<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
November 21, 1994
CHAMBERS DEVELOPMENT COMPANY, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-9108 25-1214958
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
10700 Frankstown Road
Pittsburgh, Pennsylvania 15235
(Address of Principal (Zip Code)
Executive Offices)
Registrant's Telephone Number, including area code: 412/242-6237
<PAGE> 2
Item 5. Other Information
(a) In July 1993, the Company executed comprehensive amendments to its bank
credit facility (the "Credit Facility") and note purchase agreements (the
"Senior Notes"). On November 18, 1994, the Company reached an agreement in
principle regarding additional amendments, and on November 23, 1994 executed
such amendments (the "Amendments") to its Credit Facility and Senior Note
agreements, which include waivers (with respect to noncompliance of
consolidated working capital, consolidated tangible net worth and financial
statement delivery covenants) and revisions to the terms and conditions of the
Credit Facility and Senior Note agreements, principally with respect to payment
terms and compliance covenants.
The Amendments provide that 90% of the $74,421,000 scheduled payments
previously due on July 1, 1995 will be deferred until July 1, 1996, with
further deferral to December 31, 1996, at the Company's option, of up to 75% of
the $95,512,000 scheduled payments previously due on October 31, 1995 and
December 30, 1995 and all of the $95,512,000 aggregate scheduled payments due
on October 31, 1996 and December 30, 1996. Certain of such scheduled payments
due in 1995 and 1996 will be reduced by pro rata payments made prior to the
scheduled payment dates. The non- deferred portion of these scheduled payments
will be applied to reduce Senior Note obligations, industrial revenue bond
obligations and letters of credit issued under the Credit Facility. The
Amendments also provide that the remaining originally scheduled principal
payments on the Senior Notes due after 1996 become due on December 31, 1996.
The Amendments require, however, that the Company reduce Senior Note and Credit
Facility obligations by a total of $60,000,000, primarily through the payment
of the non-deferred portions of the scheduled payments discussed above and
other scheduled payments, between August 31, 1994 and December 31, 1995, of
which $20,000,000 must occur buy January 31, 1995. Of this amount, $13,189,000
has been paid to date. Portions of the remaining required payments are
expected to be satisfied by currently available funds and operating cash flow,
and in the absence of a refinancing of the Senior Note and Credit Facility
obligations during 1995, the Company will need to complete additional
divestitures to satisfy any remaining payments. Under the Amendments, the
Company is also required to pay to the holders of the Senior Notes and the
Credit Facility banks, the amount by which its daily average unrestricted cash
balance exceeds $40,000,000 for any calendar month, and a minimum of 50% of the
net proceeds from specified divestitures as permitted by the Amendments, which
proceeds will be applied to the $60,000,000 discussed above.
The Company is endeavoring to complete a refinancing of the Senior Note and
Credit Facility obligations by April 30, 1995. At the time of refinancing, the
Company may be required to pay an early redemption premium to the Senior Note
holders (the "Premium") based on the difference between the interest rates on
the Senior Notes and an adjusted rate for U.S. Treasury securities having
a similar maturity. Based on current interest rates on U.S. Treasury
securities, on April 30, 1995 the Premium would be approximately $5,691,000.
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The Amendments also require payment of escalating extension fees by the Company
to the Senior Note holders and Credit Facility banks, based upon the principal
amounts outstanding as of the beginning of each calendar quarter, until such
time as the existing debt under these agreements has been retired. Such
extension fees are expected to aggregate approximately $652,000 through April
30, 1995. The total of the extension fees and the Premium is an estimate and
the actual amount will depend on the actual time of the refinancing and the
average principal amounts outstanding under the Senior Notes through that
period. The extension fees and the Premium will be charged to expense during
the period ending with the refinancing. A fee of approximately $673,000 was
paid upon final execution of the Amendments.
The Amendments also provide, under certain conditions, for the issuance to the
Senior Note holders and Credit Facility banks, at nominal consideration, shares
of the Company's Class A Common Stock. In the event that the Company has not
refinanced the Senior Note and Credit Facility obligations prior to October 1,
1995, shares of Class A Common Stock equivalent to 4% of the Company's then
issued and outstanding Common Stock and Class A Common Stock become issuable.
An additional 4% becomes issuable if the Company has not refinanced prior to
April 1, 1996.
The Amendments contain financial covenants which require the Company to
maintain minimum levels of tangible net worth, working capital and quarterly
cash flows from operations. The Amendments also prohibit the incurrence of
additional indebtedness and the payment of cash dividends, and limit annual
cash capital expenditures.
The Company believes that a refinancing cannot be obtained without the final
settlement of certain shareholder litigation. Further, the payments required
under the settlement of the shareholder litigation would require the
refinancing of the Senior Notes and Credit Facility obligations. In the event
that a refinancing is not achieved, the liquidity and operations of the Company
would be materially and adversely affected.
(b) On November 28, 1994, the Company entered into an agreement and plan of
merger with USA Waste Services, Inc. ("USA Waste") and a wholly-owned
subsidiary of USA Waste (the "Merger Agreement"), pursuant to which the
subsidiary would merge with and into the Company, and USA Waste would issue
0.41667 shares of its common stock, subject to certain adjustments, for each
share of the Company's Class A Common Stock and Common Stock outstanding. As a
result of the merger, the Company would become a wholly-owned subsidiary of USA
Waste. USA Waste, which has 22,575,263 shares of common stock outstanding,
would issue an aggregate of approximately 27.8 million shares of its common
stock in connection with the merger, assuming no adjustment to the exchange
ratio. The merger is subject, among other things, to the receipt by each party
of an opinion from its investment banking firm relating to the financial
fairness of the merger to its respective shareholders, the approval of the
shareholders of both USA Waste and the Company, appropriate assurances as to
the treatment of the merger as a tax-free reorganization accounted for as a
pooling of interests, expiration of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, final
settlement of the shareholder litigation involving the Company, and certain
other conditions. It is anticipated that completion of the merger will require
approximately six months.
In connection with the Merger Agreement, USA Waste received proxies from
certain of the Company's shareholders authorizing USA Waste to vote such shares
in favor of the merger, subject to certain conditions and for a limited term.
The shares covered by these proxies have voting rights representing a majority
of the voting rights of all outstanding shares of the Company entitled to vote
on the merger. The Company has also received proxies from certain of USA
Waste's shareholders similarly authorizing the Company to vote such shares in
favor of the merger.
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Item 7. Financial Statements and Exhibits
The exhibits shall be furnished in accordance with the provisions of Items
304(a)(3) and 601 of Regulation S-K.
<TABLE>
<CAPTION>
Page of
Sequential
Exhibit No. Description Numbering
<S> <C> <C>
2 Agreement and Plan of Merger, dated November 28,
1994, by and among USA Waste Services, Inc.,
Envirofil, Inc. and Chambers Development
Company, Inc.
10.3(b) Eighth Amendment to Amended, Modified and Restated
Loan Agreement, dated as of November 23, 1994, by
and among Chambers Development Company, Inc. and
NationsBank of North Carolina, N.A., Bank of New
York, National City Bank, National Westminster
Bank USA, Bank of America NT & SA, Bank One,
Columbus, N.A., Philadelphia National Bank,
Commerzbank Aktiengesellschaft, NationsBank of
Virginia, N.A., PNC Bank N.A., Fleet Bank of
Massachusetts, N.A. and Michigan National Bank.
10.3(c) Ninth Amendment to Amended, Modified and Restated
Loan Agreement, dated as of November 23, 1994, by
and among Chambers Development Company, Inc. and
NationsBank of North Carolina, N.A., Bank of New
York, National City Bank, National Westminster
Bank USA, Bank of America NT & SA, Bank One,
Columbus, N.A., Philadelphia National Bank,
Commerzbank Aktiengesellschaft, NationsBank of
Virginia, N.A., PNC Bank N.A., Fleet Bank of
Massachusetts, N.A. and Michigan National Bank.
10.10 Second Amended and Restated Note Agreement dated
as of November 21, 1994 by and among Chambers
Development Company, Inc., New York Life
Insurance Company, and Phoenix Home Mutual
Life Insurance Company.
10.11 Amended and Restated Secured Note Agreement
dated as of November 21, 1994 by and among
Chambers Development Company, Inc. and Kemper
Investors Life Insurance Company, Lumbermens
Mutual Casualty Company, Federal Kemper Life
Assurance Company, The Equitable Life Assurance
Society of the United States, Equitable Variable
Life Insurance Company, IDS Life Insurance Company,
IDS Life Insurance Company of New York, American
</TABLE>
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<PAGE> 5
<TABLE>
<S> <C> <C>
Enterprise Life Insurance Company, The Mutual
Life Insurance Company of New York, MONY Life
Insurance Company of America, MONY Legacy Life
Insurance Company, Monumental Life Insurance
Company, AUSA Life Insurance Company, PFL Life
Insurance Company, Bankers United Life Assurance
Company, General Services Life Insurance Company,
Aid Association for Lutherans, Jefferson-Pilot
Life Insurance Company, Massachusetts Mutual
Life Insurance Company, American Family Mutual
Insurance Company, American Family Life Insurance
Company, The Canada Life Assurance Company,
Great-West Life & Annuity Insurance Company,
Fidelity & Guaranty Life Insurance Company,
Safeco Life Insurance Company, Modern Woodmen
of America, Pan-American Life Insurance Company,
American Life Casualty Insurance company and West
American Insurance Company.
99 Joint press release, dated November 28, 1994, of
USA Waste Services, Inc. and Chambers Development
Company, Inc.
</TABLE>
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<PAGE> 6
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CHAMBERS DEVELOPMENT COMPANY, INC.
By:________________________________
William Rodgers, Jr.
Senior Vice President and
Chief Financial Officer
DATE: December 15, 1994
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CHAMBERS DEVELOPMENT COMPANY, INC.
By: /s/ William Rodgers, Jr.
---------------------------
William Rodgers, Jr.
Senior Vice President and
Chief Financial Officer
DATE: December 15, 1994
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<PAGE> 1
EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
DATED AS OF
NOVEMBER 28, 1994
BY AND AMONG
USA WASTE SERVICES, INC.,
ENVIROFIL, INC.
AND
CHAMBERS DEVELOPMENT COMPANY, INC.
<PAGE> 2
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 28, 1994 (the
"Agreement"), by and among USA Waste Services, Inc., an Oklahoma corporation
("Parent"), Envirofil, Inc., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Subsidiary"), and Chambers Development Company, Inc., a
Delaware corporation (the "Company").
WHEREAS, Parent, Subsidiary and the Company are entering into this
Agreement in order to effectuate the merger of Subsidiary with and into the
Company (the "Merger"), as a result of which the Company will become a
wholly-owned subsidiary of Parent;
WHEREAS, concurrently with the execution hereof, and in order to
facilitate the consummation of the Merger, certain stockholders of Parent and
certain stockholders of the Company are executing and delivering certain other
agreements and irrevocable proxies; and
WHEREAS, Parent, Subsidiary and the Company intend the Merger to
qualify as a tax-free reorganization under the provisions of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code"), and the regulations
thereunder.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1. THE MERGER. Upon the terms and subject to the
conditions of this Agreement, at the Effective Time (as defined in Section 1.2)
in accordance with the Delaware General Corporation Law (the "DGCL"),
Subsidiary shall be merged with and into the Company and the separate existence
of Subsidiary shall thereupon cease. The Company shall be the surviving
corporation in the Merger and is hereinafter sometimes referred to as the
"Surviving Corporation."
SECTION 1.2. EFFECTIVE TIME OF THE MERGER. The Merger shall
become effective at such time (the "Effective Time") as shall be stated in a
Certificate of
<PAGE> 3
Merger, in a form mutually acceptable to Parent and the Company, to be filed
with the Secretary of State of the State of Delaware in accordance with the
DGCL (the "Merger Filing"). The Merger Filing shall be made simultaneously with
or as soon as practicable after the closing of the transactions contemplated by
this Agreement in accordance with Section 3.5. The parties acknowledge that it
is their mutual desire and intent to consummate the Merger as soon as
practicable after the date hereof. Accordingly, the parties shall use all
reasonable efforts to consummate, as soon as practicable, the transactions
contemplated by this Agreement in accordance with Section 3.5.
ARTICLE II
THE SURVIVING AND PARENT CORPORATIONS
SECTION 2.1. CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of Subsidiary as in effect immediately prior to the Effective
Time shall be the Certificate of Incorporation of the Surviving Corporation
after the Effective Time, and thereafter may be amended in accordance with its
terms and as provided in the DGCL.
SECTION 2.2. BY-LAWS. The By-laws of Subsidiary as in effect
immediately prior to the Effective Time shall be the By-laws of the Surviving
Corporation after the Effective Time, and thereafter may be amended in
accordance with their terms and as provided by the Certificate of Incorporation
of the Surviving Corporation and the DGCL.
SECTION 2.3. DIRECTORS. (a) The Board of Directors of Parent
shall take such corporate action as may be necessary to cause Parent's Board of
Directors immediately following the Effective Time to be composed of five
members designated by the Board of Directors of Parent and four members
designated by the Board of Directors of the Company.
(b) The Board of Directors of Parent shall take such corporate
action immediately prior to the Effective Time as may be necessary to appoint
an Executive Committee of Parent's Board of Directors immediately following the
Effective Time which shall be composed of three members selected by the Board
of Directors of Parent and two members selected by the Board of Directors of
the Company.
SECTION 2.4. OFFICERS. Except as otherwise agreed to by
Parent and the Company, the officers of the Company in office immediately prior
to the Effective Time shall be the officers of the Surviving Corporation, to
serve in accordance
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with the By-laws of the Surviving Corporation until their respective successors
are duly elected or appointed and qualified.
ARTICLE III
CONVERSION OF SHARES
SECTION 3.1. CONVERSION OF COMPANY SHARES IN THE MERGER. At
the Effective Time, by virtue of the Merger and without any action on the part
of any holder of any capital stock of the Company:
(a) each share of the Company's Common Stock, par value $.50
per share (the "Regular Common Stock"), and each share of the Company's
Class A Common Stock, par value $.50 per share (the "Class A Common Stock"
and, together with the Regular Common Stock, the "Company Common Stock"),
shall, subject to Sections 3.3 and 3.4, be converted into the right to
receive, without interest, .41667 (the "Exchange Ratio") of a share of the
common stock, par value $.01 per share, of Parent ("Parent Common Stock");
provided, however, that (i) in the event that the Average Market Price is
greater than $18.00, the "Exchange Ratio" shall be determined by dividing
$7.50 by the lesser of $19.20 or the Average Market Price, and (ii) in the
event that the Average Market Price is less than $10.80, the "Exchange
Ratio" shall be determined by dividing $4.50 by the Average Market Price.
As used herein, "Average Market Price" means the average of the closing
prices of Parent Common Stock (rounded to the nearest one thousandth) on
the ten (10) days immediately prior to the fifth day prior to the Closing
Date that Parent Common Stock is traded on the New York Stock Exchange and
for which closing prices are reported in The Wall Street Journal (or such
other publication mutually agreed to by the Parent and the Company);
(b) each share of capital stock of the Company, if any, owned
by Parent or any subsidiary of Parent or held in treasury by the Company or
any subsidiary of the Company immediately prior to the Effective Time shall
be cancelled and shall cease to exist from and after the Effective Time;
and
(c) subject to and as more fully provided in Section 7.9, each
unexpired option to purchase Company Common Stock that is outstanding at
the Effective Time, whether or not exercisable, shall automatically and
without any action on the part of the holder thereof be converted into an
option to purchase a number of shares of Parent Common Stock equal to the
number of shares of Company Common Stock that could be purchased under such
option multiplied
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<PAGE> 5
by the Exchange Ratio, at a price per share of Parent Common Stock equal
to the per share exercise price of such option divided by the
Exchange Ratio.
SECTION 3.2. CONVERSION OF SUBSIDIARY SHARES. At the
Effective Time, by virtue of the Merger and without any action on the part of
Parent as the sole stockholder of Subsidiary, each issued and outstanding share
of common stock, par value $.001 per share, of Subsidiary ("Subsidiary Common
Stock") shall be converted into one share of common stock, par value $.50 per
share, of the Surviving Corporation.
SECTION 3.3. EXCHANGE OF CERTIFICATES. (a) From and after the
Effective Time, each holder of an outstanding certificate which immediately
prior to the Effective Time represented shares of Company Common Stock shall be
entitled to receive in exchange therefor, upon surrender thereof to an exchange
agent reasonably satisfactory to Parent and the Company (the "Exchange Agent"),
a certificate or certificates representing the number of whole shares of Parent
Common Stock to which such holder is entitled pursuant to Section 3.1(a).
Notwithstanding any other provision of this Agreement, (i) until holders or
transferees of certificates theretofore representing shares of Company Common
Stock have surrendered them for exchange as provided herein, no dividends shall
be paid with respect to any shares represented by such certificates and no
payment for fractional shares shall be made and (ii) without regard to when
such certificates representing shares of Company Common Stock are surrendered
for exchange as provided herein, no interest shall be paid on any dividends or
any payment for fractional shares. Upon surrender of a certificate which
immediately prior to the Effective Time represented shares of Company Common
Stock, there shall be paid to the holder of such certificate the amount of any
dividends which theretofore became payable, but which were not paid by reason
of the foregoing, with respect to the number of whole shares of Parent Common
Stock represented by the certificate or certificates issued upon such
surrender.
(b) If any certificate for shares of Parent Common Stock is to
be issued in a name other than that in which the certificate for shares of
Company Common Stock surrendered in exchange therefor is registered, it shall
be a condition of such exchange that the person requesting such exchange shall
pay any transfer or other taxes required by reason of the issuance of
certificates for such shares of Parent Common Stock in a name other than that
of the registered holder of the certificate surrendered, or shall establish to
the satisfaction of Parent that such tax has been paid or is not applicable.
(c) Promptly after the Effective Time, Parent shall make
available to the Exchange Agent the certificates representing shares of Parent
Common Stock required to effect the exchanges referred to in paragraph (a)
above and cash for payment of any fractional shares referred to in Section 3.4.
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<PAGE> 6
(d) Promptly after the Effective Time, the Exchange Agent
shall mail to each holder of record of a certificate or certificates that
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock (the "Company Certificates") (i) a form letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Company Certificates shall pass, only upon actual
delivery of the Company Certificates to the Exchange Agent) and (ii)
instructions for use in effecting the surrender of the Company Certificates in
exchange for certificates representing shares of Parent Common Stock. Upon
surrender of Company Certificates for cancellation to the Exchange Agent,
together with a duly executed letter of transmittal and such other documents as
the Exchange Agent shall reasonably require, the holder of such Company
Certificates shall be entitled to receive in exchange therefor a certificate
representing that number of whole shares of Parent Common Stock into which the
shares of Company Common Stock theretofore represented by the Company
Certificates so surrendered shall have been converted pursuant to the
provisions of Section 3.1(a), and the Company Certificates so surrendered shall
forthwith be cancelled. Notwithstanding the foregoing, neither the Exchange
Agent nor any party hereto shall be liable to a holder of shares of Company
Common Stock for any shares of Parent Common Stock or dividends or
distributions thereon delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(e) Promptly following the date which is nine months after the
Effective Date, the Exchange Agent shall deliver to Parent all cash,
certificates (including any Parent Common Stock) and other documents in its
possession relating to the transactions described in this Agreement, and the
Exchange Agent's duties shall terminate. Thereafter, each holder of a Company
Certificate may surrender such Company Certificate to the Surviving Corporation
and (subject to applicable abandoned property, escheat and similar laws)
receive in exchange therefor the Parent Common Stock, without any interest
thereon. Notwithstanding the foregoing, none of the Exchange Agent, Parent,
Subsidiary, the Company or the Surviving Corporation shall be liable to a
holder of Company Common Stock for any Parent Common Stock delivered to a
public official pursuant to applicable abandoned property, escheat and similar
laws.
(f) In the event any Company Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Company Certificate to be lost, stolen or destroyed, the
Surviving Corporation shall issue in exchange for such lost, stolen or
destroyed Company Certificate the Parent Common Stock deliverable in respect
thereof determined in accordance with this Article III. When authorizing such
payment in exchange therefor, the Board of Directors of the Surviving
Corporation may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed Company
Certificate to give the
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<PAGE> 7
Surviving Corporation such indemnity as it may reasonably direct as protection
against any claim that may be made against the Surviving Corporation with
respect to the Company Certificate alleged to have been lost, stolen or
destroyed.
SECTION 3.4. NO FRACTIONAL SECURITIES. Notwithstanding any
other provision of this Agreement, no certificates or scrip for fractional
shares of Parent Common Stock shall be issued in the Merger and no Parent
Common Stock dividend, stock split or interest shall relate to any fractional
security, and such fractional interests shall not entitle the owner thereof to
vote or to any other rights of a security holder. In lieu of any such
fractional shares, each holder of Company Common Stock who would otherwise have
been entitled to receive a fraction of a share of Parent Common Stock upon
surrender of Company Certificates for exchange pursuant to this Article III
shall be entitled to receive from the Exchange Agent a cash payment equal to
such fraction multiplied by the closing price per share of Parent Common Stock
on the New York Stock Exchange, as reported by the Wall Street Journal, on the
last trading day preceding the Effective Time.
SECTION 3.5. CLOSING. The closing (the "Closing") of the
transactions contemplated by this Agreement shall take place at a location
mutually agreeable to Parent and the Company on the fifth business day
immediately following the date on which the last of the conditions set forth in
Article VIII is fulfilled or waived, or at such other time and place as Parent
and the Company shall agree (the date on which the Closing occurs is referred
to in this Agreement as the "Closing Date").
SECTION 3.6. CLOSING OF THE COMPANY'S TRANSFER BOOKS. At and
after the Effective Time, holders of Company Certificates shall cease to have
any rights as stockholders of the Company, except for the right to receive
shares of Parent Common Stock pursuant to Section 3.3 and the right to receive
cash for payment of fractional shares pursuant to Section 3.4. At the
Effective Time, the stock transfer books of the Company shall be closed and no
transfer of shares of Company Common Stock which were outstanding immediately
prior to the Effective Time shall thereafter be made. If, after the Effective
Time, subject to the terms and conditions of this Agreement, Company
Certificates formerly representing Company Common Stock are presented to the
Surviving Corporation, they shall be cancelled and exchanged for Parent Common
Stock in accordance with this Article III.
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<PAGE> 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND SUBSIDIARY
Parent and Subsidiary each represent and warrant to the Company as follows:
SECTION 4.1. ORGANIZATION AND QUALIFICATION. Each of Parent and
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation and has the requisite
power and authority to own, lease and operate its assets and properties and to
carry on its business as it is now being conducted. Each of Parent and
Subsidiary is qualified to do business and is in good standing in each
jurisdiction in which the properties owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary,
except where the failure to be so qualified and in good standing will not, when
taken together with all other such failures, have a material adverse effect on
the business, operations, properties, assets, condition (financial or other),
results of operations or prospects of Parent and its subsidiaries, taken as a
whole. True, accurate and complete copies of each of Parent's and Subsidiary's
Certificates of Incorporation and By-laws, in each case as in effect on the
date hereof, including all amendments thereto, have heretofore been (or, in the
case of Subsidiary, will promptly be) delivered to the Company.
SECTION 4.2. CAPITALIZATION. (a) The authorized capital stock of
Parent consists of (i) 50,000,000 shares of Parent Common Stock, of which
22,575,263 shares were outstanding as of November 10, 1994, and (ii) 10,000,000
shares of preferred stock, par value $.01 per share, none of which was issued
and outstanding as of November 21, 1994. All of the issued and outstanding
shares of Parent Common Stock are validly issued and are fully paid,
nonassessable and free of preemptive rights.
(b) The authorized capital stock of Subsidiary consists of (i)
100,000,000 shares of Subsidiary Common Stock, of which one share is issued and
outstanding, which share is owned beneficially and of record by Parent, and
(ii) 10,000,000 shares of preferred stock, none of which is issued and
outstanding.
(c) Except as disclosed in the Parent SEC Reports (as defined in
Section 4.5) or as set forth on Schedule 4.2 attached hereto, as of the date
hereof, there are no outstanding subscriptions, options, calls, contracts,
commitments, understandings, restrictions, arrangements, rights or warrants,
including any right of conversion or exchange under any outstanding security,
instrument or other agreement and also including any rights plan or other
anti-takeover agreement, obligating Parent or any subsidiary of Parent to
issue, deliver or sell, or cause to be issued, delivered or sold,
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<PAGE> 9
additional shares of the capital stock of Parent or obligating Parent or any
subsidiary of Parent to grant, extend or enter into any such agreement or
commitment. There are no voting trusts, proxies or other agreements or
understandings to which Parent or any subsidiary of Parent is a party or is
bound with respect to the voting of any shares of capital stock of Parent. The
shares of Parent Common Stock issued to stockholders of the Company in the
Merger will be at the Effective Time duly authorized, validly issued, fully
paid and nonassessable and free of preemptive rights.
SECTION 4.3. SUBSIDIARIES. Each direct and indirect corporate
subsidiary of Parent is duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation and has the requisite power
and authority to own, lease and operate its assets and properties and to carry
on its business as it is now being conducted. Each subsidiary of Parent is
qualified to do business, and is in good standing, in each jurisdiction in
which the properties owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, except where the
failure to be so qualified and in good standing would not, when taken together
with all such other failures, have a material adverse effect on the business,
operations, properties, assets, condition (financial or other), results of
operations or prospects of Parent and its subsidiaries, taken as a whole. All
of the outstanding shares of capital stock of each corporate subsidiary of
Parent are validly issued, fully paid, nonassessable and free of preemptive
rights, and are owned directly or indirectly by Parent, free and clear of any
liens, claims or encumbrances except that such shares are pledged to secure
Parent's credit facilities. There are no subscriptions, options, warrants,
rights, calls, contracts, voting trusts, proxies or other commitments,
understandings, restrictions or arrangements relating to the issuance, sale,
voting, transfer, ownership or other rights with respect to any shares of
capital stock of any corporate subsidiary of Parent, including any right of
conversion or exchange under any outstanding security, instrument or agreement.
As used in this Agreement, the term "subsidiary" shall mean, when used with
reference to any person or entity, any corporation, partnership, joint venture
or other entity which such person or entity, directly or indirectly, controls
or of which such person or entity (either acting alone or together with its
other subsidiaries) owns, directly or indirectly, 50% or more of the stock or
other voting interests, the holders of which are entitled to vote for the
election of a majority of the board of directors or any similar governing body
of such corporation, partnership, joint venture or other entity. Parent does
not own any shares of Company Common Stock.
SECTION 4.4. AUTHORITY; NON-CONTRAVENTION; APPROVALS. (a) Parent and
Subsidiary each have full corporate power and authority to enter into this
Agreement and, subject to the Parent Stockholders' Approval (as defined in
Section 7.3(b)) and the Parent Required Statutory Approvals (as defined in
Section 4.4(c)), to consummate the transactions contemplated hereby. This
Agreement has been approved by the Boards of
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Directors of Parent and Subsidiary, and no other corporate proceedings on the
part of Parent or Subsidiary are necessary to authorize the execution and
delivery of this Agreement or, except for the Parent Stockholders' Approval,
the consummation by Parent and Subsidiary of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by each of Parent
and Subsidiary, and, assuming the due authorization, execution and delivery
hereof by the Company, constitutes a valid and legally binding agreement of
each of Parent and Subsidiary enforceable against each of them in accordance
with its terms, except that such enforcement may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting or
relating to enforcement of creditors' rights generally and (ii) general
equitable principles. Without limitation of the foregoing, each of the
covenants and obligations of Parent set forth in Sections 6.2, 6.5, 7.3, 7.6,
7.7, 7.8 and 7.11 is valid, legally binding and enforceable notwithstanding the
absence of the Parent Stockholders' Approval.
(b) The execution and delivery of this Agreement by each of Parent and
Subsidiary do not violate, conflict with or result in a breach of any provision
of, or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of Parent or any of
its subsidiaries under any of the terms, conditions or provisions of (i) the
respective charters or by-laws of Parent or any of its subsidiaries, (ii) any
statute, law, ordinance, rule, regulation, judgment, decree, order, injunction,
writ, permit or license of any court or governmental authority applicable to
Parent or any of its subsidiaries or any of their respective properties or
assets or (iii) any note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, concession, contract, lease or other instrument, obligation
or agreement of any kind to which Parent or any of its subsidiaries is now a
party or by which Parent or any of its subsidiaries or any of their respective
properties or assets may be bound or affected. The consummation by Parent and
Subsidiary of the transactions contemplated hereby will not result in any
violation, conflict, breach, termination, acceleration or creation of liens
under any of the terms, conditions or provisions described in clauses (i)
through (iii) of the preceding sentence, subject (x) in the case of the terms,
conditions or provisions described in clause (ii) above, to obtaining (prior to
the Effective Time) the Parent Required Statutory Approvals and the Parent
Stockholder's Approval and (y) in the case of the terms, conditions or
provisions described in clause (iii) above, to obtaining (prior to the
Effective Time) consents required from commercial lenders, lessors or other
third parties. Excluded from the foregoing sentences of this paragraph (b),
insofar as they apply to the terms, conditions or provisions described in
clauses (ii) and (iii) of the first sentence of this paragraph (b), are such
violations, conflicts, breaches, defaults, terminations, accelerations or
creations of liens, security interests, charges or encumbrances that would
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not, in the aggregate, have a material adverse effect on the business,
operations, properties, assets, condition (financial or other), results of
operations or prospects of Parent and its subsidiaries, taken as a whole.
(c) Except for (i) the filings by Parent and the Company required by
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) the filing of the Joint Proxy Statement/Prospectus (as defined in
Section 4.9) with the Securities and Exchange Commission (the "SEC") pursuant
to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the Securities Act of 1933, as amended (the "Securities Act"), and the
declaration of the effectiveness thereof by the SEC and filings with various
state blue sky authorities, (iii) the making of the Merger Filing with the
Secretary of State of the State of Delaware in connection with the Merger, and
(iv) any required filings with or approvals from applicable state environmental
authorities, public service commissions and public utility commissions (the
filings and approvals referred to in clauses (i) through (iv) are collectively
referred to as the "Parent Required Statutory Approvals"), no declaration,
filing or registration with, or notice to, or authorization, consent or
approval of, any governmental or regulatory body or authority is necessary for
the execution and delivery of this Agreement by Parent or Subsidiary or the
consummation by Parent or Subsidiary of the transactions contemplated hereby,
other than such declarations, filings, registrations, notices, authorizations,
consents or approvals which, if not made or obtained, as the case may be, would
not, in the aggregate, have a material adverse effect on the business,
operations, properties, assets, condition (financial or other), results of
operations or prospects of Parent and its subsidiaries, taken as a whole.
SECTION 4.5. REPORTS AND FINANCIAL STATEMENTS. Since December 31,
1990, Parent has filed with the SEC all forms, statements, reports and
documents (including all exhibits, amendments and supplements thereto) required
to be filed by it under each of the Securities Act, the Exchange Act and the
respective rules and regulations thereunder, all of which, as amended if
applicable, complied in all material respects with all applicable requirements
of the appropriate act and the rules and regulations thereunder. Parent has
previously delivered to the Company copies of its (a) Annual Reports on Form
10-K for the fiscal year ended December 31, 1993 and for each of the two
immediately preceding fiscal years, as filed with the SEC, (b) proxy and
information statements relating to (i) all meetings of its stockholders
(whether annual or special) and (ii) actions by written consent in lieu of a
stockholders' meeting from December 31, 1990, until the date hereof, and (c)
all other reports, including quarterly reports, or registration statements
filed by Parent with the SEC since December 31, 1990 (other than Registration
Statements filed on Form S-8) (collectively, the "Parent SEC Reports"). As of
their respective dates, the Parent SEC Reports did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated
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therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim consolidated financial
statements of Parent included in such reports (collectively, the "Parent
Financial Statements") have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as may be indicated
therein or in the notes thereto) and fairly present the financial position of
Parent and its subsidiaries as of the dates thereof and the results of their
operations and changes in financial position for the periods then ended,
subject, in the case of the unaudited interim financial statements, to normal
year-end and audit adjustments and any other adjustments described therein.
SECTION 4.6. ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed
in the Parent SEC Reports or with respect to acquisitions or potential
transactions or commitments heretofore disclosed to the Company in writing,
neither Parent nor any of its subsidiaries had at September 30, 1994, or has
incurred since that date, any liabilities or obligations (whether absolute,
accrued, contingent or otherwise) of any nature, except (a) liabilities,
obligations or contingencies (i) which are accrued or reserved against in the
Parent Financial Statements or reflected in the notes thereto or (ii) which
were incurred after September 30, 1994 and were incurred in the ordinary course
of business and consistent with past practices, (b) liabilities, obligations or
contingencies which (i) would not, in the aggregate, have a material adverse
effect on the business, operations, properties, assets, condition (financial or
other), results of operations or prospects of Parent and its subsidiaries,
taken as a whole, or (ii) have been discharged or paid in full prior to the
date hereof, (c) liabilities and obligations which are of a nature not required
to be reflected in the consolidated financial statements of Parent and its
subsidiaries prepared in accordance with generally accepted accounting
principles consistently applied and which were incurred in the normal course of
business and (d) that the Company acknowledges that (i) Parent is in the
process of increasing the size of its revolving credit facility with a group of
banks for whom the First National Bank of Boston is acting as agent and (ii)
Parent has disclosed to the Company that certain Home Value Guarantee Agreement
between Parent and Homeowners Association of Prairie Crossing in Lake County,
Illinois.
SECTION 4.7. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of
the most recent Parent SEC Report, there has not been any material adverse
change in the business, operations, properties, assets, liabilities, condition
(financial or other), results of operations or prospects of Parent and its
subsidiaries, taken as a whole.
SECTION 4.8. LITIGATION. Except as disclosed in the Parent SEC Reports
or in Schedule 4.8 attached hereto, there are no claims, suits, actions or
proceedings pending or, to the knowledge of Parent, threatened against,
relating to or affecting Parent
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or any of its subsidiaries, before any court, governmental department,
commission, agency, instrumentality or authority, or any arbitrator that seek
to restrain or enjoin the consummation of the Merger or which could reasonably
be expected, either alone or in the aggregate with all such claims, actions or
proceedings, to materially and adversely affect the business, operations,
properties, assets, condition (financial or other), results of operations or
prospects of Parent and its subsidiaries, taken as a whole. Except as set
forth in the Parent SEC Reports, neither Parent nor any of its subsidiaries is
subject to any judgment, decree, injunction, rule or order of any court,
governmental department, commission, agency, instrumentality or authority or
any arbitrator which prohibits or restricts the consummation of the
transactions contemplated hereby or would have any material adverse effect on
the business, operations, properties, assets, condition (financial or other),
results of operations or prospects of Parent and its subsidiaries, taken as a
whole.
SECTION 4.9. REGISTRATION STATEMENT AND PROXY STATEMENT. None of the
information to be supplied by Parent or its subsidiaries for inclusion in (a)
the Registration Statement on Form S-4 to be filed under the Securities Act
with the SEC by Parent in connection with the Merger for the purpose of
registering the shares of Parent Common Stock to be issued in the Merger (the
"Registration Statement") or (b) the proxy statement to be distributed in
connection with the Company's and Parent's meetings of their respective
stockholders to vote upon this Agreement and the transactions contemplated
hereby (the "Proxy Statement" and, together with the prospectus included in the
Registration Statement, the "Joint Proxy Statement/Prospectus") will, in the
case of the Proxy Statement or any amendments thereof or supplements thereto,
at the time of the mailing of the Proxy Statement and any amendments or
supplements thereto, and at the time of the meetings of stockholders of the
Company and Parent to be held in connection with the transactions contemplated
by this Agreement, or, in the case of the Registration Statement, as amended or
supplemented, at the time it becomes effective and at the time of such meetings
of the stockholders of the Company and Parent, contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Joint Proxy
Statement/Prospectus will, as of its effective date, comply as to form in all
material respects with all applicable laws, including the provisions of the
Securities Act and the Exchange Act and the rules and regulations promulgated
thereunder, except that no representation is made by Parent or Subsidiary with
respect to information supplied by the Company or the Majority Stockholders for
inclusion therein.
SECTION 4.10. NO VIOLATION OF LAW. Except as disclosed in the Parent
SEC Reports, neither Parent nor any of its subsidiaries is in violation of, or
has been given notice or been charged with any violation of, any law, statute,
order, rule,
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regulation, ordinance, or judgment (including, without limitation, any
applicable environmental law, ordinance or regulation) of any governmental or
regulatory body or authority, except for violations which, in the aggregate,
could not reasonably be expected to have a material adverse effect on the
business, operations, properties, assets, condition (financial or other),
results of operations or prospects of Parent and its subsidiaries, taken as a
whole. Except as disclosed in the Parent SEC Reports, as of the date of this
Agreement, to the knowledge of Parent, no investigation or review by any
governmental or regulatory body or authority is pending or threatened, nor has
any governmental or regulatory body or authority indicated an intention to
conduct the same, other than, in each case, those the outcome of which, as far
as reasonably can be foreseen, will not have a material adverse effect on the
business, operations, properties, assets, condition (financial or other),
results of operations or prospects of the Parent and its subsidiaries, taken as
a whole. Parent and its subsidiaries have all permits, licenses, franchises,
variances, exemptions, orders and other governmental authorizations, consents
and approvals necessary to conduct their businesses as presently conducted
(collectively, the "Parent Permits"), except for permits, licenses, franchises,
variances, exemptions, orders, authorizations, consents and approvals the
absence of which, alone or in the aggregate, would not have a material adverse
effect on the business, operations, properties, assets, condition (financial or
other), results of operations or prospects of the Parent and its subsidiaries,
taken as a whole. Parent and its subsidiaries are not in violation of the
terms of any Parent Permit, except for delays in filing reports or violations
which, alone or in the aggregate, would not have a material adverse effect on
the business, operations, properties, assets, condition (financial or other),
results of operations or prospects of the Parent and its subsidiaries, taken as
a whole.
SECTION 4.11. COMPLIANCE WITH AGREEMENTS. Except as disclosed in the
Parent SEC Reports, Parent and each of its subsidiaries are not in breach or
violation of or in default in the performance or observance of any term or
provision of, and no event has occurred which, with lapse of time or action by
a third party, could result in a default under (a) the respective charters,
by-laws or other similar organizational instruments of Parent or any of its
subsidiaries or (b) any contract, commitment, agreement, indenture, mortgage,
loan agreement, note, lease, bond, license, approval or other instrument to
which Parent or any of its subsidiaries is a party or by which any of them is
bound or to which any of their property is subject, which breaches, violations
and defaults, in the case of clause (b) of this Section 4.11, would have, in
the aggregate, a material adverse effect on the business, operations,
properties, assets, condition (financial or other), results of operations or
prospects of Parent and its subsidiaries, taken as a whole.
SECTION 4.12. TAXES. (a) Parent and its subsidiaries have (i) duly
filed with the appropriate governmental authorities all Tax Returns (as defined
in Section
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4.12(c)) required to be filed by them for all periods ending on or
prior to the Effective Time, other than those Tax Returns the failure of which
to file would not have a material adverse effect on the business, operations,
properties, assets, condition (financial or other), results of operations or
prospects of Parent and its subsidiaries, taken as a whole, and such Tax
Returns are true, correct and complete in all material respects and (ii) duly
paid in full or made adequate provision for the payment of all Taxes (as
defined in Section 4.12(b)) for all periods ending at or prior to the Effective
Time. The liabilities and reserves for Taxes reflected in the Parent balance
sheet included in the latest Parent SEC Report are adequate to cover all Taxes
for all periods ending at or prior to the Effective Time and there are no
material liens for Taxes upon any property or assets of Parent or any
subsidiary thereof, except for liens for Taxes not yet due. There are no
unresolved issues of law or fact arising out of a notice of deficiency,
proposed deficiency or assessment from the Internal Revenue Service (the "IRS")
or any other governmental taxing authority with respect to Taxes of the Parent
or any of its subsidiaries which, if decided adversely, singly or in the
aggregate, would have a material adverse effect on the business, operations,
properties, assets, condition (financial or other), results of operations or
prospects of Parent and its subsidiaries, taken as a whole. Neither Parent nor
any of its subsidiaries is a party to any agreement providing for the
allocation or sharing of Taxes with any entity that is not, directly or
indirectly, a wholly-owned corporate subsidiary of Parent other than agreements
the consequences of which are fully and adequately reserved for in the Parent
Financial Statements. Neither Parent nor any of its corporate subsidiaries
has, with regard to any assets or property held, acquired or to be acquired by
any of them, filed a consent to the application of Section 341(f) of the Code.
(b) For purposes of this Agreement, the term "Taxes" shall mean all
taxes, including, without limitation, income, gross receipts, excise, property,
sales, withholding, social security, occupation, use, service, service use,
license, payroll, franchise, transfer and recording taxes, fees and charges,
windfall profits, severance, customs, import, export, employment or similar
taxes, charges, fees, levies or other assessments imposed by the United States,
or any state, local or foreign government or subdivision or agency thereof,
whether computed on a separate, consolidated, unitary, combined or any other
basis, and such term shall include any interest, fines, penalties or additional
amounts and any interest in respect of any additions, fines or penalties
attributable or imposed or with respect to any such taxes, charges, fees,
levies or other assessments.
(c) For purposes of this Agreement, the term "Tax Return" shall mean
any return, report or other document or information required to be supplied to
a taxing authority in connection with Taxes.
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SECTION 4.13. EMPLOYEE BENEFIT PLANS; ERISA. (a) Except as set
forth in the Parent SEC Reports, at the date hereof, Parent and its
subsidiaries do not maintain or contribute to any material employee benefit
plans, programs, arrangements or practices (such plans, programs, arrangements
or practices of Parent and its subsidiaries being referred to as the "Parent
Plans"), including employee benefit plans within the meaning set forth in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or other similar material arrangements for the provision of benefits
(excluding any "Multi-employer Plan" within the meaning of Section 3(37) of
ERISA or a "Multiple Employer Plan" within the meaning of Section 413(c) of the
Code). Schedule 4.13 attached hereto lists all Multi-employer Plans and
Multiple Employer Plans which any of Parent or its subsidiaries maintains or to
which any of them makes contributions. Neither Parent nor its subsidiaries has
any obligation to create any additional such plan or to amend any such plan so
as to increase benefits thereunder, except as required under the terms of the
Parent Plans, under existing collective bargaining agreements or to comply with
applicable law.
(b) Except as disclosed in the Parent SEC Reports, (i) there have been
no prohibited transactions within the meaning of Section 406 or 407 of ERISA or
Section 4975 of the Code with respect to any of the Parent Plans that could
result in penalties, taxes or liabilities which, singly or in the aggregate,
could have a material adverse effect on the business, operations, properties,
assets, condition (financial or other), results of operations or prospects of
Parent and its subsidiaries, taken as a whole, (ii) except for premiums due,
there is no outstanding material liability, whether measured alone or in the
aggregate, under Title IV of ERISA with respect to any of the Parent Plans,
(iii) neither the Pension Benefit Guaranty Corporation nor any plan
administrator has instituted proceedings to terminate any of the Parent Plans
subject to Title IV of ERISA other than in a "standard termination" described
in Section 4041(b) of ERISA, (iv) none of the Parent Plans has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA and
Section 412 of the Code), whether or not waived, as of the last day of the most
recent fiscal year of each of the Parent Plans ended prior to the date of this
Agreement, (v) the current present value of all projected benefit obligations
under each of the Parent Plans which is subject to Title IV of ERISA did not,
as of its latest valuation date, exceed the then current value of the assets of
such plan allocable to such benefit liabilities by more than the amount, if
any, disclosed in the Parent SEC Reports as of September 30, 1994, based upon
reasonable actuarial assumptions currently utilized for such Parent Plan, (vi)
each of the Parent Plans has been operated and administered in all material
respects in accordance with applicable laws during the period of time covered
by the applicable statute of limitations, (vii) each of the Parent Plans which
is intended to be "qualified" within the meaning of Section 401(a) of the Code
has been determined by the Internal Revenue Service to be so qualified and such
determination has not been modified, revoked or limited by failure to satisfy
any condition thereof or by
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a subsequent amendment thereto or a failure to amend, except that it
may be necessary to make additional amendments retroactively to maintain the
"qualified" status of such Parent Plans, and the period for making any such
necessary retroactive amendments has not expired, (viii) with respect to
Multi-employer Plans, neither Parent nor any of its subsidiaries has made or
suffered a "complete withdrawal" or a "partial withdrawal," as such terms are
respectively defined in Sections 4203, 4204 and 4205 of ERISA and, to the best
knowledge of Parent and its subsidiaries, no event has occurred or is expected
to occur which presents a material risk of a complete or partial withdrawal
under said Sections 4203, 4204 and 4205, (ix) to the best knowledge of Parent
and its subsidiaries, there are no material pending, threatened or anticipated
claims involving any of the Parent Plans other than claims for benefits in the
ordinary course, and (x) Parent and its subsidiaries have no current material
liability for plan termination or withdrawal (complete or partial) under Title
IV of ERISA based on any plan to which any entity that would be deemed one
employer with Parent and its subsidiaries under Section 4001 of ERISA or
Section 414 of the Code contributed during the period of time covered by the
applicable statute of limitations (a "Parent Controlled Group Plan"), and
Parent and its subsidiaries do not reasonably anticipate that any such
liability will be asserted against Parent or any of its subsidiaries. None of
the Parent Controlled Group Plans has an "accumulated funding deficiency" (as
defined in Section 302 of ERISA and Section 412 of the Code).
(c) The Parent SEC Reports contain a true and complete summary or list
of or otherwise describe all material employment contracts and other employee
benefit arrangements with "change of control" or similar provisions and all
severance agreements with executive officers.
SECTION 4.14. LABOR CONTROVERSIES. Except as set forth in the Parent
SEC Reports, (a) there are no significant controversies pending or, to the
knowledge of Parent, threatened between Parent or its subsidiaries and any
representatives of any of their employees, (b) to the knowledge of Parent,
there are no material organizational efforts presently being made involving any
of the presently unorganized employees of Parent and its subsidiaries, (c)
Parent and its subsidiaries have, to the knowledge of Parent, complied in all
material respects with all laws relating to the employment of labor, including,
without limitation, any provisions thereof relating to wages, hours, collective
bargaining, and the payment of social security and similar taxes, and (d) no
person has, to the knowledge of Parent, asserted that Parent or any of its
subsidiaries is liable in any material amount for any arrears of wages or any
taxes or penalties for failure to comply with any of the foregoing, except for
such controversies, organizational efforts, non-compliance and liabilities
which, singly or in the aggregate, could not reasonably be expected to
materially and adversely affect the business, operations,
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properties, assets,condition (financial or other), results of
operations or prospects of Parent and its subsidiaries, taken as a whole.
SECTION 4.15. ENVIRONMENTAL MATTERS. (a) Except as set forth in the
Parent SEC Reports, (i) Parent and its subsidiaries have conducted their
respective businesses in compliance with all applicable Environmental Laws,
including, without limitation, having all permits, licenses and other approvals
and authorizations necessary for the operation of their respective businesses
as presently conducted, (ii) none of the properties owned by Parent or any of
its subsidiaries contain any Hazardous Substance as a result of any activity of
Parent or any of its subsidiaries in amounts exceeding the levels permitted by
applicable Environmental Laws, (iii) neither Parent nor any of its subsidiaries
has received any notices, demand letters or requests for information from any
Federal, state, local or foreign governmental entity or third party indicating
that Parent or any of its subsidiaries may be in violation of, or liable under,
any Environmental Law in connection with the ownership or operation of their
businesses, (iv) there are no civil, criminal or administrative actions, suits,
demands, claims, hearings, investigations or proceedings pending or threatened,
against Parent or any of its subsidiaries relating to any violation, or alleged
violation, of any Environmental Law, (v) no reports have been filed, or are
required to be filed, by Parent or any of its subsidiaries concerning the
release of any Hazardous Substance or the threatened or actual violation of any
Environmental Law, (vi) no Hazardous Substance has been disposed of, released
or transported in violation of any applicable Environmental Law from any
properties owned by Parent or any of its subsidiaries as a result of any
activity of Parent or any of its subsidiaries during the time such properties
were owned, leased or operated by Parent or any of its subsidiaries, (vii)
there have been no environmental investigations, studies, audits, tests,
reviews or other analyses regarding compliance or noncompliance with any
applicable Environmental Law conducted by or which are in the possession of
Parent or its subsidiaries relating to the activities of Parent or its
subsidiaries which have not been delivered to the Company prior to the date
hereof, (viii) there are no underground storage tanks on, in or under any
properties owned by Parent and any of its subsidiaries and no underground
storage tanks have been closed or removed from any of such properties during
the time such properties were owned, leased or operated by Parent or any of its
subsidiaries, (ix) there is no asbestos or asbestos containing material present
in any of the properties owned by Parent and its subsidiaries, and no asbestos
has been removed from any of such properties during the time such properties
were owned, leased or operated by Parent or any of its subsidiaries, and (x)
neither Parent, its subsidiaries nor any of their respective properties are
subject to any material liabilities or expenditures (fixed or contingent)
relating to any suit, settlement, court order, administrative order, regulatory
requirement, judgment or claim asserted or arising under any Environmental Law,
except for violations of the foregoing clauses (i) through (x) that, singly or
in the aggregate, would not reasonably be expected to have
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a material adverse effect on the business, operations, properties,
assets, condition (financial or other), results of operations or prospects of
Parent and its subsidiaries considered as one enterprise.
(b) As used herein, "Environmental Law" means any Federal, state, local or
foreign law, statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, legal doctrine, order, judgment, decree,
injunction, requirement or agreement with any governmental entity relating to
(x) the protection, preservation or restoration of the environment (including,
without limitation, air, water vapor, surface water, groundwater, drinking
water supply, surface land, subsurface land, plant and animal life or any other
natural resource) or to human health or safety or (y) the exposure to, or the
use, storage, recycling, treatment, generation, transportation, processing,
handling, labeling, production, release or disposal of Hazardous Substances, in
each case as amended and as in effect on the Closing Date. The term
Environmental Law includes, without limitation, (i) the Federal Comprehensive
Environmental Response Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act, the Federal Water Pollution Control Act of
1972, the Federal Clean Air Act, the Federal Clean Water Act, the Federal
Resource Conservation and Recovery Act of 1976 (including the Hazardous and
Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the
Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and
Rodenticide Act, the Federal Occupational Safety and Health Act of 1970, each
as amended and as in effect on the Closing Date, and (ii) any common law or
equitable doctrine (including, without limitation, injunctive relief and tort
doctrines such as negligence, nuisance, trespass and strict liability) that may
impose liability or obligations for injuries or damages due to, or threatened
as a result of, the presence of, effects of or exposure to any Hazardous
Substance.
(c) As used herein, "Hazardous Substance" means any substance presently or
hereafter listed, defined, designated or classified as hazardous, toxic,
radioactive, or dangerous, or otherwise regulated, under any Environmental Law.
Hazardous Substance includes any substance to which exposure is regulated by
any government authority or any Environmental Law including, without
limitation, any toxic waste, pollutant, contaminant, hazardous substance, toxic
substance, hazardous waste, special waste, industrial substance or petroleum or
any derivative or by-product thereof, radon, radioactive material, asbestos or
asbestos containing material, urea formaldehyde foam insulation, lead or
polychlorinated biphenyls.
SECTION 4.16. NON-COMPETITION AGREEMENTS. Neither Parent nor any
subsidiary of Parent is a party to any agreement which purports to restrict or
prohibit in any material respect any of them from, directly or indirectly,
engaging in any business of rubbish, garbage, paper, textile wastes, chemical
or hazardous wastes, liquid and other
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waste collection, interim storage, transfer, recovery, processing,
recycling, marketing or disposal or any other material business currently
engaged in by the Parent or the Company, or any corporations affiliated with
either of them. None of Parent's officers, directors or key employees is a
party to any agreement which, by virtue of such person's relationship with
Parent, restricts in any material respect Parent or any subsidiary of Parent
from, directly or indirectly, engaging in any of the businesses described
above.
