase shares of its common stock. At September 30, 1995, options were
available for future grants only under four plans, the Company's 1987, 1990 and
both of its 1993 plans. At September 30, 1995, 43,120 of the options outstanding
were incentive stock options and 10,129,797 were non-qualified stock options.
The exercise price, term and other conditions applicable to each option granted
under the Company's plans are generally determined by the Compensation Committee
at the time of the grant of each option and may vary with each option granted.
No
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<PAGE> 71
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
option may be granted at a price less than the stock's fair market value on
the date of the grant.
Transactions under all stock option plans are summarized below:
<TABLE>
<CAPTION>
Year Ended September 30,
---------------------------------------------
1995 1994 1993
------------- ------------- -------------
<S> <C> <C> <C>
Options outstanding at
beginning of year 9,905,868 9,708,547 9,202,726
Options granted 1,758,400 1,697,000 1,865,400
Options terminated (204,395) (632,870) (302,145)
Options exercised (1,286,956) (866,809) (1,057,434)
------------- ------------- -------------
Options outstanding at
end of year 10,172,917 9,905,868 9,708,547
============= ============= =============
Options exercisable at
end of year 5,921,652 5,939,033 5,341,527
Options available for
future grants at
end of year 4,925,856 6,501,573 380,657
Total option price of
options outstanding
at end of year $ 269,901,376 $ 249,683,713 $ 242,054,596
Option price range:
Options granted $28.00-$36.56 $25.44-$31.69 $24.81-$27.75
Options terminated $15.50-$40.44 $17.31-$43.38 $ 9.90-$43.38
Options exercised $ 9.34-$37.63 $ 7.00-$29.84 $ 7.00-$31.75
Options outstanding
at end of year $12.81-$43.38 $ 9.34-$43.38 $ 7.00-$43.38
</TABLE>
Under the 1993 Stock Incentive Plans, restricted common stock of the
Company may be granted to officers, other key employees and certain non-employee
directors. Shares granted are subject to certain restrictions on ownership and
transferability. Such restrictions on current restricted stock grants lapse 2
years from the date of grant for officers and key employees and three years for
non-employee directors. The deferred compensation expense related to restricted
stock grants is amortized to expense on a straight-line basis over the period of
time the restrictions are in place and the unamortized portion is classified as
a reduction of additional paid-in capital in the Company's consolidated balance
sheet. Additionally, the 1993 Stock Incentive Plans provide for common stock
awards. Restricted stock grants and common stock awards reduce stock options
otherwise available for future grant. Of the 500,000 shares which may be awarded
to officers and key employees as restricted stock grants or stock awards,
approximately 20,000 restricted shares were issued during the current year and
approximately 33,000 restricted shares were outstanding as of September 30,
1995. In addition, approximately 5,000 restricted shares issued to non-employee
directors were outstanding as of September 30, 1995. No common stock awards were
granted as of September 30, 1995.
-69-
<PAGE> 72
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Dividend Reinvestment Plan.
The Company has a Dividend Reinvestment Plan which provides registered
common stockholders an opportunity to reinvest automatically their dividends in
shares of the Company's common stock. Each participant in the plan may also make
additional cash payments of not less than $25 per remittance and not more than
$60,000 per calendar year to be invested in such common shares pursuant to the
plan. The plan provides that newly issued shares may be acquired from the
Company, purchased on the open market or purchased under a combination of the
two alternatives.
(13) Foreign currency translation -
Increases (decreases) in the equity component for each period's translation
adjustments are as follows (in thousands):
<TABLE>
<CAPTION>
Year Ended September 30,
---------------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Beginning cumulative
translation adjustment $ (40,744) $(136,659) $ (40,385)
Translation adjustment
for the fiscal year 71,565 95,915 (96,274)
--------- --------- ---------
Ending cumulative translation
adjustment $ 30,821 $ (40,744) $(136,659)
========= ========= =========
</TABLE>
(14) Income taxes -
In the first quarter of fiscal 1994, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes"
effective October 1, 1993. As permitted under SFAS No. 109, prior years
financial statements have not been restated to apply the provisions of SFAS No.
109. Information shown below for fiscal year 1993 was determined under the
provisions of Accounting Principles Board Opinion No. 11.
The components of (i) earnings before income taxes, minority interest and
extraordinary item and (ii) the income tax provision for each of the three
fiscal years ended September 30, are as set forth below (in thousands).
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Domestic $563,648 $421,620 $305,023
Foreign (1) 127,428 77,503 22,164
-------- -------- --------
$691,076 $499,123 $327,187
======== ======== ========
</TABLE>
- ----------
(1) Amounts are net of intercompany interest for fiscal years 1995, 1994
and 1993 of $36,572,000, $23,838,000 and
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<PAGE> 73
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
$20,216,000, respectively. The Company maintains a capital structure with
respect to its foreign operations designed to minimize worldwide income and
other tax costs.
<TABLE>
<CAPTION>
State
Federal Foreign & Local Total
--------- --------- --------- ---------
<C> <C> <C> <C> <C>
1995: Current $ 183,876 $ 46,480 $ 23,330 $ 253,686
Deferred 20,605 (6,764) 9,609 23,450
Amortization
of investment
tax credit (706) -- -- (706)
--------- --------- --------- ---------
$ 203,775 $ 39,716 $ 32,939 $ 276,430
========= ========= ========= =========
1994: Current $ 116,164 $ 42,107 $ 18,626 $ 176,897
Deferred 34,646 (220) (10,968) 23,458
Amortization
of investment
tax credit (706) -- -- (706)
--------- --------- --------- ---------
$ 150,104 $ 41,887 $ 7,658 $ 199,649
========= ========= ========= =========
1993: Current $ 90,861 $ 18,790 $ 20,366 $ 130,017
Deferred 11,859 (3,320) (7,807) 732
Amortization
of investment
tax credit (1,023) -- -- (1,023)
--------- --------- --------- ---------
$ 101,697 $ 15,470 $ 12,559 $ 129,726
========= ========= ========= =========
</TABLE>
The following is a reconciliation between the effective income tax rate and
the applicable statutory federal income tax rate for each of the three fiscal
years in the period ended September 30, 1995:
<TABLE>
<CAPTION>
1995 1994 1993
----- ----- -----
<S> <C> <C> <C>
Income tax - statutory rate 35.00% 35.00% 34.75%
Federal effect of state
income taxes (1.67) (.54) (1.33)
Effect of foreign operations (.20) .89 2.51
All other, net 2.10 3.12 (.12)
----- ----- -----
Federal and foreign 35.23 38.47 35.81
State income taxes 4.77 1.53 3.84
----- ----- -----
Effective income tax rate 40.00% 40.00% 39.65%
===== ===== =====
</TABLE>
The tax effects of temporary differences that gave rise to significant
portions of the deferred tax assets and liabilities at
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<PAGE> 74
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
September 30, 1995 and 1994, are as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994
------------------------ -----------------------
Deferred Deferred Deferred Deferred
Tax Tax Tax Tax
Assets Liabilities Assets Liabilities
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Depreciation and
amortization $ 158,436 $ 447,451 $ 116,631 $ 378,962
Accrued environ-
mental and
landfill costs 191,737 -- 193,373 --
Accruals related
to discontinued
operations 29,120 -- 43,861 --
Self-insurance
accruals 52,310 -- 49,814 --
Net operating loss
carryforwards 108,983 -- 116,660 --
Other 202,529 88,505 129,809 17,541
--------- --------- --------- ---------
Deferred tax
assets and
liabilities 743,115 $ 535,956 650,148 $ 396,503
========= =========
Valuation allowance (116,244) (119,400)
--------- ---------
Deferred tax
assets, net of
valuation
allowance $ 626,871 $ 530,748
========= =========
</TABLE>
The valuation allowance applies principally to a substantial portion of the
net operating loss carryforwards which could expire prior to utilization by the
Company. Foreign net operating loss carryforwards of approximately $180 million
are available to reduce future taxable income of the applicable foreign entities
for periods which generally range from 1996 to 2000. Domestic state net
operating loss carryforwards of approximately $807 million (the tax benefit of
which is calculated at rates ranging generally from 5%-10%) are available to
reduce future taxable income of the applicable entities taxable in such states
for periods which range from 1996 to 2010. The net change in the total valuation
allowance for the year ended September 30, 1995, was a decrease of $3.2 million
compared with an increase in the prior year of $8.9 million.
Deferred income taxes have not been provided as of September 30, 1995, on
approximately $532 million of undistributed earnings of foreign affiliates which
are considered to be permanently reinvested.
-72-
<PAGE> 75
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The components of the deferred income tax expense for the year ended
September 30, 1993 are as follows (in thousands):
<TABLE>
<CAPTION>
1993
--------
<S> <C>
Depreciation expense for income tax
purposes in excess of amounts for
financial reporting purposes $ 34,565
Environmental compliance and other
landfill related costs recognized
for financial reporting purposes
but deferred for income tax
purposes, net (14,775)
Reorganization charge (8,340)
Other, net (10,718)
--------
Deferred income tax expense $ 732
========
</TABLE>
(15) Employee benefit plans -
Employee stock ownership and savings plan.
The Company sponsors an employee stock ownership and savings plan which
incorporates deferred savings features permitted under IRS Code Section 401(k).
The plan covers substantially all U.S. employees with one or more years of
service except for certain employees subject to collective bargaining
agreements. Eligible employees may make voluntary contributions to one or more
of five investment funds through payroll deductions which, in turn, will allow
them to defer income for tax purposes. The Company matches these voluntary
contributions at a rate of $.50 per $1.00 on the first 5% of total earnings
contributed by each participating employee. The Company matches the voluntary
contributions through open market purchases or issuances of shares of the
Company's common stock. The Company expenses its contributions to the employee
stock ownership and savings plan which for fiscal years 1995, 1994 and 1993 were
$10,545,000, $9,430,000 and $9,072,000, respectively.
Employee retirement plans.
The Company and its domestic subsidiaries have two defined benefit
retirement plans covering substantially all U.S. employees except for certain
employees subject to collective bargaining agreements. The benefits for these
plans are based on years of service and the employee's compensation. The
Company's general funding policy for these plans is to make annual contributions
to the plans equal to or exceeding the actuary's recommended contribution.
The Company also has employees in various foreign countries that are
covered by defined benefit pension plans. The benefits for these plans are based
generally on years of service and the employee's compensation. Under the
Company's funding policy,
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<PAGE> 76
annual contributions are made in order to fund the plans over the participants'
total expected periods of service in conformity with the requirements of local
law or custom.
The components of net annual pension cost for fiscal years 1995, 1994 and
1993 for the defined benefit plans were as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
U.S. Plans:
Service cost (benefits earned
during the period) $ 9,933 $ 11,260 $ 11,257
Interest cost on projected
benefit obligation 12,597 10,329 10,515
Investment gain on plan
assets (14,097) (11,728) (29,121)
Net amortization and deferral (110) (1,534) 18,102
-------- -------- --------
Net annual pension cost $ 8,323 $ 8,327 $ 10,753
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Non-U.S. Plans:
Service cost (benefits earned
during the period) $ 1,969 $ 1,118 $ 994
Interest cost on projected
benefit obligation 1,748 1,004 1,054
Investment gain on plan assets (2,628) (62) (2,788)
Net amortization and deferral 12 (1,766) 767
-------- -------- --------
Net annual pension cost $ 1,101 $ 294 $ 27
======== ======== ========
</TABLE>
The following table sets forth the funded status and amounts recognized in
the Company's consolidated balance sheet as of September 30, 1995 and 1994, and
the significant assumptions used in accounting for the defined benefit plans.
The measurement dates for the U.S. and non-U.S. plans for fiscal year 1995 were
June 30, 1995 and September 30, 1995, respectively. The measurement date for
both the U.S. and non-U.S. plans for fiscal year 1994 was September 30, 1994.
-74-
<PAGE> 77
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
<TABLE>
<CAPTION>
1995 1994
---------------------- ----------------------
U.S. Non-U.S. U.S. Non-U.S.
--------- --------- --------- ---------
(In Thousands)
<S> <C> <C> <C> <C>
Actuarial present value
of accumulated benefit
obligations, including
vested benefits of
$141,572, $18,787,
$114,878 and $5,158,
respectively $(150,450) $ (19,385) $(115,780) $ (5,746)
========= ========= ========= =========
Actuarial present value
of projected benefit
obligation $(166,552) $ (24,130) $(132,275) $ (14,295)
Plan assets at fair value,
primarily commercial
paper, common stocks
(including 22,000 shares
of the Company's common
stock for U.S. plans at
both dates) and mutual
funds 159,140 30,415 150,175 20,800
--------- --------- --------- ---------
Projected benefit obligation
(in excess of) less than
plan assets (7,412) 6,285 17,900 6,505
Contributions made after
measurement date but
before end of fiscal year 4,000 -- -- --
Unrecognized net gain (13,653) (128) (29,147) (1,403)
Unrecognized prior service
cost (15,259) -- (16,562) --
Unrecognized net (asset)
obligation at transition (1,680) 2,448 (1,873) 1,526
--------- --------- --------- ---------
Prepaid (accrued) pension
costs $ (34,004) $ 8,605 $ (29,682) $ 6,628
========= ========= ========= =========
Discount rate 7.75% 6.5-8.5% 8.25% 6.5-9.5%
Rate of increase in
compensation levels 4.5% 3.5-7.0% 4.5% 3.5-7.5%
Expected long-term rate of
return on assets 9.5% 6.5-10.0% 9.5% 7.0-10.5%
</TABLE>
Termination indemnity plan.
The employees of the Company's Italian operations are covered by a
termination indemnity plan. Benefits under the plan, which are based on periods
of service and the employee's compensation,
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<PAGE> 78
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
are payable in a lump sum upon (1) retirement, (2) termination, (3) death after
10 years of credited service or (4) disability after 10 years of credited
service. Expense for fiscal years 1995, 1994 and 1993 related to this unfunded
plan was $3,253,290, $1,202,677 and $1,224,040, respectively.
Other postretirement benefits.
The Company currently maintains an unfunded postretirement benefit plan
which provides for employees participating in its medical plan to receive a
monthly benefit after retirement based on years of service. As permitted under
SFAS No. 106 - "Employers' Accounting for Postretirement Benefits Other Than
Pensions", the Company has chosen to recognize the transition obligation (the
actuarially-determined accumulated postretirement benefit obligation of
approximately $11.9 million at September 30, 1994) over a 20-year period.
Current year expense was not material to the Company's results of operations.
Postemployment benefits.
The Company maintains no plans which provide significant ben-efits to
former or inactive employees after employment but before retirement.
(16) Operations by industry segment and geographic area -
The Company's revenues and income are derived principally from one industry
segment, which includes the collection, processing/recovery and disposal of
solid wastes. This segment renders services to a variety of commercial,
industrial, governmental and residential customers. Substantially all revenues
represent income from unaffiliated customers.
The table below reflects certain geographic information relating to the
Company's operations. For purposes of this table, general corporate expenses
have been included in the computation of income from operations and are
classified under "United States and Puerto Rico" (in thousands).
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Revenues:
United States and
Puerto Rico $4,070,021 $3,293,297 $2,881,150
---------- ---------- ----------
Foreign - Europe 1,433,923 786,252 361,674
- Other 275,407 234,992 236,006
---------- ---------- ----------
Total foreign 1,709,330 1,021,244 597,680
---------- ---------- ----------
Consolidated $5,779,351 $4,314,541 $3,478,830
========== ========== ==========
</TABLE>
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<PAGE> 79
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Combined income from
operations and equity
in earnings of uncon-
solidated affiliates:
United States and
Puerto Rico $ 626,798 $ 451,108 $ 332,136(1)
---------- ---------- ----------
Foreign - Europe (2) 186,251 91,035 18,207
- Other 30,134 38,851 33,105
---------- ---------- ----------
Total foreign 216,385 129,886 51,312
---------- ---------- ----------
Consolidated $ 843,183 $ 580,994 $ 383,448
========== ========== ==========
Depreciation and
amortization:
United States and
Puerto Rico $ 412,968 $ 349,189 $ 304,968
---------- ---------- ----------
Foreign - Europe 113,907 72,288 37,962
- Other 24,995 22,715 23,551
---------- ---------- ----------
Total foreign 138,902 95,003 61,513
---------- ---------- ----------
Consolidated $ 551,870 $ 444,192 $ 366,481
========== ========== ==========
Identifiable assets:
United States and
Puerto Rico $4,532,014 $3,626,134 $3,370,508
---------- ---------- ----------
Foreign - Europe 2,599,797 1,903,141 691,939
- Other 328,561 267,680 233,195
---------- ---------- ----------
Total foreign 2,928,358 2,170,821 925,134
---------- ---------- ----------
Consolidated (3) $7,460,372 $5,796,955 $4,295,642
========== ========== ==========
</TABLE>
- -----------------
(1) Amounts for the United States and Puerto Rico operations have been
reduced by a reorganization charge incurred in the third quarter of fiscal
1993 of $27.0 million. See Note (2) - "Reorganization charge".
(2) Included in foreign combined income from operations and equity in
earnings of unconsolidated affiliates were income (loss) amounts of
approximately $.1 million, $(7.8) million and $(13.9) million from Italian
operations for fiscal 1995, 1994 and 1993, respectively; the Company's
investment in these Italian operations at September 30, 1995, 1994 and
1993
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<PAGE> 80
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
was approximately $205 million, $154 million and $149 million,
respectively.
(3) The Attwoods acquisition in the first quarter of fiscal 1995 and the
Otto Waste Services acquisition in the second quarter of fiscal 1994 each
increased the identifiable assets of the Company by over $1.0 billion.
(17) Fair value of financial instruments -
The following disclosures of the estimated fair values of financial
instruments have been determined by the Company using available market data and
valuation methodologies. Considerable judgment is required in developing the
methodologies used to determine the estimates of fair value and in interpreting
available market data and, accordingly, the estimates presented herein are not
necessarily indicative of the values of such financial instruments in a current
market exchange. Additionally, under certain financing agreements, the Company
is prohibited from redeeming certain of the long-term debt before its maturity.
<TABLE>
<CAPTION>
As of September 30,
--------------------------------------------
1995 1994
-------------------- --------------------
Book Fair Book Fair
Value Value Value Value
-------- -------- -------- --------
Debt - (In Thousands)
<S> <C> <C> <C> <C>
7.40% Debentures $397,864 $396,830 $ -- $ --
7 7/8% Senior Notes 299,125 322,606 -- --
9 1/4% Debentures 100,000 121,490 100,000 101,000
Solid waste revenue
bond obligations 114,079 119,444 114,031 110,639
Other notes payable 585,211 608,435 366,145 380,330
Commercial paper and
short-term
facilities to be
refinanced 231,988 231,701 183,345 183,932
Convertible
subordinated
debentures 744,944 742,806 744,949 714,101
</TABLE>
The book values of cash, short-term investments, trade accounts
receivables, trade accounts payable and financial instruments included in other
receivables, other assets and accrued liabilities approximate their fair values
principally because of the short-term maturities of these instruments.
The estimated fair value of long-term debt and convertible subordinated
debentures is based on quoted market prices where available or on present value
calculations which are calculated using current rates for similar debt with the
same remaining maturities.
-78-
<PAGE> 81
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
In the normal course of business, the Company has letters of credit,
performance bonds and other guarantees which are not reflected in the
accompanying consolidated balance sheets. In the past, no significant claims
have been made against these financial instruments. Management believes that the
likelihood of performance under these financial instruments is minimal and
expects no material losses to occur in connection with these financial
instruments.
(18) Related party transactions -
One of the Company's directors is affiliated with Otto Holding
International B.V. ("OHI") which owns the other 50% interest of Otto Waste
Services. The Company, primarily through its 50% ownership of Otto Waste
Services, is engaged in various transactions through the ordinary course of
business with OHI, its subsidiaries and unconsolidated affiliates or other
affiliated parties ("OHI Group"). The OHI Group leased containers and equipment
under operating leases and provided certain administrative services to Otto
Waste Services during the current fiscal year. Charges for these administrative
services were approximately $5.0 million for fiscal year 1995 and $3.5 million
for the period from the acquisition date in February 1994 through the end of
fiscal 1994. The Company, including Otto Waste Services, also purchased or
entered into capital leases for approximately $29.3 million and $25.4 million,
respectively, of containers from the OHI Group during fiscal years 1995 and
1994. Included in the balance sheets at September 30, 1995 and 1994, are the
following amounts relating to transactions with the OHI Group (in thousands):
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Accounts receivable - other $ -- $ 5,227
Accounts payable 613 3,388
Capital lease obligations 46,252 31,515
Notes payable, interest
payable at 8% 3,613 11,569
</TABLE>
(19) Quarterly financial information (Unaudited) -
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
---------- ---------- ---------- ----------
(In thousands except for per share amounts)
<S> <C> <C> <C> <C> <C>
Revenues 1995 $1,292,787 $1,409,366 $1,550,083 $1,527,115
1994 $ 928,292 $ 984,154 $1,160,632 $1,241,463
Gross profit 1995 $ 367,817 $ 403,059 $ 445,117 $ 416,055
1994 $ 252,002 $ 270,177 $ 318,510 $ 350,477
Income from 1995 $ 177,311 $ 193,034 $ 218,685 $ 200,157
operations 1994 $ 107,627 $ 119,087 $ 154,545 $ 162,651
</TABLE>
-79-
<PAGE> 82
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
-------- -------- -------- --------
(In thousands except for per share amounts)
<S> <C> <C> <C> <C> <C>
Income taxes 1995 $ 65,010 $ 66,109 $ 76,724 $ 68,587
1994 $ 39,327 $ 42,905 $ 57,648 $ 59,769
Income before
extraordinary
item 1995 $ 89,570 $ 92,809 $106,267 $ 95,915
1994 $ 58,991 $ 61,918 $ 80,813 $ 82,251
Net income 1995 $ 89,570 $ 92,809 $106,267 $ 95,915
1994 $ 58,991 $ 56,655(1) $ 80,813 $ 82,251
Earnings per
share:
Income before
extraordinary
item 1995 $ .45 $ .47 $ .53 $ .48
1994 $ .34 $ .34 $ .41 $ .42
Net income 1995 $ .45 $ .47 $ .53 $ .48
1994 $ .34 $ .31 $ .41 $ .42
</TABLE>
- -------------
(1) In the second quarter of fiscal year 1994, the Company recorded an
after-tax loss of $5.3 million associated with the early retirement of
indebtedness, which was reflected in the Company's consolidated statement
of income as an extraordinary item. See Note (7).
-80-
<PAGE> 83
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
Financial Statements
Browning-Ferris Industries, Inc. and Subsidiaries:
Report of independent public accountants.
Consolidated statement of income for the three years ended September
30, 1995.
Consolidated balance sheet--September 30, 1995 and 1994.
Consolidated statement of common stockholders' equity for the three
years ended September 30, 1995.
Consolidated statement of cash flows for the three years ended
September 30, 1995.
Notes to consolidated financial statements.
Schedules
II Allowance for doubtful accounts for the three years ended
September 30, 1995.
Schedules, other than those listed above, are omitted because of the absence of
conditions under which they are required, or because the information is included
in the financial statements or notes thereto.
-81-
<PAGE> 84
Exhibits
- --------
3(a) Restated Certificate of Incorporation of BFI, dated October 7, 1991.
(Exhibit 3(a) of Form 10-K for the fiscal year ended September 30,
1993, is hereby incorporated by reference.)
*3(b) By-laws of BFI, as amended through September 6, 1995.
4.1 Rights Agreement, dated June 1, 1988, between BFI and Texas Commerce
Bank National Association. (Exhibit 3.3 of Form 10-K for the fiscal
year ended September 30, 1988, is hereby incorporated by reference.)
4.2 First Amendment, dated March 1, 1989, to Rights Agreement, dated as
of June 1, 1988, between BFI and Texas Commerce Bank National
Association. (Exhibit 10.1 of Form 10-Q for the quarter ended June
30, 1989, is hereby incorporated by reference.)
4.3 Second Amendment, dated March 7, 1990, to Rights Agreement, dated as
of June 1, 1988, between the Registrant and First Chicago Trust
Company of New York as successor Rights Agent. (Exhibit 4.1 of Form
10-Q for the quarter ended March 31, 1990, is hereby incorporated by
reference.)
*4.4 Second Amended and Restated Revolving Credit Agreement, dated as of
May 31, 1995, among BFI and Texas Commerce Bank National
Association, as Administrative Agent, and the other banks named
therein.
4.5 Restated Indenture, dated as of September 1, 1991, between First
City, Texas-Houston, National Association, Trustee, and BFI.
(Exhibit 4.8 of Form 10-K for the fiscal year ended September 30,
1991, is hereby incorporated by reference.)
4.6 Indenture, dated as of August 1, 1987, between First RepublicBank
Houston, National Association, Trustee, and BFI. (Exhibit 4.1 to
Registration Statement on Form S-3 No. 33-16537 is hereby
incorporated by reference.)
4.7 First Supplemental Indenture, dated as of January 11, 1994, between
Nations Bank of Texas, National Association, Trustee, and BFI.
(Exhibit 4(f) to Registration Statement on Form S-3 No. 33-58790 is
hereby incorporated by reference.)
4.8 Indenture, dated as of July 16, 1990, between BFI and Morgan
Guaranty Trust Company of New York, as Trustee. (Exhibit 4.1 of Form
10-Q
-82-
<PAGE> 85
for the quarter ended June 30, 1990, is hereby incorporated by
reference.)
4.9 First Supplemental Indenture, dated as of December 26, 1990, to
Indenture, dated as of July 16, 1990, between BFI and Morgan
Guaranty Trust Company of New York, as Trustee. (Exhibit 4.1 of Form
10-Q for the quarter ended December 31, 1990, is hereby incorporated
by reference.)
4.10 Agreement dated September 20, 1994, among BFI Acquisitions plc,
Laidlaw Inc. and Laidlaw International Investments B.V. (Exhibit
4.12 of Form 10-K for the fiscal year ended September 30, 1994, is
hereby incorporated by reference.)
4.11 Multicurrency Revolving Credit Agreement, dated December 5, 1994,
between BFI Acquisition plc, BFI International, Inc.,
Browning-Ferris Industries Europe, Inc., BFI and Credit Suisse and
the Banks specified therein. (Exhibit 10 of Form 10- Q for the
quarter ended December 31, 1994, is hereby incorporated by
reference).
4.12 Purchase Contract Agreement, dated as of June 28, 1995, between BFI
and The First National Bank of Chicago, as Purchase Contract Agent.
(Exhibit 4(i) of Form 8-K dated July 3, 1995, is hereby incorporated
by reference.)
4.13 Pledge Agreement, dated as of June 28, 1995, among BFI, Texas
Commerce Bank National Association, as Collateral Agent, and The
First National Bank of Chicago, as Purchase Contract Agent. (Exhibit
4(j) of Form 8-K dated July 3, 1995, is hereby incorporated by
reference.)
*10.1 Employment Agreement, dated October 1, 1995, between BFI and William
D. Ruckelshaus.
10.2 Deferral Agreement, dated December 28, 1988, between BFI and William
D. Ruckelshaus. (Exhibit 10.2 of the Form 10-Q for the quarter ended
December 31, 1988, is hereby incorporated by reference.)
10.3 Employment Agreement, dated July 10, 1989, between BFI and Harry J.
Phillips, Sr. (Exhibit 10.5 of Form 10-K for the fiscal year ended
September 30, 1989, is hereby incorporated by reference.)
10.4 First Amendment, dated January 21, 1992, to the Employment
Agreement, dated as of July 10,
-83-
<PAGE> 86
Exhibits (cont.)
1989, between BFI and Harry J. Phillips, Sr. (Exhibit 10.6 to
Registration Statement on Form S-4 No. 33-52240 is hereby
incorporated by reference.)
10.5 Second Amendment, dated December 7, 1993, to the Employment
Agreement, dated as of July 10, 1989, between BFI and Harry J.
Phillips, Sr. (Exhibit 10 of the Form 10-Q for the quarter ended
December 31, 1993, is hereby incorporated by reference.)
10.6 Form of Employment Agreement between BFI and each of Norman A.
Myers, Bruce E. Ranck and certain other officers and former officers
(Exhibit 10.6 of Form 10-K for the fiscal year ended September 30,
1989, is hereby incorporated by reference.)
10.7 Employment Agreement, dated as of November 1, 1991 between BFI and
Louis A. Waters. (Exhibit 10.7 of Form 10-K for the fiscal year
ended September 30, 1991, is hereby incorporated by reference.)
10.8 First Amendment, dated December 7, 1993, to the Employment
Agreement, dated as of November 1, 1991, between BFI and Louis A.
Waters. (Exhibit 10 of the Form 10-Q for the quarter ended December
31, 1993, is hereby incorporated by reference.)
*10.9 Second Amendment, dated March 1, 1995, to Employment Agreement,
dated as of November 1, 1991, between BFI and Louis A. Waters.
10.10 Executive Officer Form of Employment Agreement between BFI and
certain executive officers, beginning in January 1993. (Exhibit 10.9
of Post-Effective Amendment No. 1 to Registration Statement on Form
S-4 No. 33-52240 is hereby incorporated by reference.)
10.11 Trust Agreement, dated September 7, 1988, between BFI and Texas
Commerce Bank, National Association with Louis A. Waters as
Beneficiary. (Exhibit 10.9 of Form 10-K for the fiscal year ended
September 30, 1988, is hereby incorporated by reference.)
10.12 Browning-Ferris Industries, Inc. 1993 Stock Incentive Plan. (Exhibit
4(d) to Registration Statement on Form S-8 No. 33-53393 is hereby
incorporated by reference.)
10.13 Browning-Ferris Industries, Inc. 1993 Non-Employee Director Stock
Plan (Exhibit 4(e) to Registration Statement on Form S-8 No.
33-53393 is hereby incorporated by reference.)
-84-
<PAGE> 87
Exhibits (cont.)
10.14 Browning-Ferris Industries, Inc. 1990 Stock Option Plan. (Exhibit
10.9 of Form 10-K for the fiscal year ended September 30, 1991, is
hereby incorporated by reference.)
10.15 Browning-Ferris Industries, Inc. 1987 Stock Option Plan. (Exhibit
10.11 of Form 10-K for the fiscal year ended September 30, 1988, is
hereby incorporated by reference.)
10.16 Browning-Ferris Industries, Inc. 1983 Stock Option Plan, as amended
on December 2, 1986. (Exhibit 10.7 of Form 10-K for the fiscal year
ended September 30, 1986, is hereby incorporated by reference.)
10.17 Browning-Ferris Industries, Inc.'s Cash Balance and Retirement Plan,
as amended and restated pursuant to an indenture dated September 15,
1994. (Exhibit 10.18 of Form 10-K for the fiscal year ended
September 30, 1994, is hereby incorporated by reference.)
10.18 BFI Employee Stock Ownership and Savings Plan, as amended through
December 1, 1986. (Exhibit 10.10 of Form 10-K for the fiscal year
ended September 30, 1986, is hereby incorporated by reference.)
10.19 Fifth Amendment dated June 8, 1988, to the BFI Employee Stock
Ownership and Savings Plan. (Exhibit 10.16 of Form 10-K for the
fiscal year ended September 30, 1988, is hereby incorporated by
reference.)
10.20 Sixth Amendment, dated December 23, 1988, to the BFI Employee Stock
Ownership and Savings Plan. (Exhibit 10.4 of the Form 10-Q for the
quarter ended December 31, 1988, is hereby incorporated by
reference.)
10.21 Seventh, Eighth and Ninth Amendments, dated as of May 31, 1989, June
7, 1989 and October 31, 1991, respectively, to the BFI Employee
Stock Ownership and Savings Plan. (Exhibit 10.20 of Form 10-K for
the fiscal year ended September 30, 1991, is hereby incorporated by
reference.)
10.22 Tenth Amendment, dated September 7, 1993, to the BFI Employee Stock
Ownership and Savings Plan. (Exhibit 10.22 of Form 10-K for the
fiscal year ended September 30, 1993, is hereby incorporated by
reference.)
10.23 Amended and Restated Partnership Agreement, dated as of January 25,
1991, between Air Products Ref-Fuel,
-85-
<PAGE> 88
Exhibits (cont.)
Inc. and BFI Ref-Fuel, Inc. (Exhibit 10.23 of Form 10-K for the
fiscal year ended September 30, 1993, is hereby incorporated by
reference.)
*10.24 BFI Management Incentive Compensation Plan.
10.25 Purchase and Transfer Agreement between Otto Holding International
B.V., the Registrant and BFI Atlantic GmbH, dated September 27,
1993. (Exhibit 10.25 of Form 10-K for the fiscal year ended
September 30, 1993, is hereby incorporated by reference.)
10.26 BFI Deferred Compensation Agreement.
*10.27 BFI Convertible Annual Incentive Award Plan.
*10.28 BFI Stock and Employee Benefit Trust Agreement, dated February 28,
1995, between BFI and Wachovia Bank of North Carolina, N.A., as
trustee.
*10.29 Common Stock Purchase Agreement, dated February 28, 1995, between
BFI and Wachovia Bank of North Carolina, N.A., as trustee
*12 Computation of Ratio of Earnings to Fixed Charges of Browning-Ferris
Industries, Inc. and Subsidiaries.
*21 Subsidiaries of the Registrant.
*23.1 Consent of Arthur Andersen LLP.
*27 Financial Data Schedule.
- ----------------
*Filed herewith.
-86-
<PAGE> 89
Reports on Form 8-K
A Current Report on Form 8-K dated July 3, 1995 was filed pursuant to "Item 7.
Financial Statements and Exhibits," whereby the Company filed certain exhibits
required in connection with the Company's offering of 7.25% Automatic Common
Exchange Securities, which closed on July 5, 1995.
A Current Report on Form 8-K dated September 12, 1995 was filed pursuant to
"Item 7. Financial Statements and Exhibits," whereby the Company filed certain
exhibits required in connection with the Company's offering of 7.40% Debentures
due September 15, 2035, which closed on September 15, 1995.
- -----------------
NOTE: Upon the request of a holder of the Company's securities directed to
Browning-Ferris Industries, Inc., P.O. Box 3151, Houston, Texas 77253,
Attn: Secretary, the Company will furnish a copy of any exhibit for ten cents
per page to cover the cost of copying and mailing.
- -----------------
-87-
<PAGE> 90
SCHEDULE II
BROWNING-FERRIS INDUSTRIES, INC. AND SUBSIDIARIES
ALLOWANCE FOR DOUBTFUL ACCOUNTS
For the Three Years Ended September 30, 1995
(In Thousands)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
Additions
Balance Charged Deductions Balance
Beginning to from End of
of Year Income Reserves Year
- ------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995 $33,284 $26,620 $(20,127) $39,777
1994 $21,870 $31,346 $(19,932) $33,284
1993 $16,172 $18,657 $(12,959) $21,870
</TABLE>
-88-
<PAGE> 91
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
BROWNING-FERRIS INDUSTRIES, INC.
(Registrant)
By: /s/ Bruce E. Ranck
------------------------------
DATE: November 21, 1995
Bruce E. Ranck
President, Chief Executive Officer
and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the date indicated.
/s/ William D. Ruckelshaus
------------------------------
William D. Ruckelshaus
Chairman of the Board
and Director
/s/ Bruce E. Ranck
------------------------------
Bruce E. Ranck,
President, Chief Executive
Officer and Director
/s/ Norman A. Myers
------------------------------
Norman A. Myers
Vice Chairman, Chief Marketing
Officer and Director
/s/ Jeffrey E. Curtiss
------------------------------
Jeffrey E. Curtiss,
Senior Vice President and
Chief Financial Officer
/s/ David R. Hopkins
------------------------------
David R. Hopkins,
Vice President, Controller and
Chief Accounting Officer
-89-
<PAGE> 92
/s/ William T. Butler
------------------------------
William T. Butler,
Director
/s/ C. Jackson Grayson, Jr.
------------------------------
C. Jackson Grayson, Jr.,
Director
/s/ Gerald Grinstein
------------------------------
Gerald Grinstein, Director,
/s/ Ulrich Otto
------------------------------
Ulrich Otto, Director,
/s/ Harry J. Phillips, Sr.
------------------------------
Harry J. Phillips, Sr.,
Director
/s/ Joseph L. Roberts, Jr.
------------------------------
Joseph L. Roberts, Jr.,
Director
/s/ Marc J. Shapiro
------------------------------
Marc J. Shapiro, Director
/s/ Robert M. Teeter
------------------------------
Robert M. Teeter, Director
/s/ Louis A. Waters
------------------------------
Louis A. Waters, Director
/s/ Marina v.N. Whitman
------------------------------
Marina v.N. Whitman, Director
/s/ Peter S. Willmott
------------------------------
November 21, 1995. Peter S. Willmott, Director
-90-
<PAGE> 93
EXHIBIT INDEX
Exhibits
- --------
3(a) Restated Certificate of Incorporation of BFI, dated October 7, 1991.
(Exhibit 3(a) of Form 10-K for the fiscal year ended September 30,
1993, is hereby incorporated by reference.)
*3(b) By-laws of BFI, as amended through September 6, 1995.
4.1 Rights Agreement, dated June 1, 1988, between BFI and Texas Commerce
Bank National Association. (Exhibit 3.3 of Form 10-K for the fiscal
year ended September 30, 1988, is hereby incorporated by reference.)
4.2 First Amendment, dated March 1, 1989, to Rights Agreement, dated as
of June 1, 1988, between BFI and Texas Commerce Bank National
Association. (Exhibit 10.1 of Form 10-Q for the quarter ended June
30, 1989, is hereby incorporated by reference.)
4.3 Second Amendment, dated March 7, 1990, to Rights Agreement, dated as
of June 1, 1988, between the Registrant and First Chicago Trust
Company of New York as successor Rights Agent. (Exhibit 4.1 of Form
10-Q for the quarter ended March 31, 1990, is hereby incorporated by
reference.)
*4.4 Second Amended and Restated Revolving Credit Agreement, dated as of
May 31, 1995, among BFI and Texas Commerce Bank National
Association, as Administrative Agent, and the other banks named
therein.
4.5 Restated Indenture, dated as of September 1, 1991, between First
City, Texas-Houston, National Association, Trustee, and BFI.
(Exhibit 4.8 of Form 10-K for the fiscal year ended September 30,
1991, is hereby incorporated by reference.)
4.6 Indenture, dated as of August 1, 1987, between First RepublicBank
Houston, National Association, Trustee, and BFI. (Exhibit 4.1 to
Registration Statement on Form S-3 No. 33-16537 is hereby
incorporated by reference.)
4.7 First Supplemental Indenture, dated as of January 11, 1994, between
Nations Bank of Texas, National Association, Trustee, and BFI.
(Exhibit 4(f) to Registration Statement on Form S-3 No. 33-58790 is
hereby incorporated by reference.)
4.8 Indenture, dated as of July 16, 1990, between BFI and Morgan
Guaranty Trust Company of New York, as Trustee. (Exhibit 4.1 of Form
10-Q
<PAGE> 94
for the quarter ended June 30, 1990, is hereby incorporated by
reference.)
4.9 First Supplemental Indenture, dated as of December 26, 1990, to
Indenture, dated as of July 16, 1990, between BFI and Morgan
Guaranty Trust Company of New York, as Trustee. (Exhibit 4.1 of Form
10-Q for the quarter ended December 31, 1990, is hereby incorporated
by reference.)
4.10 Agreement dated September 20, 1994, among BFI Acquisitions plc,
Laidlaw Inc. and Laidlaw International Investments B.V. (Exhibit
4.12 of Form 10-K for the fiscal year ended September 30, 1994, is
hereby incorporated by reference.)
4.11 Multicurrency Revolving Credit Agreement, dated December 5, 1994,
between BFI Acquisition plc, BFI International, Inc.,
Browning-Ferris Industries Europe, Inc., BFI and Credit Suisse and
the Banks specified therein. (Exhibit 10 of Form 10- Q for the
quarter ended December 31, 1994, is hereby incorporated by
reference).
4.12 Purchase Contract Agreement, dated as of June 28, 1995, between BFI
and The First National Bank of Chicago, as Purchase Contract Agent.
(Exhibit 4(i) of Form 8-K dated July 3, 1995, is hereby incorporated
by reference.)
4.13 Pledge Agreement, dated as of June 28, 1995, among BFI, Texas
Commerce Bank National Association, as Collateral Agent, and The
First National Bank of Chicago, as Purchase Contract Agent. (Exhibit
4(j) of Form 8-K dated July 3, 1995, is hereby incorporated by
reference.)
*10.1 Employment Agreement, dated October 1, 1995, between BFI and William
D. Ruckelshaus.
10.2 Deferral Agreement, dated December 28, 1988, between BFI and William
D. Ruckelshaus. (Exhibit 10.2 of the Form 10-Q for the quarter ended
December 31, 1988, is hereby incorporated by reference.)
10.3 Employment Agreement, dated July 10, 1989, between BFI and Harry J.
Phillips, Sr. (Exhibit 10.5 of Form 10-K for the fiscal year ended
September 30, 1989, is hereby incorporated by reference.)
10.4 First Amendment, dated January 21, 1992, to the Employment
Agreement, dated as of July 10,
<PAGE> 95
Exhibits (cont.)
1989, between BFI and Harry J. Phillips, Sr. (Exhibit 10.6 to
Registration Statement on Form S-4 No. 33-52240 is hereby
incorporated by reference.)
10.5 Second Amendment, dated December 7, 1993, to the Employment
Agreement, dated as of July 10, 1989, between BFI and Harry J.
Phillips, Sr. (Exhibit 10 of the Form 10-Q for the quarter ended
December 31, 1993, is hereby incorporated by reference.)
10.6 Form of Employment Agreement between BFI and each of Norman A.
Myers, Bruce E. Ranck and certain other officers and former officers
(Exhibit 10.6 of Form 10-K for the fiscal year ended September 30,
1989, is hereby incorporated by reference.)
10.7 Employment Agreement, dated as of November 1, 1991 between BFI and
Louis A. Waters. (Exhibit 10.7 of Form 10-K for the fiscal year
ended September 30, 1991, is hereby incorporated by reference.)
10.8 First Amendment, dated December 7, 1993, to the Employment
Agreement, dated as of November 1, 1991, between BFI and Louis A.
Waters. (Exhibit 10 of the Form 10-Q for the quarter ended December
31, 1993, is hereby incorporated by reference.)
*10.9 Second Amendment, dated March 1, 1995, to Employment Agreement,
dated as of November 1, 1991, between BFI and Louis A. Waters.
10.10 Executive Officer Form of Employment Agreement between BFI and
certain executive officers, beginning in January 1993. (Exhibit 10.9
of Post-Effective Amendment No. 1 to Registration Statement on Form
S-4 No. 33-52240 is hereby incorporated by reference.)
10.11 Trust Agreement, dated September 7, 1988, between BFI and Texas
Commerce Bank, National Association with Louis A. Waters as
Beneficiary. (Exhibit 10.9 of Form 10-K for the fiscal year ended
September 30, 1988, is hereby incorporated by reference.)
10.12 Browning-Ferris Industries, Inc. 1993 Stock Incentive Plan. (Exhibit
4(d) to Registration Statement on Form S-8 No. 33-53393 is hereby
incorporated by reference.)
10.13 Browning-Ferris Industries, Inc. 1993 Non-Employee Director Stock
Plan (Exhibit 4(e) to Registration Statement on Form S-8 No.
33-53393 is hereby incorporated by reference.)
<PAGE> 96
Exhibits (cont.)
10.14 Browning-Ferris Industries, Inc. 1990 Stock Option Plan. (Exhibit
10.9 of Form 10-K for the fiscal year ended September 30, 1991, is
hereby incorporated by reference.)
10.15 Browning-Ferris Industries, Inc. 1987 Stock Option Plan. (Exhibit
10.11 of Form 10-K for the fiscal year ended September 30, 1988, is
hereby incorporated by reference.)
10.16 Browning-Ferris Industries, Inc. 1983 Stock Option Plan, as amended
on December 2, 1986. (Exhibit 10.7 of Form 10-K for the fiscal year
ended September 30, 1986, is hereby incorporated by reference.)
10.17 Browning-Ferris Industries, Inc.'s Cash Balance and Retirement Plan,
as amended and restated pursuant to an indenture dated September 15,
1994. (Exhibit 10.18 of Form 10-K for the fiscal year ended
September 30, 1994, is hereby incorporated by reference.)
10.18 BFI Employee Stock Ownership and Savings Plan, as amended through
December 1, 1986. (Exhibit 10.10 of Form 10-K for the fiscal year
ended September 30, 1986, is hereby incorporated by reference.)
10.19 Fifth Amendment dated June 8, 1988, to the BFI Employee Stock
Ownership and Savings Plan. (Exhibit 10.16 of Form 10-K for the
fiscal year ended September 30, 1988, is hereby incorporated by
reference.)
10.20 Sixth Amendment, dated December 23, 1988, to the BFI Employee Stock
Ownership and Savings Plan. (Exhibit 10.4 of the Form 10-Q for the
quarter ended December 31, 1988, is hereby incorporated by
reference.)
10.21 Seventh, Eighth and Ninth Amendments, dated as of May 31, 1989, June
7, 1989 and October 31, 1991, respectively, to the BFI Employee
Stock Ownership and Savings Plan. (Exhibit 10.20 of Form 10-K for
the fiscal year ended September 30, 1991, is hereby incorporated by
reference.)
10.22 Tenth Amendment, dated September 7, 1993, to the BFI Employee Stock
Ownership and Savings Plan. (Exhibit 10.22 of Form 10-K for the
fiscal year ended September 30, 1993, is hereby incorporated by
reference.)
10.23 Amended and Restated Partnership Agreement, dated as of January 25,
1991, between Air Products Ref-Fuel,
<PAGE> 97
Exhibits (cont.)
Inc. and BFI Ref-Fuel, Inc. (Exhibit 10.23 of Form 10-K for the
fiscal year ended September 30, 1993, is hereby incorporated by
reference.)
*10.24 BFI Management Incentive Compensation Plan.
10.25 Purchase and Transfer Agreement between Otto Holding International
B.V., the Registrant and BFI Atlantic GmbH, dated September 27,
1993. (Exhibit 10.25 of Form 10-K for the fiscal year ended
September 30, 1993, is hereby incorporated by reference.)
10.26 BFI Deferred Compensation Agreement.
*10.27 BFI Convertible Annual Incentive Award Plan.
*10.28 BFI Stock and Employee Benefit Trust Agreement, dated February 28,
1995, between BFI and Wachovia Bank of North Carolina, N.A., as
trustee.
*10.29 Common Stock Purchase Agreement, dated February 28, 1995, between
BFI and Wachovia Bank of North Carolina, N.A., as trustee
*12 Computation of Ratio of Earnings to Fixed Charges of Browning-Ferris
Industries, Inc. and Subsidiaries.
*21 Subsidiaries of the Registrant.
*23.1 Consent of Arthur Andersen LLP.
*27 Financial Data Schedule.
- ----------------
*Filed herewith.
<PAGE> 1
Exhibit 3(b)
BY-LAWS OF
BROWNING-FERRIS INDUSTRIES, INC.
A DELAWARE CORPORATION
AS AMENDED THROUGH SEPTEMBER 6, 1995
<PAGE> 2
BY-LAWS, AS AMENDED, OF
BROWNING-FERRIS INDUSTRIES, INC.
A DELAWARE CORPORATION
TABLE OF CONTENTS*
ARTICLE 1--Offices
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 1.1 Registered Office........................................... 1
SECTION 1.2 Other Offices............................................... 1
ARTICLE II--Meetings of Stockholders
SECTION 2.1 Place of Meeting............................................ 1
SECTION 2.2 Annual Meeting.............................................. 1
SECTION 2.3 Voting List................................................. 1
SECTION 2.4 Special Meeting............................................. 1
SECTION 2.5 Notice of Meeting........................................... 1
SECTION 2.6 Quorum...................................................... 2
SECTION 2.7 Voting...................................................... 2
SECTION 2.8 Consent of Stockholders..................................... 2
SECTION 2.9 Voting of Stock of Certain Holders.......................... 2
SECTION 2.10 Treasury Stock.............................................. 2
SECTION 2.11 Fixing Record Date.......................................... 2
SECTION 2.12 Notification of Nominations................................. 3
ARTICLE III--Board of Directors
SECTION 3.1 Powers...................................................... 3
SECTION 3.2 Number, Election and Term................................... 3
SECTION 3.3 Vacancies, Additional Directors and Removal from Office..... 3
SECTION 3.4 Regular Meeting............................................. 4
SECTION 3.5 Special Meeting............................................. 4
SECTION 3.6 Notice of Special Meeting................................... 4
SECTION 3.7 Quorum...................................................... 4
SECTION 3.8 Action Without Meeting...................................... 4
SECTION 3.9 Meeting by Telephone........................................ 4
SECTION 3.10 Compensation................................................ 4
</TABLE>
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* This Table of Contents is not part of the By-Laws, as amended.
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<PAGE> 3
ARTICLE IV--Committees of Directors
<TABLE>
<S> <C> <C>
SECTION 4.1 Executive Committee.......................................... 5
SECTION 4.2 Compensation Committee....................................... 5
SECTION 4.3 Audit Committee.............................................. 5
SECTION 4.4 Nominating Committee......................................... 6
SECTION 4.5 Corporate Responsibility Committee........................... 6
SECTION 4.6 Finance Committee............................................ 7
SECTION 4.7 Designation, Powers and Name................................. 7
SECTION 4.8 Committee Operations......................................... 7
SECTION 4.9 Minutes...................................................... 8
SECTION 4.10 Compensation................................................. 8
ARTICLE V--Notice
SECTION 5.1 Methods of Giving Notice..................................... 8
SECTION 5.2 Written Waiver............................................... 8
ARTICLE VI--Officers
SECTION 6.1 Officers..................................................... 8
SECTION 6.2 Election and Term of Office.................................. 9
SECTION 6.3 Removal and Resignation...................................... 9
SECTION 6.4 Vacancies.................................................... 9
SECTION 6.5 Salaries..................................................... 9
SECTION 6.6 Chairman of the Board........................................ 9
SECTION 6.7 Chief Executive Officer...................................... 9
SECTION 6.8 Vice Chairman................................................ 10
SECTION 6.9 President.................................................... 10
SECTION 6.10 Chief Operating Officer...................................... 10
SECTION 6.11 Vice Presidents.............................................. 10
SECTION 6.12 Secretary.................................................... 10
SECTION 6.13 Treasurer.................................................... 11
SECTION 6.14 Assistant Secretary or Assistant Treasurer................... 11
ARTICLE VII--Contracts, Checks and Deposits
SECTION 7.1 Contracts.................................................... 11
SECTION 7.2 Checks, etc. ................................................ 11
SECTION 7.3 Deposits..................................................... 12
ARTICLE VIII--Certificate of Stock
SECTION 8.1 Issuance..................................................... 12
SECTION 8.2 Lost Certificates............................................ 12
SECTION 8.3 Transfers.................................................... 12
SECTION 8.4 Registered Stockholders...................................... 12
</TABLE>
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ARTICLE IX--Dividends
<TABLE>
<S> <C> <C>
SECTION 9.1 Declaration.................................................. 13
SECTION 9.2 Reserve...................................................... 13
ARTICLE X--Indemnification
SECTION 10.1 Third Party Actions.......................................... 13
SECTION 10.2 Actions by or in the Right of the Corporation................ 13
SECTION 10.3 Successful Defense........................................... 13
SECTION 10.4 Determination of Conduct..................................... 14
SECTION 10.5 Payment of Expenses in Advance............................... 14
SECTION 10.6 Indemnity Not Exclusive...................................... 14
SECTION 10.7 The Corporation.............................................. 14
SECTION 10.8 Insurance Indemnification.................................... 14
SECTION 10.9 Heirs, Executors and Administrators.......................... 14
ARTICLE XI--Miscellaneous
SECTION 11.1 Seal......................................................... 15
SECTION 11.2 Books........................................................ 15
</TABLE>
ARTICLE XII--Amendment
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<PAGE> 5
BY-LAWS, AS AMENDED,*
OF
BROWNING-FERRIS INDUSTRIES, INC.
(A DELAWARE CORPORATION)
ARTICLE I
Offices
SECTION 1.1. Registered Office. The registered office of the corporation in
the State of Delaware shall be in the City of Wilmington, County of New
Castle, and the name of its registered agent shall be The Corporation Trust
Company.
SECTION 1.2. Other Offices. The corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the corporation
may require.
ARTICLE II
Meetings of Stockholders
SECTION 2.1. Place of Meeting. All meetings of stockholders(21) shall be
held at such place, either within or without the State of Delaware, as shall
be designated from time to time by the Board of Directors and stated in the
notice of the meeting.
SECTION 2.2. Annual Meeting. The annual meeting of stockholders shall be
held at such date and time as shall be designated from time to time by the
Board of Directors and stated in the notice of the meeting.
SECTION 2.3. Voting List. The officer who has charge of the stock ledger of
the corporation shall prepare and make, at least ten days before every meeting
of stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting,(21) or if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time
and place of the meeting during the whole time thereof, and may be inspected
by any stockholder who is present.
SECTION 2.4. Special Meeting. Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or by the Restated
Certificate of Incorporation of the corporation (the "Certificate of
Incorporation"), may be called only by the persons specified in the
Certificate of Incorporation. The officers or directors shall fix the time and
any place, either within or without the State of Delaware, as the place for
holding such meeting.(21)
SECTION 2.5. Notice of Meeting. Written notice of the annual, and each
special meeting of stockholders, stating the time, place and in the case of
special meetings, the(17) purpose or purposes thereof, shall be given to
each stockholder entitled to vote thereat, not less than ten nor more than
60(7) days before the meeting.
- --------
* Through September 6, 1995. Neither the footnote references, the footnotes,
nor the Officer's Certificate appended hereto, are a part of these by-laws, as
amended.
<PAGE> 6
SECTION 2.6. Quorum. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at any meeting of stockholders for the
transaction of business except when stockholders are required to vote by
class, in which event a majority of the issued and outstanding shares of the
appropriate class shall be present in person or by proxy, and(2) except as
otherwise provided by statute or by the Certificate of Incorporation.
Notwithstanding any other provisions of the Certificate of Incorporation or
these by-laws, the holders of a majority of the shares of capital stock
entitled to vote thereat, present in person or represented by proxy, whether
or not a quorum is present, shall have power to adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. If the adjournment is for more than 30 days,
or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder
of record entitled to vote at the meeting. At such adjourned meeting at which
a quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally notified.
SECTION 2.7. Voting. When a quorum is present at any meeting of the
stockholders, the vote of the holders of a majority of the stock having voting
power present in person or represented by proxy shall decide any question
brought before such meeting, unless the question is one upon which, by express
provision of the statutes, of the Certificate of Incorporation or of these by-
laws, a different vote is required, in which case such express provision shall
govern and control the decision of such question. Every stockholder having the
right to vote shall be entitled to vote in person, or by proxy appointed by an
instrument in writing subscribed by such stockholder, bearing a date not more
than one year(2) prior to voting(2) and filed with the Secretary of the
Corporation before, or at the time of, the meeting. If such instrument shall
designate two or more persons to act as proxies, unless such instrument shall
provide the contrary, a majority of such persons present at any meeting at
which their powers thereunder are to be exercised shall have and may exercise
all the powers of voting(21) thereby conferred, or if only one be present,
then such powers may be exercised by that one; or, if an even number attend
and a majority do not agree on any particular issue, each proxy so attending
shall be entitled to exercise such powers in respect of the same portion of
the shares as he is of the proxies representing such shares. Unless required
by statute or determined by the Chairman of the Meeting to be advisable, the
vote on any question need not be by written ballot.(2)
SECTION 2.8. Consent of Stockholders. Any action required or permitted to be
taken by the stockholders of the corporation must be effected at a duly called
annual or special meeting of stockholders of the corporation and may not be
effected by a consent in writing by such stockholders.(21)
SECTION 2.9. Voting of Stock of Certain Holders. Shares standing in the name
of another corporation, domestic or foreign, may be voted by such officer,
agent or proxy as the by-laws of such corporation may prescribe, or in the
absence of such provision, the Board of Directors of such corporation may
determine. Shares standing in the name of a deceased person may be voted by
the executor or administrator of such deceased person, either in person or by
proxy.(17) Shares standing in the name of a receiver may be voted by such
receiver. A stockholder whose shares are pledged shall be entitled to vote
such shares, unless in the transfer by the pledgor on the books of the
corporation, he has expressly empowered the pledgee to vote thereon, in which
case only the pledgee, or his proxy, may represent such(21) stock and vote
thereon.
SECTION 2.10. Treasury Stock. The corporation shall not vote, directly or
indirectly, shares of its own stock owned by it; and such shares shall not be
counted in determining the total number of outstanding shares.
SECTION 2.11. Fixing Record Date. The Board of Directors may fix in advance
a date, not exceeding 60 nor less than 10(2) days preceding the date of any
meeting of stockholders, or the date for payment of any dividend or
distribution, or the date for the allotment of rights, or the date when any
change or conversion or exchange of capital stock shall go into effect,(21)
as a record date for the determination of the stockholders entitled to notice
of, and to vote at, any such meeting and any adjournment thereof, or entitled
to receive
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<PAGE> 7
payment of any such dividend or distribution, or to receive any such allotment
of rights, or to exercise the rights in respect of any such change, conversion
or exchange of capital stock,(21) and in such case such stockholders and only
such stockholders as shall be stockholders of record on the date so fixed shall
be entitled to such notice of and to vote at, any such meeting and any
adjournment thereof, or to receive payment of such dividend or distribution, or
to receive such allotment of rights, or to exercise such rights,(21) as the
case may be notwithstanding any transfer of any stock on the books of the
corporation after any such record date fixed as aforesaid.
SECTION 2.12. Notification of Nominations. Subject to the rights of holders
of Preferred Stock, nominations for the election of directors may be made by
the Board of Directors or the Nominating Committee, as provided in Section 4.4,
or by any stockholder entitled to vote in the election of directors generally.
However, any stockholder entitled to vote in the election of directors
generally may nominate one or more persons for election as directors at a
meeting only if written notice of such stockholder's intent to make such
nomination or nominations has been given, either by personal delivery or by
United States mail, postage prepaid, to the Nominating Committee, at the
address of the corporation's principal executive offices, not later than (i)
with respect to an election to be held at an annual meeting of stockholders,
90(27) days in advance of the date of the corporation's proxy statement
released to stockholders in connection with the previous year's annual meeting
of stockholders, and (ii) with respect to an election to be held at a special
meeting of stockholders for the election of directors, the close of business on
the seventh day following the date on which notice of such meeting is first
given to stockholders. Each such notice shall set forth: (a) the name and
address of the stockholder who intends to make the nomination and of the person
or persons to be nominated; (b) a representation that the stockholder is a
holder of record of stock of the corporation at the time of giving such notice,
will be a holder of record entitled to vote at such meeting and intends to
appear in person or by proxy at the meeting to nominate the person or persons
specified in the notice; (c) a description of all arrangements or
understandings between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder; (d) such other information
regarding each nominee proposed by such stockholder as would be required to be
included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission, had the nominee been nominated, or intended
to be nominated by the Board of Directors or Nominating Committee; and (e) the
consent of each nominee to serve as a director of the corporation if so
elected. The chairman of the meeting may refuse to acknowledge the nomination
of any person not made in compliance with the foregoing procedures.(21)
ARTICLE III
Board of Directors
SECTION 3.1. Powers. The business and affairs of the corporation shall be
managed by its Board of Directors, which may exercise all such powers of the
corporation and do all such lawful acts and things as are not by statute or by
the Certificate of Incorporation(17) directed or required to be exercised or
done by the stockholders.
SECTION 3.2. Number, Election and Term. The number of directors which shall
constitute the whole Board shall be determined as provided in the Certificate
of Incorporation. Such number of directors shall, from time to time, be fixed
and determined by the directors and shall be set forth in the notice of any
meeting of stockholders held for the purpose of electing directors. The
directors shall be elected at the annual meeting of stockholders, except as
provided in Section 3.3, and each director elected shall hold office until his
successor shall be elected and shall qualify or until his earlier resignation
or removal. Directors need not be residents of Delaware or stockholders of the
corporation.(21)
SECTION 3.3. Vacancies, Additional Directors and Removal From Office. If any
vacancy occurs in the Board of Directors caused by death, resignation,
retirement, disqualification or removal from office of
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<PAGE> 8
any director, or otherwise, or if any new directorship is created by an
increase in the authorized number of directors, a majority of the directors
then in office, though less than a quorum, or a sole remaining director, may
choose a successor or fill the newly created directorship; and a director so
chosen shall hold office until the end of the term he is chosen to fill and
until his successor shall be duly elected and shall qualify, or until his
earlier resignation or removal. Any director may be removed from office as a
director only as provided in the Certificate of Incorporation.(21)
SECTION 3.4. Regular Meeting. A regular meeting of the Board of Directors
shall be held each year, without other notice than this by-law, at the place
of, and immediately following, the annual meeting of stockholders; and other
regular meetings of the Board of Directors shall be held during(9) each year,
at such time and place as the Board of Directors may from time to time(9)
provide, by resolution, either within or without the State of Delaware,
without other notice than such resolution.
