<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 24, 1998.
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
LAIDLAW ENVIRONMENTAL SERVICES, INC.
LES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 4953 51-0228924
DELAWARE 4953 75-2178928
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
SUITE 300, 1301 GERVAIS STREET
COLUMBIA, SOUTH CAROLINA 29201
(803) 933-4200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
HENRY H. TAYLOR, ESQ.
LAIDLAW ENVIRONMENTAL SERVICES, INC.
SUITE 300, 1301 GERVAIS STREET
COLUMBIA, SOUTH CAROLINA 29201
(803) 933-4200
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
LEONARD V. QUIGLEY, ESQ.
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
1285 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019-6064
(212) 373-3000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
------------------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for any offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
registration statement for the same offering. [ ]
- ---------------
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. [ ]
- ---------------
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==============================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER SECURITY OFFERING PRICE REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
9 1/4% Senior Subordinated
Notes due 2008.............. $325,000,000 100% $325,000,000(1) $95,875.00
Guarantees of Senior
Subordinated Notes.......... (2) (2) (2) None
==============================================================================================================================
</TABLE>
(1) Estimated pursuant to Rule 457 under the Securities Act of 1933, as amended,
solely for purposes of calculating the registration fee.
(2) No additional consideration will be paid for the guarantees of the 9 1/4%
Senior Subordinated Notes due 2008. Pursuant to Rule 457(n) under the
Securities Act of 1933, as amended, no separate registration fee is payable
for the guarantees of such notes.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE> 2
TABLE OF ADDITIONAL REGISTRANTS
<TABLE>
<CAPTION>
ADDRESS, INCLUDING
ZIP CODE, AND
STATE OR OTHER PRIMARY STANDARD IRS TELEPHONE NUMBER,
JURISDICTION OF INDUSTRIAL EMPLOYER INCLUDING AREA CODE,
INCORPORATION CLASSIFICATION IDENTIFICATION OF REGISTRANTS'
NAME OR ORGANIZATION CODE NUMBER NUMBER PRINCIPAL EXECUTIVE OFFICES
---- --------------- ---------------- -------------- ---------------------------
<S> <C> <C> <C> <C>
Laidlaw Environmental Services
(US), Inc. ..................... Delaware 4953 57-0811016 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services
(Lone and Grassy Mountain),
Inc. ........................... Oklahoma 4953 73-0774247 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services
(Tulsa), Inc. .................. Oklahoma 4953 73-1072214 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services
(San Antonio), Inc. ............ Texas 4953 74-1670248 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services
(Wichita), Inc. ................ Kansas 4953 48-1025760 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services of
Delaware, Inc. ................. Delaware 4953 57-1036619 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services
(Rosemount), Inc. .............. Minnesota 4953 36-3645772 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services
(Sawyer), Inc. ................. Oklahoma 4953 76-0306990 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services
(Tucker), Inc. ................. Georgia 4953 48-0926641 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Ninth Street Properties, Inc. .... Missouri 4953 48-1009630 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services
(San Jose), Inc. ............... California 4953 94-2685637 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C> <C> <C>
Chemclear, Inc. of Los Angeles.... California 4953 76-0292745 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
USPCI, Inc. of Georgia............ Georgia 4953 76-0299932 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
LES Holdings's, Inc. ............. Delaware 4953 76-0289923 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
East Carbon Development Financial
Partners, Inc. ................. Utah 4953 87-0527146 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services
(Imperial Valley), Inc. ........ California 4953 57-0891474 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services
(Lokern), Inc. ................. California 4953 57-0891472 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services
(North East), Inc. ............. New Hampshire 4953 02-0335983 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services
(Recovery), Inc. ............... Louisiana 4953 72-0989782 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services
(TES), Inc. .................... Texas 4953 76-0209879 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Corsan Trucking, Inc. ............ Louisiana 4953 75-2143830 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services
(TG), Inc. ..................... Delaware 4953 57-0600257 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services
(TOC), Inc. .................... South 4953 57-0811015 1301 Gervais Street
Carolina Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services
(TS), Inc. ..................... Delaware 4953 57-0784795 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C> <C> <C>
Laidlaw Environmental Services
(Thermal Treatment), Inc. ...... Delaware 4953 86-0713567 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
GSX Chemical Services of Ohio,
Inc. ........................... Ohio 4953 34-1210390 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
LEMC, Inc. ....................... Delaware 4953 57-0987727 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Chemical Services,
Inc. ........................... Massachusetts 4953 04-2308230 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services
(Altair), Inc. ................. Texas 4953 76-0187429 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services
(FS), Inc. ..................... Delaware 4953 51-0268319 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services
(BDT), Inc. .................... New York 4953 16-1153020 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services
(Clive), Inc. .................. Oklahoma 4953 73-1311262 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services
(WT), Inc. ..................... Ohio 4953 31-0747129 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw OSCO Holdings, Inc. ...... Delaware 4953 62-1478930 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services of
Nashville, Inc. ................ Tennessee 4953 62-1268344 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services of
Bartow, Inc. ................... Florida 4953 59-2692187 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services of
California, Inc. ............... California 4953 65-0121392 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
</TABLE>
<PAGE> 5
<TABLE>
<S> <C> <C> <C> <C>
Laidlaw Environmental Services of
Chattanooga, Inc. .............. Tennessee 4953 57-0853102 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services of
Illinois, Inc. ................. Illinois 4953 36-3337048 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services of
South Carolina, Inc. ........... South 4953 04-2639118 1301 Gervais Street
Carolina Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services of
White Castle, Inc. ............. Colorado 4953 84-0619137 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
LES Merger, Inc. ................. Delaware 4953 Applied 1301 Gervais Street
For Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services
(Puerto Rico), Inc. ............ Puerto Rico 4953 Not 1301 Gervais Street
applicable Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services
(Bridgeport), Inc. ............. Delaware 4953 23-1704900 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services
(Baton Rouge), Inc. ............ Delaware 4953 51-0228882 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services
(Plaquemine), Inc. ............. Delaware 4953 52-1126035 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services
(Custom Transport), Inc. ....... Delaware 4953 51-0277687 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services
(Los Angeles), Inc. ............ California 4953 95-3562319 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services
(Tipton), Inc. ................. Delaware 4953 43-1495372 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
</TABLE>
<PAGE> 6
<TABLE>
<S> <C> <C> <C> <C>
Laidlaw Environmental Services
(Gloucester), Inc. ............ Delaware 4953 51-0336950 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services
(Deer Trail), Inc. ............. Colorado 4953 76-0167186 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services
(Mt. Pleasant), Inc. ........... Tennessee 4953 58-1735252 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services
(Minneapolis), Inc. ............ Minnesota 4953 41-1392441 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services
(Aragonite), Inc. .............. Delaware 4953 25-1563807 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental Services
(Sussex), Inc. ................. Delaware 4953 51-0262487 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Laidlaw Environmental, Inc. ...... Delaware 4953 51-0290240 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Dirt Magnet, Inc. ................ Colorado 7389 84-0705639 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
The Midway Gas & Oil Co. ......... Colorado 7389 84-0266380 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Elgint Corp. ..................... Nevada 7389 88-0374364 Suite 850
101 Convention Center
Las Vegas, Nevada 89109
Safety-Kleen Envirosystems
Company......................... California 7389 94-2764195 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Safety-Kleen Envirosystems Company
of Puerto Rico, Inc. ........... Indiana 7389 35-1283524 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Petrocon, Inc. ................... Delaware 7389 36-3562993 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Phillips Acquisition Corp. ....... Delaware 7389 36-3515322 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
</TABLE>
<PAGE> 7
<TABLE>
<S> <C> <C> <C> <C>
Safety-Kleen Aviation, Inc. ...... Delaware 7389 36-3772680 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
SK Insurance Company.............. Vermont 7389 36-3933116 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
SK Real Estate, Inc. ............. Illinois 7389 36-3973105 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Safety-Kleen International,
Inc. ........................... Delaware 7389 36-3396234 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Safety-Kleen Oil Recovery Co. .... Delaware 7389 36-3546688 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
Safety-Kleen Oil Services,
Inc. ........................... Delaware 7389 98-0082130 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
The Solvents Recovery Service of
New Jersey, Inc. ............... New Jersey 7389 22-1292778 1301 Gervais Street
Columbia, South Carolina 29201
(803) 933-4200
</TABLE>
<PAGE> 8
PRELIMINARY PROSPECTUS
LES, INC.
(COMPANY LOGO)
OFFER TO EXCHANGE ITS 9 1/4% SENIOR SUBORDINATED NOTES DUE 2008
(GUARANTEED BY LAIDLAW ENVIRONMENTAL SERVICES, INC.) WHICH
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL OF ITS OUTSTANDING 9 1/4% SENIOR SUBORDINATED
NOTES DUE 2008 (GUARANTEED BY LAIDLAW ENVIRONMENTAL SERVICES, INC.)
THE EXCHANGE OFFER WILL EXPIRE AT P.M., NEW YORK CITY TIME ON
,
1998, UNLESS EXTENDED.
------------------------------------------
LES, Inc. (the "Company"), a wholly-owned subsidiary of Laidlaw
Environmental Services Inc. (the "Parent"), hereby offers to exchange up to
$325,000,000 aggregate principal amount of its 9 1/4% Senior Subordinated Notes
due 2008 (the "New Notes") which have been registered under the Securities Act
of 1933, as amended (the "Securities Act"), for any and all outstanding 9 1/4%
Senior Subordinated Notes due 2008 (the "Existing Notes," and, together with the
New Notes, the "Notes"), upon the terms and subject to the conditions set forth
in this Prospectus and the accompanying Letter of Transmittal (the "Letter of
Transmittal" and together with this Prospectus, the "Exchange Offer"). The
Exchange Offer is not conditioned upon any minimum aggregate principal amount of
Existing Notes being tendered for exchange pursuant to the Exchange Offer.
However, the Exchange Offer is subject to the absence of certain conditions
which may be waived by the Company. See "The Exchange Offer -- Conditions to the
Exchange Offer." Subject to the absence or waiver of such conditions, the
Company will accept for exchange any and all Existing Notes validly tendered on
or prior to p.m., New York City time, on , 1998, unless the
Exchange Offer is extended (the "Expiration Date"). Existing Notes may be
tendered only in integral multiples of $1,000. The date of acceptance and
exchange of the Existing Notes (the "Exchange Date") will be the third business
day following the Expiration Date, unless an earlier date is selected by the
Company. Existing Notes tendered pursuant to the Exchange Offer may be withdrawn
at any time prior to p.m., New York City time, on the Expiration Date;
otherwise such tenders are irrevocable. The New Notes will be issued and
delivered promptly after the Exchange Date.
The terms of the New Notes are identical in all material respects to the
terms of the Existing Notes, except that the New Notes have been registered
under the Securities Act and are generally freely transferable by holders
thereof and are issued without any covenant upon the Company regarding
registration under the Securities Act. See "The Exchange Offer -- Consequences
of Failure to Exchange; Resales of New Notes." The New Notes will evidence the
same debt as the Existing Notes and will be issued under, and entitled to the
benefits of, the indenture, dated May 29, 1998 (the "Indenture"), among the
Company, the Parent, as a Guarantor, the Subsidiary Guarantors (as defined
herein) and The Bank of Nova Scotia Trust Company of New York, as trustee (the
"Trustee"), governing the Existing Notes. For a complete description of the
terms of the New Notes, see "Description of the Notes."
Interest on the New Notes will be payable semiannually in arrears on June 1
and December 1 of each year, commencing December 1, 1998. For each Existing Note
accepted for exchange, the holder of such Existing Note will receive a New Note
having a principal amount equal to that of the surrendered Existing Note. The
New Notes will bear interest from the most recent date to which interest has
been paid on the Existing Notes or, if no interest has been paid on the Existing
Notes, from May 29, 1998. Accordingly, if the relevant record date for interest
payment occurs after the consummation of the Exchange Offer registered holders
of New Notes on such record date will receive interest accruing from the most
recent date to which interest has been paid or, if no interest has been paid,
from May 29, 1998. If, however, the relevant record date for interest payment
occurs prior to the consummation of the Exchange Offer registered holders of the
Existing Notes on such record date will receive interest accruing from the most
recent date to which interest has been paid or, if no interest has been paid,
from May 29, 1998. Existing Notes accepted for exchange will cease to accrue
interest from and after the date of consummation of the Exchange Offer, except
as set forth in the immediately preceding sentence. Holders of Existing Notes
whose Existing Notes are accepted for exchange will not receive any payment in
respect of interest on such Existing Notes otherwise payable on any interest
payment date the record date for which occurs on or after the consummation of
the Exchange Offer.
The Notes mature on June 1, 2008. The Notes will be redeemable, in whole or
in part, at the option of the Company, at any time prior to June 1, 2003 at a
redemption price equal to the greater of (i) 100% of the principal amount of
such Notes or (ii) the sum of the present values of 104.625% of the principal
amount of such New Notes and the scheduled payments of interest thereon through
and including June 1, 2003 discounted to such redemption date on a semi-annual
basis (assuming a 360-day year consisting of twelve 30-day months) at the
Adjusted Treasury Rate (as defined herein) plus 50 basis points, together with
accrued and unpaid interest, if any to the redemption date. The Notes will be
redeemable, in whole or in part, at the option of the Company at any time on or
after June 1, 2003 at the redemption prices set forth herein, plus accrued and
unpaid interest to the date of redemption. In addition, prior to June 1, 2001,
the
(Continued on next page)
SEE "RISK FACTORS" BEGINNING ON PAGE 12 FOR A DISCUSSION OF CERTAIN RISKS
THAT SHOULD BE CONSIDERED BY HOLDERS OF EXISTING NOTES AND PROSPECTIVE
PURCHASERS OF NEW NOTES.
------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 1998
<PAGE> 9
(Continued from previous page)
Company may redeem up to 35% of the original aggregate principal amount of the
Notes with the net proceeds of one or more Public Equity Offerings (as defined
herein) at a redemption price equal to 109.25% of the principal amount thereof,
plus accrued and unpaid interest to the date of redemption; provided that
immediately after giving effect to any such redemption at least $211.3 million
aggregate principal amount of the Notes remains outstanding. Upon a Change of
Control (as defined herein), each holder of Notes may require the Company to
repurchase all or a portion of such holder's Notes at 101% of the principal
amount thereof, plus accrued and unpaid interest to the date or repurchase. See
"Description of the Notes."
The Notes will be general unsecured obligations of the Company, subordinated
in right of payment to all existing and future senior indebtedness of the
Company. The Notes will rank senior in right of payment to all existing and
future subordinated indebtedness of the Company, if any. The New Notes will be
guaranteed, on a senior subordinated basis, by the Parent and the wholly-owned
domestic subsidiaries of the Company (the "Subsidiary Guarantors"). The New
Notes will be effectively subordinated in rights of payment to all indebtedness
and other liabilities (including trade payables) of the Company's subsidiaries
that are not Subsidiary Guarantors. As of February 28, 1998, after giving effect
to the Safety-Kleen Transactions (as defined herein) and the issuance of the
Existing Notes and the application of the net proceeds therefrom, the Company,
the Parent and the Subsidiary Guarantors would have had approximately $1.4
billion of indebtedness outstanding ranking senior to the New Notes, and the
subsidiaries of the Company that are not Subsidiary Guarantors would have had an
aggregate of approximately $100.5 million of third-party indebtedness and
accounts payable outstanding. See "Description of the Notes -- Subordination."
The New Notes are being offered hereunder in order to satisfy certain
obligations of the Company contained in the Registration Rights Agreement, dated
as of May 29, 1998 (the "Registration Rights Agreement"), among the Company, the
Parent, the Subsidiary Guarantors and TD Securities (USA) Inc. and NationsBanc
Montgomery Securities LLC, as the initial purchasers (collectively, the "Initial
Purchasers") of the Existing Notes, with respect to the initial sale of the
Existing Notes.
The Company will not receive any proceeds from the Exchange Offer. The
Company will pay all the expenses incident to the Exchange Offer. The Company
expressly reserves the right to terminate or amend the Exchange Offer and not to
accept for exchange any Existing Notes not theretofore accepted for exchange
upon the occurrence of any of the events specified under "The Exchange Offer --
Conditions to the Exchange Offer." If any such termination or amendment occurs,
the Company will notify the Exchange Agent (as defined herein) and will either
issue a press release or give oral or written notice to the holders of the
Existing Notes as promptly as practicable. In the event the Company terminates
the Exchange Offer and does not accept for exchange any Existing Notes with
respect to the Exchange Offer, the Company will promptly return such Existing
Notes to the holders thereof. See "The Exchange Offer."
The Existing Notes were originally issued and sold on May 29, 1998 in a
transaction not registered under the Securities Act, in reliance upon the
exemption provided in Section 4(2) of the Securities Act. Accordingly, the
Existing Notes may not be reoffered, resold, or otherwise pledged, hypothecated
or transferred in the United States unless so registered or unless an applicable
exemption from the registration requirements of the Securities Act is available.
Based upon interpretations by the staff of the Securities and Exchange
Commission (the "Commission") issued to third parties, the Company believes that
New Notes issued pursuant to the Exchange Offer in exchange for Existing Notes
may be offered for resale, resold and otherwise transferred by holders thereof
(other than any holder which is a broker-dealer or an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act) without compliance with
the registration and prospectus delivery provisions of the Securities Act
provided that such New Notes are acquired in the ordinary course of business and
such holders have no arrangement with any person to participate in the
distribution of such New Notes. Each broker-dealer that receives New Notes for
its own account pursuant to the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such New Notes. The Letter
of Transmittal states that by so acknowledging and by delivery of a prospectus,
a broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Notes received in exchange for Existing Notes where such
Existing Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities. The Company has agreed that, for a
period of 90 days after the Expiration Date, it will make this Prospectus
available to any broker-dealer for use in connection with any such resale. See
"Plan of Distribution."
The New Notes will constitute a new issue of securities with no established
trading market. The Company does not intend to list any Notes on a national
securities exchange or to apply for quotation of any Notes through the National
Association of Securities Dealers Automated Quotation System. Any Existing Notes
not tendered and accepted in the Exchange Offer will remain outstanding. To the
extent that Existing Notes are tendered and accepted in the Exchange Offer, a
holder's ability to sell untendered and tendered but unaccepted Existing Notes
could be adversely affected. Following consummation of the Exchange Offer, the
holders of Existing Notes will continue to be subject to the existing
restrictions on transfers thereof, and the Company will have no further
obligation to such holders to provide for the registration under the Securities
Act of the Existing Notes held by them. No assurance can be given as to the
liquidity of the trading market for either the Existing Notes or the New Notes.
<PAGE> 10
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements
(including the notes thereto) appearing elsewhere in this Prospectus. Unless the
context otherwise requires, all references to (i) the "Company" or "Laidlaw
Environmental" are to LES, Inc. (the issuer of the Notes) and its direct and
indirect subsidiaries (including Safety-Kleen), (ii) the "Parent" are to Laidlaw
Environmental Services, Inc., the sole shareholder of the Company, on a
stand-alone basis, (iii) "Safety-Kleen" are to Safety-Kleen Corp., and its
direct and indirect subsidiaries, (iv) the "Safety-Kleen Acquisition" are to
both the acquisition by the Company of approximately 94% of the outstanding
capital stock of Safety-Kleen in April 1998 and the acquisition of the remaining
capital stock of Safety-Kleen through a merger in May 1998 (the "Safety-Kleen
Merger") and (v) the "Safety-Kleen Transactions" are to the Safety-Kleen
Acquisition, the Debt Tender Offer (as defined herein) and borrowings under the
Senior Credit Facility (as defined herein) to finance such transactions. Unless
the context otherwise requires, any reference to a "fiscal" year of the Company,
Parent or Safety-Kleen, as the case may be, refers to (i) the Company's or
Parent's fiscal year ended or ending on August 31 in such year and (ii)
Safety-Kleen's fiscal year ended or ending on the Saturday closest to December
31 in such year. Unless the context otherwise requires, any reference to
financial data or information in this Prospectus refers to financial data or
information of the Parent and its consolidated subsidiaries (including the
Company). Certain statements in the Prospectus Summary are "forward-looking
statements." See "Disclosure Regarding Forward-Looking Statements."
THE COMPANY
Laidlaw Environmental is a vertically integrated hazardous and industrial
waste management company that collects, transports, treats, recycles and
disposes of waste by distillation, incineration, landfilling and other methods.
Laidlaw Environmental is the leading hazardous and industrial waste management
company in North America (based on fiscal 1997 revenues and facilities) with
operations in the United States, Canada and Europe. The Company categorizes its
hazardous and industrial waste activities into five components: (i) collection
network services, (ii) treatment, disposal and transportation services, (iii)
used oil collection and recovery services, (iv) other specialty services and (v)
European operations. Laidlaw Environmental's strategy is to continue to develop
vertically integrated operations and to enhance the Company's profitability by
taking advantage of opportunities to rationalize operations, internalize waste
streams and expand the services provided to its existing customer base. The
Company serves over 400,000 customers with operations across North America and
Europe through an extensive network of 284 collection facilities, 11 landfills,
eight incinerators and 13 recycling facilities.
In May 1998, the Company consummated the Safety-Kleen Acquisition for
aggregate consideration of approximately $1.1 billion in cash and the issuance
of approximately 166 million shares of Common Stock of the Parent (the "Parent
Common Stock"). Safety-Kleen is a leader in servicing the recycling and waste
needs of companies in the automotive/retail repair, industrial and other
business sectors. Laidlaw Environmental also repurchased substantially all of
the outstanding $100.0 million 9 1/4% Notes due September 15, 1999 of Safety-
Kleen (the "Safety-Kleen Notes") which were tendered to Laidlaw Environmental
pursuant to its offer to purchase and consent solicitation (the "Debt Tender
Offer"). The remainder of the Safety-Kleen Notes were defeased on May 29, 1998.
Laidlaw Environmental financed the cash portion of the Safety-Kleen Acquisition
and the Debt Tender Offer and refinanced certain indebtedness with total
borrowings of approximately $1.8 billion under its senior secured bank facility
(the "Senior Credit Facility"). Pro forma for the Safety-Kleen Transactions, the
Rollins Acquisition (as defined herein) and certain related transactions, the
Parent's revenues and Adjusted EBITDA (as defined herein) would have been $1.8
billion and $497.5 million, respectively, for the twelve months ended February
28, 1998.
In May 1997, Rollins Environmental Services, Inc. ("Rollins"), the largest
commercial hazardous waste incineration company in North America, acquired
Laidlaw Inc.'s hazardous and industrial waste operations (the "Rollins
Acquisition"). Upon consummation of the Rollins Acquisition, which was accounted
for as a reverse acquisition, Rollins changed its name to Laidlaw Environmental
Services, Inc. To finance the Rollins Acquisition, the Parent (i) issued 120
million shares of Parent Common Stock, (ii) issued a $350.0 million 5%
subordinated
1
<PAGE> 11
convertible pay-in-kind debenture (the "PIK Subordinated Debenture") and (iii)
paid $349.1 million in cash to Laidlaw Inc. ("Laidlaw"). Laidlaw currently
beneficially owns 35% of the outstanding Parent Common Stock (49% assuming the
conversion of the PIK Subordinated Debenture). Laidlaw provides (i) passenger
services, including school bus transportation and public transit services, in
the United States and Canada and (ii) emergency healthcare services, including
healthcare transportation and physician practice management services, in the
United States.
BUSINESS STRATEGY AND ACQUISITION RATIONALE
Laidlaw Environmental's strategy is to continue to vertically integrate its
operations and to enhance the Company's profitability by taking advantage of
opportunities to rationalize operations, internalize waste streams and expand
the services provided to its existing customer base. The Company achieves
vertical integration through the combination of its full-service collection and
transportation network with its treatment and disposal services. To implement
its strategy, the Company examines strategic acquisitions on an opportunistic
basis. The Rollins Acquisition combined the Company's full-service collection
and treatment network with Rollins' expertise in solids incineration technology
and provided significant savings from facility and administrative
rationalizations. Laidlaw Environmental believes the Safety-Kleen Acquisition
combines complementary assets that enhance the Company's competitive position
and provide opportunities for significant cost savings from synergies related to
facility consolidation, waste internalization and selling, general and
administrative cost savings.
Strategic Fit. Laidlaw Environmental's collection network, which links
customers to treatment and disposal facilities such as landfills and
incinerators, is one of Laidlaw Environmental's primary operational strengths.
This network differentiates Laidlaw Environmental from its competitors and
allows for both responsiveness and accountability in managing a customer's
hazardous or industrial waste stream. Laidlaw Environmental believes the
Safety-Kleen Acquisition increases vertical integration of its business by
processing waste streams collected by Safety-Kleen. In addition, Laidlaw
Environmental believes that the Safety-Kleen Acquisition strengthens its market
position by: (i) providing additional market coverage in key geographic regions;
(ii) introducing a base of smaller-sized customers to complement Laidlaw
Environmental's existing base of medium and larger-sized customers; (iii)
providing significant expansion into the solvent recycling market; and (iv)
increasing profitability by capitalizing on cost saving opportunities.
Synergies. Laidlaw Environmental intends to build upon Safety-Kleen's
leading market presence and quality brand name recognition. The Company believes
that the Safety-Kleen Acquisition provides an opportunity to achieve significant
cost savings through the elimination of existing redundancies between Laidlaw
Environmental's and Safety-Kleen's operations. The Company expects that the
planned selling, general and administrative cost savings, the closure of
duplicative collection and processing facilities, the increased utilization of
the remaining facilities and the internalization of various waste streams will
generate annual cost savings of approximately $103.5 million to $165.0 million.
Laidlaw Environmental expects to begin achieving cost savings within three
months of the Safety-Kleen Acquisition and to fully realize these annualized
cost savings within twelve months after consummation of the Safety-Kleen
Acquisition. Through the Rollins Acquisition, Laidlaw Environmental has
demonstrated its ability to manage the integration of a large acquisition and to
realize substantial cost savings. To date, the Company believes that it has
generated approximately $75.0 million of annualized cost savings in connection
with the Rollins Acquisition. There can be no assurance, however, that the
projected cost savings from the Safety-Kleen Acquisition will be achieved.
The Company expects to achieve cost savings in the following areas:
- Facility Consolidation. Based on a review of Laidlaw
Environmental's and Safety-Kleen's facilities, the Company estimates
that it can close 35 to 45 collection facilities and five processing
facilities due to geographic overlap among facilities. The Company
estimates that the cost savings resulting from its planned facility
consolidation will be approximately $2.0 to $2.5 million per
processing facility and $1.0 to $1.5 million per collection facility.
The cost savings per location assume that waste collection and
routing efficiencies can be achieved by combining the transportation
resources of the overlapping locations and reducing the total number
of vehicles and drivers
2
<PAGE> 12
required to service the existing combined customer base. The closure of
redundant facilities will also result in cost savings related to the
personnel and property costs associated with such facilities. The
Company estimates that this facility consolidation will generate
approximately $45.0 million to $80.0 million of annual cost savings.
- Waste Internalization. During fiscal 1997, Safety-Kleen spent over
$50.0 million for outside disposal of waste it collected, consisting
of fuel blend material, as well as waste disposed at hazardous waste
incinerators, landfills and wastewater treatment facilities. Prior to
the Safety-Kleen Acquisition, Laidlaw Environmental received an
insignificant amount of Safety-Kleen's waste material for disposal.
The Company has already begun to internalize Safety-Kleen's
incinerable and wastewater materials for disposal at its facilities.
The fuel blend material may either be used as a fuel source or
blended with solid waste material for burning at Laidlaw
Environmental's incinerator facilities. When used as a fuel source,
Laidlaw Environmental will avoid the cost of purchasing conventional
fuel from third parties. The Company estimates that the
internalization of these waste streams, after taking into account
incremental costs, will generate approximately $13.5 million to $25.0
million of annual cost savings.
- Selling, General and Administrative Cost Savings. Laidlaw
Environmental intends to incorporate the Safety-Kleen operations into
Laidlaw Environmental's existing operational organization, which will
result in the elimination of all duplicative administrative support
functions. In connection with the elimination of duplicative support
functions, the Company expects that it will eliminate 600 to 800
personnel and their associated costs. The Company estimates that the
planned selling, general and administrative cost consolidation will
generate approximately $45.0 million to $60.0 million of annual cost
savings.
Potential Divestiture Opportunities. The Company is in the process of
analyzing whether, following consummation of the Safety-Kleen Acquisition, all
of its assets will be consistent with its strategies. To the extent certain
assets do not fit its strategies, the Company may elect to sell those assets and
use the proceeds from such sale to reduce outstanding indebtedness. For example,
the Company is currently considering the desirability of disposing of certain of
the assets utilized within Safety-Kleen's used oil collection and recovery
services business and its European operations. In fiscal 1997, revenue
attributable to Safety-Kleen's used oil collection and recovery services
business and European operations was $156.3 million and $109.9 million,
respectively.
COMPETITIVE STRENGTHS
Low-cost service provider. With over-expansion in the hazardous and
industrial waste management industry during the 1980s and the early 1990s, it
has become critical for successful waste management companies to maintain high
utilization of a well-managed fixed asset base. Laidlaw Environmental has
created a cost structure which it believes is the lowest in the industry. The
Company believes this cost structure can be further reduced as a result of the
Safety-Kleen Acquisition.
Integrated customer service. Waste generators are demanding high quality
service and waste management expertise while reducing the number of vendors they
use for these services. As a result of its integrated, full-service approach to
managing its customers' needs, Laidlaw Environmental believes that it is well
positioned to capture incremental business from existing customers.
Geographic footprint. It is critical for waste management providers to
have a broad geographic reach for two reasons. First, it is necessary to provide
full service capabilities to a marketplace that increasingly seeks a single
service provider. Additionally, with fixed cost disposal assets, it is necessary
to collect and feed high volumes of waste to those assets in the most efficient
manner possible. As a result of the Safety-Kleen Acquisition, the Company
believes that it provides the broadest geographic coverage of any hazardous and
industrial waste management company.
Diverse Customer Base. The Company has over 400,000 customers representing
diverse industries. Pro forma for the Safety-Kleen Acquisition, no one customer
represented greater than 5% of the Company's fiscal
3
<PAGE> 13
1997 revenues. In addition, a significant amount of the Company's revenue is
derived from the collection, treatment and disposal of industrial waste which is
classified as non-hazardous.
Internalization of waste streams. Hazardous and industrial waste
management services companies that are able to internalize or feed waste streams
to their own treatment and disposal facilities are able to boost profitability
significantly. As a result of the Safety-Kleen Acquisition, the Company expects
its internalization of collected waste streams to exceed 80%, which the Company
believes is without parallel in the industry.
------------------------
The principal executive offices of the Company are located at 1301 Gervais
Street, Suite 300, Columbia, South Carolina 29201.
PRO FORMA CORPORATE STRUCTURE
[FLOW CHART]
- ---------------
(1) Except for its ownership of the capital stock of the Company, the Parent has
no independent business operations.
(2) Excludes three non-wholly-owned domestic subsidiaries of the Company.
(3) The direct and indirect foreign subsidiaries and non-wholly-owned domestic
subsidiaries of the Company are not guarantors of the Senior Credit Facility
or the Notes. However, the Company has pledged 65% of the capital stock of
such foreign subsidiaries to the lenders under the Senior Credit Facility.
4
<PAGE> 14
THE EXCHANGE OFFER
For definitions of certain capitalized terms used herein, see "Description
of the Notes."
Securities Offered......... Up to $325,000,000 aggregate principal amount of
9 1/4% Senior Subordinated Notes due 2008 which
have been registered under the Securities Act. The
terms of the New Notes and those of the Existing
Notes are identical in all material respects,
except that the New Notes have been registered
under the Securities Act and are freely
transferable by holders thereof (other than as
provided herein) and are not subject to any
registration rights under the Securities Act.
The Exchange Offer......... The New Notes are being offered in exchange for a
like principal amount of Existing Notes. Existing
Notes may be exchanged only in integral multiples
of $1,000. The issuance of the New Notes is
intended to satisfy obligations of the Company
under the Registration Rights Agreement.
Expiration Date; Withdrawal
of Tender.................. The Exchange Offer will expire at p.m,
New York City time, on , 1998, or such
later date and time to which it is extended by the
Company. The tender of Existing Notes pursuant to
the Exchange Offer may be withdrawn at any time
prior to the Expiration Date. Any Existing Notes
not accepted for exchange for any reason will be
returned without expense to the tendering holder
thereof as promptly as practicable after the
expiration or termination of the Exchange Offer.
Conditions to the Exchange
Offer...................... The Exchange Offer is subject to certain customary
conditions, which may be waived by the Company. The
Company currently expects that each of the
conditions will be satisfied and that no waivers
will be necessary. See "The Exchange Offer --
Conditions to the Exchange Offer."
Procedures for Tendering
Existing Notes............. Each holder of Existing Notes wishing to accept the
Exchange Offer must complete, sign and date a
Letter of Transmittal, or a facsimile thereof, in
accordance with the instructions contained herein
and therein, and mail or otherwise deliver such
Letter of Transmittal, or such facsimile, together
with such Existing Notes and any other required
documentation, to the Exchange Agent at the address
set forth herein. See "The Exchange Offer --
Procedures for Tendering Existing Notes."
Letters of Transmittal and certificates
representing Existing Notes should not be sent to
the Company. Such documents should only be sent to
the Exchange Agent. Questions regarding how to
tender and requests for information should be
directed to the Exchange Agent. See "The Exchange
Offer -- Exchange Agent."
Use of Proceeds............ There will be no proceeds to the Company from the
exchange of the Existing Notes pursuant to the
Exchange Offer.
Certain Federal Income Tax
Considerations........... The exchange pursuant to the Exchange Offer will
not be a taxable event for U.S. federal income tax
purposes. See "Certain U.S. Federal Income Tax
Considerations."
Exchange Agent............. The Bank of Nova Scotia Trust Company of New York
is serving as the Exchange Agent in connection with
the Exchange Offer.
5
<PAGE> 15
CONSEQUENCE OF EXCHANGING EXISTING NOTES PURSUANT TO THE EXCHANGE OFFER
Based on certain no-action letters issued by the staff of the Commission to
third parties in unrelated transactions, the Company believes that New Notes
issued pursuant to the Exchange Offer may be offered for resale, resold or
otherwise transferred by holders thereof (other than (i) any holder who is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act or (ii) any broker-dealer that purchases Notes from the Company to resell
pursuant to Rule 144A under the Securities Act ("Rule 144A") or any other
available exemption) without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such New Notes are
acquired in the ordinary course of the holder's business and such holders have
no arrangement or understanding with any person to participate in a distribution
of such New Notes and are not participating in, and do not intend to participate
in, the distribution of such New Notes. By tendering, each holder will represent
to the Company in the Letter of Transmittal that, among other things, the New
Notes acquired pursuant to the Exchange Offer are being acquired in the ordinary
course of business of the person receiving such New Notes, whether or not such
person is the holder, that neither the holder nor any such other person has an
arrangement or understanding with any person to participate in the distribution
of such New Notes, that neither the holder nor any such person is participating
in or intends to participate in the distribution of such New Notes and that
neither the holder nor any such other person is an "affiliate," as defined under
Rule 405 of the Securities Act, of the Company. Each broker-dealer that receives
New Notes for its own account in exchange for Existing Notes must acknowledge
that it will deliver a prospectus in connection with any resale of such New
Notes. See "Plan of Distribution." In addition, to comply with the securities
laws of certain jurisdictions, if applicable, the New Notes may not be offered
or sold unless they have been registered or qualified for sale in such
jurisdiction or any exemption from registration or qualification is available
and complied with. The Company has agreed, pursuant to the Registration Rights
Agreement and subject to certain specified limitations therein, to register or
qualify the New Notes for offer or sale under the securities or blue sky laws of
such jurisdictions as any holder of the Notes reasonably requests in writing. If
a holder of Existing Notes does not exchange such Existing Notes for New Notes
pursuant to the Exchange Offer, such Existing Notes will continue to be subject
to the restrictions on transfer contained in the legend thereon. In general, the
Existing Notes may not be offered or sold, unless registered under the
Securities Act, except pursuant to an exemption from, or in a transaction not
subject to, the Securities Act and applicable state securities laws. See "The
Exchange Offer -- Consequences of Failure to Exchange; Resales of New Notes."
The Existing Notes are currently eligible for trading in the Private
Offerings, Resales and Trading through Automated Linkages ("PORTAL") market.
Following commencement of the Exchange Offer but prior to its consummation, the
Existing Notes may continue to be traded in the PORTAL market. Following
consummation of the Exchange Offer, the New Notes will not be, and the Existing
Notes are not expected to be, eligible for PORTAL trading.
Except as otherwise indicated, the following description relates both to
the Existing Notes issued in the Offering and to the New Notes to be issued in
exchange for Existing Notes pursuant to the Exchange Offer. The New Notes will
be obligations of the Company evidencing the same indebtedness as the Existing
Notes, and will be entitled to the benefits of the same Indenture. The form and
terms of the New Notes are the same as the form and terms of the Existing Notes,
except that the New Notes have been registered under the Securities Act and
therefore will not bear legends restricting the transfer thereof. For a more
complete description of the Notes, see "Description of the Notes." Throughout
this Prospectus, references to the "Notes" refer to the New Notes and the
Existing Notes collectively.
THE NOTES
Issuer..................... LES, Inc.
Maturity Date.............. June 1, 2008.
Interest................... June 1 and December 1 of each year, commencing
December 1, 1998. For each Existing Note accepted
for exchange, the holder of such Existing Note will
receive a New Note having a principal amount equal
to that of
6
<PAGE> 16
the surrendered Existing Note. The New Notes will
bear interest from the most recent date to which
interest has been paid on the Existing Notes or, if
no interest has been paid on the Existing Notes,
from May 29, 1998. Accordingly, if the relevant
record date for interest payment occurs after the
consummation of the Exchange Offer registered
holders of New Notes on such record date will
receive interest accruing from the most recent date
to which interest has been paid or, if no interest
has been paid, from May 29, 1998. If, however, the
relevant record date for interest payment occurs
prior to the consummation of the Exchange Offer
registered holders of the Existing Notes on such
record date will receive interest accruing from the
most recent date to which interest has been paid
or, if no interest has been paid, from May 29,
1998. Existing Notes accepted for exchange will
cease to accrue interest from and after the date of
consummation of the Exchange Offer, except as set
forth in the immediately preceding sentence.
Holders of Existing Notes whose Existing Notes are
accepted for exchange will not receive any payment
in respect of interest on such Existing Notes
otherwise payable on any interest payment date the
record date for which occurs on or after the
consummation of the Exchange Offer.
Guarantees................. The Company's payment obligations under the Notes
are guaranteed on a senior subordinated basis by
the Parent (the "Parent Guarantee"). The Company's
payment obligations under the Notes are also
jointly and severally guaranteed on a senior
subordinated basis (the "Subsidiary Guarantees"
and, together with the Parent Guarantee, the
"Guarantees") by the Company's domestic
subsidiaries other than three non-wholly-owned
domestic subsidiaries of the Company (the
"Subsidiary Guarantors" and, together with the
Parent, the "Guarantors"). The Guarantees are
subordinated to all senior indebtedness of the
Guarantors. See "Description of the
Notes -- Guarantees."
Make-Whole Redemption...... The Notes are redeemable, in whole or in part, at
the option of the Company, at any time prior to
June 1, 2003 at a redemption price equal to the
greater of (i) 100% of the principal amount of such
Notes or (ii) the sum of the present values of
104.625% of the principal amount of such Notes and
the scheduled payments of interest thereon through
and including June 1, 2003 discounted to such
redemption date on a semi-annual basis (assuming a
360-day year consisting of twelve 30-day months) at
the Adjusted Treasury Rate (as defined herein) plus
50 basis points, together with accrued and unpaid
interest, if any, to the redemption date. See
"Description of the Notes -- Make-Whole
Redemption."
Optional Redemption........ The Notes are redeemable, in whole or in part, at
the option of the Company, at any time on or after
June 1, 2003, at the redemption prices set forth
herein, plus accrued and unpaid interest to the
date of redemption. In addition, at any time on or
prior to June 1, 2001, the Company may, at its
option, redeem up to 35% of the original aggregate
principal amount of the Notes with the net proceeds
of one or more Public Equity Offerings, at a
redemption price equal to 109.25% of the principal
amount thereof, plus accrued and unpaid interest to
the date of redemption; provided that immediately
after giving effect to such redemption, at least
$211.3 million aggregate principal amount of Notes
remains outstanding. See "Description of the
Notes -- Optional Redemption."
Change of Control.......... Upon a Change of Control (as defined herein), each
holder of Notes will have the right to require the
Company, subject to certain conditions, to
7
<PAGE> 17
repurchase such holder's Notes at a purchase price
equal to 101% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the date of
repurchase. See "Description of the Notes -- Change
of Control."
Ranking.................... The Notes are general unsecured obligations of the
Company subordinated in right of payment to all
existing and future senior indebtedness of the
Company, including indebtedness incurred pursuant
to the Senior Credit Facility. The Notes rank
senior in right of payment to all existing and
future subordinated indebtedness of the Company, if
any. The Notes are guaranteed, on a senior
subordinated basis, by the Guarantors and
effectively subordinated in right of payment to all
indebtedness and other liabilities (including trade
payables) of the Company's subsidiaries that are
not Subsidiary Guarantors. As of February 28, 1998,
after giving effect to the Safety-Kleen
Transactions and the issuance of the Existing Notes
and the application of the net proceeds therefrom,
the Company, the Parent and the Subsidiary
Guarantors would have had approximately $1.4
billion of indebtedness outstanding ranking senior
to the Notes, and the Company's subsidiaries that
are not Subsidiary Guarantors would have had an
aggregate of approximately $100.5 million of
third-party indebtedness and accounts payable
outstanding. See "Description of the
Notes -- Subordination." The Indenture pursuant to
which the Existing Notes were and the New Notes
will be issued permits the Company and its
subsidiaries to incur additional indebtedness,
including senior indebtedness, subject to certain
limitations. See "Capitalization" and "Description
of the Notes -- Subordination."
Certain Covenants.......... The Indenture contains certain covenants that,
among other things, will restrict the Company and
its Restricted Subsidiaries (as defined herein)
with respect to: (i) the incurrence of additional
debt; (ii) restricted payments; (iii) asset sales;
(iv) transactions with affiliates; (v) dividend and
other payment restrictions affecting Restricted
Subsidiaries; (vi) issuing stock of subsidiaries to
third parties; (vii) certain liens; and (viii)
certain consolidations, mergers or sales of assets.
All of these restrictions are subject to a number
of significant limitations and qualifications.
Certain of the covenants in the Indenture
(including the limitations on additional debt,
restricted payments, asset sales and transactions
with affiliates) do not apply to the Parent and
none of the covenants in the Indenture apply to any
Unrestricted Subsidiaries (as defined herein). See
"Description of the Notes -- Covenants." If the
Notes achieve an Investment Grade rating and
certain other conditions are satisfied, upon the
request of the Company, all of such covenants (with
limited exceptions) will cease to apply, and the
Company and its Restricted Subsidiaries will be
subject to covenants that will restrict the Company
and its Restricted Subsidiaries with respect to (x)
incurring liens securing indebtedness and (y)
engaging in sale and leaseback transactions. See
"Description of the Notes -- Certain Investment
Grade Covenants."
8
<PAGE> 18
SUMMARY PRO FORMA COMBINED FINANCIAL DATA
The unaudited pro forma combined statement of income data for fiscal 1997
and the twelve months ended February 28, 1998 gives effect to the Safety-Kleen
Transactions, the Rollins Acquisition and certain related transactions as if
they occurred on September 1, 1996. The unaudited pro forma combined statement
of income data for the six months ended February 28, 1998 gives effect to the
Safety-Kleen Transactions as if they occurred on September 1, 1996. The
unaudited pro forma combined balance sheet data gives effect to the Safety-Kleen
Acquisition as if it occurred on February 28, 1998. The following information is
not necessarily indicative of the financial position or the actual results of
operations that would have occurred had the transactions assumed herein occurred
on such dates or of expected future results. See "Unaudited Pro Forma Combined
Financial Information."
<TABLE>
<CAPTION>
PRO FORMA(1)
--------------------------------------------
FISCAL YEAR SIX MONTHS TWELVE MONTHS
ENDED ENDED ENDED
AUGUST 31, FEBRUARY 28, FEBRUARY 28,
1997 1998 1998
----------- ------------ -------------
(IN THOUSANDS, EXCEPT RATIOS AND PER SHARE
INFORMATION)
<S> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenue............................................ $1,802,627 $954,275 $1,818,252
Expenses:
Operating....................................... 1,282,863 651,168 1,271,461
Depreciation and amortization................... 181,064 83,492 164,709
Selling, general and administrative............. 224,502 111,965 216,811
Restructuring charge(2)......................... 331,697 -- 331,697
---------- -------- ----------
Total expenses..................................... 2,020,126 846,625 1,984,678
Operating income (loss)............................ (217,499) 107,650 (166,426)
Income (loss) from continuing operations........... (247,809) 4,768 (217,249)
Income (loss) from discontinued operations......... 20 -- 234
---------- -------- ----------
Net income (loss).................................. (247,789) 4,768 (217,015)
PER SHARE DATA(3):
Basic income (loss) per share:
Income (loss) from continuing operations........ $ (0.706) $ 0.014 $ (0.624)
Income (loss) from discontinued operations...... -- -- --
---------- -------- ----------
Net income (loss)............................... (0.706) (0.014) (0.624)
Weighted average common stock outstanding.......... 351,046 348,125 348,125
OTHER DATA:
EBITDA(5).......................................... $ 295,262 $191,142 $ 329,980
Cash interest expense(6)........................... 165,394 82,309 165,463
Ratio of earnings to fixed charges(7).............. (7) 1.11x (7)
</TABLE>
9
<PAGE> 19
<TABLE>
<CAPTION>
AS OF FEBRUARY 28, 1998
----------------------------
PRO FORMA
PRO FORMA AS ADJUSTED(4)
---------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Assets:
Total current assets...................................... $ 514,232 $ 505,232
Plant, property and equipment, net........................ 3,049,048 3,049,048
Total assets.............................................. 4,433,133 4,424,133
Liabilities:
The Company and subsidiaries:
Total current liabilities(8)........................... 289,731 289,731
Senior Credit Facility................................. 1,774,535 1,449,535
9 1/4% Senior Subordinated Notes....................... -- 325,000
Other long-term debt(9)................................ 17,475 17,475
Deferred financing costs............................... (33,935) (42,935)
Other liabilities...................................... 868,234 868,234
Total Company liabilities............................ 2,916,040 2,907,040
Parent (holding company only)(10):
Total current liabilities.............................. 6,800 6,800
Long-term debt(11)..................................... 125,200 125,200
PIK Subordinated Debenture(12)......................... 350,000 350,000
Total Parent liabilities............................. 482,000 482,000
Total liabilities......................................... 3,398,040 3,389,040
Stockholders' equity........................................ 1,035,093 1,035,093
</TABLE>
- ---------------
(1) The pro forma results of operations (i) for the fiscal year ended August
31, 1997 include 12 months of Laidlaw Environmental and 52 weeks of
Safety-Kleen, (ii) for the six months ended February 28, 1998 include 6
months of Laidlaw Environmental and 29 weeks of Safety-Kleen, and (iii) for
the twelve months ended February 28, 1998 include 12 months of Laidlaw
Environmental and 53 weeks of Safety-Kleen.
(2) Reflects a non-recurring restructuring charge of $331.7 million ($200.0
million after tax or $1.45 per share) incurred in connection with the
closing of certain of the operating facilities that had become redundant,
and an impairment in the carrying value of certain operating facilities due
to lower than expected future cash flows, as a result of the Rollins
Acquisition.
(3) Diluted earnings per share amounts, which would include the dilutive effect
of the assumed conversions of potential common shares, have not been
included for the year ended August 31, 1997 nor for the six and twelve
months ended February 28, 1998 as the effect of such inclusion would be to
increase earnings per share, and thus be anti-dilutive.
(4) As adjusted to give effect to the issuance of the Existing Notes and the
application of the net proceeds therefrom.
(5) EBITDA represents operating income plus (i) depreciation and amortization
and (ii) for fiscal 1997 and the twelve months ended February 28, 1998
only, the $331.7 million non-recurring restructuring charge incurred in
fiscal 1997 in connection with the Rollins Acquisition. EBITDA is presented
because it provides useful information regarding the Company's ability to
service debt. EBITDA should not be considered as an alternative measure of
operating results or cash flow from operations (as determined in accordance
with generally accepted accounting principles). Adjusted EBITDA of $495.3
million, $261.1 million and $497.5 million for fiscal 1997 and the six and
twelve months ended February 28, 1998, respectively, represents EBITDA plus
(i) $130.0 million of annual cost savings (or $65.0 million for the six
months ended February 28, 1998) that the Company expects to realize in
connection with the Safety-Kleen Acquisition (based on the approximate
mid-point of the range of potential cost savings described in "-- Business
Strategy and Acquisition Rationale" above) and (ii) $70.0 million, $5.0
million and $37.5 million in fiscal
10
<PAGE> 20
1997, and the six and twelve months ended February 28, 1998, respectively,
of potential cost savings not yet realized in connection with the Rollins
Acquisition. No assurance can be given that any such cost savings will be
realized. To date, the Company believes it has generated $75.0 million in
annualized cost savings from the Rollins Acquisition based on estimated
realized cost-savings from the Rollins Acquisition of $5.0 million, $32.5
million, and $37.5 million in fiscal 1997, the six and the twelve months
ended February 28, 1998, respectively. Adjusted EBITDA should not be
considered as an alternative measure of operating results or cash flow from
operations (as determined in accordance with generally accepted accounting
principles). See "Risk Factors -- Uncertainties in Integrating Operations
and Achieving Cost Savings" and "Disclosure Regarding Forward-Looking
Statements."
(6) Cash interest expense reflects pro forma interest expense minus non-cash
interest expense attributable to the PIK Subordinated Debenture. Such
excluded interest expense related to interest attributable to the PIK
Subordinated Debenture was $17.5 million for each of the fiscal 1997 and
twelve months ended February 28, 1998, and $8.8 million for the six months
ended February 28, 1998. The ratio of Adjusted EBITDA to cash interest
expense was 2.99x, 3.17x and 3.01x for fiscal 1997 and the six and twelve
months ended February 28, 1998, respectively. See "Description of Other
Indebtedness -- The Parent -- PIK Subordinated Debenture" and "Unaudited
Pro Forma Combined Financial Information."
(7) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of earnings before income taxes plus fixed charges. Fixed charges
consist of interest expense, amortization of debt issuance costs and the
portion of rental expense that represents the interest factor. Earnings
were insufficient to cover fixed charges by $188.6 million and $146.9
million for fiscal 1997 and the twelve months ended February 28, 1998,
respectively.
(8) Excludes current portion of Senior Credit Facility on a pro forma basis of
$86.0 million and on a pro forma as adjusted basis of $79.6 million.
(9) Includes Company IRBs (as defined herein) of $15.7 million and other debt
of $1.8 million. See "Description of Other Indebtedness -- The
Company -- Company IRBs."
(10) The Parent is a holding company only and has no independent business
operations, and all of the business operations of the Parent are conducted
through the Company and its subsidiaries.
(11) Includes approximately $65.2 million of Parent IRBs (as defined herein) and
a $60.0 million Parent Promissory Note (as defined herein). See
"Description of Other Indebtedness -- Parent IRBs" and "--Parent Promissory
Note."
(12) The PIK Subordinated Debenture is subordinated in right of payment to the
Parent Guarantee of the Notes. The PIK Subordinated Debenture bears
interest at the fixed rate of 5% per annum. Until May 15, 1999 (the
"Mandatory PIK Interest Payment Period"), interest on the outstanding
principal balance of the PIK Subordinated Debenture accrues at the 5% rate,
but will be paid in shares of Parent Common Stock. After the Mandatory PIK
Interest Payment Period, at the election of the Parent any payment due
under the PIK Subordinated Debenture (except upon an optional early
redemption), including any accrued interest or principal, may be paid in
shares of Parent Common Stock. Interest on the outstanding principal
balance may be paid in cash or shares of Parent Common Stock. The Senior
Credit Facility requires such interest to be paid in shares of Parent
Common Stock until April 2000. See "Description of Other
Indebtedness -- The Parent -- PIK Subordinated Debenture."
11
<PAGE> 21
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the Notes,
as well as information under "Disclosure Regarding Forward Looking Statements."
SUBSTANTIAL LEVERAGE; ABILITY TO SERVICE DEBT
As a result of the Safety-Kleen Acquisition, the Company has substantial
indebtedness and debt service obligations. As of February 28, 1998, after giving
effect to the Safety-Kleen Transactions and the issuance of the Existing Notes
and the application of the net proceeds therefrom, the Company would have had
$1.8 billion of indebtedness outstanding (including $1.5 billion outstanding
under the Senior Credit Facility) and $1.0 billion of stockholders' equity and
the Parent would have had $475.2 million of indebtedness outstanding (including
$350.0 million under the PIK Subordinated Debenture). The degree to which the
Company and the Parent are leveraged will have significant consequences to
holders of the Notes, including the following: (i) the ability of the Company to
obtain additional financing in the future, whether for working capital, capital
expenditures, acquisitions or other purposes, may be impaired; (ii) a
substantial portion of the Company's cash flow from operations will be dedicated
to the payment of principal and interest on debt, thereby reducing funds
available to the Company for other purposes; (iii) the Company's flexibility in
planning for or reacting to changes in market conditions may be limited; (iv)
the Company may be more vulnerable in the event of a downturn in its business;
and (v) to the extent that the Company incurs any debt under the Senior Credit
Facility at variable rates that have not been hedged, the Company will be
vulnerable to increases in interest rates. See "Capitalization" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Laidlaw Environmental." The Indenture and the Senior Credit
Facility permit the Company and its subsidiaries to incur additional
indebtedness (subject to certain limitations) and permit the Parent to incur
additional indebtedness (without restriction). All borrowings under the Senior
Credit Facility will mature prior to the maturity of the Notes. See "Description
of Other Indebtedness -- The Company -- Senior Credit Facility."
The ability of the Company to meet its debt service obligations (including
the Notes) will depend on the future operating performance and financial results
of the Company, which will be subject in part to factors beyond the control of
the Company. If the Company is unable to generate earnings sufficient to cover
its debt service obligations and is unable to borrow funds under either the
Senior Credit Facility or from other sources, it may be required to refinance
all or a portion of its existing debt (including the Notes) or to sell all or a
portion of its assets. There can be no assurance that a refinancing would be
possible, nor can there be any assurance as to the timing of any asset sales or
the proceeds the Company could realize therefrom. In addition, the terms of the
Senior Credit Facility and the Indenture restrict the Company's ability to sell
assets and the Company's use of the proceeds therefrom. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Laidlaw Environmental."
If for any reason, including a shortfall in anticipated operating results,
the Company were unable to meet its debt service obligations, it would be in
default under the terms of the Senior Credit Facility. In the event of such a
default, the lenders under the Senior Credit Facility could elect to declare all
of such indebtedness immediately due and payable, including accrued and unpaid
interest, and to terminate their commitments with respect to funding obligations
under the Senior Credit Facility. In addition, such lenders could proceed
against their collateral, which consists of substantially all of the domestic
assets of the Company. Any default with respect to the Senior Credit Facility
could result in a default under other indebtedness or result in a bankruptcy of
the Company. Such defaults could delay or preclude payment of principal of, or
interest on, the Notes. See "Description of the Notes -- Subordination."
UNCERTAINTIES IN INTEGRATING OPERATIONS AND ACHIEVING COST SAVINGS
The Safety-Kleen Acquisition was significantly larger than the Company's
previous acquisitions (including the Rollins Acquisition) and represents a
substantial increase in the scope of the Company's business. Safety-Kleen's
revenues for fiscal 1997 were $1.0 billion, and the Company's revenues for
fiscal 1997 were $679.0 million. Successful integration of Safety-Kleen's
operations will depend primarily on the Company's ability to
12
<PAGE> 22
consolidate operations, systems and procedures and to eliminate redundancies and
excess costs. There can be no assurances that the Company will be able to
successfully integrate the operations of Safety-Kleen into the Company's
operations. In particular, the Company may experience (i) difficulty in
assimilating the operations and personnel of Safety-Kleen, (ii) disruption of
the Company's ongoing business, (iii) difficulty in the maintenance of uniform
standards, controls, procedures and policies and (iv) the impairment of
relationships with employees and customers. In addition, the Company expects to
realize certain operating efficiencies and cost savings as a result of the
Safety-Kleen Acquisition. The realization and timing of such operating
efficiencies and cost savings could be affected by a number of factors beyond
the Company's control, such as general economic conditions, increased operating
costs, the response of competitors or customers and regulatory developments.
There can be no assurance that the Company will achieve the expected operating
efficiencies and cost savings.
ENVIRONMENTAL REGULATION AND LIABILITIES
The Company's operations are subject to certain federal, state,
territorial, provincial and local requirements which regulate health, safety,
environment, zoning and land-use. Operating and other permits are generally
required for incinerators, landfills, transfer and storage facilities, certain
collection vehicles, storage tanks and other facilities owned or operated by the
Company, and these permits are subject to revocation, modification and renewal.
Although the Company believes that its facilities meet federal, state and local
requirements in all material respects and have all of the required operating and
other permits, the Company may be required to expend considerable time, effort
and money to keep its existing or acquired facilities in compliance with
applicable regulatory requirements, including new regulations, and to maintain
existing permits and approvals and to obtain the permits and approvals necessary
to increase their capacity. In addition, environmental regulatory changes could
accelerate expenditures for closure and post-closure monitoring and corrective
action for past and current operations at the Company's facilities and obligate
the Company to spend sums in addition to those presently reserved for such
purposes. These factors could increase substantially the Company's operating
costs and could impair the Company's investment in its facilities. Applicable
requirements are enforceable by injunctions and fines or penalties, including
criminal penalties. These regulations are administered by the United States
Environmental Protection Agency (the "EPA") and various other federal, state and
local environmental and health and safety agencies and authorities, including
the Occupational Safety and Health Administration of the United States
Department of Labor and by the provincial environmental ministries in Canada.
See "Business -- Regulation."
The United States Resource and Conservation Recovery Act, as amended,
("RCRA"), provides for the establishment of a national hazardous waste
management program through a comprehensive regulatory system. Among other
things, it defines hazardous wastes and provides standards for generators,
transporters and disposers of hazardous wastes, and for the issuance of permits
for sites where such material is treated, stored and disposed. These regulations
also require the Company's facilities to demonstrate financial assurance for
sudden and accidental and, in the case of land based treatment facilities,
non-sudden and gradual pollution occurrences. Financial assurance for future
closure and post-closure expenses and corrective actions must also be
maintained. The Company believes that each of its facilities has all necessary
operating permits and that each permit will be renewed at the end of its
existing term. However, any such permit issuance or renewal could include
conditions requiring further capital expenditures or corrective actions.
Although the Company also believes that each of its operating facilities
complies in all material respects with the applicable requirements of RCRA and
Canadian law for the Canadian facilities, it may be necessary to expend
considerable time, effort and money to keep existing or acquired facilities of
the Company in compliance with applicable requirements, including new
regulations, to maintain existing permits and approvals and to obtain the
permits and approvals necessary to increase their capacity. See
"Business -- Regulation."
The United States Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), imposes liability for natural
resources damages and the cleanup of sites from which there is a release or
threatened release of a hazardous substance into the environment on, among
others, the current and former owners and operators of such sites. Hundreds of
substances are defined as "hazardous" under CERCLA and the release to the
environment of such substances, even in minute amounts, can result in
substantial liability. The statute provides for the remediation of contaminated
facilities and imposes costs on the responsible
13
<PAGE> 23
parties. The expense of conducting such a cleanup can be significant.
Notwithstanding its efforts to comply with applicable regulations and to avoid
any unregulated release of hazardous substances to the environment, releases of
such substances may occur as a result of the Company's operations. Given the
substantial costs involved in a CERCLA cleanup and the difficulty of obtaining
insurance for environmental impairment liability, such liability could have a
material impact on the Company's business, financial condition and future
prospects.
With respect to various operating facilities, the Company is required by
law to provide certain financial assurances with respect to certain statutorily
required closure, post-closure and corrective obligations. These financial
assurances may take the form of insurance, guarantees, bonds, letters of credit,
deposits of cash or demonstration of net worth of the responsible party, to the
extent acceptable to the United States, Canadian or other foreign, state,
territorial, federal, provincial or local courts, executive offices,
legislatures, governmental agencies or ministries, commissions, or
administrative, regulatory or self-regulatory authorities or instrumentalities
("Governmental Entities") requiring such assurances. Following the consummation
of the Safety-Kleen Acquisition, the Company will be obligated to provide
financial assurances for certain Safety-Kleen operations as well. There can be
no assurance that the Company will be able to provide the required financial
assurances without increased cost which could be material. The Indenture will
restrict the amount of certain financial assurance obligations the Company can
incur. See "Description of the Notes -- Certain Covenants -- Incurrence of
Contingent Obligations."
Anticipated payments of remedial and closure costs (corrective action
costs, closure and post-closure costs for the Company's landfills and other
facilities, and CERCLA-type liabilities) for the Company (including an aggregate
of $41.3 million accrued by Safety-Kleen as of January 3, 1998) for each of the
next five years and thereafter are as follows (dollars in thousands):
<TABLE>
<CAPTION>
FISCAL YEAR
- -----------
<S> <C>
1998........................................ $ 38,259
1999........................................ 40,283
2000........................................ 28,417
2001........................................ 19,646
2002........................................ 14,016
Thereafter.................................. 180,710
--------
Total............................. $321,331
========
</TABLE>
See "Business -- Operations," "-- Regulations" and "-- Legal Proceedings."
COMPETITION AND TECHNOLOGICAL ADVANCES
The hazardous and industrial waste industry is highly competitive. The
Company believes that it and Chemical Waste Management, Inc. are the largest
competitors within the industry. The Company also competes with local and
regional companies of varying sizes, as well as counties and municipalities that
maintain their own waste collection and disposal operations. The key competitive
factors within the hazardous and industrial waste industry include the breadth
of services offered, price, quality, reliability of service and technical
proficiency in handling hazardous waste properly. Knowledgeable customers are
sensitive to the reputation and financial strength of the companies they use to
collect, treat, recycle and dispose of their hazardous and industrial waste
primarily because such customers, as the original generator of such waste,
remain liable under federal and state environmental laws for improper disposal
of such waste. There can be no assurance that the Company's business, financial
condition or future prospects will not be materially adversely affected by
competitive conditions. See "Business -- Competition."
In addition, technological advances in the treatment and disposal of
hazardous waste can significantly alter competition in the hazardous waste
business. In particular, patent or proprietary processes developed by or held by
competitors may adversely affect the Company's competitive position.
14
<PAGE> 24
CYCLICAL AND SEASONAL NATURE OF BUSINESS
The hazardous and industrial waste industry is cyclical to the extent that
it is dependent upon a stream of waste from cyclical industries. If those
cyclical industries slow significantly, the business that the Company receives
from those industries is likely to slow. Also, the Company's business is
somewhat seasonal in that less waste is received in winter months due to
difficult working conditions.
INTERNATIONAL OPERATIONS
As a result of the Safety-Kleen Acquisition, the Company now has business
operations in the United States, Canada and Europe. Certain risks are inherent
in international operations, including the risks of differing regulation,
currency fluctuations and differing tax treatment. Prior to the Safety-Kleen
Acquisition, the Company generally operated only under Canadian and United
States-based environmental and other regulation. As a result of the Safety-Kleen
Acquisition, the Company is now subject to European regulation. Also, the
relative values of the United States dollar, Canadian dollar and European
currencies could change. The impact of future exchange rate fluctuations on the
results of operations cannot be accurately predicted. As a result of the
Safety-Kleen Acquisition, the Company is subject to U.S., European and Canadian
tax laws and regulations. The application of United States and foreign tax laws
and regulations to the Company and to intercompany relationships created by the
Safety-Kleen Acquisition will be subject to audit and review by independent
national tax authorities. In addition, business practices or laws in Europe may
impose costs, restrictions or requirements on such activities that differ in
significant respects from the U.S. business environment.
RELIANCE ON MANAGEMENT
The Company relies significantly on the services of its senior management
team. The Company could be adversely affected if any member of the senior
management team were unwilling or unable to continue in the Company's employ.
See "Management."
CONTROL BY SIGNIFICANT STOCKHOLDER
Laidlaw beneficially owns 35% of the outstanding Parent Common Stock (49%
assuming the conversion of the PIK Subordinated Debenture). As a result, Laidlaw
has significant influence, particularly if the PIK Subordinated Debenture is
converted, with respect to all matters submitted to a vote of the stockholders
of the Parent. In turn, the Company is controlled by the Parent, which owns 100%
of the outstanding capital stock of the Company and can decide all matters
subject to stockholder approval and elect all directors of the Company.
Consequently, Laidlaw has significant influence with respect to the Parent and
the Company.
If (a) at any time Laidlaw ceases to be a primary stockholder of the Parent
or, (b) at any time when the Consolidated Total Leverage Ratio (as defined in
the Senior Credit Facility) is greater than 2.50 to 1.00, Laidlaw ceases to own
at least 20% of the outstanding Parent Common Stock, (c) at any time the Parent
ceases to own 100% of the outstanding common stock of the Company, (d) at any
time the Company ceases to own 100% of the outstanding common stock of Laidlaw
Environmental Services (Canada) Ltd., a wholly-owned subsidiary of the Company
(the "Canadian Borrower"), or (e) at any time there ceases to be at least one
member of the Board of Directors of the Parent who is a designee of Laidlaw, in
each case, an event of default will occur under the Senior Credit Facility.
There is no contractual requirement then on the part of Laidlaw with the Parent
to maintain its ownership at such level. If such an event of default were to
occur, there can be no assurance that the Company will be able to obtain a
waiver or, if necessary, refinance or repay the indebtedness under the Senior
Credit Facility.
RISKS OF PENDING AND FUTURE LEGAL PROCEEDINGS
The Company, like other hazardous waste management companies, is involved
in legal proceedings in the ordinary course of business. Alleged failure by the
Company to comply with laws and regulations may lead to the imposition of fines
or the denial, revocation or delay of the renewal of permits and licenses by
Governmental Entities. In addition, Governmental Entities as well as surrounding
landowners may claim that the Company is liable for environmental damages.
Citizens groups have become increasingly active in challenging the grant or
15
<PAGE> 25
renewal of permits and licenses for hazardous waste facilities, and responding
to such challenges has further increased the costs associated with establishing
new facilities or expanding current facilities. A significant judgment against
the Company, the loss of a significant permit or license or the imposition of a
significant fine could have a material adverse effect on the Company's business,
financial condition and future prospects. The Company is currently a party to
various legal and regulatory proceedings which have arisen in the ordinary
course of its business. Although there can be no assurance with respect to the
outcome of these legal and environmental proceedings or the effect such outcomes
may have on the Company, the Company believes that, based on currently available
information, none of the currently pending proceedings, when ultimately
resolved, will have a material adverse effect on the Company's business,
financial condition or future prospects.
RISKS ASSOCIATED WITH INDUSTRY OVER-CAPACITY
Since the 1980s, the hazardous and industrial waste management industry has
been adversely affected by over-capacity. Although recently there has been a
decrease in capacity, there can be no assurance that this trend will continue.
Such industry over-capacity may adversely affect the Company's ability to
operate its facilities at efficient capacity levels and/or affect the prices
that the Company can charge for disposal services.
POTENTIAL UNDISCLOSED LIABILITIES ASSOCIATED WITH ACQUISITIONS
The Company generally conducts due diligence in connection with each of its
acquisitions. In connection with the Safety-Kleen Acquisition, the Rollins
Acquisition or any acquisition made by the Company, there may be liabilities
that the Company fails or is unable to discover in its due diligence prior to
the consummation of the acquisition. In particular, to the extent that prior
owners of businesses acquired in connection with the Safety-Kleen Acquisition
and the Rollins Acquisition failed to comply with or otherwise violated
environmental laws, the Company, as a successor owner, may be financially
responsible for these violations. The discovery of any material liabilities
could have a material adverse effect on the Company's business, financial
condition or future prospects.
SUBORDINATION; RANKING OF THE NOTES AND GUARANTEES
The Notes and the Guarantees are unsecured, general obligations of the
Company and the Guarantors, respectively, subordinated in right of payment to
all existing and future senior indebtedness of the Company and the Guarantors,
respectively. As of February 28, 1998, after giving effect to the Safety-Kleen
Transactions and the issuance of the Existing Notes and the application of the
net proceeds therefrom, the Company, the Parent and the Subsidiary Guarantors
would have had approximately $1.4 billion of indebtedness outstanding ranking
senior to the Notes, and the Company would have had $175.5 million of additional
borrowing availability (excluding letters of credit) under the Senior Credit
Facility, all of which would be senior indebtedness. Upon any payment or
distribution of assets of the Company or any Guarantor to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors, marshaling of assets and liabilities or any bankruptcy, insolvency
or similar proceedings of the Company or any Guarantor, the holders of senior
indebtedness will be entitled to receive payment in full of the principal of and
premium, if any, and interest on such senior indebtedness, including all amounts
due or to become due on all senior indebtedness, or provision will be made for
payment in cash or cash equivalents or otherwise, before the Holders of Notes
are entitled to receive any payments, subject to certain exceptions. See
"Description of the Notes -- Subordination." In addition, the subordination
provisions of the Indenture provide that no cash payments may be made with
respect to the Notes during the continuance of a payment default under certain
senior indebtedness. Furthermore, if certain nonpayment defaults exist with
respect to certain senior indebtedness, the holders of such senior indebtedness
would be able to prevent payments on the Notes for certain periods of time. See
"Description of the Notes -- Subordination."
None of the Company's foreign subsidiaries or non-wholly-owned domestic
subsidiaries are Subsidiary Guarantors, and the Notes are effectively
subordinated in right of payment to all indebtedness and other liabilities
(including trade payables) of these subsidiaries. As of February 28, 1998, after
giving effect to the Safety-Kleen Transactions, the Company's subsidiaries that
are not Subsidiary Guarantors would have had approximately $100.5 million of
third-party indebtedness and accounts payable outstanding. The right of the
Company to
16
<PAGE> 26
receive assets of any of its subsidiaries that are not Subsidiary Guarantors
upon liquidation or reorganization of such subsidiary will be subordinated to
the claims of that subsidiary's creditors (including trade creditors), except to
the extent the Company itself is recognized as a creditor of such subsidiary.
See "Description of the Notes -- Subordination."
RESTRICTIONS IMPOSED BY THE SENIOR CREDIT FACILITY AND THE INDENTURE
The Senior Credit Facility and the Indenture will contain a number of
significant covenants that, among other things, will restrict the ability of the
Company to dispose of assets, incur additional indebtedness, incur liens on
property or assets, repay other indebtedness, pay dividends, enter into certain
investments or transactions, repurchase or redeem capital stock, engage in
mergers or consolidations, or engage in certain transactions with subsidiaries
and affiliates and otherwise restrict corporate activities. There can be no
assurance that such restrictions will not adversely affect the Company's ability
to finance its future operations or capital needs or engage in other business
activities that may be in the interest of the Company. In addition, the Senior
Credit Facility also requires the Company to maintain compliance with certain
financial ratios. The ability of the Company to comply with such ratios may be
affected by events beyond the Company's control. A breach of any of these
covenants or the inability of the Company to comply with the required financial
ratios could result in a default under the Senior Credit Facility. In the event
of any such default, the lenders under the Senior Credit Facility could elect to
declare all borrowings outstanding under the Senior Credit Facility, together
with accrued interest and other fees to be due and payable, to require the
Company and the Guarantors to apply all of their available cash to repay such
borrowings or to prevent the Company from making debt service payments on the
Notes. If the Company were unable to repay any such borrowings when due, the
lenders could proceed against their collateral. If the indebtedness under the
Senior Credit Facility or the Notes were to be accelerated, there can be no
assurance that the assets of the Company and the Guarantors would be sufficient
to repay such indebtedness in full. See "Description of the Notes" and
"Description of Other Indebtedness -- The Company -- Senior Credit Facility."
Certain of the covenants in the Indenture (including the limitations on
additional debt, restricted payments, assets sales and transactions with
affiliates) do not apply to the Parent and none of such covenants will apply to
any Unrestricted Subsidiaries. If the Notes achieve an Investment Grade rating
and certain other conditions are satisfied, upon the request of the Company, all
of such covenants (with limited exceptions) will cease to apply, and the Company
and its Restricted Subsidiaries will be subject to covenants that will restrict
the Company and its Restricted Subsidiaries with respect to (x) incurring liens
and securing indebtedness and (y) engaging in sale and leaseback transactions.
Accordingly, the Notes will thereafter be entitled to substantially no covenant
protection. See "Description of the Notes -- Certain Investment Grade
Covenants."
LIMITATION ON SUBSIDIARY GUARANTEES AND THE PARENT GUARANTEE; FRAUDULENT
CONVEYANCE CONCERNS
The issuance of a Subsidiary Guarantee by a Subsidiary Guarantor and the
Parent Guarantee by the Parent may be subject to review under federal or state
fraudulent conveyance laws in the event of the bankruptcy or other financial
difficulty of such Subsidiary Guarantor or Parent, as the case may be. Depending
upon the standard applied in connection with such review, such review could
result in the indebtedness evidenced by a Guarantee being voided or subordinated
to all other indebtedness of such Guarantor (in addition to the senior
indebtedness of such Guarantor to which such Guarantee is expressly
subordinated), and could result in payments previously made in respect of such
Guarantee being returned to such Guarantor.
For example, under applicable law, if a court, in a lawsuit by an unpaid
creditor or representative of creditors of a Subsidiary Guarantor or Parent,
were to find that when such Subsidiary Guarantor or Parent incurred the
indebtedness evidenced by its Guarantee, such Subsidiary Guarantor or Parent
(a)(i) was insolvent or was rendered insolvent by reason of such incurrence,
(ii) was engaged in a business or transaction for which the assets remaining
with such Guarantor constituted unreasonably small capital or (iii) intended to
incur, or believed (or reasonably should have believed) that it would incur,
indebtedness beyond its ability to pay such indebtedness as it matures and (b)
received less than reasonably equivalent value or fair consideration for the
incurrence of such indebtedness, then the Subsidiary Guarantee or Parent
Guarantee could be voided, or claims in respect of the Subsidiary Guarantee or
Parent Guarantee could be subordinated to all other indebtedness of such
Guarantor. In
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<PAGE> 27
addition, any amounts previously paid by a Subsidiary Guarantor or Parent
pursuant to a Guarantee could be voided and required to be returned to such
Guarantor or to a fund for the benefit of the creditors of such Guarantor. The
measure of insolvency for purposes of the foregoing considerations will vary
depending upon the law of the jurisdiction being applied. Generally, however, a
Subsidiary Guarantor or the Parent would be considered insolvent if (i) the sum
of its debts, including contingent liabilities, is greater than the saleable
value of all of its assets at a fair valuation or if the present fair saleable
value of its assets is less than the amount that would be required to pay its
probable liability on its existing debts, including contingent liabilities, as
they become absolute and matured or (ii) it could not pay its debts as they
become due.
A court will likely find that a Subsidiary Guarantor or the Parent did not
receive fair consideration or reasonably equivalent value for its Guarantee to
the extent that its liability thereunder exceeds any direct benefit it received
from the issuance of the Notes. Each Guarantee will limit the liability of the
Guarantor, thereunder to the maximum amount that it could pay without the
guarantee being deemed a fraudulent transfer. There can be no assurance that
this limitation will be effective. If this limitation is not effective, the
issuance of a Guarantee by a Subsidiary Guarantor or the Parent could be deemed
to render insolvent such Guarantor. If this limitation is effective, there can
be no assurance that the limited amount so guaranteed would be sufficient to pay
amounts owed under the Notes in full.
POTENTIAL INABILITY TO EFFECT CHANGE OF CONTROL
The Indenture requires the Company, in the event of a Change of Control, to
make an offer to purchase all outstanding Notes at a price equal to 101% of the
principal amount thereof, plus accrued interest to the date of repurchase. The
Senior Credit Facility will restrict such a purchase and such an offer would
require the approval of the lenders thereunder. In addition, certain events
involving a change of control may be an event of default under the Senior Credit
Facility or other indebtedness of the Company that may be incurred in the
future. Accordingly, the right of the holders of the Notes to require the
Company to repurchase the Notes may be of limited value if the Company cannot
obtain the required approval under the Senior Credit Facility. Even if such
approval were obtained, there can be no assurance that the Company will have the
financial resources necessary to purchase the Notes upon a Change of Control.
Failure to offer to repurchase the Notes under such circumstances, however,
would constitute an event of default under the Indenture. See "Description of
the Notes -- Change of Control."
LACK OF PUBLIC MARKET FOR THE NOTES
The New Notes are a new issuance of securities for which there is currently
no trading market. The New Notes will not be listed on any securities exchange.
The New Notes will not be eligible for PORTAL trading. There can be no assurance
that an active trading market will develop for, or as to the liquidity of, any
of the New Notes. The Company has been advised by the Initial Purchasers that
they intend to make a market in the Notes after consummation of the Offering;
however, the Initial Purchasers are not obligated to do so, and any such
market-making activities may be discontinued at any time without notice. If the
New Notes are traded, they may trade at a discount from their initial offering
price, depending upon prevailing interest rates, the market for similar
securities, the performance of the Company and other factors.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Existing Notes who do not exchange their Existing Notes for New
Notes pursuant to the Exchange Offer will continue to be subject to the
restrictions on transfer of such Existing Notes as set forth in the legend
thereon as a consequence of the issuance of the Existing Notes pursuant to
exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws. In
general, the Existing Notes may not be offered or sold unless registered under
the Securities Act and applicable state laws, or pursuant to an exemption
therefrom. The Company does not intend to register the Existing Notes under the
Securities Act, other than in the limited circumstances contemplated by the
Registration Rights Agreement. In addition, any holder of Existing Notes who
tenders in the Exchange Offer for the purpose of participating in a distribution
of the New Notes may be deemed to have received restricted securities and, if
so, will be required to comply with the registration and prospectus delivery
requirements of the Securities Act in
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<PAGE> 28
connection with any resale transaction. To the extent that Existing Notes are
tendered and accepted in the Exchange Offer, the trading market for untendered
or tendered but unaccepted Existing Notes could be adversely affected. See "The
Exchange Offer -- Consequences of Failure to Exchange; Resales of New Notes."
NECESSITY TO COMPLY WITH EXCHANGE OFFER PROCEDURES
To participate in the Exchange Offer, and to avoid the restrictions on
transfer of the Existing Notes, holders of Existing Notes must transmit a
properly completed Letter of Transmittal, including all other documents required
by such Letter of Transmittal, to the Exchange Agent at one of the addresses set
forth below under "The Exchange Offer -- Exchange Agent" on or prior to the
Expiration Date. In addition, either (i) certificates for such Existing Notes
must be received by the Exchange Agent along with the Letter of Transmittal or
(ii) a timely confirmation of a book-entry transfer described in this
Prospectus, must be received by the Exchange Agent on or prior to the Expiration
Date or (iii) the holder must comply with the guaranteed delivery procedures
described in this Prospectus. See "The Exchange Offer."
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<PAGE> 29
THE EXCHANGE OFFER
GENERAL
The Company hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and in the accompanying Letter of Transmittal (which
together constitute the Exchange Offer), to exchange up to $325,000,000
aggregate principal amount of New Notes for a like aggregate principal amount of
Existing Notes properly tendered on or prior to the Expiration Date and not
withdrawn as permitted pursuant to the procedures described below. The Exchange
Offer is being made with respect to all of the Existing Notes. The total
aggregate principal amount of Existing Notes and New Notes will in no event
exceed $325,000,000.
As of the date of this Prospectus, $325,000,000 aggregate principal amount
of the Existing Notes was outstanding. This Prospectus, together with the Letter
of Transmittal, is first being sent on or about , 1998, to all
holders of Existing Notes known to the Company. The Company's obligation to
accept Existing Notes for exchange pursuant to the Exchange Offer is subject to
certain conditions as set forth under "-- Conditions to the Exchange Offer"
below.
PURPOSE OF THE EXCHANGE OFFER
The Existing Notes were issued by the Company on May 29, 1998 in a
transaction exempt from the registration requirements of the Securities Act.
Accordingly, the Existing Notes may not be reoffered, resold, or otherwise
transferred in the United States unless so registered or unless an applicable
exemption from the registration and prospectus delivery requirements of the
Securities Act is available.
In connection with the issuance and sale of the Existing Notes, the
Company, the Parent and the Subsidiary Guarantors entered into the Registration
Rights Agreement, which requires the Company, the Parent and the Subsidiary
Guarantors to file on or before July 28, 1998 (60 days after the date of
issuance of the Existing Notes) a registration statement relating to the
Exchange Offer (or use its best efforts to file a shelf registration statement
relating to resales of the Existing Notes) and to use its best efforts to cause
the registration statement relating to the Exchange Offer or the shelf
registration statement to become effective on or before October 18, 1998 (150
days after the date of issuance of the Existing Notes). The Exchange Offer is
being made by the Company to satisfy certain of their obligations with respect
to the Registration Rights Agreement.
Based on certain no-action letters issued by the staff of the Commission to
third parties in unrelated transactions, the Company believes that the New Notes
issued pursuant to the Exchange Offer may be offered for resale, resold or
otherwise transferred by holders thereof (other than (i) any such holder that is
an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act or (ii) any broker-dealer that purchases New Notes from the
Company to resell pursuant to Rule 144A or any other available exemption)
without compliance with the registration and prospectus delivery requirements of
the Securities Act, provided that such New Notes are acquired in the ordinary
course of such holders' business and such holders have no arrangement or
understanding with any person to participate in the distribution of such New
Notes and are not participating in, and do not intend to participate in, the
distribution of such New Notes. The Company has not sought, and does not intend
to seek, its own no-action letter with regard to the Exchange Offer.
Accordingly, there can be no assurance that the staff of the Commission would
make a similar determination with respect to the Exchange Offer. Any holder of
Existing Notes who tenders in the Exchange Offer for the purpose of
participating in a distribution of the New Notes may be deemed to have received
restricted securities and, if so, will be required to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction. Thus, any New Notes acquired by
such holders will not be freely transferable except in compliance with the
Securities Act. A secondary resale transaction in the United States by a holder
using the Exchange Offer to participate in a distribution of Existing Notes must
be covered by an effective registration statement containing the selling
security holder information required by Item 507 of Regulation S-K under the
Securities Act. See "-- Consequences of Failure to Exchange; Resale of New
Notes."
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<PAGE> 30
EXPIRATION DATE; EXTENSION; TERMINATION; AMENDMENT
The Exchange Offer will expire at p.m., New York City time,
on , 1998, unless the Company, in its sole discretion, has
extended the period of time for which the Exchange Offer is open (such date, as
it may be extended, is referred to herein as the "Expiration Date"). The
Expiration Date will be at least 20 business days after the commencement of the
Exchange Offer in accordance with Rule 14e-1(a) under the Exchange Act. In
addition, the Company has agreed in the Registration Rights Agreement to keep
the Exchange Offer open for not less than 90 days after the date that notice
thereof is first mailed to the holders of the Existing Notes. The Company
expressly reserves the right, at any time or from time to time, to extend the
period of time during which the Exchange Offer is open, and thereby delay
acceptance for exchange of any Existing Notes, by giving oral notice (promptly
confirmed in writing) or written notice to the Exchange Agent and by giving
written notice of such extension to the holders thereof or by press release or
other public announcement communicated, unless otherwise required by applicable
law or regulation, in each case, no later than 9:00 a.m., New York City time, on
the next business day after the previously scheduled Expiration Date. During any
such extension, all Existing Notes previously tendered will remain subject to
the Exchange Offer unless properly withdrawn.
In addition, the Company expressly reserves the right to terminate or amend
the Exchange Offer and not to accept for exchange any Existing Notes not
theretofore accepted for exchange upon the occurrence of any of the events
specified below under "-- Conditions to the Exchange Offer." If any such
termination or amendment occurs, the Company will notify the Exchange Agent and
will either issue a press release or give oral or written notice to the holders
of the Existing Notes as promptly as practicable.
For purposes of the Exchange Offer, the term "business day" has the meaning
set forth in Rule 14d-1(c)(6) under the Exchange Act.
PROCEDURES FOR TENDERING EXISTING NOTES
The tender to the Company of Existing Notes by a holder thereof as set
forth below and the acceptance thereof by the Company will constitute a binding
agreement between the tendering holder and the Company upon the terms and
subject to the conditions set forth in this Prospectus and in the accompanying
Letter of Transmittal.
A holder of Existing Notes may tender the same by (i) properly completing
and signing the Letter of Transmittal or a facsimile thereof (all references in
this Prospectus to the Letter of Transmittal shall be deemed to include a
facsimile thereof) and delivering the same, together with the certificate or
certificates representing the Existing Notes being tendered and any required
signature guarantees, to the Exchange Agent at its address set forth below on or
prior to the Expiration Date (or complying with the procedure for book-entry
transfer described below) or (ii) complying with the guaranteed delivery
procedures described below. A tender will not be deemed to have been timely
received if the tendering holder's properly completed and duly signed Letter of
Transmittal accompanied by the Existing Notes is mailed prior to the Expiration
Date but is received by the Exchange Agent after the Expiration Date.
THE METHOD OF DELIVERY OF EXISTING NOTES, LETTERS OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH
DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL PROPERLY INSURED
WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO INSURE TIMELY DELIVERY. NO EXISTING NOTES OR LETTERS OF TRANSMITTAL
SHOULD BE SENT TO THE COMPANY.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the Existing Notes surrendered for
exchange pursuant thereto are tendered (i) by a registered holder of the
Existing Notes who has not completed the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the amount of an Eligible Institution (as defined herein). In the event
that signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, are required to be guaranteed, such guarantees must be by a firm
which is a member of a registered U.S. national securities exchange or a member
of the National Association of Securities Dealers, Inc. or by a clearing agency,
an insured
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<PAGE> 31
credit union, a savings association or a commercial bank or trust company having
an office or correspondent in the United States (collectively, "Eligible
Institutions"). If Existing Notes are registered in the name of a person other
than a signer of the Letter of Transmittal, the Existing Notes surrendered for
exchange must be endorsed by, or be accompanied by a written instrument or
instruments of transfer or exchange, in satisfactory form as determined by the
Company in its sole discretion, duly executed by the registered holder with the
signature thereon guaranteed by an Eligible Institution.
The Exchange Agent will make a request within two business days after the
date of receipt of this Prospectus to establish accounts with respect to the
Existing Notes at the book-entry transfer facility, The Depository Trust
Company, for the purpose of facilitating the Exchange Offer, and subject to the
establishment thereof, any financial institution that is a participant in the
book-entry transfer facility's system may make book-entry delivery of Existing
Notes by causing such book-entry transfer facility to transfer such Existing
Notes into the Exchange Agent's account with respect to the Existing Notes in
accordance with the book-entry transfer facility's procedures for such transfer.
Although delivery of Existing Notes may be effected through book-entry transfer
into the Exchange Agent's account at the book-entry transfer facility, an
appropriate Letter of Transmittal with any required signature guarantee and all
other required documents must in each case be transmitted to and received or
confirmed by the Exchange Agent at its address set forth below on or prior to
the Expiration Date, or if the guaranteed delivery procedures described below
are complied with, within the time period provided under such procedures.
If a holder desires to accept the Exchange Offer and time will not permit a
Letter of Transmittal or Existing Note to reach the Exchange Agent before the
Expiration Date or the procedure for book-entry transfer cannot be completed on
a timely basis, a tender may be effected if the Exchange Agent has received at
its address set forth below on or prior to the Expiration Date a letter,
telegram or facsimile transmission from an Eligible Institution setting forth
the name and address of the tendering holder, the names in which the Existing
Notes are registered and, if possible, the certificate numbers of the Existing
Notes to be tendered, and stating that the tender is being made thereby and
guaranteeing that within three business days after the Expiration Date the
Existing Notes in proper form for transfer (or a confirmation of book-entry
transfer of such Existing Notes into the Exchange Agent's account at the
book-entry transfer facility), will be delivered by such Eligible Institution
together with a properly completed and duly executed Letter of Transmittal (and
any other required documents). Unless Existing Notes being tendered by the
above-described method are deposited with the Exchange Agent within the time
period set forth above (accompanied or preceded by a properly completed Letter
of Transmittal and any other required documents), the Company may, at its
option, reject the tender. Copies of a Notice of Guaranteed Delivery which may
be used by Eligible Institutions for the purposes described in this paragraph
are available from the Exchange Agent.
A tender will be deemed to have been received as of the date when (i) the
tendering holder's properly completed and duly signed Letter of Transmittal
accompanied by the Existing Notes (or a confirmation of book-entry transfer of
such Existing Notes into the Exchange Agent's account at the book-entry transfer
facility) is received by the Exchange Agent, or (ii) a Notice of Guaranteed
Delivery or letter, telegram or facsimile transmission to similar effect (as
provided above) from an Eligible Institution is received by the Exchange Agent.
Issuances of New Notes in exchange for Existing Notes tendered pursuant to a
Notice of Guaranteed Delivery or letter, telegram or facsimile transmission to
similar effect (as provided above) by an Eligible Institution will be made only
against deposit of the Letter of Transmittal (and any other required documents)
and the tendered Existing Notes.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Existing Notes tendered for exchange will be
determined by the Company in its sole discretion, which determination shall be
final and binding. The Company reserves the absolute right to reject any and all
tenders of any particular Existing Notes not timely or properly tendered or to
not accept any particular Existing Notes which acceptance might, in the judgment
of the Company or its counsel, be unlawful. The Company also reserves the
absolute right to waive any defects or irregularities or conditions of the
Exchange Offer as to any particular Existing Notes either before or after the
Expiration Date (including the right to waive the ineligibility of any holder
who seeks to tender Existing Notes in the Exchange Offer). The interpretation of
the terms and conditions of the Exchange Offer as to any particular Existing
Notes either before or after the Expiration Date (including the Letter of
Transmittal and
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<PAGE> 32
the instructions thereto) by the Company shall be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of Existing Notes for exchange must be cured within such reasonable period of
time as the Company shall determine. Neither the Company, the Exchange Agent nor
any other person shall be under any duty to give notification of any defect or
irregularity with respect to any tender of Existing Notes for exchange, nor
shall any of them incur any liability for failure to give such notification.
If the Letter of Transmittal is signed by a person or persons other than
the registered holder or holders of Existing Notes, such Existing Notes must be
endorsed or accompanied by appropriate powers of attorney, in either case signed
exactly as the name or names of the registered holder or holders appear on the
Existing Notes.
If the Letter of Transmittal or any Existing Notes or powers of attorney
are signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing and, unless waived by the
Company, proper evidence satisfaction to the Company of their authority to so
act must be submitted.
By tendering, each holder will represent to the Company in the Letter of
Transmittal that, among other things, the New Notes acquired pursuant to the
Exchange Offer are being acquired in the ordinary course of business of the
person receiving such New Notes, whether or not such person is the holder, that
neither the holder nor any such other person has an arrangement or understanding
with any person to participate in the distribution of such New Notes, that
neither the holder nor any such other person is participating in or intends to
participate in the distribution of such New Notes and that neither the holder
nor any such other person is an "affiliate," as defined under Rule 405 of the
Securities Act, of the Company.
Each broker-dealer that receives New Notes for its own account in exchange
for Existing Notes, where such Existing Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, may be deemed to be an "underwriter" within the meaning of the
Securities Act and must acknowledge that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of such New
Notes. See "Plan of Distribution."
WITHDRAWAL RIGHTS
Tender of Existing Notes may be withdrawn at any time prior to the close of
business, New York City time, on the Expiration Date.
For a withdrawal to be effective, a written notice of withdrawal sent by
telegram, facsimile transmission (receipt confirmed by telephone) or letter must
be received by the Exchange Agent prior to the Expiration Date at its address
set forth below. Any such notice of withdrawal must (i) specify the name of the
person having tendered the Existing Notes to be withdrawn (the "Depositor"),
(ii) identify the Existing Notes to be withdrawn (including the certificate
number or numbers and principal amount of such Existing Notes), (iii) be signed
by the holder in the same manner as the original signature on the Letter of
Transmittal by which such Existing Notes were tendered or as otherwise described
above (including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the Trustee under the Indenture
register the transfer of such Existing Notes into the name of the person
withdrawing the tender and (iv) specify the name in which any such Existing
Notes are to be registered, if different from that of the Depositor. All
questions as to the validity, form and eligibility (including time of receipt)
of such notices will be determined by the Company in its sole discretion, which
determination will be final and binding on all parties. Any Existing Notes so
withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offer. Any Existing Notes which have been tendered for
exchange and which are properly withdrawn will be returned to the holder thereof
without cost to such holder as soon as practicable after such withdrawal.
Properly withdrawn Existing Notes may be retendered by following one of the
procedures described under "-- Procedures for Tendering Existing Notes" above at
any time on or prior to the Expiration Date.
ACCEPTANCE OF EXISTING NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
the Company will accept, promptly after the Expiration Date, all Existing Notes
properly tendered and will issue the New Notes promptly
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<PAGE> 33
after acceptance of the Existing Notes. See "-- Conditions to the Exchange
Offer" below. For purposes of the Exchange Offer, the Company shall be deemed to
have accepted properly tendered Existing Notes for exchange when, as and if the
Company has given oral or written notice thereof to the Exchange Agent.
For each Existing Note accepted for exchange, the holder of such Existing
Note will receive a New Note having a principal amount equal to that of the
surrendered Existing Note.
In all cases, issuance of New Notes for Existing Notes that are accepted
for exchange pursuant to the Exchange Offer will be made only after timely
receipt by the Exchange Agent of certificates for such Existing Notes or a
timely book-entry confirmation of such Existing Notes into the Exchange Agent's
account at the book-entry transfer facility, a properly completed and duly
executed Letter of Transmittal and all other required documents. If any tendered
Existing Notes are not accepted for any reason set forth in the terms and
conditions of the Exchange Offer or if Existing Notes are submitted for a
greater principal amount than the holder desires to exchange, such unaccepted or
non-exchanged Existing Notes will be returned without expense to the tendering
holder thereof (or, in the case of Existing Notes tendered by book-entry
transfer into the Exchange Agent's account at the Book-Entry Transfer Facility
pursuant to the book-entry transfer procedures described below, such
non-exchanged Existing Notes will be credited to an account maintained with such
Book-Entry Transfer Facility) as promptly as practicable after the expiration of
the Exchange Offer.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company
shall not be required to accept for exchange, or to issue New Notes in exchange
for, any Existing Notes and may terminate or amend the Exchange Offer if at any
time on or after the date of this Prospectus and prior to the Expiration Date
any of the following events shall occur:
(i) any action or proceeding shall have been instituted or threatened
in any court or before any governmental agency or body that in the
Company's judgment would reasonably be expected to prohibit, prevent or
otherwise impair the ability of the Company to proceed with the Exchange
Offer;
(ii) there shall occur a change in the current interpretation of the
staff of the Commission which current interpretation permits the New Notes
issued pursuant to the Exchange Offer in exchange for the Existing Notes to
be offered for resale, resold or otherwise transferred by holders thereof
(other than (i) a broker-dealer who purchases such New Notes directly from
the Company to resell pursuant to Rule 144A or any other available
exemption under the Securities Act) or (ii) a person that is an affiliate
of the Company within the meaning of Rule 405 under the Securities Act),
without compliance with the registration and prospectus delivery provisions
of the Securities Act, provided that such New Notes are acquired in the
ordinary course of such holders' business and such holders have no
arrangement with any person to participate in the distribution of the New
Notes;
(iii) a law, statute, rule or regulation shall have been adopted or
enacted which, in the Company's judgment, would reasonably be expected to
impair the ability of the Company to proceed with the Exchange Offer;
(iv) a stop order shall have been issued by the Commission or any
state securities authority suspending the effectiveness of the Registration
Statement or the qualification of the Indenture under the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act"), or proceedings shall
have been initiated or, to the knowledge of the Company, threatened for
that purpose, or any governmental approval has not been obtained, which
approval the Company shall, in its sole discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby; or
(v) any change, or any development involving a prospective change, in
the business or financial affairs of the Company has occurred which, in the
sole judgment of the Company, might materially impair the ability of the
Company to proceed with the Exchange Offer.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition or may be waived by the Company, in whole or
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<PAGE> 34
in part, at any time from time to time, if it determines in its reasonable
discretion that any of the foregoing events or conditions has occurred or exists
or has not been satisfied, subject to applicable law. The failure by the Company
at any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right and each such right shall be deemed an ongoing right which may
be asserted at any time and from time to time.
If the Company determines that it may terminate the Exchange Offer, as set
forth above, the Company may (i) refuse to accept any Existing Notes and return
any Existing Notes that have been tendered to the holders thereof, (ii) extend
the Exchange Offer and retain all Existing Notes tendered prior to the
Expiration Date, subject to the rights of such holders of tendered Existing
Notes to withdraw their tendered Existing Notes, or (iii) waive such termination
event with respect to the Exchange Offer and accept all properly tendered
Existing Notes that have not been withdrawn or otherwise amend the terms of the
Exchange Offer in any respect. If such waiver or amendment constitutes a
material change in the Exchange Offer, the Company will disclose such change by
means of a post-effective amendment to the Registration Statement of which this
Prospectus is a part and will distribute an amended or supplemented Prospectus
to each registered holder of Existing Notes, and the Company will extend the
Exchange Offer for a period of five to ten business days, depending upon the
significance of the waiver or amendment and the manner of disclosure to the
registered holders of the Existing Notes, if the Exchange Offer would otherwise
expire during such period.
The Exchange Offer is not conditioned upon any minimum principal amount of
Existing Notes being tendered for exchange.
EXCHANGE AGENT
The Bank of Nova Scotia Trust Company of New York has been appointed as the
Exchange Agent for the Exchange Offer. All executed Letters of Transmittal
should be directed to the Exchange Agent at one of the addresses set forth
below:
<TABLE>
<S> <C>
By Hand/ By Mail:
Overnight Courier: (Insured or Registered Recommended)
Mr. George Timmes Mr. George Timmes
The Bank of Nova Scotia The Bank of Nova Scotia
Trust Company of New York Trust Company of New York
One Liberty Plaza, 23rd Floor One Liberty Plaza, 23rd Floor
New York, NY 10006 New York, NY 10006
</TABLE>
By Facsimile:
Mr. George Timmes
(212) 225-5436
Questions and requests for assistance, requests for additional copies of
this Prospectus or of the Letter of Transmittal and requests for Notice of
Guaranteed Delivery should be directed to the Exchange Agent at the address and
telephone number set forth in the Letter of Transmittal.
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES
NOT CONSTITUTE A VALID DELIVERY.
SOLICITATION OF TENDERS; FEES AND EXPENSES
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payment to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith. The cash
expenses to be incurred by the Company in connection with the Exchange Offer
will be paid by the Company.
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<PAGE> 35
No person has been authorized to give any information or to make any
representations in connection with the Exchange Offer other than those contained
in this Prospectus. If given or made, such information or representations should
not be relied upon as having been authorized by the Company.
Neither the deliver of this Prospectus nor any exchange made hereunder
shall, under any circumstances, create any implication that there has been no
change in the affairs of the Company since the respective dates as of which
information is given herein. The Exchange Offer is not being made to (nor will
tenders be accepted from or on behalf of) holders of Existing Notes in any
jurisdiction in which the making of the Exchange Offer or the acceptance thereof
would not be in compliance with the laws of such jurisdiction.
TRANSFER TAXES
The Company will pay all transfer taxes, if any, applicable to the exchange
of Existing Notes pursuant to the Exchange Offer. If, however, certificates
representing New Notes or Existing Notes not tendered or accepted for exchange
are to be delivered to, or are to be registered or issued in the name of, any
person other than the registered holder of the Existing Notes tendered, or if
tendered Existing Notes are registered in the name of any person other than the
person signing the Letter of Transmittal, or if a transfer tax is imposed for
any reason other than the exchange of Existing Notes pursuant to the Exchange
Offer, then the amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the Letter of Transmittal, the amount of such transfer taxes will
be billed directly to such tendering holder.
ACCOUNTING TREATMENT
The New Notes will be recorded at the carrying value of the Existing Notes
as reflected in the Company's account records on the date of the exchange.
Accordingly, no gain or loss for accounting purposes will be recognized by the
Company upon the exchange of New Notes for Existing Notes. Expenses incurred in
connection with the issuance of the New Notes will be amortized over the term of
the New Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE; RESALES OF NEW NOTES
Holders of Existing Notes who do not exchange their Existing Notes for New
Notes pursuant to the Exchange Offer will continue to be subject to the
restrictions on transfer of such Existing Notes as set forth in the legend
thereon as a consequence of the issuance of the Existing Notes pursuant to the
exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws.
Existing Notes not exchanged pursuant to the Exchange Offer will continue to
remain outstanding in accordance with their terms. In general, the Existing
Notes may not be offered or sold unless registered under the Securities Act,
except pursuant to an exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws. The Company does not
currently anticipate that it will register the Existing Notes under the
Securities Act. However, if prior to the time the Exchange Offer is completed,
existing Commission interpretations are changed such that the Initial Notes
received by holders other than Restricted Holders in the Exchange Offer for
Registrable Notes are not or would not be, upon receipt, transferable by each
such holder without need for further compliance with Section 5 of the Securities
Act (except for the requirement to deliver a prospectus included in the Exchange
Registration Statement applicable to resales by broker-dealers of Exchange
Securities received by such broker-dealer pursuant to an Exchange Offer in
exchange for Registrable Notes other than those acquired by the broker-dealer
directly from the Company), in lieu of conducting the Exchange Offer
contemplated by Section 2(a) the Company and the Guarantors shall file under the
Securities Act a "shelf" registration statement.
Based on certain no-action letters issued by the staff of the Commission to
third parties in unrelated transactions, the Company believes that the New Notes
issued pursuant to the Exchange Offer may be offered for resale, resold or
otherwise transferred by holders thereof (other than (i) any such holder that is
an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act or (ii) any broker-dealer that purchases New Notes from the
Company to resell pursuant to Rule 144A or any other available exemption)
without compliance with the registration and prospectus delivery provisions of
the Securities Act, provided that such New
26
<PAGE> 36
Notes are acquired in the ordinary course of such holders' business and such
holders have no arrangement or understanding with any person to participate in
the distribution of such New Notes and are not participating in, and do not
intend to participate in, the distribution of such New Notes. The Company has
not sought, and does not intend to seek, its own no-action letter with regard to
the Exchange Offer. Accordingly, there can be no assurance that the staff of the
Commission would make a similar determination with respect to the Exchange
Offer. If any holder has any arrangement or understanding with respect to the
distribution of the New Notes to be acquired pursuant to the Exchange Offer,
such holder (i) could not rely on the applicable interpretations of the staff of
the Commission and (ii) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a secondary
resale transaction. A broker-dealer who holds Existing Notes that were acquired
for its own account as a result of market making or other trading activities may
be deemed to be an "underwriter" within the meaning of the Securities Act and
must, therefore, deliver a prospectus meeting the requirements of the Securities
Act in connection with any resale of New Notes. Each such broker-dealer that
receives New Notes for its own account in exchange for Existing Notes, where
such Existing Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, may be deemed to be an
"underwriter" within the meaning of the Securities Act and must acknowledge in
the Letter of Transmittal that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such New
Notes. A secondary resale transaction in the United States by a holder using the
Exchange Offer to participate in a distribution of Existing Notes must be
covered by an effective registration statement containing the selling security
holder information required by Item 507 of Regulation S-K under the Securities
Act. See "Plan of Distribution."
In addition, to comply with the securities laws of certain jurisdictions,
if applicable, the New Notes may not be offered or sold unless they have been
registered or qualified for sale in such jurisdiction or an exemption from
registration or qualification is available and is complied with. The Company has
agreed, pursuant to the Registration Rights Agreement and subject to certain
specified limitations therein, to register or qualify the New Notes for offer or
sale under the securities or blue sky laws of certain jurisdictions.
Participation in the Exchange Offer is voluntary, and holders of Existing
Notes should carefully consider whether to participate. Holders of the Existing
Notes are urged to consult their financial and tax advisors in making their own
decision on what action to take.
As a result of the making of, and upon acceptance for exchange of all
validly tendered Existing Notes pursuant to the terms of, this Exchange Offer,
the Company will have fulfilled a covenant contained in the Registration Rights
Agreement. Holders of Existing Notes who do not tender their Existing Notes in
the Exchange Offer will continue to hold such Existing Notes and will be
entitled to all the rights, and limitations applicable thereto, under the
Indenture, except for any such rights under the Registration Rights Agreement
that by their terms terminate or cease to have further effectiveness as a result
of the making of this Exchange Offer. See "Description of the Notes." All
untendered Existing Notes will continue to be subject to the restrictions on
transfer set forth in the Indenture. To the extent that Existing Notes are
tendered and accepted in the Exchange Offer, the trading market for untendered
Existing Notes could be adversely affected.
The Company may in the future seek to acquire untendered Existing Notes in
open market or privately negotiated transactions, through subsequent exchange
offers or otherwise. The terms of any such purchases or offers may differ from
the terms of the Exchange Offer.
27
<PAGE> 37
USE OF PROCEEDS
No proceeds will be received by the Company from the issuance of the New
Notes. The net proceeds from the issuance of the Existing Notes were $316.0
million. The Company used all of the net proceeds to repay a portion of the
borrowings outstanding under the Senior Credit Facility. For a description of
the terms of the Senior Credit Facility, see "Description of Other
Indebtedness -- The Company -- Senior Credit Facility."
28
<PAGE> 38
CAPITALIZATION
The following table sets forth, as of February 28, 1998, the consolidated
debt and capitalization of the Parent (i) on a pro forma basis for the
Safety-Kleen Transactions and (ii) on a pro forma basis for the Safety-Kleen
Transactions as adjusted to give effect to the issuance of the Existing Notes
and the application of the net proceeds therefrom. See "Use of Proceeds." The
following table should be read in conjunction with the "Unaudited Pro Forma
Combined Financial Information" and the consolidated financial statements and
notes thereto of the Parent appearing elsewhere herein.
<TABLE>
<CAPTION>
AS OF FEBRUARY 28, 1998
-------------------------
PRO FORMA
PRO FORMA AS ADJUSTED
---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents................................... $ 42,224 $ 33,224
========== ==========
Current portion of Term Loans............................... $ 86,000 $ 79,591
========== ==========
Long-term debt:
The Company and subsidiaries:
Senior Credit Facility(1):
Term Loans net of current portion.................... $1,564,000 $1,245,409
Revolver............................................. 124,535 124,535
9 1/4% Senior Subordinated Notes due 2008............ -- 325,000
Other long-term debt(2)................................ 17,475 17,475
---------- ----------
Total long-debt of Company........................... 1,706,010 1,712,419
---------- ----------
Parent (holding company only):
Parent IRBs(3)......................................... 65,200 65,200
Parent Promissory Note(4).............................. 60,000 60,000
---------- ----------
Total long-term debt of Parent....................... 125,200 125,200
---------- ----------
Total long-term debt........................................ 1,831,210 1,837,619
PIK Subordinated Debenture(5)............................... 350,000 350,000
Stockholders' equity(6)..................................... 1,035,093 1,035,093
---------- ----------
Total capitalization...................................... $3,216,303 $3,222,712
========== ==========
</TABLE>
- ---------------
(1) The Senior Credit Facility includes a $1.325 billion term loan facility (the
"Term Loans") and a $550.0 million revolving credit facility, which includes
a $200.0 million and $400.0 million sublimit for letters of credit and
loans, respectively (the "Revolver"). On May 31, 1998, the Company had
$192.0 million of additional borrowing availability (excluding letters of
credit) under the Revolver. Excluded from the amounts under the Senior
Credit Facility are approximately $33.9 million ($42.9 million pro forma as
adjusted) in deferred financing costs which have been deducted from
long-term debt shown in the pro forma combined balance sheet as of February
28, 1998. See "Unaudited Pro Forma Combined Financial Information" and
"Description of Other Indebtedness -- The Company -- Senior Credit
Facility."
(2) The Company has two outstanding series of industrial revenue bonds (the
"Company IRBs") issued in connection with the operation of certain of the
Company's facilities. See "Description of Other Indebtedness -- The
Company -- Company IRBs."
(3) The Parent has two outstanding series of industrial revenue bonds (the
"Parent IRBs") issued in connection with the operation of certain of the
Company's facilities. See "Description of Other Indebtedness -- The
Parent -- Parent IRBs."
(4) On May 15, 1997, the Parent issued a $60.0 million promissory note (the
"Parent Promissory Note") which matures on May 15, 2003. See "Description of
Other Indebtedness -- The Parent -- Parent Promissory Note."
(5) The PIK Subordinated Debenture is an obligation of the Parent and at the
Parent's election, interest and principal due may be paid in shares of
Parent Common Stock, subject to certain limitations. The PIK Subordinated
Debenture is subordinated in right of payment to the Parent Guarantee of the
Notes. See "Description of Other Indebtedness -- The Parent -- PIK
Subordinated Debenture."
(6) Pro forma for the Safety-Kleen Acquisition, the Parent would have had
approximately 348.9 million shares of Parent Common Stock outstanding.
29
<PAGE> 39
THE TRANSACTIONS
In November 1997, the Parent stated its intention to acquire Safety-Kleen
pursuant to a tender offer for all of the issued and outstanding shares of
common stock of Safety-Kleen (the "Tender Offer") for consideration comprised of
cash and Parent Common Stock. Safety-Kleen is a leader in servicing the
recycling and waste needs of companies in the automotive/retail repair,
industrial and other business sectors. On March 16, 1998, the Parent, a
subsidiary of the Company and Safety-Kleen entered into an agreement and plan of
merger pursuant to which the Company would acquire all of the outstanding shares
of common stock of Safety-Kleen which were not tendered pursuant to the Tender
Offer (the "Merger Agreement"). The Tender Offer expired on March 31, 1998 and,
as a result, as of April 7, 1998, the Company owned approximately 94% of the
outstanding shares of common stock of Safety-Kleen.
In May 1998, the Company consummated the Safety-Kleen Merger and acquired
100% of the outstanding shares of common stock of Safety-Kleen. The Safety-Kleen
Acquisition was completed for aggregate consideration of approximately $1.1
billion in cash and the issuance of approximately 166 million shares of Parent
Common Stock. Laidlaw Environmental also repurchased substantially all of the
outstanding $100.0 million Safety-Kleen Notes which were tendered to Laidlaw
Environmental pursuant to the Debt Tender Offer. The remaining outstanding
Safety-Kleen Notes were defeased on May 29, 1998. Laidlaw Environmental financed
the cash portion of the Safety-Kleen Acquisition and the Debt Tender Offer and
refinanced certain indebtedness with total borrowings of approximately $1.8
billion under the Senior Credit Facility. Pro forma for the Safety-Kleen
Transactions, the Rollins Acquisition and certain related transactions, the
Parent's revenues and Adjusted EBITDA for the twelve months ended February 28,
1998 would have been $1.8 billion and $497.5 million, respectively.
In May 1997, Rollins, the largest commercial hazardous waste incineration
company in North America, acquired Laidlaw's hazardous and industrial waste
operations. Upon consummation of the Rollins Acquisition, which was accounted
for as a reverse acquisition, Rollins changed its name to Laidlaw Environmental
Services, Inc. To finance the Rollins Acquisition, the Parent (i) issued 120
million shares of Parent Common Stock, (ii) issued the PIK Subordinated
Debenture and (iii) paid $349.1 million in cash to Laidlaw. Laidlaw currently
beneficially owns 35% of the outstanding Parent Common Stock (49% assuming the
conversion of the PIK Subordinated Debenture).
30
<PAGE> 40
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
Unless the context otherwise requires, all references to the "Parent" under
the heading "Unaudited Pro Forma Combined Financial Information" shall be deemed
to include the Parent, the Company and the Company's direct and indirect
subsidiaries (including Safety-Kleen).
The accompanying unaudited pro forma combined statement of income for
fiscal 1997 and the twelve months ended February 28, 1998 gives effect to the
Safety-Kleen Transactions, the Rollins Acquisition and certain related
transactions as if they occurred on September 1, 1996. The unaudited pro forma
combined statement of income for the six months ended February 28, 1998 gives
effect to the Safety-Kleen Transactions as if they occurred on September 1,
1996. The accompanying unaudited pro forma combined balance sheet at February
28, 1998 gives effect to the Safety-Kleen Transactions as if they occurred on
February 28, 1998.
The Rollins Acquisition and the Safety-Kleen Acquisition have been
accounted for using the purchase method of accounting and are based on the
assumptions in the notes below.
The Company believes that planned selling, general and administrative cost
consolidation, the consolidation of collection and processing facilities, the
increased utilization of remaining facilities and the internalization of various
waste streams resulting from the Safety-Kleen Acquisition will generate annual
cost savings of approximately $103.5 million to $165.0 million. The unaudited
pro forma combined financial information does not give effect to these cost
savings or potential cost savings yet to be realized in connection with the
Rollins Acquisition.
The unaudited pro forma combined financial statements do not purport to
represent what the Parent's results of operations or financial condition would
have been had the Rollins Acquisition and the Safety-Kleen Acquisition occurred
on the dates indicated or to predict the Parent's results of operations or
financial condition in the future. The unaudited pro forma combined financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto of the Parent and the consolidated financial
statement and notes thereto of Safety-Kleen included elsewhere in this
Prospectus.
31
<PAGE> 41
LAIDLAW ENVIRONMENTAL SERVICES, INC.
PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED AUGUST 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
HISTORICAL LAIDLAW FOR ROLLINS LAIDLAW
ROLLINS ENVIRONMENTAL ACQUISITION ENVIRONMENTAL
---------- ------------- ----------- -------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Revenues..................... $150,985 $ 678,619 $ (4,099)(Da) $ 825,505
Expenses:
Operating.................. 149,791 485,062 (4,099)(Da) 630,754
Depreciation and
amortization............. 22,606 53,506 (6,345)(Db) 69,767
Selling, general and
administrative........... 22,371 73,068 95,439
Restructuring charge....... -- 331,697 331,697
-------- --------- -------- ----------
Total expenses....... 194,768 943,333 (10,444) 1,127,657
-------- --------- -------- ----------
Operating income (loss)...... (43,783) (264,714) 6,345 (302,152)
Interest expense............. 5,856 44,273 9,625(Dc) 59,754
Other income................. -- 2,865 -- 2,865
-------- --------- -------- ----------
Income (loss) from continuing
operations before income
tax........................ (49,639) (306,122) (3,280) (359,041)
Income tax expense
(benefit).................. (17,460) (122,789) 3,251(Dd) (136,998)
-------- --------- -------- ----------
Income (loss) from continuing
operations before minority
interest................... (32,179) (183,333) (6,531) (222,043)
Minority interest (net of
tax)....................... -- (119) (119)
-------- --------- -------- ----------
Income (loss) from continuing
operations................. $(32,179) $(183,452) $ (6,531) $ (222,162)
======== ========= ======== ==========
Basic income (loss) per share
(Note D5).................. $ (1.329)
Weighted average common stock
outstanding................ 138,033
<CAPTION>
PRO FORMA
ADJUSTMENTS
HISTORICAL FOR SAFETY-KLEEN PRO FORMA
SAFETY-KLEEN ACQUISITION COMBINED
------------ ---------------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Revenues..................... $977,122 $ -- $1,802,627
Expenses:
Operating.................. 652,109 -- 1,282,863
Depreciation and
amortization............. 80,018 31,279(D1) 181,064
Selling, general and
administrative........... 129,063 -- 224,502
Restructuring charge....... -- -- 331,697
-------- --------- ----------
Total expenses....... 861,190 31,279 2,020,126
-------- --------- ----------
Operating income (loss)...... 115,932 (31,279) (217,499)
Interest expense............. 18,504 102,198(D2) 180,456
Other income................. 1,587 -- 4,452
-------- --------- ----------
Income (loss) from continuing
operations before income
tax........................ 99,015 (133,477) (393,503)
Income tax expense
(benefit).................. 38,294 (47,109)(D3) (145,813)
-------- --------- ----------
Income (loss) from continuing
operations before minority
interest................... 60,721 (86,368) (247,690)
Minority interest (net of
tax)....................... -- -- (119)
-------- --------- ----------
Income (loss) from continuing
operations................. $ 60,721 $ (86,368) $ (247,809)
======== ========= ==========
Basic income (loss) per share
(Note D5).................. $ (0.706)(D4)
Weighted average common stock
outstanding................ 351,046(D4)
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Combined Financial Information.
32
<PAGE> 42
LAIDLAW ENVIRONMENTAL SERVICES, INC.
PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
LAIDLAW HISTORICAL PRO FORMA PRO FORMA
ENVIRONMENTAL SAFETY-KLEEN ADJUSTMENTS COMBINED
------------- ------------ ----------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Revenues.............................................. $384,767 $569,508 $ -- $954,275
Expenses:
Operating........................................... 269,105 382,063 -- 651,168
Depreciation and amortization....................... 24,819 45,297 13,376(D1) 83,492
Selling, general and administrative................. 39,236 72,729 -- 111,965
-------- -------- -------- --------
Total expenses................................ 333,160 500,089 13,376 846,625
-------- -------- -------- --------
Operating income...................................... 51,607 69,419 (13,376) 107,650
Interest expense...................................... 29,489 9,358 50,993(D2) 89,840
Other income (expense)................................ 1,243 (8,235) -- (6,992)
-------- -------- -------- --------
Income from continuing operations before income tax... 23,361 51,826 (64,369) 10,818
Income tax expense.................................... 9,555 18,996 (22,607)(D3) 5,944
-------- -------- -------- --------
Income from continuing operations before minority
interest............................................ 13,806 32,830 (41,762) 4,874
Minority interest (net of tax)........................ (106) -- -- (106)
-------- -------- -------- --------
Net income.................................... $ 13,700 $ 32,830 $(41,762) $ 4,768
======== ======== ======== ========
Basic income per share................................ $ 0.075 $ 0.014(D4)
Weighted average common stock outstanding............. 181,523 348,125(D4)
Diluted income per share.............................. $ 0.069 $ --(D5)
Weighted average common stock outstanding and assumed
conversions......................................... 275,306 --(D5)
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Combined Financial Information.
33
<PAGE> 43
LAIDLAW ENVIRONMENTAL SERVICES, INC.
PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED FEBRUARY 28, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
HISTORICAL LAIDLAW FOR ROLLINS LAIDLAW
ROLLINS ENVIRONMENTAL ACQUISITION ENVIRONMENTAL
---------- ------------- ----------- -------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Revenues.................. $ 39,814 $ 750,194 $(1,206)(Da) $ 788,802
Expenses:
Operating............... 51,687 528,523 (1,206)(Da) 579,004
Depreciation and
amortization.......... 6,394 48,788 (1,866)(Db) 53,316
Selling, general and
administrative........ 6,153 78,361 84,514
Restructuring charge.... -- 331,697 331,697
-------- --------- ------- ----------
Total expenses.... 64,234 987,369 (3,072) 1,048,531
-------- --------- ------- ----------
Operating income (loss)... (24,420) (237,175) 1,866 (259,729)
Interest expense.......... 1,859 55,133 2,831(Dc) 59,823
Other income (expense).... -- 2,196 -- 2,196
-------- --------- ------- ----------
Income (loss) from
continuing operations
before income tax....... (26,279) (290,112) (965) (317,356)
Income tax expense
(benefit)............... (10,436) (114,791) 956(Dd) (124,271)
-------- --------- ------- ----------
Income (loss) from
continuing operations
before minority
interest................ (15,843) (175,321) (1,921) (193,085)
Minority interest (net of
tax).................... -- 231 -- 231
-------- --------- ------- ----------
Income (loss) from
continuing operations... $(15,843) $(175,090) $(1,921) $ (192,854)
======== ========= ======= ==========
Basic income (loss) per
share (D5)..............
Weighted average common
stock outstanding.......
<CAPTION>
PRO FORMA
ADJUSTMENTS
HISTORICAL FOR SAFETY-KLEEN PRO FORMA
SAFETY-KLEEN ACQUISITION COMBINED
------------ ---------------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Revenues.................. $1,029,450 $ -- $1,818,252
Expenses:
Operating............... 692,457 -- 1,271,461
Depreciation and
amortization.......... 82,398 28,995(D1) 164,709
Selling, general and
administrative........ 132,297 -- 216,811
Restructuring charge.... -- -- 331,697
---------- --------- ----------
Total expenses.... 907,152 28,995 1,984,678
---------- --------- ----------
Operating income (loss)... 122,298 (28,995) (166,426)
Interest expense.......... 17,359 103,343(D2) 180,525
Other income (expense).... (7,633) -- (5,437)
---------- --------- ----------
Income (loss) from
continuing operations
before income tax....... 97,306 (132,338) (352,388)
Income tax expense
(benefit)............... 36,017 (46,654)(D3) (134,908)
---------- --------- ----------
Income (loss) from
continuing operations
before minority
interest................ 61,289 (85,684) (217,480)
Minority interest (net of
tax).................... -- -- 231
---------- --------- ----------
Income (loss) from
continuing operations... $ 61,289 $ (85,684) $ (217,249)
========== ========= ==========
Basic income (loss) per
share (D5).............. $ (0.624)(D4)
Weighted average common
stock outstanding....... 348,125(D4)
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Combined Financial Information.
34
<PAGE> 44
LAIDLAW ENVIRONMENTAL SERVICES, INC.
PRO FORMA COMBINED BALANCE SHEET AS OF FEBRUARY 28, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
LAIDLAW HISTORICAL PRO FORMA PRO FORMA
ENVIRONMENTAL SAFETY-KLEEN ADJUSTMENTS COMBINED
------------- ------------ ------------ ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents............................. $ 11,766 $ 30,458 $ -- $ 42,224
Trade and other accounts receivable................... 186,273 134,183 -- 320,456
Inventories........................................... 7,857 51,849 -- 59,706
Deferred income taxes................................. 13,727 10,177 -- 23,904
Other current assets.................................. 17,280 20,662 30,000(D16) 67,942
---------- ---------- ----------- ----------
Total current assets............................ 236,903 247,329 30,000 514,232
---------- ---------- ----------- ----------
Property, plant and equipment, net...................... 1,143,605 627,697 1,277,746(D6) 3,049,048
Goodwill................................................ 68,890 143,017 575,643(D7) 787,550
Other assets............................................ 79,264 37,092 (34,053)(D8) 82,303
---------- ---------- ----------- ----------
Total assets.................................... $1,528,662 $1,055,135 $ 1,849,336 $4,433,133
========== ========== =========== ==========
LIABILITIES
Current liabilities
Accounts payable...................................... $ 64,202 $ 78,053 $ -- $ 142,255
Accrued liabilities................................... 79,557 74,719 -- 154,276
Current portion of long-term debt..................... 19,233 213,000 (146,233)(D10) 86,000
---------- ---------- ----------- ----------
Total current liabilities....................... 162,992 365,772 (146,233) 382,531
---------- ---------- ----------- ----------
Deferred items
Income taxes.......................................... 56,677 67,259 509,851(D14) 633,787
Other................................................. 165,251 69,196 -- 234,447
Long-term debt.......................................... 444,014 -- 1,353,261(D10) 1,797,275
PIK Subordinated Debenture.............................. 350,000 -- -- 350,000
---------- ---------- ----------- ----------
Total liabilities............................... 1,178,934 502,227 1,716,879 3,398,040
---------- ---------- ----------- ----------
STOCKHOLDERS' EQUITY
Common stock............................................ 182,287 6,010 160,592(D11) 348,889
Additional paid-in capital.............................. 392,512 231,175 289,458(D12) 913,145
Cumulative foreign currency translation adjustments..... (2,971) (27,145) 27,145(D13) (2,971)
Net unrealized gain on securities available for sale.... 1,870 -- (1,870)(D15) --
Retained earnings (accumulated deficit)................. (223,970) 342,868 (342,868)(D13) (223,970)
---------- ---------- ----------- ----------
Total stockholders' equity...................... 349,728 552,908 132,457 1,035,093
---------- ---------- ----------- ----------
Total liabilities and stockholders' equity...... $1,528,662 $1,055,135 $ 1,849,336 $4,433,133
========== ========== =========== ==========
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Combined Financial Information.
35
<PAGE> 45
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
A. SUMMARY OF SAFETY-KLEEN ACQUISITION
In the Tender Offer, the Company offered to exchange $18.30 in cash and 2.8
shares of Parent Common Stock for each outstanding share of common stock of
Safety-Kleen ("Safety-Kleen Common Stock"). The Company acquired in the
aggregate 55,751,582 shares of Safety-Kleen Common Stock pursuant to the Tender
Offer on April 3 and April 7, 1998.
In contemplation of the Safety-Kleen Acquisition, the Company established a
$2.1 billion Senior Credit Facility (which includes a $200.0 million letter of
credit sublimit) through an affiliate of TD Securities (USA) Inc. The Senior
Credit Facility is secured by all of the tangible assets of the combined Company
and the Guarantors to the extent required by the syndicate of banks and other
financial institutions (collectively, the "Lenders") acceptable to the Company
and the Agent that will make the loans pursuant to the Senior Credit Facility.
All of the capital stock of the Company's wholly-owned domestic subsidiaries,
including the acquired Safety-Kleen domestic subsidiaries, have been pledged as
part of such security for the Senior Credit Facility, and such subsidiaries have
guaranteed the obligations of the Company.
B. ACCOUNTING TREATMENT (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
The Safety-Kleen Acquisition has been accounted for using the purchase
method of accounting applied in accordance with generally accepted accounting
principles. Accordingly, the assets and liabilities of Safety-Kleen have been
recorded at their estimated fair value, with any difference between the amount
of such fair value and the purchase price being recorded as goodwill. The
operating results of the combined company will include the results of operations
of Safety-Kleen from and after the date of the acquisition of the Safety-Kleen
Common Stock pursuant to the Tender Offer.
The aggregate purchase price totals $1,907,263 and is comprised as follows:
<TABLE>
<S> <C> <C>
Safety-Kleen Common Stock outstanding at March 28,
1998............................................. 60,101,962
Safety-Kleen Common Stock previously acquired by
the Company...................................... (601,100)
-----------
Safety-Kleen Common Stock remaining to acquire..... 59,500,862
===========
Cash cost at $18.30 per share of Safety-Kleen
Common Stock..................................... $ 1,088,866
Cost of additional shares of Parent Common Stock to
be issued:
Number of shares of Parent Common Stock to be
issued at Exchange Ratio of 2.8............... 166,602,414
Price per share.................................. $ 4.125
Total cost............................... 687,235
-----------
1,776,101
Cost of Safety-Kleen Common Stock previously
acquired by the Company.......................... 13,000
Cost of Safety-Kleen stock options................. 43,162
Termination fees associated with prior merger
agreement........................................ 75,000
-----------
Total purchase price for Safety-Kleen
Acquisition............................ $ 1,907,263
===========
</TABLE>
The price per share of the additional shares of Parent Common Stock to be
issued of $4.125 is the average of the closing New York Stock Exchange (NYSE:
LLE) market price for the three trading days prior to and the three trading days
immediately following and including March 16, 1998, the date of the Merger
Agreement.
36
<PAGE> 46
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION -- (CONTINUED)
The purchase price has been allocated to the assets acquired and
liabilities assumed based on estimated fair values at February 28, 1998, as
follows:
<TABLE>
<S> <C>
Current assets.............................................. $ 277,329
Property, plant and equipment............................... 1,905,443
Goodwill.................................................... 718,660
Other assets................................................ 19,156
Current liabilities......................................... (365,772)
Deferred income taxes....................................... (578,357)
Other deferred items........................................ (69,196)
----------
Purchase price for Safety-Kleen Acquisition............ $1,907,263
==========
</TABLE>
C. BASIS OF PRESENTATION
The accompanying unaudited pro forma combined balance sheet gives effect to
the Safety-Kleen Acquisition as if it had occurred on February 28, 1998. The
unaudited pro forma combined statement of income for the fiscal year ended
August 31, 1997 gives effect to (a) the Rollins Acquisition and certain related
transactions under the heading "Pro Forma Laidlaw Environmental" and (b) the
Rollins Acquisition and certain related transactions and the Safety-Kleen
Transactions under the heading "Pro Forma Combined" as if each had occurred as
of September 1, 1996. The unaudited pro forma combined statement of income for
the six months ended February 28, 1998 gives effect to the Safety-Kleen
Transactions as if it had occurred as of September 1, 1996. The unaudited pro
forma combined statement of income for the twelve months ended February 28, 1998
gives effect to (a) the Rollins Acquisition and certain related transactions
under the heading "Pro Forma Laidlaw Environmental" and (b) the Rollins
Acquisition and certain related transactions and the Safety-Kleen Transactions
under the heading "Pro Forma Combined" as if each had occurred as of September
1, 1996.
The unaudited pro forma combined balance sheet at February 28, 1998
includes the balance sheet of Laidlaw Environmental at February 28, 1998 and the
balance sheet of Safety-Kleen at March 28, 1998. Since the February 28, 1998
balance sheet reflects the Rollins Acquisition on May 15, 1997, no pro forma
disclosure is required. The unaudited pro forma combined statement of income for
the year ended August 31, 1997 includes Laidlaw Environmental for the year ended
August 31, 1997, Rollins for the period September 1, 1996 to May 15, 1997, and
Safety-Kleen for the aggregate of the 16 weeks ended December 28, 1996 and 36
weeks ended September 6, 1997. The unaudited pro forma combined statement of
income for the six months ended February 28, 1998 includes Laidlaw Environmental
for the six months ended February 28, 1998 and Safety-Kleen for the aggregate of
the 17 weeks ended January 3, 1998 and the 12 weeks ended March 28, 1998. The
unaudited pro forma combined statement of income for the twelve months ended
February 28, 1998 includes Laidlaw Environmental for the twelve months ended
February 28, 1998, Rollins for the period March 1, 1997 to May 15, 1997, and for
Safety-Kleen, the aggregate of the 41 weeks ended January 3, 1998 and the 12
weeks ended March 28, 1998.
Both the recent and pending acquisitions have been presented using the
purchase method of accounting. Accordingly, the purchase price was allocated to
the assets acquired and liabilities assumed based upon management's best
preliminary estimate of their fair values and anticipated continued use in the
operations of the combined company. The preliminary allocation of the purchase
price will be subject to further adjustments as the Company finalizes the
allocation of the purchase price in accordance with generally accepted
accounting principles. Management does not anticipate that the final allocation
of the purchase price will result in a material change to income. The goodwill
acquired is being amortized over 40 years on a straight-line basis.
During the report periods, there were no material transactions between the
Parent or Laidlaw Environmental and Safety-Kleen.
The unaudited pro forma combined financial information does not purport to
be indicative of the combined financial position or combined results of
operations of the Company, Rollins and Safety-Kleen had the
37
<PAGE> 47
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION -- (CONTINUED)
transactions assumed therein occurred on the dates specified, nor are they
indicative of future financial position or results of operations. The unaudited
pro forma combined financial information does not give effect to potential cost
savings yet to be realized of the Rollins Acquisition, nor the annual cost
savings of approximately $103.5 million to $165.0 million that the Company's
management believes may be realized as a result of the Safety-Kleen Acquisition.
There can be no assurance that such cost savings, if any, will be achieved.
D. PRO FORMA ADJUSTMENTS (DOLLARS AND SHARES IN THOUSANDS)
The following adjustments and elimination entries have been made to the
unaudited pro forma combined statement of income to reflect the Rollins
Acquisition and certain related transactions, as of the beginning of fiscal year
1997 using the purchase method of accounting:
(a) To eliminate transactions between combined companies.
(b) To adjust depreciation to reflect the fair value adjustment of
property and equipment and to reflect the effects of the Rollins
Acquisition upon goodwill amortization.
(c) To adjust expense to reflect financing costs associated with the
Rollins Acquisition.
(d) To adjust income taxes (benefits) to record the pro forma income
taxes (benefit) as computed under Statement of Financial Accounting
Standard No. 109 on pro forma pre-tax income (loss).
The following adjustments and elimination entries have been made to the
unaudited pro forma combined statement of income to reflect the acquisition of
Safety-Kleen by the Company using the purchase method of accounting:
1. To adjust depreciation and amortization expense to reflect the fair value
adjustment of property, plant and equipment and the effect of the
Safety-Kleen Acquisition on goodwill amortization, as follows:
<TABLE>
<CAPTION>
YEAR SIX MONTHS TWELVE MONTHS
ENDED ENDED ENDED
AUGUST 31, FEBRUARY 28, FEBRUARY 28,
1997 1998 1998
------------ ------------ -------------
<S> <C> <C> <C>
To eliminate Safety-Kleen's estimated historical
intangible and other asset amortization
expense......................................... $(18,632) $(11,579) $(20,916)
To record amortization expense related to goodwill
as a result of the Safety-Kleen Acquisition..... 17,967 8,983 17,967
To record depreciation expense related to certain
Safety-Kleen property, plant and equipment
(primarily buildings and land improvements),
written up to estimated fair value.............. 31,944 15,972 31,944
-------- -------- --------
Total adjustment......................... $ 31,279 $ 13,376 $ 28,995
======== ======== ========
</TABLE>
38
<PAGE> 48
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION -- (CONTINUED)
2. To adjust interest expense for the impact of the additional long-term debt
associated with the Safety-Kleen Acquisition, as follows:
<TABLE>
<CAPTION>
YEAR SIX MONTHS TWELVE MONTHS
ENDED ENDED ENDED
AUGUST 31, FEBRUARY 28, FEBRUARY 28,
1997 1998 1998
------------ ------------ -------------
<S> <C> <C> <C>
To eliminate historical Safety-Kleen interest
expense.......................................... $(18,504) $(9,358) $(17,359)
To eliminate interest expense on refinanced debt of
the Company...................................... (30,133) (15,067) (30,133)
To record interest expense on $1,774,535(1) of
borrowings at 8.5%(2) under the Senior Credit
Facility......................................... 150,835 75,418 150,835
-------- ------- --------
Total adjustment.......................... $102,198 $50,993 $103,343
======== ======= ========
</TABLE>
- ---------------
(1) Includes long-term debt associated with the Safety-Kleen Acquisition
(Note D10) and anticipated refinancing of Safety-Kleen historical debt
of $213,000.
(2) Calculated based on current rates pursuant to the terms of the Senior
Credit Facility, other costs and the effect of interest rate swap
agreements. See "Description of Other Indebtedness -- The Company --
Senior Credit Facility."
3. To adjust income taxes (benefits) to record the pro forma income taxes
(benefits) as computed under SFAS 109 on pro forma pre-tax income (loss).
4. Pro forma weighted average common and common stock equivalents outstanding
comprise:
<TABLE>
<CAPTION>
YEAR SIX MONTHS TWELVE MONTHS
ENDED ENDED ENDED
AUGUST 31, FEBRUARY 28, FEBRUARY 28,
1997 1998 1998
------------ ------------ -------------
<S> <C> <C> <C>
Laidlaw Environmental weighted average
historical................................... 138,033 181,523 181,523
Adjustment for Rollins Acquisition............. 46,411 -- --
Additional shares of Parent Common Stock to be
issued in connection with the Safety-Kleen
Acquisition (see Note B)..................... 166,602 166,602 166,602
Percentage of shares of Parent Common Stock
held by former Safety-Kleen shareholders
after the Safety-Kleen Acquisition........... 48.0% 47.7% 47.7%
Shares of Parent Common Stock outstanding...... 180,435 182,287 182,287
Pro forma shares of Parent Common Stock........ 347,037 348,889 348,889
Pro forma weighted average total............... 351,046 348,125 348,125
======= ======= =======
Pro forma income (loss) per share.............. $(0.706) $ 0.014 $(0.624)
======= ======= =======
</TABLE>
5. Diluted earnings per share amounts, which would include the dilutive effect
of the assumed conversions of potential common shares, have not been
included for the year ended August 31, 1997 nor for the six and twelve
months ended February 28, 1998 as the effect of such inclusion would be
anti-dilutive.
The following adjustments and eliminations have been made to the unaudited
pro forma combined balance sheet to reflect the Safety-Kleen Acquisition using
the purchase method of accounting.
6. To write-up certain Safety-Kleen property, plant and equipment to fair
value. Total write-up represents $25,000 for land, $75,000 for land
improvements (parking lots, drainage systems, waste containment systems,
etc.) and $1,177,746 for buildings.
39
<PAGE> 49
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION -- (CONTINUED)
7. To eliminate the historical book value of Safety-Kleen's intangible assets
and record the goodwill resulting from the Safety-Kleen Acquisition as
follows:
<TABLE>
<S> <C>
Eliminate historical Safety-Kleen intangible assets......... $(143,017)
Record goodwill arising from the Safety-Kleen Acquisition
(See Note B).............................................. 718,660
---------
Net goodwill adjustment........................... $ 575,643
=========
</TABLE>
8. To adjust the historical book value of other assets as follows:
<TABLE>
<S> <C>
Write-off the estimated book value of Safety-Kleen's other
assets.................................................... $17,936
To eliminate cost of shares of Safety-Kleen Common Stock
previously acquired by the Company........................ 13,000
To eliminate unrealized gain on investment in Safety-Kleen
Common Stock previously acquired by the Company and
classified as securities available for sale............... 3,117
-------
Net other assets adjustment....................... $34,053
=======
</TABLE>
9. The Company's management estimates that approximately $55.0 million of
costs related to facility closures, severance costs and other direct
acquisition costs would be incurred in connection with the Safety-Kleen
Acquisition; these estimates of costs are not yet based on sufficient
factual information so as to be included as pro forma adjustments and are
subject to change as additional information becomes available.
10. To record the additional long-term debt associated with the Safety-Kleen
Acquisition, as follows:
<TABLE>
<S> <C>
Cash component of acquiring outstanding Safety-Kleen Common
Stock..................................................... $1,088,866
Cost of stock options....................................... 43,162
Termination fee associated with prior merger agreement...... 75,000
----------
Total additional long-term debt............................. 1,207,028
Current portion adjustment.................................. 146,233
----------
Net long-term debt adjustment..................... $1,353,261
==========
</TABLE>
11. To record the additional Parent Common Stock associated with the
Safety-Kleen Acquisition, as follows:
<TABLE>
<S> <C>
Eliminate historical Safety-Kleen Common Stock.............. $ (6,010)
Issuance of additional Parent Common Stock (Note B)......... 166,602
--------
Total Parent Common Stock adjustment.............. $160,592
========
</TABLE>
12. To record the impact on additional paid-in capital associated with the
Safety-Kleen Acquisition, as follows:
<TABLE>
<S> <C>
Eliminate historical Safety-Kleen paid in capital........... $(231,175)
Issuance of additional Parent Common Stock (Note B)......... 520,633
---------
Total additional paid-in capital adjustment....... $ 289,458
=========
</TABLE>
13. To eliminate historical Safety-Kleen retained earnings and cumulative
foreign currency translation adjustment.
40
<PAGE> 50
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION -- (CONTINUED)
14. To record the impact on deferred income taxes as follows:
<TABLE>
<S> <C>
To record the incremental change in the Company's tax
liability and benefit which results from the adjustment of
certain assets and the recording of certain liabilities
utilizing the Federal statutory rate of 35% plus an
effective state rate of 5%................................ $511,098
To eliminate deferred taxes on unrealized gain on investment
in Safety-Kleen Common Stock previously acquired by the
Company and classified as securities available for sale... (1,247)
--------
Total deferred tax adjustment..................... $509,851
========
</TABLE>
15. To eliminate unrealized gain, net of deferred taxes on investment in
Safety-Kleen Common Stock previously acquired by the Company and classified
as securities available for sale.
16. To record estimated income taxes recoverable in connection with the payment
of termination fees associated with a prior merger agreement.
41
<PAGE> 51
SELECTED CONSOLIDATED FINANCIAL DATA
SELECTED HISTORICAL FINANCIAL DATA OF LAIDLAW ENVIRONMENTAL
The selected consolidated financial data set forth below for, and as of the
end of, each of the years in the three-year period ended August 31, 1997 are
derived from the consolidated financial statements of the Parent, which have
been audited by Coopers & Lybrand L.L.P., independent auditors. The selected
consolidated financial data set forth below for, and as of the end of, each of
the years in the two-year period ended August 31, 1994 are derived from the
financial statements of Laidlaw. The selected consolidated financial data set
forth below for the six months ended February 28, 1997 and 1998 are derived from
the unaudited interim financial statements of the Parent. In the opinion of the
Parent's management, such unaudited interim statements include all adjustments
(consisting of only normal recurring accruals) necessary for a fair presentation
of the Parent's financial position and results of operations for such periods.
The results of operations for the six months ended February 28, 1998 are not
necessarily indicative of the results that may be expected for the full year.
The selected consolidated financial data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Laidlaw Environmental" and the consolidated financial statements
and notes thereto of the Parent appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED AUGUST 31, FEBRUARY 28,
--------------------------------------------------------- -----------------------
1993(1) 1994 1995 1996 1997 1997 1998
-------- -------- ---------- ---------- --------- ---------- ----------
(IN THOUSANDS EXCEPT RATIOS AND PER SHARE INFORMATION)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues................................. $511,554 $517,804 $ 599,241 $ 652,973 $ 678,619 $ 313,192 $ 384,767
Expenses:
Operating.............................. -- 354,499 428,932 473,563 485,062 225,644 269,105
Depreciation and amortization.......... -- 48,356 48,386 48,291 53,506 29,537 24,819
Selling, general and administrative.... -- 69,401 62,064 73,800 73,068 33,943 39,236
Restructuring charge(2)................ -- -- -- -- 331,697 -- --
-------- -------- ---------- ---------- --------- ---------- ----------
Operating income (loss).................. -- 45,548 59,859 57,319 (264,714) 24,068 51,607
Allocated interest expense............... -- 30,961 36,846 41,506 24,030 16,281 --
Interest expense......................... -- 3,039 4,296 5,344 20,243 2,348 29,489
Other income............................. -- 14,183 2,967 1,391 2,865 1,912 1,243
Income (loss) from continuing operations
before income tax...................... 17,066 25,731 21,684 11,860 (306,122) 7,351 23,361
Income tax expense (benefit)............. 5,200 3,200 4,769 2,500 (122,789) 1,557 9,555
Income (loss) from continuing operations
before minority interest............... 11,866 22,531 16,915 9,360 (183,333) 5,794 13,806
Minority interest (net of tax)........... (212) -- (150) (2,646) (119) (456) (106)
Income (loss) from continuing
operations............................. 11,654 22,531 16,765 6,714 (183,452) 5,338 13,700
Income (loss) from discontinued
operations (net of tax)................ -- -- 819 1,496 20 (214) --
-------- -------- ---------- ---------- --------- ---------- ----------
Net income (loss)........................ $ 11,654 $ 22,531 $ 17,584 $ 8,210 $(183,432) $ 5,124 $ 13,700
======== ======== ========== ========== ========= ========== ==========
PER SHARE DATA:
Basic income per shares:
Income (loss) from continuing
operations........................... $ 0.097 $ 0.188 $ 0.140 $ 0.056 $ (1.329) $ 0.044 $ 0.075
Income (loss) from discontinued
operations........................... -- -- 0.007 0.012 -- (0.020) --
Net income (loss)...................... 0.097 0.188 0.147 0.068 (1.329) 0.042 0.075
Diluted income per share(3)
Income (loss) from continuing
operations........................... 0.097 0.188 0.140 0.056 (1.329) 0.044 0.069
Income (loss) from discontinued
operations........................... -- -- 0.007 0.012 -- (0.020) --
Net income (loss)...................... 0.097 0.188 0.147 0.068 (1.329) 0.042 0.069
Cash dividends per common share.......... -- -- -- -- -- -- --
OTHER DATA:
EBITDA(4)................................ -- $ 93,904 $ 108,245 $ 105,610 $ 120,489 $ 53,605 $ 76,426
Cash interest expense.................... -- 34,000 41,142 46,850 38,464 18,629 19,552
Ratio of earnings to fixed charges(5).... -- 1.60x 1.41x 1.20x (5) 1.30x 1.67x
</TABLE>
42
<PAGE> 52
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED AUGUST 31, FEBRUARY 28,
--------------------------------------------------------- -----------------------
1993(1) 1994 1995 1996 1997 1997 1998
-------- -------- ---------- ---------- --------- ---------- ----------
(IN THOUSANDS EXCEPT RATIOS AND PER SHARE INFORMATION)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (AT PERIOD END)
Working capital.......................... 119,522 90,831 60,075 40,677 76,095 94,707 73,911
Total assets............................. 947,976 974,053 1,367,411 1,491,294 1,610,878 1,469,941 1,528,662
Long-term debt........................... 24,253 18,454 55,149 48,556 528,010 48,053 444,014
Stockholders' equity(6).................. 795,887 798,597 1,094,777 1,094,777 327,965 1,126,689 349,728
Weighted average common stock
outstanding............................ 120,000 120,000 120,000 120,000 138,033 120,000 181,523
Weighted average common stock outstanding
and assumed conversions................ 120,000 120,000 120,000 120,000 165,439 120,000 275,306
</TABLE>
- ---------------
(1) Prior to May 15, 1997, the date of the Rollins Acquisition, the Company was
operated as a division of Laidlaw and, accordingly, the Company's results of
operations were included in the financial statements of Laidlaw. Certain of
the selected financial data for fiscal 1993 were combined with that of
Laidlaw and were not available on a separate basis.
(2) Reflects a non-recurring restructuring charge of $331.7 million ($200.0
million after tax or $1.45 per share) incurred in connection with the
closing of certain of the operating facilities that had become redundant,
and an impairment in the carrying value of certain operating facilities due
to lower than expected future cash flows, as a result of the Rollins
Acquisition.
(3) Inclusion of diluted per share amounts would have been anti-dilutive in
fiscal 1997. No dilutive components existed prior to 1997.
(4) EBITDA represents operating income plus (i) depreciation and amortization
and (ii) in the case of fiscal 1997 only, the $331.7 million non-recurring
restructuring charge incurred in fiscal 1997 in connection with the Rollins
Acquisition. EBITDA is presented because it provides useful information
regarding the Company's ability to service debt. EBITDA should not be
considered as an alternative measure of operating results or cash flow from
operations (as determined in accordance with generally accepted accounting
principles).
(5) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of earnings before income taxes plus fixed charges. Fixed charges
consist of interest expense, amortization of debt issuance costs and the
portion of rental expense that represents the interest factor. In fiscal
1997, earnings were insufficient to cover fixed charges by $249.8 million.
(6) For fiscal years 1993 to 1996 inclusive, stockholders' equity represents the
net investment of Laidlaw in Laidlaw Environmental.
43
<PAGE> 53
SELECTED HISTORICAL FINANCIAL DATA OF SAFETY-KLEEN
The selected consolidated financial data set forth below for, and as of the
end of, each of the years in the five-year period ended January 3, 1998 are
derived from the consolidated financial statements of Safety-Kleen, which have
been audited by Arthur Andersen LLP, independent auditors. The selected
consolidated financial data set forth below for the 12 weeks ended March 28,
1998 and March 22, 1997 are derived from the unaudited interim financial
statements of Safety-Kleen. In the opinion of Safety-Kleen's management, such
unaudited interim financial statements include all adjustments (consisting of
only normal recurring accruals) necessary for a fair presentation of
Safety-Kleen's financial position and results of operations for such periods.
The results of operations for the 12 weeks ended March 28, 1998 are not
necessarily indicative of the results that may be expected for the full year.
The selected historical financial data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Safety-Kleen" and the Consolidated Financial Statements and Notes
thereto of Safety-Kleen appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
TWELVE WEEKS ENDED
------------------------
FISCAL YEAR MARCH 22, MARCH 28,
----------------------------------------------------------- ---------- -----------
1993 1994 1995 1996 1997(1) 1997 1998
--------- -------- ---------- ---------- ---------- ---------- -----------
(IN THOUSANDS EXCEPT RATIO AND PER SHARE INFORMATION)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues................................ $ 795,508 $791,267 $ 859,251 $ 923,126 $1,007,903 $ 220,230 $ 241,777
Expenses:
Operating............................. 533,448 510,306 559,418 603,003 676,509 148,745 164,693
Selling, general and administrative... 109,923 103,907 113,569 122,892 129,959 30,256 32,594
Depreciation and amortization......... 81,481 77,730 77,801 77,741 81,010 17,658 19,046
Restructuring charge (credit)......... 179,000 -- (15,217) -- -- -- --
Special charge for environmental
remediation costs................... 50,000 -- 11,956 -- -- -- --
--------- -------- ---------- ---------- ---------- ---------- -----------
Operating income (loss)................. (158,344) 99,324 111,724 119,490 120,425 23,571 25,444
Interest expense........................ 11,111 15,209 20,230 19,240 18,108 4,361 3,612
Other income (expense).................. 846 711 974 1,398 (1,817) 227 (5,589)
Income (loss) from continuing operations
before income tax..................... (168,609) 84,826 92,468 101,648 100,500 19,437 16,243
Income tax expense (benefit)............ (67,263) 34,732 39,165 40,539 37,330 7,599 6,286
--------- -------- ---------- ---------- ---------- ---------- -----------
Net income (loss)....................... $(101,346) $ 50,094 $ 53,303 $ 61,109 $ 63,170 $ 11,838 $ 9,957
========= ======== ========== ========== ========== ========== ===========
PER SHARE DATA:
Income (loss) per share from continuing
operations
Basic................................. $ (1.76) $ 0.87 $ 0.92 $ 1.05 $ 1.08 $ 0.20 $ 0.17
Diluted............................... (1.76) 0.87 0.92 1.05 1.07 0.20 0.16
Cash dividends per common share......... 0.36 0.36 0.36 0.36 0.36 0.09 0.09
OTHER DATA:
EBITDA(2)............................... $ 102,137 $177,054 $ 174,308 $ 197,231 $ 201,435 $ 41,229 $ 44,490
Cash interest expense................... 11,111 15,209 20,230 19,240 18,108 4,361 3,612
Ratio of earnings to fixed charges(3)... (3) 4.81x 4.24x 4.42x 4.18x 3.66x 3.37x
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital......................... $ 53,472 $ 31,766 $ 43,532 $ 72,340 $ 68,983 $ 75,361 $ (118,443)
Total assets............................ 950,664 973,444 1,009,050 1,044,823 1,034,706 1,048,933 1,055,135
Long-term debt.......................... 288,633 284,125 283,715 276,954 214,234 268,341 --
Stockholders' equity.................... 362,664 396,336 433,435 480,290 529,467 480,047 552,908
Weighted average common stock
outstanding........................... 57,679 57,741 57,813 58,089 58,415 58,258 59,652
Weighted average common stock
outstanding and assumed conversions... 57,679 57,741 57,857 58,152 58,926 58,420 61,131
</TABLE>
44
<PAGE> 54
- ---------------
(1) Fiscal 1997 was a fifty-three week year. All other years presented were
fifty-two weeks.
(2) EBITDA represents operating income plus (i) depreciation and amortization
plus or minus (ii) non-recurring restructuring charges or credits. EBITDA
should not be considered as an alternative measure of operating results or
cash flow from operations (as determined in accordance with generally
accepted accounting principles).
(3) For purposes of computing the ratio of earnings to fixed charges, earnings
consist of earnings before income taxes plus fixed charges. Fixed charges
consist of interest expense, amortization of debt issuance costs and the
portion of rental expense that represents the interest factor. In fiscal
1993, earnings were insufficient to cover fixed charges by $150.6 million.
45
<PAGE> 55
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS -- LAIDLAW ENVIRONMENTAL
The following discussion and analysis, which does not give effect to the
Safety-Kleen Acquisition, represents the financial condition and results of
operations of the Parent and its consolidated subsidiaries and is based on and
should be read in conjunction with the consolidated financial statements and
notes thereto of the Parent included elsewhere in this Prospectus. The Parent is
a holding company only and has no independent business operations, and all of
the business operations of the Parent are conducted through the Company and its
subsidiaries. The consolidated financial statements of the Parent do not give
effect to the Safety-Kleen Acquisition and, with respect to the Rollins
Acquisition, any period prior to May 15, 1997. Certain statements in the
following discussion and analysis are "forward-looking statements." See
"Disclosure Regarding Forward-Looking Statements."
OVERVIEW -- LAIDLAW ENVIRONMENTAL
The historical results of operations of the Parent represent, for any
period prior to May 15, 1997, certain of the hazardous and industrial waste
operations of Laidlaw ("Old LESI"). As a division of Laidlaw, Old LESI greatly
expanded its operations when it acquired United States Pollution Control, Inc.
("USPCI"), Union Pacific Corporation's hazardous waste management business, in
December 1994. The acquisition of USPCI greatly enhanced Old LESI's service
breadth and depth as well as its customer base, both by size and geography. The
acquisition provided over $200.0 million in annualized revenue to Old LESI.
Through the USPCI transaction, Old LESI acquired substantial hazardous and
non-hazardous landfill capacity and an expanded rail transport capability.
In May 1997, Rollins, the largest commercial hazardous waste incineration
company in North America, acquired Old LESI. Upon consummation of the Rollins
Acquisition, which was accounted for as a reverse acquisition, Rollins changed
its name to Laidlaw Environmental Services, Inc. Laidlaw currently beneficially
owns 35% of the outstanding Parent Common Stock (49% assuming the conversion of
the PIK Subordinated Debenture). To finance the Rollins Acquisition, the Parent
(i) issued 120 million shares of Parent Common Stock, (ii) issued the $350.0
million PIK Subordinated Debenture and (iii) paid $349.1 million in cash to
Laidlaw.
In May 1998, the Company consummated the Safety-Kleen Acquisition for
aggregate consideration of approximately $1.1 billion in cash and the issuance
of approximately 166 million shares of Parent Common Stock. In connection with
the Safety-Kleen Acquisition, the Company consummated the Debt Tender Offer. The
Company financed the cash portion of the Safety-Kleen Acquisition and the Debt
Tender Offer and refinanced certain indebtedness with total borrowings of $1.8
billion under the Senior Credit Facility. The Safety-Kleen Acquisition has been
accounted for using the purchase method of accounting. The Safety-Kleen
Acquisition substantially increased the scope of Laidlaw Environmental's
business. Pro forma for the Safety-Kleen Transactions, the Rollins Acquisition
and certain related transactions, the Parent's revenues and operating income
(exclusive of the restructuring charge) for fiscal 1997 would have been $1.8
billion and $114.2 million, respectively, compared to $678.6 million and $67.0
million, respectively, on an actual basis. As a result of the impact of the
Safety-Kleen Transactions, the Parent believes that its historical results of
operations (which do not give effect to the Safety-Kleen Acquisition and, with
respect to the Rollins Acquisition, any period prior to May 15, 1997) do not
reflect the current operations of the Parent.
On May 29, 1998, the Company completed the issuance of aggregate principal
amount of $325.0 million of the Existing Notes. The net proceeds from the
issuance of the Existing Notes were used to repay a portion of the borrowings
outstanding under the Senior Credit Facility. In addition on May 29, 1998, all
of the outstanding $100.0 million principal amount of the Safety-Kleen Notes
were purchased in the Debt Tender Offer or defeased.
46
<PAGE> 56
RESULTS OF OPERATIONS -- LAIDLAW ENVIRONMENTAL
SIX MONTHS ENDED FEBRUARY 28, 1998 COMPARED WITH SIX MONTHS ENDED FEBRUARY 28,
1997
The following table sets forth, for each line item presented for the
periods indicated the amount of such line item and such amount as a percentage
of the Parent's revenue for such period:
<TABLE>
<CAPTION>
SIX MONTHS ENDED FEBRUARY 28,
--------------------------------------------------
1997 1998
----------------------- -----------------------
(IN MILLIONS) (IN MILLIONS)
<S> <C> <C> <C> <C>
Revenue................................... $313.2 100.0% $384.8 100.0%
Operating expense......................... 225.7 72.1 269.1 69.9
Depreciation and amortization............. 29.5 9.4 24.8 6.5
Selling, general and administrative....... 33.9 10.8 39.3 10.2
------ ------
Operating income.......................... $ 24.1 7.7% $ 51.6 13.4%
====== ======
</TABLE>
Revenues
The following table sets forth, for the periods indicated, the revenue
attributable to each line of business of the Parent and such revenue as a
percentage of the Parent's revenue for such period:
<TABLE>
<CAPTION>
SIX MONTHS ENDED FEBRUARY 28,
--------------------------------------------------
1997 1998
----------------------- -----------------------
(IN MILLIONS) (IN MILLIONS)
<S> <C> <C> <C> <C>
Service Center............................ $140.0 38% $170.0 37%
Landfill.................................. 90.0 24 71.6 16
Incinerator............................... 27.1 7 92.6 20
Transportation............................ 46.6 13 37.3 8
Specialty Services........................ 64.9 18 88.5 19
------ ------ ------ ------
368.6 100% 460.0 100%
====== ======
Less: Intercompany eliminations........... (55.4) (75.2)
------ ------
Total revenue................... $313.2 $384.8
====== ======
</TABLE>
Revenues increased $71.6 million, or 22.9%, to $384.8 million during the
six months ended February 28, 1998 compared to the six months ended February 28,
1997. During the six months ended February 28, 1998, revenue for incinerators
increased $65.5 million, or 241.7%, while service center revenues increased
$30.0 million, or 21.4% during the same period, each reflecting the inclusion of
the acquired Rollins business. During the six months ended February 28, 1998,
revenue from specialty service operations increased $23.6 million, or 36.4%, due
to increased harbor related dredging, treatment and disposal management
activities. Revenue from landfill operations decreased $18.4 million, or 20.4%,
during the six months ended February 28, 1998 compared to the comparable prior
year period primarily due to the sale of an industrial and municipal solid waste
landfill on December 18, 1997 and generally lower receipts at the Company's
non-hazardous waste landfills. During the six months ended February 28, 1998,
revenue from transportation operations decreased $9.3 million, or 20.0%,
impacted by the lower landfill waste volumes. Revenue from intercompany sources
increased $19.8 million, or 35.7%, due to the redirection of waste streams for
internal disposal. As a result, the Company increased internalization of waste
disposal activities to 77% during the six months ended February 28, 1998, up
from 68% in the prior year period.
47
<PAGE> 57
Management's estimates of the components of changes in the Parent's
consolidated revenue are as follows:
<TABLE>
<CAPTION>
PERCENTAGE INCREASE
(DECREASE)
-------------------
<S> <C>
Expansion of customer base.................................. 24.2%
Other, primarily through volume and price changes........... 7.6
Divestitures and closures................................... (8.2)
Foreign exchange rate changes............................... (0.7)
----
Total............................................. 22.9%
====
</TABLE>
The comparative increase in revenue for the six months ended February 28,
1998 was primarily due to the inclusion of the acquired operations of Rollins.
Revenues from existing operations were supported by increased activity by the
Company's harbor related dredging, treatment and disposal operations. Volume
related increases were somewhat offset by reduced volumes at certain industrial
waste landfills. Revenues during the six months ended February 28, 1997 included
contributions from an industrial and municipal solid waste landfill which was
sold on December 18, 1997 as well as a wastewater facility and the Clive, Utah
incineration facility, both of which were closed in the six months ended
February 28, 1998.
Operating Expenses
Operating expenses increased $43.4 million, or 19.2%, to $269.1 million
during the six months ended February 28, 1998 compared to the prior year period.
The increase was primarily attributable to additional business obtained as part
of the Rollins Acquisition. As a percentage of revenue, operating expense
decreased to 69.9% in the six months ended February 28, 1998 from 72.1% in the
comparable prior year period, primarily due to stabilized pricing, increased
utilization of existing facilities and ongoing cost reduction initiatives.
Depreciation and Amortization Expense
Depreciation and amortization expense decreased $4.7 million, or 15.9%, to
$24.8 million during the six months ended February 28, 1998, compared to the
prior year period. The decrease was related to the sale of an industrial and
municipal solid waste landfill on December 18, 1997, generally reduced
non-hazardous landfill cell space consumption and the closures of a wastewater
facility and the Clive, Utah incineration facility. As a percentage of revenue,
depreciation and amortization expense decreased to 6.5% in the six months ended
February 28, 1998 from 9.4% in the comparable prior year period.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $5.4 million, or
15.9%, to $39.3 million during the six months ended February 28, 1998, versus
the prior year period. As a percentage of revenue, selling, general and
administrative expenses decreased during the six months ended February 28, 1998
to 10.2% from 10.8% in the comparable prior year period due to cost reduction
measures and economies of scale gained through the Rollins Acquisition.
Interest Expense
Interest expense (net of amount capitalized) increased $10.9 million, or
58.3%, to $29.5 million during the six months ended February 28, 1998 over the
prior year period primarily as a result of the recapitalization related to the
Rollins Acquisition. Prior to May 15, 1997 interest expense was allocated from
Laidlaw.
Income Tax Expense
Prior to May 15, 1997, the Parent's operations were included in the
consolidated tax returns of Laidlaw. Income taxes were calculated using
applicable income tax rates on income for tax purposes on a separate return
basis. Effective May 15, 1997, the Parent files a separate return and,
accordingly, income taxes have been calculated at applicable income tax rates.
48
<PAGE> 58
Fiscal 1997 compared with Fiscal 1996
The following table sets forth, for each line item presented, for the
periods indicated, the amount of such line item and such amount as a percentage
of the Parent's revenue for such period:
<TABLE>
<CAPTION>
FISCAL
------------------------------------------------
1996 1997
---------------------- ----------------------
(IN MILLIONS) (IN MILLIONS)
<S> <C> <C> <C> <C>
Revenue..................................... $653.0 100.0% $678.6 100.0%
Operating expense........................... 473.6 72.5 485.1 71.5
Depreciation and amortization............... 48.3 7.4 53.5 7.9
Selling, general and administrative......... 73.8 11.3 73.1 10.7
------ ------
Operating income............................ $ 57.3 8.8% $ 66.9 9.9%
====== ======
</TABLE>
Revenues
The following table sets forth, for the periods indicated, the revenue
attributable to each line of business of the Parent and such revenue as a
percentage of the Parent's revenue for such period:
<TABLE>
<CAPTION>
FISCAL
--------------------------------------------
1996 1997
-------------------- --------------------
(IN MILLIONS) (IN MILLIONS)
<S> <C> <C> <C> <C>
Service Center................................. $ 294.8 39% $ 301.6 38%
Landfill....................................... 190.3 25 177.1 22
Incinerator.................................... 31.4 4 89.8 11
Transportation................................. 89.9 12 95.4 12
Specialty Services............................. 148.0 20 140.4 17
------- --- ------- ---
754.4 100% 804.3 100%
=== ===
Less: Intercompany eliminations................ (101.4) (125.7)
------- -------
Total revenue........................ $ 653.0 $ 678.6
======= =======
</TABLE>
Revenues increased by $25.6 million, or 3.9%, to $678.6 million during
fiscal 1997, compared to fiscal 1996, supported primarily by increases in the
incinerator and service center lines of business. Revenue for incinerators
increased 186.0% in fiscal 1997 from fiscal 1996 reflecting the inclusion of the
acquired Rollins' incineration facilities effective May 15, 1997. Service center
revenue increased 2.3% in fiscal 1997 over fiscal 1996, also reflecting the
Rollins Acquisition. Landfill revenue decreased 6.9% in fiscal 1997 primarily
due to nonrecurring event projects performed in the comparable prior year period
by Laidlaw Environmental's industrial landfill in Utah, the most significant of
which included management and disposal activities related to dredging in the New
York/New Jersey harbor area. Transportation revenue increased 6.1% in fiscal
1997, while specialty services decreased 5.1% in fiscal 1997 from fiscal 1996.
Processing of intercompany streams increased 24.0% in fiscal 1997 over fiscal
1996, reflecting the increased utilization of the acquired Rollins' incineration
facilities. As a result, Laidlaw Environmental increased the internalization of
waste disposal activities to 68.0% in fiscal 1997, up from 50.0% in fiscal 1996.
Management anticipates increasing the internalization of waste disposal
activities to 75.0% with a full 12-month contribution from the Rollins
Acquisition.
Management's estimates of the components of changes in the Parent's
consolidated revenue are as follows:
<TABLE>
<CAPTION>
PERCENTAGE INCREASE
(DECREASE)
-------------------
<S> <C>
Expansion of customer base by acquisition................... 6.7%
Other, primarily through volume and price changes........... (2.7)
Foreign exchange rate changes............................... (0.1)
----
Total............................................. 3.9%
====
</TABLE>
49
<PAGE> 59
The comparative increase in revenue for fiscal 1997 was primarily due to
the inclusion of acquired operations, the majority of which related to the
Rollins Acquisition. The increase was partially offset by lower pricing and
volumes received in the early portion of fiscal 1997. Lower volumes were
primarily related to dredging activities performed throughout fiscal 1996 by
Laidlaw Environmental's landfill in Utah. Revenue also decreased during fiscal
1997 due to pricing and volume reductions at the Company's government services
locations, the closure of a wastewater facility in May 1997 and the planned
downsizing of its Gulf Coast remedial operations. The negative effect of these
price and volume reductions were offset by improvements, primarily in the fourth
quarter of fiscal 1997, related to increased activity at certain of the
Company's landfills and at its PCB management operations. Additional harbor
dredging project work begun in the fourth quarter of fiscal 1997 was also a
positive factor.
The Company continues to focus on developing its sales force in order to
expand the customer base in the core markets in which it operates. While the
Company has taken action to protect its market share in existing regions and has
established new business relationships, significant price competition has
impacted revenue growth. The Company continues to take pricing actions in
response to industry conditions as it attempts to maintain a competitive mix of
price, performance and customer support services while managing profitability
and growth. The Company strives to mitigate the effects of price reductions by
reducing operating costs.
Operating Expenses
Operating expenses for fiscal 1997 increased $11.5 million, or 2.4%, to
$485.1 million compared to fiscal 1996. The increase was mainly due to the
Rollins Acquisition. Operating expense, as a percentage of revenue, decreased to
71.5% in fiscal 1997 from 72.5% in fiscal 1996 due to economies of scale gained
through the Rollins Acquisition and ongoing cost reduction initiatives.
The Company believes that its ability to manage operating costs is an
important factor in its ability to remain price competitive. During fiscal 1997,
the Company continued its process of consolidating common functions to reduce
redundant costs and improve the Company's ability to deliver its services.