SECTION 4.17. TITLE TO ASSETS. Parent and each of its subsidiaries has
good and marketable title in fee simple to all its real property and good title
to all its leasehold interests and other properties as reflected in the most
recent balance sheet included in the Parent Financial Statements, except for
such properties and assets that have been disposed of in the ordinary course of
business since the date of such balance sheet, free and clear of all mortgages,
liens, pledges, charges or encumbrances of any nature whatsoever, except (i)
the lien for current taxes, payments of which are not yet delinquent, (ii) such
imperfections in title and easements and encumbrances, if any, as are not
substantial in character, amount or extent and do not materially detract from
the value or interfere with the present use of the property subject thereto or
affected thereby, or otherwise materially impair the Parent's business
operations (in the manner presently carried on by the Parent), or (iii) as
disclosed in the Parent SEC Reports, and except for such matters which, singly
or in the aggregate, could not reasonably be expected to materially and
adversely affect the business, operations, properties, assets, condition
(financial or other), results of operations or prospects of Parent and its
subsidiaries, taken as a whole. All leases under which Parent leases any real
or personal property are in good standing, valid and effective in accordance
with their respective terms, and there is not, under any of such leases, any
existing default or event which with notice or lapse of time or both would
become a default other than defaults under such leases which in the aggregate
will not materially and adversely affect the Parent and its subsidiaries, taken
as a whole.
SECTION 4.18. PARENT STOCKHOLDERS' APPROVAL. The affirmative vote of
stockholders of Parent required for approval and adoption of this Agreement and
the Merger is a majority of the outstanding shares of Parent Common Stock.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Subsidiary as follows:
SECTION 5.1. ORGANIZATION AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate power and
authority to own, lease and operate its assets and properties and to carry on
its business as it is now being conducted. The Company is qualified to do
business and is in good standing in each jurisdiction in which the properties
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary, except where the failure to be so qualified
and in good standing will not, when taken together with all other such
failures, have a material adverse effect on the business, operations,
properties, assets, condition (financial or other), results of operations or
prospects of the Company and its subsidiaries, taken as a whole. True, accurate
and complete copies of the Company's Certificate of Incorporation and By-laws,
in each case as in effect on the date hereof, including all amendments thereto,
have heretofore been delivered to Parent.
SECTION 5.2. CAPITALIZATION. (a) The authorized capital stock of the
Company consists of 50,000,000 shares of Regular Common Stock, 100,000,000
shares of Class A Common Stock and 10,000,000 shares of preferred stock. As of
November 21, 1994, 15,959,968 shares of Regular Common Stock and 50,829,159
shares of Class A Common Stock were issued and outstanding and no shares of
preferred stock were issued and outstanding. All of such issued and
outstanding shares are validly issued and are fully paid, nonassessable and
free of preemptive rights. No subsidiary of the Company holds any shares of
the capital stock of the Company.
(b) Except as set forth on Schedule 5.2 attached hereto, as of the
date hereof there were no outstanding subscriptions, options, calls, contracts,
commitments, understandings, restrictions, arrangements, rights or warrants,
including any right of conversion or exchange under any outstanding security,
instrument or other agreement and also including any rights plan or other
anti-takeover agreement, obligating the Company or any subsidiary of the
Company to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of the capital stock of the Company or obligating the Company
or any subsidiary of the Company to grant, extend or enter into any such
agreement or commitment. There are no voting trusts, proxies or other
agreements or understandings to which the Company or any subsidiary of the
Company is a party or is bound with respect to the voting of any shares of
capital stock of the Company.
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SECTION 5.3. SUBSIDIARIES. (a) Except as set forth in Schedule
5.3, each direct and indirect corporate subsidiary of the Company is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has the requisite power and authority to own,
lease and operate its assets and properties and to carry on its business as it
is now being conducted. Each subsidiary of the Company is qualified to do
business, and is in good standing, in each jurisdiction in which the properties
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary, except where the failure to be so qualified
and in good standing will not, when taken together with all such other
failures, have a material adverse effect on the business, operations,
properties, assets, condition (financial or other), results of operations or
prospects of the Company and its subsidiaries, taken as a whole. All of the
outstanding shares of capital stock of each corporate subsidiary of the Company
are validly issued, fully paid, nonassessable and free of preemptive rights and
are owned directly or indirectly by the Company free and clear of any liens,
claims, encumbrances, security interests, equities, charges and options of any
nature whatsoever except as set forth in Schedule 5.3 attached hereto. There
are no subscriptions, options, warrants, rights, calls, contracts, voting
trusts, proxies or other commitments, understandings, restrictions or
arrangements relating to the issuance, sale, voting, transfer, ownership or
other rights with respect to any shares of capital stock of any corporate
subsidiary of the Company, including any right of conversion or exchange under
any outstanding security, instrument or agreement.
SECTION 5.4. AUTHORITY; NON-CONTRAVENTION; APPROVALS. (a) The Company
has full corporate power and authority to enter into this Agreement and,
subject to the Company Stockholders' Approval (as defined in Section 7.3(a))
and the Company Required Statutory Approvals (as defined in Section 5.4(c)), to
consummate the transactions contemplated hereby. This Agreement has been
approved by the Board of Directors of the Company, and no other corporate
proceedings on the part of the Company are necessary to authorize the execution
and delivery of this Agreement or, except for the Company Stockholders'
Approval, the consummation by the Company of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by the Company,
and, assuming the due authorization, execution and delivery hereof by Parent
and Subsidiary, constitutes a valid and legally binding agreement of the
Company, enforceable against the Company in accordance with its terms, except
that such enforcement may be subject to (a) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally and (b) general equitable
principles. Without limitation of the foregoing, each of the covenants and
obligations of the Company set forth in Sections 6.1, 6.5, 7.3, 7.6, 7.7, 7.8
and 7.11 is valid, legally binding and enforceable notwithstanding the absence
of the Company Stockholders' Approval.
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(b) The execution and delivery of this Agreement by the Company do
not violate, conflict with or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of the Company or
any of its subsidiaries under any of the terms, conditions or provisions of (i)
the respective charters or by-laws of the Company or any of its subsidiaries,
(ii) any statute, law, ordinance, rule, regulation, judgment, decree, order,
injunction, writ, permit or license of any court or governmental authority
applicable to the Company or any of its subsidiaries or any of their respective
properties or assets, or (iii) any note, bond, mortgage, indenture, deed of
trust, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which the Company or any of
its subsidiaries is now a party or by which the Company or any of its
subsidiaries or any of their respective properties or assets may be bound or
affected. The consummation by the Company of the transactions contemplated
hereby will not result in any violation, conflict, breach, termination,
acceleration or creation of liens under any of the terms, conditions or
provisions described in clauses (i) through (iii) of the preceding sentence,
subject (x) in the case of the terms, conditions or provisions described in
clause (ii) above, to obtaining (prior to the Effective Time) the Company
Required Statutory Approvals and the Company Stockholder's Approval and (y) in
the case of the terms, conditions or provisions described in clause (iii)
above, to obtaining (prior to the Effective Time) consents required from
commercial lenders, lessors or other third parties. Excluded from the
foregoing sentences of this paragraph (b), insofar as they apply to the terms,
conditions or provisions described in clauses (ii) and (iii) of the first
sentence of this paragraph (b), are such violations, conflicts, breaches,
defaults, terminations, accelerations or creations of liens, security
interests, charges or encumbrances that would not, in the aggregate, have a
material adverse effect on the business, operations, properties, assets,
condition (financial or other), results of operations or prospects of the
Company and its subsidiaries, taken as a whole.
(c) Except for (i) the filings by Parent and the Company required by
the HSR Act, (ii) the filing of the Joint Proxy Statement/Prospectus with the
SEC pursuant to the Exchange Act and the Securities Act and the declaration of
the effectiveness thereof by the SEC and filings with various state blue sky
authorities, (iii) the making of the Merger Filing with the Secretary of State
of the State of Delaware in connection with the Merger and (iv) any required
filings with or approvals from applicable state environmental authorities,
public service commissions and public utility commissions (the filings and
approvals referred to in clauses (i) through (iv) are collectively referred to
as the "Company Required Statutory Approvals"), no declaration, filing or
registration with, or notice to, or authorization, consent or approval of, any
governmental or regulatory body
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or authority is necessary for the execution and delivery of this
Agreement by the Company or the consummation by the Company of the transactions
contemplated hereby, other than such declarations, filings, registrations,
notices, authorizations, consents or approvals which, if not made or obtained,
as the case may be, would not, in the aggregate, have a material adverse effect
on the business, operations, properties, assets, condition (financial or
other), results of operations or prospects of the Company and its subsidiaries,
taken as a whole.
SECTION 5.5. REPORTS AND FINANCIAL STATEMENTS. Except as set forth
on Schedule 5.5 attached hereto, since December 31, 1990, the Company has filed
with the SEC all material forms, statements, reports and documents (including
all exhibits, amendments and supplements thereto) required to be filed by it
under each of the Securities Act, the Exchange Act and the respective rules and
regulations thereunder, all of which, as amended if applicable, complied in all
material respects with all applicable requirements of the appropriate act and
the rules and regulations thereunder. The Company has previously delivered to
Parent copies of its (a) Annual Reports on Form 10-K for the fiscal year ended
December 31, 1993 and for each of the two immediately preceding fiscal years,
as filed with the SEC, (b) proxy and information statements relating to (i) all
meetings of its stockholders (whether annual or special) and (ii) actions by
written consent in lieu of a stockholders' meeting from December 31, 1990 until
the date hereof, and (c) all other reports, including quarterly reports, or
registration statements filed by the Company with the SEC since December 31,
1990 (other than Registration Statements filed on Form S-8) and (the documents
referred to in clauses (a), (b) and (c) are collectively referred to as the
"Company SEC Reports"). Except as set forth in Schedule 5.5 attached hereto,
as of their respective dates, the Company SEC Reports did not contain any
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, in light of
the circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim consolidated financial
statements of the Company included in such reports (collectively, the "Company
Financial Statements") have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as may be indicated
therein or in the notes thereto) and fairly present the financial position of
the Company and its subsidiaries as of the dates thereof and the results of
their operations and changes in financial position for the periods then ended,
subject, in the case of the unaudited interim financial statements, to normal
year-end and audit adjustments and any other adjustments described therein.
SECTION 5.6. ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed
in the Company SEC Reports, neither the Company nor any of its subsidiaries had
at September 30, 1994, or has incurred since that date, any liabilities or
obligations (whether absolute, accrued, contingent or otherwise) of any nature,
except (a) liabilities,
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obligations or contingencies (i) which are accrued or reserved against
in the Company Financial Statements or reflected in the notes thereto or (ii)
which were incurred after September 30, 1994 and were incurred in the ordinary
course of business and consistent with past practices, (b) liabilities,
obligations or contingencies which (i) would not, in the aggregate, have a
material adverse effect on the business, operations, properties, assets,
condition (financial or other), results of operations or prospects of the
Company and its subsidiaries, taken as a whole, or (ii) have been discharged or
paid in full prior to the date hereof, and (c) liabilities and obligations
which are of a nature not required to be reflected in the consolidated
financial statements of the Company and its subsidiaries prepared in accordance
with generally accepted accounting principles consistently applied and which
were incurred in the normal course of business.
SECTION 5.7. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of
the most recent Company SEC Report, there has not been any material adverse
change in the business, operations, properties, assets, liabilities, condition
(financial or other), results of operations or prospects of the Company and its
subsidiaries, taken as a whole.
SECTION 5.8. LITIGATION. Except as referred to in the Company SEC
Reports or in Schedule 5.8 attached hereto, there are no claims, suits, actions
or proceedings pending or, to the knowledge of the Company, threatened against,
relating to or affecting the Company or any of its subsidiaries, before any
court, governmental department, commission, agency, instrumentality or
authority, or any arbitrator that seek to restrain the consummation of the
Merger or which could reasonably be expected, either alone or in the aggregate
with all such claims, actions or proceedings, to materially and adversely
affect the business, operations, properties, assets, condition (financial or
other), results of operations or prospects of the Company and its subsidiaries,
taken as a whole. Except as referred to in the Company SEC Reports or in
Schedule 5.8 attached hereto, neither the Company nor any of its subsidiaries
is subject to any judgment, decree, injunction, rule or order of any court,
governmental department, commission, agency, instrumentality or authority, or
any arbitrator which prohibits or restricts the consummation of the
transactions contemplated hereby or would have any material adverse effect on
the business, operations, properties, assets, condition (financial or other),
results of operations or prospects of the Company and its subsidiaries, taken
as a whole. The Company has heretofore delivered to Parent a true and complete
copy of each document identified in Schedule 5.8.
SECTION 5.9. REGISTRATION STATEMENT AND PROXY STATEMENT. None of the
information to be supplied by the Company or its subsidiaries for inclusion in
(a) the Registration Statement or (b) the Proxy Statement will, in the case of
the Proxy Statement or any amendments thereof or supplements thereto, at the
time of the mailing of the Proxy Statement and any amendments or supplements
thereto, and at the time of
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the meetings of stockholders of the Company and Parent to be held in
connection with the transactions contemplated by this Agreement or, in the case
of the Registration Statement, as amended or supplemented, at the time it
becomes effective and at the time of such meetings of the stockholders of the
Company and Parent, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The Joint Proxy Statement/Prospectus will comply, as of
its effective date, as to form in all material respects with all applicable
laws, including the provisions of the Securities Act and the Exchange Act and
the rules and regulations promulgated thereunder, except that no representation
is made by the Company with respect to information supplied by Parent or
Subsidiary for inclusion therein.
SECTION 5.10. NO VIOLATION OF LAW. Except as disclosed in the Company
SEC Reports or in Schedule 5.8 attached hereto, neither the Company nor any of
its subsidiaries is in violation of or has been given notice or been charged
with any violation of, any law, statute, order, rule, regulation, ordinance or
judgment (including, without limitation, any applicable environmental law,
ordinance or regulation) of any governmental or regulatory body or authority,
except for violations which, in the aggregate, could not reasonably be expected
to have a material adverse effect on the business, operations, properties,
assets, condition (financial or other), results of operations or prospects of
the Company and its subsidiaries, taken as a whole. Except as disclosed in the
Company SEC Reports, as of the date of this Agreement, to the knowledge of the
Company, no investigation or review by any governmental or regulatory body or
authority is pending or threatened, nor has any governmental or regulatory body
or authority indicated an intention to conduct the same, other than, in each
case, those the outcome of which, as far as reasonably can be foreseen, will
not have a material adverse effect on the business, operations, properties,
assets, condition (financial or other), results of operations or prospects of
the Company and its subsidiaries taken as a whole. The Company and its
subsidiaries have all permits, licenses, franchises, variances, exemptions,
orders and other governmental authorizations, consents and approvals necessary
to conduct their businesses as presently conducted (collectively, the "Company
Permits"), except for permits, licenses, franchises, variances, exemptions,
orders, authorizations, consents and approvals the absence of which, alone or
in the aggregate, would not have a material adverse effect on the business,
operations, properties, assets, condition (financial or other), results of
operations or prospects of the Company and its subsidiaries, taken as a whole.
The Company and its subsidiaries are not in violation of the terms of any
Company Permit, except for delays in filing reports or violations which, alone
or in the aggregate, would not have a material adverse effect on the business,
operations, properties, assets, condition (financial or other), results of
operations or prospects of the Company and its subsidiaries, taken as a whole.
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SECTION 5.11. COMPLIANCE WITH AGREEMENTS. Except as disclosed in the
Company SEC Reports, the Company and each of its subsidiaries are not in breach
or violation of or in default in the performance or observance of any term or
provision of, and no event has occurred which, with lapse of time or action by
a third party, could result in a default under, (a) the respective charters,
by-laws or similar organizational instruments of the Company or any of its
subsidiaries or (b) any contract, commitment, agreement, indenture, mortgage,
loan agreement, note, lease, bond, license, approval or other instrument to
which the Company or any of its subsidiaries is a party or by which any of them
is bound or to which any of their property is subject, which breaches,
violations and defaults, in the case of clause (b) of this Section 5.11, would
have, in the aggregate, a material adverse effect on the business, operations,
properties, assets, condition (financial or other), results of operations or
prospects of the Company and its subsidiaries, taken as a whole.
SECTION 5.12. TAXES. The Company and its subsidiaries have (i) duly
filed with the appropriate governmental authorities all Tax Returns required to
be filed by them for all periods ending on or prior to the Effective Time,
other than those Tax Returns the failure of which to file would not have a
material adverse effect on the business, operations, properties, assets,
condition (financial or other), results of operations or prospects of the
Company and its subsidiaries, taken as a whole, and such Tax Returns are true,
correct and complete in all material respects, and (ii) duly paid in full or
made adequate provision for the payment of all Taxes for all periods ending at
or prior to the Effective Time. The liabilities and reserves for Taxes
reflected in the Company balance sheet included in the latest Company SEC
Report are adequate to cover all Taxes for all periods ending at or prior to
the Effective Time and there are no material liens for Taxes upon any property
or asset of the Company or any subsidiary thereof, except for liens for Taxes
not yet due. There are no unresolved issues of law or fact arising out of a
notice of deficiency, proposed deficiency or assessment from the IRS or any
other governmental taxing authority with respect to Taxes of the Company or any
of its subsidiaries which, if decided adversely, singly or in the aggregate,
would have a material adverse effect on the business, operations, properties,
assets, condition (financial or other), results of operations or prospects of
the Company and its subsidiaries, taken as a whole. Neither the Company nor
any of its subsidiaries is a party to any agreement providing for the
allocation or sharing of Taxes with any entity that is not, directly or
indirectly, a wholly-owned corporate subsidiary of Company. Neither the
Company nor any of its corporate subsidiaries has, with regard to any assets or
property held, acquired or to be acquired by any of them, filed a consent to
the application of Section 341(f) of the Code.
SECTION 5.13. EMPLOYEE BENEFIT PLANS; ERISA. (a) Except as set forth in
the Company SEC Reports, at the date hereof, the Company and its subsidiaries
do
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not maintain or contribute to any material employee benefit plans, programs,
arrangements and practices (such plans, programs, arrangements and practices of
the Company and its subsidiaries being referred to as the "Company Plans"),
including employee benefit plans within the meaning set forth in Section 3(3)
of ERISA, or other similar material arrangements for the provision of benefits
(excluding any "Multi-employer Plan" within the meaning of Section 3(37) of
ERISA or a "Multiple Employer Plan" within the meaning of Section 413(c) of the
Code). Schedule 5.13(a) attached hereto lists all Multi-employer Plans and
Multiple Employer Plans which any of the Company or its subsidiaries maintains
or to which any of them makes contributions. Neither the Company nor its
subsidiaries has any obligation to create any additional such plan or to amend
any such plan so as to increase benefits thereunder, except as required under
the terms of the Company Plans, under existing collective bargaining
agreements or to comply with applicable law.
(b) Except as disclosed in the Company SEC Reports, (i) there have
been no prohibited transactions within the meaning of Section 406 or 407 of
ERISA or Section 4975 of the Code with respect to any of the Company Plans that
could result in penalties, taxes or liabilities which, singly or in the
aggregate, could have a material adverse effect on the business, operations,
properties, assets, condition (financial or other) results of operations or
prospects of the Company and its subsidiaries, taken as a whole, (ii) except
for premiums due, there is no outstanding material liability, whether measured
alone or in the aggregate, under Title IV of ERISA with respect to any of the
Company Plans, (iii) neither the Pension Benefit Guaranty Corporation nor any
plan administrator has instituted proceedings to terminate any of the Company
Plans subject to Title IV of ERISA other than in a "standard termination"
described in Section 4041(b) of ERISA, (iv) none of the Company Plans has
incurred any "accumulated funding deficiency" (as defined in Section 302 of
ERISA and Section 412 of the Code), whether or not waived, as of the last day
of the most recent fiscal year of each of the Company Plans ended prior to the
date of this Agreement, (v) the current present value of all projected benefit
obligations under each of the Company Plans which is subject to Title IV of
ERISA did not, as of its latest valuation date, exceed the then current value
of the assets of such plan allocable to such benefit liabilities by more than
the amount, if any, disclosed in the Company SEC Reports as of September 30,
1994, based upon reasonable actuarial assumptions currently utilized for such
Company Plan, (vi) each of the Company Plans has been operated and administered
in all material respects in accordance with applicable laws during the period
of time covered by the applicable statute of limitations, (vii) each of the
Company Plans which is intended to be "qualified" within the meaning of Section
401(a) of the Code has been determined by the Internal Revenue Service to be so
qualified and such determination has not been modified, revoked or limited by
failure to satisfy any condition thereof or by a subsequent amendment thereto
or a failure to amend, except that it may be necessary to make additional
amendments retroactively to
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maintain the "qualified" status of such Company Plans, and the period
for making any such necessary retroactive amendments has not expired, (viii)
with respect to Multi-employer Plans, neither the Company nor any of its
subsidiaries has, made or suffered a "complete withdrawal" or a "partial
withdrawal," as such terms are respectively defined in Sections 4203, 4204 and
4205 of ERISA and, to the best knowledge of the Company and its subsidiaries,
no event has occurred or is expected to occur which presents a material risk of
a complete or partial withdrawal under said Sections 4203, 4204 and 4205, (ix)
to the best knowledge of the Company and its subsidiaries, there are no
material pending, threatened or anticipated claims involving any of the Company
Plans other than claims for benefits in the ordinary course, and (x) the
Company and its subsidiaries have no current material liability, whether
measured alone or in the aggregate, for plan termination or withdrawal
(complete or partial) under Title IV of ERISA based on any plan to which any
entity that would be deemed one employer with the Company and its subsidiaries
under Section 4001 of ERISA or Section 414 of the Code contributed during the
period of time covered by the applicable statute of limitations (the "Company
Controlled Group Plans"), and the Company and its subsidiaries do not
reasonably anticipate that any such liability will be asserted against the
Company or any of its subsidiaries. None of the Company Controlled Group Plans
has an "accumulated funding deficiency" (as defined in Section 302 of ERISA and
412 of the Code).
(c) The Company SEC Reports contain a true and complete summary or
list of or otherwise describe all material employment contracts and other
employee benefit arrangements with "change of control" or similar provisions
and all severance agreements with executive officers.
SECTION 5.14. LABOR CONTROVERSIES. Except as set forth in the Company
SEC Reports, (a) there are no significant controversies pending or, to the
knowledge of the Company, threatened between the Company or its subsidiaries
and any representatives of any of their employees, (b) to the knowledge of the
Company, there are no material organizational efforts presently being made
involving any of the presently unorganized employees of the Company or its
subsidiaries, (c) the Company and its subsidiaries have, to the knowledge of
the Company, complied in all material respects with all laws relating to the
employment of labor, including, without limitation, any provisions thereof
relating to wages, hours, collective bargaining, and the payment of social
security and similar taxes, and (d) no person has, to the knowledge of the
Company, asserted that the Company or any of its subsidiaries is liable in any
material amount for any arrears of wages or any taxes or penalties for failure
to comply with any of the foregoing, except for such controversies,
organizational efforts, non-compliance and liabilities which, singly or in the
aggregate, could not reasonably be expected to materially and adversely
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affect the business, operations, properties, assets, condition
(financial or other), results of operations or prospects of the Company and its
subsidiaries, taken as a whole.
SECTION 5.15. ENVIRONMENTAL MATTERS. Except as set forth in the
Company SEC Reports, (i) the Company and its subsidiaries have conducted their
respective businesses in compliance with all applicable Environmental Laws,
including, without limitation, having all permits, licenses and other approvals
and authorizations necessary for the operation of their respective businesses
as presently conducted, (ii) none of the properties owned by the Company or any
of its subsidiaries contain any Hazardous Substance as a result of any activity
of the Company or any of its subsidiaries in amounts exceeding the levels
permitted by applicable Environmental Laws, (iii) neither the Company nor any
of its subsidiaries has received any notices, demand letters or requests for
information from any Federal, state, local or foreign governmental entity or
third party indicating that the Company or any of its subsidiaries may be in
violation of, or liable under, any Environmental Law in connection with the
ownership or operation of their businesses, (iv) there are no civil, criminal
or administrative actions, suits, demands, claims, hearings, investigations or
proceedings pending or threatened, against the Company or any of its
subsidiaries relating to any violation, or alleged violation, of any
Environmental Law, (v) no reports have been filed, or are required to be filed,
by the Company or any of its subsidiaries concerning the release of any
Hazardous Substance or the threatened or actual violation of any Environmental
Law, (vi) no Hazardous Substance has been disposed of, released or transported
in violation of any applicable Environmental Law from any properties owned by
the Company or any of its subsidiaries as a result of any activity of the
Company or any of its subsidiaries during the time such properties were owned,
leased or operated by the Company or any of its subsidiaries, (vii) there have
been no environmental investigations, studies, audits, tests, reviews or other
analyses regarding compliance or noncompliance with any applicable
Environmental Law conducted by or which are in the possession of the Company or
its subsidiaries relating to the activities of the Company or its subsidiaries
which have not been delivered to Parent prior to the date hereof, (viii) there
are no underground storage tanks on, in or under any properties owned by the
Company or any of its subsidiaries and no underground storage tanks have been
closed or removed from any of such properties during the time such properties
were owned, leased or operated by the Company or any of its subsidiaries, (ix)
there is no asbestos or asbestos containing material present in any of the
properties owned by the Company and its subsidiaries, and no asbestos has been
removed from any of such properties during the time such properties were owned,
leased or operated by the Company or any of its subsidiaries, and (x) neither
the Company, its subsidiaries nor any of their respective properties are
subject to any material liabilities or expenditures (fixed or contingent)
relating to any suit, settlement, court order, administrative order, regulatory
requirement, judgment or claim asserted or arising under any Environmental Law,
except for violations of the foregoing clauses (i) through (x) that,
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singly or in the aggregate, would not reasonably be expected to have a
material adverse effect on the business, operations, properties, assets,
condition (financial or other), results of operations or prospects of the
Company and its subsidiaries considered as one enterprise.
SECTION 5.16. NON-COMPETITION AGREEMENTS. Neither the Company nor any
subsidiary of the Company is a party to any agreement which purports to
restrict or prohibit in any material respect any of them from, directly or
indirectly, engaging in any business of rubbish, garbage, paper, textile
wastes, chemical or hazardous wastes, liquid and other waste collection,
interim storage, transfer, recovery, processing, recycling, marketing or
disposal or any other material business currently engaged in by the Parent or
the Company, or any corporations affiliated with either of them. None of the
Company's officers, directors or key employees is a party to any agreement
which, by virtue of such person's relationship with the Company, restricts in
any material respect the Company or any subsidiary of the Company from,
directly or indirectly, engaging in any of the businesses described above.
SECTION 5.17. TITLE TO ASSETS. The Company and each of its subsidiaries
has good and marketable title in fee simple to all its real property and good
title to all its leasehold interests and other properties, as reflected in the
most recent balance sheet included in the Company Financial Statements, except
for properties and assets that have been disposed of in the ordinary course of
business since the date of such balance sheet, free and clear of all mortgages,
liens, pledges, charges or encumbrances of any nature whatsoever, except (i)
the lien of current taxes, payments of which are not yet delinquent, (ii) such
imperfections in title and easements and encumbrances, if any, as are not
substantial in character, amount or extent and do not materially detract from
the value, or interfere with the present use of the property subject thereto or
affected thereby, or otherwise materially impair the Company's business
operations (in the manner presently carried on by the Company) or (iii) as
disclosed in the Company SEC Reports, and except for such matters which, singly
or in the aggregate, could not reasonably be expected to materially and
adversely affect the business, operations, properties, assets, condition
(financial or other), results of operations or prospects of the Company and its
subsidiaries, taken as a whole. All leases under which the Company leases any
substantial amount of real or personal property have been delivered to Parent
and are in good standing, valid and effective in accordance with their
respective terms, and there is not, under any of such leases, any existing
default or event which with notice or lapse of time or both would become a
default other than defaults under such leases which in the aggregate will not
materially and adversely affect the condition of the Company.
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SECTION 5.18. COMPANY STOCKHOLDERS' APPROVAL. The affirmative vote of
stockholders of the Company required for approval and adoption of this
Agreement and the Merger is a majority of the votes to which holders of
outstanding shares of Regular Common Stock and Class A Common Stock, voting
together as a single class, are entitled. If all the shares of Company Common
Stock as to which irrevocable proxies have been granted were voted (whether
pursuant to such irrevocable proxies or otherwise) at a meeting of the
Company's stockholders in favor of the approval of this Agreement and the
Merger, such vote would constitute the requisite approval of the Company's
stockholders for the approval and adoption of this Agreement and the Merger
under the DGCL.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.1. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER.
Except as otherwise contemplated by this Agreement, after the date hereof and
prior to the Closing Date or earlier termination of this Agreement, unless
Parent shall otherwise agree in writing, the Company shall, and shall cause its
subsidiaries, to:
(a) conduct their respective businesses in the ordinary and
usual course of business and consistent with past practice;
(b) not (i) amend or propose to amend their respective
charters or by-laws, (ii) split, combine or reclassify their outstanding
capital stock or (iii) declare, set aside or pay any dividend or
distribution payable in cash, stock, property or otherwise, except for the
payment of dividends or distributions by a wholly-owned subsidiary of the
Company;
(c) not issue, sell, pledge or dispose of, or agree to issue,
sell, pledge or dispose of, any additional shares of, or any options,
warrants or rights of any kind to acquire any shares of their capital stock
of any class or any debt or equity securities convertible into or
exchangeable for such capital stock, except that the Company may issue
shares upon conversion of convertible securities and exercise of options
outstanding on the date hereof;
(d) not (i) incur or become contingently liable with respect
to any indebtedness for borrowed money other than (A) borrowings in the
ordinary course of business or (B) borrowings to refinance existing
indebtedness, (ii) redeem, purchase, acquire or offer to purchase or
acquire any shares of its
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capital stock or any options, warrants or rights to acquire any of its
capital stock or any security convertible into or exchangeable for its
capital stock, (iii) take any action which would jeopardize the treatment
of the Merger as a pooling of interests under Opinion No. 16 of the
Accounting Principles Board ("APB No. 16"), (iv) take or fail to take any
action which action or failure to take action would cause the Company or
its stockholders (except to the extent that any stockholders receive cash
in lieu of fractional shares) to recognize gain or loss for federal income
tax purposes as a result of the consummation of the Merger, (v) make any
acquisition of any assets or businesses other than expenditures for fixed
or capital assets in the ordinary course of business, (vi) sell, pledge,
dispose of or encumber any assets or businesses other than sales in the
ordinary course of business or (vii) enter into any contract, agreement,
commitment or arrangement with respect to any of the foregoing;
(e) use all reasonable efforts to preserve intact their
respective business organizations and goodwill, keep available the services
of their respective present officers and key employees, and preserve the
goodwill and business relationships with customers and others having
business relationships with them and not engage in any action, directly or
indirectly, with the intent to adversely impact the transactions
contemplated by this Agreement;
(f) confer on a regular and frequent basis with one or more
representatives of Parent to report operational matters of materiality and
the general status of ongoing operations;
(g) not enter into or amend any employment, severance, special
pay arrangement with respect to termination of employment or other similar
arrangements or agreements with any directors, officers or key employees,
except in the ordinary course and consistent with past practice; provided,
however, that the Company and its subsidiaries shall in no event enter into
any written employment agreement which provides for an annual base salary
in excess of $125,000 and has a term in excess of one year or enter into or
amend any severance or termination arrangement;
(h) not adopt, enter into or amend any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation,
health care, employment or other employee benefit plan, agreement, trust,
fund or arrangement for the benefit or welfare of any employee or retiree,
except as required to comply with changes in applicable law; and
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(i) maintain with financially responsible insurance companies
insurance on its tangible assets and its businesses in such amounts and
against such risks and losses as are consistent with past practice.
SECTION 6.2. CONDUCT OF BUSINESS BY PARENT AND SUBSIDIARY PENDING THE
MERGER. Except as otherwise contemplated by this Agreement, after the date
hereof and prior to the Closing Date or earlier termination of this Agreement,
unless the Company shall otherwise agree in writing, Parent shall, and shall
cause its subsidiaries, to:
(a) conduct their respective businesses in the ordinary and
usual course of business and consistent with past practice;
(b) not (i) amend or propose to amend their respective
charters or by-laws, (ii) split, combine or reclassify (whether by stock
dividend or otherwise) their outstanding capital stock, or (iii) declare,
set aside or pay any dividend or distribution payable in cash, stock,
property or otherwise, except for the payment of dividends or distributions
by a wholly-owned subsidiary of Parent;
(c) not issue, sell, pledge or dispose of, or agree to issue,
sell, pledge or dispose of, any shares of Parent Common Stock, or any
options, warrants or rights of any kind to acquire any shares of their
capital stock of any class or any debt or equity securities convertible
into or exchangeable for such capital stock, except for the issuance and
sale of shares issuable upon conversion of convertible securities and
exercise of options outstanding on the date hereof;
(d) not (i) incur or become contingently liable with respect to
any indebtedness for borrowed money other than (A) borrowings in the
ordinary course of business or (B) borrowings to refinance existing
indebtedness, (ii) redeem, purchase, acquire or offer to purchase or
acquire any shares of its capital stock or any options, warrants or rights
to acquire any of its capital stock or any security convertible into or
exchangeable for its capital stock, (iii) take any action which would
jeopardize the treatment of the Merger as a pooling of interests under APB
No. 16, (iv) take or fail to take any action which action or failure to
take action would cause Parent or its stockholders (except to the extent
that any stockholders receive cash in lieu of fractional shares) to
recognize gain or loss for federal income tax purposes as a result of the
consummation of the Merger, (v) make any acquisition of any assets or
businesses other than expenditures for fixed or capital assets in the
ordinary course of business, (vi) sell, pledge, dispose of or encumber any
assets or businesses other than sales in
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the ordinary course of business or (vii) enter into any contract,
agreement, commitment or arrangement with respect to any of the foregoing;
(e) use all reasonable efforts to preserve intact their
respective business organizations and goodwill, keep available the services
of their respective present officers and key employees, and preserve the
goodwill and business relationships with customers and others having
business relationships with them and not engage in any action, directly or
indirectly, with the intent to adversely impact the transactions
contemplated by this Agreement;
(f) confer on a regular and frequent basis with one or more
representatives of the Company to report operational matters of materiality
and the general status of ongoing operations;
(g) not enter into or amend any employment, severance, special
pay arrangement with respect to termination of employment or other similar
arrangements or agreements with any directors, officers or key employees,
except in the ordinary course and consistent with past practice; provided,
however, that Parent and its subsidiaries shall in no event enter into any
written employment agreement which provides for an annual base salary in
excess of $125,000 and has a term in excess of one year or enter into or
amend any severance or termination arrangement;
(h) not adopt, enter into or amend any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation,
health care, employment or other employee benefit plan, agreement, trust,
fund or arrangement for the benefit or welfare of any employee or retiree,
except as required to comply with changes in applicable law; and
(i) maintain with financially responsible insurance companies
insurance on its tangible assets and its businesses in such amounts and
against such risks and losses as are consistent with past practice.
SECTION 6.3. CONTROL OF THE COMPANY'S OPERATIONS. Nothing contained in
this Agreement shall give to Parent, directly or indirectly, rights to control
or direct the Company's operations prior to the Effective Time. Prior to the
Effective Time, the Company shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision of its
operations.
SECTION 6.4. CONTROL OF PARENT'S OPERATIONS. Nothing contained in this
Agreement shall give to the Company, directly or indirectly, rights to control
or direct
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Parent's operations prior to the Effective Time. Prior to the
Effective Time, Parent shall exercise, consistent with the terms and conditions
of this Agreement, complete control and supervision of its operations.
SECTION 6.5. ACQUISITION TRANSACTIONS. (a) After the date hereof and
prior to the Effective Time or earlier termination of this Agreement, neither
the Company nor Parent shall, and shall not permit any of its subsidiaries to,
initiate, solicit, negotiate, encourage or provide confidential information to
facilitate, and each of the Company and Parent shall, and shall cause each of
its subsidiaries to, (i) cause any officer, director or employee of, or any
attorney, accountant or other agent retained by it and (ii) use its reasonable
best efforts to cause any financial advisor or investment banker retained by
it, not to initiate, solicit, negotiate, encourage or provide non-public or
confidential information to facilitate, any proposal or offer to acquire all or
any substantial part of the business and properties of the Company or Parent or
any capital stock of the Company or Parent, whether by merger, purchase of
assets, tender offer or otherwise, whether for cash, securities or any other
consideration or combination thereof (any such transactions being referred
to herein as "Acquisition Transactions").
(b) Notwithstanding the provisions of paragraph (a) above, the Company
or the Parent may, in response to an unsolicited written proposal with respect
to an Acquisition Transaction, which proposal (insofar as it relates to the
consideration to be paid to the Company or its stockholders) is not subject to
a financing condition, furnish (subject to a confidentiality agreement
reasonably acceptable to the Company and Parent) confidential or non-public
information concerning its business, properties or assets to a financially
capable corporation, partnership, person or other entity or group (a "Potential
Acquirer") or negotiate with such Potential Acquirer if (i) the Company or the
Parent, as the case may be, shall have given not less than five business days'
advance written notice of its intention to do so to the other party, (ii) the
board of directors of the Company or the Parent, as the case may be, is advised
by one or more of its independent financial advisors that providing
confidential or non-public information to the Potential Acquirer is likely to
lead to an Acquisition Transaction on terms that would yield a materially
higher value to the Company's or the Parent's stockholders, as the case may be,
than the Merger and (iii) based upon advice of its independent legal counsel,
its board of directors determines in good faith that there is a significant
risk that the failure to provide such confidential or non-public information to
such Potential Acquirer would constitute a breach of its fiduciary duty to its
stockholders.
(c) In the event either party hereto shall determine to provide any
information or negotiate as described in paragraph (b) above, or shall receive
any offer of the type referred to in paragraph (b) above, it shall promptly
inform the other party hereto that information is to be provided, that
negotiations are to take place or that an offer has been
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received and shall furnish to the other party hereto the identity of
the person receiving such information or the proponent of such offer, if
applicable, and, if an offer has been received, a description of the material
terms thereof.
(d) A party hereto may enter into a definitive agreement for an
Acquisition Transaction which meets the requirements set forth above with a
Potential Acquirer with which it is permitted to negotiate pursuant to
paragraph (b) above, but only if (i) the board of directors of such party shall
have duly determined that such Acquisition Transaction would yield a materially
higher value to such party's stockholders than the Merger and that the
execution of such definitive agreement is in the best interests of such party's
stockholders, (ii) at least ten business days prior to the execution of such
definitive agreement, such party shall have furnished the other party hereto
with a copy of such definitive agreement and (iii) such other party shall have
failed within such ten-day period to offer to amend the terms of this Agreement
in order that the Merger would yield a value to such party's stockholders at
least equal to the Acquisition Transaction. In making the determination
required by clause (i) above, the board of directors referred to therein shall
consider all relevant considerations and factors, including, without
limitation, the form and value of the consideration, the extent to which the
economic benefits of the Acquisition Transaction differ from the economic
benefits contemplated by this Agreement, the likelihood that the Potential
Acquirer will be able to obtain financing to consummate the Acquisition
Transaction, the proposed closing date, the certainty of consummation,
antitrust issues and closing conditions.
(e) Each party (i) acknowledges that a breach of any of its covenants
contained in this Section 6.5 will result in irreparable harm to the other
party which will not be compensable in money damages and (ii) agrees that such
covenant shall be specifically enforceable and that specific performance and
injunctive relief shall be a remedy properly available to the other party for a
breach of such covenant.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1. ACCESS TO INFORMATION. (a) The Company and its
subsidiaries shall afford to Parent and Subsidiary and their respective
accountants, counsel, financial advisors and other representatives (the "Parent
Representatives") and Parent and its subsidiaries shall afford to the Company
and its accountants, counsel, financial advisors and other representatives (the
"Company Representatives") full access during normal business hours throughout
the period prior to the Effective Time to all of their respective properties,
books, contracts, commitments and records (including, but
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not limited to, Tax Returns) and, during such period, shall furnish
promptly to one another (i) a copy of each report, schedule and other document
filed or received by any of them pursuant to the requirements of federal or
state securities laws or filed by any of them with the SEC in connection with
the transactions contemplated by this Agreement or which may have a material
effect on their respective businesses, properties or personnel and (ii) such
other information concerning their respective businesses, properties and
personnel as Parent or Subsidiary or the Company, as the case may be, shall
reasonably request; provided that no investigation pursuant to this Section 7.1
shall amend or modify any representations or warranties made herein or the
conditions to the obligations of the respective parties to consummate the
Merger. Parent and its subsidiaries shall hold and shall use their reasonable
best efforts to cause the Parent Representatives to hold, and the Company and
its subsidiaries shall hold and shall use their reasonable best efforts to
cause the Company Representatives to hold, in strict confidence all non-public
documents and information furnished to Parent and Subsidiary or to the Company,
as the case may be, in connection with the transactions contemplated by this
Agreement, except that (i) Parent, Subsidiary and the Company may disclose such
information as may be necessary in connection with seeking the Parent Required
Statutory Approvals and Parent Stockholders' Approval, the Company Required
Statutory Approvals and the Company Stockholders' Approval and (ii) each of
Parent, Subsidiary and the Company may disclose any information that it is
required by law or judicial or administrative order to disclose.
(b) In the event that this Agreement is terminated in accordance with
its terms, each party shall promptly redeliver to the other all non-public
written material provided pursuant to this Section 7.1 and shall not retain any
copies, extracts or other reproductions in whole or in part of such written
material. In such event, all documents, memoranda, notes and other writings
prepared by Parent or the Company based on the information in such material
shall be destroyed (and Parent and the Company shall use their respective
reasonable best efforts to cause their advisors and representatives to
similarly destroy their documents, memoranda and notes), and such destruction
(and reasonable best efforts) shall be certified in writing by an authorized
officer supervising such destruction.
(c) The Company shall promptly advise Parent and Parent shall promptly
advise the Company in writing of any change or the occurrence of any event
after the date of this Agreement having, or which, insofar as can reasonably be
foreseen, in the future may have, any material adverse effect on the business,
operations, properties, assets, condition (financial or other), results of
operations or prospects of the Company and its subsidiaries or Parent and its
subsidiaries, as the case may be, taken as a whole.
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SECTION 7.2. REGISTRATION STATEMENT AND PROXY STATEMENT. Parent and
the Company shall file with the SEC as soon as is reasonably practicable after
the date hereof the Joint Proxy Statement/Prospectus and shall use all
reasonable efforts to have the Registration Statement declared effective by the
SEC as promptly as practicable. Parent shall also take any action required to
be taken under applicable state blue sky or securities laws in connection with
the issuance of Parent Common Stock pursuant hereto. Parent and the Company
shall promptly furnish to each other all information, and take such other
actions, as may reasonably be requested in connection with any action by any of
them in connection with the preceding sentence. The information provided and to
be provided by Parent and the Company, respectively, for use in the Joint Proxy
Statement/Prospectus shall be true and correct in all material respects without
omission of any material fact which is required to make such information not
false or misleading as of the date thereof and in light of the circumstances
under which given or made.
SECTION 7.3. STOCKHOLDERS' APPROVALS. (a) The Company shall, as
promptly as practicable, submit this Agreement and the transactions
contemplated hereby for the approval of its stockholders at a meeting of
stockholders and, subject to the fiduciary duties of the Board of Directors of
the Company under applicable law, shall use its reasonable best efforts to
obtain stockholder approval and adoption (the "Company Stockholders' Approval")
of this Agreement and the transactions contemplated hereby. Such meeting of
stockholders shall be held as soon as practicable following the date upon which
the Registration Statement becomes effective. Subject to the fiduciary duties
of the Board of Directors of the Company under applicable law, the Company
shall, through its Board of Directors, recommend to its stockholders approval
of the transactions contemplated by this Agreement. The Company (i)
acknowledges that a breach of its covenant contained in this Section 7.3(a) to
convene a meeting of its stockholders and call for a vote thereat with respect
to the approval of this Agreement and the Merger will result in irreparable
harm to Parent which will not be compensable in money damages and (ii) agrees
that such covenant shall be specifically enforceable and that specific
performance and injunctive relief shall be a remedy properly available to
Parent for a breach of such covenant.
(b) Parent shall, as promptly as practicable, submit this Agreement
and the transactions contemplated hereby for the approval of its stockholders
at a meeting of stockholders and, subject to the fiduciary duties of the Board
of Directors of Parent under applicable law, shall use its reasonable best
efforts to obtain stockholder approval and adoption (the "Parent Stockholders'
Approval") of this Agreement and the transactions contemplated hereby. Such
meeting of stockholders shall be held as soon as practicable following the date
on which the Registration Statement becomes effective. Parent shall, through
its Board of Directors, but subject to the fiduciary duties of the members
thereof, (i) recommend to its stockholders approval of the transactions
contemplated by this
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Agreement and (ii) authorize and cause an officer of Parent to vote
Parent's shares of Subsidiary Common Stock for adoption and approval of this
Agreement and the transactions contemplated hereby and shall take all
additional actions as the sole stockholder of Subsidiary necessary to adopt and
approve this Agreement and the transactions contemplated hereby. Parent (i)
acknowledges that a breach of its covenant contained in this Section 7.3(b) to
convene a meeting of its stockholders and call for a vote thereat with respect
to the approval of this Agreement and the Merger will result in irreparable
harm to the Company which will not be compensable in money damages and (ii)
agrees that such covenant shall be specifically enforceable and that specific
performance and injunctive relief shall be a remedy properly available to the
Company for a breach of such covenant.
SECTION 7.4. COMPLIANCE WITH THE SECURITIES ACT. Parent and the
Company shall each use its reasonable best efforts to cause each principal
executive officer, each director and each other person who is an "affiliate,"
as that term is used in paragraphs (c) and (d) of Rule 145 under the Securities
Act, of Parent or the Company, as the case may be, to deliver to Parent and the
Company on or prior to the Effective Time a written agreement (an "Affiliate
Agreement") to the effect that such person will not offer to sell, sell or
otherwise dispose of any shares of Parent Common Stock issued in the Merger,
except, in each case, pursuant to an effective registration statement or in
compliance with Rule 145, as amended from time to time, or in a transaction
which, in the opinion of legal counsel satisfactory to Parent, is exempt from
the registration requirements of the Securities Act and, in any case, until
after the results covering 30 days of post-Merger combined operations of Parent
and the Company have been filed with the SEC, sent to stockholders of Parent or
otherwise publicly issued.
SECTION 7.5. EXCHANGE LISTING. Parent shall use its reasonable best
efforts to effect, at or before the Effective Time, authorization for listing
on the New York Stock Exchange Inc. (the "NYSE"), upon official notice of
issuance, of the shares of Parent Common Stock to be issued pursuant to the
Merger.
SECTION 7.6. EXPENSES AND FEES. (a) Except as provided in Section 7.6(b)
or Section 7.6(c), all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses, except that those expenses incurred in connection with
printing the Joint Proxy Statement/Prospectus shall be shared equally by Parent
and the Company.
(b) The Company agrees to pay to Parent a fee equal to $28,000,000
plus the reasonable out-of-pocket expenses incurred by Parent in connection
with this Agreement and the transactions contemplated hereby:
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(i) if the Company terminates this Agreement pursuant to clause (v) or
(vi) of Section 9.1(a);
(ii) if (A) either the Company terminates this Agreement pursuant to
clause (i) or (ii) of Section 9.1(a) or Parent terminates this
Agreement pursuant to clause (vii) of Section 9.1(b) and (B) one
or more of the following events shall occur prior to one year
after such termination:
(1) the Company is acquired by merger or otherwise by another
person under terms which provide for the Company and/or
its stockholders to receive consideration having a fair
value on the date of the first public announcement of such
merger or other acquisition transaction equal to or
greater than that provided in Section 3.1(a) of this
Agreement;
(2) the Company enters into a merger or other agreement which
contemplates the acquisition of the Company by another
person under terms which provide for the Company and/or
its stockholders to receive consideration having a fair
value on the date of the first public announcement of
such merger or other agreement equal to or greater than
that provided in Section 3.1(a) of this Agreement;
(3) another person acquires or becomes the beneficial owner of
more than 50% of the outstanding shares of Company Common
Stock for consideration having a fair value on the date of
such acquisition greater than that provided in Section
3.1(a) of this Agreement;
(4) another person acquires all or any substantial portion of
the Company's assets under terms which provide for the
Company and/or its stockholders to receive consideration
having a fair value on the date of the first public
announcement of such acquisition transaction equal to or
greater than that provided in Section 3.1(a) of this
Agreement; or
(5) the Company adopts a plan of liquidation relating to all
or a substantial portion of its assets or declares a
distribution to its stockholders of all or a substantial
portion of its assets and in connection therewith the
stockholders receive consideration having a fair value on
the date of the first public announcement of such
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plan of liquidation or dividend declaration equal
to or greater than that provided in Section 3.1(a) of
this Agreement.
(c) Parent agrees to pay to the Company a fee equal to $21,000,000
plus the reasonable out-of-pocket expenses incurred by the Company in
connection with this Agreement and the transactions contemplated hereby if
Parent terminates this Agreement pursuant to clause (v) or (vi) of Section
9.1(b).
SECTION 7.7. AGREEMENT TO COOPERATE. (a) Subject to the terms and
conditions herein provided, each of the parties hereto shall use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including using its reasonable efforts to obtain all necessary
or appropriate waivers, consents and approvals and SEC "no-action" letters to
effect all necessary registrations, filings and submissions and to lift any
injunction or other legal bar to the Merger (and, in such case, to proceed with
the Merger as expeditiously as possible), subject, however, to the requisite
votes of the stockholders and boards of directors of the Company and Parent.
(b) Without limitation of the foregoing, each of Parent and the
Company undertakes and agrees to file as soon as practicable after the date
hereof a Notification and Report Form under the HSR Act with the Federal Trade
Commission (the "FTC") and the Antitrust Division of the Department of Justice
(the "Antitrust Division"). Each of Parent and the Company shall (i) use its
reasonable efforts to comply as expeditiously as possible with all lawful
requests of the FTC or the Antitrust Division for additional information and
documents and (ii) not extend any waiting period under the HSR Act or enter
into any agreement with the FTC or the Antitrust Division not to consummate the
transactions contemplated by this Agreement, except with the prior consent of
the other parties hereto.
(c) In the event any litigation is commenced by any person or entity
relating to the transactions contemplated by this Agreement, including any
Acquisition Transaction, Parent shall have the right, at its own expense, to
participate therein, and the Company will not settle any such litigation
without the consent of Parent, which consent will not be unreasonably withheld.
(d) The Company and Parent shall cooperate in developing, as soon as
practicable and in any event within 21 days following the date of this
Agreement, a mutually acceptable plan which includes the following: (i) the
refinancing or rearrangement of a $7 million debt payment payable by the
Company in January 1995, (ii) the financing of a $25 million settlement payment
payable by the Company in or about March 1995 and
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(iii) the financing of a $45 million settlement payment payable by the
Company in or about March 1996.
SECTION 7.8. PUBLIC STATEMENTS. The parties shall consult with each
other prior to issuing any press release or any written public statement with
respect to this Agreement or the transactions contemplated hereby and shall not
issue any such press release or written public statement prior to such
consultation.
SECTION 7.9. OPTION PLANS. Prior to the Effective Time, the Company
and Parent shall take such action as may be necessary to cause each unexpired
and unexercised option (each a "Company Option") to be automatically converted
at the Effective Time into an option (each a "Parent Option") to purchase a
number of shares of Parent Common Stock equal to the number of shares of
Company Common Stock that could have been purchased under the Company Option
multiplied by the Exchange Ratio, at a price per share of Parent Common Stock
equal to the option exercise price determined pursuant to the Company Option
divided by the Exchange Ratio and subject to the same terms and conditions as
the Company Option. The date of grant of the substituted Parent Option shall
be the date on which the corresponding Company Option was granted. At the
Effective Time, all references in the stock option agreements to the Company
shall be deemed to refer to Parent. Parent shall assume all of the Company's
obligations with respect to Company Options as so amended and shall, from and
after the Effective Time, make available for issuance upon exercise of the
Parent Options all shares of Parent Common Stock covered thereby and amend its
Registration Statement on Form S-8 to cover the additional shares of Parent
Common Stock subject to Parent Options granted in replacement of Company
Options.
SECTION 7.10. EMPLOYEE BENEFITS AND LOANS. Parent acknowledges its
intention, after the Effective Time, that employees of the Company who continue
after the Merger shall be provided with benefits which are no less favorable
than those provided by Parent to its own employees. Loans heretofore made by
the Company to directors, officers and employees for the purpose of purchasing
Company Common Stock will be forgiven to the extent written down prior to the
date of this Agreement, as reflected in the Company SEC Reports (but excluding
loans to any former officers, directors or employees of the Company who have
asserted claims against the Company that remain pending).
