<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) DECEMBER 2, 1996
--------------
UNITED STATES FILTER CORPORATION
------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 1-10728 33-0266015
--------------------- --------------------- ---------------------
(STATE OR OTHER (COMMISSION FILE NUMBER) (IRS EMPLOYER
JURISDICTION OF IDENTIFICATION NO.)
INCORPORATION)
40-004 COOK STREET, PALM DESERT, CALIFORNIA 92211
- --------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (619) 340-0098
PAGE 1 OF 24 PAGES.
EXHIBIT INDEX BEGINS ON PAGE 24.
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 2, 1996, United States Filter Corporation (the "Company")
completed the acquisition of certain businesses and assets comprising the
Water Systems and Manufacturing Group ("WSMG") of Wheelabrator Technologies
Inc. ("WTI") for $369.6 million in cash, subject to possible post-closing
adjustment (the "Purchase Price"). WSMG provides a broad range of water and
wastewater treatment products and technologies, as well as other environmental
products. The acquisition was completed pursuant to the Amended and Restated
Purchase and Sale Agreement dated as of September 14, 1996, as amended, by and
between the Company and WTI. The Purchase Price was determined by arm's-length
negotiations between representatives of the Company and WTI. The Company
expects to continue WSMG's historic business.
The funds used to pay the Purchase Price were obtained through borrowings
under an Amended and Restated Multicurrency Credit Agreement, dated December
2, 1996 (the "Credit Agreement"), among the Company and certain of its
subsidiaries, The First National Bank of Boston, DLJ Capital Funding, Inc.,
ABN AMRO Bank N.V., Los Angeles International Branch, Banque Paribas, The Bank
of New York, Bank of America Illinois, The Sumitomo Bank, Limited (Los Angeles
Branch), Fleet Bank, N.A., The Industrial Bank of Japan (Los Angeles Agency),
Banque Nationale de Paris, Deutsche Bank AG (New York and/or Cayman Islands
Branch), Long Term Credit Bank of Japan Ltd. (Los Angeles Agency), Union Bank
of California, N.A., Sanwa Bank California, NationsBank, N.A., and BHF-Bank
Aktiengesellschaft, as Lenders, DLJ Capital Funding, Inc., as Documentation
Agent, ABN AMRO Bank, N.V., as Co-Agent, and The First National Bank of
Boston, as Managing Agent.
ITEM 7. FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
As previously reported on a Current Report on Form 8-K dated October 28,
1996, the Company completed on such date the acquisition of WaterPro Supplies
Corporation ("WaterPro"). In addition, on October 25, 1996, the Company
completed the acquisition of The Utility Supply Group, Inc. ("USG"). The
Company has also entered into an agreement, dated October 7, 1996, to acquire
the Process Equipment Division of United Utilities PLC ("PED"). The Pro Forma
Financial Information referred to below gives effect to such recent and
pending acquisitions, in addition to the acquisition of WSMG reported herein.
(a) Financial Statements of Businesses Acquired:
Index to Financial Statements;
Wheelabrator Technologies Inc.--Systems and Manufacturing Group:
Independent Auditors' Report;
Combined Balance Sheets as of December 31, 1994 and 1995 and September
30, 1996 (unaudited);
Combined Income Statements for the years ended December 31, 1993, 1994
and 1995 and the nine months ended September 30, 1995 and 1996
(unaudited);
Combined Statements of Cash Flows for the years ended December 31,
1993, 1994 and 1995 and the nine months ended September 30, 1995 and
1996 (unaudited); and
Notes to Combined Financial Statements
(b) Pro Forma Financial Information:
Unaudited Pro Forma Combined Balance Sheet as of September 30, 1996;
Unaudited Pro Forma Combined Statement of Operations for the Fiscal Year
Ended March 31, 1996;
Unaudited Pro Forma Combined Statement of Operations for the Six Months
Ended September 30, 1996; and
Notes to Unaudited Pro Forma Combined Financial Information
2
<PAGE>
(c) Exhibits. The following exhibits are filed herewith or incorporated by
reference herein:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
2.1 Amended and Restated Purchase and Sale Agreement, dated as of
September 14, 1996, between Wheelabrator Technologies Inc. and
United States Filter Corporation (incorporated by reference to
Exhibit 2.1 to the Registration Statement of United States Filter
Corporation on Form S-3, Registration No. 333-14277)
2.2 Agreement and Amendment, dated as of December 2, 1996, between
Wheelabrator Technologies Inc. and United States Filter
Corporation
4.1 Amended and Restated Multicurrency Credit Agreement, dated as of
December 2, 1996, among United States Filter Corporation and
certain of its subsidiaries, the Lenders named therein, DLJ
Capital Funding, Inc., as Documentation Agent, ABN AMRO Bank,
N.V., as Co-Agent, and The First National Bank of Boston, as
Managing Agent
23.1 Consent of KPMG Peat Marwick LLP
</TABLE>
3
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following Unaudited Pro Forma Combined Financial Information presents
the Pro Forma Combined Balance Sheet at September 30, 1996, giving effect to
the acquisitions of WSMG, WaterPro and USG and the pending acquisition of PED
as if they had been consummated on that date. Also presented are the Pro Forma
Combined Statements of Operations for the fiscal year ended March 31, 1996 and
the six months ended September 30, 1996, after giving effect to the recent
acquisitions of WSMG, WaterPro and USG and the pending acquisition of PED as
if they had been consummated as of the beginning of the respective periods
presented. The Company's and PED's fiscal years end on March 31 and WSMG's,
WaterPro's and USG's fiscal years end on December 31. The Pro Forma Balance
Sheet combines the respective balance sheets of the Company, WSMG, PED,
WaterPro and USG as of September 30, 1996. The Pro Forma Statement of
Operations for the year ended March 31, 1996 combines the results of the
Company and PED for such year with the results of WSMG, WaterPro and USG for
the year ended December 31, 1995, and the Pro Forma Statement of Operations
for the six months ended September 30, 1996 combines the results of each of
the Company, WSMG, PED, WaterPro and USG for such six month period. All
Company historical consolidated financial data has been restated to reflect
the acquisitions in May 1996 and August 1996 of Zimpro Environmental, Inc. and
Davis Water & Waste Industries, Inc., respectively, which acquisitions have
been accounted for as poolings of interests.
The As Adjusted column gives effect to: (i) the recent acquisitions of WSMG,
WaterPro and USG and the pending acquisition of PED; and (ii) the assumed
borrowings under the Credit Agreement of approximately $541.0 million to fund
the cash portion of the consideration for such acquisitions and estimated
transaction costs. The As Further Adjusted column gives effect to: (i) the
sale by the Company in a pending public offering of $200 million principal
amount of its Convertible Subordinated Notes due 2001 (the "Notes Offering")
and the anticipated application of the net proceeds therefrom to the reduction
of amounts outstanding under the Credit Agreement; (ii) the sale by the
Company of 10,000,000 shares of Common Stock in pending public offerings (the
"Common Stock Offerings") at an assumed public offering price of $33.125 per
share and the anticipated application of the net proceeds therefrom to the
reduction of amounts outstanding under the Credit Agreement; and (iii) the
conversion of the Company's $60.0 million aggregate principal amount of 5%
Convertible Subordinated Debentures due 2000 into 4,390,000 shares of Common
Stock.
The pro forma data is based on the historical combined statements of the
Company, WSMG, PED, WaterPro and USG giving effect to such acquisitions under
the purchase method of accounting and the assumptions and adjustments (which
the Company believes to be reasonable) described in the accompanying Notes to
Unaudited Pro Forma Combined Financial Information. Under the purchase method
of accounting, assets acquired and liabilities assumed will be recorded at
their estimated fair value at the date of acquisition. The pro forma
adjustments set forth in the following Unaudited Pro Forma Combined Financial
Information are estimated and may differ from the actual adjustments when they
become known, however, no material differences are anticipated.
The historical financial statements of PED were prepared in accordance with
UK GAAP, which differs in certain respects from US GAAP. The historical PED
financial statements included in the following Unaudited Pro Forma Combined
Financial Information have been restated to reflect PED's financial position
and results of operations in accordance with US GAAP.
The following Unaudited Pro Forma Combined Financial Information does not
reflect certain cost savings that management believes may be realized
following the acquisitions. These savings are expected to be realized
primarily through rationalization of operations and implementation of strict
cost controls and standardized operating procedures. Additionally, the Company
believes the acquisitions will enable it to continue to achieve economies of
scale, such as enhanced purchasing power and increased asset utilization.
There can be no assurance that the acquisition of PED will be consummated.
The pro forma data are provided for comparative purposes only. Such data do
not purport to be indicative of the results that actually would have occurred
if the acquisitions of WSMG, PED, WaterPro and USG had been consummated on the
dates indicated or that may be obtained in the future.
4
<PAGE>
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1996
----------------------------------------------------------------------------------------------
HISTORICAL PRO FORMA
-------------------------------------------- ------------------------------------------------
ADJUSTMENTS
INCREASE AS AS FURTHER
COMPANY USG WATERPRO WSMG PED (DECREASE) NOTES ADJUSTED ADJUSTED NOTES
-------- ------- -------- -------- --------- ----------- ------ ---------- ---------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash.............. $ 19,488 $ 280 $ -- $ 12,619 $ 2,055 $ 34,442 $ 34,442
Short-term
investments...... 816 -- -- -- 1,275 2,091 2,091
Accounts
receivable, net.. 213,594 25,622 70,751 93,325 166,042 569,334 569,334
Cost and estimated
earnings in
excess of
billings on
uncompleted
contracts........ 52,802 -- -- 19,785 -- 72,587 72,587
Inventories....... 88,230 15,812 26,448 41,622 51,127 223,239 223,239
Prepaid expenses.. 11,981 -- 292 -- -- 12,273 12,273
Deferred taxes.... 7,771 -- -- -- -- 7,771 7,771
Other current
assets........... 9,614 417 -- 3,790 -- 13,821 13,821
-------- ------- -------- -------- --------- ---------- ----------
Total current
assets......... 404,296 42,131 97,491 171,141 220,499 935,558 935,558
-------- ------- -------- -------- --------- ---------- ----------
Property, plant and
equipment, net.... 178,362 2,686 5,062 55,752 31,420 273,282 273,282
Investment in
leasehold
interests, net.... 27,057 -- -- -- -- 27,057 27,057
Costs in excess of
net assets of
businesses
acquired, net..... 276,627 -- 13,968 155,578 -- $ 263,091 a(ii) 709,264 709,264
Other assets....... 50,317 736 -- 4,044 1,974 5,250 a(i) 62,321 67,471 a(v)
-------- ------- -------- -------- --------- ---------- ----------
Total assets.... $936,659 $45,553 $116,521 $386,515 $ 253,893 $2,007,482 $2,012,632
======== ======= ======== ======== ========= ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
liabilities:
Accounts payable.. $101,329 $16,113 $ 35,439 $ 53,338 $ 82,467 $ 288,686 $ 288,686
Accrued
liabilities...... 102,000 3,491 11,341 43,822 31,375 192,029 192,029
Current portion of
long-term debt... 1,386 -- -- -- 91,276 $ (91,276) a(iii) 1,386 1,386
Revolving credit
line with parent. -- -- 58,679 -- -- (58,679) a(iii) -- --
Billings in excess
of costs and
estimated
earnings on
uncompleted
contracts........ 19,631 -- -- 18,911 -- 38,542 38,542
Other current
liabilities...... 11,344 332 -- -- 806 12,482 12,482
-------- ------- -------- -------- --------- ---------- ----------
Total current
liabilities.... 235,690 19,936 105,459 116,071 205,924 533,125 533,125
-------- ------- -------- -------- --------- ---------- ----------
Notes payable...... 81,156 16,025 -- -- -- 541,040 a(i) 638,221 125,293 a(vi)
Long-term debt,
excluding current
portion........... 7,617 3,450 -- -- -- 11,067 11,067
Convertible
subordinated debt. 193,565 -- -- -- -- 193,565 340,000 a(vii)
Loan payable-
parent............ -- -- -- -- 225,704 (225,704) a(iii) -- --
Deferred taxes..... 1,223 -- 151 -- -- 1,374 1,374
Other liabilities.. 17,405 -- -- 13,962 37,481 68,848 68,848
-------- ------- -------- -------- --------- ---------- ----------
Total
liabilities.... 536,656 39,411 105,610 130,033 469,109 1,446,200 1,079,707
-------- ------- -------- -------- --------- ---------- ----------
Shareholders'
equity:
Common stock...... 493 2,553 1 -- -- (2,502) a(iv) 545 689 a(viii)
Additional paid-in
capital.......... 370,625 149 4,999 254,400 17,168 (115,489) a(iv) 531,852 903,351 a(viii)
Translation
adjustment....... 2,691 -- -- 2,082 -- (2,082) a(iv) 2,691 2,691
Retained earnings
(accumulated
deficit)......... 26,194 3,440 5,911 -- (232,384) 223,033 a(iv) 26,194 26,194
-------- ------- -------- -------- --------- ---------- ----------
Total
shareholders'
equity......... 400,003 6,142 10,911 256,482 (215,216) 561,282 932,925
-------- ------- -------- -------- --------- ---------- ----------
$936,659 $45,553 $116,521 $386,515 $ 253,893 $2,007,482 $2,012,632
======== ======= ======== ======== ========= ========== ==========
</TABLE>
The accompanying notes are an integral part of this pro forma combined
financial information.
5
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MARCH 31, 1996
----------------------------------------------------------------------------------------------------
HISTORICAL PRO FORMA
----------------------------------------------- ---------------------------------------------------
ADJUSTMENTS
INCREASE AS AS FURTHER
COMPANY USG WATERPRO WSMG PED (DECREASE) NOTES ADJUSTED ADJUSTED NOTES
-------- -------- -------- -------- -------- ----------- ----- ---------- ---------- ------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues................ $727,903 $156,838 $234,391 $452,134 $267,358 $1,838,624 $1,838,624
Cost of sales........... 538,573 130,432 195,258 361,462 189,529 1,415,254 1,415,254
-------- -------- -------- -------- -------- ---------- ----------
Gross profit........... 189,330 26,406 39,133 90,672 77,829 423,370 423,370
Selling, general and
administrative
expenses............... 148,683 21,821 32,767 68,170 66,903 $ 6,577 b(i) 344,921 344,921
Restructuring expense... -- -- -- -- 9,260 9,260 9,260
-------- -------- -------- -------- -------- ---------- ----------
Operating income....... 40,647 4,585 6,366 22,502 1,666 69,189 69,189
-------- -------- -------- -------- -------- ---------- ----------
Other income (expense):
Interest expense....... (14,419) (2,227) (3,593) -- (19,865) (17,120) b(ii) (57,224) (25,754) b(iii)
Other.................. 5,134 (582) 657 4,767 -- 9,976 9,976
-------- -------- -------- -------- -------- ---------- ----------
(9,285) (2,809) (2,936) 4,767 (19,865) (47,248) (15,778)
-------- -------- -------- -------- -------- ---------- ----------
Income (loss) before
income taxes.......... 31,362 1,776 3,430 27,269 (18,199) 21,941 53,410
Provision (benefit) for
income taxes........... 12,055 727 1,477 10,908 2,165 (18,995) b(iv) 8,337 20,296 b(v)
-------- -------- -------- -------- -------- ---------- ----------
Net income (loss)...... $ 19,307 $ 1,049 $ 1,953 $ 16,361 $(20,364) $ 13,603 $ 33,114 c
======== ======== ======== ======== ======== ========== ==========
Net income per common
share................. $ 0.45 $ 0.28 $ 0.53 c
======== ========== ==========
Weighted average number
of common shares
outstanding............ 42,159 47,400 61,790
======== ========== ==========
</TABLE>
The accompanying notes are an integral part of this pro forma combined
financial information.
6
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1996
------------------------------------------------------------------------------------------------
HISTORICAL PRO FORMA
---------------------------------------------- ------------------------------------------------
ADJUSTMENTS
INCREASE AS AS FURTHER
COMPANY USG WATERPRO WSMG PED (DECREASE) NOTES ADJUSTED ADJUSTED NOTES
-------- ------- -------- -------- -------- ----------- ----- ---------- ---------- -----
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues................ $433,719 $85,899 $185,199 $218,973 $130,407 $1,054,197 $1,054,197
Cost of sales........... 315,398 70,011 151,238 171,673 92,728 801,048 801,048
-------- ------- -------- -------- -------- ---------- ----------
Gross profit........... 118,321 15,888 33,961 47,300 37,679 253,149 253,149
Selling, general and
administrative
expenses............... 86,140 13,595 24,689 32,854 32,270 $ 3,289 b(i) 192,837 192,837
Merger and restructuring
expenses................ 5,581 -- -- -- 1,992 7,573 7,573
-------- ------- -------- -------- -------- ---------- ----------
Operating income....... 26,600 2,293 9,272 14,446 3,417 52,739 52,739
-------- ------- -------- -------- -------- ---------- ----------
Other income (expense):
Interest expense....... (7,972) (932) (2,433) -- (9,469) (8,387) b(ii) (29,193) (13,458) b(iii)
Other.................. 1,004 411 358 439 -- 2,212 2,212
-------- ------- -------- -------- -------- ---------- ----------
(6,968) (521) (2,075) 439 (9,469) (26,981) (11,246)
-------- ------- -------- -------- -------- ---------- ----------
Income (loss) before
income taxes.......... 19,632 1,772 7,197 14,885 (6,052) 25,758 41,493
Provision (benefit) for
income taxes........... 5,404 711 2,829 5,954 (310) (4,800) b(iv) 9,788 15,767 b(v)
-------- ------- -------- -------- -------- ---------- ----------
Net income (loss)...... $ 14,228 $ 1,061 $ 4,368 $ 8,931 $ (5,742) $ 15,970 $ 25,726 c
======== ======= ======== ======== ======== ========== ==========
Net income per common
share................. $ 0.28 $ 0.29 $ 0.37 c
======== ========== ==========
Weighted average number
of common shares
outstanding........... 50,629 55,870 70,260
======== ========== ==========
</TABLE>
The accompanying notes are an integral part of this pro forma combined
financial information.
7
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
a. The Pro Forma Combined Balance Sheet has been prepared to reflect the
acquisitions by the Company of WSMG, USG and WaterPro and the pending
acquisition of PED for aggregate estimated equity purchase prices comprised
of the following:
<TABLE>
<CAPTION>
EQUITY
FORM OF PURCHASE
COMPANY CONSIDERATION PRICE
------- ------------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
USG................................... Common Stock $ 22,000
WaterPro.............................. Common Stock 38,600
WSMG.................................. Cash 369,600
PED................................... Cash $160,090
.................................... Common Stock 42,000 202,090
--------
Estimated transaction costs........... 6,100
---------
$ 638,390
=========
</TABLE>
In addition to the purchase prices described above, the Company assumed
long-term indebtedness of approximately $22,000,000 ($19,475,000 at
September 30, 1996) and $67,935,000 ($58,679,000 at September 30, 1996) in
connection with the acquisitions of USG and WaterPro, respectively. The
$67,935,000 of indebtedness related to WaterPro was repaid with shares of
Common Stock concurrently with the closing of such acquisition.
The cash portion of the purchase price for PED is approximately
(Pounds)100,500,000. The Company has entered into a forward contract pursuant
to which it has the obligation to purchase (Pounds)100,000,000 for
approximately $159,250,000 at any time between December 16, 1996 and February
14, 1997. The remaining (Pounds)500,000 cash portion of the consideration and
the (Pounds)25,000,000 in shares of Common Stock are based on exchange rates
for British pounds sterling as of November 20, 1996. The estimated shares of
Common Stock to be issued is also based on an assumed price per share of
$33.125, the closing price of the Common Stock on the New York Stock Exchange
on November 20, 1996.
The estimated net book value, as adjusted, of USG, WaterPro, WSMG and PED
and the estimated fair value of their net assets as of the closing date are
assumed to be $6,142,000, $10,911,000, $256,482,000 and $101,764,000,
respectively. PED's estimated fair value of net assets excludes the net loan
payable of PED to its parent company of $316,980,000, which will be
contributed to PED's shareholders' equity (negative $215,216,000 at
September 30, 1996) by such parent company. The aggregate difference between
the estimated equity purchase prices and the estimated fair values of the
identified net assets of USG, WaterPro, WSMG and PED is approximately
$263,091,000, which has been recorded as costs in excess of net assets of
businesses acquired attributable to such acquisitions in the accompanying Pro
Forma Combined Balance Sheet.
The Pro Forma Combined Balance Sheet has been adjusted to reflect the above
as follows:
(i) To record the assumed incurrence of $541,040,000 of indebtedness under
the Credit Agreement with an assumed effective interest rate of 7.50%.
The incurrence of such additional indebtedness includes: (i) the cash
consideration for the acquisition of WSMG of $369,600,000; (ii) the
cash portion of the consideration for the acquisition of PED of
$160,090,000; (iii) estimated transaction costs of $6,100,000; and
(iv) estimated bank commitment fees of $5,250,000. The Company intends
to retire a portion of such debt with the net proceeds of the Common
Stock Offerings and the Notes Offering or, if completion of the Common
Stock Offerings and the Notes Offering occurs prior to the completion
of the acquisition of PED, to use such portions of such proceeds
directly to acquire PED.
8
<PAGE>
(ii) To adjust goodwill for the difference between the estimated equity
purchase prices and the estimated fair values of the identified net
assets acquired. The adjustment is calculated as follows: (in
thousands)
<TABLE>
<S> <C>
Aggregate estimated equity purchase prices..................... $638,390
Aggregate estimated fair value of identified net assets
acquired...................................................... 375,299
--------
Adjustment................................................. $263,091
========
</TABLE>
(iii) To eliminate: (i) the net loan payable of WaterPro of $58,679,000 to
its parent company, which will be repaid by the Company with Common
Stock; and (ii) the net loan payable of PED of $316,980,000 to its
parent company, which will be contributed to PED's equity by such
parent company.
(iv) To eliminate the equity of USG, WaterPro, WSMG and PED and record the
issuance of Common Stock for the stock portion of the consideration
for the acquisitions of USG (771,157 shares), WaterPro (3,201,507
shares) and PED (1,267,925 shares).
<TABLE>
<CAPTION>
ELIMINATE ISSUANCE
EQUITY OF EQUITY ADJUSTMENT
--------- --------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Common Stock............................ $ (2,554) $ 52 $ (2,502)
Additional paid-in capital.............. (276,716) 161,227 (115,489)
Translation adjustment.................. (2,082) -- (2,082)
Retained earnings (accumulated deficit). 223,033 -- 223,033
</TABLE>
(v) To record the incurrence of approximately $5,150,000 of capitalized
costs related to the Notes Offering.
(vi) To record the assumed reduction of $512,928,000 of indebtedness under
the Credit Agreement with the estimated net proceeds of $318,078,000
from the Common Stock Offerings and $194,850,000 from the Notes
Offering.
(vii) To record: (i) the issuance of $200,000,000 of convertible
subordinated debt in the Notes Offering; and (ii) the conversion of
$60,000,000 aggregate principal amount of 5% Convertible Subordinated
Debt due 2000 into 4,390,000 shares of Common Stock.
(viii) To record: (i) the conversion of the Company's $60,000,000 aggregate
principal amount of 5% Convertible Subordinated Debentures due 2000
into 4,390,000 shares of Common Stock and; (ii) the assumed issuance
of 10,000,000 shares of Common Stock in the Common Stock Offerings.
Adjustments are calculated as follows:
<TABLE>
<CAPTION>
CONVERSION OF
5% CONVERTIBLE
SUBORDINATED
DEBENTURES OFFERINGS ADJUSTMENT
-------------- --------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Common Stock......................... $ 44 $ 100 $ 144
Additional paid-in capital........... 53,521 317,978 371,499
</TABLE>
9
<PAGE>
b. For the fiscal year ended March 31, 1996, the historical results of
operations of USG, WaterPro and WSMG reflect their results of operations
for the twelve months ended December 31, 1995 and reflect the results of
operations of PED and the Company for the year ended March 31, 1996. The
historical results of operations for the six months ended September 30,
1996 combines the results of each of the Company, WSMG, PED, WaterPro and
USG for such six-month period.
The Pro Forma Combined Statements of Operations gives effect to the
following adjustments:
<TABLE>
<CAPTION>
FISCAL YEAR SIX MONTHS
ENDED ENDED
MARCH 31, 1996 SEPTEMBER 30, 1996
-------------- ------------------
(IN THOUSANDS)
<C> <S> <C> <C>
(i) To adjust selling, general and
administrative expenses to
reflect the goodwill amortization
from the acquisitions of WSMG,
PED, WaterPro and USG, with such
goodwill of approximately
$263,091,000 amortized over 40
years. $ 6,577 $ 3,289
======== =======
(ii) To adjust interest expense related
to the indebtedness of
approximately $541,040,000 to be
incurred to finance the
acquisitions of WSMG and PED, net
of historical interest expense
recorded by WaterPro and PED on
parent company debt. WaterPro and
PED incurred interest on such
parent company debt at the prime
rate and approximately 11%,
respectively, and incurred
interest expense of $3,593,000
and $19,865,000, respectively,
for the fiscal year ended March
31, 1996, and $2,433,000 and
$9,469,000, respectively, for the
six months ended September 30,
1996, which interest expense has
been eliminated because such debt
would not have been in existence
at the beginning of such periods.
Interest on the indebtedness
under the Credit Agreement is
assumed to be at an effective
rate of 7.50% per annum. The
Company, however, intends to
retire a portion of such debt
with the net proceeds of the
Common Stock Offerings and the
Notes Offering or, if completion
of the Common Stock Offerings and
the Notes Offering occurs prior
to the completion of the
acquisition of PED, to use a
portion of such net proceeds
directly to acquire PED.
The assumed effective interest
rate of 7.50% on the Credit
Agreement is subject to
variability. A 0.125%
increase/decrease in the assumed
effective interest rate
incrementally decreases/
increases As Adjusted net income
by $419,000 and $210,000 for the
year ended March 31, 1996 and six
months ended September 30, 1996,
respectively, and As Further
Adjusted net income by $22,000
and $11,000 for the year ended
March 31, 1996 and the six months
ended September 30, 1996,
respectively. $(17,120) $(8,387)
======== =======
(iii) The As Further Adjusted column
presented gives effect to the
Common Stock Offerings and the
Notes Offering and the
anticipated application of the
net proceeds therefrom, which
results in a reduction in
interest expense of $28,470,000
and $14,235,000 for the fiscal
year ended March 31, 1996 and the
six months ended September 30,
1996, respectively. The As
Further Adjusted column also
gives effect to the conversion of
$60,000,000 aggregate principal
amount 5% Convertible
Subordinated Debentures due 2000
to Common Stock which results in
a reduction in interest expense
of $3,000,000 and $1,500,000 for
the fiscal year ended March 31,
1996 and the six months ended
September 30, 1996, respectively,
and a resulting increase of
4,390,000 in shares of Common
Stock outstanding. $ 31,470 $15,735
======== =======
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
FISCAL YEAR SIX MONTHS
ENDED ENDED
MARCH 31, 1996 SEPTEMBER 30, 1996
-------------- ------------------
<C> <S> <C> <C>
(iv) To adjust the provision for income
taxes to reflect the combined
results of operations assuming a
combined tax rate of 38%. $(18,995) $(4,800)
======== =======
(v) To adjust the provision for income
taxes to reflect the combined
results of operations assuming a
combined tax rate of 38%. $ 11,959 $ 5,979
======== =======
</TABLE>
c. During the fiscal year ended March 31, 1996 and the six months ended
September 30, 1996, PED incurred significant restructuring charges relating
to the plant closure and relocation of the operations of Wallace & Tiernan,
Inc., a subsidiary, from Belleville, N.J., to Vineland, N.J. These
restructuring charges totaled $9,260,000 and $1,992,000 for the fiscal year
ended March 31, 1996 and the six months ended September 30, 1996,
respectively. The Company believes that the restructuring and relocation
will be completed prior to the acquisition of PED by the Company. The terms
of the Stock Purchase Agreement between the Company and the United Utilities
PLC provides that the Company will assume no ownership interest in and no
liability associated with the Belleville, N.J. facility. Excluding the
effects of these charges, net income and net income per common share for the
fiscal year ended March 31, 1996 and the six months ended September 30, 1996
would have been:
<TABLE>
<CAPTION>
AS AS FURTHER
ADJUSTED ADJUSTED
-------- ----------
(IN THOUSANDS,
EXCEPT PER SHARE
DATA)
<S> <C> <C>
Fiscal Year Ended March 31, 1996:
Net income............................................. $19,344 $38,856
Net income per common share............................ $ 0.40 $ 0.62
Six Months Ended September 30, 1996:
Net income............................................. $17,205 $26,961
Net income per common share............................ $ 0.31 $ 0.38
</TABLE>
11
<PAGE>
INDEX TO INTERIM FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
WHEELABRATOR TECHNOLOGIES INC.--SYSTEMS AND MANUFACTURING GROUP
Independent Auditors' Report--KPMG Peat Marwick LLP....................... 13
Financial Statements:
Combined Balance Sheets as of December 31, 1994 and 1995 and September
30, 1996 (unaudited)................................................... 14
Combined Income Statements for the years ended December 31, 1993, 1994
and 1995 and the nine months ended September 30, 1995 and 1996
(unaudited)............................................................ 15
Combined Statements of Cash Flows for the years ended December 31, 1993,
1994 and 1995 and the nine months ended September 30, 1995 and 1996
(unaudited)............................................................ 16
Notes to Combined Financial Statements.................................. 17
</TABLE>
12
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Wheelabrator Technologies Inc.:
The Board of Directors
United States Filter Corporation:
We have audited the accompanying combined balance sheets of the Systems and
Manufacturing Group of Wheelabrator Technologies Inc. (the "Businesses") as of
December 31, 1994 and 1995, and the related combined statements of income and
cash flows for each of the years in the three-year period ended December 31,
1995. These financial statements are the responsibility of the management of
the Businesses. Our responsibility is to express an opinion on these financial
statements 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 combined financial statements referred to above present
fairly, in all material respects, the financial position of the Systems and
Manufacturing Group of Wheelabrator Technologies Inc. as of December 31, 1994
and 1995 and the results of its operations and its cash flows for each of the
years in the three-year period ended December 31, 1995, in conformity with
generally accepted accounting principles.
/s/KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
Chicago, Illinois
October 15, 1996
13
<PAGE>
WHEELABRATOR TECHNOLOGIES INC.
SYSTEMS AND MANUFACTURING GROUP
COMBINED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
----------------- SEPTEMBER 30,
ASSETS 1994 1995 1996
------ -------- -------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents........................ $ 25,122 $ 25,092 $ 12,619
Accounts receivable, net......................... 81,490 87,526 93,325
Inventories...................................... 31,527 48,407 41,622
Costs and estimated earnings in excess of
billings on uncompleted contracts............... 20,498 22,710 19,785
Other current assets............................. 2,920 2,028 3,790
-------- -------- --------
Total current assets........................... 161,557 185,763 171,141
-------- -------- --------
Property, plant, and equipment, net................ 48,253 47,354 55,752
Goodwill, net...................................... 151,483 158,074 155,578
Other assets....................................... 5,365 3,756 4,044
-------- -------- --------
Total assets................................... $366,658 $394,947 $386,515
======== ======== ========
<CAPTION>
LIABILITIES AND GROUP EQUITY
----------------------------
<S> <C> <C> <C>
Current Liabilities:
Accounts payable................................. $ 56,485 $ 53,163 $ 53,338
Accrued liabilities.............................. 51,615 47,816 43,822
Advance payment on contracts..................... 19,802 19,966 18,911
-------- -------- --------
Total current liabilities...................... 127,902 120,945 116,071
-------- -------- --------
Other long-term liabilities........................ 17,732 16,003 13,962
Commitments and contingencies......................
Group Equity:
Group equity..................................... 220,527 255,816 254,400
Cumulative translation adjustment................ 497 2,183 2,082
-------- -------- --------
Total group equity............................... 221,024 257,999 256,482
-------- -------- --------
Total liabilities and group equity............. $366,658 $394,947 $386,515
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
14
<PAGE>
WHEELABRATOR TECHNOLOGIES INC.
SYSTEMS AND MANUFACTURING GROUP
COMBINED INCOME STATEMENTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------- -----------------
1993 1994 1995 1995 1996
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue.......................... $293,207 $364,335 $452,134 $337,589 $329,527
Operating expenses............... 222,384 281,946 361,462 269,479 257,985
-------- -------- -------- -------- --------
Gross margin................... 70,823 82,389 90,672 68,110 71,542
Selling, general & administrative
expenses........................ 47,261 62,224 68,170 50,180 49,371
-------- -------- -------- -------- --------
Operating income............... 23,562 20,165 22,502 17,930 22,171
Gain (loss) on sale of assets.... (5) 955 4,212 15 18
Interest, net.................... 288 168 423 244 487
Other income (expense), net...... (1,421) 755 132 127 96
-------- -------- -------- -------- --------
Income before pro forma income
tax provision................. 22,424 22,043 27,269 18,316 22,772
Pro forma income tax provision... 8,970 8,817 10,908 7,326 9,109
-------- -------- -------- -------- --------
Net income..................... $ 13,454 $ 13,226 $ 16,361 $ 10,990 $ 13,663
======== ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
15
<PAGE>
WHEELABRATOR TECHNOLOGIES INC.
SYSTEMS AND MANUFACTURING GROUP
COMBINED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------- ------------------
1993 1994 1995 1995 1996
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Operating Activities:
Net income................. $ 13,454 $ 13,226 $ 16,361 $ 10,990 $ 13,663
Adjustment to reconcile net
income to cash flows from
operating activities:.....
Depreciation and
amortization............ 5,581 9,608 11,211 8,492 9,145
Changes in assets and
liabilities, net of
effects of acquired
businesses:.............
Accounts receivable.... (2,088) (8,116) (5,292) (8,739) (5,799)
Inventories............ 5,254 (6,423) (11,222) (10,313) 6,785
Costs and estimated
earnings in excess of
billings on
uncompleted contracts. (17,182) 3,014 (2,212) 255 2,925
Accounts payable....... 5,865 4,327 (4,143) (8,068) 175
Accrued liabilities.... 3,213 (2,889) (4,182) (2,940) (3,994)
Advance payments on
contracts............. (982) (239) (6,358) (5,376) (1,055)
Other, net................. 4,603 2,310 (2,973) 3,764 293
-------- -------- -------- -------- --------
Net cash provided by
(used for) operating
activities............ 17,718 14,818 (8,810) (11,935) 22,138
-------- -------- -------- -------- --------
Investing Activities:
Capital expenditures....... (4,202) (5,075) (9,817) (5,612) (22,443)
Sale of property, plant,
and equipment............. 5,805 3,834 8,054 4,259 477
Cash paid for acquisitions,
net of acquired cash...... (24,790) (18,848) (5,746) -- (850)
Other, net................. -- (1,375) 46 (1,459) --
-------- -------- -------- -------- --------
Net cash provided by
(used for) investing
activities.............. (23,187) (21,464) (7,463) (2,792) (22,816)
-------- -------- -------- -------- --------
Financing Activities:
Increase (decrease) in
group equity.............. 6,073 20,073 20,614 17,015 (15,180)
Other, net................. -- 3,423 (4,371) (2,906) 3,385
-------- -------- -------- -------- --------
Net cash provided by
(used for) investing
activities.............. 6,073 23,496 16,243 14,109 (11,795)
-------- -------- -------- -------- --------
Increase (decrease) in cash
and cash equivalents........ 604 16,850 (30) (618) (12,473)
Cash and cash equivalents at
beginning of period......... 7,668 8,272 25,122 25,122 25,092
-------- -------- -------- -------- --------
Cash and cash equivalents at
end of period............... $ 8,272 $ 25,122 $225,092 $ 24,504 $ 12,619
======== ======== ======== ======== ========
Significant noncash investing
activities
Liabilities assumed in
acquisitions.............. $ 29,883 $ 74,067 $ 8,232 $ -- $ --
======== ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
16
<PAGE>
WHEELABRATOR TECHNOLOGIES INC.
SYSTEMS AND MANUFACTURING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
NOTE 1. BUSINESS DESCRIPTION AND BASIS OF PRESENTATION
The Systems and Manufacturing Group (the "Businesses") of Wheelabrator
Technologies Inc. ("WTI") provide products and services to customers in the
water, wastewater and general industrial markets, primarily in the United
States, Europe and Asia. The majority of the Businesses have been acquired by
WTI in the last three years. Certain other Businesses have been owned by WTI or
its predecessors since prior to 1993. The Businesses have no separate legal
status or existence. The assets and liabilities comprising the majority of the
U.S. based Businesses are owned by a wholly owned subsidiary of WTI.