Depreciation and Amortization Expense
Depreciation and amortization expense increased $5.2 million, or 10.8%, to
$53.5 million during fiscal 1997 compared to fiscal 1996. The increase was
associated with increased hazardous landfill cell consumption and related
amortization during fiscal 1997 as well as the inclusion of the Clive, Utah
incineration facility's depreciation expense as of September 1, 1996 and
inclusion of depreciation and amortization related to the Rollins Acquisition as
of May 15, 1997. As a percentage of revenue, depreciation and amortization
expense increased to 7.9% during fiscal 1997 from 7.4% during fiscal 1996 due in
part to the higher hazardous landfill disposal as a proportion of total revenue
and the inclusion of the Clive facility.
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased $0.7 million, or
1.0%, to $73.1 million during fiscal 1997 versus fiscal 1996. The decrease was
attributable to a number of cost reduction initiatives implemented and completed
during fiscal 1997. As a percentage of revenue, selling, general and
administrative expenses decreased to 10.7% in fiscal 1997 from 11.3% in fiscal
1996, due to the cost reduction measures and economies of scale gained through
the Rollins Acquisition.
Restructuring Charge
A one-time restructuring charge of $331.7 million ($200.0 million after
tax) impacted fiscal 1997 earnings. The charge reflected the closing of certain
of the Company's operating facilities that had become redundant, and an
impairment in the carrying value of certain operating facilities due to lower
than expected future cash flows, as a result of the Rollins Acquisition.
Reductions of $18.0 million relating to depreciation and amortization expense
savings were reflected as a result of the restructuring charge.
50
<PAGE> 60
Allocated Interest Expense
Allocated interest expense decreased $17.5 million during fiscal 1997 from
fiscal 1996 primarily as a result of the recapitalization related to the Rollins
Acquisition. Prior to May 15, 1997, interest expense was allocated to the Parent
from Laidlaw.
Interest Expense
Interest expense increased by $14.9 million during fiscal 1997 from fiscal
1996 primarily as a result of a recapitalization related to the Rollins
Acquisition. Effective May 15, 1997, interest expense includes financing costs
associated with the Company's bank credit facility, other long-term debt and the
PIK Subordinated Debenture.
Other Income
Other income increased by $1.5 million in fiscal 1997 from fiscal 1996
primarily as a result of a recapitalization related to the Rollins Acquisition
and a resultant increase in funds available for short-term investment.
Income Tax Expense (Benefit)
Prior to May 15, 1997, the operations of the Parent were included in
consolidated tax returns of Laidlaw. Income taxes were calculated using
applicable income tax rates for tax purposes on a separate return basis.
Effective May 15, 1997, the Parent files a separate return and, accordingly,
income taxes have been calculated at applicable income tax rates.
FISCAL 1996 COMPARED WITH FISCAL 1995
The following table sets forth, for each line item presented, for the
periods indicated, the amount of such line item and such amount as a percentage
of the Parent's revenue for such period:
<TABLE>
<CAPTION>
FISCAL
------------------------------------------------
1995 1996
---------------------- ----------------------
(IN MILLIONS) (IN MILLIONS)
<S> <C> <C> <C> <C>
Revenue..................................... $599.2 100.0% $653.0 100.0%
Operating expense........................... 428.9 71.6 473.6 72.5
Depreciation and amortization............... 48.3 8.0 48.3 7.4
Selling, general and administrative......... 62.1 10.4 73.8 11.3
------ ------
Operating income............................ $ 59.9 10.0% $ 57.3 8.8%
====== ======
</TABLE>
51
<PAGE> 61
Revenues
The following table sets forth, for the periods indicated, the revenue
attributable to each line of business of the Parent and such revenue as a
percentage of the Parent's revenue for such period:
<TABLE>
<CAPTION>
FISCAL
--------------------------------------------
1995 1996
-------------------- --------------------
(IN MILLIONS) (IN MILLIONS)
<S> <C> <C> <C> <C>
Service Center................................. $279.2 41% $ 294.8 39%
Landfill....................................... 139.1 21 190.4 25
Incinerator.................................... 30.1 4 31.4 4
Transportation................................. 99.1 15 89.9 12
Specialty Services............................. 131.0 19 148.0 20
------ --- ------- ---
678.5 100% 754.5 100%
=== ===
Less: Intercompany eliminations................ (79.3) (101.5)
------ -------
Total revenue........................ $599.2 $ 653.0
====== =======
</TABLE>
Revenues increased $53.8 million, or 9.0%, to $653.0 million during fiscal
1996, compared to fiscal 1995, supported primarily by the increased landfill
activity. Landfill revenue for fiscal 1996 increased 36.9% from fiscal 1995
during the same period primarily due to the full-year results of landfill
operations acquired from USPCI. Service center revenue increased 5.6% during
fiscal 1996 over fiscal 1995 while incinerator revenue increased 4.3% during the
same period. Transportation revenue decreased 9.3% during fiscal 1996 over
fiscal 1995. Specialty services revenue increased $17.0 million, or 13.0% in
fiscal 1996 over fiscal 1995. Processing of intercompany streams during fiscal
1996 increased $22.2 million, or 28.0%, over fiscal 1995.
Management's estimates of the components of changes in the Parent's
consolidated revenue are as follows:
<TABLE>
<CAPTION>
PERCENTAGE INCREASE
(DECREASE)
-------------------
<S> <C>
Expansion of customer base by acquisition................... 17.2%
Other, primarily through volume and price changes........... (8.4)
Foreign exchange rate changes............................... (0.2)
----
Total............................................. 8.6%
====
</TABLE>
Growth in revenue in fiscal 1996 was primarily attributable to the
inclusion of approximately $103.0 million from the acquired operations of USPCI
and Greenfield Services Corporation. Revenue from existing operations was lower,
primarily due to the reduced activity at Laidlaw Environmental's remedial
services locations in the Gulf Coast and Western regions of the United States
and a decline in one-time, project work at Laidlaw Environmental's landfills.
Lower pricing within the hazardous waste management industry also was a
component of lower revenue for most areas of the Company.
Operating Expenses
Operating expenses increased $44.7 million, or 10.4%, to $473.6 million
during fiscal 1996, compared to fiscal 1995. The increase was primarily
attributable to additional business obtained as part of the acquisition of
USPCI. As a percentage of revenue, operating expense increased to 72.5% in
fiscal 1996 from 71.6% in fiscal 1995, primarily due to downward pricing
pressure on revenue.
Depreciation and Amortization Expense
Depreciation and amortization expense for fiscal 1996 was essentially
unchanged from fiscal 1995. As a percentage of revenue, depreciation and
amortization expense decreased to 7.4% in fiscal 1995 from 8.0% in fiscal 1995
also due to the decline in landfill cell amortization rates.
52
<PAGE> 62
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $11.7 million, or
18.9%, to $73.8 million during fiscal 1996 over fiscal 1995. As a percentage of
revenue, selling, general and administrative expenses increased to 11.3% in
fiscal 1996 from 10.4% in fiscal 1995 due to higher selling costs related to the
acquired USPCI customer accounts.
Allocated Interest Expense
Allocated interest expense increased 12.6% during fiscal 1996 over fiscal
1995 primarily due to an increase in allocated interest expense from Laidlaw
associated with the acquisition of USPCI.
Interest Expense
Interest expense increased 24.4% during fiscal 1996 compared to fiscal 1995
primarily as a result of the acquisition of USPCI.
YEAR 2000 -- LAIDLAW ENVIRONMENTAL
The Year 2000 Issue is the result of computer programs being written using
a two-digit date field rather than four to define the applicable year. Computer
programs that have date-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in a system failure
or miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices, or engage
in similar business activities.
The Parent is assessing the impact of the Year 2000 Issue on its operations
and has engaged outside consultants to provide third party confirmation of its
findings. The assessment includes communication with all major suppliers and
customers. Due to the preliminary nature of the assessment to date, the costs of
the Year 2000 Issue and the related effect on the Parent's results of
operations, liquidity, and capital resources cannot be reasonably estimated.
SEASONALITY -- LAIDLAW ENVIRONMENTAL
Adverse winter weather moderately affects some of the Company's operations,
particularly during the second fiscal quarter. The main reason for this effect
is reduced volumes of waste being received at the Company's facilities and
higher operating costs associated with operating in sub-freezing weather and
high levels of snowfall.
LIQUIDITY AND CAPITAL RESOURCES -- LAIDLAW ENVIRONMENTAL
Prior to May 15, 1997, Laidlaw provided the majority of the financing for
the Parent's operating and investing activities through a combination of
intercompany equity and debt investments. At August 31, 1996, the Parent's
capital consisted of $55.8 million of long-term debt and $1,094.8 million of
stockholders' equity.
Since May 15, 1997, the Parent's principal sources of funds have consisted
of cash from operations and financing activities. Cash provided by continuing
operations during the six months ended February 28, 1998, and fiscal years 1997,
1996 and 1995 was $5.9 million, $37.0 million, $21.9 million and $39.8 million,
respectively. In the six months ended February 28, 1998, cash provided by
continuing operations was composed of $55.8 million from operations before
working capital financing requirements of $22.0 million and $27.9 million in
acquisition liabilities. In fiscal 1997, accounts payable, accrued liabilities
and deferred liabilities decreased $52.6 million, excluding cash spending on
acquisitions, which includes costs related to landfill cell closures, site
remediation and facility closures. Deferred income taxes increased by $37.5
million in fiscal 1997. Cash provided by discontinued operations was $0.4
million, $3.2 million and $0.3 million, in fiscal 1997, 1996 and 1995,
respectively.
Cash provided by investing activities in the six months ended February 28,
1998 totaled $2.7 million including $33.7 million in proceeds from the sale of
assets held for sale before $8.5 million for capital
53
<PAGE> 63
expenditures (net of proceeds of disposal), $13.0 million for purchases for
long-term investments (primarily an investment in the shares of Safety-Kleen)
and a $9.5 million increase in deferred charges related to the Safety-Kleen
Acquisition. Investing activities from continuing operations used cash of $21.9
million, $114.9 million and $300.8 million in fiscal 1997, 1996 and 1995,
respectively. Expenditures for the purchase of fixed assets (net of proceeds of
disposal) for normal replacement requirements and increases in services were
$34.5 million, $101.0 million and $67.5 million in fiscal 1997, 1996 and 1995,
respectively.
Net cash provided by (used in) financing activities was $(7.8) million,
$(2.5) million, $94.8 million and $263.8 million in the six months ended
February 28, 1998, and in fiscal 1997, 1996 and 1995, respectively.
LIQUIDITY AND CAPITAL RESOURCES -- PRO FORMA FOR THE SAFETY-KLEEN ACQUISITION
To finance the cash portion of the Safety-Kleen Acquisition and the Debt
Tender Offer and to refinance certain existing indebtedness, the Company entered
into the Senior Credit Facility and borrowed $1.5 billion. The net proceeds from
the issuance of the Existing Notes were used to repay indebtedness under the
Senior Credit Facility. At May 31, 1998, the Company had an aggregate of $1.5
billion of borrowings outstanding under the Senior Credit Facility (consisting
of an aggregate of $1.33 billion in Term Loans and $208.0 million of borrowings
under the Revolver (excluding letters of credit)), which borrowings bore
interest at a weighted average interest rate of 8.37% per annum at such date. At
May 31, 1998, the Company had $192.0 million of additional borrowing
availability (excluding letters of credit) under the Revolver. The Senior Credit
Facility contains certain covenants including restrictions against mergers,
acquisitions, and disposition of assets, voluntary prepayments of debt,
financial covenants and certain other covenants. See "Use of Proceeds" and
"Description of Other Indebtedness -- The Company -- Senior Credit Facility."
Projected capital expenditures for fiscal 1998 are approximately $80.0
million, excluding any capital expenditures for potential acquisitions. This
includes capital expenditures related to compliance with environmental laws and
regulations. In addition, principal repayments on the Company's indebtedness
during the balance of fiscal 1998 will total $19.9 million. Finally, in the next
12 months, the Company anticipates incurring approximately $55.0 million of
costs related to the Safety-Kleen Acquisition, consisting of integration costs,
employee severance costs and facility closing costs. As discussed below, the
Company believes it has adequate resources to fund these expenditures.
The Company believes that its existing working capital (consisting of cash
and short-term investments), together with borrowings under the Senior Credit
Facility and anticipated cash flow from operating activities, will be sufficient
to meet its debt service and expected operating and capital spending
requirements for the next 12 months. To the extent that any additional capital
is required for any purpose (including potential acquisitions), the Company
believes that it will be able to raise such capital in the public or private
debt or equity markets.
ENVIRONMENTAL LIABILITIES -- PRO FORMA FOR THE SAFETY-KLEEN ACQUISITION
In the Company's financial statements, accrued closure and post-closure
costs and environmental remediation costs represent an estimate of the current
value of the future obligations associated with closure and post-closure
monitoring of the facilities currently owned and/or operated by the Company and
environmental remediation costs of the Company. Such accrued liabilities appear
on the balance sheet under the caption "accrued liabilities" and "deferred
items -- others." Closure and post-closure monitoring and maintenance costs for
landfills are estimated based on the technical requirements of the applicable
environmental laws and regulations. The Company also evaluates potential
remedial liabilities at sites which it owns or operates or to which it
transports waste. When the Company concludes that it is probable that a
liability has been incurred, provision is made, based on management's judgment
and prior experience, for the Company's best estimate of liability. Discounting
of future costs is applied where the Company believes that both the amounts and
timing of related payments are reliably determinable. The Company periodically
updates its estimates of future closure and post-closure costs.
54
<PAGE> 64
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS -- SAFETY-KLEEN
The following discussion and analysis should be read in conjunction with
the consolidated financial statements and notes thereto of Safety-Kleen included
elsewhere in this Prospectus. Certain statements in the following discussion and
analysis are "forward-looking statements." See "Disclosure Regarding Forward-
Looking Statements."
RESULTS OF OPERATIONS -- SAFETY-KLEEN
In the first quarter of fiscal 1998, Safety-Kleen's net earnings decreased
to $9.9 million from $11.8 million in the first quarter of fiscal 1997. In
fiscal 1997 and 1996, Safety-Kleen's net earnings increased 3% and 15%,
respectively, from the prior year. The following table sets forth for the
periods indicated percentages which certain items reflected in the financial
data bear to consolidated revenue of Safety-Kleen.
<TABLE>
<CAPTION>
TWELVE WEEKS ENDED
FISCAL ----------------------
----------------------- MARCH 22, MARCH 28,
1995 1996 1997 1997 1998
----- ----- ----- --------- ---------
<S> <C> <C> <C> <C> <C>
Revenue..................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Operating costs and expenses.............. 73.1 72.8 74.3 74.5 75.2
----- ----- ----- ----- -----
Gross profit................................ 26.9 27.2 25.7 25.5 24.8
Selling and administrative expenses....... 14.2 14.3 13.7 14.8 14.3
Restructuring (credit).................... (1.8) -- -- -- --
Special charge for environmental
remediation costs...................... 1.4 -- -- -- --
----- ----- ----- ----- -----
Operating Income............................ 13.1 12.9 12.0 10.7 10.5
Interest (income)......................... (0.1) (0.2) (0.1) (0.1) (0.2)
Interest expense.......................... 2.4 2.1 1.8 2.0 1.5
Merger related costs...................... -- -- 0.3 -- 2.5
----- ----- ----- ----- -----
Earnings before income taxes................ 10.8 11.0 10.0 8.8 6.7
Income taxes.............................. 4.6 4.4 3.7 3.5 2.6
----- ----- ----- ----- -----
Net earnings................................ 6.2% 6.6% 6.3% 5.3% 4.1%
===== ===== ===== ===== =====
</TABLE>
TWELVE WEEKS ENDED MARCH 28, 1998 COMPARED WITH TWELVE WEEKS ENDED MARCH 28,
1997
Revenues
Revenue for the twelve weeks ended March 28, 1998 was $241.8 million, up
$21.6 million, or 10%, from the comparable period last year.
55
<PAGE> 65
The following table sets forth total revenue derived from Safety-Kleen's
North American services and European operations during the twelve weeks ended
March 28, 1998 and March 22, 1997:
<TABLE>
<CAPTION>
PERCENTAGE
TWELVE WEEKS ENDED OF
------------------------------- INCREASE
MARCH 28, 1998 MARCH 22, 1997 (DECREASE)
-------------- -------------- ----------
(MILLIONS OF DOLLARS)
<S> <C> <C> <C>
North America
Industrial Services........................... $ 76.8 $ 65.4 17%
Automotive/Retail Repair Services............. 63.0 59.3 6
Oil Recovery Services......................... 33.1 32.9 1
Other Services................................ 42.6 37.2 14
------ ------
Total North America........................... 215.5 194.8 11
Europe.......................................... 26.3 25.4 3
------ ------
Consolidated.................................... $241.8 $220.2 10
====== ======
</TABLE>
North American Industrial Services
Fluid Recovery Service. Revenue from Safety-Kleen's North American
Industrial Services for the twelve weeks ended March 28, 1998 includes $42.5
million from the Fluid Recovery Service, which represents an $8.1 million, or
24%, increase over the comparable period of 1997. Approximately $4.5 million of
the revenue increase is from the expansion of Safety-Kleen's new Technical Field
Services program introduced in early fiscal 1997. Waste drum service revenues
increased approximately $2.4 million in the twelve weeks ended March 28, 1998 of
which two thirds is due to increases in average prices and one third is due to
volume increases. The remaining revenue increase largely resulted from increased
absorbent sales.
Industrial Parts Cleaner Service. The North American Industrial Parts
Cleaner Service accounts for the remaining $34.3 million of the North American
Industrial Services revenue, which represents an increase of $3.3 million, or
10%, from the comparable period of 1997. The 10% revenue increase consisted of a
5% increase due to increases in average prices and a 5% increase due to volume
increases.
North American Automotive/Retail Repair Services
The continued expansion of the Vacuum Services business that was introduced
during the second half of 1996 increased revenue by $3.5 million in the twelve
weeks ended March 28, 1998 to $6.3 million. Automotive Parts Cleaning revenue
recognized in the first twelve weeks of fiscal 1998 was unchanged from the
comparable period of fiscal 1997 as an increase of 4% due to increases in
average prices was offset by a 4% volume decline.
North American Oil Recovery Services
Revenues increased by $0.2 million, or 1% to $33.1 million in the twelve
weeks ended March 28, 1998 over the comparable period in fiscal 1997. Used oil
collection pricing increased revenues by $0.7 million and oily water revenues
increased by $0.9 million in the twelve weeks ended March 28, 1998 primarily due
to volume. Fuel oil revenues declined $1.3 million substantially due to volumes
resulting from lower seasonal demand. A drop of approximately 7% in the per
gallon average price of base and blended lube oil from the comparable period of
1997 resulted in a revenue decline of $1.3 million. This price decline was
completely offset by a 21% volume increase in blended lube oil sales.
North American Other Services
Revenue from Other Services during the twelve weeks ended March 28, 1998
increased $5.4 million, or 14%, to $42.6 million over the comparable period of
fiscal 1997. Imaging Services accounted for $3.1 million of the increase
attributable mainly to increased precious metal sales. Safety-Kleen's service
revenue from its Integrated Customer Compliance Services increased by $1.3
million in the twelve weeks ended March 28, 1998
56
<PAGE> 66
due mainly to an acquisition made during the second quarter of fiscal 1997. The
remaining increase reflects improved pricing in Safety-Kleen's paint refinishing
business and improved volume in Safety-Kleen's dry cleaning business.
Europe
European revenues were $26.3 million in the twelve weeks ended March 28,
1998 up $0.9 million, or 3%, from $25.4 million in the comparable period of
fiscal 1997. The impact of foreign currency exchange rates reduced European
revenue in the current period by approximately $1.5 million, or 6% from the
comparable period in fiscal 1997. All major businesses showed increases in local
currency revenue.
Operating Costs and Expenses
Operating costs and expenses were $181.8 million (75.2% of revenue) in the
twelve weeks ended March 28, 1998 as compared to $164.1 million (74.5% of
revenue) for the comparable period in fiscal 1997. The increase in the operating
cost percentage reflects lower margins earned on the newer businesses, such as
Technical Field Services, Vacuum, Imaging, and Integrated Customer Compliance
Services.
Selling and Administrative Expenses
Selling and administrative expenses increased by $2.0 million or 6% to
$34.6 million in the twelve weeks ended March 28, 1998 over the comparable
period in fiscal 1997 due mainly to higher employee related costs. Despite this
increase, selling and administrative expenses decreased from 14.8% of revenue in
the twelve weeks ended March 22, 1997 to 14.3% of revenue in the same period of
fiscal 1998 as revenues increased at a greater rate than selling and
administrative expenses.
Interest Expense
Interest expense decreased $0.7 million to $3.6 million during the twelve
weeks ended March 28, 1998 due primarily to lower borrowings.
Merger Related Costs
The Company incurred $6.0 million in costs during the twelve weeks ended
March 28, 1998 in conjunction with the Safety-Kleen Acquisition and related
transactions. For a discussion of the costs related to the Safety-Kleen
Acquisition, see "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Laidlaw Environmental -- Liquidity and Capital
Resources -- Pro Forma for the Safety-Kleen Acquisition."
Income Taxes
Safety-Kleen's effective income tax rate was 38.7% for the twelve weeks
ended March 28, 1998 and 39.1% for the comparable period of fiscal 1997. The
drop in the effective tax rate in the twelve weeks ended March 28, 1998 is due
to the receipt of certain additional tax benefits that were not received during
the comparable period of fiscal 1997.
57
<PAGE> 67
FISCAL 1997 COMPARED WITH FISCAL 1996 AND 1995
Revenues
The following table sets forth total revenue derived from Safety-Kleen's
North American services and European operations for fiscal 1995, 1996 and 1997:
<TABLE>
<CAPTION>
PERCENTAGE OF
INCREASE (DECREASE)
--------------------
FISCAL FISCAL YEARS
---------------------------- --------------------
1995 1996 1997 1995-96 1996-97
------ ------ -------- -------- --------
<S> <C> <C> <C> <C> <C>
North America Industrial Services.... $241.6 $271.8 $ 306.0 13% 13%
Automotive/Retail Repair
Services........................ 239.7 245.0 268.0 2 9
Oil Recovery Services.............. 129.0 150.8 156.3 17 4
Other Service Areas................ 149.8 149.2 167.7 -- 12
------ ------ --------
Total North America............. 760.1 816.8 898.0 7 10
Europe............................... 99.2 106.3 109.9 7 3
------ ------ --------
Consolidated......................... $859.3 $923.1 $1,007.9 7 9
====== ====== ========
</TABLE>
Revenue includes sales of oil related products of $91.4, $103.5 and $105.9
million for fiscal 1995, 1996 and 1997, respectively. Sales of other products
during the same periods were not material.
North American Industrial Services
Fluid Recovery Service. Revenue from Safety-Kleen's North American
Industrial Services includes Fluid Recovery Service revenue of $165.1 million in
fiscal 1997, $143.0 million in fiscal 1996 and $122.8 million in fiscal 1995.
Approximately 11% of the 16% increase in revenue in fiscal 1997 was attributed
to expansion of Safety-Kleen's new lab-pack and pass-by waste programs
introduced during fiscal 1996. The remaining 5% increase consists of an increase
of approximately 3% due to increases in average prices and an increase of
approximately 2% due to volume increases. The 17% revenue increase experienced
in fiscal 1996 reflects volume increases of approximately 15% and price
increases of approximately 2%. This volume improvement is due, in part, to new
product and service offerings.
Industrial Parts Cleaner Service. The North American Industrial Parts
Cleaner Service accounts for the remaining North American Industrial Services
revenue of $140.9 million in fiscal 1997, $128.8 million in fiscal 1996 and
$118.8 million in fiscal 1995. The 9% revenue increase experienced in fiscal
1997 includes increases of 5% due to increases in average prices and 4% due to
volume increases. The 8% revenue increase experienced in fiscal 1996 included
volume increases of approximately 3% and price increases of approximately 5%.
North American Automotive/Retail Repair Services
Approximately $15.3 million of the $23.0 million revenue increase in fiscal
1997 from fiscal 1996 in the Automotive/Retail Repair Services market was
generated from the continued expansion of Safety-Kleen's Vacuum Service business
introduced during the second half of fiscal 1997. Revenue attributable to
Automotive Parts Cleaner Service increased approximately $4.1 million, or 2%,
during fiscal 1997 due to an increase in average prices of 5%, offset by a
volume decline of approximately 3%. The balance of the increase in revenue was
largely due to a higher volume of absorbent sales.
In fiscal 1996 as compared to fiscal 1995, higher revenue from Automotive
Parts Cleaner Services contributed $1.4 million to North American
Automotive/Retail Repair Services revenue increase. The remainder of the revenue
increase came from the addition of new services, including Safety-Kleen's Vacuum
Services business. Average price increases in Safety-Kleen's Automotive Parts
Cleaner Services, which averaged 5% in fiscal 1996, were partially offset by a
4% volume decline.
58
<PAGE> 68
North American Oil Recovery Services
The revenue increase of approximately $5.5 million in fiscal 1997 is
primarily due to an increase of $5.7 million, or 13%, in the oil collection
business with average price increases and volume increases each contributing
equally. A drop of 15% and 8% in the average selling prices of base and blended
lube oils, respectively, resulted in a $9.5 million lower revenue in fiscal 1997
than fiscal 1996. This revenue decline was partially offset by an increase of
approximately $8.1 million from an increase in the volume of total lube oil
sales. The remainder of the change in revenue was generated primarily from
increased fuel oil sales as a result of an acquisition made during the second
quarter of fiscal 1996.
The $21.8 million increase in revenue experienced in fiscal 1996 included
approximately $10.0 million of revenue derived from acquisitions. This increase
is attributable to more favorable pricing and higher volume.
North American Other Service Areas
Revenue from Other Service Areas increased $18.5 million, or 12%, during
fiscal 1997. Revenue from Imaging Services increased $7.1 million, or 33%,
during fiscal 1997 due primarily to higher branch service revenue volume.
Revenue from Safety-Kleen's Envirosystems business increased by $8.1 million, or
16%, during fiscal 1997 due mainly to higher volume. The remaining $3.4 million
of higher revenue is primarily due to increased revenue in Safety-Kleen's Paint
Refinishing Services.
In fiscal 1996, revenue from Other Service Areas was flat with fiscal 1995.
Increases in Imaging Services revenue generated by the branch network were
offset by a decline in revenue caused by the elimination of low-margin Imaging
Services broker business.
Europe
The continued weakening of European currencies against the U.S. dollar
decreased revenue by $7.0 million in fiscal 1997, compared to fiscal 1996.
Exclusive of exchange rate change, revenue in Europe increased by $10.5 million,
or 10%, during fiscal 1997. Approximately 3% of this increase is attributable to
price increases and the balance is attributable to volume.
A weakening of European currencies against the U.S. dollar decreased
revenue by approximately $1.8 million in fiscal 1996. Exclusive of exchange rate
effects, revenue in Europe increased approximately 9% in fiscal 1996, as all
major European operations (except the Envirosystems operations in Germany)
showed revenue growth in local currency due mainly to higher volume.
Operating Costs and Expenses
The following table sets forth the gross profit margins of Safety-Kleen's
North American services and European operations for the periods presented:
<TABLE>
<CAPTION>
FISCAL YEAR
--------------------
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
North America:
Industrial Services....................................... 30% 31% 31%
Automotive/Retail Repair Services......................... 37 36 33
Oil Recovery Services..................................... 15 13 7
Other Service Areas....................................... 17 21 22
Total North America.................................... 27 27 25
Europe...................................................... 25 25 28
Consolidated................................................ 27 27 26
</TABLE>
59
<PAGE> 69
North American Industrial Services
The North American Industrial Services gross margin for fiscal 1997 was
consistent with fiscal 1996 levels as the impact of lower margins earned on the
new services due to startup costs were offset by improved margins earned on the
established businesses.
The North American Industrial Services gross margin for fiscal 1996
improved slightly from fiscal 1995 levels due mainly to lower recycling costs
and improved pricing in the Fluid Recovery Service business caused by the
reduction of price discounts.
North American Automotive/Retail Repair Services
The North American Automotive/Retail Repair Services margin decline of 3%
in fiscal 1997 from fiscal 1996 was largely attributed to service mix as a
greater percentage of the revenue was generated by the Vacuum Services business
and Aqueous Parts Cleaning business. These new businesses generate lower gross
margins as they are currently being expanded throughout North America.
The North American Automotive/Retail Repair Services gross margin in fiscal
1996 declined slightly from fiscal 1995 due to the impact of the new Vacuum
Services business in the U.S. which was operating at approximately break-even at
the gross profit level in fiscal 1996.
North American Oil Recovery Services
The North American Oil Recovery Service margin decline of 6% in fiscal 1997
from fiscal 1996 can be attributed to the decline of $9.5 million in revenue
during fiscal 1997 as a result of lower lube oil prices.
While fiscal 1996 gross profit of the Oil Recovery Services remained
relatively unchanged from fiscal 1995, the gross profit margin declined by 2% in
fiscal 1997 from fiscal 1996. The decrease in margin is attributable principally
to a 2% decline in the average selling price of base lube oil, increased cost of
natural gas used at Safety-Kleen's re-refineries, and lower margins earned on
the $10.0 million of acquired business.
North American Other Service Areas
The improvement in gross margin in fiscal 1997 was generated by improved
gross margins earned by the Imaging and Envirosystems businesses due to improved
volume. The improvement generated from these businesses was partially offset by
a change in revenue mix as a greater percentage of revenue was being generated
from the Imaging business which, while improved, was still generating lower
gross margin rates than the established businesses due to added costs associated
with expanding the business across North America.
The improved margin in Other Services in fiscal 1996 over fiscal 1995
resulted principally from the elimination of low-margin broker business in the
Imaging Services business during fiscal 1996 and lower waste-derived fuel
processing costs and other waste disposal costs.
Europe
The European gross profit improvement realized in fiscal 1997 over fiscal
1996 was due primarily to improved volume across all of Europe's major
operations except Safety-Kleen's German Envirosystem operations which declined
slightly in fiscal 1997.
The European gross profit margin in fiscal 1996 was unchanged from fiscal
1995. Lower gross profit earned in Safety-Kleen's German Envirosystems
operation, due to lower sales, were offset by improved margins in Safety-Kleen's
other major European operations.
While foreign exchange rate changes resulted in a change in revenue, as
previously discussed, the changes did not have a material impact on European
gross margins. See Note 4 of notes to consolidated financial statements of
Safety-Kleen included elsewhere herein for further information regarding
European results of operations and investment.
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<PAGE> 70
Selling and Administrative Expenses
The 5% increase in selling and administrative expenses in fiscal 1997 from
fiscal 1996 is largely due to the impact of the 53rd week and higher costs
associated with Safety-Kleen's upgrading of its computer systems. Safety-Kleen's
selling and administrative expenses as a percentage of revenue declined to 13.7%
in fiscal 1997, from 14.3% in fiscal 1996, due to lower employee related costs
as a percentage of revenue. Approximately $2.6 million of severance costs
incurred in the third quarter of fiscal 1997 were offset by adjustments to pre-
established reserves of a similar amount.
The 8% increase in selling and administrative expenses Safety-Kleen in
fiscal 1996 resulted primarily from additional employees and related employee
expenses, increases in compensation and related benefits and business
acquisitions.
Restructuring -- Special Charges
Safety-Kleen adopted a restructuring plan in fiscal 1993 based on the
conversion of its Parts Cleaner Service to new technology and other strategic
actions intended to focus Safety-Kleen on its core environmental services,
reduce its cost structure and improve the value of its services to its
customers. In conjunction with the adoption of the plan, Safety-Kleen recorded a
restructuring charge of $179.0 million ($106.0 million after-tax or $1.84 per
share). In fiscal 1993, Safety-Kleen also recorded a $50.0 million charge ($30.0
million after-tax or $0.52 per share) representing a change in estimate for
environmental remediation costs. In fiscal 1995, Safety-Kleen recorded a $15.2
million (pre-tax) credit to income to reduce the amount of restructuring
reserves established in fiscal 1993 to their expected required levels. In fiscal
1995, Safety-Kleen also recorded a $12.0 million (pre-tax) charge to income to
increase the reserves for environmental remediation at its facilities in North
America based on its refinement of the estimate for such liabilities and its
ongoing review of spending patterns. In fiscal 1996, Safety-Kleen substantially
completed all of its restructuring activities and reclassified the remaining
reserves to "other accrued expenses" and "other liabilities" on its consolidated
balance sheet.
Interest Expense
Interest expense declined by $1.1 million in fiscal 1997 from fiscal 1996
due to lower average outstanding borrowings as compared to fiscal 1996, offset
partially by higher interest rates. Slightly lower interest rates offset
partially by a slightly higher average outstanding borrowings resulted in a $1.0
million decrease in interest expense in fiscal 1996 as compared to fiscal 1995.
Interest expense excludes $2.1 million of interest capitalized for each of
fiscal 1997, 1996, and 1995. The impact of the interest rate swaps executed in
the United States and Germany in fiscal 1992 and fiscal 1993 and more fully
explained in note 6 to the consolidated financial statements resulted in
interest expense savings of $0.7, $0.1, and $1.6 million in fiscal 1997, 1996
and 1995, respectively.
Merger Related Costs
Safety-Kleen incurred $3.2 million in costs through January 3, 1998 in
conjunction with the Safety-Kleen Acquisition and related transactions. For a
discussion of the costs related to the Safety-Kleen Acquisition, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Laidlaw Environmental -- Liquidity and Capital Resources -- Pro
Forma for the Safety-Kleen Acquisition."
Income Taxes
Safety-Kleen's income tax rate was 37% in fiscal 1997, 40% in fiscal 1996
and 42% in fiscal 1995. The effective tax rate in fiscal 1997 reflected lower
non-deductible expenses in fiscal 1997 and the timing of certain tax benefits
received in fiscal 1997 that were not received in fiscal 1996. The effective tax
rate in fiscal 1996 declined due to the tax effects of the restructuring credits
and remediation charges recorded in fiscal 1995. The effective income tax rate
in fiscal 1995, before the restructuring credits and additional remediation
charges, was 40%, which is consistent with fiscal 1996.
61
<PAGE> 71
LIQUIDITY AND CAPITAL RESOURCES -- SAFETY-KLEEN
Safety-Kleen's working capital decreased from $69.0 million at January 3,
1998 to a negative $118.4 million at March 28, 1998. Safety-Kleen reclassified
approximately $213.0 million of debt from long-term to short-term as a result of
the change of control of Safety-Kleen. All debt was repaid following the
Safety-Kleen Acquisition from borrowings under the Senior Credit Facility. In
the first quarter of fiscal 1998, capital spending for equipment at customers
and property, plant and equipment additions totaled $14.4 million. These
expenditures were mainly financed by internally generated cash. Safety-Kleen's
total debt, including both long-term and short-term debt, at March 28, 1998
decreased by $1.3 million from fiscal 1997.
Capital spending in fiscal 1997, 1996 and 1995 for additions of equipment
at customers and property, excluding business acquisitions, totaled $56.0
million, $62.0 million and $78.0 million, respectively. These capital
expenditures were financed by cash from operations. Long-term debt decreased by
$63.0 million in fiscal 1997 and $7.0 million in fiscal 1996, and remained
unchanged during 1995.
For a discussion of the liquidity and capital resources of the Company
following the Safety-Kleen Acquisition, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Laidlaw
Environmental -- Liquidity and Capital Resources -- Pro Forma for the
Safety-Kleen Acquisition."
EFFECTS OF PETROLEUM PRICE CHANGES -- SAFETY-KLEEN
Through its Oil Recovery operations, Safety-Kleen re-refines and markets
petroleum-based products at prices that have generally been positively
correlated to crude oil prices over the long term. However, during the second
half of fiscal 1996, sales prices for Safety-Kleen's base lube oil declined by
15%, even though crude oil prices increased by approximately 20% from mid-year
to year-end. Safety-Kleen believes this lube oil selling price decline reflected
the market's reaction to construction of a new large lube oil refinery in the
U.S. and the expansion of a Canadian lube oil refinery which were expected to
increase the North American lube oil industry's capacity by approximately 10%.
Safety-Kleen expects this added capacity will continue to negatively impact its
base lube oil selling prices unless and until some of the older less-efficient
refineries in North America cease their operations. At the end of fiscal 1997,
Safety-Kleen's selling price of base lube oil had decreased by approximately 10%
from the beginning of the year while the price of crude oil decreased by 27%
during the same period.
Safety-Kleen's various service operations (such as its Parts Cleaner
Service) also consume petroleum-based products, the cost of which are positively
correlated to crude oil prices over the long term. Generally, Safety-Kleen's
earnings are positively affected by higher crude oil prices. The speed at which
Safety-Kleen is able to raise prices for its services and products is restricted
somewhat by committed price contracts.
YEAR 2000 -- SAFETY-KLEEN
Safety-Kleen is currently in the process of evaluating its information
technology infrastructure for Year 2000 compliance. Safety-Kleen does not expect
that the cost to modify its information technology infrastructure to be Year
2000 compliant will be material to its financial condition or results of
operations. Safety-Kleen does not anticipate any material disruption in its
operations as a result of any failure by Safety-Kleen to be in compliance.
Safety-Kleen does not currently have any information concerning the Year 2000
compliance status of its suppliers and customers. In the event that any of
Safety-Kleen's significant suppliers or customers does not successfully and
timely achieve Year 2000 compliance, Safety-Kleen's business or operations could
be adversely affected.
62
<PAGE> 72
BUSINESS
Certain statements set forth in "Business" are forward-looking statements.
See "Disclosure Regarding Forward-Looking Statements."
THE COMPANY
Laidlaw Environmental is a vertically integrated hazardous and industrial
waste management company that collects, transports, treats, recycles and
disposes of waste by distillation, incineration, landfilling and other methods.
Laidlaw Environmental is the leading hazardous and industrial waste management
company in North America (based on fiscal 1997 revenues and facilities) with
operations in the United States, Canada and Europe. The Company categorizes its
hazardous and industrial waste activities into five components: (i) collection
network services, (ii) treatment, disposal and transportation services, (iii)
used oil collection and recovery services, (iv) other specialty services and (v)
European operations. Laidlaw Environmental's strategy is to continue to develop
vertically integrated operations and to enhance the Company's profitability by
taking advantage of opportunities to rationalize operations, internalize waste
streams and expand services provided to its existing customer base. The Company
serves over 400,000 customers with operations across North America and Europe
through an extensive network of 284 collection facilities, 11 landfills, eight
incinerators and 13 recycling facilities. In May 1998, the Company completed the
Safety-Kleen Acquisition.
INDUSTRY OVERVIEW
The hazardous and industrial waste industry can be divided into three
categories: (i) the hazardous and industrial waste management industry
(including waste treatment, storage, disposal, transportation, collection,
recycling and recovery), (ii) the industrial services industry (including
industrial cleaning, refinery turnarounds, decommissioning and demolition, tank
management and emergency response services) and (iii) the hazardous and
industrial waste consulting and remediation industry. The Company primarily
competes in the hazardous and industrial waste management services industry.
Management of the Company estimates that total revenues for the United States
and Canadian hazardous and industrial waste management industry were
approximately $8.0 billion in 1997. Management estimates the industrial services
industry generated revenues of approximately $5.0 billion in 1997 and the
hazardous and industrial waste consulting and remediation industry had total
North American revenues of approximately $9.0 billion for 1997.
The hazardous and industrial waste management industry is comprised of four
major product segments: (i) land disposal; (ii) thermal destruction (including
the use of incinerators and kilns, boilers and furnaces); (iii) resource
recovery and (iv) wastewater treatment (including underground injection
systems). In addition, and as a primary component of the hazardous waste
management industry, collection facilities and transportation activities allow
for the collection and transport of hazardous waste materials for treatment or
disposal. Not all hazardous and industrial waste management services companies
are involved in all of the above product segments and several operators have
operations that are not easily classified. The hazardous and industrial waste
industry does not involve the handling and disposal of high-level radioactive or
nuclear waste.
There are three types of participants in the hazardous and industrial waste
management industry: (i) integrated hazardous and industrial waste management
services companies, such as the Company, that provide transportation, treatment
(incineration and/or separation), disposal (landfilling treated solids or
deep-well injection for treated liquids) and resource recovery services, (ii)
companies in unrelated industries that have constructed single incinerators to
handle primarily their own waste and that may or may not have other disposal
facilities (e.g., E. I. Dupont De Nemours and Company and Allied Signal Inc.)
and (iii) companies that have boilers and industrial furnaces (BIFs) and that
are permitted to incinerate hazardous waste as fuels, but that do not have
transportation or disposal capabilities. Within the industry, there are also
hazardous and industrial waste brokers who arrange for the transportation,
treatment and disposal of waste for a fee.
63
<PAGE> 73
INDUSTRY TRENDS
General. The current hazardous waste industry was created, to a large
extent, in 1976 with the passage of RCRA. The new regulatory environment
contributed to rapid growth in the hazardous waste industry in the 1980s as high
profit margins attracted new entrants to the industry. The number of new
entrants created an overcapacity which coincided with the waste minimization
efforts of large waste generators that resulted in a decline in prices and
operating margins. Although the business fundamentals for each segment of the
industry vary, in general, operating margins and profits have now stabilized.
Rationalization. In the last four years, the hazardous and industrial
waste management industry has experienced a restructuring which has included the
exit from the industry of such players as Westinghouse Electric Corp., Union
Pacific Corp., Amoco Corp., Burlington Resources Inc. and Consolidated Rail
Corp. Acquirers are now turning their focus away from consolidation and towards
rationalization by closing facilities and reducing excess capacity.
Waste minimization. During the early 1990s, many large generators of
hazardous and industrial waste materials made economic decisions to reduce their
waste outputs or to bring in-house some of the capabilities needed to dispose of
such waste by-products of their manufacturing processes. During the last two
years, much of the economic incentive for continuing or expanding such programs
has lessened as corporations realized that they had already taken advantage of
readily available waste reduction initiatives. Given the achievement of these
efficiencies, it is expected that hazardous and industrial waste generation will
more closely parallel industrial output going forward.
Outsourcing. Companies are increasingly outsourcing waste management and
other environmental compliance tasks to waste management companies. Waste
generators cite the complexities of environmental regulation and reporting,
rising costs and the trend towards limiting the number of vendors with which a
company contracts as important reasons to move towards outsourcing. The greatest
factor, however, appears to be waste generators' desire to focus on their core
business or businesses. Vertical integration and bringing services in-house are
now being replaced by a movement towards cost-cutting through outsourcing
activities that are better and more efficiently performed by specialists.
BUSINESS STRATEGY AND ACQUISITION RATIONALE
Laidlaw Environmental's strategy is to continue to vertically integrate its
operations and to enhance the Company's profitability by taking advantage of
opportunities to rationalize operations, internalize waste streams and expand
services provided to its existing customer base. The Company achieves vertical
integration through the combination of its full-service collection and
transportation network with its treatment and disposal services. To implement
its strategy, the Company examines strategic acquisitions on an opportunistic
basis. The Rollins Acquisition combined the Company's full-service collection
and treatment network with Rollins' expertise in solids incineration technology
and provided significant savings from facility and administrative
rationalizations. Laidlaw Environmental believes the Safety-Kleen Acquisition
combines complementary assets that enhance the Company's competitive position
and provide opportunities for significant cost savings from synergies related to
facility consolidation, waste internalization and selling, general and
administrative cost savings.
Strategic Fit. Laidlaw Environmental's collection network, which links
customers to treatment and disposal facilities such as landfills and
incinerators, is one of Laidlaw Environmental's primary operational strengths.
This network differentiates Laidlaw Environmental from its competitors and
allows for both responsiveness and accountability in managing a customer's
hazardous or industrial waste stream. Laidlaw Environmental believes the
Safety-Kleen Acquisition increases vertical integration of its business by
processing waste streams collected by Safety-Kleen. In addition, Laidlaw
Environmental believes that the Safety-Kleen Acquisition strengthens its market
position by: (i) providing additional market coverage in key geographic regions;
(ii) introducing a base of smaller-sized customers to complement Laidlaw
Environmental's existing base
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of medium and larger-sized customers; (iii) providing significant expansion into
the solvent recycling market; and (iv) increasing profitability by capitalizing
on cost saving opportunities.
Synergies. Laidlaw Environmental intends to build upon Safety-Kleen's
leading market presence and quality brand name recognition. The Company believes
that the Safety-Kleen Acquisition provides an opportunity to achieve significant
cost savings through the elimination of existing redundancies between Laidlaw
Environmental's and Safety-Kleen's operations. The Company expects that the
planned selling, general and administrative cost savings, the closure of
duplicative of collection and processing facilities, the increased utilization
of the remaining facilities and the internalization of various waste streams
will generate annual cost savings of approximately $103.5 million to $165.0
million. Laidlaw Environmental expects to begin achieving cost savings within
three months of the Safety-Kleen Acquisition, and to fully realize these
annualized cost savings within twelve months after consummation of the
Safety-Kleen Acquisition. Through the Rollins Acquisition, Laidlaw Environmental
has demonstrated its ability to manage the integration of a large acquisition
and to realize substantial cost savings. To date, the Company believes that it
has generated approximately $75.0 million of annual cost savings in connection
with the Rollins Acquisition. There can be no assurance, however, that the
projected cost savings from the Safety-Kleen Acquisition will be achieved. See
"Risk Factors -- Uncertainties in Integrating Operations and Achieving Cost
Savings."
The Company expects to achieve cost savings in the following areas:
- Facility Consolidation. Based on a thorough review of Laidlaw
Environmental's and Safety-Kleen's facilities, the Company estimates that
it can close 35 to 45 collection facilities and five processing
facilities due to geographic overlap. The Company estimates that the cost
savings resulting from its planned facility consolidation will be
approximately $2.0 to $2.5 million per processing facility and $1.0 to
$1.5 million per collection facility. The cost savings per location
assume that waste collection and routing efficiencies can be achieved by
combining the transportation resources of the overlapping locations and
reducing the total number of vehicles and drivers required to service the
existing combined customer base. The closure of redundant facilities will
also result in cost savings related to the personnel and property costs
associated with such facilities. The Company estimates that this facility
consolidation will generate approximately $45.0 million to $80.0 million
of annual cost savings.
- Waste Internalization. During fiscal 1997, Safety-Kleen spent over $50.0
million for outside disposal of waste it collected, consisting of fuel
blend material, as well as waste disposed at hazardous waste
incinerators, landfills and wastewater treatment facilities. Prior to the
Safety-Kleen Acquisition, Laidlaw Environmental received an insignificant
amount of Safety-Kleen's waste material for disposal. The Company has
already begun to internalize Safety-Kleen's incinerable and wastewater
materials for disposal at its facilities. The fuel blend material may
either be used as a fuel source or blended with solid waste material for
burning at Laidlaw Environmental's incinerator facilities. When used as a
fuel source, Laidlaw Environmental will avoid the cost of purchasing
conventional fuel from third parties. The Company estimates that the
internalization of these waste streams, after taking into account
incremental costs, will generate approximately $13.5 million to $25.0
million of annual cost savings.
- Selling, General and Administrative Cost Savings. Laidlaw Environmental
intends to incorporate the Safety-Kleen operations into Laidlaw
Environmental's existing operational organization, which will result in
the elimination of all duplicative administrative support functions. In
connection with the elimination of duplicative support functions, the
Company expects that it will eliminate 600 to 800 personnel and their
associated costs. The Company estimates that the planned selling, general
and administrative cost consolidation will generate approximately $45.0
million to $60.0 million of annual cost savings.
Potential Divestiture Opportunities. The Company is in the process of
analyzing whether, following consummation of the Safety-Kleen Acquisition, all
of its assets will be consistent with its strategies. To the extent certain
assets do not fit its strategies, the Company may elect to sell these assets and
use the proceeds from such sale to reduce outstanding indebtedness. For example,
the Company is currently considering the desirability of
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disposing of certain of the assets utilized within Safety-Kleen's used oil
collection and recovery services business and its European operations. In fiscal
1997, revenue attributable to Safety-Kleen's used oil collection and recovery
services business and European operations was $156.3 million and $109.9 million,
respectively.
COMPETITIVE STRENGTHS
Low-cost service provider. With over-expansion in the hazardous and
industrial waste industry during the 1980s and the early 1990s, it has become
critical for successful waste management companies to maintain high utilization
of a well-managed fixed asset base. Laidlaw Environmental has created a cost
structure which it believes is the lowest in the industry. The Company believes
this cost structure can be further reduced as a result of the Safety-Kleen
Acquisition.
Integrated customer service. Waste generators are demanding high quality
service and waste management expertise while reducing the number of vendors they
use for these services. As a result of its integrated, full-service approach to
managing its customers' needs, Laidlaw Environmental believes that it is well
positioned to capture incremental business from existing customers.
Geographic footprint. It is critical for waste management providers to
have a broad geographic reach for two reasons. First, it is necessary to provide
full service capabilities to a marketplace that increasingly seeks a single
service provider. Additionally, with fixed cost disposal assets, it is necessary
to collect and feed high volumes of waste to those assets in the most efficient
manner possible. As a result of the Safety-Kleen Acquisition, the Company
believes that it provides the broadest geographic coverage of any hazardous and
industrial waste management company.
Diverse Customer Base. The Company has over 400,000 customers representing
diverse industries. Pro forma for the Safety-Kleen Acquisition, no one customer
represented greater than 5% of the Company's fiscal 1997 revenues. In addition,
a significant amount of the Company's revenue is derived from the collection,
treatment and disposal of industrial waste which is classified as non-hazardous.
Internalization of waste streams. Hazardous and industrial waste
management services companies that are able to internalize or feed waste streams
to their own treatment and disposal facilities are able to boost profitability
significantly. As a result of the Safety-Kleen Acquisition, the Company expects
its internalization of collected waste streams to exceed 80%, which the Company
believes is without parallel in the industry.
OPERATIONS
The Company categorizes its hazardous and industrial waste activities into
five components: (i) collection network services, (ii) treatment, disposal and
transportation services, (iii) used oil collection and recovery services, (iv)
other specialty services and (v) European operations. Prior to the Safety-Kleen
Acquisition, Laidlaw Environmental provided collection, treatment, disposal,
transportation and specialty services. As a result of the Safety-Kleen
Acquisition, the Company now provides expanded services including parts
cleaner/fluid recovery services, automotive/retail repair services, oil recovery
services and has expanded its operations into Europe. The Safety-Kleen
Acquisition also significantly augmented the Company's collection and
transportation services, adding 231 branch locations (of which 177 are located
in North America). The following table sets forth, pro forma for the
Safety-Kleen Acquisition, the allocation of the Company's gross revenue (before
inter-company
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eliminations) contributed by category of service, and such revenue expressed as
a percentage of the Company's gross revenue:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28, 1998
-----------------
<S> <C>
COLLECTION NETWORK SERVICES
Service Center Operations................................. 17%
Parts Cleaner/Fluid Recovery Services..................... 17
Automotive/Retail Repair Services......................... 14
---
Subtotal............................................... 48
---
TREATMENT, DISPOSAL AND TRANSPORTATION SERVICES
Incineration.............................................. 9
Landfills................................................. 7
Other Disposal............................................ 8
Transportation............................................ 4
---
Subtotal............................................... 28
---
USED OIL COLLECTION AND RECOVERY SERVICES................... 8
OTHER SPECIALTY SERVICES.................................... 10
EUROPEAN OPERATIONS......................................... 6
---
TOTAL GROSS REVENUES........................................ 100%
===
</TABLE>
Collection Network Services
The Company's collection network services provide the Company's customers
with a variety of regionally or locally based services. Historically, Laidlaw
Environmental provided such services through its 23 service centers and their 30
satellite locations in North America. Safety-Kleen has historically provided
local services from its 177 North American and 54 European branch locations.
Safety-Kleen's branch locations are similar in size to the satellite locations
utilized by Laidlaw Environmental. Facility consolidations providing for cost
savings will arise from the planned elimination of 35 to 45 duplicative
operations where geographic overlap exists between Laidlaw Environmental's
service centers or satellite locations and Safety-Kleen's branch locations.
Combined, the Company's collection network services customers range from small
independent businesses to large multi-location concerns.
Service Centers. The Company's service centers (including its satellite
locations) across the United States and Canada work in partnership with the
Company's treatment and disposal facilities to provide an integrated service
delivery system. The Company's service centers link customers to the final
disposal or treatment facility. Waste materials are transported from a customer
site to a service center, where they are temporarily stored or consolidated with
compatible waste streams for more efficient transportation to final treatment
and/or disposal destinations. The Company's service centers in the United States
with Part B permits under RCRA are allowed to store waste for up to one year for
bulking and/or transfer purposes. Through its service center network, the
Company can access its customers quickly in order to collect their waste
streams, thus enabling customers to remain in compliance with on-site storage
regulations. The Company's smaller satellite locations act as local collection
points for the service centers.
The Company has on-site field operations headquartered at its service
centers, including lab-packing services, field services and household hazardous
waste collection programs. To manage hazardous waste material, the Company
typically sends one or more chemists to customer sites to sample, segregate,
prepare and package waste material for transportation. If the amount of the
material is large enough, the waste may be routed directly to one of the
Company's permitted treatment and disposal facilities. Customers with low volume
waste streams can have their streams transported to the nearest service center
where it is consolidated with compatible wastes from other generators until
there is sufficient material for treatment and disposal. After "profiling"
(chemically identifying) the waste materials, the Company's chemists inventory
the waste in such a manner as to ensure that
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the wastes are stored with other chemically compatible waste. Each storage
location is designed to separate chemically incompatible material and to allow
for easy access once a full shipment of similar material has accumulated.
Materials are then shipped to the appropriate disposal sites. This collection
and treatment system affords smaller generators high levels of service and
allows them to benefit from the economy of scale normally available only to high
volume customers.
The Company also performs a variety of resource recovery processes at many
of its service centers. Resource recovery involves the distillation of used
solvents to remove contaminants and then the return of the material to the
market as a solvent or for use as fuel. Most of these hazardous materials come
from the aerospace and transportation industries and the metals finishing
industries. Fuel substitution, mainly in the energy intensive cement
manufacturing process, is the most prevalent form of resource recovery.
Service centers are the largest source of waste streams for the Company's
treatment and disposal facilities. A diverse mix of locations allows the service
centers also to serve as hubs for regional sales efforts, local community
hazardous material collection efforts and other geographically specific
initiatives.
Parts Cleaner Service. As a result of the Safety-Kleen Acquisition, the
Company is the leading parts cleaning service provider in the U.S. industrial
market. Sales representatives place parts cleaning equipment and solvent or
aqueous cleaning solutions with customers and make periodic service calls to
clean the equipment and to remove and replace the dirty solvent or aqueous
cleaner with clean material. The dirty solvent is typically recycled and reused.
The Company provides a choice of several models of parts cleaners to customers
for their use as part of the parts cleaner service and also provides service to
customers who own their own parts cleaner equipment.
Fluid Recovery Service. The Company's fluid recovery service consists
primarily of the collection of a wide variety of waste solvents and other liquid
and solid containerized wastes generated by industrial customers in relatively
small quantities, averaging a few 55-gallon drums per pickup. Depending upon the
content, the material collected by the Company in its fluid recovery service is
generally recycled into usable solvent, processed into a waste-derived fuel for
use in the cement manufacturing industry or disposed of through incineration.
Wastewater that is collected as part of the fluid recovery service is treated
and processed until it can be discharged into publicly owned treatment works in
compliance with applicable laws and regulations. Fluid recovery service
operations also provide comprehensive environmental and technical assistance to
industrial, commercial and institutional clients nationwide. These services
consist of lab pack services (the collection of small quantities of laboratory
chemicals), waste drum management, and in-plant services. The list of chemicals
to be removed at a site can be extensive and vary widely in characteristics and
quantities. The Company prepares the paperwork and packages the waste for
shipment, and provides for the transportation and disposal management.
Automotive/Retail Repair Services. The primary component of the Company's
automotive/retail repair services is its parts cleaner service. The Company
furnishes service stations, car and truck dealers, small engine repair shops,
fleet maintenance shops and its other automotive/retail repair customers with
the same high quality parts cleaner service that it provides to its industrial
services customers. The Company supplies on-site automotive parts cleaning
equipment, provides cleaning fluid and removes waste for recycling. The Company
provides the parts cleaner machine, fresh solvent or aqueous cleaning solutions
and the removal of dirty solvent or aqueous cleaner for recycling by way of
regularly scheduled service calls.
The Company's vacuum services involves using specialized vacuum trucks that
remove residual oil and sludge from underground oil/water separators found at
many automotive repair and small industrial locations. The Company provides
vacuum trucks to customers who use in-ground pits to treat waste water before
discharge to sewers. The vacuum trucks clean out all waste, including oil, water
and sludge, that accumulate in the in-ground pits. The Company expects this new
service line to grow substantially over the next few years.
Treatment, Disposal and Transportation Services
Incineration. The Company offers a wide range of technological
capabilities and locations to customers through a collection of incineration
facilities. Incineration is the preferred method for the treatment of organic
hazardous and industrial waste, because it effectively destroys the contaminants
at temperatures in excess of
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2,000 degrees Fahrenheit. High temperature incineration effectively eliminates
organic wastes such as herbicides, plastics, halogenated solvents, pesticides,
pharmaceutical and refinery wastes, regardless of whether they are gases,
liquids, sludges or solids. Federal and state incineration regulations require a
destruction and removal efficiency of 99.99% for most organic wastes and
99.9999% for PCBs and dioxin.
The Company operates three United States-based solids and liquids capable
incinerators with annual capacity of 250,000 tons, two hazardous waste liquid
injection incinerators in Canada, and one in the United States, and two lower
volume specialty incineration facilities in the United States. The Company's
incineration facilities in Bridgeport, New Jersey; Deer Park, Texas; and
Aragonite, Utah, are designed to process liquid organic wastes, sludges, solids,
soil and debris. The Deer Park facility has two kilns and a rotary reactor. The
Company's incineration facilities in Roebuck, South Carolina; Mercier, Quebec;
and Sarnia, Ontario are liquid injection incinerators, designed primarily for
the destruction of liquid organic waste. The Mercier facility also has a system
to blend and destroy pumpable sludges. Typical wastestreams include wastewater
containing concentrated organic levels not amenable to conventional
physical/chemical waste treatment, pesticide and herbicide waste, waste with
high chlorinated organic concentrations and flammable materials.
All but one of the Company's United States incineration facilities have
received Part B permits under RCRA. The facility in Roebuck, South Carolina has
received EPA approval for that portion of the Part B permit under EPA authority;
however, the required state permit which was originally issued in 1987 is
currently under appeal. Part B permits are generally issued for periods of five
or ten years, after which the permit must be reviewed by state and/or federal
regulators before the permit can be renewed for additional terms. The Company's
two Canadian facilities have operating permits issued by provincial regulatory
authorities. Management is not aware of any issues at any of the Company's sites
that would preclude the renewal of any of its Part B permits.
The following tables sets forth the annual capacity of the Company's solids
and liquid capable incinerators and the liquid injection incinerators:
<TABLE>
<CAPTION>
ANNUAL PRACTICAL
CAPACITY(1)
----------------
(TONS)
<S> <C>
SOLIDS AND LIQUIDS CAPABLE INCINERATORS
Aragonite, Utah............................................. 60,000
Bridgeport, New Jersey...................................... 45,000
Deer Park, Texas............................................ 145,000
-------
Subtotal.................................................. 250,000
-------
LIQUID INJECTION INCINERATORS
Mercier, Quebec............................................. 60,500
Sarnia, Ontario............................................. 66,000
Roebuck, South Carolina(2).................................. 33,500
-------
Subtotal.................................................. 160,000
-------
TOTAL............................................. 410,000
=======
</TABLE>
- ---------------
(1) The table does not reflect the annual capacity of the Company's two lower
volume specialty incinerators located in the United States.
(2) Scheduled for closure.
During fiscal 1997, the Company closed its incinerators at Baton Rouge,
Louisiana, and Clive, Utah, reducing utilization of less efficient and redundant
facilities. During the second quarter of fiscal 1998, the Company closed its
incinerator at Coffeyville, Kansas. In addition, the Company plans to close its
incinerator at Roebuck, South Carolina, reducing excess capacity. These four
closures eliminate approximately 244,000 tons of practical capacity from the
off-site commercial incineration market. The industry's total off-site
commercial incinerator practical capacity was estimated at 1.26 million tons in
1996, according to EI Digest.
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Landfills. The Company operates 11 landfills located throughout the United
States and Canada. A total of eight landfills are designed and permitted for the
disposal of hazardous wastes. Three landfills are operated for non-hazardous
industrial waste disposal, and to a lesser extent, municipal solid waste.
Landfill technology is a proven and environmentally sound disposal mechanism for
certain wastes that cannot effectively be destroyed or treated through
alternative methods.
The Company operates eight of the 23 permitted hazardous waste landfills in
North America, with approximately 52 million cubic yards of remaining permitted
capacity (which at current fill rates represents in excess of 50 years of
capacity). Of these facilities, six are located in the United States and two are
located in Canada.
The following table sets forth the permitted available capacity of the
Company's industrial and hazardous waste landfills:
<TABLE>
<CAPTION>
PERMITTED
AVAILABLE CAPACITY
AT AUGUST 31, 1997
------------------
(CUBIC YARDS)
<S> <C>
INDUSTRIAL WASTE LANDFILLS
Altair, Texas............................................... 400,000
Sawyer, North Dakota........................................ 5,500,000
Rosemont, Minnesota......................................... 5,800,000
----------
TOTAL............................................. 11,700,000
==========
HAZARDOUS WASTE LANDFILLS
Pinewood, South Carolina.................................... 3,800,000
Westmorland, California..................................... 12,000,000
Buttonwillow, California.................................... 11,100,000
Sarnia, Ontario............................................. 2,000,000
Tooele County, Utah......................................... 11,100,000
Waynoka, Oklahoma........................................... 8,600,000
Ryley, Alberta.............................................. 1,000,000
Deer Trail, Colorado........................................ 2,200,000
----------
TOTAL............................................. 51,800,000
==========
</TABLE>
The Company's six hazardous waste landfills in the United States all
possess operating permits issued pursuant to RCRA Subtitle C. These permits are
generally issued for periods of five or ten years, after which the permit must
be reviewed by state and/or federal regulators before the permit can be renewed
for additional terms. Management is not aware of any issues at any of the
Company's sites that would preclude the renewal of its hazardous waste landfill
permits. In fiscal 1997, approximately 0.9 million cubic yards of hazardous
wastes were disposed of in these landfills. The Company's Sarnia, Ontario
hazardous waste landfill has provincial permits authorizing its operation.
Management is not aware of any issue that would preclude renewal of these
permits.
The Company also operates three non-hazardous industrial landfills. All
three landfill facilities have received permits authorizing the acceptance of
commercial industrial waste, including wastes from foundries, demolition and
construction, machine shops, automobile manufacturing, printing, metal
fabrications and recycling. Management is not aware of any issues at any of
these landfills that would preclude renewal of these permits.
Other Treatment and Disposal Services. The Company provides a number of
other complementary treatment and disposal services including wastewater
treatment, PCB management services, harbor sediment dredging, treatment, and
placement services and other specialized offerings.
Wastewater treatment is provided from four facilities and consists of four
basic business lines: hazardous wastewater treatment, mobile treatment, sludge
dewatering/drying and non-hazardous wastewater treatment. These services include
the reduction, treatment and disposal of both hazardous and non-hazardous
wastewater,
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sludges and solids for both bulk and drummed waste. The Company removes
hazardous components from hazardous industrial liquids and/or
chemically/physically makes hazardous industrial liquids non-hazardous through
blending and treatment technology. Specialized techniques reduce residues by
recycling/reusing spent products. Batch treatment technologies also enable the
Company to handle hard-to-treat wastewater streams.
The Company also provides PCB management services. The Company recycles PCB
contaminated oils and reclaims metals from PCB contaminated equipment. The
Company accomplishes this recycling and reclamation through a de-chlorination
process operated from seven facilities mainly in the eastern United States and
Canada.
The Company provides harbor and channel sediment dredging, treatment and
placement services in addition to other specialty services including remedial
construction and consulting, analytical services, biological treatment, and
paint, oil and solvent recovery. The Company also provides field services for
industrial customers at their sites and at government installations, federal and
state Superfund sites, laboratories and schools across North America. These
activities range from typical environmental remediation and construction to
specialized services. The Company's INSITE program, an environmental outsourcing
program, allows companies to achieve their environmental goals while focusing on
their core business.
Transportation. The Company's transportation operations facilitate the
movement of materials between locations, which is key to the operation of the
Company's network of hazardous and industrial waste treatment and disposal
facilities. Transportation may be accomplished by truck, rail, or other mode,
with company-owned assets or in conjunction with third party transportation
specialists.
Specially designed containment systems, vehicles and other equipment
permitted for hazardous waste transport, along with drivers trained in
transportation skills and hazardous waste procedures, provide for the movement
of customer waste streams.
Used Oil Collection and Recovery Services
As a result of the Safety-Kleen Acquisition, Laidlaw Environmental is the
world's largest recycler of used oil, currently re-refining approximately 130
million gallons of used oil and oily water per year. The Company collects used
lubricating oils from automobile and truck dealers, automotive garages, oil
change outlets, service stations, industrial plants and other businesses, which
it then re-refines into high-quality base lubricating oil that can be sold at
significantly higher prices than industrial fuels. Laidlaw Environmental
operates oil re-refining plants in Breslau, Ontario and East Chicago, Indiana.
The plants in Breslau and East Chicago have annual re-refining capacities of 40
and 92 million gallons of used oil per year, respectively. Used oil collected in
excess of the capacity of Laidlaw Environmental's re-refining facilities is
either processed into industrial fuels or sold unprocessed for direct use as a
fuel in certain industrial applications for which such used oil is suitable.
Recently, the profitability of this business has been adversely affected by
declining oil prices, which adversely affects the prices of re-refined oil. The
Company is currently evaluating the sale of certain of these assets.
Other Specialty Services
Laidlaw Environmental provides a number of other specialty services which
either accommodate specific needs of the customer base or allow for increased
utilization of the existing asset base and facility network. These additional
services include paint refinishing services, dry cleaner services, automotive
recovery services, imaging services, its T.E.A.M. (as defined below) service and
compliance services.
The Company supplies paint refinishing services to new and used car
dealers, auto body repair and paint shops and fiberglass product manufacturers.
The Company provides a machine specially designed to clean paint spray guns.
Laidlaw Environmental representatives place a machine and solvent with each
customer, maintain the machine and regularly remove the contaminated solvent and
replace it with clean solvent. Laidlaw Environmental either recycles the
contaminated solvent into clean solvent for reuse or blends it into fuel used by
cement kilns. The Company also collects waste paint and paint booth filters,
which are blended into fuel for cement kilns. Laidlaw Environmental
representatives also provide clean buffing pads and remove dirty pads during
regularly scheduled service calls. The dirty pads are washed, dried, inspected
and returned to Laidlaw Environmental's
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distribution system. Laidlaw Environmental believes that clean air and water
regulations will create opportunities for further market penetration, new
services and product line extensions.
The Company collects and recycles contaminated dry cleaner wastes
consisting primarily of used filter cartridges and sludge containing
perchloroethylene and mineral spirits. While the market for this business has
matured, Laidlaw Environmental believes it can achieve further market
penetration and can take advantage of new markets for services evolving from
regulatory issues.
As part of its automotive recovery services, the Company provides services
for recycling used oil filters, absorbent products and waste, waste gas, gas
filters and discarded fluorescent lamps.
The Company supplies on-site silver recovery equipment and collects and
recycles photo processing waste for businesses that use silver-based
photography, including graphic arts printers, photographers and diagnostic
x-ray. Through this service, Laidlaw Environmental provides health care,
printing, photoprocessing and other businesses with on-site and off-site
recycling of photochemical solutions, as well as film, plate and silver recovery
services.
The Company provides a Total Environmental Activity Management service to
small businesses (T.E.A.M.). T.E.A.M. is a fluids and waste management service
which covers all aspects of the operations of the business. Each T.E.A.M. is
composed of an environmental specialist, engineering specialist and a financial
specialist who undertake an environmental/process evaluation. The detailed
report prepared by the T.E.A.M. includes an evaluation of the process,
environmental compliance, health and safety and costs for regulatory remediation
and compliance. In the last quarter of fiscal 1997, the Company completed 25
evaluations. There are currently three T.E.A.M.s and it is anticipated that
there will be 18 T.E.A.M.s by the end of 1998 with each T.E.A.M. expected to
perform four evaluations per month.
The Company also offers integrated customer compliance services to include
Material Safety Data Sheets ("MSDS") Fax on Demand, an electronic MSDS
management program; DOT Shipping Paper Services, which provides appropriate
shipping papers for hazardous waste shipments; regulatory training; spill and
poison control hotlines; and on-site facility assessments. Integrated Customer
Compliance offers single services and bundled full service programs in
accordance with customer requests. For example, the Company offers various
regulatory compliance services including electronic data management, on-site and
off-site training and compliance audits.
European Operations
As a result of the Safety-Kleen Acquisition, the Company operates in seven
countries in Western Europe and provides certain services identical to those
provided in North America. The Company primarily provides automotive/retail
repair and paint refinishing services in the United Kingdom, the Republic of
Ireland, Belgium, France, Italy, Spain and Germany. The Company also provides
selected industrial services in Germany and the United Kingdom. The Company has
a total of 54 branch locations in Europe. The Company is currently evaluating
the sale of these European operations. See "Risk Factors -- International
Operations."
SALES AND MARKETING
The Company's sales and marketing staff is deployed geographically
throughout North America to service more than 400,000 customers. Approximately
2,800 of the Company's employees are involved in the Company's North American
sales and marketing effort. The Company's customers represent diverse
industries, including automotive manufacturers and suppliers, chemical and
petrochemical, computer and micro-processor manufacturers, primary metals,
paper, furniture, aerospace and pharmaceutical, and are located throughout the
United States, Canada and Europe.
The sales and marketing group for the Company's incineration and landfill
services is structured around three separate groups of sales professionals,
which together total approximately 225 individuals. Approximately 25 of these
professionals manage large corporate accounts on an ongoing basis, consisting of
approximately 250 major corporations which, collectively, generated over $300.0
million in revenues in fiscal 1997. Approximately 175 of these professionals
serve as technical sales representatives who are located throughout North
America based upon geographic coverage needs and the future waste generating
potential of a particular region.
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Furthermore, approximately 25 of these professionals serve as facility sales
managers and are on-site at the Company's facilities. Facility service managers
are responsible for generating revenues at each of these profit centers in
addition to supporting technical sales representatives in the field who have
specific client-driven technical needs.
The Company's sales and marketing for its parts cleaner/fluid recovery,
automotive/retail repair and used oil collection and recovery services is
conducted through its 284 collection facilities, 19 accumulation centers, 13
solvent recycling centers, eight distribution centers, two fuel blending
facilities and two oil re-refineries. This unique network offers a local
presence and flexibility in scheduling that is unmatched in the industry, and is
a significant competitive advantage. The Company's sales and marketing group for
all other services is conducted through its collection network which is located
throughout North America.
In addition, telemarketing is used to reach low volume waste generators who
may not otherwise be reached. All sales personnel are compensated on a base
salary and sales commission basis.
COMPETITION
The Company operates in a highly competitive industry. The Company believes
that it and Chemical Waste Management, Inc. are the largest competitors within
the hazardous and industrial waste industry. The Company also competes with
local and regional companies of varying sizes, as well as counties and
municipalities that maintain their own waste collection to disposal operations.
The key competitive factors within the hazardous and industrial waste management
industry include the breadth of services offered, price, quality, reliability of
service and technical proficiency in handling hazardous and industrial waste
properly. Knowledgeable customers are sensitive to the reputation and financial
strength of the companies they use to collect, treat, recycle and dispose of
their hazardous and industrial waste primarily because such customers, as the
original generator of such hazardous waste, remain liable under federal and
state environmental laws for improper disposal of such waste. The Company
believes that its technical proficiency and reputation of financial strength are
important considerations to its customers in selecting and continuing to use the
Company's services. See "Risk Factors -- Competition and Technological
Advances."
PROPERTIES
As a result of the Safety-Kleen Acquisition, the Company operates in 45
states, seven Canadian provinces, the United Kingdom, the Republic of Ireland,
Belgium, France, Italy, Spain, Germany and Puerto Rico. The Company provides
hazardous and industrial waste services from 284 collection facilities (more
than half of which are owned), operates eleven landfills, eight incinerators,
eight transportation centers, 19 accumulation centers, 13 solvent recycling
centers, two fuel blending facilities and two oil re-refineries.
The Company estimates that 35 to 45 collection facilities and five
processing facilities can be closed due to geographic overlap among facilities.
See "-- Business Strategy and Acquisition Rationale."
The Company leases space for its executive offices at 1301 Gervais Street,
Suite 300, Columbia, South Carolina 29201.
EMPLOYEES
As of August 31, 1997, 4,500 employees provided Laidlaw Environmental's
hazardous and industrial waste services, of whom 1,500 were executive,
supervisory, clerical and sales personnel. Approximately 12% of the Laidlaw
Environmental's employees were represented by various collective bargaining
groups. The acquisition of Safety-Kleen has added approximately 7,300 additional
employees. Less than 1% of Safety-Kleen's employees were represented by various
collective bargaining groups. As a result of the Safety-Kleen Acquisition, the
Company expects that it will eliminate all duplicative administrative support
functions, which will result in the reduction of 600 to 800 personnel and close
redundant collection facilities and processing facilities which will result in
the elimination of 400 to 500 personnel.
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REGULATIONS
The collection and disposal of solid and hazardous wastes are subject to
the laws and regulations promulgated by United States, Canadian and other
foreign, state, territorial, federal, provincial or local courts, executive
offices, legislatures, governmental agencies or ministries, commissions or
administrative, regulatory or self-regulatory authorities or instrumentalities
which regulate health, safety, the environment, zoning and land-use.
Environmental laws and regulations require hazardous waste disposal facilities
to obtain permits, which generally outline the procedures under which the
facilities must be operated. Governmental authorities have the power to enforce
compliance with these regulations, and violations of permit conditions or of the
regulations, even if unintentional, may result in fines, shutdowns, remedial
work or revocation of the permit. Regulations vary but generally govern
collection, storage and disposal activities and the location and use of
facilities and impose restrictions to prohibit or minimize air and water
pollution.
The Company's business is significantly affected by federal, state,
provincial and local environmental law, including RCRA, the Toxic Substances
Control Act, CERCLA, the Clean Water Act and the Clean Air Act, and
corresponding state laws and related regulations and enforcement practices.
Safety standards under the Occupational Safety and Health Act are also
applicable to the Company's business. See "Risk Factors -- Environmental
Regulation and Liabilities."
RCRA provides for the establishment of a national hazardous waste
management program through a comprehensive regulatory system. Among other
things, it defines hazardous wastes and provides standards for generators,
transporters and disposers of hazardous wastes, and for the issuance of permits
for sites where such material is treated, stored and disposed. These regulations
also require the Company's facilities to demonstrate financial assurance for
sudden and accidental and, in the case of land based treatment facilities,
non-sudden and gradual pollution occurrences. Financial assurance for future
closure and post-closure expenses must also be maintained. The Company believes
that each of the facilities has all necessary operating permits and that each
permit will be renewed at the end of its existing term. However, any such
issuance or renewal could include conditions requiring further capital
expenditures or corrective actions. Although the Company also believes that each
of its operating facilities complies in all material respects with the
applicable requirements of RCRA and Canadian law for the Canadian facilities, it
may be necessary to expend considerable time, effort and money to keep existing
or acquired facilities of the Company in compliance with applicable
requirements, including new regulations, to maintain existing permits and
approvals and to obtain the permits and approvals necessary to increase their
capacity.
CERCLA imposes liability for natural resource damages and the cleanup of
sites from which there is a release or threatened release of hazardous
substances into the environment on, among others, the current and former owners
and operators of such sites. Hundreds of substances are defined as "hazardous"
under CERCLA and the release to the environment of such substances, even in
minute amounts, can result in substantial liability. The statute provides for
the remediation of contaminated facilities and imposes costs on the responsible
parties. The expense of conducting such a cleanup can be significant.
Notwithstanding the Company's efforts to comply with applicable regulations and
to avoid any unregulated release of hazardous substances into the environment,
releases of such substances may occur as a result of the Company's operations.
Given the substantial costs involved in a CERCLA cleanup and the difficulty of
obtaining insurance for environmental impairment liability, such liability could
have a material impact on the Company's business, financial condition and future
prospects.
The Clean Water Act regulates the discharge of pollutants into surface
waters and sewers from a variety of sources, including disposal sites and
treatment facilities. The Company is required to obtain discharge permits and
conduct sampling and monitoring programs. The Clean Air Act regulates the
emissions of pollutants into the atmosphere. These regulations also impact the
Company's operations. The Company believes each of its operating facilities
complies in all material respects with the applicable requirements.
The South Coast Air Quality Management District ("SCAQMD"), the air
district for the greater Los Angeles, California area, has amended its rule
setting the allowable volatile organic compound ("VOC") content of materials
used for remote reservoir repair and maintenance cleaning. The amended rule
will, in effect, ban remote reservoir parts cleaning with solutions containing
VOCs in excess of fifty grams per liter as of January 1, 1999, except in certain
applications. Substantially all of the Company's parts cleaners currently placed
with
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SCAQMD customers utilize solvents containing VOCs in excess of fifty grams per
liter. The Company offers aqueous parts cleaning systems which meet the 1999
SCAQMD requirements and is working with its SCAQMD customers to identify which
customers will need to convert their solvent parts cleaners to an alternative
cleaning solvent or solution prior to January 1, 1999. In addition, the Company
will continue to actively work with the SCAQMD to identify appropriate
exemptions and develop alternatives to the 1999 VOC limits for materials used
for remote reservoir parts cleaning. The Company expects other Clean Air Act
nonattainment municipalities to consider adopting similar rules.
ENVIRONMENTAL LIABILITIES AND CAPITAL EXPENDITURES
The Company estimates capital spending of approximately $80.0 million per
year, commencing in fiscal 1998. This includes capital spending to achieve and
maintain compliance with RCRA, the Clean Air Act and other environmental laws
and regulations affecting the Company's operations.
In addition to these capital expenditures, the Company will incur costs in
connection with closure activities at certain of its sites. When the Company
discontinues using or changes the use of a hazardous waste management unit,
formal closure procedures must be followed, and such procedures must be approved
by federal or state environmental authorities. In some cases, costs are incurred
to fulfill closure, post-closure and corrective obligations work at the site. In
addition at certain of the Company's other operating sites, remedial cleanup
work is required as part of the RCRA Corrective Action Program or other state
and federal programs. The Company has recorded liabilities of $321.3 million as
of February 28, 1998, for remedial cleanup work, Superfund site liability,
closure, post-closure and corrective obligations and certain other environmental
expenses related to its operating and previously closed sites.
With respect to various operating facilities, the Company is required to
provide financial assurance with respect to certain statutorily required
closure, post-closure and corrective action obligations totaling $550.0 million
as of May 1, 1998. The Company intends to provide the required financial
assurance through a combination of letters of credit, insurance policies,
insurance bonds, corporate guarantees and trusts, as allowed by the applicable
regulatory authorities.
LEGAL PROCEEDINGS
OVERVIEW
The business of the Company is regulated by federal, state, provincial and
local provisions that have been enacted or adopted, regulating the discharge of
materials into the environment or primarily for the purpose of protecting the
environment. The nature of the Company's businesses results in frequently
becoming a party to judicial or administrative proceedings involving all levels
of governmental authorities and other interested parties. See "Risk
Factors -- Risk of Pending and Future Legal Proceedings." The issues that are
involved generally relate to applications for permits and licenses by the
Company and their conformity with legal requirements and alleged technical
violations of existing permits and licenses. The Company does not believe that
these issues will be material to the Company's operations or financial
condition. During the twelve month period ending April 30, 1998, subsidiaries of
the Company were involved in 11 proceedings in which sanctions were sought for
alleged violations of environmental laws. The Company believes that each of
these proceedings involved sanctions which may exceed $100,000. Based upon
presently available information, the Company does not believe that liabilities
arising from its involvement in these matters will in the aggregate be material
to the Company's operations or financial condition.
In the United States, CERCLA imposes financial liability on persons who are
responsible for the release of hazardous substances into the environment.
Present and past owners and operators of sites which release hazardous
substances, as well as generators and transporters of the waste material, are
jointly and severally liable for remediation costs and Environmental damage. As
of April 30, 1998, the Company had been notified that it was a potentially
responsible party in connection with approximately 37 locations at which
hazardous substances may have been released as a result of the Company's
operations. The Company continually reviews its status with respect to each
location and the extent of its alleged contribution to the volume of waste at
the location, the available evidence connecting the Company to that location and
the numbers and financial soundness of other
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potentially responsible parties at the location. Based upon presently available
information, the Company does not believe that potential liabilities arising
from its involvement with these locations will individually or in the aggregate
be material to the Company's operations or financial condition.
Laidlaw Environmental
Ville Mercier Facility. On May 10, 1991, representatives of the Ministry
of the Environment of the Province of Quebec conducted a search on property of a
subsidiary of the Company in Ville Mercier pursuant to a search warrant issued
on the basis of allegations that the subsidiary, prior to its acquisition, had
during the years 1973, 1974 and 1975, illegally buried between 500 and 600
barrels of industrial waste in the ground on the site. As a result of that
search and the finding of barrels of industrial waste, the subsidiary
immediately undertook an investigation and submitted a restoration plan to the
Ministry of the Environment and in fact, commenced the restoration activity. On
May 24, 1991, the Minister of the Environment issued an order under the
provisions of the Environment Quality Act, ordering the subsidiary to collect
all the contaminants dumped, emitted, issued or discharged into the environment.
This order was issued without notice to the subsidiary at a time when the
subsidiary was already carrying out its restoration plan. The subsidiary has
filed a motion in the Superior Court in the Province of Quebec and the District
of Montreal seeking an order to, among other things, cancel and annul the order
on the basis, that the burial of the barrels between 1973 and 1975 did not
constitute an actual and current discharge, emission or deposit of contaminants
into the environment justifying the 1991 order under the law and that the order
did not identify the contaminants that the subsidiary was required to remove,
their location or a time frame in which this should be accomplished. Management
believes that the restoration plan submitted by the subsidiary as amended after
consultation with the Ministry of the Environment has been implemented and that
any contamination resulting from the barrels of industrial waste has been
remediated.
By letter dated June 19, 1992, and unrelated to the barrels of industrial
waste referred to above, the Quebec Ministry of the Environment requested the
subsidiary to advise the Ministry, within 30 days of receipt of the request, of
its intentions concerning the carrying out of certain characterization studies
of soil and water and restoration work with respect to certain areas of the
Ville Mercier property. In 1968, the Quebec government issued two permits to an
unrelated company to dump organic liquids into lagoons on the Ville Mercier
property. By 1971, groundwater contamination had been identified. In 1972, the
Quebec government provided an alternate water supply to Ville Mercier. In the
same year, the permit authorizing the dumping of liquids was terminated and a
permit to operate an organic liquids incinerator on the property was granted to
an entity which was indirectly acquired by the Company in 1989. In 1973, the
Quebec government contracted with the incinerator operator to incinerate the
pumpable liquids in the lagoons. In 1980, the incinerator operator removed,
solidified and disposed of the non-pumpable material from the lagoons in a
secure cell and completed the closure of the lagoons at its own expense. In
1983, the Quebec government constructed, and continues to operate, a groundwater
pumping and treatment facility near the lagoons. The Company believes that its
subsidiary is not the party responsible for the lagoon and groundwater
contamination. By letter dated July 17, 1992, the subsidiary responded by first
denying any responsibility for the decontamination and restoration of its site
and secondly by proposing that the Quebec Ministry of the Environment and the
subsidiary form a working group to find the most appropriate technical solution
to the contamination problem. On November 16 and 25, 1992, the Minister of the
Environment, pursuant to the provisions of the Environment Quality Act, served
the subsidiary with two Notices alleging that the subsidiary was responsible for
the presence of contaminants on its property and that of its neighbor and
ordering the subsidiary to take all the necessary measures to excavate,
eliminate or treat all of the contaminated soils and residues located within the
areas defined in the Notices and to recover and treat all of the contaminated
waters resulting from the aforementioned measures. The Notices further provided
that failing the receipt by the Department of Environment, within ten days of
the date of service of the Notices, of an undertaking by the subsidiary to carry
out the aforementioned measures, the Minister of the Environment would proceed
to do the work and would claim from the subsidiary the direct and indirect costs
relating to such work. By letter dated November 25, 1992, the subsidiary
responded by reiterating its position that it had no responsibility for the
contamination associated with the discharges of wastes into the former Mercier
Lagoons between 1968 and 1972 and proposing to submit the question of
responsibility to the Courts for determination as expeditiously as possible
through the cooperation of the parties' respective attorneys. Concurrently, the
subsidiary undertook to prepare and submit to the Department of the Environment
a technical plan to address the contamination on the site
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identified in the notices. This plan was developed with the assistance of highly
qualified experts from Quebec and elsewhere in North America drawing upon all
available information and was submitted to the Minister of the Environment. By
letter dated December 7, 1992, the subsidiary submitted to the Minister of the
Environment a document entitled "Detailed Scope of Work for the Groundwater
Contamination Panel Ville Mercier, Quebec." This proposal by the subsidiary was
refused by the Minister of the Environment by letter dated December 22, 1992 on
the grounds that it did not meet the terms of the above mentioned Notices issued
against the subsidiary. The Minister published a request for tenders for the
preparation of plans and specifications with respect to the excavation and
storage of the contaminated soils. The Minister also retained six independent
experts to review the subsidiary's technical plan. This panel of experts
subsequently submitted to the Minister of the Environment its recommended
methodology to address the contamination on the site.
The Minister of the Environment convened a public hearing which reviewed
the report submitted to the Minister by the experts he retained and recommended
to the Minister what remedial plan should be instituted to address the
contamination on the site.
The subsidiary filed legal proceedings seeking a court determination of the
liability associated with the contamination of the former Mercier lagoons. The
subsidiary asserted that it has no responsibility for the contamination on the
site. The Minister claimed that the subsidiary is responsible for the
contamination and should reimburse the Province of Quebec for costs incurred to
the present in the amount of $17.8 million Canadian and should be responsible
for future remediation costs.
Laidlaw and Laidlaw Transportation, Inc., an indirect wholly-owned
subsidiary of Laidlaw ("LTI"), have contractually agreed to indemnify and hold
harmless the Company and its subsidiaries for any damages resulting from the
remediation of contaminated soils and water arising from the former lagoon sites
and operation of the incinerator at Mercier, Quebec but only to the extent that
the aggregate cash expenditure with respect to such damages exceeds in the
aggregate (i) $1.0 million during such year and (ii) an amount equal to the
product of $1.0 million times the number of years that have elapsed since May
1997; however, there shall be no indemnification for any cash expenditures
incurred more than six years after May 1997.
Laidlaw Environmental Services of South Carolina, Inc. Financial
Assurance. A subsidiary of the Company, Laidlaw Environmental Services of South
Carolina, Inc. ("LESSC"), owns and operates a hazardous waste landfill near the
Town of Pinewood in Sumter County, South Carolina. South Carolina law requires
that hazardous waste facilities provide evidence of financial assurance for
potential Environmental cleanup and restoration in form and amount to be
determined by the South Carolina Department of Health and Environmental Control
("DHEC").
In its order dated May 19, 1994, the Board of DHEC (the "Board") decided
that over a ten year period LESSC must establish a cash funded trust in the
amount of $133.0 million adjusted for inflation as financial assurance for
potential Environmental cleanup and restoration. In August 1994, LESSC paid
approximately $14.0 million cash into the trust fund as a first installment. The
cash funded trust now stands at approximately $17.0 million. LESSC appealed to
the South Carolina Circuit Court contesting the legality of the Board's
determination.
In June 1995, DHEC promulgated, and the South Carolina legislature
approved, regulations governing financial assurance for Environmental cleanup
and restoration giving owner/operators of hazardous waste facilities the right
to choose from among six options for providing financial assurance. The options
include insurance, a bond, a letter of credit, a cash trust fund and a corporate
guaranty with a financial test.
In June 1995 under authority of the new regulations, LESSC submitted
financial assurance for potential Environmental cleanup and restoration composed
of a combination of the existing State Permitted Sites Fund (this is a state of
South Carolina fund created by statute and funded by hazardous waste disposal
taxes) in the amount of approximately $8.0 million and the balance of a total
package of $135.0 million by way of a corporate guaranty by Laidlaw
Environmental in the amount of approximately $127.0 million. LESSC also left in
place the existing cash trust fund in the amount of approximately $17.0 million.
DHEC accepted LESSC's financial submittal. On September 15, 1995, DHEC issued a
declaratory ruling finding the new regulations applicable to financial assurance
requirements for LESSC. A group of parties opposed to the ruling appealed the
declaratory
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ruling to the South Carolina Circuit Court. The opposing parties include
Citizens Asking for a Safe Environment, Energy Research Foundation, County of
Sumter, Sierra Club, County of Clarendon, The Sumter County Legislative
Delegation, the South Carolina Department of Natural Resources and the South
Carolina Public Service Authority. In June 1996, LESSC submitted and DHEC
accepted a similar financial assurance package for the state fiscal year ended
June 30, 1997. In June 1997, LESSC submitted a financial assurance package
consisting of the State Permitted Sites Fund (approximately $9.0 million), the
cash trust fund in the amount of approximately $17.0 million and the balance of
a total package of approximately $135.0 million in insurance coverage. This
submittal is pending acceptance by DHEC.
LESSC's appeal of the May 19, 1994 DHEC order and the opposing parties'
appeal of the September 15, 1995, DHEC declaratory ruling were consolidated in
the South Carolina Circuit Court in the case captioned Laidlaw Environmental
Services of South Carolina, Inc. et al., Petitioners vs. South Carolina
Department of Health and Environmental Control and South Carolina Board of
Health and Environmental Control, Respondents -- Energy Research Foundation, et
al., Intervenors, Docket Numbers C/A 94-CP-43-175, 94-CP-43-178, 94-CP-40-1412
and 94-CP-40-1859. A decision was issued by the Circuit Court on August 19, 1997
finding the regulation legally valid and applicable to financial assurance
requirements of the Pinewood landfill. Opposing parties have appealed the
decision to the South Carolina Court of Appeals. A decision adverse to the
Company could result in the reinstatement of the May 19, 1994 DHEC order. The
Company believes that the regulations promulgated in June 1995 are legally valid
and applicable to financial assurance requirements for the Pinewood landfill.
Tax Matters. The consolidated federal income tax returns of LTI and its
U.S. subsidiaries (which until May 15, 1997, included certain of the
subsidiaries of the Company) for the fiscal years ended August 31, 1986, 1987
and 1988, have been under audit by the Internal Revenue Service. In March 1994,
LTI received a statutory notice of deficiency proposing that LTI and its
subsidiaries pay additional taxes relating to disallowed deductions in those
income tax returns. The principal issue involved relates to the timing and the
deductibility for tax purposes of interest attributable to loans payable to
related foreign persons. LTI has petitioned the United States Tax Court
(captioned as Laidlaw Transportation, Inc. & Subsidiaries vs. Commissioner of
Internal Revenue, Docket Nos. 9361-94 and 9362-94) for a redetermination of
claimed deficiencies of approximately $49.6 million (plus interest of
approximately $87.4 million as of February 28, 1998). In October 1997, LTI
received a statutory notice of deficiency proposing that LTI and its
subsidiaries pay additional taxes of approximately $143.5 million (plus interest
of approximately $136.9 million as of February 28, 1998) relating to disallowed
deductions in federal income tax returns for the fiscal years ended August 31,
1989, 1990 and 1991, based on the same issues. LTI has filed a petition with the
United States Tax Court (captioned as Laidlaw Transportation, Inc. &
Subsidiaries vs. Commissioner of Internal Revenue, Docket No. 329-98) to contest
these claimed deficiencies. The Company anticipates that the Internal Revenue
Service will propose adjustments for the same issue in subsequent taxable years.
Pursuant to the Stock Purchase Agreement, Laidlaw and LTI agreed to be
responsible for any tax liabilities resulting from these matters. The Company
believes that the ultimate disposition of these issues will not have a material
adverse effect upon the Company's consolidated financial position or results of
operations.
SAFETY-KLEEN
East Chicago Feed Tank. In September 1997, Safety-Kleen discovered that
its East Chicago, Indiana main feed tank had become contaminated with PCBs
resulting in approximately 4 million gallons of contaminated oil. Safety-Kleen
immediately notified the EPA and the Indiana Department of Environmental
management ("IDEM") of the problem. Safety-Kleen believes that the IDEM and EPA
will allow it to treat this contaminated material on-site. If the IDEM or EPA
determined that off-site treatment is required, the cost of such treatment could
be material to the results of operations in that period. It is also possible
that the Company may incur fines or penalties with respect to this matter in
excess of $100,000.
SUBSIDIARY GUARANTORS
The Subsidiary Guarantors represent all of the domestic wholly-owned
subsidiaries of the Company. None of the foreign or non-wholly-owned domestic
subsidiaries of the Company are guarantors of the Notes.
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MANAGEMENT
The following sets forth certain information with respect to the directors
and executive officers of the Parent:
<TABLE>
<CAPTION>
NAME AGE POSITION HELD
- ---- --- -------------
<S> <C> <C>
Kenneth W. Winger........................ 59 President, Chief Executive Officer and
Director of the Parent and the Company
James R. Bullock......................... 53 Chairman of the Board of the Parent
John R. Grainger......................... 48 Director of the Parent
Leslie W. Haworth........................ 54 Director of the Parent
John W. Rollins, Sr...................... 81 Director of the Parent
John W. Rollins, Jr...................... 55 Director of the Parent
David E. Thomas, Jr...................... 40 Director of the Parent
Henry B. Tippie.......................... 71 Director of the Parent
James L. Wareham......................... 58 Director of the Parent
Grover C. Wrenn.......................... 55 Director of the Parent
Michael J. Bragagnolo.................... 51 Executive Vice President and Chief
Operating Officer of the Parent and the
Company
Henry H. Taylor.......................... 53 Vice President, General Counsel and
Secretary of the Parent and Secretary of
the Company
Paul R. Humphreys........................ 39 Senior Vice President of Finance and
Chief Financial Officer of the Parent and
the Company
</TABLE>
James R. Bullock became Chairman of the Board of the Parent on May 15,
1997. Mr. Bullock has been President and Chief Executive Officer of Laidlaw
since October 1993 and for more than a year prior thereto, President and Chief
Executive Officer of Cadillac Fairview Corporation Limited. Mr. Bullock also is
a director of Laidlaw.
Kenneth W. Winger became President and Chief Executive Officer and a
Director of the Parent and the Company on May 15, 1997. Mr. Winger served as
President and Chief Operating Officer of the company which is now known as
Laidlaw Environmental Services (US), Inc. from July 1995 until May 1997. He
served as Executive Vice President for Business Development of Laidlaw
Environmental Waste Systems, Ltd., a former subsidiary of the Company, from
January 1995 until July 1995. Prior to that, Mr. Winger served as Senior Vice
President for Corporate Development with Laidlaw from May 1991 to January 1995.
John R. Grainger became a Director of the Parent on May 15, 1997. Mr.
Grainger has been Executive Vice President and Chief Operating Officer of
Laidlaw since September 1997 and President and Chief Operating Officer of
Laidlaw Transit, Inc. since May 1992. Mr. Grainger currently serves as Chairman
of the Human Resources and Compensation Committee.
Leslie W. Haworth became a Director of the Parent on May 15, 1997. Mr.
Haworth has been Senior Vice President and Chief Financial Officer of Laidlaw
for more than five years. Mr. Haworth currently serves as Chairman of the Audit
Committee.
John W. Rollins, Sr. became a Director of the Parent on May 15, 1997. Mr.
Rollins has been Chairman of the Board and Chief Executive Officer of Rollins
Truck Leasing Corp. for more than five years. Mr. Rollins was Chairman of the
Board and Chief Executive Officer of Rollins from 1988 until May 15, 1997. Mr.
Rollins also is a director of Matlack Systems, Inc., Rollins, Inc., RPC, Inc.
and Dover Downs Entertainment, Inc. Mr. Rollins' son is John W. Rollins, Jr.
John W. Rollins, Jr. became a Director of the Parent on May 15, 1997. Mr.
Rollins has been President and Chief Operating Officer and a director of Rollins
Truck Leasing Corp. for more than five years and Chairman of the Board of
Matlack Systems, Inc. for more than five years. Mr. Rollins was Senior Vice
Chairman of the Board of Rollins from 1988 until May 15, 1997. Mr. Rollins also
is a director of Dover Downs Entertainment, Inc.
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Mr. Rollins is a member of the Human Resources and Compensation Committee. Mr.
Rollins' father is John W. Rollins, Sr.
David E. Thomas, Jr. has been a Director of the Parent since June 1997. Mr.
Thomas has been Senior Managing Director and the Head of the Investment Banking
Group of Raymond James since July 1996 and from 1991 until July 1996 was
Managing Director of Raymond James. Mr. Thomas also is a director of Reynolds,
Smith and Hills, Inc. Mr. Thomas is a member of the Human Resources and
Compensation Committee.
Henry B. Tippie has been a Director of the Parent since May 15, 1997. For
more than five years, he has served as Chairman of the Board and President of
Tippie Services and for more than five years, Chairman of the Executive
Committee and Vice Chairman of the Board of Rollins Truck Leasing Corp. Mr.
Tippie was Chairman of the Executive Committee of Rollins from 1988 until May
15, 1997. Mr. Tippie also is a director of Matlack Systems, Inc., Dover Downs
Entertainment, Inc., RPC, Inc. and Rollins Inc. Mr. Tippie is a member of the
Audit Committee.
James L. Wareham has been a Director of the Parent since June 1997. Mr.
Wareham has been President of AK Steel Corporation since March 1997 and from
1992 until 1996, Chief Executive Officer of Wheeling-Pittsburgh Steel
Corporation. Mr. Wareham is a member of the Audit Committee.
Grover C. Wrenn has been a Director of the Parent since July 1997. Mr.
Wrenn has been Chairman and Chief Executive Officer of Better Health Network,
Inc. since June 1996; Chief Executive Officer of EnSys Environmental Products,
Inc. from April 1995 through December 1996; and President and Chief Executive
Officer of Applied Bioscience International from 1991 through March 1995. Mr.
Wrenn also is a director of Strategic Diagnostics, Inc. and Pharmakinetics
Laboratories, Inc.
Michael J. Bragagnolo became Executive Vice President and Chief Operating
Officer of the Parent and the Company on May 15, 1997. He joined Laidlaw
Environmental Services (US), Inc. in January 1997 as Executive Vice President
after serving as Executive Vice President of U.S. Operations for Laidlaw Waste
Systems, Inc. since 1992.
Paul R. Humphreys became Senior Vice President, Finance and Chief Financial
Officer of the Parent and the Company on May 15, 1997. He joined Laidlaw
Environmental Services (US), Inc. in January 1995 as Vice President of Finance.
He had previously served as Manager of Finance for Laidlaw for more than five
years.
Henry H. Taylor became Vice President, General Counsel and Secretary of the
Parent and the Company on May 15, 1997. He previously served as Vice President
of Legal and Regulatory Affairs and Secretary of Laidlaw Environmental Services
(US), Inc. since September 1995. Mr. Taylor joined Laidlaw Environmental
Services (US), Inc. in May 1990 as Vice President of Legal Affairs.
The Parent's Board of Directors has established an Executive Committee, a
Human Resources and Compensation Committee and an Audit Committee.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
From May 15, 1997 until August 31, 1997, the Human Resources and
Compensation Committee held primary responsibility for determining executive
compensation levels. John R. Grainger, John W. Rollins, Jr. and David E. Thomas,
Jr. are the members of the Human Resources and Compensation Committee. Mr.
Grainger is an officer of Laidlaw.
Mr. Bullock and Mr. Haworth also are officers of Laidlaw which indirectly
owns approximately 35% of the outstanding Parent Common Stock. In the ordinary
course of business, the Parent, the Company and Laidlaw or affiliates of Laidlaw
from time to time have entered into various business transactions and
agreements. The following is a summary of the material agreements, arrangements
and transactions between the Parent or its affiliates and Laidlaw or its
affiliates since September 1, 1996.
Stock Purchase Agreement. On May 15, 1997, pursuant to the terms of a
Stock Purchase Agreement, dated as of February 6, 1997 (the "Stock Purchase
Agreement"), among the Parent, Laidlaw and LTI, the Company acquired certain
direct and indirect subsidiaries of Laidlaw (the "Acquired Subsidiaries") for
consideration of
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(i) $400,000,000 in cash (less certain assumed bond indebtedness described in
the Stock Purchase Agreement, a portion of which was paid at the closing of the
transactions contemplated by the Stock Purchase Agreement (the "Rollins
Closing")), consisting of a payment of $225,000,000, less the amount of such
bond indebtedness, from the Parent to LTI and a repayment of $175,000,000 owed
to Laidlaw by a Canadian subsidiary of the Company with funds contributed by the
Parent, (ii) 120,000,000 shares of Parent Common Stock issued to LTI and (iii)
the PIK Subordinated Debenture. The terms and conditions of the Rollins
Acquisition are set forth in the Stock Purchase Agreement and certain exhibits
and schedules to the Stock Purchase Agreement.
As a result of the Rollins Acquisition, Laidlaw became the majority
stockholder of the Parent and substantially all of the management of the Parent
consisted of former officers and directors of the Acquired Subsidiaries. Due to
these factors, the Acquired Subsidiaries were treated as the acquirer for
accounting purposes and the Rollins Acquisition was recorded as a reverse
acquisition.
Laidlaw Indemnities. Pursuant to the terms of the Stock Purchase
Agreement, Laidlaw and LTI agreed to jointly and severally indemnify and hold
harmless, subject to certain limitations, the Parent and its affiliates from and
against any and all Damages (as defined in the Stock Purchase Agreement)
suffered by the Parent resulting from or in respect of (i) various tax
obligations and liabilities, (ii) pre-closing insurance claims, (iii) any breach
or default in the performance by Laidlaw or LTI of (a) their covenants and
agreements in the Stock Purchase Agreement to be performed on or after the date
of the Rollins Closing or (b) any representation or warranty which survives the
Rollins Closing (to the extent that damages therefrom exceed $2,000,000) and
(iv) any environmental liability or environmental claim arising as a result of
any act or omission by Laidlaw or LTI, including any release, occurring prior to
the Rollins Closing, but only to the extent such liability or claim (a) was
known to Laidlaw or certain of its affiliates and not disclosed in writing to
the Parent or (b) relates to the Marine Shale Processors or Mercier, Quebec
facilities and exceeds (x) an aggregate of $1,000,000 in the particular year and
(y) an aggregate since the Rollins Closing of $1,000,000 times the number of
years elapsed since the Rollins Closing, but only to the extent of cash
expenditures incurred within six years after the date of the Rollins Closing.
The PIK Subordinated Debenture. On May 15, 1997, the Parent issued the PIK
Subordinated Debenture to Laidlaw. See "Description of Other Indebtedness -- The
Parent -- PIK Subordinated Debenture".
Service Arrangements. Laidlaw and its affiliates have provided certain
financial and management services to the Parent and its subsidiaries. Such
services have included providing general liability and workers' compensation
insurance, income tax management and treasury services. Each of the service
arrangements has been on arms-length terms comparable to those available in
transactions with unaffiliated parties. During fiscal 1997, the Parent paid
Laidlaw $9.8 million on account of such services.
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<PAGE> 91
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the compensation paid to the Parent's Chief
Executive Officer and each of the three other most highly compensated executive
officers (the "Named Executive Officers") for services rendered to the Company
and the Parent during fiscal 1995, 1996 and 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------- ----------------------------------------
SECURITIES
FISCAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS/SARS(#)(1) COMPENSATION($)(2)
- --------------------------- ------ --------- -------- ------------------ ------------------
<S> <C> <C> <C> <C> <C>
Kenneth W. Winger,.......... 1997 $120,167 $100,000 250,000 $7,560
President, Chief Executive
Officer and Director of
the Company and the
Parent(3)
Michael J. Bragagnolo,...... 1997 78,861 46,670 150,000 3,121
Executive Vice President
and Chief Operating
Officer of the Company and
the Parent(4)
John W. Rollins, Sr.,....... 1997 8,130 -- 10,000 8,174
Former Chairman of the 1996 180,000 -- -- --
Board and Chief Executive 1995 300,000 -- -- --
Officer of the Company and
the Parent(5)
John V. Flynn, Jr.,......... 1997 398,973 -- 28,000 138
Former President and 1996 401,981 -- 18,000 --
Chief Operating 1995 287,500 -- 54,000 --
Officer of the Company and
the Parent(6)
</TABLE>
- ---------------
(1) The options granted to Messrs. Winger and Bragagnolo were granted pursuant
to the Employee Option Plan, subject to stockholder approval which was
granted at the Parent's November 25, 1997 annual meeting of stockholders
(the "Annual Meeting"). The options granted to John W. Rollins, Sr. were
granted pursuant to the Director Option Plan and were approved by the
stockholders at the Annual Meeting.
(2) Amounts shown for fiscal 1997 consist of (i) for Mr. Winger premiums on life
insurance policies of $1,810 and matching 401(k) contributions of $5,750,
(ii) for Mr. Bragagnolo matching 401(k) contributions, (iii) for Mr. Rollins
director fees and (iv) for Mr. Flynn matching 401(k) contributions.
(3) Mr. Winger became President and Chief Executive Officer on May 15, 1997.
(4) Mr. Bragagnolo became Executive Vice President and Chief Operating Officer
on May 15, 1997.
(5) Mr. Rollins resigned from his positions as Chairman of the Board and Chief
Executive Officer on May 15, 1997. Mr. Rollins' compensation for 1995 and
1996 are for the fiscal years ended September 30. His compensation for 1997
reflects compensation received by him from October 1, 1996 through August
31, 1997.
(6) Mr. Flynn resigned from his positions as President and Chief Operating
Officer on May 15, 1997. Mr. Flynn's compensation for 1995 and 1996 are for
the fiscal years ended September 30. His compensation for 1997 reflects
compensation received by him from October 1, 1996 through August 31, 1997.
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<PAGE> 92
The following table sets forth certain information regarding options
granted during fiscal 1997 to each of the Named Executive Officers:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE
APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM
------------------------------------------------------ ---------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE
UNDERLYING GRANTED TO OR
OPTIONS/SARS EMPLOYEES IN BASE EXPIRATION
NAME GRANTED(#) FISCAL YEAR PRICE($/SH) DATE 5%($)(1) 10%($)(1)
- ---- ------------ ------------ ----------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth W. Winger(2)......... 250,000 22.8% $3.1875 07/08/07 $501,150 $1,270,000
Michael J. Bragagnolo(2)..... 150,000 13.0 3.1875 07/08/07 300,690 762,000
John W. Rollins, Sr.(3)...... 10,000 N/A 3.1875 07/08/07 20,046 50,800
John V. Flynn, Jr.(4)........ 28,000 2.4 2.625 08/14/99 6,963 14,238
</TABLE>
- ---------------
(1) These amounts, based on assumed appreciation rates of 5% and 10% as
prescribed by the Commission's rules, are not intended to forecast possible
future appreciation, if any, of the price of the Parent Common Stock. These
numbers do not take into account certain provisions of the options providing
for termination of the option following termination of employment,
nontransferability or phased-in vesting. The Parent did not use an
alternative formula for a grant date valuation as it is not aware of any
formula which will determine with reasonable accuracy a present value based
on future unknown or volatile factors. Future compensation resulting from
option grants is based solely on the performance of the Parent Common Stock.
(2) Options granted under the Employee Option Plan.
(3) Options granted under the Director Option Plan.
(4) Options granted on October 7, 1996.
The following table sets forth certain information with respect to options
held at the end of fiscal 1997 for each of the Named Executive Officers.
AGGREGATED OPTION/SAR EXERCISES IN LAST
FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------------------
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-MONEY
UNEXERCISED OPTION/SARS AT OPTIONS/SARS AT FY-END($)
NAME FY-END(#) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ----------------------------------- ---------------------------------
<S> <C> <C>
Kenneth W. Winger.................. -0-/250,000 -0-/$359,375
Michael J. Bragagnolo.............. -0-/150,000 -0-/$215,625
John W. Rollins, Sr................ -0-/10,000 -0-/$ 14,375
John V. Flynn, Jr.................. 100,000/-0- $200,000/-0-
</TABLE>
DEFINED BENEFIT PLANS
Until May 30, 1997, the Parent had a non-contributory qualified, defined
benefit plan in which all full-time employees of the Company were eligible to
participate (the "Rollins Pension Plan"). Retirement benefits under the plan
were computed utilizing 1.25% of earnings up to covered compensation, as that
term was defined in the plan, and 1.7% of earnings above covered compensation
and years of service to age 65. Compensation utilized to compute benefits under
the Rollins Pension Plan included regular salaries or wages, commissions,
bonuses, overtime earnings and short-term disability income protection benefits.
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<PAGE> 93
Until May 30, 1997, the Parent also maintained a non-qualified, defined
benefit plan (the "Rollins Excess Benefit Plan"), which covered those
participants of the Rollins Pension Plan whose benefits were limited by the
Internal Revenue Code of 1986, as amended (the "Code"). A participant in the
Rollins Excess Benefit Plan was entitled to a benefit equaling the difference
between the amount of the benefit that would have been payable to him under the
Rollins Pension Plan but for the Code limitation and the amount of the benefit
actually payable to him under the Rollins Pension Plan.
Retirement benefits under the Rollins Pension Plan and the Rollins Excess
Benefit Plan were not subject to any reduction for Social Security benefits or
other offset amounts, could be paid in certain alternative forms having
actuarially equivalent values and were fully vested after the completion of five
years of credited service or, if earlier, upon reaching age 55.
Effective as of July 31, 1997, the Rollins Pension Plan and Rollins Excess
Benefit Plan were divided into separate plans covering union and non-union
employees. The portion of the plans covering non-union employees was terminated
effective as of July 31, 1997. The combined annual benefit at retirement under
the Rollins Pension Plan and the Rollins Excess Benefit Plan for each of the
Named Executive Officers who participated therein as of August 31, 1997 was:
John V. Flynn, Jr., $9,561.
Effective as of October 14, 1997, the Parent adopted a Supplemental
Executive Retirement Plan (the "SERP") for certain eligible employees. A SERP is
an unfunded plan which provides for benefit payments in addition to those
payable under a qualified retirement plan.
The following table shows the estimated annual benefits payable upon
retirement at normal retirement dates under the SERP.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN TABLE
<TABLE>
<CAPTION>
FINAL SERVICE YEARS
AVERAGE -----------------------------------------------
PAY 15 20 25 30 35
- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
150,000.. 22,500 30,000 37,500 45,000 52,500
200,000.. 33,750 45,000 56,250 67,500 78,750
250,000.. 45,000 60,000 75,000 90,000 105,000
300,000.. 56,250 75,000 93,750 112,500 131,250
350,000.. 67,500 90,000 112,500 135,000 157,500
400,000.. 78,750 105,000 131,250 157,500 183,750
450,000.. 90,000 120,000 150,000 180,000 210,000
500,000.. 101,250 135,000 168,750 202,500 236,250
</TABLE>
For the Parent's and the Company's current executive officers, the
compensation shown in the column labeled "Salary" and "Bonus" of the Summary
Compensation Table is covered by the SERP. As of August 31, 1997, Messrs. Winger
and Bragagnolo had credited service under the SERP of six and two years,
respectively. Benefits under the SERP are computed based on a straight-life
annuity. The amounts in this table are subject to deduction for a portion of
Social Security benefits. Mr. Rollins, Sr. and Mr. Flynn do not participate in
the SERP.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
Pursuant to a letter dated January 15, 1997, John V. Flynn, Jr., former
President and Chief Operating Officer of the Parent, resigned from such
positions effective as of May 15, 1997 in exchange for (i) at the option of Mr.
Flynn, either (a) remaining an employee for two years at an annual salary of
$400,000 or (b) receiving as severance a lump sum payment equal to the total
amount then remaining unpaid under clause (a) and (ii) receiving, for so long as
Mr. Flynn remains an employee of the Parent, use of a Parent car (until such
time as Mr. Flynn is employed by another company) and such health and welfare,
life insurance, disability, pension and other benefits as are made available to
other employees of the Parent. The letter also specified that, for a period of
three
84
<PAGE> 94
years after May 15, 1997, Mr. Flynn would not participate in a business which
competes with the Company in the hazardous or industrial waste incineration
business.
Pursuant to the terms of the Stock Purchase Agreement, all employees,
including Mr. Flynn, received immediate vesting of all options outstanding under
the Parent's then existing stock option plans.
COMPENSATION OF DIRECTORS
Currently, each director of the Parent who is not an employee of the Parent
or the Company is paid an annual retainer of $20,000 (the "Annual Retainer")
plus $750 for each meeting attended. Pursuant to the Parent's Nonemployee
Director Stock Plan, 50% of the Annual Retainer for each nonemployee director is
paid in shares of Parent Common Stock. Each quarter the smallest number of whole
shares of Parent Common Stock which when multiplied by the fair market value of
such shares would equal no more than 50% of the nonemployee director's retainer
fee payable for such quarter is calculated, and the dollar amount equivalent
thereto is withheld from the director's quarterly retainer check. A certificate
evidencing the number of shares of Parent Common Stock so determined for each of
the fiscal quarters beginning in the prior calendar year is delivered to the
director at the first Board of Directors meeting held during each calendar year.
Each nonemployee director becomes vested in the Parent Common Stock so awarded
(i) at the end of the vesting period applicable to the award if the non-employee
director continues to be a member of the Board through the vesting period or
(ii) upon his death, disability or retirement or (iii) if the nonemployee
director ceases to be a director as a result of a change in control of the
Parent. Each such award is subject to a separate vesting period, and all awards
become nonforfeitable and transferable on the first anniversary of the award.
Directors of the Parent who are also employees of the Parent or the Company
receive no separate compensation for serving as directors.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
David E. Thomas, Jr., a Director of the Parent, is the Senior Managing
Director and the Head of the Investment Banking Group of Raymond James &
Associates ("Raymond James"). Pursuant to the terms of a letter agreement dated
January 3, 1997, the Parent engaged Raymond James as the Parent's financial
advisor in connection with the Safety-Kleen Acquisition and agreed to (i) pay
Raymond James a fee of $800,000, (ii) reimburse Raymond James for its reasonable
out-of-pocket expenses (up to a maximum of $25,000) and (iii) indemnify Raymond
James against certain liabilities, including certain liabilities under the
federal securities laws.
For a discussion of certain other related party transactions, see
"Management -- Compensation Committee Interlocks and Insider Participation."
85
<PAGE> 95
PRINCIPAL SHAREHOLDERS
All of the outstanding capital stock of the Company is owned by the Parent.
The following table sets forth as of June 22, 1998, the number of shares of
Common Stock of the Parent beneficially owned by each of the 5% stockholders of
the Parent, each of its directors, the Named Executive Officers and all
directors and executive officers as a group.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
NAME OWNED PERCENT OF CLASS
---- ------------ ----------------
<S> <C> <C>
Laidlaw..................................................... 124,045,410 35%
Kenneth W. Winger........................................... -0- n/a
Michael J. Bragagnolo....................................... -0- n/a
James R. Bullock(1)(2)...................................... -0- n/a
John R. Grainger(1)......................................... -0- n/a
Leslie W. Haworth(1)........................................ 5,000 n/a
John W. Rollins, Jr.(3)..................................... 357,862 *
John W. Rollins, Sr.(4)..................................... 3,697,576 2.05%
David E. Thomas, Jr......................................... -0- n/a
Henry B. Tippie(5).......................................... 2,294,689 1.27%
James L. Wareham............................................ 1,000 n/a
Grover C. Wrenn............................................. 15,000 n/a
John V. Flynn, Jr........................................... -0- n/a
All directors and current executive officers as a group (13
persons).................................................. 6,350,127 3.52%
</TABLE>
- ---------------
* Signifies less than 1%
(1) Messrs. Bullock, Grainger and Haworth are officers of Laidlaw.
(2) Does not include 25,000 shares owned by Mr. Bullock's wife, as to which
shares Mr. Bullock disclaims any beneficial ownership.
(3) Includes 191,737 shares held by Mr. Rollins as co-trustee. Does not include
6,191 shares owned by Mr. Rollins' wife, as to which shares Mr. Rollins
disclaims any beneficial ownership.
(4) Does not include 182,749 shares owned by Mr. Rollins' wife and 101,975
shares held by his wife as custodian for his minor children, as to which
shares Mr. Rollins disclaims any beneficial ownership.
(5) Includes 969,689 shares held by Mr. Tippie as co-trustee; 26,000 shares held
by him as trustee; and 30,000 shares owned by a partnership over which he
has sole voting power. Does not include 23,000 shares owned by Mr. Tippie's
wife and 21,000 shares held by his wife as trustee for his children, as to
which shares Mr. Tippie disclaims any beneficial ownership.
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<PAGE> 96
DESCRIPTION OF OTHER INDEBTEDNESS
THE COMPANY
SENIOR CREDIT FACILITY
In connection with the Safety-Kleen Acquisition, the Company obtained the
Senior Credit Facility pursuant to a credit agreement dated April 3, 1998 as
amended on May 15, 1998 (the "Loan Agreement") among the Company, as borrower,
Laidlaw Environmental Services (Canada) Ltd. and The Toronto-Dominion Bank
("TD"), as administrative agent, and a syndicate of banks and other financial
institutions (the "Lenders") pursuant to which the Lenders agreed, subject to
certain conditions, to provide aggregate borrowing and letters of credit
availability to the Company to, among other things, (i) finance the Safety-Kleen
Acquisition, (ii) refinance existing indebtedness of the Company and
Safety-Kleen, (iii) fund certain capital expenditures, working capital and
permitted acquisitions, as well as transaction fees and expenses associated with
the Safety-Kleen Acquisition and (iv) provide for up to $200 million of letters
of credit. The Parent and all wholly-owned domestic subsidiaries of the Company
(including Safety-Kleen and its wholly-owned domestic subsidiaries) (the "Credit
Agreement Guarantors") have unconditionally guaranteed the repayment of the
Senior Credit Facility. At May 31, 1998, there was an aggregate of $1.33 billion
of Term Loans outstanding and $208 million of borrowings outstanding under the
Revolver. At May 31, 1998, the Company had $192 million of additional borrowing
availability (excluding letters of credit) under the Revolver.
Terms of the Senior Credit Facility. The Senior Credit Facility consists
of the following: (i) a $550,000,000 six-year Senior Secured Revolving Credit
Facility with a $200,000,000 letter of credit sublimit and $400,000,000 sublimit
for loans (the "Revolver" or "Facility A"), (ii) a $455,000,000 six-year Senior
Secured Amortizing Term Loan ("Facility B"), (iii) a $70,000,000 six-year Senior
Secured Amortizing Term Loan to Laidlaw Environmental Services (Canada) Ltd.
("Facility C"), (iv) a $400,000,000 Minimally Amortizing seven-year Senior
Secured Term Facility ("Facility D"), and (v) a $400,000,000 Minimally
Amortizing eight-year Senior Secured Term Loan ("Facility E") (Facility B,
Facility C, Facility D and Facility E, collectively, the "Term Loans").
Secured Senior Credit Facility. The Senior Credit Facility is secured by
all of the tangible assets of the Company, the Parent and the Credit Agreement
Guarantors. All of the capital stock of the Company and its subsidiaries,
including the acquired Safety-Kleen subsidiaries, are pledged as part of such
security for the Senior Credit Facility.
Maturity and Amortization. Facility A has no scheduled amortization. The
Terms Loans were require aggregate principal repayments of $79.6 million in each
of years one and two, $103.5 million in each of years three, four, five and six,
$380.0 million in year seven and $372.0 million in year eight. See "Use of
Proceeds."
Interest. Borrowings under the Senior Credit Facility bear interest at a
floating rate based upon, at the option of the Company, (i) the higher of the TD
prime rate and the federal funds rate plus 0.50% per annum, or (ii) the London
Interbank Offered Rate ("LIBOR") as determined by TD for the respective interest
period, in each case plus a margin based upon the total leverage ratio of the
Company. The Company also will pay administration fees, commitment fees and
certain expenses and provide certain indemnities, all of which the Company
believes to be customary for commitments of this type.
Covenants. The Loan Agreement contains conditions precedent,
representations and warranties, negative, affirmative and financial covenants
(including financial covenants, restricting debt, guaranties, liens, mergers and
consolidations, sales of assets and payment of dividends, and establishing a
total leverage ratio test, a fixed charge coverage test, an interest coverage
ratio test and a maximum contingent obligation to operating cash flow ratio
test), events of default and other provisions customary for such financings.
Events of Default. The Loan Agreement contains events of default customary
for a transaction of this type including, without limitation, nonpayment of
principal, interest or other fees when due, breach of representations,
warranties or covenants, breach of other material agreements, material
undischarged judgments or fines, ERISA, bankruptcy or insolvency, change of
control, and cross default to other indebtedness of the Company and any of its
subsidiaries. If (a) at any time Laidlaw ceases to be a primary stockholder of
the Parent, (b) at any time when the Consolidated Total Leverage Ratio (as
defined in the Senior Credit Facility) is greater than 2.50 to 1.00, Laidlaw
ceases to own at least 20% of the outstanding Common Stock of the Parent, (c) at
any time the Parent
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<PAGE> 97
ceases to own 100% of the outstanding common stock of Laidlaw Environmental, (d)
at any time Laidlaw Environmental ceases to own 100% of the outstanding common
stock of Laidlaw Environmental Services (Canada) Ltd., a wholly-owned subsidiary
of Laidlaw Environmental (the "Canadian Borrower") or (e) at any time there
ceases to be at least one member of the Board of Directors of the Parent who is
a designee of Laidlaw, an event of default shall occur.
Conditions. Under the Senior Credit Facility, the Company is required to
obtain interest rate protection satisfactory to TD in respect of at least 40% of
its floating rate debt for a period of at least two years.
COMPANY IRBS
The Company has two outstanding series of industrial revenue bonds (the
"Company IRBs") issued in connection with certain of its facilities.
The Tooele County, Utah Hazardous Waste Disposal Revenue Bonds (Laidlaw
Inc./USPCI Clive Project) Series 1995, par amount $10 million. These bonds have
an interest rate of 6.75% and a maturity date of August 1, 2010. The interest
payment dates for the bonds are August 1 and February 1. The initial optional
redemption for the bonds is August 1, 2005. These bonds do not provide an
optional prepayment right to the noteholders. As of May 31, 1998, only $8.7
million of these bonds have been utilized by the Company.
The Industrial Development Board of the Metropolitan Government of
Nashville and Davidson County Industrial Development Revenue Refunding and
Improvement Bond Series 1993 (OSCO Treatment Systems, Inc. Project), par amount
$15.7 million. These bonds have an interest rate of 6% and a maturity date of
May 1, 2003. The interest payment dates for the bonds are May 1 and November 1.
These bonds do not provide an optional prepayment right to the noteholders. As
of May 31, 1998, only $7.0 million of these bonds have been utilized by the
Company.
THE PARENT
PIK SUBORDINATED DEBENTURE
On May 15, 1997, the Parent issued the PIK Subordinated Debenture. The
principal of the PIK Subordinated Debenture is payable on May 15, 2009, subject
to earlier mandatory or optional prepayment and any acceleration of its maturity
date upon default.
The PIK Subordinated Debenture bears interest at the fixed rate of 5% per
annum. Until May 15, 1999 (the "Mandatory PIK Interest Payment Period"),
interest on the outstanding principal balance of the PIK Subordinated Debenture
accrues at the 5% rate, but will be paid in shares of Parent Common Stock. After
the Mandatory PIK Interest Payment Period, at the election of the Parent any
payment due under the PIK Subordinated Debenture (except upon an optional early
redemption), including any accrued interest or principal, may be paid in shares
of Parent Common Stock. The number of shares of Parent Common Stock for each
such payment shall be equal to the dollar amount in accrued interest or
principal due divided by the average of the daily closing prices of a share of
Parent Common Stock on the NYSE -- Composite Transactions for the ten
consecutive trading days selected by the Parent commencing not more than 20
trading days before, and ending not later than, the date such payment is due.
Interest on the outstanding principal balance of the PIK Subordinated Debenture
is payable semiannually on November 15 and May 15, beginning on November 15,
1997 and continuing until the payment in full of the PIK Subordinated Debenture.
Beginning on May 15, 2002, and continuing until the business day prior to
the repayment of the PIK Subordinated Debenture, the PIK Subordinated Debenture
is convertible, in whole or in part, at the option of the holder, into shares of
Parent Common Stock of the Parent. The conversion will be at a price equal to
the conversion price (the "Conversion Price") of $3.75 per share, subject to
adjustment under certain circumstances.
During the period commencing on May 15, 2002, and continuing until
maturity, the Parent has the option to prepay the PIK Subordinated Debenture, in
whole or in part, only in cash, at the face amount of the PIK Subordinated
Debenture if the last reported sales price of a share of Parent Common Stock, as
reported by the New York Stock Exchange, equals or exceeds 120% of the
Conversion Price for a period of at least ten consecutive trading days prior to
the date of such proposed payment.
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<PAGE> 98
Subject to the subordination provisions of the PIK Subordinated Debenture,
the maturity of the PIK Subordinated Debenture may be accelerated if a "Default"
occurs. Under the PIK Subordinated Debenture a "Default" includes (i) a failure
by the Parent to pay the principal or accrued interest of the PIK Subordinated
Debenture on its maturity date or any interest payment date, respectively, (ii)
the voluntary or involuntary bankruptcy of the Parent or other insolvency
proceedings involving the Parent and (iii) the acceleration of the maturity of
the amounts outstanding under the Senior Credit Facility as a result of a
default thereunder.
The PIK Subordinated Debenture ranks junior in right of payment to the
amounts outstanding under the Senior Credit Facility and to substantially all
other indebtedness of the Parent except (i) amounts owed (other than to banks,
insurance companies and other financing institutions and obligations under
capitalized leases) for goods, materials, services or operating lease rental
payments in the ordinary course of business or for compensation to employees and
(ii) any liability for federal, state, provincial, local or other taxes owed or
owing by the Parent. The PIK Subordinated Indenture is subordinated to the
Parent Guarantee of the Notes.
PARENT IRBS
The Parent has two outstanding series of industrial revenue bonds (the
"Parent IRBs") issued in connection with certain facilities of the Company.
The Tooele County, Utah Pollution Control Refunding Revenue Bonds 1997
Series A, par amount $45.7 million. These bonds have an interest rate of 7.55%
and a maturity date of July 1, 2027. The interest payment dates for the bonds
are July 1 and January 1. The provisions provide for an optional prepayment at
the option of the Parent, subject to prepayment penalties. As of April 30, 1998,
the full amount of these bonds have been utilized by the Parent.
The California Pollution Control Financing Authority 6.7% Pollution Control
Refunding Revenue Bonds 1997 Series A, par amount $19.5 million. These bonds
have an interest rate of 6.7% and a maturity date of July 1, 2007. The interest
payment dates are July 1 and January 1. The terms of the bonds provide for an
optional redemption which is triggered by an extraordinary event. As of April
30, 1998, the full amount of these bonds have been utilized by the Parent.
PARENT PROMISSORY NOTE
On May 15, 1997, as part of the Rollins Acquisition, the Parent issued a
$60 million note (the "Parent Promissory Note"). The Parent Promissory Note
matures on May 15, 2003. Interest is payable at a fluctuating rate of six month
LIBOR (the "Contract Rate"), as calculated in accordance with the terms of the
Parent Promissory Note. From and after the maturity date, the Parent Promissory
Note will bear interest at a rate per annum equal to the Contract Rate plus five
percent. Interest is due and payable on May 30 and November 30 of each year. A
late charge of 2% of the amount of the payment will be charged on any payment
not received within fifteen days after it is due. The Parent is required to make
a $10.0 million principal reduction on each of May 15, 2001 and May 15, 2002.
The Parent will be in default upon the occurrence of any of the following
events of default: (i) Parent fails to make any payment under the Parent
Promissory Note when due; (ii) Laidlaw fails to maintain an investment grade
rating by both Standard & Poor's, Inc. and Moody's Institutional Services, Inc.;
(iii) Parent and Laidlaw fail to comply with certain obligations under the Stock
Purchase Agreement; (iv) Parent is in default under any credit agreement, or
refinancing thereof, entered into in connection with the Rollins Acquisition;
(v) default under any indentures secured by indebtedness of the Parent or
Laidlaw having an aggregate principal amount of at least Cdn. $10 million; (vi)
involuntary bankruptcy of the Parent or Laidlaw; or (vii) voluntary bankruptcy,
insolvency, reorganization or other similar proceeding in respect of the Parent
or Laidlaw.
The Parent Promissory Note has priority in payment over any indebtedness of
the Parent to Laidlaw and any affiliated entities. The holder of the Parent
Promissory Note has agreed that the Parent Promissory Note is subordinate to the
Senior Credit Facility of the Company.
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DESCRIPTION OF THE NOTES
Except as otherwise indicated, the following description relates both to
the Existing Notes and the New Notes to be issued in exchange for Existing Notes
in connection with the Exchange Offer. The form and terms of the New Notes are
the same as the form and terms of the Existing Notes, except that the New Notes
have been registered under the Securities Act and therefore will not bear
legends restricting the transfer thereof.
GENERAL
The Existing Notes were, and the New Notes will be, issued under the
"Indenture" among the Company, the Parent, as a Guarantor, and the Subsidiary
Guarantors and The Bank of Nova Scotia Trust Company of New York, as trustee
(the "Trustee"), a copy of the form of which is available upon request from the
Company. Upon the issuance of the New Notes, the Indenture will be subject to
and governed by the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). The following summary of the material provisions of the
Indenture does not purport to be complete and is subject to, and qualified in
its entirety by, reference to the provisions of the Indenture, including the
definitions of certain terms contained therein and those terms made part of the
Indenture by reference to the Trust Indenture Act. For definitions of certain
capitalized terms used in the following summary, see "-- Certain Definitions"
below.
As of the date hereof, all of the Company's Subsidiaries are Restricted
Subsidiaries. However, under certain circumstances, the Company is able to
designate current and future Subsidiaries as Unrestricted Subsidiaries, subject
to certain limitations. Unrestricted Subsidiaries are not subject to any of the
restrictive covenants set forth in the Indenture.
PRINCIPAL, MATURITY AND INTEREST
The Notes mature on June 1, 2008, are limited initially in aggregate
principal amount to $325,000,000 and are unsecured senior subordinated
obligations of the Company. The Indenture provides for the issuance of up to
$75,000,000 aggregate principal amount of additional Notes having identical
terms and conditions to the Notes offered hereby (the "Additional Notes"),
subject to compliance with the covenants contained in the Indenture. Any
Additional Notes will be part of the same issue as the Notes and will vote on
all matters with the Notes. Unless otherwise indicated, references herein to the
Notes does not include the Additional Notes. No offering of any such Additional
Notes is being or shall be deemed to be made by this Prospectus. In addition,
there can be no assurance as to when or whether the Company will issue any such
Additional Notes or as to the aggregate principal amount of such Additional
Notes.
Each Note will bear interest at the rate of 9 1/4% per annum, payable
semiannually in arrears on June 1 and December 1 in each year, commencing
December 1, 1998, until the principal thereof is paid or duly provided for, to
the person in whose name the New Note (or any predecessor Note) is registered at
the close of business on the May 15 or November 15 next preceding such interest
payment date. Interest is computed on the basis of a 360-day year comprised of
twelve 30-day months.
The principal of and premium, if any, and interest on the Notes is payable,
and the Notes are exchangeable and transferable, at the office or agency of the
Company in The City of New York maintained for such purposes (which initially is
the office of the Trustee located at One Liberty Plaza, 23rd Floor, New York,
New York 10006); provided, however, that, at the option of the Company, interest
may be paid by check mailed to the address of the Person entitled thereto as
such address appears in the security register. The Existing Notes are, and the
New Notes will be issued only in registered form without coupons and only in
denominations of $1,000 and any integral multiple thereof. No service charge
will be made for any registration of transfer or exchange or redemption of
Notes, but the Company may require payment in certain circumstances of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith.
For each Existing Note accepted for exchange, the holder of such Existing
Note will receive a New Note having a principal amount equal to that of the
surrendered Existing Note. The New Notes will bear interest from the most recent
date to which interest has been paid on the Existing Notes or, if no interest
has been paid on the Existing Notes, from May 29, 1998. Accordingly, if the
relevant record date for interest payment occurs after the
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consummation of the Exchange Offer registered holders of New Notes on such
record date will receive interest accruing from the most recent date to which
interest has been paid or, if no interest has been paid, from May 29, 1998. If,
however, the relevant record date for interest payment occurs prior to the
consummation of the Exchange Offer registered holders of Existing Notes on such
record date will receive interest accruing from the most recent date to which
interest has been paid or, if no interest has been paid, from May 29, 1998.
Existing Notes accepted for exchange will cease to accrue interest from and
after the date of consummation of the Exchange Offer, except as set forth in the
immediately preceding sentence. Holders of Existing Notes whose Existing Notes
are accepted for exchange will not receive any payment in respect of interest on
such Existing Notes otherwise payable on any interest payment date the record
date for which occurs on or after the consummation of the Exchange Offer.
Any Existing Notes that remain outstanding after the consummation of the
Exchange Offer and New Notes issued in connection with the Exchange Offer will
be treated as a single class of securities under the Indenture.
The Notes are not be entitled to the benefit of any sinking fund.
INVESTMENT GRADE RATING -- FALL-AWAY COVENANTS
If the Notes achieve an Investment Grade rating and no Default or Event of
Default shall have occurred and be continuing, upon the request of the Company,
all of the covenants described under "-- Certain Covenants" (with limited
exceptions) will no longer be applicable to the Company and its Subsidiaries.
Accordingly, the Notes will thereafter be entitled to substantially no covenant
protection.
SUBORDINATION
The Notes are unsecured senior subordinated obligations of the Company. The
Notes are, to the extent set forth in the Indenture, subordinate in right of
payment to the prior payment in full of all Senior Indebtedness, whether
outstanding on the Closing Date or thereafter incurred. Upon any payment or
distribution of assets of the Company to creditors upon any liquidation,
dissolution, winding up, reorganization, assignment for the benefit of
creditors, marshalling of assets or any bankruptcy, insolvency or similar
proceedings of the Company, whether voluntary or involuntary, the holders of
Senior Indebtedness will first be entitled to receive payment in full, in cash
or cash equivalents, of all amounts due or to become due on or in respect of
such Senior Indebtedness (including interest accruing after the commencement of
any such proceeding at the rate specified in the applicable Senior Indebtedness
whether or not such interest is an allowed claim in such proceeding) before the
Holders of Notes are entitled to receive any payment of principal of and
premium, if any, and interest on the Notes or on account of the purchase or
redemption or other acquisition of Notes by the Company or any Subsidiary of the
Company. In the event that, notwithstanding the foregoing, the Trustee or the
Holder of any Note receives any payment or distribution of assets of the Company
of any kind or character (excluding equity or subordinated securities of the
Company provided for in a plan of reorganization or readjustment that, in the
case of subordinated securities, are subordinated in right of payment to all
Senior Indebtedness to at least the same extent as the Notes are so
subordinated), before all the Senior Indebtedness is paid in full, then such
payment or distribution will be held in trust for the holders of Senior
Indebtedness and will be required to be paid over or delivered forthwith to the
trustee in bankruptcy or other Person making payment or distribution of assets
of the Company for application to the payment of all Senior Indebtedness
remaining unpaid, to the extent necessary to pay the Senior Indebtedness in
full.
The Company may not make any payments on account of the Notes or on account
of the purchase or redemption or other acquisition of Notes if a default in the
payment of principal of (or premium, if any) or interest on Designated Senior
Indebtedness has occurred and is continuing or a default in the payment when due
of any other obligation under Designated Senior Indebtedness has occurred and is
continuing (a "Senior Payment Default"). In addition, if any default (other than
a Senior Payment Default) has occurred and is continuing with respect to any
Designated Senior Indebtedness permitting the holders thereof (or a trustee or
agent on behalf thereof) to accelerate the maturity thereof (a "Senior
Nonmonetary Default") and the Company and the Trustee have received written
notice thereof from the agent under the Senior Credit Facility or from an
authorized Person on behalf of any holder of Designated Senior Indebtedness,
then the Company may not make any payments on
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account of the Notes or on account of the purchase or redemption or other
acquisition of Notes for a period (a "blockage period") commencing on the date
the Company and the Trustee receive such written notice (a "Blockage Notice")
and ending on the earliest of (x) 179 days after the date on which the
applicable Blockage Notice is received unless a Senior Payment Default has
occurred and is continuing at the end of such 179-day period, (y) the date, if
any, on which the Designated Senior Indebtedness to which such default relates
is discharged or such default is waived or otherwise cured and (z) the date, if
any, on which such blockage period has been terminated by written notice to the
Company or the Trustee from the agent under the Senior Credit Facility or from
the Person who gave the Blockage Notice. However, the Company may make payments
on the Notes without regard to the foregoing if the Company and the Trustee
receive written notice approving such payment from a representative of the
Designated Senior Indebtedness affected by such Senior Payment Default or Senior
Nonmonetary Default. In any event, not more than one blockage period may be
commenced during any period of 360 consecutive days, and there must be a period
of at least 181 consecutive days in each period of 360 consecutive days when no
blockage period is in effect. No Senior Nonmonetary Default that existed or was
continuing on the date of the commencement of any blockage period with respect
to the Designated Senior Indebtedness initiating such blockage period will be,
or can be, made the basis for the commencement of a subsequent blockage period,
unless such default has been cured or waived for a period of not less than 90
consecutive days. In the event that, notwithstanding the foregoing, the Company
makes any payment to the Trustee or the Holder of any Note prohibited by these
blockage provisions, then such payment will be held in trust for the holders of
Senior Indebtedness and will be required to be paid over and delivered forthwith
to the holders of the Senior Indebtedness remaining unpaid, to the extent
necessary to pay in full all the Senior Indebtedness.
Whenever the Company is prohibited from making any payment on or in respect
of the Notes, the Company will also be prohibited from making, directly or
indirectly, any legal defeasance or covenant defeasance of the Notes as
described under "-- Legal Defeasance and Covenant Defeasance" and from making
any payment of any kind on account of the redemption, purchase or other
acquisition of the Notes.
The Guarantees are, to the extent set forth in the Indenture, subordinated
in right of payment to the prior payment in full of all senior indebtedness of
the Parent and the Guarantors, as the case may be, upon terms substantially
comparable to the subordination of the Notes to all Senior Indebtedness.
The subordination provisions described above will cease to be applicable to
the Notes upon any defeasance or covenant defeasance of the Notes as described
under "-- Legal Defeasance and Covenant Defeasance."
As a result of the subordination provisions described above, in the event
of an insolvency, bankruptcy, reorganization or liquidation of the Company,
creditors of the Company who are holders of Senior Indebtedness may recover
more, ratably, than the holders of the Notes, and assets which would otherwise
be available to pay obligations in respect of the Notes will be available only
after all Senior Indebtedness has been paid in full, and there may not be
sufficient assets remaining to pay amounts due on any or all of the Notes. See
"Risk Factors -- Subordination; Ranking of the Notes and Guarantees."
At February 28, 1998, after giving effect to the Safety-Kleen Transactions
and the issuance of the Existing Notes and the application of the net proceeds
therefrom, the Company would have had approximately $1.4 billion of Senior
Indebtedness outstanding (all of which would have been secured), and the Company
would have had borrowing availability of $175.5 million (excluding letters of
credit) under the Senior Credit Facility, all of which would be secured Senior
Indebtedness, if borrowed. The terms of the Indenture permit the Company and its
Restricted Subsidiaries to incur additional Senior Indebtedness, subject to
certain limitations, including Indebtedness that may be secured by Liens on
property of the Company and its Restricted Subsidiaries. See the discussion
below under "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of
Disqualified Stock" and "-- Certain Covenants -- Liens." As of February 28,
1998, the Parent had an aggregate of approximately $125.2 million of
Indebtedness outstanding ranking senior to the Notes. The terms of the Indenture
do not restrict the ability of the Parent to incur additional Indebtedness
ranking senior to the Notes. In addition, the Notes are effectively subordinated
to all existing and future indebtedness and other liabilities (including trade
payables) of the Company's subsidiaries that are not Guarantors (the
"Non-Guarantor Subsidiaries"). As of February 28, 1998, after giving effect to
the Safety-Kleen Transactions and the issuance of
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the Existing Notes and the application of the net proceeds therefrom, the
Non-Guarantor Subsidiaries would have had $100.5 million of third-party
indebtedness and accounts payable outstanding. See "Risk Factors --
Subordination; Ranking of the Notes and Guarantees."
GUARANTEES
Payment of the principal of and premium, if any, and interest on the Notes,
when and as the same become due and payable, are guaranteed, jointly and
severally, on an unsecured senior subordinated basis by the Guarantors referred
to below. The Guarantees are, to the extent set forth in the Indenture,
subordinated in right of payment to the prior payment in full of all senior
indebtedness of the Guarantors, upon terms substantially comparable to the
subordination of the Notes to all Senior Indebtedness. The obligations of each
Subsidiary Guarantor under its Subsidiary Guarantee is limited so as not to
constitute a fraudulent conveyance under applicable law. See "Risk
Factors -- Limitation on Subsidiary Guarantees and Parent Guarantee; Fraudulent
Conveyance Concerns."
As of the date hereof, the Guarantors include the Parent and each Domestic
Restricted Subsidiary other than three non-wholly-owned domestic subsidiaries.
The Indenture requires that each Domestic Restricted Subsidiary be a Guarantor,
as well as each other Restricted Subsidiary that guarantees any other
Indebtedness of the Company or of a Domestic Restricted Subsidiary.
Subject to the provisions of the following paragraph, the Indenture
provides that no Guarantor may consolidate with or merge with or into any other
Person or convey, sell, assign, transfer, lease or otherwise dispose of its
properties and assets substantially as an entirety to any other Person unless:
(a) the Person formed by or surviving such consolidation or merger (if other
than such Guarantor) or to which such properties and assets are transferred
assumes all of the obligations of such Guarantor under the Indenture and its
Guarantee, pursuant to a supplemental indenture in form and substance reasonably
satisfactory to the Trustee, (b) immediately after giving effect to such
transaction, no Default or Event of Default has occurred and is continuing and
(c) immediately after giving effect to such transaction, the Person formed by or
surviving such consolidation or merger (if other than such Guarantor) or to
which such properties and assets are transferred could incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) pursuant to the
first paragraph of the covenant described under "-- Certain
Covenants -- Incurrence of Indebtedness and Issuance of Disqualified Stock."
The Indenture provides that, in the event of (a) a conveyance, sale,
assignment, transfer or other disposition of all of the Capital Stock of a
Subsidiary Guarantor to any Person (by way of merger, consolidation or
otherwise), (b) a conveyance, sale, assignment, transfer or other disposition of
all or substantially all of the assets of such Subsidiary Guarantor to any
Person (by way of merger, consolidation or otherwise) or (c) the designation of
such Subsidiary Guarantor as an Unrestricted Subsidiary, in any such case in
compliance with the terms of the Indenture, then such Subsidiary Guarantor will
be deemed automatically and unconditionally released and discharged from all of
its obligations under its Subsidiary Guarantee without any further action on the
part of the Trustee or any Holder of the Notes; provided that the Net Cash
Proceeds of such conveyance, sale, assignment, transfer or other disposition (if
any) are applied in accordance with the covenant described under "-- Certain
Covenants -- Asset Sales."
MAKE-WHOLE REDEMPTION
The Notes will be redeemable at the election of the Company, as a whole or
from time to time in part, on not less than 30 nor more than 60 days' prior
notice to the Holders at any time prior to June 1, 2003 at a redemption price
equal to the greater of (i) 100% of the principal amount of such Notes or (ii)
the sum of the present values of 104.625% of the principal amount of such Notes
and the scheduled payments of interest thereon through and including June 1,
2003 discounted to such redemption date on a semi-annual basis (assuming a
360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate
plus 50 basis points, together with accrued and unpaid interest, if any, to the
redemption date.
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If less than all the Notes or Additional Notes, if any, are to be redeemed,
the particular Notes to be redeemed will be selected not more than 60 days prior
to the redemption date by the Trustee by lot or such other method as the Trustee
deems fair and appropriate.
OPTIONAL REDEMPTION
The Notes will be redeemable at the election of the Company, as a whole or
from time to time in part, on not less than 30 nor more than 60 days' prior
notice to the Holders at the redemption prices (expressed as percentages of
principal amount) set forth below, together with accrued and unpaid interest, if
any, to the redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date), if redeemed during the 12-month period beginning on June 1 of the years
indicated below:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- ---- ----------------
<S> <C>
2003.............. 104.625%
2004.............. 103.083
2005.............. 101.542
2006 and
thereafter...... 100.000
</TABLE>
In addition, at any time or from time to time prior to June 1, 2001, the
Company may redeem, on one or more occasions, up to 35% of the sum of (i) the
initial aggregate principal amount of the Notes and (ii) the initial aggregate
principal amount of any Additional Notes with the net proceeds of one or more
Public Equity Offerings at a redemption price equal to 109.25% of the principal
amount thereof, plus accrued and unpaid interest, if any, to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date); provided that,
immediately after giving effect to any such redemption at least $211.3 million
aggregate principal amount of the Notes (including any Additional Notes) remains
outstanding; provided further that such redemptions occur within 90 days of the
date of closing of the related Public Equity Offering.
If less than all the Notes or Additional Notes, if any, are to be redeemed,
the particular Notes to be redeemed will be selected not more than 60 days prior
to the redemption date by the Trustee by lot or such other method as the Trustee
deems fair and appropriate.
REPURCHASE AT THE OPTION OF HOLDERS UPON CHANGE OF CONTROL
If a Change of Control occurs at any time, then each Holder will have the
right to require that the Company purchase such Holder's Notes and Additional
Notes, if any, in whole or in part at a purchase price in cash equal to 101% of
the principal amount of such Notes and Additional Notes, if any, plus accrued
and unpaid interest, if any, to the date of purchase, pursuant to the offer
described below (the "Change of Control Offer") and the other procedures set
forth in the Indenture.
Within 30 days following any Change of Control, the Company will notify the
Trustee thereof and give written notice of such Change of Control to each Holder
of Notes and Additional Notes by first-class mail, postage prepaid, at its
address appearing in the security register, stating, among other things, (i) the
purchase price and the purchase date, which will be a Business Day no earlier
than 30 days nor later than 60 days from the date such notice is mailed or such
later date as is necessary to comply with requirements under the Exchange Act;
(ii) that any Note or Additional Note not tendered will continue to accrue
interest; (iii) that, unless the Company defaults in the payment of the purchase
price, any Notes or Additional Notes accepted for payment pursuant to the Change
of Control Offer will cease to accrue interest after the Change of Control
purchase date; and (iv) certain other procedures that a Holder must follow to
accept a Change of Control Offer or to withdraw such acceptance.
If a Change of Control Offer is made, there can be no assurance that the
Company will have available funds sufficient to pay the purchase price for all
of the Notes and Additional Notes that might be tendered by Holders of the Notes
and Additional Notes, if any, seeking to accept the Change of Control Offer. The
Senior Credit Facility will restrict such a purchase of Notes and Additional
Notes, if any, by the Company prior to repayment in full of Indebtedness
outstanding under the Senior Credit Facility and a Change of Control Offer would
require the
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approval of the lenders thereunder. In addition, certain events involving a
Change of Control may be an event of default under the Senior Credit Facility or
other indebtedness of the Company that may be incurred in the future.
Accordingly, the right of the Holders of the Notes and Additional Notes, if any,
to require the Company to repurchase the Notes and Additional Notes, if any, may
be of limited value if the Company cannot obtain the required approval under the
Senior Credit Facility. There can be no assurance that in the event of a Change
in Control the Company will be able to obtain the necessary consents from the
lenders under the Credit Facility to consummate a Change of Control Offer. The
failure of the Company to make or consummate the Change of Control Offer or pay
the applicable Change of Control purchase price when due would result in an
Event of Default and would give the Trustee and the Holders of the Notes and
Additional Notes, if any, the rights described under "-- Events of Default and
Remedies."
The existence of a Holder's right to require the Company to purchase such
Holder's Notes or Additional Notes upon a Change of Control may deter a third
party from acquiring the Company in a transaction that constitutes a Change of
Control.
The definition of "Change of Control" in the Indenture is limited in scope.
The provisions of the Indenture may not afford Holders of Notes or Additional
Notes, if any, the right to require the Company to repurchase such Notes or
Additional Notes, if any, in the event of a highly leveraged transaction or
certain transactions with the Company's management or its affiliates, including
a reorganization, restructuring, merger or similar transaction involving the
Company (including, in certain circumstances, an acquisition of the Company by
management or its affiliates) that may adversely affect Holders of the Notes or
Additional Notes, if such transaction is not a transaction defined as a Change
of Control. See "--Certain Definitions" below for the definition of "Change of
Control."
The Company will comply with any applicable tender offer rules, including
Rule 14e-l under the Exchange Act, and any other applicable securities laws and
regulations in connection with a Change of Control Offer.
CERTAIN COVENANTS
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK. The Company
will not, and will not permit any Restricted Subsidiary to, create, issue,
assume, guarantee or in any manner become directly or indirectly liable for the
payment of, or otherwise incur (collectively, "incur") any Indebtedness
(including Acquired Indebtedness), other than Permitted Indebtedness, or issue
any Disqualified Stock, except that the Company or a Restricted Subsidiary may
incur Indebtedness or issue Disqualified Stock if, at the time of such
incurrence or issuance, the Fixed Charge Coverage Ratio for the four full fiscal
quarters (taken as one accounting period) immediately preceding the incurrence
of such Indebtedness or the issuance of such Disqualified Stock for which
internal financial statements are available would have been equal to at least
2.0 to 1.0 if such incurrence is on or prior to the second anniversary of the
Closing Date and 2.25 to 1.0 if thereafter.
In making the foregoing calculation for any four-quarter period which
includes the Closing Date, pro forma effect will be given to the issuance of the
Existing Notes and the application of the net proceeds therefrom, as if such
transactions had occurred at the beginning of such four-quarter period. In
addition (but without duplication), in making the foregoing calculation, pro
forma effect will be given to: (i) the incurrence of such Indebtedness and (if
applicable) the application of the net proceeds therefrom, including to
refinance other Indebtedness, as if such Indebtedness was incurred and the
application of such proceeds occurred at the beginning of such four-quarter
period, (ii) the incurrence, repayment or retirement of any other Indebtedness
by the Company or its Restricted Subsidiaries since the first day of such
four-quarter period as if such Indebtedness was incurred, repaid or retired at
the beginning of such four-quarter period, (iii) the acquisition (whether by
purchase, merger or otherwise) or disposition (whether by sale, merger or
otherwise) of any other company, entity or business acquired or disposed of by
the Company or any Restricted Subsidiary, as the case may be, since the first
day of such four-quarter period, as if such acquisition or disposition occurred
at the beginning of such four-quarter period. In making a computation under the
foregoing clause (i) or (ii), (A) interest on Indebtedness bearing a floating
interest rate will be computed as if the rate in effect on the date of
computation had been the applicable rate for the entire period (taking into
account any Hedging Obligations applicable to such Indebtedness if such Hedging
Obligations have a remaining term at the date of determination in excess of 12
months), (B) if such Indebtedness bears, at the option
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of the Company, a fixed or floating rate of interest, interest thereon will be
computed by applying, at the option of the Company, either the fixed or floating
rate and (C) the amount of Indebtedness under a revolving credit facility will
be computed based upon the average daily balance of such Indebtedness during
such four-quarter period.
INCURRENCE OF CONTINGENT OBLIGATIONS. The Company will not, and will not
permit any Restricted Subsidiaries to, create, issue, assume, guarantee or in
any manner become directly or indirectly liable for the payment of, or otherwise
incur, any Contingent Obligations if, at the time of such incurrence, all
Contingent Obligations outstanding at the date of such incurrence in the
aggregate equal or exceed an amount equal to 17% of the total assets of the
Company and its Restricted Subsidiaries (on a consolidated basis determined in
accordance with all GAAP).
RESTRICTED PAYMENTS. (a) The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, make any Restricted Payment
unless at the time of, and immediately after giving effect to, the proposed
Restricted Payment: (i) no Default or Event of Default has occurred and is
continuing, (ii) the Company could incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to the first paragraph
of the covenant described under " -- Certain Covenants -- Incurrence of
Indebtedness and Issuance of Disqualified Stock," and (iii) the aggregate amount
of all Restricted Payments declared or made after the Closing Date does not
exceed the sum of:
(A) 50% of the Consolidated Net Income of the Company accrued on a
cumulative basis during the period (taken as one accounting period)
beginning on the first day of the Company's fiscal quarter during which the
Closing Date occurs and ending on the last day of the Company's most
recently ended fiscal quarter for which internal financial statements are
available at the time of such proposed Restricted Payment (or, if such
aggregate cumulative Consolidated Net Income is a loss, minus 100% of such
amount), plus
(B) the aggregate net cash proceeds received by the Company after the
Closing Date from the issuance or sale (other than to a Subsidiary) of, or
as a capital contribution in respect of, Qualified Equity Interests of the
Company, plus
(C) the aggregate net proceeds, including the fair market value of
property other than cash (as determined by the Board of Directors, whose
good faith determination will be conclusive), received by the Company after
the Closing Date from the issuance or sale (other than to a Subsidiary) of
debt securities or Disqualified Stock that have been converted into or
exchanged for Qualified Stock of the Company, plus the aggregate net cash
proceeds received by the Company at the time of such conversion or
exchange, plus
(D) the amount by which Indebtedness of the Company is reduced on the
Company's balance sheet upon the conversion or exchange (other than by a
Subsidiary of the Company) subsequent to the Closing Date of any
Indebtedness of the Company for Capital Stock (other than Disqualified
Stock) of the Company (less the amount of any cash, or the fair value of
any other property, distributed by the Company upon such conversion or
exchange); plus
(E) $25.0 million.
(b) Notwithstanding paragraph (a) above, the Company and its Restricted
Subsidiaries may take any of the following actions so long as, with respect to
clauses (ii), (v), (vii), (viii), (ix), (x) and (xi) no Default or Event of
Default has occurred and is continuing or would occur:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at the declaration date such payment would not have
been prohibited by the foregoing provision;
(ii) the repurchase, redemption or other acquisition or retirement for
value of any shares of Capital Stock of the Company, in exchange for, or
out of the net cash proceeds of a substantially concurrent issuance and
sale (other than to a Subsidiary) of, Qualified Equity Interests of the
Company;
(iii) the purchase, redemption, defeasance or other acquisition or
retirement for value of any Subordinated Indebtedness in exchange for, or
out of the net cash proceeds of a substantially concurrent issuance and
sale (other than to a Subsidiary), of Qualified Equity Interests of the
Company;
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(iv) the purchase, redemption, defeasance or other acquisition or
retirement for value of Subordinated Indebtedness in exchange for, or out
of the net cash proceeds of a substantially concurrent issuance or sale
(other than to a Subsidiary) of, new Subordinated Indebtedness, so long as
the Company or a Restricted Subsidiary would be permitted to refinance such
original Subordinated Indebtedness with such new Subordinated Indebtedness
pursuant to clause (xii) of the definition of Permitted Indebtedness;
(v) the repurchase of any Subordinated Indebtedness at a purchase
price not greater than 101% of the principal amount of such Subordinated
Indebtedness in the event of a "change of control" in accordance with
provisions similar to the "Change of Control" covenant; provided that,
prior to or simultaneously with such repurchase, the Company has made the
Change of Control Offer as provided in such covenant with respect to the
Notes and has repurchased all Notes validly tendered for payment in
connection with such Change of Control Offer;
(vi) the payment of dividends or the making of loans or other advances
by the Company to the Parent to be used by the Parent to pay federal,
state, local and foreign taxes payable by the Parent and directly
attributable to (or that arise as result of ) the operations of the Company
and its Restricted Subsidiaries; provided, however, that (A) the amount of
such dividends shall not exceed the amount that the Company and its
Restricted Subsidiaries would be required to pay in respect of such
federal, state, local and foreign taxes were the Company to pay such taxes
as a stand-alone taxpayer and (B) such dividends, loans or other advances
pursuant to this clause (vi) are used by the Parent for such purposes
within 20 days of the receipt thereof by the Parent;
(vii) the payment of dividends or the making of loans or advances by
the Company to the Parent in an aggregate amount not to exceed $5.0 million
in any fiscal year for customary costs and expenses incurred by the Parent
in its capacity as a holding company or for services rendered by the Parent
on behalf of the Company;
(viii) the payment of, or the payment of a dividend or the making of a
loan or other advance to the Parent to enable the Parent to pay, interest
and principal due under the PIK Subordinated Debenture provided that such
payment of interest or principal (A) is made in cash by the Company or the
Parent, as the case may be, (B) is made at the original Stated Maturity of
such interest or principal, (C) is an amount that is no greater than actual
amount of interest or principal due at such Stated Maturity and (D)
immediately after giving effect to such payment, loan or advance, the
Company could incur at least $1.00 of additional Indebtedness (other than
Permitted Indebtedness) pursuant to the first paragraph of the covenant
described under " -- Certain Covenants -- Incurrence of Indebtedness and
the Issuance of Disqualified Stock;"
(ix) the payment of, or the payment of a dividend or the making of a
loan or other advance to the Parent to enable the Parent to pay, interest
and principal due under the Parent Promissory Note and the Parent IRBs or
any Indebtedness incurred to refinance the Parent Promissory Note or the
Parent IRBs, as the case may be, in compliance with clause (x) below,
provided that such payment of interest or principal (A) is made in cash by
the Company or the Parent, as the case may be, (B) is made at the original
Stated Maturity of such interest or principal and (C) is an amount that is
no greater than actual amount of interest or principal due at such Stated
Maturity;
(x) the payment of a dividend or the making of a loan or other advance
to the Parent to enable the Parent to refinance the Parent Promissory Note
and the Parent IRBs provided that (A) the principal amount of any such
refinancing Indebtedness incurred by the Parent does not exceed the
principal amount of the Parent Promissory Note or Parent IRBs, as the case
may be, refinanced, plus the amount of any premium required to be paid in
connection with such refinancing pursuant to the terms of the Parent
Promissory Note or Parent IRBs, as the case may be, or the amount of any
premium reasonably determined by the Parent as necessary to accomplish such
refinancing, plus the amount of the expenses of the Parent reasonably
estimated to be incurred in connection with such refinancing, (B) any such
refinancing Indebtedness is unsecured, (C) such refinancing Indebtedness
has a Weighted Average Life equal to or greater than the Weighted Average
Life of the Parent Promissory Note or the Parent IRBs, as the case may be,
and (D) such refinancing Indebtedness has a final Stated Maturity no
earlier than the final Stated Maturity of the Parent Promissory Note or the
Parent IRBs, as the case may be, provided, however, that if such dividend,
loan or
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other advance to the Parent is financed by the Company with Indebtedness
incurred pursuant to clause (i) of the definition of Permitted
Indebtedness, then the foregoing clauses (A), (B), (C) and (D) shall not be
applicable in connection with such dividend, loan or advance to the Parent;
and
(xi) the purchase, redemption, defeasance or other acquisition or
retirement for value of Subordinated Indebtedness owed by the Company to
any Wholly-Owned Foreign Restricted Subsidiary.
The payments described in clauses (ii), (iii), (v) and (viii) of this paragraph
will be Restricted Payments that will be permitted to be taken in accordance
with this paragraph (b) but will reduce the amount that would otherwise be
available for Restricted Payments under the clause (iii) of paragraph (a) of
this covenant and the payments described in clauses (i), (iv), (vi), (vii),
(ix), (x) and (xi) of this paragraph (b) will be Restricted Payments that will
be permitted to be taken in accordance with this paragraph (b) and will not
reduce the amount that would otherwise be available for Restricted Payments
under clause (iii) of paragraph (a) of this covenant.
(c) For the purpose of making any calculations under the Indenture, (i) if
a Restricted Subsidiary is designated an Unrestricted Subsidiary, the Company
will be deemed to have made an Investment in amount equal to the greater of fair
market value or net book value of the net assets of such Restricted Subsidiary
at the time of such designation as determined by the Board of Directors of the
Company, whose good faith determination will be conclusive, (ii) any property
transferred to or from an Unrestricted Subsidiary will be valued at fair market
value at the time of such transfer, as determined by the Board of Directors of
the Company, whose good faith determination will be conclusive and (iii) subject
to the foregoing, the amount of any Restricted Payment, if other than cash, will
be determined by the Board of Directors of the Company, whose good faith
determination will be conclusive.
If the aggregate amount of all Restricted Payments calculated under
paragraph (a) of this covenant includes an Investment in an Unrestricted
Subsidiary or other Person that thereafter becomes a Restricted Subsidiary, the
aggregate amount of all Restricted Payments calculated under the first paragraph
of this covenant will be reduced by the lesser of (x) the net asset value of
such Subsidiary at the time it becomes a Restricted Subsidiary and (y) the
initial amount of such Investment.
If an Investment resulted in the making of a Restricted Payment, the
aggregate amount of all Restricted Payments calculated under this covenant will
be reduced by the amount of any net reduction in such Investment (resulting from
the payment of interest or dividends, loan repayment, transfer of assets or
otherwise), to the extent such net reduction is not included in the Company's
Consolidated Net Income; provided that the total amount by which the aggregate
amount of all Restricted Payments may be reduced may not exceed the lesser of
(x) the cash proceeds received by the Company and its Restricted Subsidiaries in
connection with such net reduction and (y) the initial amount of such
Investment.
ASSET SALES. The Company will not, and will not permit any Restricted
Subsidiary to, engage in any Asset Sale unless (a) the consideration received by
the Company or such Restricted Subsidiary for such Asset Sale is not less than
the fair market value of the assets sold (as determined by the Board of
Directors of the Company, whose good faith determination will be conclusive and
evidenced by a resolution of the Board of Directors) and (b) the consideration
received by the Company or the relevant Restricted Subsidiary in respect of such
Asset Sale consists of at least 75% cash or Cash Equivalents; provided that the
amount of (x) any liabilities (as shown on the most recent balance sheet of the
Company or such Restricted Subsidiary) of the Company or any of its Restricted
Subsidiaries (other than liabilities that are by their terms subordinated to the
Notes or any guarantee thereof) that are assumed by the transferee of any such
assets pursuant to a customary novation agreement that releases the Company or
such Restricted Subsidiary from further liability and (y) any securities, notes
or other obligations received by the Company or any such Restricted Subsidiary
from such transferee that are promptly converted by the Company or such
Restricted Subsidiary into cash or Cash Equivalents (to the extent of the cash
or Cash Equivalents received), shall be deemed to be cash or Cash Equivalents,
as the case may be, for purposes of this provision.
If the Company or any Restricted Subsidiary engages in an Asset Sale, the
Company may, at its option, within 360 days after such Asset Sale, (i) apply all
or a portion of the Net Cash Proceeds to the permanent reduction of amounts
outstanding under the Senior Credit Facility or to the repayment of other Senior
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Indebtedness of the Company or a Restricted Subsidiary or (ii) invest (or enter
into a legally binding agreement to invest) all or a portion of such Net Cash
Proceeds in properties and assets to replace the properties and assets that were
the subject of the Asset Sale or in properties and assets that will be used in
businesses of the Company or its Restricted Subsidiaries, as the case may be, as
such businesses are conducted prior to such Asset Disposition or in businesses
reasonably related or ancillary thereto (in any such case as determined by the
Board of Directors in good faith). If any such legally binding agreement to
invest such Net Cash Proceeds is terminated, the Company may, within 90 days of
such termination or within 360 days of such Asset Sale, whichever is later,
invest such Net Cash Proceeds as provided in clause (i) or (ii) (without regard
to the parenthetical contained in such clause (ii)) above. Notwithstanding the
foregoing, if the Company or any Restricted Subsidiary engages in an Asset Sale
of Designated Assets, (x) the Company may, at its option, within 360 days after
such Asset Sale of Designated Assets, (1) apply all or a portion of the Net Cash
Proceeds to the repayment of amounts outstanding under the Senior Credit
Facility or to the repayment of other Senior Indebtedness of the Company or a
Restricted Subsidiary or (2) invest (or enter into a legally binding agreement
to invest) all or a portion of such Net Cash Proceeds as set forth in clause
(ii) above and (y) the Company or the relevant Restricted Subsidiary shall not
be required to receive, as set forth in clause (b) of the immediately preceding
paragraph, 75% of the consideration in respect of such Asset Sale of Designated
Assets in the form of cash or Cash Equivalents. The amount of such Net Cash
Proceeds not so used as set forth above in this paragraph constitutes "Excess
Proceeds."
When the aggregate amount of Excess Proceeds exceeds $15.0 million, the
Company will, within 30 days thereafter, make an offer to purchase from all
Holders of Notes and Additional Notes, if any, on a pro rata basis, the maximum
principal amount (expressed as a multiple of $1,000) of the Notes and Additional
Notes, if any, that may be purchased with the Excess Proceeds (an "Asset Sale
Offer"). The offer price as to each Note and Additional Note, if any, will be
payable in cash in an amount equal to 100% of the principal amount of such Note
and Additional Note, if any, and, plus in each case accrued and unpaid interest,
if any, to the date of repurchase. To the extent that the aggregate principal
amount of Notes and Additional Notes, if any, tendered pursuant to such Asset
Sale Offer is less than the Excess Proceeds, the Company may use the portion of
the Excess Proceeds not required to be used to repurchase the Notes and
Additional Notes for general corporate purposes. If the aggregate principal
amount of Notes and Additional Notes, if any, validly tendered and not withdrawn
by holders thereof exceeds the Excess Proceeds, the Notes and Additional Notes
to be purchased will be selected on a pro rata basis (based upon the principal
amount of Notes). Upon completion of such Asset Sale Offer, the amount of Excess
Proceeds will be reset to zero.