SECTION 3.5. Special Meeting. A special meeting of the Board of Directors
may be called by the Chairman of the Board(9),(20) and shall be called by
the Secretary on the written request of any two directors. The Chairman of the
Board(20) so calling, or the directors so requesting, any such meeting shall
fix the time and any place, either within or without the State of Delaware, as
the place for holding such meeting.
SECTION 3.6. Notice of Special Meeting. Notice(21) of special meetings of
the Board of Directors shall be given to each director at least 48 hours prior
to the time of such meeting. Any director may waive notice of any meeting. The
attendance of a director at any meeting shall constitute a waiver of notice of
such meeting, except where a director attends a meeting for the purpose of
objecting to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor the
purpose of, any special meeting of the Board of Directors need be specified in
the notice or waiver of notice of such meeting, except that notice shall be
given of any proposed amendment to the by-laws if it is to be adopted at any
special meeting or with respect to any other matter where notice is required
by statute.
SECTION 3.7. Quorum. A majority of the Board of Directors shall constitute a
quorum for the transaction of business at any meeting of the Board of
Directors, and the act of a majority of the directors present at any meeting
at which there is a quorum shall be the act of the Board of Directors, except
as may be otherwise specifically provided by statute, by the Certificate of
Incorporation or by these by-laws. If a quorum shall not be present at any
meeting of the Board of Directors, the directors present thereat may adjourn
the meeting from time to time without notice other than announcement at the
meeting, until a quorum shall be present.
SECTION 3.8. Action Without Meeting. Unless otherwise restricted by the
Certificate of Incorporation or these by-laws, any action required or
permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof as provided in Article IV of these by-laws, may be taken
without a meeting, if a written consent thereto is signed by all members of
the Board or of such committee, as the case may be, and such written consent
is filed with the minutes of proceedings of the Board or committee.
SECTION 3.9. Meeting by Telephone. Any action required or permitted to be
taken by the Board of Directors or any committee thereof may be taken by means
of a meeting by conference telephone or similar communications equipment so
long as all persons participating in the meeting can hear each other. Any
person participating in such meeting shall be deemed to be present in person
at such meeting.
SECTION 3.10.(22) Compensation. Directors, as such, shall not be entitled
to any stated salary for their services unless voted by the stockholders, the
Board of Directors or the Compensation Committee of the Board of Directors;
but by resolution of the Board of Directors or the Compensation Committee of
the Board of Directors, a fixed sum and expenses of attendance, if any, may be
allowed for attendance at each regular or special meeting of the Board of
Directors or any meeting of a committee of directors. No provision of these
by-laws shall be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
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<PAGE> 9
ARTICLE IV
Committees(9) of Directors
SECTION 4.1. Executive Committee. The Executive Committee of the Board of
Directors (the "Executive Committee") shall consist of not less than three
directors to be designated by the Board of Directors annually at its first
regular meeting held pursuant to Section 3.4 of these by-laws after the annual
meeting of stockholders or as soon thereafter as conveniently possible. None of
the members of the Executive Committee need be officers of the corporation. The
Executive Committee shall have and may exercise all of the powers of the Board
of Directors during the period between meetings of the Board of Directors
except as reserved to the Board of Directors or as delegated by these by-laws
or by the Board of Directors to another standing or special committee or as may
be prohibited by law and, except further, that the Executive Committee shall
not have the power to elect officers of the corporation. The Chairman of the
Board shall be a member of the Executive Committee.(16)
SECTION 4.2.(12) Compensation Committee. The Compensation Committee of the
Board of Directors (the "Compensation Committee") shall consist of at least
two(25) directors, all(25) of whom shall be "outside" directors of the
corporation, to be designated annually by the Board of Directors at its first
regular meeting held pursuant to Section 3.4 of these by-laws after the annual
meeting of stockholders or as soon thereafter as conveniently possible. The
term "outside" director, as used in this Section 4.2, shall mean a director of
the corporation who is (17),(21),(26) free of any relationship that, in
the opinion of the Board of Directors, would interfere with the designated
director's exercise of independent judgment as a member of the Compensation
Committee. The Compensation Committee shall have and may exercise all of the
powers of the Board of Directors during the period between meetings of the
Board of Directors, except as may be prohibited by law, with respect to (i)
studying, recommending, adopting, implementing, administering, determining and
authorizing the amount, terms, and conditions of payment of any and all forms
of compensation for the corporation's directors, officers, employees and
agents, (ii) approving and administering any loan to, guarantee of any
obligation of, or other assistance to any officer or other employee of the
corporation or any of its subsidiaries, including any officer or employee who
is a director of the corporation or any of its subsidiaries, and (iii)
implementing and administering those qualified, nonqualified, or other stock
option or purchase plans of the corporation, as designated by the Board of
Directors.
SECTION 4.3.(12) Audit Committee. The Audit Committee of the Board of
Directors (the "Audit Committee") shall consist solely of directors, not less
than three, all of whom shall be "outside" directors of the corporation, to be
designated annually by the Board of Directors at its first regular meeting held
pursuant to Section 3.4 of these by-laws after the annual meeting of
stockholders or as soon thereafter as conveniently possible. The term "outside"
director, as used in this Section 4.3, shall mean a director of the corporation
who is (17),(26) free of any relationship that, in the opinion of the Board
of Directors, would interfere with the designated director's exercise of
independent judgment as a member of the Audit Committee. The Audit Committee
shall have and may exercise all of the powers of the Board of Directors during
the period between meetings of the Board of Directors, except as may be
prohibited by law, with respect to (i) the selection and recommendation for
employment by the corporation, subject to approval by the Board of Directors
and the stockholders, of a firm of certified public accountants whose duty it
shall be to audit the books and accounts of the corporation and its
subsidiaries for the fiscal year in which they are appointed and who shall
report to the Audit Committee, provided, that in selecting and recommending for
employment any firm of certified public accountants, the Audit Committee shall
make a thorough investigation to ensure the "independence" of such accountants
as defined in the applicable rules and regulations of the Securities and
Exchange Commission; (ii) instructing the certified public accountants to
expand the scope and extent of the annual audits of the corporation into areas
of any concern to the Audit Committee, which may be beyond that necessary for
the certified public accountants to report on the financial statements of the
corporation and, at its discretion, directing other special investigations to
ensure the objectivity of the financial reporting of the corporation; (iii)
reviewing the reports submitted by the certified public accountants, conferring
with the auditors and reporting thereon to the Board of Directors with such
recommendations as the Audit Committee may deem appropriate; (iv) meeting with
the corporation's principal accounting and financial officers, the
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<PAGE> 10
certified public accountants and auditors, and other officers or department
managers of the corporation as the Audit Committee shall deem necessary in
order to determine the adequacy of the corporation's accounting principles and
financial and operating policies, controls and practices, its public financial
reporting principles and practices, and the results of the corporation's annual
audit; (v) conducting inquiries into any of the foregoing, the underlying and
related facts, including such matters as the conduct of the personnel of the
corporation, the integrity of the records of the corporation, the adequacy of
the procedures and the legal and financial consequences of such facts; and (vi)
retaining and deploying such professional assistance, including outside counsel
and auditors and any others, as the Audit Committee shall deem necessary or
appropriate, in connection with the exercise of its powers on such terms as the
Audit Committee shall deem necessary or appropriate to protect the interests of
the stockholders of the corporation.
SECTION 4.4.(18) Nominating Committee. The Nominating Committee of the
Board of Directors (the "Nominating Committee") shall consist of at least three
directors all of whom shall be "outside" directors of the corporation,(26)
all to be designated annually by the Board of Directors at its first regular
meeting held pursuant to Section 3.4 of these by-laws after the annual meeting
of stockholders or as soon thereafter as conveniently possible. The term
"outside" director, as used in this Section 4.4, shall mean a director of the
corporation who is(26) free of any relationship that, in the opinion of the
Board of Directors, would interfere with the designated director's exercise of
independent judgment as a member of the Nominating Committee.(26) The
Nominating Committee shall have and may exercise all of the powers of the Board
of Directors during the period between meetings of the Board of Directors,
except as may be prohibited by law, with respect to (i) recommending to the
whole Board of Directors(26) the nominees for election as directors at the
annual meetings of stockholders; (ii) searching for, evaluating and
recommending(26) to the whole Board of Directors directors to fill vacancies
and newly created directorships resulting from any increase in the authorized
number of directors; (iii) recruitment of potential director candidates; (iv)
recommending to the whole Board of Directors changes in the responsibilities,
composition, size and committee structure of the Board of Directors; (v) review
of the composition and membership of each of the standing committees and
special committees of the Board of Directors; (vi) selection of the membership
of the proxy committee charged with voting solicited proxies at stockholder
meetings; (vii) review of proxy comments received from stockholders relating
directly or indirectly to the Board of Directors, its composition and duties;
(viii) review of stockholder suggestions as to nominees for directorships that
are submitted in writing to the Nominating Committee, at the address of the
company's principal executive offices, not less than 90 days in advance of the
date of the company's proxy statement released to stockholders in connection
with the previous year's annual meeting of stockholders; and (ix) retaining and
deploying such professional assistance as the Nominating Committee shall deem
necessary or appropriate, in connection with the exercise of its powers on such
terms as the Nominating Committee shall deem necessary or appropriate, to
protect the interests of the stockholders of the corporation.(17)
SECTION 4.5.(18),(28) Corporate Responsibility Committee. The Corporate
Responsibility Committee of the Board of Directors (the "Corporate
Responsibility Committee") shall consist solely of directors, not less than
three, all of whom shall be "outside" directors of the Company, to be
designated annually by the Board of Directors at its first regular meeting held
pursuant to Section 3.4 of these by-laws after the annual meeting of
stockholders or as soon thereafter as conveniently possible. The term "outside"
director, as used in this Section, shall mean a director of the corporation who
is free of any relationship that, in the opinion of the Board of Directors,
would interfere with the designated director's exercise of independent judgment
as a member of the Corporate Responsibility Committee. The Corporate
Responsibility Committee shall have and may exercise all of the powers of the
Board of Directors during the period between meetings of the Board of
Directors, except as may be prohibited by law, with respect to (i) surveying,
monitoring and guiding the corporation's role in the fulfillment of its social
responsibilities toward its shareholders, employees and the general public in
the conduct of its normal business activities; (ii) reporting to the Board of
Directors with respect to the foregoing; and (iii) retaining and deploying such
professional assistance as the Corporate Responsibility Committee shall deem
reasonably necessary or appropriate, in connection with the exercise of its
powers on such terms as the Corporate Responsibility Committee shall deem
reasonably necessary or appropriate to protect the interests of the corporation
and its stockholders.
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SECTION 4.6.(24) Finance Committee. The Finance Committee of the Board of
Directors (the "Finance Committee") shall consist solely of not less than
three directors, all to be designated annually by the Board of Directors at
its first regular meeting held pursuant to Section 3.4 of these by-laws after
the annual meeting of the stockholders or as soon thereafter as conveniently
possible. If a director of the corporation, the corporate officer who is
designated the Chief Financial Officer of the corporation shall be a member of
the Finance Committee. None of the members of the Finance Committee, other
than the Chief Financial Officer, need be officers of the corporation. The
Finance Committee shall have and may exercise all of the powers of the Board
of Directors during the period between meetings of the Board of Directors or
the Executive Committee, except as reserved by the Board of Directors, or as
otherwise delegated by these by-laws or from time to time by resolutions duly
adopted by the Board of Directors or the Executive Committee, or as may be
prohibited by law, with respect to (i) the long-term financial planning of the
corporation; (ii) reviewing the capital requirements and other financial needs
of the corporation; (iii) exploring sources and alternatives for meeting such
requirements and needs; (iv) making recommendations to the Board of Directors
or the Executive Committee regarding authorizing the borrowing of funds or the
issuance of debt or equity securities by the corporation, its subsidiaries or
affiliates; (v) authorizing the borrowing of funds, the issuance of debt
securities, guarantees of obligations or other financial transactions of the
corporation, its subsidiaries or affiliates, upon such terms and conditions as
from time to time determined by the Finance Committee acting under such
authority as may from time to time be expressly delegated by resolution duly
adopted by the Board of Directors or the Executive Committee; (vi) overseeing
and reviewing the finances and Financial Department of the corporation to the
extent such oversight and review may be necessary or advisable to supplement
that of the Executive Committee and the Audit Committee; (vii) overseeing and
reviewing the administration and results of operations of the "Browning-Ferris
Industries, Inc. Retirement Plan", as amended (the "Plan"), the "Browning-
Ferris Industries, Inc. Canadian Retirement Plan (the "Canadian Plan") and any
other pension benefit or retirement plan or arrangement maintained by any
subsidiary of the Company (the "Subsidiary Plan"), the Plan, Canadian Plan and
Subsidiary Plan being referred to collectively as the "Pension Plans", and
further to acquaint the Board of Directors with the Finance Committee's
oversight and surveillance activities in connection with the Pension
Plans;(28) (viii)(28) appointing ex officio members of the Finance
Committee; (ix)(28) retaining and deploying such professional assistance,
including outside investment bankers, financial consultants and any others, as
the Finance Committee shall deem reasonably necessary or appropriate, in
connection with the exercise of its powers on such terms as the Finance
Committee shall deem reasonably necessary or appropriate to protect the
interests of the corporation and its stockholders.
SECTION 4.7.(12),(18),(20),(24) Designation, Powers and Name. The
Board of Directors may, by resolution passed by a majority of the whole Board,
designate one or more additional special or standing(9) committees other than
the Executive Committee, Compensation Committee, Audit Committee,(11)
Nominating Committee, Corporate Responsibility Committee(28) and Finance
Committee,(24) each such additional(9) committee to consist of two or more
of the directors of the corporation. The committee shall have and may exercise
such of the powers of the Board of Directors in the management of the business
and affairs of the corporation as may be provided in such resolution, except
as delegated by these by-laws or by the Board of Directors to another standing
or special committee or as may be prohibited by law.(9)
SECTION 4.8.(12),(18),(24) Committee Operations. A majority of a
committee shall constitute a quorum for the transaction of any committee
business. Such committee or committees shall have such name or names and such
limitations of authority as provided in these by-laws or as(9) may be
determined from time to time by resolution adopted by the Board of Directors.
The corporation shall pay all expenses of committee operations.(9) The Board
of Directors may designate one or more appropriate(9) directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of such committee. In the absence or disqualification of any
members of such committee or committees, the member or members thereof present
at any meeting and not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another appropriate(9) member of
the Board of Directors to act at the meeting in the place of any absent or
disqualified member.
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SECTION 4.9.(12),(18),(24) Minutes. Each committee of directors shall
keep regular minutes of its proceedings and report the same to the Board of
Directors when required. The Secretary or any Assistant Secretary of the
corporation shall (i) serve as the Secretary of the Executive Committee(20)
and any other special or standing committee of the Board of Directors of the
corporation, (ii) keep regular minutes of standing or special committee
proceedings, (iii) make available to the Board of Directors, as required,
copies of all resolutions adopted or minutes or reports of other actions
recommended or taken by any such standing or special committee and (iv)
otherwise as requested keep the members of the Board of Directors apprised of
the actions taken by such standing or special committees.(9)
SECTION 4.10.(12),(18),(24) Compensation. Members of special or
standing committees who are "outside" directors,(9) as that term is defined
elsewhere in this Article, may be allowed compensation for serving as a member
of any such committee and all members may be compensated for expenses of(9)
attending committee meetings, if the Board of Directors shall so determine.
ARTICLE V
Notice
SECTION 5.1. Methods of Giving Notice. Whenever under the provisions of the
Delaware General Corporation Law,(21) the Certificate of Incorporation or
these by-laws, notice is required to be given to any director, member of any
committee or stockholder, such notice shall be in writing and delivered
personally or mailed to such director, member or stockholder; provided that in
the case of a director or a member of any committee such notice may be given
orally or by telephone or telegram. If mailed, notice to a director, member of
a committee or stockholder shall be deemed to be given when deposited in the
United States mail first class in a sealed envelope, with postage thereon
prepaid, addressed, in the case of a stockholder, to the stockholder at the
stockholder's address as it appears on the records of the corporation or, in
the case of a director or a member of a committee, to such person at his
business address. If sent by telegraph, notice to a director or member of a
committee shall be deemed to be given when the telegram, so addressed, is
delivered to the telegraph company.
SECTION 5.2. Written Waiver. Whenever any notice is required to be given
under the provisions of the Delaware General Corporation Law,(21) the
Certificate of Incorporation or these by-laws, a waiver thereof in writing,
signed by the person or persons entitled to said notice, whether before or
after the time stated therein, shall be deemed equivalent thereto.
ARTICLE VI
Officers
SECTION 6.1. Officers. The officers of the corporation shall be Chairman of
the Board,(6),(11) Chief Executive Officer,(29) Vice Chairman,(19)
President, Chief Operating Officer,(29) one or more Vice Presidents, any one
or more of which may be designated Executive Vice President or Senior Vice
President, a Secretary and a Treasurer. The Board of Directors may appoint
such other officers and agents, including but not limited to,(9) Assistant
Vice Presidents, Assistant Secretaries and Assistant Treasurers, as it shall
deem necessary, who shall hold their offices for such terms and shall exercise
such powers and perform such duties as shall be determined by the Board. Any
two or more offices, other than the offices of President and Secretary, may be
held by the same person. No officer shall execute, acknowledge, verify or
countersign any instrument on behalf of the corporation in more than one
capacity, if such instrument is required by law, by these by-laws or by any
act of the corporation to be executed, acknowledged, verified or countersigned
by two or more officers. The Chairman of the Board,(6),(11) Vice Chairman,
Chief Executive Officer(29) and President(20) shall be elected from among
the directors. With the foregoing exceptions, none of the other officers need
be a director, and none of the officers need be a stockholder of the
corporation.
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SECTION 6.2. Election and Term of Office. The officers of the corporation
shall be elected annually by the Board of Directors at its first regular
meeting held after the annual meeting of stockholders or as soon thereafter as
conveniently possible. Each officer shall hold office until his successor
shall have been chosen and shall have qualified or until his death or the
effective date of his resignation or removal, or until he shall cease to be a
director in the case of the Chairman of the Board,(6),(9),(21) Chief
Executive Officer,(29) Vice Chairman or President.
SECTION 6.3. Removal and Resignation. Any officer or agent elected or
appointed by the Board of Directors may be removed without cause by the
affirmative vote of a majority of the Board of Directors whenever, in its
judgment, the best interests of the corporation shall be served thereby, but
such removal shall be without prejudice to the contractual rights, if any, of
the person so removed. Any officer may resign at any time by giving written
notice to the corporation. Any such resignation shall take effect at the date
of the receipt of such notice or at any later time specified therein, and
unless otherwise specified therein, the acceptance of such resignation shall
not be necessary to make it effective.
SECTION 6.4. Vacancies. Any vacancy occurring in any office of the
corporation by death, resignation, removal or otherwise, shall(15) be filled
by the Board of Directors for the unexpired portion of the term.
SECTION 6.5. Salaries. The salaries of all officers and agents of the
corporation shall be fixed by the Board of Directors or the Compensation
Committee(9) or pursuant to the(9) direction of the Board of Directors or
Compensation Committee(9); and no officer shall be prevented from receiving
such salary by reason of his also being a director.
SECTION 6.6. Chairman of the Board. The Chairman of the Board shall be
elected from among the directors of the corporation and(29) shall preside at
all meetings of the Board of Directors and of the stockholders of the
corporation. In the Chairman's absence, such duties shall be attended to by
the Chief Executive Officer(29), Vice Chairman(19) or the President.(11)
The Chairman of the Board(11),(15),(20),(29) shall perform such duties
and possess such powers(15) as usually pertain to the position(29) of
chairman of the board of directors(15),(20),(29) and shall have(15)
such duties and possess such powers(15) as may be further prescribed by
these by-laws, the(15) Board of Directors or the Executive Committee. In the
absence of the Chief Executive Officer or the(29) President, or in the event
of such officers'(29) inability or refusal to act, the Chairman of the Board
shall perform the duties and exercise the powers of the Chief Executive
Officer or the(29) President until such vacancies shall be filled in the
manner prescribed by these by-laws or by law.(15) The Chairman of the
Board(29) may sign with the Secretary or any other officer of the
corporation thereunto authorized by the Board of Directors certificates for
shares of the corporation and any(29) other instruments which the Board of
Directors or the Executive Committee(9) has authorized to be executed, except
in cases where the signing and execution thereof has been expressly delegated
or reserved(9) by these by-laws or by the Board of Directors or the Executive
Committee(9) to some other officer or agent of the corporation, or shall be
required by law to be otherwise executed.(29)
SECTION 6.7(29). Chief Executive Officer. The Chief Executive Officer
shall be elected by the Board of Directors and such office may be held in
conjunction with any other office of the corporation. The Chief Executive
Officer shall in general supervise and control the business and affairs of the
corporation, shall perform such duties and possess such powers as usually
pertain to the position of Chief Executive Officer and shall have such duties
and possess such powers as may be further prescribed by these by-laws, the
Board of Directors or the Executive Committee. The Chief Executive Officer
shall formulate and submit to the Board of Directors or the Executive
Committee matters of general policy for the corporation. He shall have the
power to appoint and remove subordinate officers, agents and employees, except
those elected or appointed by the Board of Directors. The Chief Executive
Officer may sign any deeds, bonds, mortgages, contracts, checks, notes, drafts
or other instruments which the Board of Directors or Executive Committee has
authorized to be executed, except in cases where the signing and execution
thereof have been expressly delegated or reserved by these by-laws or by the
Board of Directors or the Executive Committee to some other officer or agent
of the corporation, or shall be required by law to be otherwise executed. The
Chief Executive Officer shall vote, or give a proxy to any other officer of
the corporation to vote, all shares of stock of any other corporation standing
in the name of the corporation.(29)
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SECTION 6.8.(19),(29) Vice Chairman. The Vice Chairman shall be the
chief marketing officer of the corporation and, subject to the control of the
Board of Directors, the Executive Committee, the Chairman of the Board or the
Chief Executive Officer(29), shall in general supervise and control the
marketing and corporate development activities of the corporation. He shall
have the power to appoint and remove subordinate officers, agents and
employees, except those elected or appointed by the Board of Directors. The
Vice Chairman shall keep the Board of Directors, the Executive Committee, the
Chairman of the Board and the Chief Executive Officer(29) fully informed as
they or any of them shall request and shall consult with them concerning the
marketing and corporate development activities of the corporation. He may
sign, with the Secretary or any other officer of the corporation and others
authorized by the Board of Directors, certificates for shares of capital stock
of the corporation and any deeds, bonds, mortgages, contracts, checks, notes,
drafts or other instruments which the Board of Directors or the Executive
Committee has authorized to be executed except in cases where the signing and
execution thereof has been expressly delegated by these by-laws, the Board of
Directors or the Executive Committee to some other officer or agent of the
corporation, or shall be required by law to be otherwise executed. In general,
he shall perform all other duties normally incident to the office of Vice
Chairman, except any duties expressly delegated to other persons by these by-
laws, the Board of Directors, the Executive Committee,(29) the Chairman of
the Board or the Chief Executive Officer(29) and such other duties as may be
prescribed by the stockholders, the Board of Directors, the Executive
Committee,(29) the Chairman of the Board or the Chief Executive
Officer(29) from time to time.
SECTION 6.9.(10),(11),(20),(29) President. The President shall be
the chief operating(15),(20) officer of the corporation unless elected
otherwise by the Board of Directors,(29) and, subject to the control of the
Board of Directors,(15) the Executive Committee,(15),(29) the Chairman
of the Board,(20) and the Chief Executive Officer,(29) shall in general
supervise and control the day-to-day business operations of the corporation.
He shall have the power to appoint and remove subordinate officers, agents,
and employees, except those elected or appointed by the Board of
Directors.(9),(15) The President shall keep the Board of Directors, the
Executive Committee,(29) the Chairman of the Board(9) and the Chief
Executive Officer,(29) fully informed as they or any of them shall
request(9) and shall consult with them concerning the business of the
corporation. He may sign with the Secretary or any other officer of the
corporation thereunto authorized by the Board of Directors, certificates for
shares of capital stock of the corporation and any deeds, bonds, mortgages,
contracts, checks, notes, drafts or other instruments which the Board of
Directors or the Executive Committee has authorized to be executed, except in
cases where the signing and execution thereof has been expressly delegated by
these by-laws or by the Board of Directors,(29) the Executive Committee or
the Chief Executive Officer(29) to some other officer or agent of the
corporation, or shall be required by law to be otherwise executed. In general
he shall perform all other duties normally incident to the office of
President, except any duties expressly delegated to other persons by these by-
laws, the Board of Directors, the Executive Committee,(29) the Chairman of
the Board(20) or the Chief Executive Officer,(29) and such other duties as
may be prescribed by the stockholders,(9),(15) the Board of Directors, the
Executive Committee(29), the Chairman of the Board(20) or the Chief
Executive Officer(29) from time to time.
SECTION 6.10.(29) Chief Operating Officer. The Chief Operating Officer
shall be the President unless elected otherwise by the Board of Directors. If
the office of Chief Operating Officer is not the President, then such office
will perform the duties and possess the powers as delegated by the President
in connection with the supervision and control of the corporation's day-to-day
operations. The Chief Operating Officer shall have such other duties and
possess such other powers as from time to time may be further prescribed by
the Chairman of the Board, the Chief Executive Officer, the Board of Directors
or the Executive Committee.(29)
SECTION 6.11.(10),(11),(20),(29) Vice Presidents.(15) Any Vice
President (including any Vice Presidents designated by the Board of Directors
as an Executive Vice President or as a Senior Vice President)(15),(20) may
sign, with the Secretary or any Assistant Secretary, certificates for shares
of capital stock of the corporation. The Vice Presidents shall perform such
other duties as from time to time may be assigned to them by the Chairman of
the Board,(9),(20) the Chief Executive Officer,(29) the Board of Directors
or the Executive Committee.
SECTION 6.12.(10),(11),(20),(29) Secretary. The Secretary shall (a)
keep the minutes of the meetings of the stockholders, the Board of Directors
and committees of directors; (b) see that all notices are duly given in
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accordance with the provisions of these by-laws and as required by law; (c) be
custodian of the corporate records and of the seal of the corporation, and see
that the seal of the corporation or a facsimile thereof is affixed to all
certificates for shares prior to the issue thereof and to all documents, the
execution of which on behalf of the corporation under its seal is duly
authorized in accordance with the provisions of these by-laws; (d) keep or
cause to be kept a register of the post office address of each stockholder
which shall be furnished by such stockholder; (e) sign with the Chairman of
the Board,(11) the Chief Executive Officer,(29) Vice Chairman,(19)
President, or a Vice President, certificates for shares of the corporation,
the issue of which shall have been authorized by resolution of the Board of
Directors(9); (f) have general charge of the stock transfer books of the
corporation; and (g) in general, perform all duties normally incident to the
office of Secretary and such other duties as from time to time may be assigned
to him by the Chairman of the Board,(11),(20) the Chief Executive
Officer,(29) the Board of Directors or the Executive Committee.
SECTION 6.13.(10),(11),(20),(29) Treasurer. If required by the Board
of Directors or the Executive Committee, the Treasurer shall give a bond for
the faithful discharge of his duties in such sum and with such surety or
sureties as the Board of Directors or the Executive Committee shall determine.
He shall (a) have charge and custody of and be responsible for all funds and
securities of the corporation; receive and give receipts for monies due and
payable to the corporation from any source whatsoever and deposit all such
monies in the name of the corporation in such banks, trust companies or other
depositories as shall be selected in accordance with the provisions of Section
7.3 of these by-laws; (b) prepare, or cause to be prepared, for submission at
each regular meeting of the Board of Directors, at each annual meeting of the
stockholders, and at such other times as may be required by the Board of
Directors, the Chairman of the Board,(11),(20) the Chief Executive
Officer,(29) the Executive Committee, or as may be required by law,(17) a
statement of financial condition of the corporation in such detail as may be
required; (c) have the power to sign stock certificates to the full extent
permitted by law,(17) and (d(17)) in general, perform all the duties
incident to the office of Treasurer and such other duties as from time to time
may be assigned to him by the Chairman of the Board,(11),(20) the Chief
Executive Officer,(29) the Board of Directors or the Executive Committee.
SECTION 6.14.(10),(11),(20),(29) Assistant Secretary or
Assistant(17) Treasurer. The Assistant Secretaries and Assistant Treasurers
shall, in general, perform such duties as shall be assigned to them by the
Secretary or the Treasurer, respectively, or by the Chairman of the
Board,(11),(20) the Chief Executive Officer,(29) the Board of Directors
or the Executive Committee. The Assistant Secretaries and Assistant Treasurers
shall, in the absence of the Secretary or Treasurer, respectively, perform all
functions and duties which such absent officers may delegate, but such
delegation shall not relieve the absent officer from the responsibilities and
liabilities of his office. The Assistant Secretaries and Assistant
Treasurers(20) may sign, with the Chairman of the Board,(11) the Chief
Executive Officer,(29) the Vice Chairman,(19) the President or a Vice
President, certificates for shares of the corporation, the issue of which
shall have been authorized by a resolution of the Board of Directors.(9) The
Assistant Treasurers shall respectively, if required by the Board of Directors
or the Executive Committee, give bonds for the faithful discharge of their
duties in such sums and with such sureties as the Board of Directors or the
Executive Committee(9) shall determine.
ARTICLE VII
Contracts, Checks and Deposits
SECTION 7.1. Contracts. Subject to the provisions of Section 6.1, the Board
of Directors or the Executive Committee may authorize any officer, officers,
agent or agents, to enter into any contract or execute and deliver an
instrument in the name of and on behalf of the corporation, and such authority
may be general or confined to specific instances.
SECTION 7.2. Checks, etc. All checks, demands, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the corporation, shall be signed by such officer or officers or such
agent or agents of the corporation, and in such manner, as shall be determined
by the Board of Directors or the Executive Committee.
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SECTION 7.3. Deposits. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies or other depositories as the Chief Executive
Officer,(29) President or Treasurer may be empowered by the Board of
Directors or Executive Committee to select or(9) as the Board of Directors or
the Executive Committee may select.
ARTICLE VIII
Certificate of Stock
SECTION 8.1. Issuance. Each Stockholder of this corporation shall be
entitled to a certificate or certificates showing the number of shares of
stock registered in his name on the books of the corporation. The certificate
shall be in such form as may be determined by the Board of Directors or the
Executive Committee, and shall be issued in numerical order and shall be
entered in the books of the corporation as they are issued. They shall exhibit
the holder's name and the number of shares and shall be signed by the Chairman
of the Board, the Chief Executive Officer,(29) the Vice Chairman,(19) the
President or a Vice President and by the Secretary,(17) an Assistant
Secretary, the Treasurer or an Assistant Treasurer.(17) Any of or all the
signatures on the certificate may be a facsimile(4). If the corporation shall
be authorized to issue more than one class of stock or more than one series of
any class, the designation, preferences and relative, participating, optional
or other special rights of each class of stock or series thereof and the
qualifications, limitations or restrictions of such preference and rights
shall be set forth in full or summarized on the face or back of the
certificate which the corporation shall issue to represent such class of
stock; provided that, except as otherwise provided by statute, in lieu of the
foregoing requirements there may be set forth on the face or back of the
certificate which the corporation shall issue to represent such class or
series of stock, a statement that the corporation will furnish to each
Stockholder who so requests the designations, preferences and relative,
participating, optional or other special rights of each class of stock or
series thereof and the qualifications, limitations or restrictions of such
preferences and rights. All certificates surrendered to the corporation for
transfer shall be cancelled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been surrendered and
cancelled, except that in the case of a lost, stolen, destroyed or mutilated
certificate, a new one may be issued therefore upon such terms and with such
indemnity, if any, to the corporation as the Board of Directors(9) may
prescribe. Certificates may be issued representing fractional shares of stock.
SECTION 8.2. Lost Certificates. The Board of Directors(9) may direct that a
new certificate or certificates be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed.(17) When authorizing such issue of a new certificate or
certificates, the Board of Directors(9) may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed certificate or certificates, or his legal
representative,(17) to give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the corporation
with respect to the certificate or certificates alleged to have been lost,
stolen or destroyed, or both.
SECTION 8.3. Transfers. Upon surrender to the corporation or the transfer
agents of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new certificate
to the person entitled thereto, cancel the old certificate and record the
transaction upon its books. Transfers of shares shall be made only on the
books of the corporation by the registered holder thereof, or by his attorney
thereunto authorized by power of attorney and filed with the Secretary of the
corporation or the transfer agents.
SECTION 8.4. Registered Stockholders. The corporation shall be entitled to
treat the holder of record of any share or shares of stock as the holder in
fact thereof and, accordingly, shall not be bound to recognize any equitable
or other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except
as otherwise provided by the laws of the State of Delaware.
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ARTICLE IX
Dividends
SECTION 9.1. Declaration. Dividends upon the capital stock of the
corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors(9) at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property or in
shares of capital stock, subject to the provisions of the Certificate of
Incorporation.
SECTION 9.2. Reserve. Before payment of any dividend, there may be set aside
out of any funds of the corporation available for dividends such sum or sums
as the Board of Directors(9) from time to time, in their absolute discretion,
think proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
for such other purpose as the Board of Directors(9) shall think conducive to
the interest of the corporation, and the Board of Directors(9) may modify or
abolish any such reserve in the manner in which it was created.
ARTICLE X
Indemnification
SECTION 10.1. Third Party Actions. The corporation shall indemnify any
person who was or is a party or is threatened to be made a party to, or
otherwise becomes involved in(25), any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (formal or informal)(25), other than an action by or in the
right of the corporation, by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in connection with
such action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement(9), conviction, or
upon a plea of nolo contendere(9) or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
SECTION 10.2. Actions by or in the Right of the Corporation. The corporation
shall indemnify any person who was or is a party or is threatened to be made a
party to, or otherwise becomes involved in(25), any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred
by him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable(23) to the
corporation unless and only to the extent that the Delaware Court of Chancery
or the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Delaware Court of Chancery or such other
court shall deem proper.
SECTION 10.3.(13) Successful Defense. To the extent that a director,
officer, employee or agent of the corporation has been successful on the
merits or otherwise in defense of any action, suit or proceeding referred to
in Sections 10.1 and 10.2, or in defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
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SECTION 10.4.(13) Determination of Conduct. Any idemnification under
Sections 10.1, 10.2 or 10.7 (unless ordered by a court) shall be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth
in Sections 10.1 and 10.2.(9) Such determination(9) shall be made (1) by the
Board of Directors or the Executive Committee(9) by a majority vote of a
quorum consisting of directors who were not parties to such action, suit or
proceeding or(9) (2) if such quorum is not obtainable or, even(9) if
obtainable, a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (3) by the stockholders.
SECTION 10.5.(13),(21),(23) Payment of Expenses in Advance. Expenses
incurred by an officer or director in defending a civil or criminal action,
suit or proceeding shall be paid by the corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking
by or on behalf of such director or officer(21) to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by
the corporation as authorized in this Article X.
SECTION 10.6.(13),(23) Indemnity Not Exclusive. The indemnification and
advancement of expenses provided by, or granted pursuant to, the other
provisions of this Article X, shall not be deemed exclusive of any other
rights to which a person seeking indemnification or advancement of expenses
may be entitled under any(17) by-law, agreement, vote of stockholders or
disinterested directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office.
SECTION 10.7.(14) The Corporation. For purposes of this Article X,
references to "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was
a director, officer, employee or agent of such constituent corporation, or is
or was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under and subject
to the provisions of this Article X (including, without limitation, the
provisions of Section 10.4) with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if
its separate existence had continued.
SECTION 10.8.(3),(13) Insurance Indemnification. The corporation shall
have the power to purchase and maintain insurance on behalf of any person who
is or was a director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by him in
any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
the provisions of this Article X.
SECTION 10.9.(23) Heirs, Executors and Administrators. The indemnification
and advancement of expenses provided by Article X shall continue as to a
person who has ceased to be a director, officer, employee or agent of the
corporation and shall inure to the benefit of the heirs, executors and
administrators of such person.
14
<PAGE> 19
ARTICLE XI
Miscellaneous
SECTION 11.1. Seal. The corporate seal shall have inscribed thereon the name
of the corporation, and the words "Corporate Seal, Delaware". The seal may be
used by causing it or a facsimile thereof to be impressed or affixed or
otherwise reproduced.
SECTION 11.2. Books. The books of the corporation may be kept (subject to any
provision contained in the statutes) outside the State of Delaware at the
offices of the corporation at Houston, Texas, or at such other place or places
as may be designed from time to time by the Board of Directors or the Executive
Committee.
ARTICLE XII
Amendment
The by-laws of the corporation may be adopted, amended or repealed at any
regular meeting of the Board of Directors without prior notice, or at any
special meeting of the Board of Directors if notice of such alteration,
amendment or repeal be contained in the notice of such special meeting, except
as provided in the Certificate of Incorporation(21).
----------------
OFFICER'S CERTIFICATE
The undersigned, of Browning-Ferris Industries, Inc., a Delaware
corporation (the "Corporation"), hereby certifies that the above and foregoing
is a true and correct copy of the by-laws, as amended, of the Corporation in
effect on the date of this certificate.
_______________________________[Seal]
Date:________________________________
----------------
15
<PAGE> 20
- --------
FOOTNOTES
(1) Amended August 23, 1971.
(2) Amended November 19, 1971.
(3) Added November 19, 1971.
(4) Amended November 21, 1972.
(5) Amended December 12, 1972.
(6) Amended March 20, 1973.
(7) Amended December 2, 1975.
(8) Amended December 7, 1976.
(9) Amended June 7, 1977.
(10) Section 6.8 concerning "Vice Chairman of the Board" was deleted by
amendment adopted March 20, 1973, and Sections 6.9-.13 were accordingly
renumbered as 6.8-.12.
(11) Section 6.7 concerning "Chairman of the Executive Committee" was deleted by
amendment adopted June 18, 1976, and Sections 2.4, 4.1, 6.1, 6.6 and
6.8-.12 were amended to reflect the deletion and Sections 6.8-.12 were
accordingly renumbered as 6.7-.11.
(12) Sections 4.2 and 4.3 were added by amendment adopted June 7, 1977, and
Sections 4.2-.5 were accordingly renumbered as 4.4-.7. When Sections 4.4
and 4.5 were added by amendment adopted March 3, 1981, Sections 4.4-.7 were
accordingly renumbered as 4.6-4.9.
(13) Section 10.3 was added by amendment adopted June 7, 1977, and
Sections 10.3-.7 were accordingly renumbered as 10.4-.8.
(14) Section 10.7 was originally adopted as Section 10.6 on November 19, 1971,
and amended in its entirety and renumbered as Section 10.7 on June 7, 1977.
(15) Amended December 6, 1977.
(16) Amended December 1, 1980.
(17) Amended March 3, 1981.
(18) New Sections 4.4 and 4.5 were added by amendment adopted March 3, 1981, and
the following Sections 4.6 through 4.9 were renumbered accordingly.
(19) The position of Vice Chairman was reintroduced to these by-laws by the
adoption of new Section 6.7 on December 6, 1982, and the following sections
were renumbered accordingly.
(20) Amended December 6, 1982.
(21) Amended March 6, 1985.
(22) Amended December 2, 1986.
(23) Amended March 4, 1987.
(24) Amended September 7, 1988.
(25) Amended March 6, 1991.
(26) Amended December 1, 1992.
(27) Amended March 3, 1993.
(28) Amended March 1, 1995. Included the addition of a new Section 4.5.
(29) Amended September 6, 1995. Included the addition of new Sections 6.7 and
6.10.
----------------
16
<PAGE> 1
Exhibit 4.4
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECOND AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
Dated as of
May 31, 1995
among
BROWNING-FERRIS INDUSTRIES, INC.,
THE CONTINUING BANKS, THE NEW BANKS AND
THE RETIRING BANKS NAMED HEREIN,
THE CO-AGENTS,
CREDIT SUISSE,
as Documentation Agent,
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Administrative Agent
and
CHEMICAL BANK,
as Auction Administration Agent
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANDREWS & KURTH L.L.P.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE I
DEFINITIONS, ACCOUNTING TERMS AND INTERPRETATION
1.01. Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
1.02. Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-17
1.03. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-17
ARTICLE II
THE CREDITS
2.01. Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
2.02. Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
2.03. Competitive Bid Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-3
2.04. Committed Borrowing Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-5
2.05. Refinancings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-6
2.06. Conversion and Continuation of Committed Borrowings . . . . . . . . . . . . . . . . . . . . . II-7
2.07. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-8
2.08. Repayment of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-9
2.09. Interest on Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-9
2.10. Interest on Overdue Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-10
2.11. Alternate Rate of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-10
2.12. Termination and Reduction of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . II-12
2.13. Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-12
2.14. Reserve Requirements; Change in Circumstances . . . . . . . . . . . . . . . . . . . . . . . . II-14
2.15. Change in Legality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-16
2.16. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-17
2.17. Pro Rata Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-18
2.18. Sharing of Setoffs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-19
2.19. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-20
2.20. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-21
2.21 Borrowing Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-22
ARTICLE III
CONDITIONS OF LENDING
3.01. Conditions Precedent to the Initial Borrowing . . . . . . . . . . . . . . . . . . . . . . . . III-1
3.02. Conditions Precedent to the Initial Loan to each Borrowing Subsidiary . . . . . . . . . . . . III-2
3.03. Conditions Precedent to Each Committed Borrowing . . . . . . . . . . . . . . . . . . . . . . III-3
3.04. Conditions Precedent to Each Competitive Borrowing . . . . . . . . . . . . . . . . . . . . . III-3
3.05. Conditions Precedent to Conversions and Continuations . . . . . . . . . . . . . . . . . . . . III-4
</TABLE>
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<TABLE>
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.01. Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1
4.02. Principal Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1
4.03. Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1
4.04. Authorization and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1
4.05. Non-Violation of Laws, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1
4.06. Obligations Binding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-2
4.07. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-2
4.08. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-2
4.09. No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-2
4.10. Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-2
4.11. Public Utility Holding Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-3
4.12. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-3
4.13. Tax Returns and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-3
4.14. Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-3
4.15 Margin Stock; Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-3
4.16. Franchises and Other Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-4
ARTICLE V
COVENANTS
5.01. Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1
5.02. Negative Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1
5.03. Sale and Leaseback Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-3
5.04. Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-4
5.05. Merger and Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-4
5.06. Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-5
5.07. Financial Statements and Other Information . . . . . . . . . . . . . . . . . . . . . . . . . V-5
5.08. Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-6
5.09. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-7
5.10. Maintenance of Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-7
5.11. Compliance with Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-7
5.12. Notices of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-7
5.13. Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-7
ARTICLE VI
EVENTS OF DEFAULT
6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-1
</TABLE>
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<TABLE>
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ARTICLE VII
THE AGENTS
7.01. Authorization and Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-1
7.02. Agents' Reliance, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-1
7.03. Bank of America, Chemical, Credit Suisse, Morgan, NationsBank and TCB and Affiliates . . . . VII-2
7.04. Bank Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-2
7.05. Agents' Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-2
7.06. Successor Administrative Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-3
7.07. Successor Auction Administration Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-3
7.08. Resignation of the Documentation Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-4
7.09. Resignation of a Co-Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-4
7.10. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-4
7.11. No Duty of Co-Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-4
ARTICLE VIII
GUARANTY
8.01. Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-1
8.02. Guaranty Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-1
8.03. Effect of Debtor Relief Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-2
8.04. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-3
8.05. Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-3
8.06. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-3
8.07. Full Force and Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-4
ARTICLE IX
MISCELLANEOUS
9.01. Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IX-1
9.02. Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IX-1
9.03. No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IX-3
9.04. Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IX-3
9.05. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IX-4
9.06. Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IX-5
9.07. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IX-5
9.08. Usury Not Intended . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IX-6
9.09. Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . IX-7
9.10. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IX-7
9.11. Successors and Assigns; Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . IX-7
9.12. Appointment of Company as Agent for the Other Borrowers . . . . . . . . . . . . . . . . . . . IX-10
9.13. Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IX-10
9.14. Retiring Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IX-11
</TABLE>
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9.15. Submission to Jurisdiction; Waiver of Immunities . . . . . . . . . . . . . . . . . . . . . . IX-11
9.16. Judgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IX-12
9.17. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IX-12
9.18. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IX-12
9.19. Final Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IX-12
EXHIBITS
Exhibit 1.01-A Form of Administrative Questionnaire
Exhibit 1.01-B Form of Committed Note
Exhibit 1.01-C Form of Competitive Note
Exhibit 2.03-A Form of Competitive Bid Request
Exhibit 2.03-B Notice to Banks of Competitive Bid Request
Exhibit 2.03-C Competitive Bid
Exhibit 2.04 Committed Borrowing Request
Exhibit 2.21 Borrowing Subsidiary Counterpart
Exhibit 3.01-A Form of Opinion of Counsel to BFI
Exhibit 3.01-B Form of Opinion of Andrews & Kurth L.L.P.
Exhibit 9.11 Form of Assignment and Acceptance
SCHEDULES
Schedule I Schedule of Principal Subsidiaries
Schedule II Schedule of Liens
</TABLE>
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<PAGE> 6
SECOND AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT dated
as of May 31, 1995, is among:
(a) BROWNING-FERRIS INDUSTRIES, INC., a Delaware
corporation (the "Company");
(b) the Borrowing Subsidiaries, as defined below, that
become a party hereto;
(c) the banks and other financial institutions named
under the caption " Continuing Banks" on the signature pages hereof (the
"Continuing Banks");
(d) the banks and other financial institutions named
under the caption "New Banks" on the signature pages hereof (the "New Banks"
and together with the Continuing Banks and each other Person who becomes a Bank
pursuant to Section 9.11 collectively, the "Banks");
(e) the banks named under the caption "Retiring Banks" on
the signature pages hereof;
(f) BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, MORGAN GUARANTY TRUST COMPANY OF NEW YORK AND NATIONSBANK OF
TEXAS, N.A., as co-agents for the Banks ( in such capacity, the "Co-Agents");
(g) CREDIT SUISSE, as documentation agent for the Banks
(in such capacity, the "Documentation Agent");
(h) TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national
banking association, as administrative agent for the Banks (in such capacity
together with any other Person who becomes the Administrative Agent pursuant to
Section 7.06, the "Administrative Agent"); and
(i) CHEMICAL BANK, a New York banking corporation, as
auction administration agent for the Banks (in such capacity together with any
other Person who becomes the Auction Administration Agent pursuant to Section
7.07, the "Auction Administration Agent").
<PAGE> 7
PRELIMINARY STATEMENTS
(A) The Company has entered into an agreement dated
December 19, 1989 with Credit Suisse First Boston Limited as Facility Agent,
Bid Option Agent and Arranger, National Westminster Bank PLC New York Bank as
Swing-Line Agent and the banks named therein, including certain of the Banks
(the "1989 Agreement"), pursuant to which those banks were willing to make
loans and, from time to time, competitive offers to make advances to the
Company in aggregate amounts not to exceed at any time outstanding
$500,000,000, which agreement extended, renewed and modified the indebtedness
of the Company evidenced by an agreement dated August 10, 1988 among the
Company, Credit Suisse First Boston Limited as Facility Agent and Bid Option
Agent, National Westminster Bank PLC New York Branch as Prime Agent, Credit
Suisse First Boston Limited as the Arranger and the banks named therein,
including certain of the Banks.
(B) The Company has entered into an agreement dated
January 8, 1990 with Texas Commerce Bank National Association as Agent,
Chemical Bank as Auction Administration Agent and the banks named therein,
including certain of the Banks (the "1990 Agreement"), pursuant to which those
banks were willing to make loans and, from time to time, competitive offers to
make advances to the Company in aggregate amounts not to exceed at any time
outstanding $500,000,000, which agreement extended, renewed and modified the
indebtedness of the Company evidenced by an agreement dated September 19, 1988
with Texas Commerce Bank National Association as Agent and the banks named
therein, including certain of the Banks.
(C) The 1989 Agreement and the 1990 Agreement were merged
to an Amended and Restated Revolving Credit Agreement dated as of September 10,
1992 among the Company, Credit Suisse First Boston Limited as Co-Agent, Texas
Commerce Bank National Association as Administrative Agent and the banks named
therein, including certain of the Banks (the "1992 Agreement"), pursuant to
which those banks were willing to make loans to the Company in aggregate
amounts not to exceed any time outstanding $1,000,000,000.
(D) There are no outstanding loan balances or advances,
as of May 31, 1995, owed by the Company to any of the Banks or the Retiring
Bank pursuant to the 1992 Agreement.
(E) The Company wishes to amend and restate the 1992
Agreement in order to, among other things, permit the Borrowing Subsidiaries as
well as the Company to borrow thereunder, to extend the term thereof and to
modify certain of the covenants, as set forth in this Second Amended and
Restated Revolving Credit Agreement.
The Company has requested the Banks to extend a credit
facility to the Borrowers (as herein defined) in order to enable the Borrowers
to borrow on a revolving credit basis on and after the Effective Date and at
any time and from time to time prior to the Termination Date (each as herein
defined) in an aggregate principal amount not in excess of $1,000,000,000 at
any time outstanding. The Company has also requested that the Banks provide a
procedure pursuant to which each Bank may, on an uncommitted basis, bid up to
the full amount of the Total Commitment (as herein defined), regardless of such
Bank's individual Commitment on borrowings by the Borrowers
-2-
<PAGE> 8
thereunder. The Banks are willing to extend such credit to the Borrowers on
the terms and conditions herein set forth. Accordingly, the Borrowers, the
Agents, the Co-Agents and the Banks agree as follows:
-3-
<PAGE> 9
ARTICLE I
DEFINITIONS, ACCOUNTING TERMS AND INTERPRETATION
SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings:
"ABR Borrowing" means a Borrowing comprised of ABR Loans.
"ABR Loan" means any Committed Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"Adjusted CD Rate" means, with respect to any CD Borrowing for
any Interest Period, an interest rate per annum (rounded upwards, if not
already a whole multiple of 1/100 of 1%, to the next higher 1/100 of 1%) equal
to the sum of (a) a rate per annum equal to the product of (i) the Fixed
Certificate of Deposit Rate in effect for such Interest Period and (ii)
Statutory Reserves plus (b) the Assessment Rate. For purposes hereof, the term
"Fixed Certificate of Deposit Rate" shall mean the rate of interest determined
by the Administrative Agent to be the arithmetic average (rounded upward, if
necessary, to the next higher 1/100 of 1%) of the prevailing rates per annum
bid at 9:00 a.m., Houston, Texas time, to the Administrative Agent on the first
Business Day of the Interest Period applicable to such CD Borrowing by at least
two New York certificate of deposit dealers of recognized standing for the
purchase at face value from each of the Reference Banks of a certificate of
deposit of such Reference Bank in an amount comparable to the principal amount
of the participation of such Reference Bank in the Borrowing of which such
Borrowing forms a part and having a maturity comparable to such Interest
Period.
"Administrative Agent" has the meaning specified in the
introduction to this Agreement.
"Administrative Agent's Letter" means the letter agreement
dated of even date herewith between the Company and the Administrative Agent.
"Administrative Questionnaire" means an Administrative
Questionnaire in the form of Exhibit 1.01-A hereto, which each Bank shall
complete and provide to the Administrative Agent.
"Affiliate" means, when used with respect to any Person, any
other Person which controls or is controlled by or is under common control with
such Person. As used in this definition, "control" means the possession,
directly or indirectly, of power to direct or cause the direction of management
or policies (whether through ownership of securities or partnership or
ownership interests, by contract or otherwise).
"Agents" means the Documentation Agent, the Administrative
Agent and the Auction Administration Agent.
I-1
<PAGE> 10
"Agreed Maximum Rate" shall mean, for any date, the Alternate
Base Rate plus 1% per annum.
"Agreement" means this Second Amended and Restated Revolving
Credit Agreement, as the same may be amended, supplemented or modified from
time to time.
"Alternate Base Rate" means, for any date, a rate per annum
(rounded upwards, if not already a whole multiple of 1/16 of 1%, to the next
higher 1/16 of 1%) equal to the greatest of (a) the Prime Rate in effect on
such day, (b) the Base CD Rate in effect on such day plus 1% or (c) the Federal
Funds Effective Rate in effect for such day plus 1/2 of 1%. For purposes
hereof, the term "Prime Rate" means, as of a particular date, the prime rate
most recently announced by TCB and thereafter entered in the minutes of TCB's
Loan and Discount Committee, automatically fluctuating upward and downward with
and at the time specified in each such announcement without special notice to
any Borrower or any other Person, which prime rate may not necessarily
represent the lowest or best rate actually charged to a customer. "Base CD
Rate" shall mean the sum of (x) the product of (i) the Three-Month Secondary CD
Rate and (ii) Statutory Reserves and (y) the Assessment Rate. "Three-Month
Secondary CD Rate" means, for any day, the secondary market rate for
three-month certificates of deposit reported as being in effect on such day
(or, if such day is not a Business Day, the next preceding Business Day) by the
Board through the public information telephone line of the Federal Reserve Bank
of New York (which rate will, under the current practices of the Board, be
published in Federal Reserve Statistical Release H.15(519) during the week
following such day), or, if such rate shall not be so reported on such day or
such next preceding Business Day, the arithmetic average of the secondary
market quotations for three-month certificates of deposit of major money center
banks in New York City received at approximately 9:00 a.m., Houston, Texas
time, on such day (or, if such day shall not be a Business Day, on the next
preceding Business Day) by the Administrative Agent from three New York City
negotiable certificate of deposit dealers of recognized standing selected by
it. "Federal Funds Effective Rate" means, for any day, the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the next preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for such day on
such transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by it. If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Base CD
Rate or the Federal Funds Effective Rate or both for any reason, including the
inability of the Administrative Agent to obtain sufficient quotations in
accordance with the terms hereof, the Alternate Base Rate shall be determined
without regard to clause (b) or (c), or both, of the first sentence of this
definition, as appropriate, until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base Rate due to a
change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal
Funds Effective Rate shall be effective on the effective date of such change in
the Prime Rate, the Three- Month Secondary CD Rate or the Federal Funds
Effective Rate, respectively.
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<PAGE> 11
"Applicable Differential" means, on any date, with respect to
a CD Borrowing or a Eurodollar Committed Borrowing, the applicable differential
for the Loans comprising such Borrowing set forth below based upon the rating
applicable on such date to the Index Debt:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Eurodollar
Committed
Loan CD Loan
Duff Differential Differential
& (in 1/100 of 1% (in 1/100 of 1% per
Rating by: S&P Moody's Phelps per annum) annum)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Category 1 AA- or Aa3 or AA- or
higher higher higher 13.00 25.50
Category 2 A+ A1 A+ 17.00 29.50
A A2 A 17.00 29.50
A- A3 A- 17.00 29.50
Category 3 BBB+ Baal BBB+ 25 37.50
Category 4 BBB Baa2 BBB 30.00 42.50
Category 5 BBB- Baa3 BBB- 31.25 43.75
Category 6 BB+ Ba1 BB+ 50.00 62.50
- -----------------------------------------------------------------------------------------------------------
</TABLE>
If during the course of any Interest Period, any of S&P, Moody's or Duff &
Phelps shall announce a change of its rating of the Index Debt, and as a result
of such change, the Applicable Differential would increase or decrease if
calculated at that date, the Applicable Differential will change with the
effect from the date of such announcement. In the event of a split rating, the
rating of the majority (or in the case of three different ratings, the middle
rating) will apply.
"Applicable Fee Percentage" means, on any date, with respect
to the Total Commitment, the applicable percentage set forth below based upon
the rating applicable on such date to the Index Debt:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Duff Applicable Fee Percentage
& (in 1/100 of 1%
Rating by: S&P Moody's Phelps per annum)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Category 1 AA- or Aa3 or AA- or
higher higher higher 9.00
</TABLE>
I-3
<PAGE> 12
<TABLE>
- --------------------------------------------------------------------------------------
Duff Applicable Fee Percentage
& (in 1/100 of 1%
Rating by: S&P Moody's Phelps per annum)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Category 2 A+ A1 A+ 10.00
A A2 A 10.00
A- A3 A- 10.00
Category 3 BBB+ Baal BBB+ 12.50
Category 4 BBB Baa2 BBB- 15.00
Category 5 BBB- Baa3 BBB- 18.75
Category 6 BB+ Ba1 BB+ 2.00
- --------------------------------------------------------------------------------------
</TABLE>
If during the course of any payment period, any of S&P, Moody's or Duff &
Phelps shall announce a change of its rating of the Index Debt, and as a result
of such change, the Applicable Fee Percentage would increase or decrease if
calculated at that date, the Applicable Fee Percentage will change with the
effect from the date of such announcement. In the event of a split rating, the
rating of the majority (or in the case of three different ratings, the middle
rating) will apply.
"Applicable Laws" means the law in effect from time to time
and applicable to this Agreement and the transaction evidenced by, and arising
in connection with, this Agreement which lawfully permits the charging and
collection of the highest permissible lawful, nonusurious rate of interest on
this Agreement and the transaction evidenced by, and arising in connection
with, this Agreement and the Notes, including laws of the State of Texas and,
to the extent controlling, laws of the United States of America.
"Applicable Lending Office" means, with respect to each Bank,
such Bank's Domestic Lending Office in the case of an ABR Loan, CD Loan or a
Fixed Rate Loan and such Bank's Eurodollar Lending Office in the case of a
Eurodollar Loan.
"Assessment Rate" means, for any day, the annual assessment
rate in effect on such day which is payable by a member of the Bank Insurance
Fund classified as well capitalized and within supervisory subgroup "B" (or a
comparable successor assessment risk classification) within the meaning of 12
C.F.R. Section 327.3(e) (or any successor provision) to the FDIC for the FDIC
insuring time deposits at offices of such institution in the United States.
"Assignment and Acceptance" has the meaning specified in
Section 9.11(c).
"Attributable Debt" in respect of a Sale and Leaseback
Transaction means, as of any particular time, the present value (discounted at
the rate of interest implicit in the terms of the lease
I-4
<PAGE> 13
involved in such Sale and Leaseback Transaction, as determined in good faith by
the Company) of the obligation of the lessee thereunder for net rental payments
(excluding, however, any amounts required to be paid by such lessee, whether or
not designated as rent or additional rent, on account of maintenance and
repairs, services, insurance, taxes, assessments, water rates and similar
charges or any amounts required to be paid by such lessee thereunder contingent
upon monetary inflation or the amount of sales, maintenance and repairs,
insurance, taxes, assessments, water rates or similar charges) during the
remaining term of such lease (including any period for which such lease had
been extended or may, at the option of the lessor, be extended).
"Auction Administration Agent" has the meaning specified in
the introduction to this Agreement.
"Auction Administration Agent's Letter" means the letter
agreement dated of even date herewith between the Company and the Auction
Administration Agent.
"Bank of America" means Bank of America National Trust and
Savings Association.
"Bankruptcy Code" means Title 11 of the United States Code or
any successor thereto.
"Banks" has the meaning specified in the introduction to this
Agreement.
"Base CD Rate" has the meaning specified in the definition of
the term "Alternate Base Rate."
"Board" means the Board of Governors of the Federal Reserve
System of the United States.
"Borrowers" means the Company and the Borrowing Subsidiaries.
"Borrowing" means a Loan or group of Loans of a single Type
made by the Banks (or, in the case of a Competitive Borrowing, by the Bank or
Banks whose Competitive Bids have been accepted pursuant to Section 2.03) on a
single date and as to which a single Interest Period is in effect.
"Borrowing Date" means, with respect to each Borrowing made
pursuant to Section 2.03 or Section 2.04, the Business Day upon which the
proceeds of such Borrowing are to be made available to a Borrower.
"Borrowing Subsidiaries" means any wholly-owned Subsidiary
designated as a Borrowing Subsidiary by the Company pursuant to Section 2.21.
"Borrowing Subsidiary Counterpart" has the meaning specified
in Section 2.21.
I-5
<PAGE> 14
"Business Day" means any day (other than a day which is a
Saturday, Sunday or legal holiday in the States of New York or Texas) on which
banks are open for business in New York City and in Houston, Texas; provided,
however, that, when used in connection with a Eurodollar Loan, the term
"Business Day" shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.
"CD Borrowing" means a Borrowing comprised of CD Loans.
"CD Loan" means any Committed Loan bearing interest at a rate
determined by reference to the Adjusted CD Rate in accordance with the
provisions of Article II.
"Co-Agents" has the meaning specified in the introduction to
this Agreement.
"Code" means Internal Revenue Code of 1986 and the regulations
promulgated thereunder.
"Chemical" means Chemical Bank, a New York banking corporation.
"Commitment" means, with respect to each Bank, the amount set
forth beneath the name of such Bank on the signature pages hereof (or, as to
any Person who becomes a Bank after the Execution Date, on the signature page
of the Assignment and Acceptance executed by such Person), as such amount may
be permanently terminated or reduced from time to time pursuant to Section
2.12, Section 2.13(d), Section 2.14, Section 2.15 or Section 9.11, and as such
amount may be increased from time to time by assignment or assumption pursuant
to Section 2.14, Section 2.15 or Section 9.11. The Commitment of each Bank
shall automatically and permanently terminate on the Termination Date.
"Committed Borrowing" means a borrowing consisting of
concurrent Committed Loans from each of the Banks pursuant to Section 2.04
distributed ratably among the Banks in accordance with their respective
Commitments or resulting from a conversion or continuation of an existing
Committed Borrowing pursuant to Section 2.06.
"Committed Borrowing Request" has the meaning specified in
Section 2.04.