In connection with a proposed transaction whereby WTI would sell the
Businesses to United States Filter Corporation ("USF"), WTI and USF have
entered into a definitive Purchase and Sale Agreement dated September 14, 1996
(the "Agreement"), the terms of which provide for certain assets to be
purchased and certain liabilities assumed by USF in connection with Businesses
based in the United States. Additionally, the Agreement provides for certain
liabilities relating to the Businesses to be retained by WTI and for WTI to
indemnify USF in connection with certain other matters (collectively the
"Retained Liabilities"). These financial statements reflect the financial
condition, results of operations and cash flows for the Businesses on a
combined basis, excluding the Retained Liabilities, for all periods presented.
NOTE 2. SIGNIFICANT ACCOUNT POLICIES
Combined Financial Statements
The combined financial statements include the accounts of the Businesses and
the majority-owned subsidiaries. All significant intercompany transactions and
balances have been eliminated. Investments in affiliates WTI does not control
are accounted for using the equity method.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect reported amounts of assets, liabilities, income, expenses and
disclosures of contingencies. Future events could alter such estimates.
Concentrations
The Businesses offer a multitude of products and services to a diverse
customer base. Management believes the Businesses have no significant customer,
supplier, product line, credit risk, geographic or other concentrations that
could expose the Businesses to adverse, near-term severe financial impacts.
Revenue Recognition
Revenues from certain long-term engineering and equipment supply contracts
are recognized on the percentage-of-completion basis, with estimated losses
recognized in full when identified. All other revenues are recognized when
services are rendered or products are shipped.
Foreign Currency
Foreign subsidiaries' income statement accounts are translated at the average
exchange rates in effect during the period, while assets and liabilities are
translated at the rates of exchange at the balance sheet date. The resulting
balance sheet translation adjustments are charged or credited directly to group
equity. Foreign exchange transaction gains and losses realized during 1993,
1994 and 1995 were not significant.
17
<PAGE>
WHEELABRATOR TECHNOLOGIES INC.
SYSTEMS AND MANUFACTURING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
Combined Statements of Cash Flows
For purposes of the Combined Statements of Cash Flows, all highly liquid
instruments purchased with an original maturity of three months or less are
considered to be cash equivalents.
Derivative Financial Instruments
From time to time, the Businesses use derivative instruments to manage
currency risk. Immaterial amounts of various currencies were sold forward for
delivery at various dates in 1995 to hedge foreign exchange exposure on
specifically identified transactions. Gains or losses on these transactions are
included in the measurement of the subsequent transaction. Where deemed
advantageous, management will enter similar hedges in the future to mitigate
foreign exchange exposure.
Fair Value of Financial Instruments
Financial instruments of the Businesses consist primarily of cash and cash
equivalents, receivables and accounts payable. The book values of such
instruments are considered to be representative of their respective fair
values.
Inventories
Inventories are stated at the lower of cost (first-in, first-out method) or
market (net realizable value).
Property, Plant and Equipment
Property, plant, and equipment (including major improvements) are capitalized
and stated at cost. Items of an ordinary maintenance or repair nature are
charged directly to operating expense. The cost less estimated salvage value of
property, plant, and equipment is generally depreciated on a straight-line
basis over estimated useful lives that range from 3 to 35 years.
Goodwill
The excess of cost over fair value of the net assets of acquired businesses
("goodwill") is amortized on a straight-line basis over 40 years. The
accumulated amortization balances as of December 31, 1994 and 1995 were $8.2
million and $12.2 million, respectively. On an ongoing basis, the realizability
of goodwill is measured by the ability of the acquired businesses to generate
current and undiscounted expected future cash flows in excess of unamortized
goodwill. If such realizability were in doubt, an adjustment would be made to
reduce the carrying value of the goodwill. No such adjustments have been made
with respect to the Businesses.
Pro Forma Income Taxes
Certain of the assets and liabilities comprising the Businesses are not stand
alone, taxable entities (see Note 1). The taxable income from Businesses
operating in the United States have been included in the consolidated federal
tax returns of WTI for all periods presented. Entities outside the United
States are taxable in the jurisdictions in which they are organized or are
doing business. For the purposes of the accompanying combined financial
statements, a pro forma income tax expense has been provided at 40 percent of
reported combined pretax income.
18
<PAGE>
WHEELABRATOR TECHNOLOGIES INC.
SYSTEMS AND MANUFACTURING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
Contracts in Process
Information with respect to contracts in process at December 31, 1994 and
1995 follows. Contracts in process are included in the combined balance sheets
under the following captions (in thousands):
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
----------------
1994 1995
------- -------
<S> <C> <C>
Costs and earnings in excess of billings................ $20,498 $22,710
Advance payments on contracts........................... (19,802) (19,966)
------- -------
Total contracts in process............................ $ 696 $ 2,744
======= =======
</TABLE>
All contracts in process are expected to be billed and collected within two
years.
Accounts receivable include retainage that has been billed but is not due
until completion pursuant to the terms of the contract. Such retainage at
December 31, 1995 was $3.7 million, all of which (except for amounts provided
for) is expected to be collected within one year. At December 31, 1994,
retainage was $3.0 million.
Accounting Pronouncements
Effective January 1, 1994, the Businesses adopted Statement of Financial
Accounting Standards No. 112 "Employers' Accounting for Postemployment
Benefits" ("FAS 112"). This new statement established accounting standards for
employers who provide benefits to former or inactive employees after employment
but before retirement. The adoption of FAS 112 did not have a material impact
on the combined financial statements of the Businesses since its accounting
prior to adoption of FAS 112 was substantially in compliance with the new
standard. Also effective during 1994 was Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Debt and Equity Securities" ("FAS
115"). The Businesses do not have significant investments and does not
contemplate acquiring significant investments of the type covered in FAS 115.
The Businesses are required to adopt Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" ("FAS 121"), beginning in 1996. Management
does not believe the adoption of FAS 121 will have a material impact on the
combined financial statements of the Businesses.
Unaudited Interim Information
The combined financial statements as of September 30, 1996 and for the nine
months ended September 30, 1995 and 1996 are unaudited. In the opinion of
management, the unaudited combined financial statements reflect all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation. Certain information and footnote disclosures normally
included in financial statements have been condensed or omitted from the
interim combined financial statements. The results of operations for the nine
months ended September 30, 1996 are not necessarily indicative of the results
that may be expected for the year ending December 31, 1996.
19
<PAGE>
WHEELABRATOR TECHNOLOGIES INC.
SYSTEMS AND MANUFACTURING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 3. GROUP EQUITY, ALLOCATIONS AND OTHER RELATED PARTY TRANSACTIONS
Group Equity
The group equity account reflects the activity between WTI and the
Businesses, a summary of which follows (in thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------
1993 1994 1995
-------- -------- --------
<S> <C> <C> <C>
Beginning balance............................ $168,198 $187,725 $221,024
Net income................................... 13,454 13,226 16,361
Net intercompany transactions................ 6,969 18,680 18,928
Translation adjustment....................... (896) 1,393 1,686
-------- -------- --------
Ending balance............................. $187,725 $221,024 $257,999
======== ======== ========
</TABLE>
Cash Management
Certain of the Businesses participate in WTI's centralized cash management
system and, as such, their cash funding requirements have been met by WTI and
all excess cash has been transferred to WTI.
Allocations
The combined income statements includes all direct costs of the Businesses as
well as certain corporate costs directly identified with the Businesses. WTI
has not allocated interest income or expense to the Businesses. In the opinion
of management, these allocations have been made on a basis which is believed to
be reasonable for a group of businesses operating within the structure of a
larger parent organization. However, the allocations are not necessarily
indicative of the level of expenses which might have been incurred by the
Businesses operating as a stand-alone entity.
NOTE 4. ACQUISITIONS
The Businesses include three environmental services businesses acquired in
1993, six acquired in 1994 and one acquired in 1996 in exchange for
consideration, net of cash acquired and including assumed debt, of
approximately $24.8 million, $21.5 million and $5.7 million, respectively. The
Businesses utilize the purchase method of accounting, and the purchase price of
the acquisitions has been allocated to their respective net assets based upon
estimated fair market values. The results of operations of acquired entities
have been included in the Businesses' combined financial statements from their
respective dates of acquisition. The pro forma effect of the acquisitions made
during 1993, 1994 and 1995 was not material.
NOTE 5. PRO FORMA INCOME TAXES
The Businesses reported income before income tax for each of the years
indicated on the accompanying combined statements of income. During such
periods, the Businesses operating in the United States were included in WTI's
consolidated federal income tax returns. Those Businesses located outside of
the United States are taxable in the jurisdictions in which they are organized.
For the purposes of the accompanying combined financial statements, a pro forma
income tax expense has been provided at 40% of reported combined pretax income.
20
<PAGE>
WHEELABRATOR TECHNOLOGIES INC.
SYSTEMS AND MANUFACTURING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 6. BENEFIT PLANS
Substantially all employees based in the United States are participants in
the Wheelabrator-Rust Savings and Retirement Plan, which is a qualified defined
contribution plan consisting of a contributory component and a non-contributory
component. Under the terms of the contributory component, eligible employees
may elect to contribute a portion of their annual compensation and the
Businesses are required to match a minimum of 30 percent of the first six
percent of eligible compensation contributed by an employee. Under the terms of
the non-contributory component, eligible employees receive an annual
contribution equal to a minimum of three percent of their eligible earnings.
The Businesses' contributions to such plans during 1993, 1994 and 1995 amounted
to approximately $1.7 million, $2.1 million and $2.4 million, respectively.
The Businesses based outside the United States have in place various other
plans that are not significant that provide pension and welfare benefits to
certain active and former employees.
NOTE 7. ADDITIONAL FINANCIAL INFORMATION
The allowance for doubtful accounts was $3.7 million and $4.3 million as of
December 31, 1994 and 1995, respectively.
The following is a summary of inventories (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1994 1995
------- -------
<S> <C> <C>
Raw materials............................................. $ 7,697 $21,429
Work in process........................................... 14,276 15,259
Finished goods............................................ 9,554 11,719
------- -------
Total inventories....................................... $31,527 $48,407
======= =======
</TABLE>
The following is a summary of property, plant and equipment (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1994 1995
-------- --------
<S> <C> <C>
Land.................................................. $ 847 $ 743
Machinery and equipment............................... 51,005 53,484
Buildings and improvements............................ 39,174 37,661
Less: accumulated depreciation........................ (42,773) (44,534)
-------- --------
Total property, plant, and equipment................ $ 48,253 $ 47,354
======== ========
</TABLE>
Depreciation of property, plant, and equipment for the years ended December
31, 1993, 1994 and 1995 was $4.9 million, $5.9 million, and $7.0 million,
respectively.
The following is a summary of accrued liabilities (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1994 1995
------- -------
<S> <C> <C>
Wages, salaries and benefits............................. $ 8,453 $ 8,936
Warranties and contract reserves......................... 9,149 11,100
Other.................................................... 34,013 27,780
------- -------
Total accrued liabilities.............................. $51,615 $47,816
======= =======
</TABLE>
21
<PAGE>
WHEELABRATOR TECHNOLOGIES INC.
SYSTEMS AND MANUFACTURING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
Noncancelable operating lease payments at December 31, 1995 are due as
follows (in thousands):
<TABLE>
<CAPTION>
OPERATING
LEASES
---------
<S> <C>
1996............................... $ 4,290
1997............................... 3,613
1998............................... 3,172
1999............................... 2,670
2000............................... 2,648
Thereafter......................... 15,290
-------
Total............................ $31,683
=======
</TABLE>
Total rent expense was $2.2 million, $2.6 million and $2.8 million in 1993,
1994 and 1995, respectively.
NOTE 8. COMMITMENTS AND CONTINGENCIES
There are various lawsuits and claims pending against the Businesses that
have arisen in the normal course of business and related mainly to matters of
product liability, personal injury, and property damage. The outcomes of these
matters are not presently determinable, but in the opinion of management, based
on the advice of counsel, the ultimate resolution of these matters will not
have a material adverse effect on the financial condition or results of
operations of the Businesses.
The Businesses are self-insured for general liability claims up to $2.0
million per occurrence. Liability insurance in effect during the last several
years provides coverage for environmental matters only to a limited extent. In
the normal course of business, the Businesses have issued or are parties to
bank letters of credit, performance bonds, and other guarantees.
Certain of the Businesses operate in the environmental industry and are
involved with the protection of the environment. As such, a significant portion
of the Businesses' operating costs and capital expenditures could be
characterized as costs of environmental protection. While the Businesses are
faced, in the normal course of its business, with the need to expend funds for
environmental protection, it is not expected that such expenditures will have a
material adverse effect on financial condition or results of operations.
22
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UNITED STATES FILTER CORPORATION
By:/s/ Damian C. Georgino
---------------------------------
Damian C. Georgino
Vice President, General Counsel
and Secretary
Date: December 5, 1996
23
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT DESCRIPTION PAGE NO.
------- ----------- ----------
<C> <S> <C>
2.1 Amended and Restated Purchase and Sale Agreement, dated
as of September 14, 1996, between Wheelabrator Technolo-
gies Inc. and United States Filter Corporation (incorpo-
rated by reference to Exhibit 2.1 to the Registration
Statement of United States Filter Corporation on Form S-
3, Registration No. 333-14277)
2.2 Agreement and Amendment, dated as of December 2, 1996,
between Wheelabrator Technologies Inc. and United States
Filter Corporation
4.1 Amended and Restated Multicurrency Credit Agreement,
dated as of December 2, 1996, among United States Filter
Corporation and certain of its subsidiaries, the Lenders
named therein, DLJ Capital Funding, Inc., as Documenta-
tion Agent, ABN AMRO Bank, N.V., as Co-Agent, and The
First National Bank of Boston, as Managing Agent
23.1 Consent of KPMG Peat Marwick LLP
</TABLE>
24
<PAGE>
Exhibit 2.2
AGREEMENT AND AMENDMENT
-----------------------
This Agreement and Amendment ("Agreement") is made this 2nd day of
December, 1996, between Wheelabrator Technologies Inc., a Delaware corporation
("Seller"), and United States Filter Corporation, a Delaware corporation
("Purchaser").
RECITALS
--------
A. Seller and Purchaser are parties to that certain Amended and Restated
Purchase and Sale Agreement dated as of September 14, 1996 (the "Sale
Agreement").
B. Seller and Purchaser wish to enter into this Agreement to (1) provide
for additional agreements regarding certain matters relating to the Sale
Agreement and (2) amend the Sale Agreement in certain respects.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is acknowledged, the parties agree as follows:
1. Incorporation. Any capitalized term not otherwise defined in this
-------------
Agreement shall have the meaning given such term in the Sale Agreement. The
preamble and recitals set forth above are incorporated into and form a part of
this Agreement.
2. Alloy Castings; Darchet (Thailand). Prior to the Closing, Seller shall
----------------------------------
cause the appropriate Subsidiaries to transfer or dividend to an entity
designated by Seller (a) ownership of beneficial title to all capital stock held
by such Subsidiaries in (i) Wheelabrator Alloy Castings Limited, a corporation
organized under the laws of India, and (ii) Darchet Industrial Water (Thailand)
Co. Ltd., a corporation organized under the laws of Thailand, (it being agreed
that legal title to all such capital stock described at Sections 2(a)(i) and
----------------
2(a)(ii) above shall thereafter be held by such Subsidiaries in trust for the
- --------
benefit of Seller and its Affiliates, until transfer of such legal title can be
effected), and (b) all rights of the plaintiffs in, under and to the following
actions: (i) Wheelabrator Water Technology (S) Pte. Ltd. vs. Darchet Industrial
------------------------------------------------------------------
Water (Thailand) Co., Ltd., Black Case No. Thor. Bor. 99/2539, and (ii) Darchet
- ------------------------- -------
Industrial Water Pte. Ltd. vs. Darchet Industrial Water (Thailand) Co., Ltd.,
- ---------------------------------------------------------------------------
Black Case No. 10519/2539 (items (b)(i) and (b)(ii) being referred to
collectively as the "Darchet Actions"). The term "Liabilities" shall not
include any liabilities of, or arising out of the ownership or operation of,
Wheelabrator Alloy Castings Limited or Darchet Industrial Water
<PAGE>
(Thailand) Co., Ltd., whether, absolute or contingent, known or unknown. All
obligations and liabilities of the plaintiffs under the Darchet Actions shall be
deemed Retained Claims for purposes of the Sale Agreement. The instruments of
transfer, assumption and trust necessary to effect the matters contemplated
herein shall be substantially in the same form as the other instruments of
transfer and assumption between Seller and Purchaser pursuant to the Sale
Agreement. After the Closing, Purchaser and its Affiliates shall cooperate with
Seller and its Affiliates to effect transfer to an entity designated by Seller,
any right, title or interest to the capital stock of Wheelabrator Alloy Castings
Limited and Darchet Industrial Water (Thailand) Co. Ltd. The foregoing
transfers shall be made without any representations or warranties of any nature
whatsoever. Seller shall be responsible for any governmental filing fees or
governmental approval costs relating to such transfer of legal title. At
closing, the parties shall enter into an agreement governing the parties
respective post-closing rights and obligations with respect to the capital stock
in Wheelabrator Alloy Castings Limited and Darchet Industrial Water (Thailand)
Co. Ltd., which agreement shall be on the same terms as the Stock Retention
Agreement.
3. Wheelabrator Canada. The capital stock of Wheelabrator Canada Inc., a
-------------------
corporation organized under the laws of Ontario ("WCI"), shall be retained by an
Affiliate of Seller. Accordingly, the Sale Agreement is hereby amended as
follows:
(a) The fourth and fifth sentences of Section 2.1(d) of the Sale Agreement
--------------
are deleted. The following is inserted into the Sale Agreement as the new
second paragraph of Section 2.1(d):
--------------
"Prior to the Closing, Seller shall cause the following actions to be
taken, in the order set forth below, with respect to Wheelabrator Canada
Inc., a corporation organized under the laws of Ontario ("WCI"), and its
wholly owned subsidiary, MPF Engineered Filtered Products Inc., a
corporation organized under the laws of Ontario ("MPF"). (1) Wheelabrator
Water Technologies International Holdings Inc., a Delaware corporation
("WWTH"), shall transfer or dividend to an entity designated by Seller (A)
all of the capital stock in WCI owned by WWTH and (B) all right, title and
interest in that certain unsecured promissory note dated May 3, 1996, of
WCI in favor of WWTH in the principal amount of $15,000,000. (2) MPF
shall dividend to WCI all of MPF's cash on hand (the "MPF Dividend"). (3)
WCI shall subscribe for shares in MPF in consideration of an amount payable
in cash equal to the then current retained earnings of MPF less the amount
of the MPF Dividend. (4) MPF shall issue
-2-
<PAGE>
to WCI shares of common stock, which shares shall be deemed to be fully
paid and non-assessable upon issuance. (5) MPF shall issue a cash
dividend to WCI in the amount of the consideration referred to at item (3)
above. Upon completion of steps (1) through (5) above, prior to Closing,
WCI shall, for consideration of the issuance of shares in a newly
incorporated Canadian entity ("WCI II, Inc."), transfer to WCI II, Inc.,
all of the MCS Assets and all of the issued and outstanding capital stock
of MPF. The "MCS Assets" shall mean the assets used primarily in the
operation of WCI's Material Cleaning Systems Division but excluding,
specifically, all capital stock owned in Glegg Industries Inc., all rights
and obligations under that certain Strategic Alliance Agreement and other
agreements entered into in connection with the acquisition of the capital
stock investment in Glegg Industries Inc., and all of the assets used in
the Wheelabrator Air Pollution Control business. WCI II, Inc. shall assume
all liabilities or obligations of, or claims against, WCI relating to the
operation, ownership or use of the MCS Assets. The instruments of transfer
and assumption necessary to effect the matters contemplated above shall be
substantially in the same form as the other instruments of transfer between
Seller and Purchaser pursuant to this Agreement.
(b) The definition of "Liabilities" shall include all liabilities
(excluding all Retained Liabilities) of, or arising out of the ownership or
operation of, the MCS Assets, whether absolute or contingent, known or unknown,
including, without limitation, the liabilities, obligations and other matters
arising from the ownership, operation or use of the MCS Assets and described in
items (a) through (f) of the definition of "Liabilities" in Article I of the
---------
Sale Agreement.
(c) The definition of "Subsidiary" and "Subsidiaries" shall (i) exclude
WCI, and (ii) include WCI II, Inc. WCI is hereby deleted from Schedule 1.4 to
------------
the Sale Agreement.
4. The definition of "Excluded Assets" include (i) the issued and
outstanding capital stock of WCI and that certain unsecured promissory note
dated May 3, 1996, of WCI in favor of WWTH in the principal amount of
$15,000,000, (ii) the assets of JFS (UK) Limited and the assets of any other
subsidiary or affiliate of Seller other than the Subsidiaries and WWTI and (iii)
the rights and obligations of JFS (UK) Limited under the UK Microfloc Contracts.
5. Welsh Water Claim. Prior to closing, Seller shall cause the
-----------------
appropriate Subsidiaries to transfer or dividend to an entity designated by
Seller all rights of the plaintiffs in, under and to the action Johnson
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Filtration Systems Limited and Tilghman Wheelabrator Ltd. vs. Dwr. Cymru. Cys.
- ------------------------------------------------------------------------------
(a/k/a Welsh Water Co.), case no. 1996 ORB 799. All obligations and liabilities
- -----------------------
of the plaintiffs with respect to such action shall be deemed Retained Claims
for purposes of the Sale Agreement. Purchaser agrees that any payment, award or
right granted plaintiffs in such action is the sole property of Seller and its
Affiliates. After the
-3-
<PAGE>
Closing Purchaser shall cause the execution and delivery, from time to time, of
such documents as are reasonably requested by Seller to evidence or perfect the
assignment hereunder.
5. Closing Date. The Closing shall occur on December 2, 1996.
------------
Accordingly, the Sale Agreement is hereby amended in the following respects:
(a) The definition of "Base Tangible Net Book Value" set forth in Article I
---------
of the Sale Agreement is deleted in its entirety and replaced by the following:
""Base Tangible Net Book Value" means $113,600,000."
(b) Section 2.3 of the Sale Agreement is amended by:
-----------
(i) deleting the first sentence thereof and replacing it with the
following:
"Within thirty (30) days following the Closing Date Seller shall
deliver to Purchaser a consolidated balance sheet for the Business
dated as of November 30, 1996 (the "Closing Balance Sheet")."
(ii) deleting the fourth sentence thereof and replacing it with:
"The Closing Balance Sheet shall not take into consideration any
events occurring after November 30, 1996."
(c) Section 9.1 of the Sale Agreement is deleted in its entirety and
-----------
replaced by the following:
"9.1 Closing. The Closing shall take place at the offices of Mayer,
-------
Brown & Platt, 190 South LaSalle Street, Chicago, Illinois 60603 at
10:00 a.m. on or as of December 2, 1996 (the "Closing Date")."
6. Stock Transfers. (a) At the Closing, the Shares shall be conveyed as
---------------
follows:
(i) the issued and outstanding capital stock of Johnson Filtration Systems
(France) S.A. shall be conveyed to USF France S.A.;
(ii) the issued and outstanding capital stock of Wheelabrator Technologies
(UK) Limited shall be conveyed to U.S. Filter/LaGrange, Inc.;
(iii) the issued and outstanding capital stock of Johnson Filtration
Systems (Ireland) Limited shall be conveyed to USF Euroholding S.A.;
-4-
<PAGE>
(iv) the issued and outstanding capital stock of Johnson Filtration
Systems (Australia) Pty. Ltd. shall be conveyed to The Permutit Company Pty.
Ltd. (Australia);
(v) the issued and outstanding capital stock of Johnson Filtration Systems
(Japan) Ltd. shall be conveyed to USF Finance B.V. (Netherlands);
(vi) the issued and outstanding capital stock of Procesos y Systemas de
Separacion, S.A. shall be conveyed to USF Spain S.A.;
(vii) such issued and outstanding capital stock of Societe HPD S.A.
constituting, to Seller's knowledge, approximately 26.88% of such corporation's
issued and outstanding stock shall be conveyed to USF France S.A.;
(viii) the issued and outstanding capital stock of Wheelabrator Asia-
Pacific (Pte.) Ltd. shall be conveyed to U.S. Filter (Asia) Pte. Limited;
(ix) the issued and outstanding capital stock of Wheelabrator Water
Technologies International Holdings Inc. shall be conveyed to IP Holding
Company;
(x) the issued and outstanding capital stock of Wheelabrator Clean Air
Systems Inc. shall be conveyed to U.S. Filter Wastewater Group, Inc.;
(xi) such issued and outstanding capital stock of Johnson Filtration
Systems (India) Limited constituting, to Seller's knowledge, approximately 60%
of such corporation's issued and outstanding stock shall be subject to the Stock
Retention Agreement; and
(xii) such issued and outstanding capital stock of HPD/Evatherm A.G.
constituting, to Seller's knowledge, approximately 20% of such corporation's
issued and outstanding stock shall be conveyed to USF Euroholding, S.A.
(b) In addition to the conveyance set forth at Section 6(a) above, the
------------
following conveyances shall be effected at the Closing:
(i) immediately after the completion of the conveyance described at
Section 6(a)(ii) above:
- ----------------
(A) the issued and outstanding capital stock of Wheelabrator Sisson
Lehman S.A. shall be conveyed to Wheelabrator Technologies (UK) Limited,
and
(B) the issued and outstanding quota of Wheelabrator-Berger
(Maschinenfabriken) GmbH, with a nominal value of DM 2,999,200,
constituting, to Seller's knowledge, 74% of such corporation's issued and
outstanding capital stock, shall be conveyed to Wheelabrator Technologies
(UK) Limited;
-5-
<PAGE>
(ii) the issued and outstanding capital stock of WCI II, Inc. shall be
conveyed to U.S. Filter/LaGrange, Inc.;
(iii) immediately after the completion of the conveyance described at
Section 6(a)(ix) above, the issued and outstanding capital stock of RWB Beheer
- ----------------
B.V. shall be conveyed to USF Euroholding S.A.;
(iv) immediately after the completion of the conveyance described at
Section 6(a)(ix) above, the issued and outstanding capital stock of Wheelabrator
- ----------------
Water Technologies (s) Pte. Ltd. shall be conveyed to U.S. Filter (Asia) Pte.
Limited.
(c) At the Closing, Purchaser shall cause each entity receiving stock from
Seller or its Affiliates to execute and deliver to Seller an agreement to be
bound by the disclaimers set forth at the end of Article III of the Sale
-----------
Agreement and Purchaser's representations and warranties set forth at Section
-------
4.3 of the Sale Agreement. The delivery of such agreement shall be deemed to be
- ---
a closing delivery required by Section 9.3 of the Sale Agreement.
-----------
7. Insurance Agreement. The Insurance Agreement in the form of Exhibit A
------------------- ---------
to this Agreement replaces and supersedes, in all respects, the form of such
agreement set forth on Exhibit A to the Sale Agreement. At the Closing, the
---------
parties shall execute and deliver the Insurance Agreement in the form set forth
on Exhibit A to this Agreement.
---------
8. Closing Documents. At the closing, the parties shall execute and
-----------------
deliver the following:
(a) the Transition Services Agreement in the form of Exhibit B
---------
hereto;
(b) the Escrow Agreement in the form of Exhibit C hereto (which shall
---------
be the escrow agreement required by Section 2.2(b) of the Sale Agreement).
--------------
-6-
<PAGE>
9. Construction. The Sale Agreement, as amended by this Agreement,
------------
continues in full force and effect. If any provision of this Agreement is
inconsistent with the Sale Agreement, such provision of this Agreement shall
govern and control.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first written above.
WHEELABRATOR TECHNOLOGIES INC.
By: /s/ Damian C. Georgino
--------------------------------------------------
Name: Damian C. Georgino
------------------------------------------------
Title: Vice President
-----------------------------------------------
UNITED STATES FILTER CORPORATION
By: /s/ William Keightley
--------------------------------------------------
Name: William Keightley
------------------------------------------------
Title: Vice President, Wheelabrator Technologies Inc.
----------------------------------------------
-7-
<PAGE>
EXHIBIT 4.1
Amended and Restated
Multicurrency Credit Agreement
dated as of December 2, 1996
by and among
United States Filter Corporation,
its Subsidiaries listed as U.S. Borrowers and International Borrowers
on Schedule 1 hereto,
(the "Borrowers"),
The First National Bank of Boston,
DLJ Capital Funding, Inc.,
ABN AMRO Bank N.V., Los Angeles International Branch,
Banque Paribas,
The Bank of New York,
Bank of America Illinois,
The Sumitomo Bank, Limited (Los Angeles Branch),
Fleet Bank, N.A.,
The Industrial Bank of Japan, Limited (Los Angeles Agency),
Banque Nationale De Paris,
Deutsche Bank AG New York and/or Cayman Islands Branch,
The Long-Term Credit Bank of Japan Ltd. (Los Angeles Agency),
Union Bank of California, N.A.,
Sanwa Bank California,
NationsBank, N.A.,
and
BHF-BANK Aktiengesellschaft
(the "Lenders"),
DLJ Capital Funding, Inc., as Documentation Agent
(the "Documentation Agent")
ABN Amro Bank, N.V., as Co-Agent
(the "Co-Agent"),
and
The First National Bank of Boston,
as Managing Agent
<PAGE>
-1-
TABLE OF CONTENTS
Page
----
<PAGE>
-2-
Amended and Restated
MULTICURRENCY CREDIT AGREEMENT
-----
This AMENDED AND RESTATED MULTICURRENCY CREDIT AGREEMENT is made as of
December 2 1996 among UNITED STATES FILTER CORPORATION, a Delaware
corporation with its chief executive office at 40-004 Cook Street, Palm
Desert, California 92211 (the "Parent"), the Subsidiaries of the Parent other
than the Excluded Subsidiaries, each as herein defined (the Parent and such
Subsidiaries other than the Excluded Subsidiaries herein referred to
collectively as the "Borrowers" and, individually, as a "Borrower"), THE
FIRST NATIONAL BANK OF BOSTON ("FNBB"), a national banking association having
its principal place of business at 100 Federal Street, Boston, Massachusetts
02110, DLJ Capital Funding, Inc. ("DLJ"), ABN AMRO Bank N.V., los angeles
international branch ("ABN"), banque paribas ("Paribas"), The Bank of New
York ("BNY"), Bank of America Illinois ("BOAI"), the sumitomo bank, limited
(Los angeles branch) ("Sumitomo"), fleet bank, n.a., nationsbank, n.a.
("NationsBank"), the industrial bank of japan, limited (Los angeles agency)
("IBJ"), BANQUE NATIONALE DE paris ("BNP"), deutsche bank ag new york and/or
cayman islands branch ("Deutsche Bank"), The long-term credit bank of japan
ltd. (los angeles agency) ("LTCB"), Union Bank of california, n.a., ("Union")
sanwa bank california ("Sanwa") and BHF-Bank AKTIENGESELLSCHAFT ("BHF")
(such financial institutions and any financial institutions which become
parties hereto in accordance with (S)21 hereof are collectively referred to
herein as the "Lenders" and individually as a "Lender"), FNBB, as
Administrative and Managing Agent for the Lenders (in such capacity, the
"Managing Agent"), DLJ as Documentation Agent (the "Documentation Agent"),
and ABN as Co-Agent (the "Co-Agent" and, collectively with the Managing Agent
and the Documentation Agent, the "Agents").
RECITALS
WHEREAS, pursuant to a Revolving Credit and Term Loan Agreement dated as
of September 20, 1993, which was amended and restated in its entirety by the
Multicurrency Revolving Credit Agreement dated as of March 31, 1995, and
which was further amended and restated by the Amended and Restated
Multicurrency Revolving Credit Agreement dated as of November 30, 1995 (as
amended and in effect as of the date hereof, the "Original Credit
Agreement"), among the Parent, certain Subsidiaries of the Parent, FNBB,
First Interstate Bank of California, ABN, Bank of America Illinois, The Bank
of California, N.A., The Bank of New York, Banque Paribas, NatWest Bank, N.A.
now known as Fleet Bank, N.A., and Union Bank (collectively, the "Original
Lenders"), First Interstate Bank of California and ABN as co-Agents for the
Original Lenders, and FNBB as Managing Agent for the Original Lenders, the
Original Lenders have made loans to, and the Managing Agent under the
Original Credit Agreement has issued letters of credit for the account of,
the Parent and certain of the Parent's Subsidiaries (the "Existing Loans" and
the "Existing Letters of Credit", respectively); and
<PAGE>
-3-
WHEREAS, the Borrowers, the Lenders and the Agents desire to amend and
restate the Original Credit Agreement to modify the terms and structure of
the Existing Loans, to increase the amount which the Lenders are committed to
lend to the Borrowers, to modify certain financial covenants, and to join
DLJ, Sumitomo, NationsBank, IBJ, BNP, Deutsche Bank, LTCBJ, Sanwa, and BHF
and certain Subsidiaries of the Parent as parties to this Agreement;
NOW THEREFORE, subject to the satisfaction of the conditions set forth
in (S)12 hereof, the Borrowers, the Lenders, and the Agents hereby agree that
the Original Credit Agreement is hereby amended and restated in its entirety
as set forth herein.
(S) DEFINITIONS; RULES OF INTERPRETATION.
------------------------------------
(S) Definitions.
------------
The following terms shall have the meanings set forth in this (S)1
or elsewhere in the provisions of this Agreement referred to below:
ABN. See Preamble.
---
Accountants. See (S)8.4(a).
-----------
Affiliate. Any Person that would be considered to be an affiliate of
---------
any Borrower under Rule 144(a) of the Rules and Regulations of the United
States Securities and Exchange Commission, as in effect on the date hereof,
if such Borrower were issuing securities.
Agents. See Preamble.
------
Agreement. This Amended and Restated Multicurrency Revolving Credit
---------
Agreement, including the Exhibits and Schedules hereto, as amended and in
effect from time to time.
Applicable Commitment Fee. The applicable Commitment Fee set forth in
-------------------------
the following table:
<TABLE>
<CAPTION>
Applicable
Leverage Ratio Commitment Fee
- -------------------------------------------------------------------------
<S> <C>
- -------------------------------------------------------------------------
less than 2.75:1 0.250% per annum
- -------------------------------------------------------------------------
greater than or equal to 2.75:1 but less than 3.25:1 0.300% per annum
- -------------------------------------------------------------------------
</TABLE>
<PAGE>
-4-
<TABLE>
<S> <C>
greater than or equal to 3.25:1 but less than 3.75:1 0.350% per annum
- -------------------------------------------------------------------------
greater than or equal to 3.75:1 but less than 4.00:1 0.375% per annum
- -------------------------------------------------------------------------
greater than or equal to 4.00:1 but less than 4.25:1 0.450% per annum
- -------------------------------------------------------------------------
greater than or equal to 4.25:1 0.500% per annum
- -------------------------------------------------------------------------
</TABLE>
The effective date of a change in the Applicable Commitment Fee shall be the
first day after receipt by the Lenders of financial statements delivered
pursuant to (S)9.3(a) or (b) hereof which indicate a change in the Leverage
Ratio and in the Applicable Commitment Fee in accordance with the above
table. Notwithstanding the foregoing, until June 2, 1997, the Applicable
Commitment Fee shall be 0.375% per annum. If at the time of calculation of
the Commitment Fee the most recent financial statements required to be
delivered pursuant to (S)9.3(a) or (b) hereof have not been delivered, the
Applicable Commitment Fee shall be 0.500% per annum, subject to adjustment
upon actual receipt of such financial statements.
Applicable Laws. See (S)9.9.