LIENS. The Company will not, and will not permit any Restricted Subsidiary
to, create, incur, affirm or suffer to exist any Lien of any kind securing any
Pari Passu Indebtedness or Subordinated Indebtedness (including any assumption,
guarantee or other liability with respect thereto by any Restricted Subsidiary)
upon any property or assets (including any intercompany notes) of the Company or
any Restricted Subsidiary now owned or acquired after the Closing Date, or any
income or profits therefrom, unless the Notes are directly secured equally and
ratably with (or prior to in the case of Subordinated Indebtedness) the
obligation or liability secured by such Lien, and except for any Lien securing
Acquired Indebtedness created prior to the incurrence of such Indebtedness by
the Company or any Restricted Subsidiary, provided that any such Lien only
extends to the assets that were subject to such Lien securing such Acquired
Indebtedness prior to the related acquisition by the Company or the Restricted
Subsidiary.
DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES. The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction of any kind on the
ability of any Restricted Subsidiary to (a) pay dividends, in cash or otherwise,
or make any other distributions on or in respect of its Capital Stock, (b) pay
any Indebtedness owed to the Company or any other Restricted Subsidiary, (c)
make loans or advances to the Company or any other Restricted Subsidiary or (d)
transfer any of its properties or assets to the Company or any other Restricted
Subsidiary, except for such encumbrances or restrictions existing under or by
reason of (i) the Indenture, the Senior Credit Facility, as originally executed
and any other agreement in effect on the Closing Date to the extent listed on a
schedule attached to the Indenture, (ii) applicable law, (iii) customary
non-assignment provisions of any lease governing a leasehold interest of the
Company or any Restricted Subsidiary, (iv) any agreement or other instrument of
a Person acquired by the Company or any Restricted Subsidiary in existence at
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the time of such acquisition (but not created in contemplation thereof), which
encumbrance or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person, or the property or assets of the
Person, so acquired, (v) any encumbrance or restriction contained in contracts
for sales of assets (including the Capital Stock of any Restricted Subsidiary)
permitted by the covenant described under " -- Certain Covenants -- Asset Sales"
with respect to the assets to be sold pursuant to such contract and (vi) any
encumbrance or restriction existing under any agreement that extends, renews,
refinances or replaces the agreements containing the encumbrances or
restrictions in the foregoing clauses (i) and (iv); provided that the terms and
conditions of any such encumbrances or restrictions are not materially less
favorable to the Holders of Notes than those under or pursuant to the agreement
so extended, renewed, refinanced or replaced.
LIMITATION ON LAYERING INDEBTEDNESS. The Company and each Guarantor will
not, directly or indirectly, incur or otherwise permit to exist any Indebtedness
that is subordinate in right of payment to any Indebtedness of the Company or
such Guarantor, as the case may be, unless such Indebtedness is also pari passu
with, or subordinate in right of payment to, the Notes or the Guarantee issued
by such Guarantor, as the case may be, or subordinate in right of payment to the
Notes or such Guarantee, as the case may be.
CONSOLIDATION, MERGER AND SALE OF ASSETS. The Company may not consolidate
with or merge with or into any other Person (whether or not the Company is the
surviving Person) or, directly or indirectly, sell, assign, convey, transfer,
lease or otherwise dispose of all or substantially all of its properties or
assets (determined on a consolidated basis for the Company and its Subsidiaries
taken as a whole) to any other Person or Persons, in one transaction or a series
of related transactions, unless each of the following conditions is satisfied:
(a) Either (i) the Company is the surviving corporation or (ii) the
Person (if other than the Company) formed by such consolidation or into
which the Company is merged or the Person that acquires by sale,
assignment, conveyance, transfer, lease or other disposition of all or
substantially all of the properties and assets of the Company and its
Restricted Subsidiaries on a consolidated basis (the "Surviving Entity")
(A) is a corporation, partnership, limited liability company or trust duly
organized and validly existing under the laws of the United States, any
state thereof or the District of Columbia and (B) expressly assumes, by a
supplemental indenture in form reasonably satisfactory to the Trustee, all
of the Company's obligations under the Indenture and the Notes.
(b) Immediately after giving effect to such transaction or series of
transactions on a pro forma basis, no Default or Event of Default has
occurred and is continuing.
(c) Immediately after giving effect to such transaction or series of
transactions on a pro forma basis, the Consolidated Net Worth of the
Company (or of the Surviving Entity if the Company is not the continuing
obligor under the Indenture) is equal to or greater than the Consolidated
Net Worth of the Company immediately prior to such transaction or series of
transactions.
(d) Immediately after giving effect to such transaction or series of
transactions on a pro forma basis (on the assumption that the transaction
or series of transactions occurred at the beginning of the most recently
ended four full fiscal quarter period for which internal financial
statements are available), the Company (or the Surviving Entity if the
Company is not the continuing obligor under the Indenture) could incur at
least $1.00 of additional Indebtedness (other than Permitted Indebtedness)
pursuant to the first paragraph of the covenant described under
" -- Certain Covenants -- Incurrence of Indebtedness and Issuance of
Disqualified Stock."
(e) If the Company is not the continuing obligor under the Indenture,
each Guarantor, unless it is the other party to the transaction described
above, has by supplemental indenture confirmed that its Guarantee applies
to the Surviving Entity's obligations under the Indenture and the Notes.
(f) The Company delivers, or causes to be delivered, to the Trustee,
in form and substance reasonably satisfactory to the Trustee, an officers'
certificate and an opinion of counsel, each stating that such transaction
complies with the requirements of the Indenture.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of related transactions) of all or
substantially all of the properties or assets of one or more Restricted
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Subsidiaries that constitutes all or substantially all of the properties and
assets of the Company on a consolidated basis, will be deemed to be the transfer
of all or substantially all of the properties and assets of the Company.
In the event of any transaction or series of related transactions described
in and complying with the conditions listed in the first paragraph of this
covenant in which the Company is not the continuing obligor under the Indenture,
the Surviving Entity will succeed to, and be substituted for, and may exercise
every right and power of, the Company under the Indenture, and thereafter the
Company will, except in the case of a lease, be discharged from all its
obligations and covenants under the Indenture and Notes.
TRANSACTIONS WITH AFFILIATES. The Company will not, and will not permit
any Restricted Subsidiary to, directly or indirectly, enter into or suffer to
exist any transaction or series of related transactions with, or for the benefit
of, any Affiliate of the Company or any of its Restricted Subsidiaries, unless
(a) such transaction or series of related transactions is on terms that are no
less favorable to the Company or such Restricted Subsidiary, as the case may be,
than those that could have been obtained in an arm's length transaction with
third parties who are not Affiliates and (b) either (i) with respect to any
transaction or series of related transactions involving aggregate payments in
excess of $5.0 million, but less than $10.0 million, the Company delivers a
resolution of the Board of Directors of the Company set forth in an officers'
certificate to the Trustee certifying that such transaction or series of related
transactions comply with clause (a) above and that such transaction or
transactions have been approved by the Board of Directors (including a majority
of the Disinterested Directors) of the Company or (ii) with respect to a
transaction or series of related transactions involving aggregate payments equal
to or greater than $10.0 million the Company delivers (x) an officers'
certificate to the Trustee certifying that such transaction or series of related
transactions have been approved by the Board of Directors (including a majority
of the Disinterested Directors) of the Company and (y) a written opinion from a
nationally recognized accounting or investment banking firm to the effect that
such transaction or series of related transactions are fair to the Company or
such Restricted Subsidiary from a financial point of view.
The foregoing covenant will not restrict any of the following:
(A) Transactions among the Company and/or its Restricted Subsidiaries.
(B) The Company from paying reasonable and customary regular
compensation or fees to, or entering into customary expense reimbursement,
indemnification or similar arrangements with, directors of the Company or
any Restricted Subsidiary who are not employees of the Company or any
Restricted Subsidiary.
(C) Transactions permitted by the provisions of the covenant described
" -- Certain Covenants -- Restricted Payments."
(D) Transactions among the Company, the Parent and Laidlaw pursuant to
the Stock Purchase Agreement.
(E) Any payments made by the Company or a Restricted Subsidiary to the
Parent or Laidlaw or transactions entered into among the Company, any
Restricted Subsidiary, the Parent and/or Laidlaw pursuant to customary
financial and management service arrangements (including, without
limitation, general liability and workers' compensation insurance, income
tax management and treasury services); provided, however, that each such
payment or transaction is (a) in the ordinary course of business consistent
with past practice prior to the date of the Indenture and (b) upon fair and
reasonable terms no less favorable to the Company or such Restricted
Subsidiary, as the case may be, than could have been obtained in a
comparable arm's length transaction with a Person that is not an Affiliate
of the Company or such Restricted Subsidiary.
LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF RESTRICTED
SUBSIDIARIES. The Company will not, and will not permit any Restricted
Subsidiary, directly or indirectly, to issue, convey, sell, assign, transfer,
lease or otherwise dispose of any shares of Capital Stock of a Restricted
Subsidiary (including options, warrants or other rights to purchase shares of
such Capital Stock) except (a) to the Company or a Wholly Owned Restricted
Subsidiary or (b) in a transaction or series of related transactions consisting
of a sale provided that immediately after giving effect to such sale, neither
the Company nor any of its Subsidiaries owns any shares of Capital Stock
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of such Restricted Subsidiary (including options, warrants or other rights to
purchase shares of such Capital Stock) and such sale complies with the covenant
described under "-- Certain Covenants -- Asset Sales".
The Company will not permit any Restricted Subsidiary that is a Guarantor
to issue Preferred Stock.
PAYMENTS FOR CONSENT. The Indenture provides that neither the Company nor
any of its Restricted Subsidiaries will, directly or indirectly, pay or cause to
be paid any consideration, whether by way of interest, fee or otherwise, to any
Holder for or as an inducement to any consent, waiver or amendment of any of the
terms or provisions of the Indenture or the Notes unless such consideration is
offered to be paid or is paid to all Holders that consent, waive or agree to
amend in the time frame set forth in the solicitation documents relating to such
consent, waiver or agreement.
GUARANTEES OF INDEBTEDNESS BY RESTRICTED SUBSIDIARIES. All of the
Company's Domestic Restricted Subsidiaries (other than three non-wholly-owned
domestic subsidiaries of the Company) are Guarantors. As described above, the
Indenture permits, under certain circumstances, the release and discharge of the
Guarantee issued by a Guarantor. Other than a guarantee by a Foreign Restricted
Subsidiary of the payment of Indebtedness of another Foreign Restricted
Subsidiary, the Company will not permit any Restricted Subsidiary that is not a
Guarantor, directly or indirectly, to guarantee, assume or in any other manner
become liable for the payment of any Indebtedness of the Company or any
Indebtedness of any other Restricted Subsidiary, unless (a) such Restricted
Subsidiary simultaneously executes and delivers a supplemental indenture
providing for a guarantee of payment of the Notes by such Restricted Subsidiary
and (b) with respect to any guarantee of Subordinated Indebtedness by a
Restricted Subsidiary, any such guarantee is subordinated to such Restricted
Subsidiary's guarantee with respect to the Notes at least to the same extent as
such Subordinated Indebtedness is subordinated to the Notes, provided that the
foregoing provision will not be applicable to any guarantee by any Restricted
Subsidiary that existed at the time such Person became a Restricted Subsidiary
and was not incurred in connection with, or in contemplation of, such Person
becoming a Restricted Subsidiary.
Any guarantee by a Restricted Subsidiary of the Notes pursuant to the
preceding paragraph may provide by its terms that it will be automatically and
unconditionally released and discharged upon: (a) any sale, exchange or transfer
to any Person of all of the Company's and the Restricted Subsidiaries' Capital
Stock in, or all or substantially all the assets of, such Restricted Subsidiary
(which sale, exchange or transfer is not prohibited by the Indenture), (b) the
release or discharge of the guarantee that resulted in the creation of such
guarantee of the Notes, except a discharge or release by or as a result of
payment under such guarantee or (c) the designation of such Restricted
Subsidiary as an Unrestricted Subsidiary in accordance with the terms of the
Indenture.
UNRESTRICTED SUBSIDIARIES. (a) The Board of Directors of the Company may
designate any Subsidiary (including any newly acquired or newly formed
Subsidiary) to be an Unrestricted Subsidiary so long as (i) neither the Company
nor any Restricted Subsidiary is directly or indirectly liable for any
Indebtedness of such Subsidiary, (ii) no default with respect to any
Indebtedness of such Subsidiary would permit (upon notice, lapse of time or
otherwise) any holder of any other Indebtedness of the Company or any Restricted
Subsidiary to declare a default on such other Indebtedness or cause the payment
thereof to be accelerated or payable prior to its stated maturity, (iii) any
Investment in such Subsidiary made as a result of designating such Subsidiary an
Unrestricted Subsidiary will not violate the provisions of the covenant
described under " -- Certain Covenants -- Restricted Payments," (iv) neither the
Company nor any Restricted Subsidiary has a contract, agreement, arrangement,
understanding or obligation of any kind, whether written or oral, with such
Subsidiary other than those that might be obtained at the time from Persons who
are not Affiliates of the Company and (v) neither the Company nor any Restricted
Subsidiary has any obligation to subscribe for additional shares of Capital
Stock or other equity interest in such Subsidiary, or to maintain or preserve
such Subsidiary's financial condition or to cause such Subsidiary to achieve
certain levels of operating results.
(b) The Board of Directors of the Company may designate any Unrestricted
Subsidiary as a Restricted Subsidiary; provided that (i) no Default or Event of
Default has occurred and is continuing following such designation and (ii) the
Company could incur at least $1.00 of additional Indebtedness (other than
Permitted Indebtedness) pursuant to the first paragraph of the covenant
described under " -- Certain Covenants -- Incurrence of Indebtedness and
Issuance of Disqualified Stock" (treating any Indebtedness of such Unrestricted
Subsidiary as the incurrence of Indebtedness by a Restricted Subsidiary).
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LIMITATION ON CONDUCT OF BUSINESS. The Company will not, and will not
permit any of its Restricted Subsidiaries to, conduct any business other than
the business the Company and its Restricted Subsidiaries was conducting on the
Closing Date or businesses reasonably related or ancillary thereto, except to
such extent as would not be material to the Company and its Restricted
Subsidiaries taken as a whole.
REPORTS. The Company will be required to file on a timely basis with the
Commission, to the extent such filings are accepted by the Commission and
whether or not the Company has a class of securities registered under the
Exchange Act, the annual reports, quarterly reports and other documents that the
Company would be required to file if it were subject to Section 13 or 15(d) of
the Exchange Act provided, however, that so long as the Parent is a Guarantor of
the Notes, the reports, information and other documents required to be filed and
provided as described hereunder may, at the Company's option, be filed by and be
those of the Parent rather than the Company; provided further, however, that if
the Parent conducts any business or holds any significant assets other than the
capital stock of the Company at the time any such report or other document
containing financial statements of the Parent is filed, the Parent shall include
in such report or other (a) document summarized financial information (as
defined in Rule 1-02(bb) of Regulation S-X promulgated by the SEC) with respect
to the Company or (b) condensed consolidating financial statements in a columnar
format with separate columns that contain financial information for (i) the
Parent on a stand-alone basis, (ii) the Company on a stand-alone basis, (iii)
the Guarantor Subsidiaries and (iv) the Non-Guarantor Subsidiaries. The Company
will also be required (x) to supply to the Trustee and each Holder of Notes, or
supply to the Trustee for forwarding to each such Holder, without cost to such
Holder, copies of such reports and documents within 15 days after the date on
which the Company (or the Parent, as the case may be) files such reports and
documents with the Commission or the date on which the Company (or the Parent,
as the case may be) would be required to file such reports and documents if the
Company (or the Parent, as the case may be) were so required and (y) if filing
such reports and documents with the Commission is not accepted by the Commission
or is prohibited under the Exchange Act, to supply at the Company's cost copies
of such reports and documents to any prospective Holder of Notes promptly upon
written request.
CERTAIN INVESTMENT GRADE COVENANTS
In the event the Notes are rated Investment Grade, at the election of the
Company, each of the covenants described above under "-- Certain Covenants"
(other than "-- Consolidation, Merger and Sale of Assets" (except paragraph (c)
and (d) thereof) "-- Reports") shall be of no further force and effect and shall
cease to apply to the Company and, if applicable, the Restricted Subsidiaries.
In addition, the Indenture contains, among other things, the following
covenants, each of which will apply to the Company and the Restricted
Subsidiaries once the Notes are rated Investment Grade.
LIMITATION ON LIENS SECURING INDEBTEDNESS. The Company shall not, and
shall not permit any Restricted Subsidiary to, create, incur or assume any Lien
(other than any Permitted Lien) on any properties or assets of the Company or
any Restricted Subsidiary to secure the payment of Indebtedness of the Company
or any Subsidiary if immediately after the creation, incurrence or assumption of
such Lien, the aggregate outstanding principal amount of all Indebtedness of the
Company and the Subsidiaries that is secured by Liens (other than Permitted
Liens) on any properties or assets of the Company and any Restricted
Subsidiaries (other than (x) Indebtedness that is so secured equally and ratably
with (or on a basis subordinated to) the Notes and (y) the Notes), plus the
aggregate amount of all Attributable Debt of the Company and the Restricted
Subsidiaries with respect to all Sale and Leaseback Transactions outstanding at
such time (other than Sale and Leaseback Transactions permitted by the second
paragraph under "-- Limitation on Sale and Leaseback Transactions"), would
exceed 10% of Consolidated Net Tangible Assets, unless the Company secures the
outstanding Notes equally and ratably with (or prior to) all Indebtedness
secured by such Lien, so long as such Indebtedness shall be so secured.
LIMITATION ON SALE AND LEASEBACK TRANSACTIONS. The Company shall not, and
shall not permit any Restricted Subsidiary to, enter into any Sale and Leaseback
Transaction involving any properties or assets of the Company or any Restricted
Subsidiary, as the case may be, unless, after giving effect to such Sale and
Leaseback Transaction, the aggregate amount of all Attributable Debt of the
Company and the Restricted Subsidiaries with respect to all Sale and Leaseback
Transactions outstanding at such time (other than Sale and Leaseback
Transactions permitted by the next paragraph), plus the aggregate principal
amount of all Indebtedness of the
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Company and the Subsidiaries that is secured by Liens (other than Permitted
Liens) on properties or assets of the Company or any Restricted Subsidiary, as
the case may be, (other than (x) Indebtedness that is so secured equally and
ratably with (or on a basis subordinated to) the Notes and (y) the Notes), would
not exceed 10% of Consolidated Net Tangible Assets.
The restriction in the foregoing paragraph shall not apply to any Sale and
Leaseback Transaction if (a) the lease is for a period of not in excess of three
years, including renewal of rights, (b) the lease secures or relates to
industrial revenue or similar financing, (c) the transaction is solely between
the Company and a Restricted Subsidiary or between or among Restricted
Subsidiaries or (d) the Company or such Restricted Subsidiary, within 270 days
after the sale is completed, applies an amount equal to or greater of (i) the
Net Cash Proceeds of the sale of the properties or assets of the Company or any
Restricted Subsidiary, as the case may be, which are the subject of the Sale and
Leaseback Transaction or (ii) the fair market value of the properties or assets
of the Company or any Restricted Subsidiary, as the case may be, which are the
subject of the Sale and Leaseback Transaction (as determined in good faith by
the Board of Directors of the Company) either to (A) the retirement (or open
market purchase) of Notes, other long-term Indebtedness of the Company ranking
on a parity with or senior to the Notes or long-term Indebtedness of a
Restricted Subsidiary or (B) the purchase by the Company or any Restricted
Subsidiary of other properties and assets that will be used in the business of
the Company or its Restricted Subsidiaries (or businesses reasonably related or
ancillary thereto) having a value at least equal to the value of the properties
or assets of the Company or the Restricted Subsidiary, as the case may be, which
are the subject of the Sale and Leaseback Transaction.
EVENTS OF DEFAULT AND REMEDIES
Each of the following will be "Events of Default" under the Indenture:
(a) Default in the payment of any interest on any Note when it becomes
due and payable, and continuance of such default for a period of 30 days
(whether or not prohibited by the subordination provisions of the
Indenture).
(b) Default in the payment of the principal of or premium, if any, on
any Note when due (whether or not prohibited by the subordination
provisions of the Indenture).
(c) Failure to perform or comply with the provisions of the covenant
described under " -- Certain Covenants -- Consolidation, Merger and Sale of
Assets" or to make or consummate a Change of Control Offer or Asset Sale
Offer in accordance with provisions of the covenants described under
" -- Repurchase at the Option of the Holders Upon Change of Control" and
"-- Certain Covenants -- Asset Sales", respectively.
(d) Default in the performance, or breach, of any covenant or
agreement of the Company or any Guarantor contained in the Indenture or any
Guarantee (other than as contemplated by clauses (a), (b) and (c) above)
and continuance of such default or breach for a period of 60 days after
written notice has been given (x) to the Company by the Trustee or (y) to
the Company and the Trustee by the Holders of at least 25% in aggregate
principal amount of the Notes then outstanding.
(e) The occurrence of an event of default under any mortgage, bond,
indenture, loan agreement or other document evidencing Indebtedness of the
Company or any Restricted Subsidiary, which Indebtedness has an aggregate
outstanding principal amount of $25.0 million or more, and such default (i)
results in the acceleration of such Indebtedness prior to its Stated
Maturity or (ii) constitutes a failure to make any payment with respect to
any such Indebtedness when due and payable after the expiration of any
applicable grace period.
(f) Failure by the Company or any of its Restricted Subsidiaries to
pay one or more final judgments the uninsured portion of which exceeds in
the aggregate $25.0 million, which judgment or judgments are not paid,
discharged or stayed for a period of 60 days.
(g) Any Guarantee ceases to be in full force and effect or is declared
null and void or any Guarantor denies that it has any further liability
under any Guarantee, or gives notice to such effect (other than by
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reason of the termination of the Indenture or the release of any such
Guarantee in accordance with the Indenture), and such condition has
continued for a period of 30 days after written notice of such failure
requiring the Guarantor and the Company to remedy the same has been given
(x) to the Company by the Trustee or (y) to the Company and the Trustee by
the Holders of 25% in aggregate principal amount of the Notes then
outstanding.
(h) The occurrence of certain events of bankruptcy, insolvency or
reorganization with respect to the Company or any Significant Subsidiary.
If an Event of Default (other than as specified in clause (h) above) occurs
and is continuing, the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Notes then outstanding may, and the Trustee at the
request of such Holders will, declare the principal of and premium, if any, and
accrued and unpaid interest on all of the outstanding Notes immediately due and
payable and, upon any such declaration, all such amounts will become due and
payable immediately. If an Event of Default specified in clause (h) above occurs
and is continuing, then the principal and premium, if any, and accrued and
unpaid interest on all the outstanding Notes will ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder of Notes.
At any time after a declaration of acceleration under the Indenture, but
before a judgment or decree for payment of the money due has been obtained by
the Trustee, the Holders of a majority in aggregate principal amount of the
outstanding Notes, by written notice to the Company and the Trustee, may rescind
such declaration and its consequences if (i) the Company has paid or deposited
with the Trustee a sum sufficient to pay (A) all overdue interest on all Notes,
(B) all unpaid principal of and premium, if any, on any outstanding Notes that
has become due otherwise than by such declaration of acceleration and interest
thereon at the rate borne by the Notes, (C) to the extent that payment of such
interest is lawful, interest upon overdue interest and overdue principal at the
rate borne by the Notes and, (D) all sums paid or advanced by the Trustee under
the Indenture and the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel; and (ii) all Events of Default,
other than the non-payment of amounts of principal of (or premium, if any, on)
or interest on the Notes that have become due solely by such declaration of
acceleration, have been cured or waived. No such rescission will affect any
subsequent default or impair any right consequent thereon.
Notwithstanding the preceding paragraph, in the event of a declaration of
acceleration in respect of the Notes because of an Event of Default specified in
clause (e) of this covenant shall have occurred and be continuing, such
declaration of acceleration shall be automatically annulled if the Indebtedness
that is the subject of such Event of Default has been discharged or the holders
thereof have rescinded their declaration of acceleration in respect of such
Indebtedness, and written notice of such discharge or rescission, as the case
may be, shall have been given to the Trustee by the Company and countersigned by
the holders of such Indebtedness or a trustee, fiduciary or agent for such
holders, within 30 days after such declaration of acceleration in respect of the
Notes, and not other Event of Default has occurred during such 30-day period
which has not been cured or waived during such period.
No Holder has any right to institute any proceeding with respect to the
Indenture or any remedy thereunder, unless the Holders of at least 25% in
aggregate principal amount of the outstanding Notes have made written request,
and offered reasonable indemnity, to the Trustee to institute such proceeding
within 60 days after receipt of such notice and the Trustee, within such 60-day
period, has not received directions inconsistent with such written request by
Holders of a majority in aggregate principal amount of the outstanding Notes.
Such limitations do not apply, however, to a suit instituted by a Holder for the
enforcement of the payment of the principal of, premium, if any, or interest on
such Note on or after the respective due dates expressed in such Note.
The Holders of not less than a majority in aggregate principal amount of
the outstanding Notes may, on behalf of the Holders of all of the Notes, waive
any past defaults under the Indenture, except a default in the payment of the
principal of, premium, if any, or interest on any Note, or in respect of a
covenant or provision that under the Indenture cannot be modified or amended
without the consent of the Holder of each Note outstanding.
If a Default or an Event of Default occurs and is continuing and is known
to the Trustee, the Trustee will mail to each Holder of the Notes notice of the
Default or Event of Default within 90 days after the occurrence thereof. Except
in the case of a Default or an Event of Default in payment of principal of and
premium, if any, or
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interest on any Notes, the Trustee may withhold the notice to the Holders of the
Notes if a committee of its trust officers in good faith determines that
withholding such notice is in the interests of the Holders of the Notes.
The Company is required to furnish to the Trustee annual statements as to
the performance by the Company and the Guarantors of their respective
obligations under the Indenture and as to any default in such performance. The
Company is also required to notify the Trustee within five days of any Default.
LEGAL DEFEASANCE OR COVENANT DEFEASANCE
The Company may, at its option and at any time, terminate the obligations
of the Company and any Guarantors with respect to the outstanding Notes
("defeasance"). Such defeasance means that the Company will be deemed to have
paid and discharged the entire Indebtedness represented by the outstanding
Notes, except for (i) the rights of Holders of outstanding Notes to receive
payments in respect of the principal of and premium, if any, and interest on
such Notes when such payments are due, (ii) the Company's obligations to issue
temporary Notes, register the transfer or exchange of any Notes, replace
mutilated, destroyed, lost or stolen Notes, maintain an office or agency for
payments in respect of the Notes and segregate and hold such payments in trust,
(iii) the rights, powers, trusts, duties and immunities of the Trustee and (iv)
the defeasance provisions of the Indenture. In addition, the Company may, at its
option and at any time, elect to terminate the obligations of the Company and
any Guarantor with respect to certain covenants set forth in the Indenture and
described under "-- Certain Covenants" above, and any omission to comply with
such obligations would not constitute a Default or an Event of Default with
respect to the Notes ("covenant defeasance").
In order to exercise either defeasance or covenant defeasance, (a) the
Company must irrevocably deposit or cause to be deposited with the Trustee, as
trust funds in trust, specifically pledged as security for, and dedicated solely
to, the benefit of the Holders of the Notes, money in an amount, or U.S.
Government Obligations (as defined in the Indenture) that through the scheduled
payment of principal and interest thereon will provide money in an amount, or a
combination thereof, sufficient, in the opinion of a nationally recognized firm
of independent public accountants, to pay and discharge the principal of and
premium, if any, on and interest on the outstanding Notes at maturity (or upon
redemption, if applicable) of such principal or installment of interest; (b) no
Default or Event of Default has occurred and is continuing on the date of such
deposit or, insofar as an event of bankruptcy under clause (h) of "Events of
Default" above is concerned, at any time during the period ending on the 91st
day after the date of such deposit; (c) such defeasance or covenant defeasance
may not result in a breach or violation of, or constitute a default under, the
Indenture or any material agreement or instrument to which the Company or any
Guarantor is a party or by which it is bound; (d) in the case of defeasance, the
Company must deliver to the Trustee an opinion of counsel stating that the
Company has received from, or there has been published by, the Internal Revenue
Service a ruling, or since the date hereof there has been a change in applicable
federal income tax law, to the effect, and based thereon such opinion must
confirm that, the Holders of the outstanding Notes will not recognize income,
gain or loss for federal income tax purposes as a result of such defeasance and
will be subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such defeasance had not
occurred; (e) in the case of covenant defeasance, the Company must have
delivered to the Trustee an opinion of counsel to the effect that the Holders of
the Notes outstanding will not recognize income, gain or loss for federal income
tax purposes as a result of such covenant defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such covenant defeasance had not occurred; and
(f) the Company must have delivered to the Trustee an officers' certificate and
an opinion of counsel, each stating that all conditions precedent provided for
relating to either the defeasance or the covenant defeasance, as the case may
be, have been complied with.
SATISFACTION AND DISCHARGE
Upon the request of the Company, the Indenture will cease to be of further
effect (except as to surviving rights of registration of transfer or exchange of
the Notes, as expressly provided for in the Indenture) and the Trustee, at the
expense of the Company, will execute proper instruments acknowledging
satisfaction and discharge of the Indenture when (a) either (i) all the Notes
theretofore authenticated and delivered (other than destroyed, lost or stolen
Notes that have been replaced or paid and Notes that have been subject to
defeasance under "-- Legal Defeasance and Covenant Defeasance") have been
delivered to the Trustee for cancellation or
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(ii) all Notes not theretofore delivered to the Trustee for cancellation (A)
have become due and payable, (B) will become due and payable at maturity within
one year or (C) are to be called for redemption within one year under
arrangements reasonably satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Company, and
the Company has irrevocably deposited or caused to be deposited with the Trustee
funds in trust for the purpose in an amount sufficient to pay and discharge the
entire indebtedness on such Notes not theretofore delivered to the Trustee for
cancellation, for principal and premium, if any, and interest on the Notes to
the date of such deposit (in the case of Notes that have become due and payable)
or to the Stated Maturity or redemption date, as the case may be; (b) the
Company has paid or caused to be paid all sums payable under the Indenture by
the Company; and (c) the Company has delivered to the Trustee an officers'
certificate and an opinion of counsel, each stating that all conditions
precedent provided in the Indenture relating to the satisfaction and discharge
of the Indenture have been complied with.
AMENDMENT, SUPPLEMENT AND WAIVER
Modifications and amendments of the Indenture and any Guarantee may be made
by the Company, any affected Guarantor and the Trustee with the consent of the
Holders of a majority in aggregate outstanding principal amount of the Notes;
provided, however, that no such modification or amendment may, without the
consent of the Holder of each outstanding Note affected thereby:
(a) change the Stated Maturity of the principal of, or any installment
of interest on, any Note, or reduce the principal amount thereof or the
rate of interest thereon or any premium payable upon the redemption
thereof, or change the place of payment where, or the coin or currency in
which any Note or any premium or the interest thereon is payable, or impair
the right to institute suit for the enforcement of any such payment after
the Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date); or
(b) reduce the percentage in aggregate principal amount of outstanding
Notes required to consent to any amendment of, or waiver of compliance
with, any provision of or defaults under the Indenture; or
(c) waive a Default or Event or Default in the payment of principal of
or premium, if any, or interest on the Notes (except a rescission of
acceleration of Notes by the Holders of at least a majority in aggregate
principal amount of the then outstanding Notes (including Additional Notes
issued under the Indenture, if any)); or
(d) release any Guarantor from any of its obligations under its
Guarantee or the Indenture, except in accordance with the terms of the
Indenture; or
(e) amend, change or modify the obligation of the Company to make and
consummate a Change of Control Offer or Asset Sale Offer in accordance with
the provisions of the covenant described under "-- Repurchase at the Option
of the Holders Upon Change of Control" and "-- Certain Covenants -- Asset
Sales", respectively; or
(f) amend, change or modify any of the provisions of the Indenture
relating to the subordination of the Notes or the Guarantees in a manner
adverse to the Holders; or
(g) amend, change or modify any of the foregoing modification and
amendment provisions.
The Holders of a majority in aggregate principal amount of the Notes
outstanding may waive compliance with certain restrictive covenants and
provisions of the Indenture.
Without the consent of any Holders, the Company and the Trustee, at any
time and from time to time, may enter into one or more indentures supplemental
to the Indenture for any of the following purposes: (a) to evidence the
succession of another Person to the Company and the assumption by any such
successor of the covenants of the Company in the Indenture and in the Notes or
to add any Guarantor of the Notes; or (b) to add to the covenants of the Company
for the benefit of the Holders, or to surrender any right or power herein
conferred upon the Company; or (c) to add additional Events of Default; or (d)
to provide for uncertificated Notes in addition to or in place of the
certificated Notes; or (e) to evidence and provide for the acceptance of
appointment under the Indenture by a successor Trustee; or (f) to secure the
Notes or any Guarantee; or (g) to cure any ambiguity, to correct or supplement
any provision in the Indenture that may be defective or inconsistent with any
other
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provision in the Indenture, or to make any other provisions with respect to
matters or questions arising under the Indenture, provided that such actions
pursuant to this clause (g) do not adversely affect the interests of the
Holders; or (h) to comply with any requirements of the Commission in order to
effect and maintain the qualification of the Indenture under the Trust Indenture
Act.
CONCERNING THE TRUSTEE
The Bank of Nova Scotia Trust Company of New York, the Trustee under the
Indenture, is the initial paying agent and registrar for the Notes. An affiliate
of the Trustee is acting as managing agent and as co-documentation agent under
the Senior Credit Facility.
The Indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set forth
in the Indenture. Under the Indenture, the Holders of a majority in outstanding
principal amount of the Notes have the right to direct the time, method and
place of conducting any proceeding for exercising any remedy available to the
Trustee, subject to certain exceptions. If an Event of Default has occurred and
is continuing, the Trustee will exercise such rights and powers vested in it
under the Indenture and use the same degree of care and skill in its exercise as
a prudent Person would exercise under the circumstances in the conduct of such
Person's own affairs.
The Indenture and provisions of the Trust Indenture Act incorporated by
reference therein contain limitations on the rights of the Trustee thereunder,
should it become a creditor of the Company, to obtain payment of claims in
certain cases or to realize on certain property received by it in respect of any
such claims, as security or otherwise. The Trustee is permitted to engage in
other transactions; provided, however, that, if it acquires any conflicting
interest (as defined), it must eliminate such conflict upon the occurrence of an
Event of Default or else resign.
GOVERNING LAW
The Indenture, the Notes and the Guarantees are governed by, and construed
in accordance with, the laws of the State of New York.
BOOK-ENTRY; DELIVERY AND FORM
Except as set forth below, the New Notes will initially be issued in the
form of one or more registered New Notes in global form without coupons (each a
"Global Note"). Each Global Note will be deposited on the date of the closing of
the exchange of the New Notes for the Existing Notes (the "Exchange Offer
Closing Date") with, or on behalf of, The Depository Trust Company ("DTC") and
registered in the name of Cede & Co., as nominee of DTC, or will remain in the
custody of the Trustee.
DTC has advised the Company that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Direct Participants") and to facilitate the clearance and settlement of
transactions in those securities between Direct Participants through electronic
book-entry changes in accounts of Participants. The Direct Participants include
securities brokers and dealers (including the Initial Purchasers), banks, trust
companies, clearing corporations and certain other organizations, including
Euroclear and Cedel. Access to DTC's system is also available to other entities
that clear through or maintain a direct or indirect, custodial relationship with
a Direct Participant (collectively, the "Indirect Participants"). DTC may hold
securities beneficially owned by other persons only through the Direct
Participants or Indirect Participants and such other persons' ownership interest
and transfer of ownership interest will be recorded only on the records of the
Direct Participant and/or Indirect Participant, and not on the records
maintained by DTC.
DTC has also advised the Company that, pursuant to DTC's procedures, (i)
upon deposit of the Global Notes, DTC will credit the accounts of the Direct
Participants with an interest in the Global Notes, and (ii) DTC will maintain
records of the ownership interests of such Direct Participants in the Global
Notes and the transfer of ownership interests by and between Direct
Participants. DTC will not maintain records of the ownership interests of, or
the transfer of ownership interests by and between, Indirect Participants or
other owners of beneficial interests in the Global Notes. Direct Participants
and Indirect Participants must maintain their own records of the
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ownership interests of, and the transfer of ownership interests by and between,
Indirect Participants and other owners of beneficial interests in the Global
Notes.
Investors in the Global Notes may hold their interests therein directly
through DTC if they are Direct Participants in DTC or indirectly through
organizations that are Direct Participants in DTC.
The laws of some states require that certain persons take physical delivery
in definitive, certificated form, of securities that they own. This may limit or
curtail the ability to transfer beneficial interests in a Global Note to such
persons. Because DTC can act only on behalf of Direct Participants, which in
turn act on behalf of Indirect Participants and others, the ability of a person
having a beneficial interest in a Global Note to pledge such interest to persons
or entities that are not Direct Participants in DTC, or to otherwise take
actions in respect of such interests, may be affected by the lack of physical
certificates evidencing such interests.
Under the terms of the Indenture, the Company and the Trustee will treat
the persons in whose names the Notes are registered (including Notes represented
by Global Notes) as the owners thereof for the purpose of receiving payments and
for any and all other purposes whatsoever. Payments in respect of the principal,
premium, Liquidated Damages, if any, and interest on Global Notes registered in
the name of DTC or its nominee will be payable by the Trustee to DTC or its
nominee as the registered Holder under the Indenture. Consequently, neither the
Company, the Trustee nor any agent of the Company, or the Trustee has or will
have any responsibility or liability for (i) any aspect of DTC's records or any
Direct Participant's or Indirect Participant's records relating to or payments
made on account of beneficial ownership interests in the Global Notes or for
maintaining, supervising or reviewing any of DTC's records or any Direct
Participant's or Indirect Participant's records relating to the beneficial
ownership interests in any Global Note or (ii) any other matter relating to the
actions and practices of DTC or any of its Direct Participants or Indirect
Participants.
Payments with respect to the principal of, premium, if any, and interest
on, any New Notes represented by a Global Note registered in the name of DTC or
its nominee on the applicable record date will be payable by the Trustee to or
at the direction of DTC or its nominee in its capacity as the registered holder
of the Global Note representing such New Notes under the Indenture. Under the
terms of the Indenture, the Company and the Trustee may treat the persons in
whose names the New Notes, including the Global Notes, are registered as the
owners thereof for the purpose of receiving such payment and for any and all
other purposes whatsoever. Consequently, neither the Company nor the Trustee has
or will have any responsibility or liability for the payment of such amounts to
beneficial owners of interest in the Global Note (including principal, premium,
if any, and interest), or to immediately credit the accounts of the relevant
Participants with such payment, in amounts proportionate to their respective
holdings in principal amount of beneficial interest in the Global Note as shown
on the records of DTC. Payments by the Participants and the Indirect
Participants to the beneficial owners of interests in the Global Note will be
governed by standing instructions and customary practice and will be the
responsibility of the Participants or the Indirect Participants and DTC.
If the Company notifies the Trustee in writing that DTC is no longer
willing or able to act as a depositary or DTC, then, upon surrender by DTC of
its Global Notes, certificated Notes will be issued to each person that DTC
identifies as the beneficial owner of the New Notes represented by the Global
Notes. Upon any such issuance, the Trustee is required to register such
certificated Notes in the name of such person or persons (or the nominee of any
thereof), and cease the same to be delivered thereto.
Neither the Company nor the Trustee shall be liable for any delay by DTC or
any Participant or Indirect Participant in identifying the beneficial owners of
the related New Notes and each such person may conclusively rely on, and shall
be protected in relying on, instructions from DTC for all purposes (including
with respect to the registration and delivery, and the respective principal
amounts, of the New Notes to be issued).
Except in the limited circumstances described above, owners of beneficial
interests in Global Notes will not be entitled to receive physical delivery of
certificated Notes. The Notes are not issuable in bearer form.
The Notes will be issued only in fully registered form in denominations of
$1,000 and integral multiples thereof. No service charge will be made for any
registration of transfer or exchange of Notes, but the Company may require
payment of a sum sufficient to cover any tax or other government charge payable
in connection therewith.
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The Company will initially appoint the Trustee at its corporate trust
office as paying agent and registrar for the Notes. In such capacities, the
Trustee will be responsible for, among other things, (i) maintaining a record of
the aggregate holdings of Notes and accepting Notes for exchange and
registration of transfer; (ii) ensuring that payments of principal, premium, if
any, and interest in respect of the Notes received by the Trustee from the
Company are duly paid to DTC or its nominees and (iii) transmitting to the
Company any notices from holders.
The Company will cause to be kept at the office of the registrar a register
in which, subject to such reasonable regulations as it may prescribe, the
Company will provide for the registration of the Notes and registration of
transfers of the Notes. The Company may vary or terminate the appointment of any
paying agent or registrar, or appoint additional or other such agents or approve
any change in the office through which any such agent acts; provided that there
shall at all times be a paying agent and registrar in the Borough of Manhattan,
The City of New York, New York. The Company will cause notice of any
resignation, termination or appointment of the Trustee or any paying agent or
registrar, and of any change in the office through which any such agent will
act, to be provided to Holders of the Notes.
CERTAIN DEFINITIONS
"Acquired Indebtedness" means Indebtedness of a Person (a) existing at the
time such Person is merged with or into the Company or becomes a Restricted
Subsidiary or (b) assumed in connection with the acquisition of assets from such
Person; provided that any Indebtedness of such Person that is redeemed,
defeased, retired or otherwise repaid at the time of or immediately upon
consummation of the transaction by which such Person is merged with or into the
Company, becomes a Restricted Subsidiary or such assets are acquired from such
Person will not be Acquired Indebtedness.
"Adjusted Treasury Rate" means, with respect to any redemption date, the
rate per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date.
"Affiliate" means, with respect to any specified Person, (a) any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person or (b) any other Person that
owns, directly or indirectly, 10% or more of such specified Person's Capital
Stock. For the purposes of this definition, "control," when used with respect to
any specified Person, means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or other
disposition (including, without limitation, by way of merger, consolidation or
sale and leaseback transaction) (collectively, a "transfer") by the Company or a
Restricted Subsidiary, directly or indirectly, in one transaction or a series of
related transactions, of (a) any Capital Stock of any Restricted Subsidiary
(other than directors' qualifying shares or shares required by applicable law to
be held by a Person other than the Company or a Restricted Subsidiary), (b) all
or substantially all of the properties and assets of the Company and its
Restricted Subsidiaries representing a division or line of business or (c) any
other properties or assets of the Company or any Restricted Subsidiary, other
than in the ordinary course of business. For the purposes of this definition,
the term "Asset Sale" does not include any transfer of properties or assets (i)
that is governed by the provisions of the Indenture described under "-- Certain
Covenants -- Consolidation, Merger and Sale of Assets," (ii) between or among
the Company and its Restricted Subsidiaries pursuant to transactions that do not
violate any other provision of the Indenture, (iii) to any Person to the extent
it constitutes a Restricted Payment that is permitted under the covenant
described under"-- Certain Covenants -- Restricted Payments," (iv) consisting of
inventory or wornout, obsolete or permanently retired equipment and facilities,
(v) the gross proceeds of which (exclusive of indemnities) do not exceed $5.0
million in connection with any transfer or (vi) that constitutes a Permitted
Investment.
"Attributable Debt" means, as to any particular lease under which any
Person is at the time liable, at any date as of which the amount thereof is to
be determined, the total net amount of rent required to be paid by such Person
under such lease during the remaining term thereof (excluding any subsequent
renewal or other extension
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options held by the lessee), discounted from the respective due dates thereof to
such date of determination at the rate of interest per annum implicit in the
terms of such lease, as determined in good faith by the Company, compounded
annually. The net amount of rent required to be paid under any such lease for
any such period shall be the amount of the rent payable by the lessee with
respect to such period, after excluding amounts required to be paid on account
of maintenance and repairs, reconstruction, insurance, taxes, assessments, water
rates and similar charges and contingent rents (such as those based on sales).
In the case of any lease which is terminable by the lessee upon the payment of a
penalty, such net amount shall also include the amount of such penalty, but no
rent shall be considered as required to be paid under such lease subsequent to
the first date upon which it may be so terminated.
"Banks" means the banks and other financial institutions that from time to
time are lenders under the Senior Credit Facility.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in New York are authorized or
obligated by law or executive order to close.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" of any Person means any and all shares, partnership
interests, participations, rights in or other equivalents of, or interests in,
the equity of such Person, but excluding any debt securities convertible into
such equity.
"Cash Equivalents" means (a) any evidence of Indebtedness with a maturity
of one year or less issued or directly and fully guaranteed or insured by the
United States of America or any agency or instrumentality thereof (provided that
the full faith and credit of the Untied States of America is pledged in support
thereof); (b) certificates of deposit or acceptances or Eurodollar time deposits
with a maturity of one year or less of, and overnight bank deposits with, any
financial institution that is a member of the Federal Reserve System having
combined capital and surplus and undivided profits of not less than $500
million; (c) commercial paper with a maturity of one year or less issued by a
Person rated at least A-1 by S&P or at least P-1 by Moody's; (d) repurchase
obligations with a term of not more than 30 days for underlying securities of
the types described in clause (a) entered into with a bank meeting the
qualifications described in clause (b) above; (e) securities with maturities of
one year or less from the date of acquisition issued or fully guaranteed by any
state, commonwealth or territory of the United States, by any political
subdivision or taxing authority or any such state, commonwealth or territory or
by any foreign government, the securities of which state, commonwealth,
territory, political subdivision, taxing authority or foreign government (as the
case may be) are rated at least A by S&P or A by Moody's; (f) securities with
maturities of one year or less from the date of acquisition backed by standby
letters of credit issued by any financial institution satisfying the
requirements of clause (b) of this definition and (g) funds which invest in any
of the foregoing.
"Change of Control" means the occurrence of any of the following events:
(a) Any Person or "group" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than one or more Permitted Holders, is or
becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act, except that a Person will be deemed to have "beneficial
ownership" of all securities that such Person has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time), directly or indirectly, of more than 50% of the voting power of all
classes of Voting Stock of the Company;
(b) During any consecutive two-year period, individuals who at the
beginning of such period constituted the Board of Directors of the Company
(together with any new directors whose election to such Board of Directors,
or whose nomination for election by the stockholders of the Company, was
approved by a vote of 66 2/3% of the directors then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of the Company then in
office; or
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(c) The Company is liquidated or dissolved or adopts a plan of
liquidation or dissolution, other than a transaction that complies with the
provisions of the covenant described under "--Certain
Covenants--Consolidation, Merger and Sales of Assets."
"Closing Date" means May 29, 1998, the date on which the Existing Notes
were originally issued under the Indenture.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Notes (as if the final maturity of the Notes was June
1, 2003) to be redeemed that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of corporate
debt securities of comparable maturity to the remaining term of such Notes.
"Independent Investment Banker" means TD Securities (USA) Inc. or, if such firm
is unwilling or unable to select the Comparable Treasury Issue, another
independent banking institution of national standing selected by the Company.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for Government
Securities" or (ii) if such release (or any successor release) is not published
or does not contain such prices on such Business Day, (A) the average of the
Reference Treasury Dealer Quotations for such redemption date, after excluding
the highest and lowest such Reference Treasury Dealer Quotations or (B) if the
Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the
average of all such Quotations.
"Consolidated EBITDA" means, for any period, the sum of, without
duplication, Consolidated Net Income for such period, plus (or, in the case of
clause (d) below, plus or minus) the following items to the extent included in
computing Consolidated Net Income for such period (a) Fixed Charges for such
period, plus (b) the federal, state, local and foreign income tax expense of the
Company and its Restricted Subsidiaries for such period, plus (c) the
depreciation and amortization expense of the Company and its Restricted
Subsidiaries for such period, plus (d) any other non-cash charges for such
period and minus non-cash credits for such period, other than non-cash charges
or credits resulting from changes in prepaid assets or accrued liabilities in
the ordinary course of business; provided that income tax expense, depreciation
and amortization expense and non-cash charges and credits of a Restricted
Subsidiary will be included in Consolidated EBITDA only to the extent (and in
the same proportion) that the net income of such Restricted Subsidiary was
included in calculating Consolidated Net Income for such period.
"Consolidated Net Income" means, for any period, the net income (or net
loss) of the Company and its Restricted Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP, adjusted to the
extent included in calculating such net income or loss by excluding (a) any net
after-tax extraordinary gains or losses (less all fees and expenses relating
thereto), (b) any net after-tax gains or losses (less all fees and expenses
relating thereto) attributable to Asset Sales, (c) the net income (but not the
net loss) of any Person (other than the Company or a Restricted Subsidiary), in
which the Company or any Restricted Subsidiary has an equity interest, except
that the aggregate amount of dividends or other distributions actually paid to
the Company or any Restricted Subsidiary in cash during such period will be
included in such Consolidated Net Income, (d) the net income (or loss) of any
Person acquired by the Company or any Restricted Subsidiary in a "pooling of
interests" transaction attributable to any period prior to the date of such
acquisition, and (e) the net income (but not the net loss) of any Restricted
Subsidiary to the extent that the declaration or payment of dividends or similar
distributions by such Restricted Subsidiary of such net income is at the date of
determination restricted, directly or indirectly, except that the aggregate
amount of such net income that could be paid to the Company or a Restricted
Subsidiary thereof by loans, advances, intercompany transfers, principal
repayments or otherwise will be included in such Consolidated Net Income.
"Consolidated Net Tangible Assets" means, with respect to any Company, at
any date of determination, the aggregate amount of assets (less applicable
reserves and other properly deductible items) after deducting
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therefrom (a) all current liabilities (excluding current maturities of long-term
debt and Capital Lease Obligations) and (b) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other like
intangibles, all as set forth on the most recent quarterly balance sheet of the
Company and its consolidated Restricted Subsidiaries and computed in accordance
with GAAP.
"Consolidated Net Worth" means, at any date of determination, the
stockholders' equity of the Company and its Restricted Subsidiaries as set forth
on the most recently available quarterly or annual consolidated balance sheet of
the Company and its Restricted Subsidiaries, less any amounts attributable to
Disqualified Stock or any equity security convertible into or exchangeable for
Indebtedness, the cost of treasury stock and the principal amount of any
promissory notes receivable from the sale of the Capital Stock of the Company or
any of its Restricted Subsidiaries and less, to the extent included in
calculating such stockholders' equity of the Company and its Restricted
Subsidiaries, the stockholders' equity attributable to Unrestricted
Subsidiaries, each item to be determined in conformity with GAAP (excluding the
effects of foreign currency adjustments under Financial Accounting Standards
Board Statement of Financial Accounting Standards No. 52).
"Contingent Obligations" means, at any date of determination, (a) all
obligations of the Company and its Restricted Subsidiaries (and any Unrestricted
Subsidiaries for which the Company provides credit support or other similar
arrangements) in respect of performance bonds and letters of credit in the
nature of performance bonds and similar obligations and (b) all guarantees of
the Company and its Restricted Subsidiaries (and any Unrestricted Subsidiaries
for which the Company provides credit support or other similar arrangements) of
the obligations referred to in clause (a).
"Currency Agreements" means, with respect to any Person, any spot or
forward foreign exchange agreements and currency swap, currency option or other
similar financial agreements or arrangements entered into by such Person or any
of its Restricted Subsidiaries in the ordinary course of business and designed
to protect against or manage exposure to fluctuations in foreign currency
exchange rates.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Designated Assets" means the assets and properties acquired by the Company
in the Safety-Kleen Acquisition relating to (a) the European operations of
Safety-Kleen referred to in footnote 4 to the audited consolidated financial
statements of Safety-Kleen incorporated by reference into Safety-Kleen's Annual
Report on Form 10-K for the year ended January 3, 1998 and (b) the oil recovery
services provided by Safety-Kleen and described in the table under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Results of Operations -- Revenues" incorporated by reference into
Safety-Kleen's Annual Report on Form 10-K for the year ended January 3, 1998.
"Designated Senior Indebtedness" means (i) all Senior Indebtedness under
the Senior Credit Facility and (ii) any other issue of Senior Indebtedness or
refinancing thereof permitted by the definition of Senior Indebtedness, having a
principal amount of at least $25.0 million.
"Disinterested Director" means, with respect to any transaction or series
of transactions in respect of which the Board of Directors is required to
deliver a resolution of the Board of Directors, to make a finding or otherwise
take action under the Indenture, a member of the Board of Directors who does not
have any material direct or indirect financial interest in or with respect to
such transaction or series of transactions.
"Disqualified Stock" means any class or series of Capital Stock that,
either by its terms, or by the terms of any security into which it is
convertible or exchangeable or by contract or otherwise (a) is, or upon the
happening of an event or passage of time would be, required to be redeemed prior
to one year after the final Stated Maturity of the Notes, (b) is redeemable at
the option of the holder thereof at any time prior to one year after such final
Stated Maturity or (c) at the option of the holder thereof, is convertible into
or exchangeable for debt securities at any time prior to one year after such
final Stated Maturity; provided that any Capital Stock that would not constitute
Disqualified Stock but for provisions therein giving holders thereof the right
to cause the issuer thereof to repurchase or redeem such Capital Stock upon the
occurrence of an "asset sale" or "change of control" occurring prior to the
Stated Maturity of the Notes will not constitute Disqualified Stock if the
"asset sale" or "change of control" provisions applicable to such Capital Stock
are no more favorable to the holders of such Capital Stock than the provisions
contained in the covenants described under "-- Certain Covenants -- Asset
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Sales" and "-- Repurchase at the Option of Holders Upon Change of Control" and
such Capital Stock specifically provides that the issuer will not repurchase or
redeem any of such stock pursuant to such provision prior to the Company's
repurchase of such of the Notes as are required to be repurchased pursuant to
the covenants described under "-- Certain Covenants -- Asset Sales" and
"-- Repurchase at the Option of Holders Upon Change of Control."
"Domestic Subsidiary" means any Subsidiary whose jurisdiction of
incorporation, organization or formation is the United States, any state thereof
or the District of Columbia.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and the rules and regulations thereunder.
"Fixed Charges" means, for any period, without duplication, the sum of (a)
the amount that, in conformity with GAAP, would be set forth opposite the
caption "interest expense" (or any like caption) on a consolidated statement of
operations of the Company and its Restricted Subsidiaries for such period,
including, without limitation, (i) amortization of debt discount, (ii) the net
payments (if any) pursuant to Interest Rate Agreements (including amortization
of discounts), (iii) the interest portion of any deferred payment obligation,
(iv) amortization of debt issuance costs and (v) the interest component of
Capitalized Lease Obligations, plus (b) cash dividends paid on Preferred Stock
and Disqualified Stock by the Company and any Restricted Subsidiary (to any
Person other than the Company and its Restricted Subsidiaries), plus (c) all
interest on any Indebtedness of any Person guaranteed by the Company or any of
its Restricted Subsidiaries, plus (d) all payments, loans or advances made
pursuant to clause (viii) or (ix) of paragraph (b) of the covenant described
under "-- Certain Covenants -- Restricted Payments" in respect of interest
payments on the Indebtedness described in such clauses; provided, however, that
Fixed Charges will not include (i) any gain or loss from extinguishment of debt,
including the write-off of debt issuance costs and (ii) the fixed charges of a
Restricted Subsidiary to the extent (and in the same proportion) that the net
income of such Subsidiary was excluded in calculating Consolidated Net Income
pursuant to clause (e) of the definition thereof for such period.
"Fixed Charge Coverage Ratio" means, for any period, the ratio of (a)
Consolidated EBITDA for such period to (b) Fixed Charges for such period.
"Foreign Subsidiary" means any Subsidiary other than a Domestic Subsidiary.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, consistently applied, that
are in effect on the date of the Indenture.
"guarantee" means, as applied to any obligation, (a) a guarantee (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), direct or indirect, in any manner, of all or any part of
such obligation and (b) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limitation, the payment of
amounts drawn down under letters of credit.
"Guarantee" means a guarantee of the Notes by the Parent and one or more
Restricted Subsidiaries in accordance with the provisions of the Indenture.
"Guarantor" means the Parent and any Restricted Subsidiary that issues a
Guarantee.
"Hedging Obligations" means the obligations of any Person under (a)
Interest Rate Agreements and (b) Currency Agreements.
"Holder" means the Person in whose name a Note is, at the time of
determination, registered on the Registrar's books.
"Indebtedness" means (without duplication), with respect to any Person,
whether recourse is to all or a portion of the assets of such Person and whether
or not contingent, (a) every obligation of such Person for money borrowed, (b)
every obligation of such Person evidenced by bonds, debentures, notes or other
similar instruments, (c) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person (other than obligations in respect of performance
bonds
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and letters of credit in the nature of performance bonds), (d) every obligation
of such Person issued or assumed as the deferred purchase price of property or
services, (e) every Capitalized Lease Obligation of such Person, (f) all
Disqualified Stock of such Person valued at its maximum fixed repurchase price
(including, without duplication, accrued and unpaid dividends), (g) all
obligations of such Person under or in respect of Hedging Obligations and (h)
every obligation of the type referred to in clauses (a) through (g) of another
Person and all dividends of another Person the payment of which, in either case,
such Person has guaranteed. For purposes of this definition, the "maximum fixed
repurchase price" of any Disqualified Stock that does not have a fixed
repurchase price will be calculated in accordance with the terms of such
Disqualified Stock as if such Disqualified Stock were repurchased on any date on
which Indebtedness is required to be determined pursuant to the Indenture, and
if such price is based upon, or measured by, the fair market value of such
Disqualified Stock, such fair market value will be determined in good faith by
the board of directors of the issuer of such Disqualified Stock. Notwithstanding
the foregoing, trade accounts payable and accrued liabilities arising in the
ordinary course of business and any liability for federal, state or local taxes
or other taxes owed by such Person will not be considered Indebtedness for
purposes of this definition.
"Interest Rate Agreements" means any interest rate protection agreements
and other types of interest rate hedging agreements (including, without
limitation, interest rate swaps, caps, floors, collars and similar agreements)
and other related agreements and designed to protect against or manage exposure
to fluctuations in interest rates and either (a) entered into in the ordinary
course of business or (b) relating to Indebtedness permitted under the
Indenture.
"Investment" in any Person means (a) any direct or indirect advance, loan
or other extension of credit or capital contribution (by means of any transfer
of cash or other property to others or any payment for property or services for
the account or use of others) to, or any purchase, acquisition or ownership of
any Capital Stock, Indebtedness or other securities issued by such Person, the
acquisition (by purchase or otherwise) of all or substantially all of the
business or assets of such Person, or the making of any investment of cash or
other property in such Person, (b) the designation of any Restricted Subsidiary
as an Unrestricted Subsidiary, (c) the transfer of any assets or properties from
the Company or a Restricted Subsidiary to an Unrestricted Subsidiary, other than
the transfer of assets or properties made in the ordinary course of business and
(d) the fair market value of the Capital Stock (or any other Investment), held
by the Company or any of its Restricted Subsidiaries, of (or in) any Person that
has ceased to be a Restricted Subsidiary. Investments exclude extensions of
trade credit on commercially reasonable terms in accordance with normal trade
practices.
"Investment Grade" means a rating of the Notes by both S&P and Moody's,
each such rating being in one of such agency's four highest generic rating
categories that signifies investment grade (i.e. BBB- (or the equivalent) or
higher by S&P and Baa3 (or the equivalent) or higher by Moody's); provided, in
each case, such ratings are publicly available; provided further that in the
event Moody's or S&P is no longer in existence, for purposes of determining
whether the Notes are rated "Investment Grade," such organization may be
replaced by a nationally recognized statistical rating organization (as defined
in Rule 436 under the Securities Act) designated by the Company, notice of which
designation shall be given to the Trustee.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Moody's" means Moody's Investor Service, Inc. and its successors.
"NationsBank Facility" means either (a) the working capital facility made
available pursuant to the letter agreement dated March 31, 1998 between
NationsBank of Texas, N.A., as lender, and the Company, as borrower or (b) any
other agreement or agreements between the Company or any Restricted Subsidiary
and a financial institution or institutions providing for the making of loans or
advances on a revolving basis and/or the issuance of letters of credit and/or
the creation of bankers' acceptances to fund the Company's general corporate
requirements.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds
thereof in the form of cash or cash equivalents, including payments in respect
of deferred payment obligations, but only as and when received, in the form of,
or stock or other assets when disposed of for, cash or Cash Equivalents (except
to the extent that
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such obligations are financed or sold with recourse to the Company or any
Restricted Subsidiary), net of (a) brokerage commissions and other fees and
expenses (including fees and expenses of legal counsel, accountants and
investment banks) related to such Asset Sale, (b) provisions for all taxes
payable or required to be accrued in accordance with GAAP as a result of such
Asset Sale, (c) payments made to retire Indebtedness where payment of such
Indebtedness is secured by a Lien on the assets that are the subject of such
Asset Sale, (d) amounts required to be paid to any Person (other than the
Company or any Restricted Subsidiary) owning a beneficial interest in the assets
that are subject to the Asset Sale, and (e) appropriate amounts to be provided
by the Company or any Restricted Subsidiary, as the case may be, as a reserve
required in accordance with GAAP against any liabilities associated with such
Asset Sale and retained by the seller after such Asset Sale, including pension
and other postemployment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale and (f) all distributions and other payments
made to minority interest holders in Restricted Subsidiaries or joint ventures
as a result of such Asset Sale.
"Parent IRBs" means (i) the Tooele County, Utah Pollution Control Refunding
Revenue Bonds 1997 Series A, par amount $45.7 million, which bear interest at a
rate equal to 7.55% per annum and mature on July 1, 2027 and (ii) the California
Pollution Control Financing Authority 6.7% Pollution Control Refunding Revenue
Bonds 1997 Series A, par amount $19.5 million, which bear interest at a rate
equal to 6.7% per annum and mature on July 1, 2007.
"Parent Promissory Note" means the promissory note in the principal amount
of $60.0 million issued by the Parent on May 15, 1997 in connection with the
Rollins Acquisition.
"Pari Passu Indebtedness" means any Indebtedness of the Company or any
Guarantor, whether outstanding at the date of the Indenture or incurred
thereafter, that ranks pari passu in right of payment with the Notes or any
Guarantee, as the case may be.
"Permitted Holder" means Laidlaw, Inc., any successor thereto, and any of
their Affiliates.
"Permitted Indebtedness" means:
(i) Indebtedness of the Company or any Restricted Subsidiary under the
Senior Credit Facility in an aggregate principal amount at any one time
outstanding not to exceed $1.775 billion, less (x) any amounts applied to
the permanent reduction of any term loans under the Senior Credit Facility
and (y) any amounts applied to the permanent reduction of the Senior Credit
Facility pursuant to the covenant described under " -- Certain
Covenants -- Asset Sales".
(ii) Indebtedness of the Company or any Restricted Subsidiary
outstanding on the Closing Date, other than Indebtedness described under
clause (i) above.
(iii) Indebtedness owed by the Company to any Wholly-Owned Restricted
Subsidiary or owed by any Restricted Subsidiary to the Company or a
Wholly-Owned Restricted Subsidiary (provided that such Indebtedness is held
by the Company or such Wholly-Owned Restricted Subsidiary); provided,
however, that if the Company is the obligor on such Indebtedness, such
Indebtedness is unsecured and subordinated in all respects to the Company's
obligations under the Notes and provided, further, however, that if any
such Wholly-Owned Restricted Subsidiary ceases to be (for any reason) a
Wholly-Owned Restricted Subsidiary, then this clause (iii) shall no longer
be applicable to Indebtedness owed by the Company or any Restricted
Subsidiary to such Restricted Subsidiary that was formerly a Wholly-Owned
Restricted Subsidiary.
(iv) Indebtedness represented by the Notes (other than the Additional
Notes) and the Guarantees.
(v) Indebtedness of the Company or any Restricted Subsidiary in
respect of Hedging Obligations incurred in the ordinary course of business.
(vi) Capital Lease Obligations of the Company or any Restricted
Subsidiary, provided that the aggregate amount of Indebtedness under this
clause (vi) does not exceed $15.0 million at any one time outstanding.
(vii) Indebtedness of the Company or any Restricted Subsidiary under
purchase money mortgages or secured by purchase money security interests so
long as (x) such Indebtedness is not secured by any property
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or assets of the Company or any Restricted Subsidiary other than the
property and assets so acquired and (y) such Indebtedness is created within
90 days of the acquisition of the related property; provided that the
aggregate amount of Indebtedness under this clause (vii) does not exceed
$15.0 million at any one time outstanding.
(viii) guarantees by the Company or any Restricted Subsidiary of
Indebtedness that was permitted to be incurred by the provisions of the
covenant described under " -- Certain Covenants -- Incurrence of
Indebtedness and Issuance of Disqualified Stock" and, with respect to
guarantees by any Restricted Subsidiary, made in accordance with the
provisions of the covenant described under " -- Certain
Covenants -- Guarantees of Indebtedness by Restricted Subsidiaries."
(ix) Indebtedness of the Company or any Restricted Subsidiary, not
otherwise permitted by the first paragraph under the covenant described
under " -- Incurrence of Indebtedness and Issuance of Disqualified Stock"
and any other clause of this definition, in an aggregate principal amount
not to exceed an amount equal to 5% of the total assets of the Company and
its Restricted Subsidiaries (on a consolidated basis determined in
accordance with GAAP).
(x) Indebtedness of one or more Foreign Subsidiaries under one or more
credit facilities in an aggregate principal amount at any one time
outstanding not to exceed $50 million.
(xi) Indebtedness of the Company or any Restricted Subsidiary under
the NationsBank Facility in an aggregate principal amount at any one time
outstanding not to exceed $25.0 million.
(xii) Any renewals, extensions, substitutions, refinancings or
replacements (each, for purposes of this clause, a "refinancing") of any
outstanding Indebtedness incurred pursuant to clause (ii) and (iv) above,
including any successive refinancings thereof, so long as (A) any such new
Indebtedness is in a principal amount that does not exceed the principal
amount so refinanced, plus the amount of any premium required to be paid in
connection with such refinancing pursuant to the terms of the Indebtedness
refinanced or the amount of any premium reasonably determined by the
Company as necessary to accomplish such refinancing, plus the amount of the
expenses of the Company reasonably estimated to be incurred in connection
with such refinancing, (B) in the case of any refinancing of Subordinated
Indebtedness of the Company or any Guarantors, such new Indebtedness is
subordinated to the Notes or the Guarantees, as the case may be, at least
to the same extent as the Indebtedness being refinanced and (C) such
refinancing Indebtedness has a Weighted Average Life equal to or greater
than the Weighted Average Life of the Indebtedness being refinanced and has
a final Stated Maturity no earlier than the final Stated Maturity of the
Indebtedness being refinanced.
"Permitted Investments" means any of the following:
(a) Investments in Cash Equivalents.
(b) Investments by the Company or any Restricted Subsidiary in another
Person, if as a result of such Investment such other Person (i) becomes a
Restricted Subsidiary or (ii) is merged or consolidated with or into, or
transfers or conveys all or substantially all of its assets to, the Company
or a Restricted Subsidiary.
(c) Investments by the Company or any of the Restricted Subsidiaries
in any one of the other of them.
(d) Investments existing on the Closing Date.
(e) Investments made as a result of the receipt of non-cash
consideration in an Asset Sale permitted under the covenant described under
" -- Certain Covenants -- Asset Sales."
(f) Investments consisting of loans and advances to officers and
employees of the Company or any of its Restricted Subsidiaries for
reasonable travel, relocation and business expenses in the ordinary course
of business.
(g) Investments the payment for which consists exclusively of Capital
Stock (exclusive of Disqualified Stock) of the Company.
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(h) Other Investments that do not exceed in the aggregate at any one
time outstanding the greater of (i) $50.0 million or (ii) an amount equal
to 1% of the total assets of the Company and its Restricted Subsidiaries
(on a consolidated basis determined in accordance with GAAP).
"Permitted Liens" means (a) Liens in existence on the date on which the
Notes achieve an Investment Grade rating; (b) any Lien on any properties or
assets of the Company or any Restricted Subsidiary acquired (including by way of
merger or consolidation) by the Company or any Restricted Subsidiary after the
date on which the Notes achieve an Investment Grade rating, which Lien is
created, incurred or assumed contemporaneously with such acquisition, or within
270 days thereafter, to secure or provide for the payment or financing of any
part of the purchase price thereof, or any Lien upon any properties or assets of
the Company or any Restricted Subsidiary acquired after the date of the
Indenture existing at the time of such acquisition (whether or not assumed by
the Company or any Restricted Subsidiary), provided that every such Lien
referred to in this clause (b) shall attach only to the properties or assets of
the Company or any Restricted Subsidiary so acquired; (c) any Lien or any
properties or assets of the Company or any Restricted Subsidiary in favor of the
Company or any Restricted Subsidiary; (d) any Lien on properties or assets of
the Company or any Restricted Subsidiary incurred in connection with the
issuance of tax-exempt governmental obligations (including, without limitation,
industrial revenue bonds and similar financings); (e) any Lien granted by any
Restricted Subsidiary on its properties or assets to the extent such Lien is not
prohibited by any agreement to which such Restricted Subsidiary is subject as of
the date of the Indenture; (f) any Lien securing Indebtedness under the Senior
Credit Facility, the NationsBank Facility, the C$35,000,000 credit facility made
available pursuant to the letter agreement, dated as of April 3, 1998, between
Laidlaw Environmental Services (Canada) Ltd., as borrower, and Toronto-Dominion
Bank, as lender, as such agreement may be amended, modified or supplemented from
time to time, and Hedging Obligations entered into in connection with the Senior
Credit Facility; and (g) any renewal or substitution for any Lien permitted by
any of the preceding clauses (a) through (g), including any Lien securing
reborrowing of amounts previously secured within 270 days of the repayment
thereof, provided that no such renewal or substitution shall extend to any
properties or assets of the Company or any Restricted Subsidiary other than the
properties or assets of the Company or any Restricted Subsidiary covered by the
Lien being renewed or substituted.
"Person" means any individual, corporation, limited or general partnership,
limited liability company, joint venture, association, joint stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's preferred or preference stock, whether now outstanding or issued after
the Closing Date, and including, without limitation, all classes and series of
preferred or preference stock of such Person.
"Public Equity Offering" means an offer and sale of common stock (which is
Qualified Stock) of the Company or Parent pursuant to a registration statement
that has been declared effective by the Commission pursuant to the Securities
Act (other than a registration statement on Form S-8 or otherwise relating to
equity securities issuable under any employee benefit plan of the Company or
Parent).
"Qualified Equity Interest" means any Qualified Stock and all warrants,
options or other rights to acquire Qualified Stock (but excluding any debt
security that is convertible into or exchangeable for Capital Stock).
"Qualified Stock" of any Person means any and all Capital Stock of such
Person, other than Disqualified Stock.
"Reference Treasury Dealer" means each of TD Securities (USA) Inc. and
NationsBanc Montgomery Securities LLC, and their respective successors;
provided, however, that if either of the foregoing shall cease to be a primary
U.S. Government securities dealer in New York City (a "Primary Treasury
Dealer"), the Company shall substitute another Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average of the bid and
asked prices for the Comparable Treasury Issue (expressed in each
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case as a percentage of its principal amount) quoted in writing to the Trustee
by such Reference Treasury Dealer at 5:00 p.m. on the third Business Day
preceding such redemption date.
"Restricted Payment" means any of the following:
(a) the declaration or payment of any dividend on, or the making of
any distribution to holders of, any shares of the Capital Stock of the
Company or any Restricted Subsidiary other than (i) dividends or
distributions payable solely in Qualified Equity Interests or (ii)
dividends or distributions by a Restricted Subsidiary payable to the
Company or another Restricted Subsidiary or (iii) pro rata dividends or
distributions on common stock of a Restricted Subsidiary held by minority
stockholders, provided that such dividends do not in the aggregate exceed
the minority stockholders' pro rata share of such Restricted Subsidiary's
net income from the first day of the Company's fiscal quarter during which
the Closing Date occurs;
(b) the purchase, redemption or other acquisition or retirement for
value, directly or indirectly of any shares of Capital Stock (or any
options, warrants or other rights to acquire shares of Capital Stock) of
(i) the Company or any Unrestricted Subsidiary or (ii) any Restricted
Subsidiary held by any Affiliate of the Company (other than, in either
case, any such Capital Stock owned by the Company or any of its Restricted
Subsidiaries);
(c) the making of any principal payment on, or the repurchase,
redemption, defeasance or other acquisition or retirement for value, prior
to any scheduled principal payment, sinking fund payment or maturity, of
any Subordinated Indebtedness; or
(d) the making of any Investment (other than a Permitted Investment)
in any Person.
"Restricted Subsidiary" means any Subsidiary other than an Unrestricted
Subsidiary.
"Sale and Lease-Back Transaction" means any arrangement with any Person
providing for the leasing by the Company or any Restricted Subsidiary of any
properties or assets of the Company and/or such Restricted Subsidiary (except
for temporary leases for a term, including any renewal thereof, of not more than
three years and except for leases between the Company and any Restricted
Subsidiary, between any Restricted Subsidiary and the Company or between
Restricted Subsidiaries), which properties or assets have been or are to be sold
or transferred by the Company or such Restricted Subsidiary to such Person with
the intention of taking back a lease of such properties or assets.
"S&P" means Standard & Poor's Ratings Group, a division of the McGraw Hill
Companies, and its successors.
"Senior Credit Facility" means the credit agreement dated as of April 3,
1998 among the Company, the Banks and Toronto Dominion Bank, as agent, as such
agreement may be amended, renewed, extended, substituted, replaced, restated,
refinanced, restructured, supplemented or otherwise modified from time to time
(including, without limitation, any successive amendments, renewals, extensions,
substitutions, replacements, restatements, refinancings, restructuring,
supplements or other modifications of the foregoing); provided that with respect
to any agreement providing for the refinancing of Indebtedness under the Senior
Credit Facility, such agreement shall be the Senior Credit Facility for the
purposes of this definition only if a notice to that effect is delivered by the
Company to the Trustee and there shall be at any time only one instrument that
is the Senior Credit Facility under the Indenture.
"Senior Indebtedness" means the principal of and premium, if any, and
interest on (including interest accruing after the filing of a petition
initiating any proceeding pursuant to any bankruptcy law, whether or not
allowed) and other amounts due on or in connection with any Indebtedness of the
Company (other than the Notes or Pari Passu Indebtedness), whether outstanding
on the date of the Indenture or thereafter incurred, unless, in the case of such
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness will be
pari passu with or subordinate in right of payment to the Notes. Without
limiting the generality of the foregoing, "Senior Indebtedness" includes the
principal of and premium, if any, and interest (including interest accruing
after the occurrence of an event of default or after
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the filing of a petition initiating any proceeding pursuant to any bankruptcy
law, whether or not allowed) on all obligations of every nature of the Company
from time to time owed to the Banks under the Senior Credit Facility, provided,
however, that any Indebtedness under any refinancing, refunding or replacement
of the Senior Credit Facility will not constitute Senior Indebtedness to the
extent that the Indebtedness thereunder is by its express terms subordinate to
any other Indebtedness of the Company. Notwithstanding the foregoing, "Senior
Indebtedness" will not include (a) Indebtedness that is represented by
Disqualified Stock, (b) any trade payables, (c) Indebtedness of or amounts owed
by the Company for compensation to employees or for services rendered to the
Company, (d) any liability for foreign, federal, state, local or other taxes
owed or owing by the Company, (e) Indebtedness of the Company to a Subsidiary of
the Company or any other Affiliate of the Company or any of such Affiliate's
Subsidiaries, (f) that portion of any Indebtedness that, at the time of the
incurrence, is incurred by the Company in violation of the Indenture and (g)
amounts owing under leases (other than Capital Lease Obligations).
"Significant Subsidiary" means any Restricted Subsidiary of the Company
that would be a "Significant Subsidiary" of the Company within the meaning of
Rule 1-02 under Regulation S-K promulgated by the Commission as such Rule is in
effect on the date of the Indenture.
"Stated Maturity" means, when used with respect to any Note or any
installment of interest thereon, the date specified in such Note as the fixed
date on which the principal of such Note or such installment of interest is due
and payable and, when used with respect to any other Indebtedness, means the
date specified in the instrument governing such Indebtedness as the fixed date
on which the principal of such Indebtedness or any installment of interest
thereon is due and payable, and will not, in either case, include any contingent
obligations to repay, redeem or repurchase any such interest or principal prior
to the date originally scheduled for the payment thereof.
"Subordinated Indebtedness" means Indebtedness of the Company or a
Guarantor that is subordinated in right of payment to the Notes or the Guarantee
issued by such Guarantor, as the case may be.
"Subsidiary" means any Person a majority of the equity ownership or Voting
Stock of which is at the time owned, directly or indirectly, by the Company
and/or one or more Subsidiaries of the Company.
"Unrestricted Subsidiary" means (a) any Subsidiary that is designated by
the Board of Directors as an Unrestricted Subsidiary in accordance with the
covenant described under "-- Certain Covenants -- Unrestricted Subsidiaries" and
(b) any Subsidiary of an Unrestricted Subsidiary.
"Voting Stock" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees of any Person (irrespective of whether or not, at the time, stock of
any other class or classes has, or might have, voting power by reason of the
happening of any contingency).
"Weighted Average Life" means, as of the date of determination with respect
to any Indebtedness or Disqualified Stock, the quotient obtained by dividing (a)
the sum of the products of (i) the number of years from the date of
determination to the date or dates of each successive scheduled principal or
liquidation value payment of such Indebtedness or Disqualified Stock,
respectively, multiplied by (ii) the amount of each such principal or
liquidation value payment by (b) the sum of all such principal or liquidation
value payments.
"Wholly-Owned Foreign Restricted Subsidiary" means any Foreign Subsidiary
that is a Restricted Subsidiary, all of the outstanding Capital Stock (other
than directors' qualifying shares of such Foreign Subsidiary required to be
owned by foreign nationals pursuant to applicable law) of which is owned,
directly or indirectly, by the Company.
"Wholly-Owned Restricted Subsidiary" means any Restricted Subsidiary, all
of the outstanding Capital Stock (other than directors' qualifying shares or
shares of foreign Restricted Subsidiaries required to be owned by foreign
nationals pursuant to applicable law) of which is owned, directly or indirectly,
by the Company.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion of certain of the anticipated federal income tax
consequences of an exchange of Existing Notes for New Notes and of the purchase,
ownership and disposition of the New Notes is based upon the provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), the final, temporary and
proposed regulations promulgated thereunder, and administrative rulings and
judicial decisions now in effect, all of which are subject to change (possibly
with retroactive effect) or different interpretations. This summary does not
purport to deal with all aspects of federal income taxation that may be relevant
to a particular investor, nor any tax consequences arising under the laws of any
state, locality, or foreign jurisdiction, and it is not intended to be
applicable to all categories of investors, some of which, such as dealers in
securities, banks, insurance companies, tax-exempt organizations, foreign
persons, persons that hold New Notes as part of a straddle or conversion
transaction or holders subject to the alternative minimum tax, may be subject to
special rules. In addition, the summary is limited to persons that will hold the
New Notes as "capital assets" (generally, property held for investment) within
the meaning of Section 1221 of the Code. ALL INVESTORS ARE ADVISED TO CONSULT
THEIR OWN TAX ADVISORS REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX
CONSEQUENCES OF THE EXCHANGE AND THE OWNERSHIP AND DISPOSITION OF NEW NOTES.
TAXATION OF HOLDERS ON EXCHANGE
Although the matter is not free from doubt, an exchange of Existing Notes
for New Notes should not be a taxable event to Holders of Existing Notes and
Holders should not recognize any taxable gain or loss as a result of such an
exchange. Accordingly, a Holder would have the same adjusted basis and holding
period in the New Notes as it had in the Existing Notes immediately before the
exchange. Further, the tax consequences of ownership and disposition of any New
Notes should be the same as the tax consequences of ownership and disposition of
Existing Notes.
MARKET DISCOUNT
If a Holder purchases a Note for an amount that is less than its principal
amount, the amount of the difference will be treated as "market discount" for
federal income tax purposes, unless such difference is less than a specified de
minimis amount. Under the market discount rules, a Holder will be required to
treat any principal payment on, or any gain on the sale, exchange, retirement or
other disposition of, a Note as ordinary income to the extent of the market
discount which has not previously been included in income and is treated as
having accrued on such a Note at the time of such payment or disposition. In
addition, the Holder may be required to defer, until the maturity of the Note or
its earlier disposition in a taxable transaction, the deduction of all or a
portion of the interest expense on any indebtedness incurred or continued to
purchase or carry such Note.
Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of the Note, unless the Holder
elects to accrue on a constant interest method. A Holder of a Note may elect to
include market discount in income currently as it accrues (on either a ratable
or constant interest method), in which case the rule described above regarding
deferral of interest deductions will not apply. This election to include market
discount in income currently, once made, applies to all market discount
obligations acquired on or after the first taxable year to which the election
applies and may not be revoked without the consent of the Internal Revenue
Service (the "IRS").
AMORTIZABLE BOND PREMIUM
A Holder that purchases a Note for an amount in excess of the sum of its
principal amount will be considered to have purchased the Note at a "premium." A
Holder generally may elect to amortize the premium over the remaining term of
the Note on a constant yield method. The amount amortized in any year will be
treated as a reduction of the Holder's interest income from the Note. Bond
premium on a Note held by a Holder that does not make such an election will
decrease the gain or increase the loss otherwise recognized on disposition of
the Note. The election to amortize premium on a constant yield method once made
applies to all debt obligations held or subsequently acquired by the electing
Holder on or after the first day of the first taxable year to which the election
applies and may not be revoked without the consent of the IRS.
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SALE, EXCHANGE AND RETIREMENT OF NOTES
A Holder's tax basis in a Note will, in general, be the Holder's cost
therefor, increased by market discount previously included in income by the
Holder and reduced by any amortized premium. Upon the sale, exchange or
retirement of a Note, a Holder will recognize gain or loss equal to the
difference between the amount realized upon the sale, exchange or retirement
(less any accrued interest, which will be taxable as such) and the adjusted tax
basis of the Note. Except as described above with respect to market discount,
such gain or loss will be capital gain or loss and will be long-term capital
gain or loss if at the time of sale, exchange or retirement the Note has been
held for more than one year. Under current law, long-term capital gains of
individuals are, under certain circumstances, taxed at lower rates than items of
ordinary income. The deductibility of capital losses is subject to limitations.
BACKUP WITHHOLDING
In general, information reporting requirements will apply to certain
payments of principal, interest and premium paid on Notes and to the proceeds of
sale of a Note made to Holders other than certain exempt recipients (such as
corporations). A 31% backup withholding tax will apply to such payments if the
Holder fails to provide a taxpayer identification number or certification of
foreign or other exempt status or fails to report in full dividend and interest
income.
Any amounts withheld under the backup withholding rules will be allowed as
a refund or a credit against such Holder's U.S. federal income tax liability
provided the required information is furnished to the IRS.
THE FOREGOING SUMMARY OF THE PRINCIPAL FEDERAL INCOME TAX CONSEQUENCES TO
HOLDERS DOES NOT DISCUSS ALL ASPECTS OF FEDERAL INCOME TAXATION THAT MAY BE
RELEVANT TO A PARTICULAR HOLDER OF NOTES IN LIGHT OF HIS PARTICULAR
CIRCUMSTANCES AND INCOME TAX SITUATION. EACH HOLDER OF NOTES SHOULD CONSULT SUCH
HOLDER'S TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO SUCH HOLDER OF THE
OWNERSHIP AND DISPOSITION OF THE NOTES, INCLUDING THE APPLICATION AND EFFECT OF
STATE, LOCAL, FOREIGN AND OTHER TAX LAWS, OR SUBSEQUENT VERSIONS THEREOF.
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PLAN OF DISTRIBUTION
With respect to resales of New Notes, based on an interpretation by the
staff of the Commission set forth in no-action letters issued to third parties,
the Company believes that any holder or beneficial owner (other than a person
that is an affiliate of the Company within the meaning of Rule 405 under the
Securities Act or a "broker" or "dealer" registered under the Exchange Act) who
exchanges Existing Notes for New Notes in the ordinary course of business and
who is not participating, does not intend to participate, and has no arrangement
or understanding with any person to participate, in the distribution of the New
Notes, will be allowed to resell the New Notes to the public without further
registration under the Securities Act and without delivering to the purchasers
of the New Notes a prospectus that satisfies the requirements of Section 10
thereof. However, if any holder or beneficial owner acquires New Notes in the
Exchange Offer for the purpose of distributing or participating in a
distribution of the New Notes, such holder or beneficial owner cannot rely on
the position of the staff of the Commission enunciated in Exxon Capital Holdings
Corporation (available May 13, 1988) or similar no-action letters or any similar
interpretive letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a secondary
resale transaction, unless an exemption from registration is otherwise
available.
As contemplated by the above no-action letters and the Registration Rights
Agreement, each holder accepting the Exchange Offer is required to represent to
the Company in the Letter of Transmittal that (i) the New Notes to be acquired
by the holder and any beneficial owners of Existing Notes in connection with the
Exchange Offer are being acquired in the ordinary course of business of the
holder and any beneficial owners, (ii) that at the time of the consummation of
the Exchange Offer the holder and each beneficial owner are not engaging, do not
intend to engage and have no arrangements or understanding with any person to
participate in the distribution of the New Notes in violation of the provisions
of the Securities Act, (iii) the holder and each beneficial owner acknowledge
and agree that any person participating in the Exchange Offer for the purpose of
distributing the New Notes must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a secondary
resale transaction of the New Notes acquired by such person and cannot rely on
the position of the staff of the Commission set forth in no-action letters that
are discussed herein above, (iv) the holder and each beneficial owner understand
that a secondary resale transaction described in clause (iii) above should be
covered by an effective registration statement containing the selling
securityholder information required by Item 507 or 508, as applicable, of
Regulation S-K of the Commission, and (v) neither the holder nor any beneficial
owner(s) is an "affiliate," as defined under Rule 456 of the Securities Act, of
the Company except as otherwise disclosed to the Company in writing.
Any broker or dealer registered under the Exchange Act (each a
"Broker-Dealer") who holds Existing Notes that were acquired for its own account
as a result of market-making activities or other trading activities (other than
Existing Notes acquired directly from the Company or any affiliate of the
Company) may exchange such Existing Notes for New Notes pursuant to the Exchange
Offer. However, such Broker-Dealer may be deemed an underwriter within the
meaning of the Securities Act and, therefore, must deliver a prospectus meeting
the requirements of the Securities Act in connection with any resales of the New
Notes received by it in the Exchange Offer, which prospectus delivery
requirement may be satisfied by the delivery by such Broker-Dealer of this
Prospectus. Any Broker-Dealer participating in the Exchange Offer will be
required to acknowledge that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of New Notes
received by it in the Exchange Offer. However, only Broker-Dealers who exchange
Existing Notes that were acquired for their own account as a result of
market-making activities or other trading activities (other than Existing Notes
acquired directly from the Company or any affiliate of the Company), may use
this Prospectus to satisfy the prospectus delivery requirements of the
Securities Act. The delivery by a Broker-Dealer of a prospectus in connection
with resales of New Notes shall not be deemed to be an admission by such Broker-
Dealer that it is an underwriter within the meaning of the Securities Act.
Prior to the Exchange Offer, there has been no market for any of the New
Notes. The Existing Notes are eligible for trading in the Private Offerings,
Resales and Trading through Automatic Linkages ("PORTAL") market. The New Notes
will not be eligible for PORTAL trading. There can be no assurance that an
active trading market will develop for, or as to the liquidity of, any of the
New Notes.
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LEGAL MATTERS
The legality of the New Notes are being passed upon on behalf of the
Company by Paul, Weiss, Rifkind, Wharton & Garrison, New York, New York.
INDEPENDENT ACCOUNTANTS
The consolidated financial statements of the Parent as of August 31, 1997
and 1996, and for each of the three years in the period ended August 31, 1997,
included in this Prospectus have been audited by Coopers & Lybrand L.L.P.,
independent accountants, as stated in their report appearing herein.
The consolidated financial statements of Safety-Kleen as of January 3, 1998
and December 28, 1997, and for each of the three years in the period ended
January 3, 1998, included in this Prospectus have been audited by Arthur
Andersen LLP, independent accountants as stated in their report appearing
herein.
The consolidated financial statements of Rollins as of September 30, 1996
and 1995, and for each of the three years in the period ended September 30,
1996, incorporated by reference in this Prospectus have been audited by KPMG
Peat Marwick LLP, independent accountants as stated in their report incorporated
herein by reference.
AVAILABLE INFORMATION
The Parent, the Company and the Subsidiary Guarantors have filed with the
Commission a Registration Statement on Form S-4 (together with all amendments,
exhibits, schedules and supplements thereto, the "Registration Statement") under
the Securities Act with respect to the New Notes and Guarantees being offered
hereby. This Prospectus, which forms a part of the Registration Statement, does
not contain all of the information set forth in the Registration Statement. For
further information with respect to the Parent, the Company, and the Subsidiary
Guarantors and the New Notes, reference is made to the Registration Statement.
Statements contained in this Prospectus as to the contents of any contract or
other document are not necessarily complete, and, where such contract or other
document is an exhibit to the Registration Statement, each such statement is
qualified in all respects by the provisions in such exhibit, to which reference
is hereby made. The Parent is currently subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith, files reports and other information with the
Commission. Copies of the Registration Statement and reports and other
information filed by the Parent with the Commission pursuant to the
informational requirements of the Exchange Act may be examined without charge at
the Public Reference Section of the Commission, 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549, and at the Commission's regional offices located
at Seven World Trade Center, 13th Floor, New York, New York 10048 and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
all or any portion of such material can be obtained from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549, upon payment of certain fees prescribed by the Commission. The Commission
maintains an Internet Web Site at http://www.sec.gov that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission. In addition, copies of such
information may also be inspected and copied at the office of The New York Stock
Exchange, Inc. (the "NYSE"), 20 Broad Street, New York, New York 10005, upon
which the Parent's common stock is listed.
Under the Indenture relating to the Notes, and without regard to whether
the Parent or the Company is subject to the informational requirements of the
Exchange Act, the Parent has agreed to file with the Commission and to
distribute to the Trustee and holders of the Notes annual reports of the Parent
containing audited consolidated financial statements, as well as quarterly
reports containing unaudited consolidated financial statements for each of the
first three quarters of fiscal year. The Parent has agreed that if it or the
Company is not subject to the informational requirements of Section 13 or 15(d)
of the Exchange Act at any time prior to the second anniversary of the Closing
Date, it will furnish to holders of the Notes and to prospective purchasers
designated by such holders the information required to be delivered pursuant to
Rule 144A(d)(4) under the Securities Act to permit compliance with Rule 144A in
connection with resales of the Notes.
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DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed by the Parent with the Commission
pursuant to the Exchange Act are hereby incorporated by reference in this
Prospectus:
1. The Parent's Annual Report on Form 10-K for the fiscal year ended
August 31, 1997;
2. The Parent's Proxy Statement dated October 28, 1997 for the Parent's
annual meeting held on November 25, 1997;
3. The Parent's Quarterly Report on Form 10-Q for the fiscal period ended
November 30, 1997;
4. The Parent's Current Reports filed on Form 8-K dated November 5, 1997,
November 14, 1997, November 14, 1997, November 19, 1997, November 21,
1997, November 25, 1997, December 8, 1997, December 19, 1997, December
31, 1997, December 31, 1997, December 31, 1997, December 31, 1997,
December 31, 1997, January 2, 1998, January 28, 1998, February 5,
1998, February 9, 1998, February 9, 1998, February 11, 1998, February
17, 1998, February 17, 1998, February 18, 1998, February 20, 1998,
February 24, 1998, February 24, 1998, February 25, 1998, February 26,
1998, March 5, 1998, March 6, 1998, March 10, 1998, March 12, 1998,
March 13, 1998, March 16, 1998, March 19, 1998, March 30, 1998, April
1, 1998, April 3, 1998, April 6, 1998, April 8, 1998, April 20, 1998,
May 18, 1998 and May 27, 1998;
5. The Parent's Registration Statement on Form S-4 dated November 13,
1997, as amended by amendments dated November 25, 1997, December 16,
1997, January 6, 1998, January 15, 1998, January 16, 1998, January 27,
1998, January 28, 1998, March 16, 1998, March 18, 1998 and March 19,
1998;
6. The Parent's Proxy Statement dated December 16, 1997 for
Safety-Kleen's special meeting to be held on January 9, 1998;
7. The Parent's Preliminary Proxy Statement Dated January 22, 1998 for
Safety-Kleen's special meeting to be held on February 11, 1998, as
amended;
8. The Parent's Preliminary Proxy Statement dated January 21, 1998 for
the Parent's special meeting at which the stockholder's of the Parent
approved resolutions (i) increasing the Parent's authorized common
stock from 350,000,000 shares to 750,000,000 shares, and (ii)
authorizing the issuance of the Parent's common stock pursuant to the
offer;
9. The Parent's Schedule 14D-1 dated January 16, 1998, as amended, by
amendments dated January 27, 1998, January 28, 1998, February 5, 1998,
February 9, 1998, February 11, 1998, February 17, 1998, February 18,
1998, February 23, 1998, February 24, 1998, February 25, 1998,
February 27, 1998, March 3, 1998, March 5, 1998, March 6, 1998, March
11, 1998, March 12, 1998, March 13, 1998 and as amended by supplement
on March 19, 1998;
10. The Parent's Revised Definitive Proxy Materials dated December 31,
1997, January 5, 1998, January 6, 1998, January 22, 1998, January 27,
1998, February 9, 1998, February 10, 1998, February 11, 1998, February
17, 1998, February 27, 1998, March 3, 1998, March 5, 1998, March 6,
1998, March 11, 1998, March 12, 1998, filed with Safety-Kleen's
Schedule 14D-9;
11. The Parent's Quarterly Report on Form 10-Q for the fiscal period ended
February 28, 1998;
12. The Parent's Proxy Statement dated March 16, 1998, and March 18, 1998;
13. The Parent's Proxy Statement dated April 10, 1998, and April 17, 1998.
The following documents listed below filed by Rollins with the Commission
pursuant to the Exchange Act and the portions thereof referred to below are
specifically incorporated by reference in and are an integral part of this
Prospectus:
1. The consolidated audited financial statements of Rollins included in
Rollins' Annual Report on Form 10-K for the year ended September 30,
1996 filed on December 4, 1996; and
125
<PAGE> 135
2. The interim unaudited condensed consolidated financial statements for
the three and six month periods ended March 31, 1997 and 1996 included
in Rollins' Quarterly Report on Form 10-Q filed on May 9, 1997.
Each document filed by the Parent or the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and
prior to the Expiration Date shall be deemed to be incorporated by reference
into this Prospectus from the date of filing such document. Any statement
contained herein or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
document subsequently filed with the Commission which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
This Prospectus incorporates documents by reference which are not presented
herein or delivered herewith. The Company will provide without charge to each
person to whom this Prospectus is delivered, upon the written request of such
person, a copy of any or all of the documents incorporated by reference herein
(not including the exhibits to such documents, unless such exhibits are
specifically incorporated by reference in such documents). Requests for such
copies should be directed to the Company at Suite 300, 1301 Gervais Street,
Columbia, South Carolina 29201, Attention: Investor Relations.
126
<PAGE> 136
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus contains certain statements that are "Forward-Looking
Statements" within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act. Those statements include, among other things, the
discussions of the Parent's and the Company's business strategy and expectations
concerning market position, future operations, margins, profitability, liquidity
and capital resources, as well as statements concerning the integration of the
operations of Safety-Kleen and achievement of financial benefits and operational
efficiencies in connection therewith. Forward-looking statements are included in
"Prospectus Summary," "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Laidlaw Environmental," and "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Safety-Kleen," and elsewhere in this Prospectus. Although the Company believes
that the expectations reflected in such Forward-Looking Statements are
reasonable, they can give no assurance that such expectations will prove to have
been correct. Generally, these statements relate to business plans or
strategies, projected or anticipated benefits or other consequences of such
plans or strategies, number of acquisitions and projected or anticipated
benefits from acquisitions made by or to be made by the Company and the Parent
(including the Safety-Kleen Acquisition), or projections involving anticipated
revenues, expenses, earnings, levels of capital expenditures or other aspects of
operating results. All phases of the operations of the Company and the Parent
are subject to a number of certainties, risks and other influences, many of
which are outside the control of the Company and the Parent and any one of
which, or a combination of which, could materially affect the results of their
operations and whether the Forward-Looking Statements made by the Company and
the Parent ultimately prove to be accurate. Important factors that could cause
actual results to differ materially from such expectations are disclosed in this
section and in "Risk Factors." See "Risk Factors."
127
<PAGE> 137
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
CONSOLIDATED FINANCIAL STATEMENTS OF LAIDLAW ENVIRONMENTAL
SERVICES, INC.
Independent Auditors' Report.............................. F-2
Consolidated Statements of Income for the Years Ended
August 31, 1997, 1996 and 1995......................... F-3
Consolidated Balance Sheets as of August 31, 1997 and
1996................................................... F-4
Consolidated Statements of Cash Flows for the Years Ended
August 31, 1997, 1996 and 1995......................... F-5
Consolidated Statements of Stockholders' Equity for the
Years Ended August 31, 1997, 1996 and 1995............. F-6
Notes to Consolidated Financial Statements................ F-7
Consolidated Statements of Income for the Six Month
Periods Ended February 28, 1998 and 1997 (unaudited)... F-30
Consolidated Balance Sheets as of February 28, 1998
(unaudited) and August 31, 1997........................ F-31
Consolidated Statements of Cash Flows for the Six Month
Periods Ended February 28, 1998 and 1997 (unaudited)... F-32
Notes to Consolidated Financial Statements (unaudited).... F-33
CONSOLIDATED FINANCIAL STATEMENTS OF SAFETY-KLEEN CORP.
Independent Auditors' Report.............................. F-40
Consolidated Statements of Operations for Fiscal Years
1997, 1996 and 1995.................................... F-41
Consolidated Statements of Comprehensive Income for Fiscal
Years 1997, 1996 and 1995.............................. F-42
Consolidated Balance Sheets as of January 3, 1998 and
December 28, 1996...................................... F-43
Consolidated Statements of Shareholders' Equity for Fiscal
Years 1997, 1996 and 1995.............................. F-44
Consolidated Statements of Cash Flows for Fiscal Years
1997, 1996 and 1995.................................... F-45
Notes to Consolidated Financial Statements................ F-46
Consolidated Balance Sheets as of March 28, 1998 and
January 3, 1998 (unaudited)............................ F-71
Consolidated Statements of Earnings for the Twelve Weeks
Ended March 28, 1998 and March 22, 1997 (unaudited).... F-72
Consolidated Statements of Comprehensive Income for the
Twelve Weeks Ended March 28, 1998 and March 22, 1997
(unaudited)............................................ F-73
Consolidated Statements of Cash Flows for the Twelve Weeks
Ended March 28, 1998 and March 22, 1997 (unaudited).... F-74
Notes to Consolidated Financial Statements (unaudited).... F-75
</TABLE>
F-1
<PAGE> 138
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Directors
Laidlaw Environmental Services, Inc.
We have audited the accompanying consolidated balance sheets of Laidlaw
Environmental Services, Inc. and Subsidiaries, as of August 31, 1997 and 1996,
and the related consolidated statements of income, cash flows, and changes in
stockholders' equity for each of the three years in the period ended August 31,
1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Laidlaw
Environmental Services, Inc. and Subsidiaries as of August 31, 1997 and 1996,
and the consolidated results of their operations and their cash flows for each
of the three years in the period ended August 31, 1997, in accordance with
generally accepted accounting principles.
As discussed in Note 2, the statement of cashflows has been revised for the
years ended August 31, 1996 and 1995.
Coopers & Lybrand L.L.P.
Charlotte, North Carolina
October 7, 1997, except for the first two paragraphs of Note 17
as to which the date is May 21, 1998
F-2
<PAGE> 139
LAIDLAW ENVIRONMENTAL SERVICES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
-------------------------------
1997 1996 1995
--------- -------- --------
($ IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C> <C>
Revenues.................................................... $ 678,619 $652,973 $599,241
--------- -------- --------
Expenses:
Operating................................................. 485,062 473,563 428,932
Depreciation and amortization............................. 53,506 48,291 48,386
Selling, general and administrative....................... 73,068 73,800 62,064
Restructuring charge...................................... 331,697 -- --
--------- -------- --------
Total expenses.................................... 943,333 595,654 539,382
--------- -------- --------
Operating income (loss)..................................... (264,714) 57,319 59,859
Allocated interest expense.................................. 24,030 41,506 36,846
Interest expense............................................ 20,243 5,344 4,296
Other income................................................ 2,865 1,391 2,967
--------- -------- --------
Income (loss) from continuing operations before income
tax....................................................... (306,122) 11,860 21,684
Income tax expense (benefit)................................ (122,789) 2,500 4,769
--------- -------- --------
Income (loss) from continuing operations before minority
interest.................................................. (183,333) 9,360 16,915
Minority interest (net of tax).............................. (119) (2,646) (150)
--------- -------- --------
Income (loss) from continuing operations.................... (183,452) 6,714 16,765
Income from discontinued operations (net of tax)............ 20 1,496 819
--------- -------- --------
Net income (loss)................................. $(183,432) $ 8,210 $ 17,584
========= ======== ========
Per share data:
Net income (loss) from continuing operations.............. $ (1.329) $ 0.056 $ 0.140
Income from discontinued operations....................... -- 0.012 0.007
--------- -------- --------
Net income (loss) per share....................... $ (1.329) $ 0.068 $ 0.147
========= ======== ========
Weighted average common and common stock equivalents
outstanding (000's)....................................... 138,033 120,000 120,000
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-3
<PAGE> 140
LAIDLAW ENVIRONMENTAL SERVICES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AUGUST 31,
-----------------------
1997 1996
---------- ----------
($ IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents................................. $ 11,160 $ --
Trade and other accounts receivable (net of allowance for
doubtful accounts of $7,236 in 1997; $4,985 in 1996)... 210,914 184,626
Inventories............................................... 7,927 7,956
Income taxes receivable................................... -- 5,017
Deferred income taxes..................................... 13,027 --
Other current assets...................................... 8,512 5,871
---------- ----------
Total current assets.............................. 251,540 203,470
---------- ----------
Long-term investments....................................... 51,909 37,093
---------- ----------
Land, landfill sites and improvements....................... 499,680 564,934
Buildings................................................... 423,712 397,165
Machinery and equipment..................................... 610,274 431,077
Construction in process..................................... 6,357 42,732
---------- ----------
Property, plant and equipment............................... 1,540,023 1,435,908
Less: Accumulated depreciation and amortization............. (303,454) (323,180)
---------- ----------
Net property, plant and equipment................. 1,236,569 1,112,728
---------- ----------
Net assets of discontinued operations....................... -- 55,827
Goodwill, at cost (net of accumulated amortization of
$11,669 in 1997; $12,962 in 1996)......................... 70,527 81,579
Deferred changes............................................ 333 597
---------- ----------
Total assets...................................... $1,610,878 $1,491,294
========== ==========
LIABILITIES
Current liabilities
Accounts payable.......................................... $ 48,148 $ 88,806
Accrued liabilities....................................... 115,211 66,705
Current portion of long-term debt......................... 12,086 7,282
---------- ----------
Total current liabilities......................... 175,445 162,793
---------- ----------
Deferred items
Income taxes.............................................. 49,790 86,985
Other..................................................... 179,668 98,183
Long-term debt.............................................. 528,010 48,556
Subordinated convertible debenture.......................... 350,000 --
---------- ----------
Total liabilities................................. 1,282,913 396,517
---------- ----------
Commitments and contingencies............................... -- --
STOCKHOLDERS' EQUITY
Common stock, par value $1.00 per share; authorized
350,000,000, issued and outstanding 180,435,311 in
1997, 120,000,000 in 1996.............................. 180,435 120,000
Additional paid-in capital................................ 385,200 1,028,309
Accumulated deficit....................................... (237,670) (53,532)
---------- ----------
Total stockholders' equity........................ 327,965 1,094,777
---------- ----------
Total liabilities and stockholders' equity........ $1,610,878 $1,491,294
========== ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-4
<PAGE> 141
LAIDLAW ENVIRONMENTAL SERVICES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
---------------------------------
1997 1996 1995
--------- --------- ---------
($ IN THOUSANDS)
<S> <C> <C> <C>
Cash flow from operating activities:
Net income (loss)........................................... $(183,432) $ 8,210 $ 17,584
Adjustments to reconcile net income (loss) to net cash
provided by (used in) continuing operations:
Income from discontinued operations....................... (20) (1,496) (819)
Restructuring charge, net of applicable income taxes...... 200,000 -- --
Depreciation and amortization............................. 53,506 48,291 48,386
Deferred income taxes..................................... 37,507 783 4,298
Change in accounts receivable............................. (8,151) (1,719) (6,896)
Change in accounts payable, accrued liabilities and
deferred liabilities.................................... (52,632) (30,692) (21,741)
Decrease in liabilities assumed upon acquisition.......... (17,945) -- --
Change in other, net...................................... 8,126 (1,428) (984)
--------- --------- ---------
Net cash provided by continuing operations.......... 36,959 21,949 39,828
Net cash provided by discontinued operations........ 425 3,199 276
--------- --------- ---------
Net cash provided by operating activities........... 37,384 25,148 40,104
--------- --------- ---------
Cash flow from investing activities:
Cash acquired (expended) on acquisition of business....... 15,451 (8,000) (229,186)
Purchase of property, plant and equipment................. (36,097) (104,284) (68,650)
Increase in long-term investments......................... (2,837) -- (1,238)
Proceeds from sales of equipment.......................... 1,596 3,319 1,176
Other..................................................... -- (5,984) (2,859)
--------- --------- ---------
Net cash used in continuing operations.............. (21,887) (114,949) (300,757)
Net cash used in discontinued operations............ (1,887) (5,026) (3,173)
--------- --------- ---------
Net cash used in investing activities............... (23,774) (119,975) (303,930)
--------- --------- ---------
Cash flows from financing activities:
Issuance of debt under Bank Credit Facility............... 375,000 -- --
Additional debt issuances................................. 76,622 -- 32,251
Debt financing fees and expenses.......................... (18,788) -- --
Bank overdraft............................................ (32,188) 21,880 7,311
Repayment of long-term debt............................... (61,542) (7,548) (27,049)
Payment to Laidlaw Inc. .................................. (349,116) -- --
Advances from Laidlaw Inc. ............................... 7,562 82,913 243,614
--------- --------- ---------
Net cash provided by (used in) continuing
operations.......................................... (2,450) 97,245 256,127
Net cash provided by (used in) discontinued
operations.......................................... -- (2,418) 7,699
--------- --------- ---------
Net cash provided by (used in) financing
activities.......................................... (2,450) 94,827 263,826
--------- --------- ---------
Net increase in cash and cash equivalents................... 11,160 -- --
Cash and cash equivalents of:
Beginning of period....................................... -- -- --
--------- --------- ---------
End of period............................................. $ 11,160 $ -- $ --
========= ========= =========
CASH FLOW INFORMATION
Cash paid during the year for:
Interest (net of amounts capitalized)..................... $ 26,660 $ 34,050 $ 35,242
Income taxes.............................................. -- -- --
NONCASH INVESTING AND FINANCING ACTIVITIES:
Acquisition of Rollins
Fair value of assets acquired............................. $ 495,168 $ -- $ --
Fair value of liabilities assumed......................... 329,134 -- --
--------- --------- ---------
Fair value of stock issued................................ $ 166,034 $ -- $ --
========= ========= =========
Issuance of subordinated convertible debenture to Laidlaw
Inc. ................................................... $ 350,000 $ -- $ --
========= ========= =========
Accounts payable related to fixed assets.................... $ -- $ 8,992 $ --
========= ========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-5
<PAGE> 142
LAIDLAW ENVIRONMENTAL SERVICES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
TOTAL
COMMON ADDITIONAL ACCUMULATED STOCKHOLDERS'
STOCK PAID-IN CAPITAL DEFICIT EQUITY
-------- --------------- ----------- -------------
($ IN THOUSANDS)
<S> <C> <C> <C> <C>
Balance at September 1, 1994................... $120,000 $ 757,923 $ (79,326) $ 798,597
Net income..................................... -- -- 17,584 17,584
Net additional investment by Laidlaw Inc....... -- 240,085 -- 240,085
-------- ---------- --------- ----------
Balance at August 31, 1995..................... 120,000 998,008 (61,742) 1,056,266
Net income..................................... -- -- 8,210 8,210
Net additional investment by Laidlaw Inc....... -- 30,301 -- 30,301
-------- ---------- --------- ----------
Balance at August 31, 1996..................... 120,000 1,028,309 (53,532) 1,094,777
Net loss....................................... -- -- (183,432) (183,432)
Net additional investment by Laidlaw Inc....... -- 7,562 -- 7,562
Issuance of subordinated convertible debenture
to Laidlaw Inc............................... -- (350,000) -- (350,000)
Cash paid to Laidlaw Inc....................... -- (349,116) -- (349,116)
Issuance of additional shares on acquisition... 60,376 105,658 -- 166,034
Exercise of stock options...................... 59 96 -- 155
Transfer of JTM Industries, Inc. to Laidlaw
Inc.......................................... -- (57,309) -- (57,309)
Cumulative foreign currency translation
adjustments.................................. -- -- (706) (706)
-------- ---------- --------- ----------
Balance at August 31, 1997..................... $180,435 $ 385,200 $(237,670) $ 327,965
======== ========== ========= ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-6
<PAGE> 143
LAIDLAW ENVIRONMENTAL SERVICES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BUSINESS COMBINATION
On May 15, 1997, pursuant to a February 6, 1997 stock purchase agreement
(the "Stock Purchase Agreement") between Rollins Environmental Services, Inc.
("Rollins") and Laidlaw Inc. ("Laidlaw"), Rollins acquired the hazardous and
industrial waste operations of Laidlaw ("Old LESI" or the "Accounting Acquirer")
(the "Acquisition"). The business combination was accounted for as a reverse
acquisition using the purchase method of accounting. Rollins issued 120 million
common shares and a $350 million 5% subordinated convertible debenture, and paid
$349.1 million in cash ($400 million, less debt of $50.9 million assumed), to
Laidlaw to consummate the Acquisition. Coincident with the closing of the
Acquisition, the continuing legal entity changed its name from Rollins
Environmental Services, Inc. to Laidlaw Environmental Services, Inc. (the
"Company"). As a result of the Acquisition, Laidlaw owns 67% of the issued
common shares of the Company. Accordingly, the Company adopted the Accounting
Acquirer's fiscal year-end of August 31.
The reverse acquisition purchase price is the fair market value of the
Rollins common shares outstanding prior to completion of the Acquisition. As the
only remaining conditions to close the Acquisition after signing the Stock
Purchase Agreement involved stockholder and regulatory approvals, the date of
signing is the appropriate determination date for the market price of the
Rollins common shares. The average closing market price per share on the
NYSE -- Composite Transactions for the five trading days before and after
February 6, 1997, was $2.75. Applying this price per share to the 60,375,811
common shares outstanding on February 6, 1997, resulted in a purchase price of
approximately $166 million.
As a direct result of the personnel reductions and facility closures
related to the Rollins acquisition, the Company plans incurring cash severance
and closure costs. With respect to the former Rollins' operations, approximately
$17 million of severance costs and $40 million of closure costs related to
dismantling, decontamination and regulatory approval are planned to be incurred.
With respect to the Old LESI operations, approximately $25 million of costs are
scheduled to be incurred. Of such costs, management expects to incur between $20
million and $25 million within 12 months of the Acquisition. (See Note 9.)
As a result of the Acquisition, the historical financial information
included in these consolidated financial statements is that of the Accounting
Acquirer. The results of operations of Rollins have been included from the date
of acquisition, May 15, 1997.
Condensed unaudited pro forma statements of operations data, as if the
Acquisition had occurred at the beginning of the previous year, are as follows
($ in thousands, except per share amounts):
<TABLE>
<CAPTION>
FISCAL YEAR
--------------------
1997 1996
--------- --------
<S> <C> <C>
Revenue..................................................... $ 825,505 $885,741
Loss from continuing operations............................. (222,162) (23,981)
Income from discontinued operations......................... 20 1,496
--------- --------
Net loss.................................................... $(222,142) $(22,485)
========= ========
Per share data:
Loss from continuing operations............................. $ (1.204) $ (.131)
Income from discontinued operations......................... .000 .008
--------- --------
Net loss.................................................... $ (1.204) $ (.123)
========= ========
Weighted average common and common stock equivalents
outstanding (000's)....................................... 184,444 182,787
</TABLE>
F-7
<PAGE> 144
LAIDLAW ENVIRONMENTAL SERVICES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles requiring the Company
to make estimates and assumptions that affect reported amounts of assets,
liabilities, revenue and expenses, and disclosure of contingencies. Future
events could alter such estimates in the near term.
Certain figures as of August 31, 1996, and for the years ended August 31,
1996 and 1995 have been reclassified to conform to the current period's
presentations. The Company has revised its statement of cash flows for the years
ended August 31, 1996 and 1995 to reclassify certain long term liability amounts
from financing activities to operating activities and to reclassify bank
overdraft amounts from operating activities to financing activities.
Additionally, the amount reported as the change in Net Investment by Laidlaw
Inc. has been reclassified as a financing cash flow activity. Accordingly, cash
flows from operations decreased by $37,604 and $13,478 for the years ended
August 31, 1996 and 1995, respectively, and cash flows from financing activities
decreased by $907 and $244,191 for the years ended August 31, 1996 and 1995,
respectively, from the amounts previously reported.
A summary of the significant accounting policies followed in the
preparation of these consolidated financial statements is as follows:
CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and all of its subsidiary companies. All significant intercompany transactions
are eliminated. The purchase method of accounting for business combinations has
been used.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on deposit and term deposits in
investments with maturities of less than three months.
INVENTORIES
Inventories are valued at the lower of cost, determined on a first-in,
first-out basis, or replacement cost.
LONG-TERM INVESTMENTS
Long-term investments, held to maturity, are carried at cost, which
approximates fair market value, and consist primarily of long-term trust fund
deposits with government authorities to support closure and post-closure
activities at several of the Company's facilities.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is recorded at cost.
Landfill sites, preparation costs and improvements are amortized on the
basis of landfill capacity utilized during the year. Landfill capacity
represents total permitted airspace which is measured in the form of cubic
yards. Effective in 1996, the Company commenced capitalizing interest on
landfill capacity under development to the cost of the landfill. The effect of
the adoption of this policy was immaterial in the current and prior years.
During the construction and development period of an asset, the costs
incurred, including applicable interest costs, are classified as construction in
process. Once an asset has been completed and put into use, it is transferred to
the appropriate category and depreciation commences.
F-8
<PAGE> 145
LAIDLAW ENVIRONMENTAL SERVICES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
During fiscal years 1997, 1996 and 1995, the Company capitalized interest
of $6.7 million, $12.8 million and $5.9 million, respectively.
The cost of permits directly related to property, plant and equipment is
capitalized with the related asset and depreciated over the expected permit
life.
Depreciation and amortization of other property, plant and equipment is
provided substantially on a straight-line basis over their estimated useful
lives which are as follows:
Buildings -- 20 to 40 years
Machinery and equipment -- 5 to 30 years.
GOODWILL
Goodwill is amortized on a straight-line basis over forty years.
IMPAIRMENT
The Company periodically reviews the carrying values of its fixed assets
and intangibles to determine whether such values are recoverable. Accordingly,
when indicators of impairment are present, the Company evaluates the carrying
value of property, plant and equipment and intangibles in relation to the
operating performance and future undiscounted cash flows of the underlying
business. The Company adjusts the book value of the underlying asset if the sum
of expected future cash flows is less than book value. Any resulting write downs
are charged to depreciation and amortization expense.
DEFERRED CHARGES
Deferred charges are amortized on a straight-line basis over a two- to
five-year period depending on the nature of the deferred costs.
DEFERRED FINANCING COSTS
Deferred financing costs are amortized over the life of the related debt
instrument and included in long-term debt.
ENVIRONMENTAL LIABILITIES
Environmental liabilities include accruals for costs associated with
closure and post-closure monitoring and maintenance of the Company's landfills,
remediation at certain of the Company's facilities and corrective actions at
Superfund sites. The Company accrues for closure and post-closure costs over the
life of the landfill site as capacity is consumed.
FINANCIAL INSTRUMENTS
The Company's cash and cash equivalents, accounts receivable, certain
long-term investments, accounts payable, long-term debt and the subordinated
convertible debenture constitute financial instruments. Concentration of credit
risks in accounts receivable are limited due to the large number of customers
comprising the Company's customer base throughout North America. The Company
performs ongoing credit evaluations of its customers, but does not require
collateral to support customer accounts receivable. The Company establishes an
allowance for doubtful accounts based on the credit risk applicable to
particular customers, historical trends and other relevant information.
F-9
<PAGE> 146
LAIDLAW ENVIRONMENTAL SERVICES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DERIVATIVE FINANCIAL INSTRUMENTS
The Company uses interest rate swap agreements to minimize the impact of
interest rate fluctuations on floating interest rate long-term borrowings. The
differential paid or received on interest rate swap agreements is recognized as
an adjustment to interest expense. See Note 4 for fair value information
pertaining to long-term debt and derivative financial instruments.
REVENUE RECOGNITION
Revenues, along with the related costs of treatment, disposal and
transportation, at the Company's service center operations, which primarily
collect, transport and prepare waste material for transfer to disposal
facilities are recognized when the waste material is accepted at the service
center. Pursuant to contracts with its customers, the Company accepts title to
waste material at such time and provides contractual indemnification to its
customers against future liability with respect to the waste materials.
Revenues from the Company's treatment and disposal operations, primarily
landfill and incineration facilities, are recognized when the waste material is
disposed of, whether burned, landfilled or treated.
INCOME TAXES
Deferred income taxes reflect the tax consequences on future years of
differences between the tax bases of assets and liabilities and their financial
reporting amounts. Future tax benefits, such as net operating loss
carryforwards, are recognized to the extent that realization of such benefits
are more likely than not. Prior to May 15, 1997, the Company filed consolidated
tax returns with Laidlaw. Income taxes for the periods prior to May 15, 1997
have been calculated using applicable income tax rates on income for tax
purposes on a separate return basis.
FOREIGN CURRENCY TRANSLATION
The Company's foreign operations are all of a self-sustaining nature. The
functional currency of the Company's foreign subsidiaries is its respective
local currency. Assets and liabilities are translated to U. S. Dollars at the
exchange rate in effect at the balance sheet date and revenue and expenses at
weighted monthly average exchange rates for the year. Gains and losses from the
translation of the financial statements of the foreign subsidiaries are included
in stockholders' equity.
3. ACCRUED LIABILITIES
Accrued liabilities consist of the following:
<TABLE>
<CAPTION>
AUGUST 31,
------------------
1997 1996
-------- -------
($ IN THOUSANDS)
<S> <C> <C>
Current portion of environmental liabilities................ $ 27,376 $26,327
Interest payable............................................ 12,643 938
Accrued severance pay....................................... 12,911 --
Accrued disposal costs...................................... 10,039.. 9,147
Other....................................................... 52,242 30,293
-------- -------
Total............................................. $115,211 $66,705
======== =======
</TABLE>
4. LONG-TERM DEBT
Prior to May 15, 1997, Laidlaw provided the majority of the financing for
Old LESI's operating and investing activities through a combination of
intercompany equity and debt investments. The total investment in
F-10
<PAGE> 147
LAIDLAW ENVIRONMENTAL SERVICES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
the Company by Laidlaw is included in stockholders' equity prior to May 15,
1997. Interest expense associated with this intercompany financing has been
allocated to the Company based on its share of Laidlaw's consolidated net
assets.
The Company financed the cash consideration portion of the Acquisition and
certain fees related thereto with proceeds of a bank credit facility (the "Bank
Credit Facility") arranged pursuant to a credit agreement between the Company
and a syndicate of banks and other financial institutions. The Bank Credit
Facility consists of five parts: (i) a $275 million six-year senior revolving
credit facility with a $200 million letter of credit sublimit ("Revolving Credit
Facility"), (ii) a $165 million six-year senior amortizing term loan, (iii) a
$60 million six-year senior amortizing Canadian term loan, (iv) a $75 million
minimally amortizing seven-year senior term loan and (v) a $75 million minimally
amortizing eight-year senior term loan. The term loans referred to in clauses
(ii), (iii), (iv) and (v) are collectively referred to herein as the "Term
Loans".
The Term Loans were drawn upon in full May 15, 1997, the closing date of
the Acquisition. The Revolving Credit Facility has $200 million available for
letters of credit and $100 million available for loans, subject to the aggregate
limit of $275 million. As of August 31, 1997, $23.3 million of letters of credit
were issued and none was used for loans.
The Bank Credit Facility also contains negative, affirmative and financial
covenants customarily found in credit agreements for financings similar to the
financing provided under the Bank Credit Facility, including covenants limiting
annual capital expenditures, restricting debt, guaranties, liens, mergers and
consolidations, sales of assets and payment of dividends. The Company was in
compliance with its covenants at August 31, 1997.
The Bank Credit Facility is collateralized by certain tangible assets of
the Company. All of the capital stock of the Company's subsidiaries are pledged
to the lenders, and such subsidiaries guaranty the obligations of the Company to
the lenders.
Interest costs on the Bank Credit Facility are reset periodically, at least
annually, and vary depending on the particular facility and whether the Company
chooses to borrow under Eurodollar or non-Eurodollar loans. Interest costs on
the promissory note is based on U.S. Dollar London Interbank Offered Rate
("LIBOR"), determined on a semi-annual basis.
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
AUGUST 31,
------------------
1997 1996
-------- -------
($ IN THOUSANDS)
<S> <C> <C>
Bank Credit Facility:
Term loans, U.S., with interest rates from 8.095% to
9.225%................................................. $315,000 $ --
Term loans, Canadian, with interest rates from 5.881% to
6.141%................................................. 60,000 --
Promissory note, due May 2003, with an interest rate of
5.98%..................................................... 60,000 --
Industrial Revenue Bonds, due 2003 - 2027, with fixed
interest rates from 6.0% to 9.0%.......................... 123,314 46,991
Other....................................................... 948 9,717
-------- -------
559,262 56,708
Less: current portion....................................... 12,086 7,282
Less: unamortized deferred financing costs.................. 19,166 870
-------- -------
Total............................................. $528,010 $48,556
======== =======
</TABLE>
F-11
<PAGE> 148
LAIDLAW ENVIRONMENTAL SERVICES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The aggregate amount of minimum payments required on long-term debt in each
of the years indicated is as follows:
<TABLE>
<CAPTION>
YEAR ENDING AUGUST 31,
- ---------------------- ($ IN THOUSANDS)
<S> <C>
1998..................................................... $ 12,086
1999..................................................... 26,827
2000..................................................... 36,658
2001..................................................... 51,500
2002..................................................... 66,500
Thereafter............................................... 365,691
--------
Total minimum payments due..................... $559,262
========
</TABLE>
In management's view, due to the long-term debt being primarily based on
floating rates, the carrying amounts approximate fair value. The promissory note
and $39 million of the Industrial Revenue Bonds are guaranteed by Laidlaw.
In July 1997, the Company entered into interest rate swap agreements to
alter interest rate exposures. These agreements, with a principal notional
amount of $160 million, expire in periods ranging from 1.5 to 2.5 years, with a
weighted average of 2.1 years. The Company pays fixed rates ranging from 5.945%
to 6.07%, and receives floating rates based on U.S. Dollar LIBOR, determined on
a quarterly basis of 5.719% at August 31, 1997.
Credit risk arises from the possible inability of counterparties to meet
the terms of their contracts on a net basis. All of the Company's interest rate
swap agreements have been entered into with major financial institutions which
are expected to fully perform under the terms of the agreements. The Company's
credit exposure on swaps is related not to the notional balances of the interest
rate swaps, but to the current and potential replacement costs of all profitable
contracts at year end. At August 31, 1997 this credit exposure is immaterial.
Credit exposure will increase along with the market value of the swaps, if
interest rates increase, and decrease if interest rates decline.
Derivative financial instrument fair values represent an approximation of
amounts the Company would have paid to or received from counterparties to
terminate its positions prior to maturity, and are based on capital market rates
prevailing at August 31, 1997. The Company's fair value benefit for all interest
rate derivative contracts as of August 31, 1997, was approximately $0.3 million.
At August 31, 1997, the Company had no plans to terminate these positions prior
to maturity.
5. SUBORDINATED CONVERTIBLE DEBENTURE
Pursuant to the Acquisition described in Note 1, the Company issued a $350
million 5% subordinated convertible, pay-in-kind debenture ("PIK") due May 15,
2009 to Laidlaw.
Interest on the PIK is payable semiannually, on November 15 and May 15
until maturity. Beginning on May 15, 2002, and continuing until maturity, the
PIK is convertible, at the option of the holder into common shares of the
Company based on a conversion price per share of $3.75 (the "Conversion Price").
Beginning on May 15, 2002, and continuing until maturity, the Company has the
option to redeem the PIK in cash if the common shares are trading at a market
price greater than or equal to 120% of the Conversion Price. The PIK ranks
junior in right of payment (principal and interest) to all other long-term debt,
including the Bank Credit Facility.
The estimated fair value of the PIK is based on quoted market prices, where
available, along with present value calculations which are calculated using
current rates for similar debt with the same remaining maturity. The Company
estimates that the fair value of the PIK at August 31, 1997 was $493.6 million.
Interest payments due during the first two years after issuance of the PIK
are required to be satisfied by the issuance of the Company's common shares,
based on the market price of the common shares at the time the
F-12
<PAGE> 149
LAIDLAW ENVIRONMENTAL SERVICES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
interest payments are due. At the Company's option, any other interest or
principal payments, other than optional early redemption, may be satisfied by
issuing common shares, based on the market price at the time such payments are
due.
6. COMMITMENTS AND CONTINGENCIES
LEASE COMMITMENTS:
Rental expense incurred under operating leases was $36.1 million, $35.9
million and $35.4 million in 1997, 1996 and 1995, respectively. Minimum future
rental amounts required under operating leases for premises and equipment having
non-cancelable terms in excess of one year as of August 31, 1997, are as
follows:
<TABLE>
<CAPTION>
YEAR ENDING AUGUST 31,
- ---------------------- ($ IN THOUSANDS)
<S> <C>
1998........................................................ $18,163
1999........................................................ 13,007
2000........................................................ 9,853
2001........................................................ 5,664
2002........................................................ 3,454
Thereafter.................................................. 9,365
-------
Total............................................. $59,506
=======
</TABLE>
CLOSURE, POST-CLOSURE AND ENVIRONMENTAL LIABILITIES:
The Company has recorded liabilities for closure and post-closure
monitoring and environmental remediation costs as follows:
<TABLE>
<CAPTION>
AUGUST 31,
------------------
1997 1996
-------- -------
($ IN THOUSANDS)
<S> <C> <C>
Current portion, included in accrued liabilities............ $ 27,376 $26,327
Non-current portion, included in deferred items -- other.... 155,685 70,478
-------- -------
Total..................................................... $183,061 $96,805
======== =======
</TABLE>
The business of the Company's hazardous and industrial waste services is
continuously regulated by federal, state, provincial and local provisions that
have been enacted or adopted, regulating the discharge of materials into the
environment or primarily for the purpose of protecting the environment. The
nature of the Company's businesses results in its frequently becoming a party to
judicial or administrative proceedings involving all levels of governmental
authorities and other interested parties. The issues that are involved generally
relate to applications for permits and licenses by the Company and their
conformity with legal requirements and alleged technical violations of existing
permits and licenses. The Company does not believe that these matters will be
material to its operations or financial condition.
The Company, in the normal course of its business, expends funds for
environmental protection and remediation, but does not expect these expenditures
to have a materially adverse effect on its financial condition or results of
operations, since its business is based upon compliance with environmental laws
and regulations.
Closure and post-closure monitoring and maintenance costs for U.S.
landfills are estimated based on the technical requirements of Subtitle C and D
Regulations of the U. S. Environmental Protection Agency or the applicable state
requirements, whichever is stricter, and the air emissions standards under the
Clean Air Act. The costs include such items as final capping of the site,
methane gas and leachate management, groundwater monitoring and operation and
maintenance costs to be incurred during the period after the facility closes and
F-13
<PAGE> 150
LAIDLAW ENVIRONMENTAL SERVICES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
ceases to accept waste. Closure and post-closure costs for the Company's
landfills in Canada are based upon the local landfill regulations governing the
facility.
The Company has also established procedures to routinely evaluate potential
remedial liabilities at sites which it owns or operates, or to which it
transports waste, including 22 sites listed on the Superfund National Priority
List ("NPL"). In the majority of situations, the Company's connection with NPL
sites relates to allegations that its subsidiaries, or their predecessors,
transported waste to the facilities in question, often prior to the acquisition
of such subsidiaries by the Company. The Company routinely reviews and evaluates
sites requiring remediation, including NPL sites, giving consideration to the
nature (i.e., owner, operator, transporter or generator), and the extent (i.e.,
amount and nature of waste hauled to the location, number of years of site
operations or other relevant factors), of the Company's alleged connection with
the site, the accuracy and strength of evidence connecting the Company to the
location, the number, connection and financial ability of other named and
unnamed potentially responsible parties and the nature and estimated cost of the
likely remedy. Where the Company concludes that it is probable that a liability
has been incurred, provision is made in the financial statements, based upon
management's judgment and prior experience, for the Company's best estimate of
the liability. If no amount within the range appears to be a better estimate
than any other amount, then the Company provides for the minimum amount within
the range in accordance with SFAS No. 5, "Accounting for Contingencies". Such
estimates are subsequently revised as deemed necessary as additional information
becomes available. The Company believes that it is more than remotely possible
but less than likely, that its potential liability could be at the high end of
such ranges, which would be approximately $26 million higher in the aggregate
than the estimate that has been recorded in the financial statements as of
August 31, 1997.
Estimates of the extent of the Company's degree of responsibility for
remediation of a particular site and the method and ultimate cost of remediation
require a number of assumptions and are inherently difficult to evaluate, such
that the ultimate outcome may differ from current estimates. However, the
Company believes that its extensive experience in the environmental services
business, as well as its involvement with a large number of sites, provides a
reasonable basis for estimating its aggregate liability. As additional
information becomes available, estimates are adjusted as necessary. While the
Company does not anticipate that any such adjustment would be material to its
financial statements, it is reasonably possible that technological, regulatory
or enforcement developments, the results of environmental studies or other
factors could necessitate the recording of additional liabilities which could be
material. The impact of such future events cannot be estimated at the current
time.
Where the Company believes that both the amount of a particular
environmental liability and the timing of the payments are reliably
determinable, the cost in current dollars is discounted to present value
assuming inflation of 3.6% and a risk free discount rate of 8.5%. Had the
Company not discounted any portion of its liability, the amount recorded would
have been increased by approximately $9 million at August 31, 1997 (1996 -- $9
million).
The majority of the Company's active landfill sites have estimated
remaining lives ranging from two to more than 100 years based upon current site
plans and anticipated annual volumes of waste. As of August 31, 1997, the
Company estimates that during this remaining site life, it will provide for an
additional $97 million (1996 -- $72 million) of closure and post-closure costs,
including accretion for the discount recognized to date.
F-14
<PAGE> 151
LAIDLAW ENVIRONMENTAL SERVICES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Anticipated payments of environmental liabilities for each of the next five
years and thereafter are as follows:
<TABLE>
<CAPTION>
YEAR ENDING AUGUST 31,
- ---------------------- ($ IN THOUSANDS)
<S> <C>
1998....................................................... $ 27,376
1999....................................................... 32,365
2000....................................................... 22,735
2001....................................................... 15,972
2002....................................................... 10,926
Thereafter................................................. 170,687
--------
Total............................................ $280,061
========
</TABLE>
In conjunction with the acquisitions of certain facilities, the Company has
obtained varying amounts and types of indemnification from potential
environmental liabilities existing at the time of acquisition. Such indemnities
typically cover all or a portion of the costs associated with the remediation of
pre-existing environmental liabilities, and may be available for a limited
period of time.
FINANCIAL ASSURANCE OBLIGATIONS:
As of August 31, 1997, the Company was obligated to provide financial
assurances to the applicable regulatory authorities, totalling approximately
$450 million, in connection with the closure and post-closure requirements of
certain facility operating permits. The majority of these financial assurances
have been provided by Laidlaw at August 31, 1997. The Company is obligated to
assume these financial assurances from Laidlaw during fiscal 1998. The Company
intends to provide the required financial assurances through a combination of
letters of credit and insurance policies.
LEGAL PROCEEDINGS:
The consolidated federal income tax returns of Laidlaw Transportation, Inc.
and its U.S. subsidiaries (collectively "LTI") (which until May 15, 1997,
included certain of the subsidiaries of the Company) for the fiscal years ended
August 31, 1986, 1987 and 1988, have been under audit by the Internal Revenue
Service. In March 1994, LTI received a statutory notice of deficiency proposing
that LTI pay additional taxes relating to disallowed deductions in those income
tax returns. The principal issue involved relates to the timing and the
deductibility for tax purposes of interest attributable to loans owing to
related foreign persons. LTI has petitioned the United States Tax Court
(captioned as Laidlaw Transportation, Inc. & Subsidiaries et al v. Commissioner
of Internal Revenue, Docket Nos. 9361-94 and 9362-94) for a redetermination of
claimed deficiencies of approximately $49.6 million (plus interest of
approximately $80.3 million as of August 31, 1997).
In October 1997, LTI received a statutory notice of deficiency proposing
that LTI pay additional taxes of approximately $143.5 million (plus interest of
approximately $121 million as of August 31, 1997) relating to disallowed
deductions in federal income tax returns for the fiscal years ended August 31,
1989, 1990 and 1991, based on the same issues. LTI intends to vigorously contest
these claimed deficiencies. The Company anticipates that the Internal Revenue
Service will propose adjustments for the same issue in subsequent taxation
years.
Pursuant to the Stock Purchase Agreement referred to in Note 1, Laidlaw and
Laidlaw Transportation, Inc. agreed to be responsible for any tax liabilities,
including the costs to defend the subsidiaries, resulting from these matters.
The Company believes that the ultimate disposition of these issues will not have
a materially adverse effect upon the Company's consolidated financial position
or results of operations.
F-15
<PAGE> 152
LAIDLAW ENVIRONMENTAL SERVICES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. STOCKHOLDERS' EQUITY
Prior to May 15, 1997, the Company's total stockholders' equity consisted
of the intercompany investment by Laidlaw. The 120 million shares of common
stock received by Laidlaw to consummate the Acquisition described in Note 1, are
deemed, for accounting purposes, to have been issued and outstanding in all
prior periods presented in these consolidated financial statements.
AUTHORIZED AND ISSUED CAPITAL STOCK:
Since the former Rollins is the continuing legal entity, its authorized and
issued capital stock constitutes that of the Company.
The Company is authorized to issue 350 million shares of its $1 par value
common stock and one million shares of its $1 par value preferred stock. The
terms and conditions of each issue of preferred stock are determined by the
Board of Directors.
At August 31, 1997, the Company had issued and outstanding 180,435,311
shares of its $1 par value common stock. For accounting purposes, 120 million of
these shares were deemed outstanding in all periods prior to the Closing and
60,375,811 were deemed to have been issued on May 15, 1997, at $2.75 per share,
as consideration ($166,034,000) for the acquisition of the former Rollins by the
Company.
NO PREFERRED STOCK HAS BEEN ISSUED.
Each share of common stock outstanding includes one common stock purchase
right (a "Right") which is non-detachable and non-exercisable until certain
defined events occur, including certain tender offers or the acquisition by a
person or group of affiliated or associated persons of 15% or more of the
Company's common stock. Upon the occurrence of certain defined events, the Right
entitles the holder to purchase additional stock of the Company or stock of an
acquiring company at a 50% discount. The Right expires on June 30, 1999, unless
earlier redeemed by the Company at a price of $.01 per Right.
8. STOCK OPTION PLANS
The Company has the following stock option plans:
1. The 1982 Stock Option Plan of the former Rollins Environmental
Services, Inc.
2. The 1993 Stock Option Plan of the former Rollins Environmental
Services, Inc.
3. The 1997 Directors Stock Option Plan
4. The 1997 Stock Option Plan
All outstanding employee stock options granted by the former Rollins were
fully vested on May 15, 1997, in accordance with the terms of the Stock Purchase
Agreement referred to in Note 1.
Option activity is as follows:
<TABLE>
<CAPTION>
AUGUST 31,
1997
----------
<S> <C>
Number of options Outstanding at May 15, 1997............... 1,106,555
Granted................................................... 1,187,500
Exercised................................................. (59,500)
Expired or canceled....................................... (194,510)
---------
Outstanding at end of year.................................. 2,040,045
=========
</TABLE>
F-16
<PAGE> 153
LAIDLAW ENVIRONMENTAL SERVICES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
AUGUST 31,
1997
---------------
<S> <C>
Options available for grant............................... 5,352,500
Options exercisable....................................... 852,545
Per share prices
Options granted......................................... $3.19
Options exercised....................................... $2.25 to $2.88
Options outstanding..................................... $2.63 to $12.25
</TABLE>
Effective July 9, 1997, the directors of the Company set aside six million
shares of its $1 par value common stock for issuance under a 1997 stock option
plan. All options under this plan are for a term of ten years from the date of
grant and become exercisable with respect to 20% of the total number of shares
subject to the option, one year after the date of grant, and with respect to an
additional 20% at the end of each 12 month period thereafter on a cumulative
basis during the succeeding four years. The plan provides for the granting of
stock options to certain senior employees and officers of the Company at the
discretion of the Board of Directors. The plan will be submitted to the
Company's stockholders for approval at the next annual meeting. All options are
subject to certain conditions of service.
Effective July 9, 1997, the directors of the Company set aside 540,000
shares of its $1 par value common stock for issuance under a 1997 directors
stock option plan. All options under this plan are for a term of ten years from
the date of grant and become exercisable with respect to 20% of the total number
of shares subject to the option, one year after the date of grant, and with
respect to an additional 20% at the end of each 12 month period thereafter on a
cumulative basis during the succeeding four years. The plan will be submitted to
the Company's stockholders for approval at the next annual meeting. All options
are subject to certain conditions of service.
On July 9, 1997, the Board of Directors granted 1,097,500 shares from the
stock option plan and 90,000 shares from the directors stock option plan, both
at an exercise price of $3.188, subject to stockholder approval of the plans.
The Company applies Accounting Principles Board ("APB") 25 in accounting
for its stock option plans. Accordingly, no compensation cost has been
recognized for the plans in fiscal 1997 or 1996. Statement of Financial
Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation," defines a fair value method of accounting for stock options and
other equity instruments. Under the fair value method, compensation cost is
measured at the grant date based on the fair value of the award and is
recognized over the service period, which is usually the vesting, or exercise
period.
During fiscal year 1996, the Accounting Acquirer had no stock option plan.
Accordingly, no pro forma disclosures are required. As a result of the exercise
terms of the Company's 1997 stock option plan effective July 9, 1997, pro forma
disclosure is immaterial for fiscal year 1997.
9. RESTRUCTURING CHARGE
The integration related to the Acquisition described in Note 1 resulted in
the closure and consolidation of certain operations formerly owned by Rollins or
by Old LESI. Such actions are expected to produce substantial cost savings.
With respect to the Old LESI operations, the Company recorded a one-time
charge of $331.7 million ($200 million after tax, or $1.52 per share) against
income in the quarter ended May 31, 1997, to reflect the closing of certain of
the operating facilities that had become redundant, and an impairment in the
carrying value of certain operating facilities due to lower expected future cash
flows, as a result of the Acquisition.
F-17
<PAGE> 154
LAIDLAW ENVIRONMENTAL SERVICES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
10. DISCONTINUED OPERATIONS
On May 1, 1997, in contemplation of the Acquisition described in Note 1,
the Company transferred, in a non-cash transaction, JTM Industries, Inc., its
coal combustion by-products management operations to Laidlaw. Accordingly, no
gain or loss was recognized on this transfer. These operations were retained by
Laidlaw and are not part of the Company's ongoing operations.
The Company has classified these operations as discontinued. Historically
these operations have been included in Laidlaw's Hazardous Waste Services
segment for financial reporting purposes.
Revenue for the discontinued operations for 1997, 1996 and 1995, was $41.5
million, $62.9 million and $43.6 million, respectively.
11. INCOME TAXES
The income tax benefit is comprised as follows:
<TABLE>
<CAPTION>
YEAR ENDED
AUGUST 31,
1997
-----------------
($ IN THOUSANDS)
<S> <C>
Current:
Federal.................................................. $ (30,236)
State.................................................... 1,000
Foreign.................................................. (2,064)
Deferred:
Federal.................................................. (87,086)
State.................................................... (12,440)
Foreign 8,037
---------
Income tax benefit......................................... $(122,789)
=========
</TABLE>
A reconciliation of the income tax benefit, calculated by applying the
statutory federal income tax rate to the loss before income taxes is as follows:
<TABLE>
<CAPTION>
YEAR ENDED
AUGUST 31,
1997
-----------------
($ IN THOUSANDS)
<S> <C>
Federal income tax benefit at statutory rate............... 35.0%
State income tax benefit................................... 5.2
Other...................................................... (0.1)
-----
Income tax benefit......................................... 40.1%
=====
</TABLE>
F-18
<PAGE> 155
LAIDLAW ENVIRONMENTAL SERVICES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The tax effect of temporary differences which comprise the current and
non-current deferred income tax amounts shown on the balance sheet are as
follows:
<TABLE>
<CAPTION>
AUGUST 31,
--------------------
1997 1996
-------- --------
($ IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Accrued liabilities....................................... $122,051 $ 35,372
Tax attribute carryovers.................................. 62,865 69,601
Interest.................................................. 15,358 --
Other..................................................... 7,016 1,858
-------- --------
Total gross deferred tax assets................... 207,290 106,831
Less: valuation allowance................................... 14,066 --
-------- --------
Net deferred tax assets........................... $193,224 $106,831
======== ========
Deferred tax liabilities:
Excess of tax over book depreciation...................... $223,732 $187,934
Other..................................................... 6,255 5,882
-------- --------
Total gross deferred tax liabilities.............. 229,987 193,816
-------- --------
Net deferred tax liability........................ $ 36,763 $ 86,985
======== ========
</TABLE>
The Company has net operating loss carryforwards for federal income taxes
expiring in the years 2008 to 2112 of $80.3 million. A valuation allowance of
$14.1 million has been recorded against $46.9 million of the loss carryforwards
which are subject to limitations of both Treasury Regulation 1.1502-21 and
Internal Revenue Code ("IRC") Section 382. Foreign net operating losses expiring
in the years 1999 to 2004 are $44.1 million. Interest carryovers of $27.1
million limited by IRC Section 163(j) are available against federal tax without
expiration.
12 -- EARNINGS PER SHARE
Primary earnings per share amounts are computed based on the weighted
average number of shares actually outstanding. In 1997, the shares considered to
be common stock equivalents that would be outstanding, assuming the exercise of
dilutive stock options, have not been included as the effect of such inclusion
would be to increase earnings per share, and thus be anti-dilutive.
Additionally, fully diluted earnings per share amounts, which would include the
dilutive effect of the subordinated convertible debenture, have not been
included as the effect of such inclusion would be to increase earnings per
share, and thus be anti-dilutive.
13 -- RELATED PARTY TRANSACTIONS
Included in selling, general and administrative expenses are management
fees paid to Laidlaw in the amounts of $2.6 million, $4.6 million and $3.6
million during 1997, 1996 and 1995, respectively.
Management fees have been allocated to the Company, prior to May 15, 1997,
based upon the Company's share of Laidlaw's consolidated revenue. Management
fees are charged by Laidlaw to each of its operating groups in order to recover
its general and administrative costs. The services provided by Laidlaw include
treasury, taxation and insurance.
Related party insurance transactions totalled $7.2 million, $7.2 million
and $7.7 million in 1997, 1996 and 1995, respectively.
Certain directors and officers of the Company are also directors and
officers of Laidlaw.
F-19
<PAGE> 156
LAIDLAW ENVIRONMENTAL SERVICES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
14. SEGMENT AND GEOGRAPHIC INFORMATION
The Company's revenues and income are derived from one industry segment and
principally in the United States, which includes the collection, transportation,
processing, recovery and disposal of hazardous and industrial wastes. The
segment renders services to a variety of commercial, industrial, governmental
and residential customers.
15. RECENT ACCOUNTING DEVELOPMENTS
In October 1996, the American Institute of Certified Public Accountants
issued Statement of Position 96-1 "Environmental Remediation Liabilities" ("SOP
96-1") for fiscal years beginning after December 15, 1996. SOP 96-1 provides
that environmental remediation liabilities should be accrued when the criteria
of SFAS No. 5, "Accounting for Contingencies" are met and it includes benchmarks
to aid in the determination of when environmental remediation liabilities should
be recognized. SOP 96-1 also provides guidance with respect to the measurement
of the liability and the display and disclosure of environmental remediation
liabilities in the financial statements. The Company believes that the adoption
of this SOP will not have a material impact on the Company's financial condition
or results of operations.
In February 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 128 "Earnings Per Share". This standard is effective for financial
statements issued for periods ending after December 15, 1997, and will be
adopted for the interim period ended February 28, 1998, with restatement of all
prior period earnings per share ("EPS") data presented. This statement requires
the presentation of basic and diluted EPS. Basic EPS excludes dilution and is
computed by dividing income available to common stockholders by the weighted
average number of common shares outstanding for the period. Diluted EPS is
computed similarly to fully diluted EPS under the existing rules. The Company
does not expect that SFAS No. 128 will have a material impact on the earnings
per share computation.
16. QUARTERLY FINANCIAL DATA -- UNAUDITED
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH TOTAL*
-------- -------- -------- -------- --------
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1997
Revenues.................................... $172,565 $140,627 $155,330 $210,097 $678,619
Income (loss) from operations............... 14,899 9,169 (316,760) 27,978 (264,714)
Income (loss) from continuing operations.... 3,588 1,750 (197,155) 8,365 (183,452)
Income (loss) from discontinued
operations................................ 703 (917) 234 -- 20
Net income (loss)........................... 4,291 833 (196,921) 8,365 (183,432)
Earnings per share:
Continuing operations:
Before restructuring................... $ 0.030 $ 0.015 $ 0.022 $ 0.046 $ 0.120
Restructuring charge................... -- -- (1.525) -- (1.449)
-------- -------- -------- -------- --------
0.030 0.015 (1.503) 0.046 (1.329)
Discontinued operations..................... 0.006 (0.008) 0.002 -- --
-------- -------- -------- -------- --------
Net income (loss) per share....... $ 0.036 $ 0.007 $ (1.501) $ 0.046 $ (1.329)
======== ======== ======== ======== ========
</TABLE>
F-20
<PAGE> 157
LAIDLAW ENVIRONMENTAL SERVICES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH TOTAL*
-------- -------- -------- -------- --------
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1996
Revenues.................................... $179,793 $150,362 $153,139 $169,679 $652,973
Income from operations...................... 18,636 11,987 13,217 13,479 57,319
Income from continuing operations........... 3,791 365 739 1,819 6,714
Income (loss) from discontinued
operations................................ 579 (378) 622 673 1,496
Net income (loss)........................... 4,370 (13) 1,361 2,492 8,210
Net income (loss) per share................. 0.036 (0.000) 0.011 0.021 0.068
</TABLE>
- ---------------
* 1997 includes restructuring charge of $331.7 million ($200 million net of tax)
Results for the quarters include the results of operations of acquired companies
for the periods in which they were owned by the Company.
F-21
<PAGE> 158
LAIDLAW ENVIRONMENTAL SERVICES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
17. SUMMARIZED FINANCIAL INFORMATION
The Company announced on April 1, 1998 that 94% of Safety-Kleen Corp.
shareholders had accepted its exchange offer, as amended on March 16, 1998,
relating to the acquisition of Safety-Kleen by the Company. Under the terms of
the offer, the Company will exchange $18.30 and 2.8 common shares for each
Safety-Kleen share tendered. The total consideration for the acquisition is
approximately $2.2 billion, including debt assumed, estimated transaction costs
and the issuance of approximately 166 million common shares. On April 7, 1998,
the Company completed the acquisition of the shares tendered prior to April 1,
1998, with the balance to be acquired through a back-end merger, which was
completed on May 20, 1998.
In connection with the acquisition, LES, Inc., a wholly owned subsidiary of
Laidlaw Environmental Services, Inc., issued 9 1/4% Senior Subordinated Notes,
the payment of which is guaranteed on a senior subordinated basis by Laidlaw
Environmental Services, Inc. and are jointly and severally guaranteed on a
senior subordinated basis by the Company's wholly-owned domestic subsidiaries.
No foreign direct or indirect subsidiary or non-wholly-owned domestic subsidiary
is an obligor or guarantor on the financing. Separate financial statements and
other disclosures concerning each of LES, Inc. and the subsidiary guarantors are
not presented because management believes they are not material to investors.
Summarized financial information on a combined basis as of and for the year
ended August 31, 1997 is as follows:
CONSOLIDATING CONDENSED BALANCE SHEET
AUGUST 31, 1997
<TABLE>
<CAPTION>
LES, INC.
LAIDLAW AND CONSOLIDATING
ENVIRONMENTAL SUBSIDIARY SUBSIDIARY ELIMINATING CONSOLIDATED
SERVICES, INC. GUARANTORS NON-GUARANTORS ENTRIES TOTAL
-------------- ---------- -------------- ------------- ------------
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Assets:
Current assets................... $ -- $ 213,139 $ 38,401 $ -- $ 251,540
Property, plant and equipment,
net........................... -- 1,043,874 192,695 -- 1,236,569
Investment in Subsidiaries....... 809,745 88,000 -- (897,745) --
Other non-current assets......... -- 93,346 48,847 (19,424) 122,769
-------- ---------- -------- --------- ----------
Total assets..................... $809,745 $1,438,359 $279,943 $(917,169) $1,610,878
======== ========== ======== ========= ==========
Liabilities:
Current liabilities.............. $ 6,580 $ 118,631 $ 50,454 $ (220) $ 175,445
Non-current liabilities.......... -- 241,335 7,547 (19,424) 229,458
Long-term debt................... 125,200 307,580 95,230 -- 528,010
Subordinated convertible
debenture..................... 350,000 -- -- -- 350,000
-------- ---------- -------- --------- ----------
Total liabilities................ 481,780 667,546 153,231 (19,644) 1,282,913
Stockholders' Equity............... 327,965 770,813 126,712 (897,525) 327,965
-------- ---------- -------- --------- ----------
Total liabilities and stockholders'
equity........................... $809,745 $1,438,359 $279,943 $(917,169) $1,610,878
======== ========== ======== ========= ==========
</TABLE>
F-22
<PAGE> 159
LAIDLAW ENVIRONMENTAL SERVICES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING CONDENSED STATEMENT OF INCOME
YEAR ENDED AUGUST 31, 1997
<TABLE>
<CAPTION>
LES, INC.
LAIDLAW AND CONSOLIDATING
ENVIRONMENTAL SUBSIDIARY SUBSIDIARY ELIMINATING CONSOLIDATED
SERVICES, INC. GUARANTORS NON-GUARANTORS ENTRIES TOTAL
-------------- ---------- -------------- ------------- ------------
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Total revenues................... $ -- $ 510,563 $168,056 $ -- $ 678,619
Operating expenses............... -- 472,254 139,382 -- 611,636
Restructuring charge............. -- 325,070 6,627 -- 331,697
--------- --------- -------- -------- ---------
Operating income................. -- (286,761) 22,047 -- (264,714)
Interest expense................. 6,580 31,171 6,522 -- 44,273
Other income (loss).............. (179,397) 631 2,234 179,397 2,865
--------- --------- -------- -------- ---------
Income (loss) from continuing
operations before income tax... (185,977) (317,301) 17,759 179,397 (306,122)
Income tax expense (benefit)..... (2,545) (121,677) 1,433 -- (122,789)
--------- --------- -------- -------- ---------
Income (loss) from continuing
operations before minority
interest....................... (183,432) (195,624) 16,326 179,397 (183,333)
Minority interest................ -- (72) (47) -- (119)
--------- --------- -------- -------- ---------
Income (loss) from continuing
operations..................... (183,432) (195,696) 16,279 179,397 (183,452)
Income (loss) from discontinued
operations..................... -- 20 -- -- 20
--------- --------- -------- -------- ---------
Net income....................... $(183,432) $(195,676) $ 16,279 $179,397 $(183,432)
========= ========= ======== ======== =========
</TABLE>
F-23
<PAGE> 160
LAIDLAW ENVIRONMENTAL SERVICES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
YEAR ENDED AUGUST 31, 1997
<TABLE>
<CAPTION>
LES, INC.
LAIDLAW AND CONSOLIDATING
ENVIRONMENTAL SUBSIDIARY SUBSIDIARY ELIMINATING CONSOLIDATED
SERVICES, INC. GUARANTORS NON-GUARANTORS ENTRIES TOTAL
-------------- ---------- -------------- ------------- ------------
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in) continuing
operations................................ $ 2,545 $ 42,062 $ (7,428) $ (220) $ 36,959
Net cash provided by discontinued
operations................................ -- 425 -- -- 425
-------- --------- -------- -------- ---------
Net cash provided by (used in) operating
activities................................ 2,545 42,487 (7,428) (220) 37,384
-------- --------- -------- -------- ---------
Cash flow from investing activities:
Cash acquired on acquisition of
business................................ -- 15,451 -- -- 15,451
Purchase of plant, property and
equipment............................... -- (16,154) (19,943) -- (36,097)
Proceeds from sale of property, plant and
equipment............................... -- 1,689 (93) -- 1,596
Net increase in long-term investments..... -- (1,492) (1,345) -- (2,837)
-------- --------- -------- -------- ---------
Net cash used in continuing
operations........................ -- (506) (21,381) -- (21,887)
Net cash used in discontinued
operations........................ -- (1,887) -- -- (1,887)
-------- --------- -------- -------- ---------
Net cash provided by (used in)
investing activities.............. -- (2,393) (21,381) -- (23,774)
-------- --------- -------- -------- ---------
Cash flow from financing activities:
Issuance of debt under Bank Credit
Facility................................ -- 315,000 60,000 -- 375,000
Additional debt issuances................. 65,200 -- 11,422 -- 76,622
Debt financing fees and expenses.......... -- (16,448) (2,340) -- (18,788)
Bank overdraft............................ -- (28,829) (3,359) -- (32,188)
Repayment of long-term debt............... -- (55,700) (5,842) -- (61,542)
Intercompany payable (receivable)......... (67,745) 67,525 -- 220 --
Net payment to Laidlaw, Inc............... -- (296,872) (44,682) -- (341,554)
-------- --------- -------- -------- ---------
Net cash provided by (used in) continuing
operations................................ (2,545) (15,324) 15,199 220 (2,450)
Net cash provided by (used in) discontinued
operations................................ -- -- -- -- --
-------- --------- -------- -------- ---------
Net cash provided by (used in) financing
activities................................ (2,545) (17,392) 17,267 220 (2,450)
-------- --------- -------- -------- ---------
Net increase (decrease) in cash and cash
equivalents............................... -- 24,770 (13,610) -- 11,160
Cash and cash equivalents at:
Beginning of period....................... -- -- -- -- --
-------- --------- -------- -------- ---------
End of period............................. $ -- $ 24,770 $(13,610) $ -- $ 11,160
======== ========= ======== ======== =========
</TABLE>
F-24
<PAGE> 161
LAIDLAW ENVIRONMENTAL SERVICES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING CONDENSED BALANCE SHEET
AUGUST 31, 1996
<TABLE>
<CAPTION>
LES, INC.
LAIDLAW AND CONSOLIDATING
ENVIRONMENTAL SUBSIDIARY SUBSIDIARY ELIMINATING CONSOLIDATED
SERVICES, INC. GUARANTORS NON-GUARANTORS ENTRIES TOTAL
-------------- ---------- -------------- ------------- ------------
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Assets:
Current assets................. $ -- $ 155,717 $ 47,753 $ -- $ 203,470
Property, plant and equipment,
net......................... -- 899,415 213,313 -- 1,112,728
Other non-current assets....... -- 134,440 40,656 -- 175,096
-------- ---------- -------- -------- ----------
Total assets................... $ -- $1,189,572 $301,722 $ -- $1,491,294
======== ========== ======== ======== ==========
Liabilities:
Current liabilities............ $ -- $ 138,145 $ 24,648 $ -- $ 162,793
Non-current liabilities........ -- 166,266 18,902 -- 185,168
Long-term debt................. -- 18,119 30,437 -- 48,556
-------- ---------- -------- -------- ----------
Total liabilities.............. -- 322,530 73,987 -- 396,517
Stockholders' Equity............. -- 867,042 227,735 -- 1,094,777
-------- ---------- -------- -------- ----------
Total liabilities and
stockholders' equity........ $ -- $1,189,572 $301,722 $ -- $1,491,294
======== ========== ======== ======== ==========
</TABLE>
F-25
<PAGE> 162
LAIDLAW ENVIRONMENTAL SERVICES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING CONDENSED STATEMENT OF INCOME
YEAR ENDED AUGUST 31, 1996
<TABLE>
<CAPTION>
LAIDLAW LES, INC. AND CONSOLIDATING
ENVIRONMENTAL SUBSIDIARY SUBSIDIARY ELIMINATING CONSOLIDATED
SERVICES, INC. GUARANTORS NON-GUARANTORS ENTRIES TOTAL
-------------- ------------- -------------- ------------- ------------
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Total revenues.............. $ -- $474,410 $178,563 $ -- $652,973
Operating expenses.......... -- 443,093 152,561 -- 595,654
-------- -------- -------- -------- --------
Operating income............ -- 31,317 26,002 -- 57,319
Interest expense............ -- 35,101 11,749 -- 46,850
Other income (expense)...... -- 2,034 (643) -- 1,391
-------- -------- -------- -------- --------
Income (loss) from
continuing operations
before income tax......... -- (1,750) 13,610 -- 11,860
Income tax expense
(benefit)................. -- (369) 2,869 -- 2,500
-------- -------- -------- -------- --------
Income (loss) from
continuing operations
before minority
interest.................. -- (1,381) 10,741 -- 9,360
Minority interest........... -- -- (2,646) -- (2,646)
-------- -------- -------- -------- --------
Income (loss) from
continuing operations..... -- (1,381) 8,095 -- 6,714
Income (loss) from
discontinued operations... -- 1,496 -- -- 1,496
-------- -------- -------- -------- --------
Net income.................. $ -- $ 115 $ 8,095 $ -- $ 8,210
======== ======== ======== ======== ========
</TABLE>
F-26
<PAGE> 163
LAIDLAW ENVIRONMENTAL SERVICES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
YEAR ENDED AUGUST 31, 1996
<TABLE>
<CAPTION>
LES, INC.
LAIDLAW AND CONSOLIDATING
ENVIRONMENTAL SUBSIDIARY SUBSIDIARY ELIMINATING CONSOLIDATED
SERVICES, INC. GUARANTORS NON-GUARANTORS ENTRIES TOTAL
-------------- ---------- -------------- ------------- ------------
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net cash provided by continuing
operations..................... $ -- $ 18,061 $ 3,888 $ -- $ 21,949
Net cash provided by discontinued
operations..................... -- 3,199 -- -- 3,199
--------- --------- -------- --------- ---------
Net cash provided by operating
activities..................... -- 21,260 3,888 -- 25,148
--------- --------- -------- --------- ---------
Cash flow from investing
activities:
Cash expended on acquisition of
business.................... -- (8,000) -- -- (8,000)
Purchase of property, plant and
equipment................... -- (91,313) (12,971) -- (104,284)
Proceeds from sales of
equipment................... -- 3,127 192 -- 3,319
Other.......................... -- (4,881) (1,103) -- (5,984)
--------- --------- -------- --------- ---------
Net cash used in continuing
operations..................... -- (101,067) (13,882) -- (114,949)
Net cash used in discontinued
operations..................... -- (5,026) -- -- (5,026)
--------- --------- -------- --------- ---------
Net cash used in investing
activities..................... -- (106,093) (13,882) -- (119,975)
--------- --------- -------- --------- ---------
Cash flow from financing
activities:
Bank overdraft................. -- 19,503 2,377 -- 21,880
Repayment of long-term debt.... -- (3,967) (3,581) -- (7,548)
Advances from Laidlaw, Inc. ... -- 71,715 11,198 -- 82,913
--------- --------- -------- --------- ---------
Net cash provided by continuing
operations..................... -- 87,251 9,994 -- 97,245
Net cash provided by (used in)
discontinued operations........ -- (2,418) -- -- (2,418)
--------- --------- -------- --------- ---------
Net cash provided by financing
activities..................... -- 84,833 9,994 -- 94,827
--------- --------- -------- --------- ---------
Net increase in cash and cash
equivalents.................... -- -- -- -- --
Cash and cash equivalents at:
Beginning of period............ -- -- -- -- --
--------- --------- -------- --------- ---------
End of period.................. $ -- $ -- $ -- $ -- $ --
========= ========= ======== ========= =========
</TABLE>
F-27
<PAGE> 164
LAIDLAW ENVIRONMENTAL SERVICES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING CONDENSED STATEMENT OF INCOME
YEAR ENDED AUGUST 31, 1995
<TABLE>
<CAPTION>
LAIDLAW LES, INC. AND CONSOLIDATING
ENVIRONMENTAL SUBSIDIARY SUBSIDIARY ELIMINATING CONSOLIDATED
SERVICES, INC. GUARANTORS NON-GUARANTORS ENTRIES TOTAL
-------------- ------------- -------------- ------------- ------------
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Total revenues.......... $ -- $485,378 $113,863 $ -- $599,241
Operating expenses...... -- 434,829 104,553 -- 539,382
-------- -------- -------- -------- --------
Operating income........ -- 50,549 9,310 -- 59,859
Interest expense........ -- 30,895 10,247 -- 41,142
Other income
(expense)............. -- 2,942 25 -- 2,967
-------- -------- -------- -------- --------
Income (loss) from
continuing operations
before income tax..... -- 22,596 (912) -- 21,684
Income tax expense
(benefit)............. -- 4,969 (200) -- 4,769
-------- -------- -------- -------- --------
Income (loss) from
continuing operations
before minority
interest.............. -- 17,627 (712) -- 16,915
Minority interest....... -- -- (150) -- (150)
-------- -------- -------- -------- --------
Income (loss) from
continuing
operations............ -- 17,627 (862) -- 16,765
Income (loss) from
discontinued
operations............ -- 819 -- -- 819
-------- -------- -------- -------- --------
Net income.............. $ -- $ 18,446 $ (862) $ -- $ 17,584
======== ======== ======== ======== ========
</TABLE>
F-28
<PAGE> 165
LAIDLAW ENVIRONMENTAL SERVICES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
YEAR ENDED AUGUST 31, 1995
<TABLE>
<CAPTION>
LAIDLAW LES, INC. AND CONSOLIDATING
ENVIRONMENTAL SUBSIDIARY SUBSIDIARY ELIMINATING CONSOLIDATED
SERVICES, INC. GUARANTORS NON-GUARANTORS ENTRIES TOTAL
-------------- ------------- -------------- ------------- ------------
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net cash provided by
continuing operations..... $ -- $ 29,107 $ 10,721 $ -- $ 39,828
Net cash provided by
discontinued operations... -- 276 -- -- 276
-------- --------- -------- -------- ---------
Net cash provided by
operating activities...... -- 29,383 10,721 -- 40,104
-------- --------- -------- -------- ---------
Cash flow from investing
activities:
Cash expended on
acquisition of
business............... -- (227,842) (1,344) -- (229,186)
Purchase of property,
plant and equipment.... -- (61,763) (6,887) -- (68,650)
Increase in long-term
investments............ -- (1,238) -- -- (1,238)
Proceeds from sales of
equipment.............. -- 1,203 (27) -- 1,176
Other..................... -- (2,887) 28 -- (2,859)
-------- --------- -------- -------- ---------
Net cash used in continuing
operations................ -- (292,527) (8,230) -- (300,757)
Net cash used in
discontinued operations... -- (3,173) -- -- (3,173)
-------- --------- -------- -------- ---------
Net cash used in investing
activities................ -- (295,700) (8,230) -- (303,930)
-------- --------- -------- -------- ---------
Cash flow from financing
activities:
Bank overdraft............ -- 5,808 1,503 -- 7,311
Additional debt
issuances.............. -- 32,251 -- -- 32,251
Repayment of long-term
debt................... -- (15,115) (11,934) -- (27,049)
Advances from Laidlaw,
Inc. .................. -- 235,674 7,940 -- 243,614
-------- --------- -------- -------- ---------
Net cash provided by (used
in) continuing
operations................ -- 258,618 (2,491) -- 256,127
Net cash provided by
discontinued operations... -- 7,699 -- -- 7,699
-------- --------- -------- -------- ---------
Net cash provided by (used
in) financing
activities................ -- 266,317 (2,491) -- 263,826
-------- --------- -------- -------- ---------
Net increase in cash and
cash equivalents.......... -- -- -- -- --
Cash and cash equivalents
at:
Beginning of period....... -- -- -- -- --
-------- --------- -------- -------- ---------
End of period............. $ -- $ -- $ -- $ -- $ --
======== ========= ======== ======== =========
</TABLE>
F-29
<PAGE> 166
LAIDLAW ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28,
----------------------
1998 1997
-------- --------
($ IN THOUSANDS,
EXCEPT,
PER SHARE AMOUNTS)
(UNAUDITED)
<S> <C> <C>
Revenues.................................................... $384,767 $313,192
Expenses:
Operating................................................. 269,105 225,644
Depreciation and amortization............................. 24,819 29,537
Selling, general and administrative....................... 39,236 33,943
-------- --------
Total expenses.................................... 333,160 289,124
-------- --------
Operating income............................................ 51,607 24,068
Allocated interest expense.................................. -- 16,281
Interest expense (net of amount capitalized)................ 29,489 2,348
Other income................................................ 1,243 1,912
-------- --------
Income from continuing operations before income tax......... 23,361 7,351
Income tax expense.......................................... 9,555 1,557
-------- --------
Income from continuing operations before minority
interest.................................................. 13,806 5,794
Minority interest........................................... (106) (456)
-------- --------
Income from continuing operations........................... 13,700 5,338
Loss from discontinued operations........................... -- (214)
======== ========
Net income........................................ $ 13,700 $ 5,124
======== ========
Basic income per share:
Income from continuing operations......................... $ 0.075 $ 0.044
Loss from discontinued operations......................... -- (0.002)
-------- --------
Net income........................................ $ 0.075 $ 0.042
======== ========
Weighted average common stock outstanding (000s).......... 181,523 120,000
======== ========
Diluted income per share:
Income from continuing operations......................... $ 0.069 $ 0.044
Loss from discontinued operations......................... -- (0.002)
-------- --------
Net income........................................ $ 0.069 $ 0.042
======== ========
Weighted average common stock outstanding and assumed
conversions (000s)..................................... 275,306 120,000
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-30
<PAGE> 167
LAIDLAW ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
FEBRUARY 28, AUGUST 31,
1998 1997
------------ ----------
(UNAUDITED)
($ IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents................................. $ 11,766 $ 11,160
Trade and other accounts receivable....................... 186,273 210,914
Inventories............................................... 7,857 7,927
Deferred income taxes..................................... 13,727 13,027
Other current assets...................................... 17,280 8,512
---------- ----------
Total current assets.............................. 236,903 251,540
---------- ----------
Long-term investments....................................... 69,618 51,909
---------- ----------
Land, landfill sites and improvements....................... 435,023 499,326
Buildings................................................... 418,778 419,779
Machinery and equipment..................................... 581,184 607,296
Construction in process..................................... 17,367 15,608
---------- ----------
Property, plant and equipment............................... 1,452,352 1,542,009
Less: Accumulated depreciation and amortization........... (308,747) (305,440)
---------- ----------
Net property, plant and equipment................. 1,143,605 1,236,569
---------- ----------
Goodwill.................................................... 68,890 70,527
Deferred charges............................................ 9,646 333
========== ==========
Total assets...................................... $1,528,662 $1,610,878
========== ==========
LIABILITIES
Current liabilities
Accounts payable.......................................... $ 64,202 $ 48,148
Accrued liabilities....................................... 79,557 115,211
Current portion of long-term debt......................... 19,233 12,086
---------- ----------
Total current liabilities......................... 162,992 175,445
---------- ----------
Deferred items
Income taxes.............................................. 56,677 49,790
Other..................................................... 165,251 179,668
Long-term debt.............................................. 444,014 528,010
Subordinated convertible debenture.......................... 350,000 350,000
---------- ----------
Total liabilities................................. 1,178,934 1,282,913
---------- ----------
Commitments and contingencies............................... -- --
STOCKHOLDERS' EQUITY
Common stock, par value $1.00 per share; authorized
750,000,000; issued and outstanding 182,286,897; August
31, 1997 -- 180,435,311................................ 182,287 180,435
Additional paid-in capital................................ 392,512 385,200
Cumulative foreign currency translation adjustment........ (2,971) --
Net unrealized gain on securities available for sale...... 1,870 --
Accumulated deficit....................................... (223,970) (237,670)
---------- ----------
Total stockholders' equity........................ 349,728 327,965
========== ==========
Total liabilities and stockholders' equity........ $1,528,662 $1,610,878
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-31
<PAGE> 168
LAIDLAW ENVIRONMENTAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28,
--------------------
1998 1997
-------- --------
($ IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net Income.................................................. $ 13,700 $ 5,124
Adjustments to reconcile net income to net cash provided by
(used in) operations:
Depreciation and amortization............................. 24,819 30,742
Deferred income taxes..................................... 5,986 500
Change in accounts receivable............................. 18,304 7,345
Change in accounts payable, accrued liabilities and
deferred liabilities................................... (18,803) (56,349)
Decrease in liabilities assumed upon acquisition.......... (20,237) --
Restructuring charge payments............................. (7,658) --
Change in other, net...................................... (10,195) 4,094
-------- --------
Net cash provided by (used in) operating
activities...................................... 5,916 (8,544)
-------- --------
Cash flows from investing activities:
Purchase of property, plant and equipment................. (16,431) (13,369)
Proceeds from sales of property, plant and equipment...... 7,936 1,500
Net increase in long-term investments..................... (13,042) (400)
Proceeds from sale of assets held for sale................ 33,675 --
Increase in deferred charges.............................. (9,473) --
-------- --------
Net cash provided by (used in) investing
activities...................................... 2,665 (12,269)
-------- --------
Cash flows from financing activities:
Issuance of common stock on exercise of stock options..... 414 --
Bank overdraft (included in accounts payable)............. 26,432 --
Repayment of long-term debt............................... (34,640) (1,510)
Advances from Laidlaw Inc................................. -- 22,323
-------- --------
Net cash provided by (used in) financing
activities...................................... (7,794) 20,813
-------- --------
Effect of exchange rate changes on cash..................... (181) --
-------- --------
Net increase in cash and cash equivalents......... 606 --
Cash and cash equivalents at:
Beginning of period....................................... 11,160 --
======== ========
End of period............................................. $ 11,766 $ --
======== ========
Noncash investing and financing activities:
Net unrealized gain on securities available for sale...... $ 1,870 $ --
Issuance of common stock to satisfy interest payment due
on November 15, 1997 on subordinated convertible
debenture.............................................. $ 8,750 $ --
Noncash transactions arising from sale of assets held for
sale:
Promissory note receivable............................. $ 8,000 $ --
Reduction of debt...................................... $ 40,814 $ --
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-32
<PAGE> 169
LAIDLAW ENVIRONMENTAL SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998
NOTE 1 -- BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements have
been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X and, therefore, do not include all of the disclosures required by
generally accepted accounting principles for annual financial statements. In the
opinion of management, all adjustments considered necessary for a fair
presentation of the interim period results have been included; all such
adjustments are of a normal recurring nature. Operating results for the six
month periods ended February 28, 1998 are not necessarily indicative of the
results that may be expected for the full fiscal year ending August 31, 1998.