"Committed Loans" means the revolving loans made by the Banks
to the Company pursuant to Section 2.04. Each Committed Loan shall be a
Eurodollar Committed Loan, a CD Loan or an ABR Loan.
"Committed Note" means, as to each Borrower, a promissory note
of such Borrower payable to the order of each Bank, in substantially the form
of Exhibit 1.01B executed and delivered as provided in Section 2.02, together
with all modifications, extensions, renewals and rearrangements thereof.
"Communications" has the meaning specified in Section 9.02.
I-6
<PAGE> 15
"Company" has the meaning specified in the introduction to
this Agreement.
"Competitive Bid" means an offer by a Bank to make a
Competitive Loan pursuant to Section 2.03.
"Competitive Bid Rate" means, as to any Competitive Bid made
by a Bank pursuant to Section 2.03(b), (a) in the case of a Eurodollar
Competitive Loan, the Margin (which will be added to or subtracted from the
LIBO Rate) and (b) in the case of a Fixed Rate Loan, the fixed rate of
interest, in each case, offered by the Bank making such Competitive Bid.
"Competitive Bid Request" means a request for Competitive Bids
made pursuant to Section 2.03 in the form of Exhibit 2.03A.
"Competitive Borrowing" means a borrowing consisting of a
Competitive Loan or concurrent Competitive Loans from the Bank or Banks whose
Competitive Bid as all or as a part of such borrowing, as the case may be, has
been accepted by a Borrower under the bidding procedure described in Section
2.03.
"Competitive Loan" means a Loan from a Bank to a Borrower
pursuant to the bidding procedure described in Section 2.03, and shall be
either a Eurodollar Competitive Loan or a Fixed Rate Loan.
"Competitive Note" means, as to each Borrower, a promissory
note of such Borrower payable to the order of each Bank, in substantially the
form of Exhibit 1.01C executed and delivered as provided in Section 2.02,
together with all modifications, extensions, renewals and rearrangements
thereof.
"Consolidated Funded Debt" means the Funded Debt of the
Company, determined on a consolidated basis in accordance with generally
accepted accounting principles consistently applied.
"Consolidated Net Income" means, for any period, the net
income of the Company for such period, determined on a consolidated basis in
accordance with generally accepted accounting principles applied on a
consistent basis.
"Consolidated Net Tangible Assets" means the aggregate amount
of assets (less applicable reserves and other properly deductible items) after
deducting therefrom (a) all goodwill, customer lists, covenants not to compete,
trade names, trademarks, patents, copyrights, franchises, organization
expenses, formulas and processes, option rights, and other like intangibles and
(b) all current liabilities; all as reflected in the Company's most recent
consolidated balance sheet contained in the Company's financial statements most
recently delivered to the Administrative Agent pursuant to Section 5.07(a) or
(b) prior to the time as of which "Consolidated Net Tangible Assets" shall be
determined.
I-7
<PAGE> 16
"Consolidated Net Worth" means, with respect to the Company,
the stockholders' equity of the Company determined in accordance with generally
accepted accounting principles applied on a consistent basis; provided,
however, the amount of any foreign currency translation adjustment shall not be
included for purposes of determining Consolidated Net Worth.
"Continuing Banks" has the meaning specified in the
introduction to this Agreement.
"Credit Suisse" means Credit Suisse.
"Debt", when used with respect to any Person, means
Indebtedness of such Person for borrowed money, including any indebtedness for
or in respect of money borrowed or raised (whether or not for a cash
consideration), by whatever means (including acceptances and deposits), or for
the deferred purchase price of assets or services (other than (a) current trade
liabilities incurred in the ordinary course of business and payable in
accordance with customary practices and (b) any obligation in respect of such
deferred purchase price which has a remaining maturity of one year or less
although its original maturity may have exceeded one year).
"Default" means the occurrence of any event which with the
giving of notice or the passage of time or both could become an Event of
Default.
"Documents" has the meaning specified in Section 8.02.
"Documentation Agent" has the meaning specified in the
introduction to this Agreement.
"Dollars" and "dollars" and the symbol "$" mean the lawful
currency of the United States of America.
"Domestic Lending Office" means, with respect to any Bank, the
office of such Bank specified as its "Domestic Lending Office" on such Bank's
signature page to this Agreement or, as to any Person who becomes a Bank after
the date hereof, on the signature page of the Assignment and Acceptance
executed by such Bank or such other office of such Bank as such Bank may
hereafter designate from time to time as its "Domestic Lending Office" by
notice to the Company and the Administrative Agent.
"Duff & Phelps" means Duff & Phelps Credit Rating Company.
"Effective Date" means the date on which the conditions to
borrowing set forth in Article III are first met.
"Election" has the meaning specified in Section 2.13(d).
"Eligible Assignee" means (a) any Bank or any Affiliate of a
Bank; (b) a commercial bank organized under the laws of the United States, or
any state thereof, and having total assets in
I-8
<PAGE> 17
excess of $1,000,000,000; (c) a commercial bank organized under the laws of any
other country which is a member of the OECD, or a political subdivision of any
such country, and having total assets in excess of $1,000,000,000; provided
that such bank is acting through a branch or agency located in the country in
which it is organized or another country which is also a member of the OECD;
(d) the central bank of any country which is a member of the OECD; and (e) any
other lender approved by the Administrative Agent and the Company (which
approval shall not be unreasonably withheld).
"ERISA" means the Employee Retirement Income Security Act of
1974 and the regulations promulgated thereunder.
"Eurocurrency Liabilities" has the meaning assigned to that
term in Regulation D.
"Eurodollar Borrowing" means a Borrowing comprised of
Eurodollar Loans.
"Eurodollar Committed Borrowing" means any Committed Borrowing
comprised of Eurodollar Loans.
"Eurodollar Committed Loan" means any Committed Loan bearing
interest at a rate determined by reference to the LIBO Rate in accordance with
the provisions of Article II.
"Eurodollar Competitive Loan" means any Competitive Loan
bearing interest at a rate determined by reference to the LIBO Rate in
accordance with the provisions of Article II.
"Eurodollar Lending Office" means, with respect to each Bank,
the branches or affiliates of such Bank which such Bank has designated as its
"Eurodollar Lending Office" on such Bank's signature page to this Agreement or,
as to any Person who becomes a Bank after the date hereof, on the signature
page of the Assignment and Acceptance executed by such Bank or such other
office of such Bank as such Bank may hereafter designate from time to time as
its "Eurodollar Lending Office" by notice to the Company and the Administrative
Agent.
"Eurodollar Loan" means any Eurodollar Competitive Loan or any
Eurodollar Committed Loan.
"Event of Default" means any of the events described in
Article VI.
"Execution Date" means the date of execution and delivery of
this Agreement by the parties hereto.
"Facility Fee" has the meaning specified in Section 2.07(a).
"FDIC" means the Federal Deposit Insurance Corporation (or
any successor).
I-9
<PAGE> 18
"Federal Funds Effective Rate" has the meaning specified in
the definition of the term Alternate Base Rate.
"Financial Officer" of any Person means its chief financial
officer, vice president-finance, principal accounting officer, treasurer or any
other financial officer acceptable to the Administrative Agent.
"Fixed Certificate of Deposit Rate" has the meaning specified
in the definition of the term "Adjusted CD Rate."
"Fixed Rate Borrowing" means a Borrowing composed of Fixed
Rate Loans.
"Fixed Rate Loan" means any Competitive Loan bearing interest
at a fixed percentage rate per annum specified by the Bank making such Loan in
its Competitive Bid.
"Funded Debt," when used with respect to any Person on any
date, means Debt of such Person which (a) matures or is required to be paid
more than one year from the date of determination thereof or (b) matures within
one year from such date but is unconditionally renewable or extendible (by its
terms or by the terms of any instrument or agreement relating thereto) at the
option of such Person to a date more than one year from such date, or (c)
arises under a revolving credit or similar agreement which obligates the lender
or lenders to extend credit over a period of more than one year from such date.
"Guaranteed Obligations" has the meaning specified in Section
8.01.
"Guaranty" means, the guaranty of the Company contained in
Article VIII.
"Highest Lawful Rate" means, as to any Bank, at the particular
time in question, the maximum nonusurious rate of interest which, under
applicable law, such Bank is then permitted to charge the Borrowers on the
Loans. If the maximum rate of interest which, under Applicable Laws, the Banks
are permitted to charge the Borrowers on the Loans shall change after the date
hereof, to the extent permitted by applicable law, the Highest Lawful Rate
shall be automatically increased or decreased, as the case may be, as of the
effective time of such change without notice to any Borrower or any other
Person.
"Hostile Acquisition" means acquiring or attempting to acquire
(directly or indirectly) control of any Person if such acquisition or attempted
acquisition is or is reasonably expected to be resisted by or on behalf of such
Person or is otherwise unfriendly or hostile.
"Incurrence Time" has the meaning specified in Section 5.02.
"Indebtedness", when used with respect to any Person, means
any obligation (whether present or future, actual or contingent, secured or
unsecured, as principal or surety or
I-10
<PAGE> 19
otherwise) of such Person for the payment or repayment of money which would be
regarded as indebtedness in accordance with generally accepted accounting
principles.
"Index Debt" means the Company's senior, unsecured, non-credit
enhanced Funded Debt.
"Information Package" means the Confidential Information
Memorandum dated April 1995 sent to each Bank on behalf of the Company.
"Interest Payment Date" means (a) with respect to any
Eurodollar Loan, CD Loan or ABR Loan, the last day of the Interest Period
applicable thereto and, in addition, in the case of a Eurodollar Loan or CD
Loan with an Interest Period of 6 months or 180 days, respectively, the day
that would have been the Interest Payment Date for such Loan had an Interest
Period of 3 months or 90 days, respectively, been applicable to such Loan and
(b) in the case of a Fixed Rate Loan, the last day of the Interest Period
applicable thereto.
"Interest Period" means:
(a) with respect to any Committed Borrowing:
(i) If such Committed Borrowing is a Eurodollar Committed
Borrowing, (A) the period commencing on the Borrowing Date of such Borrowing or
on the last day of the immediately preceding Interest Period applicable to such
Borrowing, as the case may be, and ending on the numerically corresponding day
(or if there is no corresponding day, the last day) in the calendar month that
is one, two, three or six months thereafter, as the Company may elect, or, (B)
if earlier, on the date of the prepayment of any Eurodollar Committed
Borrowing;
(ii) If such Committed Borrowing is a CD Borrowing, (A)
the period commencing on the Borrowing Date of such Borrowing or on the last
day of the immediately preceding Interest Period applicable to such Borrowing,
as the case may be, and ending 30, 60, 90 or 180 days thereafter, as the
Company may elect, or (B) if earlier, on the date of the prepayment of such CD
Borrowing; and
(iii) If such Committed Borrowing is an ABR Borrowing, the
period commencing on the Borrowing Date of such Borrowing and ending on the
earliest of (A) the next succeeding March 31, June 30, September 30 or December
31, (B) the Termination Date and (C) the date such Borrowing is converted into
a Borrowing of a different Type in accordance with Section 2.06 or repaid or
prepaid in accordance with Section 2.08 or Section 2.13 and
(b) with respect to any Competitive Borrowing:
(i) If such Competitive Borrowing is a Fixed Rate
Borrowing, the period commencing on the Borrowing Date of such Borrowing and
ending on the date specified in the Competitive Bid in which the offer to make
such Fixed Rate Borrowing was extended; provided,
I-11
<PAGE> 20
however, that each such period shall have a duration of not less than seven
calendar days nor more than 360 days; and
(ii) If such Competitive Borrowing is a Eurodollar
Borrowing, the period commencing on the Borrowing Date of such Borrowing and
ending on the numerically corresponding date (or if there is no corresponding
date, the last day ) in the calendar month that is one, two, three or six
months thereafter, as the Company may elect.
Notwithstanding the foregoing, if any Interest Period would
end on a day which shall not be a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless, with respect to Eurodollar
Loans only, such next succeeding Business Day would fall in the next calendar
month, in which case such Interest Period shall end on the next preceding
Business Day, (i) no Interest Period may be selected for any Competitive
Borrowing that ends later than the Termination Date and (ii) no Interest Period
may be selected for any Committed Borrowing that ends later than the
Termination Date. Interest shall accrue from and including the first day of an
Interest Period to but excluding the last day of such Interest Period.
"Judgment Currency" has the meaning specified in Section 9.16.
"LIBO Rate" means, with respect to any Eurodollar Borrowing,
an interest rate per annum equal to the arithmetic average (rounded upwards, if
not already a whole multiple of 1/16 of 1%, to the next higher 1/16 of 1%) of
the rate per annum at which deposits in U.S. Dollars are offered in
immediately available funds to the principal office of each of the Reference
Banks in London, England (or if a Reference Bank does not at the time any such
determination is made maintain an office in London, England, the principal
office of any Affiliate of such Reference Bank in London, England), at 11:00
a.m., London time (or as soon thereafter as practicable), two Business Days
before the first day of such Interest Period with a maturity equal to the
applicable Interest Period and in an amount approximately equal in principal
amount to the amount of such Reference Bank's portion of such Borrowing. The
LIBO Rate for the Interest Period for such Borrowing shall be determined by the
Administrative Agent on the basis of applicable rates furnished to and received
by the Administrative Agent from the Reference Banks two Business Days before
the first day of such Interest Period, subject, however, to the provisions of
Sections 2.11(c) and (d).
"Lien", when used with respect to any Person, means any
mortgage, lien, charge, pledge, security interest or encumbrance of any kind
(whether voluntary or involuntary, affirmative or negative, and whether imposed
or created by operation of law or otherwise) upon, or pledge of, any of its
property or assets, whether now owned or hereafter acquired, or any lease
intended as security, any conditional sale agreement, or other title retention
agreement.
"Loan" means a Competitive Loan, a Committed Loan, a
Eurodollar Loan, a CD Loan, a Fixed Rate Loan or an ABR Loan.
I-12
<PAGE> 21
"Majority Banks" means, at any time, (a) the Majority
Committed Banks and (b) Banks holding at least 66-2/3% of the then aggregate
unpaid principal amount of the Competitive Loans.
"Majority Committed Banks" means, at any time, Banks holding
at least 66-2/3% of the then aggregate unpaid principal amount of the Committed
Loans or if no Committed Loans are outstanding, Banks having at least 66-2/3% of
the available Commitments (determined without considering the effect of any
reduction pursuant to Section 2.17).
"Margin" means, as to any Eurodollar Competitive Loan, the
margin (expressed as a percentage rate per annum in the form of a decimal to no
more than four decimal places) to be added to or subtracted from the LIBO Rate
in order to determine the interest rate applicable to such Loan, as specified
in the Competitive Bid relating to such Loan.
"Material Adverse Effect" means an event or circumstance which
materially and adversely affects the business, financial position or results of
operations of the Company and its Subsidiaries on a consolidated basis or the
ability of any Borrower to perform its obligations under this Agreement or the
Notes.
"Moody's" means Moody's Investors Service, Inc.
"Morgan" means Morgan Guaranty Trust Company of New York.
"NationsBank" means NationsBank of Texas, N.A.
"New Banks" has the meaning specified in the introduction to
this Agreement.
"Notice of Acquisition" has the meaning specified in Section
2.13(d).
"Notice of Election" has the meaning specified in Section
2.13(d).
"Note" means a Competitive Note or a Committed Note.
"OECD" means the Organization for Economic Cooperation and
Development (or any successor).
"Operating Rights" has the meaning specified in Section 4.16.
"Other Taxes" has the meaning specified in Section 2.20.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to all or any of its functions under ERISA.
I-13
<PAGE> 22
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, trust, unincorporated
association, joint venture or other entity, or a foreign state or political
subdivision thereof or any agency of such state or subdivision.
"Plan" means any employee pension benefit plan maintained or
contributed to by the Company or any of its Subsidiaries or by any trade or
business (whether or not incorporated) under common control (as defined in
Section 4001(b) of ERISA) with the Company and insured by the PBGC under Title
IV of ERISA.
"Prime Rate" has the meaning specified in the definition of
the term "Alternate Base Rate".
"Principal Property" means any waste processing, waste
disposal or resource recovery plant or similar facility located within the
United States of America (excluding its territories and possessions and Puerto
Rico) and owned by, or leased to, the Company or any Restricted Subsidiary,
except (a) any such plant or facility (i) owned or leased jointly or in common
with one or more persons other than the Company and its Subsidiaries, in which
the interest of the Company and its Restricted Subsidiaries does not exceed
fifty percent (50%) or (ii) which the board of directors of the Company
determines in good faith is not of material importance to the total business
conducted, or assets owned, by the Company and its Subsidiaries as an entirety,
or (b) any portion of any such plant or facility which the board of directors
of the Company determines in good faith not to be of material importance to the
use or operation thereof.
"Principal Subsidiary" means a Subsidiary (a) whose total
assets or gross revenues (each such amount expressed on a combined basis before
eliminations and adjustments in the case of a Subsidiary or a Subsidiary which
itself has Subsidiaries) represent, respectively, not less than one point seven
five percent (1.75%) of either the consolidated total assets or consolidated
gross revenues of the Company and its Subsidiaries all as calculated annually
by reference to the then latest fiscal year end financial data (consolidated or
unconsolidated, as the case may be) of such Subsidiary and the then latest
fiscal year end audited consolidated financial statements of the Company, or
(b) to which is transferred all or substantially all of the assets or
undertakings of a Principal Subsidiary. Notwithstanding the foregoing, the
term "Principal Subsidiary" shall not include any Subsidiary of a Principal
Subsidiary regardless of whether such Subsidiary would otherwise be a Principal
Subsidiary. A certificate signed by a Financial Officer of the Company as to
whether a Subsidiary is or is not or was or was not a Principal Subsidiary at a
specified date shall, in the absence of manifest error, be conclusive and
binding.
"Reference Banks" means, (a) with respect to any Borrowing
bearing interest at the Adjusted CD Rate, TCB, NationsBank and Bank of America,
and (b) with respect to any Borrowing bearing interest at the LIBO Rate, TCB,
Credit Suisse and Morgan, provided, however, in each case, should any Reference
Bank or an Affiliate of such Reference Bank cease to have a commitment to the
Company pursuant to Section 2.13(d), Section 2.14 or Section 2.15, the Company
and the Administrative Agent shall designate a new Reference Bank to replace
such Reference Bank.
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<PAGE> 23
"Register" has the meaning specified in Section 9.11(e).
"Regulation A" means Regulation A of the Board, as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Regulation D" means Regulation D of the Board as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Regulation G" means Regulation G of the Board as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Regulation T" means Regulation T of the Board as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Regulation U" means Regulation U of the Board as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Regulation X" means Regulation X of the Board as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Reserve Percentage" of any Bank for the Interest Period for
any Eurodollar Loan, means the reserve percentage applicable during such
Interest Period under regulations issued from time to time by the Board (or if
more than one such percentage shall be so applicable, the daily average of such
percentages for those days in such Interest Period during which any such
percentage shall be so applicable) for determining the maximum reserve
requirement (including any marginal reserve requirement for such Bank with
respect to liabilities or assets consisting of or including Eurocurrency
Liabilities having a term equal to such Interest Period).
"Restricted Subsidiary" means any Subsidiary, substantially
all of the property of which is located, or substantially all of the business
of which is carried on, within the United States of America (excluding its
territories and possessions and Puerto Rico).
"Retiring Bank"means the bank named under the caption
"Retiring Bank" on the signature pages hereof.
"Sale and Leaseback Transaction" has the meaning attributed to
it in Section 5.03.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc. or any successor corporation.
"Senior Funded Debt" means, with respect to any Person,
unsecured and non-credit enhanced Funded Debt of such Person which is not
subordinated in right of payment to any other Debt of such Person. Debt
incurred under this Agreement on the date hereof would be Senior Funded Debt.
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<PAGE> 24
"Stated Rate" has the meaning attributed to it in Section 9.08.
"Statutory Reserves" means a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency, or supplemental reserves),
expressed as a decimal, established by the Board and any other banking
authority to which any of the Banks is subject with respect to the Adjusted CD
Rate or the Base CD Rate, for new negotiable time deposits in Dollars of over
$100,000 with maturities approximately equal (a) the applicable Interest Period
in the case of Adjusted CD Rate and (b) three months in the case of the Base CD
Rate. Such reserve percentages shall include those imposed under Regulation D.
Statutory Reserves shall be adjusted automatically on and as of the effective
date of any change in any reserve percentage.
"Subsidiary" means, with respect to any Person, any
corporation in which more than 50% of the stock of each class having ordinary
voting power shall, at the time as of which any determination is being made, be
owned of record and beneficially by such Person directly and/or through one or
more other Subsidiaries.
"Taxes" has the meaning specified in Section 2.20.
"TCB" means Texas Commerce Bank National Association.
"Termination Date" means May 31, 2000 or the earlier date of
termination in whole of the Total Commitment pursuant to Section 2.12 or
Section 6.01.
"Three-Month Secondary CD Rate" has the meaning specified in
the definition of the term "Alternate Base Rate".
"Total Commitment" means at any time the aggregate amount of
the Banks' Commitments, as in effect at such time.
"Type" means, when used in respect to any Loan or Borrowing,
each of the following types of Loans or Borrowings as applicable: Eurodollar
Loan or Eurodollar Borrowing, CD Loan or CD Borrowing, ABR Loan or ABR
Borrowing and Fixed Rate Loan or Fixed Rate Borrowing.
"United States" and "U.S." each means United States of America.
"Wholly-owned Subsidiary" means as to the Company, a
Subsidiary, 100% of the stock of every class of which at the time as of which
any determination is made, is owned of record and beneficially by the Company
directly or indirectly through one or more other Subsidiaries of the Company.
"Withdrawal Date" has the meaning specified in Section 2.13(d).
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<PAGE> 25
"Withdrawing Bank" has the meaning specified in Section
2.13(d).
"1989 Agreement" has the meaning specified in the Preliminary
Statements to this Agreement.
"1990 Agreement" has the meaning specified in the Preliminary
Statements to this Agreement.
"1992 Agreement" has the meaning specified in the Preliminary
Statements to this Agreement.
SECTION 1.02. Accounting Terms. All accounting terms not
otherwise defined shall be construed in accordance with generally accepted
accounting principles as in effect from time to time as set forth in the
opinions, statements and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants, the Financial
Accounting Standards Board and such other Persons who shall be approved by a
significant segment of the accounting profession and concurred on by the
independent certified public accountants certifying any audited financial
statements of the Company.
SECTION 1.03. Interpretation. (a) In this Agreement,
unless a clear contrary intention appears:
(i) the singular number includes the plural number and
vice versa;
(ii) reference to any gender includes each other gender;
(iii) the words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole and
not to any particular Article, Section or other subdivision;
(iv) reference to any Person includes such Person's
successors and assigns but, if applicable, only if such successors and
assigns are permitted by this Agreement, and reference to a Person in
a particular capacity excludes such Person in any other capacity or
individually, provided that nothing in this clause (iv) is intended to
authorize any assignment not otherwise permitted by this Agreement;
(v) reference to any agreement, document or instrument
including this Agreement means such agreement, document or instrument
as amended, supplemented or modified and in effect from time to time
in accordance with the terms thereof and, if applicable, the terms
hereof, and reference to any Note or any other note includes any note
issued pursuant hereto in extension or renewal thereof and in
substitution or replacement therefor;
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(vi) unless the context indicates otherwise, reference to
any Article, Section, Schedule or Exhibit means such Article or
Section hereof or such Schedule or Exhibit hereto;
(vii) the word "including" (and with correlative meaning
"include") means including, without limiting the generality of any
description preceding such term;
(viii) with respect to the determination of any period of
time, the word "from" means "from and including" and the word "to"
means "to but excluding"; and
(ix) reference to any law, rule, regulation or
interpretation means such law, rule, regulation or interpretation as
amended, modified, codified or reenacted, in whole or in part, and in
effect from time to time.
(b) The Article and Section headings herein and the Table
of Contents are for convenience only and shall not affect the construction
hereof.
(c) No provision of this Agreement shall be interpreted
or construed against any Person solely because that Person or its legal
representative drafted such provision.
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ARTICLE II
THE CREDITS
SECTION 2.01. Commitments. (a) Subject to the terms and
conditions and relying upon the representations and warranties herein set
forth, each Bank agrees, severally and not jointly, to make Committed Loans to
the Borrowers, at any time and from time to time on and after the Effective
Date and until the Termination Date, in an aggregate principal amount at any
time outstanding not to exceed such Bank's Commitment minus the amount by which
the Competitive Loans outstanding at such time shall be deemed to have used
such Commitment pursuant to Section 2.17, subject, however, to the conditions
that (i) at no time shall (A) the sum of (x) the outstanding aggregate
principal amount of all Committed Loans plus (y) the outstanding aggregate
principal amount of all Competitive Loans exceed (B) the Total Commitment and
(ii) at all times the outstanding aggregate principal amount of all Committed
Loans made by each Bank shall equal the product of (A) the percentage which its
Commitment represents of the Total Commitment times (B) the outstanding
aggregate principal amount of all Committed Loans made pursuant to Section
2.04. Each Bank's Commitment, as in effect on the Execution Date, is set forth
opposite its name on the signature page hereto for such Bank. Such Commitments
may be terminated or reduced from time to time pursuant to Section 2.12 and
Section 2.13(d).
(b) Within the foregoing limits and subject to the terms,
conditions and limitations set forth herein, the Borrowers may borrow, pay or
prepay and reborrow hereunder, on and after the Effective Date and prior to the
Termination Date.
SECTION 2.02. Loans. (a) Each Committed Loan shall be made
as part of a Borrowing consisting of Loans made by the Banks ratably in
accordance with their Commitments; provided, however, that the failure of any
Bank to make any Committed Loan shall not in itself relieve any other Bank of
its obligation to lend hereunder (it being understood, however, that no Bank
shall be responsible for the failure of any other Bank to make any Loan
required to be made by such other Bank). Each Competitive Loan shall be made
in accordance with the procedures set forth in Section 2.03. The Committed
Loans or Competitive Loans comprising any Borrowing shall be (i) in the case of
Competitive Loans, in an aggregate principal amount which is not less than
$25,000,000 and is an integral multiple of $10,000,000 above that amount,
subject to the proviso following Section 2.03(d)(v), and (ii) in the case of
Committed Loans, in an aggregate principal amount which is an integral multiple
of $5,000,000 and not less than $25,000,000 (or an aggregate principal amount
equal to the remaining balance of the available Commitments).
(b) Each Competitive Borrowing shall be comprised
entirely of Eurodollar Competitive Loans or Fixed Rate Loans, and each
Committed Borrowing shall be comprised entirely of Eurodollar Committed Loans,
CD Loans or ABR Loans, as a Borrower may request pursuant to Section 2.03 or
2.04, as applicable. Each Bank may at its option make any Eurodollar Loan by
causing its Eurodollar Lending Office to make such Loan; provided that any
exercise of such option shall not affect the obligation of any Borrower to
repay such Loan in accordance with the terms of
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<PAGE> 28
this Agreement. Borrowings of more than one Type may be outstanding at the
same time; provided, however, that a Borrower shall not be entitled to request
any Borrowing which, if made, would result in an aggregate of more than ten
separate Committed Loans of any Bank to all Borrowers being outstanding
hereunder at any one time. For purposes of the foregoing, Loans having
different Interest Periods, regardless of whether they commence on the same
date, shall be considered separate Loans.
(c) Subject to Section 2.05, each Bank shall make each
Loan to be made by it hereunder on the proposed date thereof by wire transfer
of immediately available funds to the Administrative Agent in Houston, Texas,
not later than 11:30 a.m., Houston, Texas time, and the Administrative Agent
shall by 2:00 p.m., Houston, Texas time, credit the amounts so received to the
general deposit account of the Company with the Administrative Agent or, if a
Borrowing shall not occur on such date because any condition precedent herein
specified shall not have been met, return the amounts so received to the
respective Banks. Competitive Loans shall be made by the Bank or Banks whose
Competitive Bids therefor are accepted pursuant to Section 2.03 in the amounts
so accepted and Committed Loans shall be made by the Banks pro rata in
accordance with Section 2.17. Unless the Administrative Agent shall have
received notice from a Bank prior to the date of any Borrowing that such Bank
will not make available to the Administrative Agent such Bank's portion of such
Borrowing, the Administrative Agent may assume that such Bank has made such
portion available to the Administrative Agent on the date of such Borrowing in
accordance with this Section 2.02(c) and the Administrative Agent may, in
reliance upon such assumption, make available to the requesting Borrower on
such date a corresponding amount. If and to the extent that such Bank shall
not have made such portion available to the Administrative Agent, such Bank and
each Borrower severally agree to repay to the Administrative Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to such Borrower until the date
such amount is repaid to the Administrative Agent at (i) in the case of a
Borrower, the interest rate applicable at the time to the Loans comprising such
Borrowing and (ii) in the case of such Bank, the Federal Funds Effective Rate.
If such Bank shall repay to the Administrative Agent such corresponding amount,
such amount shall constitute such Bank's Loan as part of such Borrowing for
purposes of this Agreement.
(d) Notwithstanding any other provision of this
Agreement, no Borrower shall be entitled to request any Borrowing pursuant to
Section 2.03 or Section 2.04 if the Interest Period requested with respect
thereto would end after the Termination Date.
(e) Each Competitive Loan shall be a Eurodollar
Competitive Loan or a Fixed Rate Loan. Each Committed Loan shall be a
Eurodollar Committed Loan, a CD Loan or an ABR Loan.
(f) The Competitive Loans made by each Bank shall be
evidenced by a single Competitive Note duly executed on behalf of such
Borrower, dated the Execution Date or such later date on which the holder of
such Note becomes a party to this Agreement pursuant to Section 9.11, with the
blanks appropriately completed, payable to the order of such Bank in a
principal amount equal to the Total Commitment.
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(g) The Committed Loans made by each Bank to a Borrower
shall be evidenced by a single Committed Note duly executed on behalf of such
Borrower, dated the Execution Date or such later date on which the holder of
such Note becomes a party to this Agreement pursuant to Section 9.11, with the
blanks appropriately completed, payable to the order of such Bank in a
principal amount equal to the Commitment of such Bank.
SECTION 2.03. Competitive Bid Procedure. (a) In order to
request Competitive Bids, a Borrower shall hand deliver or telecopy to the
Administrative Agent and the Auction Administration Agents a duly completed
Competitive Bid Request, to be received by such Agents (i) in the case of a
Eurodollar Competitive Borrowing, not later than 9:00 a.m., Houston, Texas
time, five Business Days before the Borrowing Date specified for a proposed
Competitive Borrowing, and (ii) in the case of a Fixed Rate Borrowing, not
later than 9:00 a.m., Houston, Texas time, one Business Day before the
Borrowing Date specified for a proposed Competitive Borrowing. No CD Loan or
Eurodollar Committed Loan shall be requested in or made pursuant to a
Competitive Bid Request. No ABR Loan shall be requested in, or, except
pursuant to Section 2.11 or Section 2.15, made pursuant to, a Competitive Bid
Request. A Competitive Bid Request that does not conform substantially to the
format of Exhibit 2.03(A) may be rejected at the Auction Administration Agent's
sole discretion, and the Auction Administration Agent shall promptly notify the
Borrower requesting such Competitive Bid of such rejection by telecopier. Each
Competitive Bid Request shall in each case refer to this Agreement and specify
(x) whether the Competitive Borrowing then being requested is to be a
Eurodollar Competitive Borrowing or a Fixed Rate Borrowing, (y) the Borrowing
Date of such Competitive Borrowing (which shall be a Business Day) and the
aggregate principal amount thereof (which shall be in a minimum principal
amount of $50,000,000 and in an integral multiple of $1,000,000), and (z) the
Interest Period with respect thereto. Promptly after its receipt of a
Competitive Bid Request that is not rejected as aforesaid, the Auction
Administration Agent shall invite by telecopier (in substantially the form set
forth in Exhibit 2.03(B)) the Banks to bid, on the terms and conditions of this
Agreement, to make Competitive Loans pursuant to such Competitive Bid Request.
Notwithstanding the foregoing, the Auction Administration Agent shall have no
obligation to invite any Bank to make a Competitive Bid pursuant to this
Section 2.03(a) until such Bank has delivered a properly completed
Administrative Questionnaire to the Administrative Agent.
(b) On and after the Effective Date, each Bank may, in
its sole discretion, make one or more Competitive Bids responsive to each
Competitive Bid Request of a Borrower. Each Competitive Bid by a Bank must be
received by the Auction Administration Agent via telecopier, in the form of
Exhibit 2.03(C), (i) in the case of a Eurodollar Competitive Borrowing, not
later than 1:00 p.m., Houston, Texas time, four Business Days before the
Borrowing Date specified for a proposed Competitive Borrowing and (ii) in the
case of a Fixed Rate Borrowing, not later than 9:00 a.m., Houston, Texas time,
on the Borrowing Date specified for a proposed Competitive Borrowing.
Competitive Bids that do not conform substantially to the format of Exhibit
2.03(C) may be rejected by the Auction Administration Agent after conferring
with, and upon the instruction of, the Borrower requesting such Competitive
Bid, and the Auction Administration Agent shall notify the applicable Bank of
such rejection as soon as practicable. Each Competitive Bid shall refer to
this Agreement and (x) specify the principal amount (which shall be in a
minimum principal amount of
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$25,000,000 and in an integral multiple of $10,000,000 above such amount and
which may equal the entire aggregate principal amount of the Competitive
Borrowing requested by the Borrower requesting such Competitive Bid
irrespective of such Bank's Commitment) of the Competitive Loan that the
applicable Bank is willing to make to such Borrower, (y) specify the
Competitive Bid Rate or Rates at which such Bank is prepared to make the
Competitive Loan or Loans and (z) confirm the Interest Period with respect
thereto specified by such Borrower in its Competitive Bid Request. A
Competitive Bid submitted by a Bank pursuant to this paragraph (b) shall be
irrevocable.
(c) The Auction Administration Agent shall promptly
notify the Borrower requesting such Competitive Bid by telecopier of all the
Competitive Bids made, the Competitive Bid Rate and the maximum principal
amount of each Competitive Loan in respect of which a Competitive Bid was made
and the identity of the Bank that made each such Competitive Bid. The Auction
Administration Agent shall send a copy of all Competitive Bids to such Borrower
for its records as soon as practicable after completion of the bidding process
set forth in this Section 2.03.
(d) A Borrower may in its sole and absolute discretion,
subject only to the provisions of this Section 2.03(d), accept or reject any
Competitive Bid referred to in Section 2.03(c). Such Borrower shall notify the
Auction Administration Agent by telephone, confirmed by telecopier, whether and
to what extent it has decided to accept or reject any or all of the Competitive
Bids referred to in Section 2.03(c), (i) in the case of a Eurodollar
Competitive Borrowing, not later than 9:00 a.m., Houston, Texas time, three
Business Days before the Borrowing Date specified for a proposed Competitive
Borrowing and (ii) in the case of a Fixed Rate Borrowing, not later than 11:00
a.m., Houston, Texas time, on the Borrowing Date specified for a proposed
Competitive Borrowing, provided, however, (i) the failure by such Borrower to
accept or reject any Competitive Bid referred to in Section 2.03(c) shall be
deemed to be a rejection of such Competitive Bid, (ii) the Company shall not
accept a Competitive Bid made at a particular Competitive Bid Rate if the
Company has decided to reject a Competitive Bid made at a lower Competitive Bid
Rate, (iii) the aggregate amount of the Competitive Bids accepted by such
Borrower shall not exceed the principal amount specified in the Competitive Bid
Request, (iv) if such Borrower shall accept a Competitive Bid or Bids made at a
particular Competitive Bid Rate but the amount of such Competitive Bid or Bids
shall cause the total amount of Competitive Bids to be accepted by such
Borrower to exceed the amount specified in the Competitive Bid Request, then
such Borrower shall accept a portion of such Competitive Bid or Bids in an
amount equal to the amount specified in the Competitive Bid Request less the
amount of all other Competitive Bids accepted with respect to such Competitive
Bid Request, which acceptance, in the case of multiple Competitive Bids at such
Competitive Bid Rate, shall be made pro rata in accordance with the amount of
each such Competitive Bid at such Competitive Bid Rate, and (v) except pursuant
to clause (iv) above, no Competitive Bid shall be accepted for a Competitive
Loan unless such Competitive Loan is in a minimum principal amount of
$25,000,000 and an integral multiple of $10,000,000 above such amount and is
part of a Competitive Borrowing in a minimum principal amount of $25,000,000;
provided further, however, that if a Competitive Loan must be in an amount less
than $25,000,000 because of the provisions of clause (iv) above, such
Competitive Loan may be for a minimum of $1,000,000 or any integral multiple
thereof, and in calculating the pro rata allocation of acceptances or portions
of multiple Competitive Bids at a particular Competitive Bid Rate pursuant to
clause (iv)
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the amounts shall be rounded to integral multiples of $1,000,000 in a manner
which shall be in the discretion of the Company. A notice given by a Borrower
pursuant to this Section 2.03(d) shall be irrevocable.
(e) The Auction Administration Agent shall promptly
notify each Bank making a Competitive Bid whether or not its Competitive Bid or
corresponding Competitive Bids have been accepted (and if so, in what amount
and at what Competitive Bid Rate) by telecopier sent by the Auction
Administration Agent, and each successful bidder will thereupon become bound,
subject to the other applicable conditions hereof, to make the Competitive Loan
in respect of which its Competitive Bid has been accepted. After completing
the notifications referred to in the immediately preceding sentence, the
Auction Administration Agent shall (i) notify the Administrative Agent of each
Competitive Bid that has been accepted, the amount thereof and the Competitive
Bid Rate therefor and (ii) notify each Bank of the aggregate principal amount
of all Competitive Bids accepted.
(f) Upon receipt from the Administrative Agent of the
LIBO Rate applicable to any Eurodollar Competitive Loan to be made by any Bank
pursuant to a Competitive Bid that has been accepted by a Borrower pursuant to
Section 2.03(d), the Auction Administration Agent shall notify such Bank of (i)
the applicable LIBO Rate and (ii) the sum of the applicable LIBO Rate plus the
Margin bid by such Bank.
(g) A Competitive Bid Request shall not be made within
five Business Days of the date after the date of any previous Competitive Bid
Request, unless the Company and the Auction Administration Agent shall mutually
agree otherwise and notice of such agreement shall have been given to the
Administrative Agent and the Banks.
(h) If the Auction Administration Agent or any Affiliate
of the Auction Administration Agent shall at any time be a Bank with a
Commitment hereunder and shall elect to submit a Competitive Bid in its
capacity as a Bank, it shall submit such Competitive Bid directly to the
Borrower requesting such Competitive Bid one quarter of an hour earlier than
the latest time at which the other Banks are required to submit their
Competitive Bids to the Auction Administration Agent pursuant to paragraph (b)
above.
(i) All notices required by this Section 2.03 shall be
made in accordance with Section 9.02.
SECTION 2.04. Committed Borrowing Procedure. In order to
effect a Committed Borrowing, a Borrower shall give written (or telephone
notice promptly confirmed in writing) to the Administrative Agent,
substantially in the form of Exhibit 2.04 (a "Committed Borrowing Request"),
(a) in the case of a Eurodollar Committed Borrowing, not later than 11:00 a.m.,
Houston, Texas time, three Business Days before the Borrowing Date specified
for such proposed Committed Borrowing, (b) in the case of a CD Borrowing, not
later than 10:00 a.m., Houston, Texas time, two Business Days before such
proposed Committed Borrowing, and (c) in the case of an ABR Borrowing, not
later than 10:00 a.m., Houston, Texas time, on the Borrowing
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Date specified for such proposed Committed Borrowing. No Fixed Rate Loan or
Eurodollar Competitive Loan shall be requested or made pursuant to a Committed
Borrowing Request. Such Committed Borrowing Request shall be irrevocable and
shall in each case refer to this Agreement and specify (x) whether the
Borrowing then being requested is to be a Eurodollar Committed Borrowing, a CD
Borrowing, or an ABR Borrowing, (y) the Borrowing Date of such Borrowing (which
shall be a Business Day) and the aggregate amount thereof (which shall not be
less than $25,000,000 and shall be an integral multiple of $5,000,000) and (z)
the Interest Period with respect thereto. If no election as to the Type of
Committed Borrowing is specified in any such notice, then the requested
Committed Borrowing shall be an ABR Borrowing. If no Interest Period with
respect to any Eurodollar Committed Borrowing or CD Borrowing is specified in
any such Committed Borrowing Request, then (i) in the case of a Eurodollar
Committed Borrowing, such Borrower shall be deemed to have selected an Interest
Period of one month's duration and (ii) in the case of a CD Borrowing, such
Borrower shall be deemed to have selected an Interest Period of 30 days'
duration. If a Borrower shall not have given notice in accordance with this
Section 2.04 of its election to refinance a Committed Borrowing prior to the
end of the Interest Period in effect for such Borrowing, then such Borrower
shall (unless such Borrowing is repaid at the end of such Interest Period) be
deemed to have given notice of an election to refinance such Borrowing with an
ABR Borrowing. The Administrative Agent shall promptly advise the Banks of any
Committed Borrowing Request given pursuant to this Section 2.04 and of each
Bank's portion of the requested Committed Borrowing by telecopier.
SECTION 2.05. Refinancings. Each Borrower may refinance
all or any part of any Borrowing with a Borrowing of the same or a different
Type made pursuant to Section 2.03 or Section 2.04, subject to the conditions
and limitations set forth herein and elsewhere in this Agreement, including
refinancings of Competitive Borrowings with Committed Borrowings and Committed
Borrowings with Competitive Borrowings. Any Borrowing or part thereof so
refinanced shall be deemed to be repaid in accordance with Section 2.08 with
the proceeds of a new Borrowing hereunder and the proceeds of the new
Borrowing, to the extent they do not exceed the principal amount of the
Borrowing being refinanced, shall not be paid by the Banks to the
Administrative Agent or by the Administrative Agent to the Company pursuant to
Section 2.02(c); provided, however, that (a) if the principal amount extended
by a Bank in a refinancing is greater than the principal amount extended by
such Bank in the Borrowing being refinanced, then such Bank shall pay such
difference to the Administrative Agent for distribution to the Banks described
in (b) below, (b) if the principal amount extended by a Bank in the Borrowing
being refinanced is greater than the principal amount being extended by such
Bank in the refinancing, the Administrative Agent shall return the difference
to such Bank out of amounts received pursuant to (a) above, (c) to the extent
any Bank fails to pay the Administrative Agent amounts due from it pursuant to
(a) above, any Borrowing or portion thereof being refinanced shall not be
deemed repaid in accordance with Section 2.08 to the extent of such failure and
such Borrower shall pay such amount to the Administrative Agent pursuant to
Section 2.08 and (d) to the extent the Company fails to pay to the
Administrative Agent any amounts due in accordance with Section 2.08 as a
result of the failure of a Bank to pay the Administrative Agent any amounts due
as described in (c) above, the portion of any refinanced Borrowing deemed not
repaid shall be deemed to be outstanding solely to the Bank
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which has failed to pay the Administrative Agent amounts due from it pursuant
to (a) above to the full extent of such Bank's portion of such refinanced Loan.
SECTION 2.06. Conversion and Continuation of Committed
Borrowings. Each Borrower shall have the right at any time upon prior
irrevocable notice to the Administrative Agent (a) not later than 8:30 a.m.,
Houston, Texas time, one Business Day prior to conversion, to convert any
Eurodollar Committed Borrowing or CD Borrowing into an ABR Borrowing, (b) not
later than 10:00 a.m., Houston, Texas time, two Business Days prior to
conversion or continuation, to convert any Eurodollar Committed Borrowing or
ABR Borrowing into a CD Borrowing or to continue any CD Borrowing as a CD
Borrowing for an additional Interest Period, (c) not later than 11:00 a.m.,
Houston, Texas time, three Business Days prior to conversion or continuation,
to convert any ABR Borrowing or CD Borrowing into a Eurodollar Committed
Borrowing or to continue any Eurodollar Committed Borrowing as a Eurodollar
Committed Borrowing for an additional Interest Period, (d) not later than 10:00
a.m., Houston, Texas time, three Business Days prior to conversion, to convert
the Interest Period with respect to any Eurodollar Committed Borrowing to
another permissible Interest Period and (e) not later than 10:00 a.m., Houston,
Texas time, two Business Days prior to conversion, to convert the Interest
Period with respect to any CD Borrowing to another permissible Interest Period,
subject in each case to the following:
(i) each conversion or continuation shall be made pro
rata among the Banks in accordance with the respective principal
amounts of the Loans comprising the converted or continued Committed
Borrowing;
(ii) if less than all the outstanding principal amount of
any Committed Borrowing shall be converted or continued, the aggregate
principal amount of such Committed Borrowing converted or continued
shall be an integral multiple of $5,000,000 and not less than
$25,000,000;
(iii) if any Eurodollar Committed Borrowing or CD Borrowing
is converted at a time other than the end of the Interest Period
applicable thereto, such Borrower shall pay, upon demand, any amounts
due to the Banks pursuant toSection 2.16;
(iv) any portion of a Committed Borrowing maturing or
required to be repaid in less than one month may not be converted into
or continued as a Eurodollar Committed Borrowing;
(v) any portion of a Committed Borrowing maturing or
required to be repaid in less than 30 days may not be converted into
or continued as a CD Borrowing;
(vi) any portion of a Eurodollar Committed Borrowing or CD
Borrowing which cannot be converted into or continued as a Eurodollar
Committed Borrowing or a CD Borrowing by reason of clauses (iv) and
(v) above shall be automatically converted at the end of the Interest
Period in effect for such Borrowing into an ABR Borrowing;
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<PAGE> 34
(vii) no Interest Period may be selected for any Eurodollar
Committed Borrowing or CD Borrowing that would end later than the
Termination Date; and
(viii) accrued interest on a Loan (or portion thereof) being
converted or continued shall be paid by the Company at the time of
conversion or continuation.
Each notice pursuant to this Section 2.06 shall be irrevocable and shall refer
to this Agreement and specify (w) the identity and amount of the Committed
Borrowing that a Borrower requests be converted or continued, (x) whether such
Committed Borrowing is to be converted to or continued as a Eurodollar
Committed Borrowing, a CD Borrowing or an ABR Borrowing, (y) if such notice
requests a conversion, the date of such conversion (which shall be a Business
Day) and (z) if such Committed Borrowing is to be converted to or continued as
a Eurodollar Committed Borrowing or CD Borrowing, the Interest Period with
respect thereto. If no Interest Period is specified in any such notice with
respect to any conversion to or continuation as a Eurodollar Committed
Borrowing or CD Borrowing, such Borrower shall be deemed to have selected an
Interest Period of one month's duration, in the case of a Eurodollar Committed
Borrowing, or 30 days' duration, in the case of a CD Borrowing. The
Administrative Agent shall promptly advise the other Banks of any notice given
pursuant to this Section 2.06 and of each Bank's portion of any converted or
continued Committed Borrowing. If a Borrower shall not have given notice in
accordance with this Section 2.06 to continue any Committed Borrowing into a
subsequent Interest Period (and shall not otherwise have given notice in
accordance with this Section 2.06 to convert such Committed Borrowing), such
Committed Borrowing shall, at the end of the Interest Period applicable thereto
(unless repaid pursuant to the terms hereof), automatically be continued into a
new Interest Period as an ABR Borrowing.
SECTION 2.07. Fees. (a) The Company agrees to pay to each
Bank, through the Administrative Agent, on each March 31, June 30, September 30
and December 31 from theExecution Date and to the date on which the Commitment
of such Bank has been terminated and (ii) on the Termination Date and on any
other date on which the Commitment of such Bank has been terminated, facility
fees (such facility fees being the "Facility Fees"), in immediately available
funds, equal to the Applicable Fee Percentage of the amount of the Commitment
of such Bank, whether used, deemed used or unused, during the preceding quarter
(or shorter period commencing with the Execution Date and/or ending with the
Termination Date). All Facility Fees shall be computed by the Administrative
Agent on the basis of the actual number of days elapsed in a year of 360 days,
and shall be conclusive and binding for all purposes, absent manifest error.
The Facility Fees due to each Bank shall commence to accrue on the Execution
Date and shall cease to accrue on the earlier of the Termination Date and the
termination of the Commitment of such Bank as provided herein.
(b) The Company agrees to pay to the Administrative Agent
administration fees as provided in the Administrative Agent's Letter.
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(c) The Company agrees to pay to the Auction
Administration Agent an auction fee with respect to each Competitive Bid
requested hereunder as provided in the Auction Administration Agent's Letter.
(d) The Facility Fees due under this Section 2.07 shall
be paid on the date due, in immediately available funds, to the Administrative
Agent for distribution among the Banks. The fees due under this Section
2.07(b) and (c) shall be paid pursuant to the Administrative Agent's Letter or
the Auction Administration Agent's Letter, as the case may be.
(e) Notwithstanding the foregoing, in no event shall any
Bank be permitted to receive any compensation hereunder constituting interest
in excess of the Highest Lawful Rate.
SECTION 2.08. Repayment of Loans. (a) Each Borrower agrees
to pay the outstanding principal balance of each of its Loans (i) in the case
of a Competitive Loan, on the last day of the Interest Period applicable to
such Loan and on the Termination Date, and (ii) in the case of a Committed
Loan, on the Termination Date. Each Loan shall bear interest from the date of
the Borrowing of which such Loan is a part on the outstanding principal balance
thereof as set forth in Section 2.09.
(b) Each Bank shall, and is hereby authorized by each
Borrower to, endorse on the schedule attached to the relevant Note of such
Borrower held by such Bank (or on a continuation of such schedule attached to
each such Note and made a part thereof) or in its internal records relating to
such Note an appropriate notation evidencing the date and amount of each
Competitive Loan or Committed Loan of such Bank to such Borrower, each payment
or prepayment of principal of any Competitive Loan or Committed Loan and the
other information provided for on such schedule. The aggregate unpaid
principal amount so recorded shall be presumptive evidence of the principal
amount owing by such Borrower to a Bank and unpaid under each such Note of such
Bank. The failure of any Bank to make such a notation or any error therein
shall not in any manner affect the obligation of such Borrower to repay the
Competitive Loans or Committed Loans made by such Bank in accordance with the
terms of the relevant Note.
SECTION 2.09. Interest on Loans. (a) Subject to the
provisions of Section 2.09(e) and Section 2.10, the Loans comprising each
Eurodollar Borrowing shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 360 days) at a rate per annum equal to
(i) in the case of each Eurodollar Committed Loan, the lesser of (A) the LIBO
Rate for the Interest Period in effect for such Borrowing plus the Applicable
Differential from time to time in effect and (B) the Highest Lawful Rate, and
(ii) in the case of each Eurodollar Competitive Loan, the lesser of (A) the
LIBO Rate for the Interest Period in effect for such Borrowing plus the Margin
offered by the Bank making such Loan and accepted by a Borrower pursuant to
Section 2.03 and (B) the Highest Lawful Rate.
(b) Subject to the provisions of Section 2.09(e) and
Section 2.10, the Loans comprising each CD Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 360
days) at a rate per annum equal to the lesser of (A) the Adjusted CD
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<PAGE> 36
Rate for the Interest Period in effect for such Borrowing plus the Applicable
Differential from time to time in effect and (B) the Highest Lawful Rate.
(c) Subject to the provisions of Section 2.09(e) and
Section 2.10, the Loans comprising each ABR Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 365
or 366 days, as the case may be, if the Alternate Base Rate shall be based on
the Prime Rate, and a year of 360 days otherwise) at a rate per annum equal to
the Alternate Base Rate, but not in excess of the Highest Lawful Rate.
(d) Subject to the provisions of Section 2.10, each Fixed
Rate Loan shall bear interest at a rate per annum (computed on the basis of the
actual number of days elapsed over a year of 360 days) equal to the fixed rate
of interest offered by the Bank making such Loan and accepted by a Borrower
pursuant to Section 2.03, but not in excess of the Highest Lawful Rate.
(e) Interest on each Loan shall be payable in arrears on
each Interest Payment Date applicable to such Loan except as otherwise provided
in this Agreement. The applicable LIBO Rate, CD Rate or Alternate Base Rate
for each Interest Period or day within an Interest Period, as the case may be,
shall be determined by the Administrative Agent, and such determination shall
be conclusive absent manifest error. The Administrative Agent shall promptly
advise the Borrowers and each Bank, as appropriate, of such determination.
SECTION 2.10. Interest on Overdue Amounts. If any Borrower
shall default in the payment of the principal of or interest on any Loan or any
other amount becoming due hereunder, whether by scheduled maturity, notice of
prepayment acceleration or otherwise such Borrower shall on demand from time to
time pay interest, to the extent permitted by law, on such defaulted amount up
to (but not including) the date of actual payment (after as well as before
judgment) at a rate per annum equal to the lesser of (a) the Agreed Maximum
Rate (if the Alternate Base Rate is based on the Prime Rate, computed on the
basis of the actual number of days elapsed over a year of 365 or 366 days, as
the case may be; if the Alternate Base Rate is based on the Base CD Rate or the
Federal Funds Effective Rate, computed on the basis of the actual number of
days elapsed over a year of 360 days) and (b) the Highest Lawful Rate.
SECTION 2.11. Alternate Rate of Interest. (a) In the
event, and on each occasion, that on the day two Business Days prior to the
commencement of any Interest Period for a Eurodollar Borrowing, (i) the
Administrative Agent shall have determined that dollar deposits in the
principal amounts of the Loans comprising such Borrowing are not generally
available in the London interbank market, for the requested Interest Period or
that reasonable means do not exist for ascertaining the LIBO Rate or (ii) the
Majority Banks shall have determined (and notified the Administrative Agent)
that the rate at which such dollar deposits are being offered will not
adequately and fairly reflect the cost to any Bank of making or maintaining its
Eurodollar Loan during such Interest Period, the Administrative Agent shall, as
soon as practicable thereafter, give written notice of such determination to
the Borrowers, the Auction Administration Agent and the Banks. In the event of
any such determination, any request by a Borrower for a Eurodollar Loan shall,
until the circumstances giving rise to such notice no longer exist, be deemed
to be a request
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for an ABR Loan. Each such determination by the Administrative Agent or the
Majority Banks hereunder shall be conclusive absent manifest error.
(b) In the event, and on each occasion, that on or before
the date on which the Adjusted CD Rate for a CD Borrowing is to be determined,
the Administrative Agent shall have determined that such Adjusted CD Rate
cannot be determined for any reason, including the inability of the
Administrative Agent to obtain sufficient bids in accordance with the terms of
the definition of Fixed CD Rate, or the Majority Banks shall have determined
(and notified the Administrative Agent) that the Adjusted CD Rate for such CD
Borrowing will not adequately and fairly reflect the cost to any Bank of making
or maintaining its CD Loan during such Interest Period, the Administrative
Agent shall, as soon as practicable thereafter, give written notice of such
determination to the Borrowers and the Banks. In the event of any such
determination, any request by the Borrowers for a CD Borrowing shall, until the
circumstances giving rise to such notice no longer exist, be deemed to be a
request for an ABR Loan. Each such determination by the Administrative Agent
or the Majority Banks hereunder shall be conclusive absent manifest error.
(c) Each Reference Bank agrees to furnish to the
Administrative Agent timely information for the purpose of determining each
Adjusted CD Rate and LIBO Rate as applicable. Subject to paragraph (d) of this
Section 2.11, if any Reference Bank or Reference Banks shall not furnish such
timely information to the Administrative Agent for determination of any such
interest rate, the Administrative Agent shall determine such interest rate on
the basis of timely information furnished by the remaining Reference Banks or
Reference Bank.
(d) If all Reference Banks fail to furnish timely
information to the Administrative Agent for determining the LIBO Rate or the
Adjusted CD Rate for a Eurodollar Borrowing or CD Borrowing, as the case may
be, (i) the Administrative Agent shall forthwith notify the Borrowers, the
Banks and the Auction Administration Agent that the interest rate cannot be
determined for such Borrowings, (ii) the right of the Borrowers to select the
LIBO Rate or the Adjusted CD Rate, as the case may be, for such Borrowing or
any subsequent Borrowing shall be suspended until the Administrative Agent
shall notify the Borrowers and the Banks and the Auction Administration Agent
that the circumstances causing such suspension no longer exist, and (iii) each
Borrowing shall be an Alternate Base Loan.
SECTION 2.12. Termination and Reduction of Commitments.
(a) The Total Commitment shall be automatically terminated on the Termination
Date.
(b) Upon at least ten Business Days' prior irrevocable
written or telecopy notice to the Administrative Agent, the Company may at any
time in whole permanently terminate, or from time to time in part permanently
reduce, the Total Commitment; provided, however, that (i) each partial
reduction of the Total Commitment shall be in a minimum principal amount of
$25,000,000 and in an integral multiple of $10,000,000 over such amount and
(ii) no such termination or reduction shall be made which would reduce the
Total Commitment to an amount less than the aggregate outstanding principal
amount of the then outstanding Competitive Loans. Such notice shall specify
the date and the amount of the termination or reduction of the Total
Commitment. The
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Administrative Agent shall promptly notify the Banks and the Auction
Administration Agent of the amount of any such termination or reduction of the
Total Commitment.
(c) Except in the circumstances described in Section
2.13(d), Section 2.14 or Section 2.15, each reduction in the Total Commitment
hereunder shall be made ratably among the Banks in accordance with their
respective Commitments. The Company shall pay to the Administrative Agent for
the account of the Banks, on the date of each termination or reduction, the
Facility Fees on the amount of the Commitments so terminated or reduced accrued
through the date of such termination or reduction.
SECTION 2.13. Prepayment. (a) Each Borrower shall have the
right at any time and from time to time to prepay any Committed Borrowing, in
whole or in part, upon written or telecopy notice (or telephone notice promptly
confirmed by written or telecopy notice) to the Administrative Agent: (i)
before 9:00 a.m., Houston, Texas time, five Business Days prior to prepayment,
in the case of Eurodollar Committed Loans, (ii) before 10:00 a.m., New York
City time, two Business Days prior to prepayment, in the case of CD Loans, and
(iii) before 9:00 a.m., Houston, Texas time, one Business Day prior to
prepayment, in the case of ABR Loans; provided, however, that each partial
prepayment shall be in an amount which is an integral multiple of $1,000,000
and not less than $10,000,000. No Borrower shall have the right to prepay any
Competitive Borrowing.
(b) On the date of any termination or reduction of the
Commitments pursuant to Section 2.12(b), the Borrowers shall pay or prepay so
much of the Committed Borrowings as shall be necessary in order that the
aggregate principal amount of the Competitive Loans and Committed Loans
outstanding will not exceed the Total Commitment, after giving effect to such
termination or reduction.
(c) Each notice of prepayment given by a Borrower
hereunder shall specify the prepayment date and the principal amount of each
Borrowing (or portion thereof) to be prepaid, shall be irrevocable and shall
commit such Borrower to prepay such Borrowing (or portion thereof) by the
amount stated therein on the date stated therein. All prepayments under this
Section 2.13 shall be subject to Section 2.16 and Section 2.17 but otherwise
without premium or penalty. All prepayments under this Section 2.13 shall be
accompanied by accrued interest on the principal amount being prepaid to the
date of prepayment.
(d) If any Borrower intends to use the proceeds of any
Borrowing to finance a Hostile Acquisition, such Borrower shall give the Agents
and the Banks notice (a "Notice of Acquisition") thereof. Any Bank may elect
(an "Election") to have its Commitment terminated in whole and to require the
repayment in full of its Loans and other amounts owing to it hereunder. Each
Bank making an Election (a "Withdrawing Bank") shall give the Borrowers, the
Agents and the other Banks notice (a "Notice of Election") of its Election not
more than ten Business Days after its receipt of a Notice of Acquisition and
specifying the reason or reasons for its Election. The Notice of Election of
each Withdrawing Bank shall be irrevocable and shall specify the date (the
"Withdrawal Date") upon which such Withdrawing Bank will cease to be a party to
this Agreement.
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The Withdrawal Date for a Withdrawing Bank shall not be earlier than five
Business Days after receipt by the Borrowers of such Withdrawing Bank's Notice
of Election; provided, however if a Withdrawing Bank has Loans outstanding
hereunder, the Withdrawal Date for such Withdrawing Bank shall be the latest
date that is the end of an Interest Period applicable to the outstanding Loans
made by such Withdrawing Bank. Upon receipt by the Agents and the Borrowers of
a Notice of Election from a Withdrawing Bank, the unused portion of the
Commitment of such Withdrawing Bank shall automatically terminate and such
Withdrawing Bank shall not thereafter be permitted to make a Competitive Bid
pursuant to Section 2.03(b). The Borrowers, within five Business Days of its
receipt of a Notice of Election, shall pay to such Withdrawing Bank all
Facility Fees on the amount of its Commitment so terminated, accrued through
the date of payment. In addition, on the last day of each Interest Period
applicable to the outstanding Loans of a Withdrawing Bank occurring prior to
such Withdrawing Bank's Withdrawal Date, the Commitment of such Withdrawing
Bank shall automatically reduce by an amount equal to the principal amount of
the Loans whose Interest Period ends on such date, and the applicable Borrower,
or the Company in the case of Facility Fees, shall pay to such Withdrawing Bank
the principal amount of all such Loans, all accrued and unpaid interest thereon
and Facility Fees on the amount of such Withdrawing Bank's Commitment so
terminated, accrued through the date of payment and, if applicable, amounts
pursuant to Section 2.14, Section 2.16 and Section 2.20. On the Withdrawal
Date for each Withdrawing Bank, the Commitment of such Withdrawing Bank shall
terminate in whole, and the applicable Borrower, or the Company in the case of
Facility Fees, shall pay to such Withdrawing Bank the principal amount of all
of its outstanding Loans, accrued and unpaid interest thereon, Facility Fees on
the amount of such Withdrawing Bank's Commitment so terminated, accrued through
the Withdrawal Date, and all other outstanding amounts (including amounts
pursuant to Section 2.14, Section 2.16 and Section 2.20) due to such
Withdrawing Bank hereunder. Upon and after each Withdrawing Bank's Withdrawal
Date and the repayment under this Section 2.13(d) in full to such Withdrawing
Bank of its outstanding Loans, the accrued interest thereon, its Facility Fees
and all other fees and costs due to it hereunder, such Withdrawing Bank shall
not be a party to this Agreement nor be included as a "Bank" hereunder except
for purposes of Section 2.14, Section 2.16 and Section 9.05.