---------- ----
Applicable L/C Fee. The applicable rate per annum of fees for
------------------
Letters of Credit, as set forth in the following table:
<TABLE>
<CAPTION>
Applicable L/C Fee for Performance Applicable L/C Fee for all other
Leverage Ratio Letters of Credit Letters of Credit
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Less than 2.75:1 0.500% 1.000%
- ---------------------------------------------------------------------------------------------------------------------
greater than or equal to 2.75:1 but less 0.750% 1.250%
than 3.25:1
- --------------------------------------------------------------------------------------------------------------------
greater than or equal to 3.25 but less than 1.000% 1.500%
3.75:1
- --------------------------------------------------------------------------------------------------------------------
greater than or equal to 3.75:1 but less 1.250% 1.750%
than 4.00:1
- --------------------------------------------------------------------------------------------------------------------
greater than or equal to 4.00:1 but less 1.500% 2.000%
than 4.25:1
- --------------------------------------------------------------------------------------------------------------------
greater than or equal to 4.25:1 1.750% 2.250%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
-5-
The effective date of a change in the Applicable L/C Fee shall be the first
day after receipt by the Lenders of financial statements delivered pursuant
to (S)9.3(a) or (b) hereof which indicate a change in the Leverage Ratio and
in the Applicable L/C Fee in accordance with the above table.
Notwithstanding the foregoing, until June 2, 1997, the Applicable L/C Fee
shall be 1.250% per annum for all Performance Letters of Credit and 1.750%
per annum for all other Letters of Credit. If at any time the financial
statements required to be delivered pursuant to (S)9.3(a) or (b) hereof are
not delivered within the time periods specified in such subsections, the
Applicable L/C Fee shall be 1.750% per annum with respect to any Performance
Letter of Credit and 2.25% per annum with respect to any other Letter of
Credit issued after the date on which such financial statements were required
to be delivered but before actual receipt of such financial statements,
subject to adjustment upon actual receipt of such financial statements.
Applicable Margin. The applicable interest rate margin per annum
-----------------
set forth in the following table:
<TABLE>
<CAPTION>
Leverage Applicable Margin Applicable Margin for Eurocurrency
Ratio for Base Rate Advances Advances
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
less than 2.75:1 0% 1.00%
- -----------------------------------------------------------------------------------------------------------
greater than or equal to 2.75:1, but less
than 3.25:1 0% 1.25%
- -----------------------------------------------------------------------------------------------------------
greater than or equal to 3.25:1 but less
than 3.75:1 0% 1.50%
- -----------------------------------------------------------------------------------------------------------
greater than or equal to 3.75:1, but less
than 4.00:1 0% 1.75%
- -----------------------------------------------------------------------------------------------------------
greater than or equal to 4.00:1 but less
than 4.25:1 0.25% 2.00%
- -----------------------------------------------------------------------------------------------------------
greater than or equal to 4.25:1
0.50% 2.25%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
Any change in the Applicable Margin with respect to Base Rate
Advances shall become effective on the first day after receipt by the Lenders
of financial statements delivered pursuant to (S)9.3(a) or (b) hereof which
indicate a change in the Leverage Ratio and in the Applicable Margin
<PAGE>
-6-
in accordance with the above table, and, with respect to Eurocurrency
Advances, on the first day of each Interest Period which begins three (3) or
more days after receipt by the Lenders of financial statements delivered
pursuant to (S)9.3(a) or (b) hereof which indicate a change in the Leverage
Ratio and in the Applicable Margin in accordance with the above table.
Notwithstanding the foregoing, until June 2, 1997, the Applicable Margin
shall be 0% with respect to Base Rate Advances and 1.75% with respect to
Eurocurrency Advances. If at any time the financial statements required to be
delivered pursuant to (S)9.3(a) or (b) hereof are not delivered within the
time periods specified in such subsections, the Applicable Margin shall be
2.25% with respect to any Eurocurrency Advance requested on or after the date
on which such financial statements were required to be delivered but before
the time of actual receipt of such financial statements, and the Applicable
Margin with respect to Base Rate Advances shall be 0.50% effective the day
after such financial statements were required to be delivered but were not so
delivered, subject to adjustment upon actual receipt of such financial
statements.
Assignment and Acceptance. See (S)21.1
-------------------------
Authorized Officer. The President, Secretary, Treasurer, or any
------------------
Vice President of the relevant Borrower.
Authorized Signatory. Any Person who has been authorized to make
--------------------
requests for Revolving Credit Loans and/or Multicurrency Loans on behalf of
any Borrower, as evidenced by a certificate of an Authorized Officer of such
Borrower.
Balance Sheet Date. March 31, 1996.
------- ----- ----
Base Rate. The higher of (a) the rate per annum (rounded upward,
---- ----
if necessary, to the next higher 1/100 of 1%) equal to the annual rate of
interest announced from time to time by the Managing Agent at its head office
in Boston, Massachusetts, as its "Base Rate" or (b) one-half percent (1/2%)
above the overnight federal funds effective rate, as published by the Board
of Governors of the Federal Reserve System as in effect from time to time.
Base Rate Advances. Revolving Credit Loans and all or any portion
------------------
of the Term Loan bearing interest by reference to the Base Rate.
BHF. See Preamble.
---
BNP. See Preamble.
---
BNY. See Pramble.
---
<PAGE>
-7-
BOAI. See Preamble.
----
Borrowers. See Preamble.
---------
Business Day. Any day on which commercial banking institutions in
-------- ---
Boston, Massachusetts, New York, New York, and in Los Angeles, California
[other cities] are open for the transaction of banking business.
Capital Assets. Fixed assets, both tangible (such as land,
------- ------
buildings, fixtures, machinery and equipment) and intangible (such as
patents, copyrights, trademarks, franchises and goodwill) that would be
required to be capitalized and shown on the balance sheet of such Person in
accordance with GAAP (excluding any Capital Assets associated with a distinct
revenue stream from a customer contract); provided that Capital Assets shall
not include any item customarily charged directly to expense or depreciated
over a useful life of twelve (12) months or less in accordance with GAAP.
Capital Expenditures. Amounts paid or indebtedness incurred by any
------- ------------
Person in connection with the purchase or lease by such Person of a Capital
Asset.
Certified. With respect to the financial statements of any Person,
---------
such statements as audited by a firm of independent auditors, whose report
expresses the opinion, without qualification, that such financial statements
present fairly the financial position and/or results of operations of such
Person, as of and on the date therein specified.
CFO. See (S)9.3(b).
---
Change of Control. (a) The acquisition by any Person (including
-----------------
any syndicate or group deemed to be a "person" under Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") or any successor provision to either of the foregoing) of beneficial
ownership, directly or indirectly, of shares of capital stock of the Parent
entitling such person to exercise more than 50% of the total voting power of
all voting shares of the Parent; or (b) any consolidation of the Parent with,
or merger of the Parent into, any other person, any merger of another Person
into the Parent, or any sale or transfer of all or substantially all of the
assets of the Parent to another Person other than (i) a consolidation or
merger which does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of capital stock other than shares of
capital stock owned by any of the parties to the consolidation or merger and
in which the consolidated net worth of the surviving corporation immediately
after the transaction equals or exceeds the consolidated net worth of the
Parent immediately prior to such transaction, or (ii) a merger which is
effected
<PAGE>
-8-
solely to change the jurisdiction of incorporation of the Parent or (iii) any
consolidation with or merger of the Parent into a Subsidiary of the Parent
with the prior written consent of the Lenders, or any sale or transfer by the
Parent with the written consent of the Lenders of all or substantially all of
its assets to one or more of its wholly owned Subsidiaries in any one
transaction or a series of transactions, provided that in each case set forth
in clause (b) hereof that the resulting corporation or each such Subsidiary
assumes or guarantees the obligations of the Parent under this Agreement and
the FNBB Credit Agreement and the consolidated net worth of the surviving or
acquiring corporation in any such consolidation, merger or sale of assets
immediately after the consummation of such transaction equals or exceeds the
consolidated net worth of the Parent immediately prior to such transaction;
or (c) any Change of Control as defined in the Subordinated Indenture (which
definition is incorporated herein by reference as if expressly set forth
herein).
Co-Agent. See Preamble.
--------
Code. The Internal Revenue Code of 1986, as amended and in effect
----
from time to time.
Collateral. The shares of, or other equity interests in, the U.S.
----------
Borrowers other than the Parent, and the proceeds thereof, that are or are
intended to be subject to the security interests created by the Pledge
Agreement.
Commitment. With respect to any Lender, its Revolving Credit
----------
Commitment Percentage of the Revolving Credit Commitment and its
Multicurrency Commitment Percentage of the Multicurrency Commitment.
Commitment Fee. See (S)6.3.
---------- ---
Compliance Certificate. See (S)9.3(c).
---------- -----------
Consolidated or consolidated. With reference to any term defined
------------ -- ------------
herein, shall mean that term as applied to the accounts of the Parent and its
Subsidiaries, consolidated in accordance with GAAP, after eliminating all
intercompany items.
Consolidated Current Assets. All assets of the Parent and its
------------ ------- ------
Subsidiaries on a consolidated basis that, in accordance with GAAP, are
properly classified as current assets, provided that notes receivable and
accounts receivable shall be included only if payable on demand or within one
(1) year from the date as of which Consolidated Current Assets are to be
determined and if not directly or indirectly renewable or extendible at the
option of the debtors, by their terms, or by the terms of any instrument or
<PAGE>
-9-
agreement relating thereto, beyond such year, and such notes and accounts
receivable shall be taken at their face value less reserves determined to be
sufficient in accordance with GAAP.
Consolidated Current Liabilities. All liabilities of the Parent
------------ ------- -----------
and its Subsidiaries on a consolidated basis maturing on demand or within one
(1) year from the date as of which Consolidated Current Liabilities are to be
determined (but, until December 31, 1998, excluding the Loans), and such
other liabilities as may properly be classified as current liabilities in
accordance with GAAP.
Consolidated Earnings Before Interest and Taxes or EBIT. For any
------------ -------- ------ -------- --- ----- -- ----
period, the Consolidated Net Income (or Deficit) of the Parent and its
Subsidiaries determined in accordance with GAAP, plus (a) interest expense,
----
(b) income taxes and (c) extraordinary non-cash losses for such period, and
minus (d) extraordinary gains for such period, all as determined in
-----
accordance with GAAP.
Consolidated Earnings Before Interest, Taxes, Depreciation, and
---------------------------------------------------------------
Amortization, or EBITDA. For any period, EBIT, plus (a) depreciation and (b)
----------------------- ----
amortization for such period, all as determined in accordance with GAAP,
provided that, for purposes of calculating the Leverage Ratio, the portion of
EBITDA derived from companies acquired since the date of the most recent
financial statements delivered to the Lenders pursuant to (S)9.3(a) hereof
shall be included in the calculation of EBITDA only if the financial
statements of such acquired entities have been audited for the period sought
to be included by an independent accounting firm satisfactory to the Managing
Agent.
Consolidated Net Income (or Deficit) or Net Income (or Deficit).
------------ --- ------ -- ------- --- ------ -- -------
The consolidated net income (or deficit) of the Parent and its Subsidiaries,
or the net income or deficit of any Borrower on an individual basis,
determined in accordance with GAAP.
Consolidated Total Assets. All assets of the Parent and its
-------------------------
Subsidiaries determined on a consolidated basis in accordance with GAAP.
Consolidated Total Interest Expense. For any period, the aggregate
------------ ----- -------- -------
amount of interest required to be paid or accrued by the Parent and its
Subsidiaries during such period on all Indebtedness of the Parent and its
Subsidiaries outstanding during all or any part of such period, whether such
interest was or is required to be reflected as an item of expense or
capitalized, including commitment fees, agency fees, facility fees, balance
deficiency fees and similar fees or expenses in connection with the borrowing
of money.
<PAGE>
-10-
Consolidated Working Capital. The excess of Consolidated Current
----------------------------
Assets over Consolidated Current Liabilities.
Default. See (S)14.1.
-------
Deutsche Bank. See Preamble.
-------------
DLJ. See Preamble.
---
Disposal. See "Release."
--------
Distribution. The declaration or payment of any dividend or
------------
distribution on or in respect of any shares of any class of capital stock,
any partnership interests or any membership interests of any Person, other
than dividends or other distributions payable solely in shares of common
stock, partnership interests or membership units of such Person, as the case
may be; the purchase, redemption, or other retirement of any shares of any
class of capital stock, partnership interests or membership units of such
Person, directly or indirectly through a Subsidiary or otherwise; the return
of equity capital by any Person to its shareholders, partners or members as
such; or any other distribution on or in respect of any shares of any class
of capital stock, partnership interest or membership unit of such Person.
Documentation Agent. See preamble.
-------------------
Dollar Equivalent. With respect to any amounts denominated in a
-----------------
currency other than Dollars, the amount (as conclusively ascertained by the
Managing Agent absent manifest error) in Dollars which is or could be
purchased by the Managing Agent (in accordance with its normal banking
practices) with such amounts denominated in such other currency in the Nassau
foreign currency deposits market for delivery on such date at the spot rate
of exchange, at or about 11:00 a.m., local time at the Nassau Branch, on the
date of determination.
Dollars or $. Dollars in lawful currency of the United States of
------- -- -
America.
Drawdown Date. The date on which any Loan is made or is to be
-------- ----
made.
<PAGE>
-11-
Effective Date. The date on which the conditions precedent set
--------- ----
forth in (S)12 hereof are satisfied.
Eligible Assignee. Any of (i) a commercial bank, insurance
-----------------
company, or finance company organized under the laws of the United States, or
any State thereof or the District of Columbia, and having total assets in
excess of $1,000,000,000; (ii) a savings and loan association or savings bank
organized under the laws of the United States, or any State thereof or the
District of Columbia, and having a net worth of at least $100,000,000,
calculated in accordance with GAAP; (iii) a commercial bank organized under
the laws of any other country which is a member of the Organization for
Economic Cooperation and Development (the "OECD"), or a political subdivision
of any such country, 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
Cayman Islands, the country in which it is organized, or another country
which is also a member of the OECD; (iv) the central bank of any country
which is a member of the OECD; and (v) if, but only if, any Event of Default
has occurred and is continuing, any other bank, insurance company, commercial
finance company or other financial institution approved by the Managing
Agent, such approval not to be unreasonably withheld.
Employee Benefit Plan. Any employee benefit plan within the
-------- ------- ----
meaning of (S)3(3) of ERISA maintained or contributed to by any Borrower or
any ERISA Affiliate, other than a Multiemployer Plan.
Environmental Laws. All applicable federal, state, provincial,
------------- ----
municipal, local and foreign laws, principles of common law or civil law,
regulations, by-laws, guidelines and codes, as such laws, principles,
regulations, by-laws and guidelines and codes may be amended from time to
time, as well as orders, decrees, judgments, seizures or injunctions issued,
promulgated, approved or entered thereunder relating to pollution, protection
of the environment, or protection of the public from pollution or employee
health and safety, including, but not limited to the Release or threatened
Release of Hazardous Substances into the environment or otherwise relating to
the presence, manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Substances.
EPA. See (S)8.17(b).
---
ERISA. The Employee Retirement Income Security Act of 1974, as
-----
amended and in effect from time to time.
ERISA Affiliate. Any Person which is treated as a single employer
----- ---------
with any of the Borrowers under (S)414(b) and (c) of the Code.
<PAGE>
-12-
ERISA Reportable Event. A reportable event with respect to a
----- ---------- -----
Guaranteed Pension Plan within the meaning of (S)4043 of ERISA and the
regulations promulgated thereunder as to which the requirement of notice has
not been waived.
Eurocurrency Advances. Revolving Credit Loans, Multicurrency
------------ --------
Loans, and all or any portion of the Term Loan bearing interest calculated by
reference to the Eurocurrency Rate.
Eurocurrency Business Day. Any Business Day on which dealings in
------------ -------- ---
foreign currency and exchange are carried on among banks in Boston,
Massachusetts, Nassau, The Bahamas, Paris, France and London, England.
Eurocurrency Interest Determination Date. For any Interest Period,
------------ -------- ------------- ----
the date two (2) Eurocurrency Business Days prior to the first day of such
Interest Period.
Eurocurrency Offered Rate. The rate per annum at which deposits of
------------ ------- ----
Dollars or Optional Currency, as applicable, are offered to the Managing
Agent by prime banks in whatever Eurocurrency interbank market may be
selected by the Managing Agent, in its sole discretion, acting in good faith,
at or about 11:00 a.m. local time in such interbank market, on the
Eurocurrency Interest Determination Date for a period equal to the period of
such Interest Period in an amount substantially equal to the principal amount
requested to be loaned at or converted to a rate based on the Eurocurrency
Offered Rate. With respect to the Revolving Credit Loans and any portion of
the Term Loan which will bear interest by reference to the Eurocurrency Rate,
the Managing Agent shall select a Eurodollar market.
Eurocurrency Rate.
------------ ----
(a) With respect to Revolving Credit Loans and the Term Loan, the
rate per annum, rounded upwards to the nearest 1/16 of 1%, determined by
the Managing Agent with respect to an Interest Period, in accordance
with the following formula:
Eurocurrency Rate = Eurocurrency Offered Rate
-------------------------
1-Reserve Rate
(b) With respect to Multicurrency Loans, the Eurocurrency Rate plus
the cost to the Lenders, expressed as a percentage, of complying with
any law as described in (S)7.10 hereof.
<PAGE>
-13-
Event of Default. See (S)14.1.
----- -- -------
Excess Operating Cash Flow. For any period, the Consolidated Net Income
--------------------------
(or Deficit) plus (a) income taxes, (b) depreciation, (c) amortization, and
(d) extraordinary non-cash losses for such period minus (e) Capital
Expenditures, (f) cash taxes, (g) repayments of principal of the Loans
required hereunder, without duplication, and (h) voluntary prepayments with
respect to the Term Loan for such period, and plus any increases or minus any
decreases in Consolidated Working Capital.
Excluded Subsidiaries. The Subsidiaries of the Parent listed as
---------------------
Excluded Subsidiaries on Schedule 1 hereto, and any other Subsidiaries of the
Parent acquired or created after the date hereof which are not required to
become Borrowers pursuant to (S)7.16 hereof.
Existing Letters of Credit. See the Recitals hereto.
--------------------------
Existing Wheelabrator L/Cs. The Letters of Credit identified on
--------------------------
Schedule 3.1(b) hereto.
Existing Loans. See the Recitals hereto.
--------------
FNBB. See Preamble.
----
FNBB Credit Agreement. The Revolving Credit Agreement dated as of
---------------------
November 30, 1995 among the Borrowers and FNBB, as the same may be amended
and in effect from time to time as permitted by the provisions of (S)18.10
hereof.
FNBB Obligations. The obligations of the Borrowers to FNBB and its
----------------
branch offices under the FNBB Credit Agreement, in an aggregate principal
amount (calculating all amounts denominated in Optional Currencies at their
Dollar Equivalent) not to exceed $10,000,000.
Funded Debt. Indebtedness of the Parent and its Subsidiaries for
-----------
borrowed money determined on a consolidated basis in accordance with GAAP
minus the amount by which the cash and cash equivalents of the Parent and its
-----
Subsidiaries determined in accordance with GAAP exceeds $10,000,000.
GAAP. (i) When used in general, GAAP means principles which are (1)
----
consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors or successors, in effect for
the fiscal year ended on the Balance Sheet Date and (2) such that a certified
public accountant would, insofar as the use of accounting principles is
pertinent, be in a position to deliver an unqualified opinion as to financial
statements in which such principles have been properly applied; and (ii) when
used with reference to the Parent and its Subsidiaries, such principles shall
include (to the extent consistent with such principles) the accounting
practice of the Parent and its Subsidiaries, reflected in their financial
statements for the year ended on the Balance Sheet Date.
<PAGE>
-14-
Guaranteed Pension Plan. Any pension benefit plan within the meaning of
---------- ------- ----
(S)3(2) of ERISA maintained or contributed to by any Borrower or any ERISA
Affiliate the benefits of which are guaranteed on termination in full or in
part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer
Plan.
Hazardous Substances. Any waste, contaminant, pollutant, hazardous
--------- ----------
substance, toxic substance, hazardous waste, special waste, industrial
substance or waste, radioactive materials, petroleum or petroleum-derived
substance or waste, or any constituent or combination of any such substance
or waste, which substance, contaminant, pollutant or material or waste is or
shall hereafter become regulated under, governed by, or defined by any
Environmental Law.
IBJ. See Preamble.
---
Indebtedness. All obligations, contingent and otherwise, which in
------------
accordance with GAAP should be classified upon the obligor's balance sheet as
liabilities, or to which reference should be made by footnotes thereto,
including, without limitation, in any event and whether or not so classified:
(i) all debt and similar monetary obligations, whether direct or indirect;
(ii) all liabilities secured by any mortgage, pledge, security interest,
lien, charge, or other encumbrance existing on property owned or acquired
subject thereto, whether or not the liability secured thereby shall have been
assumed; and (iii) all guarantees, endorsements and other contingent
obligations whether direct or indirect in respect of Indebtedness of others,
including any obligation to supply funds to or in any manner to invest in,
directly or indirectly, the debtor, to purchase Indebtedness, or to assure
the owner of Indebtedness against loss, through an agreement to purchase
goods, supplies, or services for the purpose of enabling the debtor to make
payment of the Indebtedness held by such owner or otherwise, obligations with
respect to interest rate protection agreements, and the obligations to
reimburse the issuer of any letters of credit or guaranties.
Interest Period. With respect to each Eurocurrency Advance:
-------- ------
(a) initially, the period commencing on the date of a conversion from a
Base Rate Advance into a Eurocurrency Advance or the making of a Loan
which is a Eurocurrency Advance, and ending one (1), two (2), three (3)
or six (6) months thereafter, as the case may be, as the Borrowers may
select; and
(b) thereafter, the period beginning on the last day of the preceding
Interest Period, and ending one (1), two (2), three (3) or six (6)
months thereafter, as the case may be, as the Borrowers may select;
provided that any Interest Period which would otherwise end on a day
which is not a Eurocurrency Business Day shall end on the next
succeeding Eurocurrency Business Day, unless the result of such
extension would be to carry such Interest Period into another calendar
month, in which event such Interest Period shall end on the immediately
preceding Eurocurrency
<PAGE>
-15-
Business Day, and provided further that no Interest Period may extend
beyond the Maturity Date.
International Borrowers. The Subsidiaries of the Parent listed as
-----------------------
International Borrowers on Schedule 1 hereto, and any other international
Subsidiaries of the Parent which are required to become Borrowers pursuant to
(S)7.16 hereof.
International L/Cs. Letters of Credit issued at the request of any
------------------
International Borrower pursuant to (S)3.1 hereof.
Investments. All cash expenditures made and all liabilities incurred
-----------
(contingently or otherwise) for the acquisition of stock or other ownership
interests in, all or a substantial portion of all of the assets of, or
Indebtedness of, or for loans, advances, capital contributions or transfers
of property to, or in respect of any guaranties (or other commitments as
described under Indebtedness), or obligations of, any Person. In determining
the aggregate amount of Investments outstanding at any particular time, (i)
-
the amount of any Investment represented by a guaranty shall be taken at not
less than the principal amount of the obligations guaranteed and still
outstanding; (ii) there shall be included as an Investment all interest
--
accrued with respect to Indebtedness constituting an Investment unless and
until such interest is paid, (iii) there shall be deducted in respect of each
---
such Investment any amount received as a return of capital (but only by
repurchase, redemption, retirement, repayment, liquidating dividend or
liquidating distribution); (iv) there shall not be deducted in respect of any
--
Investment any amounts received as earnings on such Investment, whether as
dividends, interest or otherwise, except that accrued interest included as
provided in the foregoing clause (ii) may be deducted when paid; and (v)
-- -
there shall not be deducted from the aggregate amount of Investments any
decrease in the value thereof.
Issuing Lender. The Lender(s) issuing Letters of Credit, which shall
--------------
initially be FNBB, ABN, BNY, BOAI, Union, NationsBank, and such other Lenders
as are agreed to be Issuing Lenders by the Parent, such other Issuing
Lenders, and the Managing Agent.
Lenders. See Preamble.
-------
Letters of Credit. Letters of Credit issued or to be issued by any
------- -- ------
Issuing Lender in accordance with (S)3 hereof for the account of the
Borrowers.
Letter of Credit Applications. Letter of Credit Applications in such
------ -- ------ ------------
form as may be agreed upon by the Borrowers and the applicable Issuing Lender
from time to time which are entered into pursuant to (S)3 hereof as such
Letter of Credit Applications are amended, varied or supplemented from time
to time.
Letter of Credit Participation. See (S)3.7.
------------------------------
Letter of Credit Fee. See (S)3.6.
--------------------
<PAGE>
-16-
Leverage Ratio. See (S)11.2
--------------
Loans. The Revolving Credit Loans, the Term Loan, and the Multicurrency
-----
Loans made or to be made by the Lenders to the Borrowers pursuant to this
Agreement.
Loan Documents. Collectively, this Agreement, the Notes, the Letter of
---- ---------
Credit Applications, and the Security Documents, as each may be amended,
modified, or restated from time to time.
LTCB. See Preamble.
----
Majority Lenders. Subject to adjustment as set forth in (S)18.10
-------- -------
hereof, as of any date, the Lenders which in the aggregate hold fifty-one
percent (51%) of the sum of the Total Commitment plus the outstanding
principal amount of the Term Loan, and, if the Total Commitment has been
reduced to zero, the Lenders holding at least fifty-one percent (51%) of the
sum of (a) the outstanding principal amount of the Loans and Letter of Credit
Participations in International L/Cs plus (b) the Maximum Drawing Amount of
----
all outstanding Letters of Credit on such date (calculating all amounts
denominated in Optional Currencies at their Dollar Equivalent).
Managing Agent. See Preamble.
--------------
Managing Agent's Head Office. The head office of the Managing Agent
----------------------------
located at 100 Federal Street, Boston, Massachusetts 02110.
Maturity Date. December 2, 2001.
-------- ----
Maximum Drawing Amount. The maximum aggregate amount (calculating all
------- ------- ------
amounts denominated in any Optional Currency at their Dollar Equivalent) from
time to time that the beneficiaries may draw under outstanding Letters of
Credit.
Multicurrency Commitment. $25,000,000, or the Dollar Equivalent thereof
---------------------------
in the Optional Currencies, as such amount may be reduced pursuant to (S)4.2
hereof, or, if such Multicurrency Commitment is terminated pursuant to (S)4.2
or (S)14.2 hereof, zero.
Multicurrency Commitment Percentage. With respect to each Multicurrency
-----------------------------------
Lender, the percentage set forth on Schedule 2 hereto as such Lender's
Multicurrency Commitment Percentage, as such percentage may be adjusted from
time to time in accordance with (S)21 hereof.
Multicurrency Lenders. Those Lenders identified on Schedule 2 hereto as
---------------------
having a Multicurrency Commitment greater than zero.
Multicurrency Loan Request. See (S)4.3.
--------------------------
<PAGE>
-17-
Multicurrency Loans. Loans made by the Multicurrency Lenders to the
-------------------
International Borrowers pursuant to (S)4.1 hereof.
Multicurrency Notes. See (S)6.1.
-------------------
Multiemployer Plan. Any multiemployer plan within the meaning of
------------- ----
(S)3(37) of ERISA maintained or contributed to by any Borrower or any ERISA
Affiliate.
Nassau Branch. The Managing Agent's Nassau, The Bahamas, branch office.
-------------
NationsBank. See Preamble.
-----------
Non-U.S. Lender. See (S)7.8(c).
---------------
Notes. The Revolving Credit Notes, the Multicurrency Notes, and the
-----
Term Notes.
Obligations. With respect to the U.S. Borrowers, all indebtedness,
-----------
obligations and liabilities of every nature of all of the Borrowers,
collectively, to the Agents, the Issuing Lenders, and the Lenders arising or
incurred under this Agreement or the other Loan Documents or in respect of
Loans made, Letters of Credit issued, and the Notes or other documents or
instruments at any time evidencing any thereof, including, without
limitation, all Reimbursement Obligations, and, with respect to the
International Borrowers, all indebtedness, obligations and liabilities of
every nature of all of the International Borrowers, collectively, to the
Agents, the Nassau Branch, the Issuing Lenders, and the Multicurrency Lenders
arising or incurred under this Agreement or the other Loan Documents or in
respect of Multicurrency Loans made, the International Letters of Credit
issued, and the Multicurrency Notes or other documents or instruments at any
time evidencing any thereof, including, without limitation, Reimbursement
Obligations of the International Borrowers.
Optional Currency shall mean the currency of Great Britain, Germany,
-----------------
Switzerland, France, Italy, the Netherlands, Spain, Singapore, Thailand,
Malaysia, Hong Kong, the Philippines, Canada, Argentina, New Zealand, or
Australia which is freely convertible into Dollars and which is traded on the
Nassau inter-bank foreign currency deposits market, and any other currency
other than Dollars which the Multicurrency Lenders and the Parent have agreed
shall be made available hereunder.
Original Credit Agreement. See the Recitals hereto.
-------------------------
Parent. See Preamble.
------
Paribas. See Preamble.
-------
PBGC. The Pension Benefit Guaranty Corporation created by (S)4002 of
----
ERISA and any successor entity or entities having similar responsibilities.
<PAGE>
-18-
Performance Letter of Credit. A Letter of Credit under which the event
----------------------------
which triggers payment is performance-related, such as failure to ship a
product or provide a service, and not financial, such as the failure to pay
money, as set forth in greater detail in the letter dated March 30, 1995 from
the Board of Governors of the Federal Reserve System attached hereto as
Exhibit J or in any applicable directive or letter ruling of the Board of
Governors of the Federal Reserve System issued subsequent thereto.
Permitted Liens. See (S)10.2.
--------- -----
Person. Any individual, corporation, partnership, trust, unincorporated
------
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
Pledge Agreement. The Amended and Restated Pledge Agreement dated as of
------ ---------
the date hereof, made by the U.S. Borrowers in favor of the Managing Agent
for the benefit of the Lenders to secure the Obligations and for the benefit
of FNBB to secure the FNBB Obligations, in the form attached hereto as
Exhibit K.
Real Property. The real properties owned or operated by the Parent and
---- --------
its Subsidiaries.
Register. See (S)21.3.
--------
Registration Statement. The registration statement (Form S-3) of the
-----------------------
Parent as filed with the United States Securities and Exchange Commission on
October 16, 1996.
Reimbursement Obligation. The Borrowers' obligation to reimburse the
------------- ----------
Issuing Lender for the benefit of the Lenders on account of any drawing under
any Letter of Credit as provided in (S)3.2.
Release. Shall mean any release, issuance, spill, emission, leaking,
-------
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration ("Disposal") into the indoor or outdoor environment or into or out
of any property, including the movement of Hazardous Substances through or in
the air, soil, surface water, ground water, or property other than as
permitted by and in compliance with all Environmental Laws.
Reserve Rate. The highest rate, expressed as a decimal, at which any
------- ----
Lender would be required to maintain reserves under Regulation D of the Board
of Governors of the Federal Reserve System (or any subsequent or similar
regulation relating to such reserve requirements) against "Eurocurrency
Liabilities" (as such term is defined in Regulation D), or against any other
category of liabilities which might be incurred by any Lender to fund Loans
bearing interest based on the Eurocurrency Rate, if such liabilities were
outstanding.
Revolving Credit Commitment. (a) $320,000,000 prior to the United
---------------------------
Utilities Closing Date, or (b) $475,000,000 on and after the United Utilities
Closing Date, as such amount may be reduced pursuant
<PAGE>
-19-
to (S)2.2 and (S)2.5 hereof, or, if such Revolving Credit Commitment has been
terminated pursuant to (S)2.2 or (S)14.2 hereof, zero.
Revolving Credit Commitment Percentage. With respect to each Lender,
--------------------------------------
the percentage set forth on Schedule 2 hereto as such Lender's Revolving
Credit Commitment Percentage, as such percentage may be adjusted from time to
time in accordance with (S)21 hereof.
Revolving Credit Loan and Letter of Credit Request. See (S)2.3.
--------------------------------------------------
Revolving Credit Loans. Loans made by the Lenders to the U.S. Borrowers
--------- ------ -----
pursuant to (S)2.1 hereof.
Revolving Credit Notes. See (S)6.1.
----------------------
Sanwa. See Preamble.
-----
Security Documents. The Pledge Agreement, as amended and in effect from
-------- ---------
time to time, and any additional documents evidencing or perfecting the
Managing Agent's lien on the Collateral.
Smogless. USF Smogless S.p.A., a corporation organized under the laws
--------
of Italy.
Smogless Note. Promissory note of Smogless in an aggregate principal
-------------
amount not to exceed $45,000,000 payable to the Parent.
Subordinated Debt. Indebtedness of the Parent owing pursuant to the
------------ ----
Subordinated Indenture, and any other Indebtedness of the Parent which has
been subordinated to the Obligations provided that, with respect to such
other Indebtedness, (a) at the time such Subordinated Debt is incurred, no
Default or Event of Default has occurred or would occur (including under
(S)10.1 hereof) as a result of such incurrence, and the Parent shall have
provided the Lenders with calculations showing compliance with (S)10.1 and
(S)11 hereof on a pro forma basis taking into account the incurrence of such
---------
Subordinated Debt, and (b) the documentation evidencing such Subordinated
Debt shall have been delivered to the Managing Agent and shall contain all of
---
the following characteristics: (i) it shall be unsecured, (ii) it shall bear
a market rate of interest, (iii) it shall have an average weighted maturity
of at least six (6) years, (iv) it shall not require principal repayments
thereof prior to the Maturity Date, (v) it shall have financial covenants
(including covenants relating to incurrence of Indebtedness) which are
meaningfully less restrictive than those set forth herein, (vi) it shall have
no restrictions on the Parent's or any of its Subsidiaries' ability to grant
liens securing Indebtedness ranking senior to such Subordinated Debt, (vii)
it shall permit the incurrence of senior Indebtedness under this Credit
Agreement (and under any refinancings hereof) in a principal amount at least
equal to the Total Commitment hereunder at the time of incurrence of such
Subordinated Debt minus any mandatory or optional reductions thereof plus
the outstanding principal amount of the Term Loan plus $25,000,000, (viii) it
may be cross-accelerated with the Obligations and other senior Indebtedness
of the Parent (but shall not be cross-defaulted except for payment defaults
<PAGE>
-20-
which the senior lenders have not waived for a period of 60 days), (ix) it
shall provide that (A) upon any payment or distribution of the assets of the
Parent (including after the commencement of a bankruptcy proceeding) of any
kind or character, all of the Obligations (including interest accruing after
the commencement of any bankruptcy proceeding at the rate specified for the
applicable Obligation, whether or not such interest is an allowable claim in
any such proceeding) shall be paid in full prior to any payment being
received by the holders of the Subordinated Debt, and (B) until all of the
Obligations (including the interest described in subclause (A) above) are
paid in full, any payment or distribution to which the holders of the
Subordinated Debt would be entitled but for the subordination provisions of
the type described in subclauses (x) and (xi) hereof shall be made to the
holders of the Obligations, (x) it shall provide that in the event of a
payment default under (S)14.1(a) or (b) hereof, the Parent shall not be
required to pay the principal of, or any interest, fees and all other amounts
payable with respect to the Subordinated Debt until the Obligations have been
paid in full in cash, (xi) it shall provide that in the event of any other
Event of Default, the Lenders shall be permitted to block payments of
principal, interest, fees and all other amounts payable with respect to the
Subordinated Debt for a period of 180 days, (xii) it shall acknowledge that
none of the provisions outlined in part (b) of this definition can be
amended, modified or otherwise altered without the prior written consent of
the Majority Lenders, and (xiii) it shall not be guaranteed by the
Subsidiaries of the Parent (nor shall the Subsidiaries of the Parent be
direct obligors with respect thereto) without the prior written consent of
the Majority Lenders.
Subordinated Indenture. The indenture dated September 18, 1995 from the
----------------------
Parent to State Street Bank & Trust Company, as trustee, with respect to the
convertible subordinated debentures of the Parent due 2005, in an aggregate
principal amount of $140,000,000.
Subsidiary. Any corporation, association, trust, or other business
----------
entity of which the designated parent shall at any time own directly or
indirectly through a Subsidiary or Subsidiaries at least a majority of the
outstanding capital stock or other interest entitled to vote generally.
Sumitomo. See Preamble.
--------
Term Loan. See (S)5.1.
---------
Term Loan Percentage. With respect to each Lender, the percentage set
--------------------
forth on Schedule 2 hereto as such Lender's Term Loan Percentage.
Term Notes. See (S)5.2.
----------
Total Commitment. The sum of the Multicurrency Commitment and the
----- ----------
Revolving Credit Commitment in effect at the time of determination.
Union. See Preamble.
-----
<PAGE>
-21-
United Utilities Acquisition. The acquisition described in the United
----------------------------
Utilities Purchase and Sale Agreement.