These statements should be read in conjunction with the consolidated financial
statements, including the accounting policies, and notes thereto included in the
Registrant's Annual Report on Form 10-K, filed with the Securities and Exchange
Commission on October 31, 1997. Certain amounts as of August 31, 1997 have been
reclassified to conform to the current period's presentations.
In October 1996, the American Institute of Certified Public Accountants
issued Statement of Position 96-1 "Environmental Remediation Liabilities" ("SOP
96-1"). This SOP was adopted by the Company for the fiscal year beginning
September 1, 1997. SOP 96-1 provides that environmental remediation liabilities
should be accrued when the criteria of Statement of Financial Accounting
Standards ("SFAS") No. 5, "Accounting for Contingencies" are met and it includes
benchmarks to aid in the determination of when environmental remediation
liabilities should be recognized. SOP 96-1 also provides guidance with respect
to the measurement of the liability and the display and disclosure of
environmental remediation liabilities in the financial statements. The adoption
of this SOP did not have a material impact on the Company's financial condition
or net income.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard No. 128 Earnings per Share (SFAS 128). This
standard is effective for financial statements issued for periods after December
15, 1997, with restatement of all prior period earnings per share ("EPS") data
presented. This statement requires the presentation of basic and diluted EPS.
Basic EPS excludes dilution and is computed by dividing income available to
common stockholders by the weighted average number of shares outstanding for the
period. Diluted EPS gives effect to all dilutive potential common shares that
were outstanding during the period. All earnings per share information has been
restated in accordance with SFAS 128.
NOTE 2 -- COMMITMENTS AND CONTINGENCIES
LEGAL PROCEEDINGS:
Tax Matters. The consolidated federal income tax returns of Laidlaw
Transportation, Inc. and its U.S. subsidiaries (collectively, "LTI") (which
until May 15, 1997, included certain of the subsidiaries of the Company) for the
fiscal years ended August 31, 1986, 1987 and 1988, have been under audit by the
Internal Revenue Service. In March 1994, LTI received a statutory notice of
deficiency proposing that LTI pay additional taxes relating to disallowed
deductions in those income tax returns. The principal issue involved, relates to
the timing and the deductibility for tax purposes of interest attributable to
loans owing to related foreign persons. LTI has petitioned the United States Tax
Court (captioned as Laidlaw Transportation, Inc. & Subsidiaries et al. vs.
Commissioner of Internal Revenue, Docket Nos. 9361-94 and 9362-94) for a
redetermination of claimed deficiencies of approximately $49.6 million (plus
interest of approximately $87.4 million as of February 28, 1998). In October
1997, LTI received a statutory notice of deficiency proposing that the
subsidiaries pay additional taxes of approximately $143.5 million (plus interest
of approximately $136.9 million as of February 28, 1998) relating to disallowed
deductions in federal income tax returns for the fiscal years ended August 31,
1989, 1990 and 1991, based on the same issues. LTI intends to vigorously contest
these claimed deficiencies. The Company anticipates that the Internal Revenue
Service will propose adjustments for the same issue in subsequent taxation
years. Pursuant to the February 6, 1997 Stock Purchase Agreement between Rollins
Environmental Services, Inc. ("Rollins") and Laidlaw Inc. ("Laidlaw"), Laidlaw
and LTI agreed to be responsible for any tax
F-33
<PAGE> 170
LAIDLAW ENVIRONMENTAL SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
liabilities resulting from these matters. The Company believes that the ultimate
disposition of these issues will not have a materially adverse effect upon the
Company's consolidated financial position or results of operations.
NOTE 3 -- STOCKHOLDERS' EQUITY
Changes in the components of stockholders' equity since September 1, 1997
are as follows ($ in thousands):
<TABLE>
<CAPTION>
CUMULATIVE UNREALIZED
FOREIGN GAIN ON
ADDITIONAL CURRENCY ASSETS TOTAL
COMMON PAID-IN TRANSLATION AVAILABLE ACCUMULATED STOCKHOLDERS
STOCK CAPITAL ADJUSTMENT FOR SALE DEFICIT EQUITY
-------- ---------- ----------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at September 1, 1997......... $180,435 $385,200 $ -- $ -- $(237,670) $ 327,965
Net income for period................ -- -- -- -- 13,700 13,700
Exercise of stock options............ 136 278 -- -- -- 414
Issuance of shares (Note A).......... 1,716 7,034 -- -- -- 8,750
Unrealized gain on securities
available for sale................. -- -- -- 1,870 -- 1,870
Cumulative foreign currency
translation adjustments............ -- -- (2,971) -- -- (2,971)
-------- -------- ------- --------- --------- ---------
Balance at February 28, 1998......... $182,287 $392,512 $(2,971) $ 1,870 $(223,970) $ 349,728
======== ======== ======= ========= ========= =========
</TABLE>
Note A: To satisfy interest payment due on November 15, 1997 on
subordinated convertible debenture.
At February 28, 1998, the Company had issued and outstanding 182,286,897
shares of its $1 par value common stock. For accounting purposes, 120 million of
these shares were deemed outstanding in all prior periods and 60,375,811 were
deemed to have been issued on May 15, 1997, at $2.75 per share, as consideration
for the acquisition of Rollins by the Company.
During the period ended November 30, 1997, the Company purchased equity
securities classified as available for sale and accordingly are reported at fair
value at February 28, 1998, with unrealized gains excluded from earnings and
reported net of deferred income taxes as a separate component of stockholders'
equity.
NOTE 4 -- SALE OF ASSETS
On December 18, 1997, the Company sold its municipal solid waste landfill
in Carbon County, Utah to Allied Waste Industries, Inc. The total consideration
received by the Company was $90 million, consisting of $19 million in cash,
assumed debt of approximately $51 million, a promissory note for $10 million
with interest at 7% due March 1, 2000, and $10 million contingently receivable
March 1, 2000, upon the satisfaction of certain earnings targets. As well, the
Company was reimbursed $14.7 million in cash for trust funds securing
obligations of the landfill. The transaction resulted in no gain or loss.
NOTE 5 -- SUBSEQUENT EVENTS
The Company announced on April 1, 1998 that 94% of Safety-Kleen Corp.
shareholders had accepted its exchange offer, as amended on March 16, 1998,
relating to the acquisition of Safety-Kleen by the Company. Under the terms of
the offer, the Company will exchange $18.30 and 2.8 common shares for each
Safety-Kleen share tendered. The total consideration for the acquisition is
approximately $2.2 billion, including debt assumed, estimated transaction costs
and the issuance of approximately 166 million common shares. On April 7, 1998,
the Company completed the acquisition of the shares tendered prior to April 1,
1998, with the balance to be acquired through a back-end merger, which is
expected to be completed by approximately May 20, 1998.
F-34
<PAGE> 171
LAIDLAW ENVIRONMENTAL SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 6 -- SUMMARIZED FINANCIAL INFORMATION
In connection with the acquisition of Safety-Kleen (see Note 5), LES, Inc.
a wholly-owned subsidiary of Laidlaw Environmental Services, Inc., issued 9 1/4%
Senior Subordinated Notes, the payment of which is guaranteed on a senior
subordinated basis by Laidlaw Environmental Services, Inc. and are jointly and
severally guaranteed on a senior subordinated basis by the Company's
wholly-owned domestic subsidiaries. No foreign direct or indirect subsidiary or
non-wholly-owned domestic subsidiary is an obligor or guarantor on the
financing. Separate financial statements and other disclosures concerning each
of LES, Inc. and the subsidiary guarantors are not presented because management
believes they are not material to investors.
CONSOLIDATING CONDENSED BALANCE SHEET
FEBRUARY 28, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
LES, INC.
LAIDLAW AND CONSOLIDATING
ENVIRONMENTAL SUBSIDIARY SUBSIDIARY ELIMINATING CONSOLIDATED
SERVICES, INC. GUARANTORS NON-GUARANTORS ENTRIES TOTAL
-------------- ---------- -------------- ------------- ------------
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Assets:
Current assets................. $ -- $ 187,337 $ 49,566 $ -- $ 236,903
Property, plant and equipment,
net......................... -- 1,030,441 113,164 -- 1,143,605
Investment in Subsidiaries..... 831,728 88,000 -- (919,728) --
Other non-current assets....... -- 117,352 47,122 (16,320) 148,154
---------- ---------- -------- --------- ----------
Total assets................... $ 831,728 $1,423,130 $209,852 $(936,048) $1,528,662
========== ========== ======== ========= ==========
Liabilities:
Current liabilities............ $ 6,800 $ 97,439 $ 58,753 $ -- $ 162,992
Non-current liabilities........ -- 234,429 3,819 (16,320) 221,928
Long-term debt................. 125,200 268,224 50,590 -- 444,014
Subordinated convertible
debenture................... 350,000 -- -- -- 350,000
---------- ---------- -------- --------- ----------
Total liabilities.............. 482,000 600,092 113,162 -- 1,178,934
Stockholders' Equity............. 349,728 823,038 96,690 (919,728) 349,728
---------- ---------- -------- --------- ----------
Total liabilities and
stockholders' equity........... $ 831,728 $1,423,130 $209,852 $(936,048) $1,528,662
========== ========== ======== ========= ==========
</TABLE>
F-35
<PAGE> 172
LAIDLAW ENVIRONMENTAL SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING CONDENSED STATEMENT OF INCOME
SIX MONTHS ENDED FEBRUARY 28, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
LES, INC.
LAIDLAW AND CONSOLIDATING
ENVIRONMENTAL SUBSIDIARY SUBSIDIARY ELIMINATING CONSOLIDATED
SERVICES, INC. GUARANTORS NON-GUARANTORS ENTRIES TOTAL
-------------- ---------- -------------- ------------- ------------
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Total revenues.................... $ -- $305,202 $79,565 $ -- $384,767
Operating expenses................ -- 269,925 63,235 -- 333,160
-------- -------- ------- -------- --------
Operating income.................. -- 35,277 16,330 -- 51,607
Interest expense.................. 12,760 14,477 2,252 -- 29,489
Other income (expense)............ 21,518 1,689 (446) (21,518) 1,243
-------- -------- ------- -------- --------
Income (loss) from continuing
operations before income tax.... 8,758 22,489 13,632 (21,518) 23,361
Income tax expense (benefit)...... (4,942) 9,922 4,575 -- 9,555
-------- -------- ------- -------- --------
Income (loss) from continuing
operations before minority
interest........................ 13,700 12,567 9,057 (21,518) 13,806
Minority interest................. -- 384 (490) -- (106)
-------- -------- ------- -------- --------
Net income........................ $ 13,700 $ 12,951 $ 8,567 $(21,518) $ 13,700
======== ======== ======= ======== ========
</TABLE>
F-36
<PAGE> 173
LAIDLAW ENVIRONMENTAL SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED FEBRUARY 28, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
LES, INC.
LAIDLAW AND CONSOLIDATING
ENVIRONMENTAL SUBSIDIARY SUBSIDIARY ELIMINATING CONSOLIDATED
SERVICES, INC. GUARANTORS NON-GUARANTORS ENTRIES TOTAL
-------------- ---------- -------------- ------------- ------------
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in)
operating activities............ $ 1,372 $(11,818) $ 16,362 $-- $ 5,916
------- -------- -------- -- --------
Cash flow from investing
activities:
Purchase of plant, property and
equipment.................... -- (12,384) (4,047) -- (16,431)
Proceeds from sale of property,
plant and equipment.......... -- 7,921 15 -- 7,936
Net increase in long-term
investments.................. -- (12,853) (189) -- (13,042)
Proceeds from sale of assets
held for sale................ -- -- 33,675 -- 33,675
Increase in deferred charges.... -- (9,448) (25) -- (9,473)
------- -------- -------- -- --------
Net cash provided by (used in)
investing activities............ -- (26,764) 29,429 -- 2,665
------- -------- -------- -- --------
Cash flow from financing
activities:
Issuance of common stock on
exercise of stock options.... 414 -- -- -- 414
Bank overdraft (included in
accounts payable)............ -- 15,187 11,245 -- 26,432
Repayment of long-term debt..... -- (33,378) (1,262) -- (34,640)
Intercompany (receivable)
payable...................... (1,786) 37,404 (35,618) -- --
------- -------- -------- -- --------
Net cash provided by (used in)
financing activities............ (1,372) 19,213 (25,635) -- (7,794)
------- -------- -------- -- --------
Effect of exchange rates changes
on cash......................... -- -- (181) -- (181)
------- -------- -------- -- --------
Net increase (decrease) in cash
and cash equivalent............. -- (19,369) 19,975 -- 606
Cash and cash equivalents at:
Beginning of period............. -- 24,770 (13,610) -- 11,160
------- -------- -------- -- --------
End of period................... $ -- $ 5,401 $ 6,365 $-- $ 11,766
======= ======== ======== == ========
</TABLE>
F-37
<PAGE> 174
LAIDLAW ENVIRONMENTAL SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING CONDENSED STATEMENT OF INCOME
SIX MONTHS ENDED FEBRUARY 28, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
LAIDLAW LES, INC. AND CONSOLIDATING
ENVIRONMENTAL SUBSIDIARY SUBSIDIARY ELIMINATING CONSOLIDATED
SERVICES, INC. GUARANTORS NON-GUARANTORS ENTRIES TOTAL
-------------- ------------- -------------- ------------- ------------
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Total revenues................ $ -- $233,923 $79,269 $ -- $313,192
Operating expenses............ -- 220,219 68,905 -- 289,124
---- -------- ------- ---- --------
Operating income.............. -- 13,704 10,364 -- 24,068
Interest expense.............. -- 13,728 4,901 -- 18,629
Other income (expense)........ -- 375 1,537 -- 1,912
---- -------- ------- ---- --------
Income (loss) from continuing
operations before income
tax......................... -- 351 7,000 -- 7,351
Income tax expense
(benefit)................... -- 74 1,483 -- 1,557
---- -------- ------- ---- --------
Income (loss) from continuing
operations before minority
interest.................... -- 277 5,517 -- 5,794
Minority interest............. -- (196) (260) -- (456)
---- -------- ------- ---- --------
Income (loss) from continuing
operations.................. -- 81 5,257 -- 5,338
Income (loss) from
discontinued operations..... -- (214) -- -- (214)
---- -------- ------- ---- --------
Net income.................... $ -- $ (133) $ 5,257 $ -- $ 5,124
==== ======== ======= ==== ========
</TABLE>
F-38
<PAGE> 175
LAIDLAW ENVIRONMENTAL SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED FEBRUARY 28, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
LAIDLAW LES, INC. AND CONSOLIDATING
ENVIRONMENTAL SUBSIDIARY SUBSIDIARY ELIMINATING CONSOLIDATED
SERVICES, INC. GUARANTORS NON-GUARANTORS ENTRIES TOTAL
-------------- ------------- -------------- ------------- ------------
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net cash provided by (used
in) operating
activities................ $-- $(22,538) $ 13,994 $-- $ (8,544)
--- -------- -------- --- --------
Cash flow from investing
activities:
Purchase of plant,
property and
equipment.............. -- (3,693) (9,676) -- (13,369)
Proceeds from sale of
property, plant and
equipment.............. -- 1,341 159 -- 1,500
Net increase in long-term
investments............ -- 496 (896) -- (400)
--- -------- -------- --- --------
Net cash provided by (used
in) investing
activities................ -- (1,856) (10,413) -- (12,269)
--- -------- -------- --- --------
Cash flow from financing
activities:
Repayment of long-term
debt................... -- (1,422) (88) -- (1,510)
Advances from (payments
to) Laidlaw, Inc....... -- 25,816 (3,493) -- 22,323
--- -------- -------- --- --------
Net cash used in financing
activities................ -- 24,394 (3,581) -- 20,813
--- -------- -------- --- --------
Net increase in cash and
cash equivalents.......... -- -- -- -- --
Cash and cash equivalents
at:
Beginning of period....... -- -- -- --
--- -------- -------- --- --------
End of period............. $-- $ -- $ -- $-- $ --
=== ======== ======== === ========
</TABLE>
F-39
<PAGE> 176
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and
Shareholders of Safety-Kleen Corp.:
We have audited the accompanying consolidated balance sheets of
Safety-Kleen Corp. (a Wisconsin corporation) and Subsidiaries as of January 3,
1998 and December 28, 1996, and the related consolidated statements of
operations, comprehensive income, shareholders' equity and cash flows for each
of the three fiscal years in the period ended January 3, 1998. These financial
statements are the responsibility of the Company's management. 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 financial statements referred to above present fairly,
in all material respects, the financial position of Safety-Kleen Corp. and
Subsidiaries as of January 3, 1998 and December 28, 1996, and the results of
their operations and their cash flows for each of the three fiscal years in the
period ended January 3, 1998, in conformity with generally accepted accounting
principles.
Arthur Andersen LLP
Chicago, Illinois
February 12, 1998, except with respect to the matters
discussed in Note 12 as to which the date is April 1, 1998.
F-40
<PAGE> 177
SAFETY-KLEEN CORP. AND SUBSIDIARIES
FOR THE FISCAL YEARS ENDED JANUARY 3, 1998, DECEMBER 28, 1996, AND DECEMBER 30,
1995
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
1997 1996 1995
---------- -------- --------
(EXPRESSED IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
REVENUE..................................................... $1,007,903 $923,126 $859,251
Operating costs and expenses.............................. 748,986 671,971 628,469
---------- -------- --------
GROSS PROFIT................................................ 258,917 251,155 230,782
Selling and administrative expenses....................... 138,492 131,665 122,319
Restructuring (credit).................................... -- -- (15,217)
Special charge for environmental remediation costs........ -- -- 11,956
---------- -------- --------
OPERATING INCOME............................................ 120,425 119,490 111,724
Interest income........................................... (1,414) (1,398) (974)
Interest expense.......................................... 18,108 19,240 20,230
Merger related costs...................................... 3,231 -- --
---------- -------- --------
EARNINGS BEFORE INCOME TAXES................................ 100,500 101,648 92,468
Income taxes.............................................. 37,330 40,539 39,165
---------- -------- --------
NET EARNINGS................................................ $ 63,170 $ 61,109 $ 53,303
========== ======== ========
EARNINGS PER SHARE:
Basic..................................................... $ 1.08 $ 1.05 $ 0.92
Diluted................................................... $ 1.07 $ 1.05 $ 0.92
========== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-41
<PAGE> 178
SAFETY-KLEEN CORP. AND SUBSIDIARIES
FOR THE FISCAL YEARS ENDED JANUARY 3, 1998, DECEMBER 28, 1996 AND DECEMBER 30,
1995
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- -------
(EXPRESSED IN THOUSANDS)
<S> <C> <C> <C>
Net Earnings................................................ $ 63,170 $61,109 $53,303
Minimum pension liability adjustment........................ -- 1,226 (1,226)
Unrealized foreign currency translation adjustments......... (12,759) (972) 4,254
-------- ------- -------
Comprehensive Income........................................ $ 50,411 $61,363 $56,331
======== ======= =======
</TABLE>
F-42
<PAGE> 179
SAFETY-KLEEN CORP. AND SUBSIDIARIES
AS OF JANUARY 3, 1998 AND DECEMBER 28, 1996
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JANUARY 3, 1998 DECEMBER 28, 1996
--------------- -----------------
(EXPRESSED IN THOUSANDS, EXCEPT
SHARE DATA)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents................................. $ 11,202 $ 10,648
Trade accounts receivable, less allowances of $7,634 and
$8,416, respectively.................................... 131,092 132,436
Inventories............................................... 51,339 49,971
Deferred tax assets....................................... 10,694 11,973
Prepaid expenses and other................................ 20,099 25,105
---------- ----------
224,426 230,133
---------- ----------
EQUIPMENT AT CUSTOMERS AND COMPONENTS, AT COST LESS
accumulated depreciation of $44,928 and $45,811,
respectively.............................................. 127,631 124,491
---------- ----------
PROPERTY, AT COST
Land...................................................... 50,130 49,340
Buildings and improvements................................ 243,619 238,296
Leasehold improvements.................................... 35,894 34,168
Machinery and equipment................................... 431,890 421,134
Autos and trucks.......................................... 124,999 129,319
---------- ----------
886,532 872,257
Less accumulated depreciation............................. 384,422 349,921
---------- ----------
502,110 522,336
---------- ----------
INTANGIBLE ASSETS, AT COST
Goodwill.................................................. 91,219 92,112
Other..................................................... 148,885 122,203
---------- ----------
240,104 214,315
Less accumulated amortization............................. 95,568 77,106
---------- ----------
144,536 137,209
---------- ----------
OTHER ASSETS
Deferred tax assets....................................... 20,607 24,135
Other..................................................... 15,396 6,519
---------- ----------
36,003 30,654
---------- ----------
$1,034,706 $1,044,823
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long term debt...................... $ 37 $ --
Trade accounts payable.................................... 75,284 69,684
Accrued salaries, wages and employee benefits............. 29,769 25,510
Other accrued expenses.................................... 28,343 29,237
Insurance reserves........................................ 12,614 13,621
Accrued environmental liabilities......................... 8,382 8,941
Income taxes payable...................................... 1,014 10,800
---------- ----------
155,443 157,793
---------- ----------
LONG-TERM DEBT, LESS CURRENT PORTION........................ 214,234 276,954
---------- ----------
DEFERRED TAX LIABILITIES.................................... 65,607 49,849
---------- ----------
ACCRUED ENVIRONMENTAL LIABILITIES........................... 32,888 40,260
---------- ----------
OTHER LIABILITIES........................................... 37,067 39,677
---------- ----------
COMMITMENTS AND CONTINGENT LIABILITIES (NOTE 10)
---------- ----------
SHAREHOLDERS' EQUITY
Preferred stock ($.10 par value; authorized 1,000,000
shares; none issued).................................... -- --
Common stock ($.10 par value; authorized 300,000,000
shares; issued and outstanding 59,191,462 shares and
58,246,939 shares, respectively)........................ 5,919 5,825
Additional paid-in capital................................ 212,504 192,755
Retained earnings......................................... 338,318 296,225
Cumulative translation adjustments........................ (27,274) (14,515)
---------- ----------
529,467 480,290
---------- ----------
$1,034,706 $1,044,823
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-43
<PAGE> 180
SAFETY-KLEEN CORP. AND SUBSIDIARIES
FOR THE FISCAL YEARS ENDED JANUARY 3, 1998, DECEMBER 28, 1996 AND DECEMBER 30,
1995
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
MINIMUM
TOTAL COMMON ADDITIONAL PENSION CUMULATIVE
SHAREHOLDERS' STOCK $.10 PAID-IN RETAINED LIABILITY TRANSLATION
EQUITY PAR VALUE CAPITAL EARNINGS ADJ. ADJUSTMENTS
------------- ---------- ---------- -------- --------- -----------
(EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994.... $396,336 $5,775 $184,789 $223,569 $ -- $(17,797)
Net earnings.................... 53,303 -- -- 53,303 -- --
Cash dividends.................. (20,820) -- -- (20,820) -- --
Stock options exercised and
related tax benefits.......... 1,588 12 1,576 -- -- --
Minimum pension liability
adjustment.................... (1,226) -- -- -- (1,226) --
Change in cumulative translation
adjustment.................... 4,254 -- -- -- -- 4,254
-------- ------ -------- -------- ------- --------
Balance at December 30, 1995.... $433,435 $5,787 $186,365 $256,052 $(1,226) $(13,543)
Net earnings.................... 61,109 -- -- 61,109 -- --
Cash dividends.................. (20,936) -- -- (20,936) -- --
Stock issued for business
acquired...................... 4,847 27 4,820 -- -- --
Stock options exercised and
related tax benefits.......... 1,581 11 1,570 -- -- --
Minimum pension liability
adjustment.................... 1,226 -- -- -- 1,226 --
Change in cumulative translation
adjustments................... (972) -- -- -- -- (972)
-------- ------ -------- -------- ------- --------
Balance at December 28, 1996.... $480,290 $5,825 $192,755 $296,225 $ -- $(14,515)
Net earnings.................... 63,170 -- -- 63,170 -- --
Cash dividends.................. (21,077) -- -- (21,077) -- --
Stock options exercised and
related tax benefits.......... 19,843 94 19,749 -- -- --
Change in cumulative translation
adjustments................... (12,759) -- -- -- -- (12,759)
-------- ------ -------- -------- ------- --------
Balance at January 3, 1998...... $529,467 $5,919 $212,504 $338,318 $ -- $(27,274)
======== ====== ======== ======== ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-44
<PAGE> 181
SAFETY-KLEEN CORP. AND SUBSIDIARIES
FOR THE FISCAL YEARS ENDED JANUARY 3, 1998, DECEMBER 28, 1996 AND DECEMBER 30,
1995
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
1997 1996 1995
-------- --------- ---------
(EXPRESSED IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings.............................................. $ 63,170 $ 61,109 $ 53,303
-------- --------- ---------
Adjustments to reconcile net earnings to net cash provided
by operating activities
Depreciation of equipment at customers and property.... 60,815 60,830 61,681
Amortization of intangible and other assets............ 20,195 16,911 16,120
Provisions for doubtful accounts receivable............ 4,228 4,556 4,225
Change in deferred income tax assets and liabilities,
net.................................................. 13,680 15,297 26,504
Other.................................................. 9,492 9,461 2,584
(Increase) decrease in assets, net of effects from
business acquisitions:
Trade accounts receivable.............................. (2,050) (25,251) (8,433)
Inventories............................................ (1,368) (13,499) (1,088)
Prepaid expenses and other............................. 2,219 (5,152) (2,001)
Increase (decrease) in liabilities, net of effects from
business acquisitions:
Trade accounts payable and accrued expenses............ 4,188 1,990 703
Environmental liabilities.............................. (7,931) (5,073) 4,459
Restructure and other liabilities...................... (2,624) (5,234) (33,115)
-------- --------- ---------
Total adjustments......................................... 100,844 54,836 71,639
-------- --------- ---------
Net cash provided by operating activities................... 164,014 115,945 124,942
-------- --------- ---------
Cash flows used in investing activities:
Equipment at customers additions.......................... (20,869) (23,854) (34,874)
Property additions........................................ (35,162) (37,670) (43,235)
Payment for business acquisitions, net of cash acquired... (13,458) (26,651) (12,682)
Other assets additions, net............................... (26,962) (13,158) (12,671)
-------- --------- ---------
Net cash used in investing activities....................... (96,451) (101,333) (103,462)
Cash flows from (used in) financing activities:
Net borrowings (payments) under line-of-credit
agreements............................................. (62,684) (6,760) (51,565)
Proceeds from issuance of senior notes.................... -- -- 50,000
Proceeds from stock option exercises...................... 16,940 1,576 1,930
Cash dividends paid....................................... (21,077) (20,936) (20,820)
-------- --------- ---------
Net cash from (used in) financing activities................ (66,821) (26,120) (20,455)
-------- --------- ---------
Effect of exchange rate changes on cash..................... (188) (82) 198
-------- --------- ---------
Increase (decrease) in cash and cash equivalents............ 554 (11,590) 1,223
Cash and cash equivalents at beginning of year.............. 10,648 22,238 21,015
-------- --------- ---------
Cash and cash equivalents at end of year.................... $ 11,202 $ 10,648 $ 22,238
======== ========= =========
Supplemental Information:
Cash paid during the year for:
Interest (net of amount capitalized)................... $ 18,957 $ 19,607 $ 18,997
Income taxes (net of refunds received)................. 23,955 27,547 11,231
Consideration given up and liabilities assumed in business
acquisitions........................................... 16,706 30,858 17,268
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-45
<PAGE> 182
SAFETY-KLEEN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF BUSINESS
The Company is a leading provider of services to generators of spent
solvents and other contaminated waste streams as well as the leading provider of
parts cleaner services and one of the world's largest collectors and re-
refiners of used lube oil. The Company serves hundreds of thousands of customers
in North America and Europe, through a network of 230 branch facilities.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The Consolidated Financial Statements include the accounts of the Company
and its subsidiaries after elimination of all significant intercompany balances
and transactions. The Company's fiscal year ends on the Saturday closest to
December 31. Fiscal year 1997 has fifty-three weeks while fiscal years 1996 and
1995 have fifty-two weeks.
EQUIPMENT AT CUSTOMERS AND RELATED DEPRECIATION
Equipment at customers is capitalized at manufactured or purchased cost.
Depreciation is computed using the straight-line method over a period of 3 to 13
years, commencing when the units are placed in service.
PROPERTY AND RELATED DEPRECIATION
Land, buildings and improvements, leasehold improvements, machinery and
equipment, and autos and trucks are capitalized at cost. Items of an ordinary
repair or maintenance nature are charged directly to operating expense.
Improvement costs are capitalized and charged to operations over the shorter of
the improvement life or the related asset life. Depreciation is computed
principally using the straight-line method over the estimated useful lives as
follows: buildings and improvements 5 to 40 years; machinery and equipment 2 to
20 years; autos and trucks 4 to 10 years; and leasehold improvements over the
shorter of 5 to 10 years, or the remaining term of the lease.
INTANGIBLE ASSETS AND RELATED AMORTIZATION
Goodwill consists primarily of the cost of acquired businesses in excess of
market value of net assets acquired. Goodwill is being amortized on a
straight-line basis over forty years or less. Subsequent to its acquisition, the
Company continually evaluates whether later events and circumstances have
occurred that indicate the remaining estimated useful life of goodwill may
warrant revision or that the remaining balance of goodwill may not be
recoverable. When factors indicate that goodwill should be evaluated for
possible impairment, the Company uses an estimate of the related undiscounted
operating income over the remaining life of the goodwill in measuring whether
the goodwill is recoverable.
Other intangible assets consist primarily of costs to obtain customers and
computer software. Amortization of other intangible assets is computed using the
straight-line method over the expected life of the intangible asset, which
principally ranges from 2 years to 10 years. The Company continually evaluates
whether later events and circumstances have occurred that indicate that the
remaining useful life of any of the other intangible assets may warrant revision
or that the remaining balance might not be recoverable. When factors indicate
that other intangible assets should be evaluated for possible impairment, the
Company uses an estimate of the related undiscounted cash flows, over the
remaining lives of the intangibles in measuring whether such intangibles are
recoverable.
F-46
<PAGE> 183
SAFETY-KLEEN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
ENVIRONMENTAL REMEDIATION COSTS AND LIABILITIES
The Company has recorded estimates for remediation costs relating to all
operating and previously closed sites prior to conducting detailed individual
site investigations to ascertain the existence and extent of contamination. Such
estimates are based on the Company's past experience in remediating such sites.
The Company reviews the adequacy of its liability for environmental remediation
on a periodic basis and records adjustments to the costs and liabilities
accordingly. In 1995, the Company recorded a $12 million pre-tax charge to
refine its estimates of environmental liabilities based on its ongoing review of
spending patterns.
EARNINGS PER SHARE (EPS)
Effective December 15, 1997, the Company adopted Statement of Financial
Accounting Standard ("SFAS") No. 128 on "Earnings Per Share", which requires the
presentation of basic and diluted earnings per common share for all periods
presented.
Basic EPS amounts are based on the weighted average number of shares of
common stock outstanding of 58,414,996, 58,088,894 and 57,813,488 for fiscal
years 1997, 1996 and 1995, respectively, while diluted EPS amounts are based on
the weighted average number of shares of common stock during the year and the
effect of dilutive stock options and warrants. For fiscal years 1997, 1996 and
1995, the effect of potentially dilutive stock options and warrants were
510,685; 63,461 and 43,456 shares, respectively. The Company had additional
stock options of 1,388,504; 3,454,836 and 3,498,286 at January 3, 1998, December
28, 1996 and December 30, 1995, respectively, which were not included in the
computation of diluted earnings per share because the options' exercise price
was greater than the average market price of the common share.
STATEMENT OF CASH FLOWS
Short-term investments with original maturities of 90 days or less are
considered to be cash equivalents for purposes of the Consolidated Statements of
Cash Flows and Consolidated Balance Sheets. Cash flows associated with items
intended as hedges of identifiable transactions are classified in the same
categories as the cash flows of the items being hedged. Refer to Note 6 for
further information regarding the Company's hedging agreements.
FOREIGN CURRENCY TRANSLATION
The financial statements of subsidiaries outside the United States are
generally measured using the local currency as the functional currency. Assets,
including goodwill, and liabilities of the subsidiaries are translated at the
rates of exchange at the balance sheet date. The resultant translation
adjustments are included in cumulative translation adjustments, a separate
component of shareholders' equity. Income and expense items are translated at
average period rates of exchange. Gains and losses from foreign currency
transactions of these subsidiaries are included in net earnings in the period in
which they occur and are not material.
REVENUE RECOGNITION
Revenues are recorded at the time of performance of services or shipment of
products. Revenue includes sales of oil related products totaling, $105.9,
$103.5 and $91.4 million for fiscal years 1997, 1996 and 1995, respectively.
Other sales of products were not material to the Consolidated Financial
Statements.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements as well as the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
F-47
<PAGE> 184
SAFETY-KLEEN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to be consistent with
current year presentation.
NEW ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 130 on "Reporting Comprehensive Income," and SFAS No. 131 on "Disclosures
about Segments of an Enterprise and Related Information." SFAS No. 130
establishes standards for reporting comprehensive income in financial statements
and SFAS No. 131 expands certain reporting and disclosure requirements for
segments from current standards. The Company is not required to adopt these
statements until 1998 and is currently reviewing the impact of these new
standards.
3. ACQUISITIONS
All acquisitions made during the three fiscal years ended January 3, 1998
were accounted for using the purchase method and, accordingly, their operating
results have been included in the Company's Consolidated Statements of
Operations only since the respective dates of acquisition. The acquisitions were
not material either individually or in the aggregate.
4. SEGMENT INFORMATION
The Company and its subsidiaries operate in the United States, the
Commonwealth of Puerto Rico, Canada, the United Kingdom, the Republic of
Ireland, France, Belgium, Italy, Germany, and Spain. A summary of certain data
with respect to these operations for the fiscal years ended January 3, 1998,
December 28, 1996 and December 30, 1995 is presented below:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
(EXPRESSED IN THOUSANDS)
<S> <C> <C> <C>
REVENUE
United States and Puerto Rico.................. $ 834,680 $ 754,271 $ 698,792
Canada......................................... 63,345 62,529 61,286
Europe......................................... 109,878 106,326 99,173
---------- ---------- ----------
Consolidated......................... $1,007,903 $ 923,126 $ 859,251
========== ========== ==========
TOTAL ASSETS
United States and Puerto Rico.................. $ 802,602 $ 788,521 $ 766,276
Canada......................................... 73,265 75,750 68,482
Europe......................................... 158,839 180,552 174,292
---------- ---------- ----------
Consolidated......................... $1,034,706 $1,044,823 $1,009,050
========== ========== ==========
NET EARNINGS
United States and Puerto Rico.................. $ 54,178 $ 56,092 $ 44,446
Canada......................................... 656 1,614 3,751
Europe......................................... 8,336 3,403 5,106
---------- ---------- ----------
Consolidated......................... $ 63,170 $ 61,109 $ 53,303
========== ========== ==========
</TABLE>
In 1997, based on the Company's ongoing review of its accrued environmental
liabilities, approximately $2.0 million of excess reserves in Europe were
reversed and a $2.0 million charge was recorded in the United States to cover
estimated remediation costs. This transfer only impacted net earnings by segment
and had no impact on consolidated net earnings.
F-48
<PAGE> 185
SAFETY-KLEEN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In 1995, the Company recorded a $15.2 million pre-tax credit to income for
the writedown of restructuring reserves previously established in 1993 and the
$12 million pre-tax charge for the refinement of the Company's environmental
remediation reserves at its facilities in North America.
The net earnings, by segment, excluding the 1997 transfer of environmental
reserves and the 1995 adjustments to restructuring and accrued environmental
liabilities, were as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
(EXPRESSED IN THOUSANDS)
<S> <C> <C> <C>
United States and Puerto Rico......................... $55,378 $56,092 $49,383
Canada................................................ 656 1,614 1,856
Europe................................................ 7,136 3,403 2,064
------- ------- -------
Total....................................... $63,170 $61,109 $53,303
======= ======= =======
</TABLE>
The Company operates primarily in one business segment -- providing
businesses with environmentally safe and convenient solutions for managing fluid
waste and other recoverable resources.
5. INVENTORIES
The Company's inventories consist primarily of solvent, oil and supplies.
LIFO inventories at January 3, 1998 and December 28, 1996 were $5.5 million and
$4.8 million, respectively. Under the FIFO method of accounting (which
approximates current or replacement cost) inventories would have been $0.4 and
$0.3 million higher at January 3, 1998 and December 28, 1996, respectively. The
Company's inventories consist of the following:
<TABLE>
<CAPTION>
JANUARY 3, DECEMBER 28,
1998 1996
---------- ------------
(EXPRESSED IN THOUSANDS)
<S> <C> <C>
Oil......................................................... $12,759 $14,997
Solvent, Drums and Other.................................... 38,580 34,974
------- -------
Total............................................. $51,339 $49,971
======= =======
</TABLE>
6. FINANCIAL ARRANGEMENTS AND LONG-TERM DEBT
Long-term debt at January 3, 1998 and December 28, 1996 consisted of the
following:
<TABLE>
<CAPTION>
JANUARY 3, DECEMBER 28,
1998 1996
---------- ------------
(EXPRESSED IN THOUSANDS)
<S> <C> <C>
9.25% Senior Notes due in 1999.............................. $100,000 $100,000
8.05% Senior Notes due in 1998.............................. 50,000 50,000
Unsecured notes payable to banks under financing agreements:
Revolving lines of credit................................. 47,000 67,990
Uncommitted lines of credit............................... 11,192 52,897
Other....................................................... 6,079 6,067
-------- --------
214,271 276,954
Less-current portion........................................ 37 0
-------- --------
Total long-term debt.............................. $214,234 $276,954
======== ========
</TABLE>
F-49
<PAGE> 186
SAFETY-KLEEN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The long-term debt as of January 3, 1998 is due as follows:
<TABLE>
<CAPTION>
(EXPRESSED
IN THOUSANDS)
---------------
<S> <C>
1999........................................................ $100,091
2000........................................................ 108,653
2001........................................................ 5,190
2002........................................................ 60
2003 and thereafter......................................... 240
</TABLE>
The $100 million of 9.25% Senior Notes ("the Notes") due September 1999
specify that, upon the occurrence of a credit agency rating decline below
investment grade, either in conjunction with a change in control or as a result
of other events as defined in the Notes, each holder of the Notes has the option
to require the Company to purchase all or any part of such holder's Notes at a
price equal to 100% of the principal amount plus accrued interest.
In May 1992, the Company executed interest rate swap agreements that
effectively convert $100 million of its fixed-rate borrowings into variable rate
obligations. These swap agreements expire in September 1999. In April 1993, the
Company executed an interest rate swap agreement that converted these $100
million variable rate obligations to a fixed rate. This agreement expired in
September 1996. The effect of these swaps reduced the interest rate on the Notes
from 9.25% to 7.08% through September 1996. Effective September 1996, the
interest rate reverted back to a variable rate. The variable rate is based on
the U.S. Dollar London Interbank Offered Rate (LIBOR) determined at 6-month
intervals. At January 3, 1998, the effective variable rate of interest on these
borrowings was 7.9%.
In May 1992, at the same time the Company entered into the $100 million
interest rate swap agreement, the Company entered into an interest rate cap
agreement, which protects the Company from rising interest rates. The cap has a
notional amount of $100 million, and expires on September 12, 1999. The cap
effectively limits the Company's interest rate exposure to 13.92% if LIBOR
exceeds 12%. The premium paid on the cap is being amortized to interest expense
over the term of the cap.
The Company has a U.S. revolving credit agreement totaling $160 million,
which expires in March 2000. The agreement provides for interest rates to be
determined at the time of the borrowing based on a choice of formulas as
specified in the agreement. The Company currently benefits from a competitive
bid option under the agreement which ensures that favorable market rates of
interest are secured. A facility fee based on the Company's credit ratings is
paid on the total amount of the line of credit. At January 3, 1998, $47 million
of borrowings were outstanding at an average interest rate of 6.2%.
At January 3, 1998, the Company had uncommitted lines of credit totaling
$82 million. Borrowings under these lines were approximately $11 million at an
average interest rate of 6.1%.
The Company has the ability to convert other bank borrowings to its
revolving credit facilities. Since the committed facilities extend beyond 1998
and the Company intends to renew these obligations, $63 million of the loans
payable to banks have been classified as long-term debt.
The Company's German subsidiary had a revolving credit agreement totaling
76 million Deutschmarks (DM) (U.S. $42 million) that extended credit until
December 1997. The interest rate determined at the time of each borrowing was
6-month LIBOR plus 0.5%. A commitment fee of 0.125% per annum was paid quarterly
on the unused portion of the facility. On December 15, 1997, Safety-Kleen
Corp.'s USA parent company purchased the outstanding credit facility of the
German subsidiary totaling approximately DM 71 million (U.S. $40 million) from
Deutsche Bank for approximately $40 million. This note was purchased through the
use of additional U.S. borrowings through its revolving credit facility.
F-50
<PAGE> 187
SAFETY-KLEEN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In May 1992, the Company's German subsidiary executed an interest rate swap
agreement which expired in May 1997. The interest rate on DM 70 million (U.S.
$39 million) was swapped from rates based on 6-month DM LIBOR to rates based on
6-month U.S. Dollar LIBOR.
At January 3, 1998, the Company's other subsidiary operations have
miscellaneous line of credit agreements totaling $9 million (U.S.). At January
3, 1998, there were no borrowings under these lines of credit.
The Company's remaining interest rate swap agreement has been entered into
with major financial institutions which are expected to fully perform under the
terms of the agreements. The Company monitors the credit ratings of these
counterparties and considers the risk of default to be remote.
Interest expense excludes $2.1 million of interest capitalized for each of
the three fiscal years 1997, 1996 and 1995.
The fair value of the interest rate swap agreements and the interest cap
agreement noted above was approximately $1.8 and $2.1 million greater than the
Company's carrying value at January 3, 1998 and December 28, 1996, respectively.
This fair value is determined by obtaining quotes from brokers who regularly
deal in these types of financial instruments. These interest rate swaps have
resulted in a net savings of $0.7, $0.1, and $0.6 million in 1997, 1996, and
1995, respectively.
In January 1995, the Company entered into a note purchase agreement with
two insurance companies, under which the Company borrowed $50 million at a fixed
interest rate of 8.05% for 3 years expiring in January, 1998. Proceeds from the
note were used to repay existing bank borrowings. At the end of fiscal year
1997, the Company classified the $50 million in debt as non-current as it was
the Company's intention to repay the notes through the use of additional bank
borrowings under its revolving credit facilities. This action was consummated at
the end of January 1998.
The Company's credit agreements include provisions, among others, relative
to maintenance of minimum shareholders' equity and certain financial ratios. At
January 3, 1998, the Company's required minimum shareholders' equity was $465
million and the Company was in compliance with its loan provisions.
7. CAPITAL STOCK
PREFERRED STOCK
The Board of Directors has the authority to issue up to 1,000,000 shares of
preferred stock, par value $.10 per share, at such time or times, in such
series, and with such designations and features thereof as it may determine,
including rate of dividend, redemption provisions and prices, conversion
conditions and prices and voting rights. No shares of preferred stock have been
issued.
STOCK OPTION AND EMPLOYEE STOCK PURCHASE PLANS
The Company has the following stock option and employee stock purchase
plans:
1. The 1985 and 1993 Stock Option Plans (The "Option Plans")
2. The 1988 Non-Qualified Stock Option Plan for Outside Directors (The
"Directors' Plan")
3. The Employee Stock Purchase Plan (the "ESPP")
F-51
<PAGE> 188
SAFETY-KLEEN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company accounts for these plans under Accounting Principles Board
(APB) Opinion No. 25 under which no compensation has been recognized at the date
of grant. Had compensation costs for these plans been determined based on the
fair value at the date of grant consistent with SFAS No. 123, on "Accounting for
Stock-Based Compensation," the Company's net income and earnings per share
("EPS") for fiscal years 1997, 1996 and 1995 would have been reduced to the
following pro-forma amounts:
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
(EXPRESSED IN THOUSANDS, EXCEPT
PER SHARE DATA)
<S> <C> <C> <C>
NET INCOME:
As Reported............................................. $63,170 $61,109 $53,303
Pro Forma............................................... $60,134 $59,398 $52,235
BASIC EPS:
As Reported............................................. $ 1.08 $ 1.05 $ 0.92
Pro Forma............................................... $ 1.03 $ 1.02 $ 0.90
DILUTED EPS:
As Reported............................................. $ 1.07 $ 1.05 $ 0.92
Pro Forma............................................... $ 1.02 $ 1.02 $ 0.90
</TABLE>
The fair value of each option granted under the Option Plans is estimated
on the date of grant using the Black-Scholes option-pricing model with the
following weighted average assumptions used for grants in 1997, 1996 and 1995.
<TABLE>
<CAPTION>
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Expected Lives (Years)...................................... 5.45 6.00 6.00
Dividend Yield.............................................. 1.99% 1.68% 1.46%
Expected Volatility......................................... 27.23% 30.74% 30.50%
Risk Free Interest Rate..................................... 6.13% 5.41% 7.44%
</TABLE>
The weighted average fair value of the shares granted under the Option
Plans in fiscal years 1997, 1996 and 1995 would be $5.17, $5.09 and $6.24,
respectively. No grants were made in 1997, 1996 and 1995 under the Directors'
Plan. The cost per ESPP share granted in 1997, 1996 and 1995 would be $3.46,
$3.30 and $3.49, respectively, based on a 10% discount on share price and a
Black-Scholes value of a 13-month option with a 2.08%, 2.23% and 2.23% dividend
yield rate in 1997, 1996 and 1995, respectively.
Because the SFAS No. 123 method of fair-value accounting has not been
applied to options granted prior to January 1, 1995, the resulting pro forma
compensation cost may not be representative of that to be expected in future
years.
At the Annual Meeting of Shareholders held in May 1996, the shareholders
approved an increase in the number of shares available for grant under the
Option Plans by 2,500,000 shares to a total of 8,437,500 shares. Under the
Option Plans, shares of the Company's common stock may be granted to officers
and other key employees at a price of 100% of the quoted market price at date of
grant. Options granted under the Plan may be either Incentive Stock Options or
Non-Qualified Stock Options. Stock Appreciation Rights (SARs) may be granted in
conjunction with Non-Qualified Stock Options whereby the grantee may surrender
exercisable Non-Qualified Options and receive a cash payment equal to the
difference between the option price and the market value of the common stock on
the exercise date. The exercise of Incentive Options, Non-Qualified Options and
SARs are subject to conditions as determined at the time of grant by the
Compensation Committee of the Board of Directors. All options granted since May
1990 have been for a 10-year life with 25% vesting per year beginning one year
from the date of grant. In November 1994, the Board extended the expiration date
on all stock options granted from February 1987 through May 1990 from their
original expiration date to November 30, 2004.
F-52
<PAGE> 189
SAFETY-KLEEN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Under the Directors' Plan, options to purchase up to 300,000 shares of the
Company's common stock may be granted to outside Directors at a price of 100% of
the quoted market price at the date of grant. Under the terms of the Directors'
Plan, each outside Director was granted an option to purchase 15,000 shares at
the time the plan was adopted. Any new outside Director elected or appointed
after the date the plan was adopted would also be granted an option to purchase
15,000 shares of the Company's common stock upon taking office. The Directors'
Plan also provides that a second option to purchase 15,000 shares be granted to
each outside Director on the fifth anniversary of their initial grant of options
if such Director is still serving on the Board at that time. Options vest 25%
annually, on a cumulative basis, starting one year from date of grant and
terminate ten years after the grant date.
The Option Plans and the Directors' Plan include a change of control
provision that results in all shares granted under these plans becoming 100%
vested should a change of control take place.
Under the ESPP, a total of 1,500,000 shares of the Company's common stock
may be purchased by employees of the Company and designated subsidiaries,
through payroll deductions, at 90% of the lower of the quoted closing market
price on the date of grant or the quoted closing market price on June 30 in the
year following the date of grant. Under the plan, all full-time employees
(except officers of the Corporation) of the Company and designated subsidiaries
on the grant date who were continuously employed since January 1 of the year in
which the grant date occurs (subject to certain restrictions on percentage of
ownership outlined in the ESPP) are eligible to participate. The Company had an
employee stock purchase plan ("Old ESPP") which was in effect from 1990 through
1994. Under terms of the Old ESPP, no further grants to purchase shares could be
made after December 31, 1994. Therefore, 66,188 shares granted under the Old
ESPP in 1994 that were canceled in 1995 have expired.
A summary of the status of the Company's stock option plans and the
employee stock purchase plans for the three fiscal years ended January 3, 1998
is presented below:
<TABLE>
<CAPTION>
WEIGHTED AVAILABLE FOR
SHARES PRICE RANGE AVG. EX. PRICE EXERCISABLE FUTURE GRANTS
--------- --------------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Outstanding Options @
12/31/94..................... 3,239,275 $13.50 - $32.25 $20.54 1,829,500 2,365,479
1995 ACTIVITY:
Expired........................ (66,188)
Authorized..................... 1,500,000
Granted........................ 1,228,846 15.41 - 16.88 16.15
Exercised...................... (133,992) 13.50 - 15.63 14.40
Canceled....................... (233,762) 13.50 - 32.25 19.05
- -----------------------------------------------------------------------------------------------------------
Outstanding Options @
12/30/95..................... 4,100,367 13.50 - 32.25 19.51 2,142,623 2,804,207
1996 ACTIVITY:
Authorized..................... 2,500,000
Granted........................ 977,759 14.25 - 17.50 15.13
Exercised...................... (102,536) 13.50 - 16.25 15.37
Canceled....................... (115,789) 13.50 - 32.25 16.99
- -----------------------------------------------------------------------------------------------------------
Outstanding Options @
12/28/96..................... 4,859,801 13.50 - 32.25 18.78 2,718,193 4,442,237
1997 ACTIVITY:
Granted........................ 1,218,393 14.17 - 17.13 16.78
Exercised...................... (944,523) 13.50 - 26.75 17.93
Canceled....................... (214,815) 13.50 - 32.25 17.21
- -----------------------------------------------------------------------------------------------------------
Outstanding Options @ 1/3/98 4,918,856 $13.50 - $32.25 $18.51 2,517,985 3,438,659
- -----------------------------------------------------------------------------------------------------------
</TABLE>
F-53
<PAGE> 190
SAFETY-KLEEN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
STOCK WARRANTS
The Company, on January 27, 1995 issued 200,000 stock warrants in
conjunction with an acquisition. These warrants give the owner of stock warrants
the right to purchase up to 200,000 shares of the Company's common stock at a
price of $17.79 per share and expire on January 27, 2000.
The following table summarizes information about the Company's stock option
plans, employee stock purchase plan and stock warrants outstanding at January 3,
1998.
<TABLE>
<CAPTION>
WEIGHTED-AVERAGE OPTIONS/WARRANTS OPTIONS/WARRANTS EXERCISABLE
REMAINING ------------------------------------------------ ------------------------------
CONTRACTUAL LIFE NUMBER RANGE OF WEIGHTED-AVERAGE NUMBER WEIGHTED AVERAGE
(YEARS) OUTSTANDING EXERCISE PRICES EXERCISE PRICE EXERCISABLE EXERCISE PRICE
- ----------------- ----------- --------------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
1 252,935 $13.50 - $19.46 $16.84 132,839 $19.22
1 56,325 24.00 - 32.00 29.01 56,325 29.01
2 216,650 13.50 - 19.33 17.62 214,287 17.65
2 30,100 24.00 - 32.00 28.45 30,100 28.45
3 2,063 13.50 - 16.25 15.88 1,225 15.68
3 245,875 24.00 - 32.25 31.96 245,875 31.96
4 10,101 13.50 - 19.42 16.10 6,201 16.36
4 190,725 24.00 - 32.25 27.12 190,725 27.12
5 34,050 13.50 - 21.75 18.72 24,637 19.67
5 332,100 24.00 - 24.00 24.00 332,100 24.00
6 434,887 13.50 - 17.38 15.05 332,792 14.69
7 1,504,003 15.88 - 23.92 17.44 1,002,967 17.93
8 741,792 14.25 - 15.13 15.12 147,912 $14.64
9 1,067,250 15.63 - 17.50 17.08 -- --
--------- --------------- ------ --------- ------
TOTAL 5,118,856 $13.50 - $32.25 $18.48 2,717,985 $20.41
========= =============== ====== ========= ======
</TABLE>
SHAREHOLDERS' RIGHTS PLAN
Pursuant to a plan adopted by the Company in December 1988 and amended in
1991, each share of the Company's common stock carries the right to buy one
share of the Company's common stock at a price of $73.33 per share. The rights
will expire on November 21, 1998, unless earlier redeemed by the Company. The
rights will become exercisable if a person becomes an "acquiring person" by
acquiring 20% of the Company's common stock or announces a tender offer that
would result in such person owning 20% or more of the Company's common stock. If
someone becomes an acquiring person, the holder of each right (other than rights
owned by the acquiring person) will be entitled to purchase common stock of the
Company having a market value of twice the exercise price of the right. In
addition, if the Company is acquired in a merger or other business combination
transaction in which the Company's common stock is exchanged for cash or
securities, or 50% or more of its consolidated assets or earning power are sold,
each holder (other than the acquiring person) will have the right to purchase
common stock of the acquiring company having a market value of twice the
exercise price. The rights may be redeemed by the Company, at a price of 0.67
cent per right, at any time prior to anyone becoming an acquiring person. See
Note 12 to the Consolidated Financial Statements for a discussion regarding
subsequent events.
8. PENSION AND EMPLOYEE BENEFIT PLANS
The Company has four noncontributory pension plans covering substantially
all full time employees in the United States. These four domestic pension plans
consist of three qualified plans and one unfunded non-qualified plan. The
qualified plans are funded in compliance with ERISA requirements as employees
become eligible to participate, generally, after completing one year of service.
F-54
<PAGE> 191
SAFETY-KLEEN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company's consolidated pension costs for fiscal years 1997, 1996 and
1995 were $6.0 million, $6.0 million, and $4.9 million, respectively.
The following table sets forth the domestic plans' combined funded status
at January 3, 1998 and December 28, 1996:
<TABLE>
<CAPTION>
JANUARY 3, 1998 DECEMBER 28, 1996
----------------------------- -----------------------------
ASSETS EXCEED ACCUMULATED ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFITS ACCUMULATED BENEFITS
BENEFITS EXCEED ASSETS BENEFITS EXCEED ASSETS
------------- ------------- ------------- -------------
(EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C>
Actuarial present value of benefit
obligation:
Vested benefits.................... $57,034 $ 2,558 $44,213 $ 2,395
Nonvested benefits................. 4,869 323 4,427 141
------- ------- ------- -------
Accumulated benefit obligation....... 61,903 2,881 48,640 2,536
Effect of projected compensation
levels............................. 20,082 1,394 16,169 584
------- ------- ------- -------
Projected benefit obligation......... 81,985 4,275 64,809 3,120
Plan assets at fair value............ 77,858 -- 64,204 --
------- ------- ------- -------
Projected benefit obligation
(greater) than plan assets......... (4,127) (4,275) (605) (3,120)
Unrecognized net loss (gain)......... 3,065 259 1,476 (629)
Unrecognized net assets to be
amortized over 16-20 years......... (498) 432 (568) 494
Unrecognized prior service cost...... 315 105 355 114
------- ------- ------- -------
Unfunded prepaid (accrued) pension
cost recognized in the Consolidated
Balance Sheets..................... $(1,245) $(3,479) $ 658 $(3,141)
======= ======= ======= =======
</TABLE>
The Plans' assets consist of cash, cash equivalents, equity funds, pooled
funds of real estate and common stock of the Company.
Net periodic pension cost for the Company's domestic plans for fiscal years
1997, 1996 and 1995 includes the following components:
<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- --------
(EXPRESSED IN THOUSANDS)
<S> <C> <C> <C>
Service cost-benefits earned during the year............. $ 4,898 $ 4,521 $ 3,451
Interest on projected benefit obligation................. 5,897 4,981 4,274
Return on plan assets.................................... (13,461) (9,422) (10,405)
Net amortization and deferral............................ 7,092 4,593 6,493
-------- ------- --------
Net periodic pension cost................................ $ 4,426 $ 4,673 $ 3,813
======== ======= ========
</TABLE>
F-55
<PAGE> 192
SAFETY-KLEEN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Actuarial assumptions used to determine the projected benefit obligation
and the expected net periodic pension costs were:
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
(EXPRESSED IN THOUSANDS)
<S> <C> <C> <C>
Projected Benefit Obligation Assumptions:
Discount Rates............................................ 7.3% 7.8% 7.3%
Rates of increase in compensation levels.................. 4.0% 4.5% 4.0%
Net Periodic Cost Assumption:
Expected long-term rate of return on assets............... 10.0% 10.0% 10.0%
</TABLE>
The Company also has pension plans covering employees of its Canadian and
British subsidiaries. Those plans are funded by purchase of insurance contracts
and units in a managed fund invested in stocks, fixed income securities and real
estate. Vested benefits are fully funded. The Company's foreign subsidiaries are
not required to report under ERISA and do not otherwise determine the actuarial
value of accumulated plan benefits as disclosed above for the Company's domestic
pension plans. These plans do not have a material effect on the Company's
financial condition or results of operations.
The Safety-Kleen Corp. Savings and Investment Plan allows eligible
employees to make contributions, up to a certain limit, to the Plan on a
tax-deferred basis under Section 401(k) of the Internal Revenue Code of 1986.
The Company may, at its discretion, make matching contributions out of its
profits for the year. The Company's expense for contributions was $2.4 million
in 1997, $3.2 million in 1996 and $1.9 million in 1995.
The Company offers a post-retirement medical insurance plan to its domestic
employees retiring prior to the normal retirement age of 65. Retirees are
eligible to continue this medical coverage until age 65. The plan is currently
unfunded and retirees electing this coverage are required to pay a premium for
the insurance.
The following table reconciles the funded status of the plan to the accrued
post-retirement benefit cost recognized in the Consolidated Balance Sheets at
January 3, 1998 and December 28, 1996:
<TABLE>
<CAPTION>
JANUARY 3, DECEMBER 28,
1998 1996
---------- ------------
(EXPRESSED IN THOUSANDS)
<S> <C> <C>
Accumulated post-retirement benefit obligation (APBO):
Retirees, beneficiaries and dependents.................... $ 864 $ 1,310
Active employees.......................................... 5,793 5,074
------- -------
6,657 6,384
------- -------
Plan assets at fair value................................... -- --
------- -------
APBO greater than plan assets............................... (6,657) (6,384)
------- -------
Unrecognized net loss (gain)................................ (2,885) (2,502)
------- -------
Accrued post-retirement benefit cost........................ $(9,542) $(8,886)
======= =======
APBO discount rate assumption............................... 7.3% 7.8%
------- -------
</TABLE>
Net periodic post-retirement benefit costs recognized for fiscal years
1997, 1996, and 1995 are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----- ------ ----
(EXPRESSED IN
THOUSANDS)
<S> <C> <C> <C>
Service costs -- benefits earned during the year............ $ 578 $ 683 $511
Interest costs on APBO...................................... 453 478 436
Other....................................................... (121) (57) (87)
----- ------ ----
Net periodic post-retirement benefit cost................... $ 910 $1,104 $860
===== ====== ====
</TABLE>
F-56
<PAGE> 193
SAFETY-KLEEN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The health care cost trend was assumed to be 9% for 1995, 7% for 1996 and
5% for 1997 decreasing to an ultimate trend of 4.5% in 1998 and beyond.
If the health care cost trend rate increases one percent for all future
years, the accumulated post-retirement benefit obligation as of January 3, 1998
would have increased 14%. The effect of this change on the aggregate of the
service and interest cost for 1997 would be an increase of 21%.
At the end of 1994, the Company established a non-qualified Deferred
Compensation Plan. This plan allows corporate officers and other key management
personnel to defer a portion of their current compensation up to a certain
limit, as defined by the Plan. Distributions under the plan are made in
accordance with deferral elections as described in the plan. All expenses
associated with the Deferred Compensation Plan are recognized in the period in
which they are incurred. The Company has liabilities of approximately $1.6 and
$0.8 million recorded at January 3, 1998 and December 28, 1996, respectively,
associated with the Deferred Compensation Plan.
In 1997, the Company invested $5.0 million in an irrevocable Rabbi Trust
that will provide the resources necessary to pay any liabilities currently
accrued for under the Deferred Compensation Plan and the unfunded non-qualified
domestic pension plan. The investment in the trust is included in "Other Assets"
on the Company's Consolidated Balance Sheets.
9. INCOME TAXES
The components of earnings before income taxes consisted of the following
for each of the last three fiscal years:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
(EXPRESSED IN THOUSANDS)
<S> <C> <C> <C>
Domestic............................................... $ 94,044 $ 93,986 $ 74,492
Foreign................................................ 6,456 7,662 17,976
-------- -------- --------
$100,500 $101,648 $ 92,468
======== ======== ========
</TABLE>
Under SFAS No. 109 on Accounting for Income Taxes, deferred tax assets and
liabilities are calculated based on the difference between the financial
statement and income tax bases of assets and liabilities using the enacted tax
rates.
The provisions (benefits) for income taxes include the following:
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
(EXPRESSED IN THOUSANDS)
<S> <C> <C> <C>
CURRENT
Federal................................................... $16,020 $19,979 $16,505
State..................................................... 4,484 5,956 5,087
Commonwealth of Puerto Rico............................... 458 159 (376)
Foreign................................................... 2,066 704 662
DEFERRED
Federal................................................... 7,307 6,863 7,247
Foreign................................................... 1,916 4,105 2,087
PREPAID
Federal................................................... 5,706 5,077 1,949
Foreign................................................... (627) (2,304) 6,004
------- ------- -------
TOTAL PROVISION........................................... $37,330 $40,539 $39,165
======= ======= =======
</TABLE>
F-57
<PAGE> 194
SAFETY-KLEEN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table reconciles the statutory U.S. Federal income tax rate
to the Company's consolidated effective tax rate:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Statutory U.S. federal tax rate............................. 35.0% 35.0% 35.0%
Increase(decrease) resulting from:
Provision for state income tax (net of federal benefit)... 2.7 2.1 3.6
Difference in foreign statutory rates....................... 0.2 1.6 2.2
Other....................................................... (0.8) 1.2 1.6
---- ---- ----
Effective tax rate.......................................... 37.1% 39.9% 42.4%
==== ==== ====
</TABLE>
Temporary differences and carry forwards which give rise to deferred tax
assets and liabilities are as follows:
<TABLE>
<CAPTION>
JANUARY 3, DECEMBER 28, DECEMBER 30,
1998 1996 1995
---------- ------------ ------------
(EXPRESSED IN THOUSANDS)
<S> <C> <C> <C>
Deferred Tax Assets -- Current
Environmental reserves....................... $ 3,080 $ 2,395 $ 2,625
Insurance reserves........................... 4,444 4,415 5,908
Bad debt reserve............................. -- 1,800 1,800
Restructure and Other........................ 3,170 3,363 7,651
-------- -------- --------
Total deferred tax assets -- current........... $ 10,694 $ 11,973 $ 17,984
======== ======== ========
Deferred Tax Assets -- Non-Current
Restructure charges not currently
deductible................................ $ 11,872 $ 11,440 $ 17,494
Net operating loss (NOL) carry forwards of
subsidiaries.............................. 18,279 20,616 20,149
Insurance reserves........................... 8,351 7,798 4,822
Environmental reserves....................... 12,828 16,325 14,382
Other........................................ 5,294 5,458 3,273
Valuation allowance.......................... (2,879) (3,340) (3,676)
-------- -------- --------
Total deferred tax assets -- non-current....... 53,745 58,297 56,444
-------- -------- --------
Total Deferred Tax Assets...................... $ 64,439 $ 70,270 $ 74,428
======== ======== ========
Deferred Tax Liabilities
Restructuring and Special Charges............ $ (1,750) $ -- $ 13,820
Depreciation................................. (87,659) (76,115) (80,250)
Tax lease agreements......................... (6,234) (6,852) (7,253)
Other........................................ (3,102) (1,044) (915)
-------- -------- --------
Total Deferred Tax Liabilities................. $(98,745) $(84,011) $(74,598)
======== ======== ========
</TABLE>
As of January 3, 1998, the Company has undistributed earnings of foreign
consolidated subsidiaries of approximately $30.1 million. The Company does not
provide for deferred taxes on possible future remittances of these earnings
since U. S. income taxes, under current law, on such remittances would not be
material.
F-58
<PAGE> 195
SAFETY-KLEEN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
As of January 3, 1998, the tax assets derived from Net Operating Loss carry
forwards (NOLs) consist of NOL tax assets with expiration dates as follows:
<TABLE>
<CAPTION>
(EXPRESSED IN THOUSANDS)
------------------------
<S> <C>
1998................................................. $ 558
1999................................................. 1,539
2000................................................. 369
2001................................................. 395
2002................................................. 360
No Expiration........................................ 15,058
</TABLE>
The Company has recorded a valuation allowance of approximately $2.9
million for unrealized NOL tax assets that may expire before the Company is able
to utilize such NOLs.
The valuation allowance account balance of $2.9 million represents
approximately 89% of the NOL tax assets that are due to expire as it is more
likely than not that some portion of the deferred tax assets will not be
realized. The valuation account activity is summarized in the table below:
<TABLE>
<CAPTION>
1997
--------------
(EXPRESSED
IN THOUSANDS)
<S> <C>
Balance -- beginning of year................................ $3,340
Adjust valuation balances................................... 19
Cumulative translation adjustment........................... (480)
------
Balance -- end of year...................................... $2,879
======
</TABLE>
10. SPECIAL CHARGE FOR ENVIRONMENTAL REMEDIATION COSTS, OTHER ACCRUED
EXPENSES AND LIABILITIES, COMMITMENTS AND CONTINGENT LIABILITIES
The Company operates a large number of hazardous waste facilities for the
collection and processing of hazardous and non-hazardous wastes and is subject
to extensive and expansive regulation by federal, state and local authorities.
In the ordinary course of conducting its business activities, the Company
becomes involved in judicial and administrative proceedings in which
governmental authorities seek remedial actions and/or fines and penalties. The
Company also has been notified by the EPA that it may be a responsible party at
several National Priority List ("NPL") sites. Generally, these proceedings by
federal and state regulatory agencies have been resolved by negotiation and
settlement. The Company does not anticipate that the amount of fines and
penalties will have a material adverse impact on its financial condition. It
should be noted, however, that many environmental laws are written and enforced
in a way in which the potential liability can be large and it is possible that
the Company's actual liability in any particular case or claim will prove to be
larger than anticipated and accrued for by the Company. It is also possible that
expenses incurred in any particular reporting period for remediation costs or
for fines, penalties or judgments could have a material impact on the Company's
results of operations for that period.
Under various federal, state and local regulations, the Company can be
required to conduct an environmental investigation of any of its operating or
closed facilities to determine the possible existence and extent of
environmental contamination. In the event that contamination is found, the
Company may be required to perform a remedial cleanup of the site. The Company
is currently engaged in investigation and cleanup work at many of its sites.
In 1993, the Company recorded a $50 million pre-tax special charge ($30
million after-tax or $.52 per share) for a change in estimate for remediation
costs relating to all operating and previously closed sites prior to conducting
detailed individual site investigations to ascertain the existence and extent of
contamination. This change results in earlier recognition of environmental
remediation costs and liabilities as compared with the Company's previous
practice which was to accrue the estimated cost of remedial cleanup work at the
time the
F-59
<PAGE> 196
SAFETY-KLEEN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
need for such work was specifically identified based on site investigation. In
1995, the Company recorded a $12 million pre-tax charge to increase its reserves
for environmental remediation based on a refinement of the estimate for such
liabilities and its ongoing review of spending patterns. The Company intends to
continue to operate at its active sites indefinitely. Accordingly, the accrued
environmental liabilities do not include estimates for costs associated with the
physical closure of such sites.
Federal environmental regulations require that the Company demonstrate
financial responsibility for sudden and non-sudden releases, as well as closure
and post-closure liabilities. One manner by which to make this demonstration is
through Environmental Impairment Liability (EIL) insurance coverage. The Company
has not been able to purchase large amounts of risk-transfer EIL insurance
coverage. The Company has EIL insurance coverage which it believes complies with
the Federal regulatory requirements. However, the Company must reimburse the
insurance carrier for all losses and expenses incurred by it under the policy.
The Company's income could be adversely affected in the future if it is unable
to obtain risk-transfer EIL insurance coverage and uninsured losses were to be
incurred.
In September 1997, the Company discovered that its East Chicago, Indiana
main feed tank had become contaminated with polychlorinated biphenyls ("PCBs")
resulting in approximately 4 million gallons of contaminated oil. The Company
immediately notified the EPA and the Indiana Department of Environmental
Management ("IDEM") of the problem. The Company believes that the IDEM and EPA
will allow it to treat this contaminated material on-site. If the IDEM or EPA
determine that off-site treatment is required, the cost of such treatment could
be material to the results of operations in that period.
The Company leases many of its branches, vehicles and other equipment.
These leases are accounted for as operating leases. Related rental expenses were
$40.4 million in 1997, $31.5 million in 1996 and $24.8 million in 1995.
Aggregate minimum future rentals are payable as follows:
<TABLE>
<CAPTION>
PERIODS (EXPRESSED IN MILLIONS)
- ------- -----------------------
<S> <C>
1998................................................... $ 32.6
1999................................................... 25.9
2000................................................... 16.3
2001................................................... 8.6
2002................................................... 5.8
Future Years........................................... 18.2
------
Total........................................ $107.4
======
</TABLE>
11. RESTRUCTURING CHARGES
In 1993, the Company adopted a restructuring plan based on conversion of
its core parts cleaner service to new technology and other strategic actions. In
conjunction with the adoption of this plan, the Company recorded a special
charge of $179 million ($106 million after tax or $1.84 per share). The pre-tax
restructuring charge included $93 million of asset write downs and $86 million
of other restructuring charges. In 1995, the Company recorded a pre-tax credit
to income of $15.2 million to adjust the restructuring reserves to their
expected required levels.
In 1996, the Company substantially completed all of its restructuring
activities and reclassified the remaining restructure liabilities (which are
primarily associated with the European operations) to other accrued expenses in
current liabilities and other liabilities in non-current liabilities. At January
3, 1998 and December 28, 1996, other accrued expenses include $1.7 and $3.6
million, respectively, and other liabilities include $2.3 and $7.9 million,
respectively.
F-60
<PAGE> 197
SAFETY-KLEEN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
12. POTENTIAL SALE OF THE COMPANY
On August 8, 1997, the Company issued a press release stating that it had
initiated a process to explore strategic alternatives for enhancing shareholder
value and had engaged William Blair and Company, L.L.C. ("William Blair") to act
as its financial advisor in connection therewith. As part of the process, 50
potential buyers executed confidentiality and standstill agreements (which were
designed to encourage participation by creating a level playing field for all
interested parties and to protect Safety-Kleen's interests). On November 20,
1997, the Company's Board of Director's ("Board") voted unanimously to approve a
merger agreement with SK Parent Corp., a Delaware corporation owned equally by
Phillip Services Corp., affiliates of Apollo Management, L.P. and affiliates of
Blackstone Partners III, L.L.C. (the "SK Parent Merger Agreement").
Laidlaw Environmental Services, Inc. ("Laidlaw Environmental") also
contacted William Blair but repeatedly refused to execute a confidentiality and
standstill agreement and participate in the process like other potential buyers.
Laidlaw Environmental made an initial unsolicited exchange offer and two
subsequent revised exchange offers in an attempt to purchase Safety-Kleen. After
carefully reviewing the unsolicited offers from Laidlaw Environmental, the Board
continued to recommend the SK Parent Merger Agreement.
On March 9, 1998, the Company held a special meeting of shareholders for
the sole purpose of voting on the SK Parent Merger Agreement. It was announced
at the meeting, based on the advice of the Company's proxy solicitors, that the
Company would not achieve the affirmative vote of two-thirds of all outstanding
shares needed to approve the SK Parent Merger Agreement. The Board then
terminated the SK Parent Merger Agreement. The Board also announced that it
would begin negotiations with Laidlaw Environmental and would also continue to
explore other strategic alternatives for enhancing shareholder value including,
but not limited to, considering any new offers for the Company from any other
interested parties.
On March 16, 1998, the Company issued a press release stating the Board
unanimously approved a definitive merger agreement ("Merger Agreement") with
Laidlaw Environmental, providing for an exchange offer ("Exchange Offer")
followed by a back-end merger ("Merger"; together with the Exchange Offer, the
"Transaction"); the Merger Agreement provides for consideration per Safety-Kleen
share of $18.30 plus 2.8 shares of Laidlaw Environmental Common Stock in both
the Exchange Offer and the Merger. The Board also amended the Shareholders'
Rights Plan to exempt the Merger Agreement and the transactions pursuant
thereto.
On April 1, 1998, Laidlaw Environmental accepted for exchange 56,138,238
shares, constituting approximately 94% of the outstanding shares of Safety-Kleen
and announced it expected to pay for such shares on April 3, 1998 and to
consummate the Merger approximately 6 weeks thereafter. Also on April 1, 1998,
the Inspectors of Election issued their Final Report of the vote on the SK
Parent Merger Agreement, certifying that it received 21,256,083 votes for
approval out of 59,209,387 shares outstanding and entitled to vote (i.e., 36% of
the outstanding shares were voted in favor). The acceptance and exchange of
tendered shares triggers the change of control provision included in the
Company's 1985 and 1993 Stock Option Plans and the 1988 Non-Qualified Stock
Option Plan for Outside Directors which results in all granted options becoming
100% vested. Consistent with the Merger Agreement, each holder of stock options
will receive a cash-out amount, with respect to each of his/her option shares,
equal to the Exchange Offer consideration (valued for this purpose at $30.30)
reduced by the option exercise price, provided that such holder agrees to the
cancellation of all of his/her outstanding options. Also consistent with the
Merger Agreement, each participant in the Employee Stock Purchase Plan will
receive a cash-out payment equal to his/her contributions plus an amount equal
to the number of shares subscribed for by the participant multiplied by the
difference between such Exchange Offer consideration and the market price of the
stock at the date of grant.
The Company incurred $3.2 million in costs through January 3, 1998 in
conjunction with the process described above. During 1998, the Company
anticipates incurring approximately $140-160 million of additional costs related
to the process consisting primarily of the $75 million of termination costs
associated with the SK Parent Merger Agreement, compensation expense associated
principally with the cash-out of the stock option
F-61
<PAGE> 198
SAFETY-KLEEN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
plans and Employee Stock Purchase Plan described above and investment banking
and legal fees associated with the process. These estimated costs do not include
any severance related costs incurred as a result of the integration of the
Company and Laidlaw Environmental.
13. INTERIM RESULTS OF OPERATIONS (UNAUDITED)
(EXPRESSED IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
BASIC DILUTED
EARNINGS EARNINGS
REVENUE GROSS PROFIT NET EARNINGS PER SHARE PER SHARE
--------------------- ------------------- ----------------- ------------- -------------
INTERIM PERIOD 1997 1996 1997 1996 1997 1996 1997 1996 1997 1996
- -------------- ---------- -------- -------- -------- ------- ------- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
First (12 Weeks).............. $ 220,230 $201,723 $ 56,146 $ 55,900 $11,838 $13,077 $0.20 $0.23 $0.20 $0.23
Second (12 Weeks.............. 229,928 211,355 58,221 56,567 13,341 13,604 0.23 0.23 0.23 0.23
Third (12 Weeks).............. 230,014 213,098 58,662 57,824 15,118(1) 14,004 0.26 0.24 0.26 0.24
Fourth (17 and 16 Weeks)...... 327,731 296,950 85,888 80,864 22,873(2) 20,424 0.39 0.35 0.38 0.35
---------- -------- -------- -------- ------- ------- ----- ----- ----- -----
Total......................... $1,007,903 $923,126 $258,917 $251,155 $63,170(2) $61,109 $1.08 $1.05 $1.07 $1.05
========== ======== ======== ======== ======= ======= ===== ===== ===== =====
</TABLE>
- ---------------
(1) Includes $2.6 million of pre-tax severance related costs incurred during the
period that were offset by a reduction of other pre-established reserves.
(2) Includes $3.2 million pre-tax charge for merger related costs.
14. EVENT (UNAUDITED) SUBSEQUENT TO DATE OF AUDITORS' REPORT
In connection with the Merger Agreement with Laidlaw Environmental (see
Note 12), LES, Inc., a wholly-owned subsidiary of Laidlaw Environmental
Services, Inc. issued 9.25% Senior Subordinated Notes to finance the
acquisition. The wholly-owned domestic subsidiaries of LES, Inc. (including the
Company and its subsidiaries incorporated in the United States and Puerto Rico)
guaranteed such notes. No foreign direct or indirect subsidiary (including those
incorporated in Europe and Canada) or non-wholly-owned subsidiary of the Company
is an obligor or guarantor on the financing. For summarized financial
information concerning such subsidiary guarantors and subsidiary non-guarantors,
see Note 15.
F-62
<PAGE> 199
SAFETY-KLEEN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
15. SUMMARIZED FINANCIAL INFORMATION
Summarized financial information on a combined basis as of and for the year
ended January 3, 1998 is as follows:
CONSOLIDATING CONDENSED BALANCE SHEET
AS OF JANUARY 3, 1998
<TABLE>
<CAPTION>
UNITED STATES
AND EUROPE, CANADA CONSOLIDATING
PUERTO RICO AND OTHER ELIMINATING CONSOLIDATED
SUBSIDIARIES(1) SUBSIDIARIES(2) ENTRIES TOTAL
--------------- --------------- ------------- ------------
(EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C>
Assets:
Current assets...................... $170,287 $ 54,139 $ -- $ 224,426
Equipment at customers, net......... 108,085 19,546 -- 127,631
Property, plant and equipment,
net.............................. 413,051 89,059 -- 502,110
Intangible assets................... 88,381 56,361 (206) 144,536
Investment in Subsidiaries.......... 168,673 -- (168,673) --
Non-current prepaid taxes........... 32,643 21,102 (33,138) 20,607
Other non-current assets............ 14,347 1,049 -- 15,396
-------- -------- --------- ----------
Total assets........................ $995,467 $241,256 $(202,017) $1,034,706
======== ======== ========= ==========
Liabilities:
Current liabilities................. $125,546 $ 29,899 $ (2) $ 155,443
Long-term debt...................... 213,716 518 -- 214,234
Deferred income taxes............... 84,045 14,700 (33,138) 65,607
Intercompany payable (receivable)... (42,062) 42,062 -- --
Other non-current liabilities....... 61,208 8,747 -- 69,955
-------- -------- --------- ----------
Total liabilities................... 442,453 95,926 (33,140) 505,239
Stockholders' equity.................. 553,014 145,330 (168,877) 529,467
-------- -------- --------- ----------
Total liabilities and stockholders'
equity.............................. $995,467 $241,256 $(202,017) $1,034,706
======== ======== ========= ==========
</TABLE>
- ---------------
(1) Includes the Company but excludes a non-wholly-owned U.S. subsidiary.
(2) Includes a non-wholly-owned U.S. subsidiary.
F-63
<PAGE> 200
SAFETY-KLEEN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED JANUARY 3, 1998
<TABLE>
<CAPTION>
UNITED STATES EUROPE,
AND CANADA CONSOLIDATING
PUERTO RICO AND OTHER ELIMINATING CONSOLIDATED
SUBSIDIARIES(1) SUBSIDIARIES(2) ENTRIES TOTAL
---------------- ---------------- ------------- ------------
(EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C>
Total revenues........................ $839,191 $175,076 $(6,364) $1,007,903
Operating costs and expenses.......... 613,490 136,116 (620) 748,986
-------- -------- ------- ----------
Gross profit.......................... 225,701 38,960 (5,744) 258,917
Selling and administrative expenses... 114,573 29,663 (5,744) 138,492
-------- -------- ------- ----------
Operating income...................... 111,128 9,297 -- 120,425
Interest expense, net................. 13,693 3,001 -- 16,694
Merger related costs.................. 3,231 -- -- 3,231
-------- -------- ------- ----------
Earnings before taxes................. 94,204 6,296 -- 100,500
Income taxes.......................... 36,095 1,235 -- 37,330
-------- -------- ------- ----------
Net earnings.......................... $ 58,109 $ 5,061 $ -- $ 63,170
======== ======== ======= ==========
</TABLE>
- ---------------
(1) Includes the Company but excludes a non-wholly-owned U.S. subsidiary.
(2) Includes a non-wholly-owned U.S. subsidiary.
F-64
<PAGE> 201
SAFETY-KLEEN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
FOR THE FISCAL YEAR ENDED JANUARY 3, 1998
<TABLE>
<CAPTION>
UNITED STATES EUROPE,
AND CANADA CONSOLIDATING
PUERTO RICO AND OTHER ELIMINATING CONSOLIDATED
SUBSIDIARIES(1) SUBSIDIARIES(2) ENTRIES TOTAL
--------------- --------------- ------------- ------------
(EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net earnings...................................... $ 58,109 $ 5,061 $-- $ 63,170
Depreciation and amortization..................... 66,520 14,490 -- 81,010
All other operating activities (net).............. 15,996 3,838 -- 19,834
-------- -------- --- --------
Net cash provided by operating activities........... 140,625 23,389 -- 164,014
-------- -------- --- --------
Cash flows used in investing activities:
Equipment at customers additions.................. (16,850) (4,019) -- (20,869)
Property additions................................ (28,612) (6,550) -- (35,162)
Business acquisitions and other................... (34,057) (6,363) -- (40,420)
-------- -------- --- --------
Net cash used in investing activities............... (79,519) (16,932) -- (96,451)
-------- -------- --- --------
Cash flows used in financing activities:
Net payments...................................... (14,840) (47,844) -- (62,684)
Intercompany receivable (payable)................. (40,037) 40,037 -- --
Proceeds from stock option exercises.............. 16,940 -- -- 16,940
Cash dividends paid............................... (21,077) -- -- (21,077)
-------- -------- --- --------
Net cash used in financing activities............... (59,014) (7,807) -- (66,821)
-------- -------- --- --------
Effect of exchange rates changes on cash............ -- (188) -- (188)
-------- -------- --- --------
Net increase (decrease) in cash and cash
equivalents....................................... 2,092 (1,538) -- 554
Cash and cash equivalents at beginning of year...... 1,459 9,189 -- 10,648
-------- -------- --- --------
Cash and cash equivalents at end of year............ $ 3,551 $ 7,651 $-- $ 11,202
======== ======== === ========
Supplemental Information:
Cash paid during the year for:
Interest (net of amounts capitalized)............. $ 15,074 $ 3,883 $-- $ 18,957
Income taxes paid (net of refunds received........ 22,075 1,880 -- 23,955
</TABLE>
- ---------------
(1) Includes the Company but excludes a non-wholly-owned U.S. subsidiary.
(2) Includes a non-wholly-owned U.S. subsidiary.
F-65
<PAGE> 202
SAFETY-KLEEN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING CONDENSED BALANCE SHEET
AS OF DECEMBER 28, 1996
<TABLE>
<CAPTION>
UNITED STATES EUROPE,
AND CANADA CONSOLIDATING
PUERTO RICO AND OTHER ELIMINATING CONSOLIDATED
SUBSIDIARIES(1) SUBSIDIARIES(2) ENTRIES TOTAL
--------------- --------------- ------------- ------------
(EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C>
Assets:
Current assets..................................... $174,904 $ 55,229 $ -- $ 230,133
Equipment of customers, net........................ 104,519 19,972 -- 124,491
Property, plant and equipment, net................. 423,613 98,723 -- 522,336
Intangible assets.................................. 78,660 58,755 (206) 137,209
Investment in Subsidiaries......................... 163,688 -- (163,688) --
Non-current prepaid taxes.......................... 34,398 23,716 (33,979) 24,135
Other non-current assets........................... 6,328 191 -- 6,519
-------- -------- --------- ----------
Total assets....................................... $986,110 $256,586 $(197,873) $1,044,823
======== ======== ========= ==========
Liabilities:
Current liabilities................................ $122,858 $ 34,937 $ (2) $ 157,793
Long-term debt..................................... 228,351 48,603 -- 276,954
Deferred income taxes.............................. 74,711 9,117 (33,979) 49,849
Intercompany payable (receivable).................. (2,024) 2,024 -- --
Other non-current liabilities...................... 66,073 13,864 -- 79,937
-------- -------- --------- ----------
Total liabilities.................................. 489,969 108,545 (33,981) 564,533
Stockholders' Equity................................. 496,141 148,041 (163,892) 480,290
-------- -------- --------- ----------
Total liabilities and stockholders' equity......... $986,110 $256,586 $(197,873) $1,044,823
======== ======== ========= ==========
</TABLE>
- ---------------
(1) Includes the Company but excludes a non-wholly-owned U.S. subsidiary.
(2) Includes a non-wholly-owned U.S. subsidiary.
F-66
<PAGE> 203
SAFETY-KLEEN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED DECEMBER 28, 1996
<TABLE>
<CAPTION>
UNITED STATES EUROPE,
AND CANADA CONSOLIDATING
PUERTO RICO AND OTHER ELIMINATING CONSOLIDATED
SUBSIDIARIES(1) SUBSIDIARIES(2) ENTRIES TOTAL
--------------- --------------- ------------- ------------
(EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C>
Total revenues...................................... $757,309 $169,057 $(3,240) $923,126
Operating costs and expenses........................ 539,803 132,934 (766) 671,971
-------- -------- ------- --------
Gross profit........................................ 217,506 36,123 (2,474) 251,155
Selling and administrative expenses................. 107,024 27,115 (2,474) 131,665
-------- -------- ------- --------
Operating income.................................... 110,482 9,008 -- 119,490
Interest expense, net............................... 14,344 3,498 -- 17,842
-------- -------- ------- --------
Earnings before income taxes........................ 96,138 5,510 -- 101,648
Income taxes........................................ 38,739 1,800 -- 40,539
-------- -------- ------- --------
Net earnings........................................ $ 57,399 $ 3,710 $ -- $ 61,109
======== ======== ======= ========
</TABLE>
- ---------------
(1) Includes the Company but excludes a non-wholly-owned U.S. subsidiary.
(2) Includes a non-wholly-owned U.S. subsidiary.
F-67
<PAGE> 204
SAFETY-KLEEN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
FOR THE FISCAL YEAR ENDED DECEMBER 28, 1996
<TABLE>
<CAPTION>
UNITED STATES
AND EUROPE, CANADA CONSOLIDATING
PUERTO RICO AND OTHERS ELIMINATING CONSOLIDATED
SUBSIDIARIES(1) SUBSIDIARIES(2) ENTRIES TOTAL
--------------- --------------- ------------- ------------
(EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C>
Cash flows from (used in) operating activities:
Net earnings.................................... $ 57,399 $ 3,710 $ -- $ 61,109
Depreciation and amortization................... 62,497 15,244 -- 77,741
All other operating activities (net)............ (23,957) 1,052 -- (22,905)
-------- -------- ------- ---------
Net cash provided by operating activities......... 95,939 20,006 -- 115,945
-------- -------- ------- ---------
Cash flows from (used in) investing activities:
Equipment at customers additions................ (18,902) (4,952) -- (23,854)
Property additions.............................. (25,867) (11,803) -- (37,670)
Business acquisitions and other................. (36,132) (3,677) -- (39,809)
-------- -------- ------- ---------
Net cash used in investing activities............. (80,901) (20,432) -- (101,333)
-------- -------- ------- ---------
Cash flows from (used in) financing activities:
Net payments.................................... (4,057) (2,703) -- (6,760)
Intercompany receivable (payable)............... (4,436) 4,436 -- --
Proceeds from stock option exercises............ 1,576 -- -- 1,576
Cash dividends paid............................. (20,936) -- -- (20,936)
-------- -------- ------- ---------
Net cash provided by (used in) financing
activities...................................... (27,853) 1,733 -- (26,120)
-------- -------- ------- ---------
Effect of exchange rates changes on cash.......... -- (82) -- (82)
-------- -------- ------- ---------
Net increase (decrease) in cash and cash
equivalents..................................... (12,815) 1,225 -- (11,590)
Cash and cash equivalents at beginning of
reporting period................................ 14,273 7,965 -- 22,238
-------- -------- ------- ---------
Cash and cash equivalents at end of reporting
period.......................................... $ 1,458 $ 9,190 $ -- $ 10,648
======== ======== ======= =========
Supplemental disclosures of cash paid during the
reporting period:
Interest (net of amounts capitalized)........... $ 15,624 $ 3,983 $ -- $ 19,607
Income taxes paid (net of refunds received)..... 27,919 (372) -- 27,547
</TABLE>
- ---------------
(1) Includes the Company, but excludes a non-wholly-owned U.S. subsidiary.
(2) Includes a non-wholly-owned U.S. subsidiary.
F-68
<PAGE> 205
SAFETY-KLEEN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED DECEMBER 30, 1995
<TABLE>
<CAPTION>
UNITED STATES
AND EUROPE, CANADA CONSOLIDATING
PUERTO RICO AND OTHER ELIMINATING CONSOLIDATED
SUBSIDIARIES(1) SUBSIDIARIES(2) ENTRIES TOTAL
--------------- --------------- ------------- ------------
(EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C>
Total revenues.................................... $700,694 $160,636 $(2,079) $859,251
Operating costs and expenses...................... 503,550 125,548 (629) 628,469
-------- -------- ------- --------
Gross profit...................................... 197,144 35,088 (1,450) 230,782
Selling and administrative expenses............... 97,895 25,874 (1,450) 122,319
Restructuring charge (credit)..................... (6,920) (8,297) -- (15,217)
Remediation charge (credit)....................... 15,131 (3,175) -- 11,956
-------- -------- ------- --------
Operating income.................................. 91,038 20,686 -- 111,724
Interest expense, net............................. 15,379 3,877 -- 19,256
-------- -------- ------- --------
Earnings before income taxes...................... 75,659 16,809 -- 92,468
Income taxes...................................... 30,771 8,394 -- 39,165
-------- -------- ------- --------
Net earnings...................................... $ 44,888 $ 8,415 $ -- $ 53,303
======== ======== ======= ========
</TABLE>
- ---------------
(1) Includes the Company, but excludes a non-wholly-owned U.S. subsidiary.
(2) Includes a non-wholly-owned U.S. subsidiary.
F-69
<PAGE> 206
SAFETY-KLEEN CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING CONDENSED STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEAR ENDED DECEMBER 30, 1995
<TABLE>
<CAPTION>
UNITED STATES
AND EUROPE, CANADA CONSOLIDATING
PUERTO RICO AND OTHER ELIMINATING CONSOLIDATED
SUBSIDIARIES(1) SUBSIDIARIES(2) ENTRIES TOTAL
--------------- --------------- ------------- ------------
(EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C>
Cash flows from (used in) operating activities:
Net earnings.................................... $ 44,888 $ 8,415 $-- $ 53,303
Depreciation and amortization................... 62,780 15,021 -- 77,801
All other operating activities (net)............ 8,812 (14,974) -- (6,162)
-------- -------- --- --------
Net cash provided by operating activities......... 116,480 8,462 -- 124,942
-------- -------- --- --------
Cash flows from (used in) investing activities:
Equipment as customers additions................ (29,050) (5,824) -- (34,874)
Property additions.............................. (29,537) (13,698) -- (43,235)
Business acquisitions and other................. (24,764) (589) -- (25,353)
-------- -------- --- --------
Net cash used in investing activities............. (83,351) (20,111) -- (103,462)
-------- -------- --- --------
Cash flows from (used in) financing activities:
Net borrowings (payments)....................... (4,873) 3,308 -- (1,565)
Intercompany receivable (payable)............... (6,912) 6,912 -- --
Proceeds from stock option exercises............ 1,930 -- -- 1,930
Cash dividends paid............................. (20,820) -- -- (20,820)
-------- -------- --- --------
Net cash provided by (used in) financing
activities...................................... (30,675) 10,220 -- (20,455)
-------- -------- --- --------
Effect of exchange rates changes on cash.......... -- 198 -- 198
-------- -------- --- --------
Net increase in cash and cash equivalents......... 2,454 (1,231) -- 1,223
Cash and cash equivalents at beginning of
reporting period................................ 11,819 9,196 -- 21,015
-------- -------- --- --------
Cash and cash equivalents at end of reporting
period.......................................... $ 14,273 $ 7,965 $-- $ 22,238
======== ======== === ========
Supplemental disclosures of cash paid during the
reporting period:
Interest (net of amounts capitalized)........... $ 14,218 $ 4,779 $-- $ 18,997
Income taxes paid (net of refunds received)..... 10,260 971 -- 11,231
</TABLE>
- ---------------
(1) Includes the Company, but excludes a non-wholly-owned U.S. subsidiary.
(2) Includes a non-wholly-owned U.S. subsidiary.
F-70
<PAGE> 207
SAFETY-KLEEN CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(EXPRESSED IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
MARCH 28, JANUARY 3,
1998 1998
----------- ----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $30,458.... $ 11,202
Trade accounts receivable, less allowances of $7,977 and
$7,634, respectively................................... 134,183... 131,092
Inventories............................................... 51,849 51,339
Deferred tax assets....................................... 10,177 10,694
Prepaid expenses and other................................ 20,662 20,099
---------- ----------
Total current assets.............................. 247,329 224,426
---------- ----------
Equipment at customers and components, at cost, less
accumulated depreciation of $44,853 and $44,928,
respectively.............................................. 130,569 127,631
Property, plant and equipment, at cost, less accumulated
depreciation of $393,379 and $384,422, respectively....... 497,128 502,110
Intangible assets, at cost, less accumulated amortization of
$73,524 and $95,568, respectively......................... 143,017 144,536
Other assets................................................ 37,092 36,003
---------- ----------
$1,055,135 $1,034,706
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short term debt........................................... $ 213,000 $ 37
Trade accounts payable.................................... 78,053 75,284
Accrued salaries, wages and employee benefits............. 28,096 29,769
Other accrued expenses.................................... 24,343 28,343
Insurance reserves........................................ 12,855 12,614
Accrued environmental liabilities......................... 8,376 8,382
Income taxes payable...................................... 1,049 1,014
---------- ----------
Total current liabilities......................... 365,772 155,443
---------- ----------
Long-term debt.............................................. -- 214,234
---------- ----------
Deferred tax liabilities.................................... 67,259 65,607
---------- ----------
Accrued environmental liabilities........................... 31,436 32,888
---------- ----------
Other liabilities........................................... 37,760 37,067
---------- ----------
Shareholders' equity:
Preferred stock ($.10 par value; authorized 1,000,000
shares, none issued)................................... -- --
Common stock ($.10 par value; authorized 300,000,000
shares; issued and outstanding 60,101,962 and
59,191,462 shares, respectively)....................... 6,010 5,919
Additional paid-in capital................................ 231,175 212,504
Retained earnings......................................... 342,868 338,318
Cumulative translation adjustments........................ (27,145) (27,274)
---------- ----------
552,908 529,467
---------- ----------
$1,055,135 $1,034,706
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-71
<PAGE> 208
SAFETY-KLEEN CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(EXPRESSED IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
TWELVE WEEKS ENDED
-------------------------------
MARCH 28, 1998 MARCH 22, 1997
-------------- --------------
<S> <C> <C>
Revenue..................................................... $241,777 $220,230
Operating costs and expenses.............................. 181,781 164,084
Selling and administrative expenses....................... 34,552 32,575
-------- --------
Operating income............................................ 25,444 23,571
Interest income........................................... (408) (227)
Interest expense.......................................... 3,612 4,361
Merger related costs...................................... 5,997 --
-------- --------
Earnings before income taxes................................ 16,243 19,437
Income taxes................................................ 6,286 7,599
-------- --------
Net earnings................................................ $ 9,957 $ 11,838
======== ========
Earnings per common share:
Basic..................................................... $ 0.17 $ 0.20
Diluted................................................... $ 0.16 $ 0.20
======== ========
Cash dividends per common share............................. $ 0.09 $ 0.09
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-72
<PAGE> 209
SAFETY-KLEEN CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(EXPRESSED IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
TWELVE WEEKS ENDED
-------------------------------
MARCH 28, 1998 MARCH 22, 1997
-------------- --------------
<S> <C> <C>
Net earnings................................................ $ 9,957 $11,838
Unrealized foreign currency translation adjustments......... 129 (7,197)
------- -------
Comprehensive income........................................ $10,086 $ 4,641
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-73
<PAGE> 210
SAFETY-KLEEN CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(EXPRESSED IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
TWELVE WEEKS ENDED
-------------------------------
MARCH 28, 1998 MARCH 22, 1997
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings.............................................. $ 9,957 $ 11,838
Depreciation and amortization............................. 19,046 17,658
All other operating activities (net)...................... 1,534 (10,856)
-------- --------
Net cash provided by operating activities......... $ 30,537 $ 18,640
-------- --------
Cash flows used in investing activities:
Equipment at customers and component additions............ (8,709) (4,857)
Property, plant and equipment additions................... (5,686) (6,992)
Business acquisitions and other........................... (5,963) (8,399)
-------- --------
Net cash used in investing activities............. (20,358) (20,248)
-------- --------
Cash flows from (used in) financing activities:
Net borrowings (payments)................................. (1,271) 9,387
Proceeds from stock option exercises...................... 15,763 362
Cash dividends paid....................................... (5,406) --
-------- --------
Net cash from (used in) financing activities...... 9,086 9,749
-------- --------
Effect of exchange rate changes on cash..................... (9) (164)
-------- --------
Net increase in cash and cash equivalents................... 19,256 7,977
Cash and cash equivalents at beginning of year.............. 11,202 10,648
-------- --------
Cash and cash equivalents at end of the reporting period.... $ 30,458 $ 18,625
======== ========
Supplemental disclosures of cash paid during the reporting
period:
Interest (net of amount capitalized)...................... $ 7,491 $ 7,298
======== ========
Income taxes paid (net of refunds received)............... $ 119 $ 774
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-74
<PAGE> 211
SAFETY-KLEEN CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. MERGER RELATED COSTS
On August 8, 1997, the Company's Board of Directors ("Board") initiated a
process to review strategic alternatives including the sale of all or a part of
the Company. On November 20, 1997, the Board approved a merger agreement with SK
Parent Corp. (a Delaware corporation owned equally by Phillips Services Corp.,
affiliates of Apollo Management, L.P. and affiliates of Blackstone Partners III,
L.L.C.) but subsequently was unable to gain the necessary shareholder approval
for the agreement. The Board then terminated the merger agreement with SK Parent
and began negotiations with Laidlaw Environmental.
On March 15, 1998, the Board unanimously approved a definitive merger
agreement ("Merger Agreement") with Laidlaw Environmental which provides for an
exchange offer followed by a back-end merger. By April 7, 1998, Laidlaw
Environmental had acquired a total of 55,751,582 shares which were validly
tendered under the Exchange Offer and constituted approximately 93% of the
outstanding shares of Safety-Kleen. A special shareholder meeting occurred on
May 18, 1998 which approved the merger.
During the first twelve weeks of 1998, the Company incurred $6.0 million of
costs in conjunction with this process.
2. EARNINGS PER SHARE
The weighted average number of common shares outstanding for the twelve
weeks ended March 28, 1998 and March 22, 1997 were as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997
------ ------
<S> <C> <C>
Weighted average number of shares outstanding -- basic...... 59,652 58,258
Dilutive effect of stock options and warrants............... 1,479 162
------ ------
Weighted average number of common shares
outstanding -- diluted.................................... 61,131 58,420
====== ======
</TABLE>
The Company had additional stock options of 309,525 and 2,370,103 shares at
March 28, 1998 and March 22, 1997, respectively, which were not included in the
computation of diluted earnings per share because the options' exercise price
was greater than the average market price of the common share.
3. COMPREHENSIVE INCOME
In 1998, the Company adopted Statement of Financial Accounting Standard
("SFAS") No. 130 on "Reporting Comprehensive Income" which requires companies to
report all changes in equity during a period, except those resulting from
investment by owners and distribution to owners in a financial statement for the
period in which they are recognized. The Company has selected to present
separate Consolidated Statements of Comprehensive Income following the
Consolidated Statements of Earnings. The prior year has been restated to conform
to the SFAS No. 130 requirements.
4. INVENTORIES
The Companies inventories consist of the following (expressed in
thousands):
<TABLE>
<CAPTION>
MARCH 28, 1998 JANUARY 3, 1998
-------------- ---------------
<S> <C> <C>
Oil....................................................... $12,878 $12,759
Solvent, Drums and Other.................................. 38,971 38,580
------- -------
Total........................................... $51,849 $51,339
======= =======
</TABLE>
F-75
<PAGE> 212
SAFETY-KLEEN CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
LIFO inventories at March 28, 1998 and January 3, 1998 were $5.9 and $5.5
million, respectively. Under the FIFO method of accounting (which approximates
current or replacement cost), inventories would have been $0.4 million higher at
March 28, 1998 and January 3, 1998.
5. DEBT
The Company reclassified all outstanding long-term debt to short term as
all debt will be paid off in 1998 as a consequence of change of control
provisions included in the Company's credit agreements. These provisions were
triggered by the acquisition of 93% of the Company's outstanding common stock,
in April of 1998 by Laidlaw Environmental.
6. INTERIM REPORTING PERIODS
The Company's interim reporting periods are twelve weeks each for the first
three reporting periods of the year, and sixteen and seventeen weeks for the
fourth reporting period of 1998 and 1997, respectively.
F-76
<PAGE> 213
SAFETY-KLEEN CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. SUMMARIZED FINANCIAL INFORMATION
In connection with the Merger Agreement with Laidlaw Environmental (see
Note 1), LES, Inc., a wholly-owned subsidiary of Laidlaw Environmental Services,
Inc. issued 9.25% Senior Subordinated Notes to finance the acquisition. The
wholly-owned domestic subsidiaries of LES, Inc. (including the Company and its
subsidiaries incorporated in the United States and Puerto Rico) guaranteed such
notes. No foreign direct or indirect subsidiary (including those incorporated in
Europe and Canada) or non-wholly-owned subsidiary of the Company is an obligor
or guarantor on the financing. Summarized financial information on a combined
basis as of and for the twelve weeks ended March 28, 1998 is as follows:
CONSOLIDATING CONDENSED BALANCE SHEET
AS OF MARCH 28, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
UNITED STATES EUROPE,
AND CANADA CONSOLIDATING
PUERTO RICO AND OTHER ELIMINATING CONSOLIDATED
SUBSIDIARIES(1) SUBSIDIARIES(2) ENTRIES TOTAL
--------------- --------------- ------------- ------------
(EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C>
Assets:
Current assets............... $ 188,940 $ 58,389 $ -- $ 247,329
Equipment at customers,
net....................... 110,158 20,411 -- 130,569
Property, plant and
equipment, net............ 409,156 87,972 -- 497,128
Intangible assets............ 87,728 55,495 (206) 143,017
Investment in Subsidiaries... 168,626 -- (168,626) --
Non-current prepaid taxes.... 31,396 20,898 (33,138) 19,156
Other non-current assets..... 17,070 866 -- 17,936
---------- -------- --------- ----------
Total assets................. $1,013,074 $244,031 $(201,970) $1,055,135
========== ======== ========= ==========
Liabilities:
Current liabilities.......... $ 334,267 $ 31,507 $ (2) $ 365,772
Deferred income taxes........ 85,415 14,982 (33,138) 67,259
Intercompany payable
(receivable).............. (40,665) 40,665 -- --
Other non-current
liabilities............... 60,533 8,663 -- 69,196
---------- -------- --------- ----------
Total liabilities............ 439,550 95,817 (33,140) 502,227
Stockholders' Equity........... 573,524 148,214 (168,830) 552,908
---------- -------- --------- ----------
Total liabilities and
stockholders' equity......... $1,013,074 $244,031 $(201,970) $1,055,135
========== ======== ========= ==========
</TABLE>
- ---------------
(1) Includes the Company but excludes a non-wholly-owned U.S. subsidiary.
(2) Includes a non-wholly-owned U.S. subsidiary.
F-77
<PAGE> 214
SAFETY-KLEEN CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
FOR THE TWELVE WEEKS ENDED MARCH 28, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
UNITED STATES EUROPE,
AND CANADA CONSOLIDATING
PUERTO RICO AND OTHER ELIMINATING CONSOLIDATED
SUBSIDIARIES(1) SUBSIDIARIES(2) ENTRIES TOTAL
--------------- --------------- ------------- ------------
(EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C>
Total revenues.................... $ 200,476 $ 42,140 $ (839) $ 241,777
Operating costs and expenses...... 149,337 32,731 (287) 181,781
---------- -------- --------- ----------
Gross profit...................... 51,139 9,409 (552) 59,996
Selling and administrative
expenses........................ 28,170 6,934 (552) 34,552
---------- -------- --------- ----------
Operating income.................. 22,969 2,475 -- 25,444
Interest expense, net............. 2,942 262 -- 3,204
Merger related costs.............. 5,997 -- -- 5,997
---------- -------- --------- ----------
Earnings before income taxes...... 14,030 2,213 -- 16,243
Income taxes...................... 5,568 718 -- 6,286
---------- -------- --------- ----------
Net earnings...................... $ 8,462 $ 1,495 $ -- $ 9,957
========== ======== ========= ==========
</TABLE>
- ---------------
(1) Includes the Company but excludes a non-wholly-owned U.S. subsidiary.
(2) Includes a non-wholly-owned U.S. subsidiary.
F-78
<PAGE> 215
SAFETY-KLEEN CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
TWELVE WEEKS ENDED MARCH 28, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
UNITED STATES EUROPE,
AND CANADA CONSOLIDATING
PUERTO RICO AND OTHER ELIMINATING CONSOLIDATED
SUBSIDIARIES(1) SUBSIDIARIES(2) ENTRIES TOTAL
--------------- --------------- ------------- ------------
(EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C>
Cash flows from (used in) operating activities:
Net earnings................................. $ 8,462 $ 1,495 $-- $ 9,957
Depreciation and amortization................ 15,525 3,521 -- 19,046
All other operating activities (net)......... (717) 2,251 -- 1,534
-------- ------- --- -------
Net cash provided by operating activities...... 23,270 7,267 -- 30,537
-------- ------- --- -------
Cash flows from (used in) investing activities:
Equipment at customers additions............. (7,151) (1,558) -- (8,709)
Property additions........................... (5,135) (551) -- (5,686)
Business acquisitions and other.............. (5,914) (49) -- (5,963)
-------- ------- --- -------
Net cash used in investing activities.......... (18,200) (2,158) -- (20,358)
Cash flows from (used in) financing activities:
Net payments................................. (973) (298) -- (1,271)
Intercompany receivable (payable)............ 1,397 (1,397) -- --
Proceeds from stock option exercises......... 15,763 -- -- 15,763
Cash dividends paid.......................... (5,406) -- -- (5,406)
-------- ------- --- -------
Net cash provided by (used in) financing
activities................................... 10,781 (1,695) -- 9,086
-------- ------- --- -------
Effect of exchange rates changes on cash....... -- (9) -- (9)
-------- ------- --- -------
Net increase in cash and cash equivalents...... 15,851 3,405 -- 19,256
Cash and cash equivalents at beginning of
reporting period............................. 3,550 7,652 -- 11,202
-------- ------- --- -------
Cash and cash equivalents at end of reporting
period....................................... $ 19,401 $11,057 $-- $30,458
======== ======= === =======
Supplemental disclosures of cash paid during
the reporting period:
Interest (net of amounts capitalized)...... $ 6,195 $ 1,296 $-- $ 7,491
Income taxes paid (net of refunds
received)................................ 119 -- -- 119
======== ======= === =======
</TABLE>
- ---------------
(1) Includes the Company but excludes a non-wholly-owned U.S. subsidiary.
(2) Includes a non-wholly-owned U.S. subsidiary.
F-79
<PAGE> 216
SAFETY-KLEEN CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING, CONDENSED STATEMENT OF OPERATIONS
FOR THE TWELVE WEEKS ENDED MARCH 22, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
UNITED STATES
AND EUROPE, CANADA CONSOLIDATING
PUERTO RICO AND OTHER ELIMINATING CONSOLIDATED
SUBSIDIARIES(1) SUBSIDIARIES(2) ENTRIES TOTAL
--------------- --------------- ------------- ------------
(EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C>
Total revenues................... $181,830 $39,095 $(695) $220,230
Operating costs and expenses..... 133,498 30,694 (108) 164,084
-------- ------- ----- --------
Gross profit..................... 48,332 8,401 (587) 56,146
Selling and administrative
expenses....................... 26,561 6,601 (587) 32,573
-------- ------- ----- --------
Operating income................. 21,771 1,800 -- 23,571
Interest expense, net............ 3,333 801 -- 4,134
-------- ------- ----- --------
Earnings before income taxes..... 18,438 999 -- 19,437
Income taxes..................... 7,329 270 -- 7,599
-------- ------- ----- --------
Net earnings..................... $ 11,109 $ 729 $ -- $ 11,838
======== ======= ===== ========
</TABLE>
- ---------------
(1) Includes the Company but excludes a non-wholly-owned U.S. subsidiary.
(2) Includes a non-wholly-owned U.S. subsidiary.
F-80
<PAGE> 217
SAFETY-KLEEN CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
FOR THE TWELVE WEEKS ENDED MARCH 22, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
UNITED STATES
AND EUROPE, CANADA CONSOLIDATING
PUERTO RICO AND OTHER ELIMINATING CONSOLIDATED
SUBSIDIARIES (1) SUBSIDIARIES (2) ENTRIES TOTAL
---------------- ---------------- ------------- ------------
(EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C>
Cash flows from (used in)
operating activities:
Net earnings.................. $ 11,109 $ 729 $-- $ 11,838
Depreciation and
amortization............... 14,278 3,380 -- 17,658
All other operating activities
(net)...................... (15,642) 4,786 -- (10,856)
-------- ------- -- --------
Net cash provided by
operating activities.......... 9,745 8,895 -- 18,640
-------- ------- -- --------
Cash flows from (used in)
investing activities:
Equipment at customers
additions.................. (4,015) (842) -- (4,857)
Property additions............ (6,115) (877) -- (6,992)
Business acquisitions and
other...................... (8,317) (82) -- (8,399)
-------- ------- -- --------
Net cash used in investing
activities.................... (18,447) (1,801) -- (20,248)
-------- ------- -- --------
Cash flows from (used in)
financing activities:
Net borrowings (payments)..... 13,393 (4,006) -- 9,387
Intercompany receivable
(payable).................. 267 (267) -- --
Proceeds from stock option
exercises.................. 362 -- -- 362
Cash dividends paid........... -- -- -- --
-------- ------- -- --------
Net cash provided by (used in)
financing activities.......... 14,022 (4,273) -- 9,749
-------- ------- -- --------
Effect of exchange rates changes
on cash....................... -- (164) -- (164)
-------- ------- -- --------
Net increase in cash and
cash equivalents.............. 5,320 2,657 -- 7,977
Cash and cash equivalents at
beginning of reporting
period........................ 1,458 9,190 -- 10,648
-------- ------- -- --------
Cash and cash equivalents at end
of reporting period........... $ 6,778 $11,847 $-- $ 18,625
======== ======= == ========
Supplemental disclosures of cash
paid during the reporting
period:
Interest (net of amounts
capitalized)............... $ 6,753 $ 545 $-- $ 7,298
Income taxes paid (net of
refunds received).......... 774 -- -- 774
</TABLE>
- ---------------
(1) Includes the Company but excludes a non-wholly-owned U.S. subsidiary.
(2) Includes a non-wholly-owned U.S. subsidiary.
F-81
<PAGE> 218
======================================================
No dealer, salesperson, or any other person has been authorized to give any
information or to make any representations not contained in this Prospectus and,
if given or made, such information or representations must not be relied upon as
having been authorized by the Company or the Guarantors. This Prospectus does
not constitute an offer of any securities other than those to which it relates
or an offer to sell, or a solicitation of an offer to buy, to any person in any
jurisdiction where an offer or solicitation would be unlawful. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that the information herein is correct as
of any time subsequent to the date hereof.
---------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 1
Risk Factors.......................... 12
The Exchange Offer.................... 20
Use of Proceeds....................... 28
Capitalization........................ 29
The Transactions...................... 30
Unaudited Pro Forma Combined Financial
Information......................... 31
Selected Consolidated Financial
Data................................ 42
Management's Discussion and Analysis
of Financial Condition and Results
of Operations -- Laidlaw
Environmental....................... 46
Management's Discussion and Analysis
of Financial Condition and Results
of Operations -- Safety-Kleen....... 55
Business.............................. 63
Management............................ 79
Certain Relationships and Related
Transactions........................ 85
Principal Shareholders................ 86
Description of Other Indebtedness..... 87
Description of the Notes.............. 90
Certain Federal Income Tax
Considerations...................... 121
Plan of Distribution.................. 123
Legal Matters......................... 124
Independent Accountants............... 124
Available Information................. 124
Documents Incorporated by Reference... 125
Disclosure Regarding Forward-Looking
Statements.......................... 126
Index to Financial Statements......... F-1
</TABLE>
Until September , 1998 (90 days after the date of this Prospectus), all
dealers effecting transactions in the registered securities, whether or not
participating in this distribution, may be required to deliver a Prospectus.
This is in addition to the obligation of dealers to deliver a Prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
======================================================
======================================================
LES, INC.
OFFER TO EXCHANGE ITS
9 1/4% SENIOR SUBORDINATED NOTES
DUE 2008
(GUARANTEED BY LAIDLAW
ENVIRONMENTAL SERVICES, INC.)
WHICH HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, FOR ANY
AND ALL OF ITS OUTSTANDING
9 1/4% SENIOR SUBORDINATED NOTES
DUE 2008
(GUARANTEED BY LAIDLAW
ENVIRONMENTAL SERVICES, INC.)
(COMPANY LOGO)
--------------------
PROSPECTUS
--------------------
, 1998
======================================================
<PAGE> 219
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Parent is incorporated under the laws of the State of Delaware. Section
145 of the DGCL, inter alia ("Section 145") provides that a Delaware corporation
may indemnify any person who were, are or are threatened to be made, parties to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of such corporation), by reason of the fact that such person is or was an
officer, director, employee or agent of such corporation, or is or was serving
at the request of such corporation as a director, officer, employee or agent of
another corporation or enterprise. The indemnity may include expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding, provided such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the corporation's best interests
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe that his conduct was illegal. A Delaware corporation may indemnify
any persons who are, were or are threatened to be made, a party to any
threatened, pending or completed action or suit by or in the right of the
corporation by reason of the fact that such person was a director, officer,
employee or agent of such corporation, or is or was serving at the request of
such corporation as a director, officer, employee or agent of another
corporation or enterprise. The indemnity may include expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit, provided such person
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the corporation's best interests, provided that no indemnification is
permitted without judicial approval if the officer, director, employee or agent
is adjudged to be liable to the corporation. Where an officer, director,
employee or agent is successful on the merits or otherwise in the defense of any
action referred to above, the corporation must indemnify him against the
expenses which such officer or director has actually and reasonably incurred.
The Certificate of Incorporation of the Parent provides that, to the
fullest extent permitted by the DGCL as the same exists or may hereafter be
amended, a director of the Parent shall not be liable to the Parent or its
stockholders for monetary damages for a breach of fiduciary duty as a director.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or enterprise,
against any liability asserted against him and incurred by him in any such
capacity, arising out of his status as such, whether or not the corporation
would otherwise have the power to indemnify him under Section 145.
All of the the Parent's directors and officers are covered by insurance
policies maintained and held in effect by Laidlaw Inc. against certain
liabilities for actions taken in such capacities, including liabilities under
the Securities Act of 1933.
Similar indemnification provisions exist for each of the Company and the
Subsidiary Guarantors.
II-1
<PAGE> 220
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
(2) -- Agreement and Plan of Merger dated as of March 16, 1998,
by and among the Parent, LES Acquisition Inc. and
Safety-Kleen included as Annex A of Safety-Kleen's
Revised Amended Prospectus on Form 14D-9, filed as
Exhibit 62 to Safety-Kleen's Amendment No. 28 to Schedule
14D-9A on March 17, 1997, and incorporated herein by
reference.
(3)(a) -- Restated Certificate of Incorporation of the Parent dated
May 13, 1997, and Amendment to Certificate of
Incorporation dated May 15, 1997, filed as Exhibit 3(a)
to the Parent's Form 10-Q for the Quarter ended May 31,
1997, and incorporated herein by reference.
(3)(b) -- Certificate of Correction Filed to Correct a Certain
Error in the Restated and Amended Certificate of
Incorporation of the Parent dated October 15, 1997, filed
as Exhibit 3(a)(i) to the Parent's Form 10-K for the
Fiscal Year ended August 31, 1997, and incorporated
herein by reference.
(3)(c) -- Bylaws of the Company filed as Exhibit 4(ii) to the
Registrant's Current Report on Form 8-K dated July 29,
1997, and incorporated herein by reference.
(4)(a) -- Registration Rights Agreement dated as of May 29, 1998
between the Company, the Parent, the Subsidiary
Guarantors, TD Securities (USA) Inc. and NationsBanc
Montgomery Securities LLC.
4(b) -- Indenture dated as of May 29, 1998 between the Company,
the Parent, the Subsidiary Guarantors and The Bank of
Nova Scotia Trust Company of New York, as trustee.
4(c) -- Rights Agreement dated as of June 14, 1989 between the
Parent and First Chicago Trust Company as successor to
Registrar and Transfer Company, as Rights Agent filed as
an Exhibit to the Parent's Form 8-K filed on June 13,
1995, and incorporated herein by reference.
4(d) -- Senior Credit Facility dated as of April 3, 1998 among
the Company, Laidlaw Environmental Services (Canada)
Ltd., The Toronto-Dominion Bank and a syndicate of banks
and other financial institutions.
4(e) -- Supplement to the Amended and Restated Credit Agreement
dated as of April 3, 1998 among the Company, Laidlaw
Environmental Services (Canada) Ltd., the Lenders,
Toronto Dominion (Texas), Inc., The Toronto Dominion
Bank, TD Securities (USA) Inc., The Bank of Nova Scotia,
NationsBank, N.A., The First National Bank of Chicago and
Wachovia Bank.
4(f) -- Waiver and First Amendment to the Amended and Restated
Credit Agreement dated as of May 15, 1998 among the
Company, Laidlaw Environmental Services (Canada) Ltd.,
the Lenders, Toronto Dominion (Texas), Inc., The Toronto
Dominion Bank, TD Securities (USA) Inc., The Bank of Nova
Scotia, NationsBank, N.A., The First National Bank of
Chicago and Wachovia Bank.
4(g) -- Commitment Increase Supplement to the Amended and
Restated Credit Agreement dated as of June 3, 1998 among
the Company, Laidlaw Environmental Services (Canada)
Ltd., the Lenders, Toronto Dominion Bank (Texas), Inc.,
The Toronto Dominion Bank, TD Securities (USA) Inc., The
Bank of Nova Scotia, NationsBank, N.A., The First
National Bank of Chicago and Wachovia Bank.
(4)(h) -- Amendment No. 1 dated as of March 31, 1995 to the Rights
Agreement between the Parent and First Chicago Trust
Company as successor to Registrar and Transfer Company,
as Rights Agent filed as an Exhibit to the Parent's Form
8-K filed on June 13, 1995, and incorporated herein by
reference.
(4)(i) -- Credit Agreement among Laidlaw Chem-Waste, Inc., Laidlaw
Environmental Services (Canada) Ltd., Toronto Dominion
(Texas) Inc., The Toronto-Dominion Bank, TD Securities
(USA) Inc., the Bank of Nova Scotia, NationsBanc, N.A.
and The First National Bank of Chicago and NationsBanc,
N.A. as Syndication Agent dated as of May 9, 1997, filed
as Exhibit 4(c) to the Parent's Form 10-Q for the Quarter
ended March 31, 1997, and incorporated herein by
reference.
</TABLE>
II-2
<PAGE> 221
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
(4)(j) -- $350,000,000 5% Subordinated Convertible Pay-In-Kind
Debenture due 2009 issued by the Parent on May 15, 1997
to Laidlaw Inc. the form of which was included as an
appendix to the Parent's Definitive Proxy Statement on
Form DEF 14A, filed on May 1, 1997, and incorporated
herein by reference.
(4)(k) -- Registration Rights Agreement dated May 15, 1997 between
the Parent, Laidlaw Transportation, Inc. and Laidlaw Inc.
included as appendix to the Parent's Definitive Proxy
Statement on Form DEF 14A, the form of which was filed on
May 1, 1997, and incorporated herein by reference.
(4)(l) -- Indenture dated as of May 1, 1993 between the Industrial
Development Board of the Metropolitan Government of
Nashville and Davidson County (Tennessee) and NationsBanc
of Tennessee, N.A., filed as Exhibit 4(f) to the Parent's
Form 10-Q for the Quarter ended May 31, 1997, and
incorporated herein by reference.
(4)(m) -- Indenture of Trust dated as of February 1, 1995 between
Carbon County, Utah and West One Bank, Utah, now known as
U.S. Bank, as Trustee, filed as Exhibit 4(g) to the
Parent's Form 10-Q for the Quarter ended May 31, 1997,
and incorporated herein by reference.
(4)(n) -- Indenture of Trust dated as of August, 1995 between
Tooele County, Utah and West One Bank, Utah, now known as
U.S. Bank, as Trustee, filed as Exhibit 4(h) to the
Parent's Form 10-Q for the Quarter ended May 31, 1997,
and incorporated herein by reference.
(4)(o) -- Indenture of Trust dated as of July 1, 1997 between
Carbon County, Utah and U.S. Bank, a national banking
association, as Trustee, filed as Exhibit 4(i) to the
Parent's Form 10-Q for the Quarter ended May 31, 1997,
and incorporated herein by reference.
(4)(p) -- Indenture of Trust dated as of July 1, 1997 between
Tooele County, Utah and U.S. Bank, a national banking
association, as Trustee, filed as Exhibit 4(j) to the
Parent's Form 10-Q for the Quarter ended May 31, 1997,
and incorporated herein by reference.
(4)(q) -- Indenture of Trust dated as of July 1, 1997 between
California Pollution Control Financing Authority and U.S.
Bank, a national banking association, as Trustee, filed
as Exhibit 4(k) to the Parent's Form 10-Q for the Quarter
ended May 31, 1997, and incorporated herein by reference.
4(r) -- Stock Purchase Agreement between Westinghouse Electric
Corporation (Seller) and Rollins Environmental Services,
Inc. (Buyer) for National Electric, Inc. dated March 7,
1995, filed as an Exhibit to the Parent's Form 8-K filed
on June 13, 1995, and incorporated hereby by reference.
(4)(s) -- Second Amendment to Stock Purchase Agreement (as
referenced in Exhibit (4)(l) above, dated May 15, 1997,
among Westinghouse Electric Corporation, Rollins
Environmental Services, Inc. and Laidlaw Inc., filed as
Exhibit 4(m) to the Parent's Form 10-Q for the Quarter
ended May 31, 1997, and incorporated herein by reference.
(4)(t) -- Promissory Note dated May 15, 1997 for $60,000,000 from
the Parent to Westinghouse Electric Corporation, filed as
Exhibit 4(n) to the Parent's Form 10-Q for the Quarter
ended May 31, 1997, and incorporated herein by reference.
(4)(u) -- Guaranty Agreement dated May 15, 1997 by Laidlaw Inc. to
Westinghouse Electric Corporation guaranteeing Promissory
Note dated May 15, 1997 (as referenced in Exhibit (4)(n))
from the Parent to Westinghouse Electric Corporation,
filed as Exhibit 4(o) to the Parent's Form 10-Q for the
Quarter ended May 31, 1997, and incorporated herein by
reference.
(5) -- Opinion of Paul, Weiss, Rifkind, Wharton & Garrison as to
the legality of the securities being offered.*
(8) -- Opinion of Paul, Weiss, Rifkind, Wharton & Garrison as to
certain tax matters.*
(10)(a) -- Rollins Environmental Services, Inc. 1982 Incentive Stock
Option Plan, filed with Amendment No. 1 to the Company's
Registration Statement No. 2-84139 on Form S-1 dated June
24, 1983, and incorporated herein by reference.
</TABLE>
II-3
<PAGE> 222
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
(10)(b) -- Rollins Environmental Services, Inc. 1993 Stock Option
Plan, filed with the Company's Proxy Statement for the
Annual Meeting of Stockholders held January 28, 1994, and
incorporated herein by reference.
(10)(c) -- Stock Purchase Agreement dated February 6, 1997, among
the Parent, Laidlaw Inc., and Laidlaw Transportation,
Inc. included as an appendix to the Parent's Definitive
Proxy Statement on Form DEF 14A, filed on May 1, 1997,
and incorporated herein by reference.
(10)(e) -- Management Incentive Plan for fiscal year 1996, filed as
Exhibit 10(e) to the Parent's Form 10-Q for the Quarter
ended May 31, 1997, and incorporated herein by reference.
(11) -- Statement regarding computation of earnings per share,
filed as Exhibit (11) to the Parent's Form 10-K for the
year ended August 31, 1997, and incorporated herein by
reference.
(12) -- Computation of ratio earnings to fixed charges.
(21) -- Subsidiaries of the Registrant.
(23)(a) -- Consent of Coopers & Lybrand, independent accountants.
(23)(b) -- Consent of KPMG Peat Marwick LLP.
(23)(c) -- Consent of Arthur Andersen, LLP.
(23)(d) -- Consent of Paul, Weiss, Rifkind, Wharton & Garrison
(included in Exhibits (5) and (8)).*
(24) -- Powers of Attorney (included on the signature pages of
this Registration Statement).
(25) -- Statement of Eligibility of Trustee.
(99)(a) -- Letter of Transmittal.*
(99)(b) -- Notice of Guaranteed Delivery.*
</TABLE>
- ---------------
*To be filed by amendment.
UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(2) To deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule
14c-3 under the Securities Exchange Act of 1934; and, where interim
financial information is required to be presented by Article 3 of
Regulation S-X is not set forth in the prospectus, to deliver, or cause to
be delivered to each person to whom the prospectus is sent or given, the
latest quarterly report that is specifically incorporated by reference to
provide such interim financial information.
(3) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such
II-4
<PAGE> 223
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(4) The undersigned Registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the
prospectus pursuant to Items 4, 10(b), 11 and 13 of this Form within one
business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date
of the registration statement through the date of responding to the
request.
(5) The undersigned Registrant hereby undertakes to supply by means of
a post-effective amendment all information concerning a transaction, and
the company being acquired involved therein, that was not the subject of
and included in the registration statement when it became effective.
II-5
<PAGE> 224
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL SERVICES, INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President and Chief Executive
Officer
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JAMES R. BULLOCK Chairman of the Board and June 24,
- --------------------------------------------------- Director 1998
James R. Bullock
/s/ KENNETH W. WINGER President, Chief Executive June 24,
- --------------------------------------------------- Officer and Director 1998
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24,
- --------------------------------------------------- and Chief Financial Officer 1998
Paul R. Humphreys (principal financial and
accounting officer)
/s/ JOHN R. GRAINGER Director June 24,
- --------------------------------------------------- 1998
John R. Grainger
/s/ LESLIE W. HAWORTH Director June 24,
- --------------------------------------------------- 1998
Leslie W. Haworth
/s/ JOHN W. ROLLINS, SR. Director June 24,
- --------------------------------------------------- 1998
John W. Rollins, Sr.
</TABLE>
II-6
<PAGE> 225
<TABLE>
<C> <S> <C>
/s/ JOHN W. ROLLINS, JR. Director June 24,
- --------------------------------------------------- 1998
John W. Rollins, Jr.
/s/ DAVID E. THOMAS, JR. Director June 24,
- --------------------------------------------------- 1998
David E. Thomas, Jr.
/s/ HENRY B. TIPPIE Director June 24,
- --------------------------------------------------- 1998
Henry B. Tippie
/s/ JAMES L. WAREHAM Director June 24,
- --------------------------------------------------- 1998
James L. Wareham
/s/ GROVER C. WRENN Director June 24,
- --------------------------------------------------- 1998
Grover C. Wrenn
</TABLE>
II-7
<PAGE> 226
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LES, INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-8
<PAGE> 227
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES (US), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-9
<PAGE> 228
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL SERVICES
(LONE AND GRASSY MOUNTAIN), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-10
<PAGE> 229
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL SERVICES
(TULSA), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-11
<PAGE> 230
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL SERVICES
(SAN ANTONIO), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-12
<PAGE> 231
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL SERVICES
(WICHITA), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-13
<PAGE> 232
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL SERVICES OF
DELAWARE, INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-14
<PAGE> 233
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL SERVICES
(ROSEMOUNT), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-15
<PAGE> 234
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL SERVICES
(SAWYER), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-16
<PAGE> 235
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL SERVICES
(TUCKER), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-17
<PAGE> 236
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
NINTH STREET PROPERTIES, INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-18
<PAGE> 237
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES (SAN JOSE), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-19
<PAGE> 238
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
CHEMCLEAR, INC. OF LOS ANGELES
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-20
<PAGE> 239
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
USPCI, INC. OF GEORGIA
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24,
- --------------------------------------------------- 1998
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24,
- --------------------------------------------------- and Chief Financial Officer 1998
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-21
<PAGE> 240
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LES HOLDING'S, INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24,
- --------------------------------------------------- 1998
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24,
- --------------------------------------------------- and Chief Financial Officer 1998
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-22
<PAGE> 241
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
EAST CARBON DEVELOPMENT FINANCIAL
PARTNERS, INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24,
- --------------------------------------------------- 1998
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24,
- --------------------------------------------------- and Chief Financial Officer 1998
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-23
<PAGE> 242
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES (IMPERIAL VALLEY), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24,
- --------------------------------------------------- 1998
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24,
- --------------------------------------------------- and Chief Financial Officer 1998
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-24
<PAGE> 243
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES (LOKERN), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24,
- --------------------------------------------------- 1998
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24,
- --------------------------------------------------- and Chief Financial Officer 1998
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-25
<PAGE> 244
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES (NORTH EAST), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24,
- --------------------------------------------------- 1998
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24,
- --------------------------------------------------- and Chief Financial Officer 1998
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-26
<PAGE> 245
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES (RECOVERY), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24,
- --------------------------------------------------- 1998
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24,
- --------------------------------------------------- and Chief Financial Officer 1998
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-27
<PAGE> 246
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES (TES), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24,
- --------------------------------------------------- 1998
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24,
- --------------------------------------------------- and Chief Financial Officer 1998
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-28
<PAGE> 247
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
CORSAN TRUCKING, INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-29
<PAGE> 248
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL SERVICES (TG),
INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-30
<PAGE> 249
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES (TOC), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-31
<PAGE> 250
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL SERVICES (TS),
INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-32
<PAGE> 251
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL SERVICES
(THERMAL TREATMENT), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-33
<PAGE> 252
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
GSX CHEMICAL SERVICES, INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-34
<PAGE> 253
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LEMC, INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-35
<PAGE> 254
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW CHEMICAL SERVICES, INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-36
<PAGE> 255
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES (ALTAIR), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-37
<PAGE> 256
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL SERVICES (FS),
INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-38
<PAGE> 257
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES (BDT), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-39
<PAGE> 258
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES (GS), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-40
<PAGE> 259
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES (CLIVE), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-41
<PAGE> 260
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES (WT), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-42
<PAGE> 261
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW OSCO HOLDINGS, INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-43
<PAGE> 262
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES OF NASHVILLE, INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-44
<PAGE> 263
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES OF BARTOW, INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-45
<PAGE> 264
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES OF CALIFORNIA, INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-46
<PAGE> 265
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES OF CHATTANOOGA, INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-47
<PAGE> 266
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES OF ILLINOIS, INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-48
<PAGE> 267
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES OF SOUTH CAROLINA, INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-49
<PAGE> 268
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES OF WHITE CASTLE, INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-50
<PAGE> 269
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LES MERGER, INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-51
<PAGE> 270
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES (PUERTO RICO), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-52
<PAGE> 271
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES (BRIDGEPORT), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-53
<PAGE> 272
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES (DEER PARK), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-54
<PAGE> 273
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES (BATON ROUGE), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-55
<PAGE> 274
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES (PLAQUEMINE), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-56
<PAGE> 275
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES (CUSTOM TRANSPORT), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-57
<PAGE> 276
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES (LOS ANGELES), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-58
<PAGE> 277
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES (TIPTON), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-59
<PAGE> 278
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES (GLOUCESTER), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-60
<PAGE> 279
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES (DEER TRAIL), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-61
<PAGE> 280
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES (MT. PLEASANT), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-62
<PAGE> 281
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES (MINNEAPOLIS), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-63
<PAGE> 282
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES (ARAGONITE), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-64
<PAGE> 283
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL
SERVICES (SUSSEX), INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-65
<PAGE> 284
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
LAIDLAW ENVIRONMENTAL, INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Senior Vice President of Finance June 24, 1998
- --------------------------------------------------- and Chief Financial Officer
Paul R. Humphreys (principal financial and
accounting officer)
</TABLE>
II-66
<PAGE> 285
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
DIRT MAGNET, INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Treasurer and Director (principal June 24, 1998
- --------------------------------------------------- financial and accounting
Paul R. Humphreys officer)
/s/ HENRY H. TAYLOR Director June 24, 1998
- ---------------------------------------------------
Henry H. Taylor
</TABLE>
II-67
<PAGE> 286
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
THE MIDWAY GAS AND OIL CO.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Treasurer (principal financial June 24, 1998
- --------------------------------------------------- and accounting officer)
Paul R. Humphreys
</TABLE>
II-68
<PAGE> 287
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
ELGINT CORP.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Treasurer (principal financial June 24, 1998
- --------------------------------------------------- and accounting officer)
Paul R. Humphreys
/s/ MONTE MILLER Director June 24, 1998
- ---------------------------------------------------
Monte Miller
</TABLE>
II-69
<PAGE> 288
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
SAFETY-KLEEN ENVIROSYSTEMS
COMPANY
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Chief Financial Officer June 24, 1998
- --------------------------------------------------- (principal financial and
Paul R. Humphreys accounting officer)
</TABLE>
II-70
<PAGE> 289
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
SAFETY-KLEEN ENVIROSYSTEMS
COMPANY OF PUERTO RICO, INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Treasurer (principal financial June 24, 1998
- --------------------------------------------------- and accounting officer)
Paul R. Humphreys
</TABLE>
II-71
<PAGE> 290
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
PETROCON, INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Treasurer (principal financial June 24, 1998
- --------------------------------------------------- and accounting officer)
Paul R. Humphreys
</TABLE>
II-72
<PAGE> 291
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
PHILLIPS ACQUISITION CORP.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Treasurer (principal financial June 24, 1998
- --------------------------------------------------- and accounting officer)
Paul R. Humphreys
</TABLE>
II-73
<PAGE> 292
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
SAFETY-KLEEN AVIATION, INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Treasurer (principal financial June 24, 1998
- --------------------------------------------------- and accounting officer)
Paul R. Humphreys
</TABLE>
II-74
<PAGE> 293
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
SK INSURANCE COMPANY
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Treasurer (principal financial June 24, 1998
- --------------------------------------------------- and accounting officer)
Paul R. Humphreys
/s/ ALAN D. PORT Director June 24, 1998
- ---------------------------------------------------
Alan D. Port
/s/ HENRY H. TAYLOR Director June 24, 1998
- ---------------------------------------------------
Henry H. Taylor
</TABLE>
II-75
<PAGE> 294
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
SK REAL ESTATE, INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Treasurer (principal financial June 24, 1998
- --------------------------------------------------- and accounting officer)
Paul R. Humphreys
</TABLE>
II-76
<PAGE> 295
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
SAFETY-KLEEN INTERNATIONAL, INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Treasurer (principal financial June 24, 1998
- --------------------------------------------------- and accounting officer)
Paul R. Humphreys
</TABLE>
II-77
<PAGE> 296
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
SAFETY-KLEEN OIL RECOVERY CO.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Treasurer (principal financial June 24, 1998
- --------------------------------------------------- and accounting officer)
Paul R. Humphreys
</TABLE>
II-78
<PAGE> 297
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
SAFETY-KLEEN OIL SERVICES, INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Treasurer (principal financial June 24, 1998
- --------------------------------------------------- and accounting officer)
Paul R. Humphreys
</TABLE>
II-79
<PAGE> 298
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Columbia, South Carolina, on the 24th
day of June, 1998.
THE SOLVENTS RECOVERY SERVICE
OF NEW JERSEY, INC.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth Winger, Paul Humphreys and Henry
Taylor and each of them, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing), to sign
any and all amendments, including post-effective amendments, to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or his or their substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ KENNETH W. WINGER President and Director June 24, 1998
- ---------------------------------------------------
Kenneth W. Winger
/s/ PAUL R. HUMPHREYS Treasurer (principal financial June 24, 1998
- --------------------------------------------------- and accounting officer)
Paul R. Humphreys
</TABLE>
II-80
<PAGE> 299
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE NO.
------- ----------- --------
<S> <C> <C>
(2) -- Agreement and Plan of Merger dated as of March 16, 1998,
by and among the Parent, LES Acquisition Inc. and
Safety-Kleen included as Annex A of Safety-Kleen's
Revised Amended Prospectus on Form 14D-9, filed as
Exhibit 62 to Safety-Kleen's Amendment No. 28 to Schedule
14D-9A on March 17, 1997, and incorporated herein by
reference. ..............................................
(3)(a) -- Restated Certificate of Incorporation of the Parent dated
May 13, 1997, and Amendment to Certificate of
Incorporation dated May 15, 1997, filed as Exhibit 3(a)
to the Parent's Form 10-Q for the Quarter ended May 31,
1997, and incorporated herein by reference. .............
(3)(b) -- Certificate of Correction Filed to Correct a Certain
Error in the Restated and Amended Certificate of
Incorporation of the Parent dated October 15, 1997, filed
as Exhibit 3(a)(i) to the Parent's Form 10-K for the
Fiscal Year ended August 31, 1997, and incorporated
herein by reference. ....................................
(3)(c) -- Bylaws of the Company filed as Exhibit 4(ii) to the
Registrant's Current Report on Form 8-K dated July 29,
1997, and incorporated herein by reference. .............
(4)(a) -- Registration Rights Agreement dated as of May 29, 1998
between the Company, the Parent, the Subsidiary
Guarantors, TD Securities (USA) Inc. and NationsBanc
Montgomery Securities LLC. ..............................
4(b) -- Indenture dated as of May 29, 1998 between the Company,
the Parent, the Subsidiary Guarantors and The Bank of
Nova Scotia Trust Company of New York, as trustee. ......
4(c) -- Rights Agreement dated as of June 14, 1989 between the
Parent and First Chicago Trust Company as successor to
Registrar and Transfer Company, as Rights Agent filed as
an Exhibit to the Parent's Form 8-K filed on June 13,
1995, and incorporated herein by reference. .............
4(d) -- Senior Credit Facility dated as of April 3, 1998 among
the Company, Laidlaw Environmental Services (Canada)
Ltd., The Toronto-Dominion Bank and a syndicate of banks
and other financial institutions. .......................
4(e) -- Supplement to the Amended and Restated Credit Agreement
dated as of April 3, 1998 among the Company, Laidlaw
Environmental Services (Canada) Ltd., the Lenders,
Toronto Dominion (Texas), Inc., The Toronto Dominion
Bank, TD Securities (USA) Inc., The Bank of Nova Scotia,
NationsBank, N.A., The First National Bank of Chicago and
Wachovia Bank. ..........................................
4(f) -- Waiver and First Amendment to the Amended and Restated
Credit Agreement dated as of May 15, 1998 among the
Company, Laidlaw Environmental Services (Canada) Ltd.,
the Lenders, Toronto Dominion (Texas), Inc., The Toronto
Dominion Bank, TD Securities (USA) Inc., The Bank of Nova
Scotia, NationsBank, N.A., The First National Bank of
Chicago and Wachovia Bank. ..............................
4(g) -- Commitment Increase Supplement to the Amended and
Restated Credit Agreement dated as of June 3, 1998 among
the Company, Laidlaw Environmental Services (Canada)
Ltd., the Lenders, Toronto Dominion Bank (Texas), Inc.,
The Toronto Dominion Bank, TD Securities (USA) Inc., The
Bank of Nova Scotia, NationsBank, N.A., The First
National Bank of Chicago and Wachovia Bank. .............
(4)(h) -- Amendment No. 1 dated as of March 31, 1995 to the Rights
Agreement between the Parent and First Chicago Trust
Company as successor to Registrar and Transfer Company,
as Rights Agent filed as an Exhibit to the Parent's Form
8-K filed on June 13, 1995, and incorporated herein by
reference. ..............................................
</TABLE>
<PAGE> 300
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE NO.
------- ----------- --------
<S> <C> <C>
(4)(i) -- Credit Agreement among Laidlaw Chem-Waste, Inc., Laidlaw
Environmental Services (Canada) Ltd., Toronto Dominion
(Texas) Inc., The Toronto-Dominion Bank, TD Securities
(USA) Inc., the Bank of Nova Scotia, NationsBanc, N.A.
and The First National Bank of Chicago and NationsBanc,
N.A. as Syndication Agent dated as of May 9, 1997, filed
as Exhibit 4(c) to the Parent's Form 10-Q for the Quarter
ended March 31, 1997, and incorporated herein by
reference. ..............................................
(4)(j) -- $350,000,000 5% Subordinated Convertible Pay-In-Kind
Debenture due 2009 issued by the Parent on May 15, 1997
to Laidlaw Inc. the form of which was included as an
appendix to the Parent's Definitive Proxy Statement on
Form DEF 14A, filed on May 1, 1997, and incorporated
herein by reference. ....................................
(4)(k) -- Registration Rights Agreement dated May 15, 1997 between
the Parent, Laidlaw Transportation, Inc. and Laidlaw Inc.
included as appendix to the Parent's Definitive Proxy
Statement on Form DEF 14A, the form of which was filed on
May 1, 1997, and incorporated herein by reference. ......
(4)(l) -- Indenture dated as of May 1, 1993 between the Industrial
Development Board of the Metropolitan Government of
Nashville and Davidson County (Tennessee) and NationsBanc
of Tennessee, N.A., filed as Exhibit 4(f) to the Parent's
Form 10-Q for the Quarter ended May 31, 1997, and
incorporated herein by reference. .......................
(4)(m) -- Indenture of Trust dated as of February 1, 1995 between
Carbon County, Utah and West One Bank, Utah, now known as
U.S. Bank, as Trustee, filed as Exhibit 4(g) to the
Parent's Form 10-Q for the Quarter ended May 31, 1997,
and incorporated herein by reference. ...................
(4)(n) -- Indenture of Trust dated as of August, 1995 between
Tooele County, Utah and West One Bank, Utah, now known as
U.S. Bank, as Trustee, filed as Exhibit 4(h) to the
Parent's Form 10-Q for the Quarter ended May 31, 1997,
and incorporated herein by reference. ...................
(4)(o) -- Indenture of Trust dated as of July 1, 1997 between
Carbon County, Utah and U.S. Bank, a national banking
association, as Trustee, filed as Exhibit 4(i) to the
Parent's Form 10-Q for the Quarter ended May 31, 1997,
and incorporated herein by reference. ...................
(4)(p) -- Indenture of Trust dated as of July 1, 1997 between
Tooele County, Utah and U.S. Bank, a national banking
association, as Trustee, filed as Exhibit 4(j) to the
Parent's Form 10-Q for the Quarter ended May 31, 1997,
and incorporated herein by reference. ...................
(4)(q) -- Indenture of Trust dated as of July 1, 1997 between
California Pollution Control Financing Authority and U.S.
Bank, a national banking association, as Trustee, filed
as Exhibit 4(k) to the Parent's Form 10-Q for the Quarter
ended May 31, 1997, and incorporated herein by
reference. ..............................................
4(r) -- Stock Purchase Agreement between Westinghouse Electric
Corporation (Seller) and Rollins Environmental Services,
Inc. (Buyer) for National Electric, Inc. dated March 7,
1995, filed as an Exhibit to the Parent's Form 8-K filed
on June 13, 1995, and incorporated hereby by
reference. ..............................................
(4)(s) -- Second Amendment to Stock Purchase Agreement (as
referenced in Exhibit (4)(l) above, dated May 15, 1997,
among Westinghouse Electric Corporation, Rollins
Environmental Services, Inc. and Laidlaw Inc., filed as
Exhibit 4(m) to the Parent's Form 10-Q for the Quarter
ended May 31, 1997, and incorporated herein by
reference. ..............................................
(4)(t) -- Promissory Note dated May 15, 1997 for $60,000,000 from
the Parent to Westinghouse Electric Corporation, filed as
Exhibit 4(n) to the Parent's Form 10-Q for the Quarter
ended May 31, 1997, and incorporated herein by
reference. ..............................................
</TABLE>
<PAGE> 301
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE NO.
------- ----------- --------
<S> <C> <C>
(4)(u) -- Guaranty Agreement dated May 15, 1997 by Laidlaw Inc. to
Westinghouse Electric Corporation guaranteeing Promissory
Note dated May 15, 1997 (as referenced in Exhibit (4)(n))
from the Parent to Westinghouse Electric Corporation,
filed as Exhibit 4(o) to the Parent's Form 10-Q for the
Quarter ended May 31, 1997, and incorporated herein by
reference. ..............................................
(5) -- Opinion of Paul, Weiss, Rifkind, Wharton & Garrison as to
the legality of the securities being offered.* ..........
(8) -- Opinion of Paul, Weiss, Rifkind, Wharton & Garrison as to
certain tax matters.* ...................................
(10)(a) -- Rollins Environmental Services, Inc. 1982 Incentive Stock
Option Plan, filed with Amendment No. 1 to the Company's
Registration Statement No. 2-84139 on Form S-1 dated June
24, 1983, and incorporated herein by reference. .........
(10)(b) -- Rollins Environmental Services, Inc. 1993 Stock Option
Plan, filed with the Company's Proxy Statement for the
Annual Meeting of Stockholders held January 28, 1994, and
incorporated herein by reference. .......................
(10)(c) -- Stock Purchase Agreement dated February 6, 1997, among
the Parent, Laidlaw Inc., and Laidlaw Transportation,
Inc. included as an appendix to the Parent's Definitive
Proxy Statement on Form DEF 14A, filed on May 1, 1997,
and incorporated herein by reference. ...................
(10)(e) -- Management Incentive Plan for fiscal year 1996, filed as
Exhibit 10(e) to the Parent's Form 10-Q for the Quarter
ended May 31, 1997, and incorporated herein by
reference. ..............................................
(11) -- Statement regarding computation of earnings per share,
filed as Exhibit (11) to the Parent's Form 10-K for the
year ended August 31, 1997, and incorporated herein by
reference. ..............................................
(12) -- Computation of ratio earnings to fixed charges. .........
(21) -- Subsidiaries of the Registrant. .........................
(23)(a) -- Consent of Coopers & Lybrand, independent accountants....
(23)(b) -- Consent of KPMG Peat Marwick LLP. .......................
(23)(c) -- Consent of Arthur Andersen, LLP. ........................
(23)(d) -- Consent of Paul, Weiss, Rifkind, Wharton & Garrison
(included in Exhibits (5) and (8)).* ....................
(24) -- Powers of Attorney (included on the signature pages of
this Registration Statement). ...........................
(25) -- Statement of Eligibility of Trustee. ....................
(99)(a) -- Letter of Transmittal.* .................................
(99)(b) -- Notice of Guaranteed Delivery.* .........................
</TABLE>
- ---------------
*To be filed by amendment.
<PAGE> 1
Exhibit 4(a)
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of May 29,
1998, among LES, Inc., a Delaware corporation (the "Company"), Laidlaw
Environmental Services, Inc., a Delaware corporation (the "Parent"), the
Subsidiary Guarantors (as defined herein) and TD Securities (USA) Inc. ("TD
Securities"), and NationsBanc Montgomery Securities LLC ("NationsBanc" and,
together with TD Securities, the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement dated May 21,
1998 among the Company, the Parent and the Initial Purchasers (the "Purchase
Agreement"), which provides for the sale by the Company to the Initial
Purchasers of an aggregate of $325,000,000 principal amount of the Company's 9
1/4% Senior Subordinated Notes due 2008 (the "Initial Notes"). In order to
induce the Initial Purchasers to enter into the Purchase Agreement, the Company
has agreed to provide to the Initial Purchasers and their direct and indirect
transferees the registration rights set forth in this Agreement. The execution
of this Agreement is a condition to the closing under the Purchase Agreement.
1. Definitions. For purposes of this Agreement, the following terms shall
have the following respective meanings:
The term "broker-dealer" shall mean any broker or dealer registered
with the Commission under the Exchange Act.
"Closing" shall mean the date of the closing of the issuance and
sale of the Initial Notes pursuant to the Purchase Agreement.
"Commission" shall mean the United States Securities and Exchange
Commission, or any other federal agency at the time administering the
Exchange Act or the Securities Act, whichever is the relevant statute for
the particular purpose.
"Company" shall have the meaning set forth in the preamble of this
Agreement and also includes the Company's successors.
"Effective Time," in the case of (i) an Exchange Registration, shall
mean the time and date as of which the Commission declares the Exchange
Registration Statement effective or as of which the Exchange Registration
Statement otherwise becomes effective and (ii) a Shelf Registration, shall
mean the time and date as of which the Commission declares the Shelf
Registration Statement effective or as of which the Shelf Registration
Statement otherwise becomes effective.
"Electing Holder" shall mean any holder of Registrable Notes that
has returned a completed and signed Notice and Questionnaire to the
Company in accordance with Section 3(d)(ii) or 3(d)(iii) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, or
any
<PAGE> 2
successor thereto, as the same shall be amended from time to time.
"Exchange Offer" shall have the meaning assigned thereto in Section
2(a) hereof.
"Exchange Registration" shall have the meaning assigned thereto in
Section 3(c) hereof.
"Exchange Registration Statement" shall have the meaning assigned
thereto in Section 2(a) hereof.
"Exchange Notes" shall have the meaning assigned thereto in Section
2(a) hereof.
"Guarantors" shall mean, collectively, the Subsidiary Guarantors and
the Parent.
The term "holder" shall mean each of the Initial Purchasers and
other persons who acquire Registrable Notes from time to time (including
any successors or assigns), in each case for so long as such person owns
any Registrable Notes.
"Indenture" shall mean the Indenture, dated as of May 29, 1998,
between the Company, the Parent, as guarantor, the Subsidiary Guarantors
and The Bank of Nova Scotia Trust Company of New York, as trustee, as the
same shall be amended from time to time.
"Initial Notes" shall have the meaning set forth in the preamble to
this Agreement.
"NationsBanc" shall have the meaning set forth in the preamble to
this Agreement.
"Purchase Agreement" shall have the meaning set forth in the
preamble to this Agreement.
"Notice and Questionnaire" means a Notice of Registration Statement
and Selling Securityholder Questionnaire substantially in the form of
Exhibit A hereto.
"Parent" shall have meaning in the preamble of this Agreement.
The term "person" shall mean a corporation, association,
partnership, organization, business, individual, government or political
subdivision thereof or
2
<PAGE> 3
governmental agency.
"Registrable Notes" shall mean the Initial Notes; provided, however,
that an Initial Note shall cease to be a Registrable Note when (i) in the
circumstances contemplated by Section 2(a) hereof, the Initial Note has
been exchanged for an Exchange Note in an Exchange Offer as contemplated
in Section 2(a) hereof (provided that any Exchange Note received by a
broker-dealer in an Exchange Offer in exchange for a Registrable Note that
was not acquired by the broker-dealer directly from the Company will also
be a Registrable Note through and including the earlier of the 90th day
after the Exchange Offer is completed or such time as such broker-dealer
no longer owns such Initial Note); (ii) in the circumstances contemplated
by Section 2(b) hereof, a Shelf Registration Statement registering such
Initial Note under the Securities Act has been declared or becomes
effective and such Initial Note has been sold or otherwise transferred by
the holder thereof pursuant to and in a manner contemplated by such
effective Shelf Registration Statement; (iii) such Initial Note is sold
pursuant to Rule 144 under circumstances in which any legend borne by such
Initial Note relating to restrictions on transferability thereof, under
the Securities Act or otherwise, is removed by the Company or pursuant to
the Indenture; (iv) such Initial Note is eligible to be sold pursuant to
paragraph (k) of Rule 144; or (v) such Initial Note shall cease to be
outstanding.
"Registration Default" shall have the meaning assigned thereto in
Section 2(c) hereof.
"Registration Expenses" shall have the meaning assigned thereto in
Section 4 hereof.
"Resale Period" shall have the meaning assigned thereto in Section
2(a) hereof.
"Restricted Holder" shall mean (i) a holder that is an affiliate of
the Company within the meaning of Rule 405, (ii) a holder who acquires
Exchange Notes outside the ordinary course of such holder's business,
(iii) a holder who has arrangements or understandings with any person to
participate in the Exchange Offer for the purpose of distributing Exchange
Notes and (iv) a holder that is a broker-dealer, but only with respect to
Exchange Notes received by such broker-dealer pursuant to an Exchange
Offer in exchange for Registrable Notes acquired by the broker-dealer
directly from the Company.
"Rule 144," "Rule 405" and "Rule 415" shall mean, in each case, such
rule promulgated under the Securities Act (or any successor provision), as
the same shall be amended from time to time.
3
<PAGE> 4
"Securities Act" shall mean the Securities Act of 1933, or any
successor thereto, as the same shall be amended from time to time.
"Shelf Registration" shall have the meaning assigned thereto in
Section 2(b) hereof.
"Shelf Registration Statement" shall have the meaning assigned
thereto in Section 2(b) hereof.
"Subsidiary Guarantors" shall mean the wholly owned domestic
subsidiaries of the Company, as guarantors of the Initial Notes and the
Exchange Notes, as set forth on Schedule I hereof.
"TD Securities" shall have the meaning set forth in the preamble to
this Agreement.
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939, or
any successor thereto, all as the same shall be amended from time to time.
2. Registration Under the Securities Act. (a) Except as set forth in
Section 2(b) below, the Company and the Guarantors agree to file under the
Securities Act, as soon as practicable, but no later than 60 days after the
Closing, a registration statement relating to an offer to exchange (such
registration statement, the "Exchange Registration Statement," and such offer,
the "Exchange Offer") any and all of the Initial Notes for a like aggregate
principal amount at maturity of debt securities issued by the Company, which
debt securities are substantially identical to the Initial Notes (and are
entitled to the benefits of the Indenture and which has been qualified under the
Trust Indenture Act), except that they have been registered pursuant to an
effective registration statement under the Securities Act and do not contain
provisions for the additional interest contemplated in Section 2(c) below (such
new debt securities hereinafter called "Exchange Notes"). The Company and the
Guarantors agree to use their respective best efforts to cause the Exchange
Registration Statement to become effective under the Securities Act as soon as
practicable, but no later than 150 days after the Closing. The Exchange Offer
will be registered under the Securities Act on the appropriate form and will
comply with all applicable tender offer rules and regulations under the Exchange
Act. The Company and the Guarantors further agree to use their respective best
efforts to commence and complete the Exchange Offer promptly, but no later than
45 days after such registration statement has become effective, hold the
Exchange Offer open for at least 30 days and issue Exchange Notes for all
Registrable Notes that have been properly tendered and not withdrawn on or prior
to the expiration of the Exchange Offer. The Exchange Offer will be deemed to
have been "completed" only if the debt securities received by holders other than
Restricted Holders in the Exchange Offer for Registrable Notes are, upon
receipt, transferable by each such holder without need for further compliance
with Section 5 of
4
<PAGE> 5
the Securities Act and the Exchange Act (except for the requirement to deliver a
prospectus included in the Exchange Registration Statement applicable to resales
by any broker-dealer of Exchange Securities received by such broker-dealer
pursuant to an Exchange Offer in exchange for Registrable Notes other than those
acquired by the broker-dealer directly from the Company), and without material
restrictions under the blue sky or securities laws of a substantial majority of
the States of the United States of America. The Exchange Offer shall be deemed
to have been completed upon the earlier to occur of (i) the Company having
exchanged the Exchange Notes for all outstanding Registrable Notes pursuant to
the Exchange Offer and (ii) the Company having exchanged, pursuant to the
Exchange Offer, Exchange Notes for all Registrable Notes that have been properly
tendered and not withdrawn before the expiration of the Exchange Offer, which
shall be on a date that is at least 30 days following the commencement of the
Exchange Offer. The Company and the Guarantors agree (x) to include in the
Exchange Registration Statement a prospectus for use in connection with any
resales of Exchange Notes by a broker-dealer, other than resales of Exchange
Notes received by a broker-dealer pursuant to an Exchange Offer in exchange for
Registrable Notes acquired by the broker-dealer directly from the Company, and
(y) to keep such Exchange Registration Statement effective for a period (the
"Resale Period") beginning when Exchange Notes are first issued in the Exchange
Offer and ending upon the earlier of the expiration of the 90th day after the
Exchange Offer has been completed or such time as such broker-dealers no longer
own any Registrable Notes. With respect to such Exchange Registration Statement,
each broker-dealer that holds Exchange Notes received in an Exchange Offer in
exchange for Registrable Notes not acquired by it directly from the Company
shall have the benefit of the rights of indemnification and contribution set
forth in Sections 6 hereof.
(b) the Exchange Offer is completed existing Commission interpretations
are changed such that the Initial Notes received by holders other than
Restricted Holders in the Exchange Offer for Registrable Notes are not or would
not be, upon receipt, transferable by each such holder without need for further
compliance with Section 5 of the Securities Act (except for the requirement to
deliver a prospectus included in the Exchange Registration Statement applicable
to resales by broker-dealers of Exchange Securities received by such
broker-dealer pursuant to an Exchange Offer in exchange for Registrable Notes
other than those acquired by the broker-dealer directly from the Company), in
lieu of conducting the Exchange Offer contemplated by Section 2(a) the Company
and the Guarantors shall file under the Securities Act as soon as practicable,
but no later than the later of 30 days after the time such obligation to file
arises and 60 days after the Closing, a "shelf" registration statement providing
for the registration of, and the sale on a continuous or delayed basis by the
holders of, all of the Registrable Notes, pursuant to Rule 415 or any similar
rule that may be adopted by the Commission (such filing, the "Shelf
Registration" and such registration statement, the "Shelf Registration
Statement"). In addition, in the event that the Initial Purchasers shall not
have resold all of the Initial Notes initially purchased by them from the
Company
5
<PAGE> 6
pursuant to the Purchase Agreement prior to the consummation of the Exchange
Offer, the Company shall file under the Securities Act as soon as practicable a
Shelf Registration Statement. The Company and the Parent agree to use their
respective best efforts (i) to cause the Shelf Registration Statement to become
or be declared effective no later than 180 days after Closing and to keep such
Shelf Registration Statement continuously effective in order to permit the
prospectus forming a part thereof to be usable by holders for resales of
Registrable Notes for a period ending on the earlier of the second anniversary
of the Closing (or the first anniversary if the Shelf Registration is filed
because the Initial Purchasers have not resold all of the Initial Notes) or such
time as there are no longer any Registrable Notes outstanding, provided,
however, that no holder shall be entitled to be named as a selling
securityholder in the Shelf Registration Statement or to use the prospectus
forming a part thereof for resales of Registrable Notes unless such holder is an
Electing Holder, and (ii) after the Effective Time of the Shelf Registration
Statement, promptly upon the request of any holder of Registrable Notes that is
not then an Electing Holder, to take any action reasonably necessary to enable
such holder to use the prospectus forming a part thereof for resales of
Registrable Notes, including, without limitation, any action necessary to
identify such holder as a selling securityholder in the Shelf Registration
Statement, provided, however, that nothing in this clause (ii) shall relieve any
such holder of the obligation to return a completed and signed Notice and
Questionnaire to the Company in accordance with Section 3(d)(iii) hereof. The
Company further agrees to supplement or make amendments to the Shelf
Registration Statement, as and when required by the rules, regulations or
instructions applicable to the registration form used by the Company for such
Shelf Registration Statement or by the Securities Act or rules and regulations
thereunder for shelf registration, and the Company agrees to furnish to each
Electing Holder copies of any such supplement or amendment prior to its being
used or promptly following its filing with the Commission.