(e) In the event any Withdrawing Bank makes an Election
pursuant to Section 2.13(d), the Company may give notice to such Withdrawing
Bank (with copies to the Agents) that it wishes to seek one or more Eligible
Assignees (which may be one or more of the Banks) to assume the Commitment of
such Withdrawing Bank and to purchase its outstanding Loans and Notes. Each
Withdrawing Bank making an Election pursuant to Section 2.13(d) agrees to sell
its Commitment, Loans, Notes and interest in this Agreement pursuant to Section
9.11(c) to any such Eligible Assignee for an amount equal to the sum of the
outstanding unpaid principal of and accrued interest on such Loans and Notes
plus all other fees and amounts (including any compensation claimed by such
Withdrawing Bank under Section 2.14) due such Withdrawing Bank hereunder
calculated, in each case, to the date such Commitment, Loans, Notes and
interest are purchased, whereupon such Withdrawing Bank shall have no further
Commitment or other obligation to any Borrower hereunder or under any Note.
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SECTION 2.14. Reserve Requirements; Change in
Circumstances. (a) It is understood that the cost to each Bank of making or
maintaining any of the Loans may fluctuate as a result of the applicability of,
or changes in, reserve requirements imposed by the Board, including reserve
requirements under Regulation D in connection with Eurocurrency Liabilities.
Subject to Section 9.08, each Borrower agrees to pay to each Bank, as provided
in Section 2.14(d), at any time when such Bank shall be required to maintain
reserves with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities, additional interest on the unpaid principal amount of
each Eurodollar Loan of such Bank from the date of such Loan until such
principal amount is paid in full, payable on each Interest Payment Date for
such Eurodollar Loan, at an interest rate per annum equal at all times during
each Interest Period to the excess of (i) the rate obtained by dividing the
LIBO Rate for such Interest Period by a percentage equal to 100% minus the
reserve percentage applicable during such Interest Period under regulations
issued from time to time by the Board (or if more than one such percentage is
so applicable, minus the daily average of such percentages for those days in
such Interest Period during which any such percentage shall be so applicable)
for determining the maximum requirement (including any emergency, supplemental
or other marginal reserve requirement) for such Bank with respect to
liabilities or assets consisting of or including Eurocurrency Liabilities over
(ii) the LIBO Rate for such Interest Period. It is understood by the parties
hereto that the rates of interest applicable to Eurodollar Loans have been
determined on the assumption that no such reserve requirements exist or will
exist and that such rates do not reflect costs imposed on the Banks in
connection with such reserve requirements. It is agreed that for purposes of
this Section 2.14(a) the Eurodollar Loans made hereunder shall be deemed to
constitute Eurocurrency Liabilities and to be subject to the reserve
requirements of Regulation D without benefit of or credit for proration,
exemptions or offsets which might otherwise be available to the Banks from time
to time under Regulation D.
(b) Notwithstanding any other provision herein, if after
the Execution Date the introduction of any applicable law or regulation or any
change in applicable law or regulation or in the interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by any Bank with any
applicable guideline or request from any central bank or governmental authority
(whether or not having the force of law) (i) shall change the basis of taxation
of payments to any Bank of the principal of or interest on any Eurodollar Loan,
CD Loan or Fixed Rate Loan made by such Bank or any other fees or amounts
payable hereunder (other than (x) taxes imposed on the overall net income of
such Bank or its Applicable Lending Office by the jurisdiction in which such
Bank or its Applicable Lending Office has its principal office or by any
political subdivision or taxing authority therein (or any tax which is enacted
or adopted by such jurisdiction, political subdivision or taxing authority as a
direct substitute for any such taxes) or (y) any tax, assessment or other
governmental charge that would not have been imposed but for the failure of any
Bank to comply with any certification, information, documentation or other
reporting requirement), (ii) shall impose, modify or deem applicable any
reserve, special deposit or similar requirement against assets of, deposits
with or for the account of, or credit extended by, such Bank (except any
reserve requirement reflected in the Adjusted CD Rate), or (iii) shall impose
on such Bank or the London interbank market any other condition affecting this
Agreement or any Eurodollar Loan, CD Loan or Fixed Rate Loan made by such Bank,
and the result of any of the foregoing shall be to increase the cost to such
Bank of maintaining its
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<PAGE> 41
Commitment or of making or maintaining any Eurodollar Loan, CD Loan or Fixed
Rate Loan or to reduce the amount of any sum received or receivable by such
Bank hereunder (whether of principal, interest or otherwise) in respect thereof
by an amount deemed in good faith by such Bank to be material, then each
Borrower shall pay to the Administrative Agent for the account of such Bank
such additional amount or amounts as will compensate such Bank for such
increase or reduction to such Bank upon demand by such Bank (through the
Administrative Agent).
(c) If any Bank shall have determined in good faith that
the applicability of any law, rule, regulation or guideline adopted pursuant to
or arising out of the July 1988 report of the Basle Committee on Banking
Regulations and Supervisory Practices entitled "International Convergence of
Capital Measurement and Capital Standards," or the adoption after the Execution
Date of any other law, rule, regulation or guideline regarding capital
adequacy, or any change in any of the foregoing or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or any lending office of such Bank) with
any request or directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on such Bank's capital, as
a consequence of this Agreement or the Loans made by such Bank pursuant hereto
to a level below that which such Bank could have achieved but for such
applicability, adoption, change or compliance (taking into consideration such
Bank's policies with respect to capital adequacy) by an amount deemed by such
Bank to be material, then from time to time, as provided in Section 2.14(d),
each Borrower shall pay to such Bank such additional amount or amounts as will
compensate such Bank for any such increased capital requirement.
(d) Each Bank will notify the Borrowers through the
Administrative Agent of any event occurring after the date of this Agreement
which will entitle such Bank to compensation pursuant to this Section 2.14, as
promptly as practicable, and in any event within 90 days after it becomes aware
thereof and determines to request compensation. A certificate of a Bank
setting forth in reasonable detail (i) such amount or amounts as shall be
necessary to compensate such Bank (or participating banks or other entities
pursuant to Section 9.11) as specified in paragraph (a), (b) or (c) above, as
the case may be, and (ii) the calculation of such amount or amounts under
paragraphs (a), (b) and (c) above, or if such calculation is not practicable, a
statement setting forth in reasonable detail the basis for the amounts claimed
as necessary to compensate such Bank, shall be delivered to the applicable
Borrower (with a copy to the Administrative Agent) and shall be conclusive
absent manifest error. Each Borrower shall pay to the Administrative Agent for
the account of such Bank the amount shown as due on any such certificate within
30 days after its receipt of the same.
(e) Except as expressly provided in Section 2.14(d),
failure on the part of any Bank to demand compensation for any increased costs
or reduction in amounts received or receivable or reduction in return on
capital with respect to any Interest Period or any other period shall not
constitute a waiver of such Bank's rights to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction in
return on capital with respect to such Interest Period or any other period.
The protection of this Section 2.14 shall be available to each
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Bank regardless of any possible contention of invalidity or inapplicability of
law, regulation or condition which shall have been imposed.
(f) In the event any Bank shall seek compensation
pursuant to this Section 2.14, the Company may give notice to such Bank (with
copies to the Agents) that it wishes to seek one or more Eligible Assignees
(which may be one or more of the Banks) to assume the Commitment of such Bank
and to purchase its outstanding Loans and Notes. Each Bank requesting
compensation pursuant to this Section 2.14 agrees to sell its Commitment,
Loans, Notes and interest in this Agreement pursuant to Section 9.11(c) to any
such Eligible Assignee for an amount equal to the sum of the outstanding unpaid
principal of and accrued interest on such Loans and Notes plus all other fees
and amounts (including any compensation claimed by such Bank under this Section
2.14) due such Bank hereunder calculated, in each case, to the date such
Commitment, Loans, Notes and interest are purchased, whereupon such Bank shall
have no further Commitment or other obligation to any Borrower hereunder or
under any Note.
(g) Without prejudice to the survival of any other
obligations of the Borrowers hereunder, the obligations of the Borrowers under
this Section 2.14 shall survive the termination of this Agreement and the
payment or assignment of the Notes.
(h) Notwithstanding anything in this Section 2.14 to the
contrary, in no event shall any Bank be permitted to take or receive any
compensation hereunder constituting interest in excess of the Highest Lawful
Rate.
SECTION 2.15.Change in Legality. (a) Notwithstanding any
other provision herein, if any change in any law or regulation or in the
interpretation thereof by any governmental authority charged with the
administration or interpretation thereof shall make it unlawful for any Bank or
its Eurodollar Lending Office to make or maintain any Eurodollar Loan or to
give effect to its obligations as contemplated hereby, then, by written notice
to the Borrowers and to the Agents, such Bank may:
(i) declare that Eurodollar Loans will not thereafter be
made by such Bank hereunder, whereupon such Bank shall not submit a
Competitive Bid in response to a request for Eurodollar Competitive
Loans and any request by the Company for a Eurodollar Committed
Borrowing shall, as to such Bank only (unless the Company (x) shall
have withdrawn such request, in which case such request shall be of no
force and effect, or (y) shall have made a new request for a Borrowing
of a different Type in accordance with the terms hereof, which shall
be deemed to supersede such request for a Eurodollar Committed
Borrowing), be deemed a request for an ABR Loan; and
(ii) require that all outstanding Eurodollar Loans made by
it be converted to ABR Loans, in which event all such Eurodollar Loans
shall be automatically converted to ABR Loans as of the effective date
of such notice as provided in Section 2.15(b).
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<PAGE> 43
In the event any Bank shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal which would otherwise have been applied
to repay the Eurodollar Loans that would have been made by such Bank or the
converted Eurodollar Loans of such Bank shall instead be applied to repay the
ABR Loans made by such Bank in lieu of, or resulting from the conversion of,
such Eurodollar Loans.
(b) For purposes of this Section 2.15, a notice to the
Borrowers (with a copy to the Agents) by any Bank pursuant to Section 2.15(a)
shall be effective as to each Eurodollar Loan, if lawful, on the last day of
the Interest Period currently applicable to such Eurodollar Loan; in all other
cases such notice shall be effective on the date of receipt by the Company.
(c) In the event any Bank shall give a notice to the
Borrowers pursuant to this Section 2.15, the Company may give notice to such
Bank (with copies to the Agents) that it wishes to seek one or more Eligible
Assignees (which may be one or more of the Banks) to assume the Commitment of
such Bank and to purchase its outstanding Loans and Notes. Each Bank giving a
notice to the Company pursuant to this Section 2.15 agrees to sell its
Commitment, Loans, Notes and interest in this Agreement pursuant to Section
9.11(c) to any such Eligible Assignee for an amount equal to the sum of the
outstanding unpaid principal of and accrued interest on such Loans and Notes
plus all other fees and amounts (including any compensation claimed by such
Bank under Section 2.14) due such Bank hereunder calculated, in each case, to
the date such Commitment, Loans, Notes, interest and fees are purchased,
whereupon such Bank shall have no further Commitment or other obligation to the
Borrowers hereunder or under any Note.
SECTION 2.16. Indemnity. The Borrowers, jointly and
severally, shall indemnify each Bank against any loss or reasonable expense
which such Bank may sustain or incur as a consequence of (a) any failure by a
Borrower to fulfill on the date of any borrowing hereunder the applicable
conditions set forth in Article III, (b) any failure by a Borrower to borrow or
to refinance, convert (other than conversion into an ABR Loan) or continue any
Loan hereunder after a Committed Borrowing Request pursuant to Article II has
been given or after Competitive Bids have been accepted or after a notice of
conversion or continuation has been given pursuant to Section 2.05, (c) any
payment, prepayment or conversion of a Eurodollar Loan, CD Loan or Fixed Rate
Loan required or permitted by any provision of this Agreement or otherwise made
on a date other than the last day of the applicable Interest Period, (d) any
default in the payment or prepayment of the principal amount of any Loan or any
part thereof or interest accrued thereon, as and when due and payable (at the
due date thereof, by notice of prepayment or otherwise), or (e) the occurrence
of any Event of Default, including, in the case of any of the events set forth
in clauses (a) through (e) of this Section 2.16, any loss or reasonable expense
sustained or incurred or to be sustained or incurred in liquidating or
employing deposits from third parties acquired to effect or maintain such Loan
or any part thereof as a Eurodollar Loan, CD Loan or Fixed Rate Loan. Such
loss or reasonable expense shall include an amount equal to the excess, if any,
as reasonably determined by each Bank of (y) its cost of obtaining the funds
for the Loan being paid, prepaid or converted or not borrowed, refinanced,
converted or continued (based on the LIBO Rate or the Adjusted CD Rate or, in
the case of a Fixed Rate Loan, the fixed rate of interest applicable thereto)
for the period from the date of such payment, prepayment or conversion or
failure to borrow,
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<PAGE> 44
refinance, convert or continue to the last day of the Interest Period for such
Loan (or, in the case of a failure to borrow, refinance, convert or continue
the Interest Period for the Loan which would have commenced on the date of such
failure to borrow, refinance, convert or continue) over (z) the amount of
interest (as reasonably determined by such Bank) that would be realized by such
Bank in reemploying the funds so paid, prepaid or converted or not borrowed,
refinanced, converted or continued for such period or Interest Period, as the
case may be. A certificate of each Bank setting forth any amount or amounts
which such Bank is entitled to receive pursuant to this Section 2.16 together
with either a calculation of such amount or amounts or a statement of the basis
on which such amounts or amounts have been determined shall be delivered to the
Borrowers (with a copy to the Administrative Agent) and shall be conclusive, if
made in good faith, absent manifest error. The Borrowers shall pay to the
Administrative Agent for the account of each Bank the amount shown as due on
any certificate within 30 days after its receipt of the same. Without
prejudice to the survival of any other obligations of the Company hereunder,
the obligations of the Borrowers under this Section 2.16 shall survive the
termination of this Agreement and/or the payment or assignment of any of the
Notes. Without limitation of this Section 2.16, the provisions of this Section
2.16 shall be enforceable against the Borrowers with respect to the conditions
described in clauses (a) and (b) of this Section 2.16, with respect to any
Committed Borrowing Request or Competitive Bid Request given by a Borrower
hereunder on or after the Execution Date regardless of whether the Effective
Date occurs. Notwithstanding the foregoing, in no event shall any Bank be
permitted to receive any compensation hereunder constituting interest in excess
of the Highest Lawful Rate.
SECTION 2.17. Pro Rata Treatment. Except as provided in
Section 2.13(d) or as required under Section 2.14, Section 2.15 or Section 2.16
each Committed Borrowing, each payment or prepayment of principal of any
Committed Borrowing, each payment of interest on the Committed Loans, each
payment of the Facility Fees with respect to each Bank's Commitment, each
reduction of the Commitments and each refinancing of any Borrowing with a
Committed Borrowing of any Type shall be allocated pro rata among the Banks in
accordance with their respective Commitments (or, if such Commitments shall
have expired or been terminated, in accordance with the respective principal
amounts of their outstanding Committed Loans) after giving effect to any
payment or prepayment of Committed Loans. Each payment of principal of any
Competitive Borrowing shall be allocated pro rata among the Banks participating
in such Borrowing in accordance with the respective principal amounts of their
outstanding Competitive Loans comprising such Borrowing. Each payment of
interest on any Competitive Borrowing shall be allocated pro rata among the
Banks participating in such Borrowing in accordance with the respective amounts
of accrued and unpaid interest on their outstanding Competitive Loans
comprising such Borrowing. For purposes of determining the available
Commitments of the Banks at any time, each outstanding Competitive Borrowing
shall be deemed to have utilized the Commitments of the Banks (including those
Banks which shall not have made Loans as part of such Competitive Borrowing)
pro rata in accordance with such respective Commitments. Each Bank agrees that
in computing such Bank's portion of any Borrowing to be made hereunder, the
Administrative Agent may, in its discretion, round each Bank's percentage of
such Borrowing to the next higher or lower whole dollar amount.
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<PAGE> 45
SECTION 2.18. Sharing of Setoffs. (a) Each Bank agrees
that if it shall, through the exercise of a right of banker's lien, setoff or
counterclaim against the Borrowers (pursuant to Section 9.06 or otherwise),
including, but not limited to, a secured claim under Section 506 of Title 11 of
the United States Code or other security or interest arising from, or in lieu
of, such secured claim, received by such Bank under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by similar means, obtain
payment (voluntary or involuntary) (other than pursuant to Section 2.14,
Section 2.15 or Section 2.16) of any Committed Loan or Loans as a result of
which the unpaid principal portion of the Committed Loans of such Bank shall be
proportionately less than the unpaid principal portion of the Committed Loans
of any other Bank, it shall be deemed simultaneously to have purchased from
such other Bank at face value, and shall promptly pay to such other Bank the
purchase price for, a participation in the Committed Loans of such other Bank,
so that the aggregate unpaid principal amount of the Committed Loans and
participations in the Committed Loans held by each Bank shall be in the same
proportion to the aggregate unpaid principal amount of all Committed Loans then
outstanding as the principal amount of its Committed Loans prior to such
exercise of banker's lien, setoff or counterclaim or other event was to the
principal amount of all Committed Loans outstanding prior to such exercise of
banker's lien, setoff or counterclaim or other event; provided, however, that,
if any such purchase or purchases or adjustments shall be made pursuant to this
Section 2.18 and the payment giving rise thereto shall thereafter be recovered,
such purchase or purchases or adjustments shall be rescinded to the extent of
such recovery and the purchase price or prices or adjustment restored without
interest. Each Borrower expressly consents to the foregoing arrangements and
agrees that any Bank holding a participation in a Committed Loan deemed to have
been so purchased may exercise any and all rights of banker's lien, setoff or
counterclaim with respect to any and all moneys owing by such Borrower to such
Bank by reason thereof as fully as if such Bank had made a Committed Loan
directly to such Borrower in the amount of such participation.
(b) In the event that a Bank shall receive a payment of
the type described in paragraph (a) of this Section 2.18, with respect to a
Competitive Loan at a time when no Committed Loans are outstanding, as a result
of which the unpaid principal portion of the Competitive Loans of such Bank
shall be proportionately less than the unpaid principal portion of the
Competitive Loans of any other Bank on the date of such payment, it shall be
deemed to have simultaneously purchased from such other Bank at face value, and
shall promptly pay to such other Bank the purchase price for, a participation
in the Competitive Loans of such Bank, so that the aggregate unpaid principal
amount of the Competitive Loans and participations in Competitive Loans held by
each Bank shall be in the same proportion to the aggregate unpaid principal
amount of all Competitive Loans then outstanding as the principal amount of its
Competitive Loans prior to such exercise of banker's lien, setoff or
counterclaim was to the principal amount of all Competitive Loans outstanding
prior to such exercise of banker's lien, setoff or counterclaim; provided,
however, that if any such purchase or purchases or adjustments shall be made
pursuant to this Section 2.18 and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or adjustments shall be
rescinded to the extent of such recovery and the purchase price or prices or
adjustment restored without interest. Each Borrower expressly consents to the
foregoing arrangements and agrees that any Bank holding a participation in a
Competitive Loan deemed to have been so purchased may exercise any and all
rights of banker's lien, setoff or counterclaim with
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<PAGE> 46
respect to any and all moneys owing by such Borrower to such Bank as fully as
if such Bank had made a Competitive Loan directly to such Borrower in the
amount of such participation.
SECTION 2.19. Payments. (a) Each Borrower shall make each
payment hereunder and under any Note delivered hereunder not later than 11:00
a.m., Houston, Texas time, on the day when due in lawful money of the United
States (in freely transferable dollars) to the Administrative Agent at its
address referred to in Section 9.02 for the account of the Banks, in Dollars
and in federal or other immediately available funds. The Administrative Agent
will promptly thereafter cause to be distributed like funds relating to the
payment of principal or interest on Committed Loans (other than pursuant to
Section 2.02(a), Section 2.13(d), Section 2.14, Section 2.15 and Section 2.16)
or Facility Fees ratably to the Banks and like funds relating to the payment of
any other amount (including payments of principal or interest on Competitive
Loans which are not made ratably to the Banks) payable to such Bank for the
account of its Applicable Lending Office, in each case to be applied in
accordance with the terms of this Agreement. If the Administrative Agent fails
to send to any Bank its portion of any payment timely received by the
Administrative Agent hereunder by the close of business on the day such payment
was received, the Administrative Agent shall pay to such Bank interest on its
portion of such payment from the day such payment was timely received by the
Administrative Agent until the date such Bank's portion of such payment is sent
to such Bank, at the Federal Funds Effective Rate.
(b) Whenever any payment hereunder or under the Notes
(including principal of or interest on any Borrowing or any fees or other
amounts), shall be stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day, and such extension
of time shall in such case be included in the computation of payment of
interest, fee or other amount, as the case may be; provided, however, if such
extension would cause payment of interest on or principal of a Eurodollar Loan
to be made in the next following calendar month, such payment shall be made on
the next preceding Business Day.
(c) Unless the Administrative Agent shall have received
notice from a Borrower prior to the date on which any payment is due to the
Banks hereunder that such Borrower will not make such payment in full, the
Administrative Agent may assume that such Borrower has made such payment in
full to the Administrative Agent on such date and the Administrative Agent may,
in reliance upon such assumption, cause to be distributed to each Bank on such
due date an amount equal to the amount then due such Bank. If and to the
extent such Borrower shall not have so made such payment in full to the
Administrative Agent, each Bank shall repay to the Administrative Agent
forthwith on demand such amount distributed to such Bank together with interest
thereon, for each day from the date such amount is distributed to such Bank
until the date such Bank repays such amount to the Administrative Agent, at the
Federal Funds Effective Rate.
SECTION 2.20. Taxes. (a) Any and all payments by the
Borrowers hereunder shall be made, in accordance with Section 2.19, free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding taxes imposed on any Agent's or any Bank's income and
franchise taxes imposed on any Agent or any Bank by the United States or any
jurisdiction under the laws of
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<PAGE> 47
which it is organized or any political subdivision thereof (all such
nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If any Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder to any Agent or any Bank (i) the sum payable shall be increased by
the amount necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.20) such
Agent or such Bank (as the case may be) shall receive an amount equal to the
sum it would have received had no such deductions been made, (ii) such
Borrowers shall make such deductions and (iii) such Borrowers shall pay the
full amount deducted to the relevant taxing authority or other governmental
authority in accordance with applicable law.
(b) In addition, the Borrowers agree to pay any present
or future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies which arise from any payment made hereunder or from
the execution, delivery or registration of, or otherwise with respect to, this
Agreement or any Note (hereinafter referred to as "Other Taxes").
(c) The Borrowers, jointly and severally, will indemnify
each Bank and the Agents for the full amount of Taxes and Other Taxes
(including any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 2.20) paid by such Bank or such Agent, as the case
may be, and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes
were correctly or legally asserted. Such indemnification shall be made within
10 days after the date any Bank or such Agent, as the case may be, makes
written demand therefor. If a Bank or any Agent shall become aware that it is
entitled to receive a refund in respect of Taxes or Other Taxes, it shall
promptly notify the applicable Borrower of the availability of such refund and
shall, within 10 days thereafter, apply for such refund at such Borrower's
expense. If any Bank or any Agent receives a refund in respect of any Taxes or
Other Taxes for which such Bank or such Agent has received payment from a
Borrower hereunder it shall promptly notify such Borrower of such refund and
shall repay such refund to such Borrower without interest, provided that such
Borrower, upon the request of such Bank or Agent, agrees to return such refund
(plus penalties, interest or other charges) to such Bank or such Agent in the
event such Bank or such Agent is required to repay such refund.
(d) Within 30 days after the date of any payment of Taxes
or Other Taxes withheld by a Borrower in respect of any payment to any Bank (or
transferee) or any Agent, such Borrower will furnish to the Administrative
Agent, at its address referred to in Section 9.02, the original or a certified
copy of a receipt evidencing payment thereof or, if such original or copy of a
receipt is not available from the relevant taxing authority, other
documentation of payment reasonably satisfactory to such Bank (or transferee)
or the Administrative Agent.
(e) Without prejudice to the survival of any other
agreement contained herein, the agreements and obligations contained in this
Section 2.20 shall survive the payment in full of principal and interest
hereunder.
(f) With respect to each Bank which is organized under
the laws of a jurisdiction outside the United States, on the date of the
initial Borrowing hereunder, and from time to time
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<PAGE> 48
thereafter if requested by any Borrower or the Administrative Agent, each such
Bank shall provide the Administrative Agent and such Borrower with the forms
prescribed by the Internal Revenue Service of the United States certifying as
to such Bank's status for purposes of determining exemption from United States
withholding taxes with respect to all payments to be made to such Bank
hereunder and under the Notes or other documents satisfactory to the Borrowers
and the Administrative Agent indicating that all payments to be made to such
Bank hereunder are subject to such tax at a rate reduced by an applicable tax
treaty. Unless the Borrowers and the Administrative Agent have received such
forms and such other documents reasonably requested by the Administrative Agent
or a Borrower indicating that payments hereunder are not subject to United
States withholding tax or are subject to such tax at a rate reduced by an
applicable tax treaty, the Borrowers or the Administrative Agent shall withhold
taxes from such payments at the applicable statutory rate in the case of
payments to or for any Bank organized under the laws of a jurisdiction outside
the United States.
(g) Any Bank claiming any additional amounts payable
pursuant to this Section 2.20 shall use reasonable efforts (consistent with
legal and regulatory restrictions) to file any certificate or document
requested by a Borrower or to change the jurisdiction of its applicable lending
office if the making of such a filing or change would avoid the need for or
reduce the amount of any such additional amounts which may thereafter accrue
and would not, in the sole determination of such Bank, be otherwise
disadvantageous to such Bank.
SECTION 2.21 Borrowing Subsidiary. The Company may
designate any Wholly-owned Subsidiary as a Borrowing Subsidiary. Upon the
acceptance by the Administrative Agent of a Borrowing Subsidiary Counterpart of
this Agreement in the form of Exhibit 2.21 (a "Borrowing Subsidiary
Counterpart") executed by a Wholly-owned Subsidiary and the Company, such
Wholly-owned Subsidiary shall be a Borrowing Subsidiary and a party to this
Agreement.
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ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to the Initial
Borrowing. The obligation of each Bank to make its initial Loan is subject to
the condition precedent that the Administrative Agent shall have received on or
before the initial Borrowing Date the following, each dated (unless otherwise
indicated) such day and, with respect to all such documents referred to in
Section 3.01(a), Section 3.01(e), Section 3.01(f), Section 3.01(g), and Section
3.01(h) in sufficient copies for each Bank and each Agent that is not a Bank:
(a) A counterpart of this Agreement dated the Execution
Date (to which all of the Exhibits and Schedules have been attached)
executed by each of the parties hereto.
(b) The Notes of the Company, dated of even date
herewith, properly executed by the Company to the order of the Banks,
respectively.
(c) The Administrative Agent's Letter dated the Execution
Date executed by the Company and the Administrative Agent.
(d) The Auction Administration Agent's Letter dated the
Execution Date executed by the Company and the Auction Administration
Agent.
(e) A certificate of the Secretary or an Assistant
Secretary of the Company certifying, inter alia, (i) true and correct
copies of resolutions adopted by the Board of Directors of the Company
authorizing the Company to borrow and effect other transactions
hereunder including the Guaranty, and (ii) the incumbency and specimen
signatures of the Persons executing any documents on behalf of the
Company.
(f) A certificate of a Financial Officer of the Company
certifying the absence of the occurrence and continuance of any
Default or Event of Default with respect the Company.
(g) The written opinion of the Associate General Counsel
of the Company, addressed to the Agents and the Banks, substantially
in the form set out in Exhibit 3.01-A.
(h) The written opinion of Andrews & Kurth L.L.P.,
counsel for the Documentation Agent, addressed to the Agents and the
Banks, substantially in the form set out in Exhibit 3.01-B.
(i) An Administrative Questionnaire completed by each
Bank.
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<PAGE> 50
In addition, on the Effective Date the Administrative Agent and the Auction
Administration Agent shall have received all fees to which they are entitled to
receive on such date pursuant to the Administrative Agent's Letter and the
Auction Administration Agent's Letter.
SECTION 3.02. Conditions Precedent to the Initial Loan to
each Borrowing Subsidiary. The obligation of each Bank to make its initial
Loan to any Borrowing Subsidiary is subject to the further conditions precedent
that the Administrative Agent shall have received on or before the Borrowing
Date for such Loan the following, each dated such day, and with respect to all
such documents referred to in Section 3.02(a), Section 3.02(c), Section
3.02(d), Section 3.02(e), Section 3.02(f) and Section 3.02(h) in sufficient
copies for each Bank and each Agent that is not a Bank.
(a) A Borrowing Subsidiary Counterpart executed by such
Borrowing Subsidiary and acknowledged by each of the Company and the other
Borrowers, if any.
(b) Notes of such Borrowing Subsidiary dated the date of
such Borrowing, properly executed to the order of the Banks, respectively.
(c) Copies of the Articles or Certificate of
Incorporation (or other similar evidence of organization) of such Borrowing
Subsidiary, together with all amendments, and a current certificate of good
standing, both certified by the appropriate governmental officer, in its
jurisdiction of organization.
(d) A certificate of the Secretary or Assistant Secretary
of such Borrowing Subsidiary certifying, inter alia (i) true and correct copies
of the bylaws (or other similar document of such Borrowing Subsidiary) together
with all amendments, (ii) true and correct copies of resolutions adopted by the
Board of Directors of such Borrowing Subsidiary to borrow and effect other
transactions hereunder and (iii) the incumbency and specimen signatures of the
Persons executing any documents on behalf of such Borrowing Subsidiary.
(e) A Certificate of a Financial Officer of such
Borrowing Subsidiary certifying the absence of the occurrence and continuance
of any Default or Event of Default with respect to such Borrowing Subsidiary.
(f) One or more written opinions of counsel to such
Borrowing Subsidiaries, each in form and substance satisfactory to the Agents
and the Banks.
(g) A letter from CT Corporation System, Inc., in form
and substance satisfactory to the Administrative Agent, evidencing the
obligation of CT Corporation System, Inc. to accept service of process in the
State of Texas on behalf of such Borrowing Subsidiary.
(h) Such other documents as any Agent or any Bank through
the Administrative Agent may have reasonably requested.
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<PAGE> 51
SECTION 3.03. Conditions Precedent to Each Committed Borrowing.
The obligation of each Bank to make a Committed Loan on the occasion of any
Committed Borrowing (including the initial Committed Borrowing) shall be
subject to the further conditions precedent that on the Borrowing Date of such
Committed Borrowing the following statements shall be true (and each of the
giving of the applicable Committed Borrowing Request and the acceptance by a
Borrower of the proceeds of such Committed Borrowing shall constitute a
representation and warranty by the Company and such Borrower, if not the
Company, that on the date of such Committed Borrowing such statements are
true):
(a) The representations and warranties contained in
Article IV are correct on and as of the date of such Committed Borrowing,
before and after giving effect to such Committed Borrowing and to the
application of the proceeds therefrom, as though made on and as of such date;
provided, however, that for purposes of this clause (a), on and after the date
on which the Company delivers its audited consolidated financial statements to
the Administrative Agent and the Banks pursuant to Section 5.07(a), (A) the
reference in the first sentence of Section 4.07 to the Company's financial
statements contained in the Company's Annual Report on Form 10-K shall be a
reference to the audited consolidated financial statements of the Company most
recently delivered to the Administrative Agent and the Banks by the Company
pursuant to Section 5.07(a) prior to the date of such Committed Borrowing and
(B) the reference in the last sentence of Section 4.07 to September 30, 1994,
shall be a reference to the date of the audited consolidated financial
statements most recently delivered to the Administrative Agent and the Banks
pursuant to Section 5.07(a);
(b) No event has occurred and is continuing, or would
result from such Committed Borrowing or from the application of the proceeds
therefrom, which constitutes either a Default or an Event of Default; and
(c) Following the making of such Committed Borrowing and
all other Borrowings to be made on the same day under this Agreement, the
aggregate principal amount of all Loans then outstanding shall not exceed the
Total Commitment.
SECTION 3.04. Conditions Precedent to Each Competitive
Borrowing. The obligation of each Bank which is to make a Competitive Loan on
the occasion of a Competitive Borrowing (including the initial Competitive
Borrowing) to make such Competitive Loan as part of such Competitive Borrowing
is subject to the further conditions precedent that:
(a) The Auction Administration Agent and the
Administrative Agent shall have received a Competitive Bid Request with respect
thereto; and
(b) On the Borrowing Date of such Competitive Borrowing,
the following statements shall be true (and each of the giving of the
applicable Competitive Bid Request and the acceptance by the Borrowers of the
proceeds of such Competitive Borrowing shall constitute a representation and
warranty by the Company and such Borrower, if not the Company, that on the date
of such Competitive Borrowing such statements are true):
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<PAGE> 52
(i) The representations and warranties contained in
Article IV are correct on and as of the date of such Competitive
Borrowing, before and after giving effect to such Competitive
Borrowing and to the application of the proceeds therefrom, as though
made on and as of such date; provided, however, that for purposes of
this clause (i), on and after the date on which the Company delivers
its audited consolidated financial statements to the Administrative
Agent and the Banks pursuant to Section 5.07(a), (A) the reference in
the first sentence of Section 4.07 to the Company's financial
statements contained in the Company's Annual Report on Form 10-K shall
be a reference to the consolidated financial statements of the Company
most recently delivered to the Administrative Agent and the Banks by
the Company pursuant to Section 5.07(a) prior to the date of such
Competitive Borrowing and (B) the reference in the last sentence of
Section 4.07 to September 30, 1994, shall be a reference to the date
of the audited consolidated financial statements most recently
delivered to the Administrative Agent and the Banks pursuant to
Section 5.07(a);
(ii) No event has occurred and is continuing, or would
result from such Competitive Borrowing or from the application of the
proceeds therefrom, which constitutes either a Default or an Event of
Default; and
(iii) Following the making of such Competitive Borrowing
and all other Borrowings to be made on the same day under this
Agreement, the aggregate principal amount of all Loans then
outstanding shall not exceed the Total Commitment.
SECTION 3.05. Conditions Precedent to Conversions and
Continuations. The obligation of the Banks to convert any existing Committed
Borrowing into a Eurodollar Committed Borrowing or a CD Borrowing or to
continue any existing Committed Borrowing as a Eurodollar Committed Borrowing
or a CD Borrowing is subject to the condition precedent that on the date of
such conversion or continuation no Default or Event of Default shall have
occurred and be continuing or would result from the making of such conversion
or continuation. The acceptance of the benefits of each such conversion and
continuation shall constitute a representation and warranty by the Borrowers to
each of the Banks that no Default or Event of Default shall have occurred and
be continuing or would result from the making of such conversion or
continuation.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Agents and the
Banks, and, to the extent the following relates to any Borrowing Subsidiary,
such Borrowing Subsidiary severally represents and warrants to the Agents and
the Banks, in each case, as follows:
SECTION 4.01. Organization. Each Borrower and each
Principal Subsidiary (a) is a corporation duly incorporated, validly existing
and in good standing under the laws of the jurisdiction of its incorporation,
(b) has the corporate power to own its property and to carry on its business as
now being conducted and (c) is duly qualified to do business and is in good
standing in each jurisdiction in which the properties owned or leased by it
therein or in which the nature of the business conducted by it makes such
qualification necessary except where the failure of such Borrower or such
Principal Subsidiary to be so qualified or in good standing, individually or
collectively, would not have a Material Adverse Effect.
SECTION 4.02. Principal Subsidiaries. Set forth on
Schedule I is a complete and accurate list of all Principal Subsidiaries
existing on September 30, 1994, showing the jurisdiction of its incorporation,
and the percentage of its outstanding capital stock owned by the Company on the
date hereof. All stock of each Principal Subsidiary has been validly issued,
is fully paid and nonassessable and (except for directors' qualifying shares)
is owned, directly or indirectly, by the Company free and clear of all Liens
not permitted under Section 5.02 hereof.
SECTION 4.03. Powers. Each Borrower has the corporate
power to execute, deliver and perform its obligations under this Agreement and
its Notes and, in the case of the Company, under the Guaranty, all of which
have been duly authorized by all proper and necessary corporate action.
SECTION 4.04. Authorization and Consents. All actions,
conditions and things required by applicable statutes (whether foreign,
federal, state or local) or any order, rule or regulation of any court or
governmental agency or body to be taken, fulfilled and done (including the
obtaining of any necessary consents or approvals) in order (a) to enable each
Borrower lawfully to execute deliver and perform its obligations under the
Agreement and its Notes, and in the case of the Company, the Guaranty, and (b)
to ensure that those obligations are legally binding and enforceable against
such Borrower in accordance with their respective terms and (c) to make this
Agreement and the Notes admissible in evidence in the state and federal courts
in the State of Texas, have been taken, fulfilled and done.
SECTION 4.05. Non-Violation of Laws, Etc. The execution,
delivery and performance by each Borrower of its obligations under this
Agreement and its Notes do not and will not violate (a) any statute or any
order, rule or regulation of any court or governmental agency or body to which
it is subject, (b) its charter or bylaws, or (c) any agreement to which it or
any of its
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Subsidiaries is a party or by which it or its assets may be bound or affected,
other than violations of any such agreements which individually or collectively
would not have a Material Adverse Effect, and do not and will not, except as
provided in Section 5.02, result in or require the creation of any Lien of any
nature upon or with respect to any assets now owned or hereafter acquired by
such Borrower or any such Subsidiary.
SECTION 4.06. Obligations Binding. This Agreement and the
Notes constitute valid and binding obligations of each Borrower party thereto,
enforceable against such Borrower in accordance with their respective terms,
except as the enforceability of this Agreement and the Notes may be limited by
general principles of equity and bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting the enforcement of creditors' rights
generally.
SECTION 4.07. Financial Statements. The consolidated
balance sheets of the Company as of September 30, 1993 and September 30, 1994,
and the related consolidated statements of operations, common stockholders'
equity and cash flows, for each of the three years in the period ended
September 30, 1994, including in each case the footnotes thereto, examined by
Arthur Andersen & Co. and contained in the Company's Annual Report on Form 10-K
for the fiscal year ended September 30, 1994, which have been delivered to the
Administrative Agent and the Banks, fairly present, in conformity with
generally accepted accounting principles, the consolidated financial position
of the Company and its Subsidiaries as of such dates and their results of
operations and their cash flows for the periods ended on such dates. There has
been no material adverse change in such results of operations or financial
position since September 30, 1994.
SECTION 4.08. Litigation. No proceedings against or
affecting any Borrower or any of its Subsidiaries are pending, or to the
knowledge of the Company or any such Borrower, threatened before any court or
governmental agency or department:
(a) which purport to or do restrain the execution,
delivery or performance by the Borrowers under this Agreement or the
Notes or the enforcement of this Agreement or the Notes; or
(b) which involve a material risk of having (either
individually or collectively) a Material Adverse Effect.
SECTION 4.09. No Default. Neither any Default nor any
Event of Default has occurred and is continuing or will occur as a result of
making any Loan. Neither the Company nor any of its Subsidiaries is in breach
or default under any agreement relating to Indebtedness to any extent or in a
manner which is likely to have a Material Adverse Effect.
SECTION 4.10. Investment Company Act. Neither the Company
nor any of its Subsidiaries is, or is directly or indirectly controlled by or
acting on behalf of any Person which is, an "investment company," as such term
is defined in the Investment Company Act of 1940, as amended.
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SECTION 4.11. Public Utility Holding Company Act. Neither
the Company nor any of its Subsidiaries is a non-exempt "holding company," or
subject to regulation as such, or, to the knowledge of the Company's officers,
an "affiliate" of a "holding company" or a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
SECTION 4.12. ERISA. Neither the Company nor any of its
Subsidiaries has incurred any accumulated funding deficiency within the meaning
of ERISA which would have a Material Adverse Effect and neither the Company nor
any such Subsidiary has incurred any liability in connection with any Plan
under Sections 501 or 502 of ERISA, Subtitle IV of ERISA, or Chapter 43 of the
Code which would have a Material Adverse Effect, and each Plan is and has been
in compliance in all material respects with all applicable law.
SECTION 4.13. Tax Returns and Payments. (a) The Company
and its Subsidiaries have filed all foreign, federal, state and other tax
returns (or obtained extensions with respect thereto) which, to the knowledge
of the Company's officers, are required to be filed and have paid all taxes
which are shown to be due pursuant to such returns. No material income tax
liability of the Company or any of its Subsidiaries has been asserted by the
Internal Revenue Service of the United States or any foreign, state or local
agency for income taxes in excess of those already paid which is not being
contested in good faith by appropriate proceedings and for which adequate
reserves have not been created on the books of the Company and its
Subsidiaries.
(b) The federal income tax liabilities, if any, of the
Company and its Subsidiaries have been finally determined by the Internal
Revenue Service and satisfied for all taxable years through the 1985 fiscal
year.
SECTION 4.14. Information. On the date hereof the
Information Package and the other information, exhibits and reports originating
from the Company and furnished in writing to the Administrative Agent in
connection with the negotiation of this Agreement (excluding, however, any
analyst or broker reports furnished to any Agent or any Bank by any Person for
their information) did not contain any misstatement of fact or omit to state a
fact, which misstatement or omission would make the statements contained
therein, taken as a whole, in the light of the circumstances in which they were
made, materially untrue or misleading.
SECTION 4.15 Margin Stock; Use of Proceeds. (a) Neither
the Company nor any of its Subsidiaries is engaged in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulation U). No part of the proceeds of any Borrowing will be
used, directly or indirectly, for the purpose of purchasing or carrying or
trading in any securities under such circumstances as to involve any Borrower
or any Bank in a violation of Regulation G, T, U or X.
(b) The Borrowers will use the proceeds of each Borrowing
for their general corporate purposes.
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SECTION 4.16. Franchises and Other Rights. The Company and
each of its Subsidiaries have all franchises, permits, licenses, and other
authority (collectively, the "Operating Rights") as are necessary to enable
them to carry on their respective businesses as now being conducted, failure to
have which would in the aggregate have a Material Adverse Effect. None of the
Company or any such Subsidiary is in default under any of the Operating Rights
which default could have a Material Adverse Effect.
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ARTICLE V
COVENANTS
So long as any Note shall remain unpaid or any Bank shall have
any Commitment hereunder, each Borrower covenants and agrees for itself and the
Company covenants and agrees with respect to each other Borrower as follows:
SECTION 5.01. Status. Each Borrower's payment obligations
under this Agreement rank and will at all times rank at least equally and
ratably in all respects with all its other unsecured and unsubordinated
indebtedness other than statutorily preferred indebtedness.
SECTION 5.02. Negative Pledge. (a) Except as otherwise
provided in paragraph (b) below, the Company shall not, and shall not permit
any Restricted Subsidiary to, incur any Indebtedness secured by a Lien upon any
Principal Property of the Company or any Restricted Subsidiary or upon any
shares of stock other than margin stock (within the meaning of Regulation U) or
any long-term receivable of the Company due from any Restricted Subsidiary
(whether such Principal Property, shares of stock or long-term receivables are
now owned or hereafter acquired) without in any such case effectively providing
concurrently with the incurrence of any such Indebtedness that all sums payable
at that time or thereafter under this Agreement (together with, if the Company
shall so determine, any other Indebtedness of the Company or such Restricted
Subsidiary then existing or thereafter created which is not subordinate to such
sums) shall be secured equally and ratably with (or at the option of the
Company, prior to) such Indebtedness, so long as such Indebtedness shall be so
secured; provided, however, that nothing in this Section 5.02 shall prevent,
restrict or apply to (and thereby shall be excluded from secured Indebtedness
in any computation under this Section 5.02) Indebtedness secured by:
(i) Liens for taxes, assessments, or similar charges,
incurred in the ordinary course of business that are not yet past due
or which are being contested by the Company in good faith and against
which adequate reserves as required by generally accepted accounting
principles have been established by the Company;
(ii) Pledges or deposits made in the ordinary course of
business to secure payment of worker's compensation, or to participate
in any fund in connection with worker's compensation, unemployment
insurance, old-age pensions or other social security programs;
(iii) Liens of mechanics, materialmen, warehousemen,
carriers, or other like liens, securing obligations incurred in the
ordinary course of business that are not yet past due or which are
being contested by the Company in good faith and against which
adequate reserves as required by generally accepted accounting
principles have been established by the Company;
(iv) Liens on property, shares of stock or indebtedness of
any corporation existing at the time such corporation becomes a
Restricted Subsidiary or arising thereafter (A)
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otherwise than in connection with the borrowing of money arranged
thereafter and (B) pursuant to contractual commitments entered into
prior to and not in contemplation of such corporation becoming a
Restricted Subsidiary;
(v) Liens on any property (including shares of stock or
Indebtedness) existing at the time of acquisition thereof (including
acquisition through merger or consolidation) or securing the payment
of all or any part of the purchase price or construction cost thereof
or securing any Indebtedness incurred prior to, at the time of, or
within 180 days after the acquisition of such property, shares of
stock or Indebtedness or the completion of any such construction,
whichever is later, for the purpose of financing all or any part of
the purchase price or construction cost thereof;
(vi) Liens on any property to secure all or any part of
the cost of development, operation, construction, alteration, repair
or improvement of all or any part of such property, or to secure
Indebtedness incurred prior to, at the time of or within 180 days
after, the completion of such development, operation, construction,
alteration, repair or improvement, whichever is later, for the purpose
of financing all or any part of such cost;
(vii) Liens which secure Indebtedness owing by a Restricted
Subsidiary to the Company or to another Restricted Subsidiary or by
the Company to a Restricted Subsidiary;
(viii) Liens on property of the Company or a Restricted
Subsidiary in favor of the United States of America or any state
thereof, or any department, agency or instrumentality or political
subdivision of the United States of America or any state thereof, or
in favor of any other country or any political subdivision thereof, to
secure partial, progress, advance or other payments pursuant to any
contract or statute or to secure any indebtedness incurred for the
purpose of financing all or any part of the purchase price or the cost
of construction of the property subject to such Liens, or in favor of
any trustee or mortgagee for the benefit of holders of indebtedness of
any such entity incurred for any such purpose;
(ix) Liens incurred in connection with tax exempt or
similar financing of pollution control, sewage or solid or hazardous
waste disposal facilities, or similarly qualified facilities;
(x) Liens existing as of March 31, 1995 and as set out in
Schedule II; and
(xi) any extension, renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part, of any
Lien referred to in the foregoing sub-paragraphs (i) to (x),
inclusive, or of any Indebtedness secured thereby; provided that such
extension, renewal or replacement Lien shall be limited to all or any
part of the same property that secured the Lien extended, renewed or
replaced (plus any improvements on such property) and shall secure no
larger amount of Indebtedness than that existing at the time of such
extension, renewal or replacement.
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(b) Notwithstanding the foregoing provisions of this
Section 5.02, the Company and any one or more Restricted Subsidiaries may incur
Indebtedness secured by a Lien which would otherwise be subject to the
foregoing restrictions if at the time it does so (the "Incurrence Time") the
aggregate amount of such Indebtedness plus all other Indebtedness of the
Company and its Restricted Subsidiaries secured by a Lien which would otherwise
be subject to the foregoing restrictions (not including Indebtedness permitted
to be secured under sub-paragraphs (i) through (xi) above), plus the aggregate
Attributable Debt (determined as of the Incurrence Time) of Sale and Leaseback
Transactions (other than Sale and Leaseback Transactions permitted by
paragraphs (a) and (b) of Section 5.03 entered into after the date of this
Agreement and in existence at the Incurrence Time (less the aggregate amount of
proceeds of such Sale and Leaseback Transactions which shall have been applied
in accordance with paragraph (d) of Section 5.03), does not exceed 10% of
Consolidated Net Tangible Assets.
SECTION 5.03. Sale and Leaseback Transactions. The Company
shall not itself, and shall not permit any Restricted Subsidiary to, enter into
any arrangements after the date of this Agreement with any bank, insurance
company or other lender or investor (other than the Company or another
Restricted Subsidiary) providing for the leasing as lessee by the Company or
any such Restricted Subsidiary of any Principal Property (except a lease for a
temporary period not to exceed three years by the end of which it is intended
the use of such Principal Property by the lessee will be discontinued), which
was or is owned by the Company or a Restricted Subsidiary and which has been or
is to be sold or transferred by the Company or a Restricted Subsidiary, more
than 180 days after the completion of construction and commencement of full
operation thereof by the Company or such Restricted Subsidiary, to such lender
or investor or to any Person to whom funds have been or are to be advanced by
such lender or investor on the security of such Principal Property (herein
called a "Sale and Leaseback Transaction") unless:
(a) the Company or such Restricted Subsidiary would (at
the time of entering into such arrangement) be entitled pursuant to
sub-paragraphs (i) through (xi) of paragraph (a) of Section 5.02,
without equally and ratably securing all sums payable at that time or
thereafter under this Agreement, to incur Indebtedness secured by a
Lien on such Principal Property; or
(b) such Sale and Leaseback Transaction relates to a
landfill or other waste disposal site (excluding any plant or similar
facility located thereon) owned by the Company or such Restricted
Subsidiary or which the Company or such Restricted Subsidiary has the
right to use; or
(c) the Attributable Debt of the Company and its
Restricted Subsidiaries in respect of such Sale and Leaseback
Transaction and all other Sale and Leaseback Transactions entered into
after the date of this Agreement (other than such Sale and Leaseback
Transactions as are permitted by paragraphs (a) and (b) of this
Section 5.03(less the aggregate amount of proceeds of such Sale and
Leaseback Transactions which shall have been applied in accordance
with paragraph (d) of thisSection 5.03)), plus the aggregate principal
amount of Indebtedness secured by Liens on Principal Properties then
outstanding
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(excluding any such Indebtedness secured by Liens covered in
sub-paragraphs (i) through (xi) of paragraph (a) of Section 5.02)
which do not equally and ratably secure such sums, would not exceed
10% of Consolidated Net Tangible Assets; or
(d) 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 the board of directors of the Company) to
the repayment or prepayment of Loans or to the retirement of other
Indebtedness of the Company (other than Indebtedness subordinated to
the obligations of the Company under this Agreement) or Debt of a
Restricted Subsidiary, having a stated maturity more than twelve (12)
months from the date of such application or which is extendible at the
option of the obligor thereon to a date more than twelve (12) months
from the date of such application, provided that the amount to be so
applied shall be reduced by the principal amount of any such
Indebtedness of the Company or a Restricted Subsidiary voluntarily
retired by the Company or a Restricted Subsidiary within 180 days
after such sale or transfer. Notwithstanding the foregoing, no
retirement referred to in this sub-paragraph (d) may be affected by
payment at maturity.
Notwithstanding the foregoing, where the Company or any
Restricted Subsidiary is the lessee in any Sale and Leaseback Transaction,
Attributable Debt shall not include any Indebtedness resulting from the
guarantee by the Company or any other Restricted Subsidiary of the lessee's
obligation thereunder if the lessee's obligation is included in Attributable
Debt.
SECTION 5.04. Disposals. The Company will not, and will
ensure that its Subsidiaries will not (whether by a single transaction or a
number of related transactions and whether at one time or over a period of
time) sell or otherwise dispose of all or substantially all of the assets of
the Company and its Subsidiaries, taken as a whole.
SECTION 5.05. Merger and Consolidation. No Borrower shall
merge into or consolidate with any Person and no Borrower shall permit any
Person to merge into or consolidate with such Borrower unless:
(a) in case a Borrower shall merge into or consolidate
with another corporation, the corporation formed by such consolidation
or into which such Borrower is merged or consolidated shall be a
corporation organized and existing under the laws of the jurisdiction
of such Borrower, or under the laws of the United States of America,
any state thereof or the District of Columbia and, if such Borrower is
not the survivor, shall expressly assume, by an agreement supplemental
hereto, executed and delivered to the Administrative Agent, in form
satisfactory to the Majority Banks the due and punctual payment of all
sums payable at that time or thereafter under this Agreement and the
performance of every covenant of such Borrower contained in this
Agreement to be performed or observed; and
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(b) immediately after giving effect to such transaction
and treating any Indebtedness which becomes an obligation of such
Borrower or a Subsidiary as a result of such transaction as having
been incurred by such Borrower or such Subsidiary at the time of such
transaction, no Default or Event of Default shall have occurred and be
continuing;
provided, however, that the undertaking of the Banks to make Loans to the
Company shall not inure to the benefit of any successor or assign of the
Company, including any successor or assign by merger or consolidation, unless
the Company is the surviving entity.
SECTION 5.06. Financial Covenants. The Company shall not
permit Consolidated Net Worth (i) at any time during the fiscal year ending
September 30, 1995 to be less than $1,500,000,000 and (ii) at any time during
each fiscal year thereafter to be less than an amount equal to the sum of (A)
the amount of Consolidated Net Worth required under this Section 5.06 for the
immediately preceding fiscal year plus (B) 20% of Consolidated Net Income for
such immediately preceding fiscal year; provided, however, if Consolidated Net
Income in any such preceding fiscal year is less than zero, the amount to be
aggregated for such fiscal year shall be zero.
SECTION 5.07. Financial Statements and Other Information.
The Company shall maintain a system of accounting in accordance with generally
accepted accounting principles and practices and will furnish to the
Administrative Agent (with a sufficient number of copies for each Bank):
(a) as soon as available, and in any case within 120 days
after the end of each fiscal year of the Company, the consolidated
balance sheet of the Company as of the close of such fiscal year, and
the related consolidated statement of operations, common stockholders'
equity and cash flows (or such other related statements as the Company
shall prepare in accordance with generally accepted accounting
principles and practices) for the Company for such year, setting
forth, in comparative form, the corresponding figures from the
preceding fiscal year, examined by independent public accountants
selected by the Company;
(b) as soon as available, and in any case within 60 days
after the end of each of the first three fiscal quarters of each
fiscal year of the Company, the consolidated balance sheet of the
Company as of the end of such quarter, the related consolidated
statement of operations for the Company for such fiscal quarter and
for the fiscal year to date, and the consolidated statement of cash
flows (or such other related statements as the Company shall prepare
in accordance with generally accepted accounting principles and
practices) for the Company for the fiscal year to date;
(c) at the time of each delivery of a balance sheet
pursuant to the foregoing paragraphs (a) and (b), a certificate of an
authorized Financial Officer of the Company stating that no Default or
Event of Default shall have occurred and be continuing, and setting
forth computations in reasonable detail showing, as at the date of
such balance sheet, whether or not there was compliance with the
financial covenant contained in Section 5.06;
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(d) promptly after their becoming available, (i) copies
of all financial statements, reports and proxy statements which the
Company shall have sent to its stockholders generally; and (ii) copies
of all registration statements (other than registration statements on
Form S-8 or any successor form) and regular and periodic reports
(other than reports on Form 11-K or any successor form), if any, which
the Company shall have filed with the Securities and Exchange
Commission or any governmental agency or agencies substituted
therefor, or any similar or corresponding governmental department,
commission, board, bureau or agency, federal, state or foreign, or
(except for routine listing applications) with any national securities
exchange, provided that these obligations do not extend to documents
filed and not available for public inspection;
(e) promptly after a Financial Officer becomes aware
thereof, each change in the rating given by either S&P, Moody's or
Duff and Phelps to any of the Company's Senior Funded Debt;
(f) prior to announcing that any Borrower will use the
proceeds of any Borrowing to acquire or attempt to acquire any Person
in a Hostile Acquisition, a notice thereof together with the identity
of such Person; and
(g) such other information relating to the performance of
the provisions of this Agreement by any Borrower or to the business
and financial position of any Borrower or any of its Subsidiaries as
the Administrative Agent or any Bank (through the Administrative
Agent) may from time to time reasonably request, including information
concerning material legal proceedings and such legal opinions and/or
other documents relevant in the context of or relating to this
Agreement as the Administrative Agent may reasonably request.
SECTION 5.08. Payment of Taxes. Each Borrower will pay
and discharge, and cause each of its Subsidiaries to pay and discharge, all
taxes, assessments and governmental charges or levies imposed upon it or upon
its income and profits, or upon any property belonging to it, prior to the date
on which penalties attach thereto, and all lawful claims which, if unpaid,
might become a Lien upon any material property of such Borrower or such
Subsidiary not permitted by Section 5.02(a)(i), provided that neither any
Borrower nor any such Subsidiary shall be required to pay any such tax,
assessment, charge, levy or claim the payment of which is being contested in
good faith and by proper proceedings and in respect of which such Borrower has
provided adequate reserves on its books.
SECTION 5.09. Insurance. To the extent such insurance
shall be available on commercially reasonable terms, each Borrower shall, and
shall cause its Subsidiaries to, keep adequately insured by financially sound
and reputable insurers, or by way of adequate self- insurance, all risks of
loss of a character usually insured by corporations of comparable size and
financial strength and with comparable risks.
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SECTION 5.10. Maintenance of Existence. (a) Each Borrower
will preserve and maintain its corporate existence in good standing; provided,
however, that nothing herein shall prevent any merger or consolidation
permitted by Section 5.05;
(b) The Company will cause each of its Subsidiaries
(other than the Borrowing Subsidiaries) to preserve and maintain its corporate
existence in good standing, if the failure to do so could have a Material
Adverse Effect; and
(c) Each Borrower will and will cause each of its
Subsidiaries to qualify and remain qualified to do business as a foreign
corporation in each jurisdiction in which the character of the properties owned
or leased by it therein or in which transaction of its business is such that
failure to qualify has or could have a Material Adverse Effect.
SECTION 5.11. Compliance with Applicable Laws. Each
Borrower will comply, and cause each of its Subsidiaries to comply, with the
requirements of all applicable laws, rules, regulations and orders of any
governmental authority of the United States of America and such other state,
local and other national jurisdictions to which such Borrower or any such
Subsidiary may be subject, a breach of which has or could have a Material
Adverse Effect. Without prejudice to the generality of the foregoing sentence,
no Borrower will apply the proceeds of any Loan in such a way that would result
in the violation by such Borrower or any Bank of the provisions of Regulation
U, T, G or X.
SECTION 5.12. Notices of Default. Each Borrower will
furnish to the Administrative Agent, immediately upon becoming aware of the
existence of any Default or Event of Default, a written notice specifying the
nature and period of existence thereof and what action such Borrower is taking
or proposes to take with respect thereto.
SECTION 5.13. Inspection. Each Borrower shall permit an
authorized representative or representatives of any Agent or any of the Banks
to visit and inspect at all reasonable times, at the risk and expense of the
inspecting party, any of the properties of such Borrower or its Subsidiaries,
including its books, and to make extracts therefrom (subject to any
confidentiality agreements, copyright laws and similar requirements) and to
discuss the affairs, finances, and accounts of such Borrower or its
Subsidiaries with its officers and employees.