SECTION 7.11. NOTIFICATION OF CERTAIN MATTERS. Each of the Company,
Parent and Subsidiary agrees to give prompt notice to each other of, and to use
their respective reasonable best efforts to prevent or promptly remedy, (i) the
occurrence or failure to occur or the impending or threatened occurrence or
failure to occur, of any event which occurrence or failure to occur would be
likely to cause any of its representa-
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tions or warranties in this Agreement to be untrue or inaccurate in any
material respect at any time from the date hereof to the Effective Time and
(ii) any material failure on its part to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section
7.11 shall not limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
SECTION 7.12. DIRECTORS' AND OFFICERS' INDEMNIFICATION. (a) After
the Effective Time, the Surviving Corporation shall, to the fullest extent
permitted under applicable law, indemnify and hold harmless, each present and
former director, officer, employee and agent of the Company or any of its
subsidiaries (each, together with such person's heirs, executors or
administrators, an "indemnified Party" and collectively, the "indemnified
Parties") against any costs or expenses (including attorneys fees), judgments,
fines, losses, claims, damages, liabilities and amounts paid in settlement in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of, relating to
or in connection with any action or omission occurring prior to the Effective
Time (including, without limitation, acts or omissions in connection with such
persons serving as an officer, director or other fiduciary in any entity if
such service was at the request or for the benefit of the Company) or arising
out of or pertaining to the transactions contemplated by this Agreement. In the
event of any such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time), (i) the Company or Parent and the
Surviving Corporation, as the case may be, shall pay the reasonable fees and
expenses of counsel selected by the indemnified Parties, which counsel shall be
reasonably satisfactory to the Parent and the Surviving Corporation, promptly
after statements therefor are received, (ii) the Parent and the Surviving
Corporation will cooperate in the defense of any such matter, and (iii) any
determination required to be made with respect to whether an indemnified
Party's conduct complies with the standards set forth under the DGCL and the
Parent's or the Surviving Corporation's respective Certificates of
Incorporation or By-Laws shall be made by independent legal counsel acceptable
to the Parent or the Surviving Corporation, as the case may be, and the
indemnified Party; provided, however, that neither Parent nor the Surviving
Corporation shall be liable for any settlement effected without its written
consent (which consent shall not be unreasonably withheld).
(b) In the event the Surviving Corporation or Parent or any of their
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then and in each such case, proper
provisions shall be made so that the successors and assigns of the
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Surviving Corporation or Parent shall assume the obligations set forth in
this Section 7.12.
SECTION 7.13. CORRECTIONS TO THE JOINT PROXY STATEMENT/PROSPECTUS AND
REGISTRATION STATEMENT. Prior to the date of approval of the Merger by their
respective stockholders, each of the Company, Parent and Subsidiary shall
correct promptly any information provided by it to be used specifically in the
Joint Proxy Statement/Prospectus and Registration Statement that shall have
become false or misleading in any material respect and shall take all steps
necessary to file with the SEC and have declared effective or cleared by the
SEC any amendment or supplement to the Joint Proxy Statement/Prospectus or the
Registration Statement so as to correct the same and to cause the Joint Proxy
Statement/Prospectus as so corrected to be disseminated to the stockholders of
the Company and Parent, in each case to the extent required by applicable law.
ARTICLE VIII
CONDITIONS
SECTION 8.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment at or prior to the Closing Date of the following conditions:
(a) this Agreement and the transactions contemplated hereby
shall have been approved and adopted by the requisite vote of the
stockholders of the Company and Parent and of the Board of Directors of the
Company and Parent under applicable law and applicable listing
requirements;
(b) the shares of Parent Common Stock issuable in the Merger
shall have been authorized for listing on the NYSE upon official notice of
issuance;
(c) the waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated;
(d) the Registration Statement shall have become effective in
accordance with the provisions of the Securities Act, and no stop order
suspending such effectiveness shall have been issued and remain in effect
and no proceeding for that purpose shall have been instituted by the SEC or
any state regulatory authorities;
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<PAGE> 46
(e) no preliminary or permanent injunction or other order or
decree by any federal or state court which prevents the consummation of the
Merger shall have been issued and remain in effect (each party agreeing to
use its reasonable efforts to have any such injunction, order or decree
lifted);
(f) no action shall have been taken, and no statute, rule or
regulation shall have been enacted, by any state or federal government or
governmental agency in the United States which would prevent the
consummation of the Merger or make the consummation of the Merger illegal;
(g) all governmental waivers, consents, orders and approvals
legally required for the consummation of the Merger and the transactions
contemplated hereby, and all consents from lenders required to consummate
the Merger, shall have been obtained and be in effect at the Effective
Time; and
(h) Coopers & Lybrand, certified public accountants for Parent,
shall have delivered a letter, dated the Closing Date, addressed to Parent,
in form and substance reasonably satisfactory to Parent and the Company,
stating that the Merger will qualify as a pooling of interests transaction
under APB No. 16.
SECTION 8.2. CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE
MERGER. Unless waived by the Company, the obligation of the Company to effect
the Merger shall be subject to the fulfillment at or prior to the Closing Date
of the following additional conditions:
(a) Parent and Subsidiary shall have performed in all material
respects their agreements contained in this Agreement required to be
performed on or prior to the Closing Date and the representations and
warranties of Parent and Subsidiary contained in this Agreement shall be
true and correct in all material respects on and as of the date made and on
and as of the Closing Date as if made at and as of such date, and the
Company shall have received a certificate of the Chairman of the Board and
Chief Executive Officer, the President or a Vice President of Parent and of
the President and Chief Executive Officer or a Vice President of Subsidiary
to that effect;
(b) the Company shall have received an opinion of Sullivan &
Cromwell and/or Thorp, Reed & Armstrong, in form and substance reasonably
satisfactory to the Company, dated the Closing Date, to the effect that the
Company and holders of Company Common Stock (except to the extent any
stockholders receive cash in lieu of fractional shares) will recognize no
gain or loss for federal income tax purposes as a result of consummation of
the Merger;
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<PAGE> 47
(c) the Company shall have received an opinion or opinions
from Snell & Smith and/or Andrews & Kurth L.L.P., special counsel to Parent
and Subsidiary, dated the Closing Date, reasonably satisfactory to the
Company and covering the due incorporation of Parent and Subsidiary, the
binding nature of this Agreement, the effectiveness of the Merger, the
validity of the Parent Common Stock to be issued in connection with the
Merger and such other matters as may be reasonably requested by the
Company;
(d) the Company shall have received "comfort" letters in
customary form from Coopers & Lybrand, certified public accountants for
Parent and Subsidiary, dated the date of the Proxy Statement, the effective
date of the Registration Statement and the Closing Date (or such other date
reasonably acceptable to the Company) with respect to certain financial
statements and other financial information included in the Registration
Statement and any subsequent changes in specified balance sheet and income
statement items, including total assets, working capital, total
stockholders' equity, total revenues and the total and per share amounts
of net income;
(e) since the date hereof, there shall have been no changes
that constitute, and no event or events shall have occurred which have
resulted in or constitute, a material adverse change in the business,
operations, properties, assets, condition (financial or other), results of
operations or prospects of Parent and its subsidiaries, taken as a whole;
(f) all governmental waivers, consents, orders, and approvals
legally required for the consummation of the Merger and the transactions
contemplated hereby shall have been obtained and be in effect at the
Closing Date, and no governmental authority shall have promulgated any
statute, rule or regulation which, when taken together with all such
promulgations, would materially impair the value to Parent of the Merger;
and
(g) the Company shall have received from J.P. Morgan & Co.,
Incorporated (or other nationally recognized investment banking firm
reasonably acceptable to Parent) an opinion, dated as of the date on which
the Joint Proxy Statement/Prospectus is first distributed to the
stockholders of the Company, to the effect that the consideration to be
received by the stockholders of the Company in the Merger is fair, from a
financial point of view, to the holders of Company Common Stock, and such
opinion shall not have been withdrawn.
SECTION 8.3. CONDITIONS TO OBLIGATIONS OF PARENT AND SUBSIDIARY TO EFFECT
THE MERGER. Unless waived by Parent and Subsidiary, the obligations of Parent
and
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Subsidiary to effect the Merger shall be subject to the fulfillment at or
prior to the Effective Time of the additional following conditions:
(a) the Company shall have performed in all material respects
its agreements contained in this Agreement required to be performed on or
prior to the Closing Date and the representations and warranties of the
Company contained in this Agreement shall be true and correct in all
material respects on and as of the date made and on and as of the Closing
Date as if made at and as of such date, and Parent shall have received a
Certificate of the President and Chief Executive Officer or of a Vice
President of the Company to that effect;
(b) Parent shall have received an opinion of Andrews & Kurth
L.L.P., in form and substance reasonably satisfactory to Parent, dated the
Closing Date, to the effect that Parent and Subsidiary will recognize no
gain or loss for federal income tax purposes as a result of consummation
of the Merger;
(c) Parent shall have received an opinion or opinions from
Sullivan & Cromwell and/or Thorp, Reed & Armstrong, special counsel to the
Company, dated the Closing Date, reasonably satisfactory to Parent and
covering the due incorporation of the Company, the binding nature of this
Agreement, the effectiveness of the Merger and such other matters as may be
reasonably requested by Parent;
(d) Parent shall have received "comfort" letters from Deloitte
& Touche, certified public accountants for the Company, dated the date of
the Proxy Statement, the effective date of the Registration Statement and
the Closing Date (or such other date reasonably acceptable to Parent) with
respect to certain financial statements and other financial information
included in the Registration Statement in customary form and any subsequent
changes in specified balance sheet and income statement items, including
total assets, working capital, total stockholders' equity, total revenues
and the total and per share amounts of net income;
(e) the Affiliate Agreements required to be delivered to
Parent pursuant to Section 7.4 shall have been furnished as required by
Section 7.4;
(f) since the date hereof, there shall have been no changes
that constitute, and no event or events shall have occurred which have
resulted in or constitute, a material adverse change in the business,
operations, properties, assets, condition (financial or other), results of
operations or prospects of the Company and its subsidiaries, taken as a
whole;
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<PAGE> 49
(g) all governmental waivers, consents, orders and approvals
legally required for the consummation of the Merger and the transactions
contemplated hereby shall have been obtained and be in effect at the
Closing Date, and no governmental authority shall have promulgated any
statute, rule or regulation which, when taken together with all such
promulgations, would materially impair the value to Parent of the Merger;
(h) all the litigation and proceedings described or referred
to in each Memorandum of Understanding identified in Schedule 5.8 shall
have been fully and irrevocably settled, a final, nonappealable order shall
have been entered and all claims, demands and causes of action pertaining
in any way to such litigation or proceedings shall have been fully and
irrevocably released and discharged, all substantially upon the terms and
conditions set forth in such Memoranda of Understanding or otherwise upon
terms and conditions satisfactory to Parent in its sole discretion;
(i) the SEC shall have agreed to a consent order as to the
matter referred to in the letter described in Item 1 of Schedule 5.8 and
Parent shall have determined within fifteen business days after being
notified of the terms and conditions thereof that such consent decree is
satisfactory to Parent in its sole discretion;
(j) Parent shall have received from Donaldson, Lufkin &
Jenrette, Inc. (or other nationally recognized investment banking firm
reasonably acceptable to the Company) an opinion reasonably acceptable to
the Company, dated as of the date on which the Joint Proxy Statement/
Prospectus is first distributed to the shareholders of Parent, to the
effect that the Exchange Ratio is fair, from a financial point of view, to
Parent's stockholders, and such opinion shall not have been withdrawn; and
(k) The Average Market Price referred to in Section 3.1(a)
shall not be less than $9.60.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1. TERMINATION. This Agreement may be terminated at any time
prior to the Closing Date, whether before or after approval by the stockholders
of the Company or Parent, as follows:
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<PAGE> 50
(a) The Company shall have the right to terminate this Agreement:
(i) if, within 21 days after the date of this Agreement, the
Company's Board of Directors:
(A) does not receive from J.P. Morgan & Co.,
Incorporated an opinion to the effect that the consideration to be
received by the stockholders of the Company in the Merger is fair,
from a financial point of view, to the holders of Company Common
Stock, with such limitations and qualifications as are customary
in such opinions;
(B) reasonably determines that the representations
and warranties of Parent and Subsidiary contained in this
Agreement are not true and correct in any material respect on and
as of the date made and on and as of the date of the Board's
determination;
(C) reasonably determines, after consultation with
Deloitte & Touche, certified public accountants for the Company,
and Coopers & Lybrand, certified public accountants for Parent,
that the Merger will not qualify as a pooling of interests
transaction under APB No. 16, provided that the Company is not in
default of the covenant contained in Section 6.1(d)(iii); or
(D) reasonably determines that the condition set
forth in Section 8.1(g) above will not be satisfied in all
material respects on or prior to the Closing Date;
(ii) if, within 21 days after the date of this Agreement, the
Company and Parent have not reached mutual agreement on the financing plan
contemplated by Section 7.7(d) (the Company agreeing that it will not
unreasonably withhold its approval of any such financing plan and
acknowledging its acceptance of those aspects of such financing plan set
forth in each Memorandum of Understanding referred to in Section 8.3(h));
(iii) if the Merger is not completed by July 31, 1995 otherwise
than account of delay or default on the part of the Company or any of its
5% stockholders or any of their affiliates or associates;
(iv) if the Merger is enjoined by a final, unappealable court
order not entered at the request or with the support of the Company or any
of its 5% stockholders or any of their affiliates or associates;
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<PAGE> 51
(v) if (A) the Company receives an offer from any third party
(excluding any affiliate of the Company or any group of which any affiliate
of the Company is a member) with respect to a merger, sale of substantial
assets or other business combination involving the Company, (B) the
Company's Board of Directors determines, in good faith and after
consultation with an independent financial advisor, that such offer would
yield a materially higher value to the Company or its stockholders than the
Merger and (C) Parent fails, within ten business days after Parent is
notified of such determination and of the terms and conditions of such
offer, to make an offer which is substantially equivalent to, or more
favorable than, such offer;
(vi) if (A) a tender/exchange offer is commenced by a third
party (excluding any affiliate of the Company or any group of which any
affiliate of the Company is a member) for all outstanding shares of Company
Common Stock, (B) the Company's Board of Directors determines, in good
faith and after consultation with an independent financial advisor, that
such offer would yield a materially higher value to the Company or its
stockholders than the Merger and (C) Parent fails, within ten business days
after Parent is notified of such determination, to make an offer which is
substantially equivalent to, or more favorable than, such tender/exchange
offer; or
(vii) if Parent (A) fails to perform in any material respect any
of its material covenants in this Agreement and (B) does not cure such
default in all material respects within 30 days after notice of such
default is given to Parent by the Company.
(b) Parent shall have the right to terminate this Agreement:
(i) if, within 21 days after the date of this Agreement,
Parent's Board of Directors:
(A) does not receive from Donaldson, Lufkin &
Jenrette, Inc. an opinion to the effect that the Exchange Ratio is
fair, from a financial point of view, to Parent's stockholders,
with such limitations and qualifications as are customary in such
opinions;
(B) reasonably determines that the representations
and warranties of the Company contained in this Agreement are not
true and correct in any material respect on and as of the date
made and on and as of the date of the Board's determination;
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(C) reasonably determines, after consultation with
Deloitte & Touche, certified public accountants for the Company,
and Coopers & Lybrand, certified public accountants for Parent,
that the Merger will not qualify as a pooling of interests
transaction under APB No. 16, provided that Parent is not in
default of the covenant contained in Section 6.2(d)(iii); or
(D) reasonably determines that the condition set
forth in Section 8.1(g) above will not be satisfied in all
material respects on or prior to the Closing Date;
(ii) if, within 21 days after the date of this Agreement, the
Company and Parent have not reached mutual agreement on the financing plan
contemplated by Section 7.7(d) (Parent agreeing that it will not
unreasonably withhold its approval of any such financing plan and
acknowledging its acceptance of those aspects of such financing plan set
forth in each Memorandum of Understanding identified in Schedule 5.8);
(iii) if the Merger is not completed by July 31, 1995 otherwise
than account of delay or default on the part of Parent or any of its 5%
stockholders or any of their affiliates or associates;
(iv) if the Merger is enjoined by a final, unappealable court
order not entered at the request or with the support of Parent or any of
its 5% stockholders or any of their affiliates or associates;
(v) if (A) Parent receives an offer from any third party
(excluding any affiliate of Parent or any group of which any affiliate of
Parent is a member) with respect to a merger, sale of substantial assets or
other business combination involving Parent, (B) Parent's Board of
Directors determines, in good faith and after consultation with an
independent financial advisor, that such offer would yield a materially
higher value to Parent or its stockholders than the Merger and (C) the
Company fails, within ten business days after the Company is notified of
such determination and of the terms and conditions of such offer, to offer
to amend this Agreement in order to make the Merger substantially
equivalent to, or more favorable than, such offer;
(vi) if (A) a tender/exchange offer is commenced by a third
party (excluding any affiliate of Parent or any group of which any
affiliate of Parent is a member) for all outstanding shares of Parent
Common Stock, (B) Parent's Board of Directors determines, in good faith and
after consultation with an
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independent financial advisor, that such offer would yield a materially
higher value to Parent or its stockholders than the Merger and (C) the
Company fails, within ten business days after the Company is notified of
such determination, to make an offer which is substantially equivalent to,
or more favorable than, such tender/exchange offer; or
(vii) if the Company (A) fails to perform in any material respect
any of its material covenants in this Agreement and (B) does not cure such
default in all material respects within 30 days after notice of such
default is given to the Company by Parent.
(c) As used in this Section 9.1, (i) "affiliate" has the meaning
assigned to it in Section 7.4 and (ii) "group" has the meaning set forth in
Section 13(d) of the Exchange Act and the rules and regulations thereunder.
SECTION 9.2. EFFECT OF TERMINATION. In the event of termination of this
Agreement by either Parent or the Company, as provided in Section 9.1, this
Agreement shall forthwith become void and there shall be no further obligation
on the part of the Company, Parent, Subsidiary or their respective officers or
directors (except as set forth in this Section 9.2 and in Sections 7.1, 7.6 and
7.8, all of which shall survive the termination). Nothing in this Section 9.2
shall relieve any party from liability for any breach of this Agreement.
SECTION 9.3. AMENDMENT. This Agreement may not be amended except by
action taken by their respective Boards of Directors or duly authorized
committee thereof and then only by an instrument in writing signed on behalf of
each of the parties hereto and in compliance with applicable law.
SECTION 9.4. WAIVER. At any time prior to the Effective Time, the
parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant thereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid if set forth in an
instrument in writing signed on behalf of such party.
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<PAGE> 54
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties in this Agreement shall not survive the Merger,
and after effectiveness of the Merger neither the Company, Parent, Subsidiary
or their respective officers or directors shall have any further obligation
with respect thereto.
SECTION 10.2. BROKERS. The Company represents and warrants that no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee (except for the fee payable to the investment banking firm described
in Section 8.2(g)) or commission in connection with the Merger or the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. Parent and Subsidiary represent and warrant that no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee (except for the fee payable to the investment banking firm described
in Section 8.3(j)) or commission in connection with the Merger or the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent or Subsidiary.
SECTION 10.3. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally, mailed
by registered or certified mail (return receipt requested) or sent via
facsimile to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) If to Parent or Subsidiary to:
USA Waste Services, Inc.
5000 Quorum Drive, Suite 300
Dallas, Texas 75240
Attention: Earl DeFrates
with a copy to:
Andrews & Kurth L.L.P.
4200 Texas Commerce Tower
Houston, Texas 77002
Attention: David G. Elkins, Esq.
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<PAGE> 55
(b) If to the Company, to:
Chambers Development Company, Inc.
10700 Frankstown Road
Pittsburgh, Pennsylvania 15235
Attention: Alexander W. Rangos
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Richard R. Howe, Esq.
SECTION 10.4. INTERPRETATION. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. In this Agreement, unless a
contrary intention appears, (i) the words "herein", "hereof" and "hereunder"
and other words of similar import refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision and (ii) reference to any
Article or Section means such Article or Section hereof. No provision of this
Agreement shall be interpreted or construed against any party hereto solely
because such party or its legal representative drafted such provision.
SECTION 10.5. MISCELLANEOUS. This Agreement (including the documents and
instruments referred to herein) (a) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and
oral, among the parties, or any of them, with respect to the subject matter
hereof, (b) is not intended to confer upon any other person any rights or
remedies hereunder, except for rights of indemnified Parties under Section 7.12
and (c) shall not be assigned by operation of law or otherwise, except that
Subsidiary may assign this Agreement to any other wholly-owned subsidiary of
Parent. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS, INCLUDING VALIDITY,
INTERPRETATION AND EFFECT, BY THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO
CONTRACTS EXECUTED AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE.
SECTION 10.6. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
SECTION 10.7. PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and except as set forth
in the exception
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<PAGE> 56
to Section 10.5(b), nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights or remedies of
any nature whatsoever under or by reason of this Agreement.
IN WITNESS WHEREOF, Parent, Subsidiary and the Company have caused this
Agreement to be signed by their respective officers as of the date first
written above.
USA WASTE SERVICES, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
ENVIROFIL, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
CHAMBERS DEVELOPMENT COMPANY, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
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<PAGE> 1
EXHIBIT 10.3(b)
EIGHTH AMENDMENT
TO
AMENDED, MODIFIED AND RESTATED LOAN AGREEMENT
THIS EIGHTH AMENDMENT TO AMENDED, MODIFIED AND RESTATED LOAN AGREEMENT (the
"Eighth Amendment") dated as of November 23, 1994 is to that certain Amended,
Modified and Restated Loan Agreement dated as of March 15, 1991, as amended by
First, Second, Third, Fourth, Fifth, Sixth and Seventh Amendments to Loan
Agreement dated as of November 12, 1991, December 12, 1991, March 12, 1992,
December 23, 1992, March 1, 1993, April 22, 1993 and July 9, 1993,
respectively, together with such waivers and consents as have been, and may
from time to time be, given in connection therewith (hereinafter, such
amendments may be referred to as the "First Amendment", "Second Amendment",
"Third Amendment", "Fourth Amendment", "Fifth Amendment", "Sixth Amendment" and
"Seventh Amendment", respectively, and such Loan Agreement, as amended, may be
referred to as the "Loan Agreement"--all defined terms in the Loan Agreement
are incorporated herein by reference), by and among
CHAMBERS DEVELOPMENT COMPANY, INC., a Delaware corporation (the "Borrower"),
THE BANKS AND LENDING INSTITUTIONS on the signature pages hereto (the "Banks")
and NATIONSBANK OF NORTH CAROLINA, N.A. (formerly NCNB National Bank of North
Carolina), a national banking association, as agent for the Banks (the
"Agent").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Borrower has requested certain modifications to the Loan
Agreement;
WHEREAS, the Banks have agreed to the requested modifications on the terms
and conditions set forth herein;
NOW, THEREFORE, IN CONSIDERATION of these premises and other good and
valuable consideration the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
A. The Loan Agreement is amended and modified in the following respects:
1. The following definitions contained in Section 1.01 are amended and
restated to read as follows:
"Consolidated Current Assets and Consolidated Current Liabilities" means as
of the date of any determination thereof, such assets and liabilities of the
Borrower and its Subsidiaries as shall be determined on a consolidated basis
in accordance with Generally Accepted Accounting Principles to constitute
current assets and current liabilities, respectively; except, that other than
scheduled amortization
<PAGE> 2
payments to be made on VRDN Obligations (as defined in the
Intercreditor Agreement) and gross-up payments to the Senior Noteholders
relating thereto, which shall be considered Consolidated Current Liabilities,
there shall be excluded from the definition of Consolidated Current
Liabilities all scheduled and pro rata amounts due on the Senior Notes (as
defined in the Intercreditor Agreement) and reimbursement liabilities due the
Banks.
"Net Proceeds" means such term as defined in Section 2.02(d);
2. The provisions of Section 2.01(a) are modified to provide that the
Charles City Letters of Credit may be rolled-over and extended from time to
time as any other Letter of Credit. The second sentence of Section 2.01(a) is
amended and restated to read as follows:
Further Extensions of Credit under this Loan Agreement are hereby terminated,
except that, so long as no Default or Event of Default shall have occurred
and be continuing as of the date of any such request or the date of
extension, Letters of Credit (including without limitation, the Charles City
Letters of Credit) shall be rolled-over and extended for additional one year
periods (or such shorter period as provided therein or as requested with
respect thereto) through December 31, 1996; provided, however, that no Letter
of Credit shall be rolled-over or extended to provide for an expiry date
beyond December 31, 1996.
3. A new subsection (f) is added to the end of Section 2.01 to read as
follows:
(f) Extension Fee. In addition to other amounts owing hereunder, the
Borrower agrees to pay to the Agent for the benefit of the Banks an extension
fee on the first day of each calendar quarter, commencing January 1, 1995, in
an amount equal to the applicable percentage of the maximum aggregate amount
available to be drawn under the Letters of Credit as of such date of
computation. For purposes of determining the applicable extension fee
hereunder:
<TABLE>
<CAPTION>
Extension Fee
Payment Date Applicable Percentage
------------ ---------------------
<S> <C>
Jan 1, 1995 .0625%
Apr 1, 1995 .1875%
Jul 1, 1995 .3750%
Oct 1, 1995 .6250%
Jan 1, 1996 .9375%
Apr 1, 1996 1.3125%
Jul 1, 1996 1.7500%
Oct 1, 1996 2.2500%
</TABLE>
- 2 -
<PAGE> 3
4. Section 2.02 is amended and restated in its entirety to read as follows:
2.02 Mandatory Reductions in Letter of Credit Obligations. It has been
agreed among the Banks, the Senior Noteholders and the Borrower pursuant to
the terms of the Intercreditor Agreement, that the Borrower shall be required
to make certain mandatory prepayments to the Senior Noteholders and certain
mandatory payments and reductions in the Letter of Credit Obligations, as
hereinafter more particularly described:
(a) Mandatory Prepayments and Reductions.
(i) Deferral Payments. The Borrower shall pay the following amounts to
the Collateral Agent for application to the Bank Obligations under the
Intercreditor Agreement:
<TABLE>
<CAPTION>
Payment Date
------------
<S> <C>
July 1, 1995 $ 3,209,250.00
July 1, 1996 28,883,250.00
-------------
$32,092,500.00
</TABLE>
Payment of the amounts due July 1, 1995 to each of the Banks, the 1988
Senior Noteholders and the 1990 Senior Noteholders (all as defined in the
Intercreditor Agreement) shall be credited against (and serve to reduce)
amounts otherwise required to be paid under subsection (a)(iii) hereof
regarding Additional Reductions.
(ii) Excess Unrestricted Cash Balances. The Borrower shall promptly pay
on the fifth (5th) Business Day after the end of each calendar month to the
Collateral Agent the amount by which the average daily Unrestricted Cash
Balances for such calendar month exceeds $40,000,000 for pro rata
application to the Obligations under the Intercreditor Agreement as provided
therein.
(iii) Additional Reductions. The Borrower shall make additional payments
to the Collateral Agent for application to the Obligations under the
Intercreditor Agreement as provided therein, in the following amounts:
<TABLE>
<CAPTION>
Period Aggregate Amount
------ ----------------
<S> <C>
Aug 31, 1994 - Jan 31, 1995 $20,000,000
Feb 1, 1995 - Dec 31, 1995 40,000,000*
----------
$60,000,000
</TABLE>
Amounts paid under subsections (a)(i) and (a)(ii) hereof shall be credited
against (and serve to reduce)
- 3 -
<PAGE> 4
amounts required to be paid under this subsection (iii). Payments made under
this subsection (iii) during the period from August 31, 1994 through January
31, 1995 in excess of $20,000,000 shall be credited against (and serve to
reduce) amounts required to be paid for the period from February 1, 1995
through December 31, 1995. In addition, the payments made between August 31,
1994 and November 23, 1994 (being the date of the Eighth Amendment)
aggregating $13,189,000 shall be credited against the requirements of this
subsection (iii).
(iv) Other. The Borrower shall promptly make any and all other payments
required under the Intercreditor Agreement.
(b) Cash Collateral Account. There has been established under the
Intercreditor Agreement a Cash Collateral Account for the primary benefit of
the Banks in respect of outstanding Letters of Credit, and as secondary
benefit to the Lenders generally under the Intercreditor Agreement. Inasmuch
as it is expected that most, if not all, of the credit exposure of the Banks
will consist, at any time, of undrawn Letters of Credit, the Banks' pro rata
share of prepayments hereunder and under the Intercreditor Agreement will be
paid into the Cash Collateral Account for application as provided therein.
(c) Application of Prepayments. The share of prepayments and other amounts
paid to the Collateral Agent in respect of and for application to the Letter
of Credit Obligations shall be promptly applied from the Cash Collateral
Account established and maintained under the Intercreditor Agreement
(i) first, to principal payments due on VRDN Obligations in the calendar
year of such payment, whether as scheduled payments, sinking fund
redemptions, mandatory prepayment or redemption or otherwise, by purchase of
such VRDN Obligations for surrender and delivery to the Trustee in respect
of such payments,
(ii) second, to the extent possible and reasonably practicable, to the
replacement or permanent reduction of Landfill Closure and Performance
Letters of Credit, and
(iii) third, to optional redemption of VRDN Obligations agreed to by the
Majority Banks in inverse order of principal installment maturities, whether
as scheduled payments, sinking fund redemptions, mandatory prepayment or
redemption or otherwise, by purchase of such VRDN Obligations for surrender
and delivery to the Trustee in respect of such payments.
- 4 -
<PAGE> 5
(d) Lien Releases. The Collateral Agent will, in accordance with the terms
of the Intercreditor Agreement, release liens in connection with asset sales
and dispositions upon receipt of, among other things, 50% of the Net Proceeds
from the sale or disposition of any assets and businesses described in
Exhibit J attached, and 100% of the Net Proceeds from the sale or disposition
of the Harrison landfill or the Atlanta landfill and/or collections
operations. As used herein, "Net Proceeds" means the gross proceeds from an
asset sale or disposition minus reasonable and necessary expenses directly
incurred in such sale and minus any debt obligations (other than VRDN
Obligations) incurred by the Borrower (or its Subsidiaries) in connection
with the acquisition of the assets being sold which the Borrower (or its
Subsidiaries) elects, or is required, to repay in connection with the sale of
such assets and minus any amounts incurred to satisfy leases on such assets.
Interest accrued or payable on any of the Obligations shall not be deducted
from such gross proceeds.
5. The reference in Section 6.01(a)(iv) regarding permitted lease and
purchase money financings to "July 1, 1995" is amended and deemed replaced with
"December 31, 1996".
6. Section 5.01(n) regarding the Net Cash Flow from Operations covenant is
amended and restated to read as follows:
(n) Net Cash Flow from Operations. The Borrower will not permit Net Cash
Flow from Operations for the three months ending on the dates set forth below
to be less than the amounts set opposite such dates:
<TABLE>
<CAPTION>
Three Months Ended Net Cash Flow From Operations
------------------ -----------------------------
<S> <C>
March 31, 1995 $ 2,215,000
June 30, 1995 5,662,000
September 30, 1995 7,283,000
December 31, 1995 10,617,000
March 31, 1996 4,749,000
June 30, 1996 8,285,000
September 30, 1996 10,235,000
December 31, 1996 12,590,000
</TABLE>
or less than 80% of the amount of forecasted Net Cash Flow from Operations,
as set forth in the most recent business plan delivered pursuant to Section
5.01(a)(viii) for each fiscal quarter of the Borrower ending after December
31, 1996, provided, however, that the Borrower shall not be deemed to be in
default of this covenant unless and until it fails to comply with its
undertakings for two consecutive three month periods.
7. Section 5.01(p) regarding the Capital Expenditures covenant is amended
and restated to read as follows:
- 5 -
<PAGE> 6
(p) Capital Expenditures. The Borrower will not, and will not permit any
Subsidiary to, make in any fiscal year, or commit to make in such year,
aggregate expenditures for capital assets, construction or development
(exclusive of restricted funds used for such purpose and capitalized costs)
in excess of $48,300,000 for the year ending December 31, 1994 or in excess
of $38,000,000 in either of the years ending December 31, 1995 and December
31, 1996, measured on a cash basis.
8. Section 6.01(c)(ii) regarding the sale, lease, transfer or disposition of
assets is amended and restated to read as follows:
(ii) sell, lease, transfer or otherwise dispose of (collectively a
"Disposition") any assets (including capital stock of Subsidiaries), in one
or a series of transactions, other than in the ordinary course of business,
to any Person, except for
(A)(I) Dispositions of the assets and businesses described in the
attached Exhibit J upon receipt by the Collateral Agent for application to
the Obligations of 50% of the Net Proceeds therefrom, or (II) Dispositions
of the Harrison landfill and Atlanta landfill and/or collections
operations upon receipt by the Collateral Agent for application to the
Obligations of 100% of the Net Proceeds therefrom, or (III) as may be
otherwise provided under the Intercreditor Agreement and
(B) Dispositions for cash at fair market value of isolated assets
resulting in cash proceeds to the Borrower and its Subsidiaries of not in
excess of $1,000,000 in the aggregate annually;
B. The effectiveness of this Eighth Amendment is conditioned upon receipt by
the Agent of the following in form and substance satisfactory to it:
(a) Executed Documents. Executed copies of this Eighth Amendment;
(b) Legal Opinion. The favorable written opinion of Thorp, Reed &
Armstrong, or other counsel to the Borrower and the Guarantors reasonably
acceptable to the Agent and the Majority Banks, dated the date of this Eighth
Amendment addressed to the Banks and satisfactory to Moore & Van Allen,
special counsel to the Agent, addressing various matters including without
limitation due authorization, execution, delivery and enforceability of this
Eighth Amendment;
- 6 -
<PAGE> 7
(c) Corporate Resolutions. Resolutions of the Board of Directors of the
Borrower and each of the Guarantors certified by the secretary or assistant
secretary thereof as of the date of this Eighth Amendment, approving and
adopting the Eighth Amendment and the transactions contemplated herein, as
applicable, and authorizing the execution and delivery thereof;
(d) Amendment Fee. Payment to the Agent for the benefit of the Banks of a
fee equal to .25% of the maximum aggregate amount available to be drawn under
the Letters of Credit outstanding as of the date of this Eighth Amendment.
(e) Common Stock. In consideration of the waivers, amendments and further
deferrals granted by the Banks hereby, the Company has authorized the
issuance to the Banks of shares of Class A Common Stock of the Company and
agrees to issue to the Banks on the dates set forth below ("Common Stock
Determination Dates") (so long as any Bank Obligations shall be outstanding
on such dates), to each in proportion to its share of the Bank Obligations
(as defined in the Intercreditor Agreement) on such Common Stock
Determination Date:
(i) on October 1, 1995 a number of shares of Class A Common Stock of the
Company equal to 1.6953% of the total number of shares of all classes of
common stock of the Company outstanding on October 1, 1995; and
(ii) on April 1, 1996 a number of shares of Class A Common of the Company
equal to 1.6953% of the total number of shares of all classes of common
stock of the Company outstanding on October 1, 1995.
Certificates evidencing ownership of the shares of Class A Common Stock to be
issued to each Bank on each Common Stock Determination Date shall be
delivered to such Bank within three Business Days following such Common Stock
Determination Date. All Banks shall have, as to the rights of Class A Common
Stock received pursuant hereto, the right to have the offering and sale of
such shares registered as and to the extent set forth in the form of the
Registration Rights Agreement attached as Exhibit A attached hereto.
(f) Other Information. Such other information and documents as the Agent
may reasonably request.
C. Reference is hereby made to that amended, modified and restated guaranty
agreement (the "Chambers Guaranty") dated as of March 15, 1991 given by the
Borrower in connection with Letters of Credit issued or to be issued for the
account of a Subsidiary. The Borrower hereby acknowledges and agrees that
references in the Chambers Guaranty to "Loan Agreement" shall be deemed to be
references to the Amended, Modified and Restated Loan Agreement
- 7 -
<PAGE> 8
dated as of March 15, 1991 among the Borrower, the Banks and the Agent, as
amended by the First, Second, Third, Fourth, Fifth, Sixth, Seventh and this
Eighth Amendment and the SBI Waiver and Consent.
The Borrower hereby restates and reaffirms that it unconditionally guarantees
to the Agent and the Banks the payment of the Indebtedness (as such term is
defined in the Chambers Guaranty) when and as the same shall become due in
accordance with the terms of the Chambers Guaranty. Though not required by the
terms of the Chambers Guaranty, the Borrower hereby acknowledges and consents
to the changes in the Loan Agreement and the Loan Documents, as amended hereby
or in connection herewith.
D. Reference is hereby made to those Guaranty Agreements (collectively, the
"Subsidiary Guaranty") dated as of March 15, 1991 and December 23, 1992 given
by those parties shown as a Guarantor on the signature pages thereto and
hereto, each being, directly or indirectly, a wholly-owned subsidiary of the
Borrower (collectively, the "Guarantors" and individually a "Guarantor"), for
the benefit of the Borrower. Each of the Guarantors hereby acknowledges and
agrees that references in the Subsidiary Guaranty to "Loan Agreement" shall be
deemed to be references to the Amended, Modified and Restated Loan Agreement
dated as of March 15, 1991 among the Borrower, the Banks and the Agent, as
amended by the First, Second, Third, Fourth, Fifth, Sixth, Seventh and this
Eighth Amendment and the SBI Waiver and Consent.
Each of the Guarantors hereby restates and reaffirms that it unconditionally
jointly and severally guarantees to the Agent and the Banks and their
respective successors, indorsees, transferees, and assigns, the payment, when
due, by acceleration or otherwise, of the Indebtedness (as such term is defined
in the Subsidiary Guaranty) in accordance with the terms of the Subsidiary
Guaranty Agreement; provided that, as provided therein, the liability of each
Guarantor with respect to the Indebtedness so guaranteed shall not exceed the
Maximum Guaranteed Amount (as defined and determined in the Subsidiary
Guaranty). Though not required by the terms of the Subsidiary Guaranty, each
of the Guarantors hereby acknowledges and consents to the changes in the Loan
Agreement and the Loan Documents, as amended hereby or in connection herewith.
E. The Borrower and the Guarantors will execute such additional documents as
are reasonably requested by the Agent to reflect the terms and conditions of
this Eighth Amendment.
F. The Borrower hereby represents and warrants that no Default or Event of
Default exists and is continuing under the Loan Agreement as of the date of,
and after giving effect to, this Eighth Amendment (except as set forth in
Schedule A attached hereto). It is further agreed that the Defaults and Events
of Default set out in Schedule A are waived, but only through the
- 8 -
<PAGE> 9
date hereof. Except as amended hereby, all of the terms and provisions of the
Loan Agreement remain in full force and effect.
G. The Borrower agrees to pay all reasonable costs and expenses (with
appropriate supporting documentation) in connection with the preparation,
execution and delivery of and compliance with this Eighth Amendment, including
without limitation the reasonable fees and expenses of Moore & Van Allen,
counsel to the Agent and the Banks.
H. This Eighth Amendment may be executed in any number of counterparts, each
of which when so executed and delivered shall be deemed an original and it
shall not be necessary in making proof of this Eighth Amendment to produce or
account for more than one such counterpart.
I. This Eighth Amendment and the Loan Agreement, as amended hereby, shall be
deemed to be contracts made under, and for all purposes shall be construed in
accordance with the laws of the State of North Carolina.
[Remainder of Page Intentionally Left Blank]
- 9 -
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have executed this Eighth Amendment as
of the date first above written.
CHAMBERS CLEARVIEW ENVIRONMENTAL LANDFILL, INC.
CHAMBERS DEVELOPMENT COMPANY, INC.
CHAMBERS DEVELOPMENT EUROPE, B.V.
CHAMBERS DEVELOPMENT OF OHIO, INC.
CHAMBERS DEVELOPMENT OF VIRGINIA, INC.
CHAMBERS ENTERPRISES, INC.
CHAMBERS ENVIRONMENTAL SYSTEMS HELLAS, S.A.
CHAMBERS INTERNATIONAL, INC.
CHAMBERS LAUREL HIGHLANDS LANDFILL, INC.
CHAMBERS MAPLEWOOD LANDFILL, INC.
CHAMBERS MEDICAL TECHNOLOGIES, INC.,
a PA corporation formed in 1985
CHAMBERS MEDICAL TECHNOLOGIES, INC.,
a PA corporation formed in 1991
CHAMBERS MEDICAL TECHNOLOGIES OF
SOUTH CAROLINA, INC.
CHAMBERS NEW JERSEY LAND, INC.
CHAMBERS OAKRIDGE LANDFILL, INC.
CHAMBERS OF ASIA, LIMITED
CHAMBERS OF DELAWARE, INC.
CHAMBERS OF GEORGIA, INC.
CHAMBERS OF HONG KONG, LIMITED
CHAMBERS OF ILLINOIS, INC.
CHAMBERS OF INDIANA, INC.
CHAMBERS OF MARYLAND, INC.
CHAMBERS OF MASSACHUSETTS, INC.
CHAMBERS OF MISSISSIPPI, INC.
CHAMBERS OF NEW JERSEY, INC.
CHAMBERS OF NEW JERSEY RECYCLING, INC.
CHAMBERS OF PENNSYLVANIA, INC.
CHAMBERS OF TENNESSEE, INC.
CHAMBERS OF WEST VIRGINIA, INC.
CHAMBERS ORANGE COUNTY LANDFILL, INC.
CHAMBERS RESOURCES, INC.
CHAMBERS RICHLAND COUNTY LANDFILL, INC.
CHAMBERS SERVICES, INC.
CHAMBERS SMYRNA LANDFILL, INC.
CHAMBERS WASTE SYSTEMS OF SOUTH CAROLINA, INC.
CHAMBERS WASTE SYSTEMS OF CALIFORNIA, INC.
CHAMBERS WASTE SYSTEMS OF FLORIDA, INC.
CHAMBERS WASTE SYSTEMS OF MISSISSIPPI, INC.
CHAMBERS WASTE SYSTEMS OF NEW JERSEY, INC.
CHAMBERS WASTE SYSTEMS OF NEW YORK, INC.
CHAMBERS WASTE SYSTEMS OF NORTH CAROLINA, INC.
CHAMBERS WASTE SYSTEMS OF OHIO, INC.
CHAMBERS WASTE SYSTEMS OF RHODE ISLAND, INC.
CHAMBERS WASTE SYSTEMS OF TEXAS, INC.
CHAMBERS WASTE SYSTEMS OF VIRGINIA, INC.
DAUPHIN MEADOWS, INC.
THE H. SIENKNECHT CO.
LCS SERVICES, INC.
By__________________________
John G. Rangos, Jr.,
Vice President of each of the
Companies listed above
- 10 -
<PAGE> 11
MORRIS COUNTY TRANSFER STATION, INC.
RAIL-IT CORPORATION
REMOTE LANDFILL SERVICES, INC.
SOUTHERN ALLEGHENIES DISPOSAL SERVICE, INC.
U.S. SERVICES CORPORATION
U.S. UTILITIES SERVICES CORPORATION
WILLIAM H. MARTIN, INC.
CDC SERVICES, INC.
By__________________________
John G. Rangos, Jr.,
Vice President of each of the
Companies listed above
RAIL-IT LIMITED PARTNERSHIP
By Rail-It Corporation, its
General Partner
By:_________________________
John G. Rangos, Jr., Vice President
THE BANKS
NATIONSBANK OF NORTH CAROLINA, N.A. BANK OF AMERICA NT & SA (as
(formerly NCNB National Bank of successor by merger to Security
North Carolina) in its capacity Pacific National Bank)
as Agent and in its individual
capacity as a Bank By_________________________
By_________________________ Title______________________
DeWitt W. King, III,
Senior Vice President
BANK ONE, COLUMBUS, NA
THE BANK OF NEW YORK By_________________________
By_________________________ Title______________________
Title______________________
PHILADELPHIA NATIONAL BANK,
incorporated as Corestates Bank, NA
NATIONAL CITY BANK
By____________________________
By_________________________
Title_________________________
Title______________________
COMMERZBANK AKTIENGESELLSCHAFT
NATIONAL WESTMINSTER BANK USA
By____________________________
By_________________________
Title_________________________
Title______________________
NATIONSBANK OF VIRGINIA, N.A.
By____________________________
DeWitt W. King, III,
Senior Vice President
- 11 -
<PAGE> 12
PNC BANK, NATIONAL ASSOCIATION,
(formerly Pittsburgh National Bank)
By____________________________
Title_________________________
MICHIGAN NATIONAL BANK
By____________________________
Title_________________________
FLEET BANK OF MASSACHUSETTS, N.A.,
by RECOLL Management Corporation as
Attorney in Fact for the Federal
Deposit Insurance Corporation as
Receiver
By____________________________
Title__________________________
- 12 -
<PAGE> 1
EXHIBIT 10.3(c)
NINTH AMENDMENT
TO
AMENDED, MODIFIED AND RESTATED LOAN AGREEMENT
THIS NINTH AMENDMENT TO AMENDED, MODIFIED AND RESTATED LOAN AGREEMENT
(the "Ninth Amendment") dated as of November 23, 1994 is to that certain
Amended, Modified and Restated Loan Agreement dated as of March 15, 1991, as
amended by First, Second, Third, Fourth, Fifth, Sixth, Seventh and Eighth
Amendments to Loan Agreement dated as of November 12, 1991, December 12, 1991,
March 12, 1992, December 23, 1992, March 1, 1993, April 22, 1993, July 9, 1993,
and November 23, 1994 respectively, together with such waivers and consents as
have been, and may from time to time be, given in connection therewith
(hereinafter, such amendments may be referred to as the "First Amendment",
"Second Amendment", "Third Amendment", "Fourth Amendment", "Fifth Amendment",
"Sixth Amendment", "Seventh Amendment" and "Eighth Amendment", respectively,
and such Loan Agreement, as amended, may be referred to as the "Loan
Agreement"--all defined terms in the Loan Agreement are incorporated herein by
reference), by and among
CHAMBERS DEVELOPMENT COMPANY, INC., a Delaware corporation (the
"Borrower"), THE BANKS AND LENDING INSTITUTIONS on the signature pages hereto
(the "Banks") and NATIONSBANK OF NORTH CAROLINA, N.A. (formerly NCNB National
Bank of North Carolina), a national banking association, as agent for the Banks
(the "Agent").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Borrower has been named in various legal proceedings
relating to the accounting adjustments announced March 17, 1992;
WHEREAS, the Borrower has reached a settlement agreement as to various
of these proceedings which agreements are set out in those Memoranda of
Understanding approved and executed by the Borrower as of November 18, 1994,
copies of which have been provided to each of the Banks;
WHEREAS, acceptance of the terms of such agreements has caused an
immediate charge against the Borrower's earnings to such an extent that it will
no longer be in compliance with, among other provisions, the Working Capital
and Tangible Net Worth covenants; and
WHEREAS, the Borrower has requested, and the Majority Banks for and on
behalf of the Banks have agreed to, the modifications to the Loan Agreement on
the terms and conditions set forth herein;
NOW, THEREFORE, IN CONSIDERATION of these premises and other good and
valuable consideration the receipt and sufficiency of
<PAGE> 2
which is hereby acknowledged, the parties hereto agree as follows:
A. The Loan Agreement is amended and modified in the following respects:
1. The following definition is added to Section 1.01 to read as follows:
"Memoranda of Understanding" means that Memorandum or those Memoranda of
Understanding approved and executed by the Borrower as of November 18, 1994
regarding settlement of various legal proceedings relating to the accounting
adjustments announced March 17, 1992, copies of which have been provided to
each of the Banks.
2. The parties hereby acknowledge and agree that from the date of this
Amendment and hereafter any reaffirmation of the representation in Section
4.01(f) regarding the absence of any material adverse change in the Borrower's
condition, financial or otherwise, shall be made exclusive of the effect of, or
payments under, the Memoranda of Understanding.
3. Subsections (o) and (p) of Section 5.01 regarding the Working Capital and
Tangible Net Worth covenants, respectively, are amended and restated to read as
follows:
(o) Working Capital. The Borrower will not permit Consolidated Working
Capital to be less than $25,000,000 at any time; provided, however, that a
reduction in Consolidated Working Capital below $25,000,000 for less than 31
days due to a prepayment using excess Unrestricted Cash Balances pursuant to
Section 2.02(a)(ii) shall not constitute a violation of this Section 5.01(o);
and provided further, that notwithstanding anything contained herein to the
contrary, for purposes hereof in determining Consolidated Current Liabilities
there shall be excluded all charges and payments to be made under the
Memoranda of Understanding.
(q) Tangible Net Worth. The Borrower will not permit Consolidated Tangible
Net Worth at any time to be less than $100,000,000; provided, however, that
notwithstanding anything contained herein to the contrary, for purposes of
determining compliance with this covenant there shall be excluded all charges
and payments to be made under the Memoranda of Understanding.
4. A new subsection (s) shall be added to the end of Section 6.01 to read as
follows:
(s) Memoranda of Understanding. The Borrower will not, without the prior
written consent of the Majority Banks, make any payments on, under or in
respect of the Memoranda of Understanding.
- 2 -
<PAGE> 3
5. The references in subsections (i) and (ii) of Section 7.01(b) to
"Sections 6.01(a), (b), (c), (f), (g), (j), (k), (l), (m) and (o)" shall be
amended and restated to read "Sections 6.01(a), (b), (c), (f), (g), (j), (k),
(l), (m), (o) and (s)".
6. The Banks hereby acknowledge receipt of the Memoranda of Understanding,
and hereby waive (i) receipt of the Borrower's quarterly financial information
for the third quarter of 1994 until the date 60 days after the end of such
quarter, and (ii) any other Default or Event of Default which may exist on
account of the execution (but not of performance which shall be subject to the
terms of the Loan Agreement as amended hereby) of the Memoranda of
Understanding.
B. This Amendment shall be effective upon execution hereof by the Borrower,
the Guarantors and the Majority Banks.
C. Reference is hereby made to that amended, modified and restated guaranty
agreement (the "Chambers Guaranty") dated as of March 15, 1991 given by the
Borrower in connection with Letters of Credit issued or to be issued for the
account of a Subsidiary. The Borrower hereby acknowledges and agrees that
references in the Chambers Guaranty to "Loan Agreement" shall be deemed to be
references to the Amended, Modified and Restated Loan Agreement dated as of
March 15, 1991 among the Borrower, the Banks and the Agent, as amended by the
First, Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth and this Ninth
Amendment.
The Borrower hereby restates and reaffirms that it unconditionally guarantees
to the Agent and the Banks the payment of the Indebtedness (as such term is
defined in the Chambers Guaranty) when and as the same shall become due in
accordance with the terms of the Chambers Guaranty. Though not required by the
terms of the Chambers Guaranty, the Borrower hereby acknowledges and consents
to the changes in the Loan Agreement and the Loan Documents, as amended hereby
or in connection herewith.
D. Reference is hereby made to those Guaranty Agreements (collectively, the
"Subsidiary Guaranty") dated as of March 15, 1991 and December 23, 1992 given
by those parties shown as a Guarantor on the signature pages thereto and
hereto, each being, directly or indirectly, a wholly-owned subsidiary of the
Borrower (collectively, the "Guarantors" and individually a "Guarantor"), for
the benefit of the Borrower. Each of the Guarantors hereby acknowledges and
agrees that references in the Subsidiary Guaranty to "Loan Agreement" shall be
deemed to be references to the Amended, Modified and Restated Loan Agreement
dated as of March 15, 1991 among the Borrower, the Banks and the Agent, as
amended by the First, Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth and
this Ninth Amendment.
Each of the Guarantors hereby restates and reaffirms that it unconditionally
jointly and severally guarantees to the Agent and the Banks and their
respective successors, indorsees,
- 3 -
<PAGE> 4
transferees, and assigns, the payment, when due, by acceleration or otherwise,
of the Indebtedness (as such term is defined in the Subsidiary Guaranty) in
accordance with the terms of the Subsidiary Guaranty Agreement; provided that,
as provided therein, the liability of each Guarantor with respect to the
Indebtedness so guaranteed shall not exceed the Maximum Guaranteed Amount (as
defined and determined in the Subsidiary Guaranty). Though not required by the
terms of the Subsidiary Guaranty, each of the Guarantors hereby acknowledges
and consents to the changes in the Loan Agreement and the Loan Documents, as
amended hereby or in connection herewith.
E. The Borrower and the Guarantors will execute such additional documents as
are reasonably requested by the Agent to reflect the terms and conditions of
this Ninth Amendment.
F. The Borrower hereby represents and warrants that no Default or Event of
Default exists and is continuing under the Loan Agreement as of the date of,
and after giving effect to, this Ninth Amendment (except as set forth in
Schedule A attached hereto). It is further agreed that the Defaults and Events
of Default set out in Schedule A are waived, but only through the date hereof.
Except as amended hereby, all of the terms and provisions of the Loan Agreement
remain in full force and effect.