(c) In the event that (i) the Company has not filed the Exchange
Registration Statement on or prior to the 60th day after the Closing, or (ii)
such Exchange Registration Statement has not become effective or been declared
effective by the Commission on or before the 150th day after the Closing, or
(iii) the Exchange Offer is not consummated or a Shelf Registration Statement is
not declared effective on or prior to the 180th day after the Closing, or (iv)
any Exchange Registration Statement or Shelf Registration Statement required by
Section 2(a) or 2(b) hereof is filed and declared effective but shall thereafter
either be withdrawn by the Company or shall become subject to an effective stop
order issued pursuant to Section 8(d) of the Securities Act suspending the
effectiveness of such registration statement (except as specifically permitted
herein) without being succeeded immediately by an additional registration
statement filed and declared effective (each such event referred to in clauses
(i) through (iv), a "Registration Default", then, as liquidated damages for each
such Registration Default, subject to the provisions of Section 9(b), the
interest rate borne by the Registrable Notes shall be increased by 0.25% per
annum following such 60-day period in the case of clause (i)
6
<PAGE> 7
above, following such 150-day period in the case of clause (ii) above, following
such 180-day period in the case of clause (iii) above and following the date on
which such Exchange Offer Registration Statement or the Shelf Registration
Statement, as the case may be, ceases to become effective in the case of clause
(iv) above. The amount of such additional interest will increase by an
additional 0.25% for each subsequent 90-day period until such Registration
Default has been cured; provided that the aggregate amount of such increase in
the original interest rate will in no event exceed 1.50% per annum. Upon (w) the
filing of the Exchange Offer Registration Statement after the 60-day period
described in clause (i) above, (x) the effectiveness of the Exchange Offer
Registration Statement after the 150-day period described in clause (ii) above,
(y) the consummation of the Exchange Offer or the effectiveness of the Shelf
Registration Statement, as the case may be, after the 180-day period described
in clause (iii) above or (z) the effectiveness of a succeeding registration
statement after the date in clause (iv) above, the interest rate borne by the
Registrable Notes from the date of filing, effectiveness or consummation, as the
case may be, will be reduced to the original interest rate.
(d) The Company shall take all reasonable actions necessary or advisable
to be taken by it to ensure that the transactions contemplated herein are
effected as so contemplated.
(e) Any reference herein to a registration statement as of any time shall
be deemed to include any document incorporated, or deemed to be incorporated,
therein by reference as of such time and any reference herein to any
post-effective amendment to a registration statement as of any time shall be
deemed to include any document incorporated, or deemed to be incorporated,
therein by reference as of such time.
3. Registration Procedures. If the Company and the Guarantors file a
registration statement pursuant to Section 2(a) or Section 2(b), the following
provisions shall apply:
(a) At or before the Effective Time of the Exchange Offer or the Shelf
Registration, as the case may be, the Company and the Guarantors shall qualify
the Indenture under the Trust Indenture Act.
(b) In the event that such qualification would require the appointment of
a new trustee under the Indenture, the Company shall appoint a new trustee
thereunder pursuant to the applicable provisions of the Indenture.
(c) In connection with the Company's and the Guarantors' obligations with
respect to the registration of Exchange Securities as contemplated by Section
2(a) (the "Exchange Registration"), if applicable, the Company and the
Guarantors shall, as soon as practicable (or as otherwise specified):
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<PAGE> 8
(i) prepare and file with the Commission, as soon as practicable but
no later than 60 days after the Closing, an Exchange Registration
Statement on any form which may be utilized by the Company and which shall
permit the Exchange Offer and resales of Exchange Notes by broker-dealers
during the Resale Period to be effected as contemplated by Section 2(a),
and use their respective best efforts to cause such Exchange Registration
Statement to become effective as soon as practicable thereafter, but no
later than 150 days after the Closing;
(ii) as soon as practicable prepare and file with the Commission
such amendments and supplements to such Exchange Registration Statement
and the prospectus included therein as may be necessary to effect and
maintain the effectiveness of such Exchange Registration Statement for the
periods and purposes contemplated in Section 2(a) hereof and as may be
required by the applicable rules and regulations of the Commission and the
instructions applicable to the form of such Exchange Registration
Statement, and promptly provide each broker-dealer holding Exchange Notes
with such number of copies of the prospectus included therein (as then
amended or supplemented), in conformity in all material respects with the
requirements of the Securities Act and the Trust Indenture Act and the
rules and regulations of the Commission thereunder, as such broker-dealer
reasonably may request prior to the expiration of the Resale Period, for
use in connection with resales of Exchange Notes;
(iii) promptly notify each broker-dealer that has requested or
received copies of the prospectus included in such registration statement,
and confirm such advice in writing, (A) when such Exchange Registration
Statement or the prospectus included therein or any prospectus amendment
or supplement or post-effective amendment has been filed, and, with
respect to such Exchange Registration Statement or any post-effective
amendment, when the same has become effective, (B) of any comments by the
Commission and by the blue sky or securities commissioner or regulator of
any state with respect thereto or any request by the Commission for
amendments or supplements to such Exchange Registration Statement or
prospectus or for additional information, (C) of the issuance by the
Commission of any stop order suspending the effectiveness of such Exchange
Registration Statement or the initiation or threatening of any proceedings
for that purpose, (D) if at any time the representations and warranties of
the Company contemplated by Section 5 cease to be true and correct in all
material respects, (E) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Exchange Notes
for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose or (F) at any time during the Resale Period
when a prospectus is required to be delivered under the Securities Act,
that such Exchange Registration Statement, prospectus, prospectus
amendment or supplement or post-effective amendment
8
<PAGE> 9
does not conform in all material respects to the applicable requirements
of the Securities Act and the Trust Indenture Act and the rules and
regulations of the Commission thereunder or contains an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances then existing;
(iv) in the event that the Company would be required, pursuant to
Section 3(c)(iii)(F) above, to notify any broker-dealers holding Exchange
Notes, without unreasonable delay prepare and furnish to each such holder
a reasonable number of copies of a prospectus supplemented or amended so
that, as thereafter delivered to purchasers of such Exchange Notes during
the Resale Period, such prospectus shall conform in all material respects
to the applicable requirements of the Securities Act and the Trust
Indenture Act and the rules and regulations of the Commission thereunder
and shall not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances then
existing;
(v) use their respective reasonable best efforts to obtain the
withdrawal of any order suspending the effectiveness of such Exchange
Registration Statement or any post-effective amendment thereto at the
earliest practicable date;
(vi) use their respective reasonable best efforts to (A) register or
qualify the Exchange Notes under the securities laws or blue sky laws of
such jurisdictions as are contemplated by Section 2(a), if such
registration or qualification is required by such laws, no later than the
commencement of the Exchange Offer, (B) keep such registrations or
qualifications in effect and comply with such laws so as to permit the
continuance of offers, sales and dealings therein in such jurisdictions
until the expiration of the Resale Period and (C) take any and all other
actions as may be reasonably necessary or advisable to enable each
broker-dealer holding Exchange Notes to consummate the disposition thereof
in such jurisdictions; provided, however, that the Company shall not be
required for any such purpose to (1) qualify as a foreign corporation in
any jurisdiction wherein it would not otherwise be required to qualify but
for the requirements of this Section 3(c)(vi), (2) consent to general
service of process in any such jurisdiction or (3) make any changes to
their respective certificates of incorporation or bylaws or any agreement
between it and its shareholders;
(vii) use their respective reasonable best efforts to obtain the
consent or approval of each governmental agency or authority, whether
federal, state or local, which may be required to effect the Exchange
Registration, the Exchange Offer and the offering and sale of Exchange
Notes by broker-dealers during the Resale Period;
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<PAGE> 10
(viii) provide a CUSIP number for all Exchange Notes, not later than
the applicable Effective Time;
(ix) comply with all applicable rules and regulations of the
Commission, and make generally available to its securityholders as soon as
practicable but no later than eighteen months after the effective date of
such Exchange Registration Statement, an earning statement of the Company
and its subsidiaries complying with Section 11(a) of the Securities Act
(including, at the option of the Company, Rule 158 thereunder).
(d) In connection with the Company's and the Guarantors' obligations with
respect to the Shelf Registration, if applicable, the Company and the Guarantors
shall, as soon as practicable (or as otherwise specified):
(i) prepare and file with the Commission, as soon as practicable but
in any case within the time periods specified in Section 2(b), a Shelf
Registration Statement on any form which may be utilized by the Company
and which shall register all of the Registrable Notes for resale by the
holders thereof in accordance with such method or methods of disposition
as may be specified by such of the holders as, from time to time, may be
Electing Holders and use their respective reasonable best efforts to cause
such Shelf Registration Statement to become effective as soon as
practicable but in any case within the time periods specified in Section
2(b);
(ii) not less than 30 calendar days prior to the Effective Time of
the Shelf Registration Statement, mail the Notice and Questionnaire to the
holders of Registrable Notes; no holder shall be entitled to be named as a
selling securityholder in the Shelf Registration Statement as of the
Effective Time, and no holder shall be entitled to use the prospectus
forming a part thereof for resales of Registrable Notes at any time,
unless such holder has returned a completed and signed Notice and
Questionnaire to the Company by the deadline for response set forth
therein; provided, however, holders of Registrable Notes shall have at
least 28 calendar days from the date on which the Notice and Questionnaire
is first mailed to such holders to return a completed and signed Notice
and Questionnaire to the Company;
(iii) after the Effective Time of the Shelf Registration Statement,
upon the request of any holder of Registrable Notes that is not then an
Electing Holder, promptly send a Notice and Questionnaire to such holder;
provided that the Company shall not be required to take any action to name
such holder as a selling securityholder in the Shelf Registration
Statement or to enable such holder to use the prospectus forming a part
thereof for resales of Registrable Notes until such holder has returned a
completed and signed Notice and Questionnaire to the
10
<PAGE> 11
Company;
(iv) as soon as practicable prepare and file with the Commission
such amendments and supplements to such Shelf Registration Statement and
the prospectus included therein as may be necessary to effect and maintain
the effectiveness of such Shelf Registration Statement for the period
specified in Section 2(b) hereof and as may be required by the applicable
rules and regulations of the Commission and the instructions applicable to
the form of such Shelf Registration Statement, and furnish to the Electing
Holders copies of any such supplement or amendment simultaneously with or
prior to its being used or filed with the Commission;
(v) comply with the provisions of the Securities Act with respect to
the disposition of all of the Registrable Notes covered by such Shelf
Registration Statement in accordance with the intended methods of
disposition by the Electing Holders provided for in such Shelf
Registration Statement;
(vi) provide (A) the Electing Holders, (B) the underwriters (which
term, for purposes of this Registration Rights Agreement, shall include a
person deemed to be an underwriter within the meaning of Section 2(11) of
the Securities Act), if any, thereof, (C) any sales or placement agent
therefor, (D) counsel for any such underwriter or agent and (E) not more
than one counsel for all the Electing Holders the opportunity to
participate in the preparation of such Shelf Registration Statement, each
prospectus included therein or filed with the Commission and each
amendment or supplement thereto;
(vii) for a reasonable period prior to the filing of such Shelf
Registration Statement, and throughout the period specified in Section
2(b), make available at reasonable times at the Company's principal place
of business or such other reasonable place for inspection by the persons
referred to in Section 3(d)(vi) who shall certify to the Company that they
have a current intention to sell the Registrable Notes pursuant to the
Shelf Registration such financial and other information and books and
records of the Company, and cause the officers, employees, counsel and
independent certified public accountants of the Company to respond to such
inquiries, as shall be reasonably necessary, in the judgment of the
respective counsel referred to in such Section, to conduct a reasonable
investigation within the meaning of Section 11 of the Securities Act;
provided, however, that each such party shall be required to maintain in
confidence and not to disclose to any other person any information or
records reasonably designated by the Company as being confidential, until
such time as (A) such information becomes a matter of public record
(whether by virtue of its inclusion in such registration statement or
otherwise), (B) such person shall be required so to disclose such
information pursuant to a subpoena or order of any court or other
11
<PAGE> 12
governmental agency or body having jurisdiction over the matter (subject
to the requirements of such order, and only after such person shall have
given the Company prompt prior written notice of such requirement) or (C)
such information is required to be set forth in such Shelf Registration
Statement or the prospectus included therein or in an amendment to such
Shelf Registration Statement or an amendment or supplement to such
prospectus in order that such Shelf Registration Statement, prospectus,
amendment or supplement, as the case may be, complies with applicable
requirements of the federal securities laws and the rules and regulations
of the Commission and does not contain an untrue statement of a material
fact or omit to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading in
light of the circumstances then existing;
(viii) promptly notify each of the Electing Holders, any sales or
placement agent therefor and any underwriter thereof (which notification
may be made through any managing underwriter that is a representative of
such underwriter for such purpose) and confirm such advice in writing, (A)
when such Shelf Registration Statement or the prospectus included therein
or any prospectus amendment or supplement or post-effective amendment has
been filed and, with respect to such Shelf Registration Statement or any
post-effective amendment, when the same has become effective, (B) of any
comments by the Commission and by the blue sky or securities commissioner
or regulator of any state with respect thereto or any request by the
Commission for amendments or supplements to such Shelf Registration
Statement or prospectus or for additional information, (C) of the issuance
by the Commission of any stop order suspending the effectiveness of such
Shelf Registration Statement or the initiation or threatening of any
proceedings for that purpose, (D) if at any time the representations and
warranties of the Company contemplated by Section 3(d)(xvii) cease to be
true and correct in all material respects, (E) of the receipt by the
Company of any notification with respect to the suspension of the
qualification of the Registrable Notes for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose or (F) if at
any time when a prospectus is required to be delivered under the
Securities Act, such Shelf Registration Statement, prospectus, prospectus
amendment or supplement or post-effective amendment does not conform in
all material respects to the applicable requirements of the Securities Act
and the Trust Indenture Act and the rules and regulations of the
Commission thereunder or contains an untrue statement of a material fact
or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing;
(ix) use their respective reasonable best efforts to obtain the
withdrawal of any order suspending the effectiveness of such registration
statement or any post-effective amendment thereto at the earliest
practicable date;
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<PAGE> 13
(x) if requested by any managing underwriter or underwriters, any
placement or sales agent or any Electing Holder, promptly incorporate in a
prospectus supplement or post-effective amendment such information as is
required by the applicable rules and regulations of the Commission and as
such managing underwriter or underwriters, such agent or such Electing
Holder specifies should be included therein relating to the terms of the
sale of such Registrable Notes, including information with respect to the
principal amount at maturity of Registrable Notes being sold by such
Electing Holder or agent or to any underwriters, the name and description
of such Electing Holder, agent or underwriter, the offering price of such
Registrable Notes and any discount, commission or other compensation
payable in respect thereof, the purchase price being paid therefor by such
underwriters and with respect to any other terms of the offering of the
Registrable Notes to be sold by such Electing Holder or agent or to such
underwriters; and make all required filings of such prospectus supplement
or post-effective amendment promptly after notification of the matters to
be incorporated in such prospectus supplement or post-effective amendment;
(xi) furnish to each Electing Holder, each placement or sales agent,
if any, therefor, each underwriter, if any, thereof and the respective
counsel referred to in Section 3(d)(vi) an executed copy (or, in the case
of an Electing Holder, a conformed copy) of such Shelf Registration
Statement, each such amendment and supplement thereto (in each case
including all exhibits thereto (in the case of an Electing Holder of
Registrable Notes, upon request) and documents incorporated by reference
therein) and such number of copies of such Shelf Registration Statement
(excluding exhibits thereto and documents incorporated by reference
therein) and of the prospectus included in such Shelf Registration
Statement (including each preliminary prospectus and any summary
prospectus), in conformity in all material respects with the applicable
requirements of the Securities Act and the Trust Indenture Act and the
rules and regulations of the Commission thereunder, and to permit such
Electing Holder, agent and underwriter to satisfy the prospectus delivery
requirements of the Securities Act; and the Company and the Guarantors
hereby consent to the use of such prospectus (including such preliminary
and summary prospectus) and any amendment or supplement thereto by each
such Electing Holder and by any such agent and underwriter, in each case
in the form most recently provided to such person by the Company and the
Guarantors, in connection with the offering and sale of the Registrable
Notes covered by the prospectus (including such preliminary and summary
prospectus) or any supplement or amendment thereto;
(xii) use their respective reasonable best efforts to (A) register
or qualify the Registrable Notes to be included in such Shelf Registration
Statement under such securities laws or blue sky laws of such
jurisdictions as any Electing Holder and each placement or sales agent, if
any, therefor and underwriter, if any,
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<PAGE> 14
thereof shall reasonably request, (B) keep such registrations or
qualifications in effect and comply with such laws so as to permit the
continuance of offers, sales and dealings therein in such jurisdictions
during the period the Shelf Registration is required to remain effective
under Section 2(b) above and (C) take any and all other actions as may be
reasonably necessary or advisable to enable each such Electing Holder,
agent, if any, and underwriter, if any, to consummate the disposition in
such jurisdictions of such Registrable Notes; provided, however, that the
Company shall not be required for any such purpose to (1) qualify as a
foreign corporation in any jurisdiction wherein it would not otherwise be
required to qualify but for the requirements of this Section 3(d)(xii),
(2) consent to general service of process in any such jurisdiction or (3)
make any changes to their respective certificates of incorporation or
bylaws or any agreement between it and its shareholders;
(xiii) use their respective reasonable best efforts to obtain the
consent or approval of each governmental agency or authority, whether
federal, state or local, which may be required to effect the Shelf
Registration or the offering or sale in connection therewith or to enable
the selling holder or holders to offer, or to consummate the disposition
of, their Registrable Notes;
(xiv) cooperate with the Electing Holders and the managing
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Notes to be sold, which certificates
shall be printed, lithographed or engraved, or produced by any combination
of such methods, and which shall not bear any restrictive legends; and, in
the case of an underwritten offering, enable such Registrable Notes to be
in such denominations and registered in such names as the managing
underwriters may request at least two business days prior to any sale of
the Registrable Notes;
(xv) provide a CUSIP number for all Registrable Notes, not later
than the applicable Effective Time;
(xvi) enter into customary agreements (including, if requested, an
underwriting agreement in customary form) and take such other actions in
connection therewith as any Electing Holders aggregating at least a
majority in aggregate principal amount at maturity of the Registrable
Notes at the time outstanding shall reasonably request in order to
expedite or facilitate the disposition of such Registrable Notes;
(xvii) whether or not an agreement of the type referred to in
Section 3(d)(xvi) hereof is entered into and whether or not any portion of
the offering contemplated by the Shelf Registration is an underwritten
offering or is made through a placement or sales agent or any other
entity, (A) make such
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<PAGE> 15
representations and warranties to the Electing Holders and the placement
or sales agent, if any, therefor and the underwriters, if any, thereof in
form, substance and scope as are customarily made in connection with an
offering of debt securities pursuant to any appropriate agreement or to a
registration statement filed on the form applicable to the Shelf
Registration; (B) obtain an opinion of counsel to the Company in customary
form and covering such matters, of the type customarily covered by such an
opinion, as the managing underwriters, if any, or as any Electing Holders
of at least a majority in aggregate principal amount at maturity of the
Registrable Notes at the time outstanding may reasonably request,
addressed to such Electing Holder or Electing Holders and the placement or
sales agent, if any, therefor and the underwriters, if any, thereof and
dated the effective date of such Shelf Registration Statement (and if such
Shelf Registration Statement contemplates an underwritten offering of a
part or all of the Registrable Notes, dated the date of the closing under
the underwriting agreement relating thereto); (C) obtain a comfort letter
or letters from the independent certified public accountants of the
Company addressed to the selling Electing Holders, the placement or sales
agent, if any, therefor or the underwriters, if any, thereof, dated (i)
the effective date of such Shelf Registration Statement and (ii) the
effective date of any prospectus supplement to the prospectus included in
such Shelf Registration Statement or post-effective amendment to such
Shelf Registration Statement which includes unaudited or audited financial
statements as of a date or for a period subsequent to that of the latest
such statements included in such prospectus (and, if such Shelf
Registration Statement contemplates an underwritten offering pursuant to
any prospectus supplement to the prospectus included in such Shelf
Registration Statement or post-effective amendment to such Shelf
Registration Statement which includes unaudited or audited financial
statements as of a date or for a period subsequent to that of the latest
such statements included in such prospectus, dated the date of the closing
under the underwriting agreement relating thereto), such letter or letters
to be in customary form and covering such matters of the type customarily
covered by letters of such type; (D) deliver such customary documents and
certificates, including officers' certificates, as may be reasonably
requested by any Electing Holders of at least a majority in aggregate
principal amount at maturity of the Registrable Notes at the time
outstanding or the placement or sales agent, if any, therefor and the
managing underwriters, if any, thereof to evidence the accuracy of the
representations and warranties made pursuant to clause (A) hereof and the
compliance with or satisfaction of any agreements or conditions contained
in the underwriting agreement or other agreement entered into by the
Guarantors and Company; and (E) undertake such obligations relating to
expense reimbursement, indemnification and contribution as are provided in
Section 5 hereof;
(xviii) notify in writing each holder of Registrable Notes of any
proposal by the Company to amend or waive any provision of this Agreement
pursuant to
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<PAGE> 16
Section 8(c) hereof and of any amendment or waiver effected pursuant
thereto, each of which notices shall contain the text of the amendment or
waiver proposed or effected, as the case may be;
(xix) in the event that any broker-dealer registered under the
Exchange Act shall underwrite any Registrable Notes or participate as a
member of an underwriting syndicate or selling group or "assist in the
distribution" (within the meaning of the Rules of Fair Practice and the
By-Laws of the National Association of Securities Dealers, Inc. ("NASD")
or any successor thereto, as amended from time to time) thereof, whether
as a holder of such Registrable Notes or as an underwriter, a placement or
sales agent or a broker or dealer in respect thereof, or otherwise, assist
such broker-dealer in complying with the requirements of such Rules and
By-Laws, including by (A) if such Rules or By-Laws shall so require,
engaging a "qualified independent underwriter" (as defined in such
Schedule (or any successor thereto)) to participate in the preparation of
the Shelf Registration Statement relating to such Registrable Notes, to
exercise usual standards of due diligence in respect thereto and, if any
portion of the offering contemplated by such Shelf Registration Statement
is an underwritten offering or is made through a placement or sales agent,
to recommend the yield of such Registrable Notes, (B) indemnifying any
such qualified independent underwriter to the extent of the
indemnification of underwriters provided in Section 6 hereof (or to such
other customary extent as may be requested by such underwriter) and (C)
providing such information to such broker-dealer as may be required in
order for such broker-dealer to comply with the requirements of the Rules
of Fair Practice of the NASD; and
(xx) comply with all applicable rules and regulations of the
Commission, and make generally available to its securityholders as soon as
practicable but in any event not later than eighteen months after the
effective date of such Shelf Registration Statement, an earning statement
of the Company and its subsidiaries complying with Section 11(a) of the
Securities Act (including, at the option of the Company, Rule 158
thereunder).
(e) In the event that the Company and the Parent would be required,
pursuant to Section 3(d)(viii)(F) above, to notify the Electing Holders, the
placement or sales agent, if any, therefor and the managing underwriters, if
any, thereof, the Company shall without delay prepare and furnish to each of the
Electing Holders, to each placement or sales agent, if any, and to each such
underwriter, if any, a reasonable number of copies of a prospectus supplemented
or amended so that, as thereafter delivered to purchasers of Registrable Notes,
such prospectus shall conform in all material respects to the applicable
requirements of the Securities Act and the Trust Indenture Act and the rules and
regulations of the Commission thereunder and shall not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or
16
<PAGE> 17
necessary to make the statements therein not misleading in light of the
circumstances then existing. Each Electing Holder agrees that upon receipt of
any notice from the Company pursuant to Section 3(d)(viii)(F) hereof, such
Electing Holder shall forthwith discontinue the disposition of Registrable Notes
pursuant to the Shelf Registration Statement applicable to such Registrable
Notes until such Electing Holder shall have received copies of such amended or
supplemented prospectus, and if so directed by the Company, such Electing Holder
shall deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, then in such Electing Holder's possession of the
prospectus covering such Registrable Notes at the time of receipt of such
notice.
(f) In the event of a Shelf Registration, in addition to the information
required to be provided by each Electing Holder in its Notice and Questionnaire,
the Company may require such Electing Holder to furnish to the Company such
additional information regarding such Electing Holder and such Electing Holder's
intended method of distribution of Registrable Notes as may be required in order
to comply with the Securities Act. Each such Electing Holder agrees to notify
the Company as promptly as practicable of any inaccuracy or change in
information previously furnished by such Electing Holder to the Company or of
the occurrence of any event in either case as a result of which any prospectus
relating to such Shelf Registration contains or would contain an untrue
statement of a material fact regarding such Electing Holder or such Electing
Holder's intended method of disposition of such Registrable Notes or omits to
state any material fact regarding such Electing Holder or such Electing Holder's
intended method of disposition of such Registrable Notes required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing, and promptly to furnish to the Company any
additional information required to correct and update any previously furnished
information or required so that such prospectus shall not contain, with respect
to such Electing Holder or the disposition of such Registrable Notes, an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing.
(g) Until the expiration of two years after the Closing, the Company will
not, and will not permit any of its "affiliates" (as defined in Rule 144) to,
resell any of the Initial Notes that have been reacquired by any of them except
pursuant to an effective registration statement under the Securities Act.
4. Registration Expenses. The Company agrees to bear and to pay or cause
to be paid promptly all expenses incident to the Company's performance of or
compliance with this Agreement, including (a) all Commission and any NASD
registration, filing and review fees and expenses (including reasonable fees and
disbursements of counsel for the placement or sales agent or underwriters in
connection with such registration, filing and review with the NASD), (b) all
fees and expenses in connection with the qualification of the Initial Notes for
offering and sale under the State securities and blue sky laws
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<PAGE> 18
referred to in Section 3(d)(xii) hereof and determination of their eligibility
for investment under the laws of such jurisdictions as any managing underwriters
or the Electing Holders may reasonably designate (including any fees and
disbursements of counsel for the Electing Holders subject to the limitations of
clause (h) below) or underwriters in connection with such qualification and
determination, (c) all expenses relating to the preparation, printing,
production, distribution and reproduction of each registration statement
required to be filed hereunder, each prospectus included therein or prepared for
distribution pursuant hereto, each amendment or supplement to the foregoing, the
expenses of preparing the Initial Notes for delivery and the expenses of
printing any underwriting agreements, agreements among underwriters, selling
agreements and blue sky or legal investment memoranda and all other documents in
connection with the offering, sale or delivery of Initial Notes to be disposed
of (including certificates representing the Initial Notes), (d) fees and
expenses of the Trustee under the Indenture, any agent of the Trustee and any
counsel for the Trustee and of any collateral agent or custodian, (e) internal
expenses (including all salaries and expenses of the Company's officers and
employees performing legal or accounting duties), (f) fees, disbursements and
expenses of counsel and independent certified public accountants of the Company
(including the expenses of any opinions or "cold comfort" letters required by or
incident to such performance and compliance), (g) reasonable fees, disbursements
and expenses of any "qualified independent underwriter" engaged pursuant to
Section 3(d)(xix) hereof, (h) fees, disbursements and expenses of one counsel
for the Electing Holders retained in connection with a Shelf Registration, as
selected by the Electing Holders of at least a majority in aggregate principal
amount at maturity of the Registrable Notes held by Electing Holders (which
counsel shall be reasonably satisfactory to the Company), (i) any fees charged
by securities rating services for rating the Initial Notes, and (j) fees,
expenses and disbursements of any other persons, including special experts,
retained by the Company in connection with such registration (collectively, the
"Registration Expenses"). To the extent that any Registration Expenses are
incurred, assumed or paid by any holder of Registrable Notes or any placement or
sales agent therefor or underwriter thereof, the Company shall reimburse such
person for the full amount of the Registration Expenses so incurred, assumed or
paid promptly after receipt of a request therefor. Notwithstanding the
foregoing, the holders of the Registrable Notes being registered shall pay all
agency fees and commissions and underwriting discounts and commissions
attributable to the sale of such Registrable Notes and the fees and
disbursements of any counsel or other advisors or experts retained by such
holders (severally or jointly), other than the counsel and experts specifically
referred to above.
5. Indemnification. (a) The Company and the Parent shall, jointly and
severally, indemnify and hold harmless each holder, including the Initial
Purchasers, each underwriter who participates in an offering of Registrable
Notes, their respective affiliates, and their respective directors, officers,
employees and agents, and each person, if any, who controls any of such parties
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act as follows:
18
<PAGE> 19
(i) against any and all losses, liabilities, claims, damages and
expenses whatsoever, as incurred, arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement (or any amendment thereto) pursuant to which
Exchange Notes or Registrable Notes were registered under the Securities
Act, including all documents incorporated therein by reference, or the
omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading
or arising out of any untrue statement or alleged untrue statement of a
material fact contained in any prospectus included in any such
Registration Statement (or any amendment or supplement thereto) or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all losses, liabilities, claims, damages and
expenses whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or investigation or proceeding by
any governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
5(c) below) any such settlement is effected with the written consent of
the Company; and
(iii) against any and all expenses whatsoever, as incurred
(including reasonable fees and disbursements of counsel), reasonably
incurred in investigating, preparing or defending against any litigation,
or investigation or proceeding by any court or governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under
subparagraph (i) or (ii) of this Section 5(a):
provided, however, that (i) this indemnity shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by the
Initial Purchasers, any holder or any underwriter expressly for use in the
Registration Statement (or any amendment thereto) or any preliminary prospectus
or the prospectus included in such Registration Statement (or any amendment or
supplement thereto) and (ii) the Company and the Parent shall not be liable to
any indemnified party under this indemnity agreement with respect to the
Registration Statement or prospectus to the extent that any such loss,
19
<PAGE> 20
claim, damage or liability of such indemnified party results solely from an
untrue statement of a material fact contained in, or the omission of a material
fact from, the Registration Statement or prospectus which untrue statement or
omission was corrected in an amended or supplemented Registration Statement or
prospectus, if the person alleging such loss, claim, damage or liability was not
sent or given, at or prior to the written confirmation of such sale, a copy of
the amended or supplemented Registration Statement or prospectus if the Company
had previously furnished copies thereof to such indemnified party and if
delivery of a prospectus is required by the Securities Act and was not so made.
This indemnity agreement will be in addition to any liability which the Company
and the Parent may otherwise have.
(b) In the case of a Shelf Registration, each holder agrees, severally and
not jointly, to indemnify and hold harmless the Company, the Parent, the Initial
Purchasers, each underwriter who participates in an offering of Registrable
Notes and the other selling holders and each of their respective directors and
officers (including each officer of each of the Company who signed the
Registration Statement) and each person, if any, who controls the Company and
the Parent, each Initial Purchaser, any underwriter or any other selling holder
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, against any and all losses, liabilities, claims, damages and
expenses described in the indemnity contained in Section 5(a) hereof, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto) or the prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company by such holder, as the case may be, expressly for use in the
Registration Statement (or any amendment thereto), or the prospectus (or any
amendment or supplement thereto); provided, however, that no such holder shall
be liable for any claims hereunder in excess of the amount of net proceeds
received by such holder from the sale of Registrable Notes pursuant to such
Shelf Registration Statement.
(c) Each indemnified party shall give notice in writing as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure to
so notify an indemnifying party shall not relieve such indemnifying party from
any liability hereunder to the extent it is not materially prejudiced as a
result thereof and in any event shall not relieve it from any liability which it
may have otherwise than on account of this indemnity agreement. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party); provided, however, that if (i) the use of counsel chosen by
the indemnifying party to represent the indemnified party would present such
counsel with a conflict of interest, (ii) the actual or potential defendants in
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have been advised by counsel that there may be
one or more legal defenses available to it and/or other indemnified parties that
are different from or additional to those available to the indemnifying party,
or
20
<PAGE> 21
(iii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after receipt by the indemnifying party of notice of the
institution of such action, then, in each such case, the indemnifying party
shall not have the right to direct the defense of such action on behalf of such
indemnified party or parties and such indemnified party or parties shall have
the right to select separate counsel to defend such action on behalf of such
indemnified party or parties. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof and approval
by such indemnified party of counsel appointed to defend such action, the
indemnifying party will not be liable to such indemnified party under this
Section 5 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof, unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the immediately preceding
sentence (it being understood, however, that in connection with such action the
indemnifying party shall not be liable for the reasonable fees and expenses of
more than one separate counsel (in addition to any local counsel) in any one
action or separate but substantially similar actions in the same jurisdiction
arising out of the same general allegations or circumstances, designated by the
Initial Purchasers in the case of paragraph (a) of this Section 5 or the Company
in the case of paragraph (b) of this Section 5, representing the indemnified
parties under such paragraph (a) or paragraph (b), as the case may be, who are
parties to such action or actions) or (ii) the indemnifying party has authorized
in writing the employment of counsel for the indemnified party at the expense of
the indemnifying party. No indemnifying party shall, without the prior written
consent of the indemnified parties, settle or compromise or consent to the entry
of any judgment with respect to any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever in respect of which indemnification or contribution could be
sought under this Section 5 (whether or not the indemnified parties are actual
or potential parties thereof), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for reasonable fees and
expenses of counsel and the indemnifying party is obligated to reimburse the
indemnified party under the foregoing provisions of this Section 5, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 5(a)(ii) hereof effected without its written
consent if (i) such settlement is entered into more than 20 business days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least five business days prior to such settlement being entered into and (iii)
such indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior
21
<PAGE> 22
to the date of such settlement.
(e) If the indemnification provided for in any of the indemnity provisions
set forth in this Section 5 is for any reason unavailable to or insufficient to
hold harmless an indemnified party in respect of any losses, liabilities,
claims, damages or expenses referred to therein, then each indemnifying party
shall contribute to the aggregate amount of such losses, liabilities, claims,
damages and expenses incurred by such indemnified party, as incurred, (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company, the Parent, the Initial Purchaser and the holders, from the
offering of the Exchange Notes or Registrable Notes included in such offering or
(ii) if the allocation provided by clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company, the Parent, the Initial Purchasers, and the holders, in connection with
the statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations. The
relative fault of the Company, the Parent, the Initial Purchasers, and the
holders shall be determined by reference to, among other things, whether any
such untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Company, the Parent, the Initial Purchasers or the holders and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, the Parent, the Initial
Purchasers and the holders of the Registrable Notes agree that it would not be
just and equitable if contribution pursuant to this Section 5 were determined by
pro rata allocation (even if the Initial Purchasers were treated as one entity,
and the holders were treated as one entity, for such purpose) or by another
method of allocation which does not take account of the equitable considerations
referred to above in this Section 5. The aggregate amount of losses,
liabilities, claims, damages and expenses incurred by an indemnified party and
referred to above in this Section 5 shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 5, each person, if any, who
controls an Initial Purchaser or holder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as such Initial Purchaser or holder, and each director of the
Company and each officer of the Company who signed the Registration Statement,
and each person, if any, who controls the Company and the Parent within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
shall have the same rights to contribution as the Company and the Parent. The
parties hereto agree that any underwriting discount or
22
<PAGE> 23
commission or reimbursement of fees paid to any Initial Purchaser pursuant to
the Purchase Agreement shall not be deemed to be a benefit received by any
Initial Purchaser in connection with the offering of the Exchange Notes or
Registrable Notes in such offering.
6. Underwritten Offerings. (a) Selection of Underwriters. If any of the
Registrable Notes covered by the Shelf Registration are to be sold pursuant to
an underwritten offering, the managing underwriter or underwriters thereof shall
be designated by Electing Holders holding at least a majority in aggregate
principal amount at maturity of the Registrable Notes to be included in such
offering, provided that such designated managing underwriter or underwriters is
or are reasonably acceptable to the Company.
(b) Participation by Holders. Each holder of Registrable Notes hereby
agrees with each other such holder that no such holder may participate in any
underwritten offering hereunder unless such holder (i) agrees to sell such
holder's Registrable Notes on the basis provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
7. Rules 144 and 144A. Each of the Parent and the Company covenants to the
holders of Registrable Notes that to the extent the Company and the Parent shall
be required to do so under the Exchange Act, each of the Company and the Parent
shall use its reasonable best efforts to timely file the reports required to be
filed by it under the Exchange Act or the Securities Act and the rules and
regulations adopted by the Commission thereunder, and shall take such further
action as any holder of Registrable Notes may reasonably request, all to the
extent required from time to time to enable such holder to sell Registrable
Notes without registration under the Securities Act within the limitations of
the exemption provided by Rules 144 and 144A under the Securities Act, as such
Rule may be amended from time to time, or any similar or successor rule or
regulation hereafter adopted by the Commission. Upon the request of any holder
of Registrable Notes in connection with that holder's sale pursuant to Rule 144
or 144A, the Company and the Parent shall deliver to such holder a written
statement as to whether it has complied with such requirements.
8. Miscellaneous. (a) No Inconsistent Agreements. Neither the Parent nor
the Company has, as of the date hereof, entered into nor will the Parent or the
Company on or after the date of this Agreement enter into any agreement which is
inconsistent with the rights granted to the holders of Registrable Notes in this
Agreement or otherwise conflicts with the provisions hereof. The rights granted
to the holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Parent's or the
Company's other issued and outstanding securities under any such
23
<PAGE> 24
agreements.
(b) Specific Performance. The parties hereto acknowledge that there would
be no adequate remedy at law if the Company or the Parent fails to perform any
of their respective obligations hereunder and that the Initial Purchasers and
the holders from time to time of the Registrable Notes may be irreparably harmed
by any such failure, and accordingly agree that the Initial Purchasers and such
holders, in addition to any other remedy to which they may be entitled at law or
in equity, shall be entitled to compel specific performance of the obligations
of the Company and the Parent under this Agreement in accordance with the terms
and conditions of this Agreement, in any court of the United States or any State
thereof having jurisdiction.
(c) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given unless the Company have obtained the written consent of holders of at
least a majority in aggregate principal amount of the outstanding Registrable
Notes affected by such amendment, modification, supplement, waiver or departure;
provided, however, that no amendment, modification, supplement or waiver or
consent to any departure from the provisions of Section 5 hereof shall be
effective as against any holder of Registrable Notes unless consented to in
writing by such holder.
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a holder, at the most current address given by such holder to
the Company by means of a notice given in accordance with the provisions of this
Section 8(d), which address initially is, with respect to an Initial Purchaser,
the address set forth in the Purchase Agreement; and (ii) if to the Company or
the Parent, initially at the Company's address set forth in the Purchase
Agreement and thereafter at such other address, notice of which is given in
accordance with the provisions of this Section 8(d).
All such notices and communications shall be deemed to have been duly
given:
at the time delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed; when receipt is
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices demands, or other communications shall be
concurrently delivered by the person giving the same to the Trustee, at the
address specified in the Indenture.
24
<PAGE> 25
(e) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors, assigns and transferees of each of the
panics, including, without limitation and without the need for an express
assignment subsequent holders; provided, however, that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Registrable
Notes in violation of the terms hereof or of the Purchase Agreement or the
Indenture. If any transferee of any holder shall acquire Registrable Notes, in
any manner, whether by operation of law or otherwise, such Registrable Notes
shall be held subject to all of the terms of this Agreement, and by taking and
holding such Registrable Notes, such person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Agreement, including the restrictions on resale set forth in this Agreement and,
if applicable, the Purchase Agreement, and such person shall be entitled to
receive the benefits hereof.
(f) Third Party Beneficiary. The holders shall be third party
beneficiaries to the agreements made hereunder between the Company and the
Parent, on the one hand, and the Initial Purchasers, on the other hand, and the
Initial Purchasers shall have the right to enforce such agreements directly to
the extent they deem such enforcement necessary or advisable to protect their
rights hereunder.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
25
<PAGE> 26
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
LES, INC.
LAIDLAW ENVIRONMENTAL
SERVICES, INC.
LAIDLAW ENVIRONMENTAL
SERVICES (US), INC.
LAIDLAW ENVIRONMENTAL
SERVICES (LONE AND GRASSY
MOUNTAIN), INC.
LAIDLAW ENVIRONMENTAL
SERVICES (TULSA), INC.
LAIDLAW ENVIRONMENTAL
SERVICES (SAN ANTONIO), INC.
LAIDLAW ENVIRONMENTAL
SERVICES (WICHITA), INC.
LAIDLAW ENVIRONMENTAL
SERVICES OF DELAWARE, INC.
LAIDLAW ENVIRONMENTAL
SERVICES (ROSEMOUNT), INC.
LAIDLAW ENVIRONMENTAL
SERVICES (SAWYER), INC.
LAIDLAW ENVIRONMENTAL
SERVICES (TUCKER), INC.
NINTH STREET PROPERTIES, INC.
LAIDLAW ENVIRONMENTAL
SERVICES (SAN JOSE), INC.
26
<PAGE> 27
CHEMCLEAR, INC. OF LOS ANGELES
USPCI, INC. OF GEORGIA
LES HOLDINGS, INC.
EAST CARBON DEVELOPMENT
FINANCIAL PARTNERS, INC.
LAIDLAW ENVIRONMENTAL
SERVICES (IMPERIAL VALLEY), INC.
LAIDLAW ENVIRONMENTAL
SERVICES (LOKERN), INC.
LAIDLAW ENVIRONMENTAL
SERVICES (NORTH EAST), INC.
LAIDLAW ENVIRONMENTAL
SERVICES (RECOVERY), INC.
CORSAN TRUCKING, INC
LAIDLAW ENVIRONMENTAL
SERVICES (TES), INC.
LAIDLAW ENVIRONMENTAL
SERVICES (TG), INC.
LAIDLAW ENVIRONMENTAL
SERVICES (TOC), INC.
LAIDLAW ENVIRONMENTAL
SERVICES (TS), INC.
LAIDLAW ENVIRONMENTAL
SERVICES (THERMAL TREATMENT),
INC.
27
<PAGE> 28
GSX CHEMICAL SERVICES OF OHIO,
INC.
LEMC, INC.
LAIDLAW CHEMICAL SERVICES,
INC.
LAIDLAW ENVIRONMENTAL
SERVICES (ALTAIR), INC.
LAIDLAW ENVIRONMENTAL
SERVICES (BDT), INC.
LAIDLAW ENVIRONMENTAL
SERVICES (FS), INC.
LAIDLAW ENVIRONMENTAL
SERVICES (GS), INC.
LAIDLAW ENVIRONMENTAL
SERVICES (CLIVE), INC.
LAIDLAW ENVIRONMENTAL
SERVICES (WT), INC.
LAIDLAW OSCO HOLDINGS, INC.
LAIDLAW ENVIRONMENTAL
SERVICES OF NASHVILLE, INC.
LAIDLAW ENVIRONMENTAL
SERVICES OF BARTOW, INC.
LAIDLAW ENVIRONMENTAL
SERVICES OF CALIFORNIA, INC.
LAIDLAW ENVIRONMENTAL
SERVICES OF CHATTANOOGA, INC.
28
<PAGE> 29
LAIDLAW ENVIRONMENTAL
SERVICES OF ILLINOIS, INC.
LAIDLAW ENVIRONMENTAL
SERVICES OF SOUTH CAROLINA,
INC.
LAIDLAW ENVIRONMENTAL
SERVICES OF WHITE CASTLE, INC.
LES MERGER, INC.
LAIDLAW ENVIRONMENTAL
SERVICES (PUERTO RICO), INC.
LAIDLAW ENVIRONMENTAL
SERVICES (BRIDGEPORT), INC.
LAIDLAW ENVIRONMENTAL
SERVICES (DEER PARK), INC.
LAIDLAW ENVIRONMENTAL
SERVICES (BATON ROUGE), INC.
LAIDLAW ENVIRONMENTAL
SERVICES (PLAQUEMINE), INC.
LAIDLAW ENVIRONMENTAL
SERVICES (CUSTOM TRANSPORT),
INC.
LAIDLAW ENVIRONMENTAL
SERVICES (LOS ANGELES), INC.
29
<PAGE> 30
LAIDLAW ENVIRONMENTAL
SERVICES (TIPTON), INC.
LAIDLAW ENVIRONMENTAL
SERVICES (GLOUCESTER), INC.
LAIDLAW ENVIRONMENTAL
SERVICES (DEER TRAIL), INC.
LAIDLAW ENVIRONMENTAL
SERVICES (MT. PLEASANT), INC.
LAIDLAW ENVIRONMENTAL
SERVICES (MINNEAPOLIS), INC.
LAIDLAW ENVIRONMENTAL
SERVICES (ARAGONITE), INC.
LAIDLAW ENVIRONMENTAL
SERVICES (SUSSEX), INC.
LAIDLAW ENVIRONMENTAL, INC.
By \s\ PAUL HUMPHREYS
-----------------------------
Name: Paul Humphreys
Title: Sr. Vice President
Finance and CFO
SAFETY-KLEEN CORP.
DIRT MAGNET, INC.
THE MIDWAY GAS & OIL COMPANY
30
<PAGE> 31
ELGINT CORP.
SAFETY-KLEEN ENVIROSYSTEMS
COMPANY
SAFETY-KLEEN ENVIROSYSTEMS
COMPANY OF PUERTO RICO, INC.
PETROCON, INC.
PHILLIPS ACQUISITION CORP.
SAFETY-KLEEN AVIATION, INC.
SK INSURANCE COMPANY
SK REAL ESTATE, INC.
SAFETY-KLEEN INTERNATIONAL,
INC.
SAFETY-KLEEN OIL RECOVERY CO.
SAFETY-KLEEN OIL SERVICES, INC.
THE SOLVENTS RECOVERY SERVICE
OF NEW JERSEY, INC.
By \s\ PAUL R. HUMPHREYS
-----------------------------
Name: Paul R. Humphreys
Title: Assistant Treasurer
31
<PAGE> 32
Confirmed and accepted as of the date first above written:
TD SECURITIES (USA) INC.
NATIONSBANC MONTGOMERY
SECURITIES LLC
By: TD SECURITIES (USA) INC.
By: \s\ THOMAS W. REGAN, JR.
----------------------------
Name: Thomas W. Regan, Jr.
Title: Managing Director
SAFETY-KLEEN CORP.
By \s\ HENRY TAYLOR
-----------------------------
Name: Henry Taylor
Title: Assistant Secretary
31
<PAGE> 33
Exhibit A
LES, INC.
INSTRUCTION TO DTC PARTICIPANTS
(Date of Mailing)
URGENT - IMMEDIATE ATTENTION REQUESTED
DEADLINE FOR RESPONSE: [DATE](1)
The Depository Trust Company ("DTC") has identified you as a DTC
Participant through which beneficial interests in LES, Inc. (the "Company") 9
1/4% Senior Subordinated Notes due 2008 (the "Notes") are held.
The Company is in the process of registering the Notes under the
Securities Act of 1933 for resale by the beneficial owners thereof. In order to
have their Notes included in the registration statement, beneficial owners must
complete and return the enclosed Notice of Registration Statement and Selling
Securityholder Questionnaire.
It is important that beneficial owners of the Notes receive a copy of the
enclosed materials as soon as possible as their rights to have the Notes
included in the registration statement depend upon their returning the Notice
and Questionnaire by [DEADLINE FOR RESPONSE]. Please forward a copy of the
enclosed documents to each beneficial owner that holds interests in the Notes
through you. If you require more copies of the enclosed materials or have any
questions pertaining to this matter, please contact LES, Inc., 1301 Gervais
Street, Suite 300, Columbia, South Carolina 29201, Attention: General Counsel.
- --------
(1) Not less than 28 calendar days from date of mailing.
A-1
<PAGE> 34
LES, INC.
Notice of Registration Statement
and
Selling Securityholder Questionnaire
(Date)
Reference is hereby made to the Registration Rights Agreement (the
"Registration Rights Agreement") among LES, Inc. (the "Company"), Laidlaw
Environmental Services, Inc. (the "Parent"), the Subsidiary Guarantors (as
defined in the Registration Rights Agreement), and the Initial Purchasers named
therein. Pursuant to the Registration Rights Agreement, the Company has filed
with the United States Securities and Exchange Commission (the "Commission") a
registration statement on Form [___] (the "Shelf Registration Statement") for
the registration and resale under Rule 415 of the Securities Act of 1933, as
amended (the "Securities Act"), of the Company's 9 1/4% Senior Subordinated
Notes due 2008 (the "Notes"). A copy of the Registration Rights Agreement is
attached hereto. All capitalized terms not otherwise defined herein shall have
the meanings ascribed thereto in the Registration Rights Agreement.
Each beneficial owner of Registrable Notes (as defined below) is entitled
to have the Registrable Notes beneficially owned by it included in the Shelf
Registration Statement. In order to have Registrable Notes included in the Shelf
Registration Statement, this Notice of Registration Statement and Selling
Securityholder Questionnaire ("Notice and Questionnaire") must be completed,
executed and delivered to the Company's counsel at the address set forth herein
for receipt ON OR BEFORE [DEADLINE FOR RESPONSE]. Beneficial owners of
Registrable Notes who do not complete, execute and return this Notice and
Questionnaire by such date (i) will not be named as selling securityholders in
the Shelf Registration Statement and (ii) may not use the Prospectus forming a
part thereof for resales of Registrable Notes.
Certain legal consequences arise from being named as a selling
securityholder in the Shelf Registration Statement and related Prospectus.
Accordingly, holders and beneficial owners of Registrable Notes are advised to
consult their own securities law counsel regarding the consequences of being
named or not being named as a selling securityholder in the Shelf Registration
Statement and related Prospectus.
A-2
<PAGE> 35
The term "Registrable Notes" is defined in the Registration Rights
Agreement.
ELECTION
The undersigned holder (the "Selling Securityholder") of Registrable Notes
hereby elects to include in the Shelf Registration Statement the Registrable
Notes beneficially owned by it and listed below in Item (3). The undersigned, by
signing and returning this Notice and Questionnaire, agrees to be bound with
respect to such Registrable Notes by the terms and conditions of this Notice and
Questionnaire and the Registration Rights Agreement, including, without
limitation, Section 6 of the Registration Rights Agreement, as if the
undersigned Selling Securityholder were an original party thereto.
Upon any sale of Registrable Notes pursuant to the Shelf Registration
Statement, the Selling Securityholder will be required to deliver to the Company
and Trustee the Notice of Transfer set forth in Appendix A to the Prospectus and
as Exhibit B to the Registration Rights Agreement.
The Selling Securityholder hereby provides the following information to
the Company and represents and warrants that such information is accurate and
complete:
A-3
<PAGE> 36
QUESTIONNAIRE
(i) (1) Full Legal Name of Selling Securityholder:
____________________________________________________________________
(2) Full Legal Name of Registered Holder (if not the same as in (a)
above) of Registrable Notes Listed in Item (3) below:
____________________________________________________________________
(3) Full Legal Name of DTC Participant (if applicable and if not the
same as (b) above) Through Which Registrable Notes Listed in Item
(3) below are Held:
____________________________________________________________________
(ii) Address for Notices to Selling Securityholder:
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
Telephone: _______________________________
Fax: _______________________________
Contact Person: _______________________________
(iii) Beneficial Ownership of Securities:
Except as set forth below in this Item (3), the undersigned does not
beneficially own any Securities.
(1) Principal amount at maturity of Registrable Notes beneficially
owned:__
CUSIP No(s). of such Registrable Notes:_________________
(2) Principal amount at maturity of Securities other than Registrable
Notes beneficially owned:_______________________________
CUSIP No(s). of such other Securities:__________________
A-4
<PAGE> 37
(3) Principal amount at maturity of Registrable Notes which the
undersigned wishes to be included in the Shelf Registration
Statement:
CUSIP No(s). of such Registrable Notes to be included in the Shelf
Registration Statement: __________________________________________
(iv) Beneficial Ownership of Other Securities of the Company or the Parent:
Except as set forth below in this Item (4), the undersigned Selling
Securityholder is not the beneficial or registered owner of any other securities
of the Company or the Parent, other than the Securities listed above in Item
(3).
State any exceptions here:
(v) Relationships with the Company:
Except as set forth below, neither the Selling Securityholder nor any of
its affiliates, officers, directors or principal equity holders (5% or more) has
held any position or office or has had any other material relationship with the
Company or the Parent (or its predecessors or affiliates) during the past three
years.
State any exceptions here:
(vi) Plan of Distribution:
Except as set forth below, the undersigned Selling Securityholder intends
to distribute the Registrable Notes listed above in Item (3) only as follows (if
at all): Such Registrable Notes may be sold from time to time directly by the
undersigned Selling Securityholder or, alternatively, through underwriters,
broker-dealers or agents. Such Registrable Notes may be sold in one or more
transactions at fixed prices, at prevailing market prices at the time of sale,
at varying prices determined at the time of sale, or at negotiated prices. Such
sales may be effected in transactions (which may involve crosses or block
transactions) (i) on any national securities exchange or quotation service on
which the Registered Securities may be listed or quoted at the time of sale,
(ii) in the over-the-counter market, (iii) in transactions otherwise than on
such exchanges or services or in the over-the-counter market, or (iv) through
the writing of options. In connection with sales of the Registrable Notes
A-5
<PAGE> 38
or otherwise, the Selling Securityholder may enter into hedging transactions
with broker-dealers, which may in turn engage in short sales of the Registrable
Notes in the course of hedging the positions they assume. The Selling
Securityholder may also sell Registrable Notes short and deliver Registrable
Notes to close out such short positions, or loan or pledge Registrable Notes to
broker-dealers that in turn may sell such securities.
State any exceptions here:
By signing below, the Selling Securityholder acknowledges that it
understands its obligation to comply, and agrees that it will comply, with the
provisions of the Exchange Act and the rules and regulations thereunder,
particularly Regulation M (which governs manipulation, stabilization and trading
activity during a distribution of securities).
In the event that the Selling Securityholder transfers all or any portion
of the Registrable Notes listed in Item (3) above after the date on which such
information is provided to the Company, the Selling Securityholder agrees to
notify the transferee(s) at the time of the transfer of its rights and
obligations under this Notice and Questionnaire and the Registration Rights
Agreement.
By signing below, the Selling Securityholder consents to the disclosure of
the information contained herein in its answers to Items (1) through (6) above
and the inclusion of such information in the Shelf Registration Statement and
related Prospectus. The Selling Securityholder understands that such information
will be relied upon by the Company, and any underwriters in an underwritten
offering of such Selling Securityholder's Registrable Notes listed in Item(3)
above, in connection with the preparation of the Shelf Registration Statement
and related Prospectus.
In accordance with the Selling Securityholder's obligation under Section
3(d) of the Registration Rights Agreement to provide such information as may be
required by law for inclusion in the Shelf Registration Statement, the Selling
Securityholder agrees to promptly notify the Company of any inaccuracies or
changes in the information provided herein which may occur subsequent to the
date hereof at any time while the Shelf Registration Statement remains in
effect. All notices hereunder
A-6
<PAGE> 39
and pursuant to the Registration Rights Agreement shall be made in writing, by
hand-delivery, first-class mail, or air courier guaranteeing overnight delivery
as follows:
(i) To the Company or the Parent:
LES, Inc.
1301 Gervais Street
Suite 300
Columbia, South Carolina 29201
Attention: General Counsel
Telephone: (803) 933-4200
(ii) With a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: John C. Kennedy
Telephone: (212) 373-3000
Once this Notice and Questionnaire is executed by the Selling
Securityholder and received by the Company's counsel, the terms of this Notice
and Questionnaire, and the representations and warranties contained herein,
shall be binding on, shall inure to the benefit of and shall be enforceable by
the respective successors, heirs, personal representatives, and assigns of the
Company and the Selling Securityholder (with respect to the Registrable Notes
beneficially owned by such Selling Securityholder and listed in Item (3) above.
This Agreement shall be governed in all respects by the laws of the State of New
York.
A-7
<PAGE> 40
IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused
this Notice and Questionnaire to be executed and delivered either in person or
by its duly authorized agent.
Dated: ________________
_____________________________________________
Selling Securityholder
(Print/type full legal name of beneficial
owner of Registrable Notes)
By: _________________________________________
Name:
Title:
PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR RECEIPT ON
OR BEFORE [DEADLINE FOR RESPONSE] TO THE COMPANY'S COUNSEL AT:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: John C. Kennedy
Telephone: (212) 373-3000
A-8
<PAGE> 41
Exhibit B
NOTICE OF TRANSFER PURSUANT TO REGISTRATION STATEMENT
[Name]
[Address]
Attention: Trust Officer
Re: LES, Inc. (the "Company")
9 1/4% Senior Subordinated Notes due 2008
-----------------------------------------
Dear Sirs:
Please be advised that _____________________ has transferred
$___________ aggregate principal amount at maturity of the above-referenced
Notes pursuant to an effective Registration Statement on Form [___] (File No.
333-____) filed by the Company.
We hereby certify that the prospectus delivery requirements, if any,
of the Securities Act of 1933, as amended, have been satisfied and that the
above-named beneficial owner of the Notes is named as a "Selling Holder" in the
Prospectus dated ___________, 199_ or in supplements thereto, and that the
aggregate principal amount at maturity of the Notes transferred are the Notes
listed in such Prospectus opposite such owner's name.
Dated:
Very truly yours,
__________________________
(Name)
By:_______________________
(Authorized Signature)
B-1
<PAGE> 1
Exhibit 4(b)
INDENTURE, dated as of May 29, 1998 between LES, Inc., a corporation duly
organized and existing under the laws of the State of Delaware (herein called
the "Company"), Laidlaw Environmental Services, Inc., a corporation duly
organized and existing under the laws of the State of Delaware (herein called
the "Parent"), each of the Company's wholly-owned domestic subsidiaries listed
on Schedule I hereto (collectively, the "Subsidiary Guarantors" and together
with the Parent, the "Guarantors") and The Bank of Nova Scotia Trust Company of
New York, a bank and trust company duly organized and existing under the laws of
New York, trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of and issue of 9 1/4% Senior
Subordinated Notes due 2008 (herein called the "Initial Securities"), and 9 1/4%
Exchange Senior Subordinated Notes due 2008 (the "Exchange Securities" and,
together with the Initial Securities, the "Securities") to be issued in exchange
for the Initial Securities of substantially the tenor and amount hereinafter set
forth, and to provide therefor the Company has duly authorized the execution and
delivery of this Indenture.
Each of the Guarantors has duly authorized its guarantee of the
Securities, and to provide therefor each of them has duly authorized the
execution and delivery of this Indenture.
Upon the issuance of the Exchange Securities, if any, or the effectiveness
of the Exchange Offer Registration Statement (as defined herein) or, under
certain circumstances, the effectiveness of the Shelf Registration Statement (as
defined herein), this Indenture will be subject to the provisions of the Trust
Indenture Act of 1939, as amended, that are required to be part of this
Indenture and shall, to the extent applicable, be governed by such provisions.
The Company has also duly authorized the creation of up to $75,000,000
aggregate principal amount of additional Securities to be issued from time to
time having identical terms and conditions to the Initial Securities offered
hereby.
All things necessary have been done to make the Securities, when executed
by the Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company and to make this Indenture a valid
agreement of the Company and the Guarantors, each in accordance with their
respective terms.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
<PAGE> 2
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein, and the terms "cash transaction" and
"self-liquidating paper", as used in TIA Section 311, shall have the
meanings assigned to them in the rules of the Commission adopted under the
Trust Indenture Act;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP; and
(d) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
"Acquired Indebtedness" means Indebtedness of a Person (a) existing at the
time such Person is merged with or into the Company or becomes a Restricted
Subsidiary or (b) assumed in connection with the acquisition of assets from such
Person; provided that any Indebtedness of such Person that is redeemed,
defeased, retired or otherwise repaid at the time of or immediately upon
consummation of the transaction by which such Person is merged with or into the
Company, becomes a Restricted Subsidiary or such assets are acquired from such
Person shall not be Acquired Indebtedness.
"Act", when used with respect to any Holder, has the meaning specified in
Section 104.
"Additional Securities" has the meaning set forth in Section 301.
2
<PAGE> 3
"Adjusted Net Assets" has the meaning set forth in Section 1301.
"Adjusted Treasury Rate" means, with respect to any redemption date, the
rate per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date.
"Affected Obligor" has the meaning set forth in Section 1402.
"Affected Obligor Senior Indebtedness" has the meaning set forth in
Section 1402.
"Affiliate" means, with respect to any specified Person, (a) any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person or (b) any other Person that
owns, directly or indirectly, 10% or more of such specified Person's Capital
Stock. For the purposes of this definition, "control", when used with respect to
any specified Person, means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agent Member" means any member of, or participant in, the Depositary.
"Applicable Procedures" means applicable procedures of the Depositary,
Euroclear System or Cedel Bank S.A., as the case may be.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or
other disposition (including, without limitation, by way of merger,
consolidation or sale and leaseback transaction) (collectively, a "transfer") by
the Company or a Restricted Subsidiary, directly or indirectly, in one
transaction or a series of related transactions, of (a) any Capital Stock of any
Restricted Subsidiary (other than directors' qualifying shares or shares
required by applicable law to be held by a Person other than the Company or a
Restricted Subsidiary), (b) all or substantially all of the properties and
assets of the Company and its Restricted Subsidiaries representing a division or
line of business or (c) any other properties or assets of the Company or any
Restricted Subsidiary, other than in the ordinary course of business. For the
purposes of this definition, the term "Asset Sale" shall not include any
transfer of properties or assets (i) that is governed by the provisions of
Article VIII, (ii) between or among the Company and its Restricted Subsidiaries
pursuant to transactions that do not violate any other provision of this
Indenture, (iii) to any Person to the extent it constitutes a Restricted Payment
that is permitted under Section 1011, (iv) consisting of inventory or wornout,
obsolete or permanently retired equipment and facilities, (v) the gross proceeds
of which (exclusive of indemnities) do not exceed $5.0 million in connection
with any transfer or (vi) that constitutes a Permitted Investment.
"Asset Sale Offer" has the meaning set forth in Section 1013.
3
<PAGE> 4
"Asset Sale Purchase Date" has the meaning set forth in Section 1013.
"Attributable Debt" means, as to any particular lease under which any
Person is at the time liable, at any date as of which the amount thereof is to
be determined, the total net amount of rent required to be paid by such Person
under such lease during the remaining term thereof (excluding any subsequent
renewal or other extension options held by the lessee), discounted from the
respective due dates thereof to such date of determination at the rate of
interest per annum implicit in the terms of such lease, as determined in good
faith by the Company, compounded annually. The net amount of rent required to be
paid under any such lease for any such period shall be the amount of the rent
payable by the lessee with respect to such period, after excluding amounts
required to be paid on account of maintenance and repairs, reconstruction,
insurance, taxes, assessments, water rates and similar charges and contingent
rents (such as those based on sales). In the case of any lease which is
terminable by the lessee upon the payment of a penalty, such net amount shall
also include the amount of such penalty, but no rent shall be considered as
required to be paid under such lease subsequent to the first date upon which it
may be so terminated.
"Banks" means the banks and other financial institutions that from time to
time are lenders under the Senior Credit Facility.
"Blockage Notice" has the meaning set forth in Section 1403.
"Board of Directors" means, as the context requires, either the board of
directors of the Company or a Guarantor, as the case may be, or any duly
authorized committee of that board.
"Board Resolution" means, as the context requires, a copy of a resolution
certified by the Secretary or an Assistant Secretary of the Company or a
Guarantor, as the case may be, to have been duly adopted by the Board of
Directors and to be in full force and effect on the date of such certification,
and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in New York are authorized or
obligated by law or executive order to close.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" of any Person means any and all shares, partnership
interests, participations, rights in or other equivalents of, or interests in,
the equity of such Person, but excluding any debt securities convertible into
such equity.
4
<PAGE> 5
"Cash Equivalents" means (a) any evidence of Indebtedness with a maturity
of one year or less issued or directly and fully guaranteed or insured by the
United States of America or any agency or instrumentality thereof (provided that
the full faith and credit of the United States of America is pledged in support
thereof); (b) certificates of deposit or acceptances or Eurodollar time deposits
with a maturity of one year or less of, and overnight bank deposits with, any
financial institution that is a member of the Federal Reserve System having
combined capital and surplus and undivided profits of not less than $500
million; (c) commercial paper with a maturity of one year or less issued by a
Person rated at least A-1 by S&P or at least P-1 by Moody's; (d) repurchase
obligations with a term of no more than 30 days for underlying securities of the
types described in clause (a) entered into with a bank meeting the
qualifications described in clause (b) above; (e) securities with maturities of
one year or less from the date of acquisition issued or fully guaranteed by any
state, commonwealth or territory of the United States, by any political
subdivision or taxing authority of any such state, commonwealth or territory or
by any foreign government, the securities of which state, commonwealth,
territory, political subdivision, taxing authority or foreign government (as the
case may be) are rated at least A by S&P or A by Moody's; (f) securities with
maturities of one year or less from the date of acquisition backed by standby
letters of credit issued by any financial institution satisfying the
requirements of clause (b) of this definition; and (g) funds which invest in any
of the foregoing.
"CEDEL" means Cedel Bank, S.A., or any successor securities clearing
agency.
"Change of Control" means the occurrence of any of the following events:
(a) Any Person or "group" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act), other than one or more Permitted Holders,
is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5
under the Exchange Act, except that a Person will be deemed to have
"beneficial ownership" of all securities that such Person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 50% of the voting
power of all classes of Voting Stock of the Company;
(b) During any consecutive two-year period, individuals who at the
beginning of such period constituted the Board of Directors of the Company
(together with any new directors whose election to such Board of
Directors, or whose nomination for election by the stockholders of the
Company, was approved by a vote of 66 2/3% of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the Board of Directors of the
Company then in office; or
(c) The Company is liquidated or dissolved or adopts a plan of
liquidation or dissolution, other than a transaction that complies with
the provisions of Article VIII.
5
<PAGE> 6
"Change of Control Offer" has the meaning set forth in Section 1012.
"Change of Control Payment Date" has the meaning set forth in Section
1012.
"Closing Date" means the date on which the Initial Securities are
originally issued under this Indenture.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or, if at any time after the
execution of this Indenture such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Company" means the Person named as the "Company" in the first paragraph
of this Indenture, until a successor Person shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Securities (as if the final maturity of the Securities
was June 1, 2003) to be redeemed that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of such Securities.
"Comparable Treasury Price" means, with respect to any Redemption Date,
(i) the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for Government
Securities" or (ii) if such release (or any successor release) is not published
or does not contain such prices on such Business Day, (A) the average of the
Reference Treasury Dealer Quotations for such redemption date, after excluding
the highest and lowest such Reference Treasury Dealer Quotations or (B) if the
Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the
average of all such Quotations.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman, its President, any Vice
President, its Treasurer or an Assistant Treasurer, and delivered to the
Trustee.
"Consolidated EBITDA" means, for any period, the sum of, without
duplication, Consolidated Net Income for such period, plus (or, in the case of
clause (d) below, plus or minus) the following items to the extent included in
computing Consolidated Net Income for such period (a) Fixed Charges for such
period, plus (b) the federal, state, local and foreign income tax expense of the
Company and its Restricted Subsidiaries for such period, plus (c) the
depreciation and amortization expense of the Company and its Restricted
Subsidiaries for
6
<PAGE> 7
such period, plus (d) any other non-cash charges for such period and minus
non-cash credits for such period, other than non-cash charges or credits
resulting from changes in prepaid assets or accrued liabilities in the ordinary
course of business; provided that income tax expense, depreciation and
amortization expense and non-cash charges and credits of a Restricted Subsidiary
shall be included in Consolidated EBITDA only to the extent (and in the same
proportion) that the net income of such Restricted Subsidiary was included in
calculating Consolidated Net Income for such period.
"Consolidated Net Income" means, for any period, the net income (or net
loss) of the Company and its Restricted Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP, adjusted to the
extent included in calculating such net income or loss by excluding (a) any net
after-tax extraordinary gains or losses (less all fees and expenses relating
thereto), (b) any net after-tax gains or losses (less all fees and expenses
relating thereto) attributable to Asset Sales, (c) the net income (but not the
net loss) of any Person (other than the Company or a Restricted Subsidiary), in
which the Company or any Restricted Subsidiary has an equity interest, except
that the aggregate amount of dividends or other distributions actually paid to
the Company or any Restricted Subsidiary in cash during such period will be
included in such Consolidated Net Income, (d) the net income (or loss) of any
Person acquired by the Company or any Restricted Subsidiary in a "pooling of
interests" transaction attributable to any period prior to the date of such
acquisition, and (e) the net income (but not the net loss) of any Restricted
Subsidiary to the extent that the declaration or payment of dividends or similar
distributions by such Restricted Subsidiary of such net income is at the date of
determination restricted, directly or indirectly, except that the aggregate
amount of such net income that could be paid to the Company or a Restricted
Subsidiary thereof by loans, advances, intercompany transfers, principal
repayments or otherwise will be included in such Consolidated Net Income.
"Consolidated Net Tangible Assets" means, with respect to the Company, at
any date of determination, the aggregate amount of assets (less applicable
reserves and other properly deductible items) after deducting therefrom (a) all
current liabilities (excluding current maturities of long-term debt and Capital
Lease Obligations) and (b) all goodwill, trade names, trademarks, patents,
unamortized debt discount and expense and other like intangibles, all as set
forth on the most recent quarterly balance sheet of the Company and its
consolidated Restricted Subsidiaries and computed in accordance with GAAP.
"Consolidated Net Worth" means, at any date of determination, the
stockholders' equity of the Company and its Restricted Subsidiaries as set forth
on the most recently available quarterly or annual consolidated balance sheet of
the Company and its Restricted Subsidiaries, less any amounts attributable to
Disqualified Stock or any equity security convertible into or exchangeable for
Indebtedness, the cost of treasury stock and the principal amount of any
promissory notes receivable from the sale of the Capital Stock of the Company or
any of its Restricted Subsidiaries and less, to the extent included in
calculating such stockholders' equity of the Company and its Restricted
Subsidiaries, the stockholders' equity attributable to Unrestricted
Subsidiaries, each item to be determined in conformity
7
<PAGE> 8
with GAAP (excluding the effects of foreign currency adjustments under Financial
Accounting Standards Board Statement of Financial Accounting Standards No. 52).
"Contingent Obligations" means, at any date of determination, (a) all
obligations of the Company and its Restricted Subsidiaries (and any Unrestricted
Subsidiaries for which the Company provides credit support or other similar
arrangements) in respect of performance bonds and letters of credit in the
nature of performance bonds and similar obligations and (b) all guarantees of
the Company and its Restricted Subsidiaries (and any Unrestricted Subsidiaries
for which the Company provides credit support or other similar arrangements) or
the obligations referred to in clause (a).
"Corporate Trust Office" means the principal corporate trust office of the
Trustee, at which at any particular time its corporate trust business shall be
administered, which office at the date of execution of this Indenture is located
at One Liberty Plaza, 23rd Floor, New York, New York 10006.
"Currency Agreements" means, with respect to any Person, any spot or
forward foreign exchange agreements and currency swap, currency option or other
similar financial agreements or arrangements entered into by such Person or any
of its Restricted Subsidiaries in the ordinary course of business and designed
to protect against or manage exposure to fluctuations in foreign currency
exchange rates.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Defaulted Interest" has the meaning specified in Section 309.
"Depositary" means The Depository Trust Company, its nominees and
successors.
"Designated Assets" means the assets and properties acquired by the
Company in the Safety-Kleen Acquisition relating to (a) the European operations
of Safety-Kleen referred to in footnote 4 to the audited consolidated financial
statements of Safety-Kleen incorporated by reference into Safety-Kleen's Annual
Report on Form 10-K for the year ended January 3, 1998 and (b) the oil recovery
services provided by Safety-Kleen and set forth in the table under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Results of Operations--Revenues" incorporated by reference into
Safety-Kleen's Annual Report on Form 10-K for the year ended January 3, 1998.
"Designated Senior Indebtedness" means (i) all Senior Indebtedness under
the Senior Credit Facility and (ii) any other issue of Senior Indebtedness or
refinancing thereof permitted by the definition of Senior Indebtedness, having a
principal amount of at least $25.0 million.
8
<PAGE> 9
"Disinterested Director" means, with respect to any transaction or series
of transactions in respect of which the Board of Directors is required to
deliver a resolution of the Board of Directors, to make a finding or otherwise
take action under the Indenture, a member of the Board of Directors who does not
have any material direct or indirect financial interest in or with respect to
such transaction or series of transactions.
"Disqualified Stock" means any class or series of Capital Stock that,
either by its terms, or by the terms of any security into which it is
convertible or exchangeable or by contract or otherwise (a) is, or upon the
happening of an event or passage of time would be, required to be redeemed prior
to one year after the final Stated Maturity of the Securities, (b) is redeemable
at the option of the holder thereof at any time prior to one year after such
final Stated Maturity or (c) at the option of the holder thereof, is convertible
into or exchangeable for debt securities at any time prior to one year after
such final Stated Maturity; provided that any Capital Stock that would not
constitute Disqualified Stock but for provisions therein giving holders thereof
the right to cause the issuer thereof to repurchase or redeem such Capital Stock
upon the occurrence of an "asset sale" or "change of control" occurring prior to
the Stated Maturity of the Securities will not constitute Disqualified Stock if
the "asset sale" or "change of control" provisions applicable to such Capital
Stock are no more favorable to the holders of such Capital Stock than the
provisions contained in Sections 1012 and 1013 and such Capital Stock
specifically provides that the issuer will not repurchase or redeem any of such
stock pursuant to such provision prior to the Company's repurchase of such of
the Securities as are required to be repurchased pursuant to Sections 1012 and
1013.
"Domestic Restricted Subsidiary" means a Domestic Subsidiary that is a
Restricted Subsidiary.
"Domestic Subsidiary" means any Subsidiary whose jurisdiction of
incorporation, organization or formation is the United States, any state thereof
or the District of Columbia.
"Euroclear" means the Euroclear Clearance System, or any successor
securities clearing agency.
"Event of Default" has the meaning specified in Section 501.
"Excess Proceeds" has the meaning set forth in Section 1013.
"Exchange Act" means the Securities and Exchange Act of 1934, as amended
from time to time, and the rules and regulations thereunder.
"Exchange Offer" means the exchange offer that may be effected pursuant to
the Registration Rights Agreement.
"Exchange Offer Registration Statement" means the Exchange Offer
Registration Statement as defined in the Registration Rights Agreement.
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<PAGE> 10
"Exchange Securities" has the meaning stated in the first recital of this
Indenture and refers to any Exchange Securities containing terms substantially
identical to the Initial Securities (except that such Exchange Securities shall
not contain terms with respect to the interest rate step-up provisions in
Section 309 of the Initial Securities and transfer restrictions in Section 307
of the Initial Securities) that are issued and exchanged for the Initial
Securities pursuant to the Registration Rights Agreement and this Indenture.
"Fair market value" means, with respect to any asset, the price which
could be negotiated in an arm's-length free market transaction, for cash,
between an informed and willing seller and an informed and willing buyer,
neither of which is under pressure or compulsion to complete the transaction.
"Fall-away Event" shall have the meaning specified in Section 1027.
"Federal Bankruptcy Code" means the Bankruptcy Act of Title 11 of the
United States Code, as amended from time to time.
"Fixed Charges" means, for any period, without duplication, the sum of (a)
the amount that, in conformity with GAAP, would be set forth opposite the
caption "interest expense" (or any like caption) on a consolidated statement of
operations of the Company and its Restricted Subsidiaries for such period,
including, without limitation, (i) amortization of debt discount, (ii) the net
payments (if any) pursuant to Interest Rate Agreements (including amortization
of discounts), (iii) the interest portion of any deferred payment obligation,
(iv) amortization of debt issuance costs and (v) the interest component of
Capital Lease Obligations, plus (b) cash dividends paid on Preferred Stock and
Disqualified Stock by the Company and any Restricted Subsidiary (to any Person
other than the Company and its Restricted Subsidiaries), plus (c) all interest
on any Indebtedness of any Person guaranteed by the Company or any of its
Restricted Subsidiaries, plus (d) all payments, loans or advances made pursuant
to clause (viii) or (ix) of paragraph (b) of Section 1011 in respect of interest
payments on the Indebtedness described in such clauses; provided, however, that
Fixed Charges shall not include (i) any gain or loss from extinguishment of
debt, including the write-off of debt issuance costs and (ii) the fixed charges
of a Restricted Subsidiary to the extent (and in the same proportion) that the
net income of such Subsidiary was excluded in calculating Consolidated Net
Income pursuant to clause (e) of the definition thereof for such period.
"Fixed Charge Coverage Ratio" means, for any period, the ratio of (a)
Consolidated EBITDA for such period to (b) Fixed Charges for such period.
"Foreign Subsidiary" means any Subsidiary other than a Domestic
Subsidiary.
"Funding Guarantor" has the meaning set forth in Section 1301.
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<PAGE> 11
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, consistently applied, that
are in effect on the date of Indenture.
"Global Security" shall have the meaning specified in Section 201.
"guarantee" means, as applied to any obligation, (a) a guarantee (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), direct or indirect, in any manner, of all or any part of
such obligation and (b) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limitation, the payment of
amounts drawn down under letters of credit.
"Guarantor" means the Parent or any Restricted Subsidiary that issues a
Securities Guarantee.
"Guarantor Senior Indebtedness" means, as to any Guarantor, the principal
of and premium, if any, and interest on (including interest accruing after the
filing of a petition initiating any proceeding pursuant to any bankruptcy law,
whether or not allowed) and other amounts due on or in connection with any
Indebtedness of such Guarantor (other than the Securities Guarantee made by such
Guarantor or Pari Passu Indebtedness), whether outstanding on the Closing Date
or thereafter incurred, unless, in the case of any particular Indebtedness, the
instrument creating or evidencing the same or pursuant to which the same is
outstanding expressly provides that such Indebtedness will be pari passu with or
subordinate in right of payment to the Securities Guarantee. Without limiting
the generality of the foregoing, "Guarantor Senior Indebtedness" includes the
principal of and premium, if any, and interest (including interest accruing
after the occurrence of an event of default or after the filing of a petition
initiating any proceeding pursuant to any bankruptcy law, whether or not
allowed) on all obligations of every nature of such Guarantor from time to time
owed to the Banks under the Senior Credit Facility; provided, however, that any
Indebtedness under any refinancing, refunding or replacement of the Senior
Credit Facility shall not constitute Guarantor Senior Indebtedness to the extent
that the Indebtedness thereunder is by its express terms subordinate to any
other Indebtedness of such Guarantor. Notwithstanding the foregoing, "Guarantor
Senior Indebtedness" shall not include (a) Indebtedness that is represented by
Disqualified Stock, (b) any trade payables, (c) Indebtedness of or amounts owed
by such Guarantor for compensation to employees or for services rendered to such
Guarantor, (d) any liability for foreign, federal, state, local or other taxes
owed or owing by such Guarantor, (e) Indebtedness of such Guarantor to the
Parent, the Company, a Subsidiary of the Company or any other Affiliate of the
Company or any of such Affiliate's Subsidiaries, (f) that portion of any
Indebtedness that, at the time of the incurrence, is incurred by such Guarantor
in violation of the Indenture, and (g) amounts owing under leases (other than
Capital Lease Obligations).
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<PAGE> 12
"Hedging Obligations" means the obligations of any Person under (a)
Interest Rate Agreements and (b) Currency Agreements.
"Holder" means the Person in whose name a Security is, at the time of
determination, registered on the Security Register.
"Indebtedness" means (without duplication), with respect to any Person,
whether recourse is to all or a portion of the assets of such Person and whether
or not contingent, (a) every obligation of such Person for money borrowed, (b)
every obligation of such Person evidenced by bonds, debentures, notes or other
similar instruments, (c) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person (other than obligations in respect to performance
bonds and letters of credit in the nature of performance bonds), (d) every
obligation of such Person issued or assumed as the deferred purchase price of
property or services, (e) every Capitalized Lease Obligation of such Person, (f)
all Disqualified Stock of such Person valued at its maximum fixed repurchase
price (including, without duplication, accrued and unpaid dividends), (g) all
obligations of such Person under or in respect of Hedging Obligations and (h)
every obligation of the type referred to in clauses (a) through (g) of another
Person and all dividends of another Person the payment of which, in either case,
such Person has guaranteed. For purposes of this definition, the "maximum fixed
repurchase price" of any Disqualified Stock that does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Disqualified Stock as if such Disqualified Stock were repurchased on any date on
which Indebtedness is required to be determined pursuant to the Indenture, and
if such price is based upon, or measured by, the fair market value of such
Disqualified Stock, such fair market value shall be determined in good faith by
the board of directors of the issuer of such Disqualified Stock. Notwithstanding
the foregoing, trade accounts payable and accrued liabilities arising in the
ordinary course of business and any liability for federal, state or local taxes
or other taxes owed by such Person shall not be considered Indebtedness for
purposes of this definition.
"Indenture" means this instrument as originally executed and as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Indenture Obligations" means the obligations of the Company and any other
obligor hereunder or under the Securities, including the Guarantors, to pay
principal of and premium, if any, and interest on the Securities when due and
payable at Maturity, and all other amounts due or to become due under or in
connection with this Indenture, the Securities and the performance of all other
obligations to the Trustee (including all amounts due to the Trustee under
Section 606 hereof) and the Holders under this Indenture and the Securities,
according to the terms hereof and thereof.
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"Independent Investment Banker" means TD Securities (USA) Inc. or, if such
firm is unwilling or unable to select the Comparable Treasury Issue, another
independent banking institution of national standing selected by the Company.
"Initial Period" has the meaning set forth in Section 1403.
"Initial Securities" has the meaning stated in the first recital of this
Indenture.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Securities.
"Interest Rate Agreements" means any interest rate protection agreements
and other types of interest rate hedging agreements (including, without
limitation, interest rate swaps, caps, floors, collars and similar agreements)
and other related agreements designed to protect against or manage exposure to
fluctuations in interest rates and either (a) entered into in the ordinary
course of business or (b) relating to the Indebtedness permitted under the
Indenture.
"Investment" in any Person means (a) any direct or indirect advance, loan
or other extension of credit or capital contribution (by means of any transfer
of cash or other property to others or any payment for property or services for
the account or use of others) to, or any purchase, acquisition or ownership of,
Capital Stock, Indebtedness or other securities issued by such Person, the
acquisition (by purchase or otherwise) of all or substantially all of the
business or assets of such Person, or the making of any investment of cash or
other property in such Person, (b) the designation of any Restricted Subsidiary
as an Unrestricted Subsidiary, (c) the transfer of any assets or properties from
the Company or a Restricted Subsidiary to an Unrestricted Subsidiary, other than
the transfer of assets or properties made in the ordinary course of business and
(d) the fair market value of the Capital Stock (or any other Investment), held
by the Company or any of its Restricted Subsidiaries, of (or in) any Person that
has ceased to be a Restricted Subsidiary. Investments exclude extensions of
trade credit on commercially reasonable terms in accordance with normal trade
practices.
"Investment Grade" means a rating of the Securities by both S&P and
Moody's, each such rating being in one of such agency's four highest generic
rating categories that signifies investment grade (i.e. BBB- (or the equivalent)
or higher by S&P and Baa3 (or the equivalent) or higher by Moody's); provided,
in each case, such ratings are publicly available; provided further that in the
event Moody's or S&P is no longer in existence, for purposes of determining
whether the Securities are rated "Investment Grade," such organization may be
replaced by a nationally recognized statistical rating organization (as defined
in Rule 436 under the Securities Act) designated by the Company, notice of which
designation shall be given to the Trustee.
"Laidlaw" means Laidlaw Inc., a corporation organized under the laws of
Canada.
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<PAGE> 14
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, notice of redemption or otherwise.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"NationsBank Facility" means either (a) the working capital facility made
available pursuant to the letter agreement dated March 31, 1998 between
NationsBank of Texas, N.A., as lender, and the Company, as borrower or (b) any
other agreement or agreements between the Company or any Restricted Subsidiary
and a financial institution or institutions providing for the making of loans or
advances on a revolving basis and/or the issuance of letters of credit and/or
the creation of bankers' acceptances to fund the Company's general corporate
requirements.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds
thereof in the form of cash or cash equivalents, including payments in respect
of deferred payment obligations, but only as and when received, in the form of,
or stock or other assets when disposed of for, cash or Cash Equivalents (except
to the extent that such obligations are financed or sold with recourse to the
Company or any Restricted Subsidiary), net of (a) brokerage commissions and
other fees and expenses (including fees and expenses of legal counsel,
accountants and investment banks) related to such Asset Sale, (b) provisions for
all taxes payable or required to be accrued in accordance with GAAP as a result
of such Asset Sale, (c) payments made to retire Indebtedness where payment of
such Indebtedness is secured by a Lien on the assets that are the subject of
such Asset Sale, (d) amounts required to be paid to any Person (other than the
Company or any Restricted Subsidiary) owning a beneficial interest in the assets
that are subject to the Asset Sale, (e) appropriate amounts to be provided by
the Company or any Restricted Subsidiary, as the case may be, as a reserve
required in accordance with GAAP against any liabilities associated with such
Asset Sale and retained by the seller after such Asset Sale, including pension
and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale and (f) all distributions and other payments
made to minority interest holders in Restricted Subsidiaries or joint ventures
as a result of such Asset Sale.
"Non-Subsidiary Guarantors" means Subsidiaries which are not Subsidiary
Guarantors.
"Offering" means the offering of 9 1/4% Senior Subordinated Notes Due 2008
by the Company.
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<PAGE> 15
"Officers' Certificate" means a certificate signed by the Chairman, the
President or a Vice President, and by the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary of the Company, and delivered to the
Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company, including an employee of the Company, and who shall be
reasonably acceptable to the Trustee.
"Outstanding", when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:
(a) Securities theretofore canceled by the Trustee or delivered to
the Trustee for cancellation;
(b) Securities, or portions thereof, for whose payment, redemption
or purchase money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent (other than the Company) in trust or
set aside and segregated in trust by the Company (if the Company shall act
as its own Paying Agent) for the Holders of such Securities; provided
that, if such Securities are to be redeemed, notice of such redemption has
been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made;
(c) Securities, except to the extent provided in Sections 1202 and
1203, with respect to which the Company has effected defeasance and/or
covenant defeasance as provided in Article XII; and
(d) Securities which have been paid pursuant to Section 308 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities
in respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands the Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, consent, notice or waiver hereunder, and for the
purpose of making the calculations required by TIA Section 313, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in making such calculation or in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which the
Trustee knows to be so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right
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<PAGE> 16
so to act with respect to such Securities and that the pledgee is not the
Company or any other obligor upon the Securities or any Affiliate of the Company
or such other obligor.
"Parent" means Laidlaw Environmental Services, Inc., a Delaware
corporation until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Parent" shall mean such
successor Person.
"Parent IRBs" means the (a) Tooele County, Utah Pollution Control
Refunding Revenue Bonds 1997 Series A, par amount $45.7 million, which bear
interest at a rate equal to 7.55% per annum and mature on July 1, 2027 and (b)
California Pollution Control Financing Authority 6.7% Pollution Control
Refunding Revenue Bonds 1997 Series A, par amount $19.5 million which bear
interest at a rate equal to 6.7% per annum and mature on July 1, 2007.
"Parent Promissory Note" means the $60 million promissory note of the
Parent issued to Westinghouse Electric Corporation on May 15, 1997, which is due
and payable on May 15, 2003.
"Pari Passu Indebtedness" means any Indebtedness of the Company or any
Guarantor, whether outstanding at the date of this Indenture or incurred
thereafter, that ranks pari passu in right of payment with the Securities or any
Securities Guarantee, as the case may be.
"Paying Agent" means The Bank of Nova Scotia Trust Company of New York and
any successor (including the Company acting as Paying Agent) authorized by the
Company to pay the principal of and premium, if any, or interest on any
Securities on behalf of the Company.
"Payment Blockage Period" has the meaning set forth in Section 1403.
"Permitted Holder" means Laidlaw, any successor thereto, and any of their
Affiliates.
"Permitted Indebtedness" means:
(i) Indebtedness of the Company or any Restricted Subsidiary under
the Senior Credit Facility in an aggregate principal amount at any one
time outstanding not to exceed $1,775,000,000, less (x) any amounts
applied to the permanent reduction of any term loans under the Senior
Credit Facility and (y) any amounts applied to the permanent reduction of
the Senior Credit Facility pursuant to Section 1013;
(ii) Indebtedness of the Company or any Restricted Subsidiary
outstanding on the Closing Date, other than Indebtedness described under
clause (i) above;
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(iii) Indebtedness owed by the Company to any Wholly-Owned
Restricted Subsidiary or owed by any Restricted Subsidiary to the Company
or a Wholly-Owned Restricted Subsidiary (provided that such Indebtedness
is held by the Company or such Wholly-Owned Restricted Subsidiary);
provided, however, that if the Company is the obligor on such
Indebtedness, such Indebtedness is unsecured and subordinated in all
respects to the Company's obligations under the Notes and provided,
further, however, that if any such Wholly-Owned Restricted Subsidiary
ceases to be (for any reason) a Wholly-Owned Restricted Subsidiary, then
this clause (iii) shall no longer be applicable to Indebtedness owed by
the Company or any Restricted Subsidiary to such Restricted Subsidiary
that was formerly a Wholly-Owned Restricted Subsidiary;
(iv) Indebtedness represented by the Securities (other than the
Additional Securities) and the Securities Guarantees;
(v) Indebtedness of the Company or any Restricted Subsidiary in
respect of Hedging Obligations incurred in the ordinary course of
business;
(vi) Capital Lease Obligations of the Company or any Restricted
Subsidiary, provided that the aggregate amount of Indebtedness under this
clause (vi) does not exceed $15,000,000 at any one time outstanding;
(vii) Indebtedness of the Company or any Restricted Subsidiary under
purchase money mortgages or secured by purchase money security interests
so long as (x) such Indebtedness is not secured by any property or assets
of the Company or any Restricted Subsidiary other than the property and
assets so acquired and (y) such Indebtedness is created within 90 days of
the acquisition of the related property; provided that the aggregate
amount of Indebtedness under this clause (vii) does not exceed $15,000,000
at any one time outstanding;
(viii) guarantees by the Company or any Restricted Subsidiary of
Indebtedness that was permitted to be incurred by the provisions of
Section 1010, and, with respect to guarantees by any Restricted
Subsidiary, made in accordance with the provisions of Section 1020;
(ix) Indebtedness of the Company or any Restricted Subsidiary, not
otherwise permitted by the first paragraph under Section 1010 and any
other clause of this definition, in an aggregate principal amount not to
exceed an amount equal to 5% of the total assets of the Company and its
Restricted Subsidiaries (on a consolidated basis determined in accordance
with GAAP);
(x) Indebtedness of one or more Foreign Subsidiaries under one or
more credit facilities in an aggregate principal amount at any one time
outstanding not to exceed $50,000,000;
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(xi) Indebtedness of the Company or any Restricted Subsidiary under
the NationsBank Facility in an aggregate principal amount at any one time
outstanding not to exceed $25,000,000; and
(xii) Any renewals, extensions, substitutions, refinancings or
replacements (each, for purposes of this clause, a "refinancing") of any
outstanding Indebtedness incurred pursuant to clause (ii) and (iv) above,
including any successive refinancings thereof, so long as (A) any such new
Indebtedness is in a principal amount that does not exceed the principal
amount so refinanced, plus the amount of any premium required to be paid
in connection with such refinancing pursuant to the terms of the
Indebtedness refinanced or the amount of any premium reasonably determined
by the Company as necessary to accomplish such refinancing, plus the
amount of the expenses of the Company reasonably estimated to be incurred
in connection with such refinancing, (B) in the case of any refinancing of
Subordinated Indebtedness of the Company or any Guarantors, such new
Indebtedness is subordinated to the Notes or the Guarantees, as the case
may be, at least to the same extent as the Indebtedness being refinanced
and (C) such refinancing Indebtedness has a Weighted Average Life equal to
or greater than the Weighted Average Life of the Indebtedness being
refinanced and has a final Stated Maturity no earlier than the final
Stated Maturity of the Indebtedness being refinanced.
"Permitted Investments" means any of the following:
(a) Investments in Cash Equivalents.
(b) Investments by the Company or any Restricted Subsidiary in
another Person, if as a result of such Investment such other Person (i)
becomes a Restricted Subsidiary or (ii) is merged or consolidated with or
into, or transfers or conveys all or substantially all of its assets to,
the Company or a Restricted Subsidiary.
(c) Investments by the Company or any of the Restricted Subsidiaries
in any one of the other of them.
(d) Investments existing on the Closing Date.
(e) Investments made as a result of the receipt of non-cash
consideration in an Asset Sale permitted under Section 1013.
(f) Investments consisting of loans and advances to officers and
employees of the Company or any of its Restricted Subsidiaries for
reasonable travel, relocation and business expenses in the ordinary course
of business.
(g) Investments the payment for which consists exclusively of
Capital Stock (exclusive of Disqualified Stock) of the Company.
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<PAGE> 19
(h) Other Investments that do not exceed in the aggregate at any one
time outstanding the greater of (i) $50,000,000 or (ii) an amount equal to
1% of the total assets of the Company and its Restricted Subsidiaries (on
a consolidated basis determined in accordance with GAAP).
"Permitted Liens" means (a) Liens in existence on the date on which the
Securities achieve an Investment Grade rating; (b) any Lien on any properties or
assets of the Company or any Restricted Subsidiary acquired (including by way of
merger or consolidation) by the Company or any Restricted Subsidiary after the
date on which the Securities achieve an Investment Grade rating, which Lien is
created, incurred or assumed contemporaneously with such acquisition, or within
270 days thereafter, to secure or provide for the payment or financing of any
part of the purchase price thereof, or any Lien upon any properties or assets of
the Company or any Restricted Subsidiary acquired after the date of this
Indenture existing at the time of such acquisition (whether or not assumed by
the Company or any Restricted Subsidiary), provided that every such Lien
referred to in this clause (b) shall attach only to the properties or assets of
the Company or any Restricted Subsidiary so acquired; (c) any Lien on any
properties or assets of the Company or any Restricted Subsidiary in favor of the
Company or any Restricted Subsidiary; (d) any Lien on properties or assets of
the Company or any Restricted Subsidiary incurred in connection with the
issuance of tax-exempt governmental obligations (including, without limitation,
industrial revenue bonds and similar financings); (e) any Lien granted by any
Restricted Subsidiary on its properties or assets to the extent such Lien is not
prohibited by any agreement to which such Restricted Subsidiary is subject as of
the date of the Indenture; (f) any Lien securing Indebtedness under the Senior
Credit Facility, the NationsBank Facility, the C$35,000,000 credit facility made
available pursuant to the letter agreement, dated as of April 3, 1998, between
Laidlaw Environmental Services (Canada) Ltd., as borrower and Toronto-Dominion
Bank, as lender, as such agreement may be amended, modified or supplemented from
time to time, and Hedging Obligations entered into in connection with the Senior
Credit Facility; and (g) any renewal or substitution for any Lien permitted by
any of the preceding clauses (a) through (g), including any Lien securing
reborrowing of amounts previously secured within 270 days of the repayment
thereof, provided that no such renewal or substitution shall extend to any
properties or assets of the Company or any Restricted Subsidiary other than the
properties or assets of the Company or any Restricted Subsidiary covered by the
Lien being renewed or substituted.
"Person" means any individual, corporation, limited or general
partnership, limited liability company, joint venture, association, joint-stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"PIK Subordinated Debenture" means the Parent's $350 million 5%
subordinated convertible pay-in-kind debenture, which is due and payable on May
15, 2009.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security;
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and, for the purposes of this definition, any Security authenticated and
delivered under Section 308 in exchange for a mutilated security or in lieu of a
lost, destroyed or stolen Security shall be deemed to evidence the same debt as
the mutilated, lost, destroyed or stolen Security.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, partnership interests, participations, or other equivalents (however
designated) of such Person's preferred or preference stock, whether now
outstanding or issued after the Closing Date, and including, without limitation,
all classes and series of preferred or preference stock of such Person.
"Private Placement Legend" has the meaning specified in Section 202.
"Proceeding" has the meaning set forth in Section 1402.
"Public Equity Offering" means an offer and sale of common stock (which is
Qualified Stock) of the Company or Parent pursuant to a registration statement
that has been declared effective by the Commission pursuant to the Securities
Act (other than a registration statement on Form S-8 or otherwise relating to
equity securities issuable under any employee benefit plan of the Company or
Parent).
"Qualified Equity Interest" means any Qualified Stock and all warrants,
options or other rights to acquire Qualified Stock (but excluding any debt
security that is convertible into or exchangeable for Capital Stock).
"Qualified Stock" of any Person means any and all Capital Stock of such
Person, other than Disqualified Stock.
"QIB" means a "Qualified Institutional Buyer" under Rule 144A.
"Redemption Date", when used with respect to any Security to be redeemed,
in whole or in part, means the date fixed for such redemption by or pursuant to
this Indenture.
"Redemption Price", when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Registrar" means The Bank of Nova Scotia Trust Company of New York and
any successor authorized by the Company to act as Registrar.
"Registration Rights Agreement" means the Registration Rights Agreement
between the Company, the Guarantors and the Initial Purchasers named therein,
dated as of May 29, 1998 relating to the Securities.
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"Registration Statement" means the Registration Statement as defined in
the Registration Rights Agreement.
"Regular Record Date" for the interest payable on any Interest Payment
Date means the May 15 or November 15 (whether or not a Business Day), as the
case may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Global Security" has the meaning specified in Section 201.
"Restricted Global Security" has the meaning specified in Section 201.
"Restricted Payment" means any of the following:
(a) the declaration or payment of any dividend on, or the making of
any distribution to holders of, any shares of the Capital Stock of the
Company or any Restricted Subsidiary other than (i) dividends or
distributions payable solely in Qualified Equity Interests or (ii)
dividends or distributions by a Restricted Subsidiary payable to the
Company or another Restricted Subsidiary or (iii) pro rata dividends or
distributions on common stock of a Restricted Subsidiary held by minority
stockholders, provided that such dividends do not in the aggregate exceed
the minority stockholders' pro rata share of such Restricted Subsidiary's
net income from the first day of the Company's fiscal quarter during which
the Closing Date occurs;
(b) the purchase, redemption or other acquisition or retirement for
value, directly or indirectly of any shares of Capital Stock (or any
options, warrants or other rights to acquire shares of Capital Stock) of
(i) the Company or any Unrestricted Subsidiary or (ii) any Restricted
Subsidiary held by any Affiliate of the Company (other than, in either
case, any such Capital Stock owned by the Company or any of its Restricted
Subsidiaries);
(c) the making of any principal payment on, or the repurchase,
redemption, defeasance or other acquisition or retirement for value, prior
to any scheduled principal payment, sinking fund payment or maturity, of
any Subordinated Indebtedness; or
(d) the making of any Investment (other than a Permitted Investment)
in any Person.
"Restricted Period" has the meaning set forth in Section 306.
"Restricted Subsidiary" means any Subsidiary other than an Unrestricted
Subsidiary.
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"Rule 144A" means Rule 144A under the Securities Act.
"Safety-Kleen" means Safety-Kleen Corp., a Wisconsin corporation.
"Safety-Kleen Acquisition" means the Company's acquisition of all of the
capital stock of Safety-Kleen through a tender offer in April 1998 and the
acquisition of the remaining capital stock of Safety-Kleen through a merger
prior to or simultaneously with the Closing Date.
"Sale and Lease-Back Transaction" means any arrangement with any Person
providing for the leasing by the Company or any Restricted Subsidiary of any
properties or assets of the Company and/or such Restricted Subsidiary (except
for temporary leases for a term, including any renewal thereof, of not more than
three years and except for leases between the Company and any Restricted
Subsidiary, between any Restricted Subsidiary and the Company or between
Restricted Subsidiaries), which properties or assets have been or are to be sold
or transferred by the Company or such Restricted Subsidiary to such Person with
the intention of taking back a lease of such properties or assets.
"Securities" has the meaning stated in the first recital of this Indenture
and more particularly means any Securities authenticated and delivered under
this Indenture. For all purposes of this Indenture, the term "Securities" shall
include any Exchange Securities to be issued and exchanged for any Initial
Securities in accordance with the Exchange Offer as provided for in the
Registration Rights Agreement and this Indenture. From and after the issuance of
any Additional Securities pursuant to Section 312 (but, not for purposes of
determining whether such issuance is permitted hereunder), "Securities" shall
include such Additional Securities for purposes of this Indenture, and all
Initial Securities, Exchange Securities and Additional Securities shall vote
together as one series of Securities under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, and the rules and regulations thereunder.
"Securities Guarantee" means a guarantee of the Notes by the Parent and
one or more Subsidiary Guarantors in accordance with the terms of this
Indenture.
"Securities Payment" has the meaning set forth in Section 1402.
"Security Register" has the meaning set forth in Section 305.
"Senior Credit Facility" means the credit agreement dated as of April 3,
1998 among the Company, the Banks and Toronto Dominion Bank, as agent, as such
agreement may be amended, renewed, extended, substituted, replaced, restated,
refinanced, restructured, supplemented or otherwise modified from time to time
(including, without limitation, any successive amendments, renewals, extensions,
substitutions, replacements, restatements,
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refinancings, restructuring, supplements or other modifications of the
foregoing); provided that with respect to any agreement providing for the
refinancing of Indebtedness under the Senior Credit Facility, such agreement
shall be the Senior Credit Facility for the purposes of this definition only if
a notice to that effect is delivered by the Company to the Trustee and there
shall be at any time only one instrument that is the Senior Credit Facility
under the Indenture.
"Senior Credit Facility Agent" means Toronto Dominion Bank as agent for
the Banks under the Senior Credit Facility or any successor thereto as "agent"
identified in written notice to the Trustee given by the predecessor agent.
"Senior Indebtedness" means the principal of and premium, if any, and
interest on (including interest accruing after the filing of a petition
initiating any proceeding pursuant to any bankruptcy law, whether or not
allowed) and other amounts due on or in connection with any Indebtedness of the
Company (other than the Securities or Pari Passu Indebtedness), whether
outstanding on the Closing Date or thereafter incurred, unless, in the case of
such Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness will be
pari passu with or subordinate in right of payment to the Securities. Without
limiting the generality of the foregoing, "Senior Indebtedness" includes the
principal of and premium, if any, and interest (including interest accruing
after the occurrence of an event of default or after the filing of a petition
initiating any proceeding pursuant to any bankruptcy law, whether or not
allowed) on all obligations of every nature of the Company from time to time
owed to the Banks under the Senior Credit Facility, provided, however, that any
Indebtedness under any refinancing, refunding or replacement of the Senior
Credit Facility shall not constitute Senior Indebtedness to the extent that the
Indebtedness thereunder is by its express terms subordinate to any other
Indebtedness of the Company. Notwithstanding the foregoing, "Senior
Indebtedness" shall not include (a) Indebtedness that is represented by
Disqualified Stock, (b) any trade payables, (c) Indebtedness of or amounts owed
by the Company for compensation to employees or for services rendered to the
Company, (d) any liability for foreign, federal, state, local or other taxes
owed or owing by the Company, (e) Indebtedness of the Company to a Subsidiary of
the Company or any other Affiliate of the Company or any of such Affiliate's
Subsidiaries, (f) that portion of any Indebtedness that, at the time of the
incurrence, is incurred by the Company in violation of the Indenture and (g)
amounts owing under leases (other than Capital Lease Obligations).
"Senior Nonmonetary Default" has the meaning set forth in Section 1403.
"Senior Payment Default" has the meaning set forth in Section 1403.
"Shelf Registration Statement" means the Shelf Registration Statement as
defined in the Registration Rights Agreement.
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"Significant Subsidiary" means any Restricted Subsidiary of the Company
that would be a "Significant Subsidiary" of the Company within the meaning of
Rule 1-02 under Regulation S-K promulgated by the Commission as such Rule is in
effect on the date of the Indenture.
"S&P" means Standard & Poor's Ratings Services, a division of The McGraw
Hill Companies, and its successors.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 309.
"Stated Maturity" means, when used with respect to any Security or any
installment of interest thereon, the date specified in such Security as the
fixed date on which the principal of such Security or such installment of
interest is due and payable and, when used with respect to any other
Indebtedness, means the date specified in the instrument governing such
Indebtedness as the fixed date on which the principal of such Indebtedness or
any installment of interest thereon is due and payable, and will not, in either
case, include any contingent obligations to repay, redeem or repurchase any such
interest or principal prior to the date originally scheduled for the payment
thereof.
"Stock Purchase Agreement" means the Stock Purchase Agreement dated as of
February 6, 1997 among Rollins Environmental Services, Inc., Laidlaw and Laidlaw
Transportation, Inc.
"Subordinated Indebtedness" means Indebtedness of the Company or a
Guarantor that is subordinated in right of payment to the Securities or the
Securities Guarantee issued by such Guarantor, as the case may be.
"Subsidiary" means any Person a majority of the equity ownership or Voting
Stock of which is at the time owned, directly or indirectly, by the Company
and/or one or more Subsidiaries of the Company.
"Subsidiary Guarantee" means a guarantee of the Securities by a Restricted
Subsidiary in accordance with the provisions of the Indenture.
"Subsidiary Guarantor" means, initially, each of the Company's Restricted
Subsidiaries listed on Schedule I hereto, and thereafter, any Restricted
Subsidiary that issues or has issued a Securities Guarantee pursuant to or as
required by the provisions of this Indenture.
"Surviving Entity" has the meaning set forth in Section 801.
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"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939, as
amended, as in force at the date as of which this Indenture was executed, except
as provided in Section 905.
"Trustee" means the Person named as the "Trustee" in the first paragraph
of this Indenture until a successor Trustee shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Trustee" shall mean
such successor Trustee.
"Unrestricted Subsidiary" means (a) any Subsidiary that is designated by
the Board of Directors as an Unrestricted Subsidiary in accordance with Section
1018 and (b) any Subsidiary of an Unrestricted Subsidiary.
"U.S. Government Obligations" has the meaning set forth in Section 1204.
"U.S. Physical Securities" has the meaning set forth in Section 201.
"Voting Stock" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees of any Person (irrespective of whether or not, at the time, stock of
any other class or classes has, or might have, voting power by reason of the
happening of any contingency).
"Weighted Average Life" means, as of the date of determination with
respect to any Indebtedness or Disqualified Stock, the quotient obtained by
dividing (a) the sum of the products of (i) the number of years from the date of
determination to the date or dates of each successive scheduled principal or
liquidation value payment of such Indebtedness or Disqualified Stock,
respectively, multiplied by (ii) the amount of each such principal or
liquidation value payment by (b) the sum of all such principal or liquidation
value payments.
"Wholly-Owned Domestic Subsidiary" means any Domestic Subsidiary, all of
the outstanding Capital Stock (other than directors' qualifying shares) of which
is owned, directly or indirectly, by the Company.
"Wholly-Owned Foreign Restricted Subsidiary" means any Foreign Subsidiary
that is a Restricted Subsidiary, all of the outstanding Capital Stock (other
than directors' qualifying shares of such Foreign Subsidiary required to be
owned by foreign nationals pursuant to applicable law) of which is owned,
directly or indirectly, by the Company.
"Wholly-Owned Restricted Subsidiary" means any Restricted Subsidiary, all
of the outstanding Capital Stock (other than directors' qualifying shares or
shares of Foreign Restricted Subsidiaries required to be owned by foreign
nationals pursuant to applicable law) of which is owned, directly or indirectly,
by the Company.
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SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company or any Guarantor to the
Trustee to take any action under any provision of this Indenture, the Company or
such Guarantor, as the case may be, shall furnish to the Trustee an Officers'
Certificate stating that all conditions precedent, if any, provided for in this
Indenture (including any covenant compliance with which constitutes a condition
precedent) relating to the proposed action have been complied with and an
Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than pursuant to Section
1008(a)) shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company and/or any
Guarantor may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless such officer
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to the matters
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upon which his certificate or opinion is based are erroneous. Any such
certificate or Opinion of Counsel may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, an officer or
officers of the Company and/or any such Guarantor stating that the information
with respect to such factual matters is in the possession of the Company and/or
any such Guarantors, unless such counsel knows, or in the exercise of reasonable
care should know, that the certificate or opinion or representations with
respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in Person or by agents duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is hereby expressly required, to the Company or the Guarantors. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and conclusive in favor of the Trustee, the Company and the
Guarantors, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner that the Trustee deems sufficient.
(c) The ownership of Securities shall be proved by the Security Register.
(d) If the Company or any Guarantor shall solicit from the Holders of
Securities any request, demand, authorization, direction, notice, consent,
waiver or other Act, the Company or any such Guarantor (as the case may be),
may, at its option, by or pursuant to a Board Resolution, fix in advance a
record date for the determination of Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other Act, but
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the Company or any such Guarantor (as the case may be) shall have no obligation
to do so. Notwithstanding TIA Section 316(c), such record date shall be the
record date specified in or pursuant to such Board Resolution, which shall be a
date not earlier than the date 30 days prior to the first solicitation of
Holders generally in connection therewith and not later than the date such
solicitation is completed. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act may be given
before or after such record date, but only the Holders of record at the close of
business on such record date shall be deemed to be Holders for the purposes of
determining whether Holders of the requisite proportion of Outstanding
Securities have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other Act, and for that
purpose the Outstanding Securities shall be computed as of such record date;
provided that no such authorization, agreement or consent by the Holders on such
record date shall be deemed effective unless it shall become effective pursuant
to the provisions of this Indenture not later than eleven months after the
record date.
(e) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company
and/or the Guarantors in reliance thereon, whether or not notation of such
action is made upon such Security.
(f) For all purposes of this Indenture, all Initial Securities and
Exchange Securities shall vote together as one series of Securities under this
Indenture.
SECTION 105. Notices, etc., to Trustee, Company or Guarantors.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(a) the Trustee by any Holder, the Company or any Guarantor shall be
sufficient for every purpose hereunder if made, given, furnished or filed
in writing or mailed, first-class postage prepaid, to or with the Trustee
at its Corporate Trust Office, Attention: Corporate Finance Department, or
sent by facsimile to the Trustee at (212) 225-5436 (with receipt confirmed
by telephone at (212) 225-5422); or
(b) the Company by the Trustee, any Holder or any Guarantor shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to the
Company addressed to it at 1301 Gervais Street, Columbia, South Carolina
29201, Attention: Henry Taylor, Esq., or sent by facsimile to the Company
at (803) 933-4340 (with receipt confirmed by telephone at (803) 933-4219),
or at any other address or facsimile number previously furnished in
writing to the Trustee by the Company; or
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(c) any Guarantor by the Company, any other Guarantor, the Trustee
or any Holder shall be sufficient for any purpose hereunder (unless
otherwise herein expressly provided) if in writing, and mailed, first
class postage prepaid, to such Guarantor addressed to it at c/o LES, Inc.,
1301 Gervais Street, Columbia, South Carolina 29201, Attention: Henry
Taylor, Esq., or sent by facsimile to such Guarantor at (803) 933-4340
(with receipt confirmed by telephone at (803) 933-4219), or at any other
address or facsimile number previously furnished in writing to the Trustee
by such Guarantor.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice of any event to Holders by the
Company or the Trustee, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed, first-class
postage prepaid, to each Holder affected by such event, at his address as it
appears in the Security Register, not later than the latest date, and not
earlier than the earliest date, prescribed for the giving of such notice. In any
case where notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder shall
affect the sufficiency of such notice with respect to other Holders. Any notice
mailed to a Holder in the manner herein prescribed shall be conclusively deemed
to have been received by such Holder, whether or not such Holder actually
receives such notice. Where this Indenture provides for notice in any manner,
such notice may be waived in writing by the Person entitled to receive such
notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case by reason of the suspension of or irregularities in regular mail
service or by reason of any other cause, it shall be impracticable to mail
notice of any event to Holders when such notice is required to be given pursuant
to any provision of this Indenture, then any manner of giving such notice as
shall be satisfactory to the Trustee shall be deemed to be a sufficient giving
of such notice for every purpose hereunder.
SECTION 107. Conflict of any Provision of Indenture with Trust Indenture
Act.
If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with the duties imposed by Sections 310 to 318,
inclusive, of the Trust Indenture Act, or conflicts with any provision (an
"incorporated provision") required by or deemed to be included in this Indenture
by operation of such Trust Indenture Act sections, such imposed duties or
incorporated provision shall control.
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
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SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company and the
Guarantors shall bind its respective successors and assigns, whether so
expressed or not.
SECTION 110. Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto, any Paying Agent, any
Securities Registrar and their successors hereunder, and the Holders, any
benefit or any legal or equitable right, remedy or claim under this Indenture.
SECTION 112. Governing Law.
This Indenture and the Securities shall be governed by and construed in
accordance with the law of the State of New York. Upon the issuance of the
Exchange Securities, if any, or the effectiveness of the Exchange Offer
Registration Statement or, under certain circumstances, the effectiveness of the
Shelf Registration Statement, this Indenture shall be subject to the provisions
of the Trust Indenture Act that are required to be part of this Indenture and
shall, to the extent applicable, be governed by such provisions.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date, date
established for payment of Defaulted Interest pursuant to Section 309, Stated
Maturity or Maturity, Change of Control Payment Date or Asset Sale Purchase Date
with respect to any Security or other day on which principal, premium or
interest in respect or the Securities is due, shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of principal (or premium, if any) or interest need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the Interest Payment Date, Redemption Date, date
established for payment of Defaulted Interest pursuant to Section 309, Stated
Maturity or Maturity, Change of Control Purchase Date or Asset Sale Purchase
Date; provided that no interest shall accrue for the period from and after such
Interest Payment Date or other such day, Redemption Date, date established for
payment of Defaulted Interest pursuant to Section 309, Stated Maturity or
Maturity, Change in Control Payment Date or Asset Sale Purchase Date, as the
case may be, to the next succeeding Business Day.
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ARTICLE II
SECURITY FORMS
SECTION 201. Forms Generally.
The Securities and the Trustee's certificate of authentication shall be in
substantially the form annexed hereto as Exhibit A, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution of the Securities. Any portion of the text of
any Security may be set forth on the reverse thereof, with an appropriate
reference thereto on the face of the Security.
The definitive Securities shall be printed, lithographed or engraved on
steel-engraved borders or may be produced in any other manner, all as determined
by the officers of the Company executing such Securities, as evidenced by their
execution of such Securities.
The terms and provisions contained in the form of the Securities annexed
hereto as Exhibit A shall constitute, and are hereby expressly made, a part of
this Indenture. To the extent applicable, the Company, the Guarantors and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby.
Initial Securities offered and sold in reliance on Rule 144A shall be
issued initially in the form of one or more permanent global Securities without
interest coupons substantially in the form set forth in Exhibit A (collectively,
the "Restricted Global Security") deposited with, or on behalf of, the
Depositary or with the Trustee, as custodian for the Depositary, duly executed
by the Company and authenticated by the Trustee as hereinafter provided. The
aggregate principal amount of the Restricted Global Security may from time to
time be increased or decreased by adjustments made on the records of the
Trustee, as custodian for the Depositary or its nominee, as hereinafter
provided.
Initial Securities offered and sold in reliance on Regulation S shall be
issued initially in the form of one or more global Securities in fully
registered form without interest coupons substantially in the form set forth in
Exhibit A (collectively, the "Regulation S Global Security" and, together with
the Restricted Global Security, the "Global Securities" or each individually, a
"Global Security"). The Regulation S Global Securities will be registered in the
name of a nominee of DTC and deposited with the Trustee on behalf of the
Purchasers, for the accounts of Euroclear and CEDEL. The aggregate principal
amount of the Regulation S Global Security may from time to time be increased or
decreased by adjustments made on the records of the Depositary or its nominee,
or of the Trustee, as
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custodian for the Depositary or its nominee, as hereinafter provided. Until and
including the 40th day after the date of this Indenture, beneficial interests in
the Regulation S Global Security may be held only through Euroclear or CEDEL,
unless delivery is made through the Restricted Global Security in accordance
with the certification requirements provided in this Indenture.
If DTC is at any time unwilling or unable to continue as a depositary, or
if, in the case of the Regulation S Global Security held for an account of
Euroclear or CEDEL, Euroclear or CEDEL, as the case may be, is closed for
business for 14 continuous days or announces an intention to cease or
permanently ceases business, the Company will issue certificates for the
Securities in definitive, fully registered, non-global form without interest
coupons in exchange for the Regulation S Global Security or Restricted Global
Security, as the case may be. In all cases, certificates for Securities
delivered in exchange for any Global Security or beneficial interests therein
will be registered in the names, and issued in any approved denominations,
requested by DTC.
In the case of certificates for Securities in non-global form issued in
exchange for the Regulation S Global Security or Restricted Global Security,
such certificates will bear the first legend appearing under Section 202 of this
Indenture (unless the Company determines otherwise in accordance with applicable
law). The holder of a Security in non-global form may transfer such Security,
subject to compliance with the provisions of such legend, by surrendering it at
the office or agency maintained by the Company for such purpose in the Borough
of Manhattan, The City of New York, which initially will be the office of the
Trustee.
Initial Securities offered and sold other than as global securities shall
be issued in the form of permanent certificated Securities in registered form in
substantially the form set forth in Exhibit A (the "U.S. Physical Securities").
SECTION 202. Restrictive Legends.
Unless and until (i) an Initial Security is sold under an effective
Registration Statement or (ii) an Initial Security is exchanged for an Exchange
Security in connection with an effective Registration Statement, in each case
pursuant to the Registration Rights Agreement, each certificate representing a
Security shall contain a legend substantially to the following effect (the
"Private Placement Legend") on the face thereof:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE REOFFERED,
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1) TO A PERSON WHOM
THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT IN A TRANSACTION
MEETING THE
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REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION MEETING THE
REQUIREMENTS OF RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES
ACT, (3) TO AN INSTITUTION THAT IS AN ACCREDITED INVESTOR WITHIN THE
MEANING OF RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT, (4) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR
(5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE
STATES AND OTHER JURISDICTIONS OF THE UNITED STATES.
Each Global Security, whether or not an Initial Security, shall also bear
the following legend on the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC") TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC, (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY
SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET
FORTH IN SECTIONS 306 AND 307 OF THE INDENTURE.
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ARTICLE III
THE SECURITIES
SECTION 301. Title and Terms.
The initial aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to $325,000,000,
except for Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities pursuant to Section 304,
305, 306, 307, 308, 906, 1012, 1013 or 1108, pursuant to an Exchange Offer or
pursuant to Section 312. The Company may also issue up to $75,000,000 aggregate
principal amount of additional Securities having identical terms and conditions
to the Initial Securities, subject to compliance with the covenants contained
herein (the "Additional Securities").
The Initial Securities shall be known and designated as the "9 1/4% Senior
Subordinated Notes due 2008" and the Exchange Securities shall be known and
designated as the "9 1/4% Exchange Senior Subordinated Notes due 2008." Their
Stated Maturity shall be June 1, 2008, and they shall bear interest at the rate
of 9 1/4% per annum from May 29, 1998, or from the most recent Interest Payment
Date to which interest has been paid or duly provided for, payable semiannually
in arrears on June 1 and December 1 in each year, commencing December 1, 1998,
until the principal thereof is paid or duly provided for, to the Person in whose
name the Security (or any predecessor Security) is registered at the close of
business on the May 15 or November 15 next preceding such Interest Payment Date.
The principal of and premium, if any, and interest on the Securities shall
be payable, and the Securities shall be exchangeable and transferable, at the
office or agency of the Company in The City of New York maintained for such
purposes, (which initially shall be the office of the Trustee located at One
Liberty Plaza, 23rd Floor, New York, New York 10006) or, at the option of the
Company, interest may be paid by check mailed to the address of the Person
entitled thereto as such address shall appear on the Security Register;
provided, however, that all payments with respect to the U.S. Global Securities,
as well as Physical Securities the Holders of which have given wire transfer
instructions to the Trustee (or other Paying Agent) by the Regular Record Date
for such payment, will be required to be made by wire transfer of immediately
available funds to the accounts specified by the Holders thereof.
Initial Securities that remain outstanding after the consummation of the
Exchange Offer and Exchange Securities issued in connection with the Exchange
Offer will be treated as a single class of securities under this Indenture.
The Securities shall be redeemable as provided in Article XI.
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SECTION 302. Denominations.
The Securities shall be issuable only in registered form without coupons
and only in denominations of $1,000 and any integral multiple thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its Chairman,
its President or a Vice President. The signature of any of these officers on the
Securities may be manual or facsimile signatures of the present or any future
such authorized officer and may be imprinted or otherwise reproduced on the
Securities.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities executed by the Company to the
Trustee for authentication, together with a Company Order for the authentication
and delivery of such Securities directing the Trustee to authenticate the
Securities and certifying that all conditions precedent to the issuance of
Securities contained herein have been fully complied with, and the Trustee in
accordance with such Company Order shall authenticate and deliver such
Securities. On Company Order, the Trustee shall authenticate for original issue
Exchange Securities in an aggregate principal amount not to exceed $325,000,000
plus the aggregate principal amount of any Additional Securities issued;
provided that such Exchange Securities shall be issuable only upon the valid
surrender for cancellation of Securities of a like aggregate principal amount in
accordance with an Exchange Offer pursuant to the Registration Rights Agreement
and a Company Order for the authentication of such securities certifying that
all conditions precedent to the issuance have been complied with (including the
effectiveness of a registration statement related thereto). In each case, the
Trustee shall be entitled to receive an Officers' Certificate and an Opinion of
Counsel of the Company that it may reasonably request in connection with such
authentication of Securities. Such order shall specify the amount of Securities
to be authenticated and the date on which the original issue of Initial
Securities or Exchange Securities is to be authenticated.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for in Exhibit
A duly executed by the Trustee by manual signature of an authorized officer, and
such certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered hereunder
and is entitled to the benefits of this Indenture.
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In case the Company, pursuant to Article VIII, shall be consolidated or
merged with or into any other Person or shall convey, transfer, lease or
otherwise dispose of its properties and assets substantially as an entirety to
any Person, and the successor Person resulting from such consolidation, or
surviving such merger, or into which the Company shall have been merged, or the
Person which shall have received a conveyance, transfer, lease or other
disposition as aforesaid, shall have executed an indenture supplemental hereto
with the Trustee pursuant to Article VIII, any of the Securities authenticated
or delivered prior to such consolidation, merger, conveyance, transfer, lease or
other disposition may, from time to time, at the request of the successor
Person, be exchanged for other Securities executed in the name of the successor
Person with such changes in phraseology and form as may be appropriate, but
otherwise in substance of like tenor as the Securities surrendered for such
exchange and of like principal amount; and the Trustee, upon Company Request of
the successor Person, shall authenticate and deliver Securities as specified in
such request for the purpose of such exchange. If Securities shall at any time
be authenticated and delivered in any new name of a successor Person pursuant to
this Section in exchange or substitution for or upon registration of transfer of
any Securities, such successor Person, at the option of the Holders but without
expense to them, shall provide for the exchange of all Securities at the time
Outstanding for Securities authenticated and delivered in such new name.
SECTION 304. Temporary Securities.
Pending the preparation of definitive Securities, the Company may execute,
and upon Company Order the Trustee shall authenticate and deliver, temporary
Securities which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially of the tenor
of the definitive Securities in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Securities may determine, as conclusively evidenced by
their execution of such Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at the office
or agency of the Company designated for such purpose pursuant to Section 1002,
without charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of authorized denominations. Until so exchanged, the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities.
SECTION 305. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant to Section 1002 being herein sometimes
referred to as the "Security Register") in
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which, subject to such reasonable regulations as it may prescribe, the Company
shall provide for the registration of Securities and of transfers of Securities.
The Security Register shall be in written form or any other form capable of
being converted into written form within a reasonable time. At all reasonable
times, the Security Register shall be open to inspection by the Trustee. The
Trustee is hereby initially appointed as "Registrar" for the purpose of
registering Securities and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security at the office
or agency of the Company designated pursuant to Section 1002, the Company shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Securities of any
authorized denomination or denominations of a like aggregate principal amount.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denomination and of a like aggregate principal
amount, upon surrender of the Securities to be exchanged at such office or
agency. Whenever any Securities are so surrendered for exchange (including an
exchange of Initial Securities for Exchange Securities), the Company shall
execute, and the Trustee shall authenticate and deliver, the Securities which
the Holder making the exchange is entitled to receive; provided that no exchange
of Initial Securities for Exchange Securities shall occur until an Exchange
Offer Registration Statement, Shelf Registration Statement or other registration
statement with respect to such Exchange Security shall have been declared
effective by the Commission and that the Initial Securities to be exchanged for
the Exchange Securities shall be canceled by the Trustee.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or
for exchange shall (if so required by the Company or the Registrar) be duly
endorsed, or be accompanied by a written instrument of transfer, in form
satisfactory to the Company and the Registrar, duly executed by the Holder
thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange or redemption of Securities, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Securities, other
than exchanges pursuant to Section 304, 906, 1012, 1013 or 1108 not involving
any transfer.
The Company shall not be required (i) to issue, register the transfer of
or exchange any Security during a period beginning at the opening of 15 Business
Days before the selection of Securities to be redeemed under Section 1104 and
ending at the close of business
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on the day of such mailing of the relevant notice of redemption, or (ii) to
register the transfer of or exchange any Security so selected for redemption in
whole or in part, except the unredeemed portion of any Security being redeemed
in part.
Notwithstanding anything to the contrary contained herein, the Trustee
shall have no duty whatsoever to monitor Federal or State securities laws other
than to collect the certificates required herein.
SECTION 306. Book-Entry Provisions for Restricted Global Security.
(a) The Global Security initially shall (i) be registered in the name of
Cede & Co., as nominee of the Depositary, (2) be deposited with, or on behalf
of, the Depositary or with the Trustee, as custodian for such Depositary, and
(iii) bear legends as set forth in Section 202.
Beneficial interests in any Restricted Global Security may be transferred
to Persons who take delivery thereof in the form of a beneficial interest in the
same Restricted Global Security in accordance with the transfer restrictions set
forth in the legends as set forth in Section 202; provided, however, that prior
to the expiration of the Restricted Period, beneficial interests in the
Regulation S Global Security may only be held through Euroclear or CEDEL or
indirectly through organizations which are participants in such systems. After
the expiration of the Restricted Period (but not earlier), investors in the
Regulation S Global Security may also hold such interests through organizations
other than Euroclear or CEDEL that are participants in the Depositary's system.
All interests in a Global Security, including those held through Euroclear or
CEDEL, may be subject to the procedures and requirements of the Depositary.
Those interests held through Euroclear and CEDEL will be subject to the
procedures and requirements of such system. As used herein, the term "Restricted
Period" means the period of 40 consecutive days beginning on and including the
first day after the later of (i) the day that TD Securities (USA) Inc. advises
the Company and the Trustee of the day on which the Initial Securities or
Additional Securities, as the case may be, are first offered to persons other
than distributors (as defined in Regulation S) and (ii) the original issue date
of the Initial Securities or Additional Securities, as the case may be.
(b) Transfers of any Global Security shall be limited to transfers of such
Global Security in whole, but not in part, to the Depositary, its successors or
their respective nominees. Interests of beneficial owners in any Global Security
may be transferred in accordance with the rules and procedures of the Depositary
and the provisions of Section 307.
Unless (i) the Depositary notifies the Company that it is unwilling or
unable to continue as depositary for a Global Security or ceases to be a
"Clearing Agency" registered under the Exchange Act or announces an intention
permanently to cease business or does in fact do so and a successor Depositary
is not appointed by the Company within 90 days of such notice, (ii) an Event of
Default has occurred and is continuing with respect to a Global
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Security or (iii) in the case of a Global Security held for the account of
Euroclear or CEDEL, Euroclear or CEDEL, as the case may be, is closed for
business for 14 continuous Business Days or announces an intention to cease or
permanently ceases business, owners of beneficial interests in a Global Security
shall not be entitled to have any portions of such Global Security registered in
their names, shall not receive or be entitled to receive physical delivery of
Securities in definitive form and shall not be considered the owners or holders
of the Global Security.
(c) Securities issued in exchange for a Global Security or any portion
thereof pursuant to the last sentence of subsection (b) of this Section shall be
issued in definitive, fully registered form, without interest coupons, shall
have an aggregate principal amount equal to that of such Global Security or
portion thereof to be so exchanged, shall be registered in such names and be in
such authorized denominations as the Depositary shall designate and shall bear
any legends required hereunder. Any Global Security to be exchanged in whole
shall be surrendered by the Depositary to the Trustee, as Registrar. With regard
to any Global Security to be exchanged in part, either such Global Security
shall be so surrendered for exchange or, if the Trustee is acting as custodian
for the Depositary or its nominee with respect to such Global Security, the
principal amount thereof shall be reduced, by an amount equal to the portion
thereof to be so exchanged, by means of an appropriate adjustment made on the
records of the Trustee. Upon any such surrender or adjustment, the Trustee shall
authenticate and make available for delivery the Security issuable on such
exchange to or upon the order of the Depositary or an authorized representative
thereof. In the event of the occurrence of any of the events specified in the
last sentence of subsection (b) of this Section 306, the Company will promptly
make available to the Trustee a reasonable supply of certificated Securities in
definitive form.
(d) Except as otherwise set forth in this Indenture or a Global Security,
owners of beneficial interests in the Securities evidenced by a Global Security
will not be entitled to any rights under this Indenture with respect to such
Global Security, and the Depositary or its nominee may be treated by the
Company, the Trustee and any agent of the Company or the Trustee as the owner
and Holder of such Global Security for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall prevent the Company, the Trustee or any such
agent from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or its nominee or impair, as between
the Depositary or its nominee and such owners of beneficial interests, the
operation of customary practices governing the exercise of the rights of the
Depositary or its nominee as Holder of any Security.
SECTION 307. Special Transfer Provisions.
Unless and until (i) an Initial Security is sold under an effective
Registration Statement, or (ii) an Initial Security is exchanged for an Exchange
Security in connection with an effective Registration Statement the following
provisions shall apply:
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(a) Restricted Global Security to Regulation S Global Security. If, at any
time, an owner of a beneficial interest in a Restricted Global Security
deposited with the Depositary (or the Trustee as custodian for the Depositary)
wishes to transfer its interest in such Restricted Global Security to a Person
who is required or permitted to take delivery thereof in the form of an interest
in a Regulation S Global Security, such owner shall, subject to the Applicable
Procedures, exchange or cause the exchange of such interest for an equivalent
beneficial interest in a Regulation S Global Security as provided in this
Section 307(a). Upon receipt by the Trustee of (1) instructions given in
accordance with the Applicable Procedures from an Agent Member directing the
Trustee to credit or cause to be credited a beneficial interest in the
Regulation S Global Security in an amount equal to the beneficial interest in
the applicable Restricted Global Security to be exchanged, (2) a written order
given in accordance with the Applicable Procedures containing information
regarding the participant account of the Depositary and the Euroclear or CEDEL
account (if applicable) to be credited with such increase, and (3) a certificate
substantially in the form of Exhibit B hereto given by the owner of such
beneficial interest, the Trustee, as Registrar, shall instruct the Depositary to
reduce or cause to be reduced the aggregate principal amount of the applicable
Restricted Global Security and to increase or cause to be increased the
aggregate principal amount of the applicable Regulation S Global Security by the
principal amount of the beneficial interest in the Restricted Global Security to
be exchanged, to credit or cause to be credited to the account of the Person
specified in such instructions a beneficial interest in the Regulation S Global
Security equal to the reduction in the aggregate principal amount of the
applicable Restricted Global Security, and to debit, or cause to be debited,
from the account of the Person making such exchange or transfer the beneficial
interest in the Restricted Global Security that is being exchanged or
transferred.
(b) Regulation S Global Security to Restricted Global Security. If, at any
time, an owner of a beneficial interest in a Regulation S Global Security
deposited with the Depositary or with the Trustee as custodian for the
Depositary wishes to transfer its interest in such Regulation S Global Security
to a Person who is required or permitted to take delivery thereof in the form of
an interest in a Restricted Global Security, such owner shall, subject to the
Applicable Procedures, exchange or cause the exchange of such interest for an
equivalent beneficial interest in a Restricted Global Security, as provided in
this Section 307(b). Upon receipt by the Trustee of (1) instructions given in
accordance with the Applicable Procedures from an Agent Member, directing the
Trustee, as Registrar, to credit or cause to be credited a beneficial interest
in the Restricted Global Security equal to the beneficial interest in the
Regulation S Global Security to be exchanged, (2) a written order given in
accordance with the Applicable Procedures containing information regarding the
participant account of the Depositary to be credited with such increase and (3)
if such transfer is requested prior to the expiration of the Restricted Period,
a certificate in the form of Exhibit C attached hereto given by the owner of
such beneficial interest, the Trustee, as Registrar, shall instruct the
Depositary to reduce or cause to be reduced the aggregate principal amount of
such Regulation S Global Security and to increase or cause to be increased the
aggregate principal amount of the applicable Restricted Global Security by the
principal amount of the beneficial interest in the Regulation S Global Security
to be exchanged, and the Trustee, as Registrar,
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shall instruct the Depositary, concurrently with such reduction, to credit or
cause to be credited to the account of the Person specified in such instructions
a beneficial interest in the applicable Restricted Global Security equal to the
reduction in the aggregate principal amount of such Regulation S Global Security
and to debit or cause to be debited from the account of the Person making such
transfer the beneficial interest in the Regulation S Global Security that is
being transferred. After the expiration of the Restricted Period, the
certificate described in clause (3) above shall no longer be required to effect
transfers pursuant to this Section 307(b).
(c) Transfers of U.S. Physical Securities for Restricted Global Security
or Regulation S Global Security. If the holder of a U.S. Physical Security
wishes at any time to transfer such holder's U.S. Physical Security to a Person
who wishes to take delivery thereof in the form of a beneficial interest in the
Regulation S Global Security or the Restricted Global Security, such transfer
may be effected, subject to the Applicable Procedures, only in accordance with
the provisions of this Section 307(c). Upon receipt by the Trustee of (1)
instructions given in accordance with the Applicable Procedures from an Agent
Member directing the Trustee to credit or cause to be credited a beneficial
interest in the Regulation S Global Security or Restricted Global Security, as
the case may be, in a principal amount equal to that of the U.S. Physical
Securities to be so transferred, (2) a written order given in accordance with
the Applicable Procedures containing information regarding the participant
account of the Depositary (and the Euroclear or CEDEL account, as applicable) to
be credited with such beneficial interest and (3) a certificate in substantially
the form set forth in Exhibit D, given by the holder of such U.S. Physical
Security, the Trustee, as Security Registrar, shall instruct the Depositary to
increase the principal amount of the Regulation S Global Security or the
Restricted Global Security, as the case may be, by the principal amount of the
U.S. Physical Security to be so transferred, and to cancel or cause to be
canceled such U.S. Physical Security.
(d) Restricted Global Security or U.S. Physical Security to Regulation S
Global Security After Two Years. If the holder of a beneficial interest in a
Restricted Global Security or U.S. Physical Security wishes at any time after
the second anniversary of the date of original issuance of the Securities to (A)
transfer such interest to a Person who wishes to take delivery thereof in the
form of a beneficial interest in the Regulation S Global Security or (B) to
exchange such interest for a beneficial interest in a Regulation S Global
Security, such transfer or exchange may be effected, subject to the Applicable
Procedures, only in accordance with this Section 307(d). Upon receipt by the
Trustee of (1) in the case of a transfer or exchange of an interest in the
Restricted Global Security or a U.S. Physical Security, instructions given in
accordance with the Applicable Procedures from an Agent Member directing the
Trustee to credit or cause to be credited to a beneficial interest in the
Regulation S Global Security in an amount equal to that the beneficial interest
in the Restricted Global Security to be so transferred or exchanged, (2) a
written order given in accordance with the Applicable Procedures containing
information regarding the participant account of the Depositary (and, if
applicable, the Euroclear or CEDEL account, as the case may be) to be credited
with such beneficial interest and (3) a certificate substantially in the
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form of Exhibit E hereto given by the holder of such beneficial interest, the
Trustee, as Registrar, shall (i) in the case of a transfer or exchange of an
interest in the Restricted Global Security, instruct the Depositary to reduce
the principal amount of the Restricted Global Security, and to increase the
principal amount of the Regulation S Global Security, by the principal amount of
the beneficial interest in the Restricted Global Security to be so transferred
or exchanged, and to credit or cause to be credited to the account of the Person
specified in such instructions a beneficial interest in the Regulation S Global
Security having a principal amount equal to the amount by which the principal
amount of the Restricted Global Security was reduced upon such transfer or
exchange or (ii) in the case of a transfer or exchange of a U.S. Physical
Security, cancel such U.S. Physical Security and increase the principal amount
of the Regulation S Global Security accordingly.
(e) General. By its acceptance of any Security bearing the Private
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as provided
in this Indenture.
The Registrar shall retain as required by law copies of all letters,
notices and other written communications received pursuant to Section 306 or
this Section 307. The Company shall have the right to inspect and make copies of
all such letters, notices or other written communications at any reasonable time
upon the giving of reasonable written notice to the Registrar.
SECTION 308. Mutilated, Destroyed, Lost and Stolen Securities.
If (i) any mutilated Security is surrendered to the Trustee or the
Registrar, or (ii) the Company and the Trustee receive evidence to their
satisfaction of the destruction, loss or theft of any Security, and there is
delivered to the Company and the Trustee such security or indemnity as may be
required by them to save each of them harmless, then, in the absence of notice
to the Company or the Trustee that such Security has been acquired by a bona
fide purchaser, the Company shall execute and upon Company Order the Trustee
shall authenticate and deliver, in exchange for any such mutilated Security or
in lieu of any such destroyed, lost or stolen Security, a new Security of like
tenor and principal amount, bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
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Every new Security issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and shall be entitled to all benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 309. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name such Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest at the office or
agency of the Company in The City of New York maintained for such purposes
(which initially shall be the office of the Trustee located at One Liberty
Plaza, 23rd Floor, New York, New York 10006) pursuant to Section 1002 or, at the
option of the Company, interest may be paid by check mailed to the address of
the Person entitled thereto pursuant to 310 as such address appears in the
Security Register; provided that all payments with respect to Global Securities
and Physical Securities the Holders of which have given wire transfer
instructions to the Trustee (or other Paying Agent) by the Regular Record Date
shall be required to be made by wire transfer of immediately available funds to
the accounts specified by the holders thereof.
Any interest on any Security which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date shall forthwith cease to be
payable to the Holder on the Regular Record Date by virtue of having been such
Holder, and such defaulted interest and (to the extent lawful) interest on such
defaulted interest at the rate borne by the Securities (such defaulted interest
and interest thereon herein collectively called "Defaulted Interest") may be
paid by the Company, at its election in each case, as provided in clause (a) or
(b) below:
(a) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid
on each Security and the date of the proposed payment, and at the same
time the Company shall deposit with the Trustee an amount of money equal
to the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such
deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this clause provided. Thereupon
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the Trustee shall fix a Special Record Date for the payment of such
Defaulted Interest which shall be not more than 15 days and not less than
10 days prior to the date of the proposed payment and not less than 10
days after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of such Special
Record Date, and in the name and at the expense of the Company, shall
cause notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor to be given in the manner provided for in
Section 106, not less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor having been so given, such Defaulted Interest shall
be paid to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on such
Special Record Date and shall no longer be payable pursuant to the
following clause (b).
(b) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this clause,
such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
If the Company shall be required to pay any additional interest pursuant
to the terms of the Registration Rights Agreement, it shall deliver an Officers'
Certificate to the Trustee setting forth the new interest rate and the period
for which such rate is applicable.
SECTION 310. Persons Deemed Owners.
Prior to the due presentment of a Security for registration of transfer,
the Company, each Guarantor, the Trustee and any agent of the Company, such
Guarantor or the Trustee may treat the Person in whose name such Security is
registered as the owner of such Security for the purpose of receiving payment of
principal of and premium, if any, and (subject to Sections 305 and 309) interest
on such Security and for all other purposes whatsoever, whether or not such
Security be overdue, and none of the Company, the Guarantors, the Trustee or any
agent of the Company, such Guarantor or the Trustee shall be affected by notice
to the contrary.
SECTION 311. Cancellation.
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All Securities surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee and shall be promptly cancelled by it. The Company
may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and may deliver to the Trustee (or to any
other Person for delivery to the Trustee) for cancellation any Securities
previously authenticated hereunder which the Company has not issued and sold,
and all Securities so delivered shall be promptly cancelled by the Trustee. If
the Company shall so acquire any of the Securities, however, such acquisition
shall not operate as a redemption or satisfaction of the indebtedness
represented by such Securities unless and until the same are surrendered to the
Trustee for cancellation. No Securities shall be authenticated in lieu of or in
exchange for any Securities cancelled as provided in this Section, except as
expressly permitted by this Indenture. All cancelled Securities held by the
Trustee shall be disposed of by the Trustee in accordance with its customary
procedures and certification of their disposal delivered to the Company unless
by Company Order the Company shall direct that cancelled Securities be returned
to it.
SECTION 312. Issuance of Additional Securities. The Company may, subject
to Article X of this Indenture, issue up to $75,000,000 aggregate principal
amount of Additional Securities. Any Additional Securities will be part of the
same issue as the Securities offered hereby and will vote on all matters with
the Securities offered hereby.
SECTION 313. CUSIP and CINS Numbers. The Company in issuing the Securities
may use "CUSIP" and "CINS" numbers (if then generally in use) and, if so, the
Trustee shall use "CUSIP" and "CINS" numbers in notices of redemption as a
convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers.
SECTION 314. Computation of Interest.
Interest on the Securities shall be computed on the basis of a 360-day
year consisting of twelve 30-day months.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
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This Indenture shall upon Company Request cease to be of further effect
(except as to surviving rights of registration of transfer or exchange of the
Securities, as expressly provided for herein or pursuant hereto) and the
Trustee, at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture when
(a) either
(i) all the Securities theretofore authenticated and delivered
(other than mutilated, destroyed, lost or stolen Securities that
have been replaced or paid as provided in Section 308 and Securities
that have been subject to defeasance under Article XII) have been
delivered to the Trustee for cancellation; or
(ii) all Securities not theretofore delivered to the Trustee
for cancellation
(A) have become due and payable,
(B) will become due and payable at Stated Maturity within one
year,
or
(C) are to be called for redemption within one year under
arrangements reasonably satisfactory to the Trustee for the giving
of notice of redemption by the Trustee in the name, and at the
expense, of the Company,
and the Company, or the Guarantors, as the case may be, in the case
of (A), (B) or (C) above, has irrevocably deposited or caused to be
deposited with the Trustee funds in trust for the purpose in an
amount sufficient to pay and discharge the entire Indebtedness on
such Securities not theretofore delivered to the Trustee for
cancellation, for principal (and premium, if any, on) and interest
on the Securities to the date of such deposit (in the case of
Securities that have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be;
(b) the Company or the Guarantors, as the case may be, has paid or
caused to be paid all sums payable hereunder by the Company; and
(c) the Company or the Guarantors, as the case may be, has delivered
to the Trustee an Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been complied with.
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Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 606 and, if money shall
have been deposited with the Trustee pursuant to subclause (ii) of clause (a) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all money
deposited with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee; but such money need not be segregated from other funds except to the
extent required by law.
ARTICLE V
REMEDIES
SECTION 501. Events of Default.
"Event of Default", wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) default in the payment of any interest on any Security when it
becomes due and payable, and continuance of such default for a period of
30 days (whether or not prohibited by the Article XIV);
(b) default in the payment of the principal of or premium, if any,
on any Security when due (whether or not prohibited by Article XIV);
(c) failure to perform or comply with the provisions described in
Article VIII or to make or consummate a Change of Control Offer or an
Asset Sale Offer in accordance with the provision of Section 1012 and
Section 1013, respectively;
(d) default in the performance, or breach, of any covenant or
agreement of the Company or any Guarantor contained in this Indenture or
any Securities Guarantee (other than as contemplated by clauses (a), (b)
and (c) above) and continuance of such default or breach for a period of
60 days after written notice has been given (x) to the Company by the
Trustee or (y) to the Company and the Trustee
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by the Holders of at least 25% in aggregate principal amount of the
Securities then Outstanding;
(e) the occurrence of an event of default under any mortgage, bond,
indenture, loan agreement or other document evidencing Indebtedness of the
Company or any Restricted Subsidiary, which Indebtedness has an aggregate
outstanding principal amount of $25,000,000 or more, and such default (i)
results in the acceleration of such Indebtedness prior to its Stated
Maturity or (ii) constitutes a failure to make any payment with respect to
any such Indebtedness when due and payable after expiration of any
applicable grace period;
(f) failure by the Company or any of its Restricted Subsidiaries to
pay one or more final judgments the uninsured portion of which exceeds in
the aggregate $25,000,000, which judgment or judgments are not paid,
discharged or stayed for a period of 60 days;
(g) any Securities Guarantee ceases to be in full force and effect
or is declared null and void or any Guarantor denies that it has any
further liability under any Securities Guarantee, or gives notice to such
effect (other than by reason of the termination of this Indenture or the
release of any such Securities Guarantee in accordance with this
Indenture), and such condition has continued for a period of 30 days after
written notice of such failure requiring the Guarantor and the Company to
remedy the same has been given (x) to the Company by the Trustee or (y) to
the Company and the Trustee by the Holders of 25% in aggregate principal
amount of the Securities then outstanding;
(h) entry of a decree or order by a court having jurisdiction in the
premises adjudging the Company or any Significant Subsidiary a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustments or composition of or in respect
of the Company or any Significant Subsidiary under the Federal Bankruptcy
Code or any other applicable federal or state law, or appointing a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Company or any Significant Subsidiary or of any
substantial part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or
order unstayed and in effect for a period of 90 consecutive days; or
(i) the institution by the Company or any Significant Subsidiary of
proceedings to be adjudicated a bankrupt or insolvent, or the consent by
it to the institution of bankruptcy or insolvency proceedings against it,
or the filing by it of a petition or answer or consent seeking
reorganization or relief under the Federal Bankruptcy Code or any other
applicable federal or state law, or the consent by it to the filing of any
such petition or to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Company or any
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Significant Subsidiary or of any substantial part of its property, or the
making by it of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts generally as
they become due.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than as specified in Section 501(h) or (i))
occurs and is continuing, the Trustee or the Holders of not less than 25% in
aggregate principal amount of the Securities then Outstanding may, and the
Trustee at the request of such Holders shall, declare the principal of and
premium, if any, and accrued and unpaid interest on, all of the Outstanding
Securities immediately due and payable and, upon any such declaration, all such
amounts will become due and payable immediately. If an Event of Default
specified in Section 501(h) or (i) above occurs and is continuing, then the
principal and premium, if any, and accrued and unpaid interest on all of the
Securities Outstanding will ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Holder of
Securities. The Company shall deliver to the Trustee, within 10 days after the
occurrence thereof, notice of any default or acceleration referred to the
Section 501(e).
At any time after a declaration of acceleration, but before a judgment or
decree for payment of the money due has been obtained by the Trustee, the
Holders of a majority in aggregate principal amount of the Outstanding
Securities, by written notice to the Company and the Trustee, may rescind such
declaration and its consequences if
(i) the Company or any Guarantor has paid or deposited with the
Trustee a sum sufficient to pay,
(A) all overdue interest on all Securities,
(B) all unpaid principal of and premium, if any, on any
Outstanding Securities that has become due otherwise than by such
declaration of acceleration and interest thereon at the rate borne
by the Securities,
(C) to the extent that payment of such interest is lawful,
interest on overdue interest and overdue principal at the rate borne
by the Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(ii) all Events of Default, other than the non-payment of amounts of
principal of or premium, if any, on or interest on the Securities that
have become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 513.
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No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Notwithstanding the preceding paragraph, in the event of a declaration of
acceleration in respect of the Securities because of an Event of Default
specified in Section 501(e) shall have occurred and be continuing, such
declaration of acceleration shall be automatically annulled if the Indebtedness
that is the subject of such Event of Default has been discharged or the holders
thereof have rescinded their declaration of acceleration in respect of such
Indebtedness, and written notice of such discharge or rescission, as the case
may be, shall have been given to the Trustee by the Company and countersigned by
the holders of such Indebtedness or a trustee, fiduciary or agent for such
holders, within 30 days after such declaration of acceleration in respect of the
Securities, and no other Event of Default has occurred during such 30-day period
which has not been cured or waived during such period.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.
Subject to Article XIV, the Company and each of the Guarantors covenants
that if
(a) default is made in the payment of any installment of interest on
any Security when such interest becomes due and payable and such default
continues for a period of 30 days, or
(b) default is made in the payment of the principal of or premium,
if any, on any Security at the Maturity thereof,
the Company and each Guarantor will, upon demand of the Trustee, pay to the
Trustee for the benefit of the Holders of such Securities, the whole amount then
due and payable on such Securities for principal (and premium, if any) and
interest, and interest on any overdue principal (and premium, if any) and, to
the extent that payment of such interest shall be legally enforceable, upon any
overdue installment of interest, at the rate borne by the Securities, and, in
addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
If the Company or any Guarantor, as the case may be, fails to pay such
amounts forthwith upon such demand, the Trustee, in its own name as trustee of
an express trust, may institute a judicial proceeding for the collection of the
sums so due and unpaid, may prosecute such proceeding to judgment or final
decree and may enforce the same against the Company, such Guarantor or any other
obligor upon the Securities and collect the moneys adjudged or decreed to be
payable in the manner provided by law out of the property of the Company, such
Guarantor or any other obligor upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate
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judicial proceedings as the Trustee shall deem most effectual to protect and
enforce any such rights, whether for the specific enforcement of any covenant or
agreement in this Indenture or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities (including the Guarantors) or the property of the Company or of such
other obligor or their creditors, the Trustee (irrespective of whether the
principal of the Securities shall then be due and payable as therein expressed
or by declaration or otherwise and irrespective of whether the Trustee shall
have made any demand on the Company for the payment of overdue principal,
premium, if any, or interest) shall be entitled and empowered, by intervention
in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the
Securities and to file such other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel) and of the Holders
allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other securities or
property payable or deliverable upon the conversion or exchange of such
securities or upon any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 606.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by
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the Trustee shall be brought in its own name and as trustee of an express trust,
and any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, be for the ratable benefit of the Holders of the
Securities in respect of which such judgment has been recovered.
SECTION 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or premium, if
any or interest, upon presentation of the Securities and the notation thereon of
the payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
606;
SECOND: To the payment of the amounts then due and unpaid for
principal of and premium, if any, and interest on the Securities in
respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind, according
to the amounts due and payable on such Securities for principal (and
premium, if any) and interest, respectively; and
THIRD: The balance, if any, to the Company and/or the Guarantors, as
the case may be.
SECTION 507. Limitation on Suits.
No Holder of any Securities shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(a) such Holder has previously given written notice to the Trustee
of a continuing Event of Default;
(b) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities (including fees and
expenses of its agents and counsel) to be incurred in compliance with such
request;
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(d) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(e) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority or more in principal amount of the Outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium
and Interest.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment, as provided herein (including, if applicable, Article XII and Section
1404) and in such Security of the principal of and premium, if any, and (subject
to Section 309) interest on such Security on the respective Stated Maturities
expressed in such Security (or, in the case of redemption, on the Redemption
Date) and to institute suit for the enforcement of any such payment, and such
rights shall not be impaired without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case, subject to any determination in
such proceeding, the Company, the Guarantors, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of Section
308, no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
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SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
SECTION 512. Control by Holders.
The Holders of not less than a majority in principal amount of the
Outstanding Securities shall have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, provided that
(a) such direction shall not be in conflict with any rule of law or
with this Indenture,
(b) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction, and
(c) the Trustee need not take any action which might involve it in
personal liability or be unjustly prejudicial to the Holders not
consenting.
SECTION 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities may, on behalf of the Holders of all of the Securities,
waive any past defaults hereunder, except a default
(a) in the payment of the principal of or premium, if any or
interest on any Security, or
(b) in respect of a covenant or provision hereof which under Article
IX cannot be modified or amended without the consent of the Holder of each
Security Outstanding.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.
SECTION 514. Waiver of Stay or Extension Laws.
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The Company and each Guarantor covenant (to the extent that it may
lawfully do so) that it will not at any time insist upon, or plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Company and
each Guarantor (to the extent that it may lawfully do so) hereby expressly
waives all benefit or advantage of any such law and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
SECTION 515. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security by
his acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorney's fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Securities,
or to any suit instituted by any Holder for the enforcement of the payment of
the principal (or premium, if any ) or interest on any Security on or after the
respective Stated Maturities expressed in such Security (or, in the case of
redemption, on or after the Redemption Date).
SECTION 516. No Personal Liability of Directors, Officers, Employees and
Stockholders.
No officer, employee, incorporator or stockholder of the Company or the
Guarantors, as such, shall have the liability for any obligations of the Company
or the Guarantors under the Securities or the Securities Guarantees or this
Indenture, as applicable, for any claim based on, in respect of, or by reason
of, such obligations or their creation. Each holder by accepting a Security and
the Securities Guarantees waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Securities.
ARTICLE VI
THE TRUSTEE
SECTION 601. Notice of Defaults.
If a Default or an Event of Default occurs and is continuing and is known
to the Trustee, the Trustee shall mail to each Holder of the Securities in the
manner and to the
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extent provided in TIA Section 313(c) notice of the Default or Event of Default
within 90 days after the occurrence thereof; provided, however, that, except in
the case of a Default or an Event of Default in the payment of principal of and
premium, if any, on or interest on any Securities, the Trustee may withhold the
notice to the Holders of the Securities if a committee of its trust officers in
good faith determines that withholding such notice is in the interests of the
Holders of the Securities.
SECTION 602. Certain Rights of Trustee.
Subject to the provisions of TIA Sections 315(a) through 315(d):
(a) the Trustee may conclusively rely and shall be protected in
acting or refraining from acting, pursuant to the terms of this Indenture
or otherwise, upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper Person or Persons;
(b) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order with
sufficient detail as may be requested by the Trustee and any resolution of
the Board of Directors may be sufficiently evidenced by a Board
Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate or an Opinion of
Counsel;
(d) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities (including fees and expenses
of its agents and counsel) which might be incurred by it in compliance
with such request or direction;
(f) the Trustee shall not be bound to make any investigation into,
and may conclusively rely upon, the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order,
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bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder;
(h) the Trustee shall not be liable for any action taken, suffered
or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Indenture; and
(i) except during the continuance of an Event of Default, the
Trustee need perform only those duties as are specifically set forth in
this Indenture.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
SECTION 603. Trustee Not Responsible for Recitals or Issuance of
Securities.
The recitals contained herein and in the Securities, except for the
Trustee's certificates of authentication, shall be taken as the statements of
the Company and the Guarantors, and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture, the Securities or any Securities Guarantee. The
Trustee shall not be accountable for the use or application by the Company of
Securities or the proceeds thereof.
SECTION 604. May Hold Securities.
The Trustee, any Paying Agent, any Registrar or any other agent of the
Company or of the Trustee, in its individual or any other capacity, may become
the owner or pledgee of Securities and, subject to TIA Sections 310(b) and 311,
may otherwise deal with the Company with the same rights it would have if it
were not Trustee, Paying Agent, Registrar or such other agent.
SECTION 605. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on
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any money received by it hereunder except as otherwise agreed with the Company
or any Guarantor, as the case may be.
SECTION 606. Compensation and Reimbursement.
The Company agrees:
(a) to pay to the Trustee (in its capacity as Trustee, Paying Agent
and Registrar) from time to time reasonable compensation for all services
rendered by it hereunder (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
(b) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(c) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of
enforcing this Indenture against the Company or the Guarantors (including
this Section 606) and of defending itself against any claim (whether
asserted by any Holder or the Company) or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
The obligations of the Company under this Section to compensate the
Trustee, to pay or reimburse the Trustee for expenses, disbursements and
advances and to indemnify and hold harmless the Trustee shall constitute
additional indebtedness hereunder and shall survive the satisfaction and
discharge of this Indenture and any termination under any bankruptcy law. As
security for the performance of such obligations of the Company, the Trustee
shall have a claim prior to the Securities upon all property and funds held or
collected by the Trustee as such, except funds held in trust for the payment of
principal of and premium, if any, or interest on particular Securities.
When the Trustee incurs expenses or renders services in connection with an
Event of Default specified in Section 501(h) or (i), the expenses (including the
reasonable charges and expenses of its counsel) of and the compensation for such
services are intended to constitute expenses of administration under any
applicable bankruptcy, insolvency or other similar law.
The provisions of this Section shall survive the termination of this
Indenture.
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SECTION 607. Corporate Trustee Required; Eligibility.
There shall be at all times a Trustee hereunder which shall be eligible to
act as Trustee under TIA Section 310(a)(1). The Trustee together with its parent
on a consolidated basis shall have a combined capital and surplus of at least
$50,000,000 and each successor Trustee shall have a combined capital and surplus
of at least $50,000,000. If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of Federal, State,
territorial or District of Columbia supervising or examining authority, then for
the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereinafter specified
in this Article.
SECTION 608. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 609.
(b) The Trustee may resign at any time by giving written notice thereof to
the Company. If the instrument of acceptance by a successor Trustee required by
Section 609 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of not
less than a majority in principal amount of the Outstanding Securities,
delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of TIA
Section 310(b) after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Security for at least six
months, except when the Trustee's duty to resign is stayed in accordance
with the provisions of TIA Section 310(b), or
(2) the Trustee shall cease to be eligible under Section 607 and
shall fail to resign after written request therefor by the Company or by
any Holder who has been a bona fide Holder of a Security for at least six
months, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed
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or any public officer shall take charge or control of the Trustee or of
its property or affairs for the purpose of rehabilitation, conservation or
liquidation,
then, in any such case, (i) the Company, by a Board Resolution, may remove the
Trustee, or (ii) subject to TIA Section 315(e), any Holder who has been a bona
fide Holder of a Security for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, the Company,
by a Board Resolution, shall promptly appoint a successor Trustee. If, within
one year after such resignation, removal or incapability, or the occurrence of
such vacancy, a successor Trustee shall be appointed by Act of the Holders of a
majority in principal amount of the Outstanding Securities delivered to the
Company and the retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment, become the successor Trustee
and supersede the successor Trustee appointed by the Company. If no successor
Trustee shall have been so appointed by the Company or the Holders and accepted
appointment in the manner hereinafter provided subject to TIA Section 315(e),
any Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each removal of
the Trustee and each appointment of a successor Trustee to the Holders of
Securities in the manner provided for in Section 106. Each notice shall include
the name of the successor Trustee and the address of its Corporate Trust Office.
SECTION 609. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute, acknowledge and
deliver to the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on request of the Company or the successor
Trustee, such retiring Trustee shall, upon payment of its charges, execute and
deliver an instrument transferring to such successor Trustee all the rights,
powers and trusts of the retiring Trustee and shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such retiring
Trustee hereunder subject to the retiring Trustee's rights as provided under the
last sentence of Section 606. Upon request of any such successor Trustee, the
Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts.
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No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 610. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities. In
case at that time any of the Securities shall not have been authenticated, any
successor Trustee may authenticate such Securities either in the name of any
predecessor hereunder or in the name of the successor Trustee. In all such cases
such certificates shall have the full force and effect which this Indenture
provides that the certificate of authentication of the Trustee shall have;
provided, however, that the right to adopt the certificate of authentication of
any predecessor Trustee or to authenticate Securities in the name of any
predecessor Trustee shall apply only to its successor or successors by merger,
conversion or consolidation.
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE
SECTION 701. Disclosure of Names and Addresses of Holders.
Every Holder of Securities, by receiving and holding the same, agrees with
the Company and the Trustee that none of the Company or the Trustee or any agent
of either of them shall be held accountable by reason of the disclosure of any
such information as to the names and addresses of the Holders in accordance with
TIA Section 312, regardless of the source from which such information was
derived, and that the Trustee shall not be held accountable by reason of mailing
any material pursuant to a request made under TIA Section 312(b).
SECTION 702. Reports by Trustee.
Within 60 days after May 15 of each year commencing with the first May 15
after the first issuance of Securities, the Trustee shall transmit to the
Holders, in the manner and to the extent provided in TIA Section 313(c), a brief
report dated as of such May 15 if required by TIA Section 313(a).
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ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE
SECTION 801. Company May Consolidate, etc., Only on Certain Terms.
The Company shall not consolidate or merge with or into any other Person
(whether or not the Company is the surviving Person), or directly or indirectly
sell, assign, convey, transfer, lease or otherwise dispose of all or
substantially all of its properties or assets (determined on a consolidated
basis for the Company and its Subsidiaries taken as a whole) to any Person or
Persons, in one transaction or a series of related transactions, unless each of
the following conditions is satisfied:
(a) either (i) the Company is the surviving corporation or (ii) the
Person (if other than the Company) formed by such consolidation or into
which the Company is merged or the Person that acquires by sale,
assignment, conveyance, transfer, lease or other disposition of all or
substantially all of the properties and assets of the Company and its
Restricted Subsidiaries on a consolidated basis (the "Surviving Entity")
(A) is a corporation, partnership, limited liability company or trust duly
organized and validly existing under the laws of the United States, any
state thereof or the District of Columbia and (B) expressly assumes, by a
supplemental indenture in form reasonably satisfactory to the Trustee, all
the obligations of the Company under this Indenture and the Securities;
(b) immediately after giving effect to such transaction or series of
transactions on a pro forma basis, no Default or Event of Default has
occurred and is continuing;
(c) immediately after giving effect to such transaction or series of
transactions on a pro forma basis, the Consolidated Net Worth of the
Company (or of the Surviving Entity if the Company is not the continuing
obligor under this Indenture) is equal to or greater than the Consolidated
Net Worth of the Company immediately prior to such transaction or series
of transactions;
(d) immediately after giving effect to such transaction or series of
transactions on a pro forma basis (on the assumption that the transaction
or series of transactions occurred at the beginning of the most recently
ended four full fiscal quarter period for which internal financial
statements are available), the Company (or the Surviving Entity if the
Company is not the continuing obligor under this Indenture) could incur at
least $1.00 of additional Indebtedness (other than Permitted Indebtedness)
pursuant to the first paragraph of Section 1010;
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(e) if the Company is not the continuing obligor under this
Indenture, each Guarantor, unless it is the other party to such
transaction or series of related transactions, has by supplemental
indenture confirmed that its Securities Guarantee applies to the Surviving
Entity's obligations under this Indenture and the Securities; and
(f) the Company delivers, or causes to be delivered, to the Trustee,
in form and substance reasonably satisfactory to the Trustee, an Officers'
Certificate and an Opinion of Counsel, each stating that such transaction
complies with the requirements of this Indenture.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of related transactions) of all or
substantially all of the properties or assets of one or more Restricted
Subsidiaries that constitutes all or substantially all of the properties and
assets of the Company on a consolidated basis, shall be deemed to be the
transfer of all or substantially all of the properties and assets of the
Company.
SECTION 802. Successor Substituted.
In the event of any transaction or series of related transactions
described in and complying with the conditions listed in Section 801 in which
the Company is not the continuing obligor under this Indenture, the Surviving
Entity shall succeed to, and be substituted for, and may exercise every right
and power of, the Company under this Indenture with the same effect as if such
Surviving Entity had been named as the Company herein, and thereafter the
Company shall, except in the case of a lease, be discharged of all its
obligations and covenants under this Indenture and the Securities.
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO INDENTURE
AND SECURITIES GUARANTEES
SECTION 901. Without Consent of Holders.
Without the consent of any Holders, the Company and any affected
Guarantor, each when authorized by a Board Resolution, and the Trustee, at any
time and from time to time, may enter into one or more indentures supplemental
hereto, for any of the following purposes:
(a) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company
contained herein and in the Securities or to add any Guarantors of the
Securities; or
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(b) to add to the covenants of the Company or any Guarantor for the
benefit of the Holders or to surrender any right or power herein conferred
upon the Company; or
(c) to add any additional Events of Default; or
(d) to provide for uncertificated Securities in addition to or in
place of the certificated Securities; or
(e) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee pursuant to the requirements of Section
609; or
(f) to secure the Securities or any Securities Guarantee; or
(g) to cure any ambiguity, to correct or supplement any provision in
this Indenture which may be defective or inconsistent with any other
provision herein, or to make any other provision in this Indenture, or to
make any other provisions with respect to matters or questions arising
under this Indenture, provided that such action shall not adversely affect
the interests of the Holders; or
(h) to qualify, or maintain the qualification of, this Indenture
under the Trust Indenture Act.
Upon the request of the Company accompanied by a Board Resolution
authorizing the execution of any such amended or supplemental Indenture,
Security or Securities Guarantee, and upon receipt by the Trustee of the
documents described in Section 903 hereof, the Trustee shall join with the
Company in the execution of any amended or supplemental Indenture or Securities
Guarantee authorized or permitted by the terms of this Indenture and to make any
further appropriate agreements and stipulations that may be therein contained,
but the Trustee shall not be obligated to enter into such amended or
supplemental Indenture or Securities Guarantee that affects its own rights,
duties or immunities under this Indenture or otherwise.
SECTION 902. With Consent of Holders.
With the consent of the Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities, by Act of said Holders delivered
to the Company, any affected Guarantor and the Trustee, the Company and the
Guarantors, each when authorized by a Board Resolution, and the Trustee may
enter into one or more indentures supplemental hereto for the purpose of
modifying in any manner this Indenture or any Securities Guarantee; provided,
however, that no such indenture supplemental may, without the consent of the
Holder of each Outstanding Security affected thereby:
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(a) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the
redemption thereof, or change the place of payment where, or the coin or
currency in which any Security or any premium or the interest thereon is
payable, or impair the right to institute suit for the enforcement of any
such payment after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date); or
(b) reduce the percentage in aggregate principal amount of the
Outstanding Securities required to consent to any amendment of, or waiver
of compliance with, any provision of or defaults under this Indenture; or
(c) waive a Default or Event of Default in the payment of principal
of, or premium, if any, or interest on the Securities (except a rescission
of acceleration of Securities by the Holders of at least a majority in
aggregate principal amount of the then Outstanding Securities (including
Additional Securities issued under this Indenture, if any); or
(d) release any Guarantor from any of its obligations under its
Securities Guarantee or this Indenture, except in accordance with the
terms of this Indenture;
(e) amend, change or modify the obligation of the Company to make
and consummate a Change of Control Offer or Asset Sale Offer in accordance
with the provisions of Section 1012 on Section 1013, respectively; or
(f) amend, change or modify any of the provisions in Article XIV in
a manner adverse to the Holders.
(g) amend, change or modify any of the provisions in this Section
902.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and shall be fully protected in relying upon, an Opinion of Counsel stating that
the execution of such supplemental indenture is authorized or permitted by this
Indenture and that such supplemental indenture constitutes the legal, valid and
binding obligation of the Company and the Guarantor subject to the customary
exceptions. The Trustee may, but shall not be obligated to, enter into any such
supplemental
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indenture which affects the Trustees own rights, duties or immunities under this
Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
SECTION 907. Notice of Supplemental Indentures.