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ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following
events ("Events of Default") shall occur and be continuing:
(a) The Company or any Borrowing Subsidiary shall fail to
pay (i) any installment of principal of any Note on the date on which
such payment is due or (ii) any payment of interest on any such Note
or any other amount due hereunder within three Business Days after
notice of such non-payment has been given to the Company by the
Administrative Agent; or
(b) Any representation or warranty made by or on behalf
of any of the Borrowers herein or in any document, certificate or
financial statement delivered in connection with this Agreement shall
prove to have been incorrect in any material respect when made and the
same remains incorrect for a period of 30 days after the earlier of
written notice thereof shall have been given to the Company by the
Administrative Agent or any Bank or discovery thereof by the senior
financial officer or senior operating officer of such Borrower; or
(c) Any Borrower shall fail to perform or observe any
covenant contained in Section 5.04, 5.05, 5.06or 5.10(a) of this
Agreement; or
(d) Any Borrower shall fail to perform or observe any
other term, covenant or agreement contained in this Agreement and any
such failure shall remain unremedied for 30 calendar days after the
earlier of written notice of such failure shall have been given to the
Company by the Administrative Agent or any Bank or discovery of such
failure by the senior financial officer or senior operating officer of
such Borrower; or
(e) The Company or any of its Subsidiaries shall (i)
default in the payment of any Indebtedness (excluding Indebtedness
evidenced by the Notes) of the Company or such Subsidiary (as the case
may be), or any interest or premium thereon, when due whether by
acceleration or otherwise beyond any period of grace provided with
respect thereto or (ii) default in the performance or observance of
any other term or condition with respect to such other Indebtedness if
the effect of such default is to accelerate the maturity of such
Indebtedness or any such Indebtedness shall be declared due and
payable or is required to be prepaid (other than by a regularly
scheduled required prepayment or as a result of the giving of notice
or a voluntary prepayment) prior to the stated maturity thereof, if in
the case of any defaults described in clauses (i) and (ii) of this
Section 6.01(e), the aggregate principal amount of all such
Indebtedness for which all such defaults shall have occurred and be
continuing exceeds $50,000,000; provided, however, a default for
purposes of this Section 6.01(e) shall not be deemed to exist by
reason of the acceleration of the maturity of any such obligation to a
Bank or an affiliate (within the meaning of Regulation U) of a Bank
solely by reason of a default in the performance of a term or
condition in any agreement or
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instrument under or by which such obligation is created, evidenced or
secured, which term and condition restricts the right of the Company
or any other Person to sell, pledge or otherwise dispose of any margin
stock (within the meaning of Regulation U) held by the Company or such
other Person; or
(f) Any Borrower or any Principal Subsidiary shall admit
in writing its inability to pay, or generally shall not be paying, its
debts as such debts become due; or
(g) Any Borrower or any Principal Subsidiary shall (i)
apply for or consent to the appointment of, or the taking of
possession by, a receiver, custodian, trustee or liquidator of itself
or of all or a substantial part of its property, (ii) make a general
assignment for the benefit of its creditors, (iii) commence a
voluntary case under the Bankruptcy Code, (iv) file a petition seeking
to take advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or readjustment of debts,
(v) fail to controvert in a timely and appropriate manner, or
acquiesce in writing to, any petition filed against it in an
involuntary case under the Bankruptcy Code or (vi) take any corporate
action for the purpose of effecting any of the foregoing; or
(h) A proceeding or case shall be commenced, without the
application or consent of any Borrower or any Principal Subsidiary in
any court of competent jurisdiction, seeking (i) its liquidation,
reorganization, dissolution or winding-up, or the composition or
readjustment of its debts, (ii) the appointment of a trustee,
receiver, custodian, liquidator or the like of such Borrower or such
Principal Subsidiary or of all or any substantial part of its assets
or (iii) similar relief in respect of such Borrower or such Principal
Subsidiary under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustments of debts,
and such proceeding or case shall continue undismissed, for a period
of 90 days; or an order for relief against any Borrower or any
Principal Subsidiary shall be entered in an involuntary case under the
Bankruptcy Code; or
(i) A final judgment or judgments for the payment of
money shall be rendered by a court or courts against any Borrower or
any Principal Subsidiary in excess of $50,000,000 in the aggregate for
all such judgments and the same shall not be discharged (or provision
shall not be made for such discharge), or a stay of execution thereof
shall not be procured, within the appeal time provided by law and such
Borrower or such Principal Subsidiary, as the case may be, shall not,
within said period, or such longer period during which execution of
the same shall have been stayed, appeal therefrom and cause the
execution thereof to be stayed during such appeal; or
(j) (i) Any finding or determination shall be made by the
PBGC that any Borrower has satisfied the criteria for a distress
termination with respect to a Plan under Section 4041(c) of ERISA, or
(ii) (A) any fact or circumstance shall occur with respect to a Plan
which, in the opinion of the Majority Banks, provides grounds for the
commencement of any proceeding under Section 4042 of ERISA, (B) any
proceeding shall be commenced with respect to a Plan under Section
4042 of ERISA, or (C) any Plan termination or any full
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or partial withdrawal from a Plan or Plans shall occur, which event
described in subparagraph (A), (B), or (C), individually or in
combination with any other such event(s), could result in liability of
any Borrower or any Principal Subsidiary to the PBGC or to the Plan or
Plans in the aggregate amount of $20,000,000 or more, or (iii) the
actuarial present value of unfunded vested benefits under all Plans
shall exceed $50,000,000;
then, (x) if any Event of Default described in Section 6.01(g) or Section
6.01(h) shall occur and be continuing, all Notes then outstanding hereunder and
interest accrued thereon and all liabilities hereunder shall thereupon
automatically become and be immediately due and payable without presentment,
demand, protest, notice of intent to accelerate, or other notice of any kind to
any Borrower, all of which are hereby expressly waived, the Commitments (if
still in existence) shall thereupon terminate and the Banks shall be under no
further obligation to make Loans hereunder, and (y) if any other Event of
Default shall occur and be continuing, the Administrative Agent shall (1) if
requested by the Majority Banks, by notice to the Borrower, terminate the
Commitments (if still in existence) and they shall thereupon terminate, and (2)
if requested by the Majority Banks, by notice to the Borrower, declare all
Notes then outstanding hereunder and interest accrued thereon and all
liabilities of the Borrowers thereunder to be immediately due and payable, and
the same shall thereupon become and be forthwith due and payable without
presentment, demand, protest, notice of intent to accelerate, or other notice
of any kind to any Borrower or any other Person, all of which are hereby
expressly waived by the Borrowers.
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ARTICLE VII
THE AGENTS
SECTION 7.01. Authorization and Action. Except as
expressly provided in Section 7.06, each Bank hereby irrevocably appoints and
authorizes the Documentation Agent, the Administrative Agent and the Auction
Administration Agent to act on its behalf and to exercise such powers under
this Agreement as are specifically delegated to or required of such Agent by
the terms hereof, together with such powers as are reasonably incidental
thereto. As to any matters not expressly provided for by this Agreement or the
Notes (including enforcement or collection of the Notes), the Agents shall not
be required to exercise any discretion or take any action, but shall be
required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Majority Banks,
and such instructions shall be binding upon all Banks and all holders of Notes;
provided, however, that no Agent shall be required to take any action which
exposes such Agent to personal liability or which is contrary to this Agreement
or applicable law.
SECTION 7.02. Agents' Reliance, Etc. No Agent nor any of
its directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them under or in connection with this
Agreement (including the Guaranty) or the Notes (a) with the consent or at the
request of the Majority Banks or (b) in the absence of its or their own gross
negligence or willful misconduct (IT BEING THE EXPRESS INTENTION OF THE PARTIES
THAT THE AGENTS AND THEIR RESPECTIVE DIRECTORS, OFFICERS, AGENTS AND EMPLOYEES
SHALL HAVE NO LIABILITY FOR ACTIONS AND OMISSIONS UNDER THIS SECTION 7.02
RESULTING FROM THEIR ORDINARY SOLE OR CONTRIBUTORY NEGLIGENCE). Without
limitation of the generality of the foregoing, each Agent: (i) may treat the
payee of each Note as the holder thereof until such Agent receives written
notice of the assignment or transfer thereof signed by such payee and in form
satisfactory to such Agent; (ii) may consult with legal counsel (including
counsel for the Borrowers), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (iii) makes no warranty or representation to any Bank
and shall not be responsible to any Bank for any statements, warranties or
representations made in or in connection with this Agreement or any Note by any
other Person; (iv) except as otherwise expressly provided herein, shall not
have any duty to ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions of this Agreement or any Note or to
inspect the property (including the books and records) of any Borrower; (v)
except for its own due execution and delivery thereof (as applicable) shall not
be responsible to any Bank for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement (including
the Guaranty) or any Note or any other instrument or document furnished
pursuant hereto or thereto; and (vi) shall incur no liability under or with
respect of this Agreement or any Note by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telegram,
telecopier, cable or telex) reasonably believed by it to be genuine and signed
or sent by the proper party or parties.
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SECTION 7.03. Bank of America, Chemical, Credit Suisse,
Morgan, NationsBank and TCB and Affiliates. To the extent it becomes a holder
of any Note hereunder, each of Bank of America, Chemical, Credit Suisse,
Morgan, NationsBank and TCB shall have the same rights and powers under this
Agreement or any Note as any other Bank and may exercise the same as though it
were not an Agent. The term "Bank" or "Banks" shall, unless otherwise
expressly indicated, include each of Bank of America, Chemical, Credit Suisse,
Morgan, NationsBank and TCB, in its individual capacity, but only to the extent
it becomes a holder of a Note hereunder. Bank of America, Chemical, Credit
Suisse, Morgan, NationsBank and TCB and their Affiliates may accept deposits
from, lend money to, act as trustee under indentures of, and generally engage
in any kind of business with, any Borrower, any of the Subsidiaries and any
Person who may do business with or own securities of the Company or of its
Subsidiaries, all as if Bank of America, Chemical, Credit Suisse, Morgan,
NationsBank and TCB were not an Agent or a Co-Agent, as the case may be, and
without any duty to account therefor to the Banks.
SECTION 7.04. Bank Credit Decision. Each Bank acknowledges
and agrees that it has, independently and without reliance upon any Agent or
any other Bank and based on the financial statements referred to in Section
4.07 and such other documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement. Each
Bank also acknowledges and agrees that it will, independently and without
reliance upon any Agent, any Co-Agent or any other Bank and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and the Notes.
SECTION 7.05. Agents' Indemnity. No Agent shall be
required to take any action hereunder or to prosecute or defend any suit in
respect of this Agreement (including the Guaranty) or the Notes unless
indemnified to such Agent's satisfaction by the Banks against loss, cost,
liability and expense. If any indemnity furnished to such Agent shall become
impaired, such Agent may call for additional indemnity and cease to do the acts
indemnified against until such additional indemnity is given. In addition, the
Banks agree to indemnify each Agent (to the extent not reimbursed by the
Borrower), ratably according to the respective principal amounts of the Notes
then held by each of them (or if no Notes are at the time outstanding, ratably
according to either (i) the respective amount of their Commitments, or if no
Commitments are outstanding, the respective amounts of the Commitments
immediately prior to the time the Commitments ceased to be outstanding), from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against
such Agent in any way relating to or arising out of this Agreement, the
Guaranty or any action taken or omitted by such Agent under this Agreement, the
Guaranty or the Notes (including any action taken or omitted under Article II
of this Agreement); provided that no Bank shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from such Agent's gross
negligence or willful misconduct. EACH BANK AGREES, HOWEVER, THAT IT EXPRESSLY
INTENDS UNDER THIS SECTION 7.05, TO INDEMNIFY EACH AGENT RATABLY AS AFORESAID
FOR ALL SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, EXPENSES AND DISBURSEMENTS ARISING OUT OF OR RESULTING
FROM SUCH AGENT'S SOLE OR CONTRIBUTORY NEGLIGENCE.
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Without limitation of the foregoing, each Bank agrees to reimburse each Agent
promptly upon demand for its ratable share of any out-of-pocket expenses
(including reasonable counsel fees) incurred by such Agent in connection with
the preparation, execution, administration, or enforcement of, or legal advice
in respect of rights or responsibilities under, this Agreement (including the
Guaranty) and the Notes to the extent that such Agent is not reimbursed for
such expenses by the Borrowers. The provisions of this Section 7.05 shall
survive the termination of this Agreement and/or the payment or assignment of
any of the Notes.
SECTION 7.06. Successor Administrative Agent. The
Administrative Agent may resign at any time by giving written notice thereof to
the Banks, the Auction Administration Agent, the Documentation Agent and the
Borrowers and may be removed as Administrative Agent under this Agreement and
the Notes at any time with or without cause by the Majority Banks. Upon any
such resignation or removal, the Majority Banks (with the approval of the
Company, which approval shall not be unreasonably withheld) shall have the
right to appoint a successor Administrative Agent. If no successor
Administrative Agent shall have been so appointed by the Majority Banks, and
shall have accepted such appointment, within 30 calendar days after the
retiring Administrative Agent's giving of a notice of resignation or the
Majority Banks' removal of the retiring Administrative Agent, then the retiring
Administrative Agent (with the approval of the Company, which approval shall
not be unreasonably withheld) may, on behalf of the Banks, appoint a successor
Administrative Agent, which shall be a commercial bank organized or licensed
under the laws of the United States of America or of any state thereof and
having a combined capital and surplus of at least $100,000,000. Upon the
acceptance of any appointment as Administrative Agent hereunder and under the
Notes by a successor Administrative Agent, such successor Administrative Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations under
this Agreement and the Notes. After any retiring Administrative Agent's
resignation or removal as Administrative Agent hereunder and under the Notes,
the provisions of this Article VII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Administrative Agent under this
Agreement and the Notes.
SECTION 7.07. Successor Auction Administration Agent. The
Auction Administration Agent may resign at any time by giving written notice
thereof to the Banks, the Administrative Agent, the Documentation Agent and the
Borrowers and may be removed as Auction Administration Agent under this
Agreement and the Notes at any time with or without cause by the Majority Banks
(with the approval of the Company, which consent shall not be unreasonably
withheld). Upon any such resignation or removal, the Majority Banks shall have
the right to appoint a successor Auction Administration Agent. If no successor
Auction Administration Agent shall have been so appointed by the Majority
Banks, and shall have accepted such appointment, within 30 calendar days after
the retiring Auction Administration Agent's giving of notice of resignation or
the Majority Banks' removal of the retiring Auction Administration Agent, then
the retiring Auction Administration Agent may, on behalf of the Banks, appoint
a successor Auction Administration Agent, which shall be a commercial bank
organized or licensed under the laws of the United States or of any State
thereof and having a combined capital and surplus of at least $100,000,000.
Upon the acceptance of any appointment as Auction Administration Agent
hereunder
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and under the Notes by a successor Auction Administration Agent, such successor
Auction Administration Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Auction
Administration Agent, and the retiring Auction Administration Agent shall be
discharged from its duties and obligations under this Agreement and the Notes.
After any retiring Auction Administration Agent's resignation or removal as
Auction Administration Agent hereunder and under the Notes, the provisions of
this Article VII shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Auction Administration Agent under this
Agreement and the Notes.
SECTION 7.08. Resignation of the Documentation Agent. The
Documentation Agent may resign at any time by giving written notice thereof to
the Banks, the Administrative Agent and the Company and may be removed as the
Documentation Agent under this Agreement and the Notes at any time with or
without cause by the Majority Banks. Upon any such resignation or removal, no
new replacement Documentation Agent shall be appointed. After the
Documentation Agent's resignation or removal as the Documentation Agent
hereunder and under the Notes, the provisions of this Article VII shall inure
to its benefit as to any actions taken or omitted to be taken by it while it
was the Documentation Agent under this Agreement and the Notes.
SECTION 7.09. Resignation of a Co-Agent. Any Co-Agent may
resign at any time by giving written notice thereof to the Banks, the
Administrative Agent and the Company and may be removed as a Co-Agent under
this Agreement and the Notes at any time with or without cause by the Majority
Banks. Upon any such resignation or removal, no new replacement Co-Agent shall
be appointed. After any Co-Agent's resignation or removal as a Co-Agent
hereunder and under the Notes, the provisions of this Article VII shall inure
to its benefit as to any actions taken or omitted to be taken by it while it
was a Co-Agent under this Agreement and the Notes.
SECTION 7.10. Notice of Default. No Agent shall be deemed
to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless such Agent shall have received notice from a Bank or a
Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default." If any Agent
receives such a notice, such Agent shall give notice thereof to the Banks and
the other Agents; provided, however, if such notice is received from a Bank,
the Agent receiving such notice also shall give notice thereof to the Company
for itself and on behalf of the other Borrowers and the other Agent. The
Administrative Agent shall be entitled to take action or refrain from taking
action with respect to such Default or Event of Default as provided in Section
7.01 and Section 7.02.
SECTION 7.11. No Duty of Co-Agent. No Co-Agent shall have
any duties, responsibilities or liabilities with respect to the administration
or enforcement of this Agreement.
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ARTICLE VIII
GUARANTY
In consideration of the premises and in order to induce the
Banks to make Loans hereunder to the Borrowing Subsidiaries:
SECTION 8.01. Guaranty. The Company hereby unconditionally
and irrevocably guarantees the punctual payment when due, whether at stated
maturity, by acceleration or otherwise, of all obligations of each Borrowing
Subsidiary to pay the principal of and interest on the Notes of such Borrowing
Subsidiary (including interest accruing or becoming owing both prior to and
subsequent to the commencement of any proceeding against or with respect to
such Borrowing Subsidiary under any chapter of the Bankruptcy Code of 1978 (11
U.S.C. Section 101 et seq.), as from time to time amended, or any similar
statute in any other jurisdiction), and all other amounts from time to time
payable by such Borrowing Subsidiary under this Agreement and the Notes of such
Borrowing Subsidiary (such obligations with respect to the Borrowing
Subsidiaries being herein called the "Guaranteed Obligations"), and agrees to
pay any and all reasonable costs and expenses incurred by each Bank and the
Agents in enforcing any rights under this guaranty (including the reasonable
fees and expenses of outside counsel or the reasonable allocated costs of
in-house counsel). This guaranty is an absolute, irrevocable, unconditional,
present and continuing guaranty of payment and not of collectibility and is in
no way conditioned or contingent upon any attempt to collect from any Borrowing
Subsidiary, or any other action, occurrence or circumstance whatsoever.
SECTION 8.02. Guaranty Absolute. The Company guarantees
that the Guaranteed Obligations will be paid strictly in accordance with the
terms of this Agreement and the Notes of the Borrowing Subsidiaries. The
Company agrees that the Guaranteed Obligations and the Notes, this Agreement
and all other instruments and agreements applicable to the Company and the
Borrowing Subsidiaries (the Notes, this Agreement and all such other
instruments and agreements being hereinafter referred to in this Article VIII
as the "Documents") may be extended or renewed, and Loans repaid and reborrowed
in whole or in part, without notice to or assent by the Company, and that it
will remain bound upon this guaranty notwithstanding any extension, renewal or
other alteration of any Guaranteed Obligations or Documents, or any repayment
and reborrowing of Loans. To the maximum extent permitted by applicable law,
except as expressly provided in this Agreement, the obligations of the Company
under this guaranty shall be absolute, unconditional and irrevocable, and shall
be performed strictly in accordance with the terms hereof under any
circumstances whatsoever, including:
(a) any extension, renewal, modification, settlement,
compromise, waiver or release in respect of any Guaranteed
Obligations;
(b) any extension, renewal, amendment, modification,
rescission, waiver or release in respect of any of the Documents;
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(c) any release, exchange, substitution, non-perfection
or invalidity of, or failure to exercise rights or remedies with
respect to, any direct or indirect security for any Guaranteed
Obligations, including the release of any Borrowing Subsidiary or
other Person liable on any Guaranteed Obligations;
(d) any change in the corporate existence, structure or
ownership of the Company, any Borrowing Subsidiary or any insolvency,
bankruptcy, reorganization or other similar proceeding affecting the
Company, any Borrowing Subsidiary or any of their respective assets;
(e) the existence of any claim, defense, set-off or other
rights or remedies which any Borrowing Subsidiary at any time may have
against the Company, or the Company or such Borrowing Subsidiary may
have at any time against any Agent, any Bank, any other Borrowing
Subsidiary or any other Person, whether in connection with this
Agreement, the Documents, the transactions contemplated thereby or any
other transaction other than by the payment in full by the Borrowing
Subsidiaries of the Guaranteed Obligations after the termination of
the Commitments of the Banks;
(f) any invalidity or unenforceability for any reason of
this Agreement or any other Document, or any provision of law
purporting to prohibit the payment or performance by the Company or
any Borrowing Subsidiary of the Guaranteed Obligations or Loan
Documents, or of any other obligation to any Agent or any Bank; or
(g) any other circumstances or happening whatsoever,
whether or not similar to any of the foregoing.
SECTION 8.03. Effect of Debtor Relief Laws. If after
receipt of any payment of, or proceeds of any security applied (or intended to
be applied) to the payment of all or any part of the Guaranteed Obligations,
any Agent or any Bank is for any reason compelled to surrender or voluntarily
surrenders, such payment or proceeds to any Person (a) because such payment or
application of proceeds is or may be avoided, invalidated, declared fraudulent,
set aside, determined to be void or voidable as a preference, fraudulent
conveyance, fraudulent transfer, impermissible set-off or a diversion of trust
funds or (b) for any other reason, including (i) any judgment, decree or order
of any court or administrative body having jurisdiction over any Agent, any
Bank or any of their respective properties or (ii) any settlement or compromise
of any such claim effected by any Agent or any Bank with any such claimant
(including any Borrowing Subsidiary), then the Guaranteed Obligations or part
thereof intended to be satisfied shall be reinstated and continue, and this
guaranty shall continue in full force as if such payment or proceeds had not
been received, notwithstanding any revocation thereof or the cancellation of
any Note or any other instrument evidencing any Guaranteed Obligations or
otherwise; and the Company shall be liable to pay the Agents and the Banks, and
hereby does indemnify the Agents and the Banks and hold them harmless for the
amount of such payment or proceeds so surrendered and all expenses (including
reasonable attorneys' fees, court costs and expenses attributable thereto)
incurred by any Agent or any Bank in the defense of any claim made against it
that any payment or proceeds received by any Agent or
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any Bank in respect of all or part of the Guaranteed Obligations must be
surrendered. The provisions of this paragraph shall survive the termination of
this Agreement, and any satisfaction and discharge of the Borrowing
Subsidiaries by virtue of any payment, court order or any federal or state law.
SECTION 8.04. Subrogation. Notwithstanding any payment or
payments made by the Company hereunder, or any set-off or application by any
Agent or any Bank of any security or of any credits or claims, the Company will
not assert or exercise any rights of any Agent or any Bank or of the Company
against any Borrowing Subsidiary to recover the amount of any payment made by
the Company to the Agent or any Bank hereunder by way of any claim, remedy or
subrogation, reimbursement, exoneration, contribution, indemnity, participation
or otherwise arising by contract, by statute, under common law or otherwise,
and the Company shall not have any right of recourse to or any claim against
assets or property of any Borrowing Subsidiary, until all of the obligations of
the Company and the Borrowing Subsidiaries under the Documents are paid in
full. If any amount shall nevertheless be paid to the Company by a Borrowing
Subsidiary prior to payment in full of the obligations of the Company and such
Borrowing Subsidiary under the Documents, such amount shall be held in trust
for the benefit of the Agents and the Banks and shall forthwith be paid to the
Administrative Agent to be credited and applied to the Guaranteed Obligations,
whether matured or unmatured. The provisions of this paragraph shall survive
the termination of this Agreement, and any satisfaction and discharge of the
Borrowing Subsidiaries by virtue of any payment, court order or any federal or
state law.
SECTION 8.05. Subordination. If the Company becomes the
holder of any indebtedness payable by a Borrowing Subsidiary, the Company
hereby subordinates all indebtedness owing to it from such Borrowing Subsidiary
to all indebtedness of such Borrowing Subsidiary to the Agents and the Banks,
and agrees that during the continuance of any Default or Event of Default it
shall not accept any payment on the same until payment in full of the
obligations of such Borrowing Subsidiary under this Agreement and the other
Documents after the termination of the Commitments of the Banks, and shall in
no circumstance whatsoever attempt to set-off or reduce any obligations
hereunder because of such indebtedness. If any amount shall nevertheless be
paid to the Company by a Borrowing Subsidiary prior to payment in full of the
Guaranteed Obligations, such amount shall be held in trust for the benefit of
the Agents and the Banks and shall forthwith be paid to the Administrative
Agent to be credited and applied to the Guaranteed Obligations, whether matured
or unmatured.
SECTION 8.06. Waiver. The Company hereby waives
promptness, diligence, notice of acceptance and any other notice with respect
to any of the Guaranteed Obligations and this guaranty and waives presentment,
demand of payment, notice of intent to accelerate, notice of dishonor or
nonpayment and any requirement that any Agent or any Bank institute suit,
collection proceedings or take any other action to collect the Guaranteed
Obligations, including any requirement that any Agent or any Bank protect,
secure, perfect or insure any Lien against any property subject thereto or
exhaust any right or take any action against any Borrowing Subsidiary or any
other Person or any collateral (it being the intention of the Agents, the Banks
and the Company that this guaranty is to be a guaranty of payment and not of
collection). It shall not be
VIII-3
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necessary for any Agent or any Bank, in order to enforce any payment by the
Company hereunder, to institute suit or exhaust its rights and remedies against
any Borrowing Subsidiary or any other Person, including others liable to pay
any Guaranteed Obligations, or to enforce its rights against any security ever
given to secure payment thereof. The Company hereby expressly waives to the
maximum extent permitted by applicable law each and every right to which it may
be entitled by virtue of the suretyship laws of the State of Texas, including
any and all rights it may have pursuant to Rule 31, Texas Rules of Civil
Procedure, Section 17.001 of the Texas Civil Practice and Remedies Code and
Chapter 34 of the Texas Business and Commerce Code. The Company hereby waives
marshaling of assets and liabilities, notice by any Agent or any Bank of any
indebtedness or liability to which such Bank applies or may apply any amounts
received by such Bank, and of the creation, advancement, increase, existence,
extension, renewal, rearrangement or modification of the Guaranteed
Obligations. The Company expressly waives, to the extent permitted by
applicable law, the benefit of any and all laws providing for exemption of
property from execution or for valuation and appraisal upon foreclosure.
SECTION 8.07. Full Force and Effect. This Guaranty is a
continuing guaranty and shall remain in full force and effect until all of the
obligations of the Company and the Borrowing Subsidiaries under this Agreement
and the other Documents and all other amounts payable under this guaranty have
been paid in full (after the termination of the Commitments of the Banks). All
rights, remedies and powers provided in this guaranty may be exercised, and all
waivers contained in this guaranty may be enforced, only to the extent that the
exercise or enforcement thereof does not violate any provisions of applicable
law which may not be waived.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendments, Etc. No amendment or waiver of
any provision of this Agreement or any Note, nor consent to any departure by
any Borrower herefrom or therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Majority Banks in all cases, and
then, in any case, such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no amendment, waiver or consent shall, unless in writing and
signed by all the Banks, do any of the following; (a) waive any of the
conditions specified in Section 3.01, 3.02, 3.03 or 3.04, (b) except as
expressly provided in Section 2.14(f) or Section 2.15(c), reduce or increase
the amount or alter the terms of the Commitments of any Bank or subject any
Bank to any additional obligations, (c) reduce the principal of, or rate or
amount of interest applicable to, any Loan other than as provided in this
Agreement, or any fees hereunder, (d) postpone any date fixed for any payment
of principal of, or interest on, the Notes or any fees hereunder, (e) change
this Section 9.01 or Section 4.15 or the last sentence of Section 9.11(a) or
any provisions of Article VIII, (f) release the Guaranty, or (g) change the
definitions of "Applicable Differential," "Applicable Fee Percentage,"
"Majority Banks" or "Majority Committed Banks" contained in Section 1.01 or
otherwise change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Notes, or the number of Banks, which shall be required
for the Banks or any of them to take any action hereunder; provided that no
amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Banks required above to take such
action, affect the rights or duties of the Administrative Agent under this
Agreement or any Note; and provided, further, that no amendment, waiver or
consent shall, unless in writing and signed by the Co-Agent so affected in
addition to the Banks required above to take such action, affect the rights or
duties of such Co- Agent under this Agreement or any Note; and provided,
finally, that no amendment, waiver or consent shall, unless in writing and
signed by the Auction Administration Agent in addition to the Banks required
above to take such action, affect the rights or duties of the Auction
Administration Agent under this Agreement or any Note.
SECTION 9.02. Notices, Etc. The Documentation Agent, the
Administrative Agent, the Auction Administration Agent, any Bank, or the holder
of any Note, giving consent or notice or making any request of any Borrower
provided for hereunder, shall notify each Bank, the Documentation Agent, the
Administrative Agent and the Auction Administrative Agent thereof. In the
event that the holder of any Note (including any Bank) shall transfer such
Note, it shall promptly so advise the Agents which shall be entitled to assume
conclusively that no transfer of any Note has been made by any holder
(including any Bank) unless and until such Agent receives written notice to the
contrary. Notices, consents, requests, approvals, demands and other
communications (collectively, "Communications") provided for herein shall be in
writing (including telecopy, telegraphic, telex or cable Communications) and
mailed, telecopied, telegraphed, telexed, cabled or delivered:
(a) If to any Borrower, to it:
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<PAGE> 76
c/o Browning-Ferris Industries, Inc.
757 North Eldridge
Houston, Texas 77079
Telex Number: 794-592 (Answerback BFI HOU)
Telecopy Number: (713) 584-8622
Attention: Treasurer
(b) If to the Administrative Agent, to it at:
712 Main Street, 8 TCB-N 96
Houston, Texas 77002
Telecopy Number: (713) 216-2291
Attention: Syndications Department
with a copy to:
Texas Commerce Bank National Association
Manager, Houston Corporate Division
Mail Station 03 TCB-N 59
P. O. Box 2558
Houston, Texas 77251
Telecopy Number: (713) 236-5880
(c) If to the Documentation Agent, to it at:
Credit Suisse - Houston
1100 Louisiana, Suite 4750
Houston, Texas 77002
Telecopy Number: (713) 751-0702
Attention: Donald W. Herrick, Jr.
with a copy to:
Credit Suisse
Tower 49
12 East 49th Street
New York, New York 10017
Telecopy Number: (212) 238-5073
Attention: Syndications Department
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<PAGE> 77
(d) If to the Auction Administration Agent, to it at:
277 Park Avenue, Ninth Floor
New York, New York 10172
Telecopy Number: (212) 319-4941
(212) 319-4310
Attention: Syndications Department
(e) If to any Bank, as specified on the signature page
for such Bank hereto or, in the case of any Person who becomes a Bank after the
date hereof, as specified in the Administrative Questionnaire of such Person,
on the signature page of the Assignment and Acceptance executed by such Bank
or, in the case of any party, such other address, telecopy or telex number as
such party may hereafter specify for such purpose by notice to the other
parties. All Communications shall, when mailed, telecopied, telegraphed,
telexed, cabled or delivered, be effective when deposited in the mails, sent by
telecopier to any party to the telecopier number as set forth herein or on the
signature page hereof or on the signature page of the Assignment and
Acceptances (or other telecopy number designated by such party in a
Communication to the other parties hereto) and receipt thereof is acknowledged
by such party, delivered to the telegraph company, telexed to any party to the
telex number set forth herein or on the signature page hereof or on the
signature page of the Assignment and Acceptances (or other telex number
designated by such party in a Communication to the other parties hereto),
confirmed by telex answerback, or delivered to the cable company, respectively;
provided, however, Communications to any Agent pursuant to Article II or
Article VII shall not be effective until received by such Agent.
SECTION 9.03. No Waiver; Remedies. No failure on the part
of any Bank or any Agent to exercise, and no delay in exercising, any right
hereunder (including the Guaranty) or under any Note shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right, or any
abandonment or discontinuance of any steps to enforce such right, preclude any
other or further exercise thereof or the exercise of any other right. No
notice to or demand on any Borrower in any case shall entitle such Borrower to
any other or further notice or demand in similar or other circumstances. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
SECTION 9.04. Costs, Expenses and Taxes. (a) The Company
agrees to pay on demand: (i) all reasonable costs and expenses of the Agents in
connection with the preparation, execution, delivery and administration of this
Agreement (including the Guaranty), the Notes and the other documents to be
delivered hereunder, including the reasonable fees and out-of-pocket expenses
of counsel for the Agents with respect thereto and with respect to advising the
Agents as to their respective rights and responsibilities under this Agreement
(including the Guaranty) and the Notes, and any modification, supplement or
waiver of any of the terms of this Agreement and (ii) all reasonable costs and
expenses of each of the Banks and the Agents (including reasonable counsel fees
and expenses of outside counsel or the reasonable allocated costs of in-house
legal services) in connection with the enforcement of this Agreement and the
Notes. In addition, the Company shall pay any and all stamp and similar taxes
payable or determined to be payable in connection with the execution and
delivery of this Agreement and the Notes and the other documents to be
delivered
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<PAGE> 78
hereunder, and agrees to save the Agents and each Bank harmless from and
against any and all liabilities with respect to or resulting from any delay in
payment or omission to pay such taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of this
Agreement or any Note. Without prejudice to the survival of any other
obligations of the Company hereunder and the Notes, the obligations of the
Company under this Section 9.04 shall survive the termination of this Agreement
and/or the payment or assignment of the Notes.
(b) If, (i) due to payments made by a Borrower due to
acceleration of the maturity of the Notes pursuant to Section 6.01, or due to
any other reason, any Bank receives payments of principal of any Fixed Rate
Loan or Eurodollar Rate Loan, other than on the last day of the Interest Period
for such Advance, or (ii) on any Borrowing Date a Borrower shall fail to
fulfill the applicable conditions set forth in Article III, or (iii) a Borrower
shall fail to borrow hereunder after a Committed Borrowing Request pursuant to
Article II has been given or after Competitive Bids have been accepted, such
Borrower shall, upon demand by such Bank (with a copy of such demand to the
Administrative Agent), pay to the Administrative Agent for the account of such
Bank any amounts required to compensate such Bank for any additional losses,
costs or expenses which it may reasonably incur as a result of such payment or
failure to borrow, as the case may be, including, without limitation, any loss,
cost or expense incurred or sustained in liquidating or employing deposits or
other funds acquired by any Bank to effect, fund or maintain any such Loan.
SECTION 9.05. Indemnity.
(a) The Borrowers, jointly and severally, shall indemnify
the Agents, the Banks and each Affiliate thereof and their respective
directors, officers, employees and agents from, and hold each of them harmless
against, any and all losses, liabilities, claims or damages to which any of
them may become subject, insofar as such losses, liabilities, claims or damages
arise out of or result from (i) this Agreement or any actual or proposed use by
the Borrowers of the proceeds of any extension of credit by any Bank hereunder
or breach by any Borrower of this Agreement or any other documents executed in
connection with this Agreement or (ii) any investigation, litigation or other
proceeding (including any threatened investigation or proceeding) relating to
the foregoing, and the Borrowers, jointly and severally, shall reimburse the
Agents and each Bank, and each Affiliate thereof and their respective
directors, officers, employees and agents, upon demand for any expenses
(including legal fees) reasonably incurred in connection with any such
investigation or proceeding; but excluding any such losses, liabilities,
claims, damages or expenses incurred by reason of the gross negligence or
willful misconduct of the Person to be indemnified. Promptly after receipt by
any Bank or any Agent of notice of the commencement of any investigation,
litigation or proceeding in respect of which indemnity may be sought from a
Borrower under this Section 9.05, such Bank or such Agent will notify the
Company and such Borrower in writing of the commencement thereof. Subject to
the provisions hereinafter stated, the Borrowers shall be entitled to
participate in, and may, if they so elect, upon delivery to each of the Banks
of a written undertaking by the Borrowers in form and substance acceptable to
the Administrative Agent that the Borrowers will not contest the rights of the
Bank or such Agent to indemnification in connection with such investigation,
litigation or proceeding, maintain or assume the defense of any such
investigation, litigation or proceeding (including the employment of counsel,
who shall be counsel
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<PAGE> 79
satisfactory to each such Bank or such Agent involved therein, whether or not
as a party), and the payment of expenses thereof. If the defense of such
investigation, litigation or proceeding is assumed by one or more Borrowers,
each of such Banks or such Agent shall have the right to employ separate
counsel and to participate in the defense thereof but the fees and expenses of
such counsel shall not be at the expense of the Borrowers unless the employment
of such counsel has been specifically authorized in writing by the Borrowers.
Notwithstanding the foregoing, the Administrative Agent shall at any time have
the right to employ counsel to represent such Banks and the Agents in any such
investigation, litigation or proceeding if, in the reasonable judgment of the
Administrative Agent, such is advisable, in which event the fees and expenses
of such separate counsel shall be borne by the Borrowers, it being understood,
however, that the Borrowers shall not, in connection with any one such action
or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys for all indemnified parties. No Borrower shall be liable to indemnify
any Person for any settlement of such action effected without such Borrower's
consent.
(B) WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT, IT
IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO BE
INDEMNIFIED HEREUNDER OR THEREUNDER SHALL BE INDEMNIFIED AND HELD HARMLESS
AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS OR DAMAGES ARISING OUT OF OR
RESULTING FROM THE ORDINARY, SOLE OR CONTRIBUTORY NEGLIGENCE OF SUCH PERSON.
Without prejudice to the survival of any other obligations of the Company
hereunder and the Notes, the obligations of the Company under this Section 9.05
shall survive the termination of this Agreement and/or the payment or
assignment of the Notes.
SECTION 9.06. Right of Setoff. If any Event of Default
shall have occurred and be continuing, each Bank is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such
Bank or any branch, subsidiary or Affiliate of such Bank to or for the credit
or the account of the Company or any other Borrower against any of and all the
obligations of the Borrowers now or hereafter existing under this Agreement and
any Note held by such Bank, irrespective of whether or not such Bank or the
Administrative Agent shall have made any demand under this Agreement or such
Note and although such obligations may be unmatured. Each Bank agrees promptly
to notify such Borrower after any such setoff and application made by such Bank
or any branch, subsidiary or Affiliate of such Bank, but the failure to give
such notice shall not affect the validity of such setoff and application. The
rights of each Bank under this Section 9.06 are in addition to other rights and
remedies (including other rights of setoff) which such Bank may have.
SECTION 9.07. Governing Law. This Agreement, all Notes and
all other documents executed in connection herewith (including the
Administrative Agent's Letter and the Auction Administration Agent's Letter),
shall be deemed to be contracts and agreements executed by the parties hereto
under the laws of the State of Texas and of the United States and for all
purposes shall be construed in accordance with, and governed by, the laws of
said state and the of the United States. Without limitation of the foregoing,
nothing in this Agreement or in the Notes
IX-5
<PAGE> 80
shall be deemed to constitute a waiver of any rights which any Bank may have
under applicable federal legislation relating to the amount of interest which
such Bank may contract for, take, receive or charge in respect of any Loans,
including any right to take, receive, reserve and charge interest at the rate
allowed by the law of the state where such Bank is located. The Agents, the
Banks and the Borrowers further agree that insofar as the provisions of Article
1.04, Subtitle 1, Title 79, of the Revised Civil Statutes of Texas, 1925, as
amended, are applicable to the determination of the Highest Lawful Rate with
respect to the Notes, the indicated rate ceiling computed from time to time
pursuant to Section (a) of such Article shall apply to the Notes; provided,
however, that to the extent permitted by such Article, the Administrative Agent
may from time to time by notice from the Administrative Agent to the Borrowers
revise the election of such interest rate ceiling as such ceiling affects the
then current or future balances of the Loans outstanding under the Notes. The
provisions of Chapter 15 of Subtitle 3 of the said Title 79 do not apply to
this Agreement or any Note.
SECTION 9.08. Usury Not Intended. The Borrowers and the
Banks intend to strictly comply with all applicable laws, including Applicable
Laws. Accordingly, the provisions of this Section 9.08 shall govern and
control over every other provision of this Agreement, of any Note or the
Administrative Agent's Letter or the Auction Administration Agent's Letter,
whenever executed, which conflicts or is inconsistent with this Section 9.08,
even if such provision declares that it controls (unless such provision
expressly identifies and refers to this Section 9.08 and specifically states
that it will control over this Section 9.08). As used in this Section 9.08,
the term "interest" includes the aggregate of all charges which constitute
interest under Applicable Laws, provided that, to the maximum extent permitted
by Applicable Laws, (a) any non-principal payment shall be characterized as an
expense or fee or something other than compensation for the use, forbearance or
detention of money and not as interest, and (b) all interest at any time
contracted for, reserved, charged or received shall be amortized, prorated,
allocated and spread, in equal parts during the full term of the Borrowings.
In no event shall the Company or any other Person be obligated to pay, or any
Bank have any right or privilege to reserve, receive or retain, (a) any
interest in excess of the maximum amount of nonusurious interest permitted
under Applicable Laws, or (b) total interest in excess of the amount which such
Bank could lawfully have contracted for, reserved, received, retained or
charged had the interest been calculated for the full term of the Borrowings at
the Highest Lawful Rate. On each day, if any, that the interest rate (the
"Stated Rate") called for under this Agreement or under any Note or other
related document exceeds the Highest Lawful Rate, the rate at which interest
shall accrue shall automatically be fixed by operation of this sentence at the
Highest Lawful Rate (or, at any time no Highest Lawful Rate shall exist, at the
Agreed Maximum Rate) for that day, and shall remain fixed at the Highest Lawful
Rate (or at any time no Highest Lawful Rate shall exist, at the Agreed Maximum
Rate) for each day thereafter until the total amount of interest accrued equals
the total amount of interest which would have accrued if there were no such
ceiling rate as is imposed by this sentence. Thereafter, interest shall accrue
at the Stated Rate unless and until the Stated Rate again exceeds the Highest
Lawful Rate when the provisions of the immediately preceding sentence shall
again automatically operate to limit the interest accrual rate. The daily
interest rates to be used in calculating interest at the Highest Lawful Rate
shall be determined by dividing the applicable Highest Lawful Rate per annum by
the number of days in the calendar year for which such calculation is being
made. None of the terms and provisions contained in this Agreement, the Notes
or any other related document which directly
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<PAGE> 81
or indirectly relate to interest shall ever be construed without reference to
this Section 9.08 or construed to create a contract to pay for the use,
forbearance or detention of money at an interest rate in excess of the Highest
Lawful Rate. If the term of any Loan is shortened by reason of acceleration of
maturity as a result of any Default or other cause, or by reason of any
required or permitted prepayment, and if for that (or any other) reason any
Bank at any time (including but not limited to the stated maturity of any
Borrowing) is owed or receives (and/or has received) interest in excess of
interest calculated at the Highest Lawful Rate, then and in any such event all
of any such excess interest shall be cancelled automatically as of the date of
such acceleration, prepayment or other event which produces the excess, and, if
such excess interest has been paid to a Bank, it shall be credited pro tanto
against the then-outstanding principal balance of the Company's obligations to
such Bank, effective as of the date or dates when the event occurs which causes
it to be excess interest, until such excess is exhausted or all of such
principal has been fully paid and satisfied, whichever occurs first, and any
remaining balance of such excess shall be promptly refunded to its payor.
SECTION 9.09. Survival of Representations and Warranties.
All representations, warranties and covenants contained herein or made in
writing by the Company in connection herewith shall survive the execution and
delivery of this Agreement and of the Notes, and will bind and inure to the
benefit of the respective successors and assigns of the parties hereto, whether
so expressed or not, subject, however, to Section 9.11 and the proviso
contained in Section 5.05.
SECTION 9.10. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Borrowers, the Administrative
Agent, the Co-Agents and the Auction Administrative Agent and when the
Administrative Agent shall have been notified by each of the other parties
hereto that such other party has executed it and (subject to Section 9.11)
thereafter shall be binding upon and inure to the benefit of the Borrowers, the
Agents and each Bank and their respective successors and assigns.
SECTION 9.11. Successors and Assigns; Participations.
(a) Whenever in this Agreement any of the parties hereto
is referred to, such reference shall be deemed to include the successors and
permitted assigns of such party; and all covenants, promises and agreements by
or on behalf of the Borrowers, the Agents or the Banks that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and permitted assigns. Except as expressly provided in Section
5.05, no Borrower may assign or transfer any of its rights or obligations
hereunder without the written consent of all the Banks.
(b) Each Bank may without the consent of any Borrower,
with respect to such Bank's Commitment and the Loans owing to it and the Note
or Notes held by it, sell participations to one or more banks or other entities
(including any Bank or any Affiliate of any Bank) in all or a portion of its
rights and obligations under this Agreement; provided, however, that (i) the
selling Bank's obligations under this Agreement shall remain unchanged, (ii)
such Bank shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) the participating
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<PAGE> 82
banks or other entities shall be entitled to the cost protection provisions
contained in Article II and Section 9.04, but only to the extent that such
protection would have been available to the selling Bank, calculated as if no
such participations had been sold and (iv) the Borrowers, the Agents and the
other Banks shall continue to deal solely and directly with the selling Bank in
connection with such Bank's rights and obligations under this Agreement;
provided, however, that each Bank shall retain the sole right and
responsibility to enforce the obligations of the Borrowers relating to the
Loans including the right to approve any amendment, modification or waiver of
any provision of this Agreement; and further provided, however, the selling
Bank may grant a participant rights consistent with this Agreement with respect
to (x) amendments, modifications or waivers with respect to any fees payable
hereunder (including the amount and the dates fixed for the payment of any such
fees) or the amount of principal or the rate of interest payable on, or the
dates fixed for any payment of principal of or interest on, the Loans and (y)
amendments, modifications or waivers to, or release of, the Guaranty.
(c) With the prior written consent of the Company (which
consent shall not be unreasonably withheld), a Bank may assign to one or more
Eligible Assignees, and without the consent of the Company, a Bank may assign
to an Affiliate of such Bank or to another Bank, all or a portion of its
interests, rights, and obligations under this Agreement (including all or a
portion of its Commitment and the same portion of the Loans at the time owing
to it and the Note held by it); provided, however, that (i) each such
assignment shall be of a constant, and not a varying, percentage of all the
assigning Bank's rights and obligations under this Agreement and, in the event
such Bank is assigning less than all of its interests, rights and obligations
under this Agreement (unless the Company shall otherwise agree) shall be not
less than $25,000,000 of such Bank's Commitment hereunder and (ii) the parties
to each such assignment shall execute and deliver to the Administrative Agent,
for its acceptance and recording in the Register (as defined below), an
Assignment and Acceptance in the form of Exhibit 9.11 hereto (an "Assignment
and Acceptance"), together with a properly completed Administrative
Questionnaire, any Note or Notes subject to such assignment and a processing
and recordation fee of $2,000. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five Business Days after the
execution thereof (x) the Eligible Assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the rights
and obligations of a Bank hereunder and (y) the assignor Bank thereunder shall,
to the extent provided in such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the remaining portion of an assigning Bank's rights
and obligations under this Agreement, such Bank shall cease to be a party
hereto).
(d) By executing and delivering an Assignment and
Acceptance, the Bank assignor thereunder and the Eligible Assignee confirm to
and agree with each other and the other parties hereto as follows: (i) other
than the representation and warranty that it is the legal and beneficial owner
of the interest being assigned thereby free and clear of any adverse claim,
such Bank assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement
or
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<PAGE> 83
any other instrument or document furnished pursuant hereto; (ii) such Bank
assignor makes no representation or warranty and assumes no responsibility with
respect to the financial condition of any Borrower or the performance or
observance of its respective obligations under this Agreement or any other
instrument or document furnished pursuant hereto or thereto; (iii) such
Eligible Assignee confirms that it has received a copy of this Agreement
together with copies of the most recent financial statements delivered pursuant
to Section 4.07 or Section 5.07 and such other documents and information as it
has deemed appropriate and made its own credit analysis and decision to enter
into such Assignment and Acceptance; (iv) such Eligible Assignee will,
independently and without reliance upon the Agents, such Bank assignor or any
other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such Eligible Assignee appoints and
authorizes the Administrative Agent and the Auction Administration Agent,
respectively, to take such action on behalf of such Eligible Assignee and to
exercise such powers under this Agreement as are delegated to each such Agent
by the terms hereof, together with such powers as are reasonably incidental
thereto; (vi) such Eligible Assignee agrees that it will perform in accordance
with their terms all of the obligations which by the terms of this Agreement
are required to be performed by it as a Bank and (vii) such Eligible Assignee
confirms that it is an Eligible Assignee as defined herein.
(e) The Administrative Agent shall maintain at its office
a copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Banks and the Commitment of, and
principal amount of the Loans owing to, each Bank from time to time (the
"Register"). The entries in the Register shall be conclusive, in the absence
of manifest error, and the Company, the Agents and the Banks may treat each
Person whose name is recorded in the Register as a Bank hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Company, any Bank, or the Co-Agents or the Auction Administrative Agent at
any reasonable time and from time to time upon reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance
executed by an assigning Bank and an Eligible Assignee together with the Note
or Notes subject to such assignment and the written consent to such assignment,
the Administrative Agent shall, if such Assignment and Acceptance has been
completed and is in the form of Exhibit 9.11 hereto, (i) accept such Assignment
and Acceptance, (ii) record the information contained therein in the Register
and (iii) give prompt notice thereof to the Banks, the Co-Agents, the Auction
Administration Agent and the Borrowers. Within five Business Days after receipt
of such notice, the Borrowers shall execute and deliver to the Administrative
Agent in exchange for the surrendered Note or Notes a new Commitment Note
payable to the order of such Eligible Assignee in an amount equal to the
portion of the Total Commitment assumed by it pursuant to such Assignment and
Acceptance and/or a new Competitive Note to the order of such Eligible Assignee
in an amount equal to the Total Commitment and, if the assigning Bank has
retained any portion of the Total Commitment hereunder, a new Commitment Note
payable to the order of the assigning Bank in an amount equal to the Commitment
retained by it hereunder. Such new Notes shall be in aggregate principal
amount equal to the aggregate principal amount of such surrendered Notes, shall
be dated the effective date of such Assignment
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<PAGE> 84
and Acceptance and shall otherwise be in substantially the form of Exhibit
1.01-B-1 or Exhibit 1.01-B-2 as applicable, hereto. Cancelled Notes shall be
returned to the Borrower that is the signatory thereto.
(g) Notwithstanding any other provision herein, any Bank
may, in connection with any assignment or participation or proposed assignment
or participation pursuant to this Section 9.11 disclose to the assignee or
participant or proposed assignee or participant, any information relating to
the Borrowers furnished to such Bank by or on behalf of the Borrowers;
provided, that prior to any such disclosure, each such assignee or participant
or proposed assignee or participant shall agree to preserve the confidentiality
of any confidential information relating to the Borrowers received from such
Bank.
(h) Anything in this Section 9.11 to the contrary
notwithstanding, any Bank may at any time, without the consent of the
Borrowers, or any Agent, assign and pledge all or any portion of its Commitment
and the Loans owing to it to any Federal Reserve Bank (and its transferees) as
collateral security pursuant to Regulation A and any Operating Circular issued
by such Federal Reserve Bank. No such assignment shall release the assigning
Bank from its obligations hereunder.
(i) All transfers of any interest in any Note hereunder
shall be in compliance with all federal and state securities laws, if
applicable. Notwithstanding the foregoing sentence, however, the parties to
this Agreement do not intend that any transfer under this Section 9.11 be
construed as a "purchase" or "sale" of a "security" within the meaning of any
applicable federal or state securities laws.
SECTION 9.12. Appointment of Company as Agent for the Other
Borrowers. Each Borrowing Subsidiary hereby irrevocably appoints the Company as
its agent for the purpose of giving on its behalf any notice and taking any
other action provided for in this Agreement, and hereby agrees that it shall be
bound by any such notice or action given or taken by the Company hereunder
irrespective of whether or not any such notice shall have in fact been
authorized by such Borrowing Subsidiary and irrespective of whether or not the
agency provided for herein shall have theretofore been terminated.
SECTION 9.13. Separability. Should any clause, sentence,
paragraph or Section of this Agreement be judicially declared to be invalid,
unenforceable or void, such decision will not have the effect of invalidating
or voiding the remainder of this Agreement, and the parties hereto agree that
the part or parts of this Agreement so held to be invalid, unenforceable or
void will be deemed to have been stricken herefrom and the remainder will have
the same force and effectiveness as if such part or parts had never been
included herein.
SECTION 9.14. Retiring Bank. (a) Each of the parties to
the 1992 Agreement is either a Bank or a Retiring Bank.
(b) The Retiring Banks are executing this Agreement
solely for the purpose of consenting to the amendment and restatement of the
1992 Agreement. Upon the effectiveness of
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<PAGE> 85
this Agreement, no Retiring Bank shall have any commitment or obligation to the
Company under the 1992 Agreement, and neither the Company nor any other
Borrower shall have any obligation to any Retiring Bank under the 1992
Agreement or this Agreement.
SECTION 9.15. SUBMISSION TO JURISDICTION; WAIVER OF
IMMUNITIES. (A) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT,
THE NOTES, THE ADMINISTRATIVE AGENT'S LETTER AND THE AUCTION ADMINISTRATION
AGENT'S LETTER MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR OF THE
UNITED STATES FOR THE SOUTHERN DISTRICT OF TEXAS AND, BY EXECUTION AND DELIVERY
OF THIS AGREEMENT, EACH BORROWER HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS WITH RESPECT TO ANY SUCH ACTION OR PROCEEDING. EACH BORROWING
SUBSIDIARY HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS CT CORPORATION
SYSTEM, INC., WITH OFFICES ON THE DATE HEREOF AT 811 DALLAS AVENUE, HOUSTON,
TEXAS 77002, AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND
ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF
ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED
IN ANY SUCH ACTION OR PROCEEDING. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE
AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, EACH BORROWING SUBSIDIARY
AGREES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT IN HOUSTON, TEXAS ON
THE TERMS AND FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE
ADMINISTRATIVE AGENT. EACH BORROWING SUBSIDIARY FURTHER IRREVOCABLY CONSENTS
TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH
ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT ITS ADDRESS PROVIDED IN SECTION 9.02,
SUCH SERVICE TO BECOME EFFECTIVE THIRTY DAYS AFTER SUCH MAILING. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF ANY AGENT OR ANY BANK TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST ANY LOAN PARTY IN ANY OTHER JURISDICTION.
(B) TO THE EXTENT THAT ANY BORROWER HAS OR HEREAFTER MAY
ACQUIRE ANY IMMUNITY (SOVEREIGN OR OTHERWISE) FROM ANY LEGAL ACTION, SUIT OR
PROCEEDING, FROM JURISDICTION OF ANY COURT OR FROM SET-OFF OR ANY LEGAL PROCESS
(WHETHER SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF
EXECUTION OF JUDGMENT, EXECUTION OF JUDGMENT OR OTHERWISE) WITH RESPECT TO
ITSELF OR ANY OF ITS PROPERTY, SUCH BORROWER HEREBY IRREVOCABLY WAIVES AND
AGREES NOT TO PLEAD OR CLAIM SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER
THIS AGREEMENT AND THE NOTES. EACH
IX-11
<PAGE> 86
BORROWER HEREBY AGREES THAT THE WAIVERS SET FORTH IN THIS SECTION 9.15 SHALL
HAVE THE FULLEST EXTENT PERMITTED UNDER THE FOREIGN SOVEREIGN IMMUNITIES ACT OF
1976 OF THE UNITED STATES OF AMERICA AND ARE INTENDED TO BE IRREVOCABLE AND NOT
SUBJECT TO WITHDRAWAL FOR PURPOSES OF SUCH ACT.
SECTION 9.16. Judgment. The obligations of the Borrowers
hereunder and under the Notes due to any party hereto shall, notwithstanding
any judgment in a currency (the "Judgment Currency") other than Dollars, be
discharged only to the extent that on the Business Day following receipt by
such party of any sum adjudged to be so due in the Judgment Currency such party
or such holder (as the case may be) may in accordance with normal banking
procedures purchase Dollars with the judgment currency; if the amount of
Dollars so purchased is less than the sum originally due to such party in
Dollars, each Borrower agrees, as a separate obligation and notwithstanding any
such judgment, to indemnify such party against such loss, and if the amount of
Dollars so purchased exceeds the sum originally due to any party to this
Agreement, such party agrees to remit to such Borrower such excess.
SECTION 9.17. Entire Agreement. This Agreement (including
the Exhibits and Schedules hereto), the Notes, the Administrative Agent's
Letter and the Auction Administration Agent's Letter, together with all other
documents, instruments or agreements executed and delivered in connection
herewith and therewith embody the entire agreement and understanding among the
parties hereto relating to the subject matter hereof and thereof and supersede
all prior proposals, agreements and understandings relating to such subject
matter.
SECTION 9.18. Execution in Counterparts. This Agreement
may be executed in any number of counterparts and by different parties hereto
in separate counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same
agreement.
SECTION 9.19. FINAL AGREEMENT. THIS WRITTEN AGREEMENT, THE
NOTES, THE ADMINISTRATIVE AGENT'S LETTER AND THE AUCTION ADMINISTRATION AGENT'S
LETTER CONSTITUTE A "LOAN AGREEMENT" AS DEFINED IN SECTION 26.02(a) OF THE
TEXAS BUSINESS & COMMERCE CODE, REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officer thereunto duly authorized,
as of the date first above written.
IX-12
<PAGE> 87
BROWNING-FERRIS INDUSTRIES, INC.
By: /s/ Jeffrey E. Curtiss
-------------------------------
Name: Jeffrey E. Curtiss
Title: Senior Vice President
IX-13
<PAGE> 88
Documentation Agent
-------------------
CREDIT SUISSE, AS DOCUMENTATION AGENT
By: /s/ Heather J. Rieckenberg
-----------------------------------
Name: Heather J. Rieckenbert
Title: Associate
By: /s/ Matt Mober
-----------------------------------
Name: Matt Mober
Title: Associate
<PAGE> 89
Administrative Agent
--------------------
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, AS ADMINISTRATIVE AGENT
By: /s/ Jay A. Schwartz
-----------------------------------
Name: Jay A. Schwartz
Title: Vice President
<PAGE> 90
Auction Administration Agent
----------------------------
CHEMICAL BANK, AS AUCTION ADMINISTRATION
AGENT
By: /s/ Janet M. Belden
------------------------------------
Name: Janet M. Belden
Title: Vice President
<PAGE> 91
Co-Agent
--------
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, AS CO-AGENT
By: /s/ Melinda H. Nickens
------------------------------------
Name: Melinda H. Nickens
Title: Vice President
<PAGE> 92
Co-Agent
--------
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, AS CO-AGENT
By: /s/ Stephen B. King
------------------------------------
Name: Stephen B. King
Title: Vice President
<PAGE> 93
Co-Agent
--------
NATIONSBANK OF TEXAS, N.A.,
AS CO-AGENT
By: /s/ Neill P. Davis
------------------------------------
Name: Neill P. Davis
Title: Senior Vice President
<PAGE> 94
Lead Managers
-------------
ABN AMRO BANK N.V., HOUSTON AGENCY
BANQUE NATIONALE DE PARIS
HOUSTON AGENCY
CITICORP USA, INC.
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH
DEUTSCHE BANK AG NEW YORK BRANCH
AND CAYMAN ISLAND BRANCH
THE FIRST NATIONAL BANK OF CHICAGO
THE FUJI BANK, LIMITED
NATIONAL WESTMINSTER BANK PLC
SOCIETE GENERALE SOUTHWEST
AGENCY
UNION BANK OF SWITZERLAND,
HOUSTON AGENCY
<PAGE> 95
Continuing Banks
----------------
ABN AMRO BANK, N.V., HOUSTON
AGENCY
By: /s/ Michael N. Oakes
------------------------------------
Name: Michael N. Oakes
Title: Vice President
By: /s/ Kenneth S. Womack
------------------------------------
Name: Kenneth S. Womack
Title: Assistant Vice President
Three Riverway, Suite 1700
Houston, Texas 77056
Telecopy No.: (713) 629-7533
Telex No.: 064-170786
Domestic Lending Office
-----------------------
ABN AMRO Bank, N.V., Houston Agency
Three Riverway, Suite 1700
Houston, Texas 77056
Attn: Ms. Belinda Rowell
Eurodollar Lending Office
-------------------------
ABN AMRO Bank, N.V., Houston Agency
Three Riverway, Suite 1700
Houston, Texas 77056
Attn: Ms. Belinda Rowell
Commitment: $40,000,000
<PAGE> 96
Continuing Banks
----------------
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: /s/ Melinda H. Nickens
------------------------------------
Name: Melinda H. Nickens
Title: Vice President
333 Clay Street, Suite 4550
Houston, Texas 77002
Telecopy No.: (713) 651-4841
Telex No.: 67652 BANK MER SFO
Domestic Lending Office
-----------------------
Bank of America National Trust and
Savings
Association
1850 Gateway Boulevard
Concord, California 94520
Attn: Linda Allen
(213) 345-6340
Eurodollar Lending Office
-------------------------
Bank of America National Trust and
Savings
Association
1850 Gateway Boulevard
Concord, California 94520
Attn: Linda Allen
(213) 345-6340
Commitment: $52,000,000
<PAGE> 97
Continuing Banks
----------------
BANQUE NATIONALE DE PARIS HOUSTON AGENCY
By: /s/ John L. Stacy
------------------------------------
Name: John L. Stacy
Title: Vice President
333 Clay Street, Suite 3400
Houston, Texas 77002
Telecopy No.: (713) 659-1414
Telex No.: 166085 BNPHTX
Domestic Lending Offic
----------------------
333 Clay Street, Suite 3400
Houston, Texas 77002
Eurodollar Lending Office
-------------------------
333 Clay Street, Suite 3400
Houston, Texas 77002
Commitment: $40,000,000
<PAGE> 98
Continuing Banks
----------------
THE CHASE MANHATTAN BANK, N.A.
By: /s/ Dawn Lee Lum
------------------------------------
Name: Dawn Lee Lum
Title: Vice President
1 Chase Manhattan Plaza, 3rd Floor
New York, New York 10081
Telecopy No.: (212) 552-5189
Telex No.: 125563
Domestic Lending Office
-----------------------
1 Chase Manhattan Plaza, 3rd Floor
New York, New York 10081
Eurodollar Lending Office
-------------------------
1 Chase Manhattan Plaza, 3rd Floor
New York, New York 10081
Commitment: $18,000,000
<PAGE> 99
Continuing Banks
----------------
CIBC, INC.