G. The Borrower agrees to pay all reasonable costs and expenses (with
appropriate supporting documentation) in connection with the preparation,
execution and delivery of and compliance with this Ninth Amendment, including
without limitation the reasonable fees and expenses of Moore & Van Allen,
counsel to the Agent and the Banks.
H. This Ninth Amendment may be executed in any number of counterparts, each
of which when so executed and delivered shall be deemed an original and it
shall not be necessary in making proof of this Ninth Amendment to produce or
account for more than one such counterpart.
I. This Ninth Amendment and the Loan Agreement, as amended hereby, shall be
deemed to be contracts made under, and for all purposes shall be construed in
accordance with the laws of the State of North Carolina.
[Remainder of Page Intentionally Left Blank]
- 4 -
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Ninth Amendment as
of the date first above written.
CHAMBERS CLEARVIEW ENVIRONMENTAL LANDFILL, INC.
CHAMBERS DEVELOPMENT COMPANY, INC.
CHAMBERS DEVELOPMENT EUROPE, B.V.
CHAMBERS DEVELOPMENT OF OHIO, INC.
CHAMBERS DEVELOPMENT OF VIRGINIA, INC.
CHAMBERS ENTERPRISES, INC.
CHAMBERS ENVIRONMENTAL SYSTEMS HELLAS, S.A.
CHAMBERS INTERNATIONAL, INC.
CHAMBERS LAUREL HIGHLANDS LANDFILL, INC.
CHAMBERS MAPLEWOOD LANDFILL, INC.
CHAMBERS MEDICAL TECHNOLOGIES, INC.,
a PA corporation formed in 1985
CHAMBERS MEDICAL TECHNOLOGIES, INC.,
a PA corporation formed in 1991
CHAMBERS MEDICAL TECHNOLOGIES OF
SOUTH CAROLINA, INC.
CHAMBERS NEW JERSEY LAND, INC.
CHAMBERS OAKRIDGE LANDFILL, INC.
CHAMBERS OF ASIA, LIMITED
CHAMBERS OF DELAWARE, INC.
CHAMBERS OF GEORGIA, INC.
CHAMBERS OF HONG KONG, LIMITED
CHAMBERS OF ILLINOIS, INC.
CHAMBERS OF INDIANA, INC.
CHAMBERS OF MARYLAND, INC.
CHAMBERS OF MASSACHUSETTS, INC.
CHAMBERS OF MISSISSIPPI, INC.
CHAMBERS OF NEW JERSEY, INC.
CHAMBERS OF NEW JERSEY RECYCLING, INC.
CHAMBERS OF PENNSYLVANIA, INC.
CHAMBERS OF TENNESSEE, INC.
CHAMBERS OF WEST VIRGINIA, INC.
CHAMBERS ORANGE COUNTY LANDFILL, INC.
CHAMBERS RESOURCES, INC.
CHAMBERS RICHLAND COUNTY LANDFILL, INC.
CHAMBERS SERVICES, INC.
CHAMBERS SMYRNA LANDFILL, INC.
CHAMBERS WASTE SYSTEMS OF SOUTH CAROLINA, INC.
CHAMBERS WASTE SYSTEMS OF CALIFORNIA, INC.
CHAMBERS WASTE SYSTEMS OF FLORIDA, INC.
CHAMBERS WASTE SYSTEMS OF MISSISSIPPI, INC.
CHAMBERS WASTE SYSTEMS OF NEW JERSEY, INC.
CHAMBERS WASTE SYSTEMS OF NEW YORK, INC.
CHAMBERS WASTE SYSTEMS OF NORTH CAROLINA, INC.
CHAMBERS WASTE SYSTEMS OF OHIO, INC.
CHAMBERS WASTE SYSTEMS OF RHODE ISLAND, INC.
CHAMBERS WASTE SYSTEMS OF TEXAS, INC.
CHAMBERS WASTE SYSTEMS OF VIRGINIA, INC.
DAUPHIN MEADOWS, INC.
THE H. SIENKNECHT CO.
LCS SERVICES, INC.
By__________________________
John G. Rangos, Jr.,
Vice President of each of the
Companies listed above
- 5 -
<PAGE> 6
MORRIS COUNTY TRANSFER STATION, INC.
RAIL-IT CORPORATION
REMOTE LANDFILL SERVICES, INC.
SOUTHERN ALLEGHENIES DISPOSAL SERVICE, INC.
U.S. SERVICES CORPORATION
U.S. UTILITIES SERVICES CORPORATION
WILLIAM H. MARTIN, INC.
CDC SERVICES, INC.
By__________________________
John G. Rangos, Jr.,
Vice President of each of the
Companies listed above
RAIL-IT LIMITED PARTNERSHIP
By Rail-It Corporation, its
General Partner
By:_________________________
John G. Rangos, Jr., Vice President
THE BANKS
NATIONSBANK OF NORTH CAROLINA, N.A. BANK OF AMERICA NT & SA (as
(formerly NCNB National Bank of successor by merger to Security
North Carolina) in its capacity Pacific National Bank)
as Agent and in its individual
capacity as a Bank By_________________________
By_________________________ Title______________________
DeWitt W. King, III,
Senior Vice President
BANK ONE, COLUMBUS, NA
THE BANK OF NEW YORK By_________________________
By_________________________ Title______________________
Title______________________
PHILADELPHIA NATIONAL BANK,
incorporated as Corestates Bank, NA
NATIONAL CITY BANK
By____________________________
By_________________________
Title_________________________
Title______________________
COMMERZBANK AKTIENGESELLSCHAFT
NATIONAL WESTMINSTER BANK USA
By____________________________
By_________________________
Title_________________________
Title______________________
NATIONSBANK OF VIRGINIA, N.A.
By____________________________
DeWitt W. King, III,
Senior Vice President
- 6 -
<PAGE> 7
PNC BANK, NATIONAL ASSOCIATION,
(formerly Pittsburgh National Bank)
By____________________________
Title_________________________
MICHIGAN NATIONAL BANK
By____________________________
Title_________________________
FLEET BANK OF MASSACHUSETTS, N.A.,
by RECOLL Management Corporation as
Attorney in Fact for the Federal
Deposit Insurance Corporation as
Receiver
By____________________________
Title__________________________
- 7 -
<PAGE> 1
EXHIBIT 10.10
===============================================================================
CHAMBERS DEVELOPMENT COMPANY, INC.
11.95% Guarantied Senior Secured Notes due December 31, 1996
SECOND AMENDED AND RESTATED NOTE AGREEMENT
Dated as of November 21, 1994
===============================================================================
<PAGE> 2
CHAMBERS DEVELOPMENT COMPANY, INC.
10700 Frankstown Road
Pittsburgh, PA 15235
11.95% Guarantied Senior Secured Notes due December 31, 1996
_____________________
As of November 21, 1994
To the Holder Whose Name
Appears in the Acceptance
Form at the End Hereof
Gentlemen:
Reference is made to the Note Purchase Agreement dated as of
November 15, 1988 between Chambers Development Company, Inc., a Delaware
corporation (the "Company"), and each of the purchasers named therein pursuant
to which $30,000,000 aggregate principal amount of the Company's 10.95% Senior
Notes due October 31, 1998 were issued. The Note Purchase Agreement
subsequently was amended by a Waiver and First Amendment to Note Purchase
Agreement dated December 23, 1992 (the "Waiver") and an Extension of Waiver and
Second Amendment to Note Purchase Agreement dated February 26, 1993 (the
"Extension"), and was amended and restated (the "Restatement") as of July 9,
1993. The Note Purchase Agreement as amended by the Waiver and the Extension,
as amended and restated by the Restatement and as further amended and restated
herein is hereinafter referred to as the "Agreement." Simultaneously with the
execution and delivery hereof, the Company is entering into agreements (the
"Other Agreements") with the other Institutional Investors named in Annex 2
(herein called the "Other Holders"), substantially identical with this
Agreement. This Agreement and the Other Agreements are sometimes referred to
herein collectively as the "Agreements".
The Company and the guarantors of the payment and performance
of this Agreement and the Notes whose names appear on the signature pages
hereof (the "Guarantors"), intending to be legally bound, hereby, jointly and
severally agree with you as follows:
1. Authorization of Notes and Common Stock. The Company
has authorized the issuance and sale of its 10.95% Notes in the aggregate
principal amount of $30,000,000. The holders and other creditors of the
Company have heretofore agreed to waive certain defaults and events of
noncompliance by the Company, including defaults and Events of Defaults under
<PAGE> 3
the Agreement and the Holders and such other creditors also have heretofore
amended the agreements evidencing the Company's indebtedness, including the
Agreement and the 10.95% Senior Notes, which are now denominated as the
Company's 11.95% Senior Notes (the "Notes"). To effectuate amendments, and to
obtain further waivers, the Company has authorized this further amendment and
restatement of the Agreement and the Notes. The Notes shall mature, shall bear
interest and shall otherwise be substantially in the form of Exhibit A hereto,
shall be secured as set forth in this Agreement and in the Security Documents
and payment and performance thereof shall be guaranteed as set forth in this
Agreement and in the Guaranty. As hereinafter used in this Agreement, the term
"Notes" shall include all Notes originally issued pursuant to this Agreement
and the Other Agreements (as defined in this Section 1), and all Notes
delivered in substitution or exchange for any of said Notes pursuant to this
Agreement and said Other Agreements and, where applicable, shall include the
singular number as well as the plural. The term "Note" shall mean one of the
Notes. The Notes shall be issuable as registered notes to the payee or
registered assigns. It shall not be necessary for holders to surrender their
outstanding Notes in exchange for Notes in the form of Exhibit A. However,
prior to any transfer of any of your Notes you agree to make a notation thereon
that such Note has been amended.
In consideration of the waivers, amendments and further
deferrals granted by the holders of Notes in this Agreement, the Company has
authorized the issuance to the holders of Notes (if any Notes shall be
outstanding on the respective dates set forth below) of shares of Class A
Common Stock of the Company and agrees to issue to registered holders of the
Notes on the dates set forth below ("Common Stock Determination Dates"), to
each in proportion to its holding of Notes on such Common Stock Determination
Date:
(a) on October 1, 1995 a number of shares of Class A Common
Stock of the Company equal to 0.271% of the total number of shares of all
classes of common stock of the Company outstanding on October 1, 1995; and
(b) on April 1, 1996 a number of shares of Class A Common
Stock of the Company equal to 0.271% of the total number of shares of all
classes of common stock of the Company outstanding on April 1, 1996.
-2-
<PAGE> 4
Certificates evidencing ownership of the shares of Class A
Common Stock to be issued to each holder of Notes on each Common Stock
Determination Date shall be delivered to such holder within three business days
following such Common Stock Determination Date. All holders of Notes shall
have, as to shares of Class A Common Stock received pursuant hereto, the right
to have the offering and sale of such shares registered as and to the extent
set forth in the form of Registration Rights Agreement attached as Annex 3K.
2. Fees. In consideration of the waivers, amendments and
deferrals agreed to herein, the Company is paying to the holders of the Notes
on the date hereof an amount equal to .25% of the presently outstanding
principal amount of the Notes. In addition, the Company shall pay on the dates
set forth below a cash fee equal to the percentage set forth below of the then
outstanding principal amount of the Notes:
<TABLE>
<CAPTION>
Fee As a Percentage
Payment Date of Outstanding Notes
---------------- --------------------
<S> <C>
January 1, 1995 .0625%
April 1, 1995 .1875%
July 1, 1995 .3750%
October 1, 1995 .6250%
January 1, 1996 .9375%
April 1, 1996 1.3125%
July 1, 1996 1.7500%
October 1, 1996 2.2500%
</TABLE>
3. Conditions to Effectiveness. This Second Amended and
Restated Note Agreement shall become effective on the date (the "Effective
Date") on which you shall have notified the Company in writing that each of the
following conditions has been completed to your satisfaction.
3A. Opinion of Holder's Special Counsel. You shall have
received from Donovan Leisure Newton & Irvine, who are acting as special
counsel for you in connection with this transaction, an opinion, dated the
Effective Date, in form and substance satisfactory to you, as to such matters
as you may reasonably request.
3B. Opinion of Counsel for the Company. You shall have
received from Thorp, Reed & Armstrong, who are acting as counsel for the
Company, an opinion, dated the Effective Date, in form and substance
satisfactory to you and your special counsel, substantially in the form of
Annex 3B and as to such other matters as you may reasonably request.
-3-
<PAGE> 5
3C. Representations and Warranties; No Default. The
representations and warranties contained in Section 8 and Section 10 shall be
true on and as of the Effective Date, except to the extent of changes caused by
the transactions herein contemplated; there shall exist on the Effective Date
no Event of Default or Default after giving effect to the transactions
contemplated by this Agreement and the Other Agreements; and the Company shall
have delivered to you an Officer's Certificate, dated the Effective Date, to
both such effects.
3D. Consent of Reliance Group; No Other Consent Required.
You shall have received the written consent of Reliance Group to the
authorization, execution, delivery and performance by the Company and the
Guarantors of the Agreements, the Notes, the Guaranty and the Security
Documents. No consent or agreement by any Person (other than you, the Other
Holders and the Reliance Group and except such as may have been obtained by the
Effective Date) to the authorization, execution, delivery or performance of
this Agreement, the Notes, the Guaranty or the Security Documents shall be
necessary, and the Company shall have delivered to you an Officer's
Certificate, dated the Effective Date, to such effect.
3E. Purchase Permitted by Applicable Laws. The effectiveness
of the Agreement shall not be prohibited by any applicable law, court order or
governmental regulation (including, without limitation, Regulations G, T or X
of the Board of Governors of the Federal Reserve System and including laws
regulating investments by insurance companies (without regard to any "leeway"
or "basket" provisions thereof)) and there shall not be any litigation,
investigation or proceeding of or before any court, arbitrator or governmental
authority pending or, to the best knowledge of the Company, threatened against
the Company with respect to any of the transactions contemplated hereby.
3F. Other Agreements. The Other Agreements shall have been
executed and delivered by the parties thereto; you shall have received a true
and correct copy of each of the Other Agreements, which shall be in full force
and effect; no term or condition thereof shall have been amended, modified or
waived except with your prior consent; and on the Effective Date, each
condition to the effectiveness of the
-4-
<PAGE> 6
Other Agreements, as set forth in Section 3 thereof, shall have been satisfied
(or waived with your concurrence). The Company shall have delivered to you an
Officer's Certificate to all of the foregoing effects.
3G. Other Debt Agreements. The Company shall have executed
and delivered, and you shall have received a true and correct copy of the
Amended and Restated Note Agreement, dated as of November 21, 1994, with
respect to the Company's 11.45% Senior Secured Notes due December 31, 1996 (the
"1990 Note Agreement"); the Eighth Amendment to Bank Loan Agreement, dated as
of November 21, 1994, among the Company, NationsBank of North Carolina, N.A.
("NationsBank") as Agent and the Various Lending Institutions named therein
(the "Bank Agreement"); and the First Amendment to Intercreditor Agreement,
dated as of November 21, 1994, among the Company, NationsBank as Collateral
Agent and the various banks and institutional lenders named therein (the
"Intercreditor Agreement"); each of which shall be in full force and effect; no
term or condition of either shall have been amended, modified or waived except
with your prior consent; on the Effective Date, each condition to the
effectiveness of each such agreement shall have been satisfied (or waived with
your concurrence); and the representations and warranties set forth in each
such agreement shall be true, accurate and complete and there shall exist no
Event of Default under any such agreement nor any event or occurrence which
with notice or passage of time, or both, will constitute an Event of Default.
The Company shall have delivered to you an Officer's Certificate to all of the
foregoing effects.
3H. Proceedings. All corporate and other proceedings taken
or to be taken in connection with the transactions contemplated hereby and all
documents incident thereto shall be satisfactory in substance and form to you
and your special counsel, and you and your special counsel shall have received
all such counterpart originals or certified or other copies of such documents
as you or they may reasonably request.
3I. Expenses. The Company shall have paid, on the Effective
Date, the estimated fees and disbursements of your special counsel pursuant to
an invoice therefor presented at least 3 days prior to the Effective Date, and
the Company will also pay upon receipt of any statement thereof, any additional
reasonable fees and additional disbursements of your special counsel pursuant
to a statement thereof rendered after the Effective Date.
3J. Litigation Report. The Company shall have delivered to
your special counsel a detailed status report in form and substance
satisfactory to it on all pending stockholder litigation.
-5-
<PAGE> 7
3K. Registration Rights Agreement. The Company shall
have authorized, executed and delivered, and you shall have received, a
Registration Rights Agreement substantially in the form of Annex 3K. The
Company shall have delivered to you a Certificate of the Secretary to all of
the foregoing effects.
4. Prepayments. The Notes may not be prepaid except under
the circumstances set forth in this Section 4.
4A. Fixed Prepayments. In addition to paying the amount of
$5,664,450.00 which is presently scheduled to be outstanding at the maturity of
the Notes, the Company covenants and agrees that it will prepay Notes in the
aggregate amounts and at the times set forth in the following table:
<TABLE>
<CAPTION>
Fixed Prepayment Date Principal Amount to be Prepaid
--------------------- ------------------------------
<S> <C>
July 1, 1995 $ 449,802.57
October 31, 1995 $3,575,685.93
July 1, 1996 $4,048,223.09
October 31, 1996 $3,575,685.93
</TABLE>
provided, however, that the Company may elect by notice given pursuant to
Section 12I, not more than 45 and not less than 30 days prior to the date fixed
for prepayment (x) to defer not more than seventy-five percent (75%) of the
payments to be made on October 31, 1995 (after giving effect to payments made
pursuant to Section 4E, 4F and 4G) until December 31, 1996 when they shall be
paid in full and (y) to defer the fixed prepayments to be made on October 31,
1996 to December 31, 1996 when they shall be paid in full.
All Notes prepaid pursuant to this Section 4A shall be prepaid
at their principal amount, plus accrued interest thereon to the prepayment
date, but without premium.
4B. Optional Prepayment in Whole or in Part. The Notes shall
be subject to prepayment at any time at the option of the Company, as a whole
or from time to time in part in multiples of $50,000 (but in any event in an
aggregate principal amount of not less than $1,000,000), at the principal
amount so prepaid, plus accrued interest thereon to the prepayment date, plus a
Yield Maintenance Payment. Except as provided in Section 4I, the exercise of
the right to prepay pursuant to this Section 4B shall not relieve the Company
to any extent from its obligation thereafter to make the prepayments required
by Section 4A until the Notes have been paid in full.
-6-
<PAGE> 8
4C. Prepayment on Change of Control. The Company covenants
that:
(i) If at any time a Change of Control is expected by the Company to occur,
and whether or not the event which will give rise thereto is
permitted by Section 6E, the Company will notify the holders
of all of the Notes thereof not more than 45 and not less than
30 days prior to the date on which such Change of Control is
projected to occur and, upon the written demand of the holder
of any Note made by such holder not later than 10 days prior
to the date fixed for prepayment, prepay on a date which is
not more than 5 days after receipt of such demand and which in
any event must be prior to the effective time of such Change
of Control the entire unpaid principal amount of each Note
held by such holder and specified in such demand, together
with interest accrued thereon to the date of prepayment and
without premium or Yield Maintenance Payment; provided,
however, that if prior to the time prepayment is made the
particular Change of Control is cancelled and the Company
provides to the holders a certificate of a Responsible Officer
to such effect the Company shall not be required to prepay the
Notes. If any such holder shall fail to make such demand
within the time set forth above but shall not have notified
the Company in writing that it does not intend to make such
demand, such holder shall be deemed to have demanded
prepayment under this Section 4C in respect of all Notes held
by such holder. At the time any prepayment is made pursuant
to this Section 4C the Company shall also deliver to the
holder a certificate of a Responsible Officer stating that the
anticipated Change of Control is still expected to occur.
Promptly upon the request of any holder the Company will
supply all material information and respond to all questions
concerning any Change of Control. Immediately upon receipt of
demand for payment from any holder under this Section 4C, the
Company will deliver a copy of such demand to all other
holders, to which delivery all holders do hereby consent.
Except as provided in Section 4I, prepayment pursuant to this
Section 4C shall not relieve the Company to any extent from
its obligation thereafter to make the prepayments required by
Section 4A until the Notes have been paid in full.
(ii) If a Change of Control shall occur without prior knowledge of the Company
the Company will, as soon as possible and in any event within 5 days after
such
-7-
<PAGE> 9
Change of Control, offer to prepay the Notes together with interest to the date
of payment and without premium or Yield Maintenance Payment on a date which
shall be not less than 30 nor more than 45 days after the occurrence of such
Change of Control. Such notice shall specify (i) that it is given pursuant to
this Section 4C, (ii) that any holder electing not to accept such offer must do
so by notice given to the Company not less than 10 days prior to the date fixed
for prepayment and failing to do so shall be deemed to have accepted such
offer, (iii) an estimate of the principal amount of the holder's Notes to be
prepaid and (iv) the accrued interest applicable to the prepayment. If one or
more holders of Notes do not accept such offer, its or their portions of the
proceeds shall be applied by the Company, on a pro rata basis, to the
prepayment of additional Notes held by holders of Notes accepting the offer.
(iii) If a Change of Control shall occur or be expected to occur at a time
which will cause a prepayment in respect thereof to be made
subsequent to October 31, 1993 and if any amount deferred
pursuant to Section 4A shall not have been paid by its
originally scheduled prepayment date, then any prepayment made
pursuant to this Section 4C shall be made at the principal
amount of the Notes prepaid plus interest to the date of
prepayment and without premium or Yield Maintenance Payment.
4D. Prepayment of Notes if Business Changes. The Company
covenants that if at any time a Change of Business is expected by the Company
to occur the Company will notify the holders of all the Notes thereof not less
than 30 days prior to the effective date of such change and, upon the written
demand of the holder of any Note made by such holder within 30 days after the
receipt of notification, prepay on a date which is not more than 60 days after
the receipt of such demand the entire unpaid principal amount of each Note held
by such holder and specified in such demand, together with interest accrued
thereon to the date of prepayment plus a Yield Maintenance Payment; provided,
however, that if prior to the time prepayment is made the particular Change of
Business is cancelled or otherwise does not occur and the Company provides to
the holders a certificate of a Responsible Officer to such effect the Company
shall not be required to prepay the Notes; and provided further that if the
Change of Business is of the type described in clauses (iv), (v), (vi) or (vii)
of Section 5I, prepayment shall be made in accordance with the provisions of
Section 5I. If any such holder shall fail to make such demand within 30 days
after such holder's receipt of such notification, such holder shall be deemed
-8-
<PAGE> 10
to have waived its right to prepayment under this Section 4D in respect of all
Notes held by such holder, but only with respect to the particular Change of
Business which caused such right of prepayment to arise hereunder and not with
respect to any subsequent or further Change of Business. At the time any
prepayment is made pursuant to this Section 4D the Company shall also deliver
to the holder a certificate of a Responsible Officer stating that the
contemplated Change of Business has occurred or is still expected to occur.
Promptly upon the request of any holder the Company will supply all material
information and respond to all questions concerning a proposed Change of
Business. Immediately upon receipt of demand for payment from any holder under
this Section 4D, the Company will deliver a copy of such demand to all other
holders, to which delivery all holders do hereby consent. Except as provided
in Section 4I, prepayment pursuant to this Section 4D shall not relieve the
Company to any extent from its obligation thereafter to make the prepayments
required by Section 4A until the Notes have been paid in full.
4E. Prepayment of Notes Upon Disposition of Assets.
In the event the Company shall, or shall permit any Subsidiary to, sell, lease,
transfer or otherwise dispose of (collectively a "Disposition") as otherwise
permitted by this Agreement, any assets (including capital stock of
Subsidiaries), described in Annex 4E-1 such Disposition shall be for cash and,
within 2 days after receipt of the Net Cash Proceeds by the Company or any
Subsidiary, the Company shall make an irrevocable offer to prepay, pro rata, on
a date specified in such offer which shall be not less than 5 nor more than 7
days after the date of receipt of such Net Cash Proceeds, the Pro Rata Share
attributable to the Notes of 50% of the Net Cash Proceeds at a price equal to
100% of the unpaid principal amount of the Notes so prepaid plus interest
accrued to the date of prepayment. In the event the Company shall, or shall
permit any Subsidiary to, make a Disposition as otherwise permitted by this
Agreement, of any assets (including capital stock of Subsidiaries), described
in Annex 4E-2, such Disposition shall be for cash and, within 2 days after
receipt of the Net Cash Proceeds by the Company or any Subsidiary, the Company
shall make an irrevocable offer to prepay, pro rata, on a date specified in
such offer which shall be not less than 5 nor more than 7 days after the date
of receipt of such Net Cash Proceeds, the Pro Rata Share attributable to the
Notes of 100% of the Net Cash Proceeds at a price equal to 100% of the unpaid
principal amount of the Notes so prepaid plus interest accrued to the date of
prepayment. The amount of each prepayment applied pursuant to this Section 4E
to the prepayment of Notes shall be applied first in reduction of the Fixed
Prepayment to be made on July 1, 1995 and then proportionately in reduction of
-9-
<PAGE> 11
each subsequent Fixed Prepayment to be made subsequent to the date of
prepayment. Such notice shall be certified by an authorized officer of the
Company and shall specify (i) that it is given pursuant to this Section 4E,
(ii) that any holder electing not to accept such offer must do so by notice
given to the Company not later than the day prior to the date fixed for
prepayment and failing to do so shall be deemed to have accepted, (iii) an
estimate of the principal amount of the holder's Notes to be prepaid and
showing the calculations used to derive that amount and (iv) the accrued
interest applicable to the prepayment. If one or more holders of Notes do not
accept such offer, its or their portions of the proceeds shall be applied by
the Company, on a pro rata basis, to the prepayment of additional Notes held by
holders of Notes accepting the offer. Notwithstanding the foregoing, the
Company may make Dispositions of isolated assets resulting in net cash proceeds
to the Company or its Subsidiaries of not in excess of $1,000,000 per annum and
such Dispositions shall not be subject to the provisions of this Section.
4F. Prepayment From Excess Unrestricted Funds. If during any
month, the Company shall have had Average Daily Unrestricted Cash Balances in
excess of $40,000,000, the Company shall, concurrently with delivery of the
certificate required by Section 5A(iv), make an irrevocable offer to prepay,
pro rata, on a date specified in such offer which shall be not less than 5 nor
more than 7 days after the date of delivery of such certificate, the Pro Rata
Share attributable to the Notes of such excess over $40,000,000 (the "Excess
Cash") at a price equal to 100% of the unpaid principal amount of the Notes so
prepaid plus interest accrued to the date of prepayment; the amount of such
prepayment applied to the prepayment of Notes shall be applied first in
reduction of the Fixed Prepayment to be made on July 1, 1995 and then
proportionately in reduction of each subsequent Fixed Prepayment to be made
subsequent to the date of prepayment. Such notice shall specify (i) that it is
given pursuant to this Section 4F, (ii) that any holder electing not to accept
such offer must do so by notice given to the Company not later than the day
preceding the date fixed for prepayment and failing to do so shall be deemed to
have accepted, (iii) an estimate of the principal amount of the holder's Notes
to be prepaid and the calculations used to derive that amount and (iv) the
accrued interest applicable to the prepayment. If one or more holders of Notes
do not accept such offer, its or their portions of the proceeds shall be
applied by the Company, on a pro rata basis, to the prepayment of additional
Notes held by holders of Notes accepting the offer.
-10-
<PAGE> 12
4G. Other Pro Rata Prepayments. In the event that there
shall at any time be any reduction in the principal amount of notes outstanding
pursuant to the 1990 Note Agreement or in the amount of the letter-of-credit
obligations of banks participating in the Bank Agreement (other than a pro rata
reduction resulting from payments corresponding to a Pro Rata Share received
pursuant to Section 4E or Section 4F) the Company shall, within two days of the
earlier of the date of such reduction or the date on which the Company shall
have committed itself to the course of conduct resulting in such reduction,
make an irrevocable offer to prepay such amount of Notes as shall be necessary
to maintain the Pro Rata Share of the Notes, as a percentage of all Waived
Senior Debt, at 6.77%. The offer to be made shall specify (i) that it is given
pursuant to this Section 4G, (ii) that any holder electing not to accept such
offer must do so by notice given to the Company not less than five days prior
to the date fixed for prepayment (which date shall be not fewer than 10 nor
more than 30 days from the date of such offer) and failing to do so shall be
deemed to have accepted, (iii) an estimate of the principal amount of the
holder's Notes to be prepaid and the calculations used to derive that amount,
(iv) the accrued interest applicable to the prepayment and (v) if any holder of
other Waived Senior Debt shall have received any premium or other payment
(other than accrued interest or letter-of-credit fees) additional to the amount
of the reduction, the Yield Maintenance Payment which shall in such event be
payable. Any prepayment made pursuant to this Section 4G shall be applied
proportionately in reduction of each subsequent Fixed Prepayment.
4H. Notice of Optional Prepayment of Notes. The Company
shall give you written notice of each optional prepayment of the Notes pursuant
to Section 4B not less than 30 days prior to the prepayment date, specifying
such prepayment date and the principal amount of the Notes to be prepaid on
such date and Yield Maintenance Payment or other premium, if any, in respect of
such prepayment. If any Note shall have been transferred to another holder
pursuant to Section 12D and such holder shall have designated in writing the
address to which notices with respect to such Note shall be mailed, such notice
of prepayment shall also be given to such holder at such designated address.
Notice of prepayment having been given as aforesaid, the principal amount of
the Notes specified in such notice, together with interest thereon to the date
of prepayment, and the premium, if any, herein provided, shall become due and
payable on the prepayment date.
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<PAGE> 13
4I. Allocation of Partial Prepayments of Notes. Upon any
partial prepayment of the Notes pursuant to Section 4A, 4B, 4E, 4F, 4G or 5I,
the amount so prepaid shall be allocated to all Notes at the time outstanding
in proportion to the unpaid principal amounts thereof. Subject to Section 12A,
upon any partial prepayment of any Note, such Note shall, at the option of the
holder thereof, be either (i) surrendered to the Company in exchange for a new
Note in a principal amount equal to the principal amount remaining unpaid on
the Note surrendered, or (ii) made available to the Company at your principal
office for notation thereon of the portion of the principal so prepaid. Any
prepayments made pursuant to Section 4C or 4D will proportionately reduce the
remaining fixed prepayments under Section 4A. Any prepayments made pursuant to
Section 4E, 4F, 4G or 5I shall be applied to the remaining Fixed Prepayments in
the manner set forth in those Sections. Any prepayment made pursuant to
Section 4B will reduce the remaining principal payments in the inverse order of
maturity.
4J. Purchase of Notes. The Company will not, and will not
permit any Subsidiary or Affiliate to, acquire directly or indirectly by
purchase or otherwise any of the outstanding Notes except by way of payment or
prepayment in accordance with the provisions of the Notes and of this
Agreement; provided, however, that the Company may elect at any time to offer
to repurchase all, but not less than all, of the Notes on condition that:
(i) such offer shall be made on identical terms to all holders of the Notes
and shall state that (a) it is made pursuant to this Section
4J, (b) any holder electing not to accept such offer must do
so by notice given to the Company not less than five days
prior to the date fixed for repurchase (which date shall be
not less than 30 nor more than 60 days after the date of such
offer to repurchase) and failing to do so shall be deemed to
have accepted such offer; and
(ii) the offer to repurchase shall be on terms not less favorable to the
holders of Notes than any terms which may have been offered to
the holders of any other Waived Senior Debt within 12 months
prior to or subsequent to the date of the offer to repurchase.
5. Affirmative Covenants. All covenants contained herein
shall extend to and benefit you and any other holders from time to time of the
Notes.
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5A. Financial Statements and Reports. The Company will
furnish to you and to any other Institutional Holder (in duplicate if you or
such other Institutional Holder so request and provided that only another
Institutional Holder which is not a Competitor shall be entitled to receive the
information specified in clause (b) of paragraph (iv) and paragraphs (viii) and
(ix) of this Section 5A), the following:
(i) as soon as available and in any event within 50 days after the end of each
of the first three quarterly accounting periods of each fiscal
year of the Company, beginning with the quarterly accounting
period ending on September 30, 1994, a condensed consolidated
balance sheet of the Company and its Subsidiaries as of the
end of such period and condensed consolidated statements of
operations and cash flows of the Company and its Subsidiaries
for the periods beginning on the first day of such fiscal year
and the first day of such quarterly accounting period and
ending on the date of such balance sheet, setting forth in
comparative form the condensed consolidated statements of
operations and cash flows for the corresponding periods of the
preceding fiscal year and the condensed consolidated balance
sheet as of the end of the preceding fiscal year, all prepared
in accordance with GAAP (to the extent applicable to such
quarterly statements) consistently applied throughout the
period involved (except for changes disclosed in such
financial statements or in the notes thereto) and certified by
the chief financial officer or chief accounting officer of the
Company (a) outlining the basis of presentation, and (b)
stating that the information presented in such statements
presents fairly in condensed form the financial position of
the Company and its Subsidiaries and the results of their
operations and their cash flows for the period, subject to
normal year-end audit adjustments;
(ii) as soon as available and in any event within 95 days after the last day
of each fiscal year a consolidated balance sheet of the
Company and its Subsidiaries as of the end of such fiscal year
and the related consolidated statements of operations,
stockholders' equity and cash flows for such fiscal year, in
each case setting forth in comparative form figures for the
preceding fiscal year, all in reasonable detail, prepared in
accordance with generally accepted accounting principles
consistently applied throughout the period involved (except,
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as to consistency only, for changes disclosed in such
financial statements or in the notes thereto) and accompanied
by a report as to the consolidated balance sheet and the
related consolidated statements of operations, stockholders'
equity and cash flows of Deloitte & Touche or any other firm
of independent public accountants of recognized national
standing selected by the Company to the effect that such
financial statements have been prepared in conformity with
generally accepted accounting principles and present fairly,
in all material respects, the financial position of the
Company and its Subsidiaries as of the end of such period and
the results of their operations and their cash flows for such
fiscal year and that the examination of such financial
statements by such accounting firm has been made in accordance
with generally accepted auditing standards;
(iii) together with the financial statements delivered pursuant to paragraphs
(i) and (ii) of this Section 5A, a certificate or certificates
of the chief financial officer or chief accounting officer,
(a) to the effect that such officer has re-examined the terms
and provisions of this Agreement and that at the date of such
certificate, during the periods covered by such financial
statements and as of the end of such periods, the Company is
not, or was not, in default in the fulfillment of any of the
terms, covenants, provisions and conditions of this Agreement
and that no Default or Event of Default is occurring or has
occurred as of the date of such certificate during such
periods and as of the end of such periods, or if the signer is
aware of any such Default, or Event of Default, he shall
disclose in such statement the nature thereof, its period of
existence and what action, if any, the Company has taken or
proposes to take with respect thereto and (b) stating whether
the Company is in compliance with Sections 6A through 6O, and
setting forth, in sufficient detail, the information and
computations required to establish whether or not the Company
was in compliance with the requirements of Sections 6A through
6G, Section 6I, Section 6L and Section 6M during the periods
covered by the financial reports then being furnished and as
of the end of such periods and (c) setting forth a detailed
schedule of capital expenditures made during such period and a
calculation of net cash flow from operations in accordance
with Annex 6C;
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<PAGE> 16
(iv) together with the financial reports delivered pursuant
to paragraph (ii) of this Section 5A, comparable unaudited
financial information on a line-of-business segment basis
(which for purposes hereof shall be deemed to be landfills
and waste hauling);
(v) as soon as available and in any event within 10 Business Days after the
end of each month, a consolidated statement of cash receipts
and disbursements of the Company and its Subsidiaries for such
month accompanied by (a) a certificate of the Chief Financial
Officer, Vice President, Finance or the Treasurer of the
Company outlining the basis of presentation, (b) a listing for
such month of the average daily volume and net revenue per ton
for each landfill site of the Company and its Subsidiaries,
and (c) a statement of the Company's Daily Average
Unrestricted Cash Balances for the month, as of the last day
of such period;
(vi) on the twenty-fifth day of each month (except at the end of a fiscal
quarter in which case 50 days after the end of such quarter
and at the end of a fiscal year in which case 95 days after
the end of such year), a condensed consolidated balance sheet
of the Company and its Subsidiaries as of the end of the
preceding month and condensed consolidated statements of
operations of the Company and its Subsidiaries for such month,
certified by the chief financial officer or the chief
accounting officer of the Company (a) outlining the basis for
presentation and (b) stating that the information presented in
such financial statements presents fairly in condensed form
the financial position of the Company and its Subsidiaries and
the results of their operations for such month, subject to
normal year-end audit adjustments;
(vii) within 15 days after the Company obtains knowledge thereof, notice of
any litigation not fully covered by insurance or any
governmental proceeding pending against the Company or any
Subsidiary in which the damages sought exceed $3,000,000 or
which might reasonably be expected otherwise to affect,
materially and adversely, the business, property, operations
or condition, financial or otherwise, of the Company and its
Subsidiaries taken as a whole;
(viii) as soon as available, copies of each financial statement, notice,
report and proxy statement which the Company shall furnish to
its stockholders;
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<PAGE> 17
copies of each registration statement and periodic
report which the Company may file with the Securities and
Exchange Commission, and any other similar or successor agency
of the Federal government administering the Securities Act,
the Exchange Act or the Trust Indenture Act of 1939, as
amended; without duplication, copies of each report (other
than reports relating solely to the issuance of, or
transactions by others involving, its securities) relating to
the Company or its securities which the Company may file with
any securities exchange on which any of the Company's
securities may be registered; copies of any orders in any
material proceedings to which the Company or any of its
Subsidiaries is a party, issued by any governmental agency,
Federal or state, having jurisdiction over the Company or any
of its Subsidiaries; and, except at such times as the Company
is a reporting company under Section 13 or 15(d) of the
Exchange Act or has complied with the requirements for the
exemption from registration under the Exchange Act set forth
in Rule 12g-3-2(b), such financial or other information as any
holders of the Notes or prospective purchaser of the Notes may
reasonably determine is required to permit such holders to
comply with the requirements of Rule 144A under the Securities
Act in connection with the resale by it of the Notes;
(ix) as soon as available, (a) a copy of each management letter, or draft
thereof, delivered to the Company by its independent public
accountants, (b) a copy of any responses of the Company
thereto and in any event a report setting forth all actions
taken by the Company in response to each such letter or draft
thereof, and (c) a copy of each other report submitted to the
Company or any Subsidiary by independent accountants retained
by the Company or any Subsidiary in connection with any
interim or special audit made by them of the books of the
Company or any Subsidiary;
(x) as soon as available and in any event not later than January 31 of each
year a copy of its business plan, including financial
projections, for such year;
(xi) promptly upon any Responsible Officer becoming aware of any Event of
Default or Default the Company shall give you notice thereof,
together with a written statement of the President, Treasurer
or chief financial officer of the Company setting forth the
details thereof and any action with respect thereto taken or
contemplated to be taken by the Company;
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<PAGE> 18
(xii) promptly upon any Responsible Officer becoming aware thereof the Company
shall give you notice of any material adverse change in the
business, operations or condition (financial or otherwise) of
the enterprise comprised of the Company and its Subsidiaries
taken as a whole;
(xiii) as soon as available, and in any event within 50 days after the end of
each fiscal quarter, a statement of capital expenditures of
the Company and its Subsidiaries since the beginning of that
fiscal year, all in such form as may from time to time be
specified by the Majority of Holders;
(xiv) not less frequently than monthly, a status report on pending and
completed Dispositions;
(xv) concurrently with the delivery thereof, copies of any reports delivered
to any member of the Reliance Group, to any holder of Notes
issued pursuant to the 1990 Note Agreement or to any bank
which is at the time a party to Bank Agreement; and
(xvi) with reasonable promptness, such other information in such form as you
or any other Institutional Holder may reasonably request.
All financial statements specified in clauses (i) and (ii)
above shall be furnished in duplicate. You are hereby authorized to
deliver a copy of any financial statement delivered to you pursuant to
this Section 5A to any regulatory body having jurisdiction over you.
The Company will keep, and will cause each Subsidiary to keep, at all
times proper books of record and account in which full, true and
correct entries will be made of all dealings or transactions of or in
relation to the business and affairs of the Company or such
Subsidiary, in accordance with generally accepted accounting
principles consistently applied throughout the period involved (except
for such changes as are disclosed in such financial statements or in
the notes thereto) and the Company will, and will cause each
Subsidiary to, provide reasonable protection against loss or damage to
such books of record and account.
5B. ERISA; Notice of Pension-Related Events. (i) The
Company agrees that all assumptions and methods used to
determine the actuarial valuation of Employee Benefits, both vested
and unvested, under any Plan of the Company or any Subsidiary, and
each such Plan, whether now existing or adopted after the date hereof,
will comply in all material respects with ERISA and other applicable
laws.
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<PAGE> 19
(ii) The Company will not at any time permit any
Plan established, maintained or contributed to by it or any Subsidiary
or "affiliate" (as defined in Section 407(d)(u) of ERISA) to:
(a) engage in any "prohibited transaction" as such
term is defined in Section 4975 of the Code or in Section 406 of
ERISA;
(b) incur any "accumulated funding deficiency" as
such term is defined in Section 302 of ERISA, whether or not
waived; or
(c) be terminated under circumstances which are
likely to result in the imposition of a lien on the property of
the Company or any Subsidiary pursuant to Section 4068 of ERISA,
if and to the extent such termination is within the control of
the Company;
if the event or condition described in clauses (a), (b) or (c) above
is likely to subject the Company or any Subsidiary or ERISA affiliate
to a liability which, in the aggregate, is material in relation to the
business, property, operations, or condition, financial or otherwise,
of the Company and its Subsidiaries taken as a whole.
(iii) Upon the request of you or any other
Institutional Holder, the Company will furnish a copy of the annual
report of each Plan (Form 5500) required to be filed with the Internal
Revenue Service. Copies of annual reports so requested shall be
delivered no later than 30 days after the later of the date such
report has been filed with the Internal Revenue Service or the date
the copy is requested.
(iv) Promptly after the Company, or to the knowledge
of a Responsible Officer, any Controlled Group Member or any
administrator of a Plan:
(a) receives the notification referred to in
subsection (a), (d) or (g) of Section 7(viii) hereof;
(b) has knowledge of: (1) the occurrence of a
Reportable Event with respect to a Plan, and such Reportable
Event is a failure to meet the minimum funding requirement with
respect to a Plan, including failure to pay any contribution when
due, and the total unpaid balance of
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contributions due to such Plan exceeds $1,000,000; (2) any
event which has occurred or any action which has been taken to
amend or terminate a Plan as referred to in subsections (b) and
(f) of Section 7(viii) hereof; (3) any event which has occurred
or any action which has been taken which will result in complete
withdrawal, partial withdrawal or secondary liability for
withdrawal liability payments with respect to a Multiemployer
Plan as referred to in subsection (g) of Section 7(viii) hereof;
(4) any action which has been taken in furtherance of, any
agreement which has been entered into for, or any petition which
has been filed with a United States District Court for, the
appointment of a trustee for a Plan as referred to in subsection
(c) of Section 7(viii) hereof; or (5) any action to amend a Plan
which requires security to be provided to the Plan pursuant to
Section 401(a)(29) of the Code or Section 307 of ERISA; or
(c) files a notice of intent to terminate a Plan
with the Internal Revenue Service or the PBGC; or files
with the Internal Revenue Service a request pursuant to Section
412(d) or 412(e) of the Code for a variance from the minimum
funding standard or an extension of the period for amortizing
unfunded liabilities, respectively, for a Plan; or files a
return with the Internal Revenue Service with respect to the tax
imposed under Section 4971(a) of the Code for failure to meet
the minimum funding standards established under Section 412 of
the Code for a Plan,
the Company covenants that it will furnish to you (a) a copy of any
notice received, request or petition filed, and agreement entered
into, (b) the most recent Annual Report (Form 5500 Series) and
attachment thereto for the Plan, (c) the most recent actuarial report
for the Plan, (d) any notice, return or materials required to be filed
with the Internal Revenue Service, the PBGC or Plan participants and
beneficiaries in connection with the event, action or filing, and (e)
a written statement of the President, Treasurer or chief financial
officer of the Company describing the event or the action taken and
the reasons therefor.
5C. Corporate Existence; Maintenance of Office. (i)
The Company will maintain and preserve, and will cause each Subsidiary to
maintain and preserve, its corporate existence and right to carry on its
business and use, and cause each Subsidiary to use, its best efforts to
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<PAGE> 21
maintain, preserve, renew and extend all of its rights, powers,
privileges and franchises necessary to the proper conduct of its business;
provided, however, that the foregoing shall not prevent any transaction
permitted by Section 6E and provided further, that nothing in this Section
5C shall prevent the termination of the corporate existence of any
Subsidiary if, in the opinion of the Board of Directors of the Company,
such termination is in the best interests of the Company, is not
disadvantageous to holders of the Notes and is not otherwise prohibited by
this Agreement.
(ii) The Company covenants that it will maintain an
office or agency in Pittsburgh, Pennsylvania, or in such other place in
the continental United States as the Company may from time to time specify
in writing, where notices, presentations and demands to or upon the Company
in respect of the Notes may be given or made.
5D. Compliance with Laws. (i) The Company will
comply, and will cause each Subsidiary to comply, with all laws, rules
and regulations, (including, without limitation, laws and regulations
relating to equal employment opportunities and Environmental Laws) relating
to its or their respective businesses, other than laws, rules and
regulations the failure to comply with which or the sanctions and penalties
resulting therefrom, individually or in the aggregate, would not have a
material adverse effect on the business, properties, operations, or
condition, financial or otherwise, of the Company and its Subsidiaries
taken as a whole, and would not result in the creation of a Lien which, if
incurred in the ordinary course of business, would not be permitted by
Section 6I on any of the property of the Company or any Subsidiary;
provided, however, that the Company and its Subsidiaries shall not be
required to comply with laws, rules and regulations the validity or
applicability of which are being contested in good faith and by appropriate
proceedings and as to which the Company has established adequate reserves
on its books.
(ii) Promptly upon the occurrence thereof, the
Company will give you and each other Institutional Holder written
notice of the institution of any proceedings against, or the receipt of
notice of potential liability or responsibility of, the Company or any
Subsidiary for violation, or the alleged violation, of any Federal, state
or local law, rule or regulation, including but not limited to, regulations
promulgated under any Environmental Law, which violation could give rise to
a material liability of the Company and its Subsidiaries taken as a whole.
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(iii) The Company will pay and discharge when due,
and will cause each Subsidiary to pay and discharge when due, all
taxes, assessments and governmental charges or levies imposed upon it or
its property or assets, or upon properties leased by it (but only to the
extent required to do so by the applicable lease), other than taxes which
individually and in the aggregate are not material in amount and the
non-payment of which would not have a material adverse affect on the
business, properties, operations or condition, financial or otherwise, of
the Company and its Subsidiaries taken as a whole, prior to the date on
which penalties attach thereto, and all lawful claims which, if unpaid,
might become a Lien upon its property or assets provided that neither the
Company nor any Subsidiary shall be required to pay any such tax,
assessment, charge, levy or claim, the payment of which is being contested
in good faith and by proper proceedings that will stay the forfeiture of
sale of any property and with respect to which adequate reserves are
maintained in accordance with generally accepted accounting principles.
5E. Use of Proceeds. No part of the proceeds from
the sale of the Notes will be used, whether directly or indirectly, and
whether immediately, incidentally or ultimately (i) to purchase or carry
margin stock or to extend credit to others for the purpose of purchasing or
carrying margin stock, or to refund indebtedness originally incurred for
such purpose, or (ii) for any purpose which entails a violation of, or
which is inconsistent with, the provisions of the Regulations of the Board
of Governors of the Federal Reserve System, including without limitation
Regulations G, U, T or X thereof.
5F. Insurance. The Company will insure and keep
insured at all times all of its properties and all of its Subsidiaries'
properties which are of an insurable nature and of the character usually
insured by companies operating similar properties, against loss or damage
by fire and from other causes customarily insured against by companies
engaged in similar businesses in such amounts as are usually insured
against by such companies. The Company also will maintain for itself and
its Subsidiaries at all times adequate insurance against loss or damage
from such hazards and risks to the person and property of others as are
usually insured against by companies operating properties similar to the
properties of the Company and its
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Subsidiaries. All such insurance (other than permitted self-insurance)
shall be carried with financially sound and reputable insurers accorded a
rating of A- and VII or better by A.M. Best Company, Inc., unless any such
insurance is not available on commercially reasonable terms from any
insurer so rated, in which case it shall be carried by a financially sound
and reputable insurer which in the opinion of the Company most closely
approximates the criteria necessary to obtain such rating. The Company may
self-insure (i) without limitation to the extent such self-insurance is
fully collateralized by cash or letters of credit and (ii) otherwise in
amounts which, in the aggregate, do not at any time exceed 13% of
Consolidated Tangible Net Worth. At no time will the Company's and its
Subsidiaries' insurance be less than that carried on the date hereof unless
such insurance becomes unavailable. A summary of insurance presently in
force, including self-insurance and deductibles, is contained in the
attached Annex 5F.
5G. Inspection of Property, Books and Records. The
Company covenants that it will permit, and will cause each of its
Subsidiaries to permit, any representative designated in writing by you or
any other Institutional Holder which is not a Competitor to visit and
inspect any of its properties, to examine its corporate, financial and
operating records and make copies thereof or abstracts therefrom, and to
discuss its affairs, finances and accounts with its directors, officers,
employees and independent accountants, all at such reasonable times, upon
reasonable notice and as often as may reasonably be desired.
5H. Covenant to Secure Notes. The Company covenants
that, if the Company or any Subsidiary shall create, assume or suffer
to exist any Lien upon any of its property or assets not subject to the
prior Lien of the Security Documents, whether now owned or hereafter
acquired, other than Liens permitted under Section 6I hereof, it will make
or cause to be made effective provision whereby the Notes will be secured
by such Lien equally and ratably with any and all other Debt thereby
secured by the same property or assets, in each case as long as any such
other Debt shall be so secured, that the creation of any such security
shall not in any way alter the rights of the holders of the Notes to
enforce the provisions of Section 6I hereof or of the Security Documents or
the Guaranty.
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<PAGE> 24
5I. Conduct of Business.
(i) Subject to paragraphs (ii) through (vii) hereof,
the Company will, and will cause each Subsidiary to, engage
only in the business of (a) Non-Hazardous Waste management (including
recycling and composting), (b) incineration and disposal of
Non-Hazardous Wastes, (c) transportation of Non-Hazardous Wastes and
(d) operations ancillary to the foregoing.
(ii) Without reference to paragraphs (iii) through
(vii) of this Section 5I, in the event of the acquisition by
the Company or a Subsidiary of a business an incidental (less than 25%
of the assets and revenues of such business and less than 5% of the
consolidated revenues of the Company and its Subsidiaries on a
pro-forma basis) portion of which is not described in section
5I(i)(a)-(d) hereof, the Company shall have 180 days from the date of
such acquisition to discontinue or dispose of such noncomplying
activities before it shall be deemed to be in violation of this
Section 5I or a Change of Business shall be deemed to have occurred.
The Company shall give prompt written notice, but in any event within
10 days of each event specified in this paragraph (ii) to each holder
of Notes of (i) any such acquisition, specifying in reasonable detail
the noncomplying activities and (ii) the discontinuance or
disposition of such noncomplying activities. This paragraph (ii)
shall not be available for the acquisition of any business a greater
than incidental portion of which violates this Section 5I.
(iii) The reclassification to hazardous (a
"Reclassification"), by law or by any regulatory authority, of
Non-Hazardous Waste ("Reclassified Waste") being managed (which term
shall be deemed to include incineration, disposal, storage and
transportation) by the Company or any of its Subsidiaries or
contracted to be managed by the Company or any of its Subsidiaries or
with respect to which the Company or any of its Subsidiaries has been
issued a permit to manage by a regulatory authority during the term of
this Agreement shall not be deemed to be a Change of Business or a
violation of this Section 5I if, immediately following such
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<PAGE> 25
Reclassification, (x) the Company's handling of such
Reclassified Waste complies in all material respects with all
applicable permits, laws and regulations and (y) the consolidated
revenues produced from the management of Reclassified Waste shall not
have constituted more than 5% of the Company's consolidated revenues
for the twelve months ended as of the Company's most recently
completed fiscal quarter prior to the effective date of the
Reclassification. The Company shall give written notice of a
Reclassification within 10 days of such Reclassification.