United Utilities Closing Date. The date on which the Managing Agent
-----------------------------
receives (a) an opinion of general counsel to the Parent stating that the
United Utilities Acquisition has been consummated (other than the payment of
any portion of the purchase price therefor to be paid with proceeds of the
Loans) on terms substantially no less favorable to the Borrowers than those
described in the United Utilities Purchase and Sale Agreement, (b) the
documentation described in (S)12 hereof (including, without limitation,
joinders to the Loan Documents) with respect to any entity being acquired in
connection with the United Utilities Acquisition which is not an Excluded
Subsidiary, and any other documentation (including with respect to
environmental matters) as the Managing Agent may reasonably request, and (c)
a Compliance Certificate demonstrating that the Parent and its Subsidiaries
are, and after giving effect to the United Utilities Acquisition, will
continue to be in compliance with the covenants set forth herein.
United Utilities Purchase and Sale Agreement. Agreement relating to the
--------------------------------------------
Sale of the Entire Issued Share Capital and the Assets of Certain of the
Companies Comprising the Process Equipment Division of United Utilities PLC
dated as of October 7, 1996 by and among United Utilities PLC, certain of its
Subsidiaries, and the Parent.
U.S. Borrowers. The Parent and the Subsidiaries of the Parent listed as
--------------
U.S. Borrowers on Schedule 1 hereto, and any other U.S. Subsidiaries of the
Parent which are required to become Borrowers pursuant to (S)7.16 hereof.
U.S. L/Cs. Letters of Credit issued at the request of any U.S. Borrower
---------
pursuant to (S)3.1 hereof.
Wheelabrator Acquisition. The acquisition described in the Wheelabrator
------------------------
Purchase and Sale Agreement.
Wheelabrator Purchase and Sale Agreement. The Purchase and Sale
----------------------------------------
Agreement dated as of September 18, 1996 by and between the Parent and
Wheelabrator Technologies, Inc.
(S) Rules of Interpretation.
----- -- --------------
(a) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time to
time in accordance with its terms and the terms of this Agreement.
(b) The singular includes the plural and the plural includes the
singular.
(c) A reference to any law includes any amendment or modification
to such law.
<PAGE>
-22-
(d) A reference to any Person includes its permitted successors and
permitted assigns.
(e) Accounting terms capitalized but not otherwise defined herein
have the meanings assigned to them by GAAP applied on a consistent basis
by the accounting entity to which they refer.
(f) The words "include", "includes" and "including" are not
limiting.
(g) All terms not specifically defined herein or by GAAP, which
terms are defined in the Uniform Commercial Code as in effect in The
Commonwealth of Massachusetts, have the meanings assigned to them
therein.
(h) Reference to a particular "(S)" refers to that section of this
Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of like
import shall refer to this Agreement as a whole and not to any
particular section or subdivision of this Agreement.
(S) REVOLVING CREDIT LOANS.
----------------------
(S) Commitment to Lend.
------------------
Subject to the terms and conditions set forth in this Agreement, each of
the Lenders severally agrees to lend to the U.S. Borrowers, and the U.S.
Borrowers may borrow and reborrow from time to time from the Effective Date
until the Maturity Date, upon notice to the Managing Agent given in
accordance with (S)2.3 hereof, such sums in Dollars as are requested by the
U.S. Borrowers up to a maximum aggregate principal amount outstanding (after
giving effect to all amounts requested) at any one time equal to such
Lender's Revolving Credit Commitment Percentage of the Revolving Credit
Commitment. In no event shall (a) the aggregate principal outstanding
balance of the Revolving Credit Loans (after giving effect to all amounts
requested) plus the Maximum Drawing Amount of all U.S. L/Cs exceed at any one
time the Revolving Credit Commitment, (b) any Lender be obligated to fund or
maintain Revolving Credit Loans and participate in U.S. L/Cs in excess of
such Lender's Revolving Credit Commitment Percentage of the Revolving Credit
Commitment, or (c) the aggregate outstanding principal balance of all
Revolving Credit Loans and all Multicurrency Loans plus the Maximum Drawing
Amount of all Letters of Credit exceed at any one time the Total Commitment
(in each case calculating all amounts denominated in Optional Currencies at
their Dollar Equivalent). The Revolving Credit Loans shall be made pro rata
in accordance with each Lender's Revolving Credit Commitment Percentage.
(S) Optional Reduction of Revolving Credit Commitment.
--------------------------------------------------
The U.S. Borrowers shall have the right at any time and from time to
time upon five (5) Business Days' written notice given by an Authorized
Officer of the Parent to the Managing Agent (which shall then give prompt
notice thereof to each of the Lenders) to reduce by $5,000,000 or an integral
multiple
<PAGE>
-23-
thereof or terminate entirely the amount of the unborrowed or unutilized
portion of the Revolving Credit Commitment, provided that the U.S. Borrowers
may not reduce the Revolving Credit Commitment to an amount less than the sum
of the then outstanding Revolving Credit Loans plus the Maximum Drawing
Amount of all U.S. L/Cs and provided further that the U.S. Borrowers may not
reduce the Revolving Credit Commitment to an amount less than $75,000,000
(unless the U.S. Borrowers elect to terminate the Revolving Credit
Commitment). Upon the effective date of any such reduction or termination,
the U.S. Borrowers shall pay to the Managing Agent for the respective
accounts of the Lenders the full amount of any Commitment Fee then accrued on
the amount of the reduction. No reduction of the Revolving Credit Commitment
hereunder shall be subject to reinstatement. Any reduction of the Revolving
Credit Commitment pursuant to this (S)2.2 shall result in a corresponding
reduction in the Total Commitment.
(S) Requests for Revolving Credit Loans.
-----------------------------------
An Authorized Signatory of the Parent, on behalf of the Parent and the
other U.S. Borrowers as their agent, shall give to the Managing Agent written
notice in the form of Exhibit B-1 hereto (or telephonic notice confirmed by
telecopy the same day in the form of Exhibit B-1 hereto) of each Revolving
Credit Loan requested hereunder (a "Revolving Credit Loan and Letter of
Credit Request") not later than (a) 12:00 noon (Boston time) on the proposed
Drawdown Date of any Base Rate Advance, or (b) 2:00 p.m. (Boston time) three
(3) Business Days prior to the Drawdown Date of any Eurocurrency Advance
provided, however, that the signature of an Authorized Officer shall be
required for any loan request in excess of $10,000,000. The Managing Agent
shall promptly notify the Lenders of such notice (but in no event later than
1:00 p.m. (Boston time) in the case of any request for a Base Rate Advance
made on the proposed Drawdown Date of such Loan). Each request for a
Revolving Credit Loan hereunder shall be made in the minimum amount of
$500,000 or a greater integral multiple of $100,000, and shall be irrevocable
and binding on the U.S. Borrowers and shall obligate the U.S. Borrowers to
accept the Revolving Credit Loan requested on the proposed Drawdown Date.
(S) Election of Eurocurrency Rate; Notice of Election; Interest
-----------------------------------------------------------
Periods; Minimum Amounts.
------------------------
(a) With respect to the Revolving Credit Loans, at the Parent's
option, so long as no Default or Event of Default has occurred and is
then continuing, the Parent may (i) elect to convert any Base Rate
Advance or a portion thereof to a Eurocurrency Advance, (ii) at the time
of any request for a Revolving Credit Loan, specify that such requested
Revolving Credit Loan shall be a Eurocurrency Advance, or (iii) upon
expiration of the applicable Interest Period, elect to maintain an
existing Eurocurrency Advance as such, provided that the Parent gives
timely notice to the Managing Agent pursuant to (S)2.4(b) hereof. Upon
determining any Eurocurrency Rate, the Managing Agent shall forthwith
provide notice thereof to the Parent and the Lenders, and each such
notice to the Parent and the Lenders shall be considered prima facie
correct and binding, absent manifest error.
(b) With respect to the Revolving Credit Loans, three (3) Business
Days prior to the making of any Loan which is to be a Eurocurrency
Advance or the conversion of any Base Rate
<PAGE>
-24-
Advance to a Eurocurrency Advance, or, in the case of an outstanding
Eurocurrency Advance, the expiration date of the applicable Interest
Period, the Parent, on behalf of the U.S. Borrowers, shall give written,
telex or telecopy notice received by the Managing Agent not later than
2:00 P.M. (Boston time) of their election pursuant to (S)2.4(a) hereof.
Each such notice delivered to the Managing Agent shall specify the
aggregate principal amount of the Revolving Credit Loans to be borrowed
or maintained as or converted to Eurocurrency Advances and the requested
duration of the Interest Period that will be applicable to such
Eurocurrency Advance, and shall be irrevocable and binding upon the U.S.
Borrowers. If the Parent on behalf of the U.S. Borrowers shall fail to
give the Managing Agent notice of their election hereunder together with
all of the other information required by this (S)2.4(b) with respect to
any Revolving Credit Loan, whether at the end of an Interest Period or
otherwise, such Loan shall be deemed to be a Base Rate Advance.
(S) Mandatory Reduction of the Revolving Credit Commitment.
------------------------------------------------------
Upon any repayment of the Revolving Credit Loans pursuant to (S)7.6(d), (e),
or (f) hereof, the Revolving Credit Commitment shall be reduced by an amount
equal to such repayment, provided that any such repayment from the proceeds
of (a) the sale of common stock of the Parent described in the Registration
Statement, and (b) the sale of the convertible subordinated notes of the
Parent due 2001 described in the prospectus dated October __, 1996 shall not
operate to reduce the Revolving Credit Commitment to an amount less than
$375,000,000. No reduction of the Revolving Credit Commitment pursuant to
this (S)2.5 shall be reinstated.
(S) LETTERS OF CREDIT.
(S) Letter of Credit Issuance.
-------------------------
Subject to the terms and conditions hereof and the execution and receipt
of a Letter of Credit Application from an Authorized Signatory of the Parent
at least four (4) Business Days prior to issuance, and in reliance upon the
representations and warranties of the Borrowers contained herein and upon the
agreement of the Lenders set forth in (S)3.7 hereof, the Issuing Lender, on
behalf of the Lenders in the case of a U.S. L/C or on behalf of the
Multicurrency Lenders in the case of an International L/C, will issue Letters
of Credit denominated in Dollars or any Optional Currency in such form as may
be requested from time to time by the Borrowers and agreed to by the Issuing
Lender (which Letters of Credit may provide for automatic annual renewals
subject to the satisfaction of the conditions precedent to the renewal set
forth herein and in the Letter of Credit); provided, however, that after
giving effect to such request, (a) the aggregate Maximum Drawing Amount of
all U.S. L/Cs plus the aggregate outstanding principal amount of all
Revolving Credit Loans shall not exceed the Revolving Credit Commitment, (b)
the aggregate Maximum Drawing Amount of all International L/Cs plus the
aggregate outstanding principal amount of all Multicurrency Loans shall not
exceed the Multicurrency Commitment, (c) the aggregate Maximum Drawing Amount
of all Letters of Credit plus the aggregate outstanding principal amount of
all Revolving Credit Loans and all Multicurrency Loans shall not exceed the
Total Commitment, (d) the Maximum Drawing Amount of all U.S. L/Cs shall not
exceed seventy-five percent
<PAGE>
-25-
(75%) of the then effective Revolving Credit Commitment, and (e) the Maximum
Drawing Amount of all International L/Cs shall not exceed seventy-five
percent (75%) of the then effective Multicurrency Commitment (in each case
calculating all amounts denominated in Optional Currencies at their Dollar
Equivalent). No Letter of Credit shall have an expiration date later than
thirty (30) days (or, if the Letter of Credit is confirmed by a confirmer or
otherwise provides for one or more nominated Persons, forty-five (45) days)
prior to the Maturity Date. The Borrowers shall not be required to make
requests for Letters of Credit in a minimum amount. All Existing Letters of
Credit outstanding on the Effective Date listed on Schedule 3.1(a) hereto and
all Existing Wheelabrator L/Cs listed on Schedule 3.1(b) hereto shall be
Letters of Credit under this Agreement. To the extent that the provisions of
any Letter of Credit Application conflict with the provisions of this
Agreement, the provisions of this Agreement shall control.
(S) Reimbursement Obligation of the Borrowers.
-----------------------------------------
In order to induce the Issuing Lender to issue, extend and renew the
Letters of Credit, the U.S. Borrowers (with respect to all Letters of Credit)
and the International Borrowers (with respect to the International L/Cs)
hereby agree jointly and severally to reimburse or pay to the Issuing Lender
for the benefit of (i) the Lenders with respect to each U.S. L/C, and (ii)
the Multicurrency Lenders with respect to each International L/C issued,
extended or renewed by the Issuing Lender hereunder as follows:
(a) On each date that any draft presented under any Letter of
Credit is honored by the Issuing Lender or the Issuing Lender otherwise
makes payment with respect thereto, (i) the amount paid by the Issuing
Lender under or with respect to such Letter of Credit, and (ii) the
amount of any taxes (other than income taxes), fees, charges or other
costs and expenses whatsoever incurred by the Issuing Lender in
connection with any payment made by the Issuing Lender under, or with
respect to, such Letter of Credit.
(b) Each such payment shall be made to the Managing Agent in
accordance with (S)3.3 hereof.
(S) Letter of Credit Payments.
-------------------------
If any draft shall be presented or other demand for payment shall be
made under any Letter of Credit, the Issuing Lender shall notify the
Borrowers and the Managing Agent of the date and amount of the draft
presented or demand for payment and of the date and time when the Issuing
Lender expects to pay such draft or honor such demand for payment. On the
date that such draft is paid or other payment is made by the Issuing Lender,
the Managing Agent shall promptly notify the Borrowers of the amount of any
unpaid Reimbursement Obligation. Any Reimbursement Obligations with respect
to U.S. L/Cs which are not paid by the U.S. Borrowers to the Managing Agent
on the date that such draft is paid or other payment is made by the Issuing
Lender shall be deemed to be Revolving Credit Loans for all purposes
hereunder and shall bear interest at the Base Rate plus the Applicable Margin
until converted in accordance with (S)2.4 hereof. Any Reimbursement
Obligations with respect to International L/Cs which are not paid by the
Borrowers to the Managing Agent on the date that such draft is paid or other
payment is made by the Issuing Lender shall bear interest until payment in
full (whether before or after
<PAGE>
-26-
judgment) at the rate specified in specified in (S)7.3 hereof for overdue
amounts. The responsibility of the Issuing Lender to the Borrowers and the
Lenders shall be only to determine that all documents (including each draft)
required to be delivered under each Letter of Credit in connection with such
presentment have been delivered and are in conformity in all material
respects with such Letter of Credit.
(S) The Uniform Customs and Practice; Obligations Absolute.
-------------------------------- --------------------
(a) The Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500 (the
"Uniform Customs"), shall be binding on the Borrowers and the Issuing
Lenders with respect to each Letter of Credit, except as otherwise
provided in such Letter of Credit and except to the extent otherwise
from time to time agreed to by the Borrowers and the relevant Issuing
Lender in writing. The Borrowers assume all risks of the acts or
omissions of the beneficiary of the Letter of Credit with respect to the
Letter of Credit.
(b) The Borrowers' obligations under (S)3.2 and this (S)3.4 shall
be absolute and unconditional under any and all circumstances and
irrespective of the occurrence of any Default or Event of Default or any
condition precedent whatsoever or any setoff, counterclaim or defense to
payment which any Borrower may have or have had against the Issuing
Lenders, the Agents, the Lenders, or any beneficiary of any Letter of
Credit. In furtherance of, and not in limitation of the Issuing
Lenders' and the Managing Agent's rights and powers under the Uniform
Customs, but subject to all other provisions of this (S)3.4, the
Borrowers further agree with the Issuing Lender that the Issuing Lender
shall not have any liability for and that the Borrowers assume all
responsibility for: (i) the genuineness of any signature; (ii) the form,
sufficiency, accuracy, genuineness, falsification or legal effect of any
draft, certification or other document required by any Letter of Credit
or the authority of the person signing the same; (iii) the failure of
any instrument to bear any reference or adequate reference to the Letter
of Credit or the failure of any persons to note the amount of any
instrument on the reverse of the Letter of Credit or to surrender the
Letter of Credit if surrender is not an express condition of drawing
thereunder; (iv) the good faith or acts of any person other than the
Issuing Lender and its agents and employees; (v) the existence, form,
sufficiency or breach of or default under any agreement or instrument
(other than the applicable Letter of Credit) of any nature whatsoever;
(vi) any delay in giving or failure to give any notice, demand or
protest on the part of any Issuing Lender; and (vii) any error,
omission, delay in or non-delivery of any notice or other communication
on the part of the Issuing Lender, however sent. The determination as to
whether the conditions to drawing have been satisfied prior to the
expiration of the applicable Letter of Credit and whether such other
documents are in proper and sufficient form for compliance with such
Letter of Credit shall be made by the Issuing Lender in its sole
discretion, which determination shall be prima facie evidence of
----- -----
compliance. It is agreed that the Issuing Lender may honor, as complying
with the terms of any Letter of Credit and this Agreement, any documents
which appear on their face to be in accordance with the terms and
conditions of such Letter of Credit, and signed or issued by
<PAGE>
-27-
the beneficiary thereof. Any action, inaction or omission on the part of
the Issuing Lender under or in connection with any Letter of Credit or
related instruments or documents, if in good faith and with due care and
in conformity with such laws, regulations, usage of trade or commercial
or banking customs as may be applicable, shall be binding upon the
Borrowers, shall not place the Issuing Lender under any liability to the
Borrowers, and shall not affect, impair or prevent the vesting of any of
the Issuing Lender's rights or powers hereunder or the Borrowers'
obligation to make full reimbursement hereunder.
(S) Reliance by Issuing Lender.
--------------------------
To the extent not inconsistent with (S)(S)3.3 and 3.4, the Issuing
Lender shall be entitled to rely, and shall be fully protected in relying
upon, any Letter of Credit, draft, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document believed by it to be
genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel,
independent accountants and other experts selected by the Issuing Lender.
The Issuing Lender shall be fully justified in failing or refusing to take
any action under this Agreement unless it shall first have received such
advice or concurrence of the Majority Lenders as it reasonably deems
appropriate or it shall first be indemnified to its reasonable satisfaction
by the Lenders (or the Multicurrency Lenders, as the case may be) against any
and all liability and expense which may be incurred by it by reason of taking
or continuing to take any such action. The Issuing Lender shall in all cases
be fully protected in acting, or in refraining from acting, under this
Agreement in accordance with a request of the Lenders (or the Multicurrency
Lenders, as the case may be), and such request and any action taken or
failure to act pursuant thereto shall be binding upon the Lenders (or the
Multicurrency Lenders, as the case may be) and all future holders of the
Notes or of a Letter of Credit Participation.
(S) Letter of Credit Fee.
--------------------
The Borrowers shall (a) pay to the Issuing Lender in advance on the date
of issuance of the applicable Letter of Credit, the customary issuance fee of
the Issuing Lender, and (b) pay a fee (the "Letter of Credit Fee") to the
Managing Agent equal to the Applicable L/C Fee. Such Letter of Credit Fee
(but not the issuance fee) is for the accounts of the Lenders in accordance
with their respective Revolving Credit Commitment Percentage with respect to
any U.S. L/C or their respective Multicurrency Commitment Percentages, with
respect to any International L/C and shall be payable quarterly in arrears on
the last day of each calendar quarter for the quarter then ended, and on the
Maturity Date.
(S) Reimbursement Obligations of Lenders.
------------------------------------
Each Lender (or Multicurrency Lender, as the case may be) severally
agrees that it shall be absolutely liable, without regard to the occurrence
of any Default or Event of Default or any other condition precedent
whatsoever, to reimburse the Issuing Lender on demand for its Revolving
Credit Commitment Percentage of the amount of each draft paid by the Issuing
Lender under each U.S. L/C and its Multicurrency Commitment Percentage of the
amount of each draft paid by the Issuing Lender under each International L/C
(including, without limitation, the Existing Letters of Credit and the
Wheelabrator L/Cs) to the extent that such amount is not reimbursed by the
Borrowers pursuant to (S)3.2 (such
<PAGE>
-28-
agreement by a Lender being called herein the "Letter of Credit
Participation" of such Lender). Each such payment made by a Lender shall be
treated as the purchase by the Lender of a participating interest in the
Borrowers' Reimbursement Obligation under (S)3.2 in an amount equal to such
payment. Each Lender shall share in accordance with its participating
interest in any interest which accrues pursuant to (S)3.2. Each Lender agrees
that its obligation to reimburse the Issuing Lender pursuant to this (S)3.7
shall not be affected in any way by any circumstance other than the gross
negligence or willful misconduct of the Issuing Lender or the Managing Agent.
(S) Notice Regarding Letters of Credit.
----------------------------------
One (1) Business Day prior to the issuance of any Letter of Credit or
amendments or extensions or renewals thereof, the Issuing Lender shall notify
the Managing Agent of the terms of such Letter of Credit, amendment or
extension or renewal. On the day of any drawing under any Letter of Credit,
the Issuing Lender shall notify the Managing Agent of such drawing under any
Letter of Credit. The Managing Agent will promptly notify each of the
Lenders of any Letter of Credit issued hereunder and will provide a quarterly
summary of all outstanding Letters of Credit to each of the Lenders.
(S) THE MULTICURRENCY FACILITY.__
--------------------------
(S) Commitment to Lend.
------------------
Subject to the terms and conditions set forth in this Agreement, each of
the Multicurrency Lenders severally agrees to lend to the International
Borrowers, and the International Borrowers may borrow and reborrow from time
to time from the Effective Date until the Maturity Date, upon notice to the
Nassau Branch, given in accordance with (S)4.3 hereof, such Multicurrency
Lender's Multicurrency Commitment Percentage of such sums in Dollars or
Optional Currencies as are requested by the International Borrowers. In no
event shall (a) the aggregate principal outstanding balance of all
Multicurrency Loans plus the Maximum Drawing Amount of all International L/Cs
exceed at any one time the Multicurrency Commitment, (b) any Multicurrency
Lender be obligated to fund or maintain Multicurrency Loans and participate
in International L/Cs in excess of such Lender's Multicurrency Commitment
Percentage of the Multicurrency Commitment, or (c) the aggregate outstanding
principal balance of all Revolving Credit Loans and Multicurrency Loans plus
the Maximum Drawing Amount of all Letters of Credit exceed at any one time
the Total Commitment (in each case calculating all amounts denominated in
Optional Currencies at their Dollar Equivalent).
(S) Reduction of Multicurrency Commitment.
-------------------------------------
The International Borrowers shall have the right at any time and from
time to time upon five (5) Business Days' written notice given by an
Authorized Officer of the Parent to the Managing Agent (which shall give
prompt notice thereof to each of the Multicurrency Lenders) to reduce by
$5,000,000 or an integral multiple thereof or terminate entirely the amount
of the unborrowed or unutilized portion of the Multicurrency Commitment,
provided that the International Borrowers may not reduce the Multicurrency
Commitment to an amount less than the Dollar Equivalent of the sum of the
outstanding Multicurrency Loans plus the Maximum Drawing Amount of all
International L/Cs. If the U.S.
<PAGE>
-29-
Borrowers elect to terminate the Revolving Credit Commitment pursuant to
(S)2.2 hereof, then the Multicurrency Commitment shall automatically
terminate. Upon the effective date of any such reduction or termination, the
International Borrowers shall pay to the Managing Agent for the respective
accounts of the Multicurrency Lenders the full amount of any Commitment Fee
then accrued on the amount of the reduction. No reduction of the
Multicurrency Commitment hereunder shall be subject to reinstatement. Any
reduction of the Multicurrency Commitment pursuant to this (S)4.2 shall
result in a corresponding reduction in the Total Commitment.
(S) Requests for Multicurrency Loans.
--------------------------------
Any Authorized Signatory of any International Borrower shall give to the
Nassau Branch written notice in the form of Exhibit B-2 hereto (or telephonic
notice confirmed by telecopy the same day in the form of Exhibit B-2 hereto)
of each Multicurrency Loan requested hereunder (a "Multicurrency Loan
Request") not later than 2:00 P.M. (Boston time) three (3) Eurocurrency
Business Days prior to the proposed Drawdown Date of a Multicurrency Loan
(which must be a Eurocurrency Business Day), provided that the signature of
an Authorized Officer of the Parent shall be required for each loan request
in excess of $10,000,000 (expressing all amounts denominated in Optional
Currencies at their Dollar Equivalent). The Nassau Branch shall promptly
notify the Multicurrency Lenders of such notice. Each request for a
Multicurrency Loan hereunder shall be made in a minimum amount of $500,000 or
the Dollar Equivalent thereof in an Optional Currency, and shall be
irrevocable and binding on the International Borrowers and shall obligate the
International Borrowers to accept the Multicurrency Loan requested on the
proposed Drawdown Date.
(S) Optional Currencies.
-------------------
(a) Subject to the terms and conditions of (S)7.13 hereof, the
International Borrowers may elect, prior to the Maturity Date, to draw
down or convert a portion of the funds available under (S)4 of this
Agreement in, or to, an Optional Currency, provided that (i) the Dollar
Equivalent of the aggregate principal amount of Multicurrency Loans plus
the Maximum Drawing Amount of all International L/Cs outstanding under
this Agreement immediately following any such drawdown or conversion
shall not exceed the Multicurrency Commitment, (ii) the aggregate
principal amount of all Revolving Credit Loans and all Multicurrency
Loans outstanding under this Agreement immediately following any such
drawdown or conversion plus the Maximum Drawing Amount of all Letters of
Credit (calculating all amounts denominated in any Optional Currency at
their Dollar Equivalent) shall not exceed the Total Commitment, and
(iii) the Dollar Equivalent of any funds proposed to be converted at any
one time under this (S)4.4 shall be not less than $500,000. In order to
exercise the foregoing option, the International Borrowers must deliver
to the Nassau Branch, which shall promptly give to the Multicurrency
Lenders notice thereof, a written notice, subject to any other notice
requirements under this Agreement, designating the currency into which
the designated portion of the Loans is to be drawn down or, as the case
may be converted, at least three (3) Eurocurrency Business Days prior to
the commencement of the subsequent Interest Period relating to such
portion of the Loans and any such conversion shall be effected on such
date. If any such notice is not delivered
<PAGE>
-30-
to the Nassau Branch by the International Borrowers at least three (3)
Eurocurrency Business Days prior to the end of an existing Interest
Period with respect to any outstanding Multicurrency Loan, the
International Borrowers shall be deemed to have requested that the
amount of the relevant Loan continue to be denominated in the currency
in which it then currently stands denominated and that the subsequent
Interest Period have a duration of one (1) month.
(b) For all purposes of this Agreement, except as provided in
(S)7.9 hereof, the amount in one currency which shall be equivalent on
any particular date to a specified amount in another currency shall be
that amount (as conclusively ascertained by the Managing Agent absent
manifest error) in the first currency which is or could be purchased by
the Managing Agent (in accordance with its normal banking practices)
with such specified amount in the second currency in the Nassau foreign
currency deposits market for delivery on such date at the spot rate of
exchange prevailing at or about 11:00 a.m., Nassau time, on such date.
(c) In the event that any portion of the funds available under the
terms of this Agreement is denominated in one or more Optional
Currencies, the Dollar Equivalent of such portion of the funds shall be
calculated pursuant to paragraph (b) above by the Nassau Branch at the
time the Borrowers request a Loan and otherwise no less frequently than
once per week. The amount so determined shall then be added to the
amount already outstanding in Dollars for the purpose of determining the
remaining availability of funds under (S)(S)4.1 and 4.4(a) hereof, and
any required repayments under (S)7.6(a)-(c) hereof.
(S) THE TERM LOAN.
--------------
(S) Term Loan.
----------
Subject to the terms and conditions set forth herein, each Lender agrees
to lend to the U.S. Borrowers on the Effective Date, its Term Loan Percentage
of a term loan in the principal amount of $200,000,000 (the "Term Loan").
(S) The Term Notes.
---------------
The Term Loan shall be evidenced by separate promissory notes of the
U.S. Borrowers in substantially the form of Exhibit A-3 hereto (each a "Term
Note"), dated the Effective Date and completed with appropriate insertions.
One Term Note shall be payable to the order of each Lender in a principal
amount equal to such Lender's Term Loan Percentage of $200,000,000 and shall
represent the obligation of the U.S. Borrowers to pay to such Lender such
principal amount (or the outstanding principal amount, if less) plus interest
accrued thereon, as set forth below. The U.S. Borrowers irrevocably
authorize each Lender to make or cause to be made a notation on such Lender's
records reflecting the original principal amount of such Lender's Term Note
and, at or about the time of such Lender's receipt of any principal payment
on such Lender's Term Note, an appropriate notation on such Lender's records
reflecting such payment. The aggregate unpaid amount set forth on such
Lender's records shall be prima facie evidence of the principal amount
thereof owing and unpaid to such Lender, but the failure to record, or any
error in so recording, any such amount shall not limit, increase, or
<PAGE>
-31-
otherwise affect the obligations of the U.S. Borrowers hereunder or under any
Term Note to make payments of principal of and interest on any Term Note when
due.
(S) Scheduled Repayments.
---------------------
Each of the U.S. Borrowers promises to pay to the Managing Agent for the
account of the Lenders the principal amount of the Term Loan plus interest
thereon as set forth in (S)7.1 hereof in twenty (20) consecutive quarterly
installments of (a) $5,000,000 payable on each of December 31, 1996, March
31, 1997, June 30, 1997, and September 30, 1997, (b) $8,750,000 payable on
each of December 31, 1997, March 31, 1998, June 30, 1998, and September 30,
1998; (c) $11,250,000 payable on each of December 31, 1998, March 31, 1999,
June 30, 1999, and September 30, 1999, and (d) $12,500,000 payable on the
last day of each fiscal quarter thereafter, with a final payment on the
Maturity Date in an amount equal to the unpaid balance of the Term Loan, if
any, plus interest thereon.
(S) Mandatory Prepayment of the Term Loan.
-------------------------------------
So long as the outstanding principal amount of the Term Loan is greater
than $100,000,000, the U.S. Borrowers shall make mandatory prepayments with
respect to the Term Loan in an amount equal to the lesser of (a) seventy-five
percent (75%) of Excess Operating Cash Flow (i) for the period beginning on
the Effective Date and ending March 31, 1997, and (ii) for each fiscal year
thereafter, commencing with the fiscal year beginning April 1, 1997, or (b)
the amount necessary to reduce the outstanding principal amount of the Term
Loan to $100,000,000 provided that if the Leverage Ratio as at the end of the
relevant fiscal period described in clauses (i) or (ii) above is 3.50:1 or
less, the required repayment amount set forth in clause (a) hereof shall be
an amount equal to fifty percent (50%) of Excess Operating Cash Flow for such
period. Each such mandatory prepayment shall be due and payable with respect
to each fiscal period described in clause (i) or (ii) above on the next July
10 following the end of such fiscal period, and shall be shared pro rata
among the Lenders in accordance with each Lender's Term Loan Percentage. All
such prepayments shall be applied to the scheduled repayments of the Term
Loan in the inverse order of maturity.
(S) Election of Eurocurrency Rate; Notice of Election; Interest
-----------------------------------------------------------
Periods; Minimum Amounts.
------------------------
(a) With respect to the Term Loan, at the U.S. Borrowers' option,
so long as no Default or Event of Default has occurred and is then
continuing, the U.S. Borrowers may (i) elect to convert any Base Rate
Advance or a portion thereof to a Eurocurrency Advance, and, (ii) upon
expiration of the applicable Interest Period, elect to maintain an
existing Eurocurrency Advance as such, provided that the U.S. Borrowers
give timely notice to the Managing Agent pursuant to (S)5.5(b) hereof.
Upon determining any Eurocurrency Rate, the Managing Agent shall
forthwith provide notice thereof to the U.S. Borrowers and the Lenders,
and each such notice to the Borrowers and the Lenders shall be
considered prima facie correct and binding, absent manifest error.
<PAGE>
-32-
(b) With respect to the Term Loan, three (3) Business Days prior to
the conversion of any Base Rate Advance to a Eurocurrency Advance, or,
in the case of an outstanding Eurocurrency Advance, the expiration date
of the applicable Interest Period, an Authorized Signatory of the Parent
shall give written, telex or telecopy notice received by the Managing
Agent not later than 2:00 P.M. (Boston time) of their election pursuant
to (S)5.5(a) hereof. Each such notice delivered to the Managing Agent
shall specify the aggregate principal amount of the Term Loan to be
maintained as or converted to Eurocurrency Advances and the requested
duration of the Interest Period that will be applicable to such
Eurocurrency Advance, and shall be irrevocable and binding upon the U.S.
Borrowers. If the U.S. Borrowers shall fail to give the Managing Agent
notice of their election hereunder together with all of the other
information required by this (S)5.5(b) with respect to any portion of
the Term Loan, whether at the end of an Interest Period or otherwise,
such portion of the Term Loan shall be deemed to be a Base Rate Advance.
(S) PROVISIONS RELATING TO THE REVOLVING CREDIT LOANS AND THE
---------------------------------------------------------
MULTICURRENCY LOANS.
-------------------
(S) The Notes.
--- -----
The Revolving Credit Loans and the Multicurrency Loans shall be
evidenced by separate promissory notes of the Borrowers in substantially the
form of Exhibit A-1 hereto (each a "Revolving Credit Note") and Exhibit A-2
hereto (each a "Multicurrency Note") each dated as of the Effective Date and
completed with appropriate insertions. One Revolving Credit Note shall be
payable to the order of each Lender in a principal amount equal to such
Lender's Revolving Credit Commitment Percentage of the Revolving Credit
Commitment or, if less, the outstanding aggregate amount of all Revolving
Credit Loans made by such Lender, plus interest accrued thereon, as set forth
below. One Multicurrency Note shall be payable to the order of each
Multicurrency Lender in a principal amount equal to such Multicurrency
Lender's Multicurrency Commitment Percentage of the Multicurrency Commitment,
or, if less, the outstanding aggregate amount of all Multicurrency Loans made
by such Multicurrency Lender, plus interest accrued thereon as set forth
below. The Borrowers irrevocably authorize each Lender to make or cause to
be made, at or about the time of the Drawdown Date of any Revolving Credit
Loan or Multicurrency Loan or at the time of receipt of any payment of
principal on such Lender's Revolving Credit Note or Multicurrency Note, an
appropriate notation on such Lender's Revolving Credit Note record or
Multicurrency Note record, as the case may be, reflecting the making of such
Loan or (as the case may be) the receipt of such payment. The outstanding
amount of the Loans set forth on such Lender's Revolving Credit Note record
or Multicurrency Note record, as the case may be, shall be prima facie
evidence of the principal amount thereof owing and unpaid to such Lender, but
the failure to record, or any error in so recording, any such amount on such
Lender's Revolving Credit Note record or Multicurrency Note record shall not
limit, increase, or otherwise affect the obligations of the Borrowers
hereunder or under any Revolving Credit Note or Multicurrency Note to make
payments of principal of or interest on any Loans advanced to the Borrowers
and evidenced by such Revolving Credit Note or Multicurrency Note when due.
<PAGE>
-33-
(S) Funds for Revolving Credit Loans and Multicurrency Loans.
--------------------------------------------------------
(a) Not later than 4:30 p.m. (Boston time) on the proposed
Drawdown Date of any Revolving Credit Loan or any Multicurrency Loan,
each of the Lenders (in the case of a Revolving Credit Loan) or each of
the Multicurrency Lenders (in the case of a Multicurrency Loan) will
make available to the Managing Agent, at the Managing Agent's Head
Office (in the case of a Revolving Credit Loan) or to the Nassau Branch
(in the case of a Multicurrency Loan), in immediately available funds,
the amount of such Lender's Revolving Credit Commitment Percentage or
Multicurrency Commitment Percentage, as the case may be, of the amount
of the requested Loan. Upon receipt from each Lender or Multicurrency
Lender, as applicable, of such amount, and upon receipt of the documents
required by (S)(S)12 and 13 and the satisfaction of the other conditions
set forth therein, to the extent applicable, the Managing Agent or the
Nassau Branch, as appropriate, will make available to the Borrowers the
aggregate amount of such Loan made available to the Managing Agent or
the Nassau Branch by the Lenders or the Multicurrency Lenders, as
applicable. The failure or refusal of any Lender or Multicurrency
Lender, as applicable, to make available at the aforesaid time and place
on any Drawdown Date the amount of its Revolving Credit Commitment
Percentage or Multicurrency Commitment Percentage of the requested Loan
shall not relieve any other Lender from its several obligation hereunder
to make available to the Managing Agent or the Nassau Branch, as the
case may be, the amount of such other Lender's Revolving Credit
Commitment Percentage or Multicurrency Commitment Percentage of any
requested Loan.