By: /s/ Gary C. Gaskill
------------------------------------
Name: Gary C. Gaskill
Title: Vice President
Two Paces West
2727 Paces Ferry Road, Suite 1200
Atlanta, Georgia 30339
Telecopy No.: (404) 319-4950
Telex No.: N/A
Domestic Lending Offic
----------------------
Two Paces West
2727 Paces Ferry Road, Suite 1200
Atlanta, Georgia 30339
Eurodollar Lending Office
-------------------------
Two Paces West
2727 Paces Ferry Road, Suite 1200
Atlanta, Georgia 30339
Commitment: $28,000,000
<PAGE> 100
Continuing Banks
----------------
CITICORP USA, INC.
By: /s/ Barbara A. Cohen
------------------------------------
Name: Barbara A. Cohen
Title: Vice President
399 Park Avenue, 12th Floor, Zone 21
New York, New York 10043
Telecopy No.: (212) 793-3824
Telex No.: N/A
Domestic Lending Office
-----------------------
1 Court Square, 7th Floor
Long Island City, New York 11120
Eurodollar Lending Office
-------------------------
1 Court Square, 7th Floor
Long Island City, New York 11120
Commitment: $40,000,000
<PAGE> 101
Continuing Banks
----------------
COMERICA BANK
By: /s/ Bradley Terryn
------------------------------------
Name: Bradley Terryn
Title: Vice President
500 Woodward Avenue
Detroit, Michigan 48226
Telecopy No.: (313) 222-3330
Telex No.: N/A
Domestic Lending Office
-----------------------
500 Woodward Avenue
Detroit, Michigan 48226
Eurodollar Lending Office
-------------------------
500 Woodward Avenue
Detroit, Michigan 48226
Commitment: $18,000,000
<PAGE> 102
Continuing Banks
----------------
CREDIT LYONNAIS
CAYMAN ISLAND BRANCH
By: /s/ Robert Ivosevich
------------------------------------
Name: Robert Ivosevich
Title: Authorized Signature
1301 Avenue of the Americas
New York, New York 10019
Telecopy No.: (713) 751-0307
Telex No.: 6868674 CL HOU UW
Domestic Lending Office
-----------------------
Credit Lyonnais Cayman Island Branch
c/o Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, New York 10019
Eurodollar Lending Office
-------------------------
Credit Lyonnais Cayman Island Branch
c/o Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, New York 10019
Commitment: $40,000,000
With notices to:
Credit Lyonnais
Dallas Representative Office
Lincoln Plaza
500 North Akard
Suite 3210
Dallas, Texas 75201
<PAGE> 103
Continuing Banks
----------------
CREDIT SUISSE
By: /s/ David J. Worthington
------------------------------------
Name: David J. Worthington
Title: Member of Senior Management
By: /s/ Maria N. Gaspara
------------------------------------
Name: Maria N. Gaspara
Title: Associate
12 East 49th Street
New York, New York 10017
Telecopy No.: (212) 238-5245
Telex No.: 420-149
Attn: Credit Administration
Domestic Lending Office
-----------------------
12 East 49th Street
New York, New York 10017
Eurodollar Lending Office
-------------------------
12 East 49th Street
New York, New York 10017
Commitment: $52,000,000
With copies to:
Credit Suisse
Attn: Ann F. Lopez
1100 Louisiana, Suite 4750
Houston, Texas 77002
<PAGE> 104
Continuing Banks
----------------
DEUTSCHE BANK AG NEW YORK BRANCH
AND CAYMAN ISLAND BRANCH
By: /s/ Jean M. Hannigan
------------------------------------
Name: Jean M. Hannigan
Title: Assistant Vice President
By: /s/ John Augsburger
------------------------------------
Name: John Augsburger
Title: Vice President
31 W. 52nd Street
New York, New York 10019
Telecopy No.: (212) 474-8212
Telex No.: AT&T 429166
Domestic Lending Office
-----------------------
New York Branch
31 W. 52nd Street
New York, New York 10019
Eurodollar Lending Office
-------------------------
Cayman Islands Branch
c/o New York Branch
31 W. 52nd Street
New York, New York 10019
Commitment: $40,000,000
<PAGE> 105
Continuing Banks
----------------
FIRST INTERSTATE BANK OF TEXAS, N.A.
By: /s/ Kari K. Smith
------------------------------------
Name: Kari K. Smith
Title: Vice President
1000 Louisiana, 3rd Floor
Houston, Texas 77002
Telecopy No.: (713) 250-7029
Telex No.: N/A
Domestic Lending Office
-----------------------
1000 Louisiana, 3rd Floor
Houston, Texas 77002
Eurodollar Lending Office
-------------------------
1000 Louisiana, 3rd Floor
Houston, Texas 77002
Commitment: $28,000,000
<PAGE> 106
Continuing Banks
----------------
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Ted Wozniak
------------------------------------
Name: Ted Wozniak
Title: Managing Director
One First National Plaza, Suite 0374
Chicago, Illinois 60670-0374
Telecopy No.: (312) 732-3885
Telex No.: 4330253 FNBCUI
Domestic Lending Office
-----------------------
One First National Plaza, Suite 0374
Chicago, Illinois 60670-0374
Eurodollar Lending Office
-------------------------
One First National Plaza, Suite 0374
Chicago, Illinois 60670-0374
Commitment: $40,000,000
<PAGE> 107
Continuing Banks
----------------
THE FUJI BANK, LIMITED
By: /s/ David Kelley
------------------------------------
Name: David Kelley
Title: Vice President & Sr. Manager
One Houston Center
1221 McKinney Street, Suite 4100
Houston, Texas 77010
Telecopy No.: (713) 759-0048
Telex No.: 790-026 FUJI BANK HOU
Domestic Lending Office
-----------------------
One Houston Center
1221 McKinney Street, Suite 4100
Houston, Texas 77010
Eurodollar Lending Office
-------------------------
One Houston Center
1221 McKinney Street, Suite 4100
Houston, Texas 77010
Commitment: $40,000,000
<PAGE> 108
Continuing Banks
----------------
THE INDUSTRIAL BANK OF JAPAN
TRUST COMPANY
By: /s/ J. Kenneth Biegen
------------------------------------
Name: J. Kenneth Biegen
Title: Senior Vice President
245 Park Avenue, 23rd Floor
New York, New York 10167-0037
Telecopy No.: (212) 557-3581
Telex No.: 175597 IBJTC
Domestic Lending Office
-----------------------
245 Park Avenue, 23rd Floor
New York, New York 10167-0037
Eurodollar Lending Office
-------------------------
245 Park Avenue, 23rd Floor
New York, New York 10167-0037
Commitment: $28,000,000
<PAGE> 109
Continuing Banks
----------------
ISTITUTO BANCARIO SAN PAOLO DI
TORINO S.P.A.
By: /s/ Robert S. Wurster
------------------------------------
Name: Robert S. Wurster
Title: First Vice President
By: /s/ William J. De Angelo
------------------------------------
Name: William J. De Angelo
Title: First Vice President
245 Park Avenue, 35th Floor
New York, New York 10167
Telecopy No.: (212) 599-5303
Telex No.: 220045
Domestic Lending Office
-----------------------
245 Park Avenue, 35th Floor
New York, New York 10167
Eurodollar Lending Office
-------------------------
245 Park Avenue, 35th Floor
New York, New York 10167
Commitment: $18,000,000
<PAGE> 110
Continuing Banks
----------------
MELLON BANK, N.A.
By: /s/ A. Gary Chace
------------------------------------
Name: A. Gary Chace
Title: Vice President
One Mellon Bank Center, #4425
Pittsburgh, PA 15258
Telecopy No.: (412) 234-6375
Telex No.: N/A
Domestic Lending Office
-----------------------
Three Mellon Bank Center, Room 2303
Pittsburgh, PA 15259-0003
Attn: Cathy Fisher
Eurodollar Lending Office
-------------------------
Three Mellon Bank Center, Room 2303
Pittsburgh, PA 15259-0003
Attn: Cathy Fisher
Commitment: $28,000,000
<PAGE> 111
Continuing Banks
----------------
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ Stephen B. King
------------------------------------
Name: Stephen B. King
Title: Vice President
60 Wall Street, 22nd Floor
New York, New York 10260-0060
Telecopy No.: (212) 648-5336
Telex No.: 177615 MGT UT or
620106 MGT UW
Domestic Lending Office
-----------------------
500 Stanton Christiana Road
Newark, Delaware 19713
Attn: Multi-Option Unit -
Loan Department
Telephone No: (302) 634-1800
Telecopy No.: (302) 634-1094
Telex No.: 177425MBDEL UT
Eurodollar Lending Office
-------------------------
Nassau, Bahamas Office
c/o J. P. Morgan Services Inc.
Euro-Loan Servicing Unit
500 Stanton Christiana Road
Newark, Delaware 19713
Telephone No: (302) 634-1800
Telecopy No.: (302) 634-1094
Telex No.: 177425 MBDEL UT
Commitment: $52,000,000
<PAGE> 112
Continuing Banks
----------------
NATIONSBANK OF TEXAS, N.A.
By: /s/ Neill P. Davis
------------------------------------
Name: Neill P. Davis
Title: Senior Vice President
700 Louisiana, 8th Floor
Houston, Texas 77002
Telecopy No.: (713) 247-6719
Telex No.: N/A
Domestic Lending Office
-----------------------
NationsBank of Texas, N.A.
Attn: Rhonda Howell (67th Floor)
901 Main Street
Dallas, Texas 75202
Telecopy: (214) 508-0944
Eurodollar Lending Office
-------------------------
NationsBank of Texas, N.A.
Attn: Rhonda Howell (67th Floor)
901 Main Street
Dallas, Texas 75202
Telecopy: (214) 508-0944
Commitment: $52,000,000
<PAGE> 113
Continuing Banks
----------------
NATIONAL WESTMINSTER BANK PLC
By: /s/ Stephen R. Parker
------------------------------------
Name: Stephen R. Parker
Title: Vice President, New York Branch
By: /s/ Stephen R. Parker
------------------------------------
Name: Stephen R. Parker
Title: Vice President, Nassau Branch
175 Water Street
New York, New York 10038
Telecopy No.: (212) 602-4118
Telex No.: N/A
Domestic Lending Office
-----------------------
Manager and Vice President
New York Branch
175 Water Street
New York, New York 10038
Telecopy No.: (212) 602-4118
Eurodollar Lending Office
-------------------------
Manager and Vice President
Nassau Branch
175 Water Street
New York, New York 10038
Telecopy No.: (212) 602-4118
Commitment: $40,000,000
<PAGE> 114
Continuing Banks
----------------
SOCIETE GENERALE,
SOUTHWEST AGENCY
By: /s/ Thierry Namuroy
------------------------------------
Name: Thierry Namuroy
Title: Vice President
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Telecopy No.: (214) 754-0171
Telex No.: TRT 170494/SOCGEN
Domestic Lending Office
-----------------------
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Eurodollar Lending Office
-------------------------
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Commitment: $40,000,000
<PAGE> 115
Continuing Banks
----------------
THE SUMITOMO BANK, LIMITED
By: /s/ Tatsuo Ueda
------------------------------------
Name: Tatsuo Ueda
Title: General Manager
1750 NationsBank Center
700 Louisiana Street
Houston, Texas 77002
Telecopy No.: (713) 759-0020
Telex No.: 774417
Domestic Lending Office
-----------------------
1750 NationsBank Center
700 Louisiana Street
Houston, Texas 77002
Eurodollar Lending Office
-------------------------
1750 NationsBank Center
700 Louisiana Street
Houston, Texas 77002
Commitment: $28,000,000
<PAGE> 116
Continuing Banks
----------------
TRUST COMPANY BANK
By: /s/ F. McClellan Deaver, III
------------------------------------
Name: F. McClellan Deaver, III
Title: Vice President
Telecopy No.: (212)546-9675
Telex No.: 424690/6801388
Domestic Lending Office
-----------------------
375 Park Avenue
New York, New York 10152
Eurodollar Lending Office
-------------------------
375 Park Avenue
New York, New York 10152
Commitment: $18,000,000
<PAGE> 117
Continuing Banks
----------------
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION
By: /s/ Jay A. Schwartz
-----------------------------------
Name: Jay A. Schwartz
Title: Vice President
712 Main Street
Houston, Texas 77002
Telecopy No.: (713) 654-2339
Telex No.: 166-350 TCB Hou
Domestic Lending Office
712 Main Street
Houston, Texas 77002
Eurodollar Lending Office
712 Main Street
Houston, Texas 77002
Commitment: $52,000,000
<PAGE> 118
Continuing Banks
----------------
TORONTO DOMINION [TEXAS], INC.
By: /s/ Lisa Allison
-----------------------------------
Name: Lisa Allison
Title: Vice President
909 Fannin Street, Suite 1700
Houston, Texas 77010
Telecopy No.: (713) 951-9921
Telex No.: N/A
Domestic Lending Office
909 Fannin Street, Suite 1700
Houston, Texas 77010
Eurodollar Lending Office
909 Fannin Street, Suite 1700
Houston, Texas 77010
Commitment: $28,000,000
<PAGE> 119
Continuing Banks
----------------
UNION BANK OF SWITZERLAND,
HOUSTON AGENCY
By: /s/ Alfred W. Imholz
-----------------------------------
Name: Alfred W. Imholz
Title: Managing Director
By: /s/ Jan Buettgen
-----------------------------------
Name: Jan Buettgen
Title: Vice President, Corporate Banking
1100 Louisiana, Suite 4500
Houston, Texas 77002
Telecopy No.: (713) 655-6555
Telex No.: 762597 UBS HOU
Domestic Lending Office
299 Park Avenue
New York, New York 10017
Attn: Florence Reyes
Telecopy: (212) 715-3259
Eurodollar Lending Office
299 Park Avenue
New York, New York 10017
Attn: Florence Reyes
Telecopy: (212) 715-3259
Commitment: $40,000,000
<PAGE> 120
Continuing Banks
----------------
WACHOVIA BANK OF GEORGIA, N.A.
By: /s/ David L. Gaines
-----------------------------------
Name: David L. Gaines
Title: Senior Vice President
191 Peachtree Street, NE
Atlanta, Georgia 30303
Telecopy No.: (404) 332-6898
Telex No.:
Domestic Lending Office
191 Peachtree Street, NE
Atlanta, Georgia 30303
Eurodollar Lending Office
191 Peachtree Street, NE
Atlanta, Georgia 30303
Commitment: $28,000,000
<PAGE> 121
New Banks
---------
COMMERZBANK AKTIENGESELLSCHAFT,
ATLANTA AGENCY
By: /s/ Eric Kagerer
-----------------------------------
Name: Eric Kagerer
Title: Asst. V.P.
By: /s/ Carmen Aguilera
-----------------------------------
Name: Carmen Aguilera
Title: Asst. Treasurer
Promenade Two, Suite 3500
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
Telecopy No.: (404) 888-6539
Telex No.:
Domestic Lending Office
Eurodollar Lending Office
Commitment: $18,000,000
<PAGE> 122
New Banks
---------
CREDITO ITALIANO
By: /s/ Bruno Fornelli
-----------------------------------
Name: Bruno Fornelli
Title: First Vice President
By: /s/ Pierluigi Mainardi
-----------------------------------
Name: Pierluigi Mainardi
Title: Assistant Treasurer
375 Park Avenue
New York, New York 10152
Telecopy No.: (212) 546-9675
Telex No.: 424690/6801388
Domestic Lending office
375 Park Avenue
New York, New York 10152
Eurodollar Lending Office
375 Park Avenue
New York, New York 10152
Commitment: $18,000,000
<PAGE> 123
New Banks
---------
THE SANWA BANK LIMITED,
DALLAS AGENCY
By: /s/ Matthew G. Patrick
------------------------------------
Name: Matthew G. Patrick
Title: Vice President
901 Main Street, Suite 2830, LB 165
Dallas, Texas 75202-3714
Telecopy No.:
Telex No.:
Domestic Lending Office
-----------------------
901 Main Street, Suite 2830, LB 165
Dallas, Texas 75202-3714
Eurodollar Lending Office
-------------------------
901 Main Street, Suite 2830, LB 165
Dallas, Texas 75202-3714
Commitment: $18,000,000
<PAGE> 124
New Banks
---------
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK BRANCH
By: /s/ S. Battinelli
------------------------------------
Name: S. Battinelli
Title: V.P.
By: /s/ Richard R. Newman
------------------------------------
Name: Richard R. Newman
Title: Vice President
1211 Avenue of the Americas
New York, New York 10036
Telecopy No.: (212) 852-6307
Telex No.: 666668
Domestic Lending Office
-----------------------
1211 Avenue of the Americas
New York, New York 10036
Eurodollar Lending Office
-------------------------
1211 Avenue of the Americas
New York, New York 10036
Commitment: $18,000,000
<PAGE> 125
Retiring Banks
--------------
BANK OF NOVA SCOTIA
By: /s/ F.C.H. Ashby
-----------------------------------
Name: F.C.H. Ashby
Title: Senior Manager Loan Operations
<PAGE> 126
Retiring Banks
--------------
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Charles C. Woodard
-----------------------------------
Name: Charles C. Woodard
Title: Managing Director
<PAGE> 127
Retiring Banks
--------------
J.P. MORGAN DELAWARE
By: /s/ Philip S. Detjeas
-----------------------------------
Name: Philip S. Detjeas
Title: Vice President
<PAGE> 128
Retiring Banks
--------------
NBD BANK, N.A.
By: /s/ Larry E. Schuster
-----------------------------------
Name: Larry E. Schuster
Title: Vice President
<PAGE> 129
Retiring Banks
--------------
ROYAL BANK OF CANADA
By: /s/ Tom J. Oberaigner
-----------------------------------
Name: Tom J. Oberaigner
Title: Manager
<PAGE> 130
Retiring Banks
--------------
SHAWMUT BANK, N.A.
By: /s/ Robert D. Lanigan
-----------------------------------
Name: Robert D. Lanigan
Title: Managing Director
<PAGE> 131
EXHIBIT 1.01A
ADMINISTRATIVE QUESTIONNAIRE
BROWNING FERRIS INDUSTRIES, INC.
SECOND AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
NOTE TO PARTICIPANTS:
PLEASE TYPE ALL INFORMATION AND
FORWARD THIS COMPLETED TO:
Administrative Agent: Texas Commerce Bank National
Association 712 Main Street
Houston, Texas 77002
Attention: Loan Syndications
Telecopier: 713-216-2291
Full Legal Name of your Bank: _________________________________________
Exact name of signing officer: _________________________________________
Title of signing officer: _________________________________________
Business address for delivery of
execution copies of Credit Agreement
(Please do not use P.O. Box address;
hand deliveries cannot be made): _________________________________________
Signing officer's phone no.: _________________________________________
Alternate officer contact: _________________________________________
Alternate officer's phone no.: _________________________________________
Lending Offices:
Name and Address of Domestic _________________________________________
Lending Office _________________________________________
Name and Address of Eurodollar _________________________________________
Lending Office _________________________________________
<PAGE> 132
PRIMARY CONTACT INFORMATION
We will send all telecopies to a single number (the Primary or Alternate
Contact number listed below) at the banking location you designate. These
contacts are those you designate for critical telecopies (rates, loan amounts,
paydowns, etc.).
1. Your bank's primary contact for telecopies:
<TABLE>
<CAPTION>
PRIMARY NAME/ PRIMARY ALTERNATE
PHONE NO. DEPARTMENT TELECOPIER NO. TELECOPIER NO.
--------- ---------- -------------- --------------
<C> <C> <C> <C>
PRIMARY NAME/ PRIMARY ALTERNATE
PHONE NO. DEPARTMENT TELECOPIER NO. TELECOPIER NO.
--------- ---------- -------------- --------------
<C> <C> <C> <C>
</TABLE>
2. While we will send all telecopies to a single telecopy number, we can
also indicate that up to two additional individuals should be
carbon-copied when the telecopy arrives at your bank. Please
designate the individuals and departments you would like such copies
to be sent to (Note: they must be at the same location):
Name Department
(1)_____________________________________ ___________________________________
(2)_____________________________________ ___________________________________
(If at any time any of the above information changes, please advise.)
Hard-copy documents, and notices should be sent to the following officer
designated by your bank:
-2-
<PAGE> 133
Officer's Name: __________________________________________
Title: __________________________________________
Street Address
(No P.O. Boxes please): __________________________________________
City, State, Zip: __________________________________________
GENERAL OPERATIONAL INFORMATION
Operating Contacts: Name Phone No.
Loan Department: _______________________ _______________________
Loan Administrator: _______________________ _______________________
Telex Operator: _______________________ _______________________
Other: _______________________ _______________________
Movement of Funds: to us: Wire Fed Funds to:
Texas Commerce Bank National Association
ABA # 113000609
for account number 13681
Attention: Loan Operations
Reference: Browning-Ferris Industries, Inc.
to you: Wire Fed Funds to:
________________________________________
________________________________________
Attention: _____________________________
Reference: _____________________________
Publicity: How would you like your bank's name to appear in any
tombstone advertisements?
-3-
<PAGE> 134
PLEASE COMPLETE THE FOLLOWING INFORMATION
FOR COMPETITIVE AUCTIONS ONLY
Auction Administration Agent: Chemical Bank
140 East 45th Street, 29th Floor
New York, New York 10017
Attn: Agent Bank Services
Telecopier: (212) 622-0854 Primary
Contacts: Janet Belden (212) 622-0011 Agent Bank Services
PRIMARY CONTACT
COMPETITIVE AUCTIONS
Bank Name:______________________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________________
Primary Contact:________________________________________________________________
Title:__________________________________________________________________________
Department:_____________________________________________________________________
Telephone Number:_______________________________________________________________
Telecopier Number:______________________________________________________________
ALTERNATE CONTACT
COMPETITIVE AUCTIONS
Alternate Contact:______________________________________________________________
Title:__________________________________________________________________________
Department:_____________________________________________________________________
Telephone Number:_______________________________________________________________
Telecopier Number:______________________________________________________________
-4-
<PAGE> 135
Exhibit 1.01B
FORM OF COMMITTED NOTE
______________
FOR VALUE RECEIVED, the undersigned, ________________________,
a ______________ corporation (the "Borrower"), HEREBY PROMISES TO PAY to the
order of
(the "Bank") on or before the Termination Date the lesser of (a) the amount of
the Bank's Commitment and (b) the aggregate amount of Committed Loans made by
the Bank to the Borrower and outstanding on the Termination Date. Subject to
the limitations of the Credit Agreement (as hereinafter defined), the Borrower
may borrow, repay, prepay and reborrow hereunder and under the Credit
Agreement, on and after the Effective Date and prior to the Termination Date.
The principal amount of each Committed Loan made by the Bank to the Borrower
pursuant to the Credit Agreement shall be due and payable on the Termination
Date.
The Borrower promises to pay interest on the unpaid principal
amount of each Committed Loan from the date of such Committed Loan until such
principal amount is paid in full, at such interest rates, and payable at such
dates and times, as are specified in the Second Amended and Restated Revolving
Credit Agreement dated as of May 31, 1995 (as the same may from time to time be
amended, modified or supplemented, the "Credit Agreement," the terms defined
therein and not otherwise defined herein being used herein as therein defined)
among the Borrower, the other Borrowers, the Bank and certain other banks
parties thereto, Credit Suisse, as Documentation Agent, Chemical Bank, as
Auction Administration Agent, Texas Commerce Bank National Association, as
Administrative Agent, and Bank of America National Trust and Savings
Association, Morgan Guaranty Trust Company of New York and NationsBank of
Texas, N.A., as Co-Agents, for the Bank and such other banks.
Both principal and interest are payable in immediately
available funds in lawful money of the United States of America to Texas
Commerce Bank National Association, as Administrative Agent, at 1111 Fannin,
Houston, Texas, or at such other place as the Administrative Agent shall
designate in writing to the Borrower. The amount and type of each Committed
Loan made by the Bank to the Borrower and the borrowing date and maturity
thereof, the rate of interest applicable thereto and all payments made on
account of principal and interest hereof, shall be recorded by the Bank and,
prior to any transfer hereof, endorsed on the grid attached hereto which is
part of this Promissory Note; provided, that the failure of the Bank to make
such a notation or any error therein shall not in any manner affect the
obligation of the Borrower to repay such Committed Loan in accordance with the
terms of this Promissory Note.
This Promissory Note may be held by the Bank for the account
of its Domestic Lending Office or its Eurodollar Lending Office and may be
transferred from one to the other from time to time as the Bank may determine.
<PAGE> 136
This Promissory Note is one of the Committed Notes referred to
in, and is entitled to the benefits of, the Credit Agreement. [To be inserted
in notes executed by Borrowers other than the Company: The obligations of the
Borrowers hereunder are guaranteed by the Guaranty.] The Credit Agreement,
among other things, (a) provides for the making of Committed Loans and
Competitive Loans by the Bank to the Borrower from time to time, the
indebtedness of the Borrower resulting from each such Committed Loan being
evidenced by this Promissory Note, and (b) contains provisions for acceleration
of the maturity hereof upon the happening of certain stated events, also for
prepayments on account of principal hereof prior to the maturity hereof upon
the terms and conditions therein specified, and to the effect that no provision
of the Credit Agreement or this Promissory Note shall require the payment or
permit the collection of interest in excess of the Highest Lawful Rate.
The Borrower and any and all endorsers, guarantors and
sureties severally waive grace, demand, presentment for payment, notice of
dishonor or default or intent to accelerate, protest and notice of protest and
diligence in collecting and bringing of suit against any party hereto, and
agree to all renewals, extensions or partial payments hereon and to any release
or substitution of security herefor, in whole or in part, with or without
notice, before or after maturity.
This Promissory Note shall be governed by, and construed in
accordance with, the laws of the State of Texas, and any applicable laws of the
United States of America.
[NAME OF BORROWER]
By:___________________________________
Name:
Title:
-2-
<PAGE> 137
LOANS, MATURITIES,
AND PAYMENTS OF PRINCIPAL AND INTEREST
<TABLE>
<CAPTION>
Rate of
Amount Interest Amount of Amount of Unpaid
Borrowing and Type of Maturity of Applicable to Principal Interest Principal Notation
Date Loan Loan Loan Paid Paid Balance Made By
========= =========== =========== ============= ========= ========= ========= ========
<S> <C> <C> <C> <C> <C> <C> <C>
- --------- ----------- ----------- ------------- --------- --------- --------- --------
- --------- ----------- ----------- ------------- --------- --------- --------- --------
- --------- ----------- ----------- ------------- --------- --------- --------- --------
- --------- ----------- ----------- ------------- --------- --------- --------- --------
- --------- ----------- ----------- ------------- --------- --------- --------- --------
- --------- ----------- ----------- ------------- --------- --------- --------- --------
- --------- ----------- ----------- ------------- --------- --------- --------- --------
- --------- ----------- ----------- ------------- --------- --------- --------- --------
- --------- ----------- ----------- ------------- --------- --------- --------- --------
- --------- ----------- ----------- ------------- --------- --------- --------- --------
- --------- ----------- ----------- ------------- --------- --------- --------- --------
- --------- ----------- ----------- ------------- --------- --------- --------- --------
- --------- ----------- ----------- ------------- --------- --------- --------- --------
- --------- ----------- ----------- ------------- --------- --------- --------- --------
- --------- ----------- ----------- ------------- --------- --------- --------- --------
</TABLE>
-3-
<PAGE> 138
Exhibit 1.01C
FORM OF COMPETITIVE NOTE
$1,000,000,000 _______________
FOR VALUE RECEIVED, the undersigned, _________________________
_____________________________, a _______________ corporation (the "Borrower"),
HEREBY PROMISES TO PAY to the order of
(the "Bank") on or before the Termination Date the lesser of (a) One Billion
and no/100 Dollars ($1,000,000,000.00) and (b) the aggregate amount of
Competitive Loans made by the Bank to the Borrower and outstanding on the
Termination Date. Subject to the limitations of the Credit Agreement (as
hereinafter defined), the Borrower may borrow, repay, and reborrow hereunder
and under the Credit Agreement, on and after the Effective Date and prior to
the Termination Date. The principal amount of each Competitive Loan made by
the Bank to the Borrower pursuant to the Credit Agreement shall be due and
payable on the last day of the Interest Period for such Loan.
The Borrower promises to pay interest on the unpaid principal
amount of each Competitive Loan from the date of such Competitive Loan until
such principal amount is paid in full, at such interest rates, and payable at
such dates and times, as are specified in the Second Amended and Restated
Revolving Credit Agreement dated as of May 31, 1995, (as the same may from time
to time be amended, modified or supplemented, the "Credit Agreement," the terms
defined therein and not otherwise defined herein being used herein as therein
defined) among the Borrower, the other Borrowers, the Bank and certain other
banks parties thereto, Credit Suisse, as Documentation Agent, Chemical Bank, as
Auction Administration Agent, Texas Commerce Bank National Association, as
Administrative Agent, and Bank of America National Trust and Savings
Association, Morgan Guaranty Trust Company of New York and NationsBank of
Texas, N.A., as Co-Agents, for the Bank and such other banks.
Both principal and interest are payable in immediately available
funds in lawful money of the United States of America to Texas Commerce Bank
National Association, as Administrative Agent, at 1111 Fannin , Houston, Texas,
or at such other place as the Administrative Agent shall designate in writing
to the Borrower. The amount and type of each Competitive Loan made by the Bank
to the Borrower and the borrowing date and maturity thereof, the rate of
interest applicable thereto and all payments made on account of principal and
interest hereof, shall be recorded by the Bank and, prior to any transfer
hereof, endorsed on the grid attached hereto which is part of this Promissory
Note; provided, that the failure of the Bank to make such a notation or any
error therein shall not in any manner affect the obligation of the Borrower to
repay such Competitive Loan in accordance with the terms of this Promissory
Note.
This Promissory Note may be held by the Bank for the account of
its Domestic Lending Office or its Eurodollar Lending Office and may be
transferred from one to the other from time to time as the Bank may determine.
<PAGE> 139
This Promissory Note is one of the Competitive Notes referred to
in, and is entitled to the benefits of, the Credit Agreement. [To be inserted
in notes executed by Borrowers other than the Company: The obligations of the
Borrower hereunder are guaranteed by the Guaranty.] The Credit Agreement,
among other things, (a) provides for the making of Committed Loans and
Competitive Loans by the Bank to the Borrower from time to time, the
indebtedness of the Borrower resulting from each such Competitive Loan being
evidenced by this Promissory Note, and (b) contains provisions for acceleration
of the maturity hereof upon the happening of certain stated events, also for
prepayments on account of principal hereof prior to the maturity hereof upon
the terms and conditions therein specified, and to the effect that no provision
of the Credit Agreement or this Promissory Note shall require the payment or
permit the collection of interest in excess of the Highest Lawful Rate.
The Borrower and any and all endorsers, guarantors and sureties
severally waive grace, demand, presentment for payment, notice of dishonor or
default or intent to accelerate, protest and notice of protest and diligence in
collecting and bringing of suit against any party hereto, and agree to all
renewals, extensions or partial payments hereon and to any release or
substitution of security herefor, in whole or in part, with or without notice,
before or after maturity.
This Promissory Note shall be governed by, and construed in
accordance with, the laws of the State of Texas, without regard to principles
of conflicts of laws, and any applicable laws of the United States of America.
[NAME OF BORROWER]
By:___________________________________
Name:
Title:
-2-
<PAGE> 140
LOANS, MATURITIES,
AND PAYMENTS OF PRINCIPAL AND INTEREST
<TABLE>
<CAPTION>
Rate of
Amount Interest Amount of Amount of Unpaid
Borrowing and Type of Maturity of Applicable to Principal Interest Principal Notation
Date Loan Loan Loan Paid Paid Balance Made By
========= =========== =========== ============= ========= ========= ========= ========
<S> <C> <C> <C> <C> <C> <C> <C>
- --------- ----------- ----------- ------------- --------- --------- --------- --------
- --------- ----------- ----------- ------------- --------- --------- --------- --------
- --------- ----------- ----------- ------------- --------- --------- --------- --------
- --------- ----------- ----------- ------------- --------- --------- --------- --------
- --------- ----------- ----------- ------------- --------- --------- --------- --------
- --------- ----------- ----------- ------------- --------- --------- --------- --------
- --------- ----------- ----------- ------------- --------- --------- --------- --------
- --------- ----------- ----------- ------------- --------- --------- --------- --------
- --------- ----------- ----------- ------------- --------- --------- --------- --------
- --------- ----------- ----------- ------------- --------- --------- --------- --------
- --------- ----------- ----------- ------------- --------- --------- --------- --------
- --------- ----------- ----------- ------------- --------- --------- --------- --------
- --------- ----------- ----------- ------------- --------- --------- --------- --------
- --------- ----------- ----------- ------------- --------- --------- --------- --------
- --------- ----------- ----------- ------------- --------- --------- --------- --------
</TABLE>
-3-
<PAGE> 141
Exhibit 2.03A
FORM OF COMPETITIVE BID REQUEST
Texas Commerce Bank National Association,
as Administrative Agent for the Banks
parties to the Credit Agreement
referred to below
1111 Fannin, 9th Floor MS 46
Houston, Texas 77002
Attention: Capital Markets and Loan and Discount Department
Chemical Bank, as Auction Administration Agent
under the Credit Agreement referred to below
140 East 45th Street, 29th Fl.
New York, New York 10017 [Date]
Attention: Agent Bank Services
Dear Sirs:
Reference is made to the Second Amended and Restated Revolving
Credit Agreement dated as of May 31, 1995 (as the same may from time to time be
amended, modified or supplemented, the "Credit Agreement"), among the
undersigned, the other Borrowers, the Banks named therein, Credit Suisse, as
Documentation Agent, Texas Commerce Bank National Association, as
Administrative Agent, Chemical Bank, as Auction Administration Agent, and the
Co-Agents defined therein. Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such terms in the Credit
Agreement. The undersigned hereby gives you notice pursuant to Section 2.03 of
the Credit Agreement that it requests a Competitive Borrowing under the Credit
Agreement, and in that connection sets forth below the terms on which such
Competitive Borrowing is requested to be made:
(A) Borrowing Date of Competitive
Borrowing (which is a Business Day) ________________________________
(B) Aggregate Principal Amount of
Competitive Borrowing(1) ________________________________
(C) Interest rate basis(2) ________________________________
(D) Interest Period and the last
day thereof ________________________________
(3)
__________________________________
(1) Not less than $50,000,000 or greater than the unused Total Commitment and
in integral multiples of $1,000,000.
(2) Eurodollar Loan or Fixed Rate Loan.
(3) Which shall have a duration (i) in the case of a Eurodollar Loan, of one,
two, three or six months and (ii) in the case of Fixed Rate Loan, of not
less than seven days nor more than 360 days, and which, in either case,
shall end not later than the Termination Date.
<PAGE> 142
By the delivery of this Competitive Bid Request and the
acceptance of any or all of the Loans offered by the Banks in response to this
Competitive Bid Request, the undersigned, and the Company, if not the
undersigned, shall be deemed to have represented and warranted that the
applicable conditions to lending specified in Article III of the Credit
Agreement have been satisfied with respect to the Competitive Borrowing
requested hereby.
Very truly yours,
[NAME OF BORROWER]
By:____________________________________
Name:
Title:
BROWNING-FERRIS INDUSTRIES, INC.(4)
By:____________________________________
Name:
Title:
__________________________________
(4) If the Borrower is not the Company, a signature block for the Company
should be added.
-2-
<PAGE> 143
Exhibit 2.03B
FORM OF NOTICE TO BANKS OF COMPETITIVE BID REQUEST
[Name of Bank]
[Address of Bank]
[Date]
Attention:
Dear Sirs:
Reference is made to the Second Amended and Restated Revolving
Credit Agreement dated as of May 31, 1995 (as the same may from time to time
be amended, modified or supplemented, the "Credit Agreement"), among Browning-
Ferris Industries, Inc. (the "Company"), the other Borrowers, the Banks named
therein, Credit Suisse, as Documentation Agent, Texas Commerce Bank National
Association, as Administrative Agent, the Co-Agents (defined therein), and the
undersigned, as Auction Administration Agent. Capitalized terms used herein
and not otherwise defined herein shall have the meanings assigned to such terms
in the Credit Agreement. ____________________________________________________
1/ delivered a Competitive Bid Request requesting a Competitive Bid on
__________, 19__ pursuant to Section 2.03(a) of the Credit Agreement, and in
that connection you are invited to submit a Competitive Bid by [Date] / [Time].
2/ Your Competitive Bid must comply with Section 2.03(b) of the Credit Agreement
and the terms set forth below on which the Competitive Bid Request was made:
(A) Date of Competitive Borrowing ___________________________________
(B) Principal amount of
Competitive Borrowing ___________________________________
(C) Interest rate basis ___________________________________
(D) Interest Period and the last
day thereof3/ ___________________________________
Very truly yours,
CHEMICAL BANK, as Auction
Administration Agent
By: _______________________________
Name:
Title:
1/ Either the Company or [name of another Borrower], is appropriate
2/ The Competitive Bid must be received by the Auction Administration
Agent (i) in the case of Eurodollar Loans, not later than 1:00 p.m.
Houston, Texas time, four Business Days before a proposed Competitive
Borrowing, and (ii) in the case of Fixed Rate Loans, not later than
9:00 a.m., Houston, Texas time, on the Borrowing Date of a proposed
Competitive Borrowing.
3/ Which may not be a date later than the Termination Date.
<PAGE> 144
Exhibit 2.21
BORROWING SUBSIDIARY COUNTERPART
Date: _____________, ____
To the Banks and the Agents
Referred to Below
c/o Texas Commerce Bank National
Association, as Administrative Agent
712 Main Street
Houston, Texas 77002
Ladies and Gentlemen:
Reference is made to the Second Amended and Restated Revolving
Credit Agreement, dated as of May 31, 1995 (as from time to time amended, the
"Credit Agreement") among Browning-Ferris Industries, Inc. (the "Company"), the
other Borrowers defined therein, if any, Credit Suisse, as Documentation Agent,
Texas Commerce Bank National Association, as Administrative Agent, Chemical
Bank, as Auction Administration Agent and the Co-Agents defined therein. All
capitalized terms used but not defined herein shall have the meaning set forth
in the Credit Agreement.
The Company and ____________________ (the "Designated
Borrowing Subsidiary") (i) confirm that the Designated Borrowing Subsidiary is
a Wholly-Owned Subsidiary and (ii) make the representations and warranties as
to the Designated Borrowing Subsidiary contained in Article IV of the Credit
Agreement. The Designated Borrowing Subsidiary hereby agrees to be bound in
all respects by the terms of the Credit Agreement, including without
limitation, Article VI thereof and to perform all of the obligations of a
Borrowing Subsidiary thereunder.
The Company hereby ratifies and confirms the Guaranty with
respect to all Loans made by any Bank to the Designated Borrowing Subsidiary.
The address to which communications to the Designated
Borrowing Subsidiary under the Credit Agreement should be directed is:
______________________________________________________. This instrument shall
be construed in accordance with and governed by the laws of the State of Texas.
Loan proceeds should be deposited to the undersigned's account
___________________________________.
Upon the execution of this Borrowing Subsidiary Counterpart by
the Designated Borrowing Subsidiary, and the acceptance by the Administrative
Agent, the Designated Borrowing Subsidiary shall become a Borrowing Subsidiary
under the Credit Agreement as though it was an
<PAGE> 145
Texas Commerce Bank
National Association
as Administrative Agent
Page Two
original party thereto and shall be entitled to borrow under the Credit
Agreement upon the satisfaction of the conditions precedent set forth in
Section 3.01, Section 3.02, Section 3.03 and Section 3.04 of the Credit
Agreement.
Very truly yours,
[DESIGNATED BORROWING SUBSIDIARY]
By:___________________________________
Name:
Title:
Accepted as of the date first above written.
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Administrative Agent
By; __________________________________
Name:
Title:
<PAGE> 146
Exhibit 2.03C
FORM OF COMPETITIVE BID
Chemical Bank, as Auction Administration
Agent for the Banks referred to below
140 East 45th Street, 29th Fl.
New York, New York 10017 [Date]
Attention: Agent Bank Services
Dear Sirs:
The undersigned, [Name of Bank], refers to the Second Amended
and Restated Revolving Credit Agreement dated as of May 31, 1995 (as the same
may from time to time be amended, modified or supplemented, the "Credit
Agreement"), among Browning-Ferris Industries, Inc. (the "Company"), the other
Borrowers, the Banks named therein, Credit Suisse, as Documentation Agent,
Texas Commerce Bank National Association, as Administrative Agent, Chemical
Bank, as Auction Administration Agent, and the Co-Agents (defined therein).
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement. The undersigned
hereby makes a Competitive Bid pursuant to Section 2.03(b) of the Credit
Agreement, in response to the Competitive Bid Request made by ____________1/ on
_______, 19__, and in that connection sets forth below the terms on which such
Competitive Bid is made:
(A) Principal Amount 2/ ________________________________________
(B) Competitive Bid Rate 3/ ________________________________________
(C) Interest Period and
the last day thereof 4/ ________________________________________
The undersigned hereby confirms that it is prepared to extend
credit to ______________1/ upon acceptance by ____________1/ of this bid in
accordance with Section 2.03(d) of the Credit Agreement.
Very truly yours,
[NAME OF BANK]
By: ________________________________
Name:
Title:
__________________________
1/ Either the Company or (name of another Borrower), as appropriate
2/ Not less than $25,000,000 or greater than the requested Competitive
Borrowing and in integral multiples of $10,000,000 above said
$25,000,000. Multiple bids will be accepted by the Auction
Administration Agent.
3/ i.e. LIBO Rate + or - _____%, in the case of Eurodollar Loans, or
_____%, in the case of Fixed Rate Loan (in each case, expressed in the
form of a decimal to no more than four decimal places).
4/ The Interest Period must be the Interest Perid specified in the
Competitive Bid Request.
<PAGE> 147
Exhibit 2.04
FORM OF COMMITTED BORROWING REQUEST
Texas Commerce Bank National Association,
as Administrative Agent for
the Banks parties to the Credit Agreement
referred to below
1111 Fannin, 9th Floor MS 46
Houston, Texas 77002
Attention: Capital Markets and Loan and Discount Department
[Date]
Dear Sirs:
Reference is made to the Second Amended and Restated Revolving
Credit Agreement dated as of May 31, 1995 (as the same may from time to time be
amended, modified or supplemented, the "Credit Agreement"), among the
undersigned, the other Borrowers, the Banks named therein, Credit Suisse, as
Documentation Agent, Texas Commerce Bank National Association, as
Administrative Agent, Chemical Bank, as Auction Administration Agent, and the
Co-Agents (defined therein). Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such terms in the Credit
Agreement. The undersigned hereby gives you notice pursuant to Section 2.04 of
the Credit Agreement that it requests a Committed Borrowing under the Credit
Agreement, and in that connection sets forth below the terms on which such
Committed Borrowing is requested to be made:
(A) Borrowing Date of Committed
Borrowing (which is a Business Day) _______________________________
(B) Aggregate Principal Amount of
Committed Borrowing _______________________________
(C) Interest rate basis _______________________________
(D) Interest Period and the last
day thereof _______________________________
By each of the delivery of this Committed Borrowing Request
and the acceptance of any or all of the Loans made by the Banks in response to
this request, the undersigned and the Company, if not the undersigned, shall be
deemed to have represented and warranted that the conditions to lending
specified in Article III of the Credit Agreement have been satisfied with
respect to the Committed Borrowing requested hereby.
Very truly yours,
[NAME OF BORROWER]
By: _________________________________
Name:
Title:
BROWNING-FERRIS INDUSTRIES, INC.
By: _________________________________
Name:
Title:
<PAGE> 148
Exhibit 3.01-A
[Browning-Ferris Industries]
_________________________, 1995
The Banks and Agents
Referred to Below
c/o Texas Commerce Bank National
Association, as Administrative Agent
712 Main Street
Houston, Texas 77002
Gentlemen:
This opinion is furnished pursuant to Section 3.01(g) of the
Second Amended and Restated Revolving Credit Agreement, dated as of May 31,
1995 (the "Agreement"), among Browning-Ferris Industries, Inc., a Delaware
corporation (the "Company"), the Retiring Bank defined therein,the other
financial institutions therein referred to (the "Banks"), Credit Suisse, as
documentation agent (the "Documentation Agent"), Texas Commerce Bank National
Association, as administrative agent for the Banks (the "Administrative
Agent"), Chemical Bank, as auction administration agent (the "Auction
Administration Agent") and the Co-Agents defined therein. Capitalized terms
defined in the Agreement have the same meanings in this opinion unless
otherwise defined herein.
I am Associate General Counsel of the Company, and solely in
such capacity have examined, either personally or through attorneys under my
supervision, originals, or copies certified to my or their satisfaction, of the
Agreement, the Notes executed and delivered by the Company on the date hereof
(the "Notes"), the letter agreement between the Company and the Administrative
Agent (the "Administrative Agent's Letter"), the letter agreement between the
Company and the Auction Administration Agent (the "Auction Administration
Agent's Letter") and such other corporate records, certificates of corporate
officials as to certain matters of fact, and instruments and documents as I or
they have deemed necessary or advisable as a basis for the opinions set forth
herein. The Agreement, the Notes, the Administrative Agent's Letter and the
Auction Administration Agent's Letter are sometimes collectively referred to as
the "Credit Documents."
<PAGE> 149
The Banks and Agents
Page 2
In such examination, I have assumed (i) the genuineness of all
signatures (other than the signatures of Persons signing on behalf of the
Company), the authenticity and completeness of all documents, certificates,
instruments and records submitted to me as originals and the conformity to the
original instruments of all documents submitted to me as copies, and the
authenticity and completeness of the originals of such copies, (ii) the due
authorization, execution and delivery by each of the Agents and the Banks of
the Credit Documents to which they are a party, (iii) that each of the Agents
and the Banks has all requisite power and authority to execute, deliver and
perform the Credit Documents to which they are a party and (iv) the
enforceability of the Agreement and the Bank Letter against each of the Banks.
In addition, in rendering this opinion, I have relied upon, as
to certain matters of fact, certificates of officers of the Company and
certificates or telegrams of public officials, without any independent
investigation of such matters.
Based upon the foregoing and relying upon the correctness of
all statements of fact contained in the documents, certificates and records
that I have examined either personally or through attorneys under my
supervision, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, I am of the opinion that:
1. The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware,
and is duly qualified to do business in each jurisdiction in which the
character or location of its properties or the nature or conduct of its
business makes such qualification necessary, except for those jurisdictions
where the failure to be so qualified would not have a material adverse effect
on the consolidated financial condition of the Company and its Subsidiaries,
taken as a whole. Each Principal Subsidiary (determined as of September 30,
1994) is a corporation duly incorporated, validly existing and in good standing
under the laws of its state of incorporation. The Company and each Principal
Subsidiary have the corporate power to own their respective properties and to
carry on their respective businesses as now conducted.
2. The execution, delivery and performance by the
Company of the Credit Documents are within its corporate powers, have been duly
authorized by all necessary corporate action, and do not conflict with or
constitute a default under (i) the Restated Articles of Incorporation or the
Bylaws, as amended, of the Company, or (ii) any law, rule, regulation, order or
judgment or contractual restriction of the Company known to me, the violation
of which would have a material adverse effect on the Company and its
Subsidiaries on a consolidated basis.
3. No authorization or approval or other action by, and
no notice to or filing with, any governmental authority or regulatory body is
required by the laws of the State of Texas,
<PAGE> 150
The Banks and Agents
Page 3
the corporation laws of the State of Delaware or, to my knowledge, the federal
laws of the United States of America for the due execution, delivery and
performance by the Company of the Credit Documents, provided that I express no
opinion as to the applicability of federal or state blue sky or securities
laws, rules or regulations.
4. The Credit Documents have been duly and validly
executed by the Company.
5. The Agreement, the Administrative Agent's Letter and
the Auction Administration Agent's Letter constitute and, upon the making of
the initial Loan to the Company under the Notes, the Notes will constitute
valid and binding obligations of the Company, each of which is enforceable in
accordance with its respective terms. Upon the making of the initial Loan to a
Borrowing Subsidiary, the Guaranty will constitute a valid and binding
obligation of the Company enforceable in accordance with its terms.
6. To my knowledge, except as set forth in the Company's
Annual Report on Form 10-K for the fiscal year ended September 30, 1994 or in
the Company's Quarterly Reports on Form 10-Q for the fiscal quarter ended March
31, 1995, there are no legal or governmental proceedings or investigations
pending or threatened against the Company or any Subsidiary or any property of
the Company or any Subsidiary which individually or, to the extent involving
related claims, in the aggregate, involve a material risk of being resolved in
a manner that would have a material adverse effect on (i) the financial
condition of the Company and its Subsidiaries considered as a whole or (ii) the
ability of the Company to perform its obligations under the Credit Documents.
7. The Company is not an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, nor is the Company a "holding
company" or a "subsidiary company" of a "holding company" within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
In rendering the opinions expressed in paragraph 5 I have
assumed, with your approval and without independent investigation, the
following (except insofar as such assumptions could include the foregoing
opinions regarding the Company): (a) there are no fees, charges, points,
discounts, premiums or other additional considerations, amounts or benefits of
any nature contracted for, charged to or paid by, or to be charged to or paid
by, the Company or any other Person for the use or forbearance or detention of
money other than as expressly described and identified in the Credit Documents,
(b) other than as expressly set forth or referred to in the Credit Documents,
there are no other agreements, written or oral, for the contracting, charging
or payment of any amounts or giving of any benefits in each event by the
Company or any other Person to or for the benefit of the Administrative Agent,
any other Agent or any Bank, (c) notwithstanding the provisions in the Credit
Documents providing in certain instances for the computation of accrued
interest on the basis
<PAGE> 151
The Banks and Agents
Page 4
of the number of actual days elapsed over a 360-day year, such computation will
be made in regard to a year of 365 or 366 days, as the case may be, in the
event that the use of a 360-day computation will yield a rate of interest in
excess of the maximum nonusurious per annum rate of interest permitted by
applicable law ("Maximum Rate") or an amount of interest in excess of the
amount computed at the Maximum Rate, (d) for purposes of the Credit Documents
and the transactions evidenced thereby, the term "interest" includes the
aggregate of all fees, charges and other amounts which constitute or are deemed
to constitute compensation for the use or forbearance or detention of money or
"interest" under the laws of the State of Texas, (e) neither the Company nor
any other Person liable, directly or indirectly, for the payment of any Note or
any other indebtedness, obligations or liabilities arising under and in
connection with the Credit Documents shall ever be required to pay unearned
interest in respect of any such indebtedness, obligations or liabilities and
(f) all funds requested by the Company pursuant to the Credit Agreement will be
disbursed to the Company in the amount so requested, and the Company will have
full use of the funds borrowed pursuant to the Credit Agreement subject to the
permitted purposes for use of loan proceeds (to the extent any of the foregoing
is not correct, my opinion on enforceability are accordingly limited and
qualified).
The foregoing opinions are subject to the following
qualifications, limitations and exceptions:
(A) With respect to the opinion set forth in paragraph 5
above, I advise you that (i) the enforceability of the Credit Documents may be
limited by or affected by bankruptcy, insolvency, reorganization, moratorium or
similar laws now or hereafter in effect relating to creditors' rights generally
or providing for relief of debtors, including, without limitation, applicable
fraudulent transfer and fraudulent conveyance laws, (ii) the remedies of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses or principles or to the discretion of the court
before which any proceeding therefor may be brought, regardless of whether such
proceeding be deemed one in law or equity, (iii) rights to indemnity under the
Credit Documents may be limited by state or federal laws and the policies
underlying such laws and (iv) provisions of the Credit Documents which permit
any Agent, the Co-Agent or any Bank to take action or make determinations may
be subject to a requirement that such action be taken or such determination be
made on a reasonable basis and in good faith.
(B) I express no opinion with respect to the effect,
validity or enforceability of any term of any Credit Document purporting to (i)
establish evidentiary standards, (ii) waive statutory rights or remedies, (iii)
waive future laws or rights that may arise in the future or (iv) prohibit the
transfer, alienation, hypothecation or encumbrance of property.
<PAGE> 152
The Banks and Agents
Page 5
I am licensed to practice law in the State of Texas and I
express no opinion as to matters not governed by the federal laws of the United
States of America, the corporation laws of the State of Delaware or the laws of
the State of Texas.
The opinions expressed herein are for the sole benefit of, and
may only be relied upon by, the Agents, the Banks and any other holders of the
Notes or of any interest therein or in the Loans, and, without my prior written
consent, may not be relied upon in any manner by any other Person. This
opinion may not be furnished to any other Person without my prior written
consent, except that this opinion may be provided (i) to the independent
auditors and attorneys of each Agent and each Bank, (ii) to any state or
federal authority having regulatory jurisdiction over either Agent or any Bank,
as applicable, (iii) pursuant to an order or legal process of any court or
governmental agency, (iv) to any successor to either Agent or any Bank and (v)
in connection with any legal action to which either Agent or any Bank, as
applicable, is a party arising out of the Credit Documents or relating to the
transactions provided for therein. The opinions expressed herein are as of the
date hereof (and not as of any other date, including, without limitation, the
effective date of any Credit Document if a date other than the date hereof) and
I make no undertaking to amend or supplement such opinions as facts and
circumstances come to my attention or changes in the law occur which could
affect such opinions.
Very truly yours,
<PAGE> 153
Exhibit 3.01-B
[Letterhead of Andrews & Kurth]
_______________________, 1995
The Banks and the Agents
Referred to Below
c/o Texas Commerce Bank National
Association, as Administrative Agent
712 Main Street
Houston, Texas 77002
Gentlemen:
We have acted as special Texas counsel for Credit Suisse, as
documentation agent (the "Documentation Agent"), Texas Commerce Bank National
Association, as administrative agent (the "Administrative Agent"), Chemical
Bank, as auction administration agent (the "Auction Administration Agent") and
the Co-Agents (as defined in the Credit Agreement) in connection with the
Second Amended and Restated Revolving Credit Agreement dated as of May 31, 1995
(the "Credit Agreement") among Browning-Ferris Industries, Inc. (the
"Company"), the Documentation Agent, the Retiring Bank (as defined in the
Credit Agreement) and the other banks that are parties thereto (such other
banks being the "Banks"). This opinion is being rendered pursuant to Section
3.01(h) of the Credit Agreement. Capitalized terms used herein which are
defined in the Credit Agreement shall have the meanings specified therein
unless otherwise defined herein.
We have examined (a) counterparts of the Credit Agreement
executed by the Agents, the Co-Agents, the Company and each of the Banks and
(b) the Notes delivered by the Company to the Administrative Agent for the
account of the respective Banks on the date hereof pursuant to Section 3.01(b)
of the Credit Agreement (the "Notes"). We understand, and for purposes hereof
have assumed, that (i) the Credit Agreement and the Notes of the Company have
been duly authorized, executed and delivered by the Company and the Company has
the requisite power and authority to execute, deliver and perform such
instruments and (ii) the Credit Agreement has been duly authorized, executed
and delivered by the several Banks, the Agents and the Co-Agents, and that each
such Person has the requisite power and authority to execute, deliver and
perform the Credit Agreement.
<PAGE> 154
Based on the foregoing and having due regard for legal
considerations which we deem relevant, we are of the opinion that (a) the
Credit Agreement constitutes a valid, binding and enforceable obligation of the
Company, (b) upon the funding of the initial Loan to the Company, the Notes of
the Company will constitute valid, binding and enforceable obligations of the
Company and (c) upon the funding of the initial Loan to a Borrowing Subsidiary,
the Guaranty will constitute a valid, binding and enforceable obligation of the
Company.
The foregoing opinion is subject to the following
qualifications:
(A) The enforceability of the Credit Agreement and the
Notes may be limited by general principles of equity (whether considered at law
or in equity) and by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and similar laws affecting the enforcement of creditors'
rights generally.
(B) We express no opinion as to whether federal law
allows any of the Banks located in a state other than the State of Texas to
contract for, take, receive, reserve or charge interest in respect of the Loans
or the Notes (i) at a rate permitted by the laws of such other state but in
excess of the maximum rate permitted by the laws of the State of Texas or (ii)
at a rate permitted by the laws of the State of Texas but in excess of the
maximum rate permitted by the laws of such other state.
(C) We have not been called upon to, and accordingly do
not, express any opinion as to the various state and federal laws regulating
banks or the conduct of their business that may relate to the Credit Agreement
and the Notes and the transactions contemplated thereby. We express no opinion
as to the enforceability of (i) any indemnity provisions contained in the
Credit Agreement to the extent they conflict with pubic policy, (ii) any
severability provisions contained in the Credit Agreement and (iii) any
provision in the Credit Agreement or the Notes purporting to waive any defense
to the performance of contract obligations or any other right which, as a
matter of law, may not be effectively waived.
This opinion is limited in all respects to the laws of the
State of Texas and applicable federal law. This opinion is provided to you
solely for the purpose of complying with a condition set forth in the Credit
Agreement and, without our prior written consent, this opinion may not be
relied upon in any manner by any other Person (other than a Person who becomes
a Bank under the Credit Agreement).
Very truly yours,
-2-
<PAGE> 155
Exhibit 9.11
FORM OF ASSIGNMENT AND ACCEPTANCE
DATED ______________________, 19__________
Reference is made to the Second Amended and Restated Revolving
Credit Agreement dated as of May 31, 1995 (the "Credit Agreement"), among
Browning-Ferris Industries, Inc., a Delaware corporation, the other Borrowers
(as defined in the Credit Agreement), if any, the Banks (as defined in the
Credit Agreement) named therein, Credit Suisse, as Documentation Agent, Texas
Commerce Bank National Association, as Administrative Agent, Chemical Bank, as
Auction Administration Agent and the Co-Agents defined therein. Capitalized
terms used herein and not otherwise defined shall have the meanings assigned to
such terms in the Credit Agreement.
__________________________________________________________ (the "Assignor") and
____________________________________________ (the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the
Assignee, without recourse, and the Assignee hereby purchases and assumes from
the Assignor, a __________% interest in and to all the Assignor's rights and
obligations under the Credit Agreement as of the Assignment Date (as defined
below) (including, without limitation, such percentage interest in the
Commitment of the Assignor on the Assignment Date and such percentage interest
in the Committed Loans and Competitive Loans owing to the Assignor outstanding
on the Assignment Date together with such percentage interest in all unpaid
interest with respect to such Committed Loans and Competitive Loans and
Facility Fees accrued to the Assignment Date and such percentage interest in
the Committed Notes and the Competitive Notes held by the Assignor).
2. The Assignor (i) represents that as of the date
hereof, its Commitment (without giving effect to assignments thereof which have
not yet become effective) is $___________________________________ and the
outstanding balance of its Committed Loans (unreduced by any assignments
thereof which have not yet become effective) is
$___________________________________ and the outstanding balance of its
Competitive Loans (unreduced by any assignments thereof which have not yet
become effective) is $___________________________________; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement or any other
instrument or document furnished pursuant thereto, other than that it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any adverse claim; (iii) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of
<PAGE> 156
the Borrowers or the performance or observance by the Borrowers of any of their
respective obligations under the Credit Agreement or any other instrument or
document furnished pursuant thereto; and (iv) confirms that it has delivered
the Committed Notes and the Competitive Notes held by it to the Administrative
Agent and requests that the Administrative Agent exchange such Notes for a new
Committed Note and a new Competitive Note executed by the Company and payable
to the Assignee in a principal amount equal to $______________________________
and $_____________________________, respectively(1), A NEW COMMITTED NOTE AND A
NEW COMPETITIVE NOTE EXECUTED BY THE COMPANY AND PAYABLE TO THE ASSIGNOR IN A
PRINCIPAL AMOUNT EQUAL TO $______________________________ AND
$______________________________, RESPECTIVELY(2).
3. The Assignee (i) represents and warrants that it is
legally authorized to enter into this Assignment and Acceptance; (ii) confirms
that it has received a copy of the Credit Agreement, together with copies of
the most recent financial statements delivered pursuant to Section 4.07 or 5.07
thereof and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into this Assignment and
Acceptance; (iii) agrees that it will, independently and without reliance upon
the Agents, the Assignor or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement;
(iv) confirms that it is an Eligible Assignee; (v) appoints and authorizes the
Agents to take such action as agent on its behalf and to exercise such powers
under the Credit Agreement as are delegated to such Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; (vi) agrees
that it will perform in accordance with their terms all the obligations which
by the terms of the Credit Agreement are required to be performed by it as a
Bank; (vii) agrees that it will keep confidential all information with respect
to the Borrowers furnished to it by a Borrower or the Assignor (other than
information generally available to the public or otherwise available to the
Assignor on a nonconfidential basis); [AND] (viii) confirms that it has
delivered a completed Administrative Questionnaire to the Administrative
Agent[; AND (IX) ATTACHES THE FORMS PRESCRIBED BY THE INTERNAL REVENUE SERVICE
OF THE UNITED STATES CERTIFYING AS TO THE ASSIGNEE'S EXEMPTION FROM UNITED
STATES WITHHOLDING TAXES WITH RESPECT TO ALL PAYMENTS TO BE MADE TO THE
ASSIGNEE UNDER THE CREDIT AGREEMENT OR SUCH OTHER DOCUMENTS AS ARE NECESSARY TO
INDICATE THAT ALL SUCH PAYMENTS ARE SUBJECT TO SUCH TAX AT A RATE REDUCED BY AN
APPLICABLE TAX TREATY].(3)
__________________________________
(1). Add references to Committed Notes of Borrowers that have become parties
to the Credit Agreement pursuant to Section 2.21 thereof.