(iv) If, as a result of a Reclassification, the
consolidated revenues produced from the management of
Reclassified Waste exceed 5% of the Company's consolidated revenues
for the twelve months ended as of the end of the most recently
completed fiscal quarter prior to the effective date of the
Reclassification, the Company shall, within 30 days after the
effective date of such Reclassification, give written notice to each
holder of a Note of such fact, specifying in reasonable detail the
nature of such Reclassification and the amount and percentage of
consolidated revenues produced by the management of Reclassified
Waste. Such notice shall contain the written offer of the Company to
prepay, on a date specified in such notice which shall be a business
day not less than 160 nor more than 180 calendar days after the
effective date of such Reclassification, the entire principal amount
of the Notes held by each holder at a price equal to 100% of the
principal amount thereof plus accrued interest to the date of
prepayment and shall state that notice of acceptance of the Company's
offer to prepay under this Section 5J(iv) must be delivered to the
Company within 115 calendar days after receipt of the Company's
notice. Any holder may revoke its acceptance of the Company's offer
by written notice to such effect delivered to the Company not less
than 15 days prior to the date fixed for prepayment. In the event the
Company discontinues or disposes of a sufficient portion of the
Reclassified Waste management activities so that, after giving effect
thereto, the consolidated revenues produced from management of
Reclassified Waste would be less than 5% of the Company's consolidated
revenues for the period specified in the first sentence of this
paragraph (iv), the Company may revoke its prepayment offer by written
notice to each holder of Notes not less than 5 days prior to the
payment date specified in the offer, which notice shall demonstrate to
the satisfaction of each holder the effectiveness of the actions taken
and set forth the calculations of consolidated revenues, and the
Company's obligation to prepay the Notes shall terminate.
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(v) If, as a result of a Reclassification, the
consolidated revenues produced from the management of Reclassified
Waste exceed 25% of the Company's consolidated revenues for the twelve
months ended as of the end of the most recently completed fiscal
quarter prior to the effective date of the Reclassification, the
Company shall, within 30 days after the effective date of such
Reclassification, give written notice to each holder of a Note of
such fact, specifying in reasonable detail the nature of such
Reclassification and the amount and percentage of consolidated
revenues produced by the Company and its Subsidiaries from the
management of Reclassified Waste. Such notice shall contain the
written offer of the Company to prepay, on a date specified in
such notice which shall be a business day not less than 160 nor more
than 180 calendar days after the effective date of such
Reclassification, the entire principal amount of the Notes held by
each holder at a price equal to 100% of the principal amount thereof
plus accrued interest to the date of prepayment plus a Yield
Maintenance Payment and shall state that notice of acceptance of the
Company's offer to prepay under this Section 5I(v) must be delivered
to the Company within 115 calendar days after receipt of the Company's
notice. Any holder may revoke its acceptance of the Company's offer
by written notice to such effect delivered to the Company not less
than 15 days prior to the date fixed for prepayment. In the event
the Company discontinues or disposes of a sufficient portion of the
Reclassified Waste management activities so that after giving effect
thereto, the revenues produced from management of the Reclassified
Waste would be less than 5% of the Company's consolidated revenues
for the period specified in the first sentence of this paragraph (e),
the Company may revoke its prepayment offer by written notice to each
holder of Notes not less than 5 days prior to the payment date
specified in the offer, which notice shall demonstrate to the
satisfaction of each holder the effectiveness of the actions taken
and set forth the calculations of consolidated revenues, and the
Company's obligation to prepay the Notes shall terminate.
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<PAGE> 27
(vi) If as of the end of any fiscal quarter ending
after a Reclassification, the consolidated revenues produced
from the management of Reclassified Waste exceed 5% of the Company's
consolidated revenues for the twelve months then ended, the Company
shall, not later than 30 days after the end of such quarter, give
written notice to each holder of a Note of such fact, specifying in
reasonable detail the amount and percentage of consolidated revenues
produced from the management of Reclassified Waste. Such notice shall
contain the written, irrevocable offer of the Company to prepay, on a
date specified in such notice which shall be a business day not less
than 160 nor more than 180 calendar days after the end of such
quarter, the entire principal amount of the Notes held by each holder
at a price equal to 100% of the principal amount thereof plus accrued
interest to the date of prepayment and shall state that notice of
acceptance of the Company's offer to prepay under this Section 5J(vi)
must be delivered to the Company within 115 calendar days after
receipt of the Company's notice. Any holder may revoke its acceptance
of the Company's offer by written notice to such effect delivered to
the Company not less than 15 days prior to the date fixed for
prepayment. In the event the Company disposes of or discontinues all
Reclassified Waste management activities within 150 days after the end
of the fiscal quarter referred to in the first sentence of this
paragraph, the Company may revoke its prepayment offer by written
notice to each holder of Notes not less than 50 days prior to the
payment date specified in the offer, which notice shall demonstrate to
the satisfaction of each holder the effectiveness of the actions
taken, and the Company's obligation to prepay the Notes shall
terminate.
(vii) If as of the end of any fiscal quarter ending
after a Reclassification, the consolidated revenues produced
from the management of Reclassified Waste exceed 25% of the Company's
consolidated revenues for the twelve months then ended, the Company
shall not later than 30 days after the end of such quarter, give
written notice to each holder of a Note of such fact, specifying in
reasonable detail the amount and percentage of consolidated revenues
produced from the management of Reclassified Waste. Such notice shall
contain the written, irrevocable offer of the Company to prepay, on a
date specified in such notice which
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<PAGE> 28
shall be a business day not less than 160 nor more than 180
calendar days after the end of such quarter, the entire principal
amount of the Notes held by each holder at a price equal to 100% and
the principal amount thereof plus accrued interest to the date of
prepayment plus a Yield Maintenance Payment and shall state that
notice of acceptance of the Company's offer to prepay under this
Section 5I(vii) must be delivered to the Company within 115 calendar
days after receipt of the Company's notice. Any holder may revoke its
acceptance of the Company's offer by written notice to such effect
delivered to the Company not less than 15 days prior to the date fixed
for prepayment. In the event the Company disposes or discontinues all
Reclassified Waste management activities within 150 days after the end
of the fiscal quarter referred to in the first sentence of this
paragraph, the Company may revoke its prepayment offer by written
notice to each holder of Notes not less than 50 days prior to the
payment date specified in the offer, which notice shall demonstrate to
the satisfaction of each holder the effectiveness of the actions
taken, and the Company's obligation to prepay the Notes shall
terminate.
(viii) The Company will maintain, preserve and keep,
and will cause each Subsidiary to maintain, preserve and keep,
its properties (whether owned in fee or a leasehold interest) in good
repair and working order, ordinary wear and tear excepted, and from
time to time will make all necessary repairs, replacements, renewals
and additions.
(ix) Nothing in this Section 5I shall prohibit any
consolidation, merger or sale that is not prohibited by Section
6E; provided, however, that if the Company consolidates or merges with
or acquires another entity permitted by Section 6E and such entity is
engaged in businesses which are not allowed by this Section 5I the
Company shall have six months from the date of such transaction to
dispose of or terminate such unallowed operations before a Change of
Business shall be deemed to have occurred; provided, further that in
no case will the Company consolidate or merge with or acquire an
entity which is engaged in the management of hazardous waste. The
reclassification by any regulatory authority of waste materials being
managed by the Company or any of its Subsidiaries or contracted to be
managed by the Company or any of its Subsidiaries or with respect to
which the Company or any of its Subsidiaries has been issued a permit
to manage by a regulatory authority during the term of this Agreement
from Non-Hazardous Waste to hazardous waste shall not be deemed
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<PAGE> 29
a Change of Business so long as (a) the Company's management of
such material complies in all material respects with all applicable
permits, laws and regulations and (b) a Responsible Officer does not,
as of the date of this Agreement, have knowledge that such
Non-Hazardous Waste is scheduled for reclassification as a result of
completed legislative or regulatory action or pending or proposed
federal or state legislative or regulatory action notice or
description of which has been published in the Congressional Record or
the Federal Register, in the case of federal action, or the analogous
state publications, in the case of state action.
(x) The Company covenants that from and after the
date hereof neither it nor any Subsidiary will intentionally
enter the business of hazardous waste management (as defined by
federal and state statutes and regulatory authorities).
5J. Private Letter Rating. The Company shall cooperate with
you and use its best efforts to obtain at its expense a private letter rating
on the notes from either Moody's Investor Services, Inc. or Standard & Poor's
Corporation.
6. Negative Covenants. All covenants contained herein shall
be given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that such action or condition
would be permitted by any exception to, or otherwise be within the limitations
of, another covenant shall not avoid the occurrence of a Default if such action
is taken or omitted or condition exists. All such covenants shall extend to
and benefit you and any other holders from time to time of the Notes.
6A. Minimum Working Capital. The Company shall not permit
Consolidated Working Capital of the Company and its Subsidiaries to be less
than $25,000,000, provided, that a reduction in Consolidated Working Capital
below $25,000,000 for not less than 31 days shall not be a violation of this
Section 6A if such reduction shall have been caused by a prepayment pursuant to
Section 4F.
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<PAGE> 30
6B. Debt Restriction. The Company will not, and will not
permit any Subsidiary to, create, assume, incur, guarantee or otherwise become
liable for, directly or indirectly, any Debt, other than:
(i) Debt outstanding on the Effective Date which is listed on
Annex 6B;
(ii) extensions or renewals of Debt referred to in paragraph
(i) of this Section 6B provided there is no increase in the outstanding
principal amount thereof or material change in the terms thereof;
(iii) additional Debt representing unmatured indemnity
obligations under surety bonds issued for the benefit of the Company or
any of its Subsidiaries in the ordinary course of business;
(iv) Debt to Reliance Group representing advances or loans by
Reliance Group to the Company and its Subsidiaries after the occurrence
of a default under the Reliance Documents; and
(v) additional Debt not in excess of $8,000,000 in aggregate
principal amount in connection with lease and/or purchase money financing
incurred after July 8, 1993, treating the aggregate Rentals due under
leases which are not Capitalized Leases as the undiscounted aggregate
principal amount thereof.
6C. Net Cash Flow from Operations. The Company will not
permit net cash flow from operations of the Company and its Subsidiaries
(calculated as set forth on Annex 6C) to be, for the quarterly periods set
forth below, less than the relevant amount set forth below:
<TABLE>
<S> <C>
For the fiscal quarter ending on December 31, 1994 $10,826,000
For the fiscal quarter ending on March 31, 1995 $ 2,215,000
For the fiscal quarter ending on June 30, 1995 $ 5,662,000
For the fiscal quarter ending on September 30, 1995 $ 7,283,000
For the fiscal quarter ending on December 31, 1995 $10,617,000
For the fiscal quarter ending on March 31, 1996 $ 4,749,000
For the fiscal quarter ending on June 30, 1996 $ 8,285,000
For the fiscal quarter ending on September 30, 1996 $10,235,000
</TABLE>
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<PAGE> 31
provided, however, that the Company shall not be deemed to be in default of
this covenant unless and until it fails to comply with its undertakings for two
consecutive calendar quarters.
6D. Permitted Investments. The Company covenants that it
will not, and will not permit any Subsidiary to, at any time make or suffer to
remain outstanding any loan or advance to, or purchase, acquire or own any
stock, bonds, notes or securities of, or any partnership interest (whether
general or limited) in, or any other interest in, or make any capital
contribution to, any other Person, or agree, become or remain liable to do any
of the foregoing, except Qualified Investments.
6E. Restriction on Merger or Consolidation. The Company
covenants that:
(i) it will not consolidate with or merge into any Person, or
permit any Person to merge into it, unless (a) such Person is organized
under the laws of the United States or a jurisdiction thereof, (b) if the
Company is not the surviving entity, then the Person into which the
Company is merged expressly assumes, by written instrument executed and
delivered prior to or simultaneously with such consolidation or merger,
the due and punctual payment of the principal of and premium (if any) and
interest on the Notes, according to their tenor, and the due and punctual
performance and observance of all the covenants and conditions of this
Agreement to be performed or observed by the Company, and (c) immediately
after such consolidation or merger (and after giving effect thereto) no
Default or Event of Default shall have occurred and be continuing; and
(ii) it will not permit any Subsidiary to consolidate with or
merge into any Person unless such Person is the Company or a Subsidiary
of the Company and, immediately after such consolidation or merger
(and after giving effect thereto), no Default or Event of Default shall
have occurred and be continuing.
6F. Dispositions of Assets. The Company will not, and will
not permit any Subsidiary to effect a Disposition of any assets (including
capital stock of Subsidiaries), in one or a series of transactions, other than
in the ordinary course of business, to any Person, other than the Company or a
Subsidiary, except for (a) Dispositions of the assets and business described in
Annex 4E-1 and Annex 4E-2 and (b) Dispositions for cash at fair market value of
isolated assets resulting in cash proceeds to the Company of not in excess of
$1,000,000 in the aggregate annually.
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<PAGE> 32
6G. Restricted Payments. The Company will not, except as
hereinafter provided:
(a) declare or pay any dividends, either in cash or property,
on any shares of its capital stock of any class (except dividends or other
distributions payable solely in shares of capital stock of the Company);
(b) directly or indirectly, or through any Subsidiary,
purchase, redeem or retire any shares of its capital stock of any class or any
warrants, rights or options to purchase or acquire any shares of its capital
stock;
(c) make any other payment or distribution, either directly
or indirectly or through any Subsidiary, in respect of its capital stock;
(d) make any payment, either directly or indirectly or
through any Subsidiary, of principal of any Subordinated Funded Debt other than
at the expressed maturity date thereof, scheduled mandatory prepayments or
redemptions thereof in accordance with the original terms of such Subordinated
Funded Debt and redemption payments incidental to the optional redemption of
convertible Subordinated Funded Debt at a time when the market price of the
securities into which such Subordinated Funded Debt is convertible is higher
than the conversion price; or
(e) make, or permit any Subsidiary to make, any Investment
other than a Qualified Investment.
6H. Tax Consolidation. The Company covenants that neither it
nor any Subsidiary will file or consent to the filing of any consolidated
income tax return with any Person other than the Company and/or one or more
Subsidiaries.
6I. Lien Restriction. The Company covenants that it will
not, and will not permit any of its Subsidiaries to, create, assume or suffer
to exist any Lien on any property or asset now owned or hereafter acquired by
it (including, without limitation, the capital stock of any Subsidiary),
except:
(i) Liens existing on property of the Company or any
Subsidiary as of the date of this Agreement that are described in the
attached Annex 6I;
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<PAGE> 33
(ii) Liens for taxes, assessments or governmental charges not
then due and delinquent or the validity of which is being contested in good
faith and as to which the Company has established adequate reserves on its
books;
(iii) Liens arising in connection with court proceedings,
provided the execution of such Liens is effectively stayed and such Liens
are being contested in good faith and as to which the Company has
established adequate reserves on its books;
(iv) Liens arising in the ordinary course of business and not
incurred in connection with the borrowing of money, including encumbrances
in the nature of zoning restrictions, easements, rights and restrictions of
record on the use of real property, landlord's and lessor's liens in the
ordinary course of business, which do not materially interfere with the
conduct of the business of the Company and its Subsidiaries taken as a
whole;
(v) Liens created pursuant to the Security Documents in favor
of the Collateral Agent for the ratable benefit of the holders of
Waived Senior Debt and Liens otherwise permitted or contemplated by the
Security Documents and the Reliance Intercreditor Agreement in favor of
Reliance Group or any other insurance company which shall have issued
closure and post closure bonds for the benefit of the Company, or trusts,
escrow funds, or surety deposits made with such insurers in connection with
closure or post closure bonds on landfills of the Company in the ordinary
course of business; and
(vi) Liens arising in connection with the incurrence of
additional Debt pursuant to Section 6B(v), provided such Lien does not
extend to any property other than that being financed or leased.
6J. Disposition of Stock of Subsidiaries. The Company will
not, and will not permit any Subsidiary to, issue, sell or transfer the capital
stock of a Subsidiary if such issuance, sale or transfer would cause it to
cease to be a Subsidiary, unless (i) all shares of capital stock of such
Subsidiary and all Debt of such Subsidiary owned by the Company and by every
other Subsidiary shall simultaneously be sold, transferred or otherwise
disposed of, (ii) such sale would not be prohibited under Section 6E and (iii)
such Subsidiary does not own any shares of capital stock or Debt of the Company
or another Subsidiary.
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<PAGE> 34
6K. Transactions with Affiliates. The Company covenants that
it will not, and will not permit any of its Subsidiaries to, directly or
indirectly, enter into any transactions, including, without limitation, any
purchase, sale, lease or exchange of property or the rendering of any service,
with any Affiliate of the Company or any of its Subsidiaries unless each such
transaction is in the ordinary course of business and upon fair and reasonable
terms no less favorable to the Company or such Subsidiary than it would obtain
in a comparable arm's-length transaction with a Person not such an Affiliate or
is normal and reasonable compensation of employees or directors approved by the
board or directors of the Company.
6L. Consolidated Tangible Net Worth. The Company covenants
that its Consolidated Tangible Net Worth shall at no time be less than
$100,000,000.
6M. Capital Expenditures. The Company will not, and will not
permit any Subsidiary to, make in any year, or commit to make in such year,
aggregate expenditures for capital assets, construction or development
(exclusive of restricted funds and capitalized costs), in excess of the amounts
set forth below for the years indicated, measured on a cash basis:
<TABLE>
<CAPTION>
Years Ending Maximum Capital
December 31 Expenditures
------------ ---------------
<S> <C>
1994 $48,300,000
1995 38,000,000
1996 38,000,000
</TABLE>
6N. Pro Rata Share. The Company will not, and will not
permit any Subsidiary to, take, or refrain from taking, any action the result
of which should be to change the Pro Rata Share.
6O. Acquisition of Notes. Neither the Company nor any
Subsidiary or Affiliate, directly or indirectly, will repurchase or offer to
repurchase any Notes unless the offer includes a Yield Maintenance Payment and
is made to repurchase Notes pro rata from all holders at the same time and on
the same terms. The Company will forthwith cancel any Notes in any manner or
at any time acquired by the Company or any Subsidiary or Affiliate and such
Notes shall not be deemed to be outstanding for any of the purposes of this
Agreement or the Notes.
6P. Derivative Litigation. Neither the Company nor any
Subsidiary will pay any amount directly or indirectly, to or for the benefit of
any plaintiff or any counsel for any plaintiff in connection with the
litigation captioned In Re Chambers Development Company, Inc., Civil Action No.
92-0679 which is pending in the United States District Court for the Western
District of Pennsylvania.
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<PAGE> 35
7. Events Of Default. If any of the following events shall
occur (for any reason whatsoever and whether such occurrence shall be voluntary
or involuntary or come about or be effected by operation of law or pursuant to
or in compliance with any judgment, order or decree of any court or any order,
rule or regulation of any governmental or administrative body) and be
continuing:
(i) if the Company defaults in the payment of any principal
of, or Yield Maintenance Payment or premium, if any, on any Note when
the same shall become due, or defaults in the payment of any interest on
any Note or of any fees payable hereunder for more than 5 calendar days
after the same shall have become due, either by the terms thereof or
otherwise as herein provided; or
(ii) if the Company or any Subsidiary defaults (a) in the
payment of the principal of or interest on any other indebtedness of the
Company or such Subsidiary as and when due and payable (whether by
lapse of time, declaration, call for redemption or otherwise), (b) under
any mortgages, agreements or other instruments of the Company or any
Subsidiary (including but not limited to any Waived Senior Debt or any
extensions, renewals or replacement of any thereof) under or pursuant to
which indebtedness is issued, or (c) under any leases other than
Capitalized Leases of the Company or any Subsidiary, regardless of whether
such default would be an Event of Default hereunder, and such defaults
shall continue, unless waived, beyond the period of grace, if any, allowed
with respect thereto; or
(iii) if any statement, representation or warranty made by
the Company in this Agreement (including the Exhibits, Schedules and
Annexes hereto), in the Guaranty or the Security Documents, in the Private
Placement Memorandum or in any other certificate or document furnished by
the Company or any Subsidiary in connection with the execution and delivery
of this Agreement, the issuance of the Notes and Guaranties pursuant
thereto, the Waiver or the Extension shall be false in any material respect
on the date as of which made; or
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<PAGE> 36
(iv) if the Company defaults in the performance or observance
of any covenant or agreement contained in Section 5A(xi) or Section 6
(other than Section 6H); or
(v) if the Company defaults in the performance or observance
of any other covenant, agreement, term or condition contained herein or of
any covenant, agreement, term or condition in the Registration Rights
Agreement and such default shall not have been remedied within 30 days
after a Responsible Officer of the Company has knowledge thereof or the
Company's receipt of written notice thereof from the holder of any Note; or
(vi) if the Company or any Subsidiary shall fail generally to
pay its debts as they become due or the Company or any Subsidiary shall
commence a voluntary case or other proceeding seeking liquidation,
reorganization, discharge or other relief with respect to itself or its
debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial
part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary
case or other proceeding commenced against it, or shall make a general
assignment for the benefit of creditors, or shall take any corporate action
to authorize any of the foregoing; or
(vii) if an involuntary case or other proceeding shall be
commenced against the Company or any Subsidiary seeking liquidation,
reorganization, discharge or other relief with respect to it or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of its
property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 45 days, or an order for relief
shall be entered against the Company or any Subsidiary of the Company under
any federal or state bankruptcy, insolvency or other similar laws as now or
hereafter in effect; or
(viii) if the liabilities associated with the events set
forth in subsections (a) through (h) below, individually or in the
aggregate, could have a material, adverse effect on the business,
operations or condition (financial or otherwise) of the enterprise
comprised of the Company and its Subsidiaries taken as a whole:
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<PAGE> 37
(a) the PBGC notifies a Plan pursuant to Section
4042 of ERISA by service of a complaint, threat of filing a law suit or
otherwise of its determination that an event described in Section 4042(a)
of ERISA has occurred, a Plan should be terminated, or a trustee should be
appointed for a Plan; or
(b) any action is taken to terminate a Plan pursuant
to its provisions or the plan administrator files with the PBGC a notice of
intent to terminate a Plan in accordance with Section 4041 of ERISA; or
(c) any action is taken by a plan administrator to
have a trustee appointed for a Plan pursuant to Section 4042 of ERISA; or
(d) a return is filed with the Internal Revenue
Service, or a Plan is notified by the Secretary of the Treasury that a
notice of deficiency under Section 6212 of the Code has been mailed, with
respect to the tax imposed under Section 4971(a) of the Code for failure
to meet the minimum funding standards established under Section 412 of
the Code; or
(e) a Reportable Event occurs with respect to a
Plan; or
(f) any action is taken to amend a Plan to become an
employee benefit plan described in Section 4021(b)(1) of ERISA, causing a
Plan termination under Section 4041(e) of ERISA; or
(g) the Company or any Controlled Group Member
receives a notice of liability or demand for payment on account of complete
withdrawal under Section 4203 of ERISA, partial withdrawal under Section
4205 of ERISA or on account of becoming secondarily liable for withdrawal
liability payments under Section 204 of ERISA (sale of assets); or
(h) the assets of the Company or any Controlled
Group Member are encumbered as a result of security provided to a Plan
pursuant to Section 412 of the Code or Section 306 of ERISA in connection
with a request for a minimum funding waiver or extension of the
amortization period, or pursuant to Section 401(a)(29) of the Code or
Section 307 of ERISA as a result of a Plan amendment; or
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<PAGE> 38
(ix) if (a) any judgment where the amount not covered by
insurance (or the amount as to which the insurer denies liability) is
in excess of $1,000,000 is rendered against the Company or any Subsidiary
or (b) there is any attachment, injunction or execution against the Company
or any Subsidiary's properties for any amount which is in excess of
$1,000,000 or (c) there is issued by any federal, state or local agency
against the Company or any Subsidiary a final, nonappealable order to pay
or to remediate any property on account of an environmental problem where
the amount of such payment or the cost of such remediation is in excess of
$1,000,000 or (d) there is a consent or settlement entered into by the
Company or any Subsidiary on account of the occurrence or threat of the
events described in clause (c) hereof and such consent or settlement
involves an amount in excess of $1,000,000 and such judgment, attachment,
injunction, execution or order remains unpaid, unstayed, undismissed, or
unappealed for a period of 30 days or, in the case of any such payment,
remediation, consent or settlement required by clause (c) or (d) hereof,
the payment or remediation required in respect thereof is not made in
accordance with the terms of any such order, consent or settlement; or
(x) if any order, judgment or decree is entered in any
proceedings against the Company decreeing the dissolution of the Company and
such order, judgment or decree remains unstayed and in effect for more than
60 days; or
(xi) if any order, judgment or decree is entered in any
proceedings against the Company or any Subsidiary of the Company
decreeing a split-up of the Company or such Subsidiary which requires the
divestiture of at least ten percent, or the divestiture of the stock of any
Subsidiary whose assets constituted at least ten percent, of the
consolidated assets of the Company and its Subsidiaries determined as of
the end of the preceding fiscal quarter, or which requires the divestiture
of assets or stock of any Subsidiary which shall have contributed at least
ten percent of Consolidated Net Income for any of the three fiscal quarters
then most recently ended, and such order, judgment or decree remains
unstayed and in effect for more than 60 days; or
(xii) if the Company or any Subsidiary, or their respective
properties, shall become subject to one or more Liens for costs or damages
in excess of $1,000,000, individually or in the aggregate, under any
Environmental Law and such Liens are not removed within 30 days; or
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<PAGE> 39
(xiii) if the Company defaults under any provision of any of
the Security Documents and such default continues, unless waived,
beyond the period of grace, if any, allowed with respect thereto or if,
while any Note is outstanding, any of the Security Documents shall no
longer be binding on or enforceable against the Company or any of its
Subsidiaries or the Company or any Subsidiary shall disclaim or dispute the
enforceability or binding effect of any of the Security Documents; or
(xiv) if the Company defaults under any provision of the
Reliance Documents and such default continues beyond the period of grace, if
any, allowed with respect thereto; or
(xv) if the Company shall fail to make prepayments of the
principal amount of Notes outstanding in an amount of at least $1,354,000
between August 31, 1994 and January 31, 1995 and at least $4,062,000 in the
aggregate between August 31, 1994 and December 31, 1995 in each case after
giving effect to prepayments in the amount of $892,916.10 made between
August 31, 1994 and the date hereof;
then, (a) if such event is an Event of Default specified in subparagraph (vi),
(vii) or (x) of this Section 7, all of the Notes at the time outstanding shall
immediately become due and payable, together with interest accrued thereon and
a Yield Maintenance Payment, without presentment, demand, protest or notice of
any kind, all of which are hereby waived by the Company, and (b) if such event
is an Event of Default specified in any other subparagraph of this Section 7, a
Majority of Holders may, at their option and in addition to any right, power or
remedy permitted by law or equity by notice in writing to the Company, declare
all of the Notes to be, and all of such Notes shall thereupon be and become,
forthwith due and payable, together with interest accrued thereon and a Yield
Maintenance Payment, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Company; provided, however,
that if such event is an Event of Default specified in subparagraph (i) or (ii)
of this Section 7, the holder of any Note may, at its option and in addition to
any right, power or remedy permitted by law or equity, by notice in writing to
the Company, declare such Note to be, and such Note shall thereupon be and
become, forthwith due and payable together with interest accrued thereon and a
Yield Maintenance Payment, without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Company. The Company will
promptly deliver a copy of any notice of declaration pursuant to clause (b)
above to all holders of Notes at the time outstanding.
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<PAGE> 40
8. Representations and Warranties. The Company represents,
covenants and warrants:
8A. Organization and Qualification; Business of the Company.
The Company and its Subsidiaries are each corporations duly organized and
existing under the laws of their respective jurisdictions of incorporation,
have all corporate powers to own their respective properties and to carry on
their respective businesses as now being conducted, and each is duly qualified
as a foreign corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted by it requires such
qualification and the failure so to qualify might materially affect adversely
its business, operations or properties.
8B. Financial Statements. The Company has furnished you with
the following financial statements, identified by the certificate of the chief
accounting officer or chief financial officer of the Company:
(i) consolidated balance sheets of the Company and its
Consolidated Subsidiaries as at December 31 in each of the years 1992
and 1993 and consolidated statements of operations and cash flow of the
Company and its Consolidated Subsidiaries for the fiscal years ended on
such dates, certified by Deloitte & Touche, independent public accountants;
and
(ii) an unaudited condensed consolidated balance sheet of the
Company and its Consolidated Subsidiaries as at June 30, 1994 and condensed
consolidated statements of operations and cash flow of the Company and its
Consolidated Subsidiaries for the six months ended on such date.
Such financial statements (including the notes thereto) are true and correct
and have been prepared in accordance with GAAP and said consolidated balance
sheets fairly present the position of the Company and its Consolidated
Subsidiaries as at the respective dates thereof, and said consolidated
statements of operations and cash flow fairly present the results of the
operations of the Company and its Consolidated Subsidiaries for the periods
indicated. Except as disclosed therein neither the Company nor any Subsidiary
has any material contingent liabilities (including liabilities for taxes), as
determined in accordance with GAAP. There has been no material adverse change
in the condition, financial or other, of the Company since December 31, 1993.
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The Company and each of its Subsidiaries (a) maintain books,
records and accounts in reasonable detail which accurately and fairly reflect
their respective transactions and business affairs, and (b) maintain a system
of internal accounting controls sufficient to provide reasonable assurances
that transactions are executed in accordance with management's general or
specific authorization and to permit preparation of financial statements in
accordance with generally accepted accounting principles.
8C. Litigation. Except as described in Annex 8C, there is no
action, suit, proceeding or arbitration pending or, to the knowledge of the
Company, threatened against or affecting the Company or any Subsidiary before
any court, arbitrator or grand jury or any governmental body, agency or
official which if adversely decided could have a material adverse effect on the
business, operations or financial condition of the Company, or which in any
manner questions the enforceability or validity of the Agreements, the Notes,
the Registration Rights Agreement or the Guaranty and the Company knows of no
basis for any such action, suit or proceeding.
8D. Outstanding Debt. On the Effective Date the Company will
not have any outstanding Debt except Debt described in Annex 6B.
8E. Properties. The Company and each Subsidiary has good and
marketable title to its properties and assets, including the properties and
assets reflected in the consolidated balance sheet as at December 31, 1993
hereinabove described, subject to no Lien, mortgage, pledge, security interest,
encumbrance or charge of any kind except (i) the Lien of the Security
Documents, (ii) Liens, securities, interests, charges and encumbrances of the
character described in Section 6I and (iii) such defects of title which would
not materially interfere with the use or transfer of properties and assets.
The Company and each Subsidiary enjoys peaceful and undisturbed possession
under all material leases to which it is a party. All such material leases are
subsisting and are in full force and effect and none of them is in default;
none of the material leases of the Company and its Subsidiaries contains any
provision which might reasonably be expected materially and adversely to affect
the Company or any Subsidiary or the operation or use of the properties so
leased.
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8F. Taxes. All income tax returns of the Company or any
Subsidiary for any fiscal period which are required to be filed have been filed
by the Company or such Subsidiary, and all taxes due and payable and all
assessments received in connection therewith (i) have been paid or (ii) are
being contested in good faith by appropriate proceedings. The Company has set
aside on its books adequate reserves with respect to the taxes and assessments
so contested and none of such taxes and assessments being contested is material
to the Company. The Federal income tax returns of the Company and its
Subsidiaries have not been examined and reported on by taxing authorities for
any fiscal periods with the exception of a 1986 audit of Truman E. Horner,
Inc., which audit has been settled, and an audit of the Corporation and its
Subsidiaries for the fiscal year 1988 through 1992 which is currently being
conducted by the Internal Revenue Service. In the opinion of the Company, all
tax liabilities were as of December 31, 1993, and are now, adequately provided
for on the books of the Company and its Subsidiaries in accordance with GAAP.
8G. Conflicting Agreements and Other Matters. Except for the
Reliance Documents, the Bank Agreement, the 1990 Note Agreement, the Security
Documents, the Registration Rights Agreement and closure and post-closure bond
agreements, the Company is not a party to any contracts or agreements or
subject to any charter or other corporate restrictions which, either
individually or in the aggregate, materially and adversely affect its
business, properties or assets, or financial condition. Neither the execution
nor delivery of the Agreements, the Notes, the Registration Rights Agreement,
the Security Documents or the Guaranty nor fulfillment of nor compliance with
the terms and provisions hereof or of the Notes or the Guaranty or the
Registration Rights Agreement or the Security Documents will conflict with or
result in a breach of the terms, conditions or provisions of, or constitute a
default under, any provision of applicable law or regulation, the charter or
by-laws of the Company or any Guarantor or any material agreement or
instrument to which the Company or any Guarantor is now aparty or result in
the creation or imposition of any Lien on any asset of the Company or any
Guarantor.
8H. Margin Regulations, etc. The Company is not engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U issued by the Board of Governors of the Federal
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Reserve System). No part of the proceeds from the sale of the Notes has been
or will be used, directly or indirectly, for the purpose of buying or carrying
any margin stock within the meaning of Regulation G or U of the Board of
Governors of the Federal Reserve System (12 C.F.R. 207 and 221), or for the
purpose of reducing or retiring any indebtedness which was originally incurred
to purchase or carry a margin stock, or for the purpose of buying or carrying
or trading in any securities under such circumstances or to involve the Company
in a violation of Regulation X of said Board (12 C.F.R. 224) or to involve any
broker or dealer in a violation of Regulation T of said Board (12 C.F.R. 220).
Neither the Company nor any Subsidiary owns or has any present intention of
acquiring margin stock.
8I. Disclosure. Neither this Agreement nor any schedule,
exhibit, certificate or other document furnished in connection herewith or with
the transactions contemplated hereby contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein and therein not misleading when made. Other than
facts related to social, economic or political circumstances or facts of the
type which affect the waste industry generally or which are generally known by
Persons familiar with the waste industry, there is no fact known to the Company
which materially adversely affects or in the future is likely to (so far as the
Company can now foresee) materially adversely affect the business, property or
assets, or financial condition of the Company and its Subsidiaries taken as a
whole which has not been furnished to you in writing by or on behalf of the
Company prior to the date hereof in connection with the transactions
contemplated hereby.
8J. Compliance and Governmental Consent. (i) Except as
disclosed in Annex 8J, the Company and each Subsidiary has complied in all
material respects with, and is presently in compliance in all material respects
with, all applicable statutes, rules, regulations, orders and restrictions of
the United States of America, foreign countries, states and municipalities, and
of each governmental department, commission, board, regulatory authority,
bureau, agency and instrumentality of the foregoing, and of any court or
arbitrator, in respect of the conduct of its business and ownership of its
properties (including, without limitation, all applicable statutes, rules,
regulations, orders and restrictions relating to equal employment opportunities
and all laws and regulations relating to environmental standards or controls).
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Neither the nature of the Company, its business or property, nor any
relationship between the Company and any other Person nor any circumstance
relating to the Company in connection with the offer, issue, sale or delivery
of the Notes is such as to require any consent, approval or authorization of,
or filing, registration or qualification with, any administrative or
governmental body in connection with the execution and delivery of this
Agreement and the Other Agreements.
(ii) Neither the Company nor any Subsidiary nor any Affiliate
of the Company is an entity defined as a "designated national" within the
meaning of the Foreign Assets Control Regulations, 31 C.F.R. Chapter V, or for
any other reason, subject to any restriction or prohibition under, or is in
violation of, any Federal statute or Presidential Executive Order, or any rules
or regulations of any department, agency or administrative body promulgated
under any such statute or Order, concerning trade or other relations with any
foreign country or any citizen or national thereof or the ownership or
operation of any property.
(iii) Except as disclosed in Annex 8J and in the reports of
CH2M Hill delivered in connection with the execution and delivery of the
Restatement, the Company and each Subsidiary (i) are in compliance in all
material respects with all applicable Environmental Laws and all transportation
and health and safety statutes and regulations, and (ii) have not acquired,
incurred or assumed, directly or indirectly, any material contingent liability
in connection with the release into the environment or storage of any toxic or
hazardous waste, substance or material. Except as disclosed in Annex 8J and in
the reports referred to in the preceding sentence, the Company and its
Subsidiaries have not acquired, incurred or assumed, directly or indirectly,
any material contingent liability in connection with a release of other
discharge of any hazardous, toxic or waste material including petroleum, on,
in, under or into the environment surrounding any property owned, used or
leased by any of them.
8K. Investment Company Act. The Company is not an investment
company or a person directly or indirectly controlled by or acting on behalf of
an investment company within the meaning of the Investment Company Act of 1940,
as amended.
8L. Authority and Authorization. The Company has corporate
power and authority to execute and deliver this Agreement, the Notes, the Other
Agreements, the Registration Rights Agreement and the Security Documents and to
perform its obligations hereunder and thereunder, including but not limited to
the issuance of shares of Class A Common Stock, and all such action has been
duly and validly authorized by all necessary corporate proceedings on its part.
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8M. Execution and Binding Effect. This Agreement, the Other
Agreements, the Notes, the Registration Rights Agreement, the Security
Documents and the Guaranties have been duly and validly executed and delivered
by the Company and the Guarantors and constitute legal, valid and binding
obligations of the Company and the Guarantors, respectively, enforceable in
accordance with the terms hereof and thereof, except as such enforceability may
be limited by bankruptcy, insolvency or other similar laws of general
application affecting the enforcement of creditors' rights or by general
principles of equity limiting the availability of equitable remedies.
8N. No Event of Default; Compliance with Instruments. Except
for the Defaults and Events of Defaults specified in Annex 8N with respect to
the Notes (each of which is hereby waived), no event has occurred and is
continuing and no condition exists which constitutes an Event of Default or
Default. Neither the Company nor any of its Subsidiaries is in violation of
any material term of any charter, by-law, agreement or instrument to which the
Company or any Subsidiary is a party or by which any of them or any of their
respective properties may be subject or bound.
8O. Subsidiaries. Annex 8O to this Agreement states as of
the date hereof the authorized capitalization of each Subsidiary, the number of
shares of each class of capital stock issued and outstanding of each Subsidiary
and the number and percentage of outstanding shares of each such class of
capital stock owned by the Company or by any Subsidiary. The outstanding
shares of each Subsidiary have been duly authorized and validly issued and are
fully paid and nonassessable. The Company and each Subsidiary owns
beneficially and of record and has good title to all the shares it is listed as
owning in Schedule 8O free and clear of any Lien.
8P. Pension-Related Matters. The Company has provided you
with a list of all Plans and Multiemployer Plans and all available information
with respect to its or any Controlled Group Member's direct, indirect or
potential withdrawal liability to any Multiemployer Plan. Except as
specifically disclosed to you, the Company has no liability (contingent or
otherwise) for, and none of the Company's assets are encumbered in connection
with, (i) the failure to meet the minimum funding requirements under ERISA or
the Code with respect to a Plan (including, without limitation, joint and
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several liability with a Controlled Group Member for the minimum funding
requirement and the excise tax for failure to meet such requirement, any Lien
for contributions with respect to a Plan which are due and unpaid by the
Company or a Controlled Group Member, and any security posted by the Company to
obtain a waiver of the minimum funding requirement), or (ii) the termination of
a Plan or withdrawal by the Company or a Controlled Group Member from any
Multiemployer Plan which would have a material adverse effect on the business,
operations or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole. The PBGC premiums and contributions required to
meet the minimum funding requirements of ERISA and the Code for all Plans have
not exceeded $0.00 on an annual basis. The amount of unfunded benefit
liabilities (as defined in Section 4001(a)(16) of ERISA), as certified to by
the Plan's actuary, for any Plan do not exceed $0.00 and for all Plans do not
exceed $0.00.
8Q. Power To Carry On Business. The Company and each
Subsidiary has all requisite power and authority to own and operate its
properties and to carry on its business as now conducted under existing
contracts.
8R. Patents, Licenses, Franchises. The Company and each of
its Subsidiaries owns or possesses all the patents, trademarks, service marks,
trade names, copyrights, licenses, franchises, permits and rights with respect
to the foregoing necessary to own and operate its properties and to carry on
its business as presently conducted without conflict with the rights of others.
8S. Public Utility Holding Company. The Company is not a
"holding company" or a "subsidiary company" of a "holding company" or
"affiliate" of either a "holding company" or a "subsidiary company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
9. Representations of the Purchaser. You represent that you
have acquired the Notes, and will acquire the Class A Common Stock, for your
own account or that of a Subsidiary or Affiliate and not with a view to
distribution of any thereof; provided that the disposition of your property
shall at all times be and remain within your control. You further represent
that no part of the funds used by you to pay the purchase price of the Notes
constituted assets allocated to any separate account (as defined in Section
3(17) of ERISA including any pooled separate accounts, within the meaning of
DOL Prohibited Transaction Class Exemption 78-19) maintained by you in which
any employee benefit plan (as defined in Section 3(3) of ERISA) participated to
the extent of more than 5% of the value of such separate account.
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10. Security and Guaranty.
10A. Authorization; Enforceability.
(i) The Company represents and warrants that the Security
Documents are in full force and effect and create, in favor of the
secured parties named therein a valid and effective first priority Lien on
the pledged assets, subject only to (i) compliance with applicable
recording and other perfection laws and (ii) to the terms of an
Intercreditor Agreement among you, the Reliance Group and the other secured
parties which are parties thereto, dated February 26, 1993.
(ii) Each Guarantor represents and warrants that the Guaranty
has been duly authorized, executed and delivered and constitutes the valid
and binding obligation of such Guarantor, enforceable in accordance with
its terms.
10B. Organization and Qualification. Each Guarantor
represents and warrants that it is a corporation duly organized and in good
standing under the laws of the jurisdiction of its incorporation and is duly
qualified to do business in every other jurisdiction in which the failure so to
qualify would have a material adverse effect on such Guarantor.
10C. Guaranty. Each Guarantor hereby irrevocably and
unconditionally guarantees, as and for its own debt, until final and
indefeasible payment has been made, the due and punctual payment of the
principal and interest and Yield Maintenance Payment, if any, on all Notes at
any time outstanding and the due and punctual payment of all moneys payable,
and all other indebtedness owing, by the Company under the Agreements
(collectively, the "Guarantied Obligations") and the due and punctual payment
of all monies payable by the Company under the Registration Rights Agreement in
each case when and as the same shall become due and payable, whether at
maturity, pursuant to mandatory or optional prepayment, by acceleration or
otherwise, all in accordance with the terms and provisions of the Guaranty
attached as Exhibit B hereto; it being the intent of the Guarantors that the
guaranty set forth in this Section 10 shall be a guaranty of payment and not a
guaranty of collection.
10D. Performance by Guarantors. Each Guarantor agrees that
its liability under this Section 10 and under the Guaranty shall be immediate
and shall not be contingent upon the exercise or enforcement by any holder of
Notes of whatever remedies it may have against the Company or any other
guarantor or the enforcement of any Lien or realization upon any security such
holder may at any time possess or have available for its benefit.
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The Guaranty set forth in this Section 10 and in the Guaranty
is a primary and original joint and several obligation of the Guarantors and is
an absolute, unconditional, continuing and irrevocable guaranty of payment and
shall remain in full force and effect without respect to future changes in
conditions, including change of law, or any invalidity or irregularity with
respect to the issuance of any obligations (including, without limitation, any
of the Notes) of the Company, or with respect to the execution and delivery of
any agreement (including, without limitation, any of the Agreements, the
Registration Rights Agreement or the Notes) between the Company and any one or
more of the holders of Notes, or with respect to the genuineness, validity,
regularity or enforceability of any of the Guarantied Obligations.
10E. No Election. Each holder of Notes shall (individually
or collectively with the other holders) have the right to seek recourse against
any one or more of the Guarantors to the full extent provided for in this
Section 10, and against the Company to the full extent provided for in the
Notes and the Agreements. No election to proceed in one form of action or
proceeding, or against any party, or on any obligation, shall constitute a
waiver of the right of such holder of Notes, to proceed in any other form of
action or proceeding or against other parties unless such holder of Notes has
expressly waived such right in writing. Specifically, but without limiting the
generality of the foregoing, no action or proceeding by any holder of Notes
against the Company under any document or instrument evidencing Guarantied
Obligations shall serve to diminish the liability of any Guarantor under this
Section 10 except to the extent that such holder finally and unconditionally
shall have realized payment by such action or proceeding, notwithstanding the
effect of any such action or proceeding upon such Guarantor's right of
subrogation against the Company. Each Guarantor is fully aware of the
financial condition of the Company. Each Guarantor is executing and delivering
this guaranty based solely upon its own independent investigation and in no
part upon any representation or statement of any one or more of the holders of
Notes with respect thereto. Each Guarantor is in a position to obtain, and
hereby assumes full responsibility for obtaining, any additional information
concerning the financial condition of the Company as the Guarantor may deem
material to its obligations hereunder, and the Guarantor is not relying upon,
nor expecting, any holder of Notes to furnish it any information concerning the
financial condition of the Company.
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10F. Continuing Guaranty. The Guarantors' obligations in
this Section 10 are continuing obligations and shall apply to all Guarantied
Obligations whenever arising.
10G. Inspection. Each Guarantor shall permit the
representatives of each Institutional Holder (at the expense of such Person
unless a Default or Event of Default shall have occurred and then at the
expense of the Company), to visit and inspect any of the properties of the
Guarantor or any of its Subsidiaries, to examine all their respective books of
account, records, reports and other papers, to make copies and extracts
therefrom, and to discuss their respective affairs, finances and accounts with
their respective officers, employees and independent public accountants (and by
this provision each Guarantor authorizes said accountants to discuss its
finances and affairs and the finances and affairs of its Subsidiaries) all at
such reasonable times and as often as may be reasonably requested.
10H. Maintenance of Properties and Corporate Existence.
Each Guarantor will:
(i) Property -- maintain its property in good condition,
ordinary wear and tear excepted, and make all necessary renewals,
replacements, additions, betterments and improvements thereto;
(ii) Financial Records -- keep true books of records and
accounts in which full and correct entries shall be made of all its
business transactions and which will permit the provision of accurate
and complete financial statements in accordance with GAAP;
(iii) Corporate Existence and Rights -- do or cause to be
done all things necessary to preserve and keep in full force and effect
its corporate existence, rights (charter and statutory) and franchises;
and
(iv) Compliance with Law -- not be in violation of any law,
ordinance or governmental rule or regulation to which it is subject and
not fail to obtain any license, certificate, permit, franchise or other
governmental authorization necessary to the ownership of its properties
or to the conduct of its business if such violation or failure to obtain
could be reasonably expected to have a material adverse effect on such
Guarantor.
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10I. Merger; Acquisition. No Guarantor will merge into,
consolidate with, or sell, lease, transfer or otherwise dispose of all or
substantially all of its property to, any other Person or permit any other
Person to consolidate with or merge into it (except that the Company may merge
with a Guarantor if the Company is the surviving corporation); provided that
the foregoing restriction is subject to the provisions of Section 4E and does
not apply to the merger or consolidation of a Guarantor with another
corporation, if:
(i) the corporation that results from such merger or
consolidation or that purchases, leases, or acquires all or substantially
all of such Property (the "Guarantor Surviving Corporation") is organized
under the laws of the United States of America or any jurisdiction thereof;
(ii) the due and punctual payment of all the Guarantied
Obligations and all other obligations of the Guarantor hereunder and the
punctual performance and observance of all the covenants herein to be
performed or observed by the Guarantor are expressly and effectively
assumed by the Guarantor Surviving Corporation pursuant to such
agreements and instruments as shall be approved by the Majority of Holders,
and the Guarantor will cause to be delivered to each holder of Notes an
opinion of independent counsel to the effect that (i) such agreements and
instruments are enforceable in accordance with their terms and (ii) no
taxable event or consequence will result to any holder of Notes solely by
virtue of such merger, consolidation, purchase, lease or acquisition and
the assumption by the Guarantor Surviving Corporation of the obligations of
the Guarantor hereunder; and
(iii) immediately prior to, and immediately after the
consummation of the transaction, and after giving effect thereto, no
Default or Event of Default exists or would exist under any provision of
this Agreement.
10J. Additional Guarantors. The Company and each Guarantor
covenants and agrees that no Subsidiary of the Company shall be created or
acquired, and no investment shall be made in any entity which is or becomes a
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Subsidiary of the Company or any Guarantor unless such entity shall, at the
time it becomes a Subsidiary of the Company or of a Guarantor, as the case may
be, deliver to each holder of Notes a written assumption of all of the duties
and obligations of a Guarantor hereunder and under the Guaranty, such writing
to be in form and substance satisfactory to the Majority of Holders.
11. Definitions. For the purpose of this Agreement, the
following terms shall have the following meanings.
"Affiliate" shall mean any Person (other than a Subsidiary)
(i) which directly or indirectly through one or more intermediaries controls,
or is controlled by, or is under common control with, the Company, (ii) which
beneficially owns or holds securities representing 5% or more of the combined
voting power of the Voting Stock of the Company or any Subsidiary or (iii)
securities representing 5% or more of the combined voting power of the Voting
Stock (or in the case of a Person which is not a corporation, 5% of the equity
interest) of which is beneficially owned or held by the Company or a
Subsidiary. The term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies
of a Person, whether through the ownership of voting securities, by contract or
otherwise.
"Agreement" shall have the meaning given in the introductory
paragraphs hereof.
"Average Daily Unrestricted Cash Balances" shall mean, for any
month, the sum of the unrestricted cash of the Company and its Subsidiaries at
the end of each day during that month, divided by the number of days in that
month. For purposes of this definition, there shall be counted as unrestricted
cash, all cash and cash equivalents as shown on the books of the Company and
its Subsidiaries and which are not subject to contractual restrictions as to
use and shall include all such balances in which the Reliance Group (or any
member thereof) may have a Lien or other security interest pursuant to the
Reliance Documents but shall exclude the pledge of $5,000,000 to Reliance Group
pursuant to the Pledge Agreement dated as of February 26, 1993; "cash
equivalents" will mean all Investments with a stated maturity of 90 days or
less in (x) commercial paper which, at the time of acquisition, is accorded the
highest rating by Standard & Poor's Corporation or Moody's Investors Service,
Inc., (y) certificates of deposit of any commercial bank of recognized standing
with capital and surplus aggregating at least $100,000,000 and having
commercial paper so rated, and (z) direct obligations of the United States
government or its agencies.
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"Bank Agreement" shall have the meaning given in Section 3G
hereof.
"Business Day" shall mean any day, other than Saturday, Sunday
or a legal holiday or any other day on which banking institutions in Chicago,
Illinois or New York, New York generally are authorized to be closed.
"Called Principal" shall mean, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to Section 4 or
accelerated pursuant to Section 7 under circumstances in which a premium or
Yield Maintenance Payment is due.
"Capitalized Lease" shall mean any lease the obligation for
Rentals with respect to which, in accordance with GAAP, would be required to be
capitalized on a balance sheet of the lessee or for which the amount of the
asset and liability thereunder, as if so capitalized, would be required to be
disclosed in a note to such balance sheet.
"Capitalized Operating Rentals" at any time shall mean actual
Operating Rentals during the four most recently completed fiscal quarters
divided by 13%.
"Change of Business" shall mean a change in the nature and
conduct of the business conducted by the Company and its Subsidiaries from that
permitted by Section 5 of this Agreement.
"Change of Control" shall occur if (i) any "Person" or group
of Persons acting in unison (within the meaning of Section 3(d) or 14(d) of the
Securities Exchange Act of 1934, as amended, and the applicable rules and
regulations thereunder), other than those individuals listed on Annex 4C hereto
(unless an individual listed on Annex 4C shall be a member of such group of
Persons), shall have acquired, by agreement or otherwise, beneficial ownership
of 50% or more of the voting control of the Company, (ii) during any period of
25 or fewer consecutive months individuals who at the beginning of such period
were directors of the Company (together with any replacement or additional
directors whose election was recommended by or who were elected by a majority
of the directors then in office) cease to constitute a majority of the board of
directors of the Company or (iii) any Person or group of related Persons shall
acquire all or substantially all of the assets of the Company.
"Charles City Letters of Credit" shall mean, collectively
together with any amendments, modifications, extensions, renewals or
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replacements thereof, those letters of credit issued by NCNB National Bank of
North Carolina (now known as NationsBank of North Carolina, N.A.), as Issuing
Bank, for the account of Chambers Development of Virginia, Inc. in support of
tax exempt variable rate demand note obligations relating to the landfill
facility in the County of Charles City, Virginia, and being specifically
identified as (i) letter of credit no. 36905 issued March 28, 1990 in the
original face amount of $15,318,750, (ii) letter of credit no. 36653 issued
December 6, 1989 in the original face amount of $15,318,750, and (iii) letter
of credit no. 38171 issued November 12, 1991 in the original face amount of
$25,531,250.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and any successor statute of similar import, and regulations
thereunder, in each case as in effect from time to time. References to
sections of the Code shall be construed also to refer to any successor
sections.