Promptly after the execution by the Company, any affected Guarantor and
the Trustee of any supplemental indenture pursuant to the provisions of Section
902, the Company shall give notice thereof to the Holders of each Outstanding
Security affected, in the manner provided for in Section 106, setting forth in
general terms the substance of such supplemental indenture.
ARTICLE X
COVENANTS
SECTION 1001. Payment of Principal, Premium, If Any, and Interest.
The Company covenants and agrees for the benefit of the Holders that it
will duly and punctually pay the principal of and premium, if any and interest
on the Securities in accordance with the terms of the Securities and this
Indenture. Principal and interest shall be considered paid on the date due if on
such date the Trustee or the Paying Agent holds in
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accordance with this Indenture money sufficient to pay all principal and
interest then due and the Trustee or the Paying Agent, as the case may be, is
not prohibited from paying such money to the Securityholders on that date
pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the rate
specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in The City of New York, an office or agency
where Securities may be presented or surrendered for payment, where Securities
may be surrendered for registration of transfer or exchange and where notices
and demands to or upon the Company in respect of the Securities or any Guarantor
in respect of the Securities Guarantees and this Indenture may be served. The
Corporate Trust Office located at One Liberty Plaza, 23rd Floor, New York, New
York 10006 of the Trustee shall be such office or agency of the Company, unless
the Company shall designate and maintain some other office or agency for one or
more of such purposes. The Company will give prompt written notice to the
Trustee of any change in the location of any such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee and the Company and each Guarantor hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more other offices
or agencies (in or outside of The City of New York) where the Securities may be
presented or surrendered for any or all such purposes and may from time to time
rescind any such designation; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain
an office or agency in The City of New York for such purposes. The Company will
give prompt written notice to the Trustee of any such designation or rescission
and any change in the location of any such other office or agency.
SECTION 1003. Money for Security Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it will, on
or before each due date of the principal of or premium, if any, or interest on
any of the Securities, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal of or premium, if
any, or interest so becoming due until such sums shall be paid to such Persons
or otherwise disposed of as herein provided and will promptly notify the Trustee
of its action or failure so to act.
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Whenever the Company shall have one or more Paying Agents for the
Securities, it will, on or before each due date of the principal of or premium,
if any, or interest on any Securities, deposit with a Paying Agent a sum
sufficient to pay the principal (and premium, if any) or interest so becoming
due, such sum to be held in trust for the benefit of the Persons entitled to
such principal, premium or interest, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of such action or any
failure so to act.
The Company will cause each Paying Agent (other than the Trustee) to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(a) hold all sums held by it for the payment of the principal of and
premium, if any, or interest on Securities in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(b) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities) in the making of any payment of
principal (and premium, if any) or interest; and
(c) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
sums.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of or premium, if any, or
interest on any Security and remaining unclaimed for two years after such
principal (and premium, if any) or interest has become due and payable shall be
paid to the Company on Company Request, or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Security shall thereafter,
as an unsecured general creditor, look only to the Company for payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in a newspaper published in the English language, customarily
published on each Business Day
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and of general circulation in the Borough of Manhattan, The City of New York,
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be repaid to the
Company.
SECTION 1004. Corporate Existence.
Subject to Article VIII, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect the corporate
existence and corporate power of the Company and each Subsidiary; provided,
however, that the Company shall not be required to preserve any such corporate
existence and corporate power if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Restricted Subsidiaries taken as a whole and that the loss
thereof is not materially adverse to the Holders.
SECTION 1005. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary and (b)
lawful claims for labor, materials and supplies, which, if unpaid, might by law
become a lien upon the property of the Company or any Subsidiary; provided,
however, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim (i) whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings or (ii) where the failure to pay is not materially
adverse to the Holders.
SECTION 1006. Maintenance of Properties.
The Company will cause all properties owned by the Company or any
Subsidiary or used or held for use in the conduct of its business or the
business of any Subsidiary 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 Company 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 Company from discontinuing the maintenance of any of such properties
if such discontinuance is, in the judgment of the Company, desirable in the
conduct of its business or the business of any Subsidiary is not materially
adverse to the Holders.
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SECTION 1007. Insurance.
The Company will at all times keep all of its and its Restricted
Subsidiaries' material properties which are of an insurable nature insured with
insurers, believed by the Company to be responsible, against loss or damage to
the extent that property of similar character is usually so insured by
corporations similarly situated and owning like properties.
SECTION 1008. Statement by Officers As to Default.
(a) The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year, a brief certificate from the principal executive officer,
principal financial officer or principal accounting officer as to his or her
knowledge of compliance by the Company and the Restricted Subsidiaries with all
conditions and covenants under this Indenture. For purposes of this Section
1008(a), such compliance shall be determined without regard to any period of
grace or requirement of notice under this Indenture.
(b) When any Default has occurred and is continuing under this Indenture,
or if the trustee for or the holder of any other evidence of Indebtedness of the
Company or any Restricted Subsidiary gives any notice or takes any other action
with respect to a claimed default, the Company shall deliver to the Trustee by
registered or certified mail or by telegram, telex or facsimile transmission an
officers certificate specifying such event, notice or other action within five
Business Days of its occurrence.
SECTION 1009. Provision of Reports and Financial Statements.
The Company shall be required to file on a timely basis with the
Commission, to the extent such filings are accepted by the Commission and
whether or not the Company has a class of securities registered under the
Exchange Act, the annual reports, quarterly reports and other documents that the
Company would be required to file if it were subject to Section 13 or 15(d) of
the Exchange Act, provided, however, that so long as the Parent is a Guarantor,
the reports, information and other documents required to be filed and provided
as described hereunder may, at the Company's option, be filed by and be those of
the Parent rather than the Company; provided further, however, that if the
Parent conducts any business or holds any significant assets other than the
capital stock of the Company at the time any such report or other document
containing financial statements of the Parent is filed, the Parent shall include
in such report or other document (a) summarized financial information (as
defined in Rule 1-02(bb) of Regulation S-X promulgated by the Commission) with
respect to the Company or (b) condensed consolidating financial statements in a
columnar format with separate columns that contain financial information for (i)
the Parent on a stand-alone basis, (ii) the Company on a stand-alone basis,
(iii) the Subsidiary Guarantors and (iv) the Non-Subsidiary Guarantors. The
Company shall also be required (x) to supply to the Trustee and each Holder, or
supply to the Trustee for forwarding to each such Holder, without cost to such
Holder, copies of such reports and documents within 15 days after the date on
which the Company (or the Parent, as the case may be) files such reports and
documents with the
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Commission or the date on which the Company (or the Parent, as the case may be)
would be required to file such reports and documents if the Company (or the
Parent, as the case may be) were so required and (y) if filing such reports and
documents with the Commission is not accepted by the Commission or is prohibited
under the Exchange Act, to supply at the Company's cost copies of such reports
and documents to any prospective Holder of Securities promptly upon written
request.
SECTION 1010. Limitation on Incurrence of Indebtedness and Issuance of
Disqualified Stock.
The Company shall not, and shall not permit any Restricted Subsidiary to,
create, issue, assume, guarantee or in any manner become directly or indirectly
liable for the payment of, or otherwise incur (collectively, "incur"), any
Indebtedness (including Acquired Indebtedness), other than Permitted
Indebtedness, or issue any Disqualified Stock, except that the Company or a
Restricted Subsidiary may incur Indebtedness or issue Disqualified Stock if, at
the time of such incurrence or issuance, the Fixed Charge Coverage Ratio for the
four full fiscal quarters (taken as one accounting period) immediately preceding
the incurrence of such Indebtedness or the issuance of such Disqualified Stock
for which internal financial statements are available would have been equal to
at least 2.0 to 1.0 if such incurrence is on or prior to the second anniversary
of the Closing Date and 2.25 to 1.0 if thereafter.
In making the foregoing calculation for any four-quarter period which
includes the Closing Date, pro forma effect shall be given to the Offering and
the application of the net proceeds therefrom, as if such transactions had
occurred at the beginning of such four-quarter period. In addition (but without
duplication), in making the foregoing calculation, pro forma effect will be
given to: (i) the incurrence of such Indebtedness and (if applicable) the
application of the net proceeds therefrom, including to refinance other
Indebtedness, as if such Indebtedness was incurred and the application of such
proceeds occurred at the beginning of such four-quarter period, (ii) the
incurrence, repayment or retirement of any other Indebtedness by the Company or
its Restricted Subsidiaries since the first day of such four-quarter period as
if such Indebtedness was incurred, repaid or retired at the beginning of such
four-quarter period, (iii) if the acquisition (whether by purchase, merger or
otherwise) or disposition (whether by sale, merger or otherwise) of any other
company, entity or business acquired or disposed of by the Company or any
Restricted Subsidiary, as the case may be, since the first day of such
four-quarter period, as if such acquisition or disposition occurred at the
beginning of such four-quarter period. In making a computation under the
foregoing clause (i) or (ii), (A) interest on Indebtedness bearing a floating
interest rate shall be computed as if the rate in effect on the dated of
computation had been the applicable rate for the entire period (taking into
account any Hedging Obligations applicable to such Indebtedness if such Hedging
Obligations have a remaining term at the date of determination in excess of 12
months), (B) if such Indebtedness bears, at the option of the Company, a fixed
or floating rate of interest, interest thereon will be computed by applying, at
the option of the Company, either the fixed or floating rate and (C) the amount
of any Indebtedness
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under a revolving credit facility will be computed based on the average daily
balance of such Indebtedness during such four-quarter period.
SECTION 1011. Limitation on Restricted Payments. (a) The Company shall
not, and shall not permit any Restricted Subsidiary to, directly or indirectly,
make any Restricted Payment unless at the time of, and immediately after giving
effect to, the proposed Restricted Payment: (i) no Default or Event of Default
has occurred and is continuing, (ii) the Company could incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) pursuant to the
first paragraph of Section 1010 and (iii) the aggregate amount of all Restricted
Payments declared or made after the Closing Date does not exceed the sum of:
(A) 50% of the Consolidated Net Income of the Company accrued on a
cumulative basis during the period (taken as one accounting period)
beginning on the first day of the Company's fiscal quarter during which
the Closing Date occurs and ending on the last day of the Company's most
recently ended fiscal quarter for which internal financial statements are
available at the time of such proposed Restricted Payment (or, if such
aggregate cumulative Consolidated Net Income is a loss, minus 100% of such
amount), plus
(B) the aggregate net cash proceeds received by the Company after
the Closing Date from the issuance or sale (other than to a Subsidiary)
of, or as a capital contribution in respect of, Qualified Equity Interests
of the Company, plus
(C) the aggregate net proceeds, including the fair market value of
property other than cash (as determined by the Board of Directors, whose
good faith determination will be conclusive), received by the Company
after the Closing Date from the issuance or sale (other than to a
Subsidiary) of debt securities or Disqualified Stock that have been
converted into or exchanged for Qualified Stock of the Company, plus the
aggregate net cash proceeds received by the Company at the time of such
conversion or exchange, plus
(D) the amount by which Indebtedness of the Company is reduced on
the Company's balance sheet upon the conversion or exchange (other than by
a Subsidiary of the Company) subsequent to the Closing Date of any
Indebtedness of the Company for Capital Stock (other than Disqualified
Stock) of the Company (less the amount of any cash, or the fair value of
any other property, distributed by the Company upon such conversion or
exchange); plus
(E) $25,000,000.
(b) Notwithstanding paragraph (a) above, the Company and its Restricted
Subsidiaries may take any of the following actions, so long as, with respect to
clauses (ii), (v), (vii), (viii), (ix), (x) and (xi), no Default or Event of
Default has occurred and is continuing or would occur:
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(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at the declaration date such payment would not
have been prohibited by the foregoing provision;
(ii) the repurchase, redemption or other acquisition or retirement
for value of any shares of Capital Stock of the Company, in exchange for,
or out of the net cash proceeds of a substantially concurrent issuance and
sale (other than to a Subsidiary), of Qualified Equity Interests of the
Company;
(iii) the purchase, redemption, defeasance or other acquisition or
retirement for value of any Subordinated Indebtedness in exchange for, or
out of the net cash proceeds of a substantially concurrent issuance and
sale (other than to a Subsidiary), of Qualified Equity Interests of the
Company;
(iv) the purchase, redemption, defeasance or other acquisition or
retirement for value of Subordinated Indebtedness in exchange for, or out
of the net cash proceeds of a substantially concurrent issuance or sale
(other than to a Subsidiary) of, Subordinated Indebtedness, so long as the
Company or a Subsidiary would be permitted to refinance such original
Subordinated Indebtedness with such new Subordinated Indebtedness pursuant
to clause (xii) of the definition of Permitted Indebtedness;
(v) the repurchase of any Subordinated Indebtedness at a purchase
price not greater than 101% of the principal amount of such Subordinated
Indebtedness in the event of a "change of control" in accordance with
provisions similar to the provisions of Section 1013; provided that, prior
to or simultaneously with such repurchase, the Company has made the Change
of Control Offer as provided in such covenant with respect to the
Securities and has repurchased all Securities validly tendered for payment
in connection with such Change of Control Offer;
(vi) the payment of dividends or the making of loans or other
advances by the Company to the Parent to be used by the Parent to pay
federal, state, local and foreign taxes payable by the Parent and directly
attributable to (or that arise as result of) the operations of the Company
and its Restricted Subsidiaries; provided, however, that (A) the amount of
such dividends shall not exceed the amount that the Company and its
Restricted Subsidiaries would be required to pay in respect of such
federal, state, local and foreign taxes were the Company to pay such taxes
as a stand-alone taxpayer and (B) such dividends, loans or other advances
pursuant to this clause (vi) are used by the Parent for such purposes
within 20 days of the receipt thereof by the Parent;
(vii) the payment of dividends or the making of loans or advances by
the Company to the Parent in an aggregate amount not to exceed $5,000,000
in any fiscal
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year for customary costs and expenses incurred by the Parent in its
capacity as a holding company or for services rendered by the Parent on
behalf of the Company;
(viii)the payment of, or the payment of a dividend or the making of
a loan or other advance to the Parent to enable the Parent to pay,
interest and principal due under the PIK Subordinated Debenture, provided
that such payment of interest or principal (A) is made in cash by the
Company or the Parent, as the case may be, (B) is made at the original
Stated Maturity of such interest or principal, (C) is an amount that is no
greater than actual amount of interest or principal due at such Stated
Maturity and (D) immediately after giving effect to such payment, loan or
advance, the Company could incur at least $1.00 of additional Indebtedness
(other than Permitted Indebtedness) pursuant to the first paragraph of
Section 1010;
(ix) the payment of, or the payment of a dividend or the making of a
loan or other advance to the Parent to enable the Parent to pay, interest
and principal due under the Parent Promissory Note and the Parent IRBs or
any Indebtedness incurred to refinance the Parent Promissory Note or the
Parent IRBs, as the case may be, in compliance with clause (x) below,
provided that such payment of interest or principal (A) is made in cash by
the Company or the Parent, as the case may be, (B) is made at the original
Stated Maturity of such interest or principal, and (C) is an amount that
is no greater than actual amount of interest or principal due at such
Stated Maturity;
(x) the payment of a dividend or the making of a loan or other
advance to the Parent to enable the Parent to refinance the Parent
Promissory Note and Parent IRBs provided that (A) the principal amount of
any such refinancing Indebtedness incurred by the Parent does not exceed
the principal amount of the Parent Promissory Note or Parent IRBs, as the
case may be, refinanced, plus the amount of any premium required to be
paid in connection with such refinancing pursuant to the terms of the
Parent Promissory Note or Parent IRBs, as the case may be, or the amount
of any premium reasonably determined by the Parent as necessary to
accomplish such refinancing, plus the amount of the expenses of the Parent
reasonably estimated to be incurred in connection with such refinancing,
(B) any such refinancing Indebtedness is unsecured, (C) such refinancing
Indebtedness has a Weighted Average Life equal to or greater than the
Weighted Average Life of the Parent Promissory Note or Parent IRBs, as the
case may be, and (D) such refinancing Indebtedness has a final Stated
Maturity no earlier than the final Stated Maturity of the Parent
Promissory Note or Parent IRBs, as the case may be; provided, however,
that if such dividend, loan or other advance to the Parent is financed by
the Company with Indebtedness incurred pursuant to clause (i) of the
definition of Permitted Indebtedness, then the foregoing clauses (A), (B),
(C) and (D) shall not be applicable in connection with such dividend, loan
or advance to the Parent; and
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(xi) the purchase, redemption, defeasance or other acquisition or
retirement for value of Subordinated Indebtedness owed by the Company to
any Wholly-Owned Foreign Restricted Subsidiary.
The payments described in clauses (ii), (iii), (v) and (viii) of this paragraph
shall be Restricted Payments that shall be permitted to be taken in accordance
with this paragraph (b) but shall reduce the amount that would otherwise be
available for Restricted Payments under clause (iii) of paragraph (a) of this
Section 1011 and the payments described in clauses (i), (iv), (vii), (ix), (x)
and (xi) of this paragraph (b) shall be Restricted Payments that shall be
permitted to be taken in accordance with this paragraph (b) and shall not reduce
the amount that would otherwise be available for Restricted Payments under
clause (iii) of paragraph (a) of this Section 1011.
(c) For the purpose of making any calculations under this Indenture (i) if
a Restricted Subsidiary is designated an Unrestricted Subsidiary, the Company
shall be deemed to have made an Investment in an amount equal to the greater of
fair market value or net book value of the net assets of such Restricted
Subsidiary at the time of such designation as determined by the Board of
Directors of the Company, whose good faith determination will be conclusive,
(ii) any property transferred to or from an Unrestricted Subsidiary will be
valued at fair market value at the time of such transfer, as determined by the
Board of Directors of the Company, whose good faith determination will be
conclusive and (iii) subject to the foregoing, the amount of any Restricted
Payment, if other than cash, will be determined by the Board of Directors of the
Company, whose good faith determination will be conclusive.
If the aggregate amount of all Restricted Payments calculated under
paragraph (a) of this Section 1011 includes an Investment in an Unrestricted
Subsidiary or other Person that thereafter becomes a Restricted Subsidiary, the
aggregate amount of all Restricted Payments calculated under the first paragraph
of this Section 1011 shall be reduced by the lesser of (x) the net asset value
of such Subsidiary at the time it becomes a Restricted Subsidiary and (y) the
initial amount of such Investment.
If an Investment resulted in the making of a Restricted Payment, the
aggregate amount of all Restricted Payments calculated under this Section 1011
shall be reduced by the amount of any net reduction in such Investment
(resulting from the payment of interest or dividends, loan repayment, transfer
of assets or otherwise), to the extent such net reduction is not included in the
Company's Consolidated Net Income; provided that the total amount by which the
aggregate amount of all Restricted Payments may be reduced shall not exceed the
lesser of (x) the cash proceeds received by the Company and its Restricted
Subsidiaries in connection with such net reduction and (y) the initial amount of
such Investment.
In computing the Consolidated Net Income of the Company for purposes of
clause (iii)(A) of paragraph (a) of this Section 1011, (i) the Company may use
audited financial statements for the portions of the relevant period for which
audited financial statements are
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available on the date of determination and unaudited financial statements and
other current financial data based on the books and records of the Company for
the remaining portion of such period and (ii) the Company will be permitted to
rely in good faith on the financial statements and other financial data derived
from the books and records of the Company that are available on the date of
determination. If the Company makes a Restricted Payment that, at the time of
the making of such Restricted Payment, would in the good faith determination of
the Company be permitted under the requirements of this Indenture, such
Restricted Payment shall be deemed to have been made in compliance with this
Indenture notwithstanding any subsequent adjustments made in good faith to the
Company's financial statements affecting Consolidated Net Income of the Company
for any period.
SECTION 1012. Purchase of Securities upon a Change of Control.
If a Change of Control occurs at any time, then each Holder shall have the
right to require that the Company purchase such Holder's Securities, in whole or
in part, at a purchase price in cash equal to 101% of the principal amount of
such Securities, if any, plus accrued and unpaid interest, if any, to the date
of purchase, pursuant to the offer described below (the "Change of Control
Offer") and the other procedures set forth in this Indenture.
Within 30 days following any Change of Control, the Company shall notify
the Trustee thereof and give written notice of such Change of Control to each
holder of Securities by first-class mail, postage prepaid, at its address
appearing in the Security Register, stating, among other things, (i) the
purchase price and the purchase date, which will be a Business Day no earlier
than 30 days nor later than 60 days from the date such notice is mailed or such
later date as is necessary to comply with requirements under the Exchange Act
(the "Change of Control Payment Date"); (ii) that any Security or Additional
Security not tendered will continue to accrue interest; (iii) that, unless the
Company defaults in the payment of the purchase price, any Securities or
Additional Securities accepted for payment pursuant to the Change of Control
Offer will cease to accrue interest after the Change of Control Payment Date;
(iv) that Holders electing to have any Securities and Additional Securities
purchased pursuant to a Change of Control Offer shall be required to surrender
the Securities, with the form entitled "Option of Holder to Elect Purchase" on
the reverse of the Securities completed, to the Paying Agent at the address
specified in the notice prior to the close of business on the third Business Day
preceding the Change of Control Payment Date; (v) that Holders shall be entitled
to withdraw their election if the Paying Agent receives, not later than the
close of business on the second Business Day preceding the Change of Control
Payment Date, a telegram, telex, facsimile transmission or letter setting forth
the name of the Holder, the principal amount of Securities delivered for
purchase, and a statement that such Holder is withdrawing his election to have
such Securities purchased; (vi) that Holders whose Securities are being
purchased only in part shall be issued new Securities equal in principal amount
to the unpurchased portion of the Securities surrendered, which unpurchased
portion must be equal to $1,000 in principal amount or an integral multiple
thereof; and (vii) the instructions that the Holders of Securities must follow
in order to tender their Securities.
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The Company shall comply with any applicable tender offer rules including
Rule 14e-1 under the Exchange Act, and any other applicable securities laws and
regulations in connection with a Change of Control Offer.
SECTION 1013. Limitation on Certain Asset Sales.
(a) The Company shall not, and shall not permit any Restricted Subsidiary
to, engage in any Asset Sale unless (i) the consideration received by the
Company or such Restricted Subsidiary for such Asset Sale is not less than the
fair market value of the assets sold (as determined by the Board of Directors of
the Company, whose good faith determination will be conclusive, and evidenced by
a resolution of the Board of Directors) and (ii) the consideration received by
the Company or the relevant Restricted Subsidiary in respect of such Asset Sale
consists of at least 75% cash or Cash Equivalents; provided that the amount of
(x) any liabilities (as shown on the most recent balance sheet of the Company or
such Restricted Subsidiary) of the Company or any of its Restricted Subsidiaries
(other than liabilities that are by their terms subordinated to the Securities
or any guarantee thereof) that are assumed by the transferee of any such assets
pursuant to a customary novation agreement that releases the Company or such
Restricted Subsidiary from further liability and (y) any securities, notes or
other obligations received by the Company or any such Restricted Subsidiary from
such transferee that are promptly converted by the Company or such Restricted
Subsidiary into cash or Cash Equivalents (to the extent of the cash or Cash
Equivalents received), shall be deemed to be cash or Cash Equivalents, as the
case may be, for purposes of this provision.
(b) If the Company or any Restricted Subsidiary engages in an Asset Sale,
the Company may, at its option, within 360 days after such Asset Sale, (i) apply
all or a portion of the Net Cash Proceeds to the permanent reduction of amounts
outstanding under the Senior Credit Facility or to the repayment of other Senior
Indebtedness of the Company or a Restricted Subsidiary or (ii) invest (or enter
into a legally binding agreement to invest) all or a portion of such Net Cash
Proceeds in properties and assets to replace the properties and assets that were
the subject of the Asset Sale or in properties and assets that will be used in
businesses of the Company or its Restricted Subsidiaries, as the case may be, as
such businesses are conducted prior to such Asset Sale or in businesses
reasonably related or ancillary thereto (in any such case as determined by the
Board of Directors in good faith). If any such legally binding agreement to
invest such Net Cash Proceeds is terminated, the Company may, within 90 days of
such termination or within 360 days of such Asset Sale, whichever is later,
invest such Net Cash Proceeds as provided in clause (i) or (ii) (without regard
to the parenthetical contained in such clause (ii)) above. Notwithstanding the
foregoing, if the Company or any Restricted Subsidiary engages in an Asset Sale
of Designated Assets, (x) the Company may, at its option, within 360 days after
such Asset Sale of Designated Assets, (1) apply all or a portion of the Net Cash
Proceeds to the repayment of amounts outstanding under the Senior Credit
Facility or to the repayment of other Senior Indebtedness of the Company or a
Restricted Subsidiary or (2) invest (or enter into a legally binding agreement
to invest) all or a portion of such Net Cash Proceeds as set forth in
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clause (ii) above and (y) the Company or the relevant Restricted Subsidiary
shall not be required to receive, as set forth in clause (ii) of paragraph (a)
of this Section 1013, 75% of the consideration in respect of such Asset Sale of
Designated Assets in the form of cash or Cash Equivalents. The amount of such
Net Cash Proceeds not so used as set forth above in this paragraph (b)
constitutes "Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds exceeds $15,000,000, the
Company shall, within 30 days thereafter, make an offer to purchase (an "Asset
Sale Offer") from all Holders of Securities on a pro rata basis, in accordance
with the procedures set forth in paragraph (d) below, the maximum principal
amount (expressed as a multiple of $1,000) of Securities that may be purchased
with the Excess Proceeds. The offer price as to each Security will be payable in
cash in an amount equal to 100% of the principal amount of such Security plus in
each case accrued and unpaid interest, if any, to the date of repurchase. To the
extent that the aggregate principal amount of Securities tendered pursuant to an
Asset Sale Offer is less than the Excess Proceeds, the Company may use the
portion of the Excess Proceeds not required to be used to repurchase the
Securities for general corporate purposes. If the aggregate principal amount of
Securities validly tendered and not withdrawn by holders thereof exceeds the
Excess Proceeds, the Securities to be purchased will be selected on a pro rata
basis (based upon the principal amount of Securities). Upon completion of such
Asset Sale Offer, the amount of Excess Proceeds will be reset to zero.
(d) Within the time period described in paragraph (c) above for making an
Asset Sale Offer, the Company shall mail a notice to each Holder in the manner
provided in Section 106 stating: (1) that the Asset Sale Offer is being made
pursuant to the provisions of Section 1013 of this Indenture and that all
Securities and Additional Securities, if any, duly and timely tendered shall be
accepted for payment (except, as provided above, if the aggregate principal
amount as the case may be, of the Securities and Additional Securities exceeds
the amount of Excess Proceeds); (2) the purchase price and the purchase date
which will be a Business Day no earlier than 30 days nor later than 60 days from
the date such notice is mailed (the "Asset Sale Purchase Date"); (3) that any
Security not tendered will continue to accrue interest; (4) that, unless the
Company defaults in the payment of the purchase price, any Securities accepted
for payment pursuant to the Asset Sale Offer will cease to accrue interest after
the Asset Sale Purchase Date; (5) that Holders electing to have any Securities
purchased pursuant to an Asset Sale Offer shall be required to surrender the
Securities, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Securities completed, to the Paying Agent at the address
specified in the notice prior to the close of business on the third Business Day
preceding the Asset Sale Purchase Date; (6) that Holders shall be entitled to
withdraw their election if the Paying Agent receives, not later than the close
of business on the second Business Day preceding the Asset Sale Purchase Date, a
telegram, telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of Securities delivered for purchase, and a
statement that such Holder is withdrawing his election to have such Securities
purchased; (7) that Holders whose Securities are being purchased only in part
shall be issued new Securities equal in principal amount of the unpurchased
portion of the Securities surrendered, which unpurchased portion must be
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equal to $1,000 in principal amount or an integral multiple thereof; and (8) the
instructions that the Holders of Securities must follow in order to tender their
Securities.
SECTION 1014. Limitation on Transactions with Affiliates.
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, enter into or suffer to exist any transaction or series
of transactions with, or for the benefit of, any Affiliate of the Company or any
of its Restricted Subsidiaries unless (a) such transaction or series of
transactions is on terms that are no less favorable to the Company or such
Restricted Subsidiary, as the case may be, than those that could have been
obtained in an arm's length transaction with third parties who are not
Affiliates and (b) either (i) with respect to any transaction or series of
related transactions involving aggregate payments in excess of $5,000,000, but
less than $10,000,000, the Company delivers a resolution of the Board of
Directors of the Company set forth in an Officers' Certificate to the Trustee
certifying that such transaction or series of related transactions comply with
clause (a) above and that such transaction or transactions have been approved by
the Board of Directors (including a majority of the Disinterested Directors) of
the Company or (ii) with respect to a transaction or series of related
transactions involving aggregate payments equal to or greater than $10,000,000,
the Company delivers to the Trustee (x) an Officers' Certificate certifying that
such transaction or series of related transactions have been approved by the
Board of Directors (including a majority of the Disinterested Directors) of the
Company and (y) a written opinion from a nationally recognized accounting or
investment banking firm to the effect that such transaction or series of related
transactions are fair to the Company or such Restricted Subsidiary from a
financial point of view.
The foregoing covenant shall not restrict any of the following:
(A) transactions among the Company and/or its Restricted
Subsidiaries;
(B) the Company from paying reasonable and customary regular
compensation or fees to, or entering into customary expense reimbursement,
indemnification or similar arrangements with, directors of the Company or
any Restricted Subsidiary who are not employees of the Company or any
Restricted Subsidiary;
(C) transactions permitted by the provisions of Section 1011;
(D) transactions among the Company, the Parent and Laidlaw pursuant
to the Stock Purchase Agreement; or
(E) any payments made by the Company or a Restricted Subsidiary to
the Parent or Laidlaw or transactions entered into among the Company, any
Restricted Subsidiary and the Parent and/or Laidlaw pursuant to customary
financial and management service arrangements (including, without
limitation, general liability and
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workers' compensation insurance, income tax management and treasury
services); provided, however, that each such payment or transaction is (a)
in the ordinary course of business consistent with past practice prior to
the date of the Indenture and (b) upon fair and reasonable terms no less
favorable to the Company or such Restricted Subsidiary, as the case may
be, than could have been obtained in a comparable arm's length transaction
with a Person that is not an Affiliate of the Company or such Restricted
Subsidiary.
SECTION 1015. Limitation on Dividends and Other Payment Restrictions
Affecting Restricted Subsidiaries.
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction of any kind on the ability of any
Restricted Subsidiary to (a) pay dividends, in cash or otherwise, or make any
other distributions on or in respect of its Capital Stock, (b) pay any
Indebtedness owed to the Company or any other Restricted Subsidiary, (c) make
loans or advances to the Company or any other Restricted Subsidiary, or (d)
transfer any of its properties or assets to the Company or any other Restricted
Subsidiary, except for such encumbrances or restrictions existing under or by
reason of any of the following:
(i) the Indenture, the Senior Credit Facility, as originally
executed, and any other agreement in effect on the Closing Date to the
extent listed on Schedule II hereto;
(ii) applicable law;
(iii) customary non-assignment provisions of any lease governing a
leasehold interest of the Company or any Restricted Subsidiary;
(iv) any agreement or other instrument of a Person acquired by the
Company or any Restricted Subsidiary in existence at the time of such
acquisition (but not created in contemplation thereof), which encumbrance
or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person, or the property or assets of
the Person, so acquired;
(v) any encumbrance or restriction contained in contracts for sales
of assets, including the Capital Stock of any Restricted Subsidiary
permitted by Section 1013 with respect to assets to be sold pursuant to
such contract; and
(vi) any encumbrance or restriction existing under any agreement
that extends, renews, refinances or replaces the agreements containing the
encumbrances or restrictions in the foregoing clauses (i) and (iv);
provided that the terms and conditions of any such encumbrances or
restrictions are not materially less favorable
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to the Holders of Securities than those under or pursuant to the agreement
so extended, renewed, refinanced or replaced.
SECTION 1016. Limitation on Issuances and Sales of Capital Stock of
Restricted Subsidiaries.
The Company shall not, and shall not permit any Restricted Subsidiary,
directly or indirectly, to issue, convey, sell, assign, transfer, lease or
otherwise dispose of any shares of Capital Stock of a Restricted Subsidiary
(including options, warrants or other rights to purchase shares of such Capital
Stock) except (a) to the Company or a Wholly-Owned Restricted Subsidiary or (b)
in a transaction or series of related transactions consisting of a sale,
provided that immediately after giving effect to such issuance or sale neither
the Company nor any of its Subsidiaries owns any shares of Capital Stock of such
Restricted Subsidiary (including options, warrants or other rights to purchase
shares of such Capital Stock) and such sale complies with the provisions of
Section 1013.
The Company shall not permit any Restricted Subsidiary that is a Guarantor
to issue Preferred Stock.
SECTION 1017. Limitation on Liens.
The Company shall not, and shall not permit any Restricted Subsidiary to,
create, incur, affirm or suffer to exist any Lien of any kind securing any Pari
Passu Indebtedness or Subordinated Indebtedness (including any assumption,
guarantee or other liability with respect thereto by any Restricted Subsidiary)
upon any property or assets (including any intercompany notes) of the Company or
any Restricted Subsidiary now owned or acquired after the Closing Date, or any
income or profits therefrom, unless the Securities are directly secured equally
and ratably with (or prior to in the case of Subordinated Indebtedness) the
obligation or liability secured by such Lien, and except for any Lien securing
Acquired Indebtedness created prior to the incurrence of such Indebtedness by
the Company or any Restricted Subsidiary, provided that any such Lien only
extends to the assets that were subject to such Lien securing such Acquired
Indebtedness prior to the related acquisition by the Company or the Restricted
Subsidiary.
SECTION 1018. Unrestricted Subsidiaries.
(a) The Board of Directors of the Company may designate any Subsidiary
(including any newly acquired or newly formed Subsidiary) to be an Unrestricted
Subsidiary so long as (i) neither the Company nor any Restricted Subsidiary is
directly or indirectly liable for any Indebtedness of such Subsidiary, (ii) no
default with respect to any Indebtedness of such Subsidiary would permit (upon
notice, lapse of time or otherwise) any holder of any other Indebtedness of the
Company or any Restricted Subsidiary to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its Stated Maturity, (iii) any Investment in such Subsidiary made as a result of
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designating such Subsidiary an Unrestricted Subsidiary will not violate the
provisions of Section 1011, (iv) neither the Company nor any Restricted
Subsidiary has a contract, agreement, arrangement, understanding or obligation
of any kind, whether written or oral, with such Subsidiary other than those that
might be obtained at the time from Persons who are not Affiliates of the Company
and (v) neither the Company nor any Restricted Subsidiary has any obligation to
subscribe for additional shares of Capital Stock or other equity interest in
such Subsidiary, or to maintain or preserve such Subsidiary's financial
condition or to cause such Subsidiary to achieve certain levels of operating
results.
(b) The Board of Directors of the Company may designate any Unrestricted
Subsidiary as a Restricted Subsidiary; provided, that (i) no Default or Event of
Default has occurred and is continuing following such designation and (ii) the
Company could incur at least $1.00 of additional Indebtedness (other than
Permitted Indebtedness) pursuant to the first paragraph of Section 1010
(treating any Indebtedness of such Unrestricted Subsidiary as the incurrence of
Indebtedness by a Restricted Subsidiary).
SECTION 1019. Limitation on Layering Indebtedness.
The Company and each Guarantor shall not, directly or indirectly, incur or
otherwise permit to exist any Indebtedness that is subordinate in right of
payment to any Indebtedness of the Company or such Guarantor, as the case may
be, unless such Indebtedness is also pari passu with, or subordinate in right of
payment to, the Securities or the Securities Guarantee issued by such Guarantor,
as the case may be, or subordinate in right of payment to the Securities or such
Securities Guarantee, as the case may be.
SECTION 1020. Limitation on Guarantees of Indebtedness by Restricted
Subsidiaries.
Other than a guarantee by a Foreign Restricted Subsidiary of the payment
of Indebtedness of another Foreign Restricted Subsidiary, the Company shall not
permit any Restricted Subsidiary that is not a Guarantor, directly or
indirectly, to guarantee, assume or in any other manner become liable for the
payment of any Indebtedness of the Company or any Indebtedness of any other
Restricted Subsidiary, unless (a) such Restricted Subsidiary simultaneously
executes and delivers a supplemental indenture providing for a guarantee of
payment of the Securities by such Restricted Subsidiary; and (b) with respect to
any guarantee of Subordinated Indebtedness by a Restricted Subsidiary, any such
guarantee is subordinated to such Restricted Subsidiary's guarantee with respect
to the Securities at least to the same extent as such Subordinated Indebtedness
is subordinated to the Securities, provided that the foregoing provision shall
not be applicable to any guarantee by any Restricted Subsidiary that existed at
the time such Person became a Restricted Subsidiary and was not incurred in
connection with, or in contemplation of, such Person becoming a Restricted
Subsidiary.
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Any guarantee by a Restricted Subsidiary of the Securities pursuant to the
preceding paragraph may provide by its terms that it shall be automatically and
unconditionally released and discharged upon: (a) any sale, exchange or transfer
to any Person of all of the Company's and the Restricted Subsidiaries' Capital
Stock in, or all or substantially all the assets of, such Restricted Subsidiary
(which sale, exchange or transfer is not prohibited by this Indenture); (b) the
release or discharge of the guarantee that resulted in the creation of such
guarantee of the Securities, except a discharge or release by or as a result of
payment under such guarantee; or (c) the designation of such Restricted
Subsidiary as an Unrestricted Subsidiary in accordance with the terms of this
Indenture.
SECTION 1021. Limitation on Conduct of Business.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, conduct any business other than the business the Company and
its Restricted Subsidiaries were conducting on the Closing Date or businesses
reasonably related or ancillary thereto, except to such extent as would not be
material to the Company and its Restricted Subsidiaries taken as a whole.
SECTION 1022. Limitation on Incurrence of Contingent Obligations.
The Company shall not, and shall not permit any Restricted Subsidiary to,
create, issue, assume, guarantee or in any manner become directly or indirectly
liable for the payment of, or otherwise incur, any Contingent Obligations if, at
the time of such incurrence, all Contingent Obligations outstanding at the date
of such incurrence in the aggregate equal or exceed an amount equal to 17% of
the total assets of the Company and its Restricted Subsidiaries (on a
consolidated basis determined in accordance with GAAP).
SECTION 1023. Payments for Consent.
Neither the Company nor any of its Restricted Subsidiaries shall, directly
or indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder for or as an inducement to any
consent, waiver or amendment of any of the terms or provisions of this Indenture
or the Securities unless such consideration is offered to be paid or is paid to
all Holders that consent, waive or agree to amend in the time frame set forth in
the solicitation documents relating to such consent, waiver or agreement.
SECTION 1024. Limitation on Liens Securing Indebtedness.
After the occurrence of a Fall-away Event, the Company shall not, and
shall not permit any Restricted Subsidiary to, create, incur or assume any Lien
(other than any Permitted Lien) on any properties or assets of the Company or
any Restricted Subsidiary to secure the payment of Indebtedness of the Company
or any Subsidiary if immediately after the creation, incurrence or assumption of
such Lien, the aggregate outstanding principal amount of all Indebtedness of the
Company and the Subsidiaries that is secured by Liens
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(other than Permitted Liens) on any properties or assets of the Company and any
Restricted Subsidiaries (other than (x) Indebtedness that is so secured equally
and ratably with (or on a basis subordinated to) the Securities and (y) the
Securities) plus the aggregate amount of all Attributable Debt of the Company
and the Restricted Subsidiaries with respect to all Sale and Leaseback
Transactions outstanding at such time (other than Sale and Leaseback
Transactions permitted by the second paragraph under Section 1024) would exceed
10% of the Consolidated Net Tangible Assets unless the Company secures the
outstanding Securities equally and ratably with (or prior to) all Indebtedness
secured by such Lien, so long as such Indebtedness shall be so secured.
SECTION 1025. Limitation on Sale and Leaseback Transactions.
After the occurrence of a Fall-away Event, the Company shall not, and
shall not permit any Restricted Subsidiary to, enter into any Sale and Leaseback
Transaction involving any properties or assets of the Company or any Restricted
Subsidiary, as the case may be, unless, after giving effect to such Sale and
Leaseback Transaction, the aggregate amount of all Attributable Debt of the
Company and the Restricted Subsidiaries with respect to all Sale and Leaseback
Transactions outstanding at such time (other than Sale and Leaseback
Transactions permitted by the next paragraph), plus the aggregate principal
amount of all Indebtedness of the Company and the Subsidiaries that is secured
by Liens (other than Permitted Liens) on properties or assets of the Company or
any Restricted Subsidiary, as the case may be, (other than (x) Indebtedness that
is so secured equally and ratably with (or on a basis subordinated to) the
Securities and (y) the Securities) would not exceed 10% of Consolidated Net
Tangible Assets.
The restriction in the foregoing paragraph shall not apply to any Sale and
Leaseback Transaction if (a) the lease is for a period of not in excess of three
years, including renewal of rights, (b) the lease secures or relates to
industrial revenue or similar financing, (c) the transaction is solely between
the Company and a Restricted Subsidiary or between or among Restricted
Subsidiaries or (d) the Company or such Restricted Subsidiary, within 270 days
after the sale is completed, applies an amount equal to or greater of (i) the
Net Cash Proceeds of the sale of the properties or assets of the Company or any
Restricted Subsidiary, as the case may be, which are the subject of the Sale and
Leaseback Transaction or (ii) the fair market value of the properties or assets
of the Company or any Restricted Subsidiary, as the case may be, which are the
subject of the Sale and Leaseback Transaction (as determined in good faith by
the Board of Directors of the Company) either to (A) the retirement (or open
market purchase) of Notes, other long-term Indebtedness of the Company ranking
on a parity with or senior to the Notes or long-term Indebtedness of a
Restricted Subsidiary or (B) the purchase by the Company or any Restricted
Subsidiary of other properties and assets that will be used in the business of
the Company or its Restricted Subsidiaries (or businesses reasonably related or
ancillary thereto) having a value at least equal to the value of the properties
or assets of the Company or the Restricted Subsidiary, as the case may be, which
are the subject of the Sale and Leaseback Transaction.
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SECTION 1026. Waiver of Certain Covenants.
The Company or any Restricted Subsidiary may omit in any particular
instance to comply with any term, provision or condition set forth in Sections
1006 through 1025, inclusive, if before or after the time for such compliance
the Holders of at least a majority in principal amount of the Outstanding
Securities, by Act of such Holders, waive such compliance in such instance with
such term, provision or condition, but no such waiver shall extend to or affect
such term, provision or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Company and the
duties of the Trustee in respect of any such term, provision or condition shall
remain in full force and effect.
SECTION 1027. Fall-Away of Certain Covenants.
In the event that the Securities achieve an Investment Grade rating and no
Default or Event of Default shall have occurred and be continuing, upon the
request of the Company, the covenants described under Sections 801(c) and (d)
and 1009 to 1023 will no longer be applicable to the Company and, if applicable,
its Restricted Subsidiaries; provided that the Company delivers to the Trustee
(i) an Officers' Certificate certifying that the Fall-away Event shall have
occurred and (ii) a letter from Moody's and S&P, dated not more than three days
prior to the date of such Officers' Certificate, verifying the Investment Grade
rating of the Securities (the occurrence of the events (including the delivery
to the Trustee of the documents referred to in clauses (i) and (ii)) are
referred to herein as a "Fall-away Event").
ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 1101. Right of Redemption.
(a) The Securities may be redeemed at the option of the Company, as a
whole or from time to time in part, at any time prior to June 1, 2003, subject
to the conditions and at the Redemption Price specified in the form of Security
attached hereto as Exhibit A, together with accrued and unpaid interest, if any,
to the Redemption Date.
(b) The Securities may be redeemed at the option of the Company, as a
whole or from time to time in part, at any time on or after June 1, 2003,
subject to the conditions and at the Redemption Prices specified in the form of
Security attached hereto as Exhibit A, together with accrued and unpaid
interest, if any, to the Redemption Date.
(c) In addition, at any time or from time to time prior to June 1, 2001,
the Company may redeem, on one or more occasions, up to 35% of the sum of (i)
the initial aggregate principal amount of the Securities and (ii) the initial
aggregate principal amount of
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any Additional Securities with the net proceeds of one or more Public Equity
Offerings at a redemption price equal to 109.25% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the Redemption Date
(subject to the right of Holders of record on the relevant Regular Record Date
to receive interest due on the relevant Interest Payment Date); provided that,
immediately after giving effect to any such redemption, at least $211,300,000
aggregate principal amount of the Securities (including any Additional
Securities) remains outstanding; provided further that such redemptions occur
within 90 days of the date of closing of the related Public Equity Offering.
SECTION 1102. Applicability of Article.
Redemption of Securities at the election of the Company or otherwise, as
permitted or required by any provision of this Indenture, shall be made in
accordance with such provision and this Article.
SECTION 1103. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities pursuant to Section
1101 shall be evidenced by a Board Resolution. In case of any redemption at the
election of the Company, the Company shall, at least 60 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and of
the principal amount of Securities to be redeemed and shall deliver to the
Trustee such documentation and records as shall enable the Trustee to select the
Securities to be redeemed pursuant to Section 1104.
SECTION 1104. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities not previously
called for redemption, by lot or such method as the Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
of the principal of Securities; provided, however, that no such partial
redemption shall reduce the portion of the principal amount of a Security not
redeemed to less than $1,000.
The Trustee shall promptly notify the Company in writing of the Securities
selected for redemption and, in the case of any Securities selected for partial
redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to redemption of Securities shall relate, in the case of
any Security redeemed or to be redeemed only in part, to the portion of the
principal amount of such Security which has been or is to be redeemed.
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SECTION 1105. Notice of Redemption.
Notice of redemption shall be given in the manner provided for in Section
106 not less than 30 nor more than 60 days prior to the Redemption Date, to each
Holder of Securities to be redeemed.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price and the amount of accrued interest to the
Redemption Date payable as provided in Section 1107, if any,
(3) if less than all Outstanding Securities are to be redeemed, the
identification (and, in the case of a partial redemption, the principal
amounts) of the particular Securities to be redeemed,
(4) in case any Security is to be redeemed in part only, the notice
which relates to such Security shall state that on and after the
Redemption Date, upon surrender of such Security, the holder will receive,
without charge, a new Security or Securities of authorized denominations
for the principal amount thereof remaining unredeemed,
(5) that on the Redemption Date the Redemption Price (and accrued
interest, if any, to the Redemption Date payable as provided in Section
1107) will become due and payable upon each such Security, or the portion
thereof, to be redeemed, and that interest thereon will cease to accrue on
and after said date,
(6) the place or places where such Securities are to be surrendered
for payment of the Redemption Price and accrued interest, if any, and
(7) the CUSIP or CINS number, as the case may be.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 1106. Deposit of Redemption Price.
On or prior to 10:00 a.m. (New York City time) on any Redemption Date, the
Company shall deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 1003) an amount of money sufficient to pay the Redemption
Price of, and accrued interest on, all the Securities which are to be redeemed
on that date.
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SECTION 1107. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified (together with accrued interest, if any, to
the Redemption Date), and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such
Securities shall cease to bear interest. Upon surrender of any such Security for
redemption in accordance with said notice, such Security shall be paid by the
Company at the Redemption Price, together with accrued interest, if any, to the
Redemption Date; provided, however, that installments of interest whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of such Securities, or one or more Predecessor Securities, registered as such at
the close of business on the relevant Record Dates according to their terms and
the provisions of Section 309.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate borne by the Securities.
SECTION 1108. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered at
the office or agency of the Company maintained for such purpose pursuant to
Section 1002 (with, if the Company or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Company and
the Trustee duly executed by, the Holder thereof or such Holder's attorney duly
authorized in writing), and the Company shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Security without service charge,
a new Security or Securities, of any authorized denomination as requested by
such Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered.
ARTICLE XII
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1201. Company Option to Effect Defeasance or Covenant Defeasance.
The Company may, at its option by Board Resolution at any time, with
respect to the Securities, elect to have either Section 1202 or Section 1203 be
applied to all Outstanding Securities upon compliance with the conditions set
forth below in this Article XII.
SECTION 1202. Defeasance and Discharge.
Upon the Company's exercise under Section 1201 of the option applicable to
this Section 1202, the Company and the Guarantors shall be deemed to have been
discharged
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from their obligations with respect to all Outstanding Securities on the date
the conditions set forth in Section 1204 are satisfied (hereinafter,
"defeasance"). For this purpose, such defeasance means that the Company shall be
deemed to have paid and discharged the entire indebtedness represented by the
Outstanding Securities, which shall thereafter be deemed to be "Outstanding"
only for the purposes of Section 1205 and the other Sections of this Indenture
referred to in (A) and (B) below, and to have satisfied all its other
obligations under such Securities and this Indenture insofar as such Securities
are concerned (and the Trustee, at the expense of the Company, shall execute
proper instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (A) the rights of
Holders of Outstanding Securities to receive payments in respect of the
principal of and premium, if any, on and interest on such Securities when such
payments are due, (B) the Company's obligations with respect to such Securities
under Sections 304, 305, 308, 1002 and 1003, and with respect to the Trustee
under Section 606, (C) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and (D) this Article XII. Subject to compliance with this
Article XII, the Company may exercise its option under this Section 1202
notwithstanding the prior exercise of its option under Section 1203 with respect
to the Securities.
SECTION 1203. Covenant Defeasance.
Upon the Company's exercise under Section 1201 of the option applicable to
this Section 1203, each of the Company and the Restricted Subsidiaries shall be
released from its obligations under Sections 801(c) and 801(d), the covenants
contained in Sections 1004 through 1027 (other than Section 1008) with respect
to the Outstanding Securities on and after the date the conditions set forth
below are satisfied (hereinafter, "covenant defeasance"), and the Events of
Default under Sections 501(c), 501(d) and 501(e) and the Securities shall
thereafter be deemed not to be "Outstanding" for the purposes of any direction,
waiver, consent or declaration or Act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"Outstanding" for all other purposes hereunder. For this purpose, such covenant
defeasance means that, with respect to the Outstanding Securities, the Company
and any Restricted Subsidiary may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Sections
501(c), 501(d), 501(e) and 501(f) but, except as specified above, the remainder
of this Indenture and such Securities shall be unaffected thereby.
SECTION 1204. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either Section
1202 or Section 1203 to the Outstanding Securities:
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(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 607 who shall agree to comply with the provisions of this
Article XII applicable to it) as trust funds in trust, specifically
pledged as security for, and dedicated solely to, the benefit of the
Holders of such Securities, (A) money in an amount, or (B) U.S. Government
Obligations (as defined herein) that through the scheduled payment of
principal and interest thereon will provide money in an amount, or (C) a
combination thereof, sufficient, in the opinion of a nationally recognized
firm of independent public accountants, to pay and discharge the principal
of and premium, if any, on and interest on the Outstanding Securities on
the Stated Maturity (or upon Redemption Date, if applicable) of such
principal (and premium, if any) or installment of interest; provided that
the Trustee shall have been irrevocably instructed to apply such money or
the proceeds of such U.S. Government Obligations to said payments with
respect to the Securities. Before such a deposit, the Company may give to
the Trustee, in accordance with Section 1103 hereof, a notice of its
election to redeem all of the Outstanding Securities at a future date in
accordance with Article XI hereof, which notice shall be irrevocable. Such
irrevocable redemption notice, if given, shall be given effect in applying
the foregoing. For this purpose, "U.S. Government Obligations" means
securities that are (x) direct obligations of the United States of America
for the timely payment of which its full faith and credit is pledged or
(y) obligations of a Person controlled or supervised by and acting as an
agency or instrumentality of the United States of America the timely
payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act), as custodian with respect to any such U.S.
Government Obligation or a specific payment of principal of or interest on
any such U.S. Government Obligation held by such custodian for the account
of the holder of such depository receipt, provided that (except as
required by law) such custodian is not authorized to make any deduction
from the amount payable to the holder of such depository receipt from any
amount received by the custodian in respect of the U.S. Government
Obligation or the specific payment of principal of or interest on the U.S.
Government Obligation evidenced by such depository receipt.
(2) No Default or Event of Default with respect to the Securities
shall have occurred and be continuing on the date of such deposit or,
insofar as paragraphs (h) and (i) of Section 501 hereof are concerned, at
any time during the period ending on the 91st day after the date of such
deposit (it being understood that this condition shall not be deemed
satisfied until the expiration of such period).
(3) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture or
any other material agreement or instrument to which the Company or any
Guarantor is a party or by which it is bound.
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(4) In the case of an election under Section 1202, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (x) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling, or (y) since the Closing Date, there has been a
change in the applicable federal income tax law, in either case to the
effect that, and based thereon such opinion shall confirm that, the
Holders of the Outstanding Securities will not recognize income, gain or
loss for federal income tax purposes as a result of such defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
defeasance had not occurred.
(5) In the case of an election under Section 1203, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of the Securities Outstanding will not recognize income, gain or
loss for federal income tax purposes as a result of such covenant
defeasance and will be subject to federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if
such covenant defeasance had not occurred.
(6) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the defeasance under Section
1202 or the covenant defeasance under Section 1203, as the case may be,
have been complied with.
SECTION 1205. Deposited Money and U.S. Government Obligations to Be Held
in Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 1003, all money
and U.S. Government Obligations (including the proceeds thereof) deposited with
the Trustee (or other qualifying trustee, collectively for purposes of this
Section 1205, the "Trustee") pursuant to Section 1204 in respect of the
Outstanding Securities shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Securities and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Holders of
such Securities of all sums due and to become due thereon in respect of
principal (and premium, if any) and interest, but such money need not be
segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Governmental Obligations
deposited pursuant to Section 1204 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of the Outstanding Securities.
Anything in this Article XII to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon Company Request any
money or U.S.
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Government Obligations held by it as provided in Section 1204 which, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, are in
excess of the amount thereof which would then be required to be deposited to
effect an equivalent defeasance or covenant defeasance, as applicable, in
accordance with this Article.
SECTION 1206. Reinstatement.
If the Trustee or any Paying Agent is unable to apply any money in
accordance with Section 1205 by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to Section 1202 or 1203, as the case may be, until such time as the
Trustee or Paying Agent is permitted to apply all such money in accordance with
Section 1205; provided, however, that if the Company makes any payment of
principal of or premium, if any, or interest on any Security following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Securities to receive such payment from the money held by
the Trustee or Paying Agent.
ARTICLE XIII
SECURITIES GUARANTEES
SECTION 1301. Securities Guarantees.
(a) The Parent and each Subsidiary Guarantor hereby jointly and severally,
fully, absolutely, unconditionally and irrevocably guarantees to each Holder of
a Security authenticated and delivered by the Trustee, and to the Trustee for
its benefit and the benefit of each Holder, the punctual payment and performance
when due of all Indenture Obligations which, for purposes of its Securities
Guarantee, shall also be deemed to include all commissions, fees, charges, costs
and other expenses (including reasonable legal fees and disbursements of
counsel) arising out of or incurred by the Trustee or the Holders in connection
with the enforcement of any Securities Guarantee. Without limiting the
generality of the foregoing, each Guarantor's liability shall extend to all
amounts that constitute part of the Indenture Obligations and would be owed by
the Company to such Holder or the Trustee under the Securities or this Indenture
but for the fact that they are unenforceable, reduced, limited, suspended or not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving the Company.
(b) Each Guarantor and by its acceptance hereof each Holder hereby
confirms that it is the intention of all such parties that the guarantee by such
Guarantor pursuant to its Securities Guarantee not constitute a fraudulent
transfer or conveyance for purposes of the Federal Bankruptcy Code, the Uniform
Fraudulent Conveyance Act, the Uniform Fraudulent
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Transfer Act of any similar federal or state law or the provisions of its local
law relating to fraudulent transfer or conveyance. To effectuate the foregoing
intention, the Holders and each Guarantor hereby irrevocably agree that the
obligations of such Guarantor under its Securities Guarantee shall be limited to
the maximum amount as shall, after giving effect to all other contingent and
fixed liabilities of such Guarantor and after giving effect to any collections
from or payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under its Securities Guarantee or pursuant
to paragraph (c) of this Section 1301, result in the obligations of such
Guarantor under its Securities Guarantee not constituting a fraudulent
conveyance or fraudulent transfer under federal or state law.
(c) In order to provide for just and equitable contribution among the
Guarantors, the Guarantors agree, inter se, that in the event any payment or
distribution is made by any Guarantor (a "Funding Guarantor") under its
Securities Guarantee, such Funding Guarantor shall be entitled to a contribution
from each other Guarantor in a pro rata amount based on the Adjusted Net Assets
of each Guarantor (including the Funding Guarantor) for all payments, damages
and expenses incurred by the Funding Guarantor in discharging the Indenture
Obligations of the Company or any other Guarantor's obligations with respect to
its Securities Guarantee. "Adjusted Net Assets" of such Guarantor at any date
shall mean the lesser of (x) the amount by which the fair value of the property
of such Guarantor exceeds the total amount of liabilities, including, without
limitation, contingent liabilities (after giving effect to all other fixed and
contingent liabilities incurred or assumed on such date), but excluding
liabilities under the Securities Guarantee of such Guarantor at such date and
(y) the amount by which the present fair salable value of the assets of such
Guarantor at such date exceeds the amount that shall be required to pay the
probable liability of such Guarantor on its debts (after giving effect to all
other fixed and contingent liabilities incurred or assumed on such date),
excluding debt in respect of the Securities Guarantee, as they become absolute
and matured.
SECTION 1302. Guaranty Absolute.
Each Guarantor guarantees that the Securities shall be paid or performed
strictly in accordance with the terms of the Securities and this Indenture,
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of any Holder with
respect thereto. The obligations of each Guarantor under its Securities
Guarantee are independent of the obligations of the Company under the Securities
and this Indenture, and a separate action or actions may be brought and
prosecuted against such Guarantor to enforce its Securities Guarantee,
irrespective of whether any action is brought against the Company or any other
Guarantor or whether the Company or any other Guarantor is joined in any such
action or actions. The liability of each Guarantor under its Securities
Guarantee shall be absolute and unconditional and the liability and obligations
of such Guarantor hereunder shall not be released, discharged, mitigated,
waived, impaired or affected in whole or in part by:
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(a) any lack of validity or enforceability of this Indenture or the
Securities with respect to the Company or any Guarantor or any agreement
or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Indenture Obligations, or any other
amendment or waiver of or any consent to departure from this Indenture,
including any increase in the Indenture Obligations resulting from the
extension of additional credit to the Company or otherwise;
(c) the failure to give notice to the Guarantor of the occurrence of
a Default under the provisions of this Indenture or the Securities;
(d) any taking, release or amendment or waiver of or consent to
departure from any other guarantee, for all or any of the Indenture
Obligations;
(e) any failure, omission, delay by or inability on the part of the
Trustee or the Holders to assert or exercise any right, power or remedy
conferred on the Trustee or the Holders in this Indenture or the
Securities;
(f) any change in the corporate structure, or termination,
dissolution, consolidation or merger of the Company or any Guarantor with
or into any other Person, the voluntary or involuntary liquidation,
dissolution, sale or other disposition of all or substantially all the
assets of the Company or any Guarantor, the marshaling of the assets and
liabilities of the Company or any Guarantor, the receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition with the creditors, or readjustment of, or other
similar proceedings affecting the Company or any Guarantor, or any of the
assets of any of them;
(g) the assignment of any right, title or interest of the Trustee or
any Holder in this Indenture or the Securities to any other Person; or
(h) any other event or circumstance (including any statute of
limitations), whether foreseen or unforeseen and whether similar or
dissimilar to any of the foregoing, that might otherwise constitute a
defense available to, or a discharge of, the Company or a Guarantor, other
than payment in full of the Indenture Obligations; it being the intent of
each Guarantor that its obligations hereunder shall not be discharged
except by payment of all amounts owing pursuant to this Indenture or the
Securities.
The Securities Guarantee of each Guarantor shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Indenture Obligations is rescinded or must otherwise be returned by any Holder
or the Trustee upon the insolvency, bankruptcy
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or reorganization of the Company or otherwise, all as though such payment had
not been made. Each Guarantor further agrees, to the fullest extent that it may
lawfully do so, that, as between such Guarantor, on the one hand, and the
Holders and the Trustee, on the other hand, (i) the maturity of the obligations
guaranteed hereby may be accelerated as provided in Article V of this Indenture
for the purposes of this Securities Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (ii) in the event of any acceleration of such
obligations as provided in Article V of this Indenture, such obligations
(whether or not due and payable) shall forthwith become due and payable by the
Guarantor for the purpose of this Securities Guarantee.
SECTION 1303. Waivers.
(a) Each Guarantor hereby expressly waives (to the extent permitted by
law) notice of the acceptance of its Securities Guarantee and notice of the
existence, renewal, extension or the non-performance, non-payment, or
non-observance on the part of the Company of any of the terms, covenants,
conditions and provisions of this Indenture or the Securities or any other
notice whatsoever to or upon the Company or such Guarantor with respect to the
Indenture Obligations. Each Guarantor hereby acknowledges communication to it of
the terms of this Indenture and the Securities and all of the provisions herein
contained and consents to and approves the same. Each Guarantor hereby expressly
waives (to the extent permitted by law) diligence, presentment and protest.
(b) Without prejudice to any of the rights or recourse which the Trustee
or the Holders may have against the Company, each Guarantor hereby expressly
waives (to the extent permitted by law) any right to require the Trustee or the
Holders to:
(1) initiate or exhaust any rights, remedies or recourse against the
Company, any Guarantor or any other Person;
(2) value, realize upon, or dispose of any security of the Company
or any other Person held by the Trustee or the Holders; or
(3) initiate or exhaust any other remedy which the Trustee or the
Holders may have in law or equity;
before requiring, becoming entitled to or demanding payment from such Guarantor
under this Securities Guarantee.
SECTION 1304. Subrogation.
Each Guarantor shall not exercise any rights that it may acquire by way of
subrogation under this Securities Guarantee, by any payment made hereunder or
otherwise, until all the Indenture Obligations shall have been paid in full. If
any amount shall be paid to any Guarantor on account of any such subrogation
rights at any time when all the
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Indenture Obligations shall not have been paid in full, such amount shall be
held in trust for the benefit of the Holders and the Trustees and shall
forthwith be paid to the Trustee, on behalf of the Holders, to be credited and
applied to the Indenture Obligations, whether matured or unmatured.
SECTION 1305. No Waiver; Remedies.
No failure on the part of any Holder or the Trustee to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right hereunder preclude any other
or further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
SECTION 1306. Continuing Guaranty; No Right of Set-Off; Independent
Obligation.
(a) This Securities Guarantee is a continuing guarantee of the payment and
performance of all Indenture Obligations and shall remain in full force and
effect until the payment in full of all of the Indenture Obligations and all
other amounts payable under this Securities Guarantee and shall apply to and
secure any ultimate balance due or remaining unpaid to the Trustee or the
Holders under this Indenture or the Securities; and this Securities Guarantee
shall not be considered as wholly or partially satisfied by the payment or
liquidation at any time or from time to time of any sum of money for the time
being due or remaining unpaid to the Trustee or the Holders.
(b) Each Guarantor hereby guarantees that the Indenture Obligations shall
be paid to the Trustee without set-off or counterclaim or other reduction
whatsoever (whether for taxes, withholding or otherwise) in lawful currency of
the United States of America.
(c) Each Guarantor guarantees that the Indenture Obligations shall be paid
strictly in accordance with their terms regardless of any lack of validity or
enforceability of any of such terms or the rights of the Holders with respect
thereto.
(d) Each Guarantor's liability to pay or perform or cause the performance
of the Indenture Obligations under this Securities Guarantee shall arise
forthwith after demand for payment or performance by the Trustee has been given
to such Guarantor in the manner prescribed in this Indenture.
SECTION 1307. Subsidiary Guarantors May Consolidate, Etc., on Certain
Terms.
(a) Nothing contained in this Indenture or in any of the Securities shall
prevent any consolidation or merger of a Subsidiary Guarantor with or into the
Company or another Guarantor or shall prevent any sale or conveyance of the
property of a Subsidiary Guarantor as an entirety or substantially as an
entirety to the Company or another Guarantor, which
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consolidation, merger, sale or conveyance is otherwise in accordance with the
terms of this Indenture.
(b) Other than as set forth in paragraph (a) of this Section, no
Subsidiary Guarantor may consolidate with or merge with or into (whether or not
such Subsidiary Guarantor is the surviving Person) another Person whether or not
affiliated with such Subsidiary Guarantor unless: (i) subject to the provisions
of Section 1309, the Person formed by or surviving such consolidation or merger
(if other than such Subsidiary Guarantor) assumes all of the obligations of such
Subsidiary Guarantor under this Indenture and its Subsidiary Guarantee, pursuant
to a supplemental indenture in form and substance satisfactory to the Trustee,
(b) immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred and be continuing and (c) immediately after giving
effect to such transaction, the Person formed by or surviving such consolidation
or merger (if other than such Subsidiary Guarantor) or to which such properties
and assets are transferred could incur at least $1.00 of additional Indebtedness
(other than Permitted Indebtedness) pursuant to the first paragraph of Section
1010.
SECTION 1308. Additional Guarantors.
The Company will cause each Person that becomes a Domestic Subsidiary, or
any Restricted Subsidiary that guarantees any other Indebtedness of the Company
or of a Domestic Restricted Subsidiary, after the date of this Indenture to
become a Guarantor with respect to the Indenture Obligations by executing and
delivering a supplemental indenture to this Indenture providing for a Securities
Guarantee by such Subsidiary under this Article XIII (or under a separate
guarantee agreement consistent in all material respects with this Article XIII).
The Company shall deliver to the Trustee, together with the supplemental
indenture referred to above, an Opinion of Counsel that such Securities
Guarantee is a legal, valid, binding and enforceable obligation of such
Guarantor, subject to customary local law exceptions and customary exceptions
for bankruptcy and equitable principles.
SECTION 1309. Releases.
(a) In the event of (i) the conveyance, sale, assignment, transfer or
other disposition of all of the Capital Stock of a Subsidiary Guarantor to any
Person (by way of merger, consolidation or otherwise) in compliance with this
Section 1309 and the terms of this Indenture or (ii) a conveyance, sale,
assignment, transfer or other disposition of all or substantially all of the
assets of a Subsidiary Guarantor to any Person (by way of merger, consolidation
or otherwise) in compliance with this Section 1309 and the terms of this
Indenture, then such Subsidiary Guarantor (or Person acquiring such assets in
the event of a sale or other disposition of all of the assets of such Guarantor)
shall be deemed automatically and unconditionally released from and discharged
from all of its obligations under this Article XIII and its Subsidiary Guarantee
without any further action required on the part of the Trustee or any Holder;
provided that, in the event such transaction constitutes an Asset
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Sale, the Net Cash Proceeds of such conveyance, sale, assignment, transfer or
other disposition are applied in accordance with Section 1013 hereof.
(b) Any Subsidiary Guarantor that is designated by the Board of Directors
of the Company as an Unrestricted Subsidiary, or ceases to be a Subsidiary of
the Company in accordance with the terms of this Indenture may, at such time, at
the option of the Board of Directors, be released and relieved of its
obligations under its Securities Guarantee.
(c) Concurrently with the defeasance of the Securities under Section 1202
hereof, or the covenant defeasance of the Securities under Section 1203 hereof,
the Subsidiary Guarantors shall be released from all their obligations under
their Subsidiary Guarantees under this Article XIII.
(d) The Trustee shall deliver an appropriate instrument evidencing such
release upon receipt of a Company Request accompanied by an Officers'
Certificate certifying as to the compliance with this Section 1306. Any
Subsidiary Guarantor not so released shall remain liable for the full amount of
principal of and interest on the Securities as provided in its Securities
Guarantee.
SECTION 1310. Benefits Acknowledged.
Each Securities Guarantor acknowledges that it will receive direct and
indirect benefits from the financing arrangements contemplated by this Indenture
and that its guarantee and waivers pursuant to its Securities Guarantee are
knowingly made in contemplation of such benefits.
SECTION 1311. Severability.
In case any provision of this Securities Guarantee shall be invalid,
illegal or unenforceable, the validity, legality, and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
ARTICLE XIV
SUBORDINATION OF SECURITIES AND SECURITIES GUARANTEES
SECTION 1401. Securities and Securities Guarantees Subordinate to Senior
Indebtedness.
(a) The Company covenants and agrees, and each Holder of a Security, by
his acceptance thereof, likewise covenants and agrees, that, to the extent and
in the manner hereinafter set forth in this Article XIV, the indebtedness
represented by the Securities and the payment of the principal of and premium,
if any, and interest on each and all of the
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Securities (but not amounts owing to the Trustee by the Company pursuant to
Section 606 hereof) are hereby expressly made subordinate and subject in right
of payment to the prior payment in full of all Senior Indebtedness.
(b) Each Guarantor covenants and agrees, and each Holder of a Security, by
his acceptance thereof, likewise covenants and agrees, that, to the extent and
in the manner hereinafter set forth in this Article XIV, the indebtedness
represented by the Securities Guarantee of such Guarantor is hereby expressly
made subordinate and subject in right of payment to the prior payment in full of
all Guarantor Senior Indebtedness of such Guarantor.
SECTION 1402. Payment Over of Proceeds Upon Dissolution, Etc.
In the event of any payment or distribution of assets of the Company or
any Guarantor to creditors upon any liquidation, dissolution, winding-up,
reorganization, assignment for the benefit of creditors, marshaling of assets or
any bankruptcy, insolvency or similar proceedings (each such event, if any, is
herein sometimes referred to as a "Proceeding"), of the Company or any Guarantor
(the Company or such Guarantor being the "Affected Obligor"), then (i) if the
Affected Obligor is the Company, the holders of Senior Indebtedness shall first
be entitled to receive payment in full, in cash or Cash Equivalents, of all
amounts due or to become due on or in respect of such Senior Indebtedness
(including interest accruing after the commencement of any such Proceeding at
the rate specified therein whether or not such interest is an allowed claim in
such proceeding) before the Holders of the Securities are entitled to receive
any payment of principal of and premium, if any, and interest on the Securities
or on account of the purchase or redemption or other acquisition of Securities
by the Company or any Subsidiary of the Company and (ii) if the Affected Obligor
is a Guarantor, the holders of Guarantor Senior Indebtedness of such Guarantor
shall first be entitled to receive payment in full, in cash or Cash Equivalents,
of all amounts due or to become due on or in respect of such Guarantor Senior
Indebtedness (including interest accruing after the commencement of any such
Proceeding at the rate specified therein whether or not such interest is an
allowed claim in such proceeding) before the Holders of the Securities are
entitled to receive any payment or distribution of any kind with respect to the
Securities Guarantee of such Guarantor (any payment on or purchase, redemption
or acquisition of the Securities, referred to in clause (i), and any payment on
a Securities Guarantee, referred to in clause (ii), being, individually and
collectively, a "Securities Payment"), and, to that end, if the Affected Obligor
is the Company, the holders of Senior Indebtedness and, if the Affected Obligor
is a Guarantor, the holders of Guarantor Senior Indebtedness of such Guarantor
(such Senior Indebtedness or Guarantor Senior Indebtedness, as the case may be,
being "Affected Obligor Senior Indebtedness" of such Affected Obligor) shall be
entitled to receive, for application to the payment thereof, any payment or
distribution of any kind or character, whether in cash, property or securities
which may be payable or deliverable in respect of the Securities in any such
Proceeding.
In the event that, notwithstanding the foregoing provisions of this
Section 1402, the Trustee or the Holder of any Security shall have received any
payment or distribution of
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assets of an Affected Obligor of any kind or character, whether in cash,
property or securities, before all Affected Obligor Senior Indebtedness is paid
in full, and if such fact shall, at or prior to the time of such payment, have
been known to the Trustee or the Holder, as the case may be, then such payment
or distribution, except for amounts subject to the claim granted to the Trustee
in Section 606 hereof, shall be held in trust for the holders of Affected
Obligor Senior Indebtedness and shall be paid over or delivered forthwith to the
trustee in bankruptcy or other Person making payment or distribution of assets
of the Affected Obligor for application to the payment of all Affected Obligor
Senior Indebtedness remaining unpaid, to the extent necessary to pay all
Affected Obligor Senior Indebtedness in full, after giving effect to any
concurrent payment or distribution to or for the holders of the Affected Obligor
Senior Indebtedness.
For purposes of this Article XIV only, the words "any payment or
distribution of any kind or character, cash, property or securities" shall not
be deemed to include a payment or distribution of equity or subordinated
securities of the Affected Obligor provided for by a plan of reorganization or
readjustment or of any other corporation provided for by such plan of
reorganization or readjustment that, in the case of subordinated securities, are
subordinated in right of payment to all then outstanding Affected Obligor Senior
Indebtedness to at least the same extent as the Securities or Securities
Guarantees, as the case may be, are so subordinated as provided in this Article
XIV.
SECTION 1403. No Payment When Certain Senior Indebtedness in Default.
In the event that any Senior Payment Default (as defined below) shall have
occurred and be continuing, then no Securities Payment shall be made unless and
until such Senior Payment Default shall have been cured or waived or shall have
ceased to exist or all amounts then due and payable in respect of the Designated
Senior Indebtedness or other obligations that are the subject of such Senior
Payment Default shall have been paid in full. For purposes hereof, "Senior
Payment Default" means any default in the payment of principal of or premium, if
any, or interest on, Designated Senior Indebtedness or a default in the payment
of any other obligation under the Designated Senior Indebtedness, when due,
whether at the Stated Maturity of any such payment or by declaration of
acceleration, call for redemption or otherwise.
In the event that any Senior Nonmonetary Default (as defined below) shall
have occurred and be continuing, then, upon the receipt by the Company and the
Trustee of written notice of such Senior Nonmonetary Default from the Senior
Credit Facility Agent or from an authorized Person on behalf of any holder of
Designated Senior Indebtedness, no Securities Payment shall be made during the
period (the "Payment Blockage Period") commencing on the date of receipt of such
written notice (the "Blockage Notice") and ending on the earliest of (i) the
179th day after the date of such receipt of the Blockage Notice (the "Initial
Period") unless a Senior Payment Default has occurred and is continuing at the
end of such 179-day period, (ii) the date, if any, on which the Designated
Senior Indebtedness to which such default relates is discharged or such default
is waived or otherwise cured and (iii)
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the date, if any, on which such Payment Blockage Period shall have been
terminated by written notice to the Company or the Trustee from the Senior
Credit Facility Agent or from the Person who gave the Blockage Notice. In any
event, not more than one Payment Blockage Period may be commenced during any
period of 360 consecutive days, and there must be a period of at least 181
consecutive days in each period of 360 consecutive days when no Payment Blockage
Period is in effect. No Senior Nonmonetary Default that existed or was
continuing on the date of commencement of any Payment Blockage Period with
respect to the Designated Senior Indebtedness initiating such Payment Blockage
Period shall be, or can be, made the basis for the commencement of a subsequent
Payment Blockage Period unless such Senior Nonmonetary Default shall have been
cured or waived for a period of not less than 90 consecutive days. For purposes
hereof, "Senior Nonmonetary Default" means the occurrence or existence of any
event, circumstance, condition or state of facts that, by the terms of any
instrument pursuant to which any Designated Senior Indebtedness is outstanding,
permits one or more holders of such Designated Senior Indebtedness (or a trustee
or agent on behalf of the holders thereof) to declare such Designated Senior
Indebtedness due and payable prior to the date on which it would otherwise
become due and payable, other than a Senior Payment Default. Notwithstanding the
foregoing, the Company and the Guarantors may make Securities Payments without
regard to the foregoing if the Company and the Trustee receive written notice
approving such payment from a representative of such Designated Senior
Indebtedness affected by such Senior Payment Default or Senior Nonmonetary
Default.
In the event that, notwithstanding the foregoing, the Company or any
Guarantor shall make any payment to the Trustee or any Holder prohibited by the
foregoing provisions of this Section 1403, and if such fact shall, at or prior
to the time of such payment, have been made known to the Trustee or the Holder,
as the case may be, then such payment shall be held in trust for the holders of
the Affected Obligor Senior Indebtedness and shall be paid over and delivered
forthwith to the holders of the Affected Obligor Senior Indebtedness remaining
unpaid, to the extent necessary to pay in full all the Affected Obligor Senior
Indebtedness.
SECTION 1404. Payment Permitted If No Default.
Nothing contained in this Article XIV or elsewhere in this Indenture or in
any of the Securities shall, at any time except during the pendency of any
Proceeding referred to in Section 1402 or under the conditions described in
Section 1403, prevent (a) the Company or any Guarantor from making Securities
Payments, or (b) the application by the Trustee of any money deposited with it
hereunder to Securities Payments or the retention of such payment by the
Holders.
SECTION 1405. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all Senior Indebtedness in cash or Cash
Equivalents, the rights of the Holders of the Securities shall be subrogated to
the rights of the holders of
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such Senior Indebtedness to receive payments and distributions of cash, property
and securities applicable to the Senior Indebtedness until the principal of and
premium, if any, and interest on the Securities shall be paid in full. Subject
to the payment in full of all Guarantor Senior Indebtedness in cash or Cash
Equivalents, the rights of the Holders of the Securities shall be subrogated to
the rights of the holders of such Guarantor Senior Indebtedness to receive
payments and distributions of cash, property and securities applicable to such
Guarantor Senior Indebtedness until the principal of and premium, if any, and
interest on the Securities shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of the Senior
Indebtedness or Guarantor Senior Indebtedness of any cash, property or
securities to which the Holders of the Securities or the Trustee would be
entitled except for the provisions of this Article XIV, and no payments over
pursuant to the provisions of this Article XIV to the holders of Senior
Indebtedness or Guarantor Senior Indebtedness by Holders of the Securities or
the Trustee, shall, as among the Company, the Guarantors, their respective
creditors (other than holders of Senior Indebtedness and the Guarantor Senior
Indebtedness and the Holders of the Securities) be deemed to be a payment or
distribution by the Company to or on account of the Senior Indebtedness. Neither
the Holders of the Securities nor the Trustee shall have any claim against the
holders of the Senior Indebtedness or the Guarantor Senior Indebtedness or the
Senior Credit Facility Agent for any impairment of the subrogation rights herein
granted arising out of any release of Liens securing the Senior Indebtedness or
the Guarantor Senior Indebtedness.
SECTION 1406. Provisions Solely to Define Relative Rights.
The provisions of this Article XIV are and are intended solely for the
purpose of defining the relative rights of the Holders on the one hand and the
holders of Senior Indebtedness and Guarantor Senior Indebtedness on the other
hand. Nothing contained in this Article XIV or elsewhere in this Indenture or in
the Securities is intended to or shall (a) impair, as among the Company, its
creditors (other than holders of Senior Indebtedness) and the Holders of the
Securities, the obligation of the Company, which is absolute and unconditional
(and which, subject to the rights under this Article XIV of the holders of
Senior Indebtedness, is intended to rank equally with all other general
obligations of the Company) to pay to the Holders of the Securities the
principal of and premium, if any, and interest on the Securities as and when the
same shall become due and payable in accordance with their terms; or (b) impair,
as among the Guarantors, their creditors (other than holders of Guarantor Senior
Indebtedness) and the Holders of the Securities, the obligation of the
Guarantors, which is absolute and unconditional (and which, subject to the
rights under this Article XIV of the holders of Guarantor Senior Indebtedness,
is intended to rank equally with all other general obligations of the
Guarantors) to pay to the Holders of the Securities the principal of and
premium, if any, and interest on the Securities as and when the same shall
become due and payable in accordance with their terms; or (c) affect the
relative rights against the Company of the Holders of the Securities and
creditors of the Company (other than the holders of Senior Indebtedness) or the
relative rights against the Guarantors of the Holders of the Securities and
creditors of the Guarantors (other than the Holders of
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Guarantor Senior Indebtedness); or (d) prevent the Trustee or the Holder of any
Security from exercising all remedies otherwise permitted by applicable law upon
default under this Indenture, subject to the rights, if any, under this Article
XIV of the holders of Senior Indebtedness and Guarantor Senior Indebtedness to
receive cash, property and securities otherwise payable or deliverable to the
Trustee or such Holder. The holders of the Senior Indebtedness and the Senior
Credit Facility Agent, as the case may be, shall be entitled to enforce the
provisions of this Article XIV against the Company, the Guarantors, the Holders
of the Securities and the Trustee.
SECTION 1407. Trustee to Effectuate Subordination.
Each Holder of a Security by his acceptance thereof authorizes and directs
the Trustee on his behalf to take such action as may be necessary or appropriate
to effectuate the subordination provided in this Article XIV and appoints the
Trustee his attorney-in-fact for any and all such purposes.
SECTION 1408. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Indebtedness or
Guarantor Senior Indebtedness to enforce subordination as herein provided shall
at any time in any way be prejudiced or impaired by any act or failure to act on
the part of the Company or any Guarantor or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by the Company or any
Guarantor with the terms, provisions and covenants of this Indenture, regardless
of any knowledge thereof any such holder may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness or Guarantor Senior Indebtedness, as the case may
be, may, at any time and from time to time, without the consent of or notice to
the Trustee or the Holders of the Securities, without incurring responsibility
to the Trustee or the Holders of the Securities and without impairing or
releasing the subordination provided in this Article XIV or the obligations
hereunder of the Holders of the Securities to the holders of Senior Indebtedness
or Guarantor Senior Indebtedness, as the case may be, do any one or more of the
following: (i) change the manner, place or terms of payment or extend the time
of payment of, or renew or alter, Senior Indebtedness or Guarantor Senior
Indebtedness, as the case may be, or otherwise amend or supplement in any manner
Senior Indebtedness or Guarantor Senior Indebtedness, as the case may be, or any
instrument evidencing the same or any agreement under which Senior Indebtedness
or Guarantor Senior Indebtedness, as the case may be, is outstanding; (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Indebtedness or any Guarantor Senior Indebtedness, as
the case may be; (iii) release any Person liable in any manner for the
collection of Senior Indebtedness or any Guarantor Senior Indebtedness, as the
case may be; and (iv) exercise or refrain from exercising any rights against the
Company or any Guarantor and any other Person.
103
<PAGE> 104
SECTION 1409. Notice to Trustee.
The Company and each Guarantor shall give prompt written notice to the
Trustee of any fact known to the Company or such Guarantor which would prohibit
the making of any payment to or by the Trustee in respect of the Securities and
of any subsequent cure or waiver thereof. Notwithstanding the provisions of this
Article XIV or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until the Trustee shall have received written notice thereof from the
Company or a holder of Senior Indebtedness or a holder of Guarantor Senior
Indebtedness or from any trustee or agent therefor; and, prior to the receipt of
any such written notice, the Trustee, shall be entitled in all respects to
assume that no such facts exist, provided, however, that if the Trustee shall
not have received the notice provided for in this Section at least two Business
Days prior to the date upon which by the terms hereof any money may become
payable for any purpose (including, without limitation, the payment of the
principal of and premium, if any or interest on any Security), then, anything
herein contained to the contrary notwithstanding, the Trustee shall have full
power and authority to receive such money and to apply the same to the purpose
for which such money was received and shall not be affected by any notice to the
contrary which may be received by it within two Business Days prior to such
date.
The Trustee shall be entitled to rely on the delivery to it of a written
notice by a Person representing himself to be a holder of Senior Indebtedness or
a holder of Guarantor Senior Indebtedness (or a trustee or agent therefor) to
establish that such notice has been given by a holder of Senior Indebtedness or
a holder of Guarantor Senior Indebtedness (or a trustee or agent therefor). In
the event that the Trustee determines in good faith that further evidence is
required with respect to the right of any Person as a holder of Senior
Indebtedness or a holder of Guarantor Senior Indebtedness, as the case may be,
to participate in any payment or distribution pursuant to this Article XIV, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Indebtedness or Guarantor
Senior Indebtedness, as the case may be, held by such Person, the extent to
which such Person is entitled to participate in such payment or distribution and
any other facts pertinent to the rights of such Person under this Article XIV,
and if such evidence is not furnished, the Trustee may defer any payment to such
Person pending judicial determination as to the right of such Person to receive
such payment.
SECTION 1410. Reliance on Judicial Order or Certificate of Liquidation
Agent.
Upon any payment or distribution of assets of the Company or any Guarantor
referred to in this Article XIV, the Trustee and the Holders of the Securities
shall be entitled to rely upon any order or decree entered by any court of
competent jurisdiction in a Proceeding, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities, for the purpose of
ascertaining the Persons
104
<PAGE> 105
entitled to participate in such payment or distribution, the holders of the
Senior Indebtedness, Guarantor Senior Indebtedness and other indebtedness of the
Company and the Guarantors, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent thereto or to
this Article XIV.
SECTION 1411. Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to the holders
of Senior Indebtedness or Guarantor Senior Indebtedness and shall not be liable
to any such holders if it shall in good faith mistakenly pay over or distribute
to Holders of Securities or to the Company or to any other Person cash, property
or securities to which any holders of Senior Indebtedness or Guarantor Senior
Indebtedness shall be entitled by virtue of this Article XIV or otherwise. The
Trustee's duties with respect to holders of Senior Indebtedness and Guarantor
Senior Indebtedness are limited to those specifically set forth in this
Indenture, and no implied covenants or obligations shall be construed by any
provision hereof.
SECTION 1412. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article XIV with respect to any Senior Indebtedness or
Guarantor Senior Indebtedness which may at any time be held by it, to the same
extent as any other holder of Senior Indebtedness or Guarantor Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
Nothing in this Article XIV shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 606.
SECTION 1413. Applicability to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article XIV shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article XIV in addition to or in place of the Trustee; provided,
however, that this Section 1413 shall not apply to the Company or any Affiliate
of the Company if it or such Affiliate acts as Paying Agent.
SECTION 1414. Defeasance of this Article XIV.
The subordination of the Securities and the Securities Guarantees provided
by this Article XIV is expressly made subject to the provisions for defeasance
or covenant defeasance in Article XII hereof and, anything herein to the
contrary notwithstanding, upon the effectiveness of any such defeasance or
covenant defeasance, the Securities and the
105
<PAGE> 106
Securities Guarantees then outstanding shall thereupon cease to be subordinated
pursuant to this Article XIV.
SECTION 1415. Subordination Provisions Controlling.
Notwithstanding anything to the contrary contained in this Indenture, to
the extent that any provision contained in Articles I (other than Section 101)
through XIII of this Indenture conflicts with any provision contained in Article
XIV (including the definitions of certain terms used in Article XIV) of this
Indenture, the provisions contained in Article XIV of this Indenture shall
govern and control.
This Indenture may be signed in any number of counterparts each of which
so executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same Indenture.
106
<PAGE> 107
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the day and year first above written.
LES, INC.
By /s/ PAUL HUMPHREYS
-----------------------------------------
Name: Paul Humphreys
Title: Senior Vice President & CFO
LAIDLAW ENVIRONMENTAL
SERVICES, INC.
By /s/ PAUL HUMPHREYS
-----------------------------------------
Name: Paul Humphreys
Title: Senior Vice President & CFO
LAIDLAW ENVIRONMENTAL SERVICES
(US), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(LONE AND GRASSY MOUNTAIN), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(TULSA), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(SAN ANTONIO), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(WICHITA), INC.
LAIDLAW ENVIRONMENTAL SERVICES OF
DELAWARE, INC.
LAIDLAW ENVIRONMENTAL SERVICES
(ROSEMOUNT), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(SAWYER), INC.
<PAGE> 108
LAIDLAW ENVIRONMENTAL SERVICES
(TUCKER), INC.
NINTH STREET PROPERTIES, INC.
LAIDLAW ENVIRONMENTAL SERVICES
(SAN JOSE), INC.
CHEMCLEAR, INC. OF LOS ANGELES
USPCI, INC. OF GEORGIA
LES HOLDINGS, INC.
EAST CARBON DEVELOPMENT FINANCIAL
PARTNERS, INC.
LAIDLAW ENVIRONMENTAL SERVICES
(IMPERIAL VALLEY), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(LOKERN), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(NORTH EAST), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(RECOVERY), INC.
CORSAN TRUCKING, INC
LAIDLAW ENVIRONMENTAL SERVICES
(TES), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(TG), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(TOC), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(TS), INC.
2
<PAGE> 109
LAIDLAW ENVIRONMENTAL SERVICES
(THERMAL TREATMENT), INC.
GSX CHEMICAL SERVICES OF OHIO, INC.
LEMC, INC.
LAIDLAW CHEMICAL SERVICES, INC.
LAIDLAW ENVIRONMENTAL SERVICES
(ALTAIR), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(BDT), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(FS), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(GS), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(CLIVE), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(WT), INC.
LAIDLAW OSCO HOLDINGS, INC.
LAIDLAW ENVIRONMENTAL SERVICES OF
NASHVILLE, INC.
LAIDLAW ENVIRONMENTAL SERVICES OF
BARTOW, INC.
LAIDLAW ENVIRONMENTAL SERVICES OF
CALIFORNIA, INC.
LAIDLAW ENVIRONMENTAL SERVICES OF
CHATTANOOGA, INC.
3
<PAGE> 110
LAIDLAW ENVIRONMENTAL SERVICES OF
ILLINOIS, INC.
LAIDLAW ENVIRONMENTAL SERVICES OF
SOUTH CAROLINA, INC.
LAIDLAW ENVIRONMENTAL SERVICES OF
WHITE CASTLE, INC.
LES MERGER, INC.
LAIDLAW ENVIRONMENTAL SERVICES
(PUERTO RICO), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(BRIDGEPORT), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(DEER PARK), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(BATON ROUGE), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(PLAQUEMINE), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(CUSTOM TRANSPORT), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(LOS ANGELES), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(TIPTON), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(GLOUCESTER), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(DEER TRAIL), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(MT. PLEASANT), INC.
4
<PAGE> 111
LAIDLAW ENVIRONMENTAL SERVICES
(MINNEAPOLIS), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(ARAGONITE), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(SUSSEX), INC.
LAIDLAW ENVIRONMENTAL, INC.
By /s/ PAUL HUMPHREYS
------------------------------------------
Name: Paul Humphreys
Title: Senior Vice President & CFO
DIRT MAGNET, INC.
THE MIDWAY GAS & OIL COMPANY
ELGINT CORP.
SAFETY-KLEEN ENVIROSYSTEMS
COMPANY
SAFETY-KLEEN ENVIROSYSTEMS
COMPANY OF PUERTO RICO, INC.
PETROCON, INC.
5
<PAGE> 112
PHILLIPS ACQUISITION CORP.
SAFETY-KLEEN AVIATION CORP.
SK INSURANCE COMPANY
SK REAL ESTATE, INC.
SAFETY-KLEEN INTERNATIONAL, INC.
SAFETY-KLEEN OIL RECOVERY CO.
SAFETY-KLEEN OIL SERVICES, INC.
THE SOLVENTS RECOVERY SERVICE OF
NEW JERSEY, INC.
By /s/ PAUL HUMPHREYS
------------------------------------------
Name: Paul Humphreys
Title: Senior Vice President & CFO
SAFETY-KLEEN CORP.
By /s/ HENRY TAYLOR
------------------------------------------
Name: Henry Taylor
Title: Secretary
THE BANK OF NOVA SCOTIA TRUST
COMPANY OF NEW YORK COMPANY
By /s/ WARREN A. GOSHINE
------------------------------------------
Name: Warren A. Goshine
Title: Secretary
6
<PAGE> 113
Schedule I
SUBSIDIARY GUARANTORS
Laidlaw Environmental Services (US), Inc.
Laidlaw Environmental Services (Lone and Grassy Mountain), Inc.
Laidlaw Environmental Services (Tulsa), Inc.
Laidlaw Environmental Services (San Antonio), Inc.
Laidlaw Environmental Services (Wichita), Inc.
Laidlaw Environmental Services of Delaware, Inc.
Laidlaw Environmental Services (Rosemount), Inc.
Laidlaw Environmental Services (Sawyer), Inc.
Laidlaw Environmental Services (Tucker), Inc.
Ninth Street Properties, Inc.
Laidlaw Environmental Services (San Jose), Inc.
Chemclear, Inc. of Los Angeles
USPCI, Inc. of Georgia
LES Holdings, Inc.
East Carbon Development Financial Partners, Inc.
Laidlaw Environmental Services (Imperial Valley), Inc.
Laidlaw Environmental Services (Lokern), Inc.
Laidlaw Environmental Services (North East), Inc.
Laidlaw Environmental Services (Recovery), Inc.
Laidlaw Environmental Services (TES), Inc.
Corsan Trucking, Inc.
Laidlaw Environmental Services (TG), Inc.
Laidlaw Environmental Services (TOC), Inc.
Laidlaw Environmental Services (TS), Inc.
Laidlaw Environmental Services (Thermal Treatment), Inc.
GSX Chemical Services of Ohio, Inc.
LEMC, Inc.
Laidlaw Chemical Services, Inc.
Laidlaw Environmental Services (Altair), Inc.
Laidlaw Environmental Services (BDT), Inc.
Laidlaw Environmental Services (FS), Inc.
Laidlaw Environmental Services (GS), Inc.
Laidlaw Environmental Services (Clive), Inc.
Laidlaw Environmental Services (WT), Inc.
Laidlaw OSCO Holdings, Inc.
Laidlaw Environmental Services of Nashville, Inc.
Laidlaw Environmental Services of Bartow, Inc.
Laidlaw Environmental Services of California, Inc.
Laidlaw Environmental Services of Chattanooga, Inc.
Laidlaw Environmental Services of Illinois, Inc.
7
<PAGE> 114
Laidlaw Environmental Services of South Carolina, Inc.
Laidlaw Environmental Services of White Castle, Inc.
LES Merger, Inc.
Laidlaw Environmental Services (Puerto Rico), Inc.
Laidlaw Environmental Services (Bridgeport), Inc.
Laidlaw Environmental Services (Deer Park), Inc.
Laidlaw Environmental Services (Baton Rouge), Inc.
Laidlaw Environmental Services (Plaquemine), Inc.
Laidlaw Environmental Services (Custom Transport), Inc.
Laidlaw Environmental Services (Los Angeles), Inc.
Laidlaw Environmental Services (Tipton), Inc.
Laidlaw Environmental Services (Gloucester), Inc.
Laidlaw Environmental Services (Deer Trail), Inc.
Laidlaw Environmental Services (Mt. Pleasant), Inc.
Laidlaw Environmental Services (Minneapolis), Inc.
Laidlaw Environmental Services (Aragonite), Inc.
Laidlaw Environmental Services (Sussex), Inc.
Laidlaw Environmental, Inc.
Safety-Kleen Corp.
Dirt Magnet, Inc.
The Midway Gas & Oil Company
Elgint Corp.
Safety-Kleen Envirosystems Company
Safety-Kleen Envirosystems Company of Puerto Rico, Inc.
Petrocon, Inc.
Phillips Acquisition Corp.
Safety-Kleen Aviation, Inc.
SK Insurance Company
SK Real Estate, Inc.
Safety-Kleen International, Inc.
Safety-Kleen Oil Recovery Co.
Safety-Kleen Oil Services, Inc.
The Solvents Recovery Service of New Jersey, Inc.
2
<PAGE> 115
Exhibit A
[FACE OF SECURITY]
LES, INC.
__ % [Exchange]** Senior Subordinated Note due 2008
CUSIP ______________
No. _______ $_________________
LES, INC., a Delaware corporation (the "Company", which term includes any
successor under the Indenture hereinafter referred to), for value received,
promises to pay to , or its registered assigns, the principal sum of
____________________________________ ($___________), on May 29, 2008.
[Initial Interest Rate: 9 1/4% per annum.]*
[Interest Rate: 9 1/4% per annum.]**
Interest Payment Dates: June 1 and December 1 of each year
commencing December 1, 1998.
Regular Record Dates: May 15 and November 15 of each year.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officer.
Date: LES, INC.
By: __________________________
Title:
A-3
<PAGE> 116
(Form of Trustee's Certificate of Authentication)
This is one of the 9 1/4% [Exchange]** Senior Subordinated Notes due 2008
described in the within-mentioned Indenture.
THE BANK OF NOVA SCOTIA TRUST
COMPANY OF NEW YORK, as Trustee
By: _____________________________
Authorized Signatory
A-4
<PAGE> 117
[REVERSE SIDE OF SECURITY]
LES, INC.
9 1/4% Senior Subordinated Note due 2008
1. Principal and Interest.
The Company will pay the principal of this Security set forth on the face
of this Security (or such other amount that may from time to time be indicated
on the records of DTC or its nominee or on the records of the Trustee as
custodian for DTC or its nominee as the result of increases or decreases by
adjustments made on the records of DTC or its nominee or on the records of the
Trustee, as custodian for DTC, in accordance with the rules and procedures of
DTC; provided, however, such amounts may not exceed $400,000,000) on June 1,
2008.
The Company promises to pay interest on the principal amount of this
Security on each Interest Payment Date, as set forth below, at the rate of [9
1/4% per annum (subject to adjustment as provided below)]* [9 1/4% per annum,
except that interest accrued on this Security pursuant to the penultimate
paragraph of this Section 1 for periods prior to the applicable Exchange Date
(as such term is defined in the Registration Rights Agreement referred to below)
will accrue at the rate or rates borne by the Securities from time to time
during such periods].**
Interest will be payable semiannually (to the holders of record of the
Securities (or any predecessor Securities) at the close of business on the June
1 or December 1 immediately preceding the Interest Payment Date) on each
Interest Payment Date, commencing December 1, 1998
[The Holder of this Security is entitled to the benefits of the
Registration Rights Agreement, dated May 29, 1998, among the Company, the
Guarantors and the Initial Purchasers named therein (the "Registration Rights
Agreement"). In the event that either (a) the Exchange Offer Registration
Statement (as such term is defined in the Registration Rights Agreement) is not
filed with the Securities and Exchange Commission on or prior to the 60th
calendar day following the date of original issue of the Securities, (b) the
Exchange Offer Registration Statement is not declared effective on or prior to
the 150th calendar day following the date of original issue of the Securities,
(c) the Exchange Offer (as such term is defined in the Registration Rights
Agreement) is not consummated or a Shelf Registration Statement (as such term is
defined in the Registration Rights Agreement) is not declared
- ----------
* Include only for Initial Securities.
** Include only for Exchange Securities.
A-5
<PAGE> 118
effective on or prior to the 180th calendar day following the date of original
issue of the Securities, or (d) any registration statement required by the
Registration Rights Agreement is filed and declared effective but shall
thereafter cease to be effective (except as specifically provided in the
Registration Rights Agreement) without being succeeded immediately by an
additional registration statement filed and declared effective, the interest
rate borne by this Security shall be increased by 0.25% per annum for the first
90 days following the 60-day period referred to in clause (a) above, following
the 150-day period referred to in clause (b) above or following the 180-day
period referred to in clause (c) above or following the date on which the
relevant registration statement ceases to be effective in the case of clause (d)
above. Such interest will be increased by an additional 0.25% per annum for each
subsequent 90-day period in the case of clause (a), clause (b), clause (c) or
clause (d) above until such registration default has been cured; provided,
however, that in no event will the interest rate borne by the Securities be
increased by more than 1.50% per annum. Upon the filing of the Exchange Offer
Registration Statement, the effectiveness of the Exchange Offer Registration
Statement, the consummation of the Exchange Offer, the effectiveness of a Shelf
Registration Statement, or the effectiveness of a succeeding registration
statement, as the case may be, the interest rate borne by this Security from the
date of such filing, consummation or effectiveness, as the case may be, will be
reduced to the original interest rate set forth above; provided, however, that,
if after such reduction in interest rate, a different event specified in clause
(a), (b), (c) or (d) above occurs, the interest rate may again be increased
pursuant to the foregoing provisions.]*
Interest on this Security will accrue from the most recent date to which
interest has been paid [on this Security or the Security surrendered in exchange
herefor]** or, if no interest has been paid, from May 29, 1998; provided that,
if there is no existing default in the payment of interest and if this Security
is authenticated between a Regular Record Date referred to on the face hereof
and the next succeeding Interest Payment Date, interest shall accrue from such
Interest Payment Date. Interest will be computed on the basis of a 360-day year
of twelve 30-day months.
The Company shall pay interest on overdue principal and premium, if any,
and interest on overdue installments of interest, to the extent lawful, at a
rate per annum equal to the rate of interest applicable to the Securities.
2. Method of Payment.
The Company will pay interest (except defaulted interest) on the principal
amount of the Securities on each June 1 and December 1 to the persons who are
Holders (as reflected in the Security Register at the close of business on the
May 15 and November 15 immediately preceding the Interest Payment Date), in each
case, even if the Security is canceled on
- ----------
* Include only for Initial Securities.
** Include only for Exchange Securities
A-6
<PAGE> 119
registration of transfer or registration of exchange after such record date;
provided that, with respect to the payment of principal, the Company will make
payment to the Holder that surrenders this Security to any Paying Agent on or
after June 1, 2008.
The Company will pay principal, premium, if any, and interest in money of
the United States that at the time of payment is legal tender for payment of
public and private debts. [Payment of the principal of and premium, if any, and
interest on the Securities will be made at the office or agency of the Company
maintained for that purpose in The City of New York (which shall be the
Corporate Finance Department of the Trustee, unless the Company shall designate
and maintain some other office or agency for such purpose), or at such other
office or agency of the Company as may be maintained for such purpose, in lawful
money of the United States of America, or payment of interest may be made at the
option of the Company by check mailed to the address of the Person entitled
thereto as such address shall appear on the Security Register; provided,
however, that all payments to Holders who have given wire transfer instructions
to the Company will be made by wire transfer of immediately available funds to
the accounts specified by such Holder.]* [All payments will be made by wire
transfer of immediately available funds to the accounts specified by the
Holder.]** If a payment date is a date other than a Business Day at a place of
payment, payment may be made at that place on the next succeeding day that is a
Business Day and no interest shall accrue for the intervening period.
3. Paying Agent and Registrar.
Initially, the Trustee will act as Paying Agent and Registrar. The Company
may change any Paying Agent or Registrar upon written notice thereto. The
Company, any Subsidiary or any Affiliate of any of them may act as Paying Agent,
Registrar or co-registrar.
4. Securities Guarantees.
This Security is entitled to the benefits of the Securities Guarantees
made by each of the Guarantors as described in the Indenture, pursuant to which
the Guarantors have irrevocably and unconditionally, jointly and severally,
guaranteed on a senior subordinated basis the punctual payment when due, whether
at Stated Maturity, by acceleration, redemption or otherwise, of all obligations
of the Company under the Indenture and this Security. A Guarantor shall be
released from its Securities Guarantee upon the terms and subject to the
conditions set forth in the Indenture.
- ----------
* Include for Physical Securities only.
** Include for Restricted Global Security only.
A-7
<PAGE> 120
5. Subordination.
This Security and the Securities Guarantees are subordinated in right of
payment, as set forth in the Indenture, to the prior payment in full of all
existing and future Senior Indebtedness and Guarantor Senior Indebtedness. Each
of the Company and the Guarantors agrees, and each Holder by accepting this
Security agrees, to the subordination provisions set forth in the Indenture,
authorizes the Trustee to give them effect and appoints the Trustee as
attorney-in-fact for such purposes.
6. Indenture; Limitations.
The Company issued the Securities under an Indenture dated as of May 29,
1998 (the "Indenture"), among the Company, the Parent, certain domestic
subsidiaries of the Company (the "Subsidiary Guarantors," and together with the
Parent, the "Guarantors") which term will include all successor guarantors under
the Indenture) and The Bank of Nova Scotia Trust Company of New York, as trustee
(the "Trustee"). Capitalized terms herein are used as defined in the Indenture
unless otherwise indicated. The terms of the Securities include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act. The Securities are subject to all such terms, and Holders are
referred to the Indenture and the Trust Indenture Act for a statement of all
such terms. To the extent permitted by applicable law, in the event of any
inconsistency between the terms of this Security and the terms of the Indenture,
the terms of the Indenture shall control.
The Securities are general unsecured obligations of the Company.
7. Redemption.
Make-Whole Redemption. The Securities may be redeemed at the option of the
Company in whole or in part, at any time and from time to time, prior to June 1,
2003, at a Redemption Price equal to the greater of (i) 100% of the principal
amount of such Securities or (ii) the sum of the present values of 104.625% of
the principal amount of such Securities and the scheduled payments of interest
thereon through and including June 1, 2003 discounted to such Redemption Date on
a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months)
at the Adjusted Treasury Rate plus 50 basis points, together with accrued and
unpaid interest, if any, to the Redemption Date (subject to the right of Holders
of record on the relevant Regular Record Date to receive interest due on an
Interest Payment Date that is on or prior to the Redemption Date).
Optional Redemption. The Securities may be redeemed at the option of the
Company, in whole or in part, at any time and from time to time on or after June
1, 2003, at the following Redemption Prices (expressed in percentages of
principal amount), plus accrued and unpaid interest, if any, to the Redemption
Date (subject to the right of Holders of record on the relevant Regular Record
Date to receive interest due on an Interest Payment Date that is on or prior to
the Redemption Date), if redeemed during the 12-month period beginning June 1,
of each of the years set forth below:
A-8
<PAGE> 121
<TABLE>
<CAPTION>
Redemption
Year Price
---- ----------
<S> <C>
2003................................... 104.625%
2004................................... 103.083%
2005................................... 101.542%
2006 and thereafter ................... 100.000%
</TABLE>
In addition, at any time or from time to time prior to June 1, 2001, the
Company may redeem up to 35% of the sum of (i) the initial aggregate principal
amount of the Securities and (ii) the initial aggregate principal amount of any
Additional Securities with the net proceeds of one or more Public Equity
Offerings at a redemption price equal to 109.25% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the Redemption Date
(subject to the right of Holders of record on the relevant Regular Record Date
to receive interest due on the relevant Interest Payment Date); provided, that,
immediately after giving effect to such redemption, at least $211,300,000
aggregate principal amount of the Securities (including any Additional
Securities) remains outstanding; provided, further, that such redemptions occur
within 90 days of the date of closing of the related Public Equity Offering.
Notice of a redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each Holder of Securities to be redeemed
at such Holder's last address as it appears in the Security Register. Securities
in original denominations larger than $1,000 may be redeemed in part in integral
multiples of $1,000. On and after the Redemption Date, interest ceases to accrue
on Securities or portions of Securities called for redemption, unless the
Company defaults in the payment of the Redemption Price.
8. Repurchase upon a Change in Control and Asset Sales.
(a) Upon the occurrence of a Change of Control, the Company is obligated
to make an offer to purchase all outstanding Securities at a redemption price of
101% of the principal amount thereof, plus accrued and unpaid interest, if any,
to the date of purchase and (b) upon Asset Sales, the Company may be obligated
to make offers to purchase Securities with a portion of the Net Cash Proceeds of
such Asset Sales at a redemption price of 100% of the principal amount thereof
plus accrued and unpaid interest, if any, to the date of purchase.
9. Denominations; Transfer; Exchange.
The Securities are in registered form without coupons, in denominations of
$1,000 and multiples of $1,000 in excess thereof. A Holder may register the
transfer or exchange of Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the transfer
or exchange of any Securities selected for redemption (except the
A-9
<PAGE> 122
unredeemed portion of any Security being redeemed in part). Also, it need not
register the transfer or exchange of any Securities for a period of 15 days
before a selection of Securities to be redeemed is made.
10. Persons Deemed Owners.
A Holder may be treated as the owner of a Security for all purposes.
11. Unclaimed Money.
If money for the payment of principal, premium, if any, or interest
remains unclaimed for two years, the Trustee and the Paying Agent will pay the
money back to the Company at its request. After that, Holders entitled to the
money must look to the Company for payment, unless an abandoned property law
designates another Person, and all liability of the Trustee and such Paying
Agent with respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity.
If the Company irrevocably deposits, or causes to be deposited, with the
Trustee money or U.S. Government Obligations sufficient to pay the then
outstanding principal of and premium, if any, and accrued interest on the
Securities to redemption or maturity, the Company will be discharged from the
Indenture and the Securities, except in certain circumstances for certain
sections thereof.
13. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Securities may be
amended or supplemented with the consent of the Holders of at least a majority
in aggregate principal amount of the Securities then Outstanding, and any
existing default or compliance with any provision may be waived with the consent
of the Holders of a majority in aggregate principal amount of the Securities
then Outstanding. Without notice to or the consent of any Holder, the parties
thereto may amend or supplement the Indenture or the Securities to, among other
things, cure any ambiguity, defect or inconsistency and make any change that
does not adversely affect the rights of any Holder.
14. Restrictive Covenants.
The Indenture contains certain covenants, including, without limitation,
covenants with respect to the following matters: (i) Indebtedness; (ii)
Restricted Payments; (iii) certain Asset Sales; (iv) transactions with
Affiliates; (v) dividends and other payment restrictions affecting Restricted
Subsidiaries; (vi) issuances and sale of Capital Stock of Restricted
Subsidiaries; (vii) designation of Unrestricted Subsidiaries; (viii) Liens; (ix)
merger and certain transfers of assets; and (x) Contingent Obligations. Within
120 days after the end of each fiscal year, the Company must report to the
Trustee on compliance with such limitations.
A-10
<PAGE> 123
15. Fall-away Event.
In the event the Securities receive an Investment Grade rating and no
Event of Default or Default shall have occurred and be continuing, upon the
request of the Company, the covenants described in the immediately preceding
paragraph generally will no longer be applicable to the Company and, if
applicable, its Restricted Subsidiaries. Upon the Securities receiving an
Investment Grade rating, covenants relating to (i) Liens securing Indebtedness
and (ii) Sale and Leaseback Transactions will apply to the Company, and if
applicable, the Restricted Subsidiaries.
16. Successor Persons.
When a successor person or other entity assumes all the obligations of its
predecessor under the Securities and the Indenture, the predecessor person will
be released from those obligations.
17. Remedies for Events of Default.
If an Event of Default, as defined in the Indenture, occurs and is
continuing, the Trustee or the Holders of not less than 25% in principal amount
of the Securities then Outstanding may declare all the Securities to be
immediately due and payable. If a bankruptcy or insolvency default with respect
to the Company or any of its Significant Subsidiaries occurs and is continuing,
the Securities automatically become immediately due and payable. Holders may not
enforce the Indenture or the Securities except as provided in the Indenture. The
Trustee may require indemnity satisfactory to it before it enforces the
Indenture or the Securities. Subject to certain limitations, Holders of at least
a majority in principal amount of the Securities then Outstanding may direct the
Trustee in its exercise of any trust or power.
18. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other capacity,
may become the owner or pledgee of Securities and may make loans to, accept
deposits from, perform services for, and otherwise deal with, the Company and
its Affiliates as if it were not the Trustee.
19. Authentication.
This Security shall not be valid until the Trustee signs the certificate
of authentication on the other side of this Security.
A-11
<PAGE> 124
20. Abbreviations.
Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors
Act).
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to LES, Inc., 1301 Gervais
Street, Suite 300, Columbia, South Carolina 29201, Attention: Henry H. Taylor,
Esq.
A-12
<PAGE> 125
[FORM OF TRANSFER NOTICE]
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
(Please print or typewrite name and address including zip code of assignee)
the within Security and all rights thereunder, hereby irrevocably constituting
and appointing
attorney to transfer such Security on the books of the Company with full power
of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL CERTIFICATES EXCEPT
PERMANENT OFFSHORE PHYSICAL CERTIFICATES]
In connection with any transfer of this Security occurring prior to the
date which is the earlier of the date of an effective Registration Statement or
______, 2000 the undersigned confirms that without utilizing any general
solicitation or general advertising that:
[Check One]
[ ] (a) this Security is being transferred in compliance with the exemption
from registration under the Securities Act of 1933, as amended,
provided by Rule 144A thereunder.
or
[ ] (b) this Security is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the
conditions of transfer set forth in this Security and the Indenture.
If none of the foregoing boxes is checked, the Trustee or other Registrar shall
not be obligated to register this Security in the name of any Person other than
the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 307 of the Indenture shall have
been satisfied.
A-13
<PAGE> 126
Date: ____________________ ________________________________________________
NOTICE: The signature to this assignment must
correspond with the name as written upon
the face of the within-mentioned
instrument in every particular, without
alteration or any change whatsoever.
Signature Guarantee:
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:____________________ ________________________________________________
NOTICE: To be executed by an executive
officer, general partner, trustee or
similar representative.
A-14
<PAGE> 127
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Security purchased by the Company pursuant to
Section 1012 or Section 1013 of the Indenture, check the Box: |_|.
If you wish to have a portion of this Security purchased by the Company
pursuant to Section 1012 or Section 1013 of the Indenture, state the amount (in
original principal amount) below:
$____________________.
Date:
Your Signature: ________________________________
(Sign exactly as your name appears
on the other side of this Security)
Signature Guarantee: ____________________________
(Signature must be guaranteed by a member of the New York
Stock Exchange or a commercial bank or trust company)
A-15
<PAGE> 128
EXHIBIT B
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF
TRANSFER FROM RESTRICTED GLOBAL SECURITY TO
REGULATION S GLOBAL SECURITY
The Bank of Nova Scotia
Trust Company of New York
One Liberty Plaza, 23rd Floor
New York, New York 10006
Re: 9 1/4% Senior Subordinated Notes due 2008 of LES, Inc.
Reference is hereby made to the Indenture, dated as of May 29, 1998 (the
"Indenture"), between LES, Inc., as issuer (the "Company"), Laidlaw
Environmental Services, Inc. and each of the Subsidiary Guarantors listed on
Schedule I thereto and The Bank of Nova Scotia, Trust Company of New York, as
trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.
This letter relates to $_________ principal amount of Securities which are
evidenced by the Restricted Global Security (CUSIP No._________) and held with
the Depositary in the name of Cede & Co. (the "Transferor"). The Transferor has
requested a transfer of such beneficial interest in the Securities to a Person
who will take delivery thereof in the form of an equal principal amount of
Securities evidenced by the Regulation S Global Security (CUSIP No. ________).
In connection with such request and in respect of such Securities, the
Transferor hereby certifies that such transfer has been effected in compliance
with the transfer restrictions applicable to the Global Securities and pursuant
to and in accordance with Rule 903, Rule 904 or Rule 144 under the United States
Securities Act of 1933, as amended (the "Securities Act"), and accordingly the
Transferor hereby further certifies that:
(A) if the transfer has been effected pursuant to Rule 903 or Rule 904:
(1) the offer of the Securities was not made to a person in the
United States;
(2) either:
(a) at the time the buy order was originated, the transferee
was outside the United States or the Transferor and any person
acting on its behalf reasonably believed and believes that the
transferee was outside the United States; or
B-1
<PAGE> 129
(b) the transaction was executed in, on or through the
facilities of a designated offshore securities market and neither
the Transferor nor any person acting on its behalf knows that the
transaction was prearranged with a buyer in the United States;
(3) no directed selling efforts have been made in contravention of
the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as
applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act;
(5) if the transfer is being requested prior to ____________, 1998,
upon completion of the transaction, the beneficial interest being
transferred as described above is to be held with the Depositary through
Euroclear or Cedel Bank or both (Common Code ____________); and
(B) If the transfer has been effected pursuant to Rule 144, the Securities
have been transferred in a transaction permitted by Rule 144 under the
Securities Act.
Upon giving effect to this request to exchange a beneficial interest in
such Restricted Global Security for a beneficial interest in a Regulation S
Global Security, the resulting beneficial interest shall be subject to the
restrictions on transfer applicable to Regulation S Global Security pursuant to
the Indenture and the Securities.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company. Terms used in this certificate and not
otherwise defined in the Indenture have the meanings set forth in Regulation S
under the Securities Act.
[Insert Name of Transferor]
By:____________________________________
Name:
Title:
Dated: ____________, ____ Signature Guarantee
________________________________________
B-2
<PAGE> 130
EXHIBIT C
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF
TRANSFER FROM REGULATION S GLOBAL SECURITY TO
RESTRICTED GLOBAL SECURITY
The Bank of Nova Scotia
Trust Company of New York
One Liberty Plaza, 23rd Floor
New York, New York 10006
Re: 9 1/4% Senior Subordinated Notes due 2008 of LES, Inc.
Reference is hereby made to the Indenture, dated as of May 29, 1998 (the
"Indenture"), between LES, Inc., as issuer (the "Company"), Laidlaw
Environmental Services, Inc. and each of the Subsidiary Guarantors listed on
Schedule I thereto and The Bank of Nova Scotia, Trust Company of New York, as
trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.
This letter relates to $____________ principal amount of the Securities
which are evidenced by the Regulation S Global Security (CUSIP No. _________)
and held with the Depositary in the name of Cede & Co. (the "Transferor"). The
Transferor has requested a transfer of such beneficial interest in the
Securities to a Person who will take delivery thereof in the form of an equal
principal amount of Securities evidenced by the Restricted Global Security
(CUSIP No. __________), to be held with the Depositary.
In connection with such request and in respect of such Securities, the
Transferor hereby certifies that such transfer is being effected pursuant to and
in accordance with Rule 144A under the United States Securities Act of 1933, as
amended (the "Securities Act"), and, accordingly, the Transferor hereby further
certifies that the Securities are being transferred to a Person that the
Transferor reasonably believes is purchasing the Securities for its own account,
or for one or more accounts with respect to which such Person exercises sole
investment discretion, and such Person and each such account is a "qualified
institutional buyer" within the meaning of Rule 144A in a transaction meeting
the requirements of Rule 144A and such Securities are being transferred in
compliance with any applicable blue sky securities laws of any state of the
United States.
Upon giving effect to this request to exchange a beneficial interest in
Regulation S Global Securities for a beneficial interest in the Restricted
Global Security, the resulting beneficial interest shall be subject to the
restrictions on transfer applicable to the U.S. Global Securities pursuant to
the Indenture and the Securities Act.
<PAGE> 131
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company. Terms used in this certificate and not
otherwise defined in the Indenture have the meanings set forth in Regulation S
under the Securities Act.
[Insert Name of Transferor]
By:____________________________________
Name:
Title:
Dated: ____________, ____ Signature Guarantee
_____________________________________
C-2
<PAGE> 132
EXHIBIT D
FORM OF CERTIFICATE FOR TRANSFER OF U.S. PHYSICAL SECURITIES TO REGULATION S
GLOBAL SECURITY OR RESTRICTED GLOBAL SECURITY
The Bank of Nova Scotia
Trust Company of New York
One Liberty Plaza, 23rd Floor
New York, New York 10006
Re: 9 1/4% Senior Subordinated Notes due 2008 of LES, Inc.
Reference is hereby made to the Indenture, dated as of May 29, 1998 (the
"Indenture"), between LES, Inc., as issuer (the "Company"), Laidlaw
Environmental Services, Inc. and each of the Subsidiary Guarantors listed on
Schedule I thereto and The Bank of Nova Scotia, Trust Company of New York, as
trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.
This letter relates to $___________ principal amount of Securities which
are evidenced by a definitive Physical Security (Certificate No. __________,
CUSIP No. __________, in the name of _________________) (the "Transferor"). The
Transferor has requested a transfer of such interest in the Securities to a
Person that will take delivery thereof in the form of an equal principal amount
of Securities evidenced by the [Restricted Global Security CUSIP No.
____________] [Regulation S Global Security (CUSIP No. __________)].
In connection with such request and in respect of such Securities, the
Transferor does hereby certify that: [if such request is made for transfer to
the Regulation S Global Security: such transfer has been effected pursuant to
and in accordance with Rule 903, Rule 904 or Rule 144 under the United States
Securities Act of 1933, as amended (the "Securities Act") and accordingly the
Transferor does hereby further certify that:
(1) if the transfer has been effected pursuant to Rule 903 or Rule
904:
(A) the offer of the Securities was not made to a person in
the United States;
(B) either:
(i) at the time the buy order was originated, the
transferee was outside the United States or the Transferor and
any person acting on its behalf reasonably believed that the
transferee was outside the United States, or
<PAGE> 133
(ii) the transaction was executed in, on or through the
facilities of a designated offshore securities market and
neither the Transferor nor any person acting on its behalf
knows that the transaction was prearranged with a buyer in the
United States;
(C) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or 904(b) of
Regulation S, as applicable; [and]
(D) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act; [and
(E) if the transfer is being requested prior to _________,
1998: Upon completion of the transaction, the beneficial interest
being transferred as described above is to be held with the
Depositary through Euroclear or Cedel Bank or both (Common Code
__________);] or
(2) if the transfer has been effected pursuant to Rule 144, the
Securities have been transferred in a transaction permitted by Rule 144.]
(3) if such request is made for transfer to the Restricted Global
Security: Such transfer is being effected pursuant to and in accordance
with Rule 144A under the Securities Act, and, accordingly, the Transferor
hereby further certifies that the Securities are being transferred to a
person that the Transferor reasonably believes is purchasing the
Securities for its own account, or for one or more accounts with respect
to which such person exercises sole investment discretion, and such person
and each such account is a "qualified institutional buyer" within the
meaning of Rule 144A in a transaction meeting the requirements of Rule
144A.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company. Terms used in this certificate and not
otherwise defined in the Indenture have the meanings set forth in Regulation S
under the Securities Act.
D-2
<PAGE> 134
Upon completion of the transaction, the beneficial interest being
transferred as described above is to be held with the Depositary through
Euroclear or Cedel Bank or both (Common Code_____).
[Insert Name of Transferor]
By:____________________________________
Name:
Title:
Dated: ____________, ____ Signature Guarantee
_____________________________________
D-3
<PAGE> 135
EXHIBIT E
FORM OF CERTIFICATE FOR TRANSFER OR EXCHANGE AFTER TWO YEARS
The Bank of Nova Scotia
Trust Company of New York
One Liberty Plaza, 23rd Floor
New York, New York 10006
Re: 9 1/4% Senior Subordinated Notes due 2008 of LES, Inc.
Reference is hereby made to the Indenture, dated as of May 29, 1998 (the
"Indenture"), between LES, Inc., as issuer (the "Company"), Laidlaw
Environmental Services, Inc. and each of the Subsidiary Guarantors listed on
Schedule I thereto and The Bank of Nova Scotia, Trust Company of New York, as
trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.
[For transfers: This letter relates to $__________ principal amount of
Securities which are evidenced by a [Restricted Global Security (CUSIP No.
_________) and held with the Depositary in the name of Cede & Co.] [a U.S.
Physical Security (CUSIP No. ________________) registered in the name of
_________________] [and held for the benefit of _________________] (the
"Beneficial Owner"). The Beneficial Owner has requested that its beneficial
interest in such Securities be transferred to a Person that will take delivery
thereof in the form of an equal principal amount of Securities evidenced by the
Regulation S Global Security (CUSIP No. _________).
In connection with such request and in respect of such Securities, the
Beneficial Owner does hereby certify that upon such transfer, (a) a period of at
least two years will have elapsed since May __, 1998, (b) the Beneficial Owner
during the three months preceding the date of such transfer was not an
"affiliate" of the Company (as defined in Rule 144 under the Securities Act),
and it was not acting on behalf of such an affiliate and (c) such Person to whom
such transfer is being made is not an "affiliate" of the Company.]
[For exchanges: This letter relates to $__________ principal amount of
Securities that are evidenced by a [Restricted Global Security (CUSIP No.
__________) and held with the Depositary in the name of [______________] [and
held for the benefit of ]__________________] (the "Beneficial Owner"). The
Beneficial Owner has requested that its beneficial interest in such Securities
be exchanged for a beneficial interest in an equal principal amount of
Securities evidenced by the Regulation S Global Security (CUSIP No. __________).
In connection with such request and in respect of such Securities, the
Beneficial Owner does hereby certify that [it is located and acquired such
securities outside the United
<PAGE> 136
States (if the Restricted Period has ended) and that such transfer is being made
in accordance with Rule 903 or 904 of Regulation S promulgated under the U.S.
Securities Act of 1933][, upon such exchange, (a) it will be the beneficial
owner of such Securities, (b) a period of at least two years will have elapsed
since May 29, 1998 and (c) the Beneficial Owner will not be, and during the
three months preceding the date of such exchange will not have been, an
"affiliate" of the Company (as defined in Rule 144 under the Securities Act),
and it is not acting on behalf of such an affiliate.]
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
Dated: [Insert Name of Beneficial Owner]
By: ___________________________________
Name:
Title:
E-2
<PAGE> 137
================================================================================
------------------------
Indenture
Dated as of May 29, 1998
------------------------
$325,000,000
9 1/4% Senior Subordinated Notes due 2008
------------------------
LES, INC.,
Issuer,
LAIDLAW ENVIRONMENTAL SERVICES, INC. AND
EACH OF THE SUBSIDIARY GUARANTORS
LISTED ON SCHEDULE I HERETO,
Guarantors,
and
THE BANK OF NOVA SCOTIA TRUST COMPANY OF NEW YORK,
Trustee
================================================================================
<PAGE> 138
LES, Inc.
Reconciliation and tie between Trust Indenture Act
of 1939 and Indenture, dated as of April 28, 1998
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
<S> <C>
ss. 310(a)(1) ........................................ 607
(a)(2) ........................................ 607
(b) ........................................ 608
ss. 312(c) ........................................ 701
ss. 314(a) ........................................ 703
(a)(4) ........................................ 1008(a)
(c)(1) ........................................ 102
(c)(2) ........................................ 102
(e) ........................................ 102
ss. 315(b) ........................................ 601
ss. 316(a)(last
sentence) ........................................ 101 ("Outstanding")
(a)(1)(A) ........................................ 502, 512
(a)(1)(B) ........................................ 513
(b) ........................................ 508
(c) ........................................ 105(d)
ss. 317(a)(1) ........................................ 503
(a)(2) ........................................ 504
(b) ........................................ 1003
ss. 318(a) ........................................ 111
</TABLE>
<PAGE> 139
TABLE OF CONTENTS
Page
PARTIES.....................................................................1
RECITALS OF THE COMPANY.....................................................1
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.............................................2
SECTION 102. Compliance Certificates and Opinions...................26
SECTION 103. Form of Documents Delivered to Trustee.................26
SECTION 104. Acts of Holders........................................27
SECTION 105. Notices, etc., to Trustee, Company or Guarantors.......28
SECTION 106. Notice to Holders; Waiver..............................29
SECTION 107. Conflict of any Provision of Indenture with
Trust Indenture Act..................................29
SECTION 108. Effect of Headings and Table of Contents...............30
SECTION 109. Successors and Assigns.................................30
SECTION 110. Separability Clause....................................30
SECTION 111. Benefits of Indenture..................................30
SECTION 112. Governing Law..........................................30
SECTION 113. Legal Holidays.........................................30
ARTICLE II
SECURITY FORMS
SECTION 201. Forms Generally........................................31
SECTION 202. Restrictive Legends....................................32
ARTICLE III
THE SECURITIES
SECTION 301. Title and Terms........................................34
SECTION 302. Denominations..........................................35
SECTION 303. Execution, Authentication, Delivery and Dating.........35
SECTION 304. Temporary Securities...................................36
- ----------
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
<PAGE> 140
Page
SECTION 305. Registration, Registration of Transfer and Exchange....37
SECTION 306. Book-Entry Provisions for Restricted Global Security...38
SECTION 307. Special Transfer Provisions............................40
SECTION 308. Mutilated, Destroyed, Lost and Stolen Securities.......42
SECTION 309. Payment of Interest; Interest Rights Preserved.........43
SECTION 310. Persons Deemed Owners..................................45
SECTION 311. Cancellation...........................................45
SECTION 312. Issuance of Additional Securities......................45
SECTION 313. CUSIP and CINS Numbers.................................45
SECTION 314. Computation of Interest................................46
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture................46
SECTION 402. Application of Trust Money.............................47
ARTICLE V
REMEDIES
SECTION 501. Events of Default......................................47
SECTION 502. Acceleration of Maturity; Rescission and Annulment.....49
SECTION 503. Collection of Indebtedness and Suits for Enforcement
by Trustee...........................................50
SECTION 504. Trustee May File Proofs of Claim.......................51
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities...........................................52
SECTION 506. Application of Money Collected.........................52
SECTION 507. Limitation on Suits....................................52
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest.................................53
SECTION 509. Restoration of Rights and Remedies.....................53
SECTION 510. Rights and Remedies Cumulative.........................54
SECTION 511. Delay or Omission Not Waiver...........................54
SECTION 512. Control by Holders.....................................54
SECTION 513. Waiver of Past Defaults................................55
SECTION 514. Waiver of Stay or Extension Laws.......................55
SECTION 515. Undertaking for Costs..................................55
SECTION 516. No Personal Liability of Directors, Officers,
Employees and Stockholders...........................56
ii
<PAGE> 141
Page
ARTICLE VI
THE TRUSTEE
SECTION 601. Notice of Defaults.....................................56
SECTION 602. Certain Rights of Trustee..............................56
SECTION 603. Trustee Not Responsible for Recitals or Issuance
of Securities........................................58
SECTION 604. May Hold Securities....................................58
SECTION 605. Money Held in Trust....................................58
SECTION 606. Compensation and Reimbursement.........................58
SECTION 607. Corporate Trustee Required; Eligibility................59
SECTION 608. Resignation and Removal; Appointment of Successor......59
SECTION 609. Acceptance of Appointment by Successor.................61
SECTION 610. Merger, Conversion, Consolidation or Succession to
Business.............................................61
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE
SECTION 701. Disclosure of Names and Addresses of Holders...........62
SECTION 702. Reports by Trustee.....................................62
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE
SECTION 801. Company May Consolidate, etc., Only on Certain Terms...62
SECTION 802. Successor Substituted..................................63
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO INDENTURE
AND SECURITIES GUARANTEES
SECTION 901. Without Consent of Holders.............................64
SECTION 902. With Consent of Holders................................65
SECTION 903. Execution of Supplemental Indentures...................66
SECTION 904. Effect of Supplemental Indentures......................66
SECTION 905. Conformity with Trust Indenture Act....................66
SECTION 906. Reference in Securities to Supplemental Indentures.....66
iii
<PAGE> 142
Page
SECTION 907. Notice of Supplemental Indentures......................67
ARTICLE X
COVENANTS
SECTION 1001. Payment of Principal, Premium, If Any, and Interest...67
SECTION 1002. Maintenance of Office or Agency.......................67
SECTION 1003. Money for Security Payments to Be Held in Trust.......68
SECTION 1004. Corporate Existence...................................69
SECTION 1005. Payment of Taxes and Other Claims.....................69
SECTION 1006. Maintenance of Properties.............................70
SECTION 1007. Insurance.............................................70
SECTION 1008. Statement by Officers As to Default...................70
SECTION 1009. Provision of Reports and Financial Statements.........71
SECTION 1010. Limitation on Incurrence of Indebtedness and
Issuance of Disqualified Stock......................71
SECTION 1011. Limitation on Restricted Payments.....................72
SECTION 1012. Purchase of Securities upon a Change of Control.......76
SECTION 1013. Limitation on Certain Asset Sales.....................77
SECTION 1014. Limitation on Transactions with Affiliates............79
SECTION 1015. Limitation on Dividends and Other Payment
Restrictions Affecting Restricted Subsidiaries.......80
SECTION 1016. Limitation on Issuances and Sales of Capital Stock
of Restricted Subsidiaries..........................81
SECTION 1017. Limitation on Liens...................................82
SECTION 1018. Unrestricted Subsidiaries.............................82
SECTION 1019. Limitation on Layering Indebtedness...................83
SECTION 1020. Limitation on Guarantees of Indebtedness by
Restricted Subsidiaries..............................83
SECTION 1021. Limitation on Conduct of Business.....................83
SECTION 1022. Limitation on Incurrence of Contingent Obligations....84
SECTION 1023. Payments for Consent..................................84
SECTION 1024. Limitation on Liens Securing Indebtedness.............84
SECTION 1025. Limitation on Sale and Leaseback Transactions.........84
SECTION 1026. Waiver of Certain Covenants...........................85
SECTION 1027. Fall-Away of Certain Covenants........................85
ARTICLE XI
iv
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Page
REDEMPTION OF SECURITIES
SECTION 1101. Right of Redemption...................................86
SECTION 1102. Applicability of Article..............................86
SECTION 1103. Election to Redeem; Notice to Trustee.................87
SECTION 1104. Selection by Trustee of Securities to Be Redeemed.....87
SECTION 1105. Notice of Redemption..................................87
SECTION 1106. Deposit of Redemption Price...........................88
SECTION 1107. Securities Payable on Redemption Date.................88
SECTION 1108. Securities Redeemed in Part...........................89
ARTICLE XII
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1201. Company Option to Effect Defeasance or Covenant
Defeasance..........................................89
SECTION 1202. Defeasance and Discharge..............................89
SECTION 1203. Covenant Defeasance...................................90
SECTION 1204. Conditions to Defeasance or Covenant Defeasance.......90
SECTION 1205. Deposited Money and U.S. Government Obligations to
Be Held in Trust; Other Miscellaneous Provisions....92
SECTION 1206. Reinstatement.........................................93
ARTICLE XIII
SECURITIES GUARANTEES
SECTION 1301. Securities Guarantees.................................93
SECTION 1302. Guaranty Absolute.....................................94
SECTION 1303. Waivers...............................................96
SECTION 1304. Subrogation...........................................96
SECTION 1305. No Waiver; Remedies...................................97
SECTION 1306. Continuing Guaranty; No Right of Set-Off;
Independent Obligation..............................97
SECTION 1307. Subsidiary Guarantors May Consolidate, Etc., on
Certain Terms.......................................97
SECTION 1308. Additional Guarantors.................................98
SECTION 1309. Releases..............................................98
v
<PAGE> 144
SECTION 1310. Benefits Acknowledged.................................99
SECTION 1311. Severability..........................................99
ARTICLE XIV
SUBORDINATION OF SECURITIES AND SECURITIES GUARANTEES
SECTION 1401. Securities and Securities Guarantees Subordinate
to Senior Indebtedness..............................99
SECTION 1402. Payment Over of Proceeds Upon Dissolution, Etc.......100
SECTION 1403. No Payment When Certain Senior Indebtedness in
Default............................................101
SECTION 1404. Payment Permitted If No Default......................102
SECTION 1405. Subrogation to Rights of Holders of Senior
Indebtedness.......................................102
SECTION 1406. Provisions Solely to Define Relative Rights..........103
SECTION 1407. Trustee to Effectuate Subordination..................104
SECTION 1408. No Waiver of Subordination Provisions................104
SECTION 1409. Notice to Trustee....................................105
SECTION 1410. Reliance on Judicial Order or Certificate of
Liquidation Agent..................................105
SECTION 1411. Trustee Not Fiduciary for Holders of Senior
Indebtedness.......................................106
SECTION 1412. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights.................106
SECTION 1413. Applicability to Paying Agents.......................106
SECTION 1414. Defeasance of this Article XIV.......................106
SECTION 1415. Subordination Provisions Controlling.................107
SCHEDULES
SCHEDULE I - Guarantors
SCHEDULE II - Agreements Pursuant to Section 1015
EXHIBITS
Exhibit A - Form of Security
Exhibit B - Form of Certificate for Exchange or Registration of Transfer from
Restricted Global Security to Regulation S Global Security
Exhibit C - Form of Certificate for Exchange or Registration of Transfer from
Regulation S Global Security to Restricted Global Security
Exhibit D - Form of Certificate for Transfer of U.S. Physical Securities to
Regulation S Global Security or Restricted Global Security
Exhibit E - Form of Certificate for Transfer or Exchange after Two Years
vi
<PAGE> 1
Exhibit 4(d)
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of April 3, 1998,
among LES, INC., a Delaware corporation (the "Company"), LAIDLAW ENVIRONMENTAL
SERVICES (CANADA) LTD., a Canadian corporation and a wholly owned Subsidiary of
the Company (the "Canadian Borrower"; together with the Company, the
"Borrowers"), the several banks and other financial institutions or entities
from time to time parties to this Agreement (the "Lenders"), TORONTO DOMINION
(TEXAS), INC., as general administrative agent (as hereinafter defined, the
"General Administrative Agent"), THE TORONTO-DOMINION BANK, as Canadian
administrative agent (as hereinafter defined, the "Canadian Administrative
Agent"), TD SECURITIES (USA) INC., as advisor to the Borrowers and arranger of
the commitments described herein (in such capacities, the "Arranger"), and THE
BANK OF NOVA SCOTIA, NATIONSBANK, N.A., THE FIRST NATIONAL BANK OF CHICAGO and
WACHOVIA BANK, N.A., as managing agents (each, in such capacity, a "Managing
Agent"), THE BANK OF NOVA SCOTIA and THE FIRST NATIONAL BANK OF CHICAGO, as
co-documentation agent (each, in such capacity, a "Co-Documentation Agent"), and
NATIONSBANK, N.A., as syndication agent (in such capacity, the "Syndication
Agent").
W I T N E S S E T H
WHEREAS, the Borrowers are parties to the Credit Agreement, dated as
of May 9, 1997 (as heretofore amended or otherwise modified, the "Existing
Credit Agreement"), with the lenders from time to time parties thereto, Toronto
Dominion (Texas), Inc., as general administrative agent, The Toronto-Dominion
Bank, as Canadian administrative agent, TD Securities (USA) Inc., as arranger,
The Bank of Nova Scotia, NationsBank, N.A. and The First National Bank of
Chicago, as managing agents, and NationsBank, N.A., as syndication agent;
WHEREAS, pursuant to the Existing Credit Agreement, the lenders
parties thereto have agreed to make and have made certain loans and other
extensions of credit to or for the account of the Borrowers;
WHEREAS, Laidlaw Environmental Services, Inc., a Delaware
corporation and the parent of the Company ("Holdings"), and LES Acquisition,
Inc., a Delaware corporation and a wholly owned subsidiary of the Company
("Acquisition Corp."), have made an exchange offer (as amended prior to the date
hereof and as hereafter amended in accordance with this Agreement, the "Exchange
Offer") pursuant to the Offer to Exchange, as finally amended on March 18, 1998
(such Offer to Exchange, together with the associated documents filed by
Holdings and Acquisition Corp. with the Securities and Exchange Commission in
connection with the Exchange Offer, as amended prior to the date hereof and as
hereafter amended in accordance with this Agreement, collectively, the "Exchange
Offer Documents");
WHEREAS, pursuant to the Exchange Offer, shareholders of
Safety-Kleen Corp., a Wisconsin corporation ("Safety-Kleen"), are invited to
exchange shares of common
<PAGE> 2
2
stock ("Target Shares"), together with associated share purchase rights ("Target
Rights"), for consideration equal to $18.30 in cash plus 2.8 shares of common
stock of Holdings;
WHEREAS, pursuant to the Agreement and Plan of Merger, dated as of
March 16, 1998 (the "Merger Agreement"), among Holdings, Acquisition Corp. and
Safety-Kleen, as promptly as practicable after the consummation of the Exchange
Offer, Acquisition Corp. and Safety-Kleen will merge (the "Merger"), with
Safety-Kleen being the surviving corporation of the Merger (such survivor, the
"Surviving Corporation");
WHEREAS, in order to provide for financing of the Exchange Offer and
the Merger and related costs and expenses, and for the refinancing of certain
existing indebtedness of Safety-Kleen, the Borrowers have requested that the
Existing Credit Agreement be amended and restated as provided herein; and
WHEREAS, the Lenders and the other parties hereto wish to amend and
restate the Existing Credit Agreement as provided herein;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereby agree that on the Closing
Date the Existing Credit Agreement shall be amended and restated in its entirety
as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings:
"Acceptance": a Draft drawn by the Canadian Borrower and accepted by
a Canadian Lender which is (a) denominated in Canadian Dollars, (b) for a
term of not less than one month nor more than six months and which matures
prior to the Canadian Facility Termination Date and (c) issuable and
payable only in Canada; provided that to the extent the context shall
require, each Acceptance Note shall be deemed to be an Acceptance.
"Acceptance Note": as defined in Section 5.7(b).
"Acceptance Purchase Price": in respect of an Acceptance of a
specified maturity, the result (rounded to the nearest whole cent, and
with one-half cent being rounded up) obtained by dividing the face amount
of such Acceptance by the sum of (a) one and (b) the product of (i) the
Reference Discount Rate for Acceptances of the same maturity expressed as
a decimal and (ii) a fraction, the numerator of which is the term to
maturity of such Acceptance and the denominator of which is equal to 365.
"Acceptance Reimbursement Obligations": the obligation of the
Canadian Borrower to the Canadian Lenders (a) to reimburse the Canadian
Lenders for
<PAGE> 3
3
maturing Acceptances pursuant to Section 5.5 and (b) to make payments in
respect of the Acceptance Notes in accordance with the terms thereof.
"Acceptance Tranches": the collective reference to Acceptances all
of which were created on the same date and have the same maturity date.
"Acquisition Closing Date": the closing date of the Existing Credit
Agreement and the Rollins Acquisition, which date was May 15, 1997.
"Acquisition Corp.": as defined in the Recitals to this Agreement.
"Acquisition Corp. Pledge Agreement": the Pledge Agreement to be
executed and delivered by Acquisition Corp., substantially in the form of
Exhibit B-2, as the same may be amended, supplemented or otherwise
modified from time to time.
"Adjustment Date": as defined in the Pricing Grid.
"Administrative Agents": the collective reference to the General
Administrative Agent and the Canadian Administrative Agent.
"Affiliate": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person. For purposes of this
definition, "control" of a Person means the power, directly or indirectly,
either to (a) vote 10% or more of the securities having ordinary voting
power for the election of directors of such Person or (b) direct or cause
the direction of the management and policies of such Person, whether by
contract or otherwise.
"Aggregate Canadian Term Loan Outstandings": as at any date of
determination with respect to any Canadian Lender, an amount in Canadian
Dollars equal to the sum of the following, without duplication: (a) the
aggregate unpaid principal amount of such Canadian Lender's Canadian Term
Loans on such date, (b) the aggregate undiscounted face amount of all
outstanding Acceptances (other than Existing Acceptances) of such Canadian
Lender on such date, (c) such Lender's Canadian Term Loan Commitment
Percentage of the aggregate undiscounted face amount of all outstanding
Existing Acceptances on such date and (d) the aggregate undiscounted face
amount of such Canadian Lender's Acceptance Notes on such date.
"Aggregate Commitment Percentage": as to any Lender, the percentage
which such Lender's Aggregate Exposure constitutes of the Aggregate
Exposure of all Lenders.
"Aggregate Exposure": as to any Lender, the sum of such Lender's
Revolving Credit Commitment (or, after termination of the Revolving Credit
Commitments, such Lender's Revolving Extensions of Credit) and U.S. Term
Loans and the U.S. Dollar Equivalent of such Lender's Aggregate Canadian
Term Loan Outstandings.
<PAGE> 4
4
"Agreement": this Amended and Restated Credit Agreement, as amended,
supplemented or otherwise modified from time to time.
"Agreement Currency": as defined in Section 14.15(b).
"Applicable Margin": (a) on any day, for each Type of Revolving
Credit Loan, Tranche A Term Loan and Canadian Term Loan, the rate per
annum determined pursuant to the Pricing Grid; and
(b) for each Type of Tranche B Term Loan and Tranche C Term Loan,
the rate per annum set forth under the relevant column heading below:
<TABLE>
<CAPTION>
Base Rate Loans LIBOR Rate Loans
--------------- ----------------
<S> <C> <C>
Tranche B Term Loans 1.75% 2.75%
Tranche C Term Loans 2.00% 3.00%
</TABLE>
; provided, that in the event that the Consolidated Total Leverage Ratio
(the determination and effectiveness of which shall be made and
established, respectively, on an Adjustment Date in accordance with the
provisions of the Pricing Grid) is reduced to less than 3.00 to 1.00, the
Applicable Margins set forth above for Tranche B Term Loans and Tranche C
Term Loans shall be permanently reduced by 37.50 basis points; provided
further that no such reduction in Applicable Margin shall occur prior to
the Adjustment Date occurring after completion of the first four full
consecutive fiscal quarters of the Company ending after the Closing Date.
"Application": an application, in such form as the relevant Issuing
Lender may specify from time to time, requesting such Issuing Lender to
issue a Letter of Credit.
"Approved Fund": with respect to any Lender that is a fund that
invests in bank loans, any other fund that invests in bank loans and is
advised or managed by the same investment advisor as such Lender or by an
Affiliate of such investment advisor.
"Arranger": as defined in the Preamble to this Agreement.
"Asset Sale": any Disposition of assets or series of related
Dispositions of assets, excluding any Disposition of assets permitted by
clause (a), (c), (d), (e), (f) or (g) of Section 10.6; provided, that
asset Dispositions permitted by clauses (e) and (f) of Section 10.6 shall
not be excluded from the definition of "Asset Sale" to the extent that the
Net Cash Proceeds therefrom exceed $225,000,000 in the aggregate.
"Assignee": as defined in Section 14.6(c).
<PAGE> 5
5
"Available Revolving Credit Commitment": as to any U.S. Lender at
any time, an amount equal to the excess, if any, of (a) such Lender's
Revolving Credit Commitment over (b) such Lender's Revolving Extensions of
Credit.
"Bank Act (Canada)": the Bank Act (Canada), as amended from time to
time.
"Base Rate": a rate per annum determined by the General
Administrative Agent on a daily basis, equal to the higher of (a) the
Prime Rate in effect on such day and (b) the Federal Funds Effective Rate
in effect on such day plus one half of one percent (.50 of 1%) per annum.
"Base Rate Loan": any Loan the rate of interest applicable to which
is based upon the Base Rate.
"Board": the Board of Governors of the Federal Reserve System.
"Borrowers": as defined in the Preamble to this Agreement.
"Borrowing Date": any Business Day specified in a notice pursuant to
Section 2.2, 2.5., 4.2 or 5.2 as a date on which a Borrower requests the
Lenders to make Loans, create Acceptances, convert Acceptances into
Canadian Term Loans or convert Canadian Term Loans into Acceptances, as
the case may be.
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City or Houston, Texas are authorized
or required by law to close; provided that (a) when such term is used in
respect of a day on which a Loan in Canadian Dollars is to be made or an
Acceptance is to be created, a payment is to be made in respect of such
Loan or Acceptance, an Exchange Rate is to be set in respect of Canadian
Dollars or any other dealing in Canadian Dollars is to be carried out
pursuant to this Agreement, such term shall mean a day other than a
Saturday, Sunday or other day on which commercial banks in Toronto,
Ontario are authorized or required by law to close and (b) when such term
is used with respect to notices and determinations in connection with, and
payments of principal of, and interest on, LIBOR Loans, any day which is a
Business Day in New York City and which is also a day on which trading by
and between banks in Dollar deposits may be carried out in the London
interbank eurodollar market.
"Canadian Administrative Agent": The Toronto-Dominion Bank, together
with its affiliates, as the Canadian Administrative Agent for the Canadian
Lenders under this Agreement and the other Loan Documents, and any
successor thereto pursuant to Section 12.9.
"Canadian Benefit Plans": all material employee benefit plans
maintained or contributed to by the Canadian Borrower or a Subsidiary
thereof that are not Canadian Pension Plans including, without limitation,
all profit sharing, savings, supplemental retirement, retiring allowance,
severance, deferred compensation, welfare, bonus,
<PAGE> 6
6
supplementary unemployment benefit plans or arrangements and all life,
health, dental and disability plans and arrangements in which the
employees or former employees of the Canadian Borrower or a Subsidiary
thereof employed in Canada participate or are eligible to participate.
"Canadian Borrower": as defined in the Preamble to this Agreement.
"Canadian Borrower Obligations": the unpaid principal of and
interest on (including, without limitation, interest accruing after the
maturity of the Loans and Acceptance Reimbursement Obligations and
interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding,
relating to the Canadian Borrower, whether or not a claim for post-filing
or post-petition interest is allowed in such proceeding) the Loans and
Acceptance Reimbursement Obligations and all other obligations and
liabilities of the Canadian Borrower to the Administrative Agents or to
any Lender (or, in the case of any Hedging Agreements, any affiliate of
any Lender), whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under,
out of, or in connection with, this Agreement, any other Loan Document,
any Hedging Agreement entered into with any Lender or any affiliate of any
Lender or any other document made, delivered or given in connection
herewith or therewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses (including,
without limitation, all fees, charges and disbursements of counsel to the
Administrative Agents or to any Lender that are required to be paid by the
Canadian Borrower pursuant hereto) or otherwise.
"Canadian Collateral Documents": the collective reference to the
agreements, instruments and documents delivered from time to time (both
before and after the date of this Agreement) to the General Administrative
Agent, the Canadian Administrative Agent or the Lenders by the Canadian
Borrower or any of its Subsidiaries for the purpose of establishing,
perfecting, reserving or protecting the security of the Lenders in respect
hereof and in respect of amounts owing by the Canadian Borrower hereunder
(including, without limitation, guarantees, debentures, Bank Act (Canada)
assignments, general security agreements, general assignments of
receivables and share pledge agreements, each as amended, restated,
supplemented or replaced from time to time). The Canadian Collateral
Documents executed and delivered in connection with the Acquisition
Closing Date are listed on Schedule 4. On the Closing Date, the parties to
the Canadian Collateral Documents shall execute and deliver one or more
Affirmations of Security Agreements in form and substance satisfactory to
the General Administrative Agent and the Canadian Administrative Agent,
which shall affirm the continuing existence and validity of the Canadian
Collateral Documents as security for the obligations of the Canadian
Borrower hereunder.
"Canadian Dollar Prime Rate": on any day, the higher of (a) the rate
per annum designated by the Canadian Administrative Agent from time to
time (and in effect on such day) as its reference rate for Canadian Dollar
commercial loans made
<PAGE> 7
7
in Canada and (b) the rate per annum which is .75% above the one month
acceptance rate quoted by The Toronto-Dominion Bank at 10:00 A.M., Toronto
time, that appears on the Reuter's Screen CDOR page on such day as its
rate for acceptances in Canada. The Canadian Dollar Prime Rate is not
intended to be the lowest rate of interest charged by The Toronto-Dominion
Bank in connection with extensions of credit in Canadian Dollars to
debtors.
"Canadian Dollars" and "C$": dollars in the lawful currency of
Canada.
"Canadian Facility Amortization Date": as defined in Section 4.3.
"Canadian Facility Commitment Period": the period from and including
the Closing Date to the Canadian Facility Termination Date.
"Canadian Facility Maximum Amount": on any date, the maximum
Aggregate Canadian Term Loan Outstandings permitted on such date after
giving effect to payments required to be made pursuant to Section 4.3 or
reductions required to be made pursuant to Section 6.3(g), as the case may
be.
"Canadian Facility Termination Date": April 3, 2004.
"Canadian Lenders": each Lender listed on Schedule 1.1B.
"Canadian Operating Facility": the C$35,000,000 credit facility made
available pursuant to the letter agreement, dated as of the date hereof,
between the Canadian Borrower, as borrower, and The Toronto-Dominion Bank,
as lender, as the same may be amended, modified or otherwise supplemented
from time to time.
"Canadian Operating Facility Lender": The Toronto-Dominion Bank in
its capacity as lender under the Canadian Operating Facility.
"Canadian Operating Facility Obligations": all of the obligations,
liabilities and indebtedness of the Canadian Borrower to the Canadian
Operating Facility Lender from time to time, whether present or future,
absolute or contingent, liquidated or unliquidated, as principal or as
surety, alone or with others, of whatsoever nature or kind, in any
currency, under or in respect of agreements or dealings between the
Canadian Borrower and the Canadian Operating Facility Lender or agreements
or dealings between the Canadian Borrower and any Person by which such
lender may be or become in any manner whatsoever a creditor of the
Canadian Borrower, including without limitation under the Canadian
Operating Facility (including, without limitation, all fees and
disbursements of the Canadian Operating Facility Lender or its counsel or
agents incurred in the enforcement of the Canadian Operating Facility);
the amount of the Canadian Operating Facility Obligations will be
determined without regard to any right of set-off or counterclaim by the
Canadian Borrower against the Canadian Operating Facility Lender.
<PAGE> 8
8
"Canadian Pension Plan": any plan, program, arrangement or
understanding that is a pension plan for the purposes of any applicable
pension benefit or tax laws of Canada or a province or territory thereof
(whether or not registered under any such laws) which is maintained,
administered or contributed to by (or to which there is or may be an
obligation to contribute by) the Canadian Borrower or a Subsidiary thereof
in respect to any person's past, present or future employment in Canada or
a province or territory thereof with the Canadian Borrower or a Subsidiary
thereof, all related funding arrangements and all related agreements,
arrangements and understandings in respect of, or related to, any benefits
to be provided thereunder or the effect thereof on any other compensation
or remuneration of any employee.
"Canadian Reference Lenders": the collective reference to the
Schedule 1 Canadian Reference Lenders and the Schedule 2 Canadian
Reference Lenders.
"Canadian Term Loan": as defined in Section 4.1.
"Canadian Term Loan Commitment": as to any Canadian Lender, the
obligation of such Lender to make Canadian Term Loans to, and/or create
and discount Acceptances on behalf of (or, in lieu thereof, to make loans
pursuant to the Acceptance Notes to), the Canadian Borrower, in an amount
not to exceed the amount set forth opposite such Canadian Lender's name on
Schedule 1.1B under the heading "Canadian Term Loan Commitment". The
original aggregate amount of the Canadian Term Loan Commitments is the
equivalent in Canadian Dollars (determined in accordance with Section
4.3(b)) of US$70,000,000.
"Canadian Term Loan Commitment Percentage": as to any Canadian
Lender at any time, the percentage which such Canadian Lender's Canadian
Term Loan Commitment then constitutes of the aggregate Canadian Term Loan
Commitments (or, at any time after the Closing Date, the percentage which
the aggregate amount of such Canadian Lender's Aggregate Canadian Term
Loan Outstandings then outstanding constitutes of the Total Aggregate
Canadian Term Loan Outstandings then outstanding).
"Canadian Term Loan Note": as defined in Section 4.4(d).
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants or options to purchase any of the
foregoing.
"Cash Equivalents": (a) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed or insured by
the United States Government or any agency thereof, (b) certificates of
deposit and eurodollar time deposits with maturities of one year or less
from the date of acquisition and overnight bank deposits of any Lender or
of any commercial bank having capital and surplus in excess of
$500,000,000, (c) repurchase obligations of any Lender or of any
<PAGE> 9
9
commercial bank satisfying the requirements of clause (b) of this
definition, having a term of not more than 30 days with respect to
securities issued or fully guaranteed or insured by the United States
Government, (d) commercial paper of a domestic issuer rated at least A-2
by Standard and Poor's Rating Group ("S&P") or P-2 by Moody's Investors
Service, Inc. ("Moody's"), (e) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political
subdivision or taxing authority of any such state, commonwealth or
territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or
foreign government (as the case may be) are rated at least A by S&P or A
by Moody's, (f) securities with maturities of one year or less from the
date of acquisition backed by standby letters of credit issued by any
Lender or any commercial bank satisfying the requirements of clause (b) of
this definition or (g) shares of money market mutual or similar funds
which invest exclusively in assets satisfying the requirements of clauses
(a) through (f) of this definition.
"Change of Control": a Change of Control shall be deemed to occur
(a) if at any time Laidlaw shall cease to be a primary shareholder of
Holdings, (b) if at any time when the Consolidated Total Leverage Ratio is
greater than 2.50 to 1.00, Laidlaw shall not own, directly or indirectly,
at least 20% of the outstanding voting stock of Holdings, (c) if at any
time Holdings shall cease to own 100% of the outstanding voting stock of
the Company, (d) if at any time the Company shall cease to own 100% of the
outstanding voting stock of the Canadian Borrower or (e) if at any time
there shall cease to be at least one member of the Board of Directors of
Holdings who is a designee of Laidlaw.
"Closing Date": the date on which the conditions precedent set forth
in Section 8.1 shall be satisfied, which date shall not be later than
April 8, 1998.
"Co-Documentation Agent": as defined in the Preamble to this
Agreement.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral": all assets of the Loan Parties, now owned or
hereinafter acquired, upon which a Lien is purported to be created by any
Security Document.
"Commitment": as to any Lender, the sum of the Tranche A Term Loan
Commitment, the Tranche B Term Loan Commitment, the Tranche C Term Loan
Commitment, the Revolving Credit Commitment and the Canadian Term Loan
Commitment of such Lender.
"Commitment Fee Rate": on any day, the rate per annum determined
pursuant to the Pricing Grid.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Company within the
meaning of Section 4001 of
<PAGE> 10
10
ERISA or is part of a group which includes the Company and which is
treated as a single employer under Section 414 of the Code.
"Company": as defined in the Preamble to this Agreement.
"Consolidated Capital Expenditures": for any fiscal period, the
aggregate of all expenditures by Holdings and its Subsidiaries for the
acquisition or leasing (pursuant to a Financing Lease) of fixed or capital
assets or additions to equipment (including replacements, capitalized
repairs and improvements during such period, but excluding investments
made pursuant to Section 10.8(c)) which should be capitalized under GAAP
on a consolidated balance sheet of Holdings and its Subsidiaries; provided
that for any calculation of Consolidated Capital Expenditures for any
fiscal period ending November 30, 1998, February 28, 1999 or May 31, 1999,
Consolidated Capital Expenditures shall be deemed to be Consolidated
Capital Expenditures from September 1, 1998 to the last day of such period
multiplied by 4, 2 and 4/3, respectively.
"Consolidated Contingent Obligations": at any date (a) all
obligations of Holdings and its Subsidiaries in respect of performance
bonds, letters of credit in the nature of performance bonds and similar
obligations, and (b) all Guarantee Obligations of Holdings and it
Subsidiaries in respect of obligations of the kind referred to in the
foregoing clause (a).
"Consolidated Debt Service": for any fiscal period, the sum, for
Holdings and its Subsidiaries (determined on a consolidated basis without
duplication in accordance with GAAP), of (a) all regularly scheduled
payments of principal of Indebtedness during such period, including all
scheduled payments in respect of the Loans, and, without duplication, all
scheduled reductions in the Canadian Facility Maximum Amount, during such
period plus (b) Consolidated Projected Cash Interest Expense for such
period.
"Consolidated Fixed Charges": for any fiscal period, the sum for
such period of (i) Consolidated Debt Service and (ii) Consolidated
Projected Operating Lease Expense.
"Consolidated Historical Cash Interest Expense": for any fiscal
period, the aggregate amount of interest in respect of Consolidated Total
Funded Debt and in respect of the Seller Note paid in cash during such
period as determined on a consolidated basis in accordance with GAAP;
provided that for any calculation of Consolidated Historical Cash Interest
Expense for any fiscal period ending November 30, 1998, February 28, 1999
or May 31, 1999, Consolidated Historical Cash Interest Expense shall be
deemed to be Consolidated Historical Cash Interest Expense from September
1, 1998 to the last day of such period multiplied by 4, 2 and 4/3,
respectively.
<PAGE> 11
11
"Consolidated Historical Operating Lease Expense": for any fiscal
period, the aggregate lease obligations of Holdings and its Subsidiaries
for which Holdings or any of its Subsidiaries is contractually committed
having a remaining term in excess of twelve months determined on a
consolidated basis payable in respect of such period under leases of real
and/or personal property (net of income from sub-leases thereof and
excluding lease payments on operating leases which carry a termination
payment of less than twelve months of lease payments, but including taxes,
insurance, maintenance and similar expenses which the lessee is obligated
to pay under the terms of said leases), whether or not such obligations
are reflected as liabilities or commitments on a consolidated balance
sheet of Holdings and its Subsidiaries or in the notes thereto, excluding,
however, obligations under Financing Leases; provided that for any
calculation of Consolidated Historical Operating Lease Expense for any
fiscal period ending November 30, 1998, February 28, 1999 or May 31, 1999,
Consolidated Historical Operating Lease Expense shall be deemed to be
Consolidated Historical Operating Lease Expense from September 1, 1998 to
the last day of such period multiplied by 4, 2 and 4/3, respectively.
"Consolidated Net Income": of any Person for any fiscal period, net
income of such Person and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP; provided that for any calculation of
Consolidated Net Income for any fiscal period ending November 30, 1998,
February 28, 1999 or May 31, 1999, Consolidated Net Income shall be deemed
to be Consolidated Net Income from September 1, 1998 to the last day of
such period multiplied by 4, 2 and 4/3, respectively.
"Consolidated Operating Cash Flow": for any fiscal period,
Consolidated Net Income of Holdings and its Subsidiaries (excluding
without duplication, (w) extraordinary gains and losses in accordance with
GAAP, (x) gains and losses in connection with asset dispositions whether
or not constituting extraordinary gains and losses and (y) gains or losses
on discontinued operations and (z) non-cash investment income) for such
period, plus (i) to the extent deducted in determining such Consolidated
Net Income, interest expense and other financing costs and expenses (cash
and non-cash) for such period, plus (ii) to the extent deducted in
computing such Consolidated Net Income, the sum of income taxes (whether
or not deferred), depreciation and amortization, and all other non-cash
expenses; provided that for any calculation of Consolidated Operating Cash
Flow for any fiscal period ending November 30, 1998, February 28, 1999 or
May 31, 1999, Consolidated Operating Cash Flow shall be deemed to be
Consolidated Operating Cash Flow from September 1, 1998 to the last day of
such period multiplied by 4, 2 and 4/3, respectively.
"Consolidated Projected Cash Interest Expense": for any fiscal
period, the aggregate amount of interest in respect of Consolidated Total
Funded Debt and in respect of the Seller Note projected to be payable in
cash during such period as determined on a consolidated basis in
accordance with GAAP (such interest expense being calculated based upon
the assumption that interest rates in effect on the date of calculation
will remain in effect for such future fiscal period).
<PAGE> 12
12
"Consolidated Projected Operating Lease Expense": for any fiscal
period, the aggregate lease obligations of Holdings and its Subsidiaries
for which Holdings or any of its Subsidiaries is contractually committed
having a remaining term in excess of twelve months determined on a
consolidated basis projected to be payable in respect of such period under
leases of real and/or personal property (net of income from sub-leases
thereof and excluding lease payments on operating leases which carry a
termination payment of less than twelve months of lease payments, but
including taxes, insurance, maintenance and similar expenses which the
lessee is obligated to pay under the terms of said leases), whether or not
such obligations would be reflected as liabilities or commitments on a
consolidated balance sheet of Holdings and its Subsidiaries or in the
notes thereto, excluding, however, obligations under Financing Leases.
"Consolidated Total Funded Debt": at any date, all Indebtedness of
Holdings and its Subsidiaries outstanding on such date for borrowed money
or the deferred purchase price of property and all Guarantee Obligations
of the Company and its Subsidiaries in respect of Indebtedness for
borrowed money or the deferred purchase price of property, in each case
determined on a consolidated basis in accordance with GAAP, including,
without limitation, Indebtedness in respect of Financing Leases, but
excluding Indebtedness in respect of the Seller Note.
"Consolidated Total Leverage Ratio" as at any date of determination,
the ratio of (i) Consolidated Total Funded Debt as at such date to (ii)
Consolidated Operating Cash Flow for the four fiscal quarters ended on or
most recently prior to such date of determination.
"Consolidated Working Capital": of any Person at any date, the
excess of (a) the sum of all amounts (other than cash and cash
equivalents) that would, in accordance with GAAP, be set forth opposite
the caption "total current assets" (or any like caption) on a consolidated
balance sheet of such Person and its Subsidiaries at such date over (b)
all amounts that would, in accordance with GAAP, be set forth opposite the
caption "total current liabilities" (or any like caption) on a
consolidated balance sheet of such Person and its Subsidiaries on such
date (excluding, to the extent it would otherwise be included under
current liabilities, the current portion of any Consolidated Total Funded
Debt).
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"CPCFA Debt": the Indebtedness incurred by Holdings pursuant to a
credit agreement, dated as of July 1, 1997, between Holdings and the
California Pollution Control Financing Authority in connection with the
issuance by such Authority of Pollution Control Revenue Bonds, due July 1,
2007, in the aggregate principal amount of $19,500,000.
<PAGE> 13
13
"Default": any of the events specified in Section 11, whether or not
any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"Disposition": with respect to any asset, any sale, lease, sale and
leaseback, assignment, conveyance, transfer or other disposition thereof;
and the terms "Dispose" and "Disposed of" shall have correlative meanings.
"Domestic Subsidiary": any Subsidiary of the Company organized under
the laws of any jurisdiction within the United States.
"Draft": a draft substantially in the form of Exhibit A-1 or in such
other form as the Canadian Administrative Agent may from time to time
reasonably request (or to the extent the context shall require, an
Acceptance Note, delivered in lieu of a draft), as the same may be
amended, supplemented or otherwise modified from time to time.
"Environmental Laws": any and all laws (including, without
limitation, all common and civil law), rules, orders, regulations,
statutes, ordinances, guidelines, codes, decrees, or other legally
enforceable requirement of any foreign government, the United States,
Canada, or any state, provincial, local, municipal or other governmental
authority, regulating, relating to or imposing liability or standards of
conduct concerning protection of the environment or of human health, or
employee health and safety, as has been, is now, or may at any time
hereafter be, in effect.
"Environmental Permits": any and all permits, licenses,
registrations, approvals, notifications, exemptions and any other
authorization required under any Environmental Law.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
LIBOR Loan, the aggregate (without duplication) of the rates (expressed as
a decimal fraction) of reserve requirements in effect on such day
(including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors of the
Federal Reserve System or other Governmental Authority having jurisdiction
with respect thereto) dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities"
in Regulation D of such Board) maintained by a member bank of such System.
"Eurodollar Business Day": any day on which banks are open for
dealings in dollar deposits in the London interbank market.
<PAGE> 14
14
"Event of Default": any of the events specified in Section 11,
provided that any requirement for the giving of notice, the lapse of time,
or both, or any other condition, has been satisfied.