(2). Add references to Competitive Notes of Borrower that have become parties
to the Credit Agreement pursuant to Section 2.21 thereof.
(3). If the Assignee is organized under the laws of a jurisdiction outside the
United States.
-2-
<PAGE> 157
4. The effective date for this Assignment and Acceptance
shall be ________ (the "Assignment Date").(4) Following the execution of this
Assignment and Acceptance, it will be delivered to the Administrative Agent for
acceptance and recording by the Administrative Agent pursuant to Section
9.11(c) of the Credit Agreement.
5. Upon such acceptance and recording, from and after
the Assignment Date, (i) the Assignee shall be a party to the Credit Agreement
and, to the extent provided in this Assignment and Acceptance, have the rights
and obligations of a Bank thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording, from and after
the Assignment Date, the Administrative Agent shall make all payments in
respect of the interest assigned hereby (including payments of principal,
interest, fees and other amounts) to the Assignee. The Assignor and Assignee
shall make all appropriate adjustments in payments for periods prior to the
Assignment Date by the Administrative Agent or with respect to the making of
this Assignment and Acceptance directly between themselves.
7. This Assignment and Acceptance may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
8. This Assignment and Acceptance shall be governed by,
and construed and interpreted in accordance with, the laws of the State of
Texas.
[NAME OF ASSIGNOR]
Commitment: $_____________________ By:________________________________
Name:______________________________
Title:_____________________________
[NAME OF ASSIGNEE]
__________________________________
(4). See Section 9.11. Such date shall be at least five Business Days after
the execution of this Assignment and Acceptance and delivery thereof to the
Administrative Agent, unless otherwise agreed by the Assignee, the Assignor,
the Company and the Administrative Agent.
-3-
<PAGE> 158
Commitment: $_____________________ By:________________________________
Name:______________________________
Title:_____________________________
[ADDRESS]
Telecopy Number:
Domestic Lending Office:
Eurodollar Lending Office:
Accepted this _________ day
of __________________, 19__
Texas Commerce Bank National Association,
as Administrative Agent,
By: ___________________________________
Name:
Title:
Consented to this _______ day of(5)
__________________________, 19__
Browning-Ferris Industries, Inc.
By: ___________________________________
Name:
Title:
__________________________________
(5). If approval of the Company is required pursuant to Section 9.11 of
the Credit Agreement.
-4-
<PAGE> 1
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is effective as of October 1,
1995, by and between BROWNING-FERRIS INDUSTRIES, INC., a Delaware corporation
(the "Company"), and WILLIAM D. RUCKELSHAUS (the "Employee").
The Company recognizes the important contributions that the Employee has made
to the Company as an officer and key employee, as currently evidenced by an
Employment Agreement, dated as of July 10, 1989 and amended as of September 1,
1993 and September 7, 1994 (the "1989 Agreement").
The Company wishes to take steps to assure that the Company will continue to
have the Employee's services available to the Company, and the Company and the
Employee desire to amend and restate the 1989 Agreement.
In consideration for the foregoing, the mutual provisions contained herein, and
for other good and valuable consideration, the parties agree to amend and
restate in its entirety the 1989 Agreement, and agree with each other as
follows:
1. EMPLOYMENT. The Company shall employ the Employee as Chairman of the
Board, and the Employee hereby accepts such continued employment with
the Company, upon the terms and conditions hereinafter set forth.
The Employee shall devote such time and effort to his employment
hereunder as may be reasonably required for the effective performance
of his duties for the Company, and shall not be engaged in any other
activities if such activities would interfere with such performance.
<PAGE> 2
2. TERM.
A. Employment under this Agreement is at the will of the
Company, and the employment relationship may be terminated
by Employee or by the Company's Board of Directors at any
time, with or without cause.
B. Notwithstanding anything in this Agreement to the contrary,
the provisions of Sections 5, 6 and 7 shall continue in
full force and effect after any termination of this
Agreement.
3. COMPENSATION.
A. The Company agrees to pay the Employee, during the term
hereof at intervals consistent with the Company's normal
payroll schedule, a "Base Salary" in the following amounts:
<TABLE>
<CAPTION>
Period Base Salary
------ -----------
<S> <C>
October 1, 1995 - September 30, 1996 $750,000
October 1, 1996 - September 30, 1997 375,000
October 1, 1997 - Termination of Agreement 250,000
</TABLE>
B. After the payment of any award for fiscal 1995, the
Employee shall not be entitled to participate in any
incentive or supplemental compensation plan or arrangement
instituted by the Company.
C. The Employee shall be entitled to participate in the
Company's stock option program. The number and timing of
any stock option grants shall be determined in the sole
discretion of the Compensation Committee of the Board of
Directors. Solely for the purposes of any stock options
outstanding at the time of the Employee's termination of
employment, the Employee's status as an "affiliate" of the
Company shall continue to the
- 2 -
<PAGE> 3
earlier of (i) one year after the date of the Employee's
death or (ii) the last date of expiration, cancellation or
exercise, as the case may be, of any and all of such
outstanding stock options. As partial consideration for
such right, the Employee shall continue during such time
to be available to consult with the Company and its
employees at such times and at such places as may be
reasonably convenient and acceptable to the former
Employee and in such manner as may be consistent with the
former Employee's educational background, experience and
prior positions with the Company and with his regular
duties and responsibilities in the course of his then new
occupation or other employment, if any.
4. SUPPLEMENTAL RETIREMENT BENEFIT.
In addition to any benefits that the Employee may be entitled to
under the Company's retirement plans (qualified and nonqualified),
the Employee shall receive a monthly supplemental retirement benefit
payment beginning on the earlier of (i) October 1, 1997, (ii)
termination of employment or (iii) the Employee's death. The monthly
supplemental retirement benefit payment shall be computed by
converting (i) the net present value of the total amount that the
Employee would have received assuming the notice of election of
part-time status is given on or after January 1, 1997 and on or
before 90 days prior to October 1, 1997 pursuant to Section 4.C(iii)
of the 1989 Agreement, as amended, plus (ii) the retirement pay that
would have been paid pursuant to Section 4.I of the 1989 Agreement,
as amended, into an annuity. The annuity shall be calculated in
accordance with the Company's retirement plan actuarial factors, and
the Employee shall elect the type of annuity (joint or single life).
If no election is made, the annuity will be computed as if a 100%
joint annuity had been elected by the Employee.
- 3 -
<PAGE> 4
5. RESTRICTIVE COVENANTS.
A. Covenant Not to Compete. At all times during the term of
his employment hereunder and for a period of two years
after the termination of such employment, however such
termination may be brought about, the Employee will not in
any capacity, including, without limitation, as owner,
principal, agent, partner, employee, consultant,
distributor, dealer, contractor, investor, lender, broker
or trustee or through any corporation, partnership,
association or other entity, engage, directly or
indirectly, in any business or commercial activity engaged
in by the Company or any Affiliate; provided that:
(i) during the term of the Employee's employment,
whether he is on active or inactive status, the
foregoing restriction shall not be limited in
geographical scope;
(ii) after the termination of the Employee's
employment, the foregoing restriction shall
apply only within 100 miles of
(a) the principal place of business of
the Company,
(b) the principal place of business of any
Affiliate of which the Employee is an
officer or director at the termination
of active status under this Agreement,
and
(c) any other geographic location in which
the Employee has specifically
represented the interests of the
Company or any Affiliate during the
twelve months prior to the termination
of active status under this Agreement;
and
- 4 -
<PAGE> 5
(iii) the Employee may be the owner of up to 1% of the
outstanding capital stock of any publicly traded
corporation.
B. No Solicitation. The Employee agrees that during the term
of his employment hereunder and for a period of two years
after the termination of his employment hereunder, he will
not directly or indirectly (i) induce, canvass, solicit,
request or advise any customers of the Company or any
Affiliate to patronize any other entity or to withdraw,
curtail or cancel any business with the Company or any
Affiliate; (ii) disclose to any other person, firm or
corporation the names or addresses of any of the customers
of the Company or any Affiliate; (iii) pursue or prescript
for his own use or benefit or for the use or benefit of any
third party any business opportunity of the Company or any
Affiliate of which he becomes or became aware during the
term of his employment; or (iv) induce, canvass, solicit,
request or advise any employees of the Company or any
Affiliate to accept employment with any person, firm or
business which competes with any business of the Company or
any Affiliate; provided, however, that after termination of
the Employee's employment, the restrictions in clause (i)
of this Section 5B shall be limited to customers located
within one or more of the 100 mile areas described in
Section 5A. The Employee further agrees that he shall not
engage in any pattern of conduct that involves the making
or publishing of written or oral statements or remarks
(including, without limitation, the repetition or
distribution of derogatory rumors, allegations, negative
reports or comments) which are disparaging, deleterious or
damaging to the integrity, reputation or goodwill of the
Company, any Affiliate or their management.
- 5 -
<PAGE> 6
C. Injunction. If the provisions of this Section 5 are
violated, in whole or in part, the Company shall be
entitled, upon application to any court of proper
jurisdiction, to a temporary restraining order or
preliminary injunction to restrain and enjoin the Employee
from such violation without prejudice to any other remedies
the Company may have at law or in equity.
D. Reformation. In the event that the provisions of this
Section 5 should ever be deemed to exceed the time,
geographic or occupational limitations permitted by
applicable law, the Employee and the Company agree that
such provisions shall be and are hereby reformed to the
maximum time, geographic or occupational limitations
permitted by applicable law.
6. CONFIDENTIAL INFORMATION - INTELLECTUAL PROPERTY.
A. Confidentiality. The Employee recognizes and acknowledges
that he will have access to various confidential or
proprietary information concerning the Company and its
Affiliates of a special and unique value which may include,
without limitation, (i) books and records relating to
operation, finance, accounting, sales, personnel and
management, (ii) policies and matters relating particularly
to operations such as customer service requirements, costs
of providing service and equipment, operating costs and
pricing matters, and (iii) various trade or business
secrets, including business opportunities, marketing or
business diversification plans, business development and
bidding techniques, methods and processes, financial data
and the like (collectively, the "Protected Information").
B. No Disclosure. The Employee agrees, therefore, that he
will not at any time, either while employed by the
- 6 -
<PAGE> 7
Company or afterwards, knowingly make any independent use
of, or knowingly disclose to any other person or
organization (except as authorized by the Company or
required by law), any of the Protected Information.
C. Injunction. In the event of a breach or threatened breach
by the Employee of the provisions of this Section 6, the
Employee agrees that the Company shall be entitled to a
temporary restraining order or a preliminary injunction
(without the necessity of the Company posting any bond in
connection therewith) restraining the Employee from using
or disclosing, in whole or in part, such Protected
Information. Nothing herein shall be construed as
prohibiting the Company from pursuing any other remedies
available to it for such breach or threatened breach,
including the recovery of damages from the Employee.
D. Intellectual Property. The Employee shall disclose
promptly to the Company any and all conceptions and ideas
for inventions, improvements and valuable discoveries,
whether patentable or not, which are conceived or made by
the Employee solely or jointly with another during the
period of employment on active or inactive status or within
one year thereafter and which pertain primarily to the
material business activities of the Company, and the
Employee hereby assigns and agrees to assign all his
interests therein to the Company or to its nominee;
whenever requested to do so by the Company, the Employee
shall execute any and all applications, assignments or
other instruments which the Company shall deem necessary to
apply for and obtain Letters of Patent of the United States
or any foreign country or to otherwise protect the
Company's interest therein. These obligations shall
continue beyond the termination of employment with respect
to inventions, improvements and valuable discoveries,
- 7 -
<PAGE> 8
whether patentable or not, conceived, made or acquired by
the Employee during the period of employment on active or
inactive status or within one year thereafter, and shall
be binding upon the Employee's assigns, executors,
administrators and other legal representatives.
7. EMPLOYEE CONDUCT.
A. Certain Payments. The Employee represents and agrees with
the Company that he will make no disbursement or other
payment of any kind or character out of the compensation
paid or expenses reimbursed to him pursuant hereto or with
any other fund which contravenes, in any material respect,
any policy of the Company or, in any material respect, any
applicable statute or rule, regulation or order of any
jurisdiction, foreign or domestic. The Employee further
agrees to indemnify and save harmless the Company from any
liabilities, obligations, claims, penalties, fines,
expenses or losses resulting from any unauthorized or
unlawful acts of the Employee which contravene in any
material respect any policy of the Company or any statute,
rule, regulation or order of any jurisdiction, foreign or
domestic, applicable to the Employee or the Company.
B. Company Policy. The Employee acknowledges that he has been
furnished with a current copy of the policy and procedures
manual of the Company, that he has read and understands
such policies and procedures set forth in such manual (and
will read and become familiar with any revisions or
supplements to this manual), that he understands such
policies and procedures are applicable to the Employee in
the performance of his duties and job performance for the
Company and that he agrees to observe in all material
respects the Company's policies
- 8 -
<PAGE> 9
and procedures in the conduct by the Employee of his
employment duties for the Company.
C. Cooperation. The Employee agrees to disclose honestly and
fully all information and documentation in his possession
concerning all transactions or events relating to or
affecting the Company or any Affiliate as and to the extent
such information or documentation is requested by the
Company or the authorized representatives thereof.
8. GENERAL PROVISIONS.
A. Partial Invalidity. In case any one or more of the
provisions of this Agreement shall, for any reason, be held
by a court of competent jurisdiction to be invalid, illegal
or unenforceable in any respect, (i) such invalidity,
illegality or unenforceability shall not affect any other
provisions of this Agreement, and (ii) this Agreement shall
be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.
B. Entire Agreement. The Employee acknowledges this Agreement
is the entire agreement governing the Employee's
relationship with the Company.
C. Amendment. No provision of this Agreement may be amended,
modified or waived unless such amendment, modification or
waiver shall be agreed to in writing and signed by the
Employee and by a person duly authorized by the
Compensation Committee.
D. Assignment. No right to or interest in any compensation or
reimbursement payable hereunder shall be assignable or
divisible by the Employee.
- 9 -
<PAGE> 10
E. Headings. The headings of sections and subsections hereof
are included solely for convenience of reference and shall
not control the meaning or interpretation of any of the
provisions of this Agreement.
F. Choice of Law. This Agreement shall be construed in
accordance with and governed for all purposes by the laws
of the State of Texas.
G. Merger, etc. This Agreement may not be assigned,
partitioned, subdivided, pledged, or hypothecated in whole
or in part without the express prior written consent of the
Employee and the Company. This Agreement shall not be
terminated either by the voluntary or involuntary
dissolution or the winding up of the affairs of the
Company, or by any merger or consolidation wherein the
Company is not the surviving corporation, or by any
transfer of all or substantially all of the Company's
assets on a consolidated basis. In the event of any such
merger, consolidation or transfer of assets, the provisions
of this Agreement shall be binding upon and shall inure to
the benefit of the surviving corporation or to the
corporation to which such assets shall be transferred.
9. NOTICES.
Any notice required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been given when
delivered in person or when deposited in the U.S. mail, postage
prepaid, and mailed to the addressee's address set forth herein, and
any notice given to the Company shall be addressed to the Secretary
of the Company.
- 10 -
<PAGE> 11
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as
of the day and year first set forth above.
/s/ William D. Ruckelshaus
----------------------------------------
(Employee's Signature)
BROWNING-FERRIS INDUSTRIES, INC.
By: /s/ Gerald Grinstein
------------------------------------
Gerald Grinstein
Chairman, Compensation Committee
P.O. Box 3151
Houston, Texas 77253
- 11 -
<PAGE> 1
EXHIBIT 10.9
SECOND AMENDMENT TO AMENDED AND RESTATED
AGREEMENT RESPECTING EMPLOYMENT
This Second Amendment (this "Amendment") to the Amended and Restated Agreement
Respecting Employment (the "Agreement") dated as of November 1, 1991, by and
between Browning-Ferris Industries, Inc., a Delaware corporation (the
"Company"), and Louis A. Waters ("Employee") is entered into by and between the
Company and Employee effective as of March 1, 1995, as follows:
1. The first sentence of Section 3.A of the Agreement shall be deleted in
its entirety and a new sentence shall be added as the first sentence
of such Section 3.A which shall read as follows:
A base salary shall be payable to the Employee by the Company
as a guaranteed annual amount under this Agreement equal to
$465,000 (as the same may be adjusted as provided in Section
3(B) hereof, the "Base Salary") effective as of March 1, 1995,
for each compensation year thereafter during the term of this
Agreement.
In addition, the Company and Employee acknowledge and agree that the
receipt by Employee of an award or unit of the Company's (or any
successor's) stock which must be recognized by Employee as
compensation will not be excluded from "total annual direct
compensation" under clause (y) of Section 3.A of the Agreement, if,
and to the extent that such stock is granted to Employee in lieu of
incentive compensation which would be included in "total annual direct
compensation".
2. Section 3.B of the Agreement shall be deleted in its entirety and a
new Section 3.B shall be added to the Agreement which new Section 3.B
shall read as follows:
B. Adjustment to Base Salary. The Base Salary payable
from time to time hereunder shall be subject to being
increased (but not decreased) in the sole discretion
of the Compensation Committee of the Company's Board
of Directors.
3. For purposes only of calculating the Annual Retirement Payment under
Section 4.F(ii) of the Agreement, for calendar year 1995 and each
calendar year thereafter, the term "total annual direct compensation"
(as defined in Section 3.A of the Agreement) shall be reduced by each
of the following amounts:
<PAGE> 2
A. The amount (the "Extra Increase in Base Salary") by which the
Base Salary for each year exceeds $373,515 for 1995 (for 1996
and each year thereafter the 1995 amount ($373,515) will be
adjusted annually on a compounded basis by 100% of the
increase in the Consumer Price Index described in Section
4.F(i) of the Agreement for each twelve-month period from
January 1, 1995 until the first day of each such year); and
B. The part of any incentive or supplemental compensation due to
the Extra Increase in Base Salary (the "Extra Increase in
Incentive Compensation").
As stated above this reduction of total annual direct compensation
shall only apply to calendar years 1995 and thereafter for purposes of
calculating the Annual Retirement Payment under Section 4.F(ii) of the
Agreement.
4. The Company and Employee acknowledge and agree that all other benefits
or payments that Employee and his spouse may receive under the
Company's defined benefit retirement plans (qualified and
nonqualified) in which Employee participates shall be increased on a
compound basis each year by the CPI Adjustment in the same manner as
the Annual Retirement Payment under Section 4.F(ii) of the Agreement.
The aggregate of all such increases to such benefits or payments under
the Company's retirement plans shall be a separate contractual
obligation of the Company to Employee under the Agreement and shall be
payable to Employee in monthly installments in cash at the same time
as the monthly Annual Retirement Payment benefit is paid to Employee.
5. For purposes of determining the Retirement Plan Offset in the fourth
sentence of Section 4.F (ii) of the Agreement (i) the reference to the
Company's retirement plan shall include all defined benefit Company
retirement plans (qualified and nonqualified) in which Employee
participates, (ii) payments shall be assumed to be made in the form of
a 50% joint and survivor annuity with the spouse as the beneficiary
commencing the same date as payments of the Annual Retirement Payment
under the Agreement and (iii) if the Employee's current spouse is not
the Employee's beneficiary at the time of retirement, the payments
shall be assumed to be made in the form of a single life annuity
commencing the same date as payments of the Annual Retirement Payment
under the Agreement.
6. For purposes of determining the 2.86 percent reduction to the
Retirement Plan Offset included in Section 4.F(ii) of the Agreement
(i) the reduction shall be calculated using a recomputed Retirement
Plan Offset where such recomputed Retirement Plan Offset is calculated
assuming Employee has 35 years of service regardless of actual service
or when his retirement occurs, (ii) payments shall be assumed to be
made in the form of a 50% joint and survivor annuity with the spouse
as the beneficiary commencing the same date as payments
- 2 -
<PAGE> 3
of the Annual Retirement Payment under the Agreement and (iii) if the
Employee's current spouse is not the Employee's beneficiary at the
time of retirement, the payments shall be assumed to be made in the
form of a single life annuity commencing the same date as payments of
the Annual Retirement Payment under the Agreement.
7. For calendar year 1995 and each calendar year thereafter, the 2.86
percent reduction to the Retirement Plan Offset included in Section
4.F(ii) of the Agreement shall not apply to the part of the Retirement
Plan Offset attributable to the Extra Increase in Base Salary (defined
above) and the Extra Increase in Incentive Compensation (defined
above).
8. The Company and Employee acknowledge and agree that, subject to any
appropriate adjustment of the number of shares pursuant to the terms
of this Agreement, Employee is entitled to be granted options to
purchase 44,400 shares of common stock of the Company in September,
1995. The Company and Employee agree that, subject to any appropriate
adjustment of the number of shares pursuant to the terms of this
Agreement, Employee shall be issued options to purchase 44,400 shares
of the common stock of the Company in the period from October 1, 1995
through December 15, 1995 (the timing of such issuance during such
period to be determined in the sole discretion of the Compensation
Committee of the Company's Board of Directors), instead of options to
purchase 44,400 shares of common stock of the Company in September,
1995.
As amended hereby, the terms of the Agreement shall be and remain in full force
and effect.
IN WITNESS WHEREOF, the parties have executed and delivered this Second
Amendment to Amended and Restated Agreement effective as of the day and year
indicated above.
/s/ Louis A. Waters
----------------------------------------
Louis A. Waters
BROWNING-FERRIS INDUSTRIES, INC.
By: /s/ William D. Ruckelshaus
----------------------------------------
William D. Ruckelshaus
Chairman of the Board
and Chief Executive Officer
Address: P.O. Box 3151
Houston, Texas 77253
- 3 -
<PAGE> 1
EXHIBIT 10.24
BFI MANAGEMENT INCENTIVE COMPENSATION PLAN
The Company's officers and certain other key employees are eligible to
participate in an annual incentive compensation plan designed to reward the
attainment of certain company financial goals and specific individual or team
performance objectives which support the Company's overall business plan.
Each eligible plan participant shall have a "target" incentive which is a
percent of base salary as of the end of the fiscal year. Eligibility for
participation and the target incentive percent is determined by the position
responsibilities, organizational level, and competitive practices. In
addition, the target incentive is weighted for financial, and individual or
team performance depending on ability of the participant to impact the
Company's overall financial results. Generally, while financial performance is
more heavily weighted for executive officers, the financial and individual/team
components are more balanced for middle management.
Availability of any incentive awards under this plan requires improved
performance over prior year - - financial, as measured by return on assets
(ROA) and earnings per share (EPS), and individual or team criteria which, when
achieved, add significant value to the Company. For any incentive awards to be
paid under this plan, the corporate office's expenses as a percent of gross
revenue must not exceed the prior fiscal year's percentage. The actual portion
of the award attributable to financial performance is based on the EPS and the
ROA for the fiscal year. A specified percentage growth in EPS over the prior
year and a specified ROA are established as the performance levels required for
payout of "target" incentive awards; performance below these specified levels
results in less than target awards. EPS and ROA also determine the level of
payout made available for the portion of the incentive award attributable to
individual or team performance; the actual award is determined by the actual
individual or team achievement as compared to the established objectives. The
maximum incentive award available under this plan is two times the target
incentive.
All financial goals are established and approved by the Compensation Committee
of the Board of Directors at the beginning of the fiscal year. In addition,
each incentive plan participant receives a detailed workplan outlining
individual and/or team objectives focused on the priorities within the areas of
functional accountability and support the Company's overall business
objectives. These workplans contain specific criteria and define the levels of
performance required to meet and exceed the objectives. The workplan becomes
the basis from which performance is measured at the end of the fiscal year.
This plan is administered by the Compensation department in Corporate Human
Resources. All award levels made under this plan
<PAGE> 2
are subject to the approval of the Compensation Committee of the Board of
Directors. Incentive awards are paid no later than 75 days following the end
of the fiscal year. No incentive awards are paid to non-employee directors.
- 2 -
<PAGE> 1
EXHIBIT 10.27
BROWNING-FERRIS INDUSTRIES, INC.
CONVERTIBLE ANNUAL INCENTIVE AWARD PLAN
The Browning-Ferris Industries, Inc. (the "Company") Convertible Annual
Incentive Award Plan (the "Plan") is an executive incentive plan designed to
encourage increased ownership of BFI Common Stock by the Company's and its
subsidiaries' executives and key employees who have a significant impact on the
growth and profitability of the Company. The objectives of the Plan are to
offer a highly competitive stock-based compensation program to executives, to
ensure that the Company is managed in the best long-term interests of its
shareholders and employees. The Plan seeks to achieve these objectives by
allowing plan participants to convert a portion of their annual cash incentive
awards, which may be earned in the next fiscal year, to the Company's common
stock, with restrictions placed on this stock for a period of two years after
the grant date. As an incentive for participating in the Plan, participants
will receive a 25% premium, also in shares of restricted stock, in addition to
the shares of converted incentive awards. This plan document sets forth all
the terms and conditions of the Plan as approved by the Compensation Committee
of the Board of Directors of Browning-Ferris Industries, Inc.
Participation Eligibility
Participation in the Plan shall be restricted to Corporate Officers and
Regional Vice Presidents; participation in the Plan is voluntary.
Conversion Approach
A Plan participant can convert up to 100% of an annual incentive award, on a
pre-tax basis, to BFI Common Stock. The number of shares received by the
participant is a function of the percentage of the annual cash incentive award
to be converted, specified by the participant prior to the beginning of the
Company's fiscal year, and the fair market value of BFI Common Stock on the
grant date. In addition, premium shares will be granted on a 1-for-4 basis
(where one premium share is issued for every four shares of common stock that
the participant converts). The following is an example of how the Plan
operates:
Hypothetical Annual Incentive Award $34,800
50% of Award converted to Common Stock $17,400
Fair Market Value of Common Stock on Grant Date $30.00
per share
Number of shares of Common Stock converted 580
Number of Premium Shares offered 145
Total number of Plan shares awarded* 725
<PAGE> 2
Dollar value on Grant Date of both Converted Shares $21,750
and Premium Shares
*Note: Only whole shares in five share increments will be awarded to
participants in the Plan. Fractional share amounts will not be converted but
will be paid in cash as part of the annual incentive payment.
As used in this Plan, "grant date" shall mean the date the Compensation
Committee approves annual incentive awards for each Plan participant and "fair
market value" shall mean the average of the high and low prices on the New York
Stock Exchange, Composite Transactions, as reported in the Wall Street Journal,
for shares of common stock of the Company.
Restriction Period for Shares
Both converted shares and premium shares acquired through the Plan are subject
to a two-year restriction period during which the Plan shares are forfeitable
and a participant cannot sell, transfer, pledge or assign Plan shares. During
this restriction period, all Plan shares maintain full voting rights and
participants will receive dividend payments as declared and paid by the
Company. The restriction period begins on the grant date, with subsequent
two-year restriction periods beginning on the grant dates of any subsequent
awards. Generally, the taxation of all Plan shares is deferred until the
expiration of the restriction period. Following the expiration of this
restriction period, both the converted shares and the premium shares become
fully vested and their fair market value on that date will be recognized as
taxable income subject to applicable payroll taxes and inclusion in W-2
earnings for that calendar year. No participant shall exercise the election
permitted by Section 83(b) of the Code without the express written approval of
the Compensation Committee of the Board of Directors.
Forfeiture in the Case of Separation of Employment
Termination prior to the expiration of the restriction period requires complete
forfeiture of all converted common stock shares and premium shares acquired
through the Plan. Should employment end by reason of death, disability, or
retirement in accordance with the then existing rules of the Company, during
the restriction period, all Plan shares shall be vested on the effective
termination date and valued at fair market value on that date for compensation
purposes.
Conversion Election by Participant
Each participant must specify the portion of his/her annual incentive awards to
be converted to BFI common stock prior to the beginning of the Company's fiscal
year or 30 days following eligibility for this Plan. Once made, each annual
election is irrevocable. A separate election must be made prior to the
- 2 -
<PAGE> 3
beginning of each subsequent fiscal year as to the respective award conversion
for that fiscal year.
Term and Adoption of the Plan
This Plan, as set forth herein, was approved by the Compensation Committee and
is subject to the terms of the Company's 1993 Stock Incentive Plan (the "Stock
Incentive Plan"), and in the event of a conflict or inconsistency between the
terms of the Plan and the Stock Incentive Plan, then the terms of the Stock
Incentive Plan shall control. The Plan shall remain in effect until it is
terminated pursuant to the following section. The adoption of this Plan or any
modification hereof does not imply any commitment to continue or adopt the same
Plan, or any modification thereof, or any other Plan for incentive compensation
for any succeeding year, or for any award to be paid under the Company's annual
incentive plans. Neither this Plan nor any award made under the Plan shall
create any employment contract or relationship between the Company or its
subsidiaries and any participant.
Right to Amend or Terminate the Plan
This Plan will be construed in accordance with the laws of the State of
Delaware. The Compensation Committee can amend, suspend, or terminate the Plan
at any time and for any reason, except that the provisions of the Plan
pertaining to the amount, price, and timing of grants shall not be amended more
than once in any 12-month period, unless such action is required to comply
with changes in laws or regulations of the Internal Revenue Service, the
Securities and Exchange Commission or other government agencies having
jurisdiction over these types of plans.
Plan Agreement
Each participant must sign the Convertible Annual Incentive Award Plan
Agreement (Attachment I) to indicate his/her participation in the Plan under
all terms and conditions set forth herein. A new agreement must be signed for
each subsequent fiscal year for which the participant wishes to make an
election.
Plan Administration
The Compensation Committee of the Board of Directors of Browning-Ferris
Industries, Inc. shall have the exclusive responsibility for the general
administration of this Plan, according to the terms and provisions of the Plan
and the Stock Incentive Plan. In order to properly fulfill its administrative
responsibilities, the Committee shall have the right to construe the Plan,
resolve ambiguities and when exercising its discretion in good faith, its
decisions shall be binding on all parties and shall only be subject to review
as to whether the Committee has abused its discretion.
- 3 -
<PAGE> 4
Attachment I
CONVERTIBLE ANNUAL INCENTIVE AWARD PLAN AGREEMENT
This document shall constitute the agreement between Browning-Ferris
Industries, Inc. or one its subsidiaries (the "Company") and
__________________________________, which confirms his or her election to
participate in the Company's Convertible Annual Incentive Award Plan (the
"Plan").
Subject to the terms and conditions of the Plan, I elect to be a participant in
the Plan for the fiscal year beginning October 1, 19__ and ending September
30, 19__.
For the above fiscal year, I irrevocably elect the following (complete either
item 1 or 2 below):
1. ___ Fixed Option.
___% of any annual incentive award I am eligible to
receive
2. ___ Variable Option. (Complete each of the items listed below):
____% of any annual incentive award I am eligible to
receive if such award represents less than 50% of the
Target award I am eligible for in the annual incentive
plan,
____% of any annual incentive award I am eligible to
receive if such award represents at least 50% but less
than 75% of the Target award,
____% of any annual incentive award I am eligible to
receive if such award represents at least 75% but less
than 100% of the Target award, and
____% of any annual incentive award I am eligible to
receive if such award represents 100% or more of the
Target award
to be converted to BFI Common Stock under the provisions of the Plan. For each
four shares of converted incentive award that the Company grants in common
stock under the terms of the Plan, the Company will grant one premium share of
BFI Common Stock. All converted common shares and premium shares acquired
under the terms of this Plan are subject to a two year restriction period from
the grant date. During this restriction period, shares cannot be sold,
transferred, pledged or assigned.
In the event that my employment with the Company is terminated for reasons
other than disability, retirement, or death prior to the expiration of the
restriction period, I am required to forfeit all
- 4 -
<PAGE> 5
converted common stock shares and premium shares acquired under the provisions
of this Plan which are still subject to the restriction period.
I acknowledge that I have received a copy of the Convertible Annual Incentive
Plan document and the 1993 Stock Incentive Plan and am responsible for
understanding their provisions.
This agreement is valid for the fiscal year described above and is irrevocable
once made; my conversion election and beneficiary designation does not revoke
any prior election applicable to any prior period.
Beneficiary Designation
In the event of my death, I designate ________________________________________
to receive all Plan shares for the fiscal year covered by this agreement, which
will be vested on the date of my death and valued at fair market value on that
date. If I have designated a beneficiary who is not my spouse, my spouse has
indicated his or her consent by his or her execution of this document, properly
notarized. (Important Notice from the Company: In the event that a married
participant wishes to designate as beneficiary a person who is not his or her
spouse, then the participant and his or her spouse are advised to seek
independent tax counsel as to the possible federal and/or state gift and estate
tax consequences of such a beneficiary designation.)
Date:___________________________ Participant:_____________________________
Consent to Beneficiary
I understand that if the participant names a beneficiary other than his or her
spouse, the spouse must consent. I hereby consent to the beneficiary named in
this Agreement.
Consent of
Participant's Spouse:___________________________ Date:_______________________
- 5 -
<PAGE> 6
The State of _________________________
County of ____________________________
Before me, the undersigned authority, on this day personally appeared known to
me to be the person whose name is subscribed to the foregoing instrument as the
Participant's spouse, and such person acknowledged to me that he or she executed
the same for the purposes expressed and in the capacity stated.
Given under may hand and seal of office, this ______ day of __________________,
19___.
_______________________________________
Notary Public for the
State of ________________
My commission expires on
________________________, 19___.
Accepted by the Company:
By: ___________________________________
- 6 -
<PAGE> 1
EXHIBIT 10.28
BROWNING-FERRIS INDUSTRIES, INC.
STOCK AND EMPLOYEE BENEFIT TRUST AGREEMENT
Effective as of February 28, 1995
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
ARTICLE 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
Trust, Trustee and Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
1.1 Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
1.2 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
1.3 Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
1.4 Trust Fund Subject to Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
1.5 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
ARTICLE 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
Contributions and Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
2.1 Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
2.2 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
2.3 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
ARTICLE 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-5-
Release of Company Stock and Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
3.1 Company Stock Made Available for Transfer from Trust . . . . . . . . . . . . . . . . . . . . . . . . -5-
3.2 Transfer from Trust of Released Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
3.3 Transfer of Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
ARTICLE 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
Compensation, Expenses and Tax Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
4.1 Compensation and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
4.2 Withholding of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
ARTICLE 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
Administration of Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
5.1 Management and Control of Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
5.2 Investment of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
5.3 Trustee's Administrative Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -8-
5.4 Rights Regarding Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
5.5 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
5.6 General Duty to Communicate to Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
</TABLE>
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<TABLE>
<S> <C>
ARTICLE 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
Accounts and Reports of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
6.1 Records and Accounts of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
6.2 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
6.3 Reports of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
6.4 Final Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
ARTICLE 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
Succession of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
7.1 Resignation of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
7.2 Removal of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
7.3 Appointment of Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
7.4 Succession to Trust Fund Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
7.5 Continuation of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
7.6 Changes in Organization of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
7.7 Continuance of Trustee's Powers in Event of Termination of the Trust . . . . . . . . . . . . . . . -12-
ARTICLE 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
Amendment or Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
8.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
8.2 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
8.3 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
8.4 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
8.5 Form of Amendment or Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
ARTICLE 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
9.1 Controlling Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
9.2 Committee Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
9.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
9.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
9.5 Protection of Persons Dealing with the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
9.6 Tax Status of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
9.7 Participants to Have No Interest in the Company by Reason of the Trust . . . . . . . . . . . . . . -15-
9.8 Nonassignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
9.9 Gender and Plurals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
9.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
</TABLE>
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<TABLE>
<S> <C>
ARTICLE 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
Trust, Trustee and Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
1.1 Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
1.2 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
1.3 Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
1.4 Trust Fund Subject to Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -2-
1.5 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -3-
ARTICLE 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
Contributions and Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
2.1 Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -4-
2.3 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -5-
ARTICLE 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
Release of Company Stock and Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
3.1 Company Stock Made Available for Transfer from Trust . . . . . . . . . . . . . . . . . . . . . . . . -6-
3.2 Transfer from Trust of Released Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -6-
3.3 Transfer of Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
ARTICLE 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
Compensation, Expenses and Tax Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
4.1 Compensation and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
4.2 Withholding of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -7-
ARTICLE 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -8-
Administration of Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -8-
5.1 Management and Control of Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -8-
5.2 Investment of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -8-
5.3 Trustee's Administrative Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -8-
5.4 Rights Regarding Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
5.5 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
5.6 General Duty to Communicate to Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -10-
ARTICLE 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
Accounts and Reports of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
6.1 Records and Accounts of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
6.2 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
6.3 Reports of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
6.4 Final Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
ARTICLE 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
</TABLE>
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<TABLE>
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Succession of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
7.1 Resignation of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -11-
7.2 Removal of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
7.3 Appointment of Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
7.4 Succession to Trust Fund Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
7.5 Continuation of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
7.6 Changes in Organization of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -12-
7.7 Continuance of Trustee's Powers in Event of Termination of the Trust . . . . . . . . . . . . . . . -12-
ARTICLE 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
Amendment or Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
8.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
8.2 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
8.3 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -13-
8.4 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
8.5 Form of Amendment or Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
ARTICLE 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
9.1 Controlling Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
9.2 Committee Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
9.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -14-
9.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
9.5 Protection of Persons Dealing with the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
9.6 Tax Status of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
9.7 Participants to Have No Interest in the Company by Reason of the Trust . . . . . . . . . . . . . . -15-
9.8 Nonassignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
9.9 Gender and Plurals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
9.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
</TABLE>
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<PAGE> 6
BROWNING-FERRIS INDUSTRIES, INC.
STOCK AND EMPLOYEE BENEFIT TRUST AGREEMENT
THIS STOCK AND TRUST AGREEMENT (this "Agreement"), is made
effective as of February 28, 1995, between Browning-Ferris Industries, Inc., a
Delaware corporation, and Wachovia Bank of North Carolina, N.A., as trustee.
W I T N E S S E T H
WHEREAS, the Company (as herein defined) desires to establish
a trust (the "Trust") in accordance with the laws of the State of Delaware and
for the purposes stated in this Agreement;
WHEREAS, the Trustee (as herein defined) desires to act as
trustee of the Trust, and to hold legal title to the assets of the Trust, in
trust, for the purposes hereinafter stated and in accordance with the terms
hereof;
WHEREAS, the Company or its subsidiaries have previously
adopted the Plans (as herein defined);
WHEREAS, the Company desires to provide assurance of the
availability of the shares of its common stock necessary to satisfy certain of
its obligations or those of its subsidiaries under the Plans and for the
Corporate Purposes (as herein defined);
WHEREAS, the Company desires that the assets to be held in the
Trust Fund (as herein defined) should be principally or exclusively securities
of the Company and, therefore expressly waives any diversification of
investments that might otherwise be necessary, appropriate or required pursuant
to applicable provisions of law; and
WHEREAS, the Trustee has been appointed as trustee and has
accepted such appointment as of the date first set forth above;
NOW, THEREFORE, the parties hereto hereby establish the Trust
and agree that the Trust will be comprised, held and disposed of as follows:
ARTICLE 1
TRUST, TRUSTEE AND TRUST FUND
1.1 Trust. This Agreement and the Trust shall be known as
the Browning-Ferris Industries, Inc. Stock and Employee Benefit Trust. The
parties intend that the Trust will be an independent legal entity with title to
and power to convey all of its assets. The parties hereto further intend that
the Trust not be subject to the Employee Retirement Income Security Act of
1974, as amended.
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<PAGE> 7
The Trust is not a part of any of the Plans and does not provide retirement or
other benefits to any Plan Participant (as herein defined). The assets of the
Trust will be held, invested and disposed of by the Trustee, in accordance with
the terms of the Trust. The Trust shall be irrevocable.
1.2 Trustee. The trustee named above, and its successor
or successors, is hereby designated as the trustee hereunder, to receive, hold,
invest, administer and distribute the Trust Fund in accordance with this
Agreement, the provisions of which shall govern the powers, duties and
responsibilities of the Trustee.
1.3 Trust Fund. The assets held at any time and from time
to time under the Trust collectively are herein referred to as the "Trust Fund"
and shall consist of contributions received by the Trustee, proceeds of any
loans, investments and reinvestment thereof, the earnings and income thereon,
less disbursements therefrom. Except as herein otherwise provided, title to
the assets of the Trust Fund shall at all times be vested in the Trustee and
securities that are part of the Trust Fund shall be held in such manner that
the Trustee's name and the fiduciary capacity in which the securities are held
are fully disclosed, subject to the right of the Trustee to hold title in
bearer form or in the name of a nominee, and the interests of others in the
Trust Fund shall be only the right to have such assets received, held,
invested, administered and distributed in accordance with the provisions of the
Trust.
1.4 Trust Fund Subject to Claims. Notwithstanding any
provision of this Agreement to the contrary, the Trust Fund shall at all times
remain subject to the claims of the Company's general creditors under federal
and state law.
In addition, the Board of Directors and Chief Executive
Officer of the Company shall have the duty to inform the Trustee in writing of
the Company's Insolvency (as herein defined). If a person claiming to be a
creditor of the Company alleges in writing to the Trustee that the Company has
become Insolvent, the Trustee shall determine whether the Company is Insolvent
and, pending such determination, the Trustee shall discontinue allocations
pursuant to Article 3.
Unless the Trustee has actual knowledge of the Company's
Insolvency, or has received notice from the Company or a person claiming to be
a creditor alleging that the Company is Insolvent, the Trustee shall have no
duty to inquire whether the Company is Insolvent. The Trustee may in all
events rely on such evidence concerning the Company's solvency as may be
furnished to the Trustee and that provides the Trustee with a reasonable basis
for making a determination concerning the Company's Insolvency.
If at any time the Trustee has determined that the Company is
Insolvent, the Trustee shall discontinue allocations pursuant to Article 3 and
shall hold the Trust Fund for the benefit of the Company's general creditors.
Nothing in this Agreement
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<PAGE> 8
shall in any way diminish any rights of employees as general creditors of the
Company with respect to benefits due under the Plan(s) or otherwise.
The Trustee shall resume allocations pursuant to Article 3
only after the Trustee has determined that the Company is not Insolvent (or is
no longer Insolvent).
1.5 Definitions. In addition to the terms defined in the
preceding portions of this Agreement, certain capitalized terms have the
meanings set forth below:
Board of Directors. "Board of Directors" means the board of
directors of the Company.
Code. "Code" means the Internal Revenue Code of 1986, as
amended.
Committee. "Committee" means the person holding the title of
Secretary or Assistant Secretary of the Company, or such other person who is
charged by the Board of Directors with administration of the Trust.
Company. "Company" means Browning-Ferris Industries, Inc., a
Delaware corporation, or any successor thereto. Reference to the Company shall
include its subsidiaries where appropriate.
Company Stock. "Company Stock" means shares of common stock,
par value $.16 2/3 per share, issued by the Company, or any successor
securities thereto.
Corporate Purposes. "Corporate Purposes" means the variety
of transactions through which the Company might otherwise issue Company Stock,
including a public or private offering of Company Stock, conversion of debt or
preferred stock issued by the Company and convertible into Company Stock,
exercise of stock optons or warrants to purchase Company Stock, and
acquisitions funded or paid for through the issuance of Company Stock.
Extraordinary Dividend. "Extraordinary Dividend" means any
dividend or other distribution of cash or other property (other than Company
Stock) made with respect to Company Stock, which the Board of Directors
declares generally to be other than an ordinary dividend.
Fair Market Value. "Fair Market Value" means as of any date
the average of the highest and lowest reported sales prices regular way on such
date (or if such date is not a trading day, then on the most recent prior date
which is a trading day) of a share of Company Stock as reported on the
composite tape, or similar reporting system, for issues listed on the New York
Stock Exchange (or, if the Company Stock is no longer traded on the New York
Stock Exchange, on such other national securities exchange on which the Company
Stock is listed or national securities or central market system upon which
transactions in Company Stock are
- 3 -
<PAGE> 9
reported, as either shall be designated by the Committee for the purposes
hereof) or if sales of Company Stock are not reported in any manner specified
above, the average of the high bid and low asked quotations on such date (or if
such date is not a trading day, then on the most recent prior date which is a
trading day) in the over-the-counter market as reported by the National
Association of Securities Dealers' Automated Quotation System or, if not so
reported, by National Quotation Bureau, Incorporated or similar organization
selected by the Committee.
Insolvency or Insolvent. "Insolvency" or being "Insolvent"
means (i) the inability of the Company to pay its debts as they become due, or
(ii) the Company being subject to a pending proceeding as a debtor under the
provisions of Title 11 of the United States Code (Bankruptcy Code).
Loan. "Loan" means the loan and extension of credit to the
Trust evidenced by the promissory note made by the Trustee of even date
herewith with which the Trustee purchased Company Stock.
Plan Participant. "Plan Participant" means a participant
in any of the Plans.
Plans. "Plans" means the plans, contracts and compensation
structures listed on Schedule A hereto.
Trustee. "Trustee" means Wachovia Bank of North Carolina,
N.A. (not in its corporate capacity but as trustee of the Trust), or any
successor trustee.
Trust Year. "Trust Year" means the period beginning on the
date hereof and ending on September 30, 1995, and each 12 month period
beginning on October 1 and ending on September 30 thereafter.
ARTICLE 2
CONTRIBUTIONS AND DIVIDENDS
2.1 Contributions. On the date of execution of this
Agreement, the Company shall contribute to the Trust in cash the sum of
$2,500,500, which represents the aggregate par value of the 15,000,000 shares
of Company Stock purchased by the Trust pursuant to that certain Common Stock
Purchase Agreement, dated of even date herewith, between the Company and the
Trustee. In addition, for each Trust Year, the Company shall contribute to the
Trust in cash such amount, which together with dividends, as provided in
Section 2.3, and any other earnings of the Trust, shall enable the Trustee to
make all payments of principal and interest due under the Loan on a timely
basis. Unless otherwise expressly provided herein, the Trustee shall apply all
such contributions, dividends and earnings to the payment or prepayment of
principal and interest due under the Loan. If, at the end of any Trust Year,
such contributions, dividends and earnings shall be insufficient to
- 4 -
<PAGE> 10
enable the Trustee to make all payments of principal and interest due under the
Loan, then the Company shall be deemed to have forgiven principal and interest
on the Loan to the extent such contributions, dividends and earnings are less
than the principal and interest then due. All contributions made under the
Trust shall be delivered to the Trustee. The Trustee shall be accountable for
all contributions received by it, but shall have no duty to require any
contributions to be made to it.
2.2 Prepayments. The Company may, from time to time,
contribute cash to the Trust in amounts sufficient to enable the Trust to
prepay, in whole or in part, principal (and interest accrued thereon to the
date of prepayment) of the Loan at any time or, in lieu of such prepayment, the
Committee may, from time to time, direct that all or any part of such principal
(and interest accrued thereon) shall be forgiven and the payment so directed
shall be forgiven.
2.3 Dividends. Except as otherwise provided herein,
dividends paid in any Trust Year in cash on Company Stock held by the Trust
(including dividends paid on Released Shares, as defined below, that have not
been transferred out of the Trust at the time of such dividend payment) shall
be applied, immediately upon receipt thereof by the Trustee, (i) first to
interest accrued and unpaid as of the date of any such payment and then, to the
extent that any such payment exceeds such accrued and unpaid interest, (ii) to
prepay interest that accrues after such payment through the end of such Trust
Year, and then, (iii) to pay principal installments due within such Trust Year,
and then, (iv) to the extent not otherwise distributed in accordance with the
next sentence, to additional installments of principal in the order of their
scheduled maturity. In the event that dividends paid on Company Stock held in
the Trust, other than Extraordinary Dividends, exceed the amount of scheduled
principal and interest due in any Trust Year, such excess shall, as determined
in good faith by the Committee, be (i) applied to prepay, in whole or in part,
principal (and accrued interest thereon to the date of such prepayment) of the
Loan or (ii) distributed to the Plans and/or to any other broad cross section
of individuals employed by the Company. Extraordinary Dividends shall not be
used to pay interest on or principal of the Loan, but shall be invested in
additional Company Stock as soon as practicable, except as provided below.
Dividends which are not in cash or in Company Stock (including Extraordinary
Dividends, or portions thereof) shall be reduced to cash by the Trustee and
reinvested in Company Stock as soon as practicable, except as provided below.
For purposes of this Agreement, Company Stock purchased with the proceeds of an
Extraordinary Dividend or with the proceeds of a non-cash dividend shall, for
purposes of this Agreement (including, without limitation, Section 3.1 hereof),
be deemed to have been acquired with the proceeds of the Loan. In the
Trustee's discretion, investments in Company Stock may be made through
open-market purchases, private transactions or (with the Company's consent)
purchases from the Company. The Committee may direct the Trustee as to the
timing and manner of such purchases in order to comply
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with applicable law and to avoid, if possible, adverse effects on the publicly
traded market price of Company Stock.
ARTICLE 3
RELEASE OF COMPANY STOCK AND ALLOCATIONS
3.1 Company Stock Made Available for Transfer from Trust.
Immediately after each payment, prepayment or forgiveness, if any, of principal
(and accrued interest thereon) of the Loan is made, a number of shares of
Company Stock shall be made available for transfer from the Trust ("Released
Shares") in the manner set forth in Section 3.2. The number of such Released
Shares shall equal the number of shares of Company Stock held in the Trust
immediately prior to such payment, prepayment or forgiveness that have not
already been deemed Released Shares pursuant to a previous payment, prepayment
or forgiveness of principal of the Loan, multiplied by a fraction, the
numerator of which shall be the amount of principal paid or prepaid or deemed
forgiven upon such payment or prepayment date or date of forgiveness and the
denominator of which shall be the sum of the numerator plus the principal
amount of the Loan remaining after such payment, prepayment or forgiveness. No
fractional shares shall be released. If the preceding computation results in
fractional shares, the number of Released Shares shall be computed by rounding
down to the next whole number. The number of Released Shares, determined as
aforesaid, shall be certified to the Trustee by the Committee.
3.2 Transfer from Trust of Released Shares. Released
Shares shall be transferred by the Trustee, if and as directed by the
Committee, either (i) to satisfy stock requirements for the Corporate Purposes
or (ii) to the Plans, in each case, as shall be required to provide Released
Shares for such Corporate Purposes or to such Plans in accordance with the
current requirements of such Corporate Purposes or such Plans, as the case may
be, for Released Shares. If the Company has previously satisfied current
requirements of such Corporate Purposes or such Plans either through the
delivery or contribution of cash, Company Stock or otherwise, Released Shares
of equivalent value may be delivered to the Company. If after taking into
account delivery or contributions from the Company and shares delivered for
such Corporate Purposes or to such Plans by the Trust, such Corporate Purposes
or such Plans require more shares of Company Stock, then such Released Shares
shall be allocated among such Corporate Purposes or such Plans as directed by
the Committee. To the extent that Released Shares remain after the allocation
referred to in the prior provisions of this Section 3.2, the remaining Released
Shares shall, at the direction of and in the allocations specified by the
Committee, be (i) transferred to the Plans to the extent of the Company's
current cash funding obligations of such Plans or (ii) sold by the Trustee and
the proceeds of such sale transferred to the Plans or used to fund such
Corporate Purposes. The Trustee may sell Released Shares to the extent
required to fund benefits under the Plans and transfer the proceeds of such
sale to the Plans if
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and to the extent that the transfer of Released Shares to the Plans is
prohibited under applicable law. To facilitate such sales pursuant to this
Section 3.2, the Company shall register under the Securities Act of 1933, as
amended (the "1933 Act"), such number of Released Shares as the Committee may
direct. If Released Shares remain in the Trust after the transfers or sales
described above, such remaining Released Shares may, as the Committee shall
direct, (i) be transferred to, or used by the Trustee for the benefit of, the
Plans or such other employee benefit plans (or their participants and
beneficiaries) covering a broad cross section of non-collectively bargained
employees of the Company or its subsidiaries as the Committee shall direct, or
(ii) be retained in the Trust for a sufficient period of time after the release
of such shares so that such Released Shares may be sold by the Trustee in
accordance with Rule 144 under the 1933 Act at such times as the Committee may
direct. In no event, however, may Released Shares remain in the Trust longer
than four years after such shares become Released Shares. The Committee may
direct the Trustee as to the timing and manner of sales pursuant to this
Section 3.2 of Released Shares in order to comply with applicable law and to
avoid, if possible, adverse effects on the publicly traded market price of
Company Stock. Released Shares transferred to Plans with respect to which
trusts have been established shall be transferred to the trustee thereof; if
there is no such trust with respect to a Plan, the shares transferred to such
Plan shall be transferred to the plan administrator of such Plan. Released
Shares transferred to satisfy Corporate Purposes shall be transferred as
directed by the Committee.
3.3 Transfer of Other Assets. Any assets other than
Company Stock held in the Trust pursuant to Section 2.1 shall be transferred by
the Trustee in such amounts and at such times to or for the benefit of such
Plans (or their participants and beneficiaries) at the same time and in the
same proportion as Released Shares are allocated to such Plans.
ARTICLE 4
COMPENSATION, EXPENSES AND TAX WITHHOLDING
4.1 Compensation and Expenses. The Trustee shall be
entitled to such reasonable compensation for its services as may be agreed upon
from time to time by the Company and the Trustee and to be reimbursed for its
reasonable legal, accounting and appraisal fees, expenses and other charges
reasonably incurred in connection with the administration, management,
investment and distribution of the Trust Fund. Such compensation shall be
paid, and such reimbursement shall be made, out of the Trust Fund. The Company
agrees to make sufficient contributions to the Trust to pay such amounts owing
the Trustee in addition to those contributions required by Section 2.1. In the
event the Company fails to make the contributions necessary to pay amounts
owing to the Trustee, the Trustee shall be entitled to seek payment directly
from the Company, but the Trustee shall not be entitled to use contributions
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required by Section 2.1 in satisfaction of amounts owing to the Trustee.
4.2 Withholding of Taxes. While it is anticipated that
the Company will make provision for complying with all applicable withholding
requirements, the Trustee may withhold, require withholding, or otherwise
satisfy its withholding obligation, on any distribution which it is directed to
make, such amount as it may reasonably estimate to be necessary to comply with
applicable federal, state and local withholding requirements. Upon settlement
of such tax liability, the Trustee shall distribute the balance of such amount,
if any. Prior to making any distribution hereunder, the Trustee may require
such release or documents from any taxing authority, or may require such
indemnity, as the Trustee shall reasonably deem necessary for its protection.
ARTICLE 5
ADMINISTRATION OF TRUST FUND
5.1 Management and Control of Trust Fund. Subject to the
terms of this Agreement, the Trustee shall have exclusive authority, discretion
and responsibility to manage and control the assets of the Trust Fund.
5.2 Investment of Funds. Except as otherwise provided in
Section 2.3 and in this Section 5.2, the Trustee shall invest and reinvest the
Trust Fund exclusively in Company Stock, including any accretions thereto
resulting from the proceeds of a tender offer, recapitalization or similar
transaction which, if not in Company Stock, shall be reduced to cash as soon as
practicable. The Trustee may invest any portion of the Trust Fund temporarily
pending investment in Company Stock, distribution or payment of expenses in (i)
investments in United States Government obligations with maturities of less
than one year, (ii) interest-bearing accounts including but not limited to
certificates of deposit, time deposits, saving accounts and money market
accounts with maturities of less than one year in any bank, including the
Trustee's, with aggregate capital in excess of $1,000,000,000 and a Moody's
Investors Service rating of at least P1, or an equivalent rating from a
nationally recognized ratings agency, which accounts are insured by the Federal
Deposit Insurance Corporation or other similar federal agency, (iii)
obligations issued or guaranteed by any agency or instrumentality of the United
States of America with maturities of less than one year or (iv) short-term
discount obligations of the Federal National Mortgage Association, provided
that none of such investments, accounts or obligations shall be what are
commonly referred to as "derivative" investments, accounts or obligations.
5.3 Trustee's Administrative Powers. Except as otherwise
provided herein, and subject to the Trustee's duties hereunder, the Trustee
shall have the following powers and rights, in addition to those provided
elsewhere in this Agreement or by law:
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(a) to retain any asset of the Trust Fund for the purposes
set forth herein;
(b) subject to Section 2.3, Article 3, Section 5.2,
Section 5.4 and Section 8.3, to sell, transfer, mortgage, pledge, lease or
otherwise dispose of, or grant options with respect to, any Trust Fund assets
at public or private sale;
(c) upon direction from the Company, to borrow from any
lender (including the Company pursuant to the Loan), to acquire Company Stock
as authorized by this Agreement, to enter into loan agreements upon such terms
(including reasonable interest and security for the loan and rights to
renegotiate and prepay such loan) as may be determined by the Committee;
provided, however, that any collateral given by the Trustee for the Loan shall
be limited to cash and property contributed by the Company to the Trust and
dividends paid on Company Stock held in the Trust Fund and shall not include
Company Stock acquired with the proceeds of the Loan;
(d) with the consent of the Committee, to settle, submit
to arbitration, compromise, contest, prosecute or abandon claims and demands in
favor of or against the Trust Fund;
(e) to vote or to give any consent with respect to any
securities, including any Company Stock, held by the Trust either in person or
by proxy for any purpose, provided that the Trustee shall vote, tender or
exchange all shares of Company Stock as provided in Section 5.4;
(f) to exercise any of the powers and rights of an
individual owner with respect to any asset of the Trust Fund and to perform any
and all other acts that in its judgment are necessary or appropriate for the
proper administration of the Trust Fund, even though such powers, rights and
acts are not specifically enumerated in this Agreement;
(g) to employ such accountants, actuaries, investment
bankers, appraisers, other advisors and agents as may be reasonably necessary
in collecting, managing, administering, investing, valuing, distributing and
protecting the Trust Fund or the assets thereof or any borrowings of the
Trustee made in accordance with Section 5.3(c); and to pay their reasonable
fees and expenses, which shall be deemed to be expenses of the Trust and for
which the Trustee shall be reimbursed in accordance with Section 4.1;
(h) to cause any asset of the Trust Fund to be issued,
held or registered in the Trustee's name or in the name of its nominee, or in
such form that title will pass by delivery, provided that the records of the
Trustee shall indicate the true ownership of such asset;
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<PAGE> 15
(i) to utilize another entity as custodian to hold, but
not invest or otherwise manage or control, some or all of the assets of the
Trust Fund; and
(j) to consult with legal counsel (who may also be counsel
for the Trustee or the Company generally) with respect to any of its duties or
obligations hereunder; and to pay the reasonable fees and expenses of such
counsel, which shall be deemed to be expenses of the Trust and for which the
Trustee shall be reimbursed in accordance with Section 4.1.
Notwithstanding the foregoing, neither the Trust nor the Trustee shall have any
power to, and shall not, engage in any trade or business.
5.4 Rights Regarding Common Stock.
(a) Voting Rights. Subject to the provisions of Section
160 of the General Corporation Law of the State of Delaware, the Trustee shall
follow the directions of the Board of Directors of the Company with respect to
the manner of voting of Company Stock held by the Trust on each matter pending
before an annual or special meeting of stockholders of the Company or any
action by written consent of such stockholders in lieu of a meeting.
(b) Tender or Exchange Offer. If a tender or exchange
offer is commenced for Company Stock other than by the Company, the Company
Stock held by the Trust shall be transferred to the Company in full payment of
the remaining balance of the Loan. If the Company commences a tender or
exchange offer for Company Stock, the Trustee will follow the instructions of
the Company as to the tender or exchange of the Company Stock held by the
Trust.
5.5 Indemnification.
(a) To the extent lawfully allowable, the Company shall
and hereby does indemnify and hold harmless the Trustee from and against any
claims, demands, actions, administrative or other proceedings, causes of
action, liability, loss, costs, damage or expense (including reasonable
attorneys' fees), which may be asserted against it, in any way arising out of
or incurred as a result of its action or failure to act in connection with the
operation and administration of the Trust; provided that such indemnification
shall not apply to the extent that the Trustee has acted in willful or
negligent violation of applicable law or its duties under this Trust or in bad
faith. The Trustee shall be under no liability to any person for any loss of
any kind which may result (i) by reason of any action taken by it in accordance
with any direction of the Committee or pursuant to Section 5.4, (ii) by reason
of its failure to exercise any power or authority or to take any action
hereunder because of the failure of the Committee to give directions to the
Trustee, as provided for in this Agreement or (iii) by reason of any act or
omission of the Committee with
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<PAGE> 16
respect to its duties under this Trust. The Trustee shall be fully protected
in acting upon any instrument, certificate or paper delivered by the Committee
or the trustee or administrator of any Plan and believed in good faith by the
Trustee to be genuine and to be signed or presented by the proper person or
persons, and the Trustee shall be under no duty to make any investigation or
inquiry as to any statement contained in any such writing, but may accept the
same as conclusive evidence of the truth and accuracy of the statements therein
contained.
(b) The Company may, but shall not be required to,
maintain liability insurance to insure its obligations hereunder. If any
payments made by the Company or the Trust pursuant to this indemnity are
covered by insurance, the Company or the Trust (as applicable) shall be
subrogated to the rights of the indemnified party against the insurance
company.
(c) Without limiting the generality of the foregoing, the
Company may, at the request of the Trustee, advance to the Trustee reasonable
amounts of expenses, including reasonable attorneys' fees and expenses, which
the Trustee has advised have been incurred in connection with its investigation
or defense of any claim, demand, action, cause of action, administrative or
other proceeding arising out of or in connection with the Trustee's performance
of its duties under this Agreement.