(b) In the absence of written notice to the contrary received by
the Managing Agent one (1) Business Day prior to the time the relevant
Loan was requested pursuant to (S)2.3 or (S)4.3 hereof, the Managing
Agent or the Nassau Branch, as appropriate, may assume that each of the
Lenders (or the Multicurrency Lenders, as applicable) has made available
its ratable portion of the Loans in accordance with (S)2.1 or (S)4.1, as
applicable, and the Managing Agent or the Nassau Branch, as applicable,
may (but it shall not be required to), in reliance upon such assumption,
make available on the relevant Drawdown Date a corresponding amount to
the Borrowers. If any Lender or Multicurrency Lender does not make
available to the Managing Agent or the Nassau Branch its Revolving
Credit Commitment Percentage or Multicurrency Commitment Percentage, as
applicable, of the Loans on such Drawdown Date, such Lender or
Multicurrency Lender shall pay to the Managing Agent on demand an amount
equal to the product of (i) the average computed for the period referred
to in clause (iii) below, of the weighted average interest rate paid by
the Managing Agent for federal funds acquired by the Managing Agent
during each day included in such period, times (ii) the amount of such
-----
Lender's Revolving Credit Commitment Percentage or such Multicurrency
Lender's Multicurrency Commitment Percentage, as applicable, of such
Loans, times (iii) a fraction, the numerator of which is the number of
-----
days that elapse from and including such Drawdown Date to the date on
which the amount of such Lender's Revolving Credit Commitment Percentage
or such Multicurrency
<PAGE>
-34-
Lender's Multicurrency Commitment Percentage, as applicable, of such
Loans shall become immediately available to the Managing Agent, and the
denominator of which is 360. A statement of the Managing Agent submitted
to such Lender or such Multicurrency Lender with respect to any amounts
owing under this paragraph shall be prima facie evidence of the amount
due and owing to the Managing Agent by such Lender or such Multicurrency
Lender. If the amount of such Lender's Revolving Credit Commitment
Percentage or Multicurrency Commitment Percentage of such Loans is not
made available to the Managing Agent or the Nassau Branch, as
appropriate, by such Lender within three (3) Business Days following
such Drawdown Date, the Managing Agent shall be entitled to recover such
amount from the applicable Borrowers on demand (but only after demand
for payment has first been made to such Lender or such Multicurrency
Lender), with interest thereon at the rate per annum applicable to the
Loans made on such Drawdown Date, for each day from the date the
Managing Agent shall make such amount available to such Borrowers until
the date such amount is paid or prepaid to the Managing Agent or the
Nassau Branch, as the case may be.
(S) Commitment Fees.
---------------
The Borrowers agree to pay to the Managing Agent a fee (the "Commitment
Fee") in an amount equal to the Applicable Commitment Fee on the unused
portion of the Total Commitment during each fiscal quarter or portion thereof
from the Effective Date to the Maturity Date (or to the date of termination
in full of the Total Commitment, if earlier). The Commitment Fee shall be
payable in arrears on the last day of each fiscal quarter commencing with the
fiscal quarter ending December 31, 1996, for the fiscal quarter then ending,
with a final payment on the Maturity Date (or to the date of termination in
full of the Total Commitment, if earlier). For purposes of computing the
Commitment Fee, the Maximum Drawing Amount of all L/Cs shall be considered
usage with respect to the Commitment. For purposes of determining the unused
portion of the Multicurrency Commitment, the Dollar Equivalent of each
Multicurrency Loan and the Maximum Drawing Amount of all International L/Cs
as determined on the Drawdown Date, and on the date of subsequent adjustments
made twice per month shall be the amount used in connection with the usage of
the Multicurrency Commitment. That portion of the Commitment Fee payable
with respect to the Revolving Credit Commitment shall be shared among the
Lenders pro rata in accordance with their Revolving Credit Commitment
Percentages. That portion of the Commitment Fee payable with respect to the
Multicurrency Commitment shall be shared among the Multicurrency Lenders pro
rata in accordance with their respective Multicurrency Commitment
Percentages.
(S) Provisions Relating to All Loans.
--------------------------------
(S) Interest on Loans.
-----------------
The outstanding principal amount of the Loans shall bear interest at the
rate per annum equal to (a) with respect to Revolving Credit Loans and the
Term Loan, the Base Rate plus the Applicable Margin, or, at the U.S.
Borrowers' option as provided in (S)2.4 and (S)5.5 hereof, at the
Eurocurrency Rate plus the Applicable Margin, and (b) with respect to
Multicurrency Loans, the Eurocurrency Rate plus the Applicable Margin.
Interest with respect to the Loans shall be payable (i) quarterly in arrears
on the last
<PAGE>
-35-
Business Day of each fiscal quarter of each year on Base Rate Loans, (ii) on
the last day of the applicable Interest Period, and if such Interest Period
is longer than three (3) months, also on the day of the third month following
the beginning of such Interest Period which corresponds to the day on which
such Interest Period began on Eurocurrency Advances, (iii) on any prepayment
date with respect to accrued interest on amounts prepaid, and (iv) on the
Maturity Date and on any date on which any amounts owing under any of the
Loan Documents are declared immediately due and payable for all Loans.
Subject to the provisions of (S)18.10 hereof, interest payments received by
the Managing Agent with respect to the Term Loan and the Revolving Credit
Loans shall be shared among the Lenders pro rata in accordance with the
outstanding principal amount of all such Loans made by each Lender to the
U.S. Borrowers. Interest payments received by the Managing Agent with respect
to the Multicurrency Loans shall be shared pro rata among the Multicurrency
Lenders in accordance with the outstanding principal amount of all such
Multicurrency Loans made by each of the Multicurrency Lenders to the
International Borrowers.
(S) Maturity of the Loans.
---------------------
The Loans shall be due and payable on the Maturity Date or on such
earlier date on which such Loans become due and payable pursuant to (S)14
hereof. The Borrowers promise to pay on the Maturity Date or on such earlier
date on which the Loans become due and payable all Loans outstanding on such
date, together with any and all accrued and unpaid interest thereon.
(S) Interest on Overdue Amounts.
---------------------------
Except as otherwise limited by (S)7.4 hereof, overdue principal and (to
the extent permitted by applicable law) interest on the Loans and all other
overdue amounts payable hereunder or under any of the other Loan Documents
shall bear interest compounded monthly and payable on demand at a rate per
annum equal to the rate of two percent (2%) above the otherwise applicable
rate until such amount shall be paid in full (after as well as before
judgment).
(S) Interest Limitation.
-------------------
Notwithstanding any other term of this Agreement or any Note or any
other document referred to herein or therein, the maximum amount of interest
which may be charged to or collected from any Person liable hereunder or
under any Note by the Lenders shall be absolutely limited to, and shall in no
event exceed, the maximum amount of interest which could lawfully be charged
or collected under applicable law (including, to the extent applicable, the
provisions of Section 5197 of the Revised Statutes of the United States of
America, as amended, 12 U.S.C. Section 85, as amended), so that the maximum
of all amounts constituting interest under applicable law, howsoever
computed, shall never exceed as to any Person liable therefor such lawful
maximum, and any term of this Agreement, any Note, or any other document
referred to herein or therein which could be construed as providing for
interest in excess of such lawful maximum shall be and hereby is made
expressly subject to and modified by the provisions of this paragraph.
(S) Optional Repayments.
-------------------
<PAGE>
-36-
The Borrowers shall have the right, at their election, to repay the
outstanding amount of the Loans, as a whole or in part, at any time without
penalty or premium (other than the obligation to reimburse the Lenders and
the Agents pursuant to (S)7.12 hereof). The Borrowers shall give notice to
the Managing Agent, no later than 2:00 P.M., Boston time, (a) on the proposed
repayment date of any Base Rate Advances, and (b) at least three (3)
Eurocurrency Business Days prior to the proposed repayment date of
Eurocurrency Advances, in each case specifying the proposed date of repayment
of Loans, whether such prepayment is to be applied to the Revolving Credit
Loans, the Multicurrency Loans, or the Term Loan, and the principal amount to
be repaid. Each such partial repayment of the Loans shall be $500,000 or a
greater integral multiple of $100,000, and shall be accompanied by the
payment of accrued interest on the principal prepaid to the date of
repayment. Unless the Borrowers elect to repay the total aggregate
outstanding amount of the Loans, the Borrowers may not elect to make any
repayments which would reduce the total aggregate outstanding amount of the
Revolving Credit Loans or the Multicurrency Loans (calculated at their Dollar
Equivalent) to an amount less than $500,000. Any optional prepayment of
principal of the Term Loan shall be applied against the scheduled
installments of principal due in the inverse order of maturity. No amount
repaid with respect to the Term Loan may be reborrowed.
(S) Mandatory Repayments.
--------------------
(a) If at any time the aggregate principal amount of the
outstanding Revolving Credit Loans and Multicurrency Loans plus the
Maximum Drawing Amount of all Letters of Credit (calculating all amounts
denominated in any Optional Currency at their Dollar Equivalent) shall
exceed the Total Commitment, whether as a result of fluctuations in
currency exchange rates, by operation of (S)(S)2.2, 2.5, 4.2, or
otherwise, the Borrowers shall pay immediately upon demand made by the
Managing Agent all amounts (calculated at the Dollar Equivalent)
required in order to reduce such amount outstanding to the Total
Commitment, and, if no Loans are then outstanding, shall deposit with
the Managing Agent cash collateral in an amount equal to the amount by
which the Maximum Drawing Amount of all Letters of Credit (calculating
all amounts denominated in Optional Currencies at their Dollar
Equivalent) exceeds the Total Commitment.
(b) If at any time the aggregate principal amount of the
outstanding Revolving Credit Loans and the Maximum Drawing Amount of all
U.S. L/Cs (calculating all amounts denominated in Optional Currencies at
their Dollar Equivalent) shall exceed the Revolving Credit Commitment,
whether by operation of (S)(S)2.2 or 2.5 or otherwise, the Borrowers
shall pay immediately upon demand made by the Managing Agent all amounts
required in order to reduce such amount outstanding to the Revolving
Credit Commitment, and, if no Loans are then outstanding and the Dollar
Equivalent of the Maximum Drawing Amount of all U.S. L/Cs exceeds by
$100,000 or more the Revolving Credit Commitment, the Borrowers shall
deposit with the Managing Agent cash collateral in an amount equal to
the amount by which the Dollar Equivalent of the Maximum Drawing Amount
of all U.S. L/Cs exceeds the Revolving Credit Commitment.
<PAGE>
-37-
(c) If at any time the Dollar Equivalent of the aggregate
principal amount of the outstanding Multicurrency Loans plus the Maximum
Drawing Amount of all International L/Cs shall exceed the Multicurrency
Commitment, whether as a result of currency exchange rates, by operation
of (S)4.2, or otherwise, the Borrowers shall pay immediately upon demand
made by the Managing Agent all amounts (calculated at the Dollar
Equivalent) required in order to reduce such amount outstanding to the
Multicurrency Commitment, and, if no Loans are then outstanding and the
Dollar Equivalent of the Maximum Drawing Amount of all International
L/Cs exceeds by $100,000 or more the Multicurrency Commitment, the
Borrowers, shall deposit with the Managing Agent cash collateral in an
amount equal to the amount by which the Dollar Equivalent of the Maximum
Drawing Amount of all International L/Cs exceeds the Multicurrency
Commitment.
(d) Upon a sale, or a combination of sales, of the assets of the
Borrowers (other than sales in the ordinary course of business)
occurring at a time when the Leverage Ratio is greater than 3.25:1 which
results in receipt by the Borrowers of an aggregate of more than
$25,000,000 (i) in cash proceeds (net of expenses) in any twelve-month
period, and/or (ii) in repayment of any Indebtedness owing to the
Borrowers resulting from any such sale or combination of sales of
assets, the Borrowers shall prepay the Loans in an amount equal to the
lesser of (x) 100% of the excess of such amount described in clause (i)
and (ii) hereof over $25,000,000 received by the Borrowers, or (y) the
amount necessary to reduce the Leverage Ratio to a value of 3.25:1
provided that the Borrowers shall not be required to make any such
prepayment to the extent that such amount received by the Borrowers is
used within thirty (30) days of the receipt thereof to purchase
additional assets useful in the business of the Borrowers. All such
prepayments shall be applied first to the remaining scheduled repayments
of the Term Loan on a pro-rata basis, and, if no principal amount of the
Term Loan is then outstanding, to the principal amount of the Revolving
Credit Loans, and if no portion of the Term Loan and no Revolving Credit
Loans are then outstanding, to the outstanding principal amount of the
Multicurrency Loans.
(e) Upon any issuance of any Subordinated Debt of the Parent, the
Borrowers shall prepay the Loans in an amount equal to the lesser of (i)
seventy-five percent (75%) of the net cash proceeds of such issuance
received by the Parent, or if the Leverage Ratio is less than or equal
to 3.50:1, fifty percent (50%) of such net cash proceeds, or (ii) the
then outstanding principal amount of the Loans, provided that the
Borrowers shall not be required to make such prepayment to the extent
that such Subordinated Debt or such net cash proceeds are used as
consideration for a pending acquisition permitted by (S)10.4 hereof.
All such prepayments shall be applied first to the remaining scheduled
repayments of the Term Loan on a pro-rata basis, and, if no principal
amount of the Term Loan is then outstanding, to the principal amount of
the Revolving Credit Loans, and if no portion of the Term Loan and no
Revolving Credit Loans are then outstanding, to the outstanding
principal amount of the Multicurrency Loans. Nothwithstanding anything
in this (S)7.6(e) to the contrary, the proceeds of the issuance of the
convertible subordinated notes of the Parent due 2001 described in the
prospectus dated October __, 1996 shall be used to prepay the Loans as
set forth in this (S)7.6(e).
<PAGE>
-38-
(f) Upon any issuance of common stock of the Parent, the Borrowers
shall prepay the Loans in an amount equal to the lesser of (i) 100% of
the net cash proceeds of such issuance received by the Parent, or (ii)
the amount necessary to reduce the Leverage Ratio to a ratio of no more
than 3.25:1, provided that the Borrowers shall not be required to make
such prepayment to the extent that such common stock or such net cash
proceeds are used as consideration for a pending acquisition permitted
by (S)10.4 hereof. All such prepayments shall be applied first to the
remaining scheduled repayments of the Term Loan on a pro-rata basis,
and, if no principal amount of the Term Loan is then outstanding, to the
principal amount of the Revolving Credit Loans, and if no portion of the
Term Loan and no Revolving Credit Loans are then outstanding, to the
outstanding principal amount of the Multicurrency Loans.
Nothwithstanding anything in this (S)7.6(f) to the contrary, the
proceeds of the issuance of the shares of the Parent described in the
Registration Statement shall be used to prepay the Loans as set forth in
this (S)7.6(f).
(S) Application of Repayments.
-------------------------
All repayments of principal made pursuant to (S)7.6 (other than as
expressly provided in (S)7.6(d), (e) or (f) hereof) shall be applied, in the
absence of instruction by the Borrowers, first to the principal of Base Rate
Advances and then to the principal of Eurocurrency Advances. Each partial
repayment shall be allocated among the Lenders (or the Multicurrency Lenders,
in the case of repayments of the Multicurrency Loans), in proportion, as
nearly as practicable, to the respective unpaid aggregate principal amount of
each Lender's Loans, with adjustments to the extent practicable to equalize
any prior repayments not exactly in proportion.
(S) Payments.
--------
(a) All payments of principal, interest, Commitment Fees, and any
other amounts due hereunder (i) denominated in Dollars shall be made by
the Borrowers to the Managing Agent in immediately available funds in
Dollars at the Managing Agent's Head Office at 100 Federal Street,
Boston, Massachusetts 02110 or (ii) denominated in any Optional Currency
shall be made in immediately available funds in such Optional Currency,
for the account of the Managing Agent at the Nassau Branch's office.
The Managing Agent shall be entitled to debit the Borrowers' accounts
with the Managing Agent or the Nassau Branch in the amount of each such
payment when due in order to effect timely payment thereof. The
Managing Agent will, promptly after its receipt thereof, distribute like
funds relating to the payment of principal, interest, or Commitment Fees
ratably to the Lenders or the Multicurrency Lenders, as applicable.
(b) All payments by the Borrowers hereunder and under any of the
other Loan Documents shall be made without set-off or counterclaim and
free and clear of and without deduction for any taxes, levies, imposts,
duties, charges, fees, deductions, withholdings, compulsory loans,
restrictions or conditions of any nature now or hereafter imposed or
levied by any jurisdiction or any political subdivision thereof or
taxing or other authority therein unless the Borrowers are compelled by
law to make such deduction or withholding. If any such obligation is
imposed upon the Borrowers with respect to any amount payable by them
<PAGE>
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hereunder or under any of the other Loan Documents, the Borrowers will
pay to the Managing Agent, on the date on which such amount is due and
payable hereunder or under such other Loan Document, such additional
amount in Dollars as shall be necessary to enable the Lenders to receive
the same net amount which the Lenders would have received on such due
date had no such obligation been imposed upon the Borrowers. The
Borrowers will deliver promptly to the Managing Agent certificates or
other valid vouchers for all taxes or other charges deducted from or
paid with respect to payments made by the Borrowers hereunder or under
such other Loan Document. The provisions of this (S)7.8(b) shall
survive repayment of the Obligations and termination of this Agreement.
(c) Each Lender that is not incorporated under the laws of the
United States of America or a state thereof or the District of Columbia
(a "Non-U.S. Lender") agrees that, prior to the first date on which any
payment is due to it hereunder, it will deliver to the Parent and the
Managing Agent two duly completed copies of United States Internal
Revenue Service Form 1001 or 4224 or successor applicable form, as the
case may be, certifying in each case that such Non-U.S. Lender is
entitled to receive payments from the Parent under this Agreement and
the Notes payable to it, without deduction or withholding of any United
States federal income taxes. Each Non-U.S. Lender that so delivers a
Form 1001 or 4224 pursuant to the preceding sentence further undertakes
to deliver to the Parent and the Managing Agent two further copies of
Form 1001 or 4224 or successor applicable form, or other manner of
certification, as the case may be, on or before the date that any such
letter or form expires or becomes obsolete or after the occurrence of
any event requiring a change in the most recent form previously
delivered by it to the Parent and the Managing Agent, and such
extensions or renewals thereof as may reasonably be requested by the
Parent and the Managing Agent, certifying in the case of a Form 1001 or
4224 that such Non-U.S. Lender is entitled to receive payments under
this Agreement and the Notes without deduction or withholding of any
United States federal income taxes, unless in any such case an event
(including, without limitation, any change in treaty, law or regulation)
has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which
would prevent such Non-U.S. Lender from duly completing and delivering
any such form with respect to it and such Non-U.S. Lender advises the
Parent that it is not capable of receiving payments without any
deduction or from the Parent withholding of United States federal income
tax.
(S) Computations.
------------
All computations of interest with respect to Eurocurrency Loans shall be
based on a 360-day year and paid for the actual number of days elapsed. All
other computations of interest, Commitment Fees, Letter of Credit Fees, or
other fees shall be based on a 365- or 366-day year, as applicable, and paid
for the actual number of days elapsed. Whenever a payment hereunder or under
any of the other Loan Documents becomes due on a day that is not a Business
Day, the due date for such payment shall be extended to the next succeeding
Business Day, and interest shall accrue during such extension; provided that
any Interest Period for any Eurocurrency Advance which ends on a day that is
not a Eurocurrency Business Day shall end on the next succeeding Eurocurrency
Business Day unless the result of such
<PAGE>
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extension would be to carry such Interest Period into another calendar month,
in which event such Interest Period shall end on the immediately preceding
Eurocurrency Business Day. If any sum due from the Borrowers under this
Agreement or any order or judgment given or made in relation hereto has to be
converted from the currency in which the same is payable hereunder or under
such order or judgment into another currency for the purpose of (a) making or
filing a claim or proof against the Borrowers, (b) obtaining an order or
judgment in any court or other tribunal, or (c) or enforcing any order or
judgment given or made in relation hereto, the Borrowers shall indemnify and
hold harmless each of the Persons to whom such sum is due from and against
any loss suffered as a result of any discrepancy between the rate of exchange
used for such purpose to convert the sum in question from the first currency
into such other currency and the rate or rates of exchange at which such
Person may in the ordinary course of business purchase the first currency
with such other currency upon receipt of a sum paid to it in satisfaction, in
whole or in part, of any such order, judgment, claim or proof.
(S) Additional Costs, Etc.
---------------------
If any present or future applicable law, which expression, as used
herein, includes statutes, rules and regulations thereunder and
interpretations thereof by any competent court or by any governmental or
other regulatory body or official charged with the administration or the
interpretation thereof and requests, directives, instructions and notices at
any time or from time to time hereafter made upon or otherwise issued to the
any Lender or any Agent by any central bank or other fiscal, monetary or
other authority (whether or not having the force of law), shall:
(a) subject any Lender or any Agent to any tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature with respect to this
Agreement, the other Loan Documents, the Total Commitment, the
Multicurrency Commitment, the Revolving Credit Commitment, the Letters
of Credit, the Loans (other than taxes imposed by any jurisdiction in
which any Lender's or any Agent's head office is located and based upon
or measured by the income or profits of such Lender or such Agent), or
(b) materially change the basis of taxation (except for changes in
taxes on income or profits) of payments to any Lender of the principal
or of the interest on any Loans or any other amounts payable to any
Lender or any Agent under this Agreement or the other Loan Documents, or
(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Agreement) any
special deposit, reserve, assessment, liquidity, capital adequacy or
other similar requirements (whether or not having the force of law)
against assets held by, or deposits in or for the account of, or loans
by, or commitments of, an office of any Lender or any Agent, or
(d) impose on any Lender or any Agent any other conditions or
requirements with respect to this Agreement, the other Loan Documents,
the Loans, the Letters of Credit, the Total Commitment, the
Multicurrency Commitment, the Revolving Credit Commitment, or any class
<PAGE>
-41-
of loans or commitments of which any of the Loans, the Multicurrency
Commitment, the Revolving Credit Commitment, or the Total Commitment
forms a part, and the result of any of the foregoing is
(i) to increase the cost to any Lender or any Agent of making,
funding, issuing, renewing, extending or maintaining the Loans,
the Letters of Credit, the Letter of Credit Participations, the
Multicurrency Commitment, the Revolving Credit Commitment, or the
Total Commitment;
(ii) to reduce the amount of principal, interest or other amount
payable to any Lender or any Agent hereunder on account of the
Total Commitment, the Multicurrency Commitment, the Revolving
Credit Commitment, the Letters of Credit, the Letter of Credit
Participations, or the Loans;
(iii) to require any Lender or any Agent to make any payment or to
forego any interest or other sum payable hereunder, the amount of
which payment or foregone interest or other sum is calculated by
reference to the gross amount of any sum receivable or deemed
received by the any Lender or any Agent from the Borrowers
hereunder,
then, and in each such case, the Borrowers will, upon demand made by such
Lender or such Agent at any time and from time to time and as often as the
occasion therefor may arise, pay to such Lender or such Agent such additional
amounts as will be sufficient to compensate such Lender or such Agent for
such additional cost, reduction, payment or foregone interest or other sum
(after such Lender or such Agent shall have allocated the same fairly and
equitably among all customers of any class generally affected thereby). The
provisions of this (S)7.10 shall survive repayment of the Obligations and
termination of this Agreement.
(S) Capital Adequacy.
----------------
If any present or future applicable law, governmental rule, regulation,
policy, guideline or directive (whether or not having the force of law) or
the interpretation thereof by a court or governmental authority with
appropriate jurisdiction affects the amount of capital required or expected
to be maintained by any Lender or any Agent, or any corporation controlling
such Lender or such Agent, and such Lender or such Agent determines that the
amount of capital required to be maintained by it is increased by or based
upon such Lender's commitment to make, or maintenance of, Loans or Letter of
Credit Participations hereunder, then such Lender or such Agent may notify
the Borrowers of such fact. To the extent that the costs of such increased
capital requirements are not reflected in the Base Rate, the Borrowers and
such Lender or such Agent shall thereafter attempt to negotiate in good
faith, within thirty (30) days of the day on which the Borrowers receive such
notice, an adjustment payable hereunder that will adequately compensate such
Lender or such Agent in light of these circumstances. If the Borrowers and
such Lender or such Agent or any corporation controlling such Lender or such
Agent are unable to agree to such adjustment within thirty (30) days of the
date on which the Borrowers receive such notice, then commencing on the date
of such notice (but not earlier than the effective date of any such increased
<PAGE>
-42-
capital requirement), the fees payable hereunder shall increase by an amount
that will, in such Lender's or such Agent's reasonable determination, provide
adequate compensation to such Lender or such Agent or any corporation
controlling such Lender or such Agent, such amount to be considered prima
facie correct and binding, absent manifest error. Such Lender or such Agent
shall allocate such cost increases among its customers in good faith and on
an equitable basis. The provisions of this (S)7.11 shall survive repayment
of the Obligations and termination of this Agreement.
(S) Eurocurrency Indemnity.
----------------------
The Borrowers agree to indemnify each Lender and each Agent and to hold
them harmless from and against any loss, cost or expenses (including loss of
anticipated profits directly related to the circumstances described below)
that such Lender or such Agent may sustain or incur as a consequence of a
failure of the Borrowers to satisfy any condition precedent to the making of
any Loan or any default by the Borrowers in making a borrowing or conversion
or continuation after the Borrowers have given (or are deemed to have given)
notice pursuant to (S)2.3, (S)2.4, (S)4.3, (S)4.4, or (S)5.5 hereof, or the
making of any payment of a Eurocurrency Advance or the making of or any
conversion of any such Eurocurrency Advance to a Base Rate Advance on a day
that is not the last day of the applicable Interest Period with respect
thereto, including interest or fees payable by the Lenders to lenders of
funds obtained by them in order to maintain any such Loans. The Lenders and
the Agent shall deliver to the Borrowers a certificate setting forth any
amounts owing pursuant to this (S)7.12, such amounts to be considered prima
facie correct and binding, absent manifest error. The provisions of this
(S)7.12 shall survive repayment of the Obligations and termination of this
Agreement.
(S) Illegality; Inability to Determine Eurocurrency Rate.
----------------------------------------------------
(a) Notwithstanding any other provision of this Agreement, if (i) the
introduction of, any change in, or any change in the interpretation of, any
law or regulation applicable to any Lender or any Agent shall make it
unlawful, or any central bank or other governmental authority having
jurisdiction thereof shall assert that it is unlawful, for such Lender or
such Agent to perform its obligations in respect of any Eurocurrency
Advances, or (ii) if any Lender or any Agent shall reasonably determine with
respect to Eurocurrency Advances that (x) by reason of circumstances
affecting any Eurocurrency interbank market, adequate and reasonable methods
do not exist for ascertaining the Eurocurrency Rate which would otherwise be
applicable during any Interest Period, or (y) deposits of Dollars or Optional
Currencies, as applicable, in the relevant amount for the relevant Interest
Period are not available to the Lenders or the Agents in any Eurocurrency
interbank market, or (z) the Eurocurrency Rate does not or will not
accurately reflect the cost to such Lender or such Agent of obtaining or
maintaining the applicable Eurocurrency Advances during any Interest Period,
then the Managing Agent shall promptly give telephonic, telex or cable notice
of such determination to the Borrowers (which notice shall be conclusive and
binding upon the Borrowers).
(b) With respect to Revolving Credit Loans and any portion of the Term
Loan bearing interest by reference to the Eurocurrency Rate, upon such
notification by the Managing Agent given in accordance with (S)7.13(a)
hereof, the obligation of the Lenders to make Eurocurrency Advances available
<PAGE>
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shall be suspended until the Lenders determine that such circumstances no
longer exist, and the outstanding Eurocurrency Advances shall continue to
bear interest at the applicable rate based on the Eurocurrency Rate until the
end of the applicable Interest Period, and thereafter shall be deemed
converted to Base Rate Advances in equal principal amounts.
(c) With respect to Multicurrency Loans requested to be made,
maintained, or converted while the circumstances described in (S)7.13(a) are
continuing, upon such notification by the Managing Agent given in accordance
with (S)7.13(a) hereof, the Managing Agent shall substitute a one-month
Interest Period for the Interest Period requested by the International
Borrowers, and shall calculate interest on the principal amount of such
Multicurrency Loan by substituting for the Multicurrency Rate the rate per
annum determined by the Managing Agent in consultation with the Multicurrency
Lenders to be that which fairly expresses as a percentage per annum the cost
to the Multicurrency Lenders (acting in good faith in consideration of all
relevant factors, including, but not limited to, the minimization of such
costs where feasible) of funding such principal amount in the requested
Optional Currency during such alternative Interest Period, as certified by
the Managing Agent to the Borrowers and the Multicurrency Lenders upon
determination thereof. Upon receipt of notice of such alternative interest
rate, the International Borrowers may refuse to accept such Multicurrency
Loan. The Borrowers shall, forthwith on demand, indemnify each Multicurrency
Lender against any liability in respect of funds contracted for or otherwise
acquired which such Multicurrency Lender incurs as a consequence of the
International Borrowers' refusal to borrow any Multicurrency Loan pursuant to
the provisions of this (S)7.13(c). Subject to the terms and conditions of
the previous sentence, the Borrowers may request that such Multicurrency Loan
be denominated in Dollars.
(S) Concerning Joint and Several Liability of the Borrowers.
-------------------------------------------------------
(a) Each of the U.S. Borrowers, jointly and severally, hereby
irrevocably and unconditionally accepts, not merely as a surety but also
as a co-debtor, joint and several liability with all of the other
Borrowers, with respect to the payment and performance of all of the
Obligations of both the U.S. Borrowers and the International Borrowers
(including, without limitation, any such Obligations arising under this
(S)7.14), it being the intention of the parties hereto that all of the
Obligations of both the U.S. Borrowers and the International Borrowers
shall be the joint and several Obligations of each of the U.S. Borrowers
without preferences or distinction among them.
(b) To the fullest extent permitted by applicable law, each of the
International Borrowers, jointly and severally, hereby irrevocably and
unconditionally accepts, not merely as surety but also as co-debtor,
joint and several liability with all of the other International
Borrowers, with respect to the payment and performance of all of the
Obligations of the International Borrowers (including without limitation
any such Obligations arising under this (S)7.14), it being the intention
of the parties hereto that all of the Obligations of the International
Borrowers shall be the joint and several Obligations of each of the
International Borrowers without preference or distinction among them.
<PAGE>
-44-
(c) Each of the U.S. Borrowers is accepting joint and several
liability for the Obligations of all of the Borrowers hereunder and
under the other Loan Documents in consideration of the financial
accommodations to be provided by the Agents and the Lenders under this
Agreement, for the mutual benefit, directly and indirectly, of each of
the Borrowers and in consideration of the undertakings of each other
U.S. Borrower to accept joint and several liability for the Obligations
of both the U.S. Borrowers and the International Borrowers. Each of the
International Borrowers, to the fullest extent permitted by applicable
law, is accepting joint and several liability for the Obligations of the
International Borrowers hereunder and under the other Loan Documents in
consideration of the financial accommodation to be provided by the
Agents and the Lenders under this Agreement, for the mutual benefit,
directly or indirectly, of each of the International Borrowers and in
consideration of the undertakings of each other International Borrower
to accept the joint and several liability for the Obligations of the
International Borrowers.
(d) If and to the extent that any of the U.S. Borrowers shall fail
to make any payment with respect to any of the Obligations as and when
due or to perform any of such Obligations in accordance with the terms
thereof, then in each such event the other U.S. Borrowers will make such
payment with respect to, or perform, such Obligation. If and to the
extent that any of the International Borrowers shall fail to make any
payment with respect to any of the Obligations as and when due or
perform any of such Obligations in accordance with the terms thereof,
then in each such event the other International Borrowers and the U.S.
Borrowers, to the fullest extent permitted by applicable law, will make
such payment with respect to, or perform, such Obligations.
(e) The Obligations of each of the U.S. Borrowers under the
provisions of this (S)7.14 constitute full recourse Obligations of each
of such Borrowers enforceable to the fullest extent permitted by
applicable law against each such Borrower to the full extent of its
properties and assets, irrespective of the validity, regularity or
enforceability of this Agreement or any other circumstance whatsoever.
The Obligations of each of the International Borrowers under the
provisions of this (S)7.14 constitute full recourse Obligations of each
of such Borrowers enforceable against each such Borrower to the fullest
extent permitted by applicable law to the full extent of its properties
and assets, irrespective of the validity, regularity or enforceability
of this Agreement or any other circumstance whatsoever.
(f) Except for such notices to the Borrowers expressly required by
this Agreement, each of the Borrowers, to the fullest extent permitted
by applicable law, hereby waives notice of acceptance of its joint and
several liability, notice of any Loans made under this Agreement, notice
of any action at any time taken or omitted by the Agents or the Lenders
under or in respect of any of the Obligations, and, generally, to the
extent permitted by applicable law, all demands, notices and other
formalities of every kind in connection with this Agreement. Except as
otherwise expressly provided in this Agreement, each of the Borrowers,
to the fullest extent permitted by applicable law, hereby assents to,
and waives notice of, or any defense in respect
<PAGE>
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of, any extension or postponement of the time for the payment of any of
the Obligations, the acceptance of any payment of any of the
Obligations, the acceptance of any partial payment thereon, any waiver,
consent or other action or acquiescence by the Agents or the Lenders at
any time or times in respect of any default by any of the Borrowers in
the performance or satisfaction of any term, covenant, condition or
provision of this Agreement, any and all other indulgences whatsoever by
the Agents or the Lenders in respect of any of the Obligations, and the
taking, addition, substitution or release, in whole or in part, at any
time or times, of any security for any of the Obligations or the
addition, substitution or release, in whole or in part, of any of the
Borrowers. Without limiting the generality of the foregoing, each of the
Borrowers assents to any other action or delay in acting or failure to
act on the part of the Agents or the Lenders with respect to the failure
by any of the Borrowers to comply with any of its respective
Obligations, including, without limitation, any failure by any of the
Agents or the Lenders strictly or diligently to assert any right or to
pursue any remedy or to comply fully with applicable laws or regulations
thereunder, which might, but for the provisions of this (S)7.14, afford
grounds for terminating, discharging or relieving any of the Borrowers,
in whole or in part, from any of its Obligations under this (S)7.14, it
being the intention of each of the Borrowers that, so long as any of the
Obligations hereunder remain unsatisfied, the Obligations of such
Borrower under this (S)7.14 shall not be discharged except by
performance and then only to the extent of such performance. The
Obligations of each of the Borrowers under this (S)7.14 shall not be
diminished or rendered unenforceable by any winding up, reorganization,
arrangement, liquidation, reconstruction or similar proceeding with
respect to any of the Borrowers, the Agents or the Lenders. The joint
and several liability of the Borrowers set forth in this (S)7.14 shall
continue in full force and effect notwithstanding any absorption,
merger, amalgamation, consolidation or any other change whatsoever in
the name, membership, constitution or place of formation of any of the
Borrowers, the Agents or the Lenders.
(g) The provisions of this (S)7.14 are made for the benefit of the
Agents and the Lenders and their successors and assigns, and may be
enforced, to the fullest extent permitted by applicable law, in good
faith by them from time to time against any or all of the Borrowers as
often as occasion therefor may arise and without requirement on the part
of the Agents or the Lenders first to marshal any claims or to exercise
any rights against any other Borrower or to exhaust any remedies
available against any other Borrower or to resort to any other source or
means of obtaining payment of any of the obligations hereunder or to
elect any other remedy. The provisions of this (S)7.14 shall remain in
effect until all of the Obligations shall have been paid in full or
otherwise fully satisfied and the obligations of the Lenders to make
Loans and of the Managing Agent to issue, extend, or renew Letters of
Credit hereunder shall have terminated. If at any time, any payment, or
any part thereof, made in respect of any of the Obligations, is
rescinded or must otherwise be restored or returned by the Agents or the
Lenders upon the insolvency, bankruptcy or reorganization of any of the
Borrowers, or otherwise, the provisions of this (S)7.14 will forthwith
be reinstated in effect, as though such payment had not been made.