"Collateral Agent" shall mean, the Collateral Agent appointed
pursuant to the Intercreditor Agreement.
"Common Stock Determination Date" shall have the meaning given
in Section 1.
"Competitor" shall mean, any person a substantial portion
(more than 10% of such Person's revenues, earnings or assets) of whose business
is competitive with one or more of the categories of the business of the
Company and its Subsidiaries as described in Section 5I.
"Consolidated Current Assets" shall mean, as of the date of
any determination thereof, such assets of the Company and its Subsidiaries as
shall be determined on a consolidated basis in accordance with GAAP to
constitute current assets.
"Consolidated Current Liabilities" shall mean as of the date
of any determination thereof, such liabilities of the Company and its
Subsidiary as shall be determined on a consolidated basis in accordance with
GAAP to constitute current liabilities; provided that there shall be excluded
all mandatory prepayments by Waived Senior Debt and all pro rata payments in
respect of any prepayment to other holders of Waived Senior Debt.
"Consolidated Subsidiaries" at any particular time shall mean
those Subsidiaries whose accounts are or should be in accordance with GAAP
consolidated with those of the Company.
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"Consolidated Tangible Net Worth" shall mean the consolidated
stockholders' equity of the Company and its Subsidiaries determined in
accordance with GAAP after elimination of minority interests, less, without
duplication (i) the sum of all goodwill, trade names, trademarks, patents,
organization expense, unamortized debt discount and expense, deferred costs and
other similar intangibles properly classified as intangibles in accordance with
GAAP and (ii) securities of the Company held in the treasury of the Company.
"Consolidated Working Capital" shall mean, the excess of
Consolidated Current Assets over Consolidated Current Liabilities.
"Controlled Group Member" means each trade or business
(whether or not incorporated) which together with the Company is treated as a
single employer under Section 4001(b)(1) of ERISA or Sections 414(b) or (c) of
the Code.
"Current Debt" of any Person shall mean any Debt of such
Person that is not Funded Debt of such Person at such time; provided, however,
that any obligation shall be treated as Funded Debt, regardless of its term, if
such obligation (a) is renewable pursuant to the terms thereof or of a
revolving credit or similar credit agreement effective for more than one year
after the date of the creation of such obligation, or (b) may be payable out of
proceeds of a similar obligation pursuant to the terms of such obligation or
any such agreement.
"Debt" of a Person shall mean without duplication, (i) all
items of borrowings, including Capitalized Leases, which in accordance with
GAAP would be included in determining total liabilities as shown on the
liability side of a balance sheet as of the date at which Debt is to be
determined, and (ii) all Guaranties (other than Guaranties of Debt of a
Subsidiary by the Company), (iii) matured and unmatured reimbursement
obligations under letters of credit, (iv) matured and unmatured indemnity
obligations under surety bonds and (v) endorsements (other than of notes, bills
and checks presented to banks for collection or deposit in the ordinary course
of business).
"Default" shall mean any of the events specified in Section
7, whether or not any requirement in connection with such event for the giving
of notice, or the lapse of time, or the happening of any further condition,
event or act has been satisfied.
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"Discounted Value" shall mean, with respect to the Called
Principal of any Note, the amount calculated by discounting each Remaining
Scheduled Payment with respect to such Called Principal from its respective
scheduled due date (whether at maturity or by mandatory prepayment) to the
Settlement Date, in accordance with accepted financial practice and at a
discount factor (applied on a semi-annual basis) equal to the Reinvestment
Yield.
"Disposition" shall have the meaning given in Section 4E.
"Effective Date" shall have the meaning given in Section 3
hereof.
"Environmental Laws" shall mean all laws relating to
environmental matters, including those relating to (i) fines, orders,
injunctions, penalties, damages, contribution, cost recovery compensation,
losses or injuries resulting from the Release or threatened release of
hazardous materials and to the generation, use, storage, transportation, or
disposal of hazardous materials, in any manner applicable to the Company or any
of its Subsidiaries or any of their respective properties, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. Section 9601 et seq.), the Hazardous Material
Transportation Act (49 U.S.C. Section 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S. C. Section 6901 et seq.), the Federal
Water Pollution Control Act (33 U.S.C. Section 1251 et seq.), the Clean Air
Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances Control Act
(15 U.S.C. Section 2601 et seq.), the Occupational Safety and Health Act
(29 U.S.C. Section 651 et seq.), and the Emergency Planning and Community
Right-to-Know Act (42 U.S.C. Section 11001 et seq.), and (ii) environmental
protection, including the National Environmental Policy Act (42 U.S.C.
Section 4321 et seq.), and comparable state and foreign laws, each as
amended or supplemented, and any similar or analogous local, state, federal
and foreign statutes and regulations promulgated pursuant thereto, each
as in effect as of the date of determination.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import, and regulations
thereunder, in each case as in effect from time to time. References to
sections of ERISA shall be construed also to refer to any successor sections.
"Event of Default" shall mean any of the events specified in
Section 7, provided that there has been satisfied any requirement in connection
with such event for the giving of notice, or the lapse of time, or the
happening of any further condition, event or act.
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"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Extension" shall have the meaning given in the introductory
paragraph of this Agreement.
"Fixed Prepayment" shall have the meaning given in Section 4A.
"Funded Debt" of a Person shall mean any Debt which is
payable more than one year from the date of the creation thereof or which is
treated as Funded Debt in accordance with the proviso to the definition of
"Current Debt", and shall also include Capitalized Operating Rentals, letters
of credit with respect to which such Person has a contractual reimbursement
obligation and Performance Bonds.
"GAAP" shall mean generally accepted accounting principles as
such principles shall be in effect at the time of the computation or
determination or as of the date of the relevant financial statements.
"Guaranties" shall mean, all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of a Person guaranteeing or, in effect, guaranteeing any
indebtedness, dividend or other obligation, of any other Person in any manner,
whether directly or indirectly, including, without limitation, all obligations
incurred through an agreement, contingent or otherwise, by such Person: (i) to
purchase such indebtedness or obligation or any property or assets constituting
security therefor, (ii) to advance or supply funds (x) for the purchase or
payment of such indebtedness or obligation, (y) to maintain working capital or
other balance sheet condition or otherwise to advance or make available funds
for the purchase or payment of such indebtedness or obligation, (iii) to lease
property or to purchase securities or other property or services primarily for
the purpose of assuring the owner of such indebtedness or obligation, or (iv)
otherwise to assure the owner of the indebtedness or obligation against loss in
respect thereof. For the purposes of all computations made under this
Agreement, Guaranties in respect of any indebtedness for borrowed money shall
be deemed to be indebtedness equal to the principal amount of such indebtedness
for borrowed money which has been guaranteed, and Guaranties in respect of any
other obligation or liability or any dividend shall be deemed to be
indebtedness equal to maximum aggregate amount of such obligation, liability or
dividend.
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"Guaranty" shall mean, when the context so indicates, the
Guaranty referred to in Section 10 hereof.
"Institutional Holder" shall mean any of the following: bank
or other financial institution; savings and loan association; trust company;
insurance company; broker or dealer; pension or profit sharing plan or trust;
investment company; public or private institution which has received exempt
status under Section 501(c)(3) of the Code; foundation, trust or endowment fund
exempt from taxation under the Code; association engaged as a substantial part
of its business or operations in purchasing or holding securities; trust in
respect of which a financial institution is trustee or co-trustee; or any
entity whose security holders consist solely of Institutional Holders.
"Intercreditor Agreement" shall have the meaning given in
Section 3G hereof.
"Investments" shall mean all investments made, in cash or by
delivery of property, directly or indirectly, in any Person, whether by
acquisition of shares of capital stock, indebtedness or other obligations or
securities or by loan, advance, capital contribution or otherwise; provided,
however, that "Investments" shall not mean or include routine investments in
property to be used or consumed in the ordinary course of business.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind, including any agreement to grant any
of the foregoing, any conditional sale or other title retention agreement, any
lease in the nature thereof, and the filing of or agreement to file any
financing statement under the Uniform Commercial Code of any jurisdiction in
connection with any of the foregoing.
"Majority of Holders" at any time shall mean one or more
holders who together own not less than 66-2/3% of the aggregate principal
amount of the Notes then outstanding. For purposes of determining the Majority
of Holders at any time there shall be excluded all Notes held by the Company or
by an Affiliate of the Company.
"Multiemployer Plan" means any employee benefits plan which is
a "Multiemployer plan" within the meaning of section 4001(a)(3) of ERISA and
to which the Company or any Controlled Group Member has or had an obligation to
contribute.
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"Net Cash Proceeds" as applied to the Disposition of the
assets described in Annex 4E-1 and 4E-2, shall mean the gross proceeds from an
asset sale or disposition minus reasonable and necessary expenses directly
incurred in such sale and minus any debt obligations (other than VRDN
Obligations and excluding any debt obligations evidenced by the Notes) incurred
by the Borrower (or its Subsidiaries) in connection with the acquisition of the
asset being sold which the Borrower (or its Subsidiaries) elects to repay in
connection with the sale of such asset and minus any amounts incurred to
satisfy leases on such asset. Interest accrued or payable on any of the
Obligations shall not be deducted from such gross proceeds.
"Non-Hazardous Waste" shall mean any waste or substance,
including ash, except a hazardous or toxic waste or substance, as those terms
are defined in applicable Federal, state or local Environmental Law, including,
but not limited to the Resource Conservation and Recovery Act (42 U.S.C.
Section 6901 et seq.), and the Toxic Substances Control Act (15 U.S.C. Section
2601 et seq.).
"Operating Rentals" shall mean, for any period, the aggregate
Rentals payable by the Company and its Subsidiaries during such period under
all leases other than (i) leases with a remaining term, including extensions
and renewals at the option of the lessor, of three years or less, (ii) leases
of office equipment, rolling stock, heavy equipment and containers and (iii)
Capitalized Leases.
"Other Agreements" shall have the meaning given in Section 2
hereof.
"Other Holders" shall have the meaning given in Section 2
hereof.
"PBGC" means the Pension Benefit Guaranty Corporation
established under Title IV of ERISA or any other governmental agency,
department or instrumentality succeeding to the functions of said corporation.
"Performance Bonds" shall mean bonds obtained and delivered by
the Company or any Subsidiary securing the Company's or a Subsidiary's
performance obligations under any contracts related to construction,
collection, transportation or disposal activities.
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"Person" shall mean and include an individual, a partnership,
a corporation, a trust, an unincorporated organization or a government or any
department or agency thereof.
"Plan" means any employee pension benefit plan (other than a
Multi-employer Plan) to which Section 4021 of ERISA applies and (i) which is
maintained for employees of the Company or any Controlled Group Member; or (ii)
to which the Company or any Controlled Group Member made, or was required to
make, contributions at any time within the preceding 5 years.
"Private Placement Memorandum" shall mean the private
placement memorandum dated January 1988 relating to the offering of the Notes.
"Pro Rata Share" shall mean the percentage of the aggregate
outstanding principal amount of Waived Senior Debt represented by the aggregate
outstanding principal amount of the Notes, which is intended to be and remain
6.77%.
"1990 Note Agreement" shall mean the meaning set forth in
Section 3G.
"Qualified Investments" shall mean any and all of the
following Investments of the Company and its Subsidiaries:
(i) Investments in the capital stock of Subsidiaries
reflected on Annex 8O;
(ii) Loans and advances by the Company to a Subsidiary or
loans and advances by a Subsidiary to the Company, which are
subordinated in right of payment to the Notes;
(iii) Investments in (x) commercial paper maturing in 270 90
days or less from the date of issuance which, at the time of
acquisition, is accorded the highest rating by Standard & Poor's
Corporation or Moody's Investors Service, Inc. provided that no more
than $10,000,000 at any time shall be invested in commercial paper of
a single issuer, (y) certificates of deposit maturing within 90 days
from the date of issuance of banks with capital and surplus
aggregating at least $100,000,000 and having commercial paper so
rated, and (z) direct obligations of the United States government or
its agencies maturing within 90 days from the date of issuance;
(iv) Trade credit, loans and advances to subcontractors and
suppliers and advances to employees to meet expenses incurred by such
employees, in each case in the usual or ordinary course of business
consistent with past practice;
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(v) Investments of trust funds held by trustees of variable
rate tax-exempt demand notes in tax-exempt securities
maturing within 6 months of the date of issuance and backed by a
letter at least equal to the outstanding principal amount thereof
issued by a commercial bank whose long-term unsecured debt is rated A
or better by Standard & Poor's Corporation or Moody's Investors
Service, Inc.; and
(vi) Other Investments which in the aggregate do not exceed
10% of Consolidated Tangible Net Worth as of the date of determination.
In valuing Qualified Investments for purposes of this Agreement, such Qualified
Investments shall be taken at the original cost thereof, without allowance for
any subsequent write-offs or appreciation or depreciation therein, but less any
amount repaid or recovered on account of capital or principal.
"Registration Rights Agreement" shall mean that agreement,
dated November 21, 1994, in the form attached as Annex 3K.
"Reinvestment Yield" shall mean, with respect to the Called
Principal of any Note, the yield to maturity implied by the Treasury Constant
Maturity Series (as defined in the below-mentioned Release) yields reported
(for the latest day for which such yields shall have been so reported as of the
business day next preceding the Settlement Date with respect to such Called
Principal) in Federal Reserve Statistical Release H.15 (519) (or any comparable
successor publication) for actively traded United States Treasury securities
having a constant maturity equal to the remaining weighted average life to
final maturity (calculated in accordance with accepted financial practice) of
such Called Principal as of such Settlement Date, plus the following premiums
as applicable: (i) 120 basis points in the case of a prepayment pursuant to
Section 4D and (ii) 100 basis points in the case of an acceleration pursuant to
Section 7. Such implied yield shall be determined by calculating the remaining
weighted average life to final maturity of such Called Principal rounded to the
nearest month and (X) if necessary, by interpolating linearly between Treasury
Constant Maturity Series yields.
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"Reliance Group" shall mean Reliance Insurance Company,
Reliance Insurance Company of New York, United Pacific Insurance Company,
United Pacific Insurance Company of New York and Reliance National Indemnity
Corporation, collectively.
"Reliance Documents" shall mean the Underwriting and
Continuing Indemnity Agreement between the Company and its Subsidiaries and
Reliance; the Equipment and Landfill Utilization Agreement among the Company
and its Subsidiaries, Reliance and the Collateral Agent; the Security Agreement
between the Company and its Subsidiaries and Reliance; the Agreement Governing
Disposition of Contract Proceeds and Other Cash Collateral among the Company
and its Subsidiaries, Reliance and Mellon Bank, N.A.; the Stock Pledge
Agreement between the Company and Reliance; the Voting Trust Agreement among
the Company and its Subsidiaries, Reliance, Reliance Surety Company and the
Collateral Agent; and the Pledge Agreement as of February 26, 1993 between the
Company and Reliance each of such agreements being dated February 26, 1993, as
any or each of them may be modified or amended from time to time.
"Reliance Intercreditor Agreement" means the Intercreditor
Agreement between Reliance and the Collateral Agent, dated February 26, 1993 as
it may be modified or amended from time to time.
"Remaining Scheduled Payments" shall mean, with respect to the
Called Principal of any Note, all payments of such Called Principal and
interest thereon that would be due on dates after the Settlement Date with
respect to such Called Principal (excluding interest accrued on such Called
Principal as of the Settlement Date, if no payment of such Called Principal
were made prior to its scheduled due date (whether at maturity or by way of
mandatory prepayment pursuant to Section 4A)).
"Rentals" shall mean, as of the date of any determination
thereof, all fixed payments (including all payments which the lessee is
obligated to make to the lessor on termination of the lease or surrender of the
property) payable by the Company or a Subsidiary, as lessee or sublessee under
a lease of real or personal property, but exclusive of any amounts required to
be paid by the Company or a Subsidiary (whether or not designated as rents or
additional rents) on account of maintenance, repairs, insurance, taxes,
assessments, amortization and similar charges. Fixed rents under any so-called
"percentage leases" shall be computed on the basis of the minimum rents, if
any, required to be paid by the lessee, regardless of sales volume or gross
revenues.
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"Reportable Event" means (i) a reportable event described in
Section 4043 of ERISA and regulations thereunder for which a 30 day notice to
the PBGC is required, (ii) a withdrawal by a substantial employer from a Plan
to which more than one employer contributes, as referred to in Section 4063(b)
of ERISA, (iii) a cessation of operations at a facility causing more than
twenty percent (20%) of Plan participants to be separated from employment, as
referred to in Section 4062(f) of ERISA or (iv) a failure to make a required
installment or other payment with respect to a Plan when due in accordance with
Section 412 of the Code or Section 302 of ERISA which causes the total unpaid
balance of missed installments and payments (including unpaid interest) to
exceed $750,000.
"Responsible Officer" shall mean the Company's chief executive
officer, chief operating officer, chief financial officer, chief accounting
officer or any executive vice president.
"Restatement" shall have the meaning given in the introductory
paragraph to this Agreement.
"Restricted Payments" shall have the meaning given in
Section 6G.
"Securities Act" shall mean the Securities Act of 1933,
as amended.
"Security Documents" shall mean (i) the Security and Pledge
Agreement dated as of July 9, 1993 between the Company and NationsBank of North
Carolina, N.A., as Collateral Agent (the "Collateral Agent") pursuant to which
the Company has pledged the Collateral described therein to secure the payment
and performance, pari passu, of and all of the Company's and its Subsidiaries'
obligations to the holders of Waived Senior Debt (ii) the Amended and Restated
Collateral Agency and Intercreditor Agreement pursuant to which such Security
and Pledge Agreement was entered into, and (iii) such additional pledge
agreements, security agreements, mortgages, assignments, other instruments and
as the Company may execute at the request of the Agent to grant a perfected
security interest and Lien in all the assets, real, personal or mixed, of the
Company and its Subsidiaries which constitute Collateral under the Security
Documents.
"Settlement Date" shall mean, with respect to the Called
Principal of any Note, the date on which such Called Principal is to be prepaid
pursuant to Section 4 or accelerated pursuant to Section 7.
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"Subordinated" Debt shall mean any unsecured Debt which by its
terms is subordinated in right of payment to the Notes and has a Weighted
Average Life to Maturity beyond the final maturity of the Notes.
"Subsidiary" at any time shall mean any corporation of which a
majority (by number of shares or number of votes) of each class of outstanding
capital stock normally entitled to vote for the election of one or more
directors (regardless of any contingency which does or may suspend or dilute
the voting rights of such class) is at such time owned directly or indirectly
by, the Company or one or more Subsidiaries,
"Voting Stock" shall mean capital stock of any class of a
corporation having power under ordinary circumstances to vote for the election
of members of the board of directors of such corporation, or persons performing
similar functions (whether or not at the time stock of any class shall have or
might have special voting powers or rights by reason of the happening of any
contingency).
"Waived Senior Debt" shall mean the Notes, the 11.45% Senior
Notes due December 31, 1996 and the indebtedness to the Banks which are
signatories to the Bank Agreement.
"Waiver" shall have the meaning given in the introductory
paragraph to this Agreement.
"Yield-Maintenance Payment" shall mean, with respect to any
Note, a payment equal to the excess, if any, of the Discounted Value of the
Called Principal of such Note over such Called Principal.
12. Miscellaneous
12A. Home Office Payment. The Company agrees that, as long
as you shall hold any Note, it will (without surrender thereof or making
available for notation thereon, except in the case of payment in full) make
payments and prepayments of principal thereof and interest and premium, if any,
thereon in the manner shown therefor in Annex I hereto, or such other lawful
manner as you may specify in writing to the Company in accordance with the
terms hereof, notwithstanding any contrary provision herein or in any Note with
respect to the manner or place of payment. You agree that, before transferring
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any Note, you will make a notation thereon of all principal payments
previously made thereon and of the date to which interest thereon has been
paid, and will notify the Company of the name and address of the transferee
of such Note. At the election of any subsequent holder of any Note that is
an Institutional Investor which has made the same agreements relating to such
Note as you have made in this Section 12A, the Company will make payments of
principal and interest, and premium, if any, in respect thereof, to a place
within the United States, on the date such payment is due, in immediately
available funds, at the option of such holder, by credit to the account
designated by such holder or by a check mailed or delivered to the address
designated by such holder.
12B. Expenses; Indemnification. The Company agrees, whether
or not the transactions hereby contemplated shall be consummated, to pay, and
save you harmless against liability for the payment of, all out-of-pocket
expenses arising in connection with this transaction or any amendment of this
Agreement or waiver of any agreement, term or condition contained in this
Agreement, including all taxes (including interest and penalties, if any) which
may be determined to be payable in respect of the execution, delivery or
acquisition of any Note issued under this Agreement, and the reasonable fees
and expenses of Donovan Leisure Newton & Irvine, your special counsel. The
Company also agrees to pay and save you harmless against liability for the
payment of all costs and expenses, including attorneys' fees and court costs,
in connection with the enforcement of any provision of this Agreement or the
collection or attempted collection of any Note, including without limitation
costs and expenses incurred in any bankruptcy case. The Company further agrees
to indemnify you and hold you harmless from and against any and all
liabilities, losses, damages, costs and expenses of any kind (including,
without limitation, the fees and expenses of your special counsel in connection
with any investigative, administrative or judicial proceeding, whether or not
you shall be designated a party thereto) which may be incurred by you, relating
to or arising out of this Agreement, the Notes or any of the transactions
contemplated hereby, except such as may be incurred by you due to any violation
of law by you or any material breach of this Agreement by you. The obligations
of the Company under this Section 12B shall survive the transfer by you and
payment of any Note.
12C. Consent to Amendments. This Agreement may be amended,
and the Company may take any action herein prohibited, or omit to perform any
act herein required to be performed by it, if the Company shall obtain the
written consent to such amendment, action or omission to act of a Majority of
Holders (exclusive of Notes held by the Company or any Affiliate of the
Company), except that without the written consent of the holder or holders of
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all Notes at the time outstanding, no amendment to this Agreement shall extend
the maturity of any Note, or change the amount of principal of any Note, or
reduce the portion of the principal amount of Notes required with respect to
any consent, or reduce the rate or change the time of payment of interest or
reduce any premium payable with respect to any Note. Each holder of any Note
at the time or thereafter outstanding shall be bound by any consent authorized
by this Section 12C, whether or not such Note shall have been marked to
indicate such consent, but any Note issued thereafter shall bear a notation
referring to any such consent. The Company covenants that it (i) will not
solicit any modification, waiver or consent to any Agreement or Note without
making the same solicitation to each holder of any Note then outstanding, (ii)
will not pay any compensation or other remuneration, or make any accommodation
for the benefit of any holder, in connection with any requested modification,
amendment or waiver of any Agreement or Note without making the same payment or
accommodation in favor of each other holder of any Note then outstanding and
(iii) will provide copies to each holder of any Note then outstanding of all
modifications, amendments or waivers to any Agreement or Note promptly upon
adoption or approval thereof.
12D. Form, Registration, Transfer and Exchange of Notes.
The Notes are issuable as registered notes in the denominations of $500,000 and
any integral multiple of $500,000. The Company shall keep at its principal
office a register in which the Company shall provide for the registration and
transfer of Notes. Upon surrender for registration of transfer of any Note at
the office of the Company, the Company shall, at its expense, execute and
deliver one or more new Notes of a like aggregate principal amount registered
in the name of the designated transferee or transferees. At the option of the
holder of any Note, such Note may be exchanged for other Notes of any
authorized denominations, of a like aggregate principal amount, upon surrender
of the Note to be exchanged at the office of the Company. Each such new Note
shall be payable to such Person as such holder may request. Whenever any Note
is so surrendered for exchange, the Company shall, at its expense, execute and
deliver the Note or Notes that the holder of such surrendered Note is entitled
to receive. Every Note presented or surrendered for registration of transfer
shall be duly endorsed, or be accompanied by a written instrument of transfer
duly executed, by the holder of such Note or his attorney duly authorized in
writing. Any Note or Notes issued in exchange for any Note or upon transfer
thereof shall carry the rights to unpaid interest and interest to accrue which
were carried by the Note so exchanged or transferred, and neither gain nor loss
of interest shall result from any such transfer or exchange. No Note shall be
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sold by any holder unless such holder first offers such Note to the Company for
purchase. Upon receipt of notice from a holder that it desires to sell a Note
the Company will have five business days to make an offer to purchase such
Note, which offer shall include the payment of accrued interest on such Note to
the date of closing (such offer by the Company being hereinafter referred to as
the "Initial Offer"). At the time of the Initial Offer the holder shall
calculate the "Initial Offer Spread" which shall be the spread between the
yield to maturity implicit in the Initial Offer and that of the United States
Treasury Securities having a constant maturity equal to the remaining weighted
average life to final maturity of the principal of such Note. The holder shall
have five business days from the date the Initial Offer is made by the Company
to accept or reject the Initial Offer. If the holder accepts the Initial
Offer, the Company shall have 45 days to consummate the purchase of the Note.
If the Company does not consummate the purchase within that period the holder
shall be entitled to sell such Note without regard to the Company's purchase
right set forth in this Section 12D, and the Company shall indemnify the holder
for any loss it suffers as a consequence of the Company's failure to consummate
such purchase. Such indemnity shall be in an amount equal to the difference
between the Initial Offer price and the price actually received by the holder
for such Note, if less than the Initial Offer, plus any out-of-pocket expenses
incurred by the holder as a result of the Company's failure to consummate the
purchase. If the holder rejects the Initial Offer the holder may transfer such
Note to another institutional investor not more than six months after the
Initial Offer so long as the spread between the yield to maturity implicit in
the sale price and that of the United States Treasury Securities having a
constant maturity equal to the remaining weighted average life to final
maturity of the principal of such Note is less than the Initial Offer Spread.
If a sale is made by a holder pursuant to the immediately preceding sentence
the holder will deliver notice of such sale to the Company, which notice will
include the sale price at which the transaction occurred. If a holder desires
to sell a Note more than six months after an Initial Offer the Company shall
again be first offered the opportunity to purchase such Note before a sale is
made. For purposes of this Section 12D, the term "institutional investor"
shall mean any of the following: bank or other financial institution; savings
and loan association; trust company; insurance company; broker or dealer;
pension or profit sharing plan or trust; investment company; public or private
institution which has received exempt status under Section 501(c)(3) of the
Code; foundation, trust or endowment fund exempt from taxation under the Code;
association engaged as a substantial part of its business or operations in
purchasing or holding securities; trust in respect of which a financial
institution is trustee or co-trustee; or any entity whose security holders
consist solely of institutional investors.
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12E. Persons Deemed Owners. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name any
Note is registered as the owner and holder of such Note for the purpose of
receiving payment of principal of, premium, if any, and interest on such Note
and for all other purposes whatsoever, whether or not such Note shall be
overdue, and the Company shall not be affected by notice to the contrary.
12F. Lost Notes. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
any Note and, in the case of such loss, theft or destruction, upon receipt of
your indemnity agreement in form and substance reasonably satisfactory to the
Company (or other indemnity reasonably satisfactory to the Company), or in the
case of any such mutilation, upon surrender and cancellation of such Note, the
Company will make and deliver a new Note in lieu of the lost, stolen, destroyed
or mutilated Note.
12G. Survival of Representations and Warranties. All
representations and warranties contained herein or made in writing by the
Company in connection herewith shall survive the execution and delivery of this
Agreement and of the Notes, regardless of any investigation made by you or on
your behalf.
12H. Successors and Assigns. All covenants and agreements in
this Agreement contained by or on behalf of either of the parties hereto shall
bind and inure to the benefit of the respective successors and assigns of the
parties hereto whether so expressed or not, except that the Company may not
assign or transfer any of its rights or obligations under this Agreement except
as provided in Section 6E.
12I. Notices. All communications provided for hereunder
shall be sent by first class mail, courier service or facsimile or hand
delivered and, if to you, addressed to you at the address set forth by you for
such communications on Annex 2 hereto, and if to the Company, at 10700
Frankstown Road, Pittsburgh, PA 15235, or to such other address with respect to
either party as such party shall notify the other in writing. All
communications provided for shall be effective when received or, if sent by
first class mail, three days after such communication is deposited in the mail
with first class postage prepaid, addressed as aforesaid.
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12J. Governing Law. This Agreement is being delivered and is
intended to be performed in the Commonwealth of Pennsylvania and shall be
governed by and construed in accordance with the laws of such Commonwealth.
This Agreement may not be changed orally, but (subject to the provisions of
Section 12C) only by an agreement in writing and signed by the party or parties
against whom enforcement of any waiver, change, modification or discharge is
sought.
12K. Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart.
12L. Headings. The section headings in this Agreement are
inserted for convenience of reference only and shall not affect the
construction or interpretation of any of the provisions hereof.
12M. Reproduction of Documents. This Agreement and all
documents relating thereto, including without limitation, (a) consents, waivers
and modifications which may hereafter be executed, (b) documents received by
you on the Closing Date (except the Notes themselves), and (c) financial
statements, certificates and other information previously or hereafter
furnished to you, may be reproduced by you by any photographic, photostatic,
microfilm, microcard, miniature photographic or other similar process and you
may destroy any original document so reproduced. The Company agrees and
stipulates that, to the extent permitted by applicable law, any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the
regular course of business) and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
12N. Accounting Principles. Except as otherwise provided in
this Agreement, all computations and determinations as to accounting or
financial matters and all financial statements to be delivered pursuant to this
Agreement shall be made and prepared in accordance with GAAP (including
principles of consolidation where appropriate), and all accounting or financial
terms shall have the meanings ascribed to such terms by GAAP.
-67-
<PAGE> 69
12O. Reliance Documents. The Reliance Documents and the
Reliance Intercreditor Agreement shall remain in full force and effect without
modification by this Agreement. As between the holders of Notes and Reliance
Group, in the event of any conflict between this Agreement, the Guaranty or the
Security Documents on the one hand and the Reliance Intercreditor Agreement on
the other, the Reliance Intercreditor Agreement shall govern.
IN WITNESS WHEREOF, the undersigned have caused this Second
Amended and Restated Note Agreement to be executed and delivered by their
respective officer or officers thereunto duly authorized, on the page next
following this page, entitled "Signature Page To Second Amended and Restated
Note Agreement With Respect To The 11.95% Guarantied Senior Secured Notes of
Chambers Development Company, Inc. due December, 1996."
-68-
<PAGE> 70
Signature Page to Second Amended and Restated
Note Agreement With Respect To The 11.95%
Senior Secured Notes of Chambers Development
Company, Inc. due December 31, 1996
CHAMBERS DEVELOPMENT COMPANY, INC.
By:__________________
Title:
_______________ INSURANCE COMPANY
By:__________________
Title:
THE GUARANTORS
CDC SERVICES, INC.
CHAMBERS CLEARVIEW ENVIRONMENTAL LANDFILL, INC.
CHAMBERS DEVELOPMENT OF OHIO, INC.
CHAMBERS DEVELOPMENT OF VIRGINIA, INC.
CHAMBERS DEVELOPMENT EUROPE, B.V.
CHAMBERS ENTERPRISES, INC.
CHAMBERS ENVIRONMENTAL SYSTEMS HELLAS, S.A.
CHAMBERS INTERNATIONAL, INC.
CHAMBERS LAUREL HIGHLANDS LANDFILL, INC.
CHAMBERS MAPLEWOOD LANDFILL, INC.
CHAMBERS MEDICAL TECHNOLOGIES, INC.
a Pennsylvania corporation formed in 1991
CHAMBERS NEW JERSEY LAND, INC.
CHAMBERS OAKRIDGE LANDFILL, INC.
CHAMBERS OF ASIA, LIMITED
CHAMBERS OF DELAWARE, INC.
CHAMBERS OF GEORGIA, INC.
CHAMBERS OF HONG KONG, LIMITED
CHAMBERS OF ILLINOIS, INC.
CHAMBERS OF INDIANA, INC.
CHAMBERS OF MARYLAND, INC.
CHAMBERS OF MASSACHUSETTS, INC.
CHAMBERS OF MISSISSIPPI, INC.
CHAMBERS OF NEW JERSEY, INC.
CHAMBERS OF NEW JERSEY RECYCLING, INC.
CHAMBERS OF PENNSYLVANIA, INC.
CHAMBERS OF TENNESSEE, INC.
CHAMBERS OF WEST VIRGINIA, INC.
-1-
<PAGE> 71
-2-
<PAGE> 72
- - -Signature Page to Second Amended and Restated
Note Agreement With Respect To The 11.95%
Senior Secured Notes of Chambers Development
Company, Inc. due December 31, 1996
CHAMBERS ORANGE COUNTY LANDFILL, INC.
CHAMBERS RESOURCES, INC.
CHAMBERS RICHLAND COUNTY LANDFILL, INC.
CHAMBERS SERVICES, INC.
CHAMBERS SMYRNA LANDFILL, INC.
CHAMBERS WASTE SYSTEMS OF CALIFORNIA, INC.
CHAMBERS WASTE SYSTEMS OF FLORIDA, INC.
CHAMBERS WASTE SYSTEMS OF MISSISSIPPI, INC.
CHAMBERS WASTE SYSTEMS OF NEW JERSEY, INC.
CHAMBERS WASTE SYSTEMS OF NEW YORK, INC.
CHAMBERS WASTE SYSTEMS OF NORTH CAROLINA, INC.
CHAMBERS WASTE SYSTEMS OF OHIO, INC.
By:___________________
John G. Rangos, Jr.
Vice-President of each of the
Guarantors listed above
-3-
<PAGE> 73
Signature Page to Second Amended and Restated
Note Agreement With Respect To The 11.95%
Senior Secured Notes of Chambers Development
Company, Inc. due December 31, 1996
CHAMBERS WASTE SYSTEMS OF RHODE ISLAND, INC.
CHAMBERS WASTE SYSTEMS OF SOUTH CAROLINA, INC.
CHAMBERS WASTE SYSTEMS OF TEXAS, INC.
CHAMBERS WASTE SYSTEMS OF VIRGINIA, INC.
DAUPHIN MEADOWS, INC.
THE H. SIENKNECHT CO.
MORRIS COUNTY TRANSFER STATION, INC.
REMOTE LANDFILL SERVICES, INC.
RAIL-IT CORPORATION
SOUTHERN ALLEGHENIES DISPOSAL SERVICE, INC.
U.S. SERVICES CORPORATION
U.S. UTILITIES SERVICES CORPORATION
WILLIAM H. MARTIN, INC.
By:___________________
John G. Rangos, Jr.
Vice-President of each of the
Guarantors listed above
CHAMBERS MEDICAL TECHNOLOGIES, INC.
By:___________________
John G. Rangos, Jr.
President
CHAMBERS MEDICAL TECHNOLOGIES OF
SOUTH CAROLINA, INC.
By:___________________
John G. Rangos, Jr.
Secretary/Treasurer
LCS SERVICES, INC.
By:___________________
John G. Rangos, Jr.
Secretary/Treasurer
-4-
<PAGE> 74
-5-
<PAGE> 1
EXHIBIT 10.11
Execution Copy
CHAMBERS DEVELOPMENT COMPANY, INC.
AMENDED AND RESTATED
SECURED NOTE AGREEMENT
Dated as of November 21, 1994
$134,224,866.15 Principal Amount
11.45% Senior Secured Notes
Due December 31, 1996
<PAGE> 2
CHAMBERS DEVELOPMENT COMPANY, INC.
AMENDED AND RESTATED
SECURED NOTE AGREEMENT
Dated as of November 21, 1994
To Each of the Holders
Named in Schedule I Hereto
Ladies and Gentlemen:
Reference is made to the Note Agreement dated as of December 1, 1990
(the "Note Agreement") between Chambers Development Company, Inc., a Delaware
corporation (the "Company"), and each of the institutional investors named
therein pursuant to which $192,000,000 aggregate principal amount of the
Company's 10.45% Senior Notes due December 30, 2000 were issued. The Note
Agreement subsequently was amended by a Waiver and First Amendment to Note
Agreement dated December 23, 1992 and an Extension of Waiver and Second
Amendment to Note Agreement dated March 1, 1993 and was then amended and
restated by an Amended and Restated Secured Note Agreement dated as of July 9,
1993 (the "Amended and Restated Agreement"). The Amended and Restated
Agreement is hereinafter referred to as the "Outstanding Agreement" and the
11.45% Senior Secured Notes due December 30, 1999 outstanding thereunder are
hereinafter referred to as the "Outstanding Notes." You are the Holders of
Outstanding Notes in the aggregate principal amount set forth opposite your
name in the attached Schedule I. You and the other Holders of Outstanding
Notes, together with any assignee or transferee, are sometimes referred to
herein individually as a "Holder" or "Purchaser" and collectively as the
"Holders" or "Purchasers."
The Company agrees with you as follows:
Section 1. AMENDMENTS OF AGREEMENT AND NOTES
1.1. Amendments. The Holders and other creditors of the Company
have heretofore agreed to waive certain defaults and events of noncompliance by
the Company and the Holders and such other creditors also have heretofore
amended the agreements evidencing the Company's indebtedness, including the
Note Agreement and the notes originally issued thereunder. The Company and the
Holders wish to amend and restate the Outstanding Agreement to be in the form
of this Agreement (the "Agreement") and to amend the Outstanding Notes to be in
substantially the form of the attached Exhibit A (the "Notes") and to amend the
guaranty previously delivered by the Company's Subsidiaries to be in the form
of the attached Exhibit B. The Notes shall bear interest at the rate of 11.45%
per annum prior to maturity, payable quarterly on March 30, June 30, September
30 and December 30 of each year and at maturity, shall bear interest on overdue
principal (including any overdue required or optional prepayment), on any
Make-Whole Amount and (to the extent legally enforceable) on any overdue
installment of interest at the rate of 13.45% per annum, and shall be expressed
to mature on December 31, 1996.
Subject to the terms and conditions hereof and on the basis of the
representations and warranties herein contained and fulfillment of the
conditions set forth herein, the parties agree that the Outstanding Note
Agreement shall be amended to be in the form of this Agreement, and the
Outstanding Notes shall be amended to be in the form of the Notes.
This Agreement shall become effective following its execution and
delivery by all of the signatories listed on the signature pages and upon
satisfaction of all of the conditions set forth in Section 4, all of which
shall take place at 9:00 A.M. Chicago Time on the date set forth above (the
"Effective Date"). Delivery of the opinions and certificates called for by
Section 4 shall take place at the offices of Gardner, Carton & Douglas, 321
North Clark Street, Chicago, Illinois 60610.
It shall not be necessary for Holders to surrender their Outstanding
Notes in exchange for the Notes. However, prior to any transfer of your Notes
you agree to make a notation thereon that such Note has been amended.
<PAGE> 3
1.2. Security. As part of the earlier restructuring, the
Outstanding Notes were, or were to be, secured to the extent and in the manner
provided in the Consolidated Collateral Documents and the parties intend that
such outstanding security continue unabated and unaffected for the Notes, that
the Notes are secured thereby and have the benefit thereof and that such
additional contemplated security, including the Mortgages, to the extent not
heretofore provided, shall promptly be hereafter provided.
1.3. Fees. As consideration for the Holders' efforts and
cooperation in further restructuring the Company's indebtedness, the Company,
concurrently with the effectiveness of this Agreement, is paying the Holders in
cash an amount equal to .25% of the outstanding principal amount of the Notes.
In addition, the Company shall pay on the dates set forth below a cash fee
equal to the percentage set forth below of the then outstanding principal
amount of the Notes:
<TABLE>
<CAPTION>
PAYMENT DATE FEE
------------ ---
<S> <C>
January 1, 1995 .0625%
April 1, 1995 .1875%
July 1, 1995 .3750%
October 1, 1995 .6250%
January 1, 1996 .9375%
April 1, 1996 1.3125%
July 1, 1996 1.7500%
October 1, 1996 2.2500%
</TABLE>
1.4. Common Stock. As additional consideration for the agreements
of the Holders, the Company agrees to issue to the Holders on October 1, 1995
and on April 1, 1996 shares of the Company's Class A Common Stock, $.50 par
value (the "Common Shares"), which after issuance thereof, represent on each
such date the Pro Rata Share of 4% of the Company's then outstanding shares of
Common Stock of all classes. Of such number of Common Shares, each Holder
shall be entitled to its pro rata portion based on the amount of its then
unpaid principal. Concurrently with the execution and delivery of this
Agreement, the Company and holders of its Senior Debt, including the Holders,
are entering into the Registration Rights Agreement (the "Registration
Agreement"), pursuant to which the Company agrees to register the Common
Shares.
Section 2. PREPAYMENT OF NOTES
2.1. Required Prepayments. In addition to payment of all
outstanding principal of the Notes at maturity and regardless of the amount of
Notes which may be outstanding from time to time, the Company shall prepay and
there shall become due and payable on the dates set forth below, the portion of
the principal amount of the Notes set forth below or such lesser amount as
would constitute payment in full on the Notes, at a price of 100% of the
principal amount prepaid, together with interest accrued thereon to the date of
prepayment:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
PREPAYMENT DATE TO BE PREPAID
--------------- --------------
<S> <C>
July 1, 1995 $ 3,783,066.90
December 30, 1995 21,547,992.37
July 1, 1996 34,047,602.10
December 30, 1996 21,547,992.37
</TABLE>
Notwithstanding the foregoing the Company, by notice to Holders not less than 2
Business Days prior to the prepayment date, may at its option elect to defer a
portion, but in any event not more than 75% of the prepayment due on December
30, 1995 and all or any portion of the prepayment due on December 30, 1996
until December 31, 1996.
2.2. Optional Prepayments; Mandatory Offers to Prepay. (a) Upon
notice as provided in Section 2.3(a) and (d), the Company may prepay the Notes,
in whole or in part, at any time, in an amount not less than $1,000,000 or an
integral multiple of $10,000 in excess thereof. Each such prepayment shall be
at a price of 100% of the principal amount to be prepaid, plus interest accrued
thereon to the date of prepayment, plus the Make-Whole Amount, if any.
(b) In the event that (i) there shall be any Disposition pursuant
to clause (i) of Section 7.9 or (ii)
2
<PAGE> 4
there shall be Excess Unrestricted Cash Balances as of the end of any
month, or (iii) the Company shall be obligated to make a prepayment pursuant to
Section 3.02(iii) or 3.02(vii) of the Intercreditor Agreement, or (iv) there
shall be a Disposition pursuant to clause (iii) of Section 7.9 of this
Agreement, the Company, pursuant to the notice provided in Section 2.3(b), shall
offer to prepay Notes in aggregate principal amount equal to (w) the Pro Rata
Share of 50% of the Net Proceeds from such Disposition referred to in foregoing
clause (i), (x) the Pro Rata Share of 100% of such Excess Unrestricted Cash
Balances, (y) the amount of such required prepayment under the Intercreditor
Agreement, or (z) the Pro Rata Share of 100% of the Net Proceeds from such
Disposition referred to in foregoing clause (iv), as the case may be. Each such
prepayment shall be at a price of 100% of the principal amount to be prepaid,
plus interest accrued thereon to the date of payment.
(c) In the event of an anticipated or actual Change of Control,
the Company, pursuant to the notice provided in Section 2.3(c), shall offer to
prepay the entire principal amount of the Notes held by each Holder at a price
equal to 100% of the principal amount thereof plus accrued interest to the date
of prepayment.
(d) Upon notice as provided in Section 2.3(a), the Company may
offer to prepay the Notes, in whole or in part, at any time at a price of 100%
of the principal amount to be prepaid, plus interest accrued thereon to the
date of prepayment. Any offer to prepay pursuant to this paragraph (d) shall
be made only as a part of an offer to prepay, pro rata, all or a portion of the
Bank Debt and the 11.95% Senior Notes on the same terms and at the same price
as the offer to prepay the Notes.
(e) Any prepayment pursuant to Section 2.2 of less than all of the
Notes outstanding shall be applied to reduce, pro rata, the prepayments and
payment at maturity required by Section 2.1.
(f) Except as provided in Section 2.1, Section 6.12 and this
Section 2.2, the Notes shall not be prepayable in whole or in part.
2.3. Notice of Prepayments. (a) The Company shall give notice of
any optional prepayment of the Notes pursuant to Section 2.2(a) or (d) to each
Holder of the Notes not less than 30 days nor more than 60 days before the date
fixed for prepayment, specifying (i) such date, (ii) the principal amount of
the Holder's Notes to be prepaid, (iii) the date as of which the Make-Whole
Amount, if any, will be calculated, (iv) a calculation of the estimated
Make-Whole Amount, if any, showing in detail the method of calculation, (v) the
accrued interest applicable to the prepayment and (vi) that, in the case of an
offer to prepay pursuant to Section 2.2(d), any Holder electing not to accept
such offer must do so by notice to the Company not less than 1 day prior to the
date fixed for prepayment. Notice of prepayment having been so given, the
aggregate principal amount of the Notes specified in such notice, together with
accrued interest thereon and the Make-Whole Amount, if any, shall become due
and payable on the prepayment date. If one or more Holders elects not to
accept an offer made pursuant to Section 2.2(d), its or their portion of such
prepayment shall be applied by the Company on a pro rata basis to the
prepayment of Notes held by Holders accepting the offer, and if no Holder
accepts the offer or if a balance would remain after application to all
accepting Holders, then such prepayment or balance shall be applied in
accordance with the Intercreditor Agreement.
(b) The Company shall give notice of any mandatory offer to prepay
the Notes pursuant to Section 2.2(b) not later than 2 days after receipt of Net
Proceeds by the Company or any Subsidiary, on the Business Day following the
delivery of the certificate pursuant to Section 6.6(e) or not later than 2 days
after the Company learns it will be necessary to make a prepayment pursuant to
Section 3.02(iii) or 3.02(vii) of the Intercreditor Agreement (and in any event
not later than 1 day after such obligation arises), as the case may be. Such
notice shall be certified by an authorized officer and shall specify (i) that it
is given pursuant to this Section 2.3(b), (ii) the source of the funds to be
used, (iii) the date fixed for prepayment which shall be not less than 5 nor
more than 7 days after the date of delivery of such certification, (iv) that any
Holder electing not to accept such offer must do so by notice to the Company not
less than 1 day prior to the date fixed for prepayment, (v) the principal amount
of the Holder's Notes to be prepaid and (vi) the accrued interest applicable to
the prepayment. If one or more Holders elects not to accept such offer, its or
their portion of such prepayment shall be applied by the Company on a pro rata
basis to the prepayment of Notes held by Holders accepting the offer, and if no
Holder accepts the offer or if a balance would remain after application to all
accepting Holders, then such prepayment or balance shall be applied in
accordance with the Intercreditor Agreement.
(c) The Company shall give notice of any offer to prepay the Notes
pursuant to Section 2.2(c) to each Holder of the Notes (i) not more than 90 and
not less than 60 days prior to the date on which such Change of Control is
projected to occur or (ii) if such Change of Control occurs without the
knowledge of the Company, not later than 3 days after the Company learns of
such Change of Control. Such notice shall be
3
<PAGE> 5
certified by an authorized officer of the Company and shall specify (i)
the nature of the Change of Control, (ii) the date on which it is projected to
occur or on which it occurred, as the case may be, (iii) the date fixed for
prepayment which shall be not less than 30 or more than 45 calendar days after
the giving of such notice and in any event (except for the situation described
in clause (ii) of the preceding sentence) prior to the projected date of the
Change of Control, (iv) the accrued interest applicable to the prepayment and
(v) the date by which any Holder of a Note that wishes to accept such offer must
deliver notice thereof to the Company which shall not be later than 10 calendar
days prior to the date fixed for prepayment. Not earlier than 7 calendar days
prior to the date fixed for prepayment, the Company shall give written notice to
each Holder of those Holders, and the principal amount of Notes held by each,
who have given notices of acceptance of the Company's offer, and thereafter any
Holder may change its response to the Company's offer by written notice to such
effect delivered to the Company not less than 3 calendar days prior to the date
fixed for prepayment. Upon receipt by the Company of any non-revoked notice of
acceptance from any Holder within the required time period, the aggregate
principal amount of Notes held by such Holder, together with accrued interest
thereon, shall become due and payable on the prepayment date. If, prior to the
time prepayment is made, such Change of Control (actual or anticipated) is
canceled, the Company may rescind such offer to prepay by delivery of a
certificate of an authorized officer to such effect to each Holder of Notes.
(d) In connection with a prepayment pursuant to Section 2.2(a),
the Company also shall give notice to each Holder of the Notes by telecopy,
telegram, telex or other same-day written communication, as soon as practicable
but in any event not later than two business days prior to the prepayment date,
of the Make-Whole Amount, if any, applicable to such prepayment and the details
of the calculations used to determine the Make-Whole Amount.
2.4. Surrender of Notes on Prepayment or Exchange. Subject to
Section 2.5, upon any partial prepayment of a Note pursuant to this Section 2
or partial exchange of a Note pursuant to Section 10.3, such Note may, at the
option of the Holder thereof, (i) be surrendered to the Company pursuant to
Section 10.3 in exchange for a new Note equal to the principal amount remaining
unpaid on the surrendered Note, or (ii) be made available to the Company, at
the Company's principal office, for notation thereon of the portion of the
principal so prepaid or exchanged. In case the entire principal amount of any
Note is prepaid, such Note shall be surrendered to the Company for cancellation
and shall not be reissued, and no Note shall be issued in lieu of such Note.
2.5. Direct Payment. Notwithstanding any other provision contained
in the Notes or this Agreement, the Company will pay all sums becoming due on
each Note held by you or any subsequent Institutional Holder by wire transfer
of immediately available funds to such account as you or such subsequent
Institutional Holder have designated in Schedule I, or as you or such
subsequent Institutional Holder may otherwise designate by notice to the
Company, in each case without presentment and without notations being made
thereon, except that any such Note so paid or prepaid in full shall be
surrendered promptly thereafter to the Company for cancellation. Any wire
transfer shall identify such payment in the manner set forth in Schedule I and
shall identify the payment as principal, Make-Whole Amount, if any, and/or
interest. You and any subsequent Institutional Holder of a Note to which this
Section 2.5 applies agree that, before selling or otherwise transferring any
such Note, you or it will make a notation thereon of the aggregate amount of
all payments of principal theretofore made and of the date to which interest
has been paid and, upon written request of the Company, will provide a copy of
such notations to the Company.
2.6. Allocation of Payments. Except in the case of prepayments
pursuant to Sections 2.2(b) (unless all Holders accept), 2.2(c), 6.12(d),
6.12(e), 6.12(f) and 6.12(g), if less than the entire principal amount of all
the Notes outstanding is to be paid, the Company will prorate the aggregate
principal amount to be paid among the outstanding Notes in proportion to the
unpaid principal.
2.7. Payments Due on Saturdays, Sundays and Holidays. If the date
of any required prepayment of the Notes or any interest payment date on the
Notes or the date fixed for any other payment of any Note or exchange of any
Note is a day other than a Business Day, then such payment, prepayment or
exchange shall not be made on such date but shall be made on the next
succeeding Business Day, with interest payable to the actual date of payment.
2.8. Minimum Prepayments. During the period commencing August 31,
1994 and ending on and including December 31, 1995 the Company shall prepay,
pursuant to Section 2.1 or 2.2, not less than $30,264,000 principal amount of
the Notes, at least $10,088,000 of which shall be prepaid on or prior to
January 31, 1995. The prepayments made between August 31, 1994 and the date of
this Agreement,
4
<PAGE> 6
aggregating $6,652,686.57, shall be credited against the requirements of
this Section 2.8.
Section 3. REPRESENTATIONS
3.1. Representations of the Company. As an inducement to, and as
part of the consideration for, your entering into this Agreement, the Company
represents and warrants to you as follows:
(a) Corporate Organization and Authority. The Company is a
solvent corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware, has all requisite corporate power and
authority to own and operate its properties, to carry on its business as now
conducted and as presently proposed to be conducted, to enter into and perform
the Agreement, and the Registration Agreement and to issue and sell the Notes
and the Common Shares as contemplated in the Agreement.
(b) Qualification to Do Business. The Company is duly licensed or
qualified and in good standing as a foreign corporation authorized to do
business in each jurisdiction where the nature of the business transacted by it
or the character of its properties owned or leased makes such qualification or
licensing necessary, except for jurisdictions, individually or in the
aggregate, where the failure to be so licensed or qualified would not have a
material adverse effect on the business, properties, operations or condition,
financial or otherwise, of the Company and its Subsidiaries, taken as a whole.