"Excess Cash Flow": with respect to any Person for any fiscal year,
the excess of (a) the sum, without duplication, of (i) Consolidated Net
Income of such Person and its Subsidiaries for such fiscal year, (ii) the
net decrease, if any, in Consolidated Working Capital of such Person and
its Subsidiaries during such fiscal year, (iii) to the extent deducted in
computing such Consolidated Net Income, non-cash interest expense and
other financing costs and expenses, depreciation and amortization for such
fiscal year, (iv) extraordinary non-cash losses during such fiscal year
subtracted in the determination of such Consolidated Net Income, (v)
deferred income tax expense of such Person and its Subsidiaries for such
fiscal year, (vi) non-cash losses of such Person and its Subsidiaries for
such fiscal year in connection with asset dispositions whether or not
constituting extraordinary losses, and (vii) non-cash ordinary losses of
such Person and its Subsidiaries for such fiscal year over (b) the sum,
without duplication, of (i) the aggregate amount of permitted cash capital
expenditures made by such Person and its Subsidiaries during such fiscal
year, (ii) the net increase, if any, in Consolidated Working Capital of
such Person and its Subsidiaries during such fiscal year, (iii) the
aggregate amount of (A) scheduled payments of principal in respect of any
Indebtedness of such Person and its Subsidiaries during such fiscal year,
(B) optional prepayments of principal in respect of any Indebtedness of
such Person and its Subsidiaries during such fiscal year (other than, with
respect to Holdings, prepayments in respect of the Revolving Credit Loan
not accompanied by a reduction in Revolving Credit Commitments), (C) with
respect to Holdings for fiscal year 1997 only, repayments of existing
Indebtedness required to be repaid in connection with the Acquisition
Closing Date, (iv) deferred income tax credit of such Person and its
Subsidiaries for such fiscal year, (v) extraordinary non-cash gains during
such fiscal year added in the determination of Consolidated Net Income of
such Person and its Subsidiaries for such fiscal year, (vi) non-cash gains
of such Person and its Subsidiaries during such fiscal year in connection
with asset dispositions whether or not constituting extraordinary gains,
(vii) non-cash ordinary gains of such Person and its Subsidiaries during
such fiscal year and (viii) cash expenditures of such Person and its
Subsidiaries during such fiscal year on deferred (including the current
portion thereof) long term liabilities (net of related cash taxes), (ix)
to the extent not deducted in determining Consolidated Net Income of such
Person and its Subsidiaries for such fiscal year, cash expenditures made
or committed during such fiscal year in respect of site closure, related
severance costs, financing fees and other costs incurred in connection
with the Rollins Acquisition and the Safety-Kleen Acquisition (provided
that amounts deducted in any fiscal year for expenditures committed, but
not made, during such fiscal year shall not be deducted in the fiscal year
in which such expenditures are actually made) and (x) non-cash investment
income of such Person and its Subsidiaries during such fiscal year.
<PAGE> 15
15
"Exchange Agent": IBJ Schroder Bank & Trust Company, as exchange
agent under the Exchange Agent Agency Agreement, and any successor thereto
pursuant to the terms of such agreement.
"Exchange Agent Agency Agreement": the Exchange Agent Agency
Agreement to be executed and delivered by the Exchange Agent, the General
Administrative Agent and Acquisition Corp., substantially in the form of
Exhibit P, as the same may be amended, supplemented or otherwise modified
from time to time.
"Exchange Offer": as defined in the Recitals to this Agreement.
"Exchange Offer Documents": as defined in the Recitals to this
Agreement.
"Exchange Rate": with respect to Canadian Dollars on any date, the
Bank of Canada noon spot rate on such date for the exchange of Canadian
Dollars into U.S. Dollars.
"Existing Acceptances": as defined in Section 5.1(a).
"Existing Acceptance Lenders": as defined in Section 5.1(a).
"Existing Credit Agreement": as defined in the Recitals to this
Agreement.
"Existing Letters of Credit": as defined in Section 3.1(c).
"Existing Mortgages": the collective reference to (i) the Deed of
Trust, Assignment of Rents and Leases and Security Agreement, dated as of
May 15, 1997, from Rollins Environmental, Inc., as Grantor, to First
American Title Insurance Company, as trustee for the use and benefit of
Toronto Dominion (Texas), Inc., as beneficiary, and (ii) the Mortgage,
dated as of May 15, 1997, from Rollins Environmental, Inc., as mortgagor,
to Toronto Dominion (Texas), Inc., as general administrative agent, in
each case encumbering the properties described in Schedule 2 and recorded
in the recording office described in Schedule 3.
"Extension of Credit": as to any Lender, the making of a Loan by
such Lender, the issuance (or acquisition of a participating interest in)
any Letter of Credit or the creation of an Acceptance or Acceptance Note
by such Lender. It is expressly understood and agreed that the following
do not constitute Extensions of Credit for purposes of this Agreement: (a)
the conversions and continuations of U.S. Loans as or to LIBOR Loans or
Base Rate Loans pursuant to Section 6.4, (b) the substitution of maturing
Acceptances with new Acceptances, (c) the conversion of Acceptances to
Canadian Term Loans and (d) the conversion of Canadian Term Loans to
Acceptances.
"Facility": each of (a) the Tranche A Term Loan Commitments and the
Tranche A Term Loans made thereunder (the "Tranche A Term Loan Facility"),
(b)
<PAGE> 16
16
the Tranche B Term Loan Commitments and the Tranche B Term Loans made
thereunder (the "Tranche B Term Loan Facility"), (c) the Tranche C Term
Loan Commitments and the Tranche C Term Loans made thereunder (the
"Tranche C Term Loan Facility"), (d) the Revolving Credit Commitments and
the Revolving Extensions of Credit (the "Revolving Credit Facility") and
(e) the Canadian Term Loan Commitments and the Canadian Term Loans made,
and the Acceptances issued, thereunder (the "Canadian Term Loan
Facility").
"Federal Funds Effective Rate": for any day, the weighted average of
the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers as published for
such day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York or, if such rate is
not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the General
Administrative Agent from three federal funds brokers of recognized
standing selected by it.
"Financing Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance
with GAAP to be capitalized on a balance sheet of the lessee.
"Fixed Charge Coverage Ratio": as at the last day of any fiscal
quarter, the ratio of (i) the sum of Consolidated Operating Cash Flow and
Consolidated Historical Operating Lease Expense for the four consecutive
fiscal quarters ended on such last day to (ii) Consolidated Fixed Charges
for the next succeeding four consecutive fiscal quarters.
"Foreign Currency Protection Agreements": as to any Person, all
foreign exchange contracts, currency swap agreements or other similar
agreements or arrangements entered into by such Person to protect such
Person against fluctuations in currency values.
"Foreign Subsidiary": any Subsidiary of the Company organized under
the laws of any jurisdiction outside the United States of America.
"GAAP": generally accepted accounting principles in the United
States of America in effect from time to time.
"General Administrative Agent": Toronto Dominion (Texas) Inc.,
together with its affiliates, as arranger of the Commitments and as
administrative agent for the U.S. Lenders under this Agreement and the
other Loan Documents, and any successor thereto pursuant to Section 12.9.
"Governmental Authority": any nation or government, any state,
provincial or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
<PAGE> 17
17
"Guarantee and Collateral Agreement": the Amended and Restated
Guarantee and Collateral Agreement to be executed and delivered by the
Company and each Guarantor, substantially in the form of Exhibit B-1, as
the same may be amended, supplemented or otherwise modified from time to
time.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which obligation the guaranteeing person
has issued a reimbursement, counterindemnity or similar obligation, in
either case guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends or other obligations (the "primary obligations") of any
other third Person (the "primary obligor") in any manner, whether directly
or indirectly, including, without limitation, any obligation of the
guaranteeing person, whether or not contingent, (i) to purchase any such
primary obligation or any property constituting direct or indirect
security therefor, (ii) to advance or supply funds (1) for the purchase or
payment of any such primary obligation or (2) to maintain working capital
or equity capital of the primary obligor or otherwise to maintain the net
worth or solvency of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of
any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation or (iv) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect
thereof; provided, however, that the term Guarantee Obligation shall not
include endorsements of instruments for deposit or collection in the
ordinary course of business. The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the lower of (a) an amount equal
to the stated or determinable amount of the primary obligation in respect
of which such Guarantee Obligation is made and (b) the maximum amount for
which such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may
be liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum
reasonably anticipated liability in respect thereof as determined by the
Company in good faith. For avoidance of doubt, Guarantee Obligations will
not include obligations of Holdings and its Subsidiaries incurred in the
ordinary course of business to indemnify customers in connection with
business services provided by Holdings or its Subsidiaries.
"Guarantor": each party to the Guarantee and Collateral Agreement
other than the Company, which shall include Holdings and all wholly owned
Domestic Subsidiaries of the Company.
"Hedging Agreement": any Foreign Currency Protection Agreement or
Interest Rate Protection Agreement.
"High Yield Notes": up to $400,000,000 of subordinated notes of the
Company maturing no earlier than the Revolving Credit Termination Date and
having
<PAGE> 18
18
subordination and other terms reasonably acceptable to the Company and the
General Administrative Agent.
"High Yield Offering": the contemplated offering by the Company of
the High Yield Notes.
"Holdings": as defined in the Recitals to this Agreement.
"Indebtedness": of any Person at any date, (a) all indebtedness of
such Person for borrowed money or for the deferred purchase price of
property or services (other than current trade liabilities incurred in the
ordinary course of business and payable in accordance with customary
practices), (b) any other indebtedness of such Person which is evidenced
by a note, bond, debenture or similar instrument, (c) all obligations of
such Person under Financing Leases, (d) all obligations of such Person,
contingent or otherwise, as an account party under acceptance, letter of
credit or similar facilities (other than obligations in respect of
performance bonds and letters of credit in the nature of performance
bonds), (e) all obligations of such Person, contingent or otherwise, to
purchase, redeem, retire or otherwise acquire for value any Capital Stock
(other than common stock) of such Person, (f) all Guarantee Obligations of
such Person in respect of obligations of the kind referred to in clauses
(a) through (e) above, (g) all obligations of the kind referred to in
clauses (a) through (f) above secured by (or for which the holder of such
obligation has an existing right, contingent or otherwise, to be secured
by) any Lien on property (including, without limitation, accounts and
contract rights) owned by such Person, whether or not such Person has
assumed or become liable for the payment of such obligation and (h) for
the purposes of Section 11(e) only, all obligations of such Person in
respect of Hedging Agreements.
"Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intercreditor Agreement": the Amended and Restated Intercreditor
Agreement, substantially in the form of Exhibit O, to be entered into by
the Administrative Agents and The Toronto-Dominion Bank, as Canadian
Operating Facility Agent (as defined therein), and NationsBank, N.A., in
its capacity as a lender providing the NationsBank Line of Credit.
"Interest Coverage Ratio": for any period, the ratio of (i)
Consolidated Operating Cash Flow less Consolidated Capital Expenditures
for such period to (ii) Consolidated Historical Cash Interest Expense for
such period.
"Interest Determination Date": with respect to any Interest Period
for LIBOR Loans, the date which is two Eurodollar Business Days prior to
the first day of such LIBOR Interest Period.
<PAGE> 19
19
"Interest Payment Date": (a) as to any Base Rate Loan and any
Canadian Term Loan, the last Business Day of each February, May, August
and November, and, in the case of any Canadian Term Loan converted to an
Acceptance pursuant to Section 5.1(b), the Borrowing Date on which such
conversion occurs, (b) as to any LIBOR Loan having an Interest Period of
three months or less, the last day of such Interest Period, and (c) as to
any LIBOR Loan having an Interest Period longer than three months, each
day which is three months, or a whole multiple thereof, after the first
day of such Interest Period and the last day of such Interest Period.
"Interest Period": with respect to any LIBOR Loan:
(a) initially, the period commencing on the Borrowing Date
or conversion date, as the case may be, with respect to such LIBOR
Loan and ending one, two, three or six months or (if available to
all Lenders under the relevant Facility) nine or twelve months
thereafter, as selected by the Company in its notice of borrowing or
notice of conversion, as the case may be, given with respect
thereto; and
(b) thereafter, each period commencing on the last day of
the next preceding Interest Period applicable to such LIBOR Loan and
ending one, two, three or six months or (if available to all Lenders
under the relevant Facility) nine or twelve months thereafter, as
selected by the Company by irrevocable notice to the General
Administrative Agent not less than three Business Days prior to the
last day of the then current Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest
Periods are subject to the following:
(1) if any Interest Period would otherwise end on a day that
is not a Business Day, such Interest Period shall be extended to the
next succeeding 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 Business Day;
(2) any Interest Period in respect of Revolving Credit Loans,
Tranche A Term Loans, Tranche B Term Loans or Tranche C Term Loans,
as the case may be, that would otherwise extend beyond the Revolving
Credit Termination Date or beyond the date final payment is due on
the Tranche A Term Loans, the Tranche B Term Loans or the Tranche C
Term Loans, as the case may be, shall end on the Revolving Credit
Termination Date or such due date, as applicable;
(3) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month; and
<PAGE> 20
20
(4) the Company shall select Interest Periods so as not to
require a payment or prepayment of any LIBOR Loan during an Interest
Period for such Loan.
"Interest Rate Protection Agreements": as to any Person, all
interest rate swaps, caps or collar agreements or similar arrangements
entered into by such Person providing for protection against fluctuations
in interest rates or the exchange of nominal interest obligations, either
generally or under specific contingencies.
"Issuance Date": any Business Day specified in a notice pursuant to
Section 3.2 as a date on which an Issuing Lender is requested to issue a
Letter of Credit hereunder.
"Issuing Lender": any of The Toronto-Dominion Bank or any Managing
Agent or any Affiliates thereof, as selected by the Company.
"ITA": the Income Tax Act (Canada) and the regulations promulgated
thereunder, as amended or re-enacted from time to time.
"Laidlaw": Laidlaw Inc., a Canadian corporation.
"L/C Commitment": at any time, the lesser of (a) $200,000,000 and
(b) the aggregate Revolving Credit Commitments then in effect.
"L/C Fee Payment Date": the last day of each February, May, August
and November and the last day of the Revolving Credit Commitment Period.
"L/C Obligations": at any time, an amount equal to the sum of (a)
the aggregate then undrawn and unexpired amount of the then outstanding
Letters of Credit and (b) the aggregate amount of drawings under Letters
of Credit which have not then been reimbursed pursuant to Section 3.5.
"L/C Participants": with respect to any Letter of Credit, the
collective reference to all the Revolving Credit Lenders other than the
relevant Issuing Lender.
"Letters of Credit": as defined in Section 3.1(a).
"LIBOR Loan": any Loan the rate of interest applicable to which is
based upon the LIBOR Rate.
"LIBOR Rate": with respect to a LIBOR Loan for the relevant Interest
Period, the rate per annum determined by the General Administrative Agent
as follows:
(a) on the Interest Determination Date relating to such
Interest Period, the General Administrative Agent shall obtain the
offered quotation(s)
<PAGE> 21
21
for U.S. Dollar deposits for a period comparable to such Interest
Period that appear on the Reuter's Screen as of 11:00 a.m., London
time. If at least two such offered quotations appear on the Reuter's
Screen, the LIBOR Rate shall be the arithmetic average (rounded up
to the nearest 1/16th of 1%) of such offered quotations, as
determined by the General Administrative Agent;
(b) if the Reuter's Screen is not available or has been
discontinued, the LIBOR Rate shall be the rate per annum that the
General Administrative Agent determines to be the arithmetic average
(rounded as aforesaid) of the per annum rates of interest reported
to the General Administrative Agent by each LIBOR Reference Bank
(or, if any LIBOR Reference Bank fails to provide such quotation, on
the basis of the rates reported to the General Administrative Agent
by the remaining LIBOR Reference Banks) as the rate at which
deposits in U.S. Dollars are offered to such Reference Banks in the
London interbank market at 11:00 a.m., London time, on the Interest
Determination Date in the approximate amount of such LIBOR Reference
Bank's relevant LIBOR Loan and having a maturity approximately equal
to the relevant LIBOR Interest Period; and
(c) if the General Administrative Agent is not able to obtain
quotations for the determination of the LIBOR Rate pursuant to
subsection (a) or (b) above, the LIBOR Rate shall be the rate per
annum which the General Administrative Agent in good faith
determines to be the arithmetic average (rounded as aforesaid) of
the offered quotations for U.S. Dollar deposits in an amount
comparable to the General Administrative Agent's share of the
relevant amount in respect of which the LIBOR Rate is being
determined for a period comparable to the relevant LIBOR Interest
Period that leading banks in New York City selected by the General
Administrative Agent are quoting at 11:00 a.m., New York City time,
on the Interest Determination Date in the New York interbank market
to major international banks.
"LIBOR Reference Banks": The Toronto-Dominion Bank, The Bank of Nova
Scotia, NationsBank, N.A. and The First National Bank of Chicago.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention
agreement and any Financing Lease having substantially the same economic
effect as any of the foregoing).
"Loan": any loan made by any Lender pursuant to this Agreement.
"Loan Documents": the collective reference to this Agreement, any
Notes, the Applications, the Syndication Letter Agreement, the Drafts, the
Acceptances, the Acceptance Notes and the Security Documents.
<PAGE> 22
22
"Loan Parties": the collective reference to Holdings, the Borrowers
and each Subsidiary of the Company which is a party to a Loan Document.
"Majority Facility Lenders": with respect to any Facility, the
holders of more than 66-2/3% of the aggregate unpaid principal amount of
the U.S. Term Loans (and related undrawn U.S. Term Loan Commitments), the
Total Revolving Extensions of Credit or the Aggregate Canadian Term Loan
Outstandings, as the case may be, outstanding under such Facility (or, in
the case of the Revolving Credit Facility, prior to any termination of the
Revolving Credit Commitments, the holders of more than 66- 2/3% of the
aggregate Revolving Credit Commitments).
"Material Adverse Effect": a material adverse effect on (a) the
Safety-Kleen Acquisition, (b) the business, operations, property,
condition (financial or otherwise) or prospects of the Company and its
Subsidiaries taken as a whole or (c) the validity or enforceability of
this or any of the other Loan Documents or the rights or remedies of the
Administrative Agents or the Lenders hereunder or thereunder.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products,
polychlorinated biphenyls, urea-formaldehyde insulation, asbestos,
pollutants, contaminants, radioactivity, and any other substances or
forces of any kind, whether or not any such substance or force is defined
as hazardous or toxic under any Environmental Law, that is regulated
pursuant to or could give rise to liability under any Environmental Law.
"Merger": as defined in the Recitals to this Agreement.
"Merger Agreement: as defined in the Recitals to this Agreement.
"Merger Date": the date on which the Merger is consummated.
"Mortgage Amendment": each Mortgage Amendment, substantially in the
form of Exhibit M, to be entered into on the Closing Date to amend each
Existing Mortgage.
"Mortgages": the collective reference to the Existing Mortgages, as
amended by the Mortgage Amendments, and the Mortgages, substantially in
the form of Exhibit N, to be executed and delivered in respect of the
properties to be mortgaged pursuant to Section 9.10(d), as the same may be
amended, supplemented or otherwise modified from time to time.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"NationsBank Line of Credit": the working capital credit facility in
an amount not exceeding $25,000,000 made available pursuant to a letter
agreement, dated March 31, 1998 between NationsBank of Texas, N.A., as
lender, and the Company,
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23
as borrower, as the same may be amended, modified or otherwise
supplemented from time to time.
"Net Cash Proceeds": (a) in connection with any Asset Sale or any
Recovery Event, the proceeds thereof in the form of cash and cash
equivalents (including any such proceeds received by way of deferred
payment of principal pursuant to a note or installment receivable or
purchase price adjustment receivable or otherwise, but only as and when
received) of such Asset Sale or Recovery Event, net of attorneys' fees,
accountants' fees, investment banking fees, amounts required to be applied
to the repayment of Indebtedness secured by a Lien expressly permitted
hereunder on any asset which is the subject of such Asset Sale or Recovery
Event (other than any Lien pursuant to a Security Document) and other
customary fees and expenses actually incurred in connection therewith and
net of taxes paid or reasonably estimated to be payable as a result
thereof (after taking into account any available tax credits or deductions
and any tax sharing arrangements) and (b) in connection with any issuance
or sale of equity securities or debt securities or instruments or the
incurrence of loans, the cash proceeds received from such issuance or
incurrence, net of attorneys' fees, investment banking fees, accountants'
fees, underwriting discounts and commissions and other customary fees and
expenses actually incurred in connection therewith.
"Non-Excluded Taxes": as defined in Section 6.12.
"Notes": the collective reference to the Revolving Credit Notes, the
U.S. Term Notes and the Canadian Term Notes.
"Participant": as defined in Section 14.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"Permitted Employee Stock Issuances": the issuance by Holdings of
its common stock to employees or directors of Holdings and its
Subsidiaries for aggregate proceeds not exceeding $5,000,000 per fiscal
year during fiscal year 1997, 1998 and 1999 and $10,000,000 per fiscal
year thereafter.
"Person": an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Company or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Prepayment Option Notice": as defined in Section 6.3(i).
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24
"Pricing Grid": the pricing grid attached hereto as Annex A.
"Prime Rate": the prime commercial lending rate of The
Toronto-Dominion Bank as in effect from time to time in New York City for
loans in U.S. Dollars, such rate to be adjusted on and as of the effective
date of any change in the Prime Rate. The Prime Rate is only one of the
bases for computing interest on loans made by the Lenders, and by basing
interest on the unpaid principal amount of the Loans on the Prime Rate,
the Lenders have not committed to charge, and the Company has not in any
way bargained for, interest based on a lower or the lowest rate at which
the Lenders may now or in the future make loans to other borrowers.
"Pro Forma Balance Sheet": as defined in Section 7.1(a).
"Proposed Prepayment Date": as defined in Section 6.3(i).
"Recovery Event": any settlement of or payment in respect of any
property or casualty insurance claim or any condemnation proceeding
relating to any asset of the Company or any of its Subsidiaries.
"Reference Discount Rate": on any date with respect to each Draft
requested to be accepted by a Canadian Lender, (a) if such Canadian Lender
is a Schedule 1 Canadian Lender, the arithmetic average of the discount
rates (expressed as a percentage calculated on the basis of a year of 365
days) quoted by the Toronto offices of each of the Schedule 1 Canadian
Reference Lenders, at 10:00 a.m. (Toronto time) on the Borrowing Date on
which such Draft is to be accepted as the discount rate at which each such
Schedule 1 Canadian Reference Lender would, in the normal course of its
business, purchase on such date Acceptances having an aggregate face
amount and term to maturity as designated by the Canadian Borrower
pursuant to Section 5.2 and (b) if such Canadian Lender is a Schedule 2
Canadian Lender, the arithmetic average of the discount rates (expressed
as a percentage calculated on the basis of a year of 365 days) quoted by
the Toronto offices of each of the Schedule 2 Canadian Reference Lenders,
at 10:00 a.m. (Toronto time) on the Borrowing Date on which such Draft is
to be accepted as the discount rate at which each such Schedule 2 Canadian
Reference Lender would, in the normal course of its business, purchase on
such date Acceptances having an aggregate face amount and term to maturity
as designated by the Canadian Borrower pursuant to Section 5.2. The
Canadian Administrative Agent shall advise the Canadian Borrower and the
Canadian Lenders, either in writing or verbally, by 11:00 a.m. (Toronto
time) on each Borrowing Date in respect of Acceptances as to the
applicable Reference Discount Rate and corresponding Acceptance Purchase
Price in respect of Acceptances having the maturities selected by the
Canadian Borrower for such Borrowing Date.
"Register": as defined in Section 14.6(d).
"Regulation U": Regulation U of the Board as in effect from time to
time.
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"Reimbursement Obligation": the obligation of the Company to
reimburse the Issuing Lenders pursuant to Section 3.5 for amounts drawn
under Letters of Credit.
"Reinvestment Deferred Amount": with respect to any Reinvestment
Event, the aggregate Net Cash Proceeds received by a Borrower or any of
its Subsidiaries in connection therewith which are not applied to
prepayments or reductions pursuant to Section 6.3(c) as a result of the
delivery of a Reinvestment Notice.
"Reinvestment Event": any Recovery Event or Asset Sale in respect of
which the relevant Borrower has delivered a Reinvestment Notice.
"Reinvestment Notice": a written notice executed by a Responsible
Officer to the General Administrative Agent within 30 days of the
Reinvestment Event to which it relates stating that no Event of Default
has occurred and is continuing and that the relevant Borrower (directly or
indirectly through a Subsidiary), in good faith, intends and expects to
use all or a specified portion of the Net Cash Proceeds of a Recovery
Event or an Asset Sale to restore or replace the assets in respect of
which such Recovery Event or Asset Sale occurred or to purchase other
assets used in the existing business of the Company and its Subsidiaries
within twelve months from the date of receipt of such Net Cash Proceeds
(provided that if the affected assets constituted Collateral, such
restored, replacement or other purchased assets shall also constitute
Collateral).
"Reinvestment Prepayment Amount": with respect to any Reinvestment
Event, the Reinvestment Deferred Amount relating thereto less any amount
which, prior to the relevant Reinvestment Prepayment Date, the relevant
Borrower or the relevant Subsidiary has spent or has agreed, pursuant to a
binding written contract (under which performance is in progress) to
spend, to restore or replace the assets in respect of which a Recovery
Event or an Asset Sale has occurred or to purchase other assets used in
the existing business of such Borrower or such Subsidiary.
"Reinvestment Prepayment Date": with respect to any Reinvestment
Event, the earliest of (a) the first date occurring after such
Reinvestment Event on which an Event of Default shall have occurred, (b)
the date occurring twelve months after such Reinvestment Event and (c) the
date on which the relevant Borrower shall have determined not to, or shall
have otherwise ceased to, restore or replace the assets in respect of
which a Recovery Event or an Asset Sale has occurred or to purchase other
assets used in the existing business of such Borrower or such Subsidiary.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(c)
of ERISA, other than those events as to which the thirty-day notice period
is waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of
PBGC Reg. ss. 4043.
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"Request for Acceptances": as defined in Section 5.2(a).
"Required Lenders": the holders of more than 66-2/3% of (a) until
the Closing Date, the Tranche A Term Loan Commitments, the Tranche B Term
Loan Commitments, the Tranche C Term Loan Commitments, the Revolving
Credit Commitments and the U.S. Dollar Equivalent of the Canadian Term
Loan Commitments and (b) thereafter, the sum of (i) the aggregate unpaid
principal amount of the U.S. Term Loans and the aggregate undrawn amount
of the U.S. Term Loan Commitments, (ii) the U.S. Dollar Equivalent of the
Aggregate Canadian Facility Term Loan Outstandings of all Lenders and
(iii) the aggregate Revolving Credit Commitments of all Lenders or, if the
Revolving Credit Commitments have been terminated, the Total Revolving
Extensions of Credit.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation or determination
of an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Responsible Officer": the chief executive officer and the president
of the Company or Holdings, as the case may be, or, with respect to
financial matters, the chief financial officer of the Company or Holdings,
as the case may be.
"Reuter's Screen": the display designated at page "LIBO" on the
Reuter Monitor System or such other display on the Reuter Monitor System
as may replace such page displaying the London interbank bid or offered
rates.
"Revolving Credit Commitment": as to any U.S. Lender, the obligation
of such Lender, if any, to make Revolving Credit Loans and participate in
Letters of Credit, in an aggregate principal and/or face amount not to
exceed the amount set forth under the heading "Revolving Credit
Commitment" opposite such Lender's name on Schedule 1.1A, as the same may
be changed from time to time pursuant to the terms hereof. The original
aggregate amount of the Revolving Credit Commitments is $450,000,000;
provided that at no time shall the aggregate principal amount of all
Revolving Credit Loans exceed $300,000,000.
"Revolving Credit Commitment Period": the period from and including
the Closing Date to the Revolving Credit Termination Date.
"Revolving Credit Lender": each U.S. Lender which has a Revolving
Credit Commitment or which has made Revolving Extensions of Credit.
"Revolving Credit Loans": as defined in Section 2.4.
"Revolving Credit Note": as defined in Section 2.7.
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"Revolving Credit Percentage": as to any Revolving Credit Lender at
any time, the percentage which such Lender's Revolving Credit Commitment
then constitutes of the aggregate Revolving Credit Commitments (or, at any
time after the Revolving Credit Commitments shall have expired or
terminated, the percentage which the aggregate principal amount of such
Lender's Revolving Extensions of Credit then outstanding constitutes of
the Total Revolving Extensions of Credit then outstanding).
"Revolving Credit Termination Date": the earlier of (a) April 3,
2004 and (b) the date on which the Revolving Credit Commitments are
terminated pursuant to Section 11.
"Revolving Extensions of Credit": as to any Revolving Credit Lender
at any time, an amount equal to the sum of (a) the aggregate principal
amount of all Revolving Credit Loans made by such Lender then outstanding
and (b) such Lender's Revolving Credit Percentage of the L/C Obligations
then outstanding.
"Rollins Acquisition": the acquisition by Holdings of the common
stock of the Company, which was financed, in part, with proceeds of loans
under the Existing Credit Agreement.
"Safety-Kleen": as defined in the Recitals to this Agreement.
"Safety-Kleen Acquisition": the acquisition by Acquisition Corp. of
the common stock of Safety-Kleen pursuant to the Exchange Offer and the
Merger, financed, in part, with proceeds of Loans made hereunder.
"Schedule 1 Canadian Lender": each Canadian Lender listed on
Schedule 1 to the Bank Act (Canada).
"Schedule 1 Canadian Reference Lenders": initially, The
Toronto-Dominion Bank; and after completion of syndication of the
Facilities, The Toronto-Dominion Bank and one other Schedule 1 Canadian
Lender selected by the Canadian Administrative Agent and the Canadian
Borrower.
"Schedule 2 Canadian Lender": each Canadian Lender which is not a
Schedule 1 Canadian Lender.
"Schedule 2 Canadian Reference Lenders": two Schedule 2 Canadian
Lenders to be selected by the Canadian Administrative Agent and the
Canadian Borrower after completion of syndication of the Facilities.
"Security Documents": the collective reference to the Guarantee and
Collateral Agreement, the Acquisition Corp. Pledge Agreement, the
Mortgages, the Canadian Collateral Documents and all other security
documents hereafter delivered to the General Administrative Agent or the
Canadian Administrative Agent granting a
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28
Lien on any property of any Person to secure the obligations and
liabilities of any Loan Party under any Loan Document.
Seller Note": the 5% Convertible Subordinated Debenture due 2009 in
a principal amount of $350,000,000 issued by Holdings to Laidlaw
Transportation, Inc. on the Acquisition Closing Date as a portion of the
consideration for the Rollins Acquisition.
"Single Employer Plan": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means that, as of
any date of determination, (a) the amount of the "present fair saleable
value" of the assets of such Person will, as of such date, exceed the
amount of all "liabilities of such Person, contingent or otherwise", as of
such date, as such quoted terms are determined in accordance with
applicable federal and state laws governing determinations of the
insolvency of debtors, (b) the present fair saleable value of the assets
of such Person will, as of such date, be greater than the amount that will
be required to pay the liability of such Person on its debts as such debts
become absolute and matured, (c) such Person will not have, as of such
date, an unreasonably small amount of capital with which to conduct its
business, and (d) such Person will be able to pay its debts as they
mature. For purposes of this definition, (i) "debt" means liability on a
"claim", and (ii) "claim" means any (x) right to payment, whether or not
such a right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured or (y) right to an equitable remedy for breach of
performance if such breach gives rise to a right to payment, whether or
not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured or unmatured, disputed, undisputed, secured or
unsecured.
"Specified Acceptances": as defined in Section 5.1(a).
"Subsidiary": as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly
through one or more intermediaries, or both, by such Person. Unless
otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries"
in this Agreement shall refer to a Subsidiary or Subsidiaries of the
Company.
"Surviving Corporation": as defined in the Recitals to this
Agreement.
"Syndication Agent": as defined in the Preamble to this Agreement.
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"Syndication Letter Agreement": the Letter Agreement dated as of
April 3, 1998 among Holdings, the Borrowers and the Arranger pertaining to
the completion of the syndication of the Facilities after the Closing
Date.
"Target Rights": as defined in the Recitals to this Agreement.
"Target Shares": as defined in the Recitals to this Agreement.
"Tax Act": the Income Tax Act (Canada), as amended from time to
time.
"Term Loans": the collective references to the Canadian Term Loans
and the U.S. Term Loans.
"Tooele County Debt": the Indebtedness incurred by Holdings pursuant
to a credit agreement, dated as of July 1, 1997, between Holdings and
Tooele County, Utah, in connection with the issuance by Tooele County,
Utah, of Hazardous Waste Treatment Revenue Bonds, due July 1, 2027, in the
aggregate principal amount of $45,700,000.
"Total Aggregate Canadian Term Loan Outstandings": at any time, the
aggregate amount of the Aggregate Canadian Term Loan Outstandings of the
Canadian Lenders at such time.
"Total Revolving Extensions of Credit": at any time, the aggregate
amount of the Revolving Extensions of Credit of the Revolving Credit
Lenders at such time.
"Tranche": the collective reference to LIBOR Loans under the same
Facility the then current Interest Periods with respect to all of which
begin on the same date and end on the same later date (whether or not such
Loans shall originally have been made on the same day).
"Tranche A Term Loan": as defined in Section 2.1.
"Tranche A Term Loan Commitment": as to any U.S. Lender, the
obligation of such Lender, if any, to make a Tranche A Term Loan to the
Company hereunder in a principal amount not to exceed the amount set forth
under the heading "Tranche A Term Loan Commitment" opposite such Lender's
name on Schedule 1.1A. The original aggregate amount of the Tranche A Term
Loan Commitments is $480,000,000.
"Tranche A Term Loan Lender": each U.S. Lender which has a Tranche A
Term Loan Commitment or which has made a Tranche A Term Loan.
"Tranche A Term Loan Maturity Date": April 3, 2004.
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"Tranche A Term Loan Percentage": as to any Tranche A Term Loan
Lender at any time, the percentage which such Lender's Tranche A Term Loan
Commitment then constitutes of the aggregate Tranche A Term Loan
Commitments (or, at any time after the Closing Date, the percentage which
the aggregate principal amount of such Lender's Tranche A Term Loans then
outstanding constitutes of the aggregate principal amount of the Tranche A
Term Loans then outstanding).
"Tranche B Term Loan": as defined in Section 2.1.
"Tranche B Term Loan Commitment": as to any U.S. Lender, the
obligation of such Lender, if any, to make a Tranche B Term Loan to the
Company hereunder in a principal amount not to exceed the amount set forth
under the heading "Tranche B Term Loan Commitment" opposite such Lender's
name on Schedule 1.1A. The original aggregate amount of the Tranche B Term
Loan Commitments is $550,000,000. The Tranche B-1 Term Loan Commitments
are a subset of the Tranche B Term Loan Commitments.
"Tranche B Term Loan Lender": each U.S. Lender which has a Tranche B
Term Loan Commitment or which has made a Tranche B Term Loan.
"Tranche B Term Loan Maturity Date": April 3, 2005.
"Tranche B Term Loan Percentage": as to any Tranche B Term Loan
Lender at any time, the percentage which such Lender's Tranche B Term Loan
Commitment then constitutes of the aggregate Tranche B Term Loan
Commitments (or, at any time after the Closing Date, the percentage which
the aggregate principal amount of such Lender's Tranche B Term Loans then
outstanding constitutes of the aggregate principal amount of the Tranche B
Term Loans then outstanding).
"Tranche B-1 Term Loan Commitments": as defined in Section 2.1(b).
"Tranche B-1 Term Loans": as defined in Section 2.1(b).
"Tranche C Term Loan": as defined in Section 2.1.
"Tranche C Term Loan Commitment": as to any U.S. Lender, the
obligation of such Lender, if any, to make a Tranche C Term Loan to the
Company hereunder in a principal amount not to exceed the amount set forth
under the heading "Tranche C Term Loan Commitment" opposite such Lender's
name on Schedule 1.1A. The original aggregate amount of the Tranche C Term
Loan Commitments is $550,000,000. The Tranche C-1 Term Loan Commitments
are a subset of the Tranche C Term Loan Commitments.
"Tranche C Term Loan Lender": each U.S. Lender which has a Tranche C
Term Loan Commitment or which has made a Tranche C Term Loan.
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"Tranche C Term Loan Maturity Date": April 3, 2006.
"Tranche C Term Loan Percentage": as to any Tranche C Term Loan
Lender at any time, the percentage which such Lender's Tranche C Term Loan
Commitment then constitutes of the aggregate Tranche C Term Loan
Commitments (or, at any time after the Closing Date, the percentage which
the aggregate principal amount of such Lender's Tranche C Term Loans then
outstanding constitutes of the aggregate principal amount of the Tranche C
Term Loans then outstanding).
"Tranche C-1 Term Loan Commitments": as defined in Section 2.1(b).
"Tranche C-1 Term Loans": as defined in Section 2.1(b).
"Transferee": as defined in Section 14.6(f).
"Type": as to any Loan, its nature as a Base Rate Loan or a LIBOR
Loan.
"Uniform Customs": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No.
500, as the same may be amended from time to time.
"U.S. Dollar Equivalent": with respect to an amount denominated in
Canadian Dollars, the equivalent in U.S. Dollars of such amount determined
at the Exchange Rate on the Business Day immediately preceding the date of
determination of such equivalent.
"U.S Dollars" and "$": dollars in the lawful currency of the United
States of America.
"U.S. Lenders": the collective reference to the U.S. Term Loan
Lenders and the Revolving Credit Lenders.
"U.S. Loans": the collective reference to the U.S. Term Loans and
the Revolving Credit Loans.
"U.S. Term Loan Commitments": the collective reference to the
Tranche A Term Loan Commitments, the Tranche B Term Loan Commitments and
the Tranche C Term Loans Commitments.
"U.S. Term Loan Commitment Period": the period from the Closing Date
to the Merger Date.
"U.S. Term Loan Lenders": the collective reference to the Tranche A
Term Loan Lenders, the Tranche B Term Loan Lenders and the Tranche C Term
Loan Lenders.
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"U.S. Term Loans": the collective reference to the Tranche A Term
Loans, Tranche B Term Loans and Tranche C Term Loans.
"U.S. Term Notes": as defined in Section 2.7.
"Westinghouse Debt": unsecured subordinated indebtedness of Holdings
in the initial principal amount of $60,000,000 evidenced by a promissory
note of Holdings, dated May 15, 1997, initially payable to Westinghouse
Electric Corporation and its assignees, and guaranteed by Laidlaw.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in any Notes or any certificate or other document made or delivered
pursuant hereto.
(b) As used herein and in any Notes, and any certificate or other
document made or delivered pursuant hereto, accounting terms relating to the
Company and its Subsidiaries not defined in Section 1.1 and accounting terms
partly defined in Section 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP; provided that, if the Company
notifies the General Administrative Agent that the Company requests an amendment
to any provision hereof to eliminate the effect of any change occurring after
the date hereof in GAAP or in the application thereof on the operation of such
provision (or if the General Administrative Agent notifies the Company that the
Required Lenders request an amendment to any provision hereof for such purpose),
regardless of whether any such notice is given before or after such change in
GAAP or in the application thereof, then, pending execution and delivery of such
an amendment, such provision shall be interpreted on the basis of GAAP as in
effect and applied immediately before such change shall have become effective
until such notice shall have been withdrawn or such provision amended in
accordance herewith.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF U.S. COMMITMENTS
2.1 U.S. Term Loan Commitments. (a) Subject to the terms and
conditions hereof, (i) each Tranche A Term Loan Lender severally agrees to make
term loans (each, a "Tranche A Term Loan") denominated in U.S. Dollars to the
Company during the U.S. Term Loan Commitment Period in an aggregate principal
amount not to exceed the amount of the Tranche A Term Loan Commitment of such
Lender, (ii) each Tranche B Term Loan Lender severally agrees to make term loans
(each, a "Tranche B Term Loan") denominated
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in U.S. Dollars to the Company during the U.S. Term Loan Commitment Period in an
aggregate principal amount not to exceed the amount of the Tranche B Term Loan
Commitment of such Lender and (iii) each Tranche C Term Loan Lender severally
agrees to make term loans (each, a "Tranche C Term Loan") denominated in U.S.
Dollars to the Company during the U.S. Term Loan Commitment Period in an
aggregate principal amount not to exceed the amount of the Tranche C Term Loan
Commitment of such Lender. The U.S. Term Loans may from time to time be LIBOR
Loans or Base Rate Loans, as determined by the Company and notified to the
General Administrative Agent in accordance with Sections 2.2 and 6.4; provided
that the U.S. Term Loans made on the Closing Date shall initially be made as
Base Rate Loans.
(b) $150,000,000 of the Tranche B Term Loan Commitments shall be
designated as the "Tranche B-1 Term Loan Commitments", and $150,000,000 of the
Tranche C Term Loan Commitments shall be designated as the "Tranche C-1 Term
Loan Commitments". Schedule 1.1A sets forth the amount of the Tranche B-1 Term
Loan Commitments and the Tranche C-1 Term Loan Commitments held by each of the
U.S. Term Loan Lenders. Each borrowing of Tranche B Term Loans and Tranche C
Term Loans shall be deemed to utilize first the portions of the U.S. Term Loan
Commitments other than the Tranche B-1 Term Loan Commitments or the Tranche C-1
Term Loan Commitments, as the case may be, before utilizing the Tranche B-1 Term
Loan Commitment and the Tranche C-1 Term Loan Commitments. The portions of the
U.S. Term Loans attributable to the Tranche B-1 Term Loan Commitments and the
Tranche C-1 Term Loan Commitments shall be designated as the "Tranche B-1 Term
Loans" and the "Tranche C-1 Term Loans", respectively.
2.2 Procedure for U.S. Term Loan Borrowing. The Company may borrow
under the U.S. Term Loan Commitments during the U.S. Term Loan Commitment Period
on any Business Day in accordance with this Section 2.2, provided that the
Company shall give the General Administrative Agent irrevocable written notice
(which notice must be received by the General Administrative Agent prior to
12:00 Noon, New York City time, (a) three Business Days prior to the requested
Borrowing Date, in the case of LIBOR Loans, or (b) one Business Day prior to the
requested Borrowing Date, in the case of Base Rate Loans), specifying (i) the
amount and Type of U.S. Term Loans to be borrowed, (ii) the requested Borrowing
Date and (iii) in the case of LIBOR Loans, the respective amounts of each such
Type of Loan and the respective lengths of the initial Interest Periods
therefor. The U.S. Term Loans made on the Closing Date shall be in an aggregate
principal amount not exceeding the sum of (i) the cash amount payable in
connection with the Exchange Offer on the Closing Date, (ii) the aggregate
principal amount of the U.S. Term Loans and Revolving Credit Loans outstanding
under (and as defined in) the Existing Credit Agreement and (iii) costs and
expenses relating to the Exchange Offer and the financing thereof. After the
Closing Date and prior to the Merger Date, the Company
<PAGE> 34
34
may make one additional borrowing of U.S. Term Loans in an aggregate principal
amount not exceeding the cash portion of the consideration payable in connection
with delayed delivery of Target Shares pursuant to the Exchange Offer or in
connection with Target Shares for which payment cannot be made on the Closing
Date because of inability of the Exchange Agent to complete the verification
process in respect of such Target Shares. On the Merger Date, the Company may
make an additional borrowing of U.S. Term Loans in an aggregate principal amount
not exceeding the cash portion of the consideration payable in connection with
the Merger, and costs and expenses related thereto, less the amount, if any, of
Net Cash Proceeds received by the Company from the High Yield Offering, if it
has been consummated, to the extent such Net Cash Proceeds have not been applied
to prepay the Term Loans or reduce the Term Loan Commitments pursuant to Section
6.3(b) and (e). In addition, on the Merger Date the Company may borrow U.S. Term
Loans in an amount sufficient to repay existing indebtedness of Safety-Kleen
required to be repaid in connection with the Merger. Each borrowing under the
U.S. Term Loan Commitments shall be in an amount equal to (x) in the case of
Base Rate Loans, $1,000,000 or a multiple of $500,000 in excess thereof and (y)
in the case of LIBOR Loans, $5,000,000 or a whole multiple of $1,000,000 in
excess thereof. Upon receipt of any such notice from the Company, the General
Administrative Agent shall promptly notify each U.S. Term Loan Lender thereof.
Each U.S. Term Loan Lender will make the amount of its pro rata share of each
borrowing available to the General Administrative Agent for the account of the
Company at the office of the General Administrative Agent specified in Section
14.2 prior to 12:00 Noon, New York City time, on the Borrowing Date requested by
the Company in funds immediately available to the General Administrative Agent.
Such borrowing will then be made available to the Company by the General
Administrative Agent crediting the account of the Company at the office of The
Toronto-Dominion Bank at 909 Fannin Street, Suite 1700, Houston, TX 77010 with
the aggregate of the amounts made available to the General Administrative Agent
by the U.S. Term Loan Lenders and in like funds as received by the General
Administrative Agent.
2.3 Repayment of U.S. Term Loans. (a) The Tranche A Term Loan of
each Tranche A Lender shall mature, and the Company unconditionally promises to
pay such Tranche A Term Loan to the General Administrative Agent for the account
of such Tranche A Lender, in 24 consecutive quarterly installments, commencing
on August 31, 1998, each of which shall be in an amount equal to such Lender's
Tranche A Term Loan Percentage multiplied by the amount set forth below opposite
such installment:
<TABLE>
<CAPTION>
Installment Principal Amount
----------- ----------------
<S> <C>
August 31, 1998 US$16,000,000
November 30, 1998 16,000,000
February 28, 1999 16,000,000
May 31, 1999 16,000,000
August 31, 1999 16,000,000
November 30, 1999 16,000,000
February 28, 2000 16,000,000
May 31, 2000 16,000,000
August 31, 2000 22,000,000
November 30, 2000 22,000,000
February 28, 2001 22,000,000
May 31, 2001 22,000,000
August 31, 2001 22,000,000
November 30, 2001 22,000,000
</TABLE>
<PAGE> 35
35
<TABLE>
<CAPTION>
Installment Principal Amount
----------- ----------------
<S> <C>
February 28, 2002 22,000,000
May 31, 2002 22,000,000
August 31, 2002 22,000,000
November 30, 2002 22,000,000
February 28, 2003 22,000,000
May 31, 2003 22,000,000
August 31, 2003 22,000,000
November 30, 2003 22,000,000
February 28, 2004 22,000,000
Tranche A Term
Loan Maturity Date 22,000,000
</TABLE>
(b) The Tranche B Term Loan of each Tranche B Lender shall mature,
and the Company unconditionally promises to pay such Tranche B Term Loan to the
General Administrative Agent for the account of such Tranche B Lender, in 28
consecutive quarterly installments, commencing on August 31, 1998, each of which
shall be in an amount equal to such Lender's Tranche B Term Loan Percentage
multiplied by the amount set forth below opposite such installment:
<TABLE>
<CAPTION>
Installment Principal Amount
----------- ----------------
<S> <C>
August 31, 1998 US$1,375,000
November 30, 1998 1,375,000
February 28, 1999 1,375,000
May 31, 1999 1,375,000
August 31, 1999 1,375,000
November 30, 1999 1,375,000
February 28, 2000 1,375,000
May 31, 2000 1,375,000
August 31, 2000 1,375,000
November 30, 2000 1,375,000
February 28, 2001 1,375,000
May 31, 2001 1,375,000
August 31, 2001 1,375,000
November 30, 2001 1,375,000
February 28, 2002 1,375,000
May 31, 2002 1,375,000
August 31, 2002 1,375,000
November 30, 2002 1,375,000
February 28, 2003 1,375,000
May 31, 2003 1,375,000
August 31, 2003 1,375,000
November 30, 2003 1,375,000
February 28, 2004 1,375,000
May 31, 2004 1,375,000
</TABLE>
<PAGE> 36
36
<TABLE>
<S> <C>
August 31, 2004 129,250,000
November 30, 2004 129,250,000
February 28, 2005 129,250,000
Tranche B Term Loan Maturity Date 129,250,000
</TABLE>
(c) The Tranche C Term Loan of each Tranche C Lender shall mature,
and the Company unconditionally promises to pay such Tranche C Term Loan to the
General Administrative Agent for the account of such Tranche C Lender, in 32
consecutive quarterly installments, commencing on August 31, 1998, each of which
shall be in an amount equal to such Lender's Tranche C Term Loan Percentage
multiplied by the amount set forth below opposite such installment:
<TABLE>
<CAPTION>
Installment Principal Amount
----------- ----------------
<S> <C>
August 31, 1998 US$1,375,000
November 30, 1998 1,375,000
February 28, 1999 1,375,000
May 31, 1999 1,375,000
August 31, 1999 1,375,000
November 30, 1999 1,375,000
February 28, 2000 1,375,000
May 31, 2000 1,375,000
August 31, 2000 1,375,000
November 30, 2000 1,375,000
February 28, 2001 1,375,000
May 31, 2001 1,375,000
August 31, 2001 1,375,000
November 30, 2001 1,375,000
February 28, 2002 1,375,000
May 31, 2002 1,375,000
August 31, 2002 1,375,000
November 30, 2002 1,375,000
February 28, 2003 1,375,000
May 31, 2003 1,375,000
August 31, 2003 1,375,000
November 30, 2003 1,375,000
February 28, 2004 1,375,000
May 31, 2004 1,375,000
August 31, 2004 1,375,000
November 30, 2004 1,375,000
February 28, 2005 1,375,000
May 31, 2005 1,375,000
August 31, 2005 127,875,000
November 30, 2005 127,875,000
February 28, 2006 127,875,000
Tranche C Term
Loan Maturity Date 127,875,000
</TABLE>
<PAGE> 37
37
2.4 Revolving Credit Commitments. (a) Subject to the terms and
conditions hereof, each Revolving Credit Lender severally agrees to make
revolving credit loans ("Revolving Credit Loans") to the Company from time to
time during the Revolving Credit Commitment Period in an aggregate principal
amount such that, after giving effect thereto, the aggregate outstanding
principal amount of such Lender's Revolving Credit Loans will not exceed the
lesser of (i) such Lender's Revolving Credit Commitment less such Lender's
Revolving Credit Percentage of the L/C Obligations then outstanding, and (ii)
such Lender's Revolving Credit Percentage of $300,000,000. During the Revolving
Credit Commitment Period the Company may use the Revolving Credit Commitments by
borrowing, prepaying the Revolving Credit Loans in whole or in part, and
reborrowing, all in accordance with the terms and conditions hereof. The
Revolving Credit Loans may from time to time be LIBOR Loans or Base Rate Loans,
as determined by the Company and notified to the General Administrative Agent in
accordance with Sections 2.5 and 6.4, provided that no Revolving Credit Loan
shall be made as a LIBOR Loan after the day that is one month prior to the
Revolving Credit Termination Date.
(b) The Company unconditionally promises to pay to the General
Administrative Agent for the account of the Revolving Credit Lenders all
outstanding Revolving Credit Loans on the Revolving Credit Termination Date.
2.5 Procedure for Revolving Credit Borrowing. The Company may borrow
under the Revolving Credit Commitments during the Revolving Credit Commitment
Period on any Business Day, provided that the Company shall give the General
Administrative Agent irrevocable written notice (which notice must be received
by the General Administrative Agent prior to 12:00 Noon, New York City time, (a)
three Business Days prior to the requested Borrowing Date, in the case of LIBOR
Loans, or (b) one Business Day prior to the requested Borrowing Date, in the
case of Base Rate Loans), specifying (i) the amount and Type of Revolving Credit
Loans to be borrowed, (ii) the requested Borrowing Date and (iii) in the case of
LIBOR Loans, the respective amounts of each such Type of Loan and the respective
lengths of the initial Interest Periods therefor. Each borrowing under the
Revolving Credit Commitments shall be in an amount equal to (x) in the case of
Base Rate Loans, $1,000,000 or a multiple of $500,000 in excess thereof (or, if
the then aggregate Available Revolving Credit Commitments are less than
$1,000,000, such lesser amount) and (y) in the case of LIBOR Loans, $5,000,000
or a whole multiple of $1,000,000 in excess thereof. Upon receipt of any such
notice from the Company, the General Administrative Agent shall promptly notify
each Revolving Credit Lender thereof. Each Revolving Credit Lender will make the
amount of its pro rata share of each borrowing available to the General
Administrative Agent for the account of the Company at the office of the General
Administrative Agent specified in Section 14.2 prior to 12:00 Noon, New York
City time, on the Borrowing Date requested by the Company in funds immediately
available to the General Administrative Agent. Such borrowing will then be made
available to the Company by the General Administrative Agent crediting the
account of the Company at the office of The Toronto-Dominion Bank at 909 Fannin
Street, Suite 1700, Houston, TX 77010 with the aggregate of the amounts made
available to the General Administrative Agent by the Revolving Credit Lenders
and in like funds as received by the General Administrative Agent.
<PAGE> 38
38
2.6 Termination or Reduction of Revolving Credit Commitments. The
Company shall have the right, upon not less than three Business Days'
irrevocable written notice to the General Administrative Agent, to terminate the
Revolving Credit Commitments or, from time to time, to reduce the amount of the
Revolving Credit Commitments without premium or penalty; provided that no such
termination or reduction of Revolving Credit Commitments shall be permitted if,
after giving effect thereto and to any prepayments of the Revolving Credit Loans
made on the effective date thereof, the Total Revolving Extensions of Credit
would exceed the Revolving Credit Commitments then in effect. Any such reduction
shall be in an amount equal to $5,000,000, or a whole multiple of $1,000,000 in
excess thereof, and shall reduce permanently the Revolving Credit Commitments
then in effect.
2.7 Evidence of Debt. (a) Each U.S. Lender shall maintain in
accordance with its usual practice an account or accounts evidencing
indebtedness of the Company to such Lender resulting from each U.S. Loan of such
Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time under this Agreement.
(b) The General Administrative Agent shall maintain the Register
pursuant to Section 14.6(d), and a subaccount therein for each U.S. Lender, in
which shall be recorded (i) the amount of each Revolving Credit Loan and U.S.
Term Loan made hereunder, the Type thereof and each Interest Period applicable
thereto, (ii) the amount of any principal or interest due and payable or to
become due and payable from the Company to each U.S. Lender hereunder and (iii)
both the amount of any sum received by the General Administrative Agent
hereunder from the Company and each Lender's share thereof.
(c) The entries made in the Register and the accounts of each U.S.
Lender maintained pursuant to Section 2.7(a) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Company therein recorded; provided, however, that the failure
of any Lender or the General Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Company to repay (with applicable interest) the U.S. Loans
made to the Company by such U.S. Lender in accordance with the terms of this
Agreement.
(d) The Company agrees that, upon the request to the General
Administrative Agent by any U.S. Lender, the Company will execute and deliver to
such Lender (i) a promissory note of the Company evidencing the Revolving Credit
Loans of such Lender, substantially in the form of Exhibit C with appropriate
insertions as to date and principal amount (a "Revolving Credit Note"), and/or
(ii) a promissory note of the Company evidencing the Tranche A Term Loans,
Tranche B Term Loan or Tranche C Term Loan, as the case may be, of such Lender,
substantially in the form of Exhibit D with appropriate insertions as to date
and principal amount (a "U.S. Term Note").
<PAGE> 39
39
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Pursuant to the Existing Credit Agreement,
the Issuing Lenders specified on Schedule 1.1C have issued the letters of credit
described on Schedule 1.1C (the "Existing Letters of Credit"), which from and
after the Closing Date shall continue to be "Letters of Credit" hereunder.
Subject to the terms and conditions hereof, each Issuing Lender, in reliance on
the agreements of the other Revolving Credit Lenders set forth in Section
3.4(a), agrees to issue letters of credit (together with the Existing Letters of
Credit, the "Letters of Credit") for the account of the Company on any Business
Day during the Revolving Credit Commitment Period in such form as may be
approved from time to time by such Issuing Lender; provided that (i) no Issuing
Lender shall issue any Letter of Credit if, after giving effect to such
issuance, the L/C Obligations would exceed the L/C Commitment or the Total
Revolving Extensions of Credit would exceed the Revolving Credit Commitments
of all Lenders and (ii) no Issuing Lender shall issue any Letter of Credit
unless it shall have received notice from the General Administrative Agent that
the issuance of such Letter of Credit will not violate the foregoing clause (i)
of this proviso. Each Letter of Credit shall (i) be denominated in U.S. Dollars
and (ii) expire no later than the earlier of (x) the first anniversary of its
date of issuance and (y) the date which is five Business Days prior to the
Revolving Credit Termination Date, provided that any Letter of Credit with a
one-year term may provide for the renewal thereof for additional one-year
periods (which shall in no event extend beyond the date referred to in the
foregoing clause (y) of this proviso).
(b) Each Letter of Credit shall be subject to the Uniform Customs
and, to the extent not inconsistent therewith, the laws of the State of New
York.
3.2 Procedure for Issuance of Letter of Credit. The Company may from
time to time request that an Issuing Lender issue a Letter of Credit by
delivering to such Issuing Lender at its address for notices specified herein an
Application therefor, completed to the satisfaction of such Issuing Lender, and
such other certificates, documents and other papers and information as such
Issuing Lender may request. Upon receipt of any Application, each Issuing Lender
agrees to process such Application and the certificates, documents and other
papers and information delivered to it in connection therewith in accordance
with its customary procedures and shall promptly issue the Letter of Credit
requested thereby (but in no event shall such Issuing Lender be required to
issue any Letter of Credit earlier than three Business Days after its receipt of
the Application therefor and all such other certificates, documents and other
papers and information relating thereto) by issuing the original of such Letter
of Credit to the beneficiary thereof or as otherwise may be agreed to by such
Issuing Lender and the Company. Each Issuing Lender shall furnish a copy of each
Letter of Credit by it hereunder to the Company promptly following the issuance
thereof. Each Issuing Lender shall promptly furnish to the General
Administrative Agent, which shall in turn promptly furnish to the Revolving
Credit Lenders, notice of the issuance of each Letter of Credit (including the
amount thereof).
3.3 Commissions, Fees and Other Charges. (a) The Company shall pay
to the General Administrative Agent, for the account of the Revolving Credit
Lenders, a letter
<PAGE> 40
40
of credit commission with respect to each Letter of Credit outstanding under
this Agreement for the period from the Issuance Date of such Letter of Credit
(or, in the case of the Existing Letters of Credit, from the Closing Date) to
the expiration or termination of such Letter of Credit, computed at a per annum
rate equal to (i) the Applicable Margin then in effect with respect to LIBOR
Loans under the Revolving Credit Facility less (ii) 1/4 of 1% (the fronting fee
referred to in paragraph (b) below) on the average aggregate amount available to
be drawn under such Letter of Credit during the period for which such fee is
calculated. Such commission shall be shared ratably among the Revolving Credit
Lenders and payable quarterly in arrears on each L/C Fee Payment Date to occur
after the respective Issuance Date (or the Closing Date, as the case may be) and
on the Revolving Credit Termination Date and shall be nonrefundable.
(b) The Company shall pay to the relevant Issuing Lender with
respect to each Letter of Credit issued by such Issuing Lender under this
Agreement, for its own account, a fronting fee with respect to the period from
the Issuance Date of such Letter of Credit to the expiration or termination date
of such Letter of Credit, computed at a rate of 1/4 of 1% per annum on the
average aggregate amount available to be drawn under such Letter of Credit
during the period for which such fee is calculated. Such fronting fee shall be
payable in arrears on each L/C Fee Payment Date to occur after the Issuance Date
(or the Closing Date, as the case may be) and on the Revolving Credit
Termination Date and shall be nonrefundable.
(c) In addition to the foregoing fees and commissions, the Company
shall pay or reimburse each Issuing Lender for such normal and customary costs
and expenses as are incurred or charged by such Issuing Lender in issuing,
negotiating, effecting payment under, amending or otherwise administering any
Letter of Credit.
3.4 L/C Participations. (a) Effective on the Closing Date, in
respect of each Existing Letter of Credit, and effective on the Issuance Date,
in respect of each Letter of Credit issued after the Closing Date, each Issuing
Lender irrevocably agrees to grant and hereby grants to each L/C Participant
(other than such Issuing Lender), and, to induce such Issuing Lender to issue
Letters of Credit hereunder, each L/C Participant irrevocably agrees to accept
and purchase and hereby accepts and purchases from such Issuing Lender, on the
terms and conditions hereinafter stated, for such L/C Participant's own account
an undivided interest equal to such L/C Participant's Revolving Credit
Percentage in such Issuing Lender's obligations and rights under each Letter of
Credit issued hereunder and the amount of each draft paid by such Issuing Lender
thereunder. Each L/C Participant unconditionally and irrevocably agrees with
each Issuing Lender that, if a draft is paid under any Letter of Credit for
which such Issuing Lender is not reimbursed in full by the Company in accordance
with the terms of this Agreement, such L/C Participant shall pay to such Issuing
Lender upon demand at such Issuing Lender's address for notices specified herein
an amount equal to such L/C Participant's Revolving Credit Percentage of the
amount of such draft, or any part thereof, which is not so reimbursed.
(b) If any amount required to be paid by any L/C Participant to any
Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion
of any payment
<PAGE> 41
41
made by such Issuing Lender under any Letter of Credit issued by such Issuing
Lender is not paid when due but is paid within three Business Days after the
date such payment is due, such L/C Participant shall pay to such Issuing Lender
on demand an amount equal to the product of (i) such amount, times (ii) the
daily average Federal Funds Effective Rate during the period from and including
the date such payment is required to the date on which such payment is
immediately available to such Issuing Lender, times (iii) a fraction the
numerator of which is the number of days that elapse during such period and the
denominator of which is 360. If any such amount required to be paid by any L/C
Participant pursuant to Section 3.4(a) is not made available to any Issuing
Lender by such L/C Participant within three Business Days after the date such
payment is due, such Issuing Lender shall be entitled to recover from such L/C
Participant, on demand, such amount with interest thereon calculated from such
due date at the rate per annum applicable to Base Rate Loans under the Revolving
Credit Facility. A certificate of any Issuing Lender submitted to any L/C
Participant with respect to any amounts owing under this Section shall be
conclusive in the absence of manifest error.
(c) Whenever, at any time after any Issuing Lender has made payment
under any Letter of Credit issued by such Issuing Lender and has received from
any L/C Participant its pro rata share of such payment in accordance with
Section 3.4(a), such Issuing Lender receives any payment related to such Letter
of Credit (whether directly from the Company or otherwise, including proceeds of
collateral applied thereto by such Issuing Lender, but excluding payments from
L/C Participants), or any payment of interest on account thereof, such Issuing
Lender will distribute to such L/C Participant its pro rata share thereof;
provided, however, that in the event that any such payment received by such
Issuing Lender shall be required to be returned by such Issuing Lender, such L/C
Participant shall return to such Issuing Lender the portion thereof previously
distributed by such Issuing Lender to it.
3.5 Reimbursement Obligation of the Company. If any draft shall be
presented for payment under any Letter of Credit issued by any Issuing Lender,
such Issuing Lender shall promptly notify the Company of the date and amount
thereof. If any Issuing Lender notifies the Company prior to 10:00 a.m., New
York City time, on any Business Day, of any drawing under any Letter of Credit
issued by it, the Company shall reimburse such Issuing Lender with respect to
such drawing on the next succeeding Business Day. If any Issuing Lender notifies
the Company after 10:00 a.m., New York City time, on any Business Day of any
drawing under any Letter of Credit issued by it, the Company shall reimburse
such Issuing Lender with respect to such drawing on the second succeeding
Business Day. Interest shall be payable on any and all amounts drawn under
Letters of Credit from the date of such drawing until the date on which
reimbursement of such amount is due pursuant to the two immediately preceding
sentences at the interest rate then applicable to Base Rate Loans made under the
Revolving Credit Facility. In addition, the Company agrees to reimburse each
Issuing Lender for any taxes, fees, charges or other costs or expenses incurred
by such Issuing Lender in connection with any payment under any Letter of Credit
issued by such Issuing Lender. Each payment by the Company pursuant to this
Section 3.5 shall be made to the relevant Issuing Lender at its address for
notices specified herein in U.S. Dollars and in immediately available funds.
<PAGE> 42
42
3.6 Obligations Absolute. The Company's obligations under this
Section 3 shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment which the
Company may have or have had against any Issuing Lender, any beneficiary of a
Letter of Credit or any other Person. The Company also agrees with each Issuing
Lender that such Issuing Lender shall not be responsible for, and the Company's
Reimbursement Obligations under Section 3.5 shall not be affected by, among
other things, the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged, or any dispute between or among the Company and any
beneficiary of any Letter of Credit or any other party to which such Letter of
Credit may be transferred or any claims whatsoever of the Company against any
beneficiary of such Letter of Credit or any such transferee. No Issuing Lender
shall be liable for any error, omission, interruption or delay in transmission,
dispatch or delivery of any message or advice, however transmitted, in
connection with any Letter of Credit, except for errors or omissions found by a
final and nonappealable decision of a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of such Issuing Lender.
The Company agrees that any action taken or omitted by any Issuing Lender under
or in connection with any Letter of Credit or the related drafts or documents,
if done in the absence of gross negligence or willful misconduct and in
accordance with the standards of care specified in the Uniform Commercial Code
of the State of New York, shall be binding on the Company and shall not result
in any liability of such Issuing Lender to the Company.
3.7 Letter of Credit Payments. If any draft shall be presented for
payment under any Letter of Credit issued by any Issuing Lender, such Issuing
Lender shall promptly notify the Company of the date and amount thereof. The
responsibility of each Issuing Lender to the Company in connection with any
draft presented for payment under any Letter of Credit shall, in addition to any
payment obligation expressly provided for in such Letter of Credit, be limited
to determining that the documents (including each draft) delivered under such
Letter of Credit in connection with such presentment are substantially in
conformity with such Letter of Credit.
3.8 Applications. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 3 or any other provision of this Agreement, the provisions of
this Section 3 or such other provisions of this Agreement shall apply.
SECTION 4. AMOUNT AND TERMS OF THE CANADIAN TERM LOAN COMMITMENTS
4.1 Canadian Term Loan Commitments. (a) Subject to the terms and
conditions hereof, each Canadian Lender severally agrees to make term loans
(each, a "Canadian Term Loan") in Canadian Dollars to the Canadian Borrower on
the Closing Date in an aggregate principal amount not exceeding the Canadian
Term Loan Commitment of such Canadian Lender; provided, that after giving effect
to such Canadian Term Loans, the
<PAGE> 43
43
Total Aggregate Canadian Term Loan Outstandings shall not exceed the Canadian
Facility Maximum Amount.
(b) Subject to the terms and conditions hereof, each Canadian Lender
severally agrees from time to time during the Canadian Facility Commitment
Period to convert maturing Acceptances created by it into Canadian Term Loans in
a principal amount not to exceed the face amount of such maturing Acceptances;
provided, that no such conversion shall occur if, after giving effect thereto,
the Total Aggregate Canadian Term Loan Outstandings would exceed the Canadian
Facility Maximum Amount at such time.
4.2 Procedure for Canadian Term Loan Borrowing. The Canadian
Borrower shall give the Canadian Administrative Agent irrevocable written notice
(which notice must be received by the Canadian Administrative Agent prior to
10:00 a.m., Toronto time, at least two Business Days prior to the requested
Borrowing Date) requesting that the Canadian Term Loan Lenders make Canadian
Term Loans (or convert Acceptances into Canadian Term Loans) on a specified
Borrowing Date and specifying the amount to be borrowed or converted. Upon
receipt of such notice, the Canadian Administrative Agent shall promptly notify
each Canadian Lender thereof. In the case of any Canadian Term Loans other than
Canadian Term Loans resulting from the conversion of Acceptances pursuant to
Section 4.1(b), not later than 11:00 a.m., Toronto time, on the Borrowing Date
therefor, each Canadian Term Loan Lender shall make available to the Canadian
Administrative Agent at its office specified in Section 14.2 an amount in
Canadian Dollars in immediately available funds equal to the Canadian Term Loan
to be made by such Canadian Lender on such Borrowing Date. The Canadian
Administrative Agent shall on such date credit the account of the Canadian
Borrower at the office of The Toronto-Dominion Bank at Toronto Dominion Centre
Branch, 55 King Street West and Bay Street, Toronto, Ontario M5K 1A2 with the
aggregate of the amounts made available to the Canadian Administrative Agent by
the Canadian Lenders in like funds as received by the Canadian Administrative
Agent. In the case of any Canadian Term Loans resulting from the conversion of
Acceptances pursuant to Section 4.1(b), the proceeds of such Canadian Term Loans
made by each Canadian Lender, together with such additional funds of the
Canadian Borrower as may be necessary, shall be applied by it to repay the
maturing Acceptance being converted into such Canadian Term Loans.
4.3 Reduction of Canadian Facility; Repayment of Canadian Term
Loans. (a) The amount available under the Canadian Term Loans and the
Acceptances and Acceptance Notes shall be permanently reduced in 24 consecutive
quarterly installments, commencing on August 31, 1998, each of which shall be in
an amount equal to the equivalent in Canadian Dollars (determined in accordance
with Section 4.3(b)) of the amount set forth below opposite such installment
date (each, a "Canadian Facility Amortization Date"):
<PAGE> 44
44
<TABLE>
<CAPTION>
Installment Principal Amount
----------- ----------------
<S> <C>
August 31, 1998 US$2,750,000
November 30, 1998 2,750,000
February 28, 1999 2,750,000
May 31, 1999 2,750,000
August 31, 1999 2,750,000
November 30, 1999 2,750,000
February 28, 2000 2,750,000
May 31, 2000 2,750,000
August 31, 2000 3,000,000
November 30, 2000 3,000,000
February 28, 2001 3,000,000
May 31, 2001 3,000,000
August 31, 2001 3,000,000
November 30, 2001 3,000,000
February 28, 2002 3,000,000
May 31, 2002 3,000,000
August 31, 2002 3,000,000
November 30, 2002 3,000,000
February 28, 2003 3,000,000
May 31, 2003 3,000,000
August 31, 2003 3,000,000
November 30, 2003 3,000,000
February 28, 2004 3,000,000
Canadian Facility
Termination Date 3,000,000
</TABLE>
Accordingly, on each Canadian Facility Amortization Date, the
Canadian Borrower unconditionally agrees to pay to the Canadian Administrative
Agent, for the account of each Canadian Lender, a principal amount of the
Canadian Term Loans of such Canadian Lender, which, together with the face
amount of Acceptances created by such Canadian Lender that mature and are being
repaid on such date (and not replaced with other Acceptances or converted into
Canadian Term Loans), is equal to such Canadian Lender's Canadian Term Loan
Commitment Percentage of the amount set forth opposite such Canadian Facility
Amortization Date above.
<PAGE> 45
45
(b) Not later than three Business Days prior to the Closing Date,
the Canadian Administrative Agent and the Canadian Borrower will determine,
based on then-prevailing market conditions, the exchange rate for conversion
into Canadian Dollars of the U.S. Dollar amount of the Canadian Term Loan
Commitments and the U.S. Dollar amount of each installment set forth in Section
4.3(a), which determination shall be conclusive and binding on all parties
hereto. The Canadian Administrative Agent will advise the Canadian Lenders of
the results of such determination, and specify the amount in Canadian Dollars of
each Canadian Lender's Canadian Term Loan Commitment, prior to or concurrently
with the notice of borrowing given to the Canadian Lenders pursuant to Section
4.2.
4.4 Evidence of Debt. (a) Each Canadian Lender shall maintain in
accordance with its usual practice an account or accounts evidencing
indebtedness of the Canadian Borrower to such Canadian Lender resulting from the
Canadian Term Loans of such Canadian Lender, including the amounts of principal
and interest payable thereon and paid to such Canadian Lender from time to time
under this Agreement.
(b) The Canadian Administrative Agent (and the General
Administrative Agent) shall maintain the Register pursuant to Section 14.6(d),
and a subaccount therein for each Canadian Lender, in which shall be recorded
(i) the amount of each Canadian Term Loan made hereunder, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Canadian Borrower to each Canadian Lender hereunder in respect of the Canadian
Term Loans and (iii) both the amount of any sum received by the Canadian
Administrative Agent hereunder from the Canadian Borrower in respect of the
Canadian Term Loans and each Canadian Lender's share thereof.
(c) The entries made in the Register and the accounts of each
Canadian Lender maintained pursuant to Section 4.4(a) shall, to the extent
permitted by applicable law, be prima facie evidence of the existence and
amounts of the obligations of the Canadian Borrower therein recorded; provided,
however, that the failure of any Canadian Lender or the Canadian Administrative
Agent to maintain the Register or any such account, or any error therein, shall
not in any manner affect the obligation of the Canadian Borrower to repay (with
applicable interest) the Canadian Term Loans made to the Canadian Borrower by
such Canadian Lender in accordance with the terms of this Agreement.
(d) The Canadian Borrower agrees that, upon request to the Canadian
Administrative Agent by any Canadian Lender, it will execute and deliver to such
Canadian Lender a promissory note of the Canadian Borrower evidencing the
Canadian Term Loans of such Canadian Lender, substantially in the form of
Exhibit E with appropriate insertions as to date and principal amount (each, a
"Canadian Term Loan Note").
SECTION 5. AMOUNT AND TERMS OF THE ACCEPTANCES
5.1 Acceptance Commitments. (a) Pursuant to the Existing Credit
Agreement, the Canadian Lenders (as defined under the Existing Credit Agreement,
the "Existing Acceptance Lenders") have created (i) the Acceptances described on
Schedule 1.1D
<PAGE> 46
46
(the "Existing Acceptances"), which from and after the Closing Date shall
continue to be "Acceptances" hereunder and (ii) the Acceptances described on
Schedule 1.1E (the "Specified Acceptances"), which will be repaid in full on the
Closing Date . As of the Closing Date, The Toronto-Dominion Bank, as a Canadian
Lender, shall have entered into an indemnity agreement with the Existing
Acceptance Lenders with respect to amounts to be paid to the Existing Acceptance
Lenders in respect of the Existing Acceptances and, as of the Closing Date, The
Toronto-Dominion Bank shall be deemed to have created all of the Existing
Acceptances. In the event that any Acceptances are outstanding on the date on
which any Canadian Lender other than The Toronto-Dominion Bank becomes a party
to this Agreement, such Canadian Lender shall enter into an indemnity agreement
with The Toronto-Dominion Bank with respect to such Existing Acceptances, in
form and substance satisfactory to such Canadian Lender and The Toronto-Dominion
Bank.
(b) Subject to the terms and conditions hereof, each Canadian Lender
severally agrees during the Canadian Facility Commitment Period to convert
Canadian Term Loans made by such Canadian Lender to Acceptances in an aggregate
face amount not to exceed the aggregate principal amount of such Canadian Term
Loans; provided, that no such conversion shall occur if, (i) after giving effect
to such conversion and to the repayment of any portion of maturing Acceptances
not being so converted, the Total Aggregate Canadian Term Loan Outstandings
would exceed the Canadian Facility Maximum Amount at such time or (ii) prior to
the maturity of such Acceptances a Canadian Facility Amortization Date will
occur and, after giving effect to the reduction in the Canadian Facility Maximum
Amount on such date, the Total Aggregate Canadian Term Loan Outstandings will
exceed the Canadian Facility Maximum Amount. Notwithstanding the foregoing,
during the period prior to completion of the Syndication of the Facilities, the
Canadian Borrower will consult with the Canadian Administrative Agent with
respect to any request for Acceptances, and during such period no Acceptance
will be created having a maturity later than the date on which the syndication
of the Facilities is expected to be completed.
5.2 Creation of Acceptances. (a) The Canadian Borrower may request
the creation of Acceptances hereunder by submitting to the Canadian
Administrative Agent at its office in Canada specified in Section 14.2 prior to
11:00 a.m., Toronto time, two Business Days prior to the requested Borrowing
Date, (i) a request for acceptances, substantially in the form of Exhibit A-2
(each, a "Request for Acceptances") completed in a manner and in form and
substance reasonably satisfactory to the Canadian Administrative Agent and
specifying, among other things, the Borrowing Date, term in months and amount of
the Drafts to be accepted and discounted, and (ii) such other certificates,
documents and other papers and information as the Canadian Administrative Agent
may reasonably request. Upon receipt of any such Request for Acceptances, the
Canadian Administrative Agent shall promptly notify each Canadian Lender of
details thereof, including each Canadian Lender's share of the amount of Drafts
to be accepted and discounted.
(b) The Canadian Borrower hereby irrevocably authorizes each
Canadian Lender to draw Drafts on such Canadian Lender, in the name of and on
behalf of the Canadian Borrower, and to complete such Drafts in accordance with
the Requests for Acceptances submitted from time to time pursuant to Section
5.2(a). Drafts so completed
<PAGE> 47
47
and signed on behalf of the Canadian Borrower by any Canadian Lender shall bind
the Canadian Borrower as fully and effectively as if so performed by an
authorized officer of the Canadian Borrower. Any executed Drafts which are held
by any Canadian Lender need only be held in safekeeping with the same degree of
care as if they were such Canadian Lender's own property and such Canadian
Lender was keeping them at the place at which they are to be held. The Canadian
Borrower shall, by written notice to the Canadian Administrative Agent,
designate the persons authorized to sign Requests for Acceptance. Neither the
Canadian Administrative Agent nor any Canadian Lender nor any of their
respective directors, officers, employees or representatives shall be liable for
any action taken or omitted to be taken by any of them under this Section 5
except for its own gross negligence or willful misconduct.
(c) Each Request for Acceptances made by or on behalf of the
Canadian Borrower hereunder shall contain a request for Acceptances denominated
in Canadian Dollars and having an aggregate undiscounted face amount equal to
C$5,000,000 or a whole multiple of C$1,000,000 in excess thereof. Each
Acceptance shall be dated the Borrowing Date specified in the Request for
Acceptances with respect thereto and shall be stated to mature on a Business Day
which is not less than one month and not more than six months after the date
thereof; provided, that no Acceptance shall mature after the Canadian Facility
Termination Date.
(d) Not later than 12:00 noon, Toronto time, on the Borrowing Date
specified in the relevant Request for Acceptances, each Canadian Lender will, in
accordance with such Request for Acceptances, (i) sign each Draft on behalf of
the Canadian Borrower pursuant to Section 5.3(b), (ii) complete the date, amount
and maturity of each Draft to be accepted, (iii) accept such Drafts and give
notice to the Canadian Administrative Agent of such acceptance and (iv) upon
such acceptance, purchase such Acceptances to the extent contemplated by Section
5.3.
5.3 Purchase of Acceptances. (a) Each Canadian Lender hereby agrees,
on the terms and subject to the conditions set forth in this Agreement, to
purchase Acceptances created by it on the Borrowing Date with respect thereto
for the applicable Acceptance Purchase Price and to notify the Canadian
Administrative Agent that such Draft has been accepted and purchased by such
accepting Canadian Lender.
(b) In the event that the Canadian Administrative Agent receives a
Request for Acceptances to be created upon conversion of Canadian Term Loans
pursuant to Section 5.1, then the Canadian Borrower shall pay on the requested
Borrowing Date to the Canadian Administrative Agent, for the account of the
Canadian Lenders, the principal amount of the then outstanding Canadian Term
Loans being so converted, and each Canadian Lender shall accept and purchase the
Canadian Borrower's Drafts having an aggregate face amount not greater than the
principal amount of the Canadian Term Loans of such Canadian Lender which are
then being converted (it being understood and agreed that for the purposes of
this Section 5.3(b), such payment by the Canadian Borrower of such outstanding
Canadian Term Loans may be in part from the Acceptance Purchase Price of such
Drafts); provided that,
<PAGE> 48
48
following the occurrence and during the continuance of a Default or an Event of
Default, no Acceptances may be created.
(c) Acceptances purchased by any Canadian Lender may be held by it
for its own account until maturity or sold by it at any time prior thereto in
the relevant market therefor in Canada in such Canadian Lender's sole
discretion.
5.4 Stamping Fees. On the Borrowing Date with respect to each
Acceptance, the Canadian Borrower shall pay to the Canadian Administrative
Agent, for the account of the Canadian Lenders, a stamping fee on the
undiscounted face amount of such Acceptance, computed at the rate per annum in
effect on such Borrowing Date (determined in accordance with the Pricing Grid)
for the period from and including the Borrowing Date with respect to such
Acceptance to but not including the maturity of such Acceptance. On the Closing
Date, in consideration of the obligations undertaken by The Toronto-Dominion
Bank pursuant to the indemnity agreement entered into pursuant to the second
sentence of Section 5.1(a), the Canadian Borrower agrees to pay to The
Toronto-Dominion Bank an amount in respect of each Existing Acceptance equal to
(i) the amount of stamping fee that would have been payable under this Section
in respect of such Existing Acceptance if such Existing Acceptance had been
created on the Closing Date with the maturity date set forth in such Existing
Acceptance less (ii) the amount received or to be received by The
Toronto-Dominion Bank from the relevant Existing Acceptance Lender in respect of
such Existing Acceptance pursuant to the provisions of such indemnity agreement.
5.5 Acceptance Reimbursement Obligations. (a) The Canadian Borrower
hereby unconditionally agrees to pay to the Canadian Administrative Agent for
the account of each Canadian Lender, on the maturity date (whether at stated
maturity, by acceleration or otherwise) for each Acceptance created by such
Canadian Lender, the aggregate undiscounted face amount of each such
then-maturing Acceptance. Without limiting the generality of the foregoing, the
Canadian Borrower hereby unconditionally agrees to pay to the Canadian
Administrative Agent for the account of The Toronto-Dominion Bank (and each
other Canadian Lender which has an interest therein pursuant to an indemnity
agreement entered into pursuant to the last sentence of Section 5.1(a)) on the
maturity date (whether at stated maturity, by acceleration or otherwise) for
each Existing Acceptance, the aggregate undiscounted face amount of each such
then-maturing Existing Acceptance.
(b) The obligation of the Canadian Borrower to reimburse the
Canadian Lenders for then-maturing Acceptances may be satisfied by the Canadian
Borrower by:
(i) paying to the Canadian Administrative Agent, for the account of
the Canadian Lenders, an amount in Canadian Dollars and in immediately
available funds equal to the aggregate undiscounted face amount of all
Acceptances which are then maturing by 12:00 noon, Toronto time, on such
maturity date; provided that the Canadian Borrower shall have given not
less than two Business Days' prior notice to the Canadian Administrative
Agent (which shall promptly notify each Canadian Lender thereof) of its
intent to reimburse the Canadian Lenders in the manner contemplated by
this clause (i); or
<PAGE> 49
49
(ii) having new Drafts accepted and purchased by the Canadian
Lenders in the manner contemplated by Sections 5.2 and 5.3 in substitution
for the then-maturing Acceptances; provided that (A) the Canadian Borrower
shall have delivered to the Canadian Administrative Agent (which shall
promptly provide a copy thereof to each Canadian Lender) a duly completed
Request for Acceptances not later than 11:00 a.m., Toronto time, two
Business Days prior to such maturity date, together with the documents,
instruments, certificates and other papers and information contemplated by
Sections 5.2(a)(ii) and 5.2(a)(iii), (B) each Canadian Lender shall retain
the Acceptance Purchase Price for the Acceptance created by it and apply
such Acceptance Purchase Price to the Acceptance Reimbursement Obligations
of the Canadian Borrower in respect of the maturing Acceptance created by
such Canadian Lender, (C) when the Acceptance Purchase Price so retained
by such Canadian Lender is less than the undiscounted face amount of the
then-maturing Acceptance, the Canadian Borrower shall have made
arrangements reasonably satisfactory to such Canadian Lender for payment
of such deficiency, (D) if any Default or Event of Default has occurred
and is then continuing, the Request for Acceptances shall be deemed to be
a request to convert such then-maturing Acceptances into Canadian Term
Loans in an aggregate amount equal to the undiscounted face amount of the
Acceptances requested, (E) no such Acceptance shall be created if, after
giving effect thereto, the Aggregate Canadian Term Loan Outstandings would
exceed the Canadian Facility Maximum Amount and (F) the Canadian Borrower
shall request Acceptances in amounts and with maturity dates such that the
Aggregate Canadian Term Loan Outstandings can be reduced to an amount not
greater than the Canadian Facility Maximum Amount on each Canadian
Facility Amortization Date; or
(iii) to the extent that the Canadian Borrower has not given to the
Canadian Administrative Agent a notice contemplated by clause (i) or (ii)
above, then the Canadian Borrower shall be deemed to have requested a
conversion pursuant to Section 4.1(b) of such then-maturing Acceptances
into Canadian Term Loans in an aggregate principal amount equal to the
undiscounted face amount of such then-maturing Acceptances. The Borrowing
Date with respect to such conversion shall be the maturity date for such
Acceptances. Except to the extent that any of the events contemplated by
clause (i) or (ii) of paragraph (f) of Section 11 with respect to the
Canadian Borrower has occurred and is then continuing (in which case the
Canadian Borrower shall be obligated to pay to each Canadian Lender the
undiscounted face amount of the Acceptances created by such Canadian
Lender which are then maturing), each Canadian Lender shall convert the
then-maturing Acceptances into Canadian Term Loans as contemplated by this
Section 5.5(b)(iii) regardless of whether the conditions precedent to
borrowing set forth in this Agreement are then satisfied. The proceeds of
any Canadian Term Loans made pursuant to this Section 5.5(b)(iii) shall be
retained by the Canadian Lenders and applied by them to the Acceptance
Reimbursement Obligations of the Canadian Borrower in respect of the
then-maturing Acceptances.
<PAGE> 50
50
(c) In no event shall the Canadian Borrower claim from any Canadian
Lender any grace period with respect to the payment at maturity of any
Acceptances created by such Canadian Lender pursuant to this Agreement.
5.6 Acceptances to be Allocated in order to be Created Ratably. The
Canadian Borrower hereby agrees that each Request for Acceptances, reimbursement
of Acceptances and conversion of Canadian Term Loans to Acceptances shall be
made in a manner so that any such Request for Acceptances, reimbursement or
conversion shall apply ratably to all Canadian Lenders in accordance with their
respective Canadian Term Loan Commitment Percentages. In the event that the
aggregate undiscounted face amount of Acceptances requested by the Canadian
Borrower to be created by all Canadian Lenders hereunder pursuant to any Request
for Acceptances is an amount which, if divided ratably among the Canadian
Lenders in accordance with their respective Canadian Term Loan Commitment
Percentages, would not result in each Canadian Lender accepting a Draft which
has an undiscounted face amount equal to C$100,000 or a whole multiple of
C$100,000 in excess thereof, then the Canadian Administrative Agent is
authorized by the Canadian Borrower and the Canadian Lenders to allocate among
the Canadian Lenders the Acceptances to be issued in such manner and amounts as
the Canadian Administrative Agent may, in its sole discretion, acting
reasonably, consider necessary, rounding up or down, so as to ensure that no
Canadian Lender is required to accept a Draft for a fraction of $100,000 and, in
such event, the Canadian Lenders' ratable share with respect to such Acceptances
shall be adjusted accordingly.
5.7 Special Provisions Relating to Acceptance Notes. (a) The
Canadian Borrower and each Canadian Lender hereby acknowledge and agree that
from time to time certain Canadian Lenders may not be authorized to or may, as a
matter of market availability, elect not to accept Drafts, and the Canadian
Borrower and each Canadian Lender agree that any such Canadian Lender may
purchase Acceptance Notes of the Canadian Borrower in accordance with the
provisions of Section 5.7(b) in lieu of creating Acceptances for its account.
(b) In the event that any Canadian Lender described in Section
5.7(a) above is unable to, or elects as a matter of market availability not to,
create Acceptances hereunder, such Canadian Lender shall not create Acceptances
hereunder, but rather, if the Canadian Borrower requests the creation of such
Acceptances, the Canadian Borrower shall deliver to such Canadian Lender
non-interest bearing promissory notes (each, an "Acceptance Note") of the
Canadian Borrower, substantially in the form of Exhibit G, having the same
maturity as the Acceptances to be created and in an aggregate principal amount
equal to the undiscounted face amount of such Acceptances. Each such Canadian
Lender hereby agrees to purchase Acceptance Notes from the Canadian Borrower at
a purchase price equal to the Acceptance Purchase Price which would have been
applicable if a Draft in the same aggregate face amount as the principal amount
of its Acceptance Notes had been accepted by it (less any stamping fee which
would have been paid pursuant to Section 5.4 if such Lender had created an
Acceptance) and such Acceptance Notes shall be governed by the provisions of
this Section 5 as if they were Acceptances.
<PAGE> 51
51
SECTION 6. GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT
6.1 Commitment Fees, etc. (a) The Company agrees to pay to the
General Administrative Agent for the account of each Revolving Credit Lender a
commitment fee for the period from and including the Closing Date to the last
day of the Revolving Credit Commitment Period, computed at the Commitment Fee
Rate on the average daily amount of the Available Revolving Credit Commitment of
such Lender during the period for which payment is made, payable quarterly in
arrears on the last day of each February, May, August and November and on the
Revolving Credit Termination Date, commencing on the first of such dates to
occur after the date hereof.
(b) The Company agrees to pay to the General Administrative Agent
for the account of each of the U.S. Term Loan Lenders a commitment fee for the
period from and including the Closing Date to the last day of U.S. Term Loan
Commitment Period, computed at the Commitment Fee Rate on the average daily
amount of the unutilized U.S. Term Loan Commitments of such Lender during such
period, payable quarterly in arrears on the last day of each February, May,
August and November and on the last day of the U.S. Term Loan Commitment Period,
commencing on the first of such dates to occur after the date hereof.
(c) The Company agrees to pay to the General Administrative Agent
and the Arranger the fees in the amounts and on the dates previously agreed to
in writing by the Company and the General Administrative Agent and the Arranger.
6.2 Optional Prepayments. (a) Subject to the provisions of Section
6.3(i), the Company may at any time and from time to time prepay the U.S. Loans,
in whole or in part, without premium or penalty, upon at least three Business
Days' irrevocable notice to the General Administrative Agent, specifying the
date and amount of prepayment and whether the prepayment is of LIBOR Loans or
Base Rate Loans, provided, that if a LIBOR Loan is prepaid on any day other than
the last day of the Interest Period applicable thereto, the Company shall also
pay any amounts owing pursuant to Section 6.13. Upon receipt of any such notice,
the General Administrative Agent shall promptly notify each relevant U.S. Lender
thereof. If any such notice is given, the amount specified in such notice shall
be due and payable on the date specified therein, together with any amounts
payable pursuant to Section 6.13 and, except in the case of Revolving Credit
Loans that are Base Rate Loans, accrued interest to such date on the amount
prepaid. Amounts prepaid on account of the U.S. Term Loans may not be
reborrowed. Partial prepayments of U.S. Loans shall be in an aggregate principal
amount of not less than $5,000,000 and whole multiples of $1,000,000 in excess
thereof.
(b) Subject to Section 6.3(i), the amount of each optional
prepayment of the U.S. Term Loans under any Facility shall be applied to reduce
the then remaining installments of the U.S. Term Loans under such Facility, pro
rata based upon the then
<PAGE> 52
52
remaining number of installments thereof, after giving effect to all prior
reductions thereto (i.e., each then remaining installment of the Tranche A Term
Loans, Tranche B Term Loans or Tranche C Term Loans, as the case may be, shall
be reduced by an amount equal to the aggregate amount to be applied to the
Tranche A Term Loans, Tranche B Term Loans or Tranche C Term Loans, as the case
may be, divided by the number of the then remaining installments for such
Tranche A Term Loans, Tranche B Term Loans or Tranche C Term Loans); provided,
that if the amount to be so applied to any installment would exceed the then
remaining amount of such installment, then an amount equal to such excess shall
be applied to the next succeeding installment after giving effect to all prior
reductions thereto (including the amount of prepayments theretofore allocated
pursuant to the preceding portion of this sentence).
(c) The Canadian Borrower may at any time and from time to time
prepay the Canadian Term Loans, in whole or in part, without premium or penalty,
upon at least four Business Days' irrevocable notice to the Canadian
Administrative Agent, specifying the date and amount of prepayment. Upon receipt
of any such notice, the Canadian Administrative Agent shall promptly notify the
General Administrative Agent and each Canadian Lender thereof. If any such
notice is given, the amount specified in such notice shall be due and payable on
the date specified therein, together with accrued interest to such date on the
amount prepaid. Amounts prepaid on account of the Canadian Term Loans may not be
reborrowed except as provided in Section 5. Partial prepayments of Canadian Term
Loans shall be in an aggregate principal amount of not less than C$5,000,000 and
whole multiples of C$1,000,000 in excess thereof.
(d) The amount of each optional prepayment of the Canadian Term
Loans shall be applied to reduce the then remaining installments of the Canadian
Term Loans pro rata based upon the then remaining number of installments
thereof, after giving effect to all prior reductions thereto (i.e., each then
remaining installment of the Canadian Term Loans shall be reduced by an amount
equal to the aggregate amount to be applied to the Canadian Term Loans divided
by the number of the then remaining installments for such Canadian Term Loans);
provided, that if the amount to be so applied to any installment would exceed
the then remaining amount of such installment, then an amount equal to such
excess shall be applied to the next succeeding installment after giving effect
to all prior reductions thereto (including the amount of prepayments theretofore
allocated pursuant to the preceding portion of this sentence).
6.3 Mandatory Prepayments and Commitment Reductions. (a) If after
the Closing Date any Capital Stock shall be sold or issued by Holdings, the
Company or any of its Subsidiaries (including, without limitation, any sales
pursuant to the exercise of warrants, but excluding (i) any issuance of common
stock in payment of interest under the Seller Note, (ii) any Permitted Employee
Stock Issuances, to the extent the proceeds of such Permitted Employee Stock
Issuances are contributed by Holdings to the Company and (iii) the issuance of
common stock of Holdings as a part of the consideration for the Exchange Offer
and the Merger), an amount equal to 50% of the Net Cash Proceeds thereof shall
be applied within three Business Days after the date of receipt of such Net Cash
Proceeds toward the
<PAGE> 53
53
prepayment of the Term Loans and Acceptances and the reduction of the Revolving
Credit Commitments as set forth in Section 6.3(e).
(b) If after the Closing Date any Indebtedness shall be issued or
incurred by Holdings, the Company or any of its Subsidiaries (excluding any
Indebtedness (other than Indebtedness evidenced by High Yield Notes) incurred in
accordance with Section 10.2 as in effect on the date of this Agreement), an
amount equal to 100% of the Net Cash Proceeds thereof shall be applied within
three Business Days after the date of such issuance or incurrence toward the
prepayment of the Term Loans and the Acceptances and the reduction of the
Revolving Credit Commitments (or, if required by Section 6.3(e), reduction of
the Tranche B-1 Term Loan Commitments and the Tranche C-1 Term Loan Commitments)
as set forth in Section 6.3(e).
(c) If after the Closing Date the Company or any of its Subsidiaries
(other than the Canadian Borrower or any of its Subsidiaries) shall receive Net
Cash Proceeds from any Asset Sale (including, without limitation, any Net Cash
Proceeds from any Dispositions permitted by clauses (e) and (f) of Section 10.6
to the extent such proceeds exceed $225,000,000 in the aggregate) or Recovery
Event, an amount equal to 100% of such Net Cash Proceeds shall be applied on
such date toward the prepayment of the U.S. Term Loans and the reduction of the
Revolving Credit Commitments as set forth in Section 6.3(f). If after the
Closing Date the Canadian Borrower or any of its Subsidiaries shall receive Net
Cash Proceeds from any Asset Sale or Recovery Event, an amount equal to 100% of
such Net Cash Proceeds shall be applied on such date toward the prepayment of
the Total Aggregate Canadian Term Loan Outstandings and the permanent reduction
of the Canadian Facility Maximum Amount as set forth in Section 6.3(g).
Notwithstanding the foregoing, (i) no such prepayment or reduction shall be
required in respect of Asset Sales for which the Net Cash Proceeds in any fiscal
year aggregate up to (but do not exceed) $5,000,000 (in the aggregate for the
Company and its Subsidiaries, including the Canadian Borrower and its
Subsidiaries) and (ii) no such prepayment or reduction shall be required in
respect of any Asset Sales or any Recovery Event if the Company delivers a
Reinvestment Notice in respect of each such Asset Sale and Recovery Event;
provided, that, on each Reinvestment Prepayment Date, an amount equal to the
Reinvestment Prepayment Amount with respect to the relevant Reinvestment Event
shall be applied toward the prepayments and reductions required by Section
6.3(f) or 6.3(g), as applicable; and provided, further, that no Reinvestment
Notice shall be required in respect of Asset Sales for which no prepayment is
required pursuant to the foregoing clause (i) of this sentence.
(d) If, for any fiscal year of Holdings commencing with the fiscal
year ending August 31, 1999, Holdings shall have Excess Cash Flow (calculated
without taking into account the Canadian Borrower and its Subsidiaries), the
Company shall, on the relevant Excess Cash Flow Application Date, apply 75% of
such Excess Cash Flow toward the prepayment of the Term Loans and the reduction
of the Revolving Credit Commitments as set forth in Section 6.3(f). If, for any
fiscal year of the Canadian Borrower commencing with the fiscal year ending
August 31, 1999, the Canadian Borrower shall have Excess Cash Flow, the Canadian
Borrower shall, on the relevant Excess Cash Flow Application Date, apply 75% of
such Excess Cash Flow toward the prepayment of the Total Aggregate
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54
Canadian Term Loan Outstandings and the permanent reduction of the Canadian
Facility Maximum Amount as set forth in Section 6.3(g). Each such prepayment and
reduction shall be made on a date (an "Excess Cash Flow Application Date") no
later than five days after the earlier of (i) the date on which the financial
statements of Holdings referred to in Section 9.1(a), for the fiscal year with
respect to which such prepayment is made, are required to be delivered to the
Lenders and (ii) the date such financial statements are actually delivered.
Notwithstanding the foregoing, if for any fiscal year the Excess Cash Flow of
one of the Canadian Borrower or Holdings (calculated without taking into account
the Canadian Borrower and its Subsidiaries), as the case may be, is a negative
number, and the Excess Cash Flow of the other such Person is a positive number,
the amount of the prepayment and reduction required by this Section 6.3(d) in
respect of the Company (if Holdings is the Person having positive Excess Cash
Flow) or the Canadian Borrower (if the Canadian Borrower is the Person having
positive Excess Cash Flow) for such fiscal year shall be reduced by the amount
of the negative Excess Cash Flow of the other such Person for such fiscal year.
(e) Amounts to be applied in connection with prepayments and
Commitment reductions made pursuant to Section 6.3(a) or 6.3(b) shall be
applied, first, to the prepayment of the U.S. Term Loans and Total Aggregate
Canadian Term Loan Outstandings, ratably in accordance with the outstanding
amount of each Facility and, second, to reduce permanently the Revolving Credit
Commitments. Notwithstanding the preceding sentence, any prepayment made
pursuant to Section 6.3(b) with the Net Cash Proceeds of the High Yield Offering
shall be applied, first, to prepay the Tranche B-1 Term Loans and the Tranche
C-1 Term Loans, ratably in accordance with the outstanding amounts thereof (or,
if the High Yield Offering is consummated prior to the Merger Date, such amount
shall be applied to permanently reduce the Tranche B-1 Term Loan Commitments and
the Tranche C-1 Term Loan Commitments) and, second, in accordance with the
preceding sentence. Any such reduction of the Revolving Credit Commitments shall
be accompanied by prepayment of the Revolving Credit Loans to the extent, if
any, that the Total Revolving Extensions of Credit exceed the amount of the
aggregate Revolving Credit Commitments as so reduced, provided that if the
aggregate principal amount of Revolving Credit Loans then outstanding is less
than the amount of such excess (because L/C Obligations constitute a portion
thereof), the Company shall not be required to reduce any outstanding Letters of
Credit. The application of any such prepayment of U.S. Term Loans shall be made
first to Base Rate Loans and second to LIBOR Loans. The application of any such
prepayment to Total Aggregate Canadian Term Loan Outstandings shall be made
first to Canadian Term Loans and second (but only on the maturity date thereof)
to Acceptances. Each such prepayment of the Loans (except in the case of
Revolving Credit Loans that are Base Rate Loans) shall be accompanied by accrued
interest to the date of such prepayment on the amount prepaid.
(f) Amounts to be applied in connection with prepayments and
reductions made pursuant to Section 6.2(c), the first sentence of Section 6.3(c)
or the first sentence of Section 6.3(d) shall be applied, first, to the
prepayment of the U.S. Term Loans, ratably in accordance with the respective
outstanding amounts of the Facilities, and, second, to reduce permanently the
Revolving Credit Commitments. Any such reduction of the Revolving Credit
Commitments shall be accompanied by prepayment of the Revolving Credit Loans to
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the extent, if any, that the Total Revolving Extensions of Credit exceed the
amount of the aggregate Revolving Credit Commitments as so reduced, provided
that if the aggregate principal amount of Revolving Credit Loans then
outstanding is less than the amount of such excess (because L/C Obligations
constitute a portion thereof), the Company shall not be required to reduce any
outstanding Letters of Credit. The application of any such prepayment of U.S.
Term Loans shall be made first to Base Rate Loans and second to LIBOR Loans.
Each such prepayment of the Loans (except in the case of Revolving Credit Loans
that are Base Rate Loans) shall be accompanied by accrued interest to the date
of such prepayment on the amount prepaid.
(g) Amounts to be applied in connection with prepayments and
reductions made pursuant to Section 6.2(c), the second sentence of Section
6.3(c) or the second sentence of Section 6.3(d) shall be applied to the
reduction of the Total Aggregate Canadian Term Loan Outstandings and the
simultaneous and automatic reduction in an equal amount of the Canadian Facility
Maximum Amount. The application of any such prepayment to Total Aggregate
Canadian Term Loan Outstandings shall be made first to Canadian Term Loans and
second (but only on the maturity date thereof) to Acceptances. Each such
prepayment of the Canadian Term Loans shall be accompanied by accrued interest
to the date of such prepayment on the amount prepaid.
(h) The amount of each prepayment of the Tranche A Term Loans,
Tranche B Term Loans, Tranche C Term Loans or Canadian Term Loans, as the case
may be, required pursuant to this Section 6.3 shall be applied to reduce the
then remaining installments of the Term Loans under the relevant Facility, pro
rata based upon the then remaining outstanding principal amount of such
installments.
(i) Notwithstanding anything in Section 6.2(a), Section 6.3(e) or
Section 6.3(f) to the contrary and provided that there are Tranche A Term Loans
and/or Total Aggregate Canadian Term Loan Outstandings then outstanding, with
respect to the amount of any optional prepayment described in Section 6.2(a) or
mandatory prepayment described in Section 6.3 that is allocated to the Tranche B
Term Loans or Tranche C Term Loans (such amounts, the "Tranche B Prepayment
Amount" and the "Tranche C Prepayment Amount", respectively), the Company will,
in lieu of applying such amount to the prepayment of Tranche B Term Loans and
Tranche C Term Loans, respectively, as provided in Section 6.2(a) or Section
6.3(e) or (f), as the case may be, on the date specified in Section 6.2(a) or
Section 6.3, as the case may be, for such prepayment, give the General
Administrative Agent telephonic notice (promptly confirmed in writing)
requesting that the General Administrative Agent prepare and provide to each
Tranche B Lender and Tranche C Lender a notice (each, a "Prepayment Option
Notice") as described below. As promptly as practicable after receiving such
notice from the Company, the General Administrative Agent will send to each
Tranche B Lender and Tranche C Lender a notice (a "Prepayment Option Notice"),
which shall be in the form of Exhibit H, and shall include an offer by the
Company to prepay on the date (each a "Proposed Prepayment Date") that is 15
days after the date of the Prepayment Option Notice, the Tranche B Term Loans or
Tranche C Term Loans, as the case may be, of such Lender by an amount equal to
the portion of the Tranche B Prepayment Amount or Tranche C Prepayment Amount
indicated in such Lender's
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Prepayment Option Notice as being applicable to such Lender's Tranche B Term
Loans or Tranche C Term Loans, as the case may be. On the Proposed Prepayment
Date, (A) the Company shall pay to the General Administrative Agent the
aggregate amount necessary to prepay that portion of the outstanding Tranche B
Term Loans or Tranche C Term Loans, as the case may be, in respect of which
Tranche B Lenders and Tranche C Lenders have accepted prepayment as described
above (such Lenders, the "Accepting Lenders"), and such amount shall be applied
to reduce the Tranche B Prepayment Amount and Tranche C Prepayment Amount, as
applicable, with respect to each Accepting Lender and (B) the Company shall pay
to the General Administrative Agent an amount equal to 100% of the portion of
the Tranche B Prepayment Amount and Tranche C Prepayment Amount not accepted by
the Accepting Lenders, and such amount shall be applied (i) in the case of
optional prepayments pursuant to Section 6.2, to prepay the Tranche A Term Loans
and (ii) in the case of mandatory prepayments, to the other Facilities required
to be prepaid pursuant to Section 6.3(e) or Section 6.3(f), as the case may be,
ratably in accordance with the outstanding amounts thereof.
6.4 Conversion and Continuation Options. (a) The Company may elect
from time to time to convert LIBOR Loans to Base Rate Loans, by giving the
General Administrative Agent at least two Business Days' prior irrevocable
notice of such election; provided that any such conversion of LIBOR Loans may
only be made on the last day of an Interest Period with respect thereto. The
Company may elect from time to time to convert Base Rate Loans to LIBOR Loans by
giving the General Administrative Agent at least three Business Days' prior
irrevocable notice of such election. Any such notice of conversion to LIBOR
Loans shall specify the length of the initial Interest Period or Interest
Periods therefor. Upon receipt of any such notice the General Administrative
Agent shall promptly notify each affected Lender thereof. All or any part of
outstanding LIBOR Loans and Base Rate Loans may be converted as provided herein,
provided that (i) no Base Rate Loan under a particular Facility may be converted
into a LIBOR Loan when any Event of Default has occurred and is continuing and
the General Administrative Agent has or the Majority Facility Lenders in respect
of such Facility have determined in its or their sole discretion that such a
conversion is not appropriate and (ii) no Loan may be converted into a LIBOR
Loan after the date that is one month prior to the final maturity date of such
Facility.
(b) Any LIBOR Loans may be continued as such upon the expiration of
the then current Interest Period with respect thereto by the Company giving
notice to the General Administrative Agent, in accordance with the applicable
provisions of the term "Interest Period" set forth in Section 1.1, of the length
of the next Interest Period to be applicable to such Loans, provided that no
LIBOR Loan under a particular Facility may be continued as such (i) when any
Event of Default has occurred and is continuing and the General Administrative
Agent has or the Majority Facility Lenders in respect of such Facility have
determined in its or their sole discretion that such a continuation is not
appropriate or (ii) after the date that is one month prior to the final maturity
date of such Facility and provided, further, that if the Company shall fail to
give such notice or if such continuation is not permitted such Loans shall be
automatically converted to Base Rate Loans on the last day of such then expiring
Interest Period. Upon receipt of any such notice the General Administrative
Agent shall promptly notify each relevant Lender thereof.
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6.5 Minimum Amounts of Tranches. Notwithstanding anything to the
contrary in this Agreement, all borrowings, conversions and continuations of
LIBOR Loans hereunder and all selections of Interest Periods hereunder shall be
in such amounts and be made pursuant to such elections so that, after giving
effect thereto, the aggregate principal amount of the LIBOR Loans comprising
each Tranche shall be equal to $5,000,000 or a whole multiple of $1,000,000 in
excess thereof.
6.6 Interest Rates and Payment Dates. (a) Each LIBOR Loan shall bear
interest for each day during each Interest Period with respect thereto at a rate
per annum equal to the LIBOR Rate determined for such day plus the Applicable
Margin.
(b) Each Base Rate Loan shall bear interest at a rate per annum
equal to the Base Rate plus the Applicable Margin.
(c) Each Canadian Term Loan shall bear interest at a rate per annum
equal to the Canadian Dollar Prime Rate plus the Applicable Margin.
(d) If all or a portion of (i) any principal of any Loan, (ii) any
interest payable thereon, (iii) any commitment fee or (iv) any Reimbursement
Obligation or Acceptance Reimbursement Obligation or other amount payable
hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), the principal of the Loans, the Reimbursement
Obligations or Acceptance Reimbursement Obligation and any such overdue
interest, commitment fee or other amount shall bear interest at a rate per annum
which is (w) in the case of principal, the rate that would otherwise be
applicable thereto pursuant to the foregoing provisions of this subsection plus
2% or, if higher, (x) in the case of Reimbursement Obligations, the rate
applicable to Base Rate Loans under the Revolving Credit Facility plus 2%, (y)
in the case of Acceptance Reimbursement Obligations, the rate applicable to
Revolving Credit Loans that are LIBOR Loans plus 2% or (z) in the case of any
such overdue interest, commitment fee or other amount, the rate described in
paragraph (b) of this subsection (paragraph (c) in the case of interest on
Canadian Term Loans) plus 2%, in each case from the date of such non-payment
until such overdue principal, interest, commitment fee or other amount is paid
in full (as well after as before judgment).
(e) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (d) of this Section
6.6 shall be payable from time to time on demand.
6.7 Computation of Interest and Fees. (a) Commitment fees,
Acceptance stamping fees and, whenever it is calculated on the basis of the
Prime Rate or the Canadian Dollar Prime Rate, interest shall be calculated on
the basis of a 365- (or 366-, as the case may be) day year for the actual days
elapsed; and, otherwise, interest and letter of credit commissions and fronting
fees shall be calculated on the basis of a 360-day year for the actual days
elapsed. The General Administrative Agent shall as soon as practicable notify
the Company and the U.S. Lenders of each determination of a LIBOR Rate. Any
change in the interest rate on a Loan resulting from a change in the Base Rate,
the Canadian Dollar
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Prime Rate or the Eurocurrency Reserve Requirements shall become effective as of
the opening of business on the day on which such change becomes effective. The
General Administrative Agent shall as soon as practicable notify the Company and
the U.S. Lenders of the effective date and the amount of each such change in the
Base Rate. For purposes of the Interest Act (Canada), whenever any interest
under this Agreement is calculated using an annual rate based on a period which
is less than the actual number of days in a year (the "Lesser Period"), such
rate determined pursuant to such calculation, when expressed as an annual rate,
is equivalent to (i) the applicable rate based on such Lesser Period, (ii)
multiplied by the actual number of days in the calendar year in which the period
for which such interest is payable ends, and (iii) divided by the number of days
in such Lesser Period. The rates of interest specified in this Agreement are
nominal rates and all interest payments and computations are to be made without
allowance or deduction for deemed reinvestment of interest.
(b) Each determination of an interest rate by the General
Administrative Agent or the Canadian Administrative Agent pursuant to any
provision of this Agreement shall be conclusive and binding on the Borrowers and
the Lenders in the absence of manifest error.
(c) If any Canadian Reference Lender shall for any reason no longer
have a Canadian Loan Commitment or any Canadian Term Loans, such Canadian
Reference Lender shall thereupon cease to be a Canadian Reference Lender, and
if, as a result, there shall only be one Schedule 1 Canadian Reference Lender or
Schedule 2 Canadian Reference Lender (as the case may be) remaining, the
Canadian Administrative Agent (after consultation with the Canadian Borrower and
the Schedule 1 Canadian Lender or the Schedule 2 Canadian Lender, as applicable)
shall, by notice to the Canadian Borrower and the Canadian Lenders, designate
another Schedule 1 Canadian Lender or Schedule 2 Canadian Lender, as applicable,
as a Schedule 1 Canadian Reference Lender or a Schedule 2 Canadian Reference
Lender, as applicable, so that there shall at all times be at least two Schedule
1 Canadian Reference Lenders and two Schedule 2 Canadian Reference Lenders.
(d) Each Canadian Reference Lender shall use its best efforts to
furnish quotations of rates to the Canadian Administrative Agent as contemplated
hereby. If any of the Canadian Reference Lenders shall be unable or shall
otherwise fail to supply such rates to the Canadian Administrative Agent upon
its request, the rate of interest shall, subject to the provisions of Section
6.8, be determined on the basis of the quotations of the remaining Canadian
Reference Lenders or Reference Lender.
6.8 Inability to Determine Interest Rate. If prior to the first day
of any Interest Period:
(a) the General Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Company) that, by
reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the LIBOR Rate for such
Interest Period, or
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(b) the General Administrative Agent shall have received notice from
the Majority Facility Lenders in respect of the relevant Facility that the
LIBOR Rate determined or to be determined for such Interest Period will
not adequately and fairly reflect the cost to such Lenders (as
conclusively certified by such Lenders) of making or maintaining their
affected Loans during such Interest Period,
the General Administrative Agent shall give telecopy or telephonic notice
thereof to the Company and the relevant U.S. Lenders as soon as practicable
thereafter. If such notice is given (x) any LIBOR Loans under the relevant
Facility requested to be made on the first day of such Interest Period shall be
made as Base Rate Loans, (y) any Loans under the relevant Facility that were to
have been converted on the first day of such Interest Period to LIBOR Loans
shall be continued as Base Rate Loans and (z) any outstanding LIBOR Loans under
the relevant Facility shall be converted, on the first day of such Interest
Period, to Base Rate Loans. Until such notice has been withdrawn by the General
Administrative Agent, no further LIBOR Loans under the relevant Facility shall
be made or continued as such, nor shall the Company have the right to convert
Loans under the relevant Facility to LIBOR Loans.
6.9 Pro Rata Treatment and Payments. (a) Each borrowing by the
Company from the Lenders hereunder shall be made pro rata according to the
respective Tranche A Term Loan Percentages, Tranche B Term Loan Percentages,
Tranche C Term Loan Percentages, Canadian Term Loan Commitment Percentages or
Revolving Credit Percentages, as the case may be, of the relevant Lenders;
provided, that, pursuant to the second sentence of Section 5.6, Acceptances may
be created in non-pro rata amounts if required to permit rounding to whole
multiples of C$100,000. Each borrowing of the U.S. Term Loans shall be made
first under the Tranche B Term Loan Commitments and the Tranche C Term Loan
Commitments, pro rata in accordance with the aggregate amounts of the Tranche B
Term Loan Commitments and Tranche C Term Loan Commitments of the respective
Lenders (provided, that until all Tranche B Term Loan Commitments and Tranche C
Term Loan Commitments other than the Tranche B-1 Term Loan Commitments and the
Tranche C-1 Term Loan Commitments have been fully drawn, such pro rata
calculations shall be made without regard to the Tranche B-1 Term Loan
Commitments and Tranche C-1 Term Loan Commitments of the Lenders) and, second,
after the Tranche B Term Loan Commitments and the Tranche C Term Loan Commitment
have been utilized in full, under the Tranche A Term Loan Commitments pro rata
in accordance with the amounts of the Tranche A Term Loan Commitments of the
respective Lenders. Each payment by the Company on account of any commitment fee
and letter of credit commission and any reduction of the Revolving Credit
Commitments shall be made pro rata according to the respective Revolving Credit
Percentages of the Lenders. Each payment (other than any prepayment pursuant to
Section 6.2 or 6.3) shall be applied to the Facilities ratably in accordance
with the respective amounts due and owing under the Facilities.
(b) Each payment (including each prepayment) by the Company on
account of principal of and interest on the U.S. Term Loans under any Facility
shall be made pro rata according to the respective outstanding principal amounts
of the U.S. Term Loans under such Facility then held by the U.S. Term Loan
Lenders.
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(c) Each payment (including each prepayment) by the Canadian
Borrower on account of principal of and interest on the Canadian Term Loans
shall be made pro rata according to the respective outstanding principal amounts
of the Canadian Term Loans then held by the Canadian Lenders. Each payment in
respect of Acceptance Reimbursement Obligations shall be made pro rata according
to the respective amounts of Acceptance Reimbursement Obligations then due and
owing to the Canadian Lenders.
(d) Each payment (including each prepayment) by the Company on
account of principal of and interest on the Revolving Credit Loans shall be made
pro rata according to the respective outstanding principal amounts of the
Revolving Credit Loans then held by the Revolving Credit Lenders.
(e) All payments (including prepayments) to be made by the Company
hereunder, whether on account of principal, interest, fees or otherwise (other
than payments under Section 13 in respect of the Canadian Borrower Obligations
and the Canadian Operating Facility Obligations), shall be made without setoff
or counterclaim and shall be made prior to 12:00 Noon, New York City time, on
the due date thereof to the General Administrative Agent, for the account of the
Lenders, at the General Administrative Agent's office specified in Section 14.2,
in Dollars and in immediately available funds. The General Administrative Agent
shall distribute such payments to the Lenders promptly upon receipt in like
funds as received. If any payment by the Company hereunder (other than payments
on the LIBOR Loans) becomes due and payable on a day other than a Business Day,
such payment shall be extended to the next succeeding Business Day. If any
payment on a LIBOR Loan becomes due and payable on a day other than a Business
Day, the maturity thereof shall be extended to the next succeeding Business Day
unless the result of such extension would be to extend such payment into another
calendar month, in which event such payment shall be made on the immediately
preceding Business Day. In the case of any extension of any payment of principal
pursuant to the preceding two sentences, interest thereon shall be payable at
the then applicable rate during such extension.
(f) All payments (including prepayments) to be made by the Canadian
Borrower hereunder (or by the Company under Section 13 in respect of the
Canadian Borrower Obligations and the Canadian Operating Facility Obligations),
whether on account of principal, interest, fees or otherwise, shall be made
without setoff or counterclaim and shall be made prior to 12:00 Noon, Toronto
time, on the due date thereof to the Canadian Administrative Agent, for the
account of the Lenders, at the Canadian Administrative Agent's office specified
in Section 14.2, in Canadian Dollars and in immediately available funds. The
Canadian Administrative Agent shall distribute such payments to the Lenders
promptly upon receipt in like funds as received. If any payment by the Canadian
Borrower hereunder becomes due and payable on a day other than a Business Day,
such payment shall be extended to the next succeeding Business Day. In the case
of any extension of any payment of principal pursuant to the preceding sentence,
interest thereon shall be payable at the then applicable rate during such
extension.
(g) Unless the applicable Administrative Agent shall have been
notified in writing by any Lender prior to a Borrowing Date that such Lender
will not make available to
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such Administrative Agent the amount that would constitute its share of the
Loans or Acceptance Purchase Price to be disbursed to a Borrower on such
Borrowing Date, such Administrative Agent may assume that such Lender is making
such amount available to such Administrative Agent, and such Administrative
Agent may, in reliance upon such assumption, make available to the applicable
Borrower a corresponding amount. If such amount is not made available to such
Administrative Agent by the required time on the Borrowing Date therefor, such
Lender shall pay to such Administrative Agent, on demand, such amount with
interest thereon at a rate equal to (i) in the case of amounts to be made
available in U.S. Dollars, the daily average Federal Funds Effective Rate for
the period until such Lender makes such amount immediately available to the
General Administrative Agent and (ii) in the case of amounts to be made
available in Canadian Dollars, the Canadian Administrative Agent's reasonable
estimate of its average daily cost of funds. A certificate of the General
Administrative Agent or the Canadian Administrative Agent, as the case may be,
submitted to any Lender with respect to any amounts owing under this Section
6.9(g) shall be conclusive in the absence of manifest error. If such Lender's
share of such amount is not made available to such Administrative Agent by such
Lender within three Business Days of such Borrowing Date, such Administrative
Agent shall also be entitled to recover such amount from the relevant Borrower
on demand with interest thereon at the rate per annum applicable to Base Rate
Loans under the relevant Facility (in the case of amounts to be made available
in U.S. Dollars), or Canadian Term Loans (in the case of amounts to be made
available in Canadian Dollars).
6.10 Illegality. (a) Notwithstanding any other provision herein, if
the adoption of or any change in any Requirement of Law or in the interpretation
or application thereof shall make it unlawful for any Lender to make or maintain
LIBOR Loans as contemplated by this Agreement, (i) the commitment of such U.S.
Lender hereunder to make LIBOR Loans, continue LIBOR Loans as such and convert
Base Rate Loans to LIBOR Loans shall forthwith be cancelled and (ii) such U.S.
Lender's Loans then outstanding as LIBOR Loans, if any, shall be converted
automatically to Base Rate Loans on the respective last days of the then current
Interest Periods with respect to such Loans or within such earlier period as
required by law. If any such conversion of a LIBOR Loan occurs on a day which is
not the last day of the then current Interest Period with respect thereto, the
Company shall pay to such Lender such amounts, if any, as may be required
pursuant to Section 6.13.
(b) Notwithstanding any other provision herein, if the adoption of
or any change in any Requirement of Law or in the interpretation or application
thereof shall make it unlawful for any Canadian Lender to create or maintain
Acceptances as contemplated by this Agreement, (i) the commitment of such
Canadian Lender hereunder to accept Drafts, purchase Acceptances, continue
Acceptances as such and convert Canadian Term Loans to Acceptances shall
forthwith be cancelled until such time as it shall no longer be unlawful for
such Canadian Lender to create or maintain Acceptances and (ii) such Canadian
Lender's then outstanding Acceptances, if any, shall be converted automatically
to Canadian Term Loans on the respective maturities thereof or within such
earlier period as may be required by law.
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6.11 Requirements of Law. (a) If the adoption of or any change in
any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law, but with which similarly-situated entities generally comply)
from any central bank or other Governmental Authority made subsequent to the
date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, any Letter of Credit or any LIBOR Loan made by
it, or change the basis of taxation of payments to such Lender in respect
thereof (except for Non-Excluded Taxes covered by Section 6.12 and changes
in the rate of tax on the overall net income of such Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the LIBOR Rate; or
(iii) shall impose on such Lender any other condition, the cost of
which is not otherwise included in the determination of the LIBOR Rate;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining LIBOR Loans or Acceptances or issuing or participating
in Letters of Credit, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the applicable Borrower shall promptly pay such
Lender such additional amount or amounts as will compensate such Lender on an
after-tax basis for such increased cost or reduced amount receivable.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law, but with which
similarly-situated entities generally comply) from any Governmental Authority
made subsequent to the date hereof shall have the effect of reducing the rate of
return on such Lender's or such corporation's capital as a consequence of its
obligations hereunder to a level below that which such Lender or such
corporation could have achieved but for such adoption, change or compliance
(taking into consideration such Lender's or such corporation's policies with
respect to capital adequacy) by an amount deemed by such Lender to be material,
then from time to time, the applicable Borrower shall promptly pay to such
Lender such additional amount or amounts as will compensate such Lender on an
after-tax basis for such reduction.
(c) If any Lender becomes entitled to claim any additional amounts
pursuant to this Section, it shall promptly notify the applicable Borrower (with
a copy to the General Administrative Agent and, if applicable, the Canadian
Administrative Agent) of the event by
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reason of which it has become so entitled. A certificate as to any additional
amounts payable pursuant to this Section submitted by such Lender to such
Borrower (with a copy to the General Administrative Agent and, if applicable,
the Canadian Administrative Agent) shall be conclusive in the absence of
manifest error. The agreements in this Section shall survive the termination of
this Agreement and the payment of the Loans, the Acceptance Reimbursement
Obligations, the Acceptance Notes and all other amounts payable hereunder.
6.12 Taxes. (a) All payments made by the Borrowers under this
Agreement and any Notes shall be made free and clear of, and without deduction
or withholding for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or withholdings,
now or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding net income taxes and franchise taxes (imposed
in lieu of net income taxes) imposed on either Administrative Agent or any
Lender as a result of a present or former connection between such Administrative
Agent or such Lender and the jurisdiction of the Governmental Authority imposing
such tax or any political subdivision or taxing authority thereof or therein
(other than any such connection arising solely from such Administrative Agent or
such Lender having executed, delivered or performed its obligations or received
a payment under, or enforced, this Agreement or any other Loan Document). If any
such non-excluded taxes, levies, imposts, duties, charges, fees deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts
payable to such Administrative Agent, or any Lender hereunder or under any Note,
the amounts so payable to such Administrative Agent or such Lender shall be
increased to the extent necessary to yield to such Administrative Agent or such
Lender (after payment of all Non-Excluded Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement, provided, however, that the Company shall not be required to increase
any such amounts payable to any U.S. Lender if such U.S. Lender fails to comply
with the requirements of paragraph (b) of this Section. Whenever any
Non-Excluded Taxes are payable by a Borrower, as promptly as possible thereafter
such Borrower shall send to the applicable Administrative Agent for its own
account or for the account of such Lender, as the case may be, a certified copy
of an original official receipt received by such Borrower showing payment
thereof. If a Borrower fails to pay any Non-Excluded Taxes when due to the
appropriate taxing authority or fails to remit to the applicable Administrative
Agent the required receipts or other required documentary evidence, such
Borrower shall indemnify such Administrative Agent and the Lenders for any
incremental taxes, interest or penalties that may become payable by either
Administrative Agent or any Lender as a result of any such failure. The
agreements in this subsection shall survive the termination of this Agreement
and the payment of the Loans, the Acceptance Reimbursement Obligations, the
Acceptance Notes and all other amounts payable hereunder.
(b) Each U.S. Lender that is not incorporated under the laws of the
United States of America or a state thereof shall:
(i) in the case of a Lender other than a Lender described in
subsection 6.12(b)(ii);
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(A) deliver to the Company and the General Administrative
Agent (A) two duly completed copies of United States Internal
Revenue Service Form 1001 or 4224, or successor applicable form, as
the case may be, and (B) an Internal Revenue Service Form W-8 or
W-9, or successor applicable form, as the case may be;
(B) deliver to the Company and the General Administrative
Agent two further copies of any such form or certification on or
before the date that any such form or certification expires or
becomes obsolete and after the occurrence of any event requiring a
change in the most recent form previously delivered by it to the
Company; and
(C) obtain such extensions of time for filing and complete
such forms or certifications as may reasonably be requested by the
Company or the General Administrative Agent; and
(D) file amendments to such forms as and when required; and
(ii) in the case of a Lender that is not a "bank" under Section
881(c)(3)(A) of the Code and that is legally unable to comply with the
requirements of subsection 6.11(b)(i);
(A) at least five Business Days before the date of the initial
payment to be made by the Company under this Agreement to such
Lender, deliver to the Company and the General Administrative Agent
(I) a statement that such Lender (x) is not a "bank" under Section
881(c)(3)(A) of the Code, is not subject to regulatory or other
legal requirements as a bank in any jurisdiction, and has not been
treated as a bank for purposes of any tax, securities law or other
filing or submission made to any Governmental Authority, any
application made to a rating agency or qualification for any
exemption from tax, securities law or other legal requirements, (y)
is not a 10-percent shareholder within the meaning of Section
881(c)(3)(B) of the Code and (z) is not a controlled foreign
corporation receiving interest from a related person within the
meaning of Section 881(c)(3)(C) of the Code and (II) a properly
completed and duly executed Internal Revenue Service Form W-8 or
applicable successor form; and
(B) deliver to the Company and the General Administrative
Agent two further properly completed and duly executed copies of
said Form W-8, or any successor applicable form at least five
Business Days on or before the date that any such Form W-8 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
Company or upon the request of the Company or the General
Administrative Agent; and
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65
(C) obtain such extensions of time for filing and completing
such forms or certifications as may be reasonably requested by the
Company and the General Administrative Agent; and
(D) file amendments to such forms as and when required;
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 Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Company and the General
Administrative Agent. Such Lender shall certify (i) in the case of a Form 1001
or 4224, that it is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes and (ii) in
the case of a Form W-8 or W-9, that it is entitled to an exemption from United
States backup withholding tax. Each Person that shall become a Lender or a
Participant pursuant to Section 14.6 shall, upon the effectiveness of the
related transfer, be required to provide all of the forms and statements
required pursuant to this subsection, provided that in the case of a Participant
such Participant shall furnish all such required forms and statements to the
Lender from which the related participation shall have been purchased.
6.13 Indemnity. Each Borrower agrees to indemnify each Lender and to
hold each Lender harmless from any loss or expense which such Lender may sustain
or incur as a consequence of (a) default by such Borrower in making a borrowing
of, conversion into or continuation of LIBOR Loans after such Borrower has given
a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by such Borrower in making any prepayment after such
Borrower has given a notice thereof in accordance with the provisions of this
Agreement or (c) the making of a prepayment of LIBOR Loans on a day which is not
the last day of an Interest Period with respect thereto. Such indemnification
may include an amount equal to the excess, if any, of (i) the amount of interest
which would have accrued on the amount so prepaid, or not so borrowed, converted
or continued, for the period from the date of such prepayment or of such failure
to borrow, convert or continue to the last day of such Interest Period (or, in
the case of a failure to borrow, convert or continue, the Interest Period that
would have commenced on the date of such failure) in each case at the applicable
rate of interest for such Loans provided for herein (excluding, however, the
Applicable Margin included therein, if any) over (ii) the amount of interest (as
reasonably determined by such U.S. Lender) which would have accrued to such
Lender on such amount by placing such amount on deposit for a comparable period
with leading banks in the interbank eurodollar market. This covenant shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.
6.14 Change of Lending Office. Each Lender agrees that if it makes
any demand for payment under Section 6.11 or 6.12(a), or if any adoption or
change of the type described in Section 6.10 shall occur with respect to it, it
will use reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions and so long as such efforts would not be disadvantageous
to it, as determined in its sole discretion) to designate a different lending
office if the making of such a designation would reduce or obviate the need
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for the Borrowers to make payments under Section 6.11 or 6.12(a), or would
eliminate or reduce the effect of any adoption or change described in Section
6.10; provided, that such designation is made on terms that, in the sole
judgment of such Lender, cause such Lender and its lending office(s) to suffer
no economic, legal or regulatory disadvantage, and provided, further, that
nothing in this Section 6.14 shall affect or postpone any of the obligations of
any Borrower or the rights of any Lender pursuant to Section 6.11 or 6.12(a).
SECTION 7. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agents and the Lenders to enter into
this Agreement and to make the Loans and the other extensions of credit
hereunder, each of the Company and the Canadian Borrower (to the extent
applicable to the Canadian Borrower) hereby represents and warrants to each
Administrative Agent and each Lender that:
7.1 Financial Condition. (a) The unaudited pro forma combined
balance sheet of Holdings and its consolidated Subsidiaries as at November 30,
1997 (including the notes thereto) (the "Pro Forma Balance Sheet"), copies of
which have heretofore been furnished to each Lender, has been prepared giving
effect (as if such events had occurred on such date) to (i) the consummation of
the Exchange Offer and the Merger, (ii) the Loans to be made on or prior to the
Merger Date and the use of proceeds thereof and (iii) the payment of fees and
expenses in connection with the Exchange Offer and Merger. The Pro Forma Balance
Sheet has been prepared based on the best information available to the Company
as of the date of delivery thereof, and presents fairly on a pro forma basis the
estimated combined financial position of Holdings and its consolidated
Subsidiaries as at the Closing Date, assuming that the events specified in the
preceding sentence had actually occurred at such date.
(b) To the best of the Company's knowledge, the audited consolidated
balance sheet of Safety-Kleen as of December 31, 1996 and the related
consolidated statements of income and of cash flows for the fiscal year ended on
such date, reported on by and accompanied by an unqualified report from Arthur
Andersen, present fairly the consolidated financial condition of Safety-Kleen as
at such date, and the consolidated results of its operations and its
consolidated cash flows for the fiscal year then ended. To the best of the
Company's knowledge, all such financial statements, including the related
schedules and notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by the relevant
firm of accountants and disclosed therein). To the best of the Company's
knowledge, the balance sheet referred to above reflects any material Guarantee
Obligations, contingent liabilities and liabilities for taxes, and any long-term
leases and unusual forward or long-term commitments, including, without
limitation, any interest rate or foreign currency swap or exchange transaction
or other obligation in respect of derivatives, in each case as of the date of
such balance sheets. During the period from December 31, 1996 to and including
the date hereof there has been no Disposition by Safety-Kleen or any of its
Subsidiaries of any material part of its business or property.
(c) The audited consolidated balance sheet of Holdings as at August
31, 1997, and the related consolidated statements of income and of cash flows
for the fiscal year ended
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on such date, reported on by and accompanied by an unqualified report from
Coopers & Lybrand, present fairly the consolidated financial condition of
Holdings as at such date, and the consolidated results of its operations and its
consolidated cash flows for the respective fiscal year then ended. All such
financial statements, including the related schedules and notes thereto, have
been prepared in accordance with GAAP applied consistently throughout the
periods involved (except as approved by the relevant firm of accountants and
disclosed therein). The balance sheet referred to above reflects any material
Guarantee Obligations, contingent liabilities and liabilities for taxes, and any
long-term leases and unusual forward or long-term commitments, including,
without limitation, any interest rate or foreign currency swap or exchange
transaction or other obligation in respect of derivatives, in each case as of
the date of such balance sheets. During the period from August 31, 1997 to and
including the date hereof there has been no Disposition by Holdings or any of
its Subsidiaries of any material part of its business or property other than the
sale by the Company of ECDC Environmental, L.C.
7.2 No Change. Since August 31, 1997 there has been no development
or event which has had or could reasonably be expected to have a Material
Adverse Effect. Without limiting the representation in the preceding sentence,
since December 31, 1996 there has been no development or event which, to the
best knowledge of the Company, has had or could reasonably be expected to have a
material adverse effect on the business, operations, property, condition
(financial or otherwise) or prospects of Safety-Kleen and its Subsidiaries taken
as a whole.
7.3 Corporate Existence; Compliance with Law. Each of the Company
and its Subsidiaries (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has the
corporate power and authority, and the legal right, to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification and (d) is in compliance with all Requirements of
Law except to the extent that the failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
7.4 Corporate Power; Authorization; Enforceable Obligations. Each
Loan Party has the corporate power and authority, and the legal right, to make,
deliver and perform the Loan Documents to which it is a party and, in the case
of each Borrower, to borrow hereunder and has taken all necessary corporate
action to authorize the borrowings on the terms and conditions of this Agreement
and any Notes and to authorize the execution, delivery and performance of the
Loan Documents to which it is a party. No consent or authorization of, filing
with, notice to or other act by or in respect of, any Governmental Authority or
any other Person is required in connection with (i) the borrowings hereunder or
with the execution, delivery, performance, validity or enforceability of the
Loan Documents or (ii) the consummation of the Exchange Offer or the Merger,
except approval of the Merger by the Safety-Kleen shareholders. This Agreement
has been, and each other Loan Document to which it is a party will be, duly
executed and delivered on behalf of each Loan
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Party which is a party thereto. This Agreement constitutes, and each other Loan
Document to which it is a party when executed and delivered will constitute, a
legal, valid and binding obligation of the Loan Party which is a party thereto
enforceable against such Loan Party in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
7.5 No Legal Bar. The execution, delivery and performance of the
Loan Documents, the issuance of Letters of Credit, the borrowings hereunder and
the use of the proceeds thereof will not violate any Requirement of Law or
Contractual Obligation of the Company or of any of its Subsidiaries and will not
result in, or require, the creation or imposition of any Lien on any of its or
their respective properties or revenues pursuant to any such Requirement of Law
or Contractual Obligation (other than the Liens created by the Security
Documents).
7.6 No Material Litigation. (a) No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of the Company, threatened by or against the Company or any of
its Subsidiaries or against any of its or their respective properties or
revenues (i) with respect to any of the Loan Documents or any of the
transactions contemplated hereby or thereby (other than as set forth on Schedule
7.6 relating to the Exchange Offer, none of which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect), or
(ii) which could reasonably be expected to have a Material Adverse Effect.
(b) Without limiting the representation made in paragraph (a) of
this Section 7.6, to the best knowledge of the Company, except as described in
the Exchange Offer Documents, no litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending or threatened against
Safety-Kleen or any of its Subsidiaries or against any of its or their
respective properties or revenues which could reasonably be expected to have a
material adverse effect on the business, operations, property, condition
(financial or otherwise) or prospects of Safety-Kleen and its Subsidiaries taken
as a whole.
7.7 No Default. Neither the Company nor any of its Subsidiaries is
in default under or with respect to any of its Contractual Obligations in any
respect which could have a Material Adverse Effect. No Default or Event of
Default has occurred and is continuing.
7.8 Ownership of Property; Liens. Each of the Company and its
Subsidiaries has good record and marketable title in fee simple to, or a valid
leasehold interest in, all its real property, and good title to, or a valid
leasehold interest in, all its other property, and none of such property is
subject to any Lien except as permitted by Section 10.3.
7.9 Intellectual Property. Each of the Company and its Subsidiaries
owns, or is licensed to use, all trademarks, tradenames, copyrights, technology,
know-how and processes necessary for the conduct of its business as currently
conducted (the "Intellectual
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Property"). Except as set forth in Schedule 7.9, no claim has been asserted and
is pending by any Person challenging or questioning the use of any such
Intellectual Property or the validity or effectiveness of any such Intellectual
Property, nor does the Company know of any valid basis for any such claim. The
use of such Intellectual Property by the Company and its Subsidiaries does not
infringe on the rights of any Person, except for such claims and infringements
that, in the aggregate, could not reasonably be expected to have a Material
Adverse Effect. An adverse determination of any or all of the matters set forth
on Schedule 7.9 could not reasonably be expected to have a Material Adverse
Effect.
7.10 No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation of the Company or any of its Subsidiaries could
reasonably be expected to have a Material Adverse Effect.
7.11 Taxes. Each of the Company and its Subsidiaries has filed or
caused to be filed all tax returns which, to the knowledge of the Company, are
required to be filed and has paid all taxes shown to be due and payable on said
returns or on any assessments made against it or any of its property and all
other taxes, fees or other charges imposed on it or any of its property by any
Governmental Authority (other than any taxes, fees or other charges, the amount
or validity of which are currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been
provided on the books of the Company or its Subsidiaries, as the case may be);
no tax Lien has been filed, and, to the knowledge of the Company, no claim is
being asserted, with respect to any such tax, fee or other charge.
7.12 Federal Regulations. No part of the proceeds of any Loans will
be used in violation of Regulation U of the Board of Governors of the Federal
Reserve System as now and from time to time hereafter in effect.
7.13 ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no Lien
in favor of the PBGC or a Plan has arisen, during such five-year period. The
present value of all accrued benefits under each Single Employer Plan (based on
those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits. Neither Borrower nor any Commonly Controlled Entity has had a complete
or partial withdrawal from any Multiemployer Plan, and neither of the Borrowers
nor any Commonly Controlled Entity would become subject to any liability under
ERISA if the Borrowers or any such Commonly Controlled Entity were to withdraw
completely from all Multiemployer Plans as of the valuation date most closely
preceding the date on which this representation is made or deemed made. No such
Multiemployer Plan is in Reorganization or Insolvent. The present value
(determined using actuarial and other assumptions which are reasonable in
respect of the benefits provided and the employees participating) of the
liability of the Borrowers and
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each Commonly Controlled Entity for post retirement benefits to be provided to
their current and former employees under Plans which are welfare benefit plans
(as defined in Section 3(1) of ERISA) does not, in the aggregate, exceed the
assets under all such Plans allocable to such benefits by an amount in excess of
$2,000,000.
7.14 Canadian Benefit and Pension Plans. The Canadian Pension Plans
are duly registered under the provisions of the ITA and any other Requirements
of Law and no event has occurred which is reasonably likely to cause the loss of
such registered status. The Canadian Pension Plans and the Canadian Benefits
Plans have been administered in accordance with the ITA and all other
Requirements of Law. All material obligations of each of the Canadian Borrower
or any Subsidiary thereof (including fiduciary and funding obligations) required
to be performed in connection with the Canadian Pension Plans have been
performed. No promises of benefit improvements under the Canadian Pension Plans
or the Canadian Benefit Plans have been made except where such improvement could
not have a Material Adverse Effect. There have been no improper withdrawals or
applications of the assets of the Canadian Pension Plans or the Canadian Benefit
Plans. As of the most current evaluation date, each of the Canadian Pension
Plans and the Canadian Benefit Plans is fully funded and there exist no going
concern unfunded actuarial liabilities or solvency deficiencies in respect of
such plans.
7.15 Investment Company Act; Other Regulations. No Loan Party is an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. No Loan
Party is subject to regulation under any Federal or State statute or regulation
(other than Regulation X of the Board of Governors of the Federal Reserve
System) which limits its ability to incur Indebtedness.
7.16 Subsidiaries. Schedule 7.16 sets forth a complete list of all
the Subsidiaries of the Company on the Closing Date after giving effect to the
consummation of the Exchange Offer.
7.17 Purpose of Loans. The proceeds of the Loans and Acceptances
shall be used (i) to finance a portion of the Safety-Kleen Acquisition and the
fees and expenses associated therewith, (ii) to purchase stock appreciation
rights from employees and directors of Safety-Kleen pursuant to Safety-Kleen's
existing stock option/purchase plans in an amount not to exceed $46,000,000,
(iii) to repay certain Indebtedness of the Borrowers outstanding on the Closing
Date, including all amounts outstanding under the Existing Credit Agreement and
(iv) on the Merger Date, to repay certain Indebtedness of Safety-Kleen required
to be repaid in connection with the Merger. The proceeds of the Loans and
Acceptances also shall be used to finance the ongoing working capital needs of
the Borrowers and their Subsidiaries in the ordinary course of business, capital
expenditures and acquisitions permitted by Section 10.8.
7.18 Environmental Matters.
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Other than exceptions to any of the following that could not, individually
or in the aggregate, reasonably be expected to give rise to a Material Adverse
Effect:
(a) The Company and each of its Subsidiaries: (i) are, and within
the period of all applicable statutes of limitation have been, in
compliance with all applicable Environmental Laws; (ii) hold all
Environmental Permits (each of which is in full force and effect) required
for any of their current or intended operations or for any property owned,
leased, or otherwise operated by any of them; (iii) are, and within the
period of all applicable statutes of limitation have been, in compliance
with all of their Environmental Permits; and (iv) reasonably believe that:
each of their Environmental Permits will be timely renewed and complied
with, without material expense; any additional Environmental Permits that
may be required of any of them will be timely obtained and complied with,
without material expense; and compliance with any Environmental Law that
is or is expected to become applicable to it will be timely attained and
maintained, without material expense.
(b) Materials of Environmental Concern have not been transported,
disposed of, emitted, discharged, or otherwise released or threatened to
be released, to or at any real property now or formerly owned, leased or
operated by the Company or any of its Subsidiaries or at any other
location, which could reasonably be expected to (i) give rise to liability
of the Company or any of its Subsidiaries under any applicable
Environmental Law, (ii) interfere with the continued operations of the
Company or any of its Subsidiaries, or (iii) impair the fair saleable
value of any real property owned or leased by the Company or any of its
Subsidiaries.
(c) There is no judicial, administrative, or arbitral proceeding
(including any notice of violation or alleged violation) under or relating
to any Environmental Law to which the Company or any of its Subsidiaries
is, or to the knowledge of the Company or any of its Subsidiaries will be,
named as a party that is pending or, to the knowledge of the Company or
any of its Subsidiaries, threatened.
(d) Neither the Company nor any of its Subsidiaries has received any
written request for information, or been notified that it is a potentially
responsible party under or relating to the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. ss.ss. 9601 et seq.,
or any similar Environmental Law, or with respect to any Materials of
Environmental Concern.
(e) Neither the Company nor any of its Subsidiaries has entered into
or agreed to any consent decree, order, or settlement or other agreement,
nor is subject to any judgment, decree, or order or other agreement, in
any judicial, administrative, arbitral, or other forum, relating to
compliance with or liability under any Environmental Law.
(f) Neither the Company nor any of its Subsidiaries has assumed or
retained, by contract or operation of law, any liabilities of any kind,
fixed or contingent,
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known or unknown, under any Environmental Law or with respect to any
Materials of Environmental Concern.
7.19 Accuracy of Information, etc. No statement or information
contained in this Agreement, any other Loan Document or any other document,
certificate or statement furnished to the Administrative Agents or the Lenders
or any of them, by or on behalf of any Loan Party for use in connection with the
transactions contemplated by this Agreement or the other Loan Documents,
contained as of the date such statement, information, document or certificate
was so furnished, any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements contained herein or
therein not misleading. The projections and pro forma financial information
contained in the materials referenced above are based upon good faith estimates
and assumptions believed by management of such Loan Party to be reasonable at
the time made, it being recognized by the Lenders that such financial
information as it relates to future events is not to be viewed as fact and that
actual results during the period or periods covered by such financial
information may differ from the projected results set forth therein by a
material amount. The Company has provided to the General Administrative Agent a
true and complete copy of the Exchange Offer Documents and the Merger Agreement
(including all exhibits and schedules thereto and financial statements referred
to therein). As of the date hereof, the representations and warranties contained
in the Merger Agreement are true and correct in all material respects. There is
no fact known to any Loan Party that could reasonably be expected to have a
Material Adverse Effect that has not been expressly disclosed herein, in the
other Loan Documents or in any other documents, certificates and statements
furnished to the Administrative Agents and the Lenders for use in connection
with the transactions contemplated hereby and by the other Loan Documents.
7.20 Security Documents. (a) The Guarantee and Collateral Agreement
is effective to create in favor of the General Administrative Agent, for the
benefit of the Lenders, a legal, valid and enforceable security interest in the
Collateral described therein and proceeds thereof. In the case of the Pledged
Stock described in the Guarantee and Collateral Agreement, when stock
certificates representing such Pledged Stock are delivered to the General
Administrative Agent, and in the case of the other Collateral described in the
Guarantee and Collateral Agreement, when financing statements in appropriate
form are filed in the offices specified on Schedule 3 to the Guarantee and
Collateral Agreement, the Guarantee and Collateral Agreement shall constitute a
fully perfected Lien on, and security interest in, all right, title and interest
of the Loan Parties in such Collateral and the proceeds thereof, as security for
the Obligations (as defined in the Guarantee and Collateral Agreement), in each
case prior and superior in right to any other Person other than as permitted by
the Guarantee and Collateral Agreement.
(b) The Acquisition Corp. Pledge Agreement is effective to create in
favor of the General Administrative Agent, for the benefit of the Lenders, a
legal, valid and enforceable security interest in the Collateral described
therein and proceeds thereof. When the actions described in Section 3(a) or
3(b), as the case may be, of the Acquisition Corp. Pledge Agreement have been
taken, the Acquisition Corp. Pledge Agreement shall constitute a fully perfected
Lien on, and security interest in, all right, title and interest of the Loan
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Parties in such Collateral and the proceeds thereof, as security for the
Obligations (as defined in the Acquisition Corp. Pledge Agreement), in each case
prior and superior in right to any other Person other than as permitted by the
Acquisition Corp. Pledge Agreement.
(c) Each of the Canadian Collateral Documents is effective to create
in favor of the Canadian Administrative Agent, for the benefit of the Canadian
Lenders, a legal, valid and enforceable security interest in the Collateral
described therein and proceeds thereof. Upon completion of the actions set forth
on Schedule 7.20, the Canadian Collateral Documents shall constitute fully
perfected Liens on, and security interests in, all right, title and interest of
the Loan Parties in such Collateral and the proceeds thereof, as security for
the Canadian Borrower Obligations, in each case prior and superior in right to
any other Person other than as permitted by the Canadian Collateral Documents.
(d) Each of the Mortgages is effective to create in favor of the
General Administrative Agent, for the benefit of the Lenders, a legal, valid and
enforceable Lien on the mortgaged properties described therein and proceeds
thereof, and when the Mortgages are filed in the offices specified on Schedule
3, each such Mortgage shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the Loan Parties in such mortgaged
properties and the proceeds thereof, as security for the Obligations (as defined
in the relevant Mortgage), in each case prior and superior in right to any other
Person.
7.21 Solvency. Each Loan Party is, and after giving effect to the
Safety-Kleen Acquisition and the incurrence of all Indebtedness and obligations
being incurred in connection herewith and therewith will be and will continue to
be, Solvent.
7.22 Regulation H. No Mortgage encumbers improved real property
which is located in an area that has been identified by the Secretary of Housing
and Urban Development as an area having special flood hazards and in which flood
insurance has been made available under the National Flood Insurance Act of
1968.
7.23 Corsan Trucking, Inc.. As of the date hereof, Corsan Trucking,
Inc., a wholly owned Subsidiary of the Company, does not have any assets and
does not conduct any operations.
SECTION 8. CONDITIONS PRECEDENT
8.1 Conditions to Initial Extensions of Credit. The agreement of
each Lender to make the initial Extension of Credit requested to be made by it
is subject to the satisfaction, immediately prior to or concurrently with the
making of such Extension of Credit on the Closing Date, of the following
conditions precedent:
(a) Loan Documents. The General Administrative Agent shall have
received (i) this Agreement, executed and delivered by a duly authorized
officer of each Borrower, with a counterpart for each Lender, (ii) the
Guarantee and Collateral
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Agreement, executed and delivered by a duly authorized officer of the
parties thereto, with a counterpart or a conformed copy for each Lender,
(iii) the Acquisition Corp. Pledge Agreement and the Exchange Agent Agency
Agreement, each executed and delivered by a duly authorized officer of the
parties thereto, with a counterpart or a conformed copy for each Lender,
(iv) each of the Mortgage Amendments, each executed and delivered by a
duly authorized officer of the party thereto, with a counterpart or a
conformed copy for each Lender, (v) each Canadian Collateral Document
listed on Schedule 4, executed and delivered by a duly authorized officer
of the parties thereto, with a counterpart or a conformed copy for each
Lender and (vi) the Intercreditor Agreement, executed and delivered by a
duly authorized officer of the parties thereto.
(b) Payment of Indebtedness under Existing Credit Agreement and
Termination of Commitments. The Commitments (as defined in the Existing
Credit Agreement) under the Existing Credit Agreement shall have been
terminated and all Indebtedness of the Borrowers thereunder, including all
principal, interest and fees accrued to the Closing Date (including, but
not limited to, any prepayment premium payable in connection with the
prepayment of the Tranche B Term Loans and Tranche C Term Loans (each as
defined in the Existing Credit Agreement)), but excluding reimbursement
obligations in respect of the Existing Acceptances and the Existing Letter
of Credit, shall have been repaid in full. The indemnity agreement
described in the second sentence of Section 5.1(a) shall have been
executed and delivered by The Toronto-Dominion Bank and the Existing
Acceptance Lenders. All reimbursement obligations in respect of the
Specified Acceptances shall have been paid in full and the Specified
Acceptances shall have been cancelled.
(c) Exchange Offer, Merger, etc. The following transactions shall
have been consummated (and the General Administrative Agent shall have
received a certificate of the Company to such effect, accompanied by
copies of any documentary evidence thereof reasonably requested by the
General Administrative Agent):
(i) all conditions precedent to the consummation of the
Exchange Offer set forth in the Exchange Offer Documents shall have
been satisfied or waived with the Required Lenders' consent and the
number of Target Shares being validly tendered for exchange in the
Exchange Offer and not properly withdrawn prior to the expiration of
the Exchange Offer, together with the Target Shares owned by
Holdings and its Subsidiaries, shall represent no less than the
minimum number of Target Shares (the "Minimum Number of Shares"),
determined on a fully diluted basis after giving effect to the
exercise of any uncancelled warrants, rights, options, conversion
privileges or similar rights (other than the Target Rights),
necessary under Wisconsin law and the articles of incorporation and
bylaws of Safety-Kleen to have sufficient voting power in
Safety-Kleen to approve the Merger independently of the votes of any
other Safety-Kleen shareholders;
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(ii) since the date of this Agreement, the terms of the
Exchange Offer shall not have been amended, waived or modified as to
price, consideration, conditions, termination or expiration or in
any other material respect without the prior approval of the General
Administrative Agent;
(iii) there shall be no legal impediments to the Merger that
are not within the control of Holdings to overcome;
(iv) all actions shall have been taken so that the provisions
of Section 180.1141 of the Wisconsin Business Corporation Law shall
be inapplicable to the Exchange Offer and the Merger, and no other
"fair price", "moratorium", "business combination", "control share
acquisition" or other form of anti-takeover statute, regulation,
charter or by-law provision, is or shall become applicable which
would cause or could reasonably be expected to cause any material
adverse consequences to Acquisition Corp., Holdings, the Borrowers,
Safety-Kleen or the Exchange Offer or Merger;
(v) Safety-Kleen and its Board of Directors shall have taken
all necessary action to amend the Rights Agreement, dated as of
November 9, 1988 (as amended, the "Rights Agreement") to provide for
the redemption or annulment or inapplicability (without any
substantial cost) of all interests outstanding under or issued
pursuant to the Rights Agreement and to otherwise avoid the
occurrence of any material adverse consequences to Acquisition Corp.
or Safety-Kleen as a consequence of the Exchange Offer or the
Merger;
(vi) Holdings, Acquisition Corp. and Safety-Kleen shall have
entered into a definitive Merger Agreement and related documentation
providing for the Merger in form and substance satisfactory to the
General Administrative Agent;
(vii) all regulatory approvals (including, without limitation,
all such approvals with respect to antitrust matters) necessary to
consummate the Exchange Offer shall have been obtained, all
applicable waiting periods shall have expired and the General
Administrative Agent shall be satisfied that all material regulatory
approvals necessary to consummate the Merger have been obtained or
can be timely obtained;
(viii) there shall be no order, injunction or restraining
order in effect or known by the Company to be threatened which would
prevent or delay the consummation of, or impose material adverse
conditions on, the Exchange Offer or the Merger. There shall not
exist any pending or threatened litigation which, in the good faith
judgment of the General Administrative Agent, could reasonably be
expected to have a Material Adverse Effect or a material adverse
effect on the ability of Holdings or Acquisition Corp. to consummate
the Exchange Offer or on the ability of Holdings or Acquisition
Corp. to consummate the Merger or to perform any material obligation
contemplated
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hereby or thereby or on the General Administrative Agent's and
Lenders' rights and remedies;
(ix) neither Safety-Kleen nor any of its subsidiaries shall
have taken, or be taking, any action (including any reorganization,
recapitalization, asset sale, stock purchase or distribution to its
stockholders) that, in the good faith judgment of the General
Administrative Agent, could reasonably be expected to have a
material adverse effect on the condition (financial or otherwise),
business, operations, assets or prospects of Safety-Kleen or its
subsidiaries or on the consummation of the Exchange Offer or the
Merger. In the good faith judgment of the General Administrative
Agent, no material adverse change shall have otherwise occurred in
the condition (financial or otherwise), business, operations, assets
or prospects of (A) Holdings and its Subsidiaries since the date of
the audited financial statements of Holdings dated August 31, 1997
or (B) Safety-Kleen and its Subsidiaries since the date of the
audited financial statements of Safety-Kleen dated December 31,
1996; and
(x) the capital and legal structure of each Loan Party after
the Safety-Kleen Acquisition as proposed to be consummated pursuant
to the Exchange Offer Documentation and the Merger Agreement shall
be satisfactory in all respects; and
(xi) all actions required under Safety-Kleen's existing credit
facility shall have been taken such that the consummation of the
Exchange Offer does not constitute a default, or an event of
mandatory prepayment, thereunder.
(d) Regulations of Board; Forms G-3 and U-1. The Lenders shall be
satisfied that the Exchange Offer and the financing thereof comply with
Regulation T, U and X of the Board. Each Lender shall have received a duly
completed and executed Form FR G-3 or Form FR U-1, as applicable, of the
Board, demonstrating such compliance.
(e) Pledged Stock; Stock Powers. The General Administrative Agent or
the Exchange Agent shall have received the certificates representing the
Target Shares pledged pursuant to the Acquisition Corp. Pledge Agreement
(other than such Shares constituting Book-Entry Shares (as defined in the
Acquisition Corp. Pledge Agreement)), together with an undated stock power
for each such certificate executed in blank by a duly authorized officer
of Acquisition Corp., and with respect to Target Shares consisting of
Book-Entry Shares, evidence that all actions described in Section 3(b) of
the Acquisition Corp. Pledge Agreement which are necessary to create and
perfect the security interests pursuant to the Acquisition Corp. Pledge
Agreement in accordance with Article 8 of the Uniform Commercial Code of
the State of New York have been taken. The shares pledged on the Closing
Date pursuant to the Acquisition Corp. Pledge Agreement shall constitute
all Shares owned by Acquisition Corp. or any of its affiliates, whether
acquired in the Exchange Offer or otherwise.
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(f) Exchange Offer Documents; Merger Agreement. The General
Administrative Agent shall have received certified true copies of the
Exchange Offer Documents and the Merger Agreement, in each case as in
effect on the Closing Date.
(g) Pro Forma Balance Sheet; Financial Statements. The Lenders shall
have received (i) the Pro Forma Balance Sheet, (ii) the audited
consolidated financial statements described in Section 7.1 and (iii)
unaudited interim consolidated financial statements of Holdings for the
most recent fiscal quarterly period ended subsequent to the date of the
latest applicable financial statement delivered pursuant to clause (ii) of
this paragraph as to which such financial statements have been made
publicly available.
(h) Business Plan. The Lenders shall have received a business plan
for the Company and its Subsidiaries (including Safety-Kleen) for the 1998
fiscal year and a written analysis of the business and prospects of the
Company and its Subsidiaries for the period from the Closing Date through
the final maturity of the Term Loans, in each case as set forth in the
Confidential Information Memorandum dated February 1998.
(i) Environmental Reports. The General Administrative Agent shall
have received reports prepared by Dames & Moore with respect to
environmental matters relating to Safety-Kleen, in form and substance
satisfactory to the Lenders.
(j) Closing Certificate. The Administrative Agents shall have
received, with a counterpart for each Lender, a certificate of each Loan
Party, dated the Closing Date, substantially in the form of Exhibit I,
with appropriate insertions and attachments, satisfactory in form and
substance to the Administrative Agents, executed by the President or any
Vice President and the Secretary or any Assistant Secretary of such party.
(k) Fees. The Administrative Agents and the Arranger shall have
received the fees to be received on the Closing Date referred to in
Sections 3.3 and 6.1.
(l) Legal Opinions. The Administrative Agents shall have received,
with a counterpart for each Lender, the following executed legal opinions:
(i) the executed legal opinion of Katten, Muchin & Zavis, U.S.
counsel to the Company and the other Loan Parties, in form and
substance reasonably satisfactory to the General Administrative
Agent;
(ii) the executed legal opinion of Ivan R. Cairns, general
counsel to Laidlaw, the Canadian Borrower and its Subsidiaries, in
form and substance reasonably satisfactory to the General
Administrative Agent;
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(iii) the executed legal opinion of Tory Tory DesLauriers &
Binnington, Canadian counsel to the Lenders, in form and substance
reasonably satisfactory to the General Administrative Agent; and
(iv) the executed legal opinion of South Carolina counsel to
the Company and the other Loan Parties, in form and substance
reasonably satisfactory to the General Administrative Agent.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agents
may reasonably require.
(m) Validity of Liens. The Security Documents shall be effective to
create in favor of the General Administrative Agent or Canadian
Administrative Agent, as the case may be, a legal, valid and enforceable
first (except for prior Liens not prohibited by Section 10.3) security
interest in and lien upon the Collateral. The General Administrative Agent
shall have received evidence in form and substance satisfactory to it that
all filings, recordings, registrations and other actions, including,
without limitation, the filing of duly executed financing statements on
form UCC-1, necessary or, in the opinion of the General Administrative
Agent, desirable to perfect the Liens created by the Security Documents
shall have been completed.
(n) Title Insurance Policy. The General Administrative Agent shall
have received in respect of each parcel covered by each Existing Mortgage
a mortgagee's title policy (or policies) or marked up unconditional binder
for such insurance dated the Closing Date. Each such policy shall (i) be
in an amount satisfactory to the General Administrative Agent; (ii) be
issued at ordinary rates; (iii) insure that the Mortgage insured thereby
creates a valid first Lien on such parcel free and clear of all defects
and encumbrances, except such as may be approved by the General
Administrative Agent; (iv) name the General Administrative Agent for the
benefit of the Lenders as the insured thereunder; (v) be in the form of
ALTA Loan Policy - 1970 (Amended 10/17/70); (vi) contain such endorsements
and affirmative coverage as the General Administrative Agent may request
and (vii) be issued by title companies satisfactory to the General
Administrative Agent (including any such title companies acting as
co-insurers or reinsurers, at the option of the General Administrative
Agent). The General Administrative Agent shall have received evidence
satisfactory to it that all premiums in respect of each such policy, and
all charges for mortgage recording tax, if any, have been paid.
(o) Copies of Documents. The General Administrative Agent shall have
received a copy of all recorded documents referred to, or listed as
exceptions to title in, the title policy or policies referred to in
Section 8.1(n) and a copy, certified by such parties as the General
Administrative Agent may deem appropriate, of all other documents
affecting the property covered by each Mortgage.
(p) Lien Searches. The General Administrative Agent shall have
received the results of a recent search by a Person satisfactory to the
General Administrative
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Agent, of the Uniform Commercial Code, judgement and tax lien filings
which may have been filed with respect to personal property of the Loan
Parties, and the results of such search shall be satisfactory to the
General Administrative Agent.
(q) Insurance. The General Administrative Agent shall have received
evidence in form and substance satisfactory to it that all of the
requirements of Section 9.5 of this Agreement and Section 5.3 of the
Guarantee and Collateral Agreement shall have been satisfied.
8.2 Conditions to Extensions of Credit made on the Merger Date. The
agreement of each Lender to make Extensions of Credit on the Merger Date
requested to be made by it is subject to the satisfaction, immediately prior to
or concurrently with the making of such Extension of Credit on the Merger Date,
of the following conditions precedent:
(a) Merger Agreement. (i) The terms and conditions of the
Merger Agreement shall not have been amended, waived or modified as
to price, consideration, conditions, termination or expiration or in
any other material respect without the prior approval of the General
Administrative Agent and the Required Lenders;
(ii) the Merger shall have been consummated in
accordance with the Merger Agreement and applicable law; and
(iii) all conditions precedent to the consummation of
the Merger shall have been satisfied or waived with the
Required Lenders' consent.
(b) Solvency Certificate. The General Administrative Agent
shall have received a solvency certificate of the Company, in form,
scope and substance satisfactory to the General Administrative Agent
and its legal counsel.
(c) Collateral. All actions required by Section 9.10 in
respect of all Subsidiaries and assets acquired on the Merger Date
(including delivery of legal opinions with respect thereto as
provided in Section 9.10) shall have been taken so that on the
Merger Date the General Administrative Agent shall have a duly
perfected first priority security interest in all such assets.
(d) Legal Opinions. The Administrative Agents shall have
received, with a counterpart for each Lender, the executed legal
opinion of Katten, Muchin & Zavis, U.S. counsel to the Company and
the other Loan Parties, in form and substance reasonably
satisfactory to the General Administrative Agent. Such legal opinion
shall cover such other matters incident to the transactions
contemplated by this Agreement as the Administrative Agents may
reasonably require.
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(e) Lien Searches. The General Administrative Agent shall have
received the results of a recent search by a Person satisfactory to
the General Administrative Agent, of the Uniform Commercial Code,
judgement and tax lien filings which may have been filed with
respect to personal property of Safety-Kleen and its Subsidiaries,
and the results of such search shall be satisfactory to the General
Administrative Agent.
(f) Insurance. The General Administrative Agent shall have
received evidence in form and substance satisfactory to it that all
of the requirements of Section 9.5 of this Agreement and Section 5.3
of the Guarantee and Collateral Agreement shall have been satisfied
with respect to the Surviving Corporation and its Subsidiaries.
(g) all outstanding indebtedness of Safety-Kleen and its
subsidiaries (other than the indebtedness set forth on Schedule
8.2(g) hereto) shall have been repaid in full.
8.3 Conditions to Extension of Credit. The agreement of each Lender
to make any Extension of Credit requested to be made by it on any date
(including, without limitation, its initial Extension of Credit) is subject to
the satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the representations and
warranties made by any Loan Party in or pursuant to the Loan Documents
shall be true and correct in all material respects on and as of such date
as if made on and as of such date.
(b) No Default. No Default or Event of Default shall have occurred
and be continuing on such date or after giving effect to the extensions of
credit requested to be made on such date.
(c) Additional Matters. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement, the other Loan Documents and
the Merger Agreement shall be satisfactory in form and substance to the
General Administrative Agent, and the General Administrative Agent shall
have received such other documents and legal opinions in respect of any
aspect or consequence of the transactions contemplated hereby or thereby
as it shall reasonably request.
Each request by a Borrower for an Extension of Credit hereunder shall constitute
a representation and warranty by each Borrower as of the date thereof that the
conditions contained in this subsection have been satisfied.
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SECTION 9. AFFIRMATIVE COVENANTS
The Company hereby agrees that, so long as the Commitments remain in
effect, any Loan, Reimbursement Obligation, Acceptance Reimbursement Obligation,
Acceptance Note or Letter of Credit remains outstanding or any amount is owing
to any Lender, the General Administrative Agent or the Canadian Administrative
Agent hereunder or under any other Loan Document, the Company shall and (except
in the case of delivery of financial information, reports and notices) shall
cause each of its Subsidiaries to:
9.1 Financial Statements. Furnish to the General Administrative
Agent, the Canadian Administrative Agent and each Lender:
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of Holdings, a copy of the consolidated and
consolidating balance sheets of Holdings and its consolidated Subsidiaries
as at the end of such year and the related consolidated and consolidating
statements of income and retained earnings and of cash flows for such
year, setting forth in each case in comparative form the figures for the
previous year, reported on (in the case of such consolidated statements
and balance sheet) without a "going concern" or like qualification or
exception, or qualification arising out of the scope of the audit, by
Coopers & Lybrand or other independent certified public accountants of
nationally recognized standing, and certified (in the case of such
consolidating statements and balance sheet) by a Responsible Officer as
being fairly stated in all material respects; and
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal
year of Holdings, the unaudited consolidated and consolidating balance
sheets of Holdings and its consolidated Subsidiaries as at the end of such
quarter and the related unaudited consolidated and consolidating
statements of income and retained earnings and of cash flows of Holdings
and its consolidated Subsidiaries for such quarter and the portion of the
fiscal year through the end of such quarter, setting forth in each case in
comparative form the figures for the previous year, certified by a
Responsible Officer as being fairly stated in all material respects
(subject to normal year-end audit adjustments);
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
9.2 Certificates; Other Information. Furnish to each Lender:
(a) concurrently with the delivery of the financial statements
referred to in Section 9.1(a), a certificate of the independent certified
public accountants reporting on such financial statements stating that in
making the examination necessary therefor
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no knowledge was obtained of any Default or Event of Default, except as
specified in such certificate;
(b) concurrently with the delivery of the financial statements
referred to in Sections 9.1(a) and (b), (i) a certificate of a Responsible
Officer stating that, to the best of such Responsible Officer's knowledge,
during such period the Company has observed or performed all of its
covenants and other agreements, and satisfied every condition, contained
in this Agreement and the other Loan Documents to be observed, performed
or satisfied by it, and that such Responsible Officer has obtained no
knowledge of any Default or Event of Default except as specified in such
certificate and (ii) a compliance certificate of a Responsible Officer
containing all information necessary, or reasonably requested by the
General Administrative Agent, for determining compliance by the Company
and its Subsidiaries with the provisions of Section 10 of this Agreement
as of the last day of the fiscal quarter or fiscal year of the Company, as
the case may be;
(c) prior to the end of each fiscal year of the Company, a copy of
the projections by the Company of the operating budget and cash flow
budget of the Company and its Subsidiaries for the succeeding fiscal year,
such projections to be accompanied by a certificate of a Responsible
Officer to the effect that such projections have been prepared on the
basis of sound financial planning practice and that such Responsible
Officer has no reason to believe they are incorrect or misleading in any
material respect;
(d) within five days after the same are sent, copies of all
financial statements and reports which the Company or Holdings sends to
its stockholders, and within five days after the same are filed, copies of
all financial statements and reports which the Company or Holdings may
make to, or file with, the Securities and Exchange Commission or any
successor or analogous Governmental Authority (including, but not limited
to, each Exchange Offer Document); and
(e) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
9.3 Payment of Obligations. Pay, discharge or otherwise satisfy at
or before maturity or before they become delinquent, as the case may be, all its
obligations of whatever nature, except where the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP with respect thereto have been provided on the books of
the Company or its Subsidiaries, as the case may be.