<PAGE>
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(h) To the extent any Borrower makes a payment hereunder in excess
of the aggregate amount of the benefit received by such Borrower in
respect of the extensions of credit under this Agreement, then such
Borrower, after the final and irrevocable payment in full in cash of all
the Obligations of the U.S. Borrowers and the International Borrowers
hereunder and the termination of all Commitments and Letters of Credit
hereunder, shall be entitled to recover from other Borrowers such excess
payment pro rata and the right to such recovery shall be deemed to be an
asset and property of such Borrower so funding.
(S) Representations and Warranties upon Loan Request.
------------------------------------------------
Each request for Loans or for the issuance, extension or renewal of a
Letter of Credit hereunder shall constitute a representation by the Borrowers
that the conditions set forth in (S)(S)12 and 13 hereof, as the case may be,
have been satisfied on the date of such request and will continue to be
satisfied on the Drawdown Date of such Loan or the date of issuance,
extension or renewal of the Letter of Credit. Each of the representations
and warranties made by or on behalf of the Borrowers to the Agents and the
Lenders in this Agreement or any other Loan Document or any statement,
instrument, document, or certificate delivered in connection therewith shall
be true and correct in all material respects when made and shall, for all
purposes of this Agreement, be deemed to be repeated on and as of the date of
the submission of any Loan Request or request for a Letter of Credit or an
extension or renewal thereof and on and as of the Drawdown Date of such Loan
or the date of issuance, extension, or renewal of such Letter of Credit
(except to the extent of changes resulting from transactions contemplated or
permitted by this Agreement and the other Loan Documents, and changes
occurring in the ordinary course of business or disclosed in the financial
statements and other information delivered to the Lenders pursuant to (S)9.4
hereof that singly or in the aggregate are not materially adverse, and to the
extent that such representations and warranties expressly relate solely to an
earlier date).
(S) New Borrowers.
--- ---------
Any existing or newly-created or acquired Subsidiary of the Parent which
(a) has annual gross revenues of at least $10,000,000 on an historical or
annualized basis, or (b) is the parent of any other Borrower shall be
Borrowers hereunder, and all other Subsidiaries of the Parent designated as
such by the Parent shall be Excluded Subsidiaries, provided that the Excluded
Subsidiaries may not, in the aggregate, have in excess of five percent (5%)
of Consolidated Total Assets, the consolidated total liabilities of the
Parent and its Subsidiaries, or consolidated gross revenues of the Parent and
its Subsidiaries at any time, in each case as determined in accordance with
GAAP. Any Subsidiary which is required to become a Borrower pursuant to the
terms of this (S)7.16 shall sign Revolving Credit Notes, Term Notes and
Multicurrency Notes (or, at the option of the Managing Agent, allonges to
such Notes in the form of Exhibit L hereto and joinders to this Agreement in
the form of Exhibit M hereto), shall enter into an amendment to this
Agreement with the other parties hereto providing that such Subsidiary is a
Borrower hereunder, and shall provide such other documentation (including
opinions of counsel) as the Managing Agent may reasonably request. In the
event that any Subsidiary is required to become a Borrower hereunder after
the date hereof, the Managing Agent is hereby authorized by the parties to
amend Schedule 1 hereto to include such Subsidiary as a Borrower hereunder.
The Borrowers hereby agree to pledge all of the stock of their U.S.
Subsidiaries (other than Excluded Subsidiaries) to the
<PAGE>
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Managing Agent for the benefit of the Lenders pursuant to the terms of the
Pledge Agreement. Notwithstanding subclauses (a) and (b) of the first
sentence of this (S)7.16, the following Subsidiaries of the Parent designated
as Excluded Subsidiaries, shall each become a Borrower or shall be merged
with a Subsidiary of the Parent that is a Borrower (such that the surviving
entity is a Borrower) on or before June 2, 1997: Wheelabrator Technologies
(UK) Limited, The Permutit Company Pty. Ltd., U.S. Filter Finance, B.V., USF
Spain, S.A., Wheelabrator Water Technologies (S) Pte. Ltd., U.S. Filter
(Asia) Pte. Limited, Wheelabrator Water Technologies International Holdings,
Inc., and USF Euroholding, S.A.
(S) Limitations on Interest Periods.
-------------------------------
Notwithstanding anything contained herein to the contrary, the Borrowers
may not at any time select an Interest Period which would extend beyond the
Maturity Date. The Borrowers may not have more than twelve (12) different
maturities of Eurocurrency Loans outstanding at any one time.
(S) REPRESENTATIONS AND WARRANTIES.
------------------------------
Each of the Borrowers represents and warrants to the Lenders and the
Agents as follows:
(S) Corporate Authority.
-------------------
(a) Incorporation; Good Standing.
----------------------------
Each of the Borrowers (i) is duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation,
(ii) has all requisite power to own its property and conduct its
business as now conducted and as presently contemplated, except where a
failure to have such power would not have a material adverse effect on
the business, assets, or financial condition of the Parent and its
Subsidiaries taken as a whole, and (iii) is in good standing as a
foreign corporation and is duly authorized to do business in each
jurisdiction in which its property or business as presently conducted or
contemplated makes such qualification necessary, except where a failure
to be so qualified would not have a material adverse effect on the
business, assets or financial condition of the Parent and its
Subsidiaries taken as a whole.
(b) Authorization.
-------------
The execution, delivery and performance of the Loan Documents and the
transactions contemplated hereby and thereby (i) are within the
authority of each Borrower, (ii) have been duly authorized by all
necessary corporate, partnership, membership, or other proceedings,
(iii) do not materially conflict with or result in any material breach
or contravention of any provision of law, statute, rule or regulation to
which any Borrower is subject or any judgment, order, writ, injunction,
license or permit applicable to any Borrower so as to materially
adversely affect the assets, business or any activity of the Parent and
its Subsidiaries taken as a whole, (iv) do not conflict with any
provision of the corporate charter, bylaws, or other organizational
documents of any Borrower or any agreement or other instrument binding
upon any Borrower, and (v) will not create a lien on any properties of
any Borrower other than pursuant to the Loan Documents.
(c) Enforceability.
--------------
<PAGE>
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The execution, delivery and performance of the Loan Documents will result in
valid and legally binding obligations of each Borrower, enforceable
against each of them in accordance with the respective terms and
provisions hereof and thereof, except as limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or
affecting generally the enforcement of creditors' rights, and except to
the extent that availability of the remedy of specific performance or
injunctive relief is subject to the discretion of the court before which
any proceeding therefor may be brought.
(S) Governmental Approvals.
----------------------
The execution, delivery and performance by each Borrower of the Loan
Documents and the transactions contemplated hereby and thereby do not require
any approval or consent of, or filing with, any governmental agency or
authority other than those already obtained and which are in full force and
effect.
(S) Title to Properties; Leases.
---------------------------
Each of the Parent and its Subsidiaries owns all of its respective
assets reflected in the consolidated balance sheet of the Parent as at the
Balance Sheet Date or acquired since that date (except property and assets
sold or otherwise disposed of in the ordinary course of business since that
date), subject to no mortgages, capitalized leases, conditional sales
agreements, title retention agreements, liens or other encumbrances except
those permitted by (S)10.2 hereof.
(S) Financial Statements; Solvency.
------------------------------
(a) There has been furnished to each of the Lenders a consolidated
balance sheet of the Parent dated the Balance Sheet Date, and a
consolidated statement of operations for the fiscal year then ended,
certified by KPMG Peat Marwick, L.L.P. or by other independent certified
public accountants satisfactory to the Managing Agent (the
"Accountants"). There has also been furnished to each of the Lenders a
consolidated and consolidating unaudited balance sheet of the Parent
dated September 30, 1996, and the financial statements of the entities
being acquired in the Wheelabrator Acquisition as set forth in the
Registration Statement. Such balance sheets and statements of
operations have been prepared in accordance with GAAP and fairly present
the financial condition of the Parent and its Subsidiaries as at the
close of business on the date thereof and the results of operations for
the period then ended. There are no contingent liabilities of the
Parent or any such Subsidiaries as of such dates involving material
amounts, known to the officers of the Parent or such Subsidiaries not
disclosed in said financial statements and the related notes thereto.
Since the Balance Sheet Date, the Parent and such Subsidiaries have not
incurred any liabilities other than in the ordinary course of business
or as permitted by (S)10.1 hereof. There has been furnished to each of
the Lenders a combined pro forma balance sheet of the Parent and all of
its Subsidiaries, including those entities acquired in connection with
the Wheelabrator Acquisition. To the best knowledge of the Borrowers
after due inquiry, such pro forma balance sheet is based on reasonable
assumptions and accurately reflects the projected financial condition of
the Parent and its Subsidiaries following the
<PAGE>
-49-
Wheelabrator Acquisition, based upon the financial statements attached
as Schedule 3.16 to the Wheelabrator Purchase and Sale Agreement.
(b) The Parent and its Subsidiaries on a consolidated basis (both
before and after giving effect to the transactions contemplated by this
Agreement) are solvent, have assets having a fair value in excess of the
amount required to pay their probable liabilities on their existing
debts as they become absolute and matured, and have, and will have at
the time of any borrowing hereunder, access to adequate capital for the
conduct of their business and the ability to pay their debts from time
to time incurred in connection therewith as such debts mature.
(S) No Material Changes, Etc.
-------------------------
Since the Balance Sheet Date, there have occurred no material adverse
changes in the financial condition or business of the Parent and its
Subsidiaries as shown on or reflected in the consolidated balance sheet of
the Parent as at the Balance Sheet Date, or the consolidated statement of
operations for the fiscal year then ended, other than changes in the ordinary
course of business or as described in the 10-Q of the Parent filed with the
United States Securities and Exchange Commission on [date of most recent 10-
Q], 1996 which have not had any material adverse effect either individually
or in the aggregate on the business or financial condition of the Parent and
its Subsidiaries taken as a whole. Since the Balance Sheet Date, there has
not been any Distribution by the Borrowers except as permitted by (S)10.5
hereof.
(S) Franchises, Patents, Copyrights, Etc.
-------------------------------------
Each of the Parent and its Subsidiaries possesses all franchises,
patents, copyrights, trademarks, trade names, licenses and permits
(including, but not limited to, environmental permits), and rights in respect
of the foregoing, adequate for the conduct of its business substantially as
now conducted without known conflict with any rights of others, except as
would not have a material adverse effect on the business, operations, or
financial condition of the Parent and its Subsidiaries taken as a whole.
(S) Litigation.
----------
There are no actions, suits, proceedings or investigations of any kind
pending or threatened against the Parent or any of its Subsidiaries before
any court, tribunal or administrative agency or board which, if adversely
determined, might, either in any case or in the aggregate, materially
adversely affect the properties or business of the Parent and its
Subsidiaries taken as a whole, or materially impair the right of the Parent
and its Subsidiaries taken as a whole to carry on business substantially as
now conducted, or which question the validity of any of the Loan Documents,
or any action taken or to be taken pursuant hereto or thereto.
(S) No Materially Adverse Contracts, Etc.
------------------------------------
The Parent and its Subsidiaries are not subject to any charter,
corporate or other legal restriction, or any judgment, decree, order, rule or
regulation which in the judgment of the Parent's officers has or is expected
in the future to have a materially adverse effect on the business, assets or
financial condition of the Parent and its Subsidiaries taken as a whole. The
Parent and its Subsidiaries are not party to any
<PAGE>
-50-
contract or agreement which in the judgment of the Parent's officers has or
is expected to have any materially adverse effect on the business of the
Parent and its Subsidiaries are not, except as otherwise reflected in
adequate reserves.
(S) Compliance With Other Instruments, Laws, Etc.
--------------------------------------------
The Parent and its Subsidiaries are not violating any provision of their
charter documents or bylaws or any agreement or instrument to which they are
or may be subject or by which they or any of their properties may be bound or
any decree, order, judgment, or any statute, license, rule or regulation, in
a manner which could result in the imposition of substantial penalties or
materially and adversely affect the financial condition, properties or
business of the Parent and its Subsidiaries taken as a whole.
(S) Tax Status.
--- ------
The Parent and its Subsidiaries have made or filed all federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which they are subject (unless and only to the extent that
(a) the Parent has set aside on its books provisions reasonably adequate for
the payment of all unpaid taxes, and (b) the failure to so file would not
have a material adverse effect on the financial condition, properties, or
business of the Parent and its Subsidiaries taken as a whole); and have paid
all taxes and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith; and have set aside
on the Parent's books provisions reasonably adequate for the payment of all
taxes for periods subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction.
(S) No Event of Default.
-------------------
No Default or Event of Default has occurred and is continuing.
(S) Holding Company and Investment Company Acts.
-------------------------------------------
None of the Borrowers is a "holding company", or a "subsidiary company"
of a "holding company", or an "affiliate" of a "holding company", as such
terms are defined in the Public Utility Holding Company Act of 1935; nor are
any of them a "registered investment company", or an "affiliated company" or
a "principal underwriter" of a "registered investment company", as such terms
are defined in the Investment Company Act of 1940, as amended.
(S) Absence of Financing Statements, Etc.
-------------------------------------
Except as contemplated by (S)10.2 of this Agreement, there is no
financing statement, security agreement, chattel mortgage, real estate
mortgage or other document filed or recorded with any filing records,
registry, or other public office, which purports to cover, affect or give
notice of any present or possible future lien on, or security interest in,
any assets or property of the Parent and its Subsidiaries or rights
thereunder.
(S) Certain Transactions.
--------------------
<PAGE>
-51-
Except as set forth in the Registration Statement, and except as would
not be considered material under the rules and regulations of the United
States Securities and Exchange Commission, none of the officers, directors,
or employees of the Parent or any of its Subsidiaries is presently a party to
any transaction with such Parent or Subsidiary including, without limitation,
any contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or
from, or otherwise requiring payments to or from any officer, director or
such employee or, to the knowledge of the Parent and its Subsidiaries any
corporation, partnership, trust or other entity in which any officer,
director, or any such employee has a substantial interest or is an officer,
director, trustee or partner.
(S) Employee Benefit Plans.
----------------------
Each of the Parent and its Subsidiaries is in substantial compliance
with all material provisions of ERISA, except to the extent that any failure
so to be in compliance with any provisions of ERISA has not had and could not
reasonably be expected to materially and adversely affect the financial
condition, properties or business of the Parent and its Subsidiaries taken as
a whole.
(S) Use of Proceeds.
--- -- --------
The proceeds of the Term Loan shall be used by the Borrowers solely to
finance the Wheelabrator Acquisition. The proceeds of the Revolving Credit
Loans may be used to finance the Wheelabrator Acquisition and the United
Utilities Acquisition and to finance other acquisitions permitted hereunder,
and the proceeds of the Revolving Credit Loans and the Multicurrency Loans
may be used to refinance existing Indebtedness of the Borrowers and to pay
fees and other transaction costs associated therewith, and for working
capital and other general corporate purposes. The Letters of Credit may be
used by the Borrowers to support their trade and bonding requirements, to
back their financial obligations, to purchase inventory and to support
guaranties of the International Borrowers permitted under (S)10.1(m) not to
exceed $10,000,000 (all amounts expressed in Optional Currencies being
calculated at their Dollar Equivalent). No proceeds of the Loans shall be
used in any way that will violate Regulations G, T, U or X of the Board of
Governors of the Federal Reserve System.
(S) Environmental Compliance. Except
------------------------
with respect to any matters which would not be deemed to be material
pursuant to the regulations of the United States Securities and Exchange
Commission and for those matters which are set forth in the Registration
Statement:
(a) Neither the Parent nor any of its Subsidiaries nor any operator
of their properties is in violation, or alleged violation, of any
judgment, decree, order, law, license, rule or regulation pertaining to
environmental matters, including without limitation, those arising under
Environmental Laws, which violation would have a material adverse effect
on the environment or the business, assets or financial condition of the
Parent and its Subsidiaries, taken as a whole.
<PAGE>
-52-
(b) Neither the Parent nor any of its Subsidiaries has received
written notice from any third party including, without limitation: any
federal, state or local governmental authority, (i) that any one of them
has been identified by the United States Environmental Protection Agency
("EPA") as a potentially responsible party under CERCLA with respect to
a site listed on the National Priorities List, 40 C.F.R. Part 300
Appendix B; (ii) that any Hazardous Substances which any one of them has
generated, transported or disposed of has been found at any site at
which a federal, state or local agency or other third party has
conducted or has ordered that any of them conduct a remedial
investigation, removal or other response action pursuant to any
Environmental Law; or (iii) that it is or shall be a named party to any
claim, action, cause of action, complaint, legal or administrative
proceeding arising out of any third party's incurrence of costs,
expenses, losses or damages of any kind whatsoever in connection with
the release of Hazardous Substances.
(c) To the best of the Parent's and its Subsidiaries' knowledge
after reasonable inquiry, (i) No portion of the Parent's and its
Subsidiaries' Real Properties has been used for the handling,
processing, storage or disposal of Hazardous Substances except in
material compliance with applicable Environmental Laws; and no
underground tank or other underground storage receptacle for Hazardous
Substances is located on such Real Property except such tanks as are in
material compliance with all Environmental Laws; (ii) in the course of
any activities conducted by the Parent and its Subsidiaries or operators
of their Real Property, no Hazardous Substances have been generated or
are being used on such Real Properties except in material compliance
with applicable Environmental Laws; (iii) there have been no unpermitted
Releases or threatened Releases of Hazardous Substances on, upon, into
or from the properties of the Parent and its Subsidiaries, which
Releases would have a material adverse effect on the value of such Real
Properties or adjacent properties or the environment; (iv) there have
been no Releases on, upon, from or into any real property in the
vicinity of the Real Properties of the Parent and its Subsidiaries
which, through soil or groundwater contamination, may have come to be
located on, and which would have a material adverse effect on the value
of, any Real Properties of the Parent and its Subsidiaries; and (v) in
addition, any Hazardous Substances that have been generated on the Real
Properties of the Parent and its Subsidiaries have been transported
offsite and have been treated or disposed of only by treatment or
disposal facilities maintaining valid permits as required under
applicable Environmental Laws, which transporters and facilities have
been and are, to the best of the Parent's and its Subsidiaries'
knowledge, operating in material compliance with such permits and
applicable Environmental Laws.
(d) None of the Real Properties of the Parent and its Subsidiaries
are or shall be subject to any applicable environmental clean up
responsibility law or environmental restrictive transfer law or
regulation by virtue of the transactions set forth herein and
contemplated hereby.
(S) Perfection of Security Interests.
--------------------------------
The Collateral and the Managing Agent's rights with respect to the
Collateral are not subject to any setoff, claims, withholdings or other
defenses. The U.S. Borrowers are the owners of the Collateral
<PAGE>
-53-
free from any lien, security interest, encumbrance and any other claim or
demand, other than liens in favor of the Managing Agent for the benefit of
the Lenders to secure the Obligations and for the benefit of FNBB to secure
the FNBB Obligations. The Security Documents are effective to create in favor
of the Managing Agent, for the benefit of the Lenders, a legal, valid and
enforceable first priority security interest in the Collateral. The
certificates for the shares of such Collateral have been delivered to the
Managing Agent.
(S) True Copies of Charter and Other Documents.
------------------------------------------
The Borrowers have furnished each of the Lenders with copies, in each
case true and complete as of the Effective Date, of (a) all charter and other
incorporation and organizational documents (together with any amendments
thereto) and (b) by-laws (together with any amendments thereto).
(S) Subsidiaries.
------------
Schedule 1 sets forth a complete and accurate list of the Subsidiaries
of the Parent. Each such Subsidiary is wholly owned, directly or indirectly,
by the Parent. The Parent has good and marketable title to all of the shares
it purports to own of the stock of each Subsidiary, free and clear in each
case of any lien. All such shares have been duly issued and are fully paid
and non-assessable and, other than those of the Excluded Subsidiaries and the
International Subsidiaries, have been pledged and delivered to the Managing
Agent for the benefit of the Lenders.
(S) AFFIRMATIVE COVENANTS OF THE BORROWERS.
--------------------------------------
The Borrowers covenant and agree that, so long as any Loan, any Letter
of Credit, any Reimbursement Obligation, or any Note is outstanding or any
Lender has any obligation to make Loans or any Issuing Lender has any
obligation to issue, extend, renew or honor any Letters of Credit hereunder:
(S) Punctual Payment.
----------------
The Borrowers will duly and punctually pay or cause to be paid the
principal and interest on the Loans, all Reimbursement Obligations, and all
fees and other amounts provided for in this Agreement and the other Loan
Documents, all in accordance with the terms of this Agreement and such other
Loan Documents.
(S) Records and Accounts.
--------------------
The Parent will and will cause each of its Subsidiaries to keep true and
accurate records and books of account in which full, true and correct entries
will be made in accordance with GAAP and with the requirements of all
regulatory authorities and maintain adequate accounts and reserves for all
taxes (including income taxes), depreciation, depletion, obsolescence and
amortization of their properties, all other contingencies, and all other
proper reserves in accordance with GAAP or as required by applicable
regulatory authorities.
(S) Financial Statements, Certificates and Information.
--------------------------------------------------
The Borrowers will deliver to each of the Lenders:
<PAGE>
-54-
(a) as soon as practicable, but, in any event not later than 90
days after the end of each fiscal year of the Parent, the consolidated
balance sheet of the Parent as at the end of such year, consolidated
income statement, and consolidated statement of cash flows, each setting
forth in comparative form the amounts for the previous fiscal year, all
such consolidated statements to be in reasonable detail, prepared in
accordance with GAAP, and certified without qualification by the
Accountants;
(b) as soon as practicable, but in any event not later than (i) 45
days after the end of each of the first three fiscal quarters of each
fiscal year of the Parent, and (ii) 90 days after the end of the last
fiscal quarter of each fiscal year, copies of the unaudited consolidated
and consolidating balance sheet, income statement and statement of cash
flows of the Parent as at the end of such quarter and for the fiscal
year to date, comparing actual results with corresponding figures for
the same period in the preceding fiscal year, subject to year end audit
adjustments, all in reasonable detail and prepared in accordance with
GAAP, together with a certification by the principal financial or
accounting officer of the Parent ("CFO") that such financial statements
have been prepared in accordance with GAAP, are complete and correct in
all material respects, and fairly present the financial condition of the
Parent and its Subsidiaries as at the close of business on the date
thereof and the results of operations for the period then ended, subject
to normal year-end audit adjustments;
(c) simultaneously with the delivery of the financial statements
referred to in (a) and (b) above, (i) a statement in the form of Exhibit
C hereto (the "Compliance Certificate") certified by the CFO that the
Parent and its Subsidiaries are in compliance with the covenants
contained in (S)(S)9, 10, and 11 hereof as of the end of the applicable
period and setting forth in reasonable detail computations evidencing
such compliance, provided that if the Parent and its Subsidiaries shall
at the time of issuance of such certificate or at any other time obtain
knowledge of any Default or Event of Default, the Parent and its
Subsidiaries shall include in such certificate or otherwise deliver
forthwith to the Lenders a certificate specifying the nature and period
of existence thereof and what action the Parent and its Subsidiaries
propose to take with respect thereto; [(ii) a backlog report in the form
of Exhibit D hereto; and (iii) additional consolidating financial
information in the form of Exhibit E hereto];
(d) promptly with the filing or mailing thereof, copies of all
forms 8-K, 10-K, and 10-Q and any other material of a financial nature
filed with the Securities and Exchange Commission or sent to the
stockholders of the Parent; and
(e) from time to time such other financial data and information,
including, without limitation, pro forma financial projections,
financial information relating to the Excluded Subsidiaries, or
financial information and financial covenant calculations regarding the
accounts of the Borrowers, as any Agent or any Lender may reasonably
request.
<PAGE>
-55-
The Borrowers hereby authorize any Agent or any Lender to disclose any
information obtained pursuant to this Agreement to all appropriate
governmental regulatory authorities where required by law; provided, however,
that such Agent or such Lender shall, to the extent allowable under law,
notify the Borrowers at the time any such disclosure is made (except in the
case of disclosures made in the course of bank regulatory reviews); and
provided further that this authorization shall not be deemed to be a waiver
of any rights to object to the disclosure by any Agent or any Lender of any
such information which the Borrowers have or may have under the federal Right
to Financial Privacy Act of 1978, as in effect from time to time.
(S) Corporate Existence and Conduct of Business.
-------------------------------------------
Subject to the provisions of (S)10.4 hereof, the Parent will and will
cause each of its Subsidiaries to do or cause to be done all things necessary
to preserve and keep in full force and effect their corporate existence,
corporate rights and franchises; effect and maintain their foreign
qualifications, licensing, domestication or authorization, except as
otherwise determined by their authorized officers or Boards of Directors in
the exercise of their reasonable judgment; use their best efforts to comply
with all Applicable Laws; and shall not become obligated under any contract
or binding arrangement which, at the time it was entered into would
materially adversely impair the financial condition of the Parent and its
Subsidiaries, on a consolidated basis. The Parent will and will cause its
Subsidiaries to continue to engage primarily in the businesses now conducted
by them and in related businesses.
(S) Maintenance of Properties.
-------------------------
The Parent will and will cause each of its Subsidiaries to cause all of
their properties used or useful in the conduct of their business to be
maintained and kept in good condition, repair and working order and supplied
with all necessary equipment and will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Parent and its Subsidiaries may be necessary so that the
business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that nothing in
this section shall prevent the Parent or any Subsidiary from taking any
action different from that described in this (S)9.5 if, in the judgment of
such Parent or Subsidiary, such action is desirable in the conduct of its
business and which does not in the aggregate materially adversely affect the
business of the Parent and its Subsidiaries on a consolidated basis.
(S) Insurance.
---------
The Parent will maintain on behalf of itself and its Subsidiaries with
financially sound and reputable insurance companies, funds or underwriters
the kinds of insurance usually carried by reasonable and prudent companies
conducting businesses similar to that of the Parent and its Subsidiaries,
covering the risks and in the relative proportionate amounts usually carried
by such companies (including, to the extent it is commercially available to
the Parent at a reasonable cost, environmental impairment insurance), but in
no event less than the amounts and coverages set forth in Schedule 9.6
hereto.
(S) Taxes.
-----
<PAGE>
-56-
The Parent will and will cause each of its Subsidiaries to duly pay and
discharge, or cause to be paid and discharged, before the same shall become
overdue, all taxes, assessments and other governmental charges (other than
taxes, assessments and other governmental charges imposed by foreign
jurisdictions which in the aggregate are not material to the business or
assets of the Parent and its Subsidiaries on a consolidated basis) imposed
upon them and their Real Properties, sales and activities, or any part
thereof, or upon the income or profits therefrom, as well as all claims for
labor, materials, or supplies, which if unpaid might by law become a lien or
charge upon any of its property; provided, however, that any such tax,
assessment, charge, levy or claim need not be paid if the validity or amount
thereof shall currently be contested in good faith by appropriate proceedings
and if the Parent shall have set aside on its books adequate reserves with
respect thereto; and provided, further, that the Parent and its Subsidiaries
will pay all such taxes, assessments, charges, levies or claims forthwith
upon the commencement of proceedings to foreclose any lien which may have
attached as security therefor.
(S) Inspection of Properties, Books, and Contracts.
----------------------------------------------
The Parent will and will cause its Subsidiaries to permit any Agent or
any Lender or any of their designated representatives, to visit and inspect
any of their properties, to examine the books of account of the Parent and
its Subsidiaries (and to make copies thereof and extracts therefrom), and to
discuss the affairs, finances and accounts of the Parent and its Subsidiaries
with, and to be advised as to the same by, their officers, all at such
reasonable times during normal working hours and intervals as any Agent or
any Lender may reasonably request.
(S) Compliance with Laws, Contracts, Licenses and Permits.
-----------------------------------------------------
The Parent will and will cause each of its Subsidiaries to comply (i) in all
material respects with the provisions of its charter documents and by-laws
and all agreements and instruments by which it or any of its properties may
be bound; and (ii) with all applicable laws and regulations (including
Environmental Laws), and decrees, orders and judgments ("Applicable Laws"),
except where noncompliance with such agreements, instruments or Applicable
Laws would not have a material adverse effect in the aggregate on the
financial condition, properties or business of the Parent and its
Subsidiaries taken as a whole. If at any time while any Note, any Loan, or
any Letter of Credit is outstanding or the Lenders have any obligation to
make Loans or the Managing Agent or any Issuing Bank has any obligation to
issue, extend, or renew Letters of Credit hereunder, any authorization,
consent, approval, permit or license from any officer, agency or
instrumentality of any government shall become necessary or required in order
that any Borrower may fulfill any of its obligations hereunder, such Borrower
will immediately take or cause to be taken all reasonable steps within the
power of such Borrower to obtain such authorization, consent, approval,
permit or license and furnish the Agents and the Lenders with evidence
thereof.
(S) Further Assurances.
------------------
The Borrowers will cooperate with the Agents and the Lenders and execute
such further instruments and documents as any Agent or any Lender shall
reasonably request to carry out to the satisfaction of the Agents and the
Lenders the transactions contemplated by this Agreement.
(S) Notice of Potential Claims or Litigation.
----------------------------------------
<PAGE>
-57-
The Parent shall deliver to the Agents and the Lenders, within 30 days
of receipt thereof, written notice of any pending action, claim, complaint,
or any other notice of dispute or potential litigation (including without
limitation any alleged violation of any Environmental Law), wherein the
potential liability would be material under the regulations of the United
States Securities and Exchange Commission, together with a copy of each such
notice received by the Parent or any of its Subsidiaries.
(S) Environmental Indemnification.
-----------------------------
The Borrowers covenant and agree that they will indemnify and hold the
Agents and the Lenders and their respective Affiliates harmless from and
against any and all claims, expense, damage, loss or liability incurred by
the Agents or the Lenders (including all costs of legal representation
incurred by the Agents or the Lenders) relating to (a) any Release or
threatened Release of Hazardous Substances on the Real Property; (b) any
violation of any Environmental Laws with respect to conditions at the Real
Property or the operations conducted thereon; or (c) the investigation or
remediation of offsite locations at which any Borrower or its predecessors
are alleged to have directly or indirectly disposed of Hazardous Substances.
It is expressly acknowledged by the Borrowers that this covenant of
indemnification shall survive any foreclosure or any modification, release or
discharge of any or all of the Loan Documents or the payment of the Loans and
the Notes and shall inure to the benefit of the Agents, the Lenders and their
successors and assigns, but shall not apply to any Release or offsite
disposal of Hazardous Materials which was caused by the gross negligence or
willful misconduct of the Agents or the Lenders or to any violations of
Environmental Laws first commencing after foreclosure (other than with
respect to the continuance of operations at the Real Properties in
substantial conformance with practices in effect at the time of such
foreclosure). The provisions of this (S)9.12 shall survive repayment of the
Obligations and termination of this Agreement.
(S) Notice of Certain Events Concerning Insurance and Environmental
---------------------------------------------------------------
Claims.
------
(a) The Parent will provide the Agents and the Lenders with written
notice as to any cancellation or material change in any insurance of any
Borrower within ten (10) Business Days after the Borrowers' receipt of
any notice (whether formal or informal) of such cancellation or change
by any of its insurers.
(b) The Parent will promptly notify the Agents and the Lenders in
writing of any of the following events:
(i) upon the the Parent or any of its Subsidiaries obtaining
knowledge of any violation of any Environmental Law regarding the Real
Property or the operations of the Parent or any of its Subsidiaries
which violation could have a material adverse effect on the consolidated
operations of the Parent and its Subsidiaries; (ii) upon the Parent or
any of its Subsidiaries obtaining knowledge of any potential or known
Release, or threat of Release, of any Hazardous Substance at, from, or
into the Real Property which could reasonably be expected to result in a
liability which would be material under the rules and regulations of the
United States Securities and Exchange Commission; (iii) upon the
Parent's or any of its
<PAGE>
-58-
Subsidiaries' receipt of any notice of violation of any Environmental
Laws or of any Release or threatened Release of Hazardous Substances,
including a notice or claim of liability or potential responsibility
from any third party (including without limitation any federal, state or
local governmental officials) representing a claim which could
reasonably be expected to result in a liability which would be material
under the rules and regulations of the United States Securities and
Exchange Commission; or (iv) any setoff, claims (including, with respect
to the Real Property, environmental claims), withholdings or other
defenses to which any of the Collateral, or the Managing Agent's rights
with respect to the Collateral, are subject.
For purposes of (S)9.13(b) hereof, the Agents and the Lenders shall
have been deemed to have been provided with notice of any matter
disclosed in the filings of the Parent with the United States Securities
and Exchange Commission at the time such filings are delivered to the
Lenders.
(S) Notice of Default.
------------------
The Borrowers will promptly notify the Agents and the Lenders in writing
of the occurrence of any Default or Event of Default. If any Person shall
give any notice or take any other action in respect of a claimed default
(whether or not constituting an Event of Default) under this Agreement or any
other note, evidence of indebtedness, indenture or other obligation
evidencing indebtedness in excess of $100,000 as to which any Borrower is a
party or obligor, whether as principal or surety, the Borrowers shall
forthwith give written notice thereof to the Agents and the Lenders,
describing the notice of action and the nature of the claimed default.
(S) Ownership of Borrowers.
----------------------
Subject to the provisions of (S)10.4 hereof, the Parent shall at all
times own, either directly or indirectly through one or more Subsidiaries
which are Borrowers, 100% of the issued and outstanding shares or other
equity interests of each other Borrower.
(S) CERTAIN NEGATIVE COVENANTS OF THE BORROWERS.
-------------------------------------------
The Borrowers agree that, so long as any Loan, any Reimbursement
Obligation, any Note, or any Letter of Credit is outstanding, or any Lender
has any obligation to make Loans or any Issuing Lender has any obligation to
issue, extend, renew or honor Letters of Credit hereunder:
(S) Restrictions on Indebtedness.
----------------------------
The Parent will not and will not permit any of its Subsidiaries to,
create, incur, assume, guarantee or be or remain liable, contingently or
otherwise, with respect to any Indebtedness other than:
(a) Indebtedness to the Agents, the Issuing Lenders, and the
Lenders arising under this Agreement or the other Loan Documents;
<PAGE>
-59-
(b) Additional existing Indebtedness as listed on Schedule 10.1(b),
in the amounts and on the terms and conditions in effect as of the date
hereof, and any refinancing thereof on terms no less favorable to the
Borrowers than those in effect on the date hereof;
(c) Current liabilities of the Borrowers incurred in the ordinary
course of business not incurred through (i) the borrowing of money, or
(ii) the obtaining of credit except for credit on an open account basis
customarily extended and in fact extended in connection with normal
purchases of goods and services;
(d) Indebtedness in respect of taxes, assessments, governmental
charges or levies and claims for labor, materials and supplies to the
extent that payment therefor shall not at the time be required to be
made in accordance with the provisions of (S)9.7, and Indebtedness
secured by liens of carriers, warehousemen, mechanics and materialmen
permitted by (S)10.2(e);
(e) Indebtedness in respect of judgments or awards which have been
in force for less than the applicable period for taking an appeal, so
long as execution is not levied thereunder or in respect of which the
Borrowers shall at the time in good faith be prosecuting an appeal or
proceedings for review, and in respect of which the Borrowers have
maintained reserves in an amount satisfactory to the Majority Lenders;
(f) Incurrence by any Borrower of guaranty, suretyship or
indemnification obligations in connection with such Borrower's
performance of services for its respective customers in the ordinary
course of its business;
(g) Purchase money Indebtedness of the Borrowers incurred after the
date hereof secured by Liens permitted by (S)10.2(h) hereof in an
aggregate amount not to exceed $25,000,000 at any one time;
(h) Indebtedness of the Parent with respect to the Subordinated
Debt, subject to (S)10.7 hereof;
(i) Unsecured Indebtedness of Smogless not to exceed an aggregate
of $5,000,000 (all amounts denominated in currencies other than Dollars
being expressed at their Dollar Equivalent) (a) under its Italian credit
facility, and (b) to Banco Commerciale, for performance and bid bonds
and letters of credit;
(j) Unsecured Indebtedness of Smogless owing to the Parent pursuant
to the Smogless Note;
(k) Unsecured Indebtedness of Permutit Pty. Ltd. in an aggregate
amount not to exceed $1,200,000 (all amounts denominated in currencies
other than Dollars being expressed at their Dollar Equivalent) owing to
National Australia Bank and New Zealand National Bank;
<PAGE>
-60-
(l) the FNBB Obligations;
(m) Indebtedness of the International Borrowers owing to foreign
affiliates of the Managing Agent for reimbursement obligations in
respect of guaranties issued by such affiliates and backed by a Letter
of Credit issued hereunder, in an aggregate principal amount not to
exceed $10,000,000 (all amounts denominated in currencies other than
Dollars being expressed at their Dollar Equivalent);
(n) Indebtedness of any Excluded Subsidiary which is non-recourse
to the Borrowers (except that the capital stock of such Subsidiary
(other than USF TWO, Inc.) may be pledged by a Borrower to secure such
Indebtedness of such Subsidiary);
(o) Indebtedness of the Parent in an aggregate amount not to exceed
$10,000,000 with respect to the guaranty by the Parent of the
obligations owing from Treated Water Outsourcing, a Nalco/U.S. Filter
Joint Venture to Bank of America Illinois;
(p) Existing Indebtedness (other than lines of credit provided by a
bank or other financial institution) of any Subsidiary acquired after
the date hereof originally incurred by such acquired Subsidiary in
connection with the lease or acquisition of property or fixed assets
used in the business of such acquired Subsidiary; or with respect to
industrial finance bonds issued to finance the purchase of such property
or assets, provided that if such Indebtedness is unsecured it shall have
an interest rate below the lowest rate then available to the Borrowers
hereunder or shall have material call premiums or other material
penalties for prepayment; and existing Indebtedness of any Subsidiary
acquired after the date hereof with respect to obligations under
capitalized leases or sale and leaseback transactions; provided that the
aggregate amount of all such Indebtedness described in this subsection
(p) shall not exceed an aggregate amount outstanding of five percent
(5%) of Consolidated Total Assets after giving effect to such
acquisitions;
(q) Additional unsecured Indebtedness of the Borrowers in an
aggregate amount not to exceed $20,000,000; and
(r) Indebtedness with respect to the call or put of shares in
connection with the acquisition of WaterPro Corporation, as described in
the Registration Statement.