(c) Subsidiaries. The Company has no Subsidiaries, as defined in
Section 5.1, except those listed in the attached Annex I, which correctly sets
forth the jurisdiction of incorporation and the percentage of the outstanding
Voting Stock or equivalent interest of each Subsidiary which is owned, of
record or beneficially, by the Company and/or one or more Subsidiaries. Each
Subsidiary has been duly organized and is validly existing and in good standing
under the laws of its jurisdiction of incorporation or organization and is duly
licensed or qualified and in good standing as a foreign corporation in each
other jurisdiction where the nature of the business transacted by it or the
character of its properties owned or leased makes such qualification or
licensing necessary, except for jurisdictions, individually or in the
aggregate, where the failure to be so licensed or qualified would not have a
material adverse effect on the business, properties, operations or condition,
financial or otherwise, of the Company and its Subsidiaries, taken as a whole.
Each Subsidiary has full corporate power and authority to own and operate its
properties and to carry on its business as now conducted and as presently
proposed to be conducted. The Company and each Subsidiary have good and
marketable title to all of the shares they purport to own of the capital stock
of each Subsidiary, free and clear in each case of any Lien, except as
otherwise disclosed in the attached Annex II, and all such shares have been
duly issued and are fully paid and nonassessable.
(d) Financial Statements. The consolidated balance sheets of the
Company and its Subsidiaries as of December 31, 1990, 1991, 1992 and 1993, and
the related consolidated statements of operations, stockholders' equity and
cash flows for the years ended on such dates, accompanied by the reports and
opinions of Deloitte & Touche, independent certified public accountants, copies
of which have heretofore been delivered to you, were prepared in accordance
with generally accepted accounting principles consistently applied throughout
the periods involved (except as otherwise noted therein) and present fairly the
consolidated financial position and consolidated results of operations
and cash flows of the Company and its Subsidiaries for and as of the end of
each of such years. The unaudited condensed consolidated balance sheets of the
Company as of March 31 and June 30, 1993 and 1994, the unaudited condensed
consolidated statements of operations for the three months ended March 31 and
three and six months ended June 30, 1993 and 1994, and the unaudited condensed
consolidated statements of cash flows for the three months ended March 31 and
six months ended June 30, 1993 and 1994 were prepared in accordance with
generally accepted accounting principles for interim financial statements
consistently applied during the periods involved and present fairly the
consolidated financial position and consolidated results of operations and cash
flows of the Company and its Subsidiaries for and as of the end of each such
period.
(e) No Contingent Liabilities or Adverse Changes. Neither the
Company nor any of its Subsidiaries has any contingent liabilities which are
material to the Company and its Subsidiaries taken as a whole, other than as
indicated in the 1993 audited financial statements heretofore delivered to you,
and, since December 31, 1993, except for changes disclosed or reflected in the
unaudited 1994 financial statements heretofore delivered to you, there have
been no changes in the condition, financial or otherwise, of the Company and
its Subsidiaries except changes occurring in the ordinary course of business,
none of which, individually or in the aggregate, has been materially adverse.
(f) No Pending Litigation or Proceedings. Except as described in
the notes to the 1993 audited financial statements referred to in the foregoing
paragraph (e) of this Section 3.1, there are no actions, suits or
5
<PAGE> 7
proceedings pending or threatened against or affecting the Company or
any of its Subsidiaries, at law or in equity or before or by any Federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which might reasonably be expected to
result, either individually or in the aggregate, in any material adverse change
in the business, properties, operations or condition, financial or otherwise, of
the Company and its Subsidiaries taken as a whole.
(g) Compliance with Law. (i) Neither the Company nor any of its
Subsidiaries is: (x) in default with respect to any order, writ, injunction or
decree of any court to which it is a named party; or (y) in default under any
law, rule, regulation, ordinance or order relating to its or their respective
businesses, the sanctions and penalties resulting from which defaults described
in clauses (x) and (y) might reasonably be expected to have a material adverse
effect on the business, properties, operations, assets or condition, financial
or otherwise, of the Company and its Subsidiaries taken as a whole, or on the
Company's ability to perform its obligations under this Agreement or the Notes.
(ii) Neither the Company nor any Subsidiary nor any
Affiliate of the Company is an entity defined as a "designated national" within
the meaning of the Foreign Assets Control Regulations, 31 C.F.R. Chapter V, or
for any other reason, subject to any restriction or prohibition under, or is in
violation of, any Federal statute or Presidential Executive Order, or any rules
or regulations of any department, agency or administrative body promulgated
under any such statute or Order, concerning trade or other relations with any
foreign country or any citizen or national thereof or the ownership or
operation of any property.
(h) Pension Reform Act of 1974. Neither the execution and delivery
of this Agreement nor the consummation of any of the transactions contemplated
by this Agreement is or will constitute a "prohibited transaction" within the
meaning of Section 4975 of the Internal Revenue Code of 1986, as amended (the
"Code"), or Section 406 of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"). Although the Internal Revenue Service has not issued
(nor has the Company or any Subsidiary requested) a determination that each
"employee pension benefit plan," as defined in Section 3 of ERISA (a "Plan"),
established, maintained or contributed to by the Company or any Subsidiary
(except for any Plan which is unfunded and maintained primarily for the purpose
of providing deferred compensation for a select group of management or highly
compensated employees) is qualified under Section 401(a) and related provisions
of the Code or that each related trust or custodial account is exempt from
taxation under Section 501(a) of the Code, the Company believes that such Plans
so qualify, that such trusts or accounts are so exempt and that, when request
is so made, the Internal Revenue Service will so determine. All Plans of the
Company or any Subsidiary comply in all material respects with ERISA and other
applicable laws. There exist with respect to the Company or any Subsidiary no
"multi-employer plans," as defined in the Multi-employer Pension Plan
Amendments Act of 1980, for which a material withdrawal or termination
liability may be incurred. There exist with respect to all Plans or trusts
established or maintained by the Company or any Subsidiary: (i) no accumulated
funding deficiency within the meaning of ERISA; (ii) no termination of any Plan
or trust which could result in any liability to the Pension Benefit Guaranty
Corporation ("PBGC") or any "reportable event," as that term is defined in
ERISA, which could constitute grounds for termination of any Plan or trust by
the PBGC; and (iii) no "prohibited transaction," as that term is defined in
ERISA, which could subject any Plan, trust or party dealing with any such Plan
or trust to any tax or penalty on prohibited transactions imposed by Section
4975 of the Code.
(i) Title to Properties. Except as disclosed in the 1993 audited
financial statements heretofore delivered to you, the Company and each
Subsidiary has (i) good and marketable title in fee simple or its equivalent
under applicable law to all the real property owned by it and (ii) good and
marketable title to all of the other property reflected in such financial
statements or subsequently acquired by the Company or any Subsidiary (except as
sold or otherwise disposed of in the ordinary course of business or
contemplated by this Agreement or consented to by the Holders), in each case
free from all Liens or defects in title except (x) Liens created or permitted
by the Consolidated Collateral Documents, (y) Liens securing Indebtedness of
the Company or a Subsidiary, which are listed in the attached Annex II and (z)
other Liens and minor defects in title, which primarily relate to nonoperating
properties, that, in the aggregate, do not materially detract from the value of
such properties or materially impair their use in the operation of the business
of the Company and its Subsidiaries.
(j) Leases. The Company and each Subsidiary enjoy peaceful and
undisturbed possession under all leases under which the Company or such
Subsidiary is a lessee or is operating. None of such leases contains any
provision which might reasonably be expected to materially and adversely affect
the operation or use of the
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<PAGE> 8
properties so leased. All of such leases are valid and subsisting and
none of them is in default.
(k) Franchises, Patents, Trademarks and Other Rights. The Company
and each Subsidiary have all franchises, permits (or similar rights pending
receipt of permits which have been applied for and which the Company has no
reason to believe will not be granted), licenses and other authority necessary
to carry on their businesses as now being conducted, and none are in default
under any of such franchises, permits, licenses or other authority which are
material to their businesses, properties, operations or condition, financial or
otherwise taken as a whole. The Company and its Subsidiaries own or possess
all patents, trademarks, service marks, trade names, copyrights, licenses and
rights with respect to the foregoing necessary for the present conduct of their
businesses, without any known conflict with the rights of others which might
result in any material adverse change in their businesses, properties,
operations or condition, financial or otherwise, taken as a whole.
(l) Authorization. This Agreement, the Consolidated Collateral
Documents, the Registration Agreement and the Notes have been, and the Common
Shares will be, duly authorized on the part of the Company and this Agreement,
the Consolidated Collateral Documents, the Registration Agreement and the Notes
constitute, and the Common Shares will constitute, the legal, valid and binding
obligations of the Company, enforceable in accordance with their terms, except
to the extent that enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws of general application
relating to or affecting the enforcement of the rights of creditors or by
equitable principles, regardless of whether enforcement is sought in equity or
at law. The Guaranty and the Consolidated Collateral Documents have been duly
authorized on the part of each Subsidiary and the Consolidated Collateral
Documents do, and the Guaranty when executed and delivered will, constitute the
legal, valid and binding obligations of such Subsidiary, enforceable in
accordance with their terms, except to the extent that enforcement thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws of general application relating to or affecting the enforcement of
the rights of creditors or by equitable principles, regardless of whether
enforcement is sought in equity or at law. Compliance by the Company and the
Subsidiaries, as the case may be, with all of the provisions of this Agreement,
the Guaranty, the Consolidated Collateral Documents, the Registration Agreement,
the Notes and the Common Shares (i) are within their respective corporate
powers, (ii) have been, or will be as to the Common Shares, duly authorized by
proper corporate action and (iii) are, or will be as to the Common Shares,
legal, will not violate any provisions of any law or regulation or order of any
court, governmental authority or agency and will not result in any breach of any
of the provisions of, or constitute a default under, or result in the creation
of any Lien not provided for or permitted therein on any property of the Company
or any Subsidiary under the provisions of, any charter document, by-law, loan
agreement or other agreement or instrument to which the Company or any
Subsidiary is a party or by which any of them or their property may be bound.
(m) No Defaults. Except for the matters described in Annex VII
which have been waived to the extent provided in Section 11.10, there exist no
Defaults or Events of Default. Neither the Company nor any Subsidiary is in
default under any charter document, by-law, loan agreement or other material
agreement or material instrument to which it is a party or by which it or its
property may be bound.
(n) Governmental Consent. Neither the nature of the Company or
any of its Subsidiaries, their respective businesses or properties, nor any
relationship between the Company or any of its Subsidiaries and any other
Person, nor any circumstances in connection with the offer, issue, sale or
delivery of the Notes or the Common Shares is such as to require a consent,
approval or authorization of, or withholding of objection on the part of, or
filing, registration or qualification with, any governmental authority on the
part of the Company in connection with the execution and delivery of this
Agreement, the Notes, the Common Shares, the Consolidated Collateral Documents,
the Registration Agreement or the Guaranty.
(o) Taxes. All income tax returns and all other material tax
returns required to be filed by the Company or any Subsidiary in any
jurisdiction have been filed, and all taxes, assessments, fees and other
governmental charges upon the Company or any Subsidiary, or upon any of their
respective properties, income or franchises, which are due and payable, have
been paid timely or within appropriate extension periods or contested in good
faith by appropriate proceedings. The Company does not know of any proposed
additional tax assessment against it or any Subsidiary for which adequate
provision has not been made on its books. The statute of limitations with
respect to federal income tax liability of the Company and its Subsidiaries has
expired for all taxable years up to and including the taxable year ended
December 31, 1987 and no material controversy in respect of additional taxes
due since such date is pending or to the Company's knowledge threatened. The
provisions for taxes on the books of the Company and each Subsidiary are
adequate for all open years and for the current fiscal period.
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<PAGE> 9
(p) Status under Certain Statutes. Neither the Company nor any
Subsidiary is: (i) a "public utility company" or a "holding company," or an
"affiliate" or a "subsidiary company" of a "holding company," or an "affiliate"
of such a "subsidiary company," as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended, or (ii) a "public utility" as defined
in the Federal Power Act, as amended, or (iii) an "investment company" or an
"affiliated person" thereof or an "affiliated person" of any such "affiliated
person," as such terms are defined in the Investment Company Act of 1940, as
amended.
(q) Private Offering. Neither the Company nor any Person
authorized or employed by the Company as agent, broker, dealer or otherwise in
connection with this Agreement has offered any of the Notes or any similar
security of the Company for sale to, or solicited offers to buy any thereof
from, or otherwise approached or negotiated with respect thereto with, any
prospective purchaser. Neither the Company nor anyone acting on its
authorization will offer the Notes or any part thereof or any similar
securities for issue or sale to, or solicit any offer to acquire any of the
same from, anyone so as to bring the issuance and exchange of the Notes within
the provisions of Section 5 of the Securities Act.
(r) Effect of Other Instruments. Except for the Reliance
Documents, the Bank Loan Agreement, the 11.95% Senior Note Agreement and
closure and post-closure bond agreements, neither the Company nor any
Subsidiary is bound by any agreement or instrument or subject to any charter or
other corporate restriction which materially and adversely affects the
business, properties, operations, or condition, financial or otherwise, of the
Company and its Subsidiaries, taken as a whole.
(s) Margin Regulations. None of the transactions contemplated in
this Agreement will violate or result in a violation of Section 7 of the
Exchange Act, or any regulations issued pursuant thereto, including, without
limitation, Regulations G, T, U and X of the Board of Governors of the
Federal Reserve System (12 C.F.R., Chapter II). Neither the Company nor any
Subsidiary owns or intends to carry or purchase any "margin stock" within the
meaning of Regulation G.
(t) Condition of Property. All of the facilities of the Company
and each of its Subsidiaries are in sound operating condition and repair except
for facilities being repaired in the ordinary course of business or facilities
which individually or in the aggregate are not material to the Company and its
Subsidiaries taken as a whole.
(u) Books and Records. The Company and each of its Subsidiaries
(i) maintain books, records and accounts in reasonable detail which accurately
and fairly reflect their respective transactions and business affairs, and (ii)
maintain a system of internal accounting controls sufficient to provide
reasonable assurances that transactions are executed in accordance with
management's general or specific authorization and to permit preparation of
financial statements in accordance with generally accepted accounting
principles.
(v) Full Disclosure. Neither the financial statements referred to
in paragraph (d) of this Section 3.1 nor this Agreement, the Consolidated
Collateral Documents, the Registration Agreement and the Guaranty, nor any
other written statement or document furnished by the Company or any Subsidiary
to you in connection with the negotiation of this Agreement and the
transactions contemplated hereby, taken together, contain any untrue statement
of a material fact or omit a material fact necessary to make the statements
contained therein or herein not misleading in light of the circumstances under
which they were made. There is no fact (exclusive of general economic,
political or social conditions or trends) particular to the Company known by
the Company which the Company has not disclosed to you in writing which has a
material adverse effect on or, so far as the Company can now foresee, will have
a material adverse effect on the business, properties, operations or condition,
financial or otherwise, of the Company and its Subsidiaries taken as a whole or
on the ability of the Company to perform its undertakings under and in respect
of this Agreement and the Notes.
(w) Environmental Compliance. Except as disclosed in the reports
of CH2M Hill dated March 1993 and heretofore delivered to you, the Company and
each Subsidiary (i) are in compliance in all material respects with all
applicable Environmental Laws and all transportation and health and safety
statutes and regulations, and (ii) have not acquired, incurred or assumed,
directly or indirectly, any material contingent liability in connection with
the release into the environment or storage of any toxic or hazardous waste,
substance or material. Except as disclosed in the reports in the preceding
sentence, the Company and its Subsidiaries have not acquired, incurred or
assumed, directly or indirectly, any material contingent liability in
connection with a release or other discharge of any hazardous, toxic or waste
material, including petroleum, on, in, under or into the environment
surrounding any property owned, used or leased by any of them.
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<PAGE> 10
3.2. Representations of the Purchasers. You represent, and in
entering into this Agreement the Company understands, that you have acquired
the Notes and will acquire the Common Shares for your own account and not with
a view to any distribution thereof; provided that the disposition of your
property shall at all times be and remain within your control, subject,
however, to compliance with Federal securities laws. You acknowledge that the
Notes have not been registered under the Securities Act and you understand that
the Notes must be held indefinitely unless they are subsequently registered
under the Securities Act or an exemption from such registration is available.
You have been advised that the Company does not contemplate registering, and is
not legally required to register, the Notes under the Securities Act.
Section 4. CLOSING CONDITIONS
The effectiveness of this Agreement is subject to the execution of
this Agreement by the Company and each Holder, to the performance by the
Company of its agreements hereunder, which are to be performed at or prior to
the effectiveness of this Agreement, and to the following conditions to be
satisfied on or before the Effective Date:
4.1. Representations and Warranties. The representations and
warranties of the Company contained in this Agreement and the Registration
Agreement or otherwise made in writing in connection herewith shall be true and
correct on or as of the Effective Date and the Company shall have delivered to
you a certificate to such effect, dated the Effective Date and executed by the
chief financial officer or Vice President-Finance of the Company.
4.2. Legal Opinions. You shall have received from Gardner, Carton
& Douglas, who is acting as your special counsel in this transaction, and from
Thorp, Reed & Armstrong, counsel for the Company, their respective opinions,
dated such Effective Date, in form and substance satisfactory to you and
covering substantially the matters set forth or provided in the attached
Exhibits C and D.
4.3. Events of Default. Upon satisfaction of the other conditions
set forth in this Section 4, no Default or Event of Default will exist
immediately after the Effective Date, and the Company shall have delivered to
you a certificate to such effect, dated the Effective Date and executed by the
chief financial officer or Vice President-Finance of the Company.
4.4. Payment of Fees and Expenses. The Company shall have paid all
reasonable fees, expenses, costs and charges for which invoices have been
received at least 1 day prior to the Effective Date, including the reasonable
fees and expenses of Gardner, Carton & Douglas, your special counsel, incurred
by you and the other Holders through the Effective Date and incident to the
proceedings in connection with, and transactions contemplated by, this
Agreement and the Notes.
4.5. Registration Agreement. The Company and all Holders of its
Senior Debt shall have entered into the Registration Agreement in substantially
the form of Exhibit I.
4.6. Amended Guaranty. Each Subsidiary shall have executed and
delivered an Amended and Restated Guaranty Agreement (the "Guaranty") in
substantially the form of the attached Exhibit B.
4.7. Bank Loan Agreement. The Company and the Banks shall have
entered into amendments to the Bank Loan Agreement in substantially the forms
of the attached Exhibit E1 and E2.
4.8. Senior Note Agreement. The Company and the 11.95% Senior
Noteholders shall have entered into the 11.95% Senior Note Agreement in
substantially the form of the attached Exhibit F.
4.9. Intercreditor Agreement. The parties to the Intercreditor
Agreement shall have entered into an amendment and restatement thereof in
substantially the form of the attached Exhibit G.
4.10. No Objection by Reliance. You shall have been provided by the
Company with a letter from Reliance, or other written evidence satisfactory to
you, that Reliance consents to the terms of this Agreement or any of the
transactions contemplated hereby.
4.11. Proceedings and Documents. All proceedings taken in
connection with the transactions contemplated by this Agreement, and all
documents necessary to the consummation of such transactions shall be
satisfactory in form and substance to you and your special counsel, and you and
your special counsel shall have received copies (executed or certified as may
be appropriate) of all legal documents or proceedings which you and they may
reasonably request.
Section 5. INTERPRETATION OF AGREEMENT
5.1. Certain Terms Defined. The terms hereinafter set forth when
used in this Agreement shall have the following meanings:
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<PAGE> 11
Affiliate - Any Person (other than a Subsidiary) (i) which directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with, the Company, (ii) which beneficially owns or holds
securities representing 5% or more of the combined voting power of the Voting
Stock of the Company or any Subsidiary or (iii) securities representing 5% or
more of the combined voting power of the Voting Stock (or in the case of a
Person which is not a corporation, 5% of the equity interest) of which is
beneficially owned or held by the Company or a Subsidiary. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
Agreement - As defined in Section 1.1.
Bank Debt - Indebtedness of the Company and its Subsidiaries to the
Banks under or pursuant to the Bank Loan Agreement, less the amount of any cash
in the Cash Collateral Account maintained pursuant to the Intercreditor
Agreement.
Bank Loan Agreement - The Amended, Modified and Restated Loan Agreement
with the Company dated as of March 15, 1991, as amended by First, Second, Third,
Fourth, Fifth, Sixth and Seventh Amendments and Waivers dated as of November 12,
1991, December 12, 1991, March 12, 1992, December 23, 1992, March 1, 1993, April
22, 1993, and July 9, 1993 and as proposed to be amended in the forms of
Exhibits E1 and E2 hereto, as further amended and modified from time to time.
Banks - The banks and other lending institutions from time to time party
to the Bank Loan Agreement.
Business Day - Any day, other than Saturday, Sunday or a legal holiday
or any other day on which banking institutions in Chicago, Illinois or New
York, New York generally are authorized to be closed.
Capitalized Lease - Any lease the obligation for Rentals with respect
to which, in accordance with generally accepted accounting principles, would be
required to be capitalized on a balance sheet of the lessee or for which the
amount of the asset and liability thereunder, as if so capitalized, would be
required to be disclosed in a note to such balance sheet.
Cash Equivalents - Investments with a stated maturity of 90 days or
less in (x) commercial paper which, at the time of acquisition, is accorded the
highest rating by Standard & Poor's Corporation or Moody's Investors Service,
Inc., (y) certificates of deposit of any commercial bank of recognized standing
with capital and surplus aggregating at least $100,000,000 and having
commercial paper so rated, and (z) direct obligations of the United States
government or its agencies.
Change of Control - (i) The acquisition, through purchase or otherwise
(including the agreement to act in concert without anything more), by any
Person or group of Persons (other than John G. Rangos, John G. Rangos, Jr. and
Alexander W. Rangos, individually or acting together) acting in concert,
directly or indirectly, in one or more transactions, of (x) beneficial
ownership or control of securities representing 50% or more of the combined
voting power of the Company's Voting Stock or (y) substantially all of the
assets of the Company or (ii) during any period of 25 or fewer consecutive
months individuals who at the beginning of such period were directors of the
Company (together with any replacement or additional directors whose election
was recommended by or who were elected by a majority of the directors then in
office) cease to constitute a majority of the board of directors of the
Company.
Charles City Letters of Credit - Collectively together with any
amendments, modifications, extensions, renewals or replacements thereof, those
letters of credit issued by NCNB National Bank of North Carolina (now known as
NationsBank of North Carolina, N.A.), as Issuing Bank, for the account of
Chambers Development of Virginia, Inc. in support of tax exempt variable rate
demand note obligations relating to the landfill facility in the County of
Charles City, Virginia, and being specifically identified as (i) letter of
credit no. 36905 issued March 28, 1990 in the original face amount of
$15,318,750, (ii) letter of credit no. 36653 issued December 6, 1989 in the
original face amount of $15,318,750, and (iii) letter of credit no. 38171
issued November 12, 1991 in the original face amount of $25,531,250.
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Code - As defined in Section 3.1(h).
Collateral Agent - The Collateral Agent appointed pursuant to the
Intercreditor Agreement.
Competitor - Any Person a substantial portion (more than 10% of such
Person's revenues, earnings or assets) of whose business is competitive with
one or more of the categories of the business of the Company and its
Subsidiaries as described in Section 6.12.
Consolidated Collateral Documents - As defined in the Intercreditor
Agreement.
Consolidated Current Assets and Consolidated Current Liabilities - As
of the date of any determination thereof, such assets and liabilities of the
Company and its Subsidiaries as shall be determined on a consolidated basis in
accordance with generally accepted accounting principles to constitute current
assets and current liabilities, respectively, including scheduled amortization
payments to be made on VRDN obligations (as defined in the Intercreditor
Agreement) and any commensurate pro rata payments owing to the Holders and the
11.95% Senior Noteholders relating thereto, but excluding (i) the reimbursement
obligations owed to the Banks, (ii) the scheduled mandatory prepayments on the
Notes and the 11.95% Senior Notes and the commensurate pro rata payments owing
in connection with such prepayments, and (iii) the approximately $29,000,000 of
current liabilities incurred in connection with the transactions described in
the Memorandum of Understanding attached as Annex VIII, which current
liabilities are set forth in the Analysis of Effect of Litigation Settlement
attached as Annex IX.
Consolidated Indebtedness - The consolidated Indebtedness of the
Company and its Subsidiaries determined in accordance with generally accepted
accounting principles.
Consolidated Tangible Net Worth - The consolidated stockholders' equity
of the Company and its Subsidiaries determined in accordance with generally
accepted accounting principles after elimination of minority interests, less,
without duplication, (i) the sum of all goodwill, trade names, trademarks,
patents, organization expense, unamortized debt discount and expense, deferred
costs and other similar intangibles properly classified as intangibles in
accordance with generally accepted accounting principles and (ii) securities of
the Company held in the treasury of the Company. Notwithstanding the
foregoing, Consolidated Tangible Net Worth for purposes of Section 7.4 shall be
determined without regard to the charge against retained earnings of up to
$74,000,000 resulting from the transactions described in the Memorandum of
Understanding attached as Annex VIII, the financial impact of which is
described in attached Annex IX.
Consolidated Working Capital - The excess of Consolidated Current
Assets over Consolidated Current Liabilities.
Default - Any default which, with the passage of time or the giving of
notice, or both, would constitute an Event of Default.
Determination Date - The day 3 days before the date fixed for a
prepayment pursuant to a notice required by Section 2.3 or the day 15 days
before the date of declaration pursuant to Section 8.2.
Disposition - As defined in Section 7.9.
Effective Date - As defined in Section 1.1.
11.95% Senior Note Agreement - The Note Purchase Agreement dated as of
November 15, 1988 between the Company and the institutions named therein, as
amended and modified by the Waiver and Amendment dated December 23, 1992, the
Extension of Waiver and Second Amendment, dated February 26, 1993 and the
Amended and Restated Note Purchase Agreement dated July 9, 1993 and as proposed
to be amended and modified by an Amended and Restated Note Purchase Agreement
in the form of the attached Exhibit F and as further amended and modified from
time to time.
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11.95% Senior Noteholders - The holders of the Company's 11.95% Senior
Notes due December 31, 1996.
11.95% Senior Notes - The outstanding 11.95% Senior Notes due December
31, 1996 of the Company issued pursuant to the 11.95% Senior Note Agreement.
Environmental Laws - All laws relating to environmental matters,
including those relating to (i) fines, orders, injunctions, penalties, damages,
contribution, cost recovery compensation, losses or injuries resulting from the
release or threatened release of hazardous materials and to the generation,
use, storage, transportation, or disposal of hazardous materials, in any manner
applicable to the Company or any of its Subsidiaries or any of their respective
properties, including, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. Section 9601 et seq.),
the Hazardous Material Transportation Act (49 U.S.C. Section 1801 et seq.),
the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.
"RCRA"), the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et
seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic
Substances Control Act (15 U.S.C. Section 2601 et seq. "TSCA"), the
Occupational Safety and Health Act (29 U.S.C. Section 651 et seq.), and the
Emergency Planning and Community Right-to-Know Act (42 U.S.C. Section 11001
et seq.), and (ii) environmental protection, including the National
Environmental Policy Act (42 U.S.C. Section 4321 et seq.), and comparable
local, state and foreign laws, each as amended or supplemented, and any similar
or analogous local, state, federal and foreign statutes and regulations
promulgated pursuant thereto, each as in effect as of the date of
determination.
ERISA - As defined in Section 3.1(h).
Event of Default - As defined in Section 8.1.
Excess Unrestricted Cash Balances - For any month, the Unrestricted
Cash Balances in excess of $40,000,000.
Exchange Act - The Securities Exchange Act of 1934, as amended, and as
it may be further amended from time to time.
Guaranties - All obligations (other than endorsements in the ordinary
course of business of negotiable instruments for deposit or collection) of a
Person guaranteeing or, in effect, guaranteeing any Indebtedness, dividend or
other obligation, of any other Person in any manner, whether directly or
indirectly, including, without limitation, all obligations incurred through an
agreement, contingent or otherwise, by such Person: (i) to purchase such
Indebtedness or obligation or any property or assets constituting security
therefor, (ii) to advance or supply funds (x) for the purchase or payment of
such Indebtedness or obligation, (y) to maintain working capital or other
balance sheet condition or otherwise to advance or make available funds for the
purchase or payment of such Indebtedness or obligation, (iii) to lease property
or to purchase securities or other property or services primarily for the
purpose of assuring the owner of such Indebtedness or obligation, or (iv)
otherwise to assure the owner of the Indebtedness or obligation against loss in
respect thereof. For the purposes of all computations made under this
Agreement, Guaranties in respect of any Indebtedness for borrowed money shall
be deemed to be Indebtedness equal to the principal amount of such Indebtedness
for borrowed money which has been guaranteed, and Guaranties in respect of any
other obligation or liability or any dividend shall be deemed to be
Indebtedness equal to the maximum aggregate amount of such obligation,
liability or dividend.
Guaranty - As defined in Section 4.6.
Holder - As defined in the introduction.
Indebtedness - Without duplication, (i) all items of borrowings,
including Capitalized Leases, which in accordance with generally accepted
accounting principles would be included in determining total liabilities as
shown on the liability side of a balance sheet as of the date at which
Indebtedness is to be determined, and
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(ii) all Guaranties (other than Guaranties of Indebtedness of a
Subsidiary by the Company), (iii) matured and unmatured reimbursement
obligations under letters of credit, (iv) matured and unmatured indemnity
obligations under surety bonds and (v) endorsements (other than of negotiable
instruments for collection or deposit in the ordinary course of business).
Institutional Holder - Any bank, trust company, insurance company,
pension fund, mutual fund or other similar financial institution, including,
without limiting the foregoing, any "qualified institutional buyer" within the
meaning of Rule 144A under the Securities Act, which is or becomes a Holder of
any Note.
Intercreditor Agreement - The Restated Collateral, Agency and
Intercreditor Agreement dated as of July 9, 1993 among the Company and its
Subsidiaries, the Holders, the Banks, the 11.95% Senior Noteholders and the
Collateral Agent named therein and as proposed to be amended and modified by an
Amended and Restated Collateral, Agency and Intercreditor Agreement in the form
of the attached Exhibit G and as further amended and modified from time to
time.
Investments - All investments made, in cash or by delivery of property,
directly or indirectly, in any Person, whether by acquisition of shares of
capital stock, indebtedness or other obligations or securities or by loan,
advance, capital contribution or otherwise; provided, however, that
"Investments" shall not mean or include routine investments in property to be
used or consumed in the ordinary course of business.
Lien - Any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind, including any agreement to grant any of the foregoing, any
conditional sale or other title retention agreement, any lease in the nature
thereof, and the filing of or agreement to file any financing statement under
the Uniform Commercial Code of any jurisdiction in connection with any of the
foregoing.
Make-Whole Amount - As of any Determination Date, to the extent that
the Reinvestment Yield on such Determination Date is lower than the interest
rate payable on or in respect of the Notes, the excess of (a) the present value
of the principal and interest payments to be foregone by any prepayment
(exclusive of accrued interest on such Notes through the date of prepayment) on
such Notes (taking into account the manner of application of such prepayment
required by Section 2.2(e)), determined by discounting (quarterly on the basis
of a 360-day year composed of twelve 30-day months) such payments at a rate
that is equal to the Reinvestment Yield over (b) the aggregate principal amount
of such Notes then to be prepaid or paid. To the extent that the Reinvestment
Yield on any Determination Date is equal to or higher than the interest rate
payable on or in respect of such Notes, the Make-Whole Amount is zero.
Mortgages - As defined in the Intercreditor Agreement.
Net Cash Flow from Operations - For any period, the difference between
cash receipts from operations and cash disbursements from operations,
calculated on a consolidated basis for the Company and its Subsidiaries as
provided in the attached Exhibit H.
Net Proceeds - The gross proceeds from any Disposition less (i)
reasonable and necessary expenses directly incurred in such sale, (ii) any
Indebtedness (other than Senior Debt and obligations under variable rate demand
notes or similar industrial revenue bonds) incurred by the Company or a
Subsidiary in connection with the acquisition of the assets subject to such
Disposition which the Company or such Subsidiary is required or elects to repay
substantially contemporaneously with such Disposition and (iii) amounts paid to
satisfy leases on such assets.
Non-Hazardous Waste - Any waste, substance or material, including ash,
except a hazardous or toxic waste, substance or material, as those terms are
defined in applicable Federal, state or local laws or regulations, including,
but not limited to RCRA and TSCA.
Note Register - As defined in Section 10.2.
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Notes - As defined in Section 1.1.
PBGC - As defined in Section 3.1(h).
Person - Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Plan - As defined in Section 3.1(h).
Pro Rata Share - The percentage of the aggregate outstanding principal
amount of Senior Debt represented by the aggregate outstanding principal amount
of the Notes, which is intended to be and remain 50.44%.
Qualified Investments - Any and all of the following Investments of
the Company and its Subsidiaries:
(i) Investments in the capital stock of
Subsidiaries;
(ii) Loans and advances by the Company to a
Subsidiary or loans and advances by a Subsidiary to the Company, which
are subordinated in right of payment to the Notes;
(iii) Investments in (x) commercial paper maturing
in 90 days or less from the date of issuance which, at the time of
acquisition, is accorded the highest rating by Standard & Poor's
Corporation or Moody's Investors Service, Inc., provided that no more
than $10,000,000 at any time shall be invested in commercial paper of
a single issuer, (y) certificates of deposit maturing within 90 days
from the date of issuance of banks with capital and surplus
aggregating at least $100,000,000 and having commercial paper so
rated, and (z) direct obligations of the United States government or
its agencies maturing within 90 days from the date of issuance;
(iv) Trade credit, loans and advances to
subcontractors and suppliers and advances to employees to meet
expenses incurred by such employees, in each case in the usual or
ordinary course of business consistent with past practice;
(v) Investments of trust funds held by trustees
of variable rate tax-exempt demand notes in tax-exempt securities
maturing within 6 months of the date of issuance and backed by a
letter of credit at least equal to the outstanding principal amount
thereof issued by a commercial bank whose long-term unsecured debt is
rated A or better by Standard & Poor's Corporation or Moody's
Investors Service, Inc.; and
(vi) Other Investments which in the aggregate do
not exceed 10% of Consolidated Tangible Net Worth as of the date of
determination.
In valuing Qualified Investments for purposes of this Agreement, such Qualified
Investments shall be taken at the original cost thereof, without allowance for
any subsequent write-offs or appreciation or depreciation therein, but less any
amount repaid or recovered on account of capital or principal.
Reclassification - As defined in paragraph (c) of Section 6.12.
Reclassified Waste - As defined in paragraph (c) of Section 6.12.
Reinvestment Yield - The sum of (i) 0.50% plus (ii) (A) the yield
reported, as of 10:00 A.M. (New York City time) on the Determination Date, on
the Cantor-Fitzgerald Brokerage Screen available on the Bloomberg and Knight
Ridder Information System (or, if not available, any other nationally recognized
trading screen reporting on-line intraday trading in United States government
securities) for actively traded U.S. Treasury securities having a maturity
equal to the Weighted Average Life to Maturity of the Notes then being prepaid
or paid as of the date of prepayment or payment, rounded to the nearest month,
or (B) if such yields are not reported as of such time or the yields reported as
of such time are not ascertainable in accordance with the preceding clause, then
the arithmetic mean of the yields published in the statistical release
designated H.15(519) (or any successor publication) of the Board of Governors of
the Federal Reserve System under the caption "U.S. Government Securities--
Treasury Constant Maturities" for the maturity corresponding to the remaining
Weighted Average Life to Maturity of the Notes as of the date of such
prepayment or payment, rounded to the
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nearest month. If no maturity exactly corresponding to such rounded
Weighted Average Life to Maturity shall appear therein, yields for the two most
closely corresponding published maturities (one of which occurs prior and the
other subsequent to the Weighted Average Life to Maturity) shall be calculated
pursuant to the foregoing sentence and the Reinvestment Yield shall be
interpolated from such yields on a straight-line basis (rounding in each of such
relevant periods, to the nearest month). For purposes of calculating the
Reinvestment Yield, the most recent weekly statistical release published prior
to the applicable Determination Date shall be used. In the event the statistical
release is not published, the arithmetic mean of such reasonably comparable
index as may be designated by the Holders of at least 51% in aggregate principal
amount of the Notes, for the maturity corresponding to the remaining Weighted
Average Life to Maturity of the Notes, as of the date of prepayment or payment,
as the case may be, rounded to the nearest month shall be used.
Reliance - Reliance Insurance Company, Reliance Insurance Company of
New York, Reliance National Indemnity Company, United Pacific Insurance Company
and United Pacific Insurance Company of New York, collectively.
Reliance Documents - The Underwriting and Continuing Indemnity
Agreement between the Company and its Subsidiaries and Reliance; the Equipment
and Landfill Utilization Agreement among the Company and its Subsidiaries,
Reliance and the Collateral Agent; the Security Agreement between the Company
and its Subsidiaries and Reliance; the Agreement Governing Disposition of
Contract Proceeds and Other Cash Collateral among the Company and its
Subsidiaries, Reliance and Mellon Bank, N.A.; the Stock Pledge Agreement
between the Company and its Subsidiaries and Reliance; the Pledge Agreement
between the Company and Reliance; and the Voting Trust Agreement among the
Company and its Subsidiaries, Reliance, Reliance Surety Company and the
Collateral Agent, each of such agreements being dated February 26, 1993, as any
or each of them may be modified or amended from time to time.
Reliance Intercreditor Agreement - The Intercreditor Agreement among
the Company and its Subsidiaries, Reliance and the Collateral Agent, as
modified or amended from time to time.
Rentals - As of the date of any determination thereof, all fixed
payments (including all payments which the lessee is obligated to make to the
lessor on termination of the lease or surrender of the property) payable by the
Company or a Subsidiary, as lessee or sublessee under a lease of real or
personal property, but exclusive of any amounts required to be paid by the
Company or a Subsidiary (whether or not designated as rents or additional
rents) on account of maintenance, repairs, insurance, taxes, assessments,
amortization and similar charges. Fixed rents under any so-called "percentage
leases" shall be computed on the basis of the minimum rents, if any, required
to be paid by the lessee, regardless of sales volume or gross revenues.
Securities Act - The Securities Act of 1933, as amended, and as it may
be further amended from time to time.
Security and Pledge Agreement - As defined in the Intercreditor
Agreement.
Senior Debt - The Notes, the 11.95% Senior Notes and the Bank Debt.
Subordinated Debt - Any unsecured Indebtedness of the Company which is
subordinate in right of payment to the Notes.
Subsidiary - Any corporation of which more than 50% of the outstanding
shares of Voting Stock are owned or controlled, directly or indirectly, by the
Company and/or one or more Subsidiaries.
Unrestricted Cash Balances - For any month, the sum of the cash and
Cash Equivalents of the Company and its Subsidiaries which are not subject to
contractual restrictions as to use at the end of each day during such month
divided by the number of days in such month. Except for the pledge of
$5,000,000 to Reliance pursuant to the Pledge Agreement dated as of February
26, 1993, the Lien of Reliance under the Reliance Documents shall not be deemed
to be a contractual restriction.
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Voting Stock - Capital stock of any class of a corporation having power
under ordinary circumstances to vote for the election of members of the board
of directors of such corporation, or persons performing similar functions
(whether or not at the time stock of any class shall have or might have special
voting powers or rights by reason of the happening of any contingency).
Weighted Average Life to Maturity - As applied to any prepayment of
principal of the Notes, or to any Subordinated Debt, at any date, the number of
years obtained by dividing (a) the then outstanding principal amount of the
Notes to be prepaid, or the then outstanding principal amount of such
Subordinated Debt, as the case may be, into (b) the sum of the products
obtained by multiplying (i) the amount of each then remaining installment,
sinking fund, serial maturity, or other required payment, including payment at
final maturity, foregone by such prepayment in the case of a prepayment of the
Notes or in respect of such Subordinated Debt, by (ii) the number of years
(calculated to the nearest 1/12th) which will elapse between such date and the
making of such payment.
Wholly-Owned - When applied to a Subsidiary, any Subsidiary 100% of the
Voting Stock of which is owned by the Company and/or its Wholly-Owned
Subsidiaries.
Terms which are defined in other Sections of this Agreement shall have
the meanings specified therein.
5.2. Accounting Principles. Where the character or amount of any
asset or liability or item of income or expense is required to be determined or
any consolidation or other accounting computation is required to be made for
the purposes of this Agreement, the same shall be done in accordance with
generally accepted accounting principles in force from time to time, except
where such principles are inconsistent with the requirements of this Agreement.
5.3. Valuation Principles. Except where indicated expressly to the
contrary by the use of terms such as "fair value," "fair market value" or
"market value," each asset, each liability and each capital item of any Person,
and any quantity derivable by a computation involving any of such assets,
liabilities or capital items, shall be taken at the net book value thereof for
all purposes of this Agreement. "Net book value" with respect to any asset,
liability or capital item of any Person shall mean the amount at which the same
is recorded or, in accordance with generally accepted accounting principles,
should have been recorded in the books of account of such Person, as reduced by
any reserves which have been or, in accordance with generally accepted
accounting principles, should have been set aside with respect thereto, but in
every case (whether or not permitted in accordance with generally accepted
accounting principles) without giving effect to any write-up, write-down or
write-off (other than any write-down or write-off the entire amount of which
was charged to consolidated net income or to a reserve which was a charge to
consolidated net income) relating thereto which was made after the date of this
Agreement.
5.4. Direct or Indirect Actions. Where any provision in this
Agreement refers to action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether the action
in question is taken directly or indirectly by such Person.
Section 6. AFFIRMATIVE COVENANTS
The Company agrees that, for so long as any amount remains unpaid on
any Note or pursuant to the Consolidated Collateral Documents:
6.1. Corporate Existence. The Company will maintain and preserve,
and will cause each Subsidiary to maintain and preserve, its corporate
existence and right to carry on its business and use, and cause each Subsidiary
to use, its best efforts to maintain, preserve, renew and extend all of its
rights, powers, privileges and franchises necessary to the proper conduct of
its business; provided, however, that the foregoing shall not prevent any
transaction permitted by Section 7.8 and provided further, that nothing in this
Section 6.1 shall prevent the termination of the corporate existence of any
Subsidiary if, in the opinion of the Board of Directors of the Company, such
termination is in the best interests of the Company, is not disadvantageous to
Holders of the Notes and is not otherwise prohibited by this Agreement.
6.2. Insurance. The Company will insure and keep insured at all
times all of its properties and all of its Subsidiaries' properties which are
of an insurable nature and of the character usually insured by companies
operating similar properties against loss or damage by fire and from other
causes customarily insured
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against by companies engaged in similar businesses in such amounts as are
usually insured against by such companies. The Company also will maintain for
itself and its Subsidiaries at all times adequate insurance against loss or
damage from such hazards and risks to the person and property of others as are
usually insured against by companies operating properties similar to the
properties of the Company and its Subsidiaries. All such insurance (other than
permitted self-insurance) shall be carried with financially sound and reputable
insurers accorded a rating of A- and VII or better by A.M. Best Company, Inc.,
unless any such insurance is not available on commercially reasonable terms from
an insurer so rated, in which case it shall be carried by a financially sound
and reputable insurer which in the opinion of the Company most closely
approximates the criteria necessary to obtain such rating. The Company may
self-insure (i) without limitation to the extent such self-insurance is fully
collateralized by cash or letters of credit and (ii) otherwise in amounts which,
in the aggregate, do not at any time exceed 13% of Consolidated Tangible Net
Worth. At no time will the Company's and its Subsidiaries' insurance be less
than that carried on the date hereof unless such insurance becomes unavailable.
A summary of insurance presently in force, including self-insurance and
deductibles, is contained in the attached Annex V.
6.3. Taxes, Claims for Labor and Materials. The Company will pay
and discharge when due, and will cause each Subsidiary to pay and discharge
when due, all taxes, assessments and governmental charges or levies imposed
upon it or its property or assets, or upon properties leased by it (but only to
the extent required to do so by the applicable lease), other than taxes which
individually and in the aggregate are not material in amount and the
non-payment of which would not have a material adverse effect on the business,
properties, operations or condition, financial or otherwise, of the Company and
its Subsidiaries taken as a whole, prior to the date on which penalties attach
thereto, and all lawful claims which, if unpaid, might become a Lien upon its
property or assets, provided that neither the Company nor any Subsidiary shall
be required to pay any such tax, assessment, charge, levy or claim, the payment
of which is being contested in good faith and by proper proceedings that will
stay the forfeiture or sale of any property and with respect to which adequate
reserves are maintained in accordance with generally accepted accounting
principles.
6.4. Maintenance of Properties. The Company will maintain,
preserve and keep, and will cause each Subsidiary to maintain, preserve and
keep, its properties (whether owned in fee or a leasehold interest) in good
repair and working order, ordinary wear and tear excepted, and from time to
time will make all necessary repairs, replacements, renewals and additions.
6.5. Maintenance of Records. The Company will keep, and will cause
each Subsidiary to keep, at all times proper books of record and account in
which full, true and correct entries will be made of all dealings or
transactions of or in relation to the business and affairs of the Company or
such Subsidiary, in accordance with generally accepted accounting principles
consistently applied throughout the period involved (except for such changes as
to consistency only as are disclosed in such financial statements or in the
notes thereto), and the Company will, and will cause each Subsidiary to,
provide reasonable protection against loss or damage to such books of record
and account.
6.6. Financial Information and Reports. The Company will furnish to
you and to any other Institutional Holder (in duplicate if you or such other
Holder so request and provided that only another Institutional Holder which is
not a Competitor shall be entitled to receive the information specified in
clause (ii) of paragraph (e) and paragraphs (j) and (m) of this Section 6.6),
the following:
(a) As soon as available and in any event within 50 days after the
end of each of the first three quarterly accounting periods of each fiscal year
of the Company, a condensed consolidated balance sheet of the Company and its
Subsidiaries as of the end of such period and condensed consolidated statements
of operations and cash flows of the Company and its Subsidiaries for the periods
beginning on the first day of such fiscal year and the first day of such
quarterly accounting period and ending on the date of such balance sheet,
setting forth in comparative form the corresponding condensed consolidated
statements of operations and cash flows for the corresponding periods of the
preceding fiscal year and the condensed consolidated balance sheet as of the end
of the preceding fiscal year, all in reasonable detail prepared in accordance
with generally accepted accounting principles consistently applied throughout
the period involved (except, as to consistency only, for changes disclosed in
such financial statements or in the notes thereto) and certified by the chief
financial officer or chief accounting officer of the Company (i) outlining the
basis of presentation, and (ii) stating that the information presented in such
statements presents fairly the financial position of the Company and its
Subsidiaries and the results of their operations for the period, subject to
customary year-end audit adjustments;
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(b) As soon as available and in any event within 95 days after the
last day of each fiscal year a consolidated balance sheet of the Company and
its Subsidiaries as of the end of such fiscal year and the related consolidated
statements of operations, stockholders' equity and cash flows for such fiscal
year, in each case setting forth in comparative form figures for the preceding
fiscal year, all in reasonable detail, prepared in accordance with generally
accepted accounting principles consistently applied throughout the period
involved (except, as to consistency only, for changes disclosed in such
financial statements or in the notes thereto) and accompanied by a report as to
the consolidated balance sheet and the related consolidated statements of
operations, stockholders' equity and cash flows of Deloitte & Touche or any
other firm of independent public accountants of recognized national standing
selected by the Company to the effect that such financial statements have been
prepared and present fairly, in all material respects, the financial position
of the Company and its Subsidiaries as of the end of such period and the
results of their operations and their cash flows for such fiscal year in
conformity with generally accepted accounting principles and that the
examination of such financial statements by such accounting firm has been made
in accordance with generally accepted auditing standards;
(c) Together with the financial statements delivered pursuant to
paragraphs (a) and (b) of this Section 6.6, a certificate or certificates of
the chief financial officer or chief accounting officer, (i) to the effect that
such officer has re-examined the terms and provisions of this Agreement and
that at the date of such certificate, during the periods covered by such
financial reports and as of the end of such periods, the Company is not, or was
not, in default in the fulfillment of any of the terms, covenants, provisions
and conditions of this Agreement and that no Default or Event of Default, is
occurring or has occurred as of the date of such certificate, during such
periods and as of the end of such periods, or if the signer is aware of any
such Default, or Event of Default, he shall disclose in such statement the
nature thereof, its period of existence and what action, if any, the Company
has taken or proposes to take with respect thereto and (ii) stating whether the
Company is in compliance with Section 6.12 and Sections 7.1 through 7.13 and
setting forth, in sufficient detail, the information and computations required
to establish whether or not the Company was in compliance with the requirements
of Sections 7.1 through 7.10 during the periods covered by the financial
reports then being furnished and as of the end of such periods and (iii)
setting forth a detailed schedule of capital expenditures made during such
period;
(d) Together with the financial reports delivered pursuant to
paragraph (b) of this Section 6.6, comparable unaudited financial information
on a line of business basis (which for purposes hereof shall be deemed to be
landfills and waste hauling);
(e) As soon as available and in any event within 10 Business Days
after the end of each month, a consolidated statement of cash receipts and
disbursements of the Company and its Subsidiaries for such month, which also
sets forth the Company's Unrestricted Cash Balances as of the last day of such
month, accompanied by (i) a certificate of the chief financial officer, the Vice
President-Finance or the Treasurer of the Company outlining the basis of
presentation and (ii) a listing for such month of the average daily volume and
net revenue per ton for each landfill site of the Company and its Subsidiaries;
(f) On the twenty-fifth day of each month (except at the end of a
fiscal quarter in which case 50 days after the end of such quarter), a condensed
consolidated balance sheet of the Company and its Subsidiaries as of the end of
the preceding month and condensed consolidated statement of operations of the
Company and its Subsidiaries for such month, certified by the chief financial
officer or the chief accounting officer of the Company (i) outlining the basis
for presentation and (ii) stating that the information presented in such
statements presents fairly the financial position of the Company and its
Subsidiaries and the results of their operations for such month in accordance
with generally accepted accounting principles (to the extent applicable to
interim financial statements), subject to customary year-end audit adjustments;
(g) Not less frequently than monthly, a status report on actual
and pending Dispositions;
(h) Within 15 days after the Company obtains knowledge thereof,
notice of any litigation not fully covered by insurance or any governmental
proceeding pending against the Company or any Subsidiary in which the damages
sought exceed $3,000,000 or which might reasonably be expected to otherwise
materially adversely affect the business, property, operations or condition,
financial or otherwise, of the Company and its Subsidiaries taken as a whole;
(i) As soon as available, copies of each financial statement,
notice, report and proxy statement which the Company shall furnish to its
stockholders; copies of each registration statement and periodic report which
the Company may file with the Securities and Exchange Commission, and any other
similar or successor agency of the Federal government administering the
Securities Act, the Exchange Act or the Trust Indenture Act of 1939, as
amended; without duplication, copies of each report (other than reports
relating solely to the
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issuance of, or transactions by others involving, its securities)
relating to the Company or its securities which the Company may file with any
securities exchange on which any of the Company's securities may be registered;
copies of any orders in any material proceedings to which the Company or any of
its Subsidiaries is a party, issued by any governmental agency, Federal or
state, having jurisdiction over the Company or any of its Subsidiaries; and,
except at such times as the Company is a reporting company under Section 13 or
15(d) of the Exchange Act or has complied with the requirements for the
exemption from registration under the Exchange Act set forth in Rule 12g-3-2(b),
such financial or other information as any Holders of the Notes or prospective
purchaser of the Notes may reasonably determine is required to permit such
Holders to comply with the requirements of Rule 144A under the Securities Act in
connection with the resale by such Holders of the Notes;
(j) As soon as available, a copy of each management letter, or
draft thereof, delivered to the Company by its independent public accountants,
a copy of any responses of the Company thereto and in any event a report
setting forth all actions taken by, and responses of the Company to, such
letters or drafts, and a copy of each other report submitted to the Company or
any Subsidiary by independent accountants retained by the Company or any
Subsidiary in connection with any interim or special audit made by them of the
books of the Company or any Subsidiary;
(k) As soon as available and in any event not later than January
31 of each year a copy of its business plan, including financial projections,
for such year;
(l) Concurrently with the delivery thereof, copies of any reports
delivered to Reliance, the Banks or the 11.95% Noteholders; and
(m) Such additional information as you or such other
Institutional Holders of the Notes may reasonably request concerning the Company
and its Subsidiaries.
6.7. Inspection of Properties and Records. The Company will allow,
and will cause each Subsidiary to allow, any representative of you or any other
Institutional Holder which is not a Competitor, so long as you or such other
Institutional Holder which is not a Competitor holds any Note, to visit and
inspect any of its properties, to examine its books of record and account and
to discuss its affairs, finances and accounts with its officers and its public
accountants (and by this provision the Company authorizes such accountants to
discuss with you or such Institutional Holder which is not a Competitor its
affairs, finances and accounts), all at such reasonable times and as often as
you or such Institutional Holder which is not a Competitor may reasonably
request and, if at the time thereof any Default or Event of Default has
occurred and is continuing, at the Company's expense.