9.4 Conduct of Business and Maintenance of Existence. Continue to
engage in business of the same general type as now conducted by it and preserve,
renew and keep in full force and effect its corporate existence and take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business except as otherwise permitted
pursuant to Section 10.5; comply with all Contractual
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Obligations and Requirements of Law except to the extent that failure to comply
therewith could not, in the aggregate, have a Material Adverse Effect.
9.5 Maintenance of Property; Insurance. Keep all property useful and
necessary in its business in good working order and condition; maintain with
financially sound and reputable insurance companies insurance on all its
property in at least such amounts and against at least such risks as are usually
insured against in the same general area by companies engaged in the same or a
similar business (including, but not limited to, general liability insurance in
an amount of at least $100,000,000 and a deductible of not more than $5,000,000
per occurrence).
9.6 Inspection of Property; Books and Records; Discussions. Keep
proper books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and permit
representatives of the Administrative Agents (or, with the coordination of the
Administrative Agents, the Lenders) to visit and inspect any of its properties
and examine and make abstracts from any of its books and records at any
reasonable time and as often as may reasonably be desired and to discuss the
business, operations, properties and financial and other condition of the
Company and its Subsidiaries with officers and employees of the Company and its
Subsidiaries and with its independent certified public accountants.
9.7 Notices. Promptly give notice to the Administrative Agents and
each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Company or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between the
Company or any of its Subsidiaries and any Governmental Authority, which
in either case, if not cured or if adversely determined, as the case may
be, could have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Company or any of its
Subsidiaries in which the amount involved is $5,000,000 or more and not
covered by insurance or in which injunctive or similar relief is sought;
(d) the following events, as soon as possible and in any event
within 30 days after the Company knows or has reason to know thereof: (i)
the occurrence or expected occurrence of any Reportable Event with respect
to any Plan, a failure to make any required contribution to a Plan, the
creation of any Lien in favor of the PBGC or a Plan or any withdrawal
from, or the termination, Reorganization or Insolvency of, any
Multiemployer Plan or (ii) the institution of proceedings or the taking of
any other action by the PBGC or the Company or any Commonly Controlled
Entity or any Multiemployer Plan with respect to the withdrawal from, or
the terminating, Reorganization or Insolvency of, any Plan;
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(e) the occurrence or expected occurrence of any event that is
reasonably likely to result in the Company or any of its Subsidiaries
being unable to obtain, renew, or comply with any Environmental Permit the
absence of which could have a Material Adverse Effect, or being unable to
comply with any Environmental Law in a manner that could have a Material
Adverse Effect; and
(f) any material adverse change in the business, operations,
property, condition (financial or otherwise) or prospects of the Company
and its Subsidiaries taken as a whole.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Company proposes to take with respect thereto.
9.8 Environmental Laws. (a) (i) Comply with all Environmental Laws
applicable to it, and obtain, comply with and maintain any and all Environmental
Permits necessary for its operations as conducted and as planned; and (ii) take
all reasonable efforts to ensure that all of its tenants, subtenants,
contractors, subcontractors, and invitees comply with all Environmental Laws,
and obtain, comply with and maintain any and all Environmental Permits,
applicable to any of them insofar as any failure to so comply, obtain or
maintain reasonably could adversely affect the Company or any Subsidiary. For
purposes of this Section 9.8(a), noncompliance by the Company and any of its
Subsidiaries with any applicable Environmental Law or Environmental Permit shall
be deemed not to constitute a breach of this covenant; provided that, upon
learning of any actual or suspected noncompliance, the Company and its
Subsidiaries shall promptly undertake all reasonable efforts to achieve
compliance; and provided further that, in any case, such non-compliance, and any
other noncompliance with any Environmental Law, individually or in the
aggregate, could not reasonably be expected to give rise to a Material Adverse
Effect.
(b) Promptly comply with all orders and directives of all
Governmental Authorities regarding Environmental Laws, other than such orders
and directives as to which an appeal has been timely and properly taken in good
faith and provided that the pendency of any and all such appeals does not give
rise to a Material Adverse Effect.
(c) Prior to acquiring any ownership or leasehold interest in real
property for which a permit would be required for operation as a hazardous waste
facility, or any other real property or other interest in any real property that
could reasonably be expected to give rise to the Company or any of its
Subsidiaries being found to be subject to potential liability under any
Environmental Law: (i) obtain a written report by a reputable environmental
consultant of the environmental consultant's assessment of the presence or
potential presence of significant levels of any Materials of Environmental
Concern on, under, in, or about the property, or of other conditions or
operations that could give rise to potentially significant liability under or
violations of Environmental Law relating to such acquisition; and (ii) inform
the General Administrative Agent of its plans to acquire such interest in real
property and, upon the General Administrative Agent's request, afford the
General Administrative Agent a reasonable opportunity to review and discuss the
contents of such report with the
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environmental consultant who prepared it and a knowledgeable representative of
the Company.
(d) Promptly upon the General Administrative Agent's request if
there has been an Event of Default which has not been fully and timely cured,
permit an environmental consultant whom the General Administrative Agent in its
discretion designates to perform an environmental assessment (including, without
limitation: reviewing documents; interviewing knowledgeable persons; and
sampling and analyzing soil, air, surface water, groundwater, building
materials, and/or other media or substances) in or about property owned or
leased by the Company or any of its Subsidiaries, or on which operations of the
Company or any of its Subsidiaries otherwise take place. Such environmental
assessment shall be in form, scope, and substance satisfactory to the General
Administrative Agent. The Company and its Subsidiaries shall cooperate fully in
the conduct of such environmental assessment, and shall pay the costs of such
environmental assessment immediately upon written demand by the General
Administrative Agent. Pursuant to this Section 9.8(d), the General
Administrative Agent shall have the right, but shall not have any duty, to
request and/or obtain any such environmental assessment.
9.9 Further Assurances. Upon the request of the General
Administrative Agent, promptly perform or cause to be performed any and all acts
and execute or cause to be executed any and all documents (including, without
limitation, financing statements and continuation statements) for filing under
the provisions of the Uniform Commercial Code or any other Requirement of Law
which are necessary or advisable to maintain in favor of the General
Administrative Agent or the Canadian Administrative Agent, as the case may be,
for the benefit of the Lenders, Liens on the Collateral that are duly perfected
in accordance with all applicable Requirements of Law.
9.10 Additional Collateral. (a) With respect to any assets acquired
after the Closing Date by the Company or any of its Subsidiaries (other than
each of ECDC East, L.C., ECDC Services, L.C., Osco Treatment Systems of
Mississippi, Inc., USPCI of Mississippi, Inc., so long as such entity is not,
directly or indirectly, a wholly-owned subsidiary of the Company) that are
intended to be subject to the Lien created by any of the Security Documents but
which are not so subject (other than any assets described in paragraph (b) or
(c) of this Section), promptly (and in any event within 30 days after the
acquisition thereof): (i) execute and deliver to the General Administrative
Agent or the Canadian Administrative Agent, as the case may be, such amendments
to the relevant Security Documents or such other documents as the General
Administrative Agent shall deem necessary or advisable to grant to the General
Administrative Agent or the Canadian Administrative Agent, as the case may be,
for the benefit of the Lenders, a Lien on such assets, (ii) take all actions
necessary or advisable to cause such Lien to be duly perfected in accordance
with all applicable Requirements of Law, including, without limitation, the
filing of financing statements in such jurisdictions as may be requested by the
General Administrative Agent or the Canadian Administrative Agent, as the case
may be, and (iii) if requested by the General Administrative Agent, deliver to
the General Administrative Agent legal opinions relating to the matters
described in clauses (i) and (ii) immediately preceding,
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which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the General Administrative Agent.
(b) With respect to any Person (other than a Subsidiary of the
Canadian Borrower) that, subsequent to the Closing Date, becomes a Subsidiary,
including, without limitation on the Merger Date, Safety-Kleen and its
Subsidiaries, promptly upon the request of the General Administrative Agent: (i)
execute and deliver to the General Administrative Agent, for the benefit of the
Lenders, a new pledge agreement or such amendments to the Guarantee and
Collateral Agreement as the General Administrative Agent shall deem necessary or
advisable to grant to the General Administrative Agent, for the benefit of the
Lenders, a Lien on the Capital Stock of such Subsidiary which is owned by the
Company or any of its Subsidiaries, (ii) deliver to the General Administrative
Agent the certificates representing such Capital Stock, together with undated
stock powers executed and delivered in blank by a duly authorized officer of the
Company or such Subsidiary, as the case may be, (iii) cause such new Subsidiary
(A) to become a party to the Guarantee and Collateral Agreement, and (B) to take
all actions necessary or advisable to cause the Lien created by the Guarantee
and Collateral Agreement to be duly perfected in accordance with all applicable
Requirements of Law, including, without limitation, the filing of financing
statements in such jurisdictions as may be requested by the General
Administrative Agent and (iv) if requested by the General Administrative Agent,
deliver to the General Administrative Agent legal opinions relating to the
matters described in clauses (i), (ii) and (iii) immediately preceding, which
opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the General Administrative Agent.
(c) With respect to any Person that, subsequent to the Closing Date,
becomes a Subsidiary of the Canadian Borrower, promptly upon the request of the
General Administrative Agent: (i) execute and deliver to the Canadian
Administrative Agent a new pledge agreement or such amendments to the Canadian
Collateral Documents as the General Administrative Agent shall deem necessary or
advisable to grant to the Canadian Administrative Agent, for the benefit of the
Canadian Lenders, a Lien on the Capital Stock of such Subsidiary which is owned
by the Canadian Borrower or any of its Subsidiaries, (ii) deliver to the
Canadian Administrative Agent any certificates representing such Capital Stock,
together with undated stock powers executed and delivered in blank by a duly
authorized officer of the Canadian Borrower or such Subsidiary, as the case may
be, and take or cause to be taken all such other actions under the law of the
jurisdiction of organization of such Subsidiary as may be necessary or advisable
to perfect such Lien on such Capital Stock, (iii) cause such Subsidiary to
become a guarantor under the Canadian Collateral Documents and to grant security
interests in its personal property assets and (iv) if requested by the General
Administrative Agent, deliver to the General Administrative Agent legal opinions
relating to the matters described in clauses (i), (ii) and (iii) immediately
preceding, which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the General Administrative Agent.
(d) With respect to any parcel of real property having a book value
in excess of $1,000,000 acquired by the Company or any of its Subsidiaries after
the Closing Date (including any such real property owned by any Person when it
becomes a Subsidiary), if
<PAGE> 87
87
requested by the General Administrative Agent, promptly provide to the General
Administrative Agent a mortgage on such property, together with such title
insurance policies, surveys and legal opinions related thereto as shall be
reasonably requested by the General Administrative Agent.
9.11 Canadian Benefit and Pension Plans. (a) For each existing
Canadian Pension Plan and Canadian Benefit Plan and for any Canadian Pension
Plan or Canadian Benefit Plan hereafter adopted, the Canadian Borrower and its
Subsidiaries shall in a timely fashion perform all obligations (including
fiduciary, funding, investment and administration obligations) required to be
performed in connection with such plan and the funding media therefor in
accordance with the terms of such plan and all Requirements of Law.
(b) Each of the Canadian Borrower and its Subsidiaries shall deliver
to the General Administrative Agent (A) if requested by the Canadian
Administrative Agent, acting reasonably, promptly after the filing thereof by
the Canadian Borrower or such Subsidiary with any applicable Governmental
Authority, copies of each annual and other return, report or valuation with
respect to each Canadian Pension Plan, copies of any actuarial report with
respect to each Canadian Pension Plan (whether or not required by any
Governmental Authority) and (B) promptly after receipt thereof, a copy of any
direction, notice or other communication (i) in respect of any breach of
Applicable Law, (ii) which would have the effect of increasing the funding
obligation in respect of each such plan, or (iii) which could result in the
imposition of any Lien on any of the properties or assets of the Canadian
Borrower or such Subsidiary, and any order or ruling that the Canadian Borrower
or such Subsidiary may receive from any applicable Governmental Authority with
respect to any Canadian Pension Plan.
9.12 Interest Rate Protection. Within 90 days after the Closing
Date, obtain interest rate protection for a period through March 31, 2000 for a
notional amount at least equal to 40% of Consolidated Total Funded Debt that
bears interest at a floating rate on terms and conditions satisfactory to the
General Administrative Agent.
9.13 Consummation of Merger. As promptly as practicable, but in any
event within 60 days after the Closing Date, consummate the Merger in accordance
with the terms of the Merger Agreement.
9.14 Pledge Agreement Supplement. The Company shall cause
Acquisition Corp. to deliver to the General Administrative Agent on the date of
purchase an executed Pledge Agreement Supplement, substantially in the form of
Exhibit A to the Acquisition Corp. Pledge Agreement (a "Pledge Agreement
Supplement"), covering any Additional Pledged Stock (as defined in the
Acquisition Corp. Pledge Agreement) purchased by Acquisition Corp., together
with the stock certificates representing such Additional Pledged Stock and
appropriate undated stock powers duly executed in blank for each such stock
certificate.
<PAGE> 88
88
SECTION 10. NEGATIVE COVENANTS
The Company hereby agrees that, so long as the Commitments remain in
effect, any Loan, Reimbursement Obligation, Acceptance Reimbursement Obligation,
Acceptance Note or Letter of Credit remains outstanding or any amount is owing
to any Lender or either Administrative Agent hereunder or under any other Loan
Document, the Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly:
10.1 Financial Condition Covenants.
(a) Consolidated Total Leverage Ratio. Permit the Consolidated Total
Leverage Ratio as at the last day of any fiscal quarter of the Company ending
during any fiscal year set forth below, commencing with the fiscal quarter
ending November 30, 1998, to exceed the ratio set forth below opposite such
fiscal year:
<TABLE>
<CAPTION>
Consolidated Total
Fiscal Year Leverage Ratio
----------- --------------
<S> <C>
1999 4.50:1.00
2000 3.75:1.00
2001 3.25:1.00
2002 2.75:1.00
2003 2.50:1.00
2004 and thereafter 2.00:1.00
</TABLE>
(b) Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage
Ratio as at the last day of any fiscal quarter ending during any fiscal year set
forth below, commencing with the fiscal quarter ending November 30, 1998, to be
less than the ratio set forth below opposite such fiscal year:
<TABLE>
<CAPTION>
Fixed
Fiscal Year Charge Coverage Ratio
----------- ---------------------
<S> <C>
1999 1.25:1.00
2000 1.25:1.00
2001 and thereafter 1.50:1.00
</TABLE>
(c) Interest Coverage Ratio. Permit the Interest Coverage Ratio for
any period of four consecutive fiscal quarters of the Company (or, if less, the
number of full fiscal quarters ending subsequent to the Closing Date) ending
with any fiscal quarter ending during any fiscal year set forth below,
commencing with the fiscal quarter ending November 30, 1998, to be less than the
ratio set forth below opposite such fiscal year:
<PAGE> 89
89
<TABLE>
<CAPTION>
Interest
Fiscal Year Coverage Ratio
----------- --------------
<S> <C>
1999 2.00:1.00
2000 2.25:1.00
2001 2.50:1.00
2002 2.75:1.00
2003 and thereafter 3.00:1.00
</TABLE>
(d) Maximum Ratio of Contingent Obligations to Operating Cash Flow.
Permit the ratio of (i) Consolidated Contingent Obligations on the last day of
any fiscal quarter ending during any fiscal year, commencing with the fiscal
quarter ending November 30, 1998, to (ii) Consolidated Operating Cash Flow for
the period of four consecutive fiscal quarters ending on such last day to be
greater than 1.00 to 1.00.
For purposes of calculating the foregoing covenants of this Section 10.1 for any
period of four full fiscal quarters, the applicable income statement items for
any Person acquired by the Company or its Subsidiaries during such period shall
be included on a pro forma basis for such period of four full fiscal quarters
(assuming the consummation of each such acquisition and the incurrence or
assumption of any Indebtedness in connection therewith occurred on the first day
of such period of four full fiscal quarters and assuming only such cost
reductions as are related to such acquisition and are immediately realizable as
of the date of such acquisition) if (i) the consolidated balance sheet of such
acquired Person and its consolidated Subsidiaries as at the end of the period
preceding the acquisition of such Person and the related consolidated statements
of income and stockholders' equity and of cash flows for such period have been
reported on without a qualification arising out of the scope of the audit (other
than a "going concern" or like qualification or exception) by independent
certified public accountants of nationally recognized standing and (ii) such
audited consolidated financial statements have been previously provided to the
General Administrative Agent and the Lenders.
10.2 Limitation on Indebtedness. Create, incur, assume or suffer to
exist any Indebtedness, except:
(a) Indebtedness of the Borrowers under this Agreement;
(b) Indebtedness of the Company to any Subsidiary and, to the extent
permitted by Section 10.8, of any Subsidiary to the Company or any other
Subsidiary;
(c) Indebtedness of the Company and any of its Subsidiaries incurred
to finance the acquisition of fixed or capital assets (whether pursuant to
a loan, a Financing Lease or otherwise) in an aggregate principal amount
not exceeding as to the Company and its Subsidiaries $40,000,000 at any
one time outstanding;
<PAGE> 90
90
(d) Indebtedness of the Canadian Borrower under the Canadian
Operating Facility incurred for working capital purposes in an aggregate
principal amount not exceeding C$35,000,000 at any one time outstanding;
(e) Indebtedness of the Company under the NationsBank Line of Credit
incurred for working capital purposes in an aggregate principal amount not
exceeding $25,000,000 at any one time outstanding;
(f) Indebtedness outstanding on the date hereof and listed on
Schedule 10.2(f) and any refinancings, refundings, renewals or extensions
thereof (excluding any Indebtedness required to be repaid pursuant to
Section 8.2(g));
(g) Indebtedness of a corporation which becomes a Subsidiary after
the date hereof, provided that (i) such indebtedness existed at the time
such corporation became a Subsidiary and was not created in anticipation
thereof and (ii) immediately after giving effect to the acquisition of
such corporation by the Company no Default or Event of Default shall have
occurred and be continuing;
(h) Indebtedness of the Company of up to $400,000,000 under the High
Yield Notes, provided that the Borrowers and the General Administrative
Agent shall have entered into a written supplement to this Agreement
whereby the Company agrees to maintain a senior leverage ratio of not
greater than certain levels to be agreed by the Company and the General
Administrative Agent;
(i) Indebtedness in the form of Guarantee Obligations permitted by
Section 10.4; and
(j) additional Indebtedness of the Company not exceeding $50,000,000
in aggregate principal amount at any one time outstanding.
10.3 Limitation on Liens. Create, incur, assume or suffer to exist
any Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of the Company or its
Subsidiaries, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business
which are not overdue for a period of more than 60 days or which are being
contested in good faith by appropriate proceedings;
<PAGE> 91
91
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements;
(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
Company or such Subsidiary;
(f) Liens in existence on the date hereof listed on Schedule
10.3(f), securing Indebtedness permitted by Section 10.2(f), provided that
no such Lien is spread to cover any additional property after the Closing
Date and that the amount of Indebtedness secured thereby is not increased;
(g) Liens securing Indebtedness of the Company and its Subsidiaries
permitted by Section 10.2(c) incurred to finance the acquisition of fixed
or capital assets, provided that (i) such Liens shall be created
substantially simultaneously with the acquisition of such fixed or capital
assets, (ii) such Liens do not at any time encumber any property other
than the property financed by such Indebtedness, (iii) the amount of
Indebtedness secured thereby is not increased and (iv) the principal
amount of Indebtedness secured by any such Lien shall at no time exceed
90% of the original purchase price of such property at the time it was
acquired;
(h) Liens on assets of any Foreign Subsidiary securing Indebtedness
of such Foreign Subsidiary permitted by Section 10.2(f);
(i) Liens on the property or assets of a corporation which becomes a
Subsidiary after the date hereof securing Indebtedness permitted by
Section 10.2(g), provided that (i) such Liens existed at the time such
corporation became a Subsidiary and were not created in anticipation
thereof, (ii) any such Lien is not spread to cover any property or assets
of such corporation after the time such corporation becomes a Subsidiary,
and (iii) the amount of Indebtedness secured thereby is not increased;
(j) Liens (not otherwise permitted hereunder) which secure
obligations not exceeding (as to the Company and all Subsidiaries)
$5,000,000 in aggregate amount at any time outstanding; and
(k) Liens created pursuant to the Security Documents.
<PAGE> 92
92
10.4 Limitation on Guarantee Obligations. Create, incur, assume or
suffer to exist any Guarantee Obligation except:
(a) Guarantee Obligations in existence on the date hereof and listed
on Schedule 10.4;
(b) Guarantee Obligations of the Company or any of its Subsidiaries
in respect of Indebtedness and other obligations of Subsidiaries which are
permitted to be incurred by such Subsidiaries hereunder, provided that
such Guarantee Obligations shall be deemed "investments" and must be
permitted under Section 10.8;
(c) Guarantee Obligations in respect of, or in the nature of,
performance bonds or performance letters of credit or similar obligations
incurred in the ordinary course of business;
(d) Guarantee Obligations incurred after the date hereof in an
aggregate amount not to exceed (i) $75,000,000 at any one time outstanding
for the Company and its Domestic Subsidiaries and (ii) $25,000,000 at any
one time outstanding for the Company's Foreign Subsidiaries;
(e) the Guarantee Obligations of Subsidiaries in respect of the High
Yield Notes, provided that such Guarantee Obligations are subordinated to
the obligations of the Subsidiaries under the Loan Documents to the same
extent as the Company's obligations under the High Yield Notes are
subordinated to the Company's obligations under the Loan Documents; and
(f) the Guarantee Obligations under this Agreement or any Security
Document.
10.5 Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, or make any material change in its present method of conducting
business, except:
(a) any Subsidiary of the Company (other than the Canadian Borrower)
may be merged or consolidated with or into the Company (provided that the
Company shall be the continuing or surviving corporation) or with or into
any one or more wholly owned Subsidiaries of the Company (provided that
the wholly owned Subsidiary or Subsidiaries shall be the continuing or
surviving corporation);
(b) any wholly owned Subsidiary (other than the Canadian Borrower)
may sell, lease, transfer or otherwise dispose of any or all of its assets
(upon voluntary liquidation or otherwise) to the Company or any other
wholly owned Subsidiary of the Company;
<PAGE> 93
93
(c) the Merger may be consummated in accordance with the terms of
the Merger Agreement; and
(d) the dissolution of Corsan Trucking, Inc.
10.6 Limitation on Disposition of Assets. Dispose of any of its
property, business or assets (including, without limitation, receivables and
leasehold interests), whether now owned or hereafter acquired, or, in the case
of any Subsidiary, issue or sell any shares of such Subsidiary's Capital Stock
to any Person other than the Company or any wholly owned Subsidiary, except:
(a) the sale or other Disposition of obsolete or worn out property
in the ordinary course of business;
(b) the sale or other Disposition of any property (other than
inventory), provided that the aggregate book value of all assets so sold
or disposed of in any period of twelve consecutive months shall not exceed
5% of consolidated total assets of the Company and its Subsidiaries as at
the beginning of such twelve-month period;
(c) the sale of inventory in the ordinary course of business;
(d) the sale or discount without recourse of accounts receivable
arising in the ordinary course of business in connection with the
compromise or collection thereof;
(e) after the consummation of the Merger, the sale of Safety-Kleen's
European operations for fair market value;
(f) after the consummation of the Merger, the sale of Safety-Kleen's
oil recovery services business for fair market value; and
(g) as permitted by Section 10.5(b).
10.7 Limitation on Dividends. Declare or pay any dividend (other
than dividends payable solely in common stock of the Person making such
dividend) on, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any shares of any class of Capital Stock of
the Company or any of its Subsidiaries or any warrants or options to purchase
any such Stock, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of the Company or any Subsidiary (such
declarations, payments, setting apart, purchases, redemptions, defeasances,
retirements, acquisitions and distributions being herein called "Restricted
Payments"), except that any Subsidiary may make Restricted Payments to the
Company or any wholly owned Subsidiary of the Company and so long as, on the
date of such Restricted Payment, both before and after giving effect thereto, no
Default or Event of Default shall have occurred and be continuing (a) the
Company may make Restricted Payments to Holdings to service the Seller Note, the
Westinghouse Debt, the CPCFA Debt
<PAGE> 94
94
and the Tooele County Debt, provided that (i) each such Restricted Payment shall
be made on the date on which a cash payment of interest under the Seller Note or
of principal or interest under the Westinghouse Debt, the CPCFA Debt or the
Tooele County Debt, as the case may be, is due and shall be in an amount not
greater than the amount of such cash payment, and such cash payment in respect
of such Indebtedness shall be made by Holdings on such date and (b) the Company
may make Restricted Payments to Holdings to provide for payment in the ordinary
course of business of taxes, directors' fees, stock exchange fees, and other
costs and expenses of its operations as a public company permitted by the
Guarantee and Collateral Agreement.
10.8 Limitation on Investments, Loans and Advances. Make any
advance, loan, extension of credit or capital contribution to, or purchase any
stock, bonds, notes, debentures or other securities of or any assets
constituting a business unit of, or make any other investment in, any Person,
except:
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
(c) acquisitions of interests in any Persons (other than
Safety-Kleen) engaged in the hazardous and industrial waste management
services industry, provided that (i) the aggregate amount of cash expended
and Indebtedness assumed in connection with all such investments does not
exceed $100,000,000 in the aggregate during the twelve month period
following the Closing Date or $200,000,000 in the aggregate during the
term of this Agreement and (ii) after giving pro forma effect to any such
investment, no Default or Event of Default shall have occurred and be
continuing (including, without limitation, pursuant to Section 10.1, with
compliance with Section 10.1 being determined on a pro forma basis as
determined in the manner described in the last paragraph of Section 10.1);
(d) loans to officers of the Company listed on Schedule 10.8 in
aggregate principal amounts outstanding not to exceed the respective
amounts set forth for such officers on said Schedule;
(e) loans and advances to employees of the Company or its
Subsidiaries for travel, entertainment and relocation expenses in the
ordinary course of business in an aggregate amount for the Company and its
Subsidiaries not to exceed $1,000,000 at any one time outstanding;
(f) investments by the Company and its Subsidiaries in the
Subsidiaries of the Company that are parties to the Guarantee and
Collateral Agreement;
(g) investments by the Company and its Domestic Subsidiaries in the
Canadian Borrower, the proceeds of which are used solely to repay the
Canadian Borrower Obligations, and additional investments by the Company
and its Domestic
<PAGE> 95
95
Subsidiaries in the Canadian Borrower in an amount not exceeding
$15,000,000 in the aggregate during the term of this Agreement;
(h) investments by the Canadian Borrower in any of its Subsidiaries
that have guaranteed the Canadian Borrower Obligations;
(i) loans by the Company to its employees in connection with
management incentive plans in an aggregate amount not to exceed
$1,000,000;
(j) acquisitions of interests in Safety-Kleen pursuant to the
Exchange Offer and the Merger; and
(k) the loan made by the Company on the date hereof to Safety-Kleen
in the principal amount of $46,000,000.
10.9 Limitation on Optional Payments and Modifications of Debt
Instruments and other Instruments. (a) Make any optional payment or prepayment
on or redemption or purchase of any Indebtedness (other than Indebtedness under
this Agreement), (b) amend, modify or change, or consent or agree to any
amendment, modification or change to any of the terms relating to the payment or
prepayment or principal of or interest on any such Indebtedness (other than any
such amendment, modification or change which would extend the maturity or reduce
the amount of any payment of principal thereof or which would reduce the rate or
extend the date for payment of interest thereon), (c) amend the subordination
provisions of the Seller Note or the High Yield Notes, if any, or (d) amend,
modify or change in any material respect the terms of the Exchange Offer or the
Merger Agreement.
10.10 Limitation on Transactions with Affiliates. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) otherwise permitted under this Agreement, (b) in the
ordinary course of the Company's or such Subsidiary's business and (c) upon fair
and reasonable terms no less favorable to the Company or such Subsidiary, as the
case may be, than it would obtain in a comparable arm's length transaction with
a Person which is not an Affiliate.
10.11 Limitation on Sales and Leasebacks. Enter into any arrangement
with any Person providing for the leasing by the Company or any Subsidiary of
real or personal property which has been or is to be sold or transferred by the
Company or such Subsidiary to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of the Company or such Subsidiary, except for any such
arrangements with respect to real or personal property with respect to which the
aggregate sales price shall not exceed $25,000,000.
10.12 Limitation on Changes in Fiscal Year. Permit the fiscal year
of the Company to end on a day other than August 31, unless the Company shall
have provided to the General Administrative Agent evidence satisfactory to it
that such change will have no
<PAGE> 96
96
effect on the calculation of, or compliance by the Company with, the covenants
set forth in Section 10.1; or permit the fiscal years of the Company and
Holdings to end on different days.
10.13 Limitation on Negative Pledge Clauses. Enter into with any
Person any agreement, other than (a) this Agreement and (b) any industrial
revenue bonds, purchase money mortgages or Financing Leases permitted by this
Agreement (in which cases, any prohibition or limitation shall only be effective
against the assets financed thereby), which prohibits or limits the ability of
the Company or any of its Subsidiaries to create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired.
10.14 Limitation on Lines of Business. Enter into any business,
either directly or through any Subsidiary, except for those businesses in which
the Company and its Subsidiaries, and Safety-Kleen and its Subsidiaries, are
engaged on the date of this Agreement or which are directly related thereto.
10.15 Canadian Benefit and Pension Plans. Permit the Canadian
Borrower or any of its Subsidiaries to directly, or indirectly, (a) terminate or
cause to terminate, in whole or in part, or initiate the termination of, in
whole or in part, any Canadian Pension Plan so as to result in any liability to
any of them which could have a Material Adverse Effect, (b) permit to exist any
event or condition in respect of any Canadian Pension Plan which presents the
risk of liability of the Canadian Borrower or any of its Subsidiaries which
could have a Material Adverse Effect, (c) enter into any new Canadian Pension
Plan or Canadian Benefit Plan or modify any such existing plans so as to
increase its obligations thereunder which could result in any liability to any
of them and which could have a Material Adverse Effect; (d) permit the greater
of the going concern unfunded liability or the solvency deficiency under
Canadian Pension Plans, but only to the extent they are permitted to remain
unfunded under Requirements of Law, to exceed (in the aggregate, taking into
account all Canadian Pension Plans of the Canadian Borrower and its
Subsidiaries) C$5,000,000, (e) fail to make minimum required contributions to
amortize any funding deficiencies under a Canadian Pension Plan within the time
period set out in any Requirements of Law, (f) fail to make a required
contribution under any Canadian Pension Plan or Canadian Benefit Plan which
could result in the imposition of a Lien upon the assets of any of the Canadian
Borrower or any of its Subsidiaries within 30 days after the date such payment
becomes due, unless such payment is being contested pursuant to Section 9.3; (g)
make any improper withdrawals or applications of assets of a Canadian Pension
Plan or Canadian Benefit Plan or (h) accept payment of any amount from any
Canadian Pension Plan.
10.16 Hedging Agreements. Enter into any Hedging Agreement outside
the ordinary course of business or for speculative purposes.
<PAGE> 97
97
SECTION 11. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) Either Borrower shall fail to pay any principal of any Loan when
due in accordance with the terms thereof or hereof; or either Borrower
shall fail to pay any interest on any Loan, or any other amount payable
hereunder, within five days after any such interest or other amount
becomes due in accordance with the terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by either
Borrower or any other Loan Party herein or in any other Loan Document or
which is contained in any certificate, document or financial or other
statement furnished by it at any time under or in connection with this
Agreement or any such other Loan Document shall prove to have been
incorrect in any material respect on or as of the date made or deemed
made; or
(c) The Company or any other Loan Party shall default in the
observance or performance of any agreement contained in Section 10 of this
Agreement or Section 5 of the Guarantee and Collateral Agreement, or
Acquisition Corp. shall default in the observance or performance of any
agreement contained in the Acquisition Corp. Pledge Agreement; or
(d) The Company or any other Loan Party shall default in the
observance or performance of any other agreement contained in this
Agreement or any other Loan Document (other than as provided in paragraphs
(a) through (c) of this Section), and such default shall continue
unremedied for a period of 30 days; or
(e) Holdings, the Company or any of its Subsidiaries shall (i)
default in any payment of principal of or interest of any Indebtedness
(other than the Loans) or in the payment of any Guarantee Obligation,
beyond the period of grace (not to exceed 30 days), if any, provided in
the instrument or agreement under which such Indebtedness or Guarantee
Obligation was created; or (ii) default in the observance or performance
of any other agreement or condition relating to any such Indebtedness or
Guarantee Obligation or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur
or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Guarantee Obligation
(or a trustee or agent on behalf of such holder or holders or beneficiary
or beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity or such Guarantee
Obligation to become payable; provided, however, that no Default or Event
of Default shall exist under this paragraph unless the aggregate amount of
Indebtedness and/or Guarantee Obligations in respect of which any default
or other event or condition referred to in this paragraph shall have
occurred shall be equal to at least $15,000,000; or
<PAGE> 98
98
(f) (i) Holdings, the Company or any of its Subsidiaries shall
commence any case, proceeding or other action (A) under any existing or
future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to
have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (B) seeking
appointment of a receiver, trustee, custodian, conservator or other
similar official for it or for all or any substantial part of its assets,
or Holdings, the Company or any of its Subsidiaries shall make a general
assignment for the benefit of its creditors; or (ii) there shall be
commenced against Holdings, the Company or any of its Subsidiaries any
case, proceeding or other action of a nature referred to in clause (i)
above which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced
against Holdings, the Company or any of its Subsidiaries any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial
part of its assets which results in the entry of an order for any such
relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal within 60 days from the entry thereof; or (iv) Holdings,
the Company or any of its Subsidiaries shall take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence
in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v)
Holdings, the Company or any of its Subsidiaries shall generally not, or
shall be unable to, or shall admit in writing its inability to, pay its
debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Company or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate,
any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of
the Required Lenders, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the Company or any
Commonly Controlled Entity shall, or in the reasonable opinion of the
Required Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist with
respect to a Plan; and in each case in clauses (i) through (vi) above,
such event or condition, together with all other such events or
conditions, if any, could have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against the
Company or any of its Subsidiaries involving in the aggregate a liability
(not paid or fully
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99
covered by insurance) of $15,000,000 or more, and all such judgments or
decrees shall not have been vacated, discharged, stayed or bonded pending
appeal within 60 days from the entry thereof; or
(i) (i) Any of the Security Documents shall cease, for any reason,
to be in full force and effect, or either Borrower or any other Loan Party
which is a party to any of the Security Documents shall so assert or (ii)
the Lien created by any of the Security Documents shall cease to be
enforceable and of the same effect and priority purported to be created
thereby; or
(j) The Guarantee and Collateral Agreement shall cease, for any
reason, to be in full force and effect or any Guarantor shall so assert;
or
(k) A Change of Control shall occur;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) of this Section with respect to the
Company or the Canadian Borrower, automatically the Commitments shall
immediately terminate and the Loans hereunder (with accrued interest thereon)
and all other amounts owing under this Agreement (including, without limitation,
all Acceptance Reimbursement Obligations, regardless of whether or not such
Acceptance Reimbursement Obligations are then due and payable) and the other
Loan Documents (including, without limitation, all amounts of L/C Obligations,
whether or not the beneficiaries of the then outstanding Letters of Credit shall
have presented the documents required thereunder) shall immediately become due
and payable, and (B) if such event is any other Event of Default, either or both
of the following actions may be taken: (i) with the consent of the Majority
Facility Lenders under the Revolving Credit Facility, the General Administrative
Agent may, or upon the request of the Majority Facility Lenders under the
Revolving Credit Facility, the General Administrative Agent shall, by notice to
the Company declare the Revolving Credit Commitments to be terminated forthwith,
whereupon such commitments shall immediately terminate; and (ii) with the
consent of the Required Lenders, the General Administrative Agent may, or upon
the request of the Required Lenders, the General Administrative Agent shall, by
notice to the Borrowers, declare the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement (including, without
limitation, all amounts of L/C Obligations, whether or not the beneficiaries of
the then outstanding Letters of Credit shall have presented the documents
required thereunder, and all Acceptance Reimbursement Obligations, regardless of
whether or not such Acceptance Reimbursement Obligations are then due and
payable) and the other Loan Documents to be due and payable forthwith, whereupon
the same shall immediately become due and payable.
With respect to all Letters of Credit with respect to which
presentment for honor shall not have occurred at the time of an acceleration
pursuant to the preceding paragraph, the Company shall at such time deposit in a
cash collateral account opened by the General Administrative Agent an amount
equal to the aggregate then undrawn and unexpired amount of such Letters of
Credit. Amounts held in such cash collateral account shall be applied by the
General Administrative Agent to the payment of drafts drawn under such
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Letters of Credit, and the unused portion thereof after all such Letters of
Credit shall have expired or been fully drawn upon, if any, shall be applied to
repay other obligations of the Company hereunder and under the other Loan
Documents. After all such Letters of Credit shall have expired or been fully
drawn upon, all Reimbursement Obligations shall have been satisfied and all
other obligations of the Company hereunder and under the other Loan Documents
shall have been paid in full, the balance, if any, in such cash collateral
account shall be returned to the Company (or such other Person as may be
lawfully entitled thereto).
With respect to all outstanding Acceptance Reimbursement Obligations
in respect of Acceptances which have not matured at the time of an acceleration
pursuant to the paragraph above, the Canadian Borrower shall at such time
deposit in a cash collateral account opened by and maintained by the Canadian
Administrative Agent an amount equal to the aggregate undiscounted face amount
of all such unmatured Acceptances. Amounts held in such cash collateral account
shall be applied by the Canadian Administrative Agent to the payment of maturing
Acceptances, and any balance in such account shall be applied to repay other
obligations of the Canadian Borrower hereunder and under any Notes. After all
Acceptance Reimbursement Obligations shall have been satisfied and all other
obligations of the Canadian Borrower hereunder and under any Notes shall have
been paid in full, the balance, if any, in such cash collateral account shall be
returned to the Canadian Borrower.
Except as otherwise expressly provided above in this Section 11, the
Borrowers waive presentment, demand, protest or other notice of any kind.
SECTION 12. THE ADMINISTRATIVE AGENTS; OTHERS
12.1 Appointment. Each Lender hereby irrevocably designates and
appoints Toronto Dominion (Texas), Inc. as the General Administrative Agent and
The Toronto-Dominion Bank as the Canadian Administrative Agent of such Lender
under this Agreement and the other Loan Documents, and each such Lender
irrevocably authorizes the General Administrative Agent and the Canadian
Administrative Agent to take such action on its behalf under the provisions of
this Agreement and the other Loan Documents and to exercise such powers and
perform such duties as are expressly delegated to the General Administrative
Agent and the Canadian Administrative Agent, respectively, by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, the Administrative Agents shall not have any duties
or responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against either
Administrative Agent.
Each Issuing Lender shall act on behalf of the Lenders with respect
to Letters of Credit issued by it under this Agreement and the documents
associated therewith. It is understood and agreed that each Issuing Lender (a)
shall have all of the benefits and immunities (i) provided to an Administrative
Agent in this Section 12 with respect to acts
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taken or omissions suffered by such Issuing Lender in connection with Letters of
Credit issued by it under this Agreement and the documents associated therewith
as fully as if the term "General Administrative Agent", "Canadian Administrative
Agent" or "Administrative Agent", as used in this Section 12, included such
Issuing Lender with respect to such acts or omissions and (ii) as additionally
provided in this Agreement and (b) shall have all of the benefits of the
provisions of Section 12.7 as fully as if the term "General Administrative
Agent", "Canadian Administrative Agent" or "Administrative Agent", as used in
Section 12.7, included such Issuing Lender.
Each Lender authorizes and directs the Administrative Agents to
execute and deliver the Intercreditor Agreement.
12.2 Delegation of Duties. Each Administrative Agent may execute any
of its duties under this Agreement and the other Loan Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. Neither Administrative Agent
shall be responsible for the negligence or misconduct of any agents or attorneys
in-fact selected by it with reasonable care.
12.3 Exculpatory Provisions. Neither Administrative Agent nor any of
its respective officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except for its or such Person's own gross negligence or
willful misconduct) or (ii) responsible in any manner to any of the Lenders for
any recitals, statements, representations or warranties made by the Borrowers or
any officer thereof contained in this Agreement or any other Loan Document or in
any certificate, report, statement or other document referred to or provided for
in, or received by such Administrative Agent under or in connection with, this
Agreement or any other Loan Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or for any failure of the Company to perform its obligations hereunder
or thereunder. Neither Administrative Agent shall be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of either Borrower.
12.4 Reliance by Administrative Agents. Each Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
Note, writing, resolution, notice, consent, certificate, affidavit, letter,
telecopy, telex or teletype message, statement, order or other document or
conversation 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 (including, without limitation, counsel to the Borrowers),
independent accountants and other experts selected by such Administrative Agent.
Each Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with such Administrative Agent. Each
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders or Majority Facility
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Lenders, as applicable, as it deems appropriate or it shall first be indemnified
to its satisfaction by the Lenders against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action. Each Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement and the other Loan
Documents in accordance with a request of the Required Lenders (or, in any case
where this Agreement specifically requires the consent of the Majority Facility
Lenders under any Facility, such Majority Facility Lenders), and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all the Lenders and all future holders of the Loans.
12.5 Notice of Default. Neither Administrative Agent shall be deemed
to have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless such Administrative Agent has received notice from a Lender or
the Company referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
an Administrative Agent receives such a notice, such Administrative Agent shall
give notice thereof to the Lenders. Each Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders or Majority Facility Lenders, as applicable;
provided that unless and until the Administrative Agents shall have received
such directions, the Administrative Agents may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best interests of
the Lenders.
12.6 Non-Reliance on Administrative Agents and Other Lenders. (a)
Each Lender expressly acknowledges that neither Administrative Agent nor any of
its respective officers, directors, employees, agents, attorneys-in-fact or
Affiliates has made any representations or warranties to it and that no act by
either Administrative Agent hereinafter taken, including any review of the
affairs of the Company or the Canadian Borrower, shall be deemed to constitute
any representation or warranty by such Administrative Agent to any Lender. Each
Lender represents to each Administrative Agent that it has, independently and
without reliance upon such Administrative Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Company and made its
own decision to make its Loans hereunder and enter into this Agreement. Each
Lender also represents that it will, independently and without reliance upon
either Administrative Agent 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 analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigation as
it deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Company. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by such Administrative Agent hereunder, each Administrative Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, operations, property, condition
(financial or otherwise), prospects or creditworthiness of the Company or the
Canadian
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Borrower which may come into the possession of such Administrative Agent or any
of its officers, directors, employees, agents, attorneys-in-fact or Affiliates.
(b) For purposes of determining compliance with the conditions
specified in Section 8.1, each Lender that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by either Administrative Agent or the
Company to such Lender prior to the Closing Date, or required thereunder to be
consented to or approved by or acceptable or satisfactory to such Lender.
12.7 Indemnification. The Lenders agree to indemnify each
Administrative Agent in its capacity as such (to the extent not reimbursed by
the Borrowers and without limiting the obligation of the Borrowers to do so),
ratably according to their respective Aggregate Commitment Percentages in effect
on the date on which indemnification is sought, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Loans)
be imposed on, incurred by or asserted against such Administrative Agent in any
way relating to or arising out of, the Commitments, this Agreement, any of the
other Loan Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by such Administrative Agent under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from such
Administrative Agent's gross negligence or willful misconduct. The agreements in
this Section shall survive the payment of the Loans and all other amounts
payable hereunder.
12.8 Agent in Its Individual Capacity. Each Administrative Agent and
its respective Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with the Borrowers as though such Administrative
Agent were not an Administrative Agent hereunder and under the other Loan
Documents. With respect to the Loans made by it and with respect to any Letter
of Credit issued or participated in by it, each Administrative Agent shall have
the same rights and powers under this Agreement and the other Loan Documents as
any Lender and may exercise the same as though it were not an Administrative
Agent, and the terms "Lender" and "Lenders" shall include such Administrative
Agent in its individual capacity.
12.9 Successor Agent. Either Administrative Agent may resign as
Administrative Agent upon 10 days' notice to the Lenders. If either
Administrative Agent shall resign as Administrative Agent under this Agreement
and the other Loan Documents, then the Required Lenders shall appoint from among
the Lenders a successor agent for the Lenders, which successor agent (provided
that it shall have been approved by the Company), shall succeed to the rights,
powers and duties of such Administrative Agent hereunder. Effective upon such
appointment and approval, the term "General Administrative Agent" or "Canadian
Administrative Agent", as the case may be, shall mean such successor agent, and
such former Administrative Agent's rights, powers and duties as General
Administrative
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Agent or Canadian Administrative Agent, as the case may be, shall be terminated,
without any other or further act or deed on the part of such former
Administrative Agent or any of the parties to this Agreement or any holders of
the Loans. After any retiring Administrative Agent's resignation as an
Administrative Agent, the provisions of this Section 12 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement and the other Loan Documents.
12.10 Others. Neither the Arranger, the Syndication Agent nor any
Managing Agent, in such respective capacities, shall have any duties or
responsibilities, or incur any liabilities, under this Agreement or the other
Loan Documents.
SECTION 13. GUARANTEE
13.1 Guarantee. In order to induce the Administrative Agents and the
Lenders to execute and deliver this Agreement and to make or maintain Extensions
of Credit to the Canadian Borrower hereunder, and to induce the Canadian
Operating Facility Lender to enter into the Canadian Operating Facility and to
make loans to the Canadian Borrower thereunder, and in consideration thereof,
the Company hereby unconditionally and irrevocably guarantees to the
Administrative Agents, for the ratable benefit of the Lenders to which Canadian
Borrower Obligations are owed and to the Canadian Operating Facility Lender, the
prompt and complete payment and performance by the Canadian Borrower when due
(whether at stated maturity, by acceleration or otherwise) of the Canadian
Borrower Obligations and the Canadian Operating Facility Obligations,
respectively, and the Company further agrees to pay any and all expenses
(including, without limitation, all reasonable fees, charges and disbursements
of counsel) which may be paid or incurred by either Administrative Agent, the
Lenders or the Canadian Operating Facility Lender in enforcing, or obtaining
advice of counsel in respect of, any of their rights under the guarantee
contained in this Section 13. The guarantee contained in this Section 13,
subject to Section 13.5, shall remain in full force and effect until the
Canadian Borrower Obligations and the Canadian Operating Facility Obligations
are paid in full, the Commitments are terminated, no Extensions of Credit are
outstanding and the Canadian Operating Facility is terminated, notwithstanding
that from time to time prior thereto the Canadian Borrower may be free from any
obligations or liabilities under this Agreement or the Canadian Operating
Facility.
The Company agrees that whenever, at any time, or from time to time,
it shall make any payment to the Administrative Agents, any Lender or the
Canadian Operating Facility Lender on account of its liability under this
Section 13, it will notify the Administrative Agents and such lender in writing
that such payment is made under the guarantee contained in this Section 13 for
such purpose. No payment or payments made by the Canadian Borrower or any other
Person or received or collected by either Administrative Agent, any Lender or
the Canadian Operating Facility Lender from the Canadian Borrower or any other
Person by virtue of any action or proceeding or any setoff or appropriation or
application, at any time or from time to time, in reduction of or in payment of
the Canadian Borrower Obligations or the Canadian Operating Facility Obligations
shall be deemed to modify, reduce, release or otherwise affect the liability of
the Company under this Section 13
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which, notwithstanding any such payment or payments, shall remain liable for the
Canadian Borrower Obligations or the Canadian Operating Facility Obligations, as
the case may be, until, subject to Section 13.5, the Canadian Borrower
Obligations are paid in full, the Canadian Term Loan Commitments are terminated
and no Letters of Credit are outstanding, the Canadian Operating Facility
Obligations are paid in full and the Canadian Operating Facility is terminated.
13.2 No Subrogation, Contribution, Reimbursement or Indemnity.
Notwithstanding anything to the contrary in this Section 13, the Company hereby
irrevocably waives all rights which may have arisen in connection with the
guarantee contained in this Section 13 to be subrogated to any of the rights
(whether contractual, under the United States Bankruptcy Code (or similar action
under any successor law or under any comparable law), including Section 509
thereof, under common law or otherwise) of the Administrative Agents, any Lender
or the Canadian Operating Facility Lender against the Canadian Borrower or
against either Administrative Agent or any such lender for the payment of the
Canadian Borrower Obligations or the Canadian Operating Facility Obligations,
until all the Canadian Borrower Obligations and Canadian Operating Facility
Obligations shall have been paid in full and each of the Canadian Term Loan
Commitments and the Canadian Operating Facility shall have been terminated. The
Company hereby further irrevocably waives all contractual, common law, statutory
and other rights of reimbursement, contribution, exoneration or indemnity (or
any similar right) from or against the Canadian Borrower or any other Person
which may have arisen in connection with the guarantee contained in this Section
13, until the Canadian Borrower Obligations and the Canadian Operating Facility
Obligations shall have been paid in full and the Canadian Term Loan Commitments
and the Canadian Operating Facility shall have been terminated. So long as the
Canadian Borrower Obligations or the Canadian Operating Facility Obligations
remain outstanding, if any amount shall be paid by or on behalf of the Canadian
Borrower to the Company on account of any of the rights waived in this Section
13.2, such amount shall be held by the Company in trust, segregated from other
funds of the Company, and shall, forthwith upon receipt by the Company, be
turned over to the Canadian Administrative Agent in the exact form received by
the Company (duly indorsed by the Company to the Canadian Administrative Agent,
if required), to be applied against the Canadian Borrower Obligations and the
Canadian Operating Facility Obligations, whether matured or unmatured, in such
order as the Canadian Administrative Agent may determine. The provisions of this
Section 13.2 shall survive the term of the guarantee contained in this Section
13 and the payment in full of the Canadian Borrower Obligations and the Canadian
Operating Facility Obligations and the termination of the Canadian Term Loan
Commitments and the Canadian Operating Facility.
13.3 Amendments, etc. with respect to the Canadian Borrower
Obligations. The Company shall remain obligated under this Section 13
notwithstanding that, without any reservation of rights against the Company, and
without notice to or further assent by the Company, any demand for payment of or
reduction in the principal amount of any of the Canadian Borrower Obligations or
the Canadian Operating Facility Obligations made by either Administrative Agent,
any Lender or the Canadian Operating Facility Lender may be rescinded by such
Administrative Agent or such lender, and any of the Canadian Borrower
Obligations or the Canadian Operating Facility Obligations, as the case may be,
continued,
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and the Canadian Borrower Obligations or the Canadian Operating Facility
Obligations, as the case may be, or the liability of any other party upon or for
any part thereof, or any collateral security or guarantee therefor or right of
offset with respect thereto, may, from time to time, in whole or in part, be
renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by such Administrative Agent, any Lender or the Canadian
Operating Facility Lender, and this Agreement, any other Loan Document, and any
other documents executed and delivered in connection therewith may be amended,
modified, supplemented or terminated, in whole or in part, as the Lenders (or
the Required Lenders, as the case may be) may deem advisable (or in the case of
the Canadian Operating Facility Obligations, as the Canadian Operating Facility
Lender may deem advisable) from time to time, and any collateral security,
guarantee or right of offset at any time held by either Administrative Agent,
any Lender or the Canadian Operating Facility for the payment of the Canadian
Borrower Obligations or the Canadian Operating Facility may be sold, exchanged,
waived, surrendered or released. Neither Administrative Agents nor any Lender or
the Canadian Operating Facility Lender shall have any obligation to protect,
secure, perfect or insure any Lien at any time held by it as security for the
Canadian Borrower Obligations, the Canadian Operating Facility Obligations or
for the guarantee contained in this Section 13 or any property subject thereto.
13.4 Guarantee Absolute and Unconditional. The Company waives any
and all notice of the creation, renewal, extension or accrual of any of the
Canadian Borrower Obligations or the Canadian Operating Facility Obligations and
notice of or proof of reliance by either Administrative Agent, any Lender or the
Canadian Operating Facility Lender upon the guarantee contained in this Section
13 or acceptance of the guarantee contained in this Section 13; the Canadian
Borrower Obligations and the Canadian Operating Facility Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or incurred,
or renewed, extended, amended or waived, in reliance upon the guarantee
contained in this Section 13; and all dealings between the Canadian Borrower or
the Company, on the one hand, and either Administrative Agent, the Lenders
and/or the Canadian Operating Facility Lender, on the other, shall likewise be
conclusively presumed to have been had or consummated in reliance upon the
guarantee contained in this Section 13. The Company waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Canadian Borrower or the Company with respect to the Canadian
Borrower Obligations and the Canadian Operating Facility Obligations. The
guarantee contained in this Section 13 shall be construed as a continuing,
absolute and unconditional guarantee of payment without regard to (a) the
validity or enforceability of this Agreement or any other Loan Document or the
Canadian Operating Facility, any of the Canadian Borrower Obligations or the
Canadian Operating Facility Obligations or any collateral security therefor or
guarantee or right of offset with respect thereto at any time or from time to
time held by either Administrative Agent, any Lender or the Canadian Operating
Facility Lender, (b) any defense, setoff or counterclaim (other than a defense
of payment or performance) which may at any time be available to or be asserted
by the Borrowers against either Administrative Agent, any Lender or the Canadian
Operating Facility Lender, or (c) any other circumstance whatsoever (with or
without notice to or knowledge of the Canadian Borrower or the Company) which
constitutes, or might be construed to constitute, an equitable or legal
discharge of the Canadian Borrower for the
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Canadian Borrower Obligations or the Canadian Operating Facility Obligations, or
of the Company under the guarantee contained in this Section 13, in bankruptcy
or in any other instance. When either Administrative Agent, any Lender or the
Canadian Operating Facility Lender is pursuing its rights and remedies under
this Section 13 against the Company, such Administrative Agent or any such
lender may, but shall be under no obligation to, pursue such rights and remedies
as it may have against the Canadian Borrower or any other Person or against any
collateral security or guarantee for the Canadian Borrower Obligations or the
Canadian Operating Facility Obligations or any right of offset with respect
thereto, and any failure by such Administrative Agent or any such lender to
pursue such other rights or remedies or to collect any payments from the
Canadian Borrower or any such other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or any
release of the Canadian Borrower or any such other Person or of any such
collateral security, guarantee or right of offset, shall not relieve the Company
of any liability under this Section 13, and shall not impair or affect the
rights and remedies, whether express, implied or available as a matter of law,
of the Administrative Agents, the Lenders and the Canadian Operating Facility
Lender against the Company.
13.5 Reinstatement. The guarantee contained in this Section 13 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Canadian Borrower Obligations or the
Canadian Operating Facility Obligations is rescinded or must otherwise be
restored or returned by either Administrative Agent, any Lender or the Canadian
Operating Facility Lender upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Canadian Borrower or upon or as a result of
the appointment of a receiver, intervenor or conservator of, or trustee or
similar officer for, the Canadian Borrower or any substantial part of its
property, or otherwise, all as though such payments had not been made.
13.6 Payments. The Company hereby agrees that any payments in
respect of the Canadian Borrower Obligations and the Canadian Operating Facility
Obligations pursuant to this Section 13 will be paid to the Canadian
Administrative Agent without setoff or counterclaim in Canadian Dollars, at the
office of the Canadian Administrative Agent specified in Section 14.2.
SECTION 14. MISCELLANEOUS
14.1 Amendments and Waivers. Neither this Agreement, the
Intercreditor Agreement nor any other Loan Document, nor any terms hereof or
thereof may be amended, supplemented or modified except as set forth in Section
10.2(h) or in accordance with the provisions of this Section. The Required
Lenders may, or, with the written consent of the Required Lenders, the
Administrative Agents may, from time to time, (a) enter into with the Borrowers
written amendments, supplements or modifications hereto and to the other Loan
Documents or the Intercreditor Agreement for the purpose of adding any
provisions to this Agreement, the other Loan Documents or the Intercreditor
Agreement or changing in any manner the rights of the Lenders or of the
Borrowers hereunder or thereunder or (b) waive, on such terms and conditions as
the Required Lenders or the Administrative Agents, as the
<PAGE> 108
108
case may be, may specify in such instrument, any of the requirements of this
Agreement or the other Loan Documents or the Intercreditor Agreement or any
Default or Event of Default and its consequences; provided, however, that no
such waiver and no such amendment, supplement or modification shall (i) reduce
the amount or extend the scheduled date of maturity of any Loan or of any
installment thereof, or reduce the stated rate of any interest or fee payable
hereunder or extend the scheduled date of any payment thereof or increase the
amount or extend the expiration date of any Lender's Commitments or extend the
expiry date of any Letter of Credit beyond the date referred to in Section
3.1(a), or modify the provisions of Section 6.9, in each case without the
consent of each Lender affected thereby, or (ii) amend, modify or waive any
provision of this Section or reduce the percentage specified in the definition
of Required Lenders or Majority Facility Lenders, or consent to the assignment
or transfer by either Borrower of any of its rights and obligations under this
Agreement and the other Loan Documents or release all or substantially all of
the Collateral or release all or substantially all of the Guarantors from their
obligations under the Guarantee and Collateral Agreement, in each case without
the written consent of all the Lenders, (iii) amend, modify or waive any
provision of Section 4 or 5 without the consent of the Majority Facility Lenders
under the Canadian Term Loan Facility, (iv) amend, modify or waive any provision
of Section 12 without the written consent of the Administrative Agents, (v)
amend, modify or waive any provision of Section 3 without the written consent of
each Issuing Lender, (vi) amend, modify or waive any provision of Section 13
without the consent of all the Canadian Lenders or (vii) amend, modify or waive
any provision of Section 6.3 without the consent of the Majority Facility
Lenders under each Facility. Any such waiver and any such amendment, supplement
or modification shall apply equally to each of the Lenders and shall be binding
upon the Borrowers, the Lenders, the Agents and all future holders of the Loans.
In the case of any waiver, the Borrowers, the Lenders and the Agents shall be
restored to their former positions and rights hereunder and under the other Loan
Documents, and any Default or Event of Default waived shall be deemed to be
cured and not continuing; no such waiver shall extend to any subsequent or other
Default or Event of Default or impair any right consequent thereon.
14.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) in the case of delivery by hand,
when delivered, (b) in the case of delivery by mail, three days after being
deposited in the mails, postage prepaid, or (c) in the case of delivery by
facsimile transmission, when sent and receipt has been confirmed, addressed as
follows in the case of the Borrowers, the General Administrative Agent and the
Canadian Administrative Agent, and as set forth in Schedule 1.1F in the case of
the other parties hereto, or to such other address as may be hereafter notified
by the respective parties hereto:
The Company: LES, Inc.
1301 Gervais Street, 3rd Floor
Columbia, South Carolina 29201
Attention: Paul Humphreys
Fax: (803) 933-4346
<PAGE> 109
109
The Canadian Borrower: Laidlaw Environmental (Canada) Ltd.
c/o LES, Inc.
1301 Gervais Street, 3rd Floor
Columbia, South Carolina 29201
Attention: Paul Humphreys
Fax: (803) 933-4346
The General Administrative Agent: Toronto Dominion (Texas), Inc.
909 Fannin Street, Suite 1700
Houston, Texas 77010
Attention: Jano Mott
Fax: (703) 951-9921
The Canadian Administrative Agent: The Toronto-Dominion Bank
9th Floor, Toronto Dominion Bank Tower
Toronto Dominion Centre
55 King Street West
Toronto, Ontario M5K 1A2
Attention: Manager Agency
Fax: (416) 982-5535
provided that any notice, request or demand to or upon the General
Administrative Agent, the Canadian Administrative Agent or the Lenders pursuant
to Section 2.2, 2.4, 2.6, 4.2, 5.2, 5.5, 6.2, 6.3 and 6.4 shall not be effective
until received.
14.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of either Administrative Agent or any Lender,
any right, remedy, power or privilege hereunder or under the other Loan
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
14.4 Survival of Representations and Warranties. All representations
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.
14.5 Payment of Expenses and Taxes. The Company agrees (a) to pay or
reimburse each Administrative Agent for all its out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution of, and
any amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including, without limitation, the reasonable fees and
disbursements of counsel to such Administrative Agent (b)
<PAGE> 110
110
to pay or reimburse each Lender, the General Administrative Agent and the
Canadian Administrative Agent for all its costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
Agreement, the other Loan Documents and any such other documents, including,
without limitation, the fees and disbursements of counsel to each Lender and of
counsel to such Administrative Agent, (c) to pay, indemnify, and hold each
Lender and each Administrative Agent harmless from, any and all recording and
filing fees and any and all liabilities with respect to, or resulting from any
delay in paying, stamp, excise and other taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, the other Loan Documents and any such other
documents, and (d) to pay, indemnify, and hold each Lender and each
Administrative Agent harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement, the other Loan Documents and any such other documents, including,
without limitation, any of the foregoing relating to the violation of,
noncompliance with or liability under, any Environmental Law applicable to the
operations of the Company or any of its Subsidiaries or any of the facilities or
properties owned, leased or operated by the Company or any of its Subsidiaries
(all the foregoing in this clause (d), collectively, the "indemnified
liabilities"), provided that the Borrowers shall have no obligation hereunder to
any person seeking indemnification with respect to indemnified liabilities
arising from the gross negligence or willful misconduct of such person. Without
limiting the foregoing, and to the extent permitted by applicable law, the
Company agrees, and shall cause each of its Subsidiaries to agree, not to
assert, and hereby waives and agrees to cause each of its Subsidiaries to waive,
all rights for contribution or any other rights of recovery with respect to all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of whatever kind or nature whatsoever, under or
related to Environmental Laws, that any of them might have by statute or
otherwise against each Lender and each Administrative Agent. The agreements in
this Section shall survive repayment of the Loans and all other amounts payable
hereunder.
14.6 Successors and Assigns; Participations and Assignments. (a)
This Agreement shall be binding upon and inure to the benefit of the Borrowers,
the Lenders, the Administrative Agents, all future holders of the Loans, the
Reimbursement Obligations and the Acceptance Reimbursement Obligations and their
respective successors and assigns, except that no Borrower may assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of each Lender.
(b) Any Lender may, in the ordinary course of its commercial banking
or institutional financial business and in accordance with applicable law, at
any time sell to one or more banks or other entities ("Participants")
participating interests in any Loan owing to such Lender, any Commitment of such
Lender or any other interest of such Lender hereunder and under the other Loan
Documents; provided that, in the case of participations in any Canadian Term
Loan granted by a Canadian Lender, such Participant must be a resident of Canada
for purposes of the Tax Act unless such participation is granted pursuant
<PAGE> 111
111
to Section 14.7. In the event of any such sale by a Lender of a participating
interest to a Participant, such Lender's obligations under this Agreement to the
other parties to this Agreement shall remain unchanged, such Lender shall remain
solely responsible for the performance thereof, such Lender shall remain the
holder of any such Loan or other interest for all purposes under this Agreement
and the other Loan Documents, and the Borrowers and the Administrative Agents
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement and the other Loan
Documents. No Lender shall be entitled to create in favor of any Participant, in
the participation agreement pursuant to which such Participant's participating
interest shall be created or otherwise, any right to vote on, consent to or
approve any matter relating to this Agreement or any other Loan Document except
for those specified in clauses (i) and (ii) of the proviso to Section 14.1. Each
of the Borrowers agrees that if amounts outstanding under this Agreement are due
or unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall, to the maximum
extent permitted by applicable law, be deemed to have the right of setoff in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement, provided that, in purchasing
such participating interest, such Participant shall be deemed to have agreed to
share with the Lenders the proceeds thereof as provided in Section 14.7(a) as
fully as if it were a Lender hereunder. Each of the Borrowers also agrees that
each Participant shall be entitled to the benefits of Sections 6.11, 6.12 and
6.13 with respect to its participation in the Commitments and the Loans and
other amounts outstanding from time to time as if it was a Lender; provided
that, in the case of Section 6.12, such Participant shall have complied with the
requirements of said Section and provided, further, that no Participant shall be
entitled to receive any greater amount pursuant to any such Section than the
transferor Lender would have been entitled to receive in respect of the amount
of the participation transferred by such transferor Lender to such Participant
had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its commercial banking
or institutional financial business and in accordance with applicable law, at
any time and from time to time assign to any Lender, an Approved Fund of any
Lender, or any affiliate thereof or, with the consent of the Company and the
General Administrative Agent (which in each case shall not be unreasonably
withheld or delayed), to an additional bank, financial institution or fund (an
"Assignee") all or any part of its rights and obligations under this Agreement
and the other Loan Documents pursuant to an Assignment and Acceptance,
substantially in the form of Exhibit L, executed by such Assignee, such
assigning Lender (and, in the case of an Assignee that is not then a Lender, an
Approved Fund of any Lender, or an affiliate thereof, by the Company and the
General Administrative Agent) and delivered to the appropriate Administrative
Agent for its acceptance and recording in the Register, provided that no such
assignment to an Assignee (other than any Lender, any Approved Fund of any
Lender, or any affiliate thereof) shall be in an aggregate principal amount of
less than $5,000,000 (other than in the case of an assignment of all of a
Lender's interests under this Agreement), unless otherwise agreed by the Company
and the General Administrative Agent. Any such assignment need not be ratable as
among the Facilities. Upon such execution, delivery, acceptance and recording,
from and after the effective date determined pursuant to
<PAGE> 112
112
such Assignment and Acceptance, (x) 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 with a Commitment as set forth
therein, and (y) the assigning Lender thereunder shall, to the extent provided
in such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender's rights and obligations under this
Agreement, such assigning Lender shall cease to be a party hereto).
Notwithstanding any provision of this paragraph (c) and paragraph (e) of this
Section, the consent of the Company shall not be required, and, unless requested
by the Assignee and/or the assigning Lender, new Notes shall not be required to
be executed and delivered by any Borrower, for any assignment which occurs at
any time when any Event of Default shall have occurred and be continuing.
(d) The General Administrative Agent, on behalf of the Borrowers,
shall maintain at the address of the General Administrative Agent referred to in
Section 14.2 a copy of each Assignment and Acceptance delivered to it and a
register (the "Register") for the recordation of the names and addresses of the
Lenders and the Commitments of, and principal amounts of the Loans owing to,
each Lender from time to time. The entries in the Register shall be conclusive,
in the absence of manifest error, and the Borrowers, the Administrative Agents
and the Lenders may (and, in the case of any Loan or other obligation hereunder
not evidenced by a Note, shall) treat each Person whose name is recorded in the
Register as the owner of a Loan or other obligation hereunder as the owner
thereof for all purposes of this Agreement and the other Loan Documents,
notwithstanding any notice to the contrary. Any assignment of any Loan or other
obligation hereunder not evidenced by a Note shall be effective only upon
appropriate entries with respect thereto being made in the Register.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender, an Approved Fund of any Lender, or an affiliate thereof, by the
Company and the General Administrative Agent) together with payment to the
General Administrative Agent (or, in the case of an Assignment of a portion of
the Canadian Term Loans only, to the Canadian Administrative Agent) of a
registration and processing fee of $3,500, the General Administrative Agent (or
the Canadian Administrative Agent, as appropriate) shall (i) promptly accept
such Assignment and Acceptance and (ii) on the effective date determined
pursuant thereto record the information contained therein in the Register and
give notice of such acceptance and recordation to the Lenders and the relevant
Borrower.
(f) Each Borrower authorizes each Lender to disclose to any
Participant or Assignee (each, a "Transferee") and any prospective Transferee,
subject to the provisions of Section 14.16, any and all financial information in
such Lender's possession concerning the Borrowers and their Affiliates which has
been delivered to such Lender by or on behalf of the Borrowers pursuant to this
Agreement or which has been delivered to such Lender by or on behalf of the
Borrowers in connection with such Lender's credit evaluation of the Borrower and
its Affiliates prior to becoming a party to this Agreement.
<PAGE> 113
113
(g) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this subsection concerning assignments of
Loans and Notes relate only to absolute assignments and that such provisions do
not prohibit assignments creating security interests, including, without
limitation, any pledge or assignment by a Lender of any Loan or Note to any
Federal Reserve Bank in accordance with applicable law.
14.7 Adjustments; Set-off. (a) If any Lender (a "benefitted Lender")
(i) shall at any time prior to any date on which the Commitments are terminated
and the Loans become due and payable pursuant to Section 11 (an "Acceleration")
receive any payment of all or part of its Extensions of Credit made by it to any
Borrower, or interest thereon, or receive any collateral in respect thereof
(whether voluntarily or involuntarily, by set-off or otherwise), in a greater
proportion than any such payment to or collateral received by any other Lender,
if any, in respect of such other Lender's Extensions of Credit made by it to
such Borrower, or interest thereon (in each case except to the extent that this
Agreement provides for payments to be allocated to the Lenders under a
particular Facility) or (ii) shall at any time after an Acceleration receive any
payment of all or part of the aggregate amount of the Extensions of Credit made
by such benefitted Lender to all Borrowers, or interest thereon, or receive any
collateral in respect thereof (whether voluntarily, by set-off, pursuant to
events or proceedings of the nature referred to in Section 11(f), or otherwise),
in a greater proportion than any such payment or collateral received by any
other Lender, if any, in respect by the aggregate amount of the Extensions of
Credit made by such Lender to all Borrowers, or interest thereon, then, in each
case described in the foregoing clauses (i) and (ii), such benefitted Lender
shall purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender's Extensions of Credit, or shall provide such
other Lenders with the benefits of any such collateral, or the proceeds thereof,
as shall be necessary to cause such benefitted Lender to share the excess
payment or benefits of such collateral or proceeds ratably with each of the
Lenders (to the extent required by the foregoing clause (i) or (ii), as
applicable); provided, however, that if all or any portion of such excess
payment or benefits is thereafter recovered from such benefitted Lender, such
purchase shall be rescinded, and the purchase price and benefits returned, to
the extent of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided
by law, each Lender shall have the right, without prior notice to the Borrowers,
any such notice being expressly waived by the Borrowers to the extent permitted
by applicable law, upon any amount becoming due and payable by a Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise) to
set-off and appropriate and apply against such amount any and all deposits
(general or special, time or demand, provisional or final), in any currency, and
any other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch, agency or Affiliate thereof to or
for the credit or the account of the Borrower. Each Lender agrees promptly to
notify the Borrowers and the Administrative Agents after any such set-off and
application made by such Lender, provided that the failure to give such notice
shall not affect the validity of such set-off and application.
<PAGE> 114
114
(c) Notwithstanding the foregoing, no Lender shall institute or
commence any proceeding to collect any amounts owed to it hereunder or shall
otherwise exercise any remedies (including setoff) with respect to the amounts
owed to it unless such Lender shall provide at least five Business Days' (or
such shorter period as may be consented to by the General Administrative Agent)
prior written notice thereof to the General Administrative Agent.
14.8 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by facsimile transmission), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be lodged with the Company and each
Administrative Agent.
14.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
14.10 Integration. This Agreement and the other Loan Documents
represent the agreement of the Borrowers, the Administrative Agents, and the
Lenders with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agents or any
Lender relative to subject matter hereof not expressly set forth or referred to
herein or in the other Loan Documents.
14.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
14.12 Submission To Jurisdiction; Waivers. (a) Each Borrower hereby
irrevocably and unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgement
in respect thereof, to the non-exclusive general jurisdiction of the
courts of the State of New York, the courts of the United States of
America for the Southern District of New York, and appellate courts from
any thereof;
(ii) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same;
<PAGE> 115
115
(iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to such Borrower at its address set forth in Section 14.2 or at
such other address of which each Administrative Agent shall have been
notified pursuant thereto;
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(v) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred
to in this subsection any special, exemplary, punitive or consequential
damages.
(b) The Canadian Borrower hereby irrevocably appoints the Company as
its agent for service of process in any proceeding referred to in Section
14.2(a) and agrees that service of process in any such proceeding may be made by
mailing or delivering a copy thereof to it care of the Company at its address
for notice set forth in Section 14.2(a).
14.13 Acknowledgments. Each Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither Administrative Agent nor any Lender has any fiduciary
relationship with or duty to such Borrower arising out of or in connection
with this Agreement or any of the other Loan Documents, and the
relationship between Administrative Agents and Lenders, on one hand, and
such Borrower, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Lenders or among such Borrower and the Lenders.
14.14 WAIVERS OF JURY TRIAL. EACH OF THE BORROWERS, THE
ADMINISTRATIVE AGENTS AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
14.15 Judgment. (a) If for the purpose of obtaining judgment in any
court it is necessary to convert a sum due hereunder in one currency into
another currency, the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures the General Administrative Agent could
purchase the first currency with such other currency in
<PAGE> 116
116
the city in which it normally conducts its foreign exchange operation for the
first currency on the Business Day preceding the day on which final judgment is
given.
(b) The obligation of each Borrower in respect of any sum due from
it to any Lender hereunder shall, notwithstanding any judgment in a currency
(the "Judgment Currency") other than that in which such sum is denominated in
accordance with the applicable provisions of this Agreement (the "Agreement
Currency"), be discharged only to the extent that on the Business Day following
receipt by such Lender of any sum adjudged to be so due in the Judgment Currency
such Lender may in accordance with normal banking procedures purchase the
Agreement Currency with the Judgment Currency; if the amount of Agreement
Currency so purchased is less than the sum originally due to such Lender in the
Agreement Currency, such Borrower agrees notwithstanding any such judgment to
indemnify such Lender against such loss, and if the amount of the Agreement
Currency so purchased exceeds the sum originally due to any Lender, such Lender
agrees to remit to such Borrower such excess.
14.16 Confidentiality. Each Lender agrees to keep confidential all
non-public information provided to it by the Company pursuant to this Agreement
that is designated by the Company in writing as confidential; provided that
nothing herein shall prevent any Lender from disclosing any such information (i)
to its affiliates, the Administrative Agents or any other Lender, (ii) to any
Transferee which agrees to comply with the provisions of this subsection, (iii)
to its employees, directors, agents, attorneys, accountants and other
professional advisors, or to direct or indirect contractual counterparts in swap
agreements relating to swaps with a Borrower or such contractual counterparties'
professional advisors provided that any such contractual counterparty or its
professional advisors shall agree to keep such confidential information
confidential, (iv) upon the request or demand of any Governmental Authority
having jurisdiction over such Lender, (v) in response to any order of any court
or other Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (vi) which has been publicly disclosed other than in breach
of this Agreement, or is currently publicly available or is in the possession of
a Lender on a nonconfidential basis or is disclosed to a Lender on a
nonconfidential basis by a person who in so doing has not violated a duty of
confidentiality owing to the Company (vii) to the National Association of
Insurance Commissioners or any similar organization or any nationally recognized
rating agency that requires access to information about a Lender's investment
portfolio in connection with ratings issued with respect to such Lender or
(viii) in connection with the exercise of any remedy hereunder.
14.17 Effect of Amendment and Restatement. On the Closing Date, the
Existing Credit Agreement and the Guarantee and Collateral Agreement (as defined
in the Existing Credit Agreement) shall be amended, restated and superseded in
their entirety, and the Mortgages and Canadian Collateral Documents (as such
terms are defined in the Existing Credit Agreement) are being amended and/or
affirmed as provided herein. The parties hereto acknowledge and agree that (a)
this Agreement and the other Loan Documents, whether executed and delivered in
connection herewith or otherwise, do not constitute a novation or termination of
the obligations of the Loan Parties (as defined in the Existing Credit
Agreement) under the Existing Credit Agreement as in effect prior to the Closing
<PAGE> 117
117
Date; (b) such obligations are in all respects continuing (as amended and
restated hereby) with only the terms thereof being modified as provided in this
Agreement; (c) the Liens, guarantees and security interests as granted under the
Security Documents (as defined in this Agreement) securing payment of such
obligations are in all respects continuing and in full force and effect and
secure the payment of the obligations of the Loan Parties under (and as defined)
in this Agreement; and (d) upon the effectiveness of this Agreement, all loans
outstanding under the Existing Credit Agreement immediately before the
effectiveness of this Agreement will be continued as Loans hereunder or will be
repaid in accordance with the Existing Credit Agreement on the Closing Date and
reborrowed hereunder as provided herein, and, except as provided herein with
respect to the Specified Acceptances, all outstanding letters of credit and
bankers' acceptances under the Existing Credit Agreement will be continued as
Letters of Credit and Acceptances, respectively, hereunder, in each case on the
terms and conditions set forth in this Agreement.
<PAGE> 118
118
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
LES, INC.
By: /s/ HENRY TAYLOR
----------------------------------------
LAIDLAW ENVIRONMENTAL SERVICES
(CANADA) LTD.
By: /s/ HENRY TAYLOR
----------------------------------------
TORONTO DOMINION (TEXAS), INC.,
as General Administrative Agent and Lender
By: /s/ WADE JACOBSON
----------------------------------------
THE TORONTO-DOMINION BANK,
as Canadian Administrative Agent
By: /s/ DEREK HANNON
----------------------------------------
TD SECURITIES (USA) INC.,
as Arranger
By: /s/ BREANDON O'HALLORAN
----------------------------------------
<PAGE> 119
119
THE TORONTO-DOMINION BANK,
as a Lender
By: /s/ DAVID PANKHURST
----------------------------------------
THE BANK OF NOVA SCOTIA,
as Managing Agent, Co-Documentation Agent
and Lender
By: /s/ WILLIAM E. ZARRETT
----------------------------------------
THE FIRST NATIONAL BANK OF CHICAGO,
as Managing Agent, Co-Documentation Agent
and Lender
By: /s/ BRETT NEUBERT
----------------------------------------
NATIONSBANK, N.A.,
as Syndication Agent, Managing Agent and
Lender
By: /s/ DAVID SACHSENMAIER
----------------------------------------
WACHOVIA BANK, N.A.,
as Managing Agent and Lender
By: /s/ DONALD E. SELLERS
----------------------------------------
<PAGE> 120
120
VAN KAMPEN MERRITT AMERICAN
CAPITAL PRIME RATE INCOME TRUST
By: /s/ KATHLEEN A. ZARN
----------------------------------------
OAK HILL SECURITIES FUND, L.P.
BY: OAK HILL SECURITIES GENPAR, L.P., its
General Partner
BY: OAK HILL SECURITIES MGP, INC., its
General Partner
By: /s/ SCOTT D. KRASE
----------------------------------
PILGRIM AMERICA PRIME RATE TRUST
By: /s/ DANIEL A. NORMAN
----------------------------------------
KZH HOLDING CORPORATION III
By: /s/ VIRGINIA CONWAY
----------------------------------------
JACKSON NATIONAL LIFE INSURANCE
COMPANY
BY: PPM AMERICA, INC., as attorney in fact,
on behalf of Jackson National Life
Insurance Company
By: /s/ MICHAEL DIRE
------------------------------------
<PAGE> 121
121
AMERICAN GENERAL ANNUITY
INSURANCE COMPANY
By: /s/ JULIA S. TUCKER
----------------------------------------
METROPOLITAN LIFE INSURANCE
COMPANY
By: /s/ JAMES R. DINGLER
----------------------------------------
KZH-CRESCENT CORPORATION
By: /s/ VIRGINIA CONWAY
----------------------------------------
KZH-CRESCENT 2 CORPORATION
By: /s/ VIRGINIA CONWAY
----------------------------------------
CRESCENT/MACH I PARTNERS, L.P.
BY: TCW ASSET MANAGEMENT COMPANY,
as its Investment Manager
By: /s/ MARK L. GOLD
----------------------------------
<PAGE> 122
122
ARCHIMEDES FUNDING LLC
BY: ING CAPITAL ADVISORS, INC., as
Collateral Manager
By: /s/ MICHAEL D. HATLEY
----------------------------------
CYPRESSTREE INVESTMENT
MANAGEMENT COMPANY, INC.
AS: Attorney-in-Fact and on behalf of FIRST
ALLMERICA FINANCIAL LIFE
INSURANCE COMPANY as Portfolio
By: /s/ PETER MERRILL
----------------------------------
ING HIGH INCOME PRINCIPAL
PRESERVATION FUND HOLDINGS, LDC
BY: ING CAPITAL ADVISORS, INC., as
Investment Advisor
By: /s/ MICHAEL HATLEY
----------------------------------
Title: Vice President &
Portfolio Manager
KZH-ING-1-CORPORATION
By: /s/ VIRGINIA CONWAY
----------------------------------------
<PAGE> 123
123
INDOSUEZ CAPITAL FUNDING III, LIMITED
BY: INDOSUEZ CAPITAL LUXEMBOURG, as
Collateral Manager
By: /s/ FRANCOISE BERTHELOT
----------------------------------
KZH-ING-2-CORPORATION
By: /s/ VIRGINIA CONWAY
----------------------------------------
KZH SOLEIL CORPORATION
By: /s/ VIRGINIA CONWAY
----------------------------------------
DELANO COMPANY
BY: PACIFIC INVESTMENT MANAGEMENT
COMPANY, as its Investment Advisor
By: /s/ RAYMOND KENNEDY
----------------------------------
CONTINENTAL ASSURANCE COMPANY
SEPARATE ACCOUNT (E)
BY: TCW ASSET MANAGEMENT COMPANY,
as Attorney-in-Fact
By: /s/ MARK L. GOLD
----------------------------------
<PAGE> 124
124
By: /s/ JONATHAN R. INSULL
----------------------------------
ROYALTON COMPANY
BY: PACIFIC INVESTMENT MANAGMENT
COMPANY, as its Investment Advisor
By: /s/ RAYMOND KENNEDY
----------------------------------
DEEPROCK & COMPANY
BY: EATON VANCE MANAGEMENT, as
Investment Advisor
By: /s/ PAYSON F. SWAFFIELD
----------------------------------
<PAGE> 125
Annex A
PRICING GRID
<TABLE>
<CAPTION>
==========================================================================================================
Applicable Applicable
Margin Margin
for LIBOR Applicable for
Loans/ Margin for Canadian
Stamping Base Rate Term Commitment
Consolidated Total Leverage Ratio Fee Rate Loans Loans Fee Rate
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Greater than or equal to 4:00:1.00 2.375% 1.375% 1.375% 0.500%
- ----------------------------------------------------------------------------------------------------------
Greater than or equal to 3.50:1.00, but
less than 4.00:1.00 2.250% 1.250% 1.250% 0.500%
- ----------------------------------------------------------------------------------------------------------
Greater than or equal 3.25:1.00, but less
than 3.50:1.00 2.000% 1.000% 1.000% 0.375%
- ----------------------------------------------------------------------------------------------------------
Greater than or equal to 3.00:1.00, but
less than 3.25:1.00 1.875% 0.875% 0.875% 0.375%
- ----------------------------------------------------------------------------------------------------------
Greater than or equal to 2.50:1.00, but
less than 3.00:1.00 1.500% 0.500% 0.500% 0.375%
- ----------------------------------------------------------------------------------------------------------
Greater than or equal to 2.00:1.00, but
less than 2.50:1.00 1.125% 0.125% 0.125% 0.250%
- ----------------------------------------------------------------------------------------------------------
Greater than or equal to 1.50:1.00, but
less than 2.00:1.00 0.875% 0% 0% 0.250%
- ----------------------------------------------------------------------------------------------------------
Less than 1.50:1.00 0.625% 0% 0% 0.150%
==========================================================================================================
</TABLE>
Changes in the Applicable Margin or in the Commitment Fee Rate resulting from
changes in the Consolidated Total Leverage Ratio shall become effective on the
date (the "Adjustment Date") on which financial statements are received by the
General Administrative Agent and the Canadian Administrative Agent pursuant to
Section 9.1(a) or 9.1(b) (but in any event not later than the 45th day after the
end of each of the first three quarterly periods of each fiscal year or the 90th
day after the end of each fiscal year, as the case may be) and shall remain in
effect until the next change to be effected pursuant to this paragraph. If any
financial statements referred to above are not delivered within the time periods
specified above, then, until such financial statements are delivered, the
Consolidated Total Leverage Ratio as at the end of the fiscal period that would
have been covered thereby shall for the purposes of this definition be deemed to
be greater than 4.00 to 1.00. Each determination of the Consolidated Total
Leverage Ratio pursuant to this definition shall be made with respect to the
period of four consecutive fiscal quarters of the Company ending at the end of
the period covered by the relevant financial statements.
Notwithstanding the foregoing, until the first Adjustment Date occurring
following the end of the first two full fiscal quarters to be completed after
the Closing Date, the Applicable Margins and Commitment Fee Rate will be as set
forth above opposite Consolidated Total Leverage Ratio greater than or equal to
4.00 to 1:00.
<PAGE> 126
SCHEDULE 1.1F to
CREDIT AGREEMENT
----------------
ADDRESSES FOR NOTICES
Toronto Dominion (Texas), Inc.
909 Fannin, Suite 1700
Houston, Texas 77010
Attention: Jano Mott
Telephone: 713-653-8231
Facsimile: 713-951-9921
The Toronto-Dominion Bank
TD Tower
Toronto Dominion Centre
9th Floor
Toronto, Ontario M5K 1A2
Attention: David Pankhurst
Telephone: 416-982-2375
Facsimile: 416-982-4468
TD Securities (USA) Inc.
31 West 52nd Street
New York, New York 10019
Attention: Bill Evenson
Telephone: 212-927-7593
Facsimile: 212-262-1926
The Bank of Nova Scotia
600 Peachtree St., N.E.
Suite 2700
Atlanta, GA 30308
Attn: Willam Zarrett
Tel: 404-877-1504
Fax: 404-888-8998
Attn: Carmen Malizia
Tel: 404-877-1521
Fax: 404-888-8998
with a copy to:
The Bank of Nova Scotia
Corporate Credit East
44 King St. W.
Toronto, Ontario M5H 1H1
Canada
<PAGE> 127
2
Attn: Stephen Eisen
Tel: 416-866-4766
Attn: Jean Hopkins
Tel: 416-866-7094
Fax: 416-866-2009
The First National Bank of Chicago
1 First National Plaza
Mail Suite 0167, 1-10
Chicago, IL 60670
Attn: Courtenay Wood
Tel: 312-732-1563
Fax: 312-732-5435
NationsBank, N.A.
100 North Tyron St.
Charlotte, NC 28255
Attn: David Sachsenmaier
NC1-007-12-04
Tel: 704-386-3160
Fax: 704-388-9215
Attn: Grant Harbrecht
NC1-007-20-01
Tel: 704-386-0507
Fax: 704-388-6453
Wachovia Bank
1401 Main Street
Suite 705
Columbia, SC 29226
Attn: Gene Sellers
Tel: 803-765-3130
Fax: 803-765-3232
with a copy to:
<PAGE> 128
3
Wachovia Bank
400 South Tryon Street
31st Floor
Charlotte, NC 28202-1915
Attn: Paul Grube
Tel: 704-378-5078
Fax: 704-378-5035
and:
Wachovia Bank
191 Peachtree
26th Floor
Atlanta, GA 30303
Attn: Mark Abraham
Tel: 404-332-1253
Fax: 404-332-4005
and:
Womble, Carlyle
3300 One First Union Center
301 South College Street
Charlotte, NC 28202-6025
Attn: Bill McMillin
Tel: 910-331-4972
Fax: 910-331-4955
Van Kampen American Capital Prime Rate Income Trust
One Parkview Plaza
Oakbrook Terrace, IL 60181
Attn: Jeff Maillet
Tel: 630-684-6438
Fax: 630-684-6741
with a copy to:
Hopkins & Sutter
3 First National Plaza
43rd Floor
Chicago, IL 60602
Attn: John Powers, Esq.
Fax: 312-558-6538
<PAGE> 129
4
Oak Hill Securities Fund, LP
65 East 55th Street
32nd Floor
New York, NY 10022
Attn: Scott Krase
Tel: 212-326-1551
Fax: 212-593-3956
Pilgrim America Prime Rate Trust
2 Renaissance Square
40 North Central Avenue
Suite 1200
Phoenix, AZ 85004-4424
Attn: Dan Norman
Tel: 602-417-8112
Fax: 602-417-8327
KZH Holding III Corporation
c/o The Chase Manhattan Bank
450 West 33rd Street
15th Floor
New York, NY 10011
Attn: Virginia Conway
Tel: 212-946-7575
Fax: 212-946-7776
with a copy to:
Gibson, Dunn & Crutcher
200 Park Avenue
New York, NY 10166
Attn: Lee Ann Duffy
Tel: 212-351-3809
Fax: 212-351-5311
Jackson National Life Insurance Company
c/o PPM America, Inc.
225 W. Wacker Drive
Suite 1200
Chicago, IL 60606
Attn: Michael DiRe
Tel: 312-634-2509
Fax: 312-634-0054
<PAGE> 130
5
Americal General Annuity Insurance Company
2929 Allen Parkway, A37-01
Houston, TX 77019
Attn: Victoria Chin
Tel: 713-831-1261
Fax: 713-831-1366
Metropolitan Life Insurance Company
1 Madison Avenue
Area 7H
New York, NY 10010
Attn: Jennifer Kalb
Tel: 212-578-8716
Fax: 212-578-3916
with a copy to:
Metropolitan Life Insurance Company
334 Madison Avenue
Convent Station, NJ 07961
Attn: Frank MonFalcone
Tel: 973-254-3228
973-254-3204
Fax: 973-254-3050
KZH-Crescent Corporation
c/o The Chase Manhattan Bank
450 West 33rd Street
15th Floor
New York, NY 10011
Attn: Virginia Conway
Tel: 212-946-7575
Fax: 212-946-7776
with a copy to:
Gibson, Dunn & Crutcher
200 Park Avenue
New York, NY 10166
Attn: Lee Ann Duffy
Tel: 212-351-3809
Fax: 212-351-5311
<PAGE> 131
6
KZH-Crescent 2 Corporation
c/o The Chase Manhattan Bank
450 West 33rd Street
15th Floor
New York, NY 10011
Attn: Virginia Conway
Tel: 212-946-7575
Fax: 212-946-7776
with a copy to:
Gibson, Dunn & Crutcher
200 Park Avenue
New York, NY 10166
Attn: Lee Ann Duffy
Tel: 212-351-3809
Fax: 212-351-5311
Crescent/Mach I Partners, L.P.
c/o TCW Asset Management Company
200 Park Avenue, Suite 2200
New York, NY 10166-0228
Attn: Mark L. Gold/Justin Driscoll
Tel: 212-297-4000
Fax: 212-297-4159
with a copy to:
Crescent/Mach I Partners, L.P.
c/o State Street Bank & Trust Co.
Two International Place
Boston, MA 02110
Attn: Howie Gortman
Tel: 617-664-5282
Fax: 617-664-5367
Archimedes Funding, L.L.C.
c/o ING Capital Advisors
333 S. Grand Avenue, Suite 4250
Los Angeles, CA 90071
Attn: Michael Hatley
Tel: 213-346-3972
Fax: 213-346-3995
<PAGE> 132
7
First Allmerica Financial Life
Insurance Company
c/o CypressTree Investment Managment Company, Inc.
125 High Street, 14th Floor
Boston, MA 02110
Attn: Peter Merrill
Tel: 617-946-0600
Fax: 617-946-5681
ING High Income Principal Preservation
Fund Holdings, LDC
c/o ING Capital Advisors
333 S. Grand Avenue, Suite 4250
Los Angeles, CA 90071
Attn: Michael Hatley
Tel: 213-346-3972
Fax: 213-346-3995
KZH-ING-1-Corporation
c/o The Chase Manhattan Bank
450 West 33rd Street
15th Floor
New York, NY 10011
Attn: Virginia Conway
Tel: 212-946-7575
Fax: 212-946-7776
with a copy to:
Gibson, Dunn & Crutcher
200 Park Avenue
New York, NY 10166
Attn: Lee Ann Duffy
Tel: 212-351-3809
Fax: 212-351-5311
Indosuez Capital Funding III, Limited
1211 Avenue of the Americas
7th Floor
New York, NY 10036
Attn: Francois Berthelot
Tel: 212-278-2213
Fax: 212-278-2254
with a copy to:
<PAGE> 133
8
Indosuez Capital Funding III, Limited
c/o Queensgate Bank & Trust Company Limited
P.O. Box 30464 SMB/South Church Street
Ugland House, 5th Floor
George Town
Grand Cayman, Cayman Islands
British West Indies
KZH-ING-2-Corporation
c/o The Chase Manhattan Bank
450 West 33rd Street
15th Floor
New York, NY 10011
Attn: Virginia Conway
Tel: 212-946-7575
Fax: 212-946-7776
with a copy to:
Gibson, Dunn & Crutcher
200 Park Avenue
New York, NY 10166
Attn: Lee Ann Duffy
Tel: 212-351-3809
Fax: 212-351-5311
KZH SOLEIL CORPORATION
c/o The Chase Manhattan Bank
450 West 33rd Street
15th Floor
New York, NY 10011
Attn: Virginia Conway
Tel: 212-946-7575
Fax: 212-946-7776
with a copy to:
Gibson, Dunn & Crutcher
200 Park Avenue
New York, NY 10166
Attn: Lee Ann Duffy
Tel: 212-351-3809
Fax: 212-351-5311
<PAGE> 134
9
Delano Company
c/o Pacific Investment Management Co.
840 Newport Center Drive
Newport Beach, CA 92660
Attn: Melissa Fedjasz
Tel: 714-717-5169
Fax: 714-718-2623
Continental Assurance Company
c/o TCW Asset Management Company
200 Park Avenue, Suite 2200
New York, NY 10166-0228
Attn: Mark L. Gold/Justin Driscoll
Tel: 212-297-4000
Fax: 212-297-4159
Royalton Company
c/o Pacific Investment Management Co.
840 Newport Center Drive
Newport Beach, CA 92660
Attn: Melissa Fedjasz
Tel: 714-717-5169
Fax: 714-718-2623
Deeprock & Company
c/o Eaton Vance Management
24 Federal Street
6th Floor
Boston, MA 02110
Attn: Payson Swaffield
Tel: 617-654-8486
Fax: 617-695-9594
with a copy to:
Mayer Brown & Platt
1675 Broadway
New York, NY 10019
Attn: Andrew Mattei
Tel: 212-506-2572
Fax: 212-262-1910
<PAGE> 135
EXECUTION COPY
================================================================================
AMENDED AND RESTATED CREDIT AGREEMENT
among
LES, INC.,
LAIDLAW ENVIRONMENTAL SERVICES (CANADA) LTD.,
The Several Lenders
from Time to Time Parties hereto,
TORONTO DOMINION (TEXAS), INC.,
as General Administrative Agent,
THE TORONTO-DOMINION BANK,
as Canadian Administrative Agent,
TD SECURITIES (USA) INC.,
as Arranger,
THE BANK OF NOVA SCOTIA,
NATIONSBANK, N.A.,
THE FIRST NATIONAL BANK OF CHICAGO,
and
WACHOVIA BANK, N.A.,
as Managing Agents,
THE BANK OF NOVA SCOTIA
and
THE FIRST NATIONAL BANK OF CHICAGO,
as Co-Documentation Agents,
and
NATIONSBANK, N.A.,
as Syndication Agent
Dated as of April 3, 1998
================================================================================
<PAGE> 136
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINITIONS.................................................... 2
1.1 Defined Terms.................................................. 2
1.2 Other Definitional Provisions.................................. 32
SECTION 2. AMOUNT AND TERMS OF U.S. COMMITMENTS........................... 32
2.1 U.S. Term Loan Commitments..................................... 32
2.2 Procedure for U.S. Term Loan Borrowing......................... 33
2.3 Repayment of U.S. Term Loans................................... 34
2.4 Revolving Credit Commitments................................... 36
2.5 Procedure for Revolving Credit Borrowing....................... 37
2.6 Termination or Reduction of Revolving Credit Commitments....... 37
2.7 Evidence of Debt............................................... 38
SECTION 3. LETTERS OF CREDIT.............................................. 38
3.1 L/C Commitment................................................. 38
3.2 Procedure for Issuance of Letter of Credit..................... 39
3.3 Commissions, Fees and Other Charges............................ 39
3.4 L/C Participations............................................. 40
3.5 Reimbursement Obligation of the Company........................ 41
3.6 Obligations Absolute........................................... 41
3.7 Letter of Credit Payments...................................... 42
3.8 Applications................................................... 42
SECTION 4. AMOUNT AND TERMS OF THE CANADIAN TERM LOAN COMMITMENTS......... 42
4.1 Canadian Term Loan Commitments................................. 42
4.2 Procedure for Canadian Term Loan Borrowing..................... 42
4.3 Reduction of Canadian Facility; Repayment of Canadian Term
Loans ....................................................... 43
4.4 Evidence of Debt............................................... 45
SECTION 5. AMOUNT AND TERMS OF THE ACCEPTANCES ........................... 45
5.1 Acceptance Commitments......................................... 45
5.2 Creation of Acceptances........................................ 46
5.3 Purchase of Acceptances........................................ 47
5.4 Stamping Fees.................................................. 48
5.5 Acceptance Reimbursement Obligations........................... 48
5.6 Acceptances to be Allocated in order to be Created Ratably..... 50
5.7 Special Provisions Relating to Acceptance Notes................ 50
SECTION 6. GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT... 51
6.1 Commitment Fees, etc. ......................................... 51
6.2 Optional Prepayments........................................... 51
- i -
<PAGE> 137
6.3 Mandatory Prepayments and Commitment Reductions................ 52
6.4 Conversion and Continuation Options............................ 56
6.5 Minimum Amounts of Tranches.................................... 56
6.6 Interest Rates and Payment Dates............................... 57
6.7 Computation of Interest and Fees............................... 57
6.8 Inability to Determine Interest Rate........................... 58
6.9 Pro Rata Treatment and Payments................................ 59
6.10 Illegality..................................................... 61
6.11 Requirements of Law............................................ 61
6.12 Taxes.......................................................... 62
6.13 Indemnity...................................................... 65
6.14 Change of Lending Office....................................... 65
SECTION 7. REPRESENTATIONS AND WARRANTIES................................. 65
7.1 Financial Condition............................................ 66
7.2 No Change...................................................... 67
7.3 Corporate Existence; Compliance with Law....................... 67
7.4 Corporate Power; Authorization; Enforceable Obligations........ 67
7.5 No Legal Bar................................................... 67
7.6 No Material Litigation......................................... 68
7.7 No Default..................................................... 68
7.8 Ownership of Property; Liens................................... 68
7.9 Intellectual Property.......................................... 68
7.10 No Burdensome Restrictions..................................... 68
7.11 Taxes.......................................................... 68
7.12 Federal Regulations............................................ 69
7.13 ERISA.......................................................... 69
7.14 Canadian Benefit and Pension Plans............................. 69
7.15 Investment Company Act; Other Regulations...................... 70
7.16 Subsidiaries................................................... 70
7.17 Purpose of Loans............................................... 70
7.18 Environmental Matters.......................................... 70
7.19 Accuracy of Information, etc................................... 71
7.20 Security Documents............................................. 72
7.21 Solvency....................................................... 73
7.22 Regulation H................................................... 73
7.23 Corsan Trucking, Inc........................................... 73
SECTION 8. CONDITIONS PRECEDENT........................................... 73
8.1 Conditions to Initial Extensions of Credit..................... 73
8.2 Conditions to Extensions of Credit made on the Merger Date..... 78
8.3 Conditions to Extension of Credit.............................. 79
SECTION 9. AFFIRMATIVE COVENANTS.......................................... 80
9.1 Financial Statements........................................... 80
9.2 Certificates; Other Information................................ 81
9.3 Payment of Obligations......................................... 82
- ii -
<PAGE> 138
9.4 Conduct of Business and Maintenance of Existence............... 82
9.5 Maintenance of Property; Insurance............................. 82
9.6 Inspection of Property; Books and Records; Discussions......... 82
9.7 Notices........................................................ 82
9.8 Environmental Laws............................................. 83
9.9 Further Assurances............................................. 84
9.10 Additional Collateral.......................................... 85
9.11 Canadian Benefit and Pension Plans............................. 86
9.12 Interest Rate Protection....................................... 87
9.13 Consummation of Merger......................................... 87
9.14 Pledge Agreement Supplement.................................... 87
SECTION 10. NEGATIVE COVENANTS............................................. 87
10.1 Financial Condition Covenants.................................. 87
10.2 Limitation on Indebtedness..................................... 89
10.3 Limitation on Liens............................................ 89
10.4 Limitation on Guarantee Obligations............................ 91
10.5 Limitation on Fundamental Changes.............................. 91
10.6 Limitation on Disposition of Assets............................ 92
10.7 Limitation on Dividends........................................ 92
10.8 Limitation on Investments, Loans and Advances.................. 93
10.9 Limitation on Optional Payments and Modifications of Debt
Instruments ................................................. 94
10.10 Limitation on Transactions with Affiliates..................... 94
10.11 Limitation on Sales and Leasebacks............................. 94
10.12 Limitation on Changes in Fiscal Year........................... 95
10.13 Limitation on Negative Pledge Clauses.......................... 95
10.14 Limitation on Lines of Business................................ 95
10.15 Canadian Benefit and Pension Plans............................. 95
10.16 Hedging Agreements............................................. 96
SECTION 11. EVENTS OF DEFAULT.............................................. 96
SECTION 12. THE ADMINISTRATIVE AGENT....................................... 99
12.1 Appointment.................................................... 99
12.2 Delegation of Duties...........................................100
12.3 Exculpatory Provisions.........................................100
12.4 Reliance by Administrative Agents..............................100
12.5 Notice of Default..............................................101
12.6 Non-Reliance on Administrative Agents and Other Lenders........101
12.7 Indemnification................................................102
12.8 Agent in Its Individual Capacity...............................102
12.9 Successor Agent................................................102
12.10 Others.........................................................103
SECTION 13. GUARANTEE......................................................103
13.1 Guarantee......................................................103
13.2 No Subrogation, Contribution, Reimbursement or Indemnity.......104
- iii -
<PAGE> 139
13.3 Amendments, etc. with respect to the Canadian Borrower
Obligations ................................................104
13.4 Guarantee Absolute and Unconditional..........................105
13.5 Reinstatement.................................................106
13.6 Payments......................................................106
SECTION 14. MISCELLANEOUS.................................................106
14.1 Amendments and Waivers........................................106
14.2 Notices.......................................................107
14.3 No Waiver; Cumulative Remedies................................108
14.4 Survival of Representations and Warranties....................108
14.5 Payment of Expenses and Taxes.................................108
14.6 Successors and Assigns; Participations and Assignments........109
14.7 Adjustments; Set-off..........................................112
14.8 Counterparts..................................................113
14.9 Severability..................................................113
14.10 Integration...................................................113
14.11 GOVERNING LAW.................................................113
14.12 Submission To Jurisdiction; Waivers...........................113
14.13 Acknowledgments...............................................114
14.14 WAIVERS OF JURY TRIAL.........................................114
14.15 Judgment......................................................114
14.16 Confidentiality...............................................115
- iv -
<PAGE> 140
SCHEDULES
1.1A Commitments of U.S. Lenders
1.1B Commitments of Canadian Lenders
1.1C Existing Letters of Credit
1.1D Existing Acceptances
1.1E Specified Acceptance
1.1F Addresses for Notices
2 Properties Covered by Existing Mortgages
3 Mortgage Recording Jurisdictions
4 Initial Canadian Collateral Documents
7.6 Litigation
7.9 Intellectual Property Matters
7.16 Subsidiaries
7.20 Canadian Collateral Perfection Procedures
8.2(g) Safety-Kleen Outstanding Debt
10.2(f) Existing Indebtedness
10.3(f) Existing Liens
10.4 Existing Guarantee Obligations
10.8 Existing Loans to Officers
EXHIBITS
A-1 Form of Draft
A-2 Form of Request for Acceptances
B-1 Form of Guarantee and Collateral Agreement
B-2 Form of Acquisition Corp. Pledge Agreement
C Form of Revolving Credit Note
D Form of U.S. Term Note
E Form of Canadian Term Note
F [Reserved]
G Form of Acceptance Note
H Form of Prepayment Option Notice
I Form of Closing Certificate
J [Reserved]
K [Reserved]
L Form of Assignment and Acceptance
M Form of Mortgage Amendment
N Form of Mortgage
O Form of Intercreditor Agreement
P Form of Exchange Agent Agency Agreement
- v -
<PAGE> 1
Exhibit 4(e)
SUPPLEMENT
Reference is hereby made to the Amended and Restated Credit
Agreement, dated as of April 3, 1998 (as the same may be amended, supplemented
or otherwise modified, the "Credit Agreement"), among LES, INC., a Delaware
corporation (the "Company"), LAIDLAW ENVIRONMENTAL SERVICES (CANADA) LTD., a
Canadian corporation and a wholly owned Subsidiary of the Company (the "Canadian
Borrower"; together with the Company, the "Borrowers"), the several banks and
other financial institutions or entities from time to time parties thereto (the
"Lenders"), TORONTO DOMINION (TEXAS), INC., as general administrative agent (in
such capacity, the "General Administrative Agent"), THE TORONTO-DOMINION BANK,
as Canadian administrative agent (in such capacity, the "Canadian Administrative
Agent"; together with the General Administrative Agent, the "Administrative
Agents"), TD SECURITIES (USA) INC., as advisor to the Borrowers and arranger of
the commitments described in the Credit Agreement, THE BANK OF NOVA SCOTIA,
NATIONSBANK, N.A., THE FIRST NATIONAL BANK OF CHICAGO and WACHOVIA BANK, N.A.,
as managing agents, THE BANK OF NOVA SCOTIA and THE FIRST NATIONAL BANK OF
CHICAGO, as co-documentation agent, and NATIONSBANK, N.A., as syndication agent.
Terms defined in the Credit Agreement are used herein with the meanings set
forth in the Credit Agreement unless otherwise defined herein.
1. This SUPPLEMENT (this "Supplement"), dated as of May 21, 1998, to
the Credit Agreement is hereby entered into by the Borrowers and the General
Administrative Agent pursuant to subsections 10.2(h) and 14.1 of the Credit
Agreement.
2. The Company hereby agrees that, so long as the Commitments remain
in effect, any Loan, Reimbursement Obligation, Acceptance Reimbursement
Obligation, Acceptance Note or Letter of Credit remains outstanding or any
amount is owing to any Lender or either Administrative Agent under the Credit
Agreement or under any other Loan Document, the Company shall not permit the
Senior Leverage Ratio (as defined below) as at the last day of any fiscal
quarter of the Company ending during any fiscal year set forth below, commencing
with the fiscal quarter ending November 30, 1998, to exceed the ratio set forth
below opposite such fiscal year:
<TABLE>
<CAPTION>
Senior
Fiscal Year Leverage Ratio
----------- --------------
<S> <C>
1999 4.00:1.00
2000 3.25:1.00
2001 2.75:1.00
2002 2.25:1.00
2003 2.00:1.00
2004 and thereafter 1.50:1.00
</TABLE>
"Senior Leverage Ratio" shall mean, as of any date of determination,
the ratio of (a) the aggregate principal amount of all Indebtedness of the
Company and its Subsidiaries outstanding under the Credit Agreement as at such
date and (ii) the aggregate principal
<PAGE> 2
2
amount of all other senior Indebtedness of the Company and its Subsidiaries
(excluding Indebtedness evidenced by the High Yield Notes) as at such date to
(b) the Consolidated Operating Cash Flow for the four fiscal quarters ended on
or most recently prior to such date of determination.
3. The parties hereby agree that the covenant contained in paragraph
2 of this Supplement shall be a covenant of the Company under the Credit
Agreement and a breach of such covenant shall constitute a Default under the
Credit Agreement.
4. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
<PAGE> 3
3
IN WITNESS WHEREOF, the parties hereto have caused this Supplement
to the Credit Agreement to be duly executed and delivered by their proper and
duly authorized officers as of the day and year first above written.
LES, INC.
By: \s\ PAUL HUMPHREYS
---------------------------------------
Title: Senior Vice President and Chief
Financial Officer
LAIDLAW ENVIRONMENTAL SERVICES
(CANADA) LTD.
By: \s\ PAUL HUMPHREYS
---------------------------------------
Title: Senior Vice President and Chief
Financial Officer
TORONTO DOMINION (TEXAS), INC.,
as General Administrative Agent
By: \s\ WADE C. JACOBSON
---------------------------------------
Title: Managing Director
<PAGE> 1
Exhibit 4(f)
WAIVER AND FIRST AMENDMENT
WAIVER AND FIRST AMENDMENT (this "Amendment"), dated as of May 15,
1998, to (i) the Amended and Restated Credit Agreement, dated as of April 3,
1998 (as the same may be amended, supplemented or otherwise modified, the
"Credit Agreement"), among LES, INC., a Delaware corporation (the "Company"),
LAIDLAW ENVIRONMENTAL SERVICES (CANADA) LTD., a Canadian corporation and a
wholly owned Subsidiary of the Company (the "Canadian Borrower"; together with
the Company, the "Borrowers"), the several banks and other financial
institutions or entities from time to time parties thereto (the "Lenders"),
TORONTO DOMINION (TEXAS), INC., as general administrative agent (in such
capacity, the "General Administrative Agent"), THE TORONTO-DOMINION BANK, as
Canadian administrative agent (in such capacity, the "Canadian Administrative
Agent"; together with the General Administrative Agent, the "Administrative
Agents"), TD SECURITIES (USA) INC., as advisor to the Borrowers and arranger of
the commitments described in the Credit Agreement, THE BANK OF NOVA SCOTIA,
NATIONSBANK, N.A., THE FIRST NATIONAL BANK OF CHICAGO and WACHOVIA BANK, N.A.,
as managing agents (each, in such capacity, a "Managing Agent"), THE BANK OF
NOVA SCOTIA and THE FIRST NATIONAL BANK OF CHICAGO, as co-documentation agent
(each, in such capacity, a "Co-Documentation Agent"), and NATIONSBANK, N.A., as
syndication agent (in such capacity, the "Syndication Agent"), and (ii) the
Guarantee and Collateral Agreement (as defined below).
W I T N E S S E T H :
WHEREAS, the Borrowers and Laidlaw Environmental Services, Inc., a
Delaware corporation ("Holdings"), have requested that Administrative Agents and
the Lenders agree to waive compliance with certain provisions of the Amended and
Restated Guarantee and Collateral Agreement, dated as of April 3, 1998 (as the
same may be amended, supplemented or otherwise modified, the "Guarantee and
Collateral Agreement"), made by Holdings and each of the other Grantors named
therein in favor of the General Administrative Agent for the benefit of the
Lenders upon the terms and subject to the conditions set forth herein; and
WHEREAS, the Borrowers have requested that the Administrative Agents
and the Lenders agree to amend certain provisions of the Credit Agreement upon
the terms and subject to the conditions set forth herein; and
WHEREAS, the Administrative Agents and the Lenders have agreed to
such waivers and amendments only upon the terms and subject to the conditions
set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto hereby agree as follows:
1. Defined Terms. Terms defined in the Credit Agreement are used
herein with the meanings set forth in the Credit Agreement unless otherwise
defined herein.
<PAGE> 2
2
2. Waiver of Section 5.12(c) of the Guarantee and Collateral
Agreement. The General Administrative Agent and the Lenders hereby waive
compliance with the provisions of Section 5.12(c) of the Guarantee and
Collateral Agreement to the extent and only to the extent necessary to permit
Holdings to guarantee the obligations of the Company under the High Yield Notes;
provided, that such guarantee is subordinated to the obligations of Holdings
under the Loan Documents on terms reasonably acceptable to the General
Administrative Agent; provided, further, that Holdings shall not amend the
subordination terms of such guarantee without the prior written consent of the
Required Lenders.
3. Amendment of Section 1.1 of the Credit Agreement. Section 1.1 of
the Credit Agreement is hereby amended by:
(a) inserting after clause (e) of the definition of "Change of
Control" the following: "or (f) if at any time a "Change of Control"
occurs as defined in the indenture governing the High Yield Notes"; and
(b) deleting the last sentence of the definition of "Revolving
Credit Commitment" and inserting in lieu thereof the following: "The
original aggregate amount of the Revolving Credit Commitments is
$450,000,000; provided that at no time shall the aggregate principal
amount of all Revolving Credit Loans exceed $300,000,000 plus an amount
equal to the aggregate increase in Revolving Credit Commitments pursuant
to subsection 2.8."
4. Amendment of Subsection 2.4 of the Credit Agreement. Subsection
2.4(a) of the Credit Agreement is hereby amended by inserting at the end of
clause (ii) of the first sentence thereof the following: "plus an amount equal
to the aggregate increase in Revolving Credit Commitments pursuant to subsection
2.8".
5. Amendment of Section 2 of the Credit Agreement. Section 2 of the
Credit Agreement is hereby amended by adding a new subsection 2.8 at the end
thereof, which shall read as follows:
"2.8 Revolving Credit Commitment Increases. (a) In the event
that the Company wishes to increase the aggregate Revolving Credit
Commitments at any time that no Default or Event of Default has occurred
and is continuing, it shall notify the General Administrative Agent in
writing of the amount (the "Offered Increase Amount") of such proposed
increase (such notice, a "R/C Commitment Increase Notice"). The Company
may, with the consent of the General Administrative Agent (which consent
shall not be unreasonably withheld), (i) offer one or more of the Lenders
the opportunity to participate in all or a portion of the Offered Increase
Amount pursuant to subsection (c) below and/or (ii) offer one or more
additional banks, financial institutions or other entities the opportunity
to participate in all or a portion of the Offered Increase Amount pursuant
to paragraph (b) below. Each R/C Commitment Increase Notice shall specify
which Lenders and/or banks, financial institutions or other entities the
Company desires to participate in such commitment increase. The Company
or, if requested by the Company, the General Administrative
<PAGE> 3
3
Agent will notify such Lenders, and/or banks, financial institutions or
other entities of such offer.
(b) Any additional bank, financial institution or other entity which
the Company selects to offer participation in the increased Revolving
Credit Commitments approved by the General Administrative Agent and which
elects to become a party to this Agreement and obtain a Revolving Credit
Commitment in an amount so offered and accepted by it pursuant to
subsection 2.8(a)(ii) shall execute a New Lender Supplement with the
Borrowers and the General Administrative Agent, substantially in the form
of Exhibit Q, whereupon such bank, financial institution or other entity
(herein called a "New Lender") shall become a Lender for all purposes and
to the same extent as if originally a party hereto and shall be bound by
and entitled to the benefits of this Agreement, and Schedule 1.1A shall be
deemed to be amended to add the name and Revolving Credit Commitment of
such New Lender, provided that the Revolving Credit Commitment of any such
New Lender shall be in an amount not less than $5,000,000.
(c) Any Lender which accepts an offer to it by the Company to
increase its Revolving Credit Commitment pursuant to subsection 2.8(a)(i)
shall, in each case, execute a R/C Commitment Increase Supplement with the
Borrowers and the General Administrative Agent, substantially in the form
of Exhibit R, whereupon such Lender shall be bound by and entitled to the
benefits of this Agreement with respect to the full amount of its
Revolving Credit Commitment as so increased, and Schedule 1.1A shall be
deemed to be amended to so increase the Revolving Credit Commitment of
such Lender.
(d) If any bank, financial institution or other entity becomes a New
Lender pursuant to subsection 2.8(b) or any Lender's Revolving Credit
Commitment is increased pursuant to subsection 2.8(c), additional
Revolving Credit Loans made on or after the effectiveness thereof (the
"Re-Allocation Date") shall be made pro rata based on the Revolving Credit
Commitment Percentages in effect on and after such Re-Allocation Date
(except to the extent that any such pro rata borrowings would result in
any Lender making an aggregate principal amount of Revolving Credit Loans
in excess of its Revolving Credit Commitment, in which case such excess
amount will be allocated to, and made by, such new Lenders and/or Lenders
with such increased Revolving Credit Commitments to the extent of, and pro
rata based on, their respective Revolving Credit Commitments otherwise
available for Revolving Credit Loans), and continuations of LIBOR Loans
outstanding on such Re-Allocation Date shall be effected by repayment of
such LIBOR Loans on the last day of the Interest Period applicable thereto
and the making of new LIBOR Loans pro rata based on such new Revolving
Credit Commitment Percentages. In the event that on any such Re-Allocation
Date there is an unpaid principal amount of Base Rate Loans, the Company
shall make prepayments thereof and borrowings of Base Rate Loans so that,
after giving effect thereto, the Base Rate Loans outstanding are held pro
rata based on such new Revolving Credit Commitment Percentages. In the
event that on any such Re-Allocation Date there is an unpaid principal
amount of LIBOR Loans, such LIBOR
<PAGE> 4
4
Loans shall remain outstanding with the respective holders thereof until
the expiration of their respective Interest Periods (unless the Company
elects to prepay any thereof in accordance with the applicable provisions
of this Agreement), and interest on and repayments of such LIBOR Loans
will be paid thereon to the respective Lenders holding such LIBOR Loans
pro rata based on the respective principal amounts thereof outstanding.
(e) Notwithstanding anything to the contrary in this subsection 2.8,
(i) in no event shall any transaction effected pursuant to this subsection
2.8 cause the aggregate Revolving Credit Commitments to exceed
$550,000,000, and (ii) no Lender shall have any obligation to increase its
Revolving Credit Commitment unless it agrees to do so in its sole
discretion."
6. Amendment of Section 10 of the Credit Agreement. (a) Section
10.13 of the Credit Agreement is hereby amended by inserting at the end thereof,
before the period, the following: ", that would secure the obligations or
liabilities of any Loan Parties under any Loan Documents".
(b) Section 10 of the Credit Agreement is hereby amended by adding a
new subsection 10.17 at the end thereof, which shall read as follows:
"10.17 Limitation on Designated Senior Indebtedness;
Defeasance. Designate any Indebtedness of such Person, or cause any
Indebtedness of such Person (in each case, other than Indebtedness under
the Loan Documents), to be "Designated Senior Indebtedness", as such term
is defined in the indenture governing the High Yield Notes; or deposit or
set aside any funds for the redemption or defeasance of the High Yield
Notes."
7. Amendment of Schedule 10.2f (Existing Indebtedness) to the Credit
Agreement. Schedule 10.2f (Existing Indebtedness) to the Credit Agreement is
hereby amended by deleting therefrom the references to "Pollution Control
Revenue Bonds, California Pollution Control Financing Authority, due July 1,
2027" in the amount of $19,500,000 and to "Hazardous Waste Treatment Revenue
Bonds, Tooele County, Utah, due July 1, 2027" in the amount of $45,700,000, and
a new Schedule 10.2f in the form of Annex A hereto shall be attached to the
Credit Agreement.
8. New Exhibits to the Credit Agreement. The Credit Agreement is
hereby amended by attaching thereto, in correct order, a new "Exhibit Q" and
"Exhibit R" in the forms attached hereto as Annexes B and C, respectively.
9. Conditions to Effectiveness. This Amendment shall become
effective (the actual date of such effectiveness, the "Amendment Effective
Date") as of the date first above written when (i) counterparts hereof shall
have been duly executed and delivered by each of the Borrowers and the Required
Lenders and acknowledged by each of the Grantors (as defined in the Guarantee
and Collateral Agreement) and (ii) a legal opinion of counsel to
<PAGE> 5
5
the Borrowers, in form and substance satisfactory to the General Administrative
Agent, shall have been delivered to the General Administrative Agent.
10. Borrower Representations. Each of the Borrowers represents and
warrants that:
(a) this Amendment has been duly authorized, executed and delivered by
each of the Borrowers;
(b) each of this Amendment, and the Credit Agreement as amended by this
Amendment, constitutes the legal, valid and binding obligation of each of
the Borrowers;
(c) each of the representations and warranties set forth in Section 7 of
the Credit Agreement are true and correct as of the Amendment Effective
Date; provided that references in the Credit Agreement to this "Agreement"
shall be deemed references to the Credit Agreement as amended to date and
by this Amendment; and
(d) after giving effect to this Amendment, there does not exist any
Default or Event of Default.
11. Continuing Effects. Except as expressly waived or amended
hereby, the Credit Agreement and the Guarantee and Collateral Agreement shall
continue to be and shall remain in full force and effect in accordance with its
terms.
12. Expenses. The Company agrees to pay and reimburse the General
Administrative Agent for all of its out-of-pocket costs and expenses incurred in
connection with the negotiation, preparation, execution, and delivery of this
Amendment, including the reasonable fees and expenses of counsel to such Agent.
13. Counterparts. This Amendment may be executed on any number of
separate counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
14. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
<PAGE> 6
6
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
LES, INC.
By:
-----------------------------------------
Title:
LAIDLAW ENVIRONMENTAL SERVICES
(CANADA) LTD.
By:
-----------------------------------------
Title:
TORONTO DOMINION (TEXAS), INC.,
as General Administrative Agent and Lender
By:
-----------------------------------------
Title:
THE TORONTO-DOMINION BANK,
as Canadian Administrative Agent
By:
-----------------------------------------
Title:
TD SECURITIES (USA) INC.,
as Arranger
By: /s/ BREANDON J. O'HALLORAN
-----------------------------------------
Title: Managing Director
<PAGE> 7
7
THE TORONTO-DOMINION BANK,
as a Lender
By: /s/ DAVID PANKHURST
------------------------------------------
Title: Manager
By:
------------------------------------------
Title:
THE BANK OF NOVA SCOTIA,
as Managing Agent, Co-Documentation Agent
and Lender
By: /s/ WILLIAM E. ZARRETT
------------------------------------------
Title: Sr. Relationship Manager
THE FIRST NATIONAL BANK OF CHICAGO,
as Managing Agent, Co-Documentation Agent
and Lender
By:
------------------------------------------
Title:
NATIONSBANK, N.A.,
as Syndication Agent, Managing Agent and
Lender
By: /s/ signature illegible
------------------------------------------
Title: Senior Vice President
WACHOVIA BANK, N.A.,
as Managing Agent and Lender
By: /s/ DONALD E. SELLERS
------------------------------------------
Title: Vice President
<PAGE> 8
8
VAN KAMPEN AMERICAN
CAPITAL PRIME RATE INCOME TRUST
By: /s/ JEFFREY W. MAILLET
---------------------------------------------
Title: Senior Vice President & Director
OAK HILL SECURITIES FUND, L.P.
BY: OAK HILL SECURITIES GENPAR, L.P., its
General Partner
BY: OAK HILL SECURITIES MGP, INC., its
General Partner
By:
---------------------------------------
Title: Vice President
PILGRIM AMERICA PRIME RATE TRUST
By:
---------------------------------------------
Title:
KZH HOLDING CORPORATION III
By: /s/ VIRGINIA CONWAY
---------------------------------------------
Title: Authorized Agent
JACKSON NATIONAL LIFE INSURANCE
COMPANY
BY: PPM AMERICA, INC., as attorney in fact,
on behalf of Jackson National Life Insurance
Company
By:
-----------------------------------------
Title:
<PAGE> 9
9
AMERICAN GENERAL ANNUITY
INSURANCE COMPANY
By:
---------------------------------------------
Title:
METROPOLITAN LIFE INSURANCE
COMPANY
By: /s/ JAMES R. DINGLER
---------------------------------------------
Title: Director
KZH-CRESCENT CORPORATION
By: /s/ VIRGINIA CONWAY
---------------------------------------------
Title: Authorized Agent
KZH-CRESCENT 2 CORPORATION
By: /s/ VIRGINIA CONWAY
---------------------------------------------
Title: Authorized Agent
CRESCENT/MACH I PARTNERS, L.P.
BY: TCW ASSET MANAGEMENT COMPANY,
as its Investment Manager
By:
---------------------------------------
Title:
<PAGE> 10
10
ARCHIMEDES FUNDING LLC
BY: ING CAPITAL ADVISORS, INC., as
Collateral Manager
By: /s/ MICHAEL D. HATLEY
--------------------------------------
Title: Senior Vice President
CYPRESSTREE INVESTMENT
MANAGEMENT COMPANY, INC.
AS: Attorney-in-Fact and on behalf of FIRST
ALLMERICA FINANCIAL LIFE
INSURANCE COMPANY as Portfolio
By: /s/ PETER K. MERRILL
--------------------------------------
Title: Managing Director
ING HIGH INCOME PRINCIPAL
PRESERVATION FUND HOLDINGS, LDC
BY: ING CAPITAL ADVISORS, INC., as
Investment Advisor
By: /s/ MICHAEL D. HATLEY
--------------------------------------
Title: Vice President &
Portfolio Manager
KZH-ING-1-CORPORATION
By: /s/ VIRGINIA CONWAY
--------------------------------------------
Title: Authorized Agent
<PAGE> 11
11
INDOSUEZ CAPITAL FUNDING III, LIMITED
BY: INDOSUEZ CAPITAL LUXEMBOURG, as
Collateral Manager
By: /s/ DANIEL H. SMITH
-----------------------------------
Title: First Vice President
KZH-ING-2-CORPORATION
By: /s/ VIRGINIA CONWAY
-----------------------------------
Title: Authorized Agent
KZH SOLEIL CORPORATION
By: /s/ VIRGINIA CONWAY
-----------------------------------
Title: Authorized Agent
DELANO COMPANY
BY: PACIFIC INVESTMENT MANAGEMENT
COMPANY, as its Investment Advisor
By:
-----------------------------------
Title:
CONTINENTAL ASSURANCE COMPANY
SEPARATE ACCOUNT (E)
BY: TCW ASSET MANAGEMENT COMPANY,
as Attorney-in-Fact
By:
-----------------------------------
Title:
<PAGE> 12
12
ROYALTON COMPANY
BY: PACIFIC INVESTMENT MANAGMENT
COMPANY, as its Investment Advisor
By: /s/ RAYMOND KENNEDY
------------------------------------
Title: Sr. Vice President
DEEPROCK & COMPANY
BY: EATON VANCE MANAGEMENT, as
Investment Advisor
By:
------------------------------------
Title:
AERIES FINANCE LTD.
By: /s/ ANDREW IAN WIGNALL
------------------------------------------
Title: Director
AG CAPITAL FUNDING PARTNERS, L.P.
BY: ANGELO, GORDON & CO., L.P.,
as Investment Advisor
By: /s/ signature illegible
------------------------------------------
Title: Managing Director
<PAGE> 13
13
ALLIANCE CAPITAL FUNDING, L.L.C.
BY: ALLIANCE CAPITAL MANAGEMENT
L.P., as Manager on behalf of ALLIANCE
CAPITAL FUNDING, L.L.C.
BY: ALLIANCE CAPITAL MANAGEMENT
CORPORATION, General Partner of
Alliance Capital Management L.P.
By:
-----------------------------------------------
Title:
AMARA-1 FINANCE LTD.
By:
-----------------------------------------------
Title:
AMARA-2 FINANCE LTD.
By:
-----------------------------------------------
Title:
BALANCED HIGH-YIELD FUND I LTD.
BY: BHF-BANK AKTIENGESELLSCHAFT
acting through its New York Branch
as its attorney-in-fact
By:
-----------------------------------------------
Title:
CAPTIVA FINANCE LTD.
By: /s/ DAVID EGGLISHAW
-----------------------------------------------
Title: Director
<PAGE> 14
14
CAPTIVA II FINANCE LTD.
By: /s/ DAVID EGGLISHAW
-----------------------------------------------
Title: Director
CERES FINANCE LTD.
By: /s/ DAVID EGGLISHAW
-----------------------------------------------
Title: Director
CHASE SECURITIES INC., as Agent for
THE CHASE MANHATTAN BANK
By:
-----------------------------------------------
Title:
FLOATING RATE PORTFOLIO
BY: CHANCELLOR LGT SENIOR SECURED
MANAGEMENT INC., as attorney in fact
By:
-----------------------------------------------
Title:
KEYPORT LIFE INSURANCE COMPANY
BY: CHANCELLOR LGT SENIOR SECURED
MANAGEMENT INC., as Portfolio Advisor
By:
-----------------------------------------------
Title:
<PAGE> 15
15
KZH-PAMCO CORPORATION
By:
-----------------------------------------------
Title:
MELLON BANK, N.A., solely in its capacity
as Trustee (as directed by Shenkman Capital
Management, Inc.) and not in its individual
capacity for General Motors Cash Management
Master Trust
By: /s/ BERNADETTE RIST
-----------------------------------------------
Title: Authorized Signatory
MERRILL LYNCH, PIERCE FENNER & SMITH INCORPORATED
By:
-----------------------------------------------
Title:
ML CBO IV (CAYMAN) LTD.
BY: PROTECTIVE ASSET MANAGEMENT
COMPANY, as Collateral Manager
By:
-----------------------------------------------
Title:
ML CLO XII PILGRIM AMERICA (CAYMAN) LTD.
BY: PILGRIM AMERICA INVESTMENTS,
INC., as its Investment Manager
By:
-----------------------------------------------
Title:
<PAGE> 16
16
ML CLO XV PILGRIM AMERICA (CAYMAN) LTD.
BY: PILGRIM AMERICA INVESTMENTS,
INC., as its Investment Manager
By:
-----------------------------------------------
Title:
MORGAN STANLEY SENIOR FUNDING, INC.
By: /s/ CHRISTOPHER PUCILLO
----------------------------------------------
Title: Vice President
MOUNTAIN CLO TRUST
By:
-----------------------------------------------
Title:
PAMCO CAYMAN LTD.
BY: PROTECTIVE ASSET MANAGEMENT
COMPANY, as Collateral Manager
By:
-----------------------------------------------
Title:
SENIOR DEBT PORTFOLIO
BY: BOSTON MANAGEMENT AND
RESEARCH, as Investment Advisor
By:
-----------------------------------------------
Title:
<PAGE> 17
17
STRATA FUNDING LTD.
By:/s/ signature illegible
-----------------------------------------------
Title: Director
VAN KAMPEN CLO I, LIMITED
BY: VAN KAMPEN AMERICAN CAPITAL
MANAGEMENT INC., as Collateral
Manager
By:/s/ JEFFREY W. MAILLET
-----------------------------------------------
Title: Senior Vice President & Director
<PAGE> 18
ACKNOWLEDGEMENT AND CONSENT
The undersigned does hereby acknowledge and consent to the foregoing
Amendment. The undersigned does hereby confirm and agree that, after giving
effect to such Amendment, the Guarantees and Collateral Agreement and other
Collateral Documents in favor of the General Administrative Agent or the
Canadian Administrative Agent, as the case may be, to which it is a party are
and shall continue to be in full force and effect and are hereby confirmed and
ratified in all respects.
LES, INC.
LAIDLAW ENVIRONMENTAL SERVICES,
INC.
LAIDLAW ENVIRONMENTAL SERVICES
(US),INC.
LES MERGER, INC.
LES ACQUISITION, INC.
LAIDLAW ENVIRONMENTAL SERVICES
OF ILLINOIS, INC.
GSX CHEMICAL SERVICES OF OHIO, INC.
LAIDLAW ENVIRONMENTAL SERVICES
(BDT), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(FS), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(GS), INC.
LAIDLAW ENVIRONMENTAL SERVICES OF
CHATTANOOGA, INC.
LAIDLAW ENVIRONMENTAL SERVICES OF
WHITE CASTLE, INC.
LAIDLAW ENVIRONMENTAL SERVICES
(RECOVERY), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(TS), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(IMPERIAL VALLEY), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(LOKERN), INC.
LAIDLAW ENVIRONMENTAL SERVICES
OF CALIFORNIA, INC.
LAIDLAW ENVIRONMENTAL SERVICES OF
SOUTH CAROLINA, INC.
LAIDLAW ENVIRONMENTAL SERVICES
(NORTH EAST), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(TES), INC.
LAIDLAW CHEMICAL SERVICES, INC.
LAIDLAW ENVIRONMENTAL SERVICES
(TOC), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(TG), INC.
<PAGE> 19
19
LAIDLAW ENVIRONMENTAL SERVICES
(ALTAIR), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(WT), INC.
LAIDLAW ENVIRONMENTAL SERVICES OF
BARTOW, INC.
LAIDLAW ENVIRONMENTAL SERVICES
(THERMAL TREATMENT), INC.
LEMC, INC.
LAIDLAW OSCO HOLDINGS, INC.
LAIDLAW ENVIRONMENTAL SERVICES OF
NASHVILLE, INC.
LAIDLAW ENVIRONMENTAL SERVICES
(CLIVE),INC.
LAIDLAW ENVIRONMENTAL SERVICES
(LONE AND GRASSY MOUNTAIN), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(TULSA), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(SAN ANTONIO), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(WICHITA), INC.
LAIDLAW ENVIRONMENTAL SERVICES OF
DELAWARE, INC.
CORSAN TRUCKING, INC.
USPCI, INC. OF GEORGIA
LAIDLAW ENVIRONMENTAL SERVICES
(SAN JOSE), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(SAWYER), INC.
CHEMCLEAR, INC. OF LOS ANGELES
LAIDLAW ENVIRONMENTAL SERVICES
(ROSEMOUNT), INC.
LES HOLDING'S, INC.
EAST CARBON DEVELOPMENT FINANCIAL
PARTNERS, INC.
LAIDLAW ENVIRONMENTAL SERVICES
(TUCKER), INC.
NINTH STREET PROPERTIES, INC.
LAIDLAW ENVIRONMENTAL SERVICES
(MT. PLEASANT), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(DEER TRAIL), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(MINNEAPOLIS), INC.
<PAGE> 20
20
LAIDLAW ENVIRONMENTAL SERVICES
(LOS ANGELES), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(BATON ROUGE), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(PLAQUEMINE), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(BRIDGEPORT), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(DEER PARK), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(TIPTON), INC.
LAIDLAW ENVIRONMENTAL, INC.
LAIDLAW ENVIRONMENTAL SERVICES
(SUSSEX), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(GLOUCESTER), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(CUSTOM TRANSPORT), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(ARAGONITE), INC.
LAIDLAW ENVIRONMENTAL SERVICES
(PUERTO RICO), INC.
By: /s/ HENRY H. TAYLOR
------------------------------
Name: Henry H. Taylor
Title: Secretary
<PAGE> 21
ANNEX A
SCHEDULE 10.2f EXISTING INDEBTEDNESS
<TABLE>
<S> <C>
Tax Exempt Bonds:
Hazardous Waste Disposal Revenue Bonds $ 10,000,000
Tooele County, Utah, Due August 1, 2010
Industrial Development Revenue Funding and 15,700,000
Improvements Bonds
The Industrial Development Board of The
Metropolitan Government of Nashville and
Davidson County (Tennessee), Due May 1, 2003
County of Lexington, South Carolina 2,700,000
Industrial Revenue Bonds
Due December 1, 2009
City of Denton, Texas Industrial Development Authority 2,700,000
Industrial Revenue Bonds, Due December 1, 2009
Total
-----------
31,100,000
===========
Amounts held in Trust relating to the above tax exempt bonds:
Hazardous Waste Disposal Revenue Bonds 1,349,317
Tooele County, Utah, Due August 2010
Industrial Development Revenue Funding and 8,659,230
Improvements Bonds
The Industrial Development Board of The
Metropolitan Government of Nashville and
Davidson County (Tennessee), Due May 1, 2003
-----------
10,008,547
===========
-----------
Net Amount of Tax Exempt Bonds: 21,091,453
===========
Capital Leases:
GE Capital 484,482
Xerox 19,156
-----------
503,638
===========
Notes:
Bryson (Davis) 146,745
Grassy Mountain (Semnani) 158,436
Miscellaneous Mortgages 593,000
Deutsche Bank, Bochum 151,000
Safety-Kleen Corporation Senior Debenture 9.25% 100,000,000
Due September 15, 1999
-----------
101,049,181
===========
</TABLE>
<PAGE> 22
ANNEX B
EXHIBIT Q
FORM OF NEW LENDER SUPPLEMENT
SUPPLEMENT, dated _________________, to the Amended and Restated
Credit Agreement, dated as of April 3, 1998 (as the same may be amended,
supplemented or otherwise modified, the "Credit Agreement"), among LES, INC., a
Delaware corporation (the "Company"), LAIDLAW ENVIRONMENTAL SERVICES (CANADA)
LTD., a Canadian corporation and a wholly owned Subsidiary of the Company (the
"Canadian Borrower"; together with the Company, the "Borrowers"), the several
banks and other financial institutions or entities from time to time parties
thereto (the "Lenders"), TORONTO DOMINION (TEXAS), INC., as general
administrative agent (in such capacity, the "General Administrative Agent"), THE
TORONTO-DOMINION BANK, as Canadian administrative agent (in such capacity, the
"Canadian Administrative Agent"; together with the General Administrative Agent,
the "Administrative Agents"), TD SECURITIES (USA) INC., as advisor to the
Borrowers and arranger of the commitments described in the Credit Agreement, THE
BANK OF NOVA SCOTIA, NATIONSBANK, N.A., THE FIRST NATIONAL BANK OF CHICAGO and
WACHOVIA BANK, N.A., as managing agents (each, in such capacity, a "Managing
Agent"), THE BANK OF NOVA SCOTIA and THE FIRST NATIONAL BANK OF CHICAGO, as
co-documentation agent (each, in such capacity, a "Co-Documentation Agent"), and
NATIONSBANK, N.A., as syndication agent (in such capacity, the "Syndication
Agent").
W I T N E S S E T H :
WHEREAS, the Credit Agreement provides in Section 2.8 thereof that
any bank, financial institution or other entity, although not originally a party
thereto, may become a party to the Credit Agreement in accordance with the terms
thereof by executing and delivering to the Borrowers and the General
Administrative Agent a supplement to the Credit Agreement in substantially the
form of this Supplement; and
WHEREAS, the undersigned was not an original party to the Credit
Agreement but now desires to become a party thereto;
NOW, THEREFORE, the undersigned hereby agrees as follows:
1. The undersigned agrees to be bound by the provisions of the
Credit Agreement, and agrees that it shall, on the date this Supplement is
accepted by the Borrowers and the General Administrative Agent, become a
Lender for all purposes of the Credit Agreement to the same extent as if
originally a party thereto, with a Revolving Credit Commitment of
$__________________.
2. The undersigned (a) represents and warrants that it is legally
authorized to enter into this Supplement; (b) confirms that it has
received a copy of the Credit Agreement, together with copies of the
financial statements delivered pursuant to Section ___ thereof and such
other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into this Supplement; (c) agrees
that it has made and will, independently and without reliance upon the
General Administrative Agent 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 the Credit Agreement or any instrument or document furnished
pursuant hereto or thereto; (d) appoints and authorizes the General
Administrative Agent to take such action as administrative agent on its
behalf and to exercise such powers and discretion under the Credit
Agreement or any instrument or document furnished pursuant hereto or
thereto as are delegated to the General Administrative Agent by the terms
thereof, together with such powers as are incidental thereto; and (e)
agrees that it will be bound by the provisions of the Credit Agreement and
will perform in accordance with its terms all the obligations which by the
terms of the Credit Agreement are required to be performed by it as a
Lender including, without limitation, if it is organized under the laws of
a jurisdiction outside the United States, its obligation pursuant to
Section 6.12 of the Credit Agreement.
3. The undersigned's address for notices for the purposes of the
Credit Agreement is as follows:
<PAGE> 23
2
4. Terms defined in the Credit Agreement shall have their defined
meanings when used herein.
IN WITNESS WHEREOF, the undersigned has caused this Supplement to be
executed and delivered by a duly authorized officer on the date first above
written.
[INSERT NAME OF LENDER]
By
--------------------------------
Title:
Accepted this day of
-----
- --------------, ----.
LES, INC.
By
----------------------------
Title:
Accepted this day of
----
- --------------, ----.
LAIDLAW ENVIRONMENTAL SERVICES (CANADA) LTD.
By
----------------------------
Title:
Accepted this day of
----
- --------------, ----.
TORONTO DOMINION (TEXAS), INC.,
as General Administrative Agent
By
----------------------------
Title:
<PAGE> 24
ANNEX C
EXHIBIT R
FORM OF COMMITMENT INCREASE SUPPLEMENT
SUPPLEMENT, dated _________________, to the Amended and Restated
Credit Agreement, dated as of April 3, 1998 (as the same may be amended,
supplemented or otherwise modified, the "Credit Agreement"), among LES, INC., a
Delaware corporation (the "Company"), LAIDLAW ENVIRONMENTAL SERVICES (CANADA)
LTD., a Canadian corporation and a wholly owned Subsidiary of the Company (the
"Canadian Borrower"; together with the Company, the "Borrowers"), the several
banks and other financial institutions or entities from time to time parties
thererto (the "Lenders"), TORONTO DOMINION (TEXAS), INC., as general
administrative agent (in such capacity, the "General Administrative Agent"), THE
TORONTO-DOMINION BANK, as Canadian administrative agent (in such capacity, the
"Canadian Administrative Agent"; together with the General Administrative Agent,
the "Administrative Agents"), TD SECURITIES (USA) INC., as advisor to the
Borrowers and arranger of the commitments described in the Credit Agreement, THE
BANK OF NOVA SCOTIA, NATIONSBANK, N.A., THE FIRST NATIONAL BANK OF CHICAGO and
WACHOVIA BANK, N.A., as managing agents (each, in such capacity, a "Managing
Agent"), THE BANK OF NOVA SCOTIA and THE FIRST NATIONAL BANK OF CHICAGO, as
co-documentation agent (each, in such capacity, a "Co-Documentation Agent"), and
NATIONSBANK, N.A., as syndication agent (in such capacity, the "Syndication
Agent").
W I T N E S S E T H :
WHEREAS, pursuant to the provisions of Section 2.8 of the Credit
Agreement, the undersigned may increase the amount of its Revolving Credit
Commitment in accordance with the terms thereof by executing and delivering to
the Borrowers and the General Administrative Agent a supplement to the Credit
Agreement in substantially the form of this Supplement; and
WHEREAS, the undersigned now desires to increase the amount of its
Revolving Credit Commitment under the Credit Agreement;
NOW THEREFORE, the undersigned hereby agrees as follows:
1. The undersigned agrees, subject to the terms and conditions of
the Credit Agreement, that on the date this Supplement is accepted by the
Borrowers and the General Administrative Agent it shall have its Revolving
Credit Commitment increased by $______________, thereby making the amount
of its Commitment $______________.
2. Terms defined in the Credit Agreement shall have their defined
meanings when used herein.
<PAGE> 25
2
IN WITNESS WHEREOF, the undersigned has caused this Supplement to be
executed and delivered by a duly authorized officer on the date first above
written.
[INSERT NAME OF LENDER]
By
--------------------------------
Title:
Accepted this day of
-----
- --------------, ----.
LES, INC.
By
----------------------------
Title:
Accepted this day of
----
- --------------, ----.
LAIDLAW ENVIRONMENTAL SERVICES (CANADA) LTD.
By
----------------------------
Title:
Accepted this day of
----
- --------------, ----.
TORONTO DOMINION (TEXAS), INC.,
as General Administrative Agent
By
----------------------------
Title:
<PAGE> 1
Exhibit 4(g)
COMMITMENT INCREASE SUPPLEMENT
SUPPLEMENT, dated June 3, 1998, to the Amended and Restated Credit
Agreement, dated as of April 3, 1998 (as the same may be amended, supplemented
or otherwise modified, the "Credit Agreement"), among LES, INC., a Delaware
corporation (the "Company"), LAIDLAW ENVIRONMENTAL SERVICES (CANADA) LTD., a
Canadian corporation and a wholly owned Subsidiary of the Company (the "Canadian
Borrower"; together with the Company, the "Borrowers"), the several banks and
other financial institutions or entities from time to time parties thererto (the
"Lenders"), TORONTO DOMINION (TEXAS), INC., as general administrative agent (in
such capacity, the "General Administrative Agent"), THE TORONTO-DOMINION BANK,
as Canadian administrative agent (in such capacity, the "Canadian Administrative
Agent"; together with the General Administrative Agent, the "Administrative
Agents"), TD SECURITIES (USA) INC., as advisor to the Borrowers and arranger of
the commitments described in the Credit Agreement, THE BANK OF NOVA SCOTIA,
NATIONSBANK, N.A., THE FIRST NATIONAL BANK OF CHICAGO and WACHOVIA BANK, N.A.,
as managing agents (each, in such capacity, a "Managing Agent"), THE BANK OF
NOVA SCOTIA and THE FIRST NATIONAL BANK OF CHICAGO, as co-documentation agent
(each, in such capacity, a "Co-Documentation Agent"), and NATIONSBANK, N.A., as
syndication agent (in such capacity, the "Syndication Agent").
W I T N E S S E T H :
WHEREAS, pursuant to the provisions of Section 2.8 of the Credit
Agreement, the undersigned may increase the amount of its Revolving Credit
Commitment in accordance with the terms thereof by executing and delivering to
the Borrowers and the General Administrative Agent a supplement to the Credit
Agreement in substantially the form of this Supplement; and
WHEREAS, the undersigned now desires to increase the amount of
its Revolving Credit Commitment under the Credit Agreement;
NOW THEREFORE, the undersigned hereby agrees as follows:
1. The undersigned agrees, subject to the terms and conditions of
the Credit Agreement, that on the date this Supplement is accepted by the
Borrowers and the General Administrative Agent it shall have its Revolving
Credit Commitment increased by $100,000,000, thereby making the amount of
its Commitment $259,677,419.36.
2. Terms defined in the Credit Agreement shall have their defined
meanings when used herein.
<PAGE> 2
2
IN WITNESS WHEREOF, the undersigned has caused this Supplement to be
executed and delivered by a duly authorized officer on the date first above
written.
TORONTO DOMINION (TEXAS), INC.
By /s/ WADE C. JACOBSON
--------------------------------
Title: Managing Director
Accepted this 3rd day of June, 1998.
LES, INC.
By /s/ PAUL R. HUMPHREYS
----------------------------------
Title: Senior Vice President & CFO
Accepted this 3rd day of June, 1998.
LAIDLAW ENVIRONMENTAL SERVICES (CANADA) LTD.
By /s/ PAUL R. HUMPHREYS
----------------------------------
Title: Senior Vice President & CFO
Accepted this 3rd day of June, 1998.
TORONTO DOMINION (TEXAS), INC.,
as General Administrative Agent
By /s/ WADE C. JACOBSON
----------------------------------
Title: Managing Director
<PAGE> 1
EXHIBIT 12
LAIDLAW ENVIRONMENTAL SERVICES, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Six Months Ended
Year Ended August 31,
February 28, 1998
1993(1) 1994 1995 1996
1997 1997 1998
------- ---- ---- ----
---- ---- ----
(dollars in
thousands)
<S> <C> <C> <C> <C>
<C> <C> <C>
Income (loss) from continuing
operations before income tax - 25,731 21,684 11,860
(306,122) 7,351 23,361
Add:
Portion of rents representative
of the interest factor - 8,577 11,800 11,967
12,033 6,016 5,135
Interest on indebtedness - 34,000 41,142 46,850
43,642 18,629 28,230
Amortization of deferred
financing charges - - - -
631 - 1,259
-----------------------------------------
- ------------------------------
Income as adjusted - 63,308 74,626 70,677
(249,816) 31,996 57,985
=========================================
==============================
Fixed charges:
Portion of rents representative
of the interest factor - 8,577 11,800 11,967
12,033 6,016 5,135
Interest on indebtedness - 34,000 41,142 46,850
43,642 18,629 28,230
Amortization of deferred
financing charges - - - -
631 - 1,259
-----------------------------------------
- ------------------------------
Total Fixed Charges - 42,577 52,942 58,817
56,306 24,645 34,624
=========================================
==============================
Ratio of earnings to fixed charges - 1.60 1.41 1.20
(4.44) 1.30 1.67
=========================================
==============================
</TABLE>
(1) Prior to May 15, 1997, the date of the Rollins Acquisition, the Company was
operated as a division of Laidlaw and, accordingly, the Company's results of
operations were included in the financial statements of Laidlaw. Certain of the
selected financial data for fiscal 1993 were combined with that of Laidlaw and
were not available on a separate basis.
<PAGE> 2
SAFETY-KLEEN CORP.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Fiscal Year
Twelve Weeks Ended
March 22, March 28,
1993 1994 1995 1996
1997 1997 1998
---- ---- ---- ----
---- ---- ----
(dollars in
thousands)
<S> <C> <C> <C> <C>
<C> <C> <C>
Income (loss) from continuing
operations before income tax (168,609) 84,826 92,468 101,648
100,500 19,437 16,243
Add:
Portion of rents representative
of the interest factor 6,933 7,067 8,267 10,500
13,467 2,936 3,256
Interest on indebtedness 11,111 15,209 20,230 19,240
18,108 4,361 3,612
---------------------------------------
- -----------------------------
Income as adjusted (150,565) 107,102 -120,965 131,388
132,075 26,734 23,111
=======================================
=============================
Fixed charges:
Portion of rents representative
of the interest factor 6,933 7,067 8,267 10,500
13,467 2,936 3,256
Interest on indebtedness 11,111 15,209 20,230 19,240
18,108 4,361 3,612
---------------------------------------
- -----------------------------
Total Fixed Charges 18,044 22,276 28,497 29,740
31,575 7,297 6,868
=======================================
=============================
Ratio of earnings to fixed charges (8.34) 4.81 4.24 4.42
4.18 3.66 3.37
=======================================
=============================
</TABLE>
<PAGE> 3
LAIDLAW ENVIRONMENTAL SERVICES, INC.
PRO FORMA COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
The following computations for fiscal 1997 and the six and twelve months ended
February 28, 1998 reflect, on a pro forma basis, earnings available for fixed
charges, and resultant ratios.
<TABLE>
<CAPTION>
Six Months Twelve
Fiscal Year Ended Months Ended
Ended February 28, February 28,
August 31, 1997 1998 1998
(dollars in thousands)
<S> <C> <C> <C>
Income (loss) from continuing
operations before income tax (393,503) 10,818 (352,388)
Add:
Portion of rents representative
of the interest factor 24,466 10,892 24,939
Interest on indebtedness,
including amortization of
deferred financing charges 180,456 89,840 180,525
-------------------------------------
Income as adjusted (188,581) 111,550 (146,924)
=====================================
Fixed charges:
Portion of rents representative
of the interest factor 24,466 10,892 24,939
Interest on indebtedness,
including amortization of
deferred financing charges 180,456 89,840 180,525
-------------------------------------
Total Fixed Charges 204,922 100,732 205,464
=====================================
Ratio of earnings to fixed charges (0.92) 1.11 (0.72)
=====================================
</TABLE>
<PAGE> 1
EXHIBIT 21
Subsidiaries of the Registrant
<TABLE>
<CAPTION>
Name of Company(1) Jurisdiction of Incorporation/Organization
- ----------------- ------------------------------------------
<S> <C>
Laidlaw Environmental Services (US), Inc. Delaware
Laidlaw Environmental Services (Lone and Grassy Oklahoma
Mountain), Inc.
Laidlaw Environmental Services (Tulsa), Inc. Oklahoma
Laidlaw Environmental Services (San Antonio), Inc. Texas
Laidlaw Environmental Services (Wichita), Inc. Kansas
Laidlaw Environmental Services of Delaware, Inc. Delaware
ECDC East, L.C. Utah
ECDC Services, L.C. Utah
Laidlaw Environmental Services (Rosemount), Inc. Minnesota
Laidlaw Environmental Services (Sawyer), Inc. Oklahoma
Laidlaw Environmental Services (Tucker), Inc. Georgia
Ninth Street Properties, Inc. Missouri
Laidlaw Environmental Services (San Jose), Inc. California
Chemclear, Inc. of Los Angeles California
USPCI, Inc. of Georgia Georgia
LES Holding's, Inc. Delaware
East Carbon Development Financial Partners, Inc. Utah
Laidlaw Environmental Services (Imperial Valley) Inc. California
Laidlaw Environmental Services (Lokern), Inc. California
Laidlaw Environmental Services (North East), Inc. New Hampshire
Laidlaw Environmental Services (Recovery) Inc. Louisiana
Laidlaw Environmental Services (TES), Inc. Texas
Corsan Trucking, Inc. Louisiana
Laidlaw Environmental Services (TG), Inc. Delaware
Laidlaw Environmental Services (TOC) Inc. South Carolina
Laidlaw Environmental Services (TS), Inc. Delaware
Laidlaw Environmental Services (Thermal Treatment), Inc. Delaware
GSX Chemical Services of Ohio, Inc. Ohio
LEMC, Inc. Delaware
Laidlaw Chemical Services, Inc. Massachussets
Laidlaw Environmental Services (Altair), Inc. Texas
Laidlaw Environmental Services (FS), Inc. Delaware
Laidlaw Environmental Services (BDT), Inc. New York
Laidlaw Environmental Services (GS), Inc. Tennessee
Laidlaw Environmental Services (Clive), Inc. Oklahoma
Laidlaw Environmental Services (WT), Inc. Ohio
Laidlaw OSCO Holdings, Inc. Delaware
Laidlaw Environmental Services of Nashville, Inc. Tennessee
Laidlaw Environmental Services of Bartow, Inc. Florida
Laidlaw Environmental Services of California, Inc. California
Laidlaw Environmental Services of Chattanooga, Inc. Tennessee
Laidlaw Environmental Services of Illinois, Inc. Illinois
Laidlaw Environmental Services of South Carolina, Inc. South Carolina
Laidlaw Environmental Services of White Castle, Inc. Colorado
LES Merger, Inc. Delaware
</TABLE>
- ----------
(1) All of the companies do business under their name of incorporation.
<PAGE> 2
2
<TABLE>
<CAPTION>
Name of Company(2) Jurisdiction of Incorporation/Organization
- ----------------- ------------------------------------------
<S> <C>
Laidlaw Environmental Services (Puerto Rico), Inc. Puerto Rico
Laidlaw Environmental Services (Bridgeport), Inc. Delaware
Laidlaw Environmental Services (Deer Park), Inc. Delaware
Laidlaw Environmental Services (Baton Rouge), Inc. Delaware
Laidlaw Environmental Services (Plaquemine), Inc. Delaware
Laidlaw Environmental Services (Custom Transport), Inc. Delaware
Laidlaw Environmental Services (Los Angeles), Inc. California
Laidlaw Environmental Services (Tipton), Inc. Delaware
Laidlaw Environmental Services (Gloucester), Inc. Delaware
Laidlaw Environmental Services (Deer Trail), Inc. Colorado
Laidlaw Environmental Services (Mt. Pleasant), Inc. Tennessee
Laidlaw Environmental Services (Minneapolis), Inc. Minnesota
Laidlaw Environmental Services (Aragonite), Inc. Delaware
Laidlaw Environmental Services (Sussex), Inc. Delaware
Laidlaw Environmental, Inc. Delaware
Safety-Kleen Corp. Wisconsin
Dirt Magnet, Inc. Colorado
The Midway Gas and Oil Company Colorado
Elgint Corp. Nevada
Safety-Kleen Envirosystems Company California
Safety-Kleen Envirosystems Company of Puerto Indiana
Rico, Inc.
Petrocon, Inc. Delaware
Phillips Acquisition Corp. Delaware
Safety-Kleen Aviation, Inc. Delaware
SK Insurance Company Vermont
SK Real Estate, Inc. Illinois
Safety-Kleen International, Inc. Delaware
Safety-Kleen Oil Recovery Co. Delaware
Safety-Kleen Oil Services, Inc. Delaware
The Solvents Recovery Service of New Jersey, Inc. New Jersey
3E Company Environmental, Ecological and California
Engineering
</TABLE>
- ----------
(2) All of the companies do business under their name of incorporation.
<PAGE> 1
EXHIBIT 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-4 (File No.
333- ) of our report, which includes an explanatory paragraph relating to the
revised statement of cash flows for the years ended August 31, 1996 and 1995,
dated October 7, 1997, except for the first two paragraphs of Note 17 as to
which is dated May 21, 1998, on our audits of the consolidated financial
statements and financial statement schedule of Laidlaw Environmental Services,
Inc. as of August 31, 1997 and 1996, and for each of the three years in the
period ended August 31, 1997. We also consent to the references to our firm
under the caption "Independent Accountants."
/s/ COOPERS & LYBRAND L.L.P.
Charlotte, North Carolina
June 22, 1998
<PAGE> 1
EXHIBIT 23(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Laidlaw Environmental Services, Inc.:
We consent to the incorporation by reference of our report dated November 8,
1996, except for the last paragraph under the footnote, "Indebtedness", which is
as of November 17, 1996, in this Registration Statement on Form S-4 of Laidlaw
Environmental Services, Inc. relating to the consolidated financial statements
of Rollins Environmental Services, Inc. as of September 30, 1996 and 1995, and
for each of the years in the three-year period ended September 30, 1996.
/s/ KPMG PEAT MARWICK LLP
Wilmington, Delaware
June 22, 1998
<PAGE> 1
EXHIBIT 23(c)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in this
registration statement on Form S-4 of our report dated February 12, 1998, except
with respect to the matters discussed in Note 12 as to which the date is April
1, 1998, included herein and to all references to our Firm included in this
registration statement.
/s/ ARTHUR ANDERSEN, LLP
Chicago, Illinois
June 22, 1998
<PAGE> 1
EXHIBIT 25
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- --------------------------------------------------------------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305 (B) (2)___________________
THE BANK OF NOVA SCOTIA TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
-------------------------------------------------------------
New York 13-5691211
(State of Incorporation (I.R.S. employer
If not a U.S. national bank) Identification number)
-------------------------------------------------------------
One Liberty Plaza
New York, N.Y. 10006
(Address of principal (Zip code)
Executive office)
-------------------------------------------------------------
-------------------------------------------------------------
LES, INC.
(Exact name of obligor as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
75-2178928
(I.R.S. employer identification no.)
1301 Gervais Street - Suite 300
Columbia, SC 29201
(Address of principal executive offices) (Postal Code)
-------------------------------------------------------------
SENIOR SUBORDINATED NOTES DUE 2008
(Title of the indenture securities)
<PAGE> 2
2
Item 1. General Information
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Federal Reserve Bank of New York
33 Liberty Street
New York, N.Y. 10045
State of New York Banking Department
State House, Albany, N.Y.
(b) Whether it is authorized to exercise corporate trust powers.
The Trustee is authorized to exercise corporate trust powers.
Item 2. Affiliation with the Obligor
If the obligor is an affiliate of the trustee, describe each such
affiliation. The obligor is not an affiliate of the Trustee.
Item 16. List of Exhibits
List below all exhibits filed as part of this statement of
eligibility.
Exhibit 1 - Copy of the Organization Certificate of the
Trustee as now in effect. (Exhibit 1 to T-1 to
Registration Statement No. 333-6688).
Exhibit 2 - Copy of the Certificate of Authority of the
Trustee to commerce business. (Exhibit 2 to T-1 to
Registration Statement No. 333-6688).
Exhibit 3 - None; authorization to exercise corporate trust
powers is continued in the documents identified
above as Exhibit 1 and 2.
Exhibit 4 - Copy of the existing By-Laws of the Trustee
(Exhibit 4 to T-1 to Registration Statement No.
333-6688).
Exhibit 5 - No Indenture referred to in Item 4.
Exhibit 6 - The consent of the Trustee required by Section 321
(b) of the Trust Indenture Act of 1939 (Exhibit 6
to T-1 to Registration Statement No. 333-27685).
Exhibit 7 - Copy of the latest Report of Condition of the
Trustee as of March 1, 1998.
<PAGE> 3
3
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, The Bank of Nova Scotia Trust Company of New York, a corporation
organized and existing under the laws of the State of New York, has duly caused
this statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of New York, and State of New York,
on the 24th day June, 1998.
THE BANK OF NOVA SCOTIA TRUST
COMPANY OF NEW YORK
By: /s/ GEORGE E. TIMMES
--------------------------
George E. Timmes
Vice President
<PAGE> 4
4
The Bank of Nova Scotia Trust Company of New York
- -------------------------------------------------
Legal Title of Bank
New York
- -------------------------------------------------
City
N.Y. 10006
- -------------------------------------------------
State Zip Code
FDIC Certificate Number |__|__|__|__|__|
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for March 31, 1998
All Schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
Schedule RC -- Balance Sheet
<TABLE>
<CAPTION>
Dollar Amounts in Thousands C100
- -----------------------------------------------------------------------------------------------------------
Assets Mil Thou
--------------------------
<S> <C> <C> <C>
1. Cash and balances due from depository institutions:
a. Noninterest-bearing balances and currency and coin(1)(2) ............ RCON
0061 50
--------------------------
b. Interest-bearing balances(3) ........................................ RCON -0-
0071
- -----------------------------------------------------------------------------------------------------------
2. Securities: RCON 1 774
a. Held-to-maturity securities (from Schedule RC-B, column A) .......... 1754
--------------------------
b. Available-for-sale securities (from Schedule RC-B, column D) ........ RCON
1773 -0-
- -----------------------------------------------------------------------------------------------------------
3. Federal funds sold(4) and securities purchased under agreements to resell RCON
1350 1 350
- -----------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
(1) Includes cash items in process of collection and unposted debits.
(2) The amount reported in this item must be greater than or equal to
the sum of Schedule RC-M, Items 3.a and 3.b.
(3) Includes time certificates of deposit not held for trading.
(4) Report "term federal funds sold" in Schedule RC, Item 4.a, "Loans
and leases, net of unearned income," and in Schedule RC-C, part 1.
<PAGE> 5
5
<TABLE>
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule RC-C) ........
b. LESS: Allowance for loan and lease losses ............................
c. LESS: Allocated transfer risk reserve ................................
--------------------------
d. Loans and leases, net of unearned income, allowance, and reserve
(item 4.a minus 4.b and 4.c) .........................................
RCON -0-
2125
- -----------------------------------------------------------------------------------------------------------
5. Trading assets .......................................................... RCON -0-
3545
- -----------------------------------------------------------------------------------------------------------
6. Premises and fixed assets (including capitalized leases ................. RCON
2145 12
- -----------------------------------------------------------------------------------------------------------
7. Other real estate owned (from Schedule RC-M) ............................ RCON
2150 -0-
- -----------------------------------------------------------------------------------------------------------
8. Investments in unconsolidated subsidiaries and associated companies (from RCON
Schedule RC-M) .......................................................... 2130 -0-
- -----------------------------------------------------------------------------------------------------------
9. Customers' liability to this bank on acceptances outstanding ............ RCON
2155 -0-
- -----------------------------------------------------------------------------------------------------------
10. Intangible assets (from Schedule RC-M) .................................. RCON
2143 -0-
- -----------------------------------------------------------------------------------------------------------
11. Other assets (from Schedule RC-F) ....................................... RCON
2160 115
- -----------------------------------------------------------------------------------------------------------
12. a. Total assets (sum of items 1 through 11) ............................. RCON 3 301
2170
b. Losses deferred pursuant to 12 U.S.C. 1823(j) ........................ RCON -0-
0306
c. Total assets and losses deferred pursuant to 12 U.S.C. 1823(j) (sum RCON 301
of items 12.a and 12.b) .............................................. 0307 3
- -----------------------------------------------------------------------------------------------------------
LIABILITIES
- -----------------------------------------------------------------------------------------------------------
13. Deposits:
a. In domestic offices (sum of totals of columns A and C from RCON
Schedule RC-E) ....................................................... 2200 1 021
(1) Noninterest-bearing(1) ...........................................
(2) Interest-bearing .................................................
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs ........
(1) Noninterest-bearing ..............................................
(2) Interest-bearing .................................................
- -----------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
(1) Includes total demand deposits and noninterest-bearing time and
savings deposits.
<PAGE> 6
6
<TABLE>
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
14. Federal funds purchased(2) and securities sold under agreements to RCON
repurchase .............................................................. 2800 -0-
- -----------------------------------------------------------------------------------------------------------
15. a. Demand notes issued to the U.S. Treasury ............................. RCON
2840 -0-
b. Trading liabilities .................................................. RCON
3548 -0-
- -----------------------------------------------------------------------------------------------------------
16. Other borrowed money (includes mortgage indebtedness and obligations
under capitalized leases): ..............................................
a. With a remaining maturity of one year or less ........................ RCON
b. With a remaining maturity of more than one year through three years .. 2332 -0-
c. With a remaining maturity of more than three years ................... RCON
A547 -0-
RCON
A548 -0-
- -----------------------------------------------------------------------------------------------------------
17. Not applicable ..........................................................
- -----------------------------------------------------------------------------------------------------------
18. Bank's liability on acceptances executed and outstanding ................ RCON
2920 -0-
- -----------------------------------------------------------------------------------------------------------
19. Subordinated notes and debentures(3) .................................... RCON
3200 -0-
- -----------------------------------------------------------------------------------------------------------
20. Other liabilities (from Schedule RC-G) .................................. RCON
2930 46
- -----------------------------------------------------------------------------------------------------------
21. Total liabilities (sum of items 13 through 20) .......................... RCON
2948 1 067
- -----------------------------------------------------------------------------------------------------------
22. Not applicable
- -----------------------------------------------------------------------------------------------------------
EQUITY CAPITAL
- -----------------------------------------------------------------------------------------------------------
23. Perpetual preferred stock and related surplus ........................... RCON
3838 -0-
- -----------------------------------------------------------------------------------------------------------
24. Common stock ............................................................ RCON
3230 1 000
- -----------------------------------------------------------------------------------------------------------
25. Surplus (exclude all surplus related to preferred stock) ................ RCON
3839 1 000
- -----------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
(2) Report "term federal funds purchased" in Schedule RC, item 16,
"other borrowed money."
(3) Includes limited-life preferred stock and related surplus.
<PAGE> 7
7
<TABLE>
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
26. a. Undivided profits and capital reserves................................ RCON
3832 234
b. Net unrealized holding gains (losses) on available-for-sale securities RCON
8434 -0-
- -----------------------------------------------------------------------------------------------------------
27. Cumulative foreign currency translation adjustments......................
- -----------------------------------------------------------------------------------------------------------
28. a. Total equity capital (sum of items 23 through 27)..................... RCON
3210 2 234
b. Losses deferred pursuant to 12 U.S.C. 1823(j)......................... RCON
0306 -0-
c. Total equity capital and losses deferred pursuant to 12 U.S.C. 1823(j) RCON
(sum of items 28.a and 28.b).......................................... 3559 2 234
- -----------------------------------------------------------------------------------------------------------
29. Total liabilities, equity capital, and losses deferred pursuant to U.S.C.
1823(j) (sum of items 21 and 28.c).......................................
--------------------------
RCON
2257 3 301
- -----------------------------------------------------------------------------------------------------------
</TABLE>
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that
best describes the most comprehensive level of auditing work performed for
the bank by independent external auditors as of any date during
1996....................................................................