5.6 General Duty to Communicate to Committee. The Trustee
shall promptly notify the Committee of all communications with or from any
government agency or with respect to any legal proceeding with regard to the
Trust and with or from any Plan Participants concerning their entitlements
under the Plans or the Trust.
ARTICLE 6
ACCOUNTS AND REPORTS OF TRUSTEE
6.1 Records and Accounts of Trustee. The Trustee shall
maintain accurate and detailed records and accounts of all transactions of the
Trust, which shall be available at all reasonable times for inspection or audit
by any person designated by the Company and which shall be retained as required
by applicable law.
6.2 Fiscal Year. The fiscal year of the Trust shall be
the twelve month period beginning on October 1 and ending on September 30.
6.3 Reports of Trustee. Within thirty (30) days following
the close of each fiscal year of the Trust and each quarter of each fiscal year
of the Trust, the Trustee shall prepare and present to the Committee a report
for the period ending on the last day of such fiscal year and/or quarter of
such fiscal year, as the case may be, listing all securities and other property
acquired
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or disposed of and all receipts, disbursements and other transactions effected
by the Trust during such period, and further listing all cash, securities, and
other property held by the Trust, together with the Fair Market Value thereof,
as of the end of such period. In addition to the foregoing, the report shall
contain such information regarding the Trust Fund's assets and transactions as
the Committee in its discretion may reasonably request. The Trustee shall also
prepare and present to the Committee such reports for other periods as the
Committee may reasonably request. Except as otherwise provided in the next
sentence, all tax returns and other regulatory filings, if any, required by the
Trust shall be prepared by the Trustee and submitted to the Committee for the
Company's review at least thirty (30) days before the due date (excluding any
extension thereof) for filing such tax return or other regulatory filing. The
Company may, upon written notice to the Trustee, assume the responsibility for
preparing any tax return or other regulatory filing required by the Trust. The
Trustee shall timely file all such tax returns and other regulatory filings, if
any, as shall be directed by the Company and shall promptly provide copies of
such filings to the Committee.
6.4 Final Report. In the event of the resignation or
removal of a Trustee hereunder, the Committee may request and the Trustee shall
with reasonable promptness submit, for the period ending on the effective date
of such resignation or removal, a report similar in form and purpose to that
described in Section 6.3.
ARTICLE 7
SUCCESSION OF TRUSTEE
7.1 Resignation of Trustee. The Trustee or any successor
thereto may resign as Trustee hereunder at any time upon delivering a written
notice of such resignation, to take effect 30 days after the delivery thereof
to the Committee, unless the Committee accepts shorter notice; provided,
however, that no such resignation shall be effective until a successor Trustee
has assumed the office of Trustee hereunder.
7.2 Removal of Trustee. The Trustee or any successor
thereto may be removed by the Company by delivering to the Trustee so removed
an instrument executed by the Committee. Such removal shall take effect at the
date specified in such instrument, which shall not be less than 30 days after
delivery of the instrument, unless the Trustee accepts shorter notice;
provided, however, that no such removal shall be effective until a successor
Trustee has assumed the office of Trustee hereunder.
7.3 Appointment of Successor Trustee. Whenever the
Trustee or any successor thereto shall resign or be removed or a vacancy in the
position shall otherwise occur, the Committee shall use its best efforts to
appoint a successor Trustee as soon as practicable after receipt by the
Committee of a notice described in
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Section 7.1, or the delivery to the Trustee of a notice described in Section
7.2, as the case may be, but in no event more than 60 days after receipt or
delivery, as the case may be, of such notice. A successor Trustee's
appointment shall not become effective until such successor shall accept such
appointment by delivering its acceptance in writing to the Company. If a
successor is not appointed within such 60 day period, the Trustee, at the
Company's expense, may petition a court of competent jurisdiction for
appointment of a successor. In any event only a corporation with trust powers
under applicable law, which is not an affiliate of the Company, may be a
successor trustee hereunder.
7.4 Succession to Trust Fund Assets. The title to all
property held hereunder shall vest in any successor Trustee acting pursuant to
the provisions hereof without the execution or filing of any further
instrument, but a resigning or removed Trustee shall execute all instruments
and do all acts necessary to vest title in the successor Trustee. Each
successor Trustee shall have, exercise and enjoy all of the powers, both
discretionary and ministerial, herein conferred upon its predecessors. A
successor Trustee shall not be obliged to examine or review the accounts,
records, or acts of, or property delivered by, any previous Trustee and shall
not be responsible for any action or any failure to act on the part of any
previous Trustee.
7.5 Continuation of Trust. In no event shall the legal
disability, resignation or removal of a Trustee terminate the Trust, but the
Committee shall forthwith appoint a successor Trustee in accordance with
Section 7.3 to carry out the terms of the Trust.
7.6 Changes in Organization of Trustee. In the event that
any corporate Trustee hereunder shall be converted into, shall merge or
consolidate with, or shall sell or transfer substantially all of its assets and
business to, another corporation, state or federal, the corporation resulting
from such conversion, merger or consolidation, or the corporation to which such
sale or transfer shall be made, shall thereafter become and be the Trustee
under the Trust with the same effect as though originally so named but only if
such corporation is qualified to be a successor trustee hereunder.
7.7 Continuance of Trustee's Powers in Event of
Termination of the Trust. In the event of the termination of the Trust, as
provided herein, the Trustee shall dispose of the Trust Fund in accordance with
the provisions hereof. Until the final distribution of the Trust Fund, the
Trustee shall continue to have all powers provided hereunder as necessary or
expedient for the orderly liquidation and distribution of the Trust Fund.
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ARTICLE 8
AMENDMENT OR TERMINATION
8.1 Amendments. Except as otherwise provided herein, the
Company may amend the Trust at any time and from time to time in any manner
which it deems desirable, provided, however:
(a) no amendment that would adversely affect the
contingent rights of Plan Participants may change:
(i) the allocation formula contained in Section
3.1 or Section 3.2 so as to change the number
of Released Shares in any Trust Year;
(ii) the terms of Sections 2.1, 2.3, 3.2, 5.4,
8.1, 8.2 or 8.3; and
(b) no amendment may change the duties of the Trustee
without the Trustee's consent, which consent shall not
be unreasonably withheld.
Notwithstanding the foregoing, the Company, acting in good
faith taking into account the best interests of a broadly based population of
individuals employed by the Company or broadly based employee benefit plans in
which such persons participate, shall retain the power under all circumstances
to amend the Trust to add employee benefit plans to, or delete Plans from,
Schedule A and to clarify any ambiguities or similar issues of interpretation
in this Agreement.
8.2 Termination. The Trust shall terminate upon the
earlier of (i) September 30, 2000, or (ii) the date on which the Trust no
longer holds any assets. The Board of Directors may terminate the Trust at any
time prior to the date the Trust terminates pursuant to the preceding sentence.
8.3 Effect of Termination. Upon termination of the Trust,
the Trustee shall sell sufficient remaining assets of the Trust so that the
proceeds of such sale, together with any other available cash, can be applied
to pay in full the remaining principal of the Loan and any accrued but unpaid
interest thereon. The Committee may direct the Trustee as to the timing and
manner of such sale in order to comply with applicable law and to avoid, if
possible, adverse effects on the publicly traded market price of Company Stock.
In the event the proceeds of the sale shall be insufficient to discharge the
Loan in its entirety, the Company shall be deemed to have forgiven all amounts
which shall remain due and owing thereon. Any assets or Company Stock
remaining in the Trust after such payment in full of the Loan shall be
distributed to or for the benefit of any employee benefit plan (including one
or more of the Plans) in which a broad cross section of non-collectively
bargained employees of the Company or its subsidiaries
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<PAGE> 20
participate, as the Committee shall, in its sole discretion, determine.
8.4 Merger. If the Company is merged into another
corporation or another corporation is merged into the Company then (a) the
surviving corporation shall become the grantor of the Trust, (b) the assets of
the Trust shall be subject to the claims of the creditors of the surviving
corporation in accordance with Article 1, above, and (c) the provisions of this
Agreement which apply to Company Stock (including without limitation the
provisions of Article 3, above) shall apply to the stock of the surviving
corporation held hereunder or transferred to the Trust.
8.5 Form of Amendment or Termination. Any amendment or
termination of the Trust shall be evidenced by an instrument in writing signed
by an authorized officer of the Company, certifying that said amendment or
termination has been authorized and directed by the Company or the Board of
Directors, as applicable, and, in the case of any amendment, shall be consented
to by signature of an authorized officer of the Trustee, if required by Section
8.1.
ARTICLE 9
MISCELLANEOUS
9.1 Controlling Law. The laws of the State of Delaware
shall be the controlling law in all matters relating to the Trust, without
regard to conflicts of law.
9.2 Committee Action. Any action required or permitted to
be taken by the Committee may be taken on behalf of the Committee by any
individual so authorized. The Company shall furnish to the Trustee the name
and specimen signature of each member of the Committee upon whose statement of
a decision or direction the Trustee is authorized to rely. Until notified of a
change in the identity of such person or persons, the Trustee shall act upon
the assumption that there has been no change.
9.3 Notices. All notices, requests, or other
communications required or permitted to be delivered hereunder shall be in
writing, delivered by registered or certified mail, return receipt requested,
telecopier or hand delivery as follows:
To the Company: Browning-Ferris Industries, Inc.
757 N. Eldridge
Houston, Texas 77079
Attention: Treasurer
Telecopier: (713) 584-8622
Assistant Secretary
Telecopier: (713) 584-8652
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<PAGE> 21
To the Trustee: Wachovia Bank of North Carolina, N.A.
301 North Main Street
Winston-Salem, North Carolina 27150-3099
Attention: Alan C. Frazier
Telecopier: (910) 770-4059
Any party hereto may from time to time, by written notice given as aforesaid,
designate any other address to which notices, requests or other communications
addressed to it shall be sent.
9.4 Severability. If any provision of the Trust shall be
held illegal, invalid or unenforceable for any reason, such provision shall not
affect the remaining parts hereof, but the Trust shall be construed and
enforced as if said provision had never been inserted herein.
9.5 Protection of Persons Dealing with the Trust. No
person dealing with the Trustee shall be required or entitled to monitor the
application of any money paid or property delivered to the Trustee, or
determine whether or not the Trustee is acting pursuant to authorities granted
to it hereunder or to authorizations or directions herein required.
9.6 Tax Status of Trust. It is intended that the Company,
as grantor hereunder, be treated as the owner of the entire Trust and the trust
assets under Section 671, et seq. of the Code. Until advised otherwise, the
Trustee may presume that the Trust is so characterized for federal income tax
purposes and shall make all filings of tax returns on that presumption.
9.7 Participants to Have No Interest in the Company by
Reason of the Trust. Neither the creation of the Trust nor anything contained
in the Trust shall be construed as giving any person, including any individual
employed by the Company or any subsidiary of the Company, any equity or
interest in the assets, business or affairs of the Company.
9.8 Nonassignability. No right or interest of any person
to receive distributions from the Trust shall be assignable or transferable, in
whole or in part, either directly or by operation of law or otherwise,
including, but not by way of limitation, execution, levy, garnishment,
attachment, pledge, or bankruptcy, but excluding death or mental incompetency,
and, to the fullest extent permitted by applicable law, no right or interest of
any person to receive distributions from the Trust shall be subject to any
obligation or liability of any such person, including claims for alimony or the
support of any spouse or child.
9.9 Gender and Plurals. Whenever the context requires or
permits, the masculine gender shall include the feminine gender and the
singular form shall include the plural form and shall be interchangeable.
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<PAGE> 22
9.10 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be considered an original.
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<PAGE> 23
IN WITNESS WHEREOF, the Company and the Trustee have caused
this Agreement to be signed, and their seals affixed hereto, by their
authorized officers all as of the day, month and year first above written.
BROWNING-FERRIS INDUSTRIES, INC.
By: /s/ Henry L. Hirvela
-------------------------------------
Name: Henry L. Hirvela
Title: Vice President & Treasurer
WACHOVIA BANK OF NORTH CAROLINA, N.A.
By: /s/ Alan C. Frazier
-------------------------------------
Name: Alan C. Frazier
Title: Vice President
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<PAGE> 24
SCHEDULE A
PLANS
BFI Retirement Plan
BFI Employee Stock Ownership and Savings Plan
1983 Stock Option Plan of Browning-Ferris Industries, Inc.
1987 Stock Option Plan of Browning-Ferris Industries, Inc.
1990 Stock Option Plan of Browning-Ferris Industries, Inc.
1993 Stock Incentive Plan
1993 Non-Employee Director Stock Plan
Pension Plan of San Mateo County Scavenger and Affiliated Companies
BFI Medical Plan - Group Insurance Plan for Employees of Browning-Ferris
Industries, Inc.
BFI Dental Plan
BFI Long Term Disability Group Insurance Plan
Group Term Life Insurance and Accidental Death and Dismemberment Plan for
Browning-Ferris Industries, Inc.
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<PAGE> 1
EXHIBIT 10.29
COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (the "Agreement") is made this
28th day of February, 1995, between Browning-Ferris Industries, Inc., a
Delaware corporation (the "Seller" or the "Company"), and Wachovia Bank of
North Carolina, N.A., not in its individual or corporate capacity, but solely
in its capacity as trustee (the "Trustee") of the Browning-Ferris Industries,
Inc. Stock and Employee Benefit Trust (the "Trust", which is hereinafter
sometimes referred to as the "Purchaser") under a trust agreement between the
Seller and the Trustee dated as of February 28, 1995 (the "Trust Agreement").
W I T N E S S E T H:
WHEREAS, as contemplated by the Trust Agreement, the Purchaser is to
purchase from the Seller, and the Seller is to sell to the Purchaser,
15,000,000 shares of the Seller's Common Stock, par value $.16 2/3 per share
(the "Common Shares"), all as more specifically provided herein;
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to and on the terms and conditions
herein set forth, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
1.1. Purchase and Sale. Subject to the terms and conditions set
forth herein, the Seller will sell to the Purchaser, and the Purchaser will
purchase from the Seller, at the Closing (as hereinafter defined), the Common
Shares, and, in consideration for the Common Shares, the Purchaser will deliver
to the Seller (i) the note in the form of Appendix 1 to this Agreement in the
principal amount of $456,874,500 (the "Note") and (ii) cash in the amount of
$2,500,500.
1.2. Closing. The closing of the sale and purchase of the Common
Shares hereunder (the "Closing") will be held at the offices of the Seller at
10:00 a.m. Houston, Texas time, on the date of execution and delivery of this
Agreement by the Seller and the Purchaser, or at such other time, date and
place as may be mutually agreed upon by the Seller and the Purchaser.
1.3. Delivery and Payment. At the Closing, the Seller will deliver
to the Purchaser a certificate representing the Common Shares, which
certificate shall be registered in the name of the Trustee, or the name of its
nominee, against payment therefor by the Purchaser to the Seller of the
aggregate consideration set forth in Section 1.1 hereof. The Seller will pay
all stamp and other transfer taxes, if any, that may be payable in respect of
the sale and delivery of the Common Shares.
<PAGE> 2
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Purchaser as follows:
2.1. Corporate Existence and Authority. The Seller (a) is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, (b) has all requisite corporate power to
execute, deliver and perform this Agreement and (c) has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement.
2.2. No Conflict. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby will
not, violate, conflict with or constitute a default under (a) the Seller's
certificate of incorporation or bylaws, (b) any agreement, indenture or other
instrument to which the Seller is a party or by which the Seller or its assets
may be bound or (c) any law, regulation, order, arbitration, award, judgment or
decree applicable to the Seller.
2.3. Validity. This Agreement has been duly executed and delivered
by the Seller and is a valid and binding agreement of the Seller enforceable
against the Seller in accordance with its terms, except as the enforceability
thereof may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other laws affecting the
enforcement of creditors' rights generally, and by general principles of
equity.
2.4. The Common Shares. The Common Shares have been duly
authorized and, when sold as contemplated hereby, will be validly issued,
fully-paid and non-assessable shares of the Seller. No stockholder of the
Seller has any preemptive or other subscription right to acquire any shares of
Common Stock. The Seller will convey to the Purchaser, on the date of Closing,
good and valid title to the Common Shares free and clear of any liens, claims,
security interests and encumbrances.
2.5. Litigation. There are no actions, suits, proceedings,
arbitrations or investigations pending or, to the Seller's best knowledge,
threatened in any court or before any governmental agency or instrumentality or
arbitration panel or otherwise against or by the Seller which seek to or could
restrain, prohibit, rescind or declare unlawful, or result in substantial
damages in respect of, this Agreement or the performance hereof by the Seller
(including, without limitation, the delivery of the Common Shares).
2.6. Business and Financial Information. Seller has heretofore
delivered to the Purchaser copies of the audited consolidated balance sheets,
statements of stockholders' equity, statements of income and statements of cash
flows of Seller and its consolidated subsidiaries as of and for the fiscal
years ended September 30, 1993 and 1994 and the unaudited consolidated balance
sheet, statement of stockholders' equity, statement of income and
- 2 -
<PAGE> 3
statement of cash flows of Seller and its consolidated subsidiaries as of and
for the three months ended December 31, 1994 (including the related notes and
schedules, the "Seller Financial Statements"). The Seller Financial Statements
fairly present the consolidated results of operations, changes in stockholders'
equity and cash flows for the periods set forth therein and the consolidated
financial position as at the dates thereof of Seller and its consolidated
subsidiaries, in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as set forth in
the notes thereto and subject, in the case of unaudited financial statements,
to the omission of certain notes not ordinarily accompanying such unaudited
financial statements and to normal year-end audit adjustments which in each
case will not be material to Seller and its consolidated subsidiaries taken as
a whole. Since September 30, 1994, Seller has filed with the Securities and
Exchange Commission all forms, reports and documents required pursuant to the
Securities Act of 1933, as amended (the "1933 Act"), and the Securities
Exchange Act of 1934, as amended (the "1934 Act"), to be filed by it (the
"Disclosure Documents"). At the time filed, all of the Disclosure Documents
complied as to form in all material respects with all applicable requirements
of such Acts. None of the Disclosure Documents, at the time filed, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Seller as follows:
3.1. Authority; Validity. The Purchaser has full power and
authority under the Trust to execute and deliver this Agreement and the Note
and to consummate the transactions contemplated hereby. This Agreement has
been duly authorized, executed and delivered by the Trustee on behalf of the
Trust and is a valid and binding agreement of the Purchaser enforceable in
accordance with its terms, except as the enforceability thereof may be limited
by any applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other laws affecting the enforcement of creditors'
rights generally, and by general principles of equity. The Note has been duly
authorized by the trustee on behalf of the Trust and, upon execution and
delivery by the Trustee on behalf of the Trust, the Note will be a valid and
binding agreement of the Purchaser enforceable in accordance with its terms,
except as the enforceability thereof may be limited by any applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other laws affecting the enforcement of creditors' rights generally, and by
general principles of equity.
3.2. No Conflict. The execution and delivery of this Agreement do
not, and the execution and delivery of the Note and
- 3 -
<PAGE> 4
the consummation of the transactions contemplated hereby and thereby will not,
violate, conflict with or constitute a default under (a) the terms of the
Trust, (b) any agreement, indenture or other instrument to which the Trust is a
party or by which the Trust or its assets may be bound or subject or (c) any
law, regulation, order, arbitration award, judgment or decree applicable to the
Trust.
ARTICLE IV
RESTRICTIONS ON DISPOSITION OF THE COMMON SHARES
4.1. Restricted Securities. The Purchaser acknowledges that the
Purchaser is acquiring the Common Shares pursuant to a transaction exempt from
registration under the 1933 Act. The Purchaser represents, warrants and agrees
that all Common Shares acquired by the Purchaser pursuant to this Agreement are
being acquired for investment without any intention of making a distribution
thereof, or of making any sale or other disposition thereof which would be in
violation of the 1933 Act or any applicable state securities law, and that the
Purchaser will not dispose of any of the Common Shares, except that the Trustee
will, from time to time, convey to certain Plans (as defined in the Trust
Agreement) or sell pursuant to an effective Registration Statement under the
1933 Act or an exemption therefrom, a portion of the Common Shares to satisfy
the obligations of the Company or affiliate of the Company under such Plans,
and except upon termination of the Trust to the extent that the Trust then
holds any Common Shares, all in compliance with all provisions of applicable
federal and state law regulating the issuance, sale and distribution of
securities and then only in compliance with the Trust Agreement.
4.2. Legend. Until such time as the Common Shares are registered
pursuant to the provisions of the 1933 Act or may be sold without registration
in accordance with Rule 144 under the 1933 Act, any certificate or certificates
representing the Common Shares delivered pursuant to Section 1.1 will bear a
legend in substantially the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may not
be sold, transferred or otherwise disposed of unless they have first
been registered under such Act or unless an exemption from
registration is available."
The Seller may place stop transfer orders against the registration or transfer
of any shares evidenced by such a certificate or certificates until such time
as the requirements of the foregoing are satisfied.
- 4 -
<PAGE> 5
ARTICLE V
COVENANTS OF SELLER
The Seller agrees that:
5.1. Compliance and Filings. The Seller will comply with all
federal, state, local and foreign laws, regulations or orders, and all the
rules of any stock exchange or similar entity which are applicable to it or to
the conduct of its business, and, without limiting the generality of the
foregoing, shall make such filings, distributions and disclosures as are
required by the 1933 Act, the 1934 Act or any of the regulations, rules or
orders promulgated thereunder, insofar as the failure to comply would
materially and adversely affect the Company and its subsidiaries taken as a
whole. The Seller will maintain complete and accurate books, records and
accounts in accordance with the requirements of Section 13(b)(2) under the 1934
Act.
5.2. Registration; Listing. As soon as practicable after the
Closing, the Seller shall cause the Common Shares to be listed on the New York
Stock Exchange, Inc. The Seller will, after a written request by the Committee
(as such term is defined in the Trust Agreement) to register under the 1933 Act
such number of Common Shares as the Committee may from time to time direct,
prepare for filing at the Seller's expense a registration statement with the
Securities and Exchange Commission sufficient to permit the public offering of
such Common Shares in accordance with the terms of this Agreement, and the
Seller will use its best efforts in all matters necessary or advisable to cause
such registration statement to become effective as promptly as practicable and
to remain effective for a reasonable period, all to the extent requisite to
permit the sale or other disposition of such Common Shares. The Seller shall
also use its best efforts to register or qualify the Common Shares so
registered under the securities and blue sky laws of such jurisdictions within
the United States as the Trustee may reasonably request, provided, however,
that the Seller shall not be required to consent to general service of process
for all purposes in any jurisdiction where it is not then qualified.
ARTICLE VI
CONDITIONS TO CLOSING
6.1. Conditions to Obligations of Purchaser. The obligation of the
Purchaser to purchase the Common Shares is subject to the satisfaction of the
following conditions on the date of Closing:
(a) The representations and warranties of the Seller set
forth in Article II hereof shall be true and correct; and if the
Closing shall occur on a date other than the date of this Agreement,
the Purchaser shall have been furnished with a certificate, dated the
date of the Closing, to such effect, signed by an authorized officer
of the Seller; and
- 5 -
<PAGE> 6
(b) All permits, approvals, authorizations and consents
of third parties necessary for the consummation of the transactions
herein shall have been obtained, and no order of any court or
administrative agency shall be in effect which restrains or prohibits
the transactions contemplated by this Agreement, and no suit, action
or other proceeding by any governmental body or other person shall
have been instituted which questions the validity or legality of the
transactions contemplated by this Agreement.
6.2. Conditions to Obligations of the Seller. The obligation of
the Seller to issue, sell and deliver the Common Shares to the Purchaser is
subject to the satisfaction of the following conditions on the date of Closing;
(a) The representations and warranties of the Purchaser
set forth in Article III hereof shall be true and correct; and if the
Closing shall occur on a date other than the date of this Agreement,
the Seller shall have been furnished with a certificate dated the date
of the Closing, to such effect, signed by an authorized officer of the
Trustee; and
(b) No order of any court or administrative agency shall
be in effect which restrains or prohibits the transactions
contemplated by this Agreement, and no suit, action or other
proceeding by any governmental body or other person shall have been
instituted which questions the validity or legality of the
transactions contemplated by this Agreement.
ARTICLE VII
MISCELLANEOUS
7.1. Expenses. The Seller shall pay all of its expenses, and it
shall pay the Purchaser's expenses, in connection with the authorization,
preparation, execution and performance of this Agreement, including, without
limitation, the reasonable fees and expenses of the Trustee, its agents,
representatives, counsel, financial advisors and consultants.
7.2. Survival of Seller's Representations and Warranties. All
representations and warranties made by the Seller to the Purchaser in this
Agreement shall survive the Closing.
7.3. Notices. All notices, requests, or other communications
required or permitted to be delivered hereunder shall be in writing, delivered
by registered or certified mail, return receipt requested, telecopier or hand
delivery as follows:
- 6 -
<PAGE> 7
(a) To the Seller:
Browning-Ferris Industries, Inc.
757 N. Eldridge
Houston, Texas 77079
Attention: Treasurer
Telecopier: (713) 584-8622
Assistant Secretary
Telecopier: (713) 584-8652
(b) To the Purchaser:
Wachovia Bank of North Carolina, N.A.
301 North Main Street
Winston-Salem, North Carolina 27150-3099
Attention: Alan C. Frazier
Telecopier: (910) 770-4059
Any party hereto may from time to time, by written notice given as aforesaid,
designate any other address to which notices, requests or other communications
addressed to it shall be sent.
7.4. Specific Performance. The parties hereto acknowledge that
damages would be an inadequate remedy for any breach of the provisions of this
Agreement and agree that the obligations of the parties hereunder shall be
specifically enforceable, and neither party will take any action to impede the
other from seeking to enforce such rights or specific performance.
7.5. Successors and Assigns; Integration; Assignment. This
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the parties hereto and their respective legal representatives, successors and
assigns. This Agreement (a) constitutes, together with the Note, the Trust
Agreement and any other written agreements between the Purchaser and the Seller
executed and delivered on the date hereof, the entire agreement between the
parties hereto and supersedes all other prior agreements and understandings,
both written and oral, among the parties, with respect to the subject matter
hereof, (b) shall not confer upon any person other than the parties hereto any
rights or remedies hereunder and (c) shall not be assignable by operation of
law or otherwise, except that the Trustee may assign all its rights hereunder
to any corporation or other institution exercising trust powers in connection
with any such institution assuming the duties of a trustee under the Trust.
7.6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
7.7. Further Assurances. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use all reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or
- 7 -
<PAGE> 8
advisable to consummate and make effective the transactions contemplated by
this Agreement.
7.8. Amendment and Waiver. No amendment or waiver of any provision
of this Agreement or consent to departure therefrom shall be effective unless
in writing and signed by the Purchaser and the Seller.
7.9. Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if the signatures thereto were upon one
instrument.
7.10. Certain Limitations. The execution, delivery and performance
by the Trustee of this Agreement have been, and will be, effected by the
Trustee solely in its capacity as Trustee under the terms of the Trust and not
in its individual or corporate capacity. Nothing in this Agreement shall be
interpreted to increase, decrease or modify in any manner any liability of the
Trustee to the Seller or to any trustee, representative or other claimant by
right of the Seller resulting from the Trustee's performance of its duties
under the constituent instruments of the Trust, and no personal or corporate
liability shall be asserted or enforceable against the Trustee by reason of any
of the covenants, statements or representations contained in this Agreement.
7.11. Incorporation. The terms and conditions of the Trust
Agreement relating to the nature of the responsibilities of the Trustee and the
indemnification of the Trustee by the Seller are incorporated herein by
reference and made applicable to this Agreement.
- 8 -
<PAGE> 9
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
on the date and year first above written.
BROWNING-FERRIS INDUSTRIES, INC.
By: /s/ Henry L. Hirvela
------------------------------------
Name: Henry L. Hirvela
Title: Vice President & Treasurer
WACHOVIA BANK OF NORTH CAROLINA, N.A.,
as Trustee
By: /s/ Alan C. Frazier
------------------------------------
Name: Alan C. Frazier
Title: Vice President
- 9 -
<PAGE> 10
APPENDIX 1
PROMISSORY NOTE
$456,874,500.00
Houston, Texas February 28, 1995
FOR VALUE RECEIVED, the undersigned, Wachovia Bank of North
Carolina, N.A., not in its individual or corporate capacity but solely in its
capacity as Trustee of the Browning-Ferris Industries, Inc. Stock and Employee
Benefit Trust (the "Trust") hereby promises on behalf of the Trust to pay to
the order of Browning-Ferris Industries, Inc., a Delaware corporation (the
"Company"), at the principal offices of the Company in Houston, Texas or at
such other place as the Company shall designate in writing, the aggregate
principal amount of FOUR HUNDRED FIFTY SIX MILLION EIGHT HUNDRED SEVENTY FOUR
THOUSAND FIVE HUNDRED AND NO/100 DOLLARS ($456,874,500.00), as shown on Annex A
attached hereto as such may be amended from time to time, with interest in
arrears thereon, as hereinafter provided.
Principal shall be paid in installments in the amounts and on
the dates set forth on the maturity schedule attached hereto as Annex A, the
last such installment due on September 30, 2000; provided, however, that this
Note may be prepaid in whole or in part at any time without penalty in
accordance with Section 2.2 of the Trust Agreement creating the Trust (the
"Trust Agreement"); and provided further, in accordance with Section 2.1 or 2.2
of the Trust Agreement, that all or any portion of the principal of this Note
outstanding at any time, together with any accrued but unpaid interest on this
Note, may be deemed forgiven; and provided further in the event that the Trust
shall have been terminated in accordance with Section 8.2 of the Trust
Agreement and the Trustee shall have complied with the requirements of Section
8.3 of the Trust Agreement, then any remaining principal of this Note then
outstanding, together with any accrued but unpaid interest on this Note, shall
be deemed forgiven. Interest on the unpaid principal balance, at an annual
interest rate equal to 8.5%, shall be paid annually, in arrears, on or before
each October 15 for interest accrued and unpaid as of the previous September
30, such payments commencing October 15, 1995, and shall be calculated on the
basis of a 360-day year of 30-day months. Payments received within any Trust
Year (as defined in the Trust Agreement) shall be applied (i) first to interest
accrued and unpaid as of the date of any such payment and then, to the extent
that any such payment exceeds such accrued and unpaid interest, (ii) to prepay
interest that accrues after such payment through the end of such Trust Year,
and then, (iii) to pay principal installments due within such Trust Year, and
then, (iv) to the extent not otherwise distributed in accordance with Section
2.3 of the Trust Agreement, to additional installments of principal in the
order of their scheduled maturity. Whenever any payment falls due on a
Saturday, Sunday or public holiday, such
- 1 -
<PAGE> 11
payment shall be made on the next succeeding business day. Upon termination of
the Trust, the entire unpaid balance of principal and interest shall be
immediately payable.
This Note shall be construed under the laws of the State of
Delaware.
The undersigned represents and warrants that the indebtedness
represented by this Note was incurred for the purpose of purchasing shares of
Common Stock, par value $.16 2/3 per share, of the Company.
The Note may not be assigned by the Company, other than by
operation of law, without the prior express written consent of the undersigned.
The Company shall have no recourse whatsoever to any assets of
the Trustee in its individual or corporate capacity for repayment. The Trustee
is entering into this Note not in its individual or corporate capacity but
solely as Trustee, and no personal or corporate liability or personal or
corporate responsibilities are assumed by, or shall at any time be asserted or
enforceable against, the Trustee in its individual or corporate capacity under,
or with respect to, this Note.
WACHOVIA BANK OF NORTH CAROLINA, N.A.,
on behalf of
BROWNING-FERRIS INDUSTRIES, INC.
STOCK AND EMPLOYEE BENEFIT TRUST
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
- 2 -
<PAGE> 12
ANNEX A
PRINCIPAL PAYMENT DATES
<TABLE>
<CAPTION>
Principal Principal
Payment Date Payments
------------ -------------
<S> <C>
30-Sep-1995 $ -0-
30-Sep-1996 -0-
30-Sep-1997 -0-
30-Sep-1998 -0-
30-Sep-1999 -0-
30-Sep-2000 456,874,500
------------
$456,874,500
============
</TABLE>
- 1 -
<PAGE> 1
Exhibit 12
BROWNING-FERRIS INDUSTRIES, INC.
AND SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges
(Unaudited)
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
Year Ended September 30,
-------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Earnings Available for
Fixed Charges:
Income before extra-
ordinary item and
minority interest $414,646 $299,474 $197,461 $175,607 $ 66,026
Income taxes 276,430 199,649 129,726 112,273 51,670
-------- -------- -------- -------- --------
Income before income
taxes, extraordinary
item and minority
interest 691,076 499,123 327,187 287,880 117,696
Consolidated interest
expense 159,529 93,159 70,894 71,096 84,129
Interest expense related
to proportionate share
of 50% owned affiliates 19,722 22,689 25,354 25,269 16,520
Portion of rents repre-
senting the interest
factor 31,842 20,868 18,721 16,393 13,319
Less-Equity in earnings
(losses) of affiliates
less than 50% owned 1,643 4,698 -- 22 148
-------- -------- -------- -------- --------
Total 900,526 $631,141 $442,156 $400,616 $231,516
======== ======== ======== ======== ========
Fixed Charges:
Consolidated interest
expense and interest
costs capitalized $170,958 $104,759 $ 89,563 $ 86,908 $ 95,455
Interest expense and
interest costs capi-
talized related to
proportionate share
of 50% owned
affiliates 20,351 22,974 25,484 26,952 22,649
Portion of rents repre-
senting the interest
factor 31,842 20,868 18,721 16,393 13,319
-------- -------- -------- -------- --------
Total $223,151 $148,601 $133,768 $130,253 $131,423
======== ======== ======== ======== ========
Ratio of Earnings to
Fixed Charges 4.04 4.25 3.31(1) 3.08 1.76(2)
======== ======== ======== ======== ========
</TABLE>
(1) Excluding the effects of the fiscal 1993 reorganization charge of $27.0
million, the ratio of earnings to fixed changes for fiscal 1993 is 3.51.
(2) Excluding the effects of the fiscal year 1991 special charge of $246.5
million, the ratio of earnings to fixed charges for fiscal year 1991 is 3.63.
<PAGE> 1
Exhibit 21
(SEE INDEX ON PAGES 7 THROUGH 9 FOR EXPLANATION
OF PARENT AND SUBSIDIARY RELATIONSHIPS)
BROWNING-FERRIS INDUSTRIES, INC.
LIST OF SUBSIDIARIES
<TABLE>
<S> <C>
(10) Al-Mulla Environmental Systems, W.L.L. Kuwait
Acco International, Inc. Texas
Acco Paper Mill Fibers Co., Inc. Texas
Acco Waste Paper, Inc. Texas
Attwoods of North America, Inc. Delaware
Attwoods Inc. Delaware
MedX, Inc. Florida
Enviro-Solutions, Inc. Georgia
Bio-Safe Systems Inc. Wisconsin
National Environmental Services Corp. Illinois
County Sanitation, Inc. Florida
BFI of Port Richmond, Inc. Pennsylvania
Eastern Waste Industries, Inc. Maryland
Mednet, Inc. Maryland
Attwoods Environmental, Inc. Delaware
Attwoods Environmental of Florida, Inc. Florida
Jones Road Landfill and Recycling, Inc. Florida
(14) Jones Road Landfill and Recycling Ltd. Florida
Attwoods Environmental of Pennsylvania, Inc. Pennsylvania
Attwoods New Jersey Holdings, Inc. New Jersey
Aliance Corporation New Jersey
BFI of Mt. Laurel, N.J., Inc. New Jersey
BFI of Southwestern N.J., Inc. New Jersey
Churchdale Leasing, Inc. New Jersey
Eastern Solid Waste Equipment Co. New Jersey
BFI Constructors California
BFI Disposal Systems of North America, Inc. Delaware
BFI Disposal Systems of Alabama, Inc. Delaware
Blount County Disposal, Inc. Alabama
Lawrence County Disposal, Inc. Alabama
South Alabama Disposal, Inc. Alabama
Walker County Disposal, Inc. Alabama
BFI Disposal Systems of Florida, Inc. Florida
Polk County Disposal, Inc. Florida
Wood Resource Recovery, Inc. Florida
BFI Disposal Systems of Georgia, Inc. Delaware
East DeKalb Landfill, Inc. Georgia
Marble Mill Recycling & Transfer Station, Inc. Georgia
Moreland Avenue Disposal, Inc. Georgia
BFI Disposal Systems of Mississippi, Inc. Delaware
Escatawpa Environmental Services, Inc. Mississippi
BFI Disposal Systems of North Carolina, Inc. Delaware
Holly Springs Disposal, Inc. North Carolina
Sampson County Disposal, Inc. North Carolina
BFI Disposal Systems of Ohio, Inc. Delaware
Browning-Ferris Industries of Ohio, Inc. Delaware
( 1) Warner Hill Development Company Ohio
( 1) Warner Hill Improvement Company Ohio
Browning-Ferris Gas Services, Inc. Delaware
BFI Energy Systems, Inc. Delaware
BFI Ref-Fuel, Inc. Delaware
BFI Energy Systems of Albany, Inc. Delaware
BFI Energy Systems of Boston, Inc. Massachusetts
</TABLE>
<PAGE> 2
<TABLE>
<S> <C>
BFI Energy Systems of Essex County, Inc. New Jersey
BFI Energy Systems of Hempstead, Inc. Delaware
BFI Energy Systems of Niagara, Inc. Delaware
BFI Energy Systems of Plymouth, Inc. Delaware
BFI Energy Systems of Southeastern Connecticut, Inc. Delaware
BFI Energy Systems-U.K., Inc. Delaware
BFI Trans River (GP), Inc. Delaware
BFI Trans River (LP), Inc. Delaware
BFI International Finance B.V. Netherlands
BFI Investments, Inc. Delaware
BFI Medical Waste Systems, Inc. Delaware
BFI Medical Waste Systems (Atlantic), Inc. Delaware
BFI Medical Waste Systems of New Jersey, Inc. New Jersey
BFI Medical Waste Systems (South Central), Inc. Tennessee
Health Management, Inc. Tennessee
Bio-Tech Services, Inc. Missouri
BFI Medical Waste Systems (Steel), Inc. Delaware
BFI Medical Waste Systems (Southeast), Inc. Delaware
BFI Medical Waste Systems of Arizona, Inc. Delaware
BFI Medical Waste Systems of California, Inc. Delaware
BFI Medical Waste Systems of Colorado, Inc. Colorado
BFI Medical Waste Systems of Illinois, Inc. Delaware
BFI Medical Waste Systems of Minnesota, Inc. Delaware
BFI Medical Waste Systems of Oregon, Inc. Delaware
BFI Medical Waste Systems of Utah, Inc. Delaware
BFI Medical Waste Systems of Washington, Inc. Delaware
Merrimack Valley Medical Services Company, Inc. Massachusetts
BFI of Metro New York, Inc. Delaware
BFI Organics, Inc. Delaware
BFI Services Group, Inc. California
BFI of Ponce, Inc. Puerto Rico
BFI Northern Transfer, Inc. Delaware
BFI Pharmaceutical Services, Inc. Delaware
BFI Recycling Systems of Minnesota, Inc. Minnesota
BFI Special Services, Inc. Delaware
BFI Waste Systems of North America, Inc. Delaware
BFI Transportation, Inc. Delaware
BFI Waste Systems of Michigan, Inc. Delaware
BFI Waste Systems of Ohio, Inc. Delaware
Karas Trucking Co., Inc. Ohio
Lorain County Resource Recovery Complex, Inc. Delaware
Youngstown BFI Waste Systems, Inc. Ohio
BFI Whispering Oaks Sanitary Landfill, Inc. Missouri
Browning-Ferris, Inc. Delaware
BFI de Mexico, S.A. deC.V. Mexico
BFI Medical Waste Systems of Texas, Inc. Texas
Browning-Ferris Industries of Louisiana, Inc. Louisiana
Health Management of New Orleans, Inc. Louisiana
Ninety Plus, Inc. Louisiana
RMRR, Inc. Texas
Browning-Ferris, Inc. Maryland
BFI Transfer Systems of Maryland, Inc. Maryland
Mon Valley Sanitary Landfill, Inc. Pennsylvania
TRC, Inc. Pennsylvania
Browning-Ferris Industries Chemical Services, Inc. Nevada
Browning-Ferris Industries, Inc. Massachusetts
Northern Disposal, Inc. Massachusetts
Suburban Disposal Co., Inc. Massachusetts
</TABLE>
- 2 -
<PAGE> 3
<TABLE>
<S> <C>
Browning-Ferris Industries Ltd. Ontario
389343 Alberta Ltd. Alberta
(31) Eldridge Finance Company Republic of Ireland
Contenants - Rebut Cadi Ltee Quebec
Usine de Triage Lachenaie Inc. Quebec
BFI Energy Inc. Quebec
( 2) Environmental Waste Systems, Inc. Ontario
10133 Newfoundland Limited Newfoundland
Browning-Ferris Industries (DC), Inc. Delaware
Browning-Ferris Industries of Alabama, Inc. Alabama
Browning-Ferris Industries of Arizona, Inc. Delaware
Browning-Ferris Industries of Arkansas, Inc. Arkansas
Browning-Ferris Industries of California, Inc. California
American Sheds, Inc. California
Azusa Land Reclamation Co., Inc. California
Keller Canyon Landfill Company California
Loma Linda Disposal Company, Inc. California
Pleasant Hill Bayshore Disposal, Inc. California
Browning-Ferris Industries of Colorado, Inc. Colorado
Jeffco Land Reclamation Company Colorado
RPS, Inc. Colorado
Browning-Ferris Industries of Connecticut, Inc. Delaware
Browning-Ferris Industries of Florida, Inc. Delaware
Tanis Leasing Company Florida
Browning-Ferris Industries of Georgia, Inc. Georgia
BFI Tire Recyclers of Georgia, Inc. Georgia
Browning-Ferris Industries of Atlanta, Inc. Delaware
( 3) UWL, Inc. Georgia
Browning-Ferris Industries of Hawaii, Inc. Delaware
Honolulu Environmental Transfer, Inc. Hawaii
Browning-Ferris Industries of Idaho, Inc. Idaho
Browning-Ferris Industries of Illinois, Inc. Delaware
Active Service Corp. Illinois
Brooks Disposal Service, Inc. Illinois
(11) Congress Development Co. Illinois
E&E Hauling, Inc. Illinois
Hoving and Sons, Inc. West Virginia
Oak Brook Disposal, Inc. Illinois
Browning-Ferris Industries of Indiana, Inc. Indiana
Browning-Ferris Industries of Iowa, Inc. Iowa
Browning-Ferris Industries of Kansas City, Inc. Missouri
Browning-Ferris Industries of Kansas, Inc. Kansas
Browning-Ferris Industries of Kentucky, Inc. Delaware
Browning-Ferris Industries of Maine, Inc. Delaware
Browning-Ferris Industries of Marion County, Inc. Delaware
Browning-Ferris Industries of Michigan, Inc. Michigan
Browning-Ferris Industries of Minnesota, Inc. Minnesota
Action Disposal System, Inc. Minnesota
BFI Tire Recyclers of Minnesota, Inc. Minnesota
FFF, Inc. Minnesota
Browning-Ferris Industries of Mississippi, Inc. Mississippi
Browning-Ferris Industries of Mississippi Valley, Inc. Missouri
Browning-Ferris Industries of Montana, Inc. Nevada
Browning-Ferris Industries of Nebraska, Inc. Nebraska
Browning-Ferris Industries of New Hampshire, Inc. New Hampshire
Hooksett Recycling & Processing Center, Inc. New Hampshire
Browning-Ferris Industries of New Jersey, Inc. New Jersey
BFI Transfer Systems of New Jersey, Inc. New Jersey
</TABLE>
- 3 -
<PAGE> 4
<TABLE>
<S> <C>
Browning-Ferris Industries of Central Jersey, Inc. Delaware
Browning-Ferris Industries of Elizabeth, N.J., Inc. New Jersey
Browning-Ferris Industries of Gloucester, N.J., Inc. New Jersey
Browning-Ferris Industries of North Jersey, Inc. New Jersey
Browning-Ferris Industries of Paterson, N.J., Inc. New Jersey
Browning-Ferris Industries of South Jersey, Inc. New Jersey
Browning-Ferris Industries of Western Jersey, Inc. New Jersey
Browning-Ferris Industries of Southwestern Jersey, Inc. New Jersey
Browning-Ferris Industries of New York, Inc. New York
Browning-Ferris Industries of Northern Michigan, Inc. Michigan
Browning-Ferris Industries of Ohio and Michigan, Inc. Ohio
BFI Great Lakes Medical, Inc. Michigan
Browning-Ferris Industries of Oregon, Inc. Oregon
Browning-Ferris Industries of Pennsylvania, Inc. Delaware
Homestand Land Corp. Pennsylvania
Imperial Landfill Company, Inc. Pennsylvania
New Morgan Landfill Company, Inc. Pennsylvania
Browning-Ferris Industries of Pinal County, Inc. Arizona
Browning-Ferris Industries of Puerto Rico, Inc. Puerto Rico
Browning-Ferris Industries of Quincy, Illinois, Inc. Iowa
Longview of Northeast Missouri, Inc. Missouri
Browning-Ferris Industries of Rhode Island, Inc. Delaware
BFI Rhode Island Acquisition, Inc. Delaware
Browning-Ferris Industries of Rochester, Inc. Minnesota
Browning-Ferris Industries of South Atlantic, Inc. North Carolina
CMS Development Corp. North Carolina
Browning-Ferris Industries of Southern Illinois, Inc. Delaware
Browning-Ferris Industries of Southeastern Michigan, Inc. Michigan
Browning-Ferris Industries of Springfield, Inc. Missouri
Springfield Relay Systems, Inc. Missouri
Browning-Ferris Industries of St. Louis, Inc. Delaware
BFI Modern Landfill, Inc. Illinois
Halls Ferry Investments, Inc. Missouri
Jeffco Land Reclamation, Inc. Missouri
Longview of St. Louis, Inc. Missouri
Schroder Solid-Waste Service, Inc. Missouri
Browning-Ferris Industries of Tennessee, Inc. Tennessee
Jefferson Pike Landfill, Inc. Delaware
T.R.A.S.H., Inc. Tennessee
Browning-Ferris Industries of Utah, Inc. Utah
Browning-Ferris Industries of Vermont, Inc. Vermont
Browning-Ferris Industries of Washington, Inc. Washington
Browning-Ferris Industries of Western Kansas, Inc. Kansas
Browning-Ferris Industries of West Virginia, Inc. Delaware
Browning-Ferris Industries of Wisconsin, Inc. Wisconsin
River City Refuse Removal, Inc. Wisconsin
Town & Country Waste Service, Inc. Wisconsin
Troy Area Landfill, Inc. Wisconsin
Browning-Ferris Industries of Wyoming, Inc. Wyoming
BFI International, Inc. Delaware
BFI Atlantic, Inc. Delaware
(34) BFI Atlantic GmbH Germany
(35) Otto Entsorgungsdienstleistung GmbH Germany
BFI Waste Systems (Thailand) Limited Kingdom of Thailand
Browning-Ferris Industries Chile, Inc. Delaware
(33) Browning-Ferris Industries (Australia) Pty. Ltd. Australia
Browning-Ferris Industries (A.C.T.) Pty. Ltd. Australia
Browning-Ferris Industries (Cranbourne) Pty. Ltd. Australia
</TABLE>
- 4 -
<PAGE> 5
<TABLE>
<S> <C>
Browning-Ferris Industries (N.S.W.) Pty. Ltd. Australia
Browning-Ferris Industries (S.A.) Pty. Ltd. Australia
Browning-Ferris Industries (Superahhuation) Pty Ltd. Australia
Browning-Ferris Industries (Vic.) Pty. Ltd. Australia
Browning-Ferris Industries Asia Pacific, Inc. Delaware
(32) UMW-BFI Waste Services Sdn Bhd Malaysia
Browning-Ferris Industries Malaysia Sdn Bhd Malaysia
(15) Swire BFI Waste Services Ltd. Hong Kong
(36) C.S.R. Macau - Compenhia de Sistemas Macau
de Residuos Limitada
Waylung Waste Collection Limited Hong Kong
Midland Waste International Limited Hong Kong
Island East Transfer Station Limited Hong Kong
Waste Care Limited New Zealand
Allens Septic Tank Cleaning Services New Zealand
(Manawatu) Limited
Allens United Septic Tank Cleaning Services New Zealand
(Whangarei) Limited
Besco Bins (1992) Limited New Zealand
Browning-Ferris Industries (NZ) Limited New Zealand
Waste Disposal Services Limited New Zealand
Container Rubbish Services (1992) Limited New Zealand
Hopper Services (Wellington) Limited New Zealand
J.R. McKeen Contractors Limited New Zealand
Jumbo Bins Limited New Zealand
Waste Care Medi Safe Limited New Zealand
Winz Bins (N.Z.) Limited New Zealand
Browning-Ferris Industries de Costa Rica S.A. Costa Rica
Browning-Ferris Industries Finance B.V. Netherlands
Browning-Ferris Industries (Ireland) Limited Republic of Ireland
Falkenberg Limited Republic of Ireland
Browning-Ferris Industries (Taiwan), Ltd. Republic of China
Browning-Ferris Industries Europe, Inc. Delaware
( 8) BFI Acquisitions plc United Kingdom
(13) Attwoods Limited United Kingdom
Browning-Ferris Industries (Belgium) Belgium
Browning-Ferris Industries Reinigungstechnik GmbH Germany
Browning-Ferris Industries (Deutschland) GmbH Germany
Browning-Ferris Industries Europa B.V. Netherlands
(17) Browning-Ferris Industries (Italia) S.r.l. Italy
(25) Nuova ISPA S.r.l. Italy
ISPA S.r.l. Italy
(26) Grosso Scarl Italy
( 9) Servizi Industriali S.r.l. Italy
Fineco Partecip S.r.l. Italy
(18) Maddalena e Rossi S.r.l. Italy
(19) Impresa Maddalena S.r.l. Italy
(22) Ecofin S.r.l. Italy
(23) Valeco S.p.A Italy
(20) Assia S.r.l. Italy
(21) Imec S.r.l. Italy
G.E.A. Italia S.r.l. Italy
Ca' Brusa S.r.l. Italy
(27) ISUC S.r.l. Italy
Technoveneta S.r.l. Italy
Ecoimpresa S.r.l. Italy
Feller S.r.l. Italy
(24) Eldridge Finance Co. Italy
</TABLE>
- 5 -
<PAGE> 6
<TABLE>
<S> <C>
Browning-Ferris Industries UK Limited United Kingdom
BFI Packington Limited United Kingdom
Jacksons (Warwickshire) Brickworks Limited United Kingdom
Browning-Ferris Services (U.K.) Limited United Kingdom
Browning-Ferris Environmental Services Limited United Kingdom
BFI Wastecare Limited United Kingdom
BFI Coventry Limited United Kingdom
BFI Carnforth Limited United Kingdom
Browning-Ferris Industries B.V. Netherlands
( 6) Browning-Ferris Industries Iberica S.A. Spain
Ingenieria Ambiental Alcarrena S.A. Spain
(16) Ingenieria Ambiental Granadina S.A. Spain
Ingenieria Imbiental Castellana, S.A. Spain
Transric UTE
(28) Castellana de Servicios, S.A. y Spain
Transric, S.A., UTE
Ingeniera Ambiental Andaluza, S.A. Spain
(29) Ingenieria Ambiental Antequerana, S.A. Spain
Ingenieria Ambiental Catalana, S.A. Spain
Gestion y Tratarniento de Residuos, S.A. Spain
Jansen Industriele reiniging en afvalverwerking B.V. Netherlands
Jaap Van Vliet B.V. Netherlands
Riooltechnieken Nederland B.V. Netherlands
West Holland Milieu B.V. Netherlands
Koks Nilo Milieu B.V. Netherlands
Koks' Containerservice B.V. Netherlands
Zwart Vastgoed B.V. Netherlands
Koks/Nilo Recycling B.V. Netherlands
Cotraned Milieu B.V. Netherlands
A.C.D. Milieu B.V. Netherlands
Recycling Amsterdam Vastgoed B.V. Netherlands
Recycling Maatschappij "Houtsnip" B.V. Netherlands
Wijtrans Recycling B.V. Netherlands
Maatman Milieu B.V. Netherlands
Maatman Reiniging B.V. Netherlands
Maatman Rioolreiniging B.V. Netherlands
Maatman Afvalverwerking B.V. Netherlands
Maatman Eibergen B.V. Netherlands
R.J. Maatman Beheer B.V. Netherlands
Maatman Containers B.V. Netherlands
Wijtrans Milieu B.V. Netherlands
Spitman Industrie Service B.V. Netherlands
Groenheide Reiniging B.V. Netherlands
Kroon Beheer Urmond B.V. Netherlands
Kroon Milieu Techneck B.V. Netherlands
BFI Vastgoed B.V. Netherlands
West Holland Recycling B.V. Netherlands
Van Rijswijk Containers B.V. Netherlands
Lekkerkerk-Rehorst Vastgoed Combinatie B.V. Netherlands
Oost Nederlandse Reinigingsdienst B.V. Netherlands
Oost-Nederlandse Container Dienst B.V. Netherlands
B.V. Handelsmaatschappij R.V.R. Netherlands
IBA Recycling B.V. Netherlands
Spitman Chemie B.V. Netherlands
Spitman Milieu B.V. Netherlands
IBA Milieu B.V. Netherlands
Niemendal Transport B.V. Netherlands
Heerbaart Recycling B.V. Netherlands
</TABLE>
- 6 -
<PAGE> 7
<TABLE>
<S> <C>
Reinmat B.V. Netherlands
Transportbedrijf J. van Tongeren B.V. Netherlands
Browning-Ferris Industries Umwelttechnik Austria
Gesellschaft m.b.H.
Latin American Environmental Services, Inc. Delaware
Browning-Ferris Services, Inc. Delaware
BFI Equipment Leasing I, Inc. Delaware
Browning-Ferris Financial Services, Inc. Delaware
CECOS International, Inc. New York
Condor Waste Transportation, Inc. Texas
(12) Cotecnica, C.A. Venezuela
Dave Systems, Inc. California
Ameride Corporation California
Disposal Specialists, Inc. Vermont
Dooley Equipment Corporation Massachusetts
( 5) Eastern Disposal Inc. Quebec
Environmental Development Corp. Puerto Rico
Global Indemnity Assurance Company Colorado
Hennepin Transfer, Inc. Minnesota
HL-NIW, Inc. New York
Indoco, Inc. Texas
International Disposal Corp. of California California
International Disposal Corporation of Kansas Kansas
Landfill, Inc. Missouri
Lake Area Disposal, Inc. Wisconsin
Land Reclamation, Inc. New York
Louis Kmito & Son, Inc. Massachusetts
M & N Disposal, Inc. Wisconsin
M & N Recycling, Inc. Wisconsin
National Disposal Service of Nebraska, Inc. Nebraska
Newco Waste Systems of New Jersey, Inc. New Jersey
Niagara Landfill, Inc. New York
Niagara Recycling, Inc. New York
Pine Bend Landfill, Inc. Minnesota
Risk Services, Inc. Delaware
West Roxbury Crushed Stone Co. Massachusetts
Westowns Disposal Systems, Inc. Wyoming
Woodlake Sanitary Service, Inc. Minnesota
(30) VHG, Inc. Minnesota
( 4) Minneapolis Refuse, Incorporated Minnesota
</TABLE>
- ----------------------
Parent-subsidiary relationships are indicated by indentations. Except as
otherwise indicated by symbol preceding the name, 100% of the voting securities
of each of the subsidiaries is owned by the indicated parent of such subsidiary.
( 1) 66-2/3% owned
( 2) Namesaver corporation. No stock issued at this time
( 3) 100% of Preferred Stock of UWL, Inc. owned by Browning-Ferris
Industries of Georgia, Inc.
( 4) 9% of stock owned by Woodlake Sanitary Service, Inc.
( 5) 50% owned by Browning-Ferris Industries Ltd.
50% owned by Browning-Ferris Industries, Inc. (Delaware)
<TABLE>
<S> <C>
( 6) Browning-Ferris Industries, Inc. 33.84%
Browning-Ferris Industries B.V. 54.45%
Carlos Benjumea Morenes 6.07%
</TABLE>
- 7 -
<PAGE> 8
<TABLE>
<S> <C>
Jaime Ventura 3.46%
Luis Basteiro .60%
Grupo Liga Financera 0.68%
L.M. van Staalduinen 0.45%
Bel. Hoeberg B. 0.45%
</TABLE>
( 8) 49,999 ordinary shares owned by Browning-Ferris Industries Europe, Inc.
1 ordinary share is held by nominee shareholder,
Browning-Ferris Industries UK Limited
( 9) 50% owned by Browning-Ferris Industries (Italia) S.r.l. and
50% owned by outside party
(10) 49% owned
(11) 50% owned by Browning-Ferris Industries of Illinois, Inc. and
50% John Sexton Sand and Gravel Corp.
(12) 45% owned
(13) Listing sets forth the Attwoods domestic subsidiaries; a listing of the
international subsidiaries is forthcoming.
(14) Limited partnership that operates the Jones Road Landfill, of which 99%
owned by Attwoods Environmental, Inc. and 1% owned by Jones Road
Landfill and Recycling, Inc.
(15) 50% owned by Browning-Ferris Industries Asia Pacific, Inc. and
50% owned by Swire Engineering Limited
(16) 90% owned by Browning-Ferris Industries Iberica S.A.
10% owned by Granada Municipality
(17) 95% owned by Browning-Ferris Industries Europe, Inc.
5% owned by BFI International, Inc.
(18) 80% owned by Browning-Ferris Industries (Italia) S.r.l.
20% owned by Fineco Partecip S.r.l.
(19) 99.23% owned by Maddalena e Rossi S.r.l.
.77% owned by Browning-Ferris Industries (Italia) S.r.l.
(20) 95% owned by Imp. Maddalena
5% owned by Maddalena and Rossi
(21) 80% ownd by Imp. Maddalena
20% owned by Maddalena and Rossi
(22) 37.5% owned by Impresa Maddalena S.r.l.
67.5% owned by outside party
(23) 80% owned by Ecofin S.r.l.
20% owned by outside party
(24) 1% owned by Browning-Ferris Industries (Italia) S.r.l.
99% outside party
(25) 80% owned by Browning-Ferris Industries (Italia) S.r.l.
20% owned by Impresa Maddalena S.r.l.
(26) 65% owned by ISPA S.r.l.
35% owned by outside party
(27) 44% owned by G.E.A. Italia
56% owned by outside party
(28) 50% owned by Ingenieria Ambiental Castellana, S.A.
50% owned by Castellana de Servicios, S.A.
(29) 80% owned by Ingenieria Ambiental Andaluza, S.A.
20% owned by Antequera Municipality
(30) 50% owned by Woodlake Sanitary Service, Inc.
(31) 99% owned by Browning-Ferris Industries Ltd. and
1% owned by Browning-Ferris Industries (Italia) S.r.l.
(32) 49% owned by Browning-Ferris Industries Asia Pacific, Inc.
51% owned by UMW Industries (1985) Sdn Bhd
(33) 9% owned by BFI International, Inc.
1% owned by Browning-Ferris Industries Asia Pacific, Inc.
(34) 50% owned by BFI International, Inc.
30% owned by BFI Atlantic, Inc.
- 8 -
<PAGE> 9
20% owned by Browning-Ferris Industries Ltd.
(35) (Subsidiaries of this Company are not listed herein)
50% owned by BFI Atlantic GmbH
50% owned by Otto Holding International B.V.
(36) 70% owned by Swire BFI Waste Services Limited
30% owned by Noriente-Gestao de Participacoes Limited
- 9 -
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated November 22, 1995, included in this Form 10-K,
into the Browning-Ferris Industries, Inc. previously filed Form S-8 Registration
Statement File Nos. 33- 41281, 33-53393 and 33-56583, Form S-3 Registration
Statement File Nos. 33-58298 and 33-58891 and Form S-4 Registration Statement
File Nos. 33-52240 and 33-58889.
ARTHUR ANDERSEN LLP
Houston, Texas
November 22, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE TWELVE MONTHS ENDED
SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS. (IN THOUSANDS EXCEPT PER SHARE DATA.)
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<CASH> 197,569
<SECURITIES> 0
<RECEIVABLES> 1,023,583
<ALLOWANCES> (39,777)
<INVENTORY> 50,090
<CURRENT-ASSETS> 1,422,295
<PP&E> 6,118,087
<DEPRECIATION> (2,395,795)
<TOTAL-ASSETS> 7,460,372
<CURRENT-LIABILITIES> 1,414,328
<BONDS> 2,410,748
<COMMON> 35,581
0
0
<OTHER-SE> 2,706,169
<TOTAL-LIABILITY-AND-EQUITY> 7,460,372
<SALES> 0
<TOTAL-REVENUES> 5,779,351
<CGS> 0
<TOTAL-COSTS> 4,147,303
<OTHER-EXPENSES> 816,241
<LOSS-PROVISION> 26,620
<INTEREST-EXPENSE> 152,107
<INCOME-PRETAX> 691,076
<INCOME-TAX> 276,430
<INCOME-CONTINUING> 384,561
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 384,561
<EPS-PRIMARY> 1.93
<EPS-DILUTED> 1.93
</TABLE>