(S) Restrictions on Liens.
---------------------
Neither the Parent nor any of its Subsidiaries will create or incur or
suffer to be created or incurred or to exist any lien, encumbrance, mortgage,
pledge, charge, restriction or other security interest of any kind upon any
of its property or assets of any character whether now owned or hereafter
acquired, or upon the income or profits therefrom; or transfer any of such
property or assets or the income or profits therefrom for the purpose of
subjecting the same to the payment of Indebtedness or performance of any
other obligation in priority to payment of its general creditors; or acquire,
or agree or have an option to
<PAGE>
-61-
acquire, any property or assets upon conditional sale or other title
retention or purchase money security agreement, device or arrangement; or
suffer to exist for a period of more than thirty (30) days after the same
shall have been incurred any Indebtedness or claim or demand against it which
if unpaid might by law or upon bankruptcy or insolvency, or otherwise, be
given any priority whatsoever over its general creditors; or sell, assign,
pledge or otherwise transfer any accounts, contract rights, general
intangibles or chattel paper, with or without recourse, except the following
(the "Permitted Liens"):
(a) Liens arising under the Security Documents in favor of the
Managing Agent for the benefit of the Lenders as security for the
Obligations, and for the benefit of FNBB and its branch offices to
secure the FNBB Obligations;
(b) Liens to secure taxes, assessments and other government charges
or claims for labor, material or supplies (i) in respect of obligations
which are not overdue at the time of determination, or (ii) which are
currently being contested in good faith by appropriate proceedings, if
the Parent shall have set aside on its books adequate reserves with
respect thereto, if required, and if no proceedings have been commenced
to foreclose any such lien;
(c) Deposits or pledges made in connection with, or to secure
payment of, workmen's compensation, unemployment insurance, old age
pensions or other social security obligations;
(d) Liens in respect of judgments or awards, the Indebtedness with
respect to which is permitted by (S)10.1(e);
(e) Liens of carriers, warehousemen, mechanics and materialmen, and
other like liens, in existence less than 120 days from the date of
creation thereof in respect of obligations not overdue;
(f) Encumbrances consisting of easements, rights of way, zoning
restrictions, restrictions on the use of real property and defects and
irregularities in the title thereto, landlord's or lessor's liens under
leases to which any Borrower is a party, and other minor liens or
encumbrances none of which in the opinion of such Borrower interferes
materially with the use of the property affected in the ordinary conduct
of the business of such Borrower which defects do not individually or in
the aggregate have a material adverse effect on the business of such
Borrower individually or of the Borrowers on a consolidated basis;
(g) Existing liens set forth in Schedule 10.1(b);
(h) Liens securing purchase money obligations permitted by
(S)10.1(g) hereof provided that any such Lien shall not encumber any
property other than the property so acquired and shall not exceed the
fair market value thereof; and
<PAGE>
-62-
(i) Previously existing Liens granted by acquired Subsidiaries with
respect to asset financings (mortgages, capitalized leases, etc.) or
industrial revenue bonds permitted under (S)10.1(p) on the terms and
conditions in effect as of the date of the acquisition, and the
replacement, extension or renewal of any such Lien encumbering no more
than the property or assets encumbered by such Lien, provided that in
each such case such Liens shall encumber only the property or assets so
financed and shall not have been incurred in contemplation of such
acquisition.
(S) Restrictions on Investments.
---------------------------
None of the Borrowers will make or permit to exist or to remain
outstanding any Investment except the following:
(a) Marketable direct or guaranteed obligations of the United
States of America which mature within one year from the date of
purchase;
(b) Certificates of deposit, time deposits or repurchase agreements
which are fully insured or are issued by commercial banks organized
under the laws of the United States of America or any state thereof and
having a combined capital, surplus, and undivided profits of not less
than $100,000,000;
(c) Commercial paper issued by a corporation organized and existing
under the laws of the United States of America or any state thereof
which at the time of purchase have been rated not less than "P-1" by
Moody's Investors Services, Inc., or not less than "A-1" by Standard and
Poor's;
(d) Investments existing on the date hereof by any Borrower in any
other Borrower;
(e) Additional Investments by the Parent in new Borrowers permitted
under (S)10.4;
(f) Investments (including Investments existing on the date hereof)
in USF TWO, Inc. in an aggregate amount not to exceed $6,000,000; and
(g) Investments (including Investments existing on the date hereof)
in the Excluded Subsidiaries (other than USF TWO, Inc.) in an aggregate
amount not to exceed $15,000,000.
(S) Mergers, Consolidations, Sales.
------------------------------
Neither the Parent nor any of its Subsidiaries shall be a party to any
merger, consolidation or exchange of stock, or purchase or otherwise acquire
all or substantially all of the assets or stock of any class of, or any
partnership, membership, or joint venture interest in, any other Person
except as otherwise provided in (S)10.3 or this (S)10.4, or sell, transfer,
convey or lease any assets or group of assets (except (i) sales of equipment
and inventory in the ordinary course of business and (ii) any other sale or
sale/leaseback of assets by the Borrowers not to exceed an aggregate book
value of five percent (5%) of
<PAGE>
-63-
Consolidated Total Assets immediately prior to such sale or sale and
leaseback). The Parent and its Subsidiaries may purchase or otherwise acquire
all or substantially all of the assets or stock of, or partnership,
membership, or joint venture interest in, or (in the case of any Subsidiary
of the Parent) may merge with any Person, provided that (a) the Agents and
the Lenders shall have been provided with pro forma financial statements
reasonably satisfactory to the Managing Agent demonstrating that the
Borrowers are in current compliance with and, after giving effect to the
proposed transaction (including any borrowings made or to be made in
connection therewith), will continue to be in compliance through the Maturity
Date with, all of the covenants in (S)10.1 and (S)11 hereof; (b) no Default
or Event of Default exists, and the proposed transaction will not otherwise
create a Default or an Event of Default hereunder; (c) the business to be
acquired involves the Borrowers' existing lines of business or a reasonably
related line of business; (d) (i) all of the assets to be acquired shall be
placed in an existing or newly created Subsidiary of the Parent which is a
Borrower and, in the case of a U.S. acquisition, 100% of the stock of which
has been or will be pledged to the Managing Agent for the benefit of the
Lenders, if required by (S)7.16 hereof, or (ii) in the case of a stock
acquisition, the acquired company, if required by (S)7.16 hereof, shall
become, or shall be merged with a Borrower that is a wholly-owned Subsidiary
of the Parent and, in the case of a U.S. stock acquisition, the acquired
stock shall be pledged to the Managing Agent for the benefit of the Lenders;
(e) in the case of a merger, the surviving entity shall be a Borrower, if
required by (S)7.16 hereof; (f) a copy of the purchase agreement, together
with all financial statements received by the Parent or its Subsidiaries for
any Subsidiary to be acquired or created shall have been furnished to the
Agents and the Lenders; (g) the aggregate cash consideration to be paid in
connection with any one such transaction (including the amount of all
Indebtedness, including, without limitation, any notes, or puts payable in
cash with respect to any securities issued as consideration for any such
transaction, assumed in connection therewith) does not exceed (i)
$250,000,000, if, after giving effect to the proposed acquisition, the
Leverage Ratio would be less than 2.75:1, or (ii) $200,000,000 in all other
cases, expressing all amounts denominated in currencies other than Dollars at
their Dollar Equivalent; and (h) the acquisition shall have been approved by
the board of directors of the corporation to be acquired prior to the
commencement of (i) any tender offer for, or the acquisition by the Parent or
any of its Subsidiaries of, any shares of the corporation to be acquired, or
(ii) any proxy solicitation of the shareholders of the corporation to be
acquired. The U.S. Borrowers (other than the Parent) may merge, consolidate
or combine with and into one another, and the International Borrowers may
merge, consolidate, or combine with and into one another. The Excluded
Subsidiaries may merge with any Borrower other than the Parent, provided that
the surviving entity is a Borrower (the stock of which has been pledged to
the Managing Agent for the benefit of the Lenders in the case of a merger
involving a U.S. Borrower and an Excluded Subsidiary organized within the
United States) and no Default or Event of Default exists or would exist after
giving effect to such merger.
(S) Restricted Distributions and Redemptions.
----------------------------------------
The Parent will not, and will cause each of its Subsidiaries not to,
declare or pay any Distributions (other than Distributions payable solely in
common stock, provided that each Subsidiary that is a wholly-owned Subsidiary
of the Parent may pay Distributions to its shareholder so long as no Default
or Event of Default exists or would be created by the making of such
Distribution. In addition, the Parent shall not, and shall cause each of its
Subsidiaries not to, redeem, convert, retire or otherwise
<PAGE>
-64-
acquire shares of any class of their capital stock provided, however, the
Parent may make all post-closing adjustments in the number of shares
exchanged for the stock of another Person permitted under (S)10.4. The
Borrowers shall not effect or permit any change in or amendment to any
document or instrument pertaining to the terms of the capital stock of the
U.S. Borrowers which is pledged to the Managing Agent without prior written
notice to the Managing Agent, and will deliver any and all shares of capital
stock of such U.S. Borrowers to the Managing Agent to be held as Collateral.
The International Borrowers shall not effect or permit any increase in the
amount of their stated capital.
(S) Employee Benefit Plans.
----------------------
None of the Borrowers nor any ERISA Affiliate will:
(a) engage in any "prohibited transaction" within the meaning of
(S)406 of ERISA or (S)4975 of the Code which could result in a material
liability for any Borrower; or
(b) permit any Guaranteed Pension Plan to incur an "accumulated
funding deficiency", as such term is defined in (S)302 of ERISA, whether
or not such deficiency is or may be waived or otherwise permit any
pension plan to be underfunded; or
(c) fail to contribute to any Guaranteed Pension Plan to an extent
which, or terminate any Guaranteed Pension Plan in a manner which, could
result in the imposition of a lien or encumbrance on the assets of any
Borrower pursuant to (S)302(f) or (S)4068 of ERISA; or
(d) permit or take any action which would result in the aggregate
benefit liabilities (within the meaning of (S)4001 of ERISA) of all
Guaranteed Pension Plans exceeding the value of the aggregate assets of
such Plans, disregarding for this purpose the benefit liabilities and
assets of any such Plan with assets in excess of benefit liabilities.
The Borrowers will (i) promptly upon filing the same with the Department
of Labor or Internal Revenue Service, furnish to the Agents and the Lenders a
copy of the most recent actuarial statement required to be submitted under
(S)103(d) of ERISA and Annual Report, Form 5500, with all required
attachments, in respect of each Guaranteed Pension Plan and (ii) promptly
upon receipt or dispatch, furnish to the Agent and the Lenders any notice,
report or demand sent or received in respect of a Guaranteed Pension Plan
under (S)(S)302, 4041, 4042, 4043, 4063, 4065, 4066 and 4068 of ERISA, or in
respect of a Multiemployer Plan, under (S)(S)4041A, 4202, 4219, or 4245 of
ERISA.
(S) Subordinated Debt; Smogless Note.
--------------------------------
The Parent will not (a) amend, supplement or otherwise modify the terms
of the Subordinated Debt without thirty (30) days prior written notice to the
Agents and the Lenders of such change, and will not make any change which, in
the reasonable opinion of the Majority Lenders, would be in any way adverse
to the Agents and the Lenders without the prior written consent of the
Majority Lenders, such consent not to be unreasonably withheld; (b) make any
payment of principal or other amounts owing with respect thereto (other than
interest) or prepay, redeem or repurchase any of the Subordinated Debt,
except
<PAGE>
-65-
that the Parent may (i) repay the principal of the Subordinated Debt owing
under the Subordinated Indenture on or after September 18, 2005, and (ii)
after complying with the provisions of (S)7.6(e) or (f) hereof, as
applicable, prepay all or any portion of the Subordinated Debt with the
proceeds of an equity offering or a substitute debt offering subordinated to
the Obligations and the FNBB Obligations on terms and conditions satisfactory
to the Majority Lenders, the form and substance of which shall have
previously been consented to by the Majority Lenders in writing; and (c)
except as permitted under the terms thereof, pay any interest on the
Subordinated Debt. Notwithstanding anything herein to the contrary, in no
case may the Parent make any payment of principal, interest, or other amounts
owing with respect to the Subordinated Debt if a Default or an Event of
Default exists or would be created by the making of such payment. The Parent
shall not assign, pledge, or transfer the Smogless Note to any Person.
(S) Negative Pledges.
----------------
The Borrowers will not enter into or be a party to any agreement which
prohibits any Borrower from granting security interests in their assets.
(S) FINANCIAL COVENANTS.
-------------------
The Borrowers agree that, so long as any Loan, any Note, any
Reimbursement Obligation, or any Letter of Credit is outstanding or any
Lender has any obligation to make Loans or any Issuing Lender has any
obligation to issue, extend, renew or honor any Letters of Credit hereunder:
(S) Current Ratio.
-------------
The ratio of Consolidated Current Assets to Consolidated Current
Liabilities shall not at any time be less than 1.50:1.
(S) Leverage Ratio.
--------------
As of the end of any fiscal quarter commencing with the fiscal quarter
ending March 31, 1997, the ratio of (a) Funded Debt to (b) (i) four times
EBITDA for the fiscal quarter ending March 31, 1997, (ii) two times EBITDA
for the two consecutive fiscal quarters ending June 30, 1997, (iii) one and
one-third times EBITDA for the three consecutive fiscal quarters ending
September 30, 1997, and (iv) EBITDA for the four fiscal quarters ending on
such date with respect to any other fiscal quarter (the "Leverage Ratio")
shall not at any time exceed the ratio set forth below:
<TABLE>
<CAPTION>
Period Ratio
- ------------------------------------------
<S> <C>
Effective Date through 12/31/97 4.50:1
- ------------------------------------------
1/1/98 through 12/31/98 4.25:1
- ------------------------------------------
Thereafter 3.75:1
- ------------------------------------------
</TABLE>
<PAGE>
-66-
(S) Interest Coverage Ratio.
As of the end of any fiscal quarter commencing with the fiscal
quarter ending December 31, 1996 the ratio of (a) EBIT (i) for the fiscal
quarter ending December 31, 1996, (ii) for the two consecutive fiscal
quarters ending March 31, 1997, (iii) for the three consecutive fiscal
quarters ending June 30, 1997, and (iv) for the four quarters ending on such
date with respect to any fiscal quarter ending thereafter to (b) Consolidated
Total Interest Expense for such period shall not be less than the stated
ratio for the periods set forth below:
<TABLE>
<CAPTION>
- ----------------------------------------
Period Ratio
- ----------------------------------------
<S> <C>
Effective Date through 3/31/97 1.80:1
- ----------------------------------------
4/1/97 through 12/31/97 2.25:1
- ----------------------------------------
Thereafter 2.75:1
- ----------------------------------------
</TABLE>
(S) Debt Service.
As at the end of any fiscal quarter commencing with the fiscal
quarter ending December 31, 1996 the ratio of (a) EBITDA minus (i) Capital
Expenditures and (ii) cash paid for income taxes (A) for the fiscal quarter
ending December 31, 1996, (B) for the two consecutive fiscal quarters ending
March 31, 1997, (C) for the three consecutive fiscal quarters ending June 30,
1997 and (D) for the four quarters ending on such date with respect to any
fiscal quarter ending thereafter to (b) Consolidated Total Interest Expense
plus the current maturity of long-term debt and dividends on preferred shares
of the Parent, if any, for such period shall not be less than the stated
ratio for the periods set forth below:
<TABLE>
<CAPTION>
Period Ratio
- -----------------------------------------
<S> <C>
Effective Date through 12/31/97 1.35:1
- -----------------------------------------
Thereafter 1.50:1
- -----------------------------------------
</TABLE>
(S) CLOSING CONDITIONS.
Upon the Effective Date, all of the obligations of the Borrowers
under or in respect of the Original Credit Agreement shall be terminated and
the Obligations shall be evidenced solely by the terms of this Agreement, the
Notes and the other Loan Documents. The Lenders' obligations to make the
Loans and the Managing Agent's and each Issuing Lender's obligations with
respect to the issuance of the Letters of Credit provided for in this
Agreement and otherwise to be
<PAGE>
-67-
bound by the terms provided for in this Agreement shall be subject to the
satisfaction, prior to the Effective Date, of each of the following
conditions:
(S) Representations and Warranties.
------------------------------
The representations and warranties contained in (S)8 hereof and
otherwise made by the Borrowers in writing in connection with the
transactions contemplated by this Agreement shall have been correct as of the
date on which made and shall also be correct at and as of the date of the
first Loan or issuance of the first Letter of Credit with the same effect as
if made at and as of such time, except to the extent that the facts upon
which such representations and warranties are based may in the ordinary
course be changed by the transactions permitted or contemplated hereby.
(S) Performance; No Default.
-----------------------
The Borrowers shall have performed and complied with all terms and
conditions herein required to be performed or complied with by them prior to
or at the time of the first Loan or issuance of the first Letter of Credit,
and at the time of the first Loan or issuance of the first Letter of Credit,
as certified by the chief financial officer of the Borrower, there shall
exist no Default or Event of Default or condition which would, with either or
both the giving of notice or the lapse of time, result in a Default or Event
of Default upon consummation of the first Loan or issuance of the first
Letter of Credit.
(S) Corporate Action.
----------------
All corporate, partnership, membership, or other action necessary
for the valid execution, delivery and performance by the Borrowers of the
Loan Documents shall have been duly and effectively taken, and evidence
thereof satisfactory to the Lenders shall have been provided to each of the
Lenders.
(S) Loan Documents, Etc.
-------------------
Each of the Loan Documents shall have been duly and properly
authorized, executed and delivered by the respective parties thereto and
shall be in full force and effect in a form satisfactory to the Lenders.
(S) Certified Copies of Charter Documents.
-------------------------------------
The Managing Agent shall have received from each of the Borrowers a
copy, certified by a duly authorized officer of such Person to be true and
complete on the Effective Date, of each of (a) its charter or other
incorporation or organizational documents as in effect on such date of
certification, and (b) its by-laws as in effect on such date. With respect
to the Borrowers that were parties to the Original Credit Agreement, such
requirement may be satisfied by delivery to the Managing Agent of a
certificate of such officer stating that there have been no changes to such
charter documents and by-laws since November 30, 1995.
(S) Incumbency Certificate.
----------------------
<PAGE>
-68-
Each of the Lenders shall have received an incumbency certificate,
dated as of the Effective Date, signed by duly authorized officers giving the
name and bearing a specimen signature of each individual who shall be
authorized: (a) to sign the Loan Documents on behalf of each Borrower; (b)
to make Loan requests; and (c) to give notices and to take other action on
such Borrower's behalf under the Loan Documents.
(S) Validity of Liens.
-----------------
The Security Documents shall be effective to create in favor of the
Managing Agent a first priority legal, valid and enforceable security
interest in and lien upon the Collateral. All filings, recordings,
deliveries of instruments (including delivery of all stock pledged) and other
actions necessary or desirable in the opinion of the Managing Agent to
protect and preserve such security interests shall have been duly effected.
The Lenders shall have received evidence thereof in form and substance
satisfactory to the Lenders.
(S) Payment of Fees and Interest.
----------------------------
The Borrowers shall have paid (a) to the Original Lenders all
interest, fees and other amounts which are due pursuant to the Original
Credit Agreement, (b) all fees required to be paid to the Agents and the
Lenders on the Effective Date, and (c) all Indebtedness owing by any of the
entities to be acquired in connection with the Wheelabrator Acquisition which
is not permitted by (S)10.1 hereof.
(S) Financial Statements.
--------------------
The Borrowers shall have delivered to each of the Lenders audited
consolidated financial statements for the year ended the Balance Sheet Date
and unaudited consolidated financial statements for the period ended on
September 30, 1996 which shall fairly represent the business and financial
condition of the Parent and its Subsidiaries on a consolidated basis in
accordance with GAAP, together with a Compliance Certificate demonstrating
that the Borrowers are in compliance with the provisions of (S)11 hereof as
of the Effective Date.
(S) Opinions of Counsel.
-------------------
Each of the Lenders shall have received a favorable opinion from
General Counsel of the Parent regarding each of the U.S. Borrowers, and from
local counsel to Smogless and Societe des Ceramiques Techniques, S.A. (and to
any other Foreign Borrower which has in excess of $20,000,000, or the Dollar
Equivalent thereof, in annual gross revenues) dated the Effective Date in
form and substance satisfactory to the Lenders.
(S) Lien Searches.
-------------
The Managing Agent shall have received from the Borrowers the
results of lien searches demonstrating that there are no liens on the assets
of any U.S. Borrower which first became a U.S. Borrower after November 30,
1995 (including, without limitation, U.S. Borrowers being acquired pursuant
to the Wheelabrator Acquisition), other than Permitted Liens.
<PAGE>
-69-
(S) Environmental Reports.
---------------------
The Borrowers shall have delivered to the Managing Agent (a) the results of
the most recent groundwater analysis conducted as the U.S. Filter Recovery
Services, Inc. facility in Roseville, Minnesota, (b) an update report
concerning the remediation being conducted at the Illinois Water Treatment,
Inc. facility in Rockford, Illinois, (c) an update report concerning the
remediation being conducted in connection with the closure of the U.S.
Filter/Marlboro facility in Marlboro, New Jersey, (d) environmental
information concerning the Wheelabrator Acquisition, including, without
limitation, the Arthur D. Little audit report, and (e) information concerning
permit violations at the Polymetrics facility in Connecticut, all such
information to be in form and substance satisfactory to the Managing Agent.
(S) Wheelabrator Acquisition.
------------------------
The Wheelabrator Acquisition shall have been successfully completed
(with the exception of the payment of the purchase price therefor to be paid
with the proceeds of the Loans), on terms no less favorable to the Borrowers
than the terms set forth in the Wheelabrator Purchase and Sale Agreement,
without waiver by the Borrowers in any material respect of any conditions
contained in Article VII thereof, and evidence thereof satisfactory to the
Managing Agent, including, without limitation, an opinion of general counsel
to the Borrowers as to the completion of such acquisition, shall have been
furnished to the Managing Agent.
(S) CONDITIONS OF ALL LOANS.
-----------------------
The obligation of Lenders to make the first Loan and any Loan
subsequent to the first Loan and the obligation of Issuing Lenders to issue,
extend or renew any Letter of Credit are subject to the following conditions
precedent:
(S) Representations True.
--------------------
Each of the representations and warranties of the Borrowers
contained in this Agreement or in any document or instrument delivered
pursuant to or in connection with this Agreement shall be true as of the date
as of which they were made and shall also be true at and as of the time of
the making of the Loan or the issuance, extension or renewal of Letter of
Credit with the same effect as if made at and as of that time (except to the
extent of changes resulting from transactions contemplated or permitted by
this Agreement and changes occurring in the ordinary course of business or
disclosed in the financial statements and other information delivered to the
Lenders pursuant to (S)9.4 hereof which singly or in the aggregate are not
materially adverse, and to the extent that such representations and
warranties expressly relate solely to an earlier date).
(S) Performance; No Default or Event of Default.
--------------------------------------------
The Borrowers shall have performed and complied with all terms and
conditions herein required to be performed or complied with by them prior to
or at the time of the Loan or the issuance, extension or renewal of any
Letter of Credit, and at the time of the making of the Loan or the issuance,
extension or renewal of Letter of Credit, there shall exist no Default
<PAGE>
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or Event of Default or condition which would result in a Default or Event of
Default upon consummation of the Loan or the issuance, extension or renewal
of Letter of Credit.
(S) No Legal Impediment.
-------------------
No change shall have occurred in any law or regulations thereunder
or interpretations thereof which in the reasonable opinion of the Lenders
would make it illegal for the Lenders to make Loans hereunder or for the
Managing Agent to issue, extended or renew a Letter of Credit.
(S) Governmental Regulation.
-----------------------
The Lenders shall have received such statements in substance and
form reasonably satisfactory to the Lenders as they shall require for the
purpose of compliance with any applicable regulations of the Comptroller of
the Currency or the Board of Governors of the Federal Reserve System.
(S) Proceedings and Documents.
-------------------------
All proceedings in connection with the transactions contemplated by
this Agreement and all documents incident thereto shall be satisfactory in
form and substance to the Agents and the Lenders, and the Lenders and the
Agents shall have received all information and such counterpart originals or
certified or other copies of such documents as the Lenders and the Agents may
reasonably request.
(S) EVENTS OF DEFAULT; ACCELERATION; TERMINATION OF COMMITMENTS;
------------------------------------------------------------
REMEDIES.
--------
(S) Events of Default and Acceleration.
If any of the following events ("Events of Default" or, if the
giving of notice or the lapse of time or both is required, then, prior to
such notice and/or lapse of time, "Defaults") shall occur:
(a) if the Borrowers shall fail to pay any principal of the Loans
or any Reimbursement Obligation when the same shall become due and
payable, whether at the stated date of maturity or any accelerated date
of maturity or at any other date fixed for payment;
(b) if the Borrowers shall fail to pay any interest, Commitment
Fees, Letter of Credit Fees, or any other fees or other amounts owing
under any of the Loan Documents within five (5) Business Days after the
same shall become due and payable whether at the stated date of maturity
or any accelerated date of maturity or at any other date fixed for
payment;
(c) if the Parent or any of its Subsidiaries shall fail to comply
with the covenants contained in (S)(S)9.14, 9.15, 10, or 11 hereof;
<PAGE>
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(d) if the Parent or any of its Subsidiaries shall fail to comply
with the covenants contained in (S)(S)9.11 or 9.13 hereof, and such
failure shall be continuing for a period of ten (10) days;
(e) if the Borrowers shall fail to perform any term, covenant or
agreement herein contained or contained in any of the other Loan
Documents (other than those specified in subsections (a), (b), (c), and
(d) above) and such failure has not been remedied within thirty (30)
days after written notice of such failure has been given to the Parent
by the Managing Agent;
(f) if any representation or warranty contained in this Agreement
or in any document or instrument delivered pursuant to or in connection
with this Agreement shall prove to have been false in any material
respect upon the date when made (or deemed made) or repeated;
(g) if any Borrower shall (i) fail to pay at maturity, or within
any applicable period of grace, any obligation in respect of borrowed
money in the aggregate amount of $5,000,000 or (ii) fail to observe or
perform any material term, covenant or agreement contained in any
agreement by which it is bound evidencing or securing borrowed money in
an amount in excess of $15,000,000 in the aggregate for such period of
time as would, or would have permitted (assuming the giving of
appropriate notice if required) the holder or holders thereof or of any
obligations issued thereunder to accelerate the maturity thereof;
(h) if any Borrower makes an assignment for the benefit of
creditors, or admits in writing its inability to pay or generally fails
to pay its debts as they mature or become due or petitions or applies
for the appointment of a trustee or other custodian, liquidator or
receiver of such Borrower or of any substantial part of the assets of
such Borrower or commences any case or other proceeding relating to such
Borrower under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law of any
jurisdiction, now or hereafter in effect, or takes any action to
authorize or in furtherance of any of the foregoing, or if any such
petition or application is filed or any such case or other proceeding is
commenced against such Borrower and such Borrower indicates its approval
thereof, consent thereto or acquiescence therein;
(i) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating any Borrower bankrupt
or insolvent, or approving a petition in any such case or other
proceeding, or a decree or order for relief is entered in respect of
such Borrower in an involuntary case under Federal bankruptcy laws as
now or hereafter constituted, and such decree or order remains in effect
for more than thirty (30) days, whether or not consecutive;
(j) if there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty (30) days, whether or not consecutive,
any final non-appealable judgment against any
<PAGE>
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Borrower which, with other outstanding final judgments, undischarged
against the Borrowers exceeds in the aggregate $5,000,000 after taking
into account any insurance coverage;
(k) with respect to any Guaranteed Pension Plan, an ERISA
Reportable Event shall have occurred and the Majority Lenders shall have
determined in their reasonable discretion that such event reasonably
could be expected to result in liability of any Borrower or any
Subsidiary of any Borrower to the PBGC or the Plan in an aggregate
amount exceeding $500,000 and such event in the circumstances occurring
reasonably could constitute grounds for the termination of such Plan by
the PBGC or for the appointment by the appropriate United States
District Court of a trustee to administer such Plan; or a trustee shall
have been appointed by the United States District Court to administer
such Plan; or the PBGC shall have instituted proceedings to terminate
such Plan;
(l) if any of the Loan Documents shall be canceled, terminated,
revoked or rescinded otherwise than in accordance with the terms thereof
or with the express prior written agreement, consent or approval of the
Lenders, or any action at law, or suit in equity or other legal
proceeding to cancel, revoke or rescind any of the Loan Documents shall
be commenced by or on behalf of any Borrower, or any of its
stockholders, or any court or any other governmental or regulatory
authority or agency of competent jurisdiction shall make a determination
that, or issue a judgment, order, decree or ruling to the effect that,
any one or more of the Loan Documents is illegal, invalid or
unenforceable in accordance with the terms thereof, or any of the
Borrowers shall deny or contest its obligations pursuant to (S)7.14
hereof;
(m) if any event of default shall have occurred and is continuing
under the FNBB Obligations; or
(n) if a Change of Control shall have occurred;
then, the Managing Agent may, and upon the request of the Majority Lenders
shall, by notice in writing to the Borrowers, declare all amounts owing with
respect to this Agreement, the Notes, and the other Loan Documents, and all
Reimbursement Obligations to be, and they shall thereupon forthwith mature
and become, immediately due and payable without presentment, demand, protest
or other notice of any kind, all of which are hereby expressly waived by the
Borrowers; provided, that in the event of any Event of Default specified in
(S)(S)14.1(h) or 14.1(i) hereof, all such amounts shall become immediately
due and payable automatically and without any requirement of notice from the
Managing Agent.
(S) Termination of Commitments.
--------------------------
If any Event of Default pursuant to (S)(S)14.1(h) or 14.1(i) hereof
shall occur, any unused portion of the Total Commitment shall forthwith
terminate and the Lenders, the Managing Agent, and the Issuing Lenders shall
be relieved of all obligations to make Loans to or to issue, extend or renew
Letters of Credit for the account of the Borrowers; or if any other Event of
Default shall occur, the Majority Lenders may by notice to the Borrower
terminate the unused portion of the Total Commitment hereunder, and, upon
<PAGE>
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such notice being given, such unused portion of the Total Commitment
hereunder shall terminate immediately and the Lenders, the Managing Agent,
and the Issuing Lenders shall be relieved of all further obligations to make
Loans to or to issue, extend or renew Letters of Credit for the account of,
the Borrowers hereunder. No termination of any portion of the Total
Commitment hereunder shall relieve the Borrowers of any of their existing
Obligations to the Lenders, the Issuing Lenders, or the Agents hereunder or
elsewhere.
(S) Remedies.
--------
Upon demand by the Managing Agent after the occurrence of any Event of
Default, the Borrowers shall immediately provide to the Managing Agent cash
in an amount equal to the aggregate Maximum Drawing Amount of all Letters of
Credit outstanding to be held by the Managing Agent as collateral security
for the Obligations provided, that in the event of any Event of Default
specified in (S)(S)14.1(h) or 14.1(i) hereof, the Borrowers shall immediately
provide such collateral security without any requirement of notice from the
Managing Agent. In case any one or more of the Events of Default shall have
occurred and be continuing, and whether or not the maturity of the Loans
shall have been accelerated pursuant to the foregoing, each of the Lenders,
if owed any amount with respect to the Loans may, with the consent of the
Majority Lenders, (a) proceed to protect and enforce its rights by suit in
equity, action at law and/or other appropriate proceeding, whether for the
specific performance of any covenant or agreement contained in this Agreement
or any instrument pursuant to which the Obligations to the Lenders and the
Agents hereunder are evidenced, including as permitted by applicable law the
obtaining of the ex parte appointment of a receiver, and, (b) if such amount
shall have become due, by declaration or otherwise, proceed to enforce the
payment thereof or any other legal or equitable right of such Lender. No
remedy herein conferred upon the Agents, the Lenders or the holder of the
Notes is intended to be exclusive of any other remedy and each and every
remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by
statute or any other provision of law.
(S) COLLATERAL SECURITY.
-------------------
The Obligations shall be secured by a perfected security interest
(having, with respect to each category of Collateral, the respective rights
and priorities set forth herein and the Security Documents) in all of the
Collateral, whether now owned or hereafter acquired, pursuant to the terms of
the Security Documents.
(S) SETOFF.
------
Regardless of the adequacy of any collateral, during the continuance of
an Event of Default, any deposits or other sums credited by or due from the
Lenders to the Borrowers and any securities or other property of the
Borrowers in the possession of the Lenders may, with the prior written
consent of the Managing Agent, be applied to or set off against the payment
of the Obligations hereunder and under any Note and any and all other
liabilities, direct, or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising, of the Borrowers to the Lenders and
the Agents. Each of the Lenders agrees with each other Lender that (i) if an
amount to be set off is to be applied to Indebtedness of the Borrowers to
such Lender, other than Indebtedness evidenced by the Notes held by such
Lender or
<PAGE>
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constituting Reimbursement Obligations owed to such Lender, such amount shall
be applied ratably to such other Indebtedness and to the Indebtedness
evidenced by all such Notes held by such Lender or constituting Reimbursement
Obligations owed to such Lender, and (ii) if such Lender shall receive from
the Borrowers, whether by voluntary payment, exercise of the right of setoff,
counterclaim, cross action, enforcement of the claim evidenced by the Notes
held by, or constituting Reimbursement Obligations owed to, such Lender by
proceedings against the Borrowers at law or in equity or by proof thereof in
bankruptcy, reorganization, liquidation, receivership or similar proceedings,
or otherwise, and shall retain and apply to the payment of the Note or Notes
held by, or Reimbursement Obligations owed to, such Lender any amount in
excess of its ratable portion of the payments received by all of the Lenders
with respect to the Notes held by, and Reimbursement Obligations owed to, all
of the Lenders, such Lender will make such disposition and arrangements with
the other Lenders with respect to such excess, either by way of distribution,
pro tanto assignment of claims, subrogation or otherwise as shall result in
each Lender receiving in respect of the Notes held by it or Reimbursement
Obligations owed it, its proportionate payment as contemplated by this
Agreement; provided that if all or any part of such excess payment is
thereafter recovered from such Lender, such disposition and arrangements
shall be rescinded and the amount restored to the extent of such recovery,
but without interest.
(S) EXPENSES.