6.8. ERISA. (a) The Company agrees that all assumptions and
methods used to determine the actuarial valuation of employee benefits, both
vested and unvested, under any Plan of the Company or any Subsidiary, and each
such Plan, whether now existing or adopted after the date hereof, will comply
in all material respects with ERISA and other applicable laws.
(b) The Company will not at any time permit any Plan established,
maintained or contributed to by it or any Subsidiary or "affiliate" (as defined
in Section 407(d)(7) of ERISA) to:
(i) engage in any "prohibited transaction" as
such term is defined in Section 4975 of the Code or in Section 406 of
ERISA;
(ii) incur any "accumulated funding deficiency" as
such term is defined in Section 302 of ERISA, whether or not waived;
or
(iii) be terminated under circumstances which are
likely to result in the imposition of a Lien on the property of the
Company or any Subsidiary pursuant to Section 4068 of ERISA, if and to
the extent such termination is within the control of the Company;
if the event or condition described in clauses (i), (ii) or (iii) above is
likely to subject the Company or any Subsidiary or ERISA affiliate to a
liability which, in the aggregate, is material in relation to the business,
property, operations, or condition, financial or otherwise, of the Company and
its Subsidiaries taken as a whole.
(c) Upon the request of you or any other Institutional Holder, the
Company will furnish a copy of the annual report of each Plan (Form 5500)
required to be filed with the Internal Revenue Service. Copies of annual
reports shall be delivered no later than 30 days after the later of the date
such report has been filed with the Internal Revenue Service or the date the
copy is requested.
(d) Promptly upon the occurrence thereof, the Company will give
you and each other Institutional Holder written notice of (i) a reportable
event with respect to any Plan; (ii) the institution of any steps by the
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Company, any Subsidiary, any ERISA affiliate, the PBGC or any other person to
terminate any Plan; (iii) the institution of any steps by the Company, any
Subsidiary, or any ERISA affiliate to withdraw from any Plan; (iv) a prohibited
transaction in connection with any Plan; (v) any material increase in the
contingent liability of the Company or any Subsidiary with respect to any
post-retirement welfare liability; or (vi) the taking of any action by the
Internal Revenue Service, the Department of Labor or the PBGC with respect to
any of the foregoing which, in any of the events specified above, would result
in any material liability of the Company or any of its Subsidiaries.
6.9. Compliance with Laws. (a) The Company will comply, and will
cause each Subsidiary to comply, with all laws, rules and regulations,
including Environmental Laws, relating to its or their respective businesses,
other than laws, rules and regulations the failure to comply with which or the
sanctions and penalties resulting therefrom, individually or in the aggregate,
would not have a material adverse effect on the business, properties,
operations, or condition, financial or otherwise, of the Company and its
Subsidiaries taken as a whole, and which would not result in the creation of a
Lien which, if incurred in the ordinary course of business, would not be
permitted by Section 7.6 on any of the property of the Company or any
Subsidiary; provided, however, that the Company and its Subsidiaries shall not
be required to comply with laws, rules and regulations the validity or
applicability of which are being contested by it or them in good faith and by
appropriate proceedings and as to which the Company has established adequate
reserves on its books.
(b) Promptly upon the occurrence thereof, the Company will give
you and each other Institutional Holder written notice of the institution of
any proceedings against, or the receipt of notice of potential liability or
responsibility of, the Company or any Subsidiary for violation, or the alleged
violation, of any Environmental Law which violation, individually or together
with all other alleged violations, could give rise to a material liability of
the Company and its Subsidiaries taken as a whole.
6.10. Acquisition of Notes. Neither the Company nor any Subsidiary
or Affiliate, directly or indirectly, will repurchase or offer to repurchase
any Notes unless the offer is made to repurchase Notes pro rata from all
Holders at the same time and on the same terms. The Company will forthwith
cancel any Notes in any manner or at any time acquired by the Company or any
Subsidiary or Affiliate and such Notes shall not be deemed to be outstanding
for any of the purposes of this Agreement or the Notes.
6.11. Reserved
6.12. Nature of Business. (a) Subject to paragraphs (b) through
(g) hereof, the Company will, and will cause each Subsidiary to, engage only in
the business of (i) Non-Hazardous Waste management (including recycling and
composting), (ii) incineration and disposal of Non-Hazardous Wastes, (iii)
transportation of Non-Hazardous Wastes, and (iv) operations ancillary to the
foregoing.
(b) Without reference to paragraphs (c) through (g) of this
Section 6.12, in the event of the acquisition by the Company or a Subsidiary of
a business an incidental portion of which (less than 25% of the assets and
revenues of such business and less than 5% of the consolidated revenues of the
Company and its Subsidiaries on a pro-forma basis) is not described in clauses
(i) through (iv) of paragraph (a) of this Section 6.12, the Company shall have
180 days from the date of such acquisition to discontinue or dispose of such
noncomplying activities before it shall be deemed to be in violation of this
Section 6.12. The Company shall give prompt written notice, but in any event
within 10 days of each event specified in clauses (i) and (ii) of paragraph (a)
of this Section 6.12, to each Holder of Notes of (i) any such acquisition,
specifying in reasonable detail the noncomplying activities and (ii) the
discontinuance or disposition of such noncomplying activities. This paragraph
(b) shall not be available for the acquisition of any business a greater than
incidental portion of which violates this Section 6.12.
(c) The reclassification to hazardous (a "Reclassification"), by
law or by any regulatory authority, of Non-Hazardous Waste ("Reclassified
Waste") being managed (which term shall be deemed to include incineration,
disposal, storage and transportation) by the Company or any of its Subsidiaries
or contracted to be managed by the Company or any of its Subsidiaries or with
respect to which the Company or any of its Subsidiaries has been issued a
permit to manage by a regulatory authority during the term of this Agreement
shall not be deemed a violation of this Section 6.12 if, immediately following
such Reclassification, (x) the Company's handling of such Reclassified Waste
complies in all material respects with all applicable permits, laws and
regulations and (y) the consolidated revenues produced from the management of
Reclassified Waste do not exceed 5% of the Company's consolidated revenues for
the twelve months ended as of the Company's most recently completed fiscal
quarter prior to the effective date of the Reclassification. The Company shall
give written notice of a Reclassification within 10 days of such
Reclassification.
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(d) If, as a result of a Reclassification, the consolidated
revenues produced from the management of Reclassified Waste exceed 5% of the
Company's consolidated revenues for the twelve months ended as of the end of
the most recently completed fiscal quarter prior to the effective date of the
Reclassification, the Company shall, within 30 days after the effective date of
such Reclassification, give written notice to each Holder of a Note of such
fact, specifying in reasonable detail the nature of such Reclassification and
the amount and percentage of consolidated revenues produced by the management
of Reclassified Waste. Such notice shall contain the written offer of the
Company to prepay, on a date specified in such notice which shall be a business
day not less than 160 nor more than 180 calendar days after the effective date
of such Reclassification, the entire principal amount of the Notes held by each
Holder at a price equal to 100% of the principal amount thereof plus accrued
interest to the date of prepayment and shall state that notice of acceptance of
the Company's offer to prepay under this Section 6.12(d) must be delivered to
the Company within 115 calendar days after receipt of the Company's notice.
Any Holder may revoke its acceptance of the Company's offer by written notice
to such effect delivered to the Company not less than 15 days prior to the date
fixed for prepayment. In the event the Company discontinues or disposes of a
sufficient portion of the Reclassified Waste management activities so that,
after giving effect thereto, the consolidated revenues produced from management
of the Reclassified Waste would be less than 5% of the Company's consolidated
revenues for the period specified in the first sentence of this paragraph (d),
the Company may revoke its prepayment offer by written notice to each Holder of
Notes not less than 5 days prior to the payment date specified in the offer,
which notice shall specify the actions taken and set forth the calculations of
consolidated revenues, and the Company's obligation to prepay the Notes shall
terminate.
(e) If, as result of a Reclassification, the consolidated revenues
produced from the management of Reclassified Waste exceed 25% of the Company's
consolidated revenues for the twelve months ended as of the end of the most
recently completed fiscal quarter prior to the effective date of the
Reclassification, the Company shall, within 30 days after the effective
date of such Reclassification, give written notice to each Holder of a Note of
such fact, specifying in reasonable detail the nature of such Reclassification
and the amount and percentage of consolidated revenues produced by the Company
and its Subsidiaries from the management of Reclassified Waste. Such notice
shall contain the written offer of the Company to prepay, on a date specified
in such notice which shall be a business day not less than 160 nor more than
180 calendar days after the effective date of such Reclassification, the entire
principal amount of the Notes held by each Holder at a price equal to 100% of
the principal amount thereof plus accrued interest to the date of prepayment
plus the Make-Whole Amount, and shall state that notice of acceptance of the
Company's offer to prepay under this Section 6.12(e) must be delivered to the
Company within 115 calendar days after receipt of the Company's notice. Any
Holder may revoke its acceptance of the Company's offer by written notice to
such effect delivered to the Company not less than 15 days prior the date fixed
for prepayment. In the event the Company discontinues or disposes of a
sufficient portion of the Reclassified Waste management activities so that
after giving effect thereto, the revenues produced from management of the
Reclassified Waste would be less than 5% of the Company's consolidated revenues
for the period specified in the first sentence of this paragraph (e), the
Company may revoke its prepayment offer by written notice to each Holder of
Notes not less than 5 days prior to the payment date specified in the offer,
which notice shall specify the actions taken and set forth the calculations of
consolidated revenues, and the Company's obligation to prepay the Notes shall
terminate.
(f) If as of the end of any fiscal quarter ending after a
Reclassification, the consolidated revenues produced from the management of
Reclassified Waste exceed 5% of the Company's consolidated revenues for the
twelve months then ended, the Company shall, not later than 30 days after the
end of such quarter, give written notice to each Holder of a Note of such fact,
specifying in reasonable detail the amount and percentage of consolidated
revenues produced from the management of Reclassified Waste. Such notice shall
contain the written, irrevocable offer of the Company to prepay, on a date
specified in such notice which shall be a business day not less than 160 nor
more than 180 calendar days after the end of such quarter, the entire principal
amount of the Notes held by each Holder at a price equal to 100% of the
principal amount thereof plus accrued interest to the date of prepayment and
shall state that notice of acceptance of the Company's offer to prepay under
this Section 6.12(f) must be delivered to the Company within 115 calendar days
after receipt of the Company's notice. Any holder may revoke its acceptance of
the Company's offer by written notice to such effect delivered to the Company
not less than 15 days prior to the date fixed for prepayment. In the event the
Company disposes or discontinues all Reclassified Waste management activities
within 150 days after the end of the fiscal quarter referred to in the first
sentence of this paragraph, the Company may revoke its prepayment offer by
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written notice to each Holder of Notes not less than 50 days prior to the
payment date specified in the offer, which notice shall specify the actions
taken, and the Company's obligation to prepay the Notes shall terminate.
(g) If as of the end of any fiscal quarter ending after a
Reclassification, the consolidated revenues produced from the management of
Reclassified Waste exceed 25% of the Company's consolidated revenues for the
twelve months then ended, the Company shall not later than 30 days after the
end of such quarter, give written notice to each Holder of a Note of such fact,
specifying in reasonable detail the amount and percentage of consolidated
revenues produced from the management of Reclassified Waste. Such notice shall
contain the written, irrevocable offer of the Company to prepay, on a date
specified in such notice which shall be a business day not less than 160 nor
more than 180 calendar days after the end of such quarter, the entire principal
amount of the Notes held by each Holder at a price equal to 100% of the
principal amount thereof plus accrued interest to the date of prepayment plus
the Make-Whole Amount, and shall state that notice of acceptance of the
Company's offer to prepay under this Section 6.12(g) must be delivered to the
Company within 115 calendar days after receipt of the Company's notice. Any
Holder may revoke its acceptance of the Company's offer by written notice to
such effect delivered to the Company not less than 15 days prior to the date
fixed for prepayment. In the event the Company disposes or discontinues all
Reclassified Waste management activities within 150 days after the end of the
fiscal quarter referred to in the first sentence of this paragraph, the Company
may revoke its prepayment offer by written notice to each holder of Notes not
less than 50 days prior to the payment date specified in the offer, which
notice shall specify the actions taken, and the Company's obligation to
prepay the Notes shall terminate.
6.13. Private Letter Rating. The Company shall cooperate with the
Holders and use its best efforts to obtain at its expense a private letter
rating on the Notes from either Moody's Investor Services, Inc. or Standard &
Poor's Corporation.
6.14. Valuation of Businesses. Upon the request of holders of
more than 50% in principal amount of the outstanding Notes and 11.95%
Senior Notes, treated as a single group, the Company, at its expense, shall
arrange promptly for the valuation of its landfills and other businesses by one
or more qualified independent appraisers reasonably acceptable to the holders
of at least 66-2/3% in aggregate principal amount of the outstanding Notes and
11.95% Senior Notes, treated as a single group, and promptly shall provide
copies of such valuations to each holder. The Company shall not be obligated
to arrange for such valuation more than twice during the term of this Agreement
and in no event in consecutive years.
Section 7. NEGATIVE COVENANTS
The Company agrees that, for so long as any amount remains unpaid on
any Note or pursuant to the Consolidated Collateral Documents:
7.1. Net Cash Flow from Operations. The Company will not permit
Net Cash Flow from Operations for any fiscal quarter to be less than 80% of the
amount of forecasted Net Cash Flow from Operations, as set forth in the
business plan dated October 7, 1994 and delivered pursuant to Section 6.6(k),
for each fiscal quarter of the Company ending after the Effective Date of this
Agreement, provided, however, that the Company shall not be deemed to be in
default of this covenant unless and until it fails to comply with its
undertakings for two consecutive fiscal quarters.
7.2. Working Capital. The Company will not permit Consolidated
Working Capital to be less than $25,000,000 at any time; provided, however,
that a reduction in Consolidated Working Capital below $25,000,000 for less
than 31 days due to a prepayment using Excess Unrestricted Cash Balances
pursuant to Section 2.2(b) shall not constitute a violation of this Section
7.2.
7.3. Capital Expenditures. The Company will not, and will not
permit any Subsidiary to, make in any year, or commit to make in such year,
aggregate expenditures for capital assets, construction or development
(exclusive of restricted trust funds used for such purpose and direct and
indirect costs capitalized in accordance with generally accepted accounting
principles), in excess of $48,300,000 for the year ending December 31, 1994 or
in excess of $38,000,000 in either of the years ending December 31, 1995 and
1996, measured on a cash basis.
7.4. Tangible Net Worth. The Company will not permit Consolidated
Tangible Net Worth at any time to be less than $100,000,000.
7.5. Indebtedness. The Company will not, and will not permit any
Subsidiary to, create, assume, incur, guarantee or otherwise become liable for,
directly or indirectly, any Indebtedness, other than:
(a) Indebtedness outstanding on the date of this Agreement which
is listed on the attached Annex III;
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(b) Extensions or renewals of Indebtedness referred to in
paragraph (a) of this 7.5 provided there is no increase in the outstanding
principal amount thereof or material change in the terms thereof;
(c) Additional Indebtedness representing unmatured indemnity
obligations under surety bonds issued for the benefit of the Company and its
Subsidiaries in the ordinary course of their businesses;
(d) Indebtedness to Reliance representing advances or loans by
Reliance to the Company and its Subsidiaries after the occurrence of a default
under the Reliance Documents; and
(e) Additional Indebtedness not in excess of $8,000,000 in
aggregate principal amount in connection with lease and/or purchase money
financing entered into or incurred after July 8, 1993 and prior to December 31,
1996, treating the aggregate Rentals due under leases which are not Capitalized
Leases as the principal amount thereof.
7.6. Liens. The Company will not, and will not permit any
Subsidiary to, create, assume, incur or permit to exist, directly or
indirectly, any Lien on its properties or assets, whether now owned
or hereafter acquired, except:
(a) Liens existing on property of the Company or any Subsidiary as
of the date of this Agreement that are described in the attached Annex II;
(b) Liens for taxes, assessments or governmental charges not then
due and delinquent or the validity of which is being contested in good faith
and as to which the Company has established adequate reserves on its books;
(c) Liens arising in connection with court proceedings, provided
the execution of such Liens is effectively stayed and such Liens are being
contested in good faith and as to which the Company has established adequate
reserves on its books;
(d) Liens arising in the ordinary course of business and not
incurred in connection with the borrowing of money, including encumbrances in
the nature of zoning restrictions, easements, rights and restrictions of record
on the use of real property, landlord's and lessor's liens in the ordinary
course of business, which do not materially interfere with the conduct of the
business of the Company and its Subsidiaries taken as a whole;
(e) Liens in the form of cash collateral securing indemnity
obligations under closure and post-closure surety bonds issued by sureties
other than Reliance for the benefit of the Company and its Subsidiaries in the
ordinary course of their businesses;
(f) Liens created pursuant to the Consolidated Collateral
Documents in favor of the Collateral Agent for the ratable benefit of the
holders of Senior Debt (including the Holders) and Liens otherwise permitted or
contemplated by the Consolidated Collateral Documents or the Reliance
Intercreditor Agreement in favor of Reliance; and
(g) Liens arising in connection with the incurrence of additional
Indebtedness pursuant to Section 7.5(e), provided such Lien does not extend to
any property other than that being financed or leased.
7.7. Restricted Payments. The Company will not, except as
hereinafter provided:
(a) declare or pay any dividends, either in cash or property, on
any shares of its capital stock of any class (except dividends or other
distributions payable solely in shares of capital stock of the Company);
(b) directly or indirectly, or through any Subsidiary, purchase,
redeem or retire any shares of its capital stock or any warrants, rights or
options to purchase or acquire any shares of its capital stock;
(c) make any other payment or distribution, either directly or
indirectly or through any Subsidiary, in respect of its capital stock;
(d) make any payment, either directly or indirectly or through any
Subsidiary, of principal of any Subordinated Debt other than at the expressed
maturity date thereof, scheduled mandatory prepayments or redemptions thereof
in accordance with the original terms of such Subordinated Debt and redemption
payments incidental to the optional redemption of convertible Subordinated Debt
at a time when the market price of the securities into which such Subordinated
Debt is convertible is higher than the conversion price; or
(e) make, or permit any Subsidiary to make, any Investment other
than a Qualified Investment.
7.8. Merger or Consolidation. The Company will not, and will not
permit any Subsidiary to, merge or consolidate with any other Person,
except that:
(a) Subject to the provisions of Section 2.2(c), the Company may
consolidate with or merge into any Person or permit any other Person to merge
into it, provided that the Holders of 66-2/3% or more in outstanding principal
amount of the Notes have approved such consolidation or merger and provided
further that immediately after giving effect thereto:
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(i) The Company is the successor corporation or,
if the Company is not the successor corporation, the successor
corporation is a solvent corporation organized under the laws of a
state of the United States of America or the District of Columbia and
shall expressly assume in writing the Company's obligations under the
Notes, this Agreement and the Consolidated Collateral Documents; and
(ii) There shall exist no Default or Event of Default; and
(b) Any Subsidiary may (i) merge into the Company or another
Wholly-Owned Subsidiary or (ii) sell, transfer or lease all or any part of its
assets to the Company or to another Wholly-Owned Subsidiary or (iii)
merge into any Person which, as a result of such merger, concurrently
becomes a Subsidiary, provided in each such instance that there shall
exist no Default or Event of Default.
7.9. Sale of Assets. The Company will not, and will not permit
any Subsidiary to, sell, lease, transfer or otherwise dispose of
(collectively a "Disposition") any assets (including capital stock of
Subsidiaries), in one or a series of transactions, other than in the ordinary
course of business, to any Person, except for (i) Dispositions of the assets
and businesses described in the attached Annex VI, (ii) Dispositions for cash
at fair market value of isolated assets resulting in cash proceeds to the
Company of not in excess of $1,000,000 in the aggregate annually, and (iii)
Dispositions of the Harrison County, Ohio landfill and the Atlanta, Georgia
collection and/or landfill operations. Dispositions described in the foregoing
clause (ii) shall not be subject to Section 2.2(b).
7.10. Disposition of Stock of Subsidiaries. The Company will not,
and will not permit any Subsidiary to, issue, sell or transfer the capital
stock of a Subsidiary if such issuance, sale or transfer would cause it to
cease to be a Subsidiary, unless (i) all shares of capital stock of such
Subsidiary and all Indebtedness of such Subsidiary owned by the Company and by
every other Subsidiary shall simultaneously be sold, transferred or otherwise
disposed of, (ii) such sale would not be prohibited under Section 7.9 and (iii)
such Subsidiary does not own any shares of capital stock or Indebtedness of the
Company or another Subsidiary.
7.11. Pro Rata Share. The Company will not, and will not permit any
Subsidiary to, take, or refrain from taking, any action the result of which
would be to change the Pro Rata Share except to the extent contemplated by the
last sentence of Sections 2.3(a) and (b).
7.12. Transactions with Affiliates. The Company will not, and will
not permit any Subsidiary to, enter into any transaction (including the
furnishing of goods or services) with an Affiliate except in the ordinary
course of business as presently conducted and on terms and conditions no less
favorable to the Company or such Subsidiary than would be obtained in a
comparable arm's-length transaction with a Person not an Affiliate.
7.13. Consolidated Tax Returns. The Company will not file, or
consent to the filing of, any consolidated Federal income tax return with any
Person other than a Subsidiary, except to the extent that the Company is
required under the Code to do otherwise.
7.14. Payments in Respect of Litigation. The Company will not, and
will not permit any Subsidiary to, pay any amount to any plaintiff or any
counsel to any plaintiff in connection with the litigation described in Annex
VIII. Payments to plaintiffs' attorneys of up to $10,000,000 under the
Company's directors and officers liability insurance policy, to be held in
escrow by such attorneys, shall not be deemed a violation of this provision.
Section 8. EVENTS OF DEFAULT AND REMEDIES THEREFOR
8.1. Nature of Events. An "Event of Default" shall exist if any
one or more of the following occurs:
(a) Default in the payment of interest when due on any of the
Notes or of any fees payable hereunder and continuance of such default for a
period of five days;
(b) Default in the payment of the principal of any of the Notes or
Make-Whole Amount, if any, at maturity, upon acceleration of maturity or at any
date fixed for prepayment;
(c) Default shall occur (i) in the payment of the principal of or
interest on any other Indebtedness of the Company or any Subsidiary as and when
due and payable (whether by lapse of time, declaration, call for redemption or
otherwise), (ii) under any mortgages, agreements or other instruments of the
Company or any Subsidiary under or pursuant to which Indebtedness is issued
(including but not limited to the Bank Loan Agreement and the 11.95% Senior
Note Agreement), or (iii) under any leases other than Capitalized Leases of the
Company or any Subsidiary regardless of whether such default would be an Event
of Default hereunder, and such defaults shall continue, unless waived, beyond
the period of grace, if any, allowed with respect thereto;
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(d) Default in the observance of any covenant or agreement
contained in Sections 6.14, 7.1 through 7.12, Section 7.14 or Section 8.7;
(e) Default in the observance or performance of any other covenant
or provision of this Agreement which is not remedied within 30 days;
(f) Default under any provision of any of the Registration
Agreement, Consolidated Collateral Documents or the Guaranty and continuance of
such default, unless waived beyond the period of grace, if any, allowed with
respect thereto; or if any of such documents shall no longer be binding on the
Company or its Subsidiaries or the Company or any Subsidiary shall disclaim the
binding effect of such documents;
(g) Default under any provision of the Reliance Documents and
continuance of such default beyond the period of grace, if any, allowed with
respect thereto;
(h) Except to the extent heretofore or herein waived, any
representation or warranty made by the Company or any Subsidiary in this
Agreement, the Registration Agreement, the Guaranty or the Consolidated
Collateral Documents or made by the Company or any Subsidiary in any written
statement or certificate furnished by the Company or any Subsidiary in
connection with the issuance and exchange of the Notes or furnished by the
Company or any Subsidiary pursuant to this Agreement, the Guaranty or the
Consolidated Collateral Documents, proves incorrect in any material respect as
of the date of the issuance or making thereof;
(i) Any judgment, writ or warrant of attachment or any similar
process in an aggregate amount in excess of $1,000,000 shall be entered or
filed against the Company or any Subsidiary or against any property or assets
of either and remain unpaid, unvacated, unbonded or unstayed (through appeal or
otherwise) for a period of 30 days after the Company or any Subsidiary receives
notice thereof;
(j) The Company or any Subsidiary shall incur a "Distress
Termination" (as defined in Title IV of ERISA) of any Plan or any trust created
thereunder which results in material liability to the PBGC, the PBGC shall
institute proceedings to terminate any Plan or any trust created thereunder, or
a trustee shall be appointed by a United States District Court pursuant to
Section 4042(b) of ERISA to administer any Plan or any trust created
thereunder;
(k) The Company or any Subsidiary, or their respective properties,
shall become subject to one or more Liens for costs or damages in excess of
$1,000,000, individually or in the aggregate, under any Environmental Law and
such Liens are not removed within 30 days; or
(l) The Company or any Subsidiary shall
(i) generally not pay its debts as they become
due or admit in writing its inability to pay its debts generally as
they become due;
(ii) file a petition in bankruptcy or for
reorganization or for the adoption of an arrangement under the Federal
Bankruptcy Code, or any similar applicable bankruptcy or insolvency
law, as now or in the future amended (herein collectively called
"Bankruptcy Laws"); file an answer or other pleading admitting or
failing to deny the material allegations of such a petition; fail to
file, within the time allowed for such purpose, an answer or other
pleading denying or otherwise controverting the material allegations
of such a petition; or file an answer or other pleading seeking,
consenting to or acquiescing in relief provided for under the
Bankruptcy Laws;
(iii) make an assignment of all or a substantial
part of its property for the benefit of its creditors;
(iv) seek or consent to or acquiesce in the
appointment of a receiver, liquidator, custodian or trustee of it or
for all or a substantial part of its property;
(v) be finally adjudicated a bankrupt or
insolvent;
(vi) be subject to the entry of a court order,
appointing a receiver, liquidator, custodian or trustee of it or for
all or a substantial part of its property, or for relief pursuant to
an involuntary case brought under, or effecting an arrangement in,
bankruptcy or for a reorganization pursuant to the Bankruptcy Laws or
for any other judicial modification or alteration of the rights of
creditors; or
(vii) be subject to the assumption of custody or
sequestration by a court of competent jurisdiction of all or a
substantial part of its property, which custody or sequestration shall
not be suspended or terminated within 60 days from its inception.
8.2. Remedies on Default. When any Event of Default described
in paragraphs (a) through (k) inclusive of Section 8.1 has happened and is
continuing, the Holders of at least 25% in aggregate principal amount of the
Notes then outstanding may by notice to the Company declare the entire
principal amount of,
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together with the Make-Whole Amount (to the extent permitted by law),
and all interest accrued on all Notes to be, and such Notes shall thereupon
become, forthwith due and payable, without any presentment, demand, protest or
other notice of any kind, all of which are expressly waived. Notwithstanding
the foregoing, (i) when any Event of Default described in paragraphs (a), (b)
or (c) of Section 8.1 has happened and is continuing, any Holder may by notice
to the Company declare the entire principal amount of, together with the
Make-Whole Amount (to the extent permitted by law), and all interest accrued on
the Notes then held by such Holder to be, and such Notes shall thereupon
become, forthwith due and payable, without any presentment, demand, protest or
other notice of any kind, all of which are expressly waived and (ii) when any
Event of Default described in clauses (i) through (vii) of paragraph (l) of
Section 8.1 has happened, then the entire principal amount of, together with
the Make-Whole Amount (to the extent permitted by law) and all interest accrued
on all outstanding Notes shall immediately become due and payable without
presentment, demand or notice of any kind. Upon the Notes or any of them
becoming due and payable as aforesaid, the Company will forthwith pay to the
Holders of such Notes the entire principal of and interest accrued on such
Notes, plus the Make-Whole Amount (to the extent permitted by law) which shall
be calculated on the Determination Date.
8.3. Annulment of Acceleration of Notes. The provisions of
Section 8.2 are subject to the condition that if the principal of, Make-Whole
Amount and accrued interest on the Notes have been declared immediately due
and payable by reason of the occurrence of any Event of Default described in
paragraphs (a) through (k), inclusive, of Section 8.1, the Holder or Holders
of 66-2/3% in aggregate principal amount of the Notes then outstanding may, by
written instrument filed with the Company, rescind and annul such declaration
and the consequences thereof, provided that (i) at the time such declaration
is annulled and rescinded no judgment or decree has been entered for the
payment of any monies due pursuant to the Notes, this Agreement, the Guaranty
or the Consolidated Collateral Documents, (ii) all arrears of interest upon
all the Notes and all other sums payable under the Notes, under this Agreement
(except any principal, interest or Make-Whole Amount on the Notes which has
become due and payable solely by reason of such declaration under Section 8.2),
the Guaranty and under the Consolidated Collateral Documents shall have been
duly paid and (iii) each and every other Event of Default shall have been
cured or waived; and provided further, that no such rescission and annulment
shall extend to or affect any subsequent Default or Event of Default or
impair any right consequent thereto.
8.4. Other Remedies. If any Event of Default shall be continuing,
any Holder of Notes may enforce its rights by suit in equity, by action at law,
or by any other appropriate proceedings, whether for the specific performance
(to the extent permitted by law) of any covenant or agreement contained in this
Agreement or in the Notes or in aid of the exercise of any power granted in
this Agreement, and may enforce the payment of any Note held by such Holder and
any of its other legal or equitable rights.
8.5. Conduct No Waiver; Collection Expenses. No course of dealing
on the part of any Holder of Notes, nor any delay or failure on the part of any
Holder of Notes to exercise any of its rights, shall operate as a waiver of such
rights or otherwise prejudice such Holder's rights, powers and remedies. If the
Company fails to pay, when due, the principal of, Make-Whole Amount or the
interest on, any Note, or fails to comply with any other provision of this
Agreement, the Company will pay to each Holder, to the extent permitted by law,
on demand, such further amounts as shall be sufficient to cover the cost and
expenses, including but not limited to reasonable attorneys' fees, incurred by
such Holders of the Notes in collecting any sums due on the Notes or in
otherwise enforcing any of their rights.
8.6. Remedies Cumulative. No right or remedy conferred upon or
reserved to any Holder of Notes under this Agreement is intended to be
exclusive of any other right or remedy, and every right and remedy shall be
cumulative and in addition to every other right or remedy given under this
Agreement or now or hereafter existing under any applicable law. Every right
and remedy given by this Agreement or by applicable law to any Holder of Notes
may be exercised from time to time and as often as may be deemed expedient by
such Holder, as the case may be.
8.7. Notice of Default. With respect to Defaults or Events of
Default, the Company will give the following notices:
(a) The Company promptly, but in any event within 5 days, will
furnish to each Holder written notice of the occurrence of a Default or an
Event of Default. Such notice shall specify the nature of such default, the
period of existence thereof and what action the Company has taken or is taking
or proposes to take with respect thereto.
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(b) If the Holder of any Note or of any other evidence of
Indebtedness of the Company or any Subsidiary gives any notice or takes any
other action with respect to a claimed default, the Company will forthwith give
written notice thereof to each Holder of the then outstanding Notes, describing
the notice or action and the nature of the claimed default.
Section 9. AMENDMENTS, WAIVERS AND CONSENTS
9.1. Matters Subject to Modification. Any term, covenant,
agreement or condition of this Agreement may, with the consent of the Company,
be amended, or compliance therewith may be waived (either generally or in a
particular instance and either retroactively or prospectively), if the Company
shall have obtained the consent in writing of the Holder or Holders of at least
66-2/3% in aggregate principal amount of outstanding Notes; provided, however,
that, without the written consent of the Holder or Holders of all of the Notes
then outstanding, no such waiver, modification, alteration or amendment shall
be effective which will (i) change the time of payment (including any required
prepayment) of the principal of or the interest on any Note, (ii) reduce the
principal amount thereof or the Make-Whole Amount, if any, or reduce the rate
of interest thereon, (iii) change any provision of any instrument affecting the
preferences among Holders of the Notes or between Holders of the Notes and
other creditors of the Company, or (iv) change any of the provisions of Section
8.1, Section 8.2, Section 8.3 or this Section 9.
For the purpose of determining whether Holders of the requisite
principal amount of Notes have made or concurred in any waiver, consent,
approval, notice or other communication under this Agreement, Notes held in the
name of, or owned beneficially by, the Company, any Subsidiary or any Affiliate
thereof, shall not be deemed outstanding.
9.2. Solicitation of Holders of Notes. The Company will not
solicit, request or negotiate for or with respect to any proposed waiver or
amendment of any of the provisions of this Agreement or the Notes unless each
Holder of the Notes (irrespective of the amount of Notes then owned by it)
shall concurrently be informed thereof by the Company and shall be afforded the
opportunity of considering the same and shall be supplied by the Company with
sufficient information to enable it to make an informed decision with respect
thereto. Executed or true and correct copies of any waiver or consent effected
pursuant to the provisions of this Section 9 shall be delivered by the Company
to each Holder of outstanding Notes forthwith following the date on which the
same shall have been executed and delivered by the Holder or Holders of the
requisite percentage of outstanding Notes. The Company will not, directly or
indirectly, pay or cause to be paid any remuneration, whether by way of
supplemental or additional interest, fee or otherwise, to any Holder of the
Notes as consideration for or as an inducement to the entering into by any
Holder of the Notes of any waiver or amendment of any of the terms and
provisions of this Agreement unless such remuneration is concurrently paid, on
the same terms, ratably to each Holder of the then outstanding Notes.
9.3. Binding Effect. Any such amendment or waiver shall apply
equally to all the Holders of the Notes and shall be binding upon them, upon
each future Holder of any Note and upon the Company whether or not such Note
shall have been marked to indicate such amendment or waiver. No such amendment
or waiver shall extend to or affect any obligation not expressly amended or
waived or impair any right related thereto.
Section 10. FORM OF NOTES, REGISTRATION, TRANSFER, EXCHANGE AND REPLACEMENT
10.1. Form of Notes. The Notes to be delivered under this Agreement
will be in the form of fully registered Notes in the form attached as Exhibit
A. The Notes are issuable only in fully registered form and in denominations
of at least $100,000 (or the remaining outstanding balance thereof, if less
than $100,000).
10.2. Note Register. The Company shall cause to be kept at its
principal office a register (the "Note Register") for the registration and
transfer of the Notes. The names and addresses of the Holders of Notes, the
transfer thereof and the names and addresses of the transferees of the Notes
shall be registered in the Note Register. The Company may deem and treat the
Person in whose name a Note is so registered as the Holder and owner thereof
for all purposes and shall not be affected by any notice to the contrary, until
due presentment of such Note for registration of transfer as provided in this
Section 10.
10.3. Issuance of New Notes upon Exchange or Transfer. Upon
surrender for exchange or registration of transfer of any Note (including any
Outstanding Note) at the office of the Company designated for notices in
accordance with Section 11.2, the Company shall execute and deliver, at its
expense, one or more new Notes of any authorized denominations requested by the
Holder of the surrendered Note (including any Outstanding Note), each dated the
date to which interest has been paid on the Notes so surrendered (or, if no
interest has been paid, the date of such surrendered Note), but in the same
aggregate unpaid principal amount as such surrendered Note (including any
Outstanding Note), and registered in the name of such Person or Persons
27
<PAGE> 29
as shall be designated in writing by such Holder. Every Note (including any
Outstanding Note) surrendered for registration of transfer shall be duly
endorsed, or be accompanied by a written instrument of transfer duly executed,
by the Holder of such Note or by his attorney duly authorized in writing. The
Company may condition its issuance of any new Note (other than upon surrender
of an Outstanding Note) in connection with a transfer by any Person on
compliance with Section 3.2, by Institutional Holders on compliance with
Section 2.5 and on the payment to the Company of a sum sufficient to cover any
stamp tax or other governmental charge imposed in respect of such transfer.
10.4. Replacement of Notes. Upon receipt of evidence satisfactory
to the Company of the loss, theft, mutilation or destruction of any Note
(including any Outstanding Note), and in the case of any such loss, theft or
destruction upon delivery of a bond of indemnity in such form and amount as
shall be reasonably satisfactory to the Company or in the event of such
mutilation upon surrender and cancellation of the Note (including any
Outstanding Note), the Company, without charge to the Holder thereof, will make
and deliver a new Note, of like tenor in lieu of such lost, stolen, destroyed
or mutilated Note (including any Outstanding Note). If any such lost, stolen
or destroyed Note (including any Outstanding Note) is owned by you or any other
Institutional Holder, then the affidavit of an authorized officer of such owner
setting forth the fact of loss, theft or destruction and of its ownership of
the Note (including any Outstanding Note) at the time of such loss, theft or
destruction shall be accepted as satisfactory evidence thereof, and no further
indemnity shall be required as a condition to the execution and delivery of a
new Note, other than a written agreement of such owner (in form reasonably
satisfactory to the Company) to indemnify the Company.
Section 11. MISCELLANEOUS
11.1. Expenses. Whether or not the transactions herein contemplated
shall be consummated, the Company agrees to pay directly all reasonable
expenses in connection with the preparation, execution and delivery of this
Agreement, the Guaranty and the Consolidated Collateral Documents and the
transactions contemplated thereby, including, but not limited to, out-of-pocket
expenses, filing fees of Standard & Poor's Corporation in connection with
obtaining a private placement number, charges and disbursements of special
counsel, photocopying and printing costs and charges for shipping the Notes,
adequately insured, to you at your home office or at such other address as you
may designate, and all similar expenses (including the fees and expenses of
counsel) relating to any amendments, waivers or consents in connection with
this Agreement, the Notes, the Guaranty or the Consolidated Collateral
Documents, including, but not limited to, any such amendments, waivers or
consents resulting from any work-out, renegotiation or restructuring relating
to the performance by the Company of its obligations under this Agreement, the
Guaranty, the Consolidated Collateral Documents and the Notes. The Company
also agrees that it will pay and save you harmless against any and all
liability with respect to stamp and other documentary taxes, if any, which may
be payable, or which may be determined to be payable in connection with the
execution and delivery of this Agreement, the Guaranty, the Consolidated
Collateral Documents, the Registration Agreement, the Notes or the Common
Shares (but not in connection with a transfer of any Notes or any Common
Shares), whether or not any Notes are then outstanding. The obligations of
the Company under this Section 11.1 shall survive the retirement of the Notes.
11.2. Notices. Except as otherwise expressly provided herein, all
communications provided for in this Agreement shall be in writing and
delivered or sent by registered or certified mail, return receipt
requested, or by overnight courier (i) if to you, to the address set forth
below your name in Annex I, or to such other address as you may in writing
designate, (ii) if to any other Holder of the Notes, to such address as the
Holder may designate in writing to the Company, and (iii) if to the Company, to
Chambers Development Company, Inc., 10700 Frankstown Road, Pittsburgh,
Pennsylvania 15235, or to such other address as the Company may in writing
designate.
11.3. Reproduction of Documents. This Agreement and all documents
relating hereto, including, without limitation, (i) consents, waivers and
modifications which may hereafter be executed, (ii) documents received by you
at the closing, and (iii) financial statements, certificates and other
information previously or hereafter furnished to you, may be reproduced by you
by any photographic, photostatic, microfilm, micro-card, miniature photographic
or other similar process, and you may destroy any original document so
reproduced. The Company agrees and stipulates that any such reproduction which
is legible shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and that any enlargement, facsimile or further reproduction
of such reproduction shall likewise be admissible in evidence; provided that
nothing herein contained shall preclude the Company from objecting to the
admission of any reproduction on the basis that such reproduction is not
accurate, has been altered or is otherwise incomplete.
28
<PAGE> 30
11.4. Successors and Assigns. This Agreement will inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns.
11.5. Law Governing. This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois. No provision
of this Agreement may be waived, changed or modified, or the discharge thereof
acknowledged, except by an agreement in writing signed by the party against
whom the enforcement of any waiver, change, modification or discharge is
sought.
11.6. Headings. The headings of the sections and subsections of
this Agreement are inserted for convenience only and do not constitute a part
of this Agreement.
11.7. Counterparts. This Agreement may be executed simultaneously
in one or more counterparts, each of which shall be deemed an original, but all
such counterparts shall together constitute one and the same instrument, and it
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart or reproduction thereof permitted by Section
11.3.
11.8. Reliance on and Survival of Provisions. All covenants,
representations and warranties made by the Company herein and in any
certificates delivered pursuant to this Agreement, the Guaranty, the
Registration Agreement, or the Consolidated Collateral Documents, whether or
not in connection with a closing, (i) shall be deemed to have been relied upon
by you, notwithstanding any investigation heretofore or hereafter made by you
or on your behalf and (ii) shall survive the delivery of this Agreement and the
Notes.
11.9. Reliance Documents. The Company and the Holders agree that
the Reliance Documents and the Reliance Intercreditor Agreement remain in full
force and effect without modification by this Agreement. The Holders confirm
that, as between the Holders and Reliance, in the event of any conflict between
this Agreement, the Guaranty or the Consolidated Collateral Documents on the
one hand and the Reliance Intercreditor Agreement on the other hand, the
Reliance Intercreditor Agreement shall govern.
11.10. Waiver. Upon the effectiveness of this Agreement the Defaults
and Events of Default described in Annex VII are waived; provided that the
Company shall have provided to the Holders not later than the fifth Business
Day after the effectiveness of this Agreement copies of each of the
financial statements, certificates and schedules referred to in Item 3 of such
Annex.
11.11. Integration and Severability. This Agreement, the Guaranty,
the Registration Agreement and the Consolidated Collateral Documents embody the
entire agreement and understanding between you and the Company, and supersedes
all prior agreements and understandings relating to the subject matter hereof.
In case any one or more of the provisions contained in this Agreement, the
Guaranty, the Registration Agreement, or the Consolidated Collateral Documents
or in any Note, or application thereof, shall be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained in this Agreement, the Guaranty, the
Registration Agreement, and the Consolidated Collateral Documents and in any
Note, and any other application thereof, shall not in any way be affected or
impaired thereby.
29
<PAGE> 31
IN WITNESS WHEREOF, the Company and the Purchasers have caused this
Agreement to be executed and delivered by their respective officer or officers
thereunto duly authorized.
CHAMBERS DEVELOPMENT COMPANY, INC.
By: /s/ John G. Rangos
----------------------------
Its: Chairman and CEO
----------------------------
KEMPER INVESTORS LIFE INSURANCE
COMPANY
By: /s/ H. E. Guenther
----------------------------
Its: Authorized Signatory
----------------------------
By: /s/ F. Collecchia
----------------------------
Its: Authorized Signatory
----------------------------
LUMBERMENS MUTUAL CASUALTY
COMPANY
By: /s/ H. E. Guenther
----------------------------
Its: Authorized Signatory
----------------------------
By: /s/ F. Collecchia
----------------------------
Its: Authorized Signatory
----------------------------
FEDERAL KEMPER LIFE ASSURANCE
COMPANY
By: /s/ H. E. Guenther
----------------------------
Its: Authorized Signatory
----------------------------
By: /s/ F. Collecchia
----------------------------
Its: Authorized Signatory
----------------------------
30
<PAGE> 32
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
By: /s/ James Pendergast
----------------------------
Its: Investment Officer
----------------------------
EQUITABLE VARIABLE LIFE INSURANCE
COMPANY
By:
Its:
IDS LIFE INSURANCE COMPANY
By: /s/ Lorraine R. Hart
----------------------------
Its: Vice President, Investments
----------------------------
IDS LIFE INSURANCE COMPANY OF
NEW YORK
By: /s/ Lorraine R. Hart
----------------------------
Its: Vice President, Investments
----------------------------
AMERICAN ENTERPRISE LIFE INSURANCE
COMPANY
By: /s/ Lorraine R. Hart
----------------------------
Its: Vice President, Investments
----------------------------
THE MUTUAL LIFE INSURANCE COMPANY
OF NEW YORK
By: /s/ Suzanne E. Walton
----------------------------
Its: Managing Director
----------------------------
31
<PAGE> 33
THE MUTUAL LIFE INSURANCE COMPANY
OF NEW YORK, for the account of
a Separate Account
By: /s/ Suzanne E. Walton
----------------------------
Its: Managing Director
-----------------------------
MONY LIFE INSURANCE COMPANY OF
AMERICA
By: /s/ Suzanne E. Walton
-----------------------------
Its: Managing Director
-----------------------------
MONY LEGACY LIFE INSURANCE COMPANY
By: THE MUTUAL LIFE INSURANCE
COMPANY OF NEW YORK, its
successor by merger
By: /s/ Suzanne E. Walton
----------------------------
Its: Managing Director
-----------------------------
MONUMENTAL LIFE INSURANCE COMPANY
By: /s/ Gregory W. Theobald
-----------------------------
Its: Vice President and Assistant Secretary
---------------------------------------
FIRST AUSA LIFE INSURANCE COMPANY
By: /s/ Gregory W. Theobald
-----------------------------
Its: Vice President and Assistant Secretary
---------------------------------------
32
<PAGE> 34
PFL LIFE INSURANCE COMPANY
By: /s/ Gregory W. Theobald
-----------------------------
Its: Vice President and Assistant Secretary
---------------------------------------
BANKERS UNITED LIFE ASSURANCE
COMPANY
By: /s/ Gregory W. Theobald
-----------------------------
Its: Vice President and Assistant Secretary
---------------------------------------
BANKERS UNITED LIFE ASSURANCE COMPANY AS
THE SUCCESSOR TO GENERAL SERVICES LIFE
INSURANCE COMPANY
By: /s/ Gregory W. Theobald
-----------------------------
Its: Vice President and Assistant Secretary
---------------------------------------
AID ASSOCIATION FOR LUTHERANS
By: /s/ James Abitz
-------------------------
Its: Vice President - Securities
----------------------------
By: /s/ R. Jerry Scheel
--------------------------
Its: Second Vice President - Securities
-------------------------------------
JEFFERSON-PILOT LIFE INSURANCE
COMPANY
By: /s/ Robert E. Whalen, II
-------------------------------
Its: Second Vice President
------------------------------
33
<PAGE> 35
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Michael P. Hermsen
------------------------------
Its: Second Vice President
------------------------------
AMERICAN FAMILY MUTUAL INSURANCE
COMPANY
By: /s/ Phillip Hannifan
---------------------------
Its: Investment Director
----------------------------
AMERICAN FAMILY LIFE INSURANCE
COMPANY
By: /s/ Phillip Hannifan
---------------------------
Its: Investment Director
----------------------------
ON BEHALF OF THE CANADA LIFE
ASSURANCE COMPANY--MORGAN
GUARANTY TRUST COMPANY OF NEW
YORK AS TRUSTEE -- INCE & CO.
By:
Its:
GREAT-WEST LIFE & ANNUITY INSURANCE
COMPANY
By: /s/ Julie Bock
-----------------------------
Its: Manager, Private Placement Investments
----------------------------------------
By: /s/ Wayne T. Hoffmann
--------------------------------
Its: Vice President, Private Placement
----------------------------------------
FIDELITY AND GUARANTY LIFE
INSURANCE COMPANY
By: /s/ Richard P. Campagna
-------------------------------
Its: Vice President - Treasurer
----------------------------------
34
<PAGE> 36
SAFECO LIFE INSURANCE COMPANY
By: /s/ Ronald Spaulding
----------------------------
Its: Vice President
---------------------------
MODERN WOODMEN OF AMERICA
By: /s/ J. V. Standaert
---------------------------
Its: National Secretary
----------------------------
PAN-AMERICAN LIFE INSURANCE
COMPANY
By: /s/ Luis Ingles, Jr.,
-------------------------------
Its: Senior Vice President - Investments
----------------------------------------
AMERICAN LIFE & CASUALTY INSURANCE
COMPANY
By: /s/ Gary F. Greaves
------------------------------
Its: A.V.P. of Conseco Capital Management
-------------------------------------
as Investment Advisor
---------------------
By:
Its:
35
<PAGE> 37
WEST AMERICAN INSURANCE COMPANY
By: /s/ Richard B. Kelly
-----------------------------
Its: Senior Investment Officer
-----------------------------
THE CHASE MANHATTAN BANK, N.A.
as Trustee
By: /s/ A. K. Crain
---------------------------
Name: A. K. Crain
--------------
Title: 2VP
-------
36
<PAGE> 1
EXHIBIT 99
USA
Waste Services, Inc.
FOR IMMEDIATE RELEASE
UW #94-13
Contacts:
USA Waste Services, Inc.
Earl E. DeFrates
(214) 233-4212
Chambers Development Company, Inc.
Jim Leonard (Media)
412-244-7560
Lew Nevins (Financial Community)
412-244-6195
USA WASTE SERVICES AND CHAMBERS DEVELOPMENT COMPANY
ANNOUNCE DEFINITIVE MERGER AGREEMENT
Dallas, Texas (November 28, 1994)--USA Waste Services, Inc.
(NYSE--"UW") and Chambers Development Company, Inc. (AMEX: "CDVA/CDVB") jointly
announced today the execution of a definitive agreement providing for the
merger of Chambers into USA Waste. Under the terms of the merger agreement, USA
Waste will issue 0.41667 shares of its common stock for each share of Chambers'
Class A common stock and common stock outstanding, subject to certain
adjustments. In the aggregate, USA Waste will issue approximately 27.8 million
shares of its common stock in connection with the merger. Based on USA Waste's
closing price on November 25, 1994, of $14.00 and taking into account Chambers'
existing indebtedness, the transaction has a total value of approximately $725
million.
As a result of the merger, USA Waste will be the fourth largest solid
waste company in North America, with annual revenues of approximately $450
million. It will have operations in 21 states, including 25 municipal solid
waste landfills with permitted capacity in excess of 340 million cubic yards of
air space, 37 collection companies and 13 transfer stations.
- more -
<PAGE> 2
The management team will be led by John E. Drury of USA Waste, as
Chairman and Chief Executive Officer. Donald F. Moorehead, Jr., of USA Waste
and John G. Rangos, Sr., of Chambers, will serve as Vice-Chairmen of the Board
of Directors. Mr. Moorehead will also function as USA Waste's Chief Development
Officer. David Sutherland-Yoest, USA Waste's President and Chief Operating
Officer, and Earl E. DeFrates, USA Waste's Chief Financial Officer, will
continue to serve in their current positions. Alexander W. Rangos will serve as
a Board member and will join USA Waste as Executive Vice President.
"Chambers has some of the finest landfill assets in North America,"
said Mr. Drury, "and we believe the combination of the two companies will
provide significant benefits to both shareholder groups. Our strong waste
collection operations coupled with Chambers' exceptional landfill properties
will provide significant operating leverage to the combined asset base."
John Rangos, Sr., Chambers' Chairman and Chief Executive Officer,
stated, "The combination of Chambers and USA Waste creates a strong, vibrant
entity that is capable of participating in the continuing consolidation that is
occurring in the solid waste industry. I believe this merger will serve the
best interests of our respective shareholders."
The closing of the merger is subject to, among other things, the
receipt by each party of an opinion from its investment banking firm relating
to the financial fairness of the merger to its shareholders, approval of both
companies' shareholders, appropriate assurances as to the treatment of the
merger as a tax free reorganization accounted for as a pooling of interests,
Hart Scott-Rodino clearance, final settlement of certain litigation
- more -
<PAGE> 3
affecting Chambers, and certain other conditions. If the conditions to the
closing of the merger are satisfied, the merger is expected to be consummated
in approximately six months.
In connection with the merger agreement, USA Waste has received proxies
from certain of Chambers' shareholders authorizing USA Waste to vote such
shares in favor of the merger. The shares covered by these proxies represent a
majority of the total voting rights outstanding.
Chambers has also received proxies from certain of USA Waste's
shareholders authorizing Chambers to vote such shares in favor of the merger.
On November 19, 1994, Chambers announced that it had executed memoranda
of understanding relating to the settlement of its long-standing class action
litigation and had recorded a third quarter charge of approximately $74 million
to provide for such settlement.
USA Waste Services, headquartered in Dallas, Texas, is a rapidly
growing, non-hazardous solid waste management company, performing both waste
collection and disposal services in multiple locations nationwide.
Chambers Development Company, headquartered in Pittsburgh,
Pennsylvania, is a leading environmental services firm involved in landfill,
transfer station and recycling operations, as well as the collection,
transportation and hauling of residential, commercial, non-hazardous industrial
and medical wastes.