--------
Whether or not the transactions contemplated herein shall be
consummated, the Borrowers hereby promise to reimburse the Managing Agent for
all reasonable out-of-pocket fees and expenses, including, without
limitation, attorneys' fees and disbursements, incurred or expended in
connection with the preparation, syndication or interpretation of this
Agreement, the Notes, the Letters of Credit or any other Loan Document or any
amendment hereof or thereof, and to reimburse the Lenders for reasonable
legal fees and disbursements incurred in connection with the enforcement of
any Obligations or the satisfaction of any indebtedness of the Borrowers
hereunder or thereunder, or in connection with any litigation, proceeding or
dispute hereunder in any way related to the credit hereunder, including
without limitation the so-called "work-out" thereof whether before or after
the occurrence of a Default or Event of Default. The Borrowers will pay any
taxes (including any interest and penalties in respect thereof), other than
the federal and state income taxes of the Agents and the Lenders, payable on
or with respect to the transactions contemplated by this Agreement (the
Borrowers hereby agreeing to indemnify the Agents and the Lenders with
respect thereto). The Borrowers further promise to reimburse the Agents and
the Lenders for all such fees and disbursements incurred or expended in
connection with the enforcement of any Obligations or the satisfaction of any
indebtedness of the Borrowers hereunder or thereunder, or in connection with
any litigation, proceeding or dispute in any way related to the credit
hereunder. The covenants of this (S)17 shall survive payment or satisfaction
of amounts owing with respect to the Loan Documents.
(S) THE AGENTS.
----------
(S) Authorization.
-------------
Each Agent is authorized to take such action on behalf of each of the
Lenders and to exercise all such powers as are set forth hereunder and under
any of the other Loan Documents and any related
<PAGE>
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documents delegated to such Agent, together with such powers as are
reasonably incident thereto, provided that no duties or responsibilities not
expressly assumed herein or therein shall be implied to have been assumed by
such Agent. The relationship between each of the Agents and the Lenders is
and shall be that of agent and principal only, and nothing contained in this
Agreement or any of the other Loan Documents shall be construed to constitute
such Agent as a trustee for any Lenders.
(S) Employees and Agents.
--------------------
Each Agent may exercise its powers and execute its duties by or through
employees or agents and shall be entitled to take, and to rely on, advice of
counsel concerning all matters pertaining to its rights and duties under this
Agreement and the other Loan Documents. Each Agent may utilize the services
of such Persons as such Agent in its sole discretion may reasonably
determine, and all reasonable fees and expenses of any such Persons shall be
paid by the Borrower.
(S) No Liability.
------------
None of the Agents nor any of their shareholders, directors, officers or
employees nor any other Person assisting them in their duties nor any agent
or employee thereof, shall be liable for any waiver, consent or approval
given or any action taken, or omitted to be taken, in good faith by it or
them hereunder or under any of the other Loan Documents, or in connection
herewith or therewith, or be responsible for the consequences of any
oversight or error of judgment whatsoever, except that such Agent or such
other Person, as the case may be, may be liable for losses due to its willful
misconduct or gross negligence.
(S) No Representations.
------------------
None of the Agents shall be responsible for the execution or validity or
enforceability of this Agreement, the Notes, the Letters of Credit, any of
the other Loan Documents or any instrument at any time constituting, or
intended to constitute, collateral security for the Notes, or for the value
of any such collateral security or for the validity, enforceability or
collectability of any such amounts owing with respect to the Notes, or for
any recitals or statements, warranties or representations made herein or in
any of the other Loan Documents or in any certificate or instrument hereafter
furnished to it by or on behalf of the Borrowers, or be bound to ascertain or
inquire as to the performance or observance of any of the terms, conditions,
covenants or agreements herein or in any instrument at any time constituting,
or intended to constitute, collateral security for the Notes or to inspect
any of the properties, books or records of the Borrowers. None of the Agents
shall be bound to ascertain whether any notice, consent, waiver or request
delivered to it by the Borrowers or any holder of any of the Notes shall have
been duly authorized or is true, accurate and complete. None of the Agents
has made, nor does it now make, any representations or warranties, express or
implied, nor does it assume any liability to the Lenders, with respect to the
credit worthiness or financial conditions of the Borrowers. Each Lender
acknowledges that it has, independently and without reliance upon any Agent
or any other Lender, and based upon such information and documents as it has
deemed appropriate, made its own credit analysis and decision to enter into
this Agreement.
(S) Payments.
--------
<PAGE>
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(a) A payment by the Borrowers to the Managing Agent hereunder or
any of the other Loan Documents for the account of any Lender shall
constitute a payment to such Lender. The Managing Agent agrees promptly
to distribute to each Lender or Multicurrency Lender, as applicable,
such Lender's or Multicurrency Lender's pro rata share of payments
received by the Managing Agent for the account of the Lenders or
Multicurrency Lender, as applicable, except as otherwise expressly
provided herein or in any of the other Loan Documents.
(b) If in the opinion of the Managing Agent the distribution of
any amount received by it in such capacity hereunder, under the Notes or
under any of the other Loan Documents might involve it in liability, it
may refrain from making distribution until its right to make
distribution shall have been adjudicated by a court of competent
jurisdiction, provided that interest shall accrue on such amount at a
rate not less than the then effective Federal Funds Effective Rate until
such distribution has been made, and the recipients of such distribution
shall each be entitled to receive their ratable share of such interest
accrued to the time of such distribution. If a court of competent
jurisdiction shall adjudge that any amount received and distributed by
the Managing Agent is to be repaid, each Person to whom any such
distribution shall have been made shall either repay to the Managing
Agent its proportionate share of the amount so adjudged to be repaid or
shall pay over the same in such manner and to such Persons as shall be
determined by such court.
(c) Notwithstanding anything to the contrary contained in this
Agreement or any of the other Loan Documents, any Lender that fails (i)
to make available to the Managing Agent its pro rata share of any Loan
or to purchase any Letter of Credit Participation or (ii) to comply with
the provisions of (S)16 with respect to making dispositions and
arrangements with the other Lenders, where such Lender's share of any
payment received, whether by setoff or otherwise, is in excess of its
pro rata share of such payments due and payable to all of the Lenders,
in each case as, when and to the full extent required by the provisions
of this Agreement, shall be deemed delinquent (a "Delinquent Lender")
and shall be deemed a Delinquent Lender until such time as such
delinquency is satisfied. A Delinquent Lender shall be deemed to have
assigned any and all payments due to it from the Borrowers, whether on
account of outstanding Loans, unpaid Reimbursement Obligations,
interest, fees or otherwise, to the remaining nondelinquent Lenders for
application to, and reduction of, their respective pro rata shares of
all outstanding Loans and unpaid Reimbursement Obligations. The
Delinquent Lender hereby authorizes the Managing Agent to distribute
such payments to the nondelinquent Lenders in proportion to their
respective pro rata shares of all outstanding Loans and unpaid
Reimbursement Obligations. A Delinquent Lender shall be deemed to have
satisfied in full a delinquency when and if, as a result of application
of the assigned payments to all outstanding Loans and unpaid
Reimbursement Obligations of the nondelinquent Lenders, the Lenders'
respective pro rata shares of all outstanding Loans and unpaid
Reimbursement Obligations have returned to those in effect immediately
prior to such delinquency and without giving effect to the nonpayment
causing such delinquency.
<PAGE>
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(S) Holders of Notes.
----------------
The Managing Agent may deem and treat the payee of any Note or the
purchaser of any Letter of Credit Participation as the absolute owner or
purchaser thereof for all purposes hereof until it shall have been furnished
in writing with a different name by such payee or by a subsequent holder,
assignee or transferee.
(S) Indemnity.
---------
The Lenders ratably (in accordance with the relationship that each of
their respective Commitments bears to the Total Commitment) agree hereby to
indemnify and hold harmless each Agent from and against any and all claims,
actions and suits (whether groundless or otherwise), losses, damages, costs,
expenses (including any expenses for which such Agent has not been reimbursed
by the Borrowers as required by (S)17), and liabilities of every nature and
character arising out of or related to this Agreement, the Notes, or any of
the other Loan Documents or the transactions contemplated or evidenced hereby
or thereby, or such Agent's actions taken hereunder or thereunder, except to
the extent that any of the same shall be directly caused by such Agent's
willful misconduct or gross negligence. The covenants of this (S)18.7 shall
survive payment or satisfaction of amounts owing with respect to the Loan
Documents.
(S) Agents as Lenders.
-----------------
In its individual capacity, each Agent shall have the same obligations
and the same rights, powers and privileges in respect to its Commitment and
the Loans made by it, and as the holder of any of the Notes and as the
purchaser of any Letter of Credit Participations, as it would have were it
not also an Agent.
(S) Resignation.
-----------
Any Agent may resign at any time by giving sixty (60) days prior written
notice thereof to the Lenders and the Borrowers. Upon any such resignation,
the Majority Lenders shall have the right to appoint a successor Agent from
among the Lenders. Unless a Default or Event of Default shall have occurred
and be continuing, such successor Agent shall be reasonably acceptable to the
Borrowers. If no successor Agent shall have been so appointed by the
Majority Lenders and shall have accepted such appointment within thirty (30)
days after the retiring Agent's giving of notice of resignation, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent,
which shall be a financial institution having a rating of not less than A or
its equivalent by Standard & Poor's Corporation. Upon the acceptance of any
appointment as an Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any retiring
Agent's resignation, the provisions of this Agreement and the other Loan
Documents shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as Agent.
(S) Certain Intercreditor Provisions.
--------------------------------
<PAGE>
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(a) Notwithstanding anything contained herein or in any other Loan
Documents to the contrary, the Lenders agree with FNBB individually
that, so long as the FNBB Obligations are outstanding or FNBB or its
affiliates, successors or assigns have any obligation to extend credit
to the Borrowers thereunder (a) the FNBB Obligations shall be secured by
the Collateral, and such security interest shall be pari passu with the
security interest in the Collateral granted to the Managing Agent for
the benefit of the Lenders and the proceeds of any such Collateral shall
be applied ratably against the FNBB Obligations and the Obligations; and
(b) with respect to matters involving the Collateral which require
action on the part of the Majority Lenders, for purposes of (S)14 hereof
and for all purposes while an Event of Default is continuing the term
"Majority Lenders" shall mean the lending institutions holding at least
fifty-one percent (51%) of the sum of (i) the outstanding principal
amount of the Loans plus (ii) the Maximum Drawing Amount of the Letters
of Credit plus (iii) the outstanding amount of the FNBB Obligations
(calculating all amounts denominated in Optional Currencies at their
Dollar Equivalent), or, if no principal amounts and no Letters of Credit
are outstanding, the financial institutions whose aggregate commitment
to lend to the Borrowers constitutes fifty-one percent (51%) of the sum
of the Total Commitment plus the amount which FNBB and its affiliates
are committed to lend to the Borrowers under the FNBB Credit Agreement.
FNBB agrees that it will not increase the rate of interest or the fees
payable under the FNBB Credit Agreement, or amend any of the financial
covenants contained therein, without the prior written consent of the
Lenders, provided that FNBB may increase such interest rates or fees
and/or amend such covenants so as to be substantially similar to the
relevant rates, fees, and covenants contained herein.
(b) Notwithstanding anything to the contrary set forth herein, each
payment or prepayment of principal and interest received pursuant to
this Agreement after the occurrence of an Event of Default hereunder
shall be distributed pari passu among the Lenders, in accordance with
the aggregate outstanding principal amount of the Obligations owing to
each Lender divided by the aggregate outstanding principal amount of all
Obligations.
(c) Following the occurrence and during the continuance of any
Event of Default, each Lender agrees that if, through the exercise of a
right of banker's lien, setoff or counterclaim against any Borrower,
including a secured claim under Section 506 of the Bankruptcy Code or
other security or interest arising from or in lieu of, such secured
claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, such Lender shall obtain
payment (voluntary or involuntary) in respect of the Notes, the Loans,
Reimbursement Obligations and other Obligations held by it (other than
pursuant to (S)7.10, (S)7.11 or (S)7.12) and, as a result, the unpaid
principal portion of the Notes and the Obligations held by it shall be
proportionately less than the unpaid principal portion of the Notes and
Obligations held by any other Lender, it shall be deemed to have
simultaneously purchased from such other Lender a participation in the
Notes and Obligations held by such other Lender, so that the aggregate
unpaid principal amount of the Notes, Obligations and participations in
Notes and Obligations held by each Lender shall be in the same
proportion to the aggregate unpaid principal amount of the Notes and
Obligations then outstanding as the principal amount of the Notes and
other
<PAGE>
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Obligations held by it prior to such exercise of banker's lien, setoff
or counterclaim was to the principal amount of all Notes and other
Obligations 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 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 adjustments restored
without interest. Each Borrower expressly consents to the foregoing
arrangements and agrees that any Person holding such a participation in
the Notes and the Obligations 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 Person
as fully as if such Person had made a Loan directly to such Borrower in
the amount of such participation.
(S) INDEMNIFICATION.
---------------
The Borrowers agree to indemnify and hold harmless the Agents, the
Issuing Lenders, and the Lenders and their affiliates, as well as their
respective shareholders, directors, agents, officers, subsidiaries and
affiliates, from and against any and all damages, losses, settlement
payments, obligations, liabilities, claims, actions or causes of action,
whether statutorily created or under the common law, and reasonable costs and
expenses incurred, suffered, sustained or required to be paid by an
indemnified party by reason of or resulting from the transactions
contemplated hereby, or any claim, litigation, investigation, or other
proceeding relating to any of the foregoing, except, with respect to each
indemnified party, any of the foregoing which result from the gross
negligence or willful misconduct of such indemnified party. In any
investigation, proceeding or litigation, or the preparation therefor, the
Agents, the Issuing Lenders, and the Lenders shall be entitled to select
their own counsel and, in addition to the foregoing indemnity, the Borrowers
agree to pay promptly the reasonable fees and expenses of such counsel. In
the event of the commencement of any such proceeding or litigation, the
Borrowers shall be entitled to participate in such proceeding or litigation
with counsel of their choice at their expense, and, unless exigent
circumstances exist which would preclude such a meeting, the party claiming
indemnification and the Borrowers shall meet to discuss the anticipated fees
of legal counsel expected to arise in the course of such proceeding or
litigation. The covenants of this (S)19 shall survive payment or
satisfaction of payment of amounts owing with respect to any Note, any
Reimbursement Obligation, any Letter of Credit, or any other Loan Document.
(S) SURVIVAL OF COVENANTS, ETC.
---------------------------
All covenants, agreements, representations and warranties made herein,
in the other Loan Documents or in any documents or other papers delivered by
or on behalf of the Borrowers pursuant hereto shall be deemed to have been
relied upon by the Agents and the Lenders, notwithstanding any investigation
heretofore or hereafter made by any of them, and shall survive the making by
the Lenders of the Loans as herein contemplated, and shall continue in full
force and effect so long as any amount due under this Agreement, any Loan
Document, any Letter of Credit or any Note remains outstanding and unpaid or
the Lenders or the Multicurrency Lenders have any obligation to make any
Loans or any Issuing Lender has any obligation to issue, extend, or renew
Letters of Credit hereunder. All statements contained in any certificate or
other paper delivered to the Agents, the Issuing Lenders, or the Lenders
<PAGE>
-80-
at any time by or on behalf of the Borrowers pursuant hereto or in connection
with the transactions contemplated hereby shall constitute representations
and warranties by the Borrowers hereunder.
(S) ASSIGNMENT AND PARTICIPATION.
----------------------------
(S) Conditions to Assignment by Lenders.
-----------------------------------
Except as provided herein, each Lender may assign to one or more
Eligible Assignees 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, the Notes held by it and
its participating interest in the risk relating to any Letters of Credit);
provided that (i) except in the case of an assignment by a Lender to its
affiliate, the Managing Agent and, if no Event of Default is then continuing,
the Borrowers, shall have given prior written consent to such assignment,
such consent not to be unreasonably withheld, (ii) each such assignment shall
be of a constant, and not a varying, percentage of all the assigning Lender's
rights and obligations under this Agreement, (iii) each assignment shall be
in an amount that is a whole multiple of $10,000,000 (or an amount
constituting all of such Lender's Commitment), and (iv) the parties to such
assignment shall execute and deliver to the Managing Agent, for recording in
the Register (as hereinafter defined), an Assignment and Acceptance,
substantially in the form of Exhibit I hereto (an "Assignment and
Acceptance"), together with any Notes subject to such assignment and an
assignment fee in the amount of $3,000 payable by the assigning Lender to the
Managing Agent. 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 (5) Business Days
after the execution thereof, (i) the assignee thereunder shall be a party
hereto and, to the extent provided in such Assignment and Acceptance, have
the rights and obligations of a Lender hereunder, and (ii) the assigning
Lender shall, to the extent provided in such assignment and be released from
its obligations under this Agreement.
(S) Certain Representations and Warranties; Limitations; Covenants.
--------------------------------------------------------------
By executing and delivering an Assignment and Acceptance, the parties to
the assignment thereunder confirm to and agree with each other and the other
parties hereto as follows:
(a) 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, the assigning Lender makes no
representation or warranty, express or implied, 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, the other Loan Documents or any other
instrument or document furnished pursuant hereto or the attachment,
perfection or priority of any security interest or mortgage,
(b) the assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrowers or any other Person primarily or secondarily liable in respect
of any of the Obligations, or the performance or observance by the
Borrowers or any other Person primarily or secondarily liable in respect
of
<PAGE>
-81-
any of the Obligations or any of their obligations under this Agreement
or any of the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto;
(c) such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements
referred to in (S)9.4 hereof and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision
to enter into such Assignment and Acceptance;
(d) such assignee will, independently and without reliance upon
the assigning Lender, the Agents or any other Lender 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;
(e) such assignee represents and warrants that it is an Eligible
Assignee;
(f) such assignee appoints and authorizes each Agent to take such
action as agent on its behalf and to exercise such powers under this
Agreement and the other Loan Documents as are delegated to such Agent by
the terms hereof or thereof, together with such powers as are reasonably
incidental thereto;
(g) such assignee agrees that it will perform in accordance with
their terms all of the obligations that by the terms of this Agreement
are required to be performed by it as a Lender;
(h) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance; and
(i) such assignee acknowledges that it has made arrangements with
the assigning Lender satisfactory to such assignee with respect to its
pro rata share of Letter of Credit Fees in respect of outstanding
Letters of Credit, accrued interest, and Commitment Fees.
(S) Register.
--------
The Managing Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register or similar list (the "Register")
for the recordation of the names and addresses of the Lenders and the
Commitment Percentage of, and principal amount of the Loans owing to and
Letter of Credit Participations purchased by, the Lenders from time to time.
The entries in the Register shall be conclusive, in the absence of manifest
error, and the Borrowers, the Agents and the Lenders may treat each Person
whose name is recorded in the Register as a Lender hereunder for all purposes
of this Agreement. The Register shall be available for inspection by the
Borrowers and the Lenders at any reasonable time and from time to time upon
reasonable prior notice.
(S) New Notes.
---------
<PAGE>
-82-
Upon its receipt of an Assignment and Acceptance executed by the parties
to such assignment, together with each Note subject to such assignment, the
Managing Agent shall (i) record the information contained therein in the
Register, and (ii) give prompt notice thereof to the Borrowers and the
Lenders (other than the assigning Lenders). Within five (5) Business Days
after receipt of such notice, the Borrowers, at their own expense, shall
execute and deliver to the Managing Agent, in exchange for each surrendered
Note, a new Note to the order of such Eligible Assignee in an amount equal to
the amount assumed by such Eligible Assignee pursuant to such Assignment and
Acceptance and, if the assigning Lender has retained some portion of its
obligations hereunder, a new Note to the order of the assigning Lender in an
amount equal to the amount retained by it hereunder. Such new Notes shall
provide that they are replacements for the surrendered Notes, shall be in an
aggregate principal amount equal to the aggregate principal amount of the
surrendered Notes, shall be dated the effective date of such in Assignment
and Acceptance and shall otherwise be substantially the form of the assigned
Notes. Within five (5) days of issuance of any new Notes pursuant to this
(S)21.4, the Borrowers shall deliver an opinion of counsel, addressed to the
Lenders and the Agents, relating to the due authorization, execution and
delivery of such new Notes and the legality, validity and binding effect
thereof, in form and substance satisfactory to the Lenders. The surrendered
Notes shall be canceled and returned to the Borrowers.
(S) Participations.
--------------
Each Lender may sell participations to one or more banks or other
entities in all or a portion of such Lender's rights and obligations under
this Agreement and the other Loan Documents; provided that (i) each such
participation shall be in an amount of not less than $5,000,000, (ii) any
such sale or participation shall not affect the rights and duties of the
selling Lender hereunder to the Borrowers, and (iii) the only rights which
such Lender may grant to the participant pursuant to such participation
arrangements with respect to waivers, amendments or modifications of the Loan
Documents shall be the rights to approve such Lender's vote with respect to
waivers, amendments or modifications that would require the approval of all
of the Lenders pursuant to (S)29 hereof.
(S) Disclosure.
----------
The Borrowers agree that in addition to disclosures made in accordance
with standard and customary banking practices any Lender may disclose
information obtained by such Lender pursuant to this Agreement to assignees
or participants and potential assignees or participants hereunder; provided
that such assignees or participants or potential assignees or participants
shall agree (i) to treat in confidence such information unless such
information becomes public knowledge other than as a result of any Agent's,
any Lender's or any actual or potential assignee's or participant's breach of
its obligation of confidentiality set forth herein, (ii) not to disclose such
information to a third party, except as required by law or legal process or
by a regulatory authority and (iii) not to make use of such information for
purposes of transactions unrelated to such contemplated assignment or
participation.
(S) Assignee or Participant Affiliated with the Borrowers.
-----------------------------------------------------
If any assignee Lender is an Affiliate of the Borrowers, then any such
assignee Lender shall have no right to vote as a Lender hereunder or under
any of the other Loan Documents for purposes of granting consents or waivers
or for purposes of agreeing to amendments or other modifications to any
<PAGE>
-83-
of the Loan Documents or for purposes of making requests to the Managing
Agent pursuant to (S)18.1 or (S)18.2, and the determination of the Majority
Lenders shall for all purposes of this Agreement and the other Loan Documents
be made without regard to such assignee Lender's interest in any of the
Loans. If any Lender sells a participating interest in any of the Loans or
Reimbursement Obligations to a participant, and such participant is a
Borrower or an Affiliate of a Borrower, such transferor Lender shall promptly
notify the Managing Agent of the sale of such participation. A transferor
Lender shall have no right to vote as a Lender hereunder or under any of the
other Loan Documents for purposes of granting consents or waivers or for
purposes of agreeing to amendments or modifications to any of the Loan
Documents or for purposes of making requests to the Managing Agent pursuant
to (S)18.1 or (S)18.2 to the extent that such participation is beneficially
owned by a Borrower or any Affiliate of a Borrower, and the determination of
the Majority Lenders shall for all purposes of this Agreement and the other
Loan Documents be made without regard to the interest of such transferor
Lender in the Loans to the extent of such participation.
(S) Miscellaneous Assignment Provisions.
-----------------------------------
Any assigning Lender shall retain its rights to be indemnified pursuant
to (S)19 with respect to any claims or actions arising prior to the date of
such assignment. If any assignee Lender is not incorporated under the laws
of the United States of America or any state thereof, it shall, prior to the
date on which any interest or fees are payable hereunder or under any of the
other Loan Documents for its account, deliver to the Borrowers and the Agents
certification as to its exemption from deduction or withholding of any United
States federal income taxes. Anything contained in this (S)21 to the
contrary notwithstanding, any Lender may at any time pledge all or any
portion of its interest and rights under this Agreement (including all or any
portion of its Notes) to any of the twelve Federal Reserve Banks organized
under (S)4 of the Federal Reserve Act, 12 U.S.C. (S)341. No such pledge or
the enforcement thereof shall release the pledgor Lender from its obligations
hereunder or under any of the other Loan Documents or shall confer voting
rights thereunder to such Federal Reserve Bank.
(S) Assignment by Borrowers.
-----------------------
The Borrowers shall not assign or transfer any of their rights or
obligations under any of the Loan Documents without the prior written consent
of each of the Lenders.
(S) PARTIES IN INTEREST.
-------------------
All the terms of this Agreement and the other Loan Documents shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto and thereto; provided, that the
Borrowers shall not assign or transfer their rights hereunder without the
prior written consent of each of the Lenders.
(S) NOTICES, ETC.
------- ---
Except as otherwise expressly provided in this Agreement, all notices
and other communications made or required to be given pursuant to this
Agreement or the other Loan Documents shall be in writing and shall be
delivered in hand, mailed by first-class mail, postage prepaid, or sent by
telegraph, telex or telecopier and confirmed by letter, addressed as follows:
<PAGE>
-84-
(a) if to the Borrowers, at: 40-004 Cook Street, Palm Desert,
California 92211 (telephone: (619) 340-0098; telecopy (619) 341-9368)
Attention: President;
(b) if to the Managing Agent, at: 100 Federal Street, Boston,
Massachusetts 02110, Attention: J. Lee Harper, Jr., Vice President
(telephone: (617) 434-7570; telecopy: 617/434-2160);
(c) if to the Nassau Branch, at Bank of Boston, Nassau Operations,
MA DED 74-02-02D, 100 Rustcraft Road, Dedham, Massachusetts 02026,
Attention: John J. Kelley (telephone: (617) 467-2081; telecopy: (617)
467-2094);
(d) if to the Documentation Agent, the Co-Agent, or any Lender at
the appropriate address set forth in Schedule 2 hereto, or such other
address for notice as such Agent or Lender shall have last furnished in
writing to the Person giving the notice;
or at such other address for notice as shall last have been furnished in
writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or
made and to have become effective (a) if delivered by hand or via overnight
delivery service to a responsible officer of the party to which it is
directed, at the time of the receipt thereof by such officer, (b) if sent by
registered or certified first-class mail, postage prepaid, five (5) Business
Days after the posting thereof, and (c) if sent by telex, telecopy, or cable,
at the time of the dispatch thereof, if in normal business hours in the place
of receipt, or otherwise at the opening of business on the following Business
Day. Any such notice given by or to the Parent shall be deemed to be notice
given by or to the Borrowers, but notice to any Borrower other than the
Parent shall not be deemed to be notice to all Borrowers unless the Parent
shall also have received such notice.
(S) MISCELLANEOUS.
-------------
The rights and remedies herein expressed are cumulative and not
exclusive of any other rights which the Agents or the Lenders would otherwise
have. The captions in this Agreement are for convenience of reference only
and shall not define or limit the provisions hereof. This Agreement and any
amendment hereof may be executed in several counterparts and by each party on
a separate counterpart, each of which when so executed and delivered shall be
an original, but all of which together shall constitute one instrument. In
proving this Agreement it shall not be necessary to produce or account for
more than one such counterpart signed by the party against whom enforcement
is sought.
(S) ENTIRE AGREEMENT, ETC.
----------------------
This Agreement, together with the other Loan Documents and any other
documents executed in connection herewith or therewith, express the entire
understanding of the parties with respect to the transactions contemplated
hereby. On and after the Effective Date, this Agreement shall supersede the
<PAGE>
-85-
Original Credit Agreement. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated orally or in writing, except as
provided in (S)29.
(S) WAIVER OF JURY TRIAL.
--------------------
Each of the Borrowers hereby waives its right to a jury trial with
respect to any action or claim arising out of any dispute in connection with
this Agreement, the Notes or any of the other Loan Documents, any rights or
obligations hereunder or thereunder or the performance of such rights and
obligations. Except as prohibited by law, each of the Borrowers hereby
waives any right it may have to claim or recover in any litigation referred
to in the preceding sentence any special, exemplary, punitive or
consequential damages or any damages other than, or in addition to, actual
damages. Each of the Borrowers (a) certifies that no representative, agent
or attorney of the Agents or the Lenders has represented, expressly or
otherwise, that the Agents and the Lenders would not, in the event of
litigation, seek to enforce the foregoing waivers and (b) acknowledges that
the Agents and the Lenders have been induced to enter into this Agreement and
the other Loan Documents to which they are parties because of, among other
things, the Borrowers' waivers and certifications contained herein.
(S) SEVERABILITY.
------------
The provisions of this Agreement are severable and if any one clause or
provision hereof shall be held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof, in such jurisdiction, and
shall not in any manner affect such clause or provision in any other
jurisdiction, or any other clause or provision of this Agreement in any
jurisdiction.
(S) GOVERNING LAW.
-------------
THIS AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER
THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL BE DEEMED TO BE
DOCUMENTS UNDER SEAL AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH (EXCLUDING THE LAWS
APPLICABLE TO CONFLICTS OR CHOICE OF LAW). EACH OF THE BORROWERS CONSENTS TO
THE JURISDICTION OF ANY OF THE FEDERAL OR STATE COURTS LOCATED IN THE
COMMONWEALTH OF MASSACHUSETTS IN CONNECTION WITH ANY SUIT TO ENFORCE THE
RIGHTS OF THE AGENTS AND THE LENDERS UNDER THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS.
(S) CONSENTS, AMENDMENTS, WAIVERS, ETC.
-----------------------------------
Any consent or approval required or permitted by this Agreement to be
given by the Lenders may be given, and any term of this Agreement, the other
Loan Documents or any other instrument related hereto or mentioned herein may
be amended, and the performance or observance by the Borrowers of any terms
of this Agreement, the other Loan Documents or such other instrument or the
continuance of any Default or Event of Default may be waived (either
generally or in a particular instance and either
<PAGE>
-86-
retroactively or prospectively) with, but only with, the written consent of
the Borrowers and the written consent of the Majority Lenders.
Notwithstanding the foregoing, (a) the rate of interest on the Notes, the
term of the Notes, the amount of any Reimbursement Obligations, the amount of
the Commitments of the Lenders, the Revolving Credit Commitment, the
Multicurrency Commitment, the Total Commitment, the amount or date of any
scheduled payment or mandatory prepayment, and the amount of Commitment Fees
or Letter of Credit Fees hereunder may not be changed without the written
consent of the Borrowers and the written consent of all of the Lenders; (b)
the definition of Majority Lenders and the provisions of (S)21.9 and this
(S)29 may not be amended, and no collateral having a value in excess of
$10,000,000 in the aggregate may be released, without the written consent of
all of the Lenders (it being understood that the Managing Agent may release
collateral having an aggregate value of $10,000,000 or less with the consent
of the Majority Lenders); (c) the amount of any Letter of Credit Fees payable
for any Issuing Lender's account may not be amended without the written
consent of such Issuing Lender, and (d) (S)18 may not be amended without the
written consent of the Managing Agent. No waiver shall extend to or affect
any obligation not expressly waived or impair any right consequent thereon.
No course of dealing or delay or omission on the part of any Agent, any
Issuing Lender, or any Lender in exercising any right shall operate as a
waiver thereof or otherwise be prejudicial thereto. No notice to or demand
upon the Borrowers shall entitle the Borrowers to other or further notice or
demand in similar or other circumstances.
[remainder of this page left blank intentionally]
<PAGE>
-87-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed under seal by their duly authorized officers as of the day and year
first above written.
<TABLE>
<CAPTION>
[corporate seal]
<S> <C>
UNITED STATES FILTER IP HOLDING COMPANY
CORPORATION
By:____________________________
By:___________________________ Title:
Title:
- --------------------------------------------------------------------------------------------------------------------------------
ILLINOIS WATER TREATMENT, INC. U.S. FILTER/IONPURE, INC.
By:___________________________
Title: By:____________________________
Title:
- --------------------------------------------------------------------------------------------------------------------------------
U.S. FILTER RECOVERY SERVICES, U.S. FILTER/WHITTIER, INC.
INC.
By:___________________________ By:___________________________
Title: Title:
- --------------------------------------------------------------------------------------------------------------------------------
U.S. FILTER WASTEWATER GROUP, INC. U.S. FILTER DISTRIBUTION GROUP, INC.
By:____________________________ By:____________________________
Title: Title:
- --------------------------------------------------------------------------------------------------------------------------------
WHEELABRATOR CLEAN AIR SYSTEMS, INC. U.S. FILTER/ZIMPRO, INC.
By:____________________________ By:____________________________
Title: Title:
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
-88-
<TABLE>
<S> <C>
U.S. FILTER/LaGRANGE, INC. WATERPRO SUPPLIES CORPORATION
By:____________________________ By:____________________________
Title: Title:
- --------------------------------------------------------------------------------------------------------------------------------
DARCHET INDUSTRIAL WATER PTE. LTD. IONPURE TECHNOLOGIES
LIMITED
By:___________________________ By:____________________________
Title: Title:
- --------------------------------------------------------------------------------------------------------------------------------
SOCIETE DES CERAMIQUES TECHNIQUES USF FRANCE S.A.
By:____________________________ By:____________________________
Title: Title:
- --------------------------------------------------------------------------------------------------------------------------------
USF SMOGLESS S.p.A. IONPURE TECHNOLOGIES GmbH
WASSERAUFBEREITUNGSSYSTEME
By:____________________________
Title:
By:_____________________________
Title:
- --------------------------------------------------------------------------------------------------------------------------------
WHEELABRATOR-BERGER WHEELABRATOR TECHNOLOGIES (T)
(MASCHINENFABRIKEN) GmbH CO. LIMITED
By:___________________________ By:___________________________
Title: Title:
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
-89-
<TABLE>
<S> <C>
JOHNSON FILTRATION SYSTEMS (JAPAN) LTD. PROCESOS Y SISTEMAS de
SEPARACION, S.A.
By:___________________________ By:___________________________
Title: Title:
- --------------------------------------------------------------------------------------------------------------------------------
JOHNSON FILTRATION SYSTEMS (AUSTRALIA) RWB BEHEER B.V.
PTY. LTD.
By:___________________________ By:___________________________
Title: Title:
- --------------------------------------------------------------------------------------------------------------------------------
THE LENDERS:
THE FIRST NATIONAL BANK DLJ CAPITAL FUNDING, INC.,
OF BOSTON, individually and individually and as Documentation Agent
as Managing Agent
By:___________________________
By:___________________________ Title:
Title:
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
-90-
<TABLE>
<S> <C>
ABN AMRO BANK N.V., LOS ANGELES BANQUE PARIBAS
INTERNATIONAL BRANCH, individually and
as Co-Agent
By: ABN AMRO NORTH AMERICA, INC., as Agent By:___________________________
Title:
By:___________________________
Title:
By:___________________________
Title:
- --------------------------------------------------------------------------------------------------------------------------------
THE BANK OF NEW YORK BANK OF AMERICA ILLINOIS
By:___________________________ By:___________________________
Title: Title:
- --------------------------------------------------------------------------------------------------------------------------------
THE SUMITOMO BANK, LIMITED (LOS FLEET BANK, N.A.
ANGELES BRANCH)
By:___________________________ By:___________________________
Title: Title:
- --------------------------------------------------------------------------------------------------------------------------------
THE INDUSTRIAL BANK OF JAPAN, LIMITED BANQUE NATIONALE DE PARIS
(LOS ANGELES AGENCY)
By:___________________________ By:____________________________
Title: Title:
By:___________________________
Title:
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
-91-
<TABLE>
<S> <C>
DEUTSCHE BANK AG (NEW YORK AND/OR THE LONG-TERM CREDIT BANK OF
CAYMAN ISLAND BRANCH) JAPAN LTD. (LOS ANGELES AGENCY)
By:___________________________
Title: By:____________________________
Title:
By:___________________________
Title:
- --------------------------------------------------------------------------------------------------------------------------------
UNION BANK OF CALIFORNIA, N.A. SANWA BANK CALIFORNIA
By:___________________________
Title: By:___________________________
Title:
- --------------------------------------------------------------------------------------------------------------------------------
NATIONSBANK, N.A. BHF-BANK AKTIENGESELLSCHAFT
By:____________________________ By:____________________________
Title: Title:
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
To the Board of Directors and Shareholders
of United States Filter Corporation:
We consent to the incorporation by reference in the Registration Statements on
Form S-8 (No. 33-49382, No. 33-56744, No. 33-73542, No. 33-89662, No. 33-63285,
No. 33-82424, No. 33-63287) and the Prospectuses constituting part of the
Registration Statements on Form S-3 (No. 33-63281, No. 33-63325, No. 33-85026,
No. 333-07759, No. 333-14277, No. 333-14281) and the Registration Statement on
Form S-4 (No. 333-07763) of United States Filter Corporation of our report dated
October 15, 1996, relating to the combined balance sheets of the Systems and
Manufacturing Group of Wheelabrator Water Technologies Inc. as of December 31,
1994 and 1995 and the related combined statements of income and cash flows for
the years in the three-year period ended December 31, 1995, which report appears
in this Current Report on Form 8-K of United States Filter Corporation dated
December 2, 1996.
KPMG Peat Marwick LLP
Chicago, Illinois
December 5, 1996
