SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended FEBRUARY 29, 1996 or
-----------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to ____________
Commission file number 1-11016
ALLWASTE, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 74-2427167
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
5151 SAN FELIPE, SUITE 1600
HOUSTON, TEXAS 77056-3609
(Address of Principal Executive Offices) (Zip Code)
(713) 623-8777
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
The number of shares of Common Stock of the Registrant, par value $.01 per
share, outstanding at April 9, 1996 was 39,771,029.
REPORT INDEX
PART AND ITEM NO. PAGE NO.
- ----------------- --------
PART I - Financial Information
Item 1 - Financial Statements
General Information ............................................. 1
Condensed Consolidated Balance Sheets as of
February 29, 1996 (unaudited) and August 31, 1995 .............. 2
Condensed Consolidated Statements of Operations
for the Six and Three Months Ended February 29, 1996
and February 28, 1995 (unaudited) .............................. 3
Condensed Consolidated Statements of Cash Flows
for the Six Months Ended February 29, 1996 and
February 28, 1995 (unaudited) .................................. 4
Notes to Condensed Consolidated Financial
Statements (unaudited) ......................................... 5
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations .................. 8
PART II - Other Information
Item 4 - Submission of Matters to a Vote of
Security Holders .............................................. 11
Item 6 - Exhibits and Reports on Form 8-K ......................... 12
PART I, FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
GENERAL INFORMATION
The Condensed Consolidated Financial Statements herein have been
prepared by the Company without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission (the "SEC"). As applicable under such
regulations, certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. The Company believes that the
presentation and disclosures herein are adequate to make the information not
misleading, and the financial statements reflect all elimination entries and
normal adjustments which are necessary for a fair statement of the results for
the six and three months ended February 29, 1996 and February 28, 1995.
Operating results for interim periods are not necessarily indicative of
the results for full years. It is suggested that these condensed consolidated
financial statements be read in conjunction with the consolidated financial
statements for the year ended August 31, 1995 and the related notes thereto
included in the Company's Annual Report on Form 10-K filed with the SEC.
-1-
ALLWASTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
February 29, August 31,
1996 1995
--------- ---------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents ............................................................ $ 2,625 $ 4,029
Receivables, net ..................................................................... 75,695 80,065
Prepaid expenses ..................................................................... 4,870 3,609
Deferred taxes and other current assets .............................................. 10,604 10,216
--------- ---------
Total current assets ............................................................ 93,794 97,919
--------- ---------
INVESTMENTS .............................................................................. 10,619 --
PROPERTY AND EQUIPMENT ................................................................... 245,897 230,291
Less -- Accumulated depreciation ..................................................... (109,824) (99,193)
--------- ---------
136,073 131,098
--------- ---------
GOODWILL, net ............................................................................ 88,114 88,122
NOTES RECEIVABLE AND OTHER ASSETS ........................................................ 15,200 8,943
NET ASSETS OF DISCONTINUED OPERATIONS .................................................... -- 46,151
--------- ---------
Total assets .................................................................... $ 343,800 $ 372,233
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable ..................................................................... $ 18,558 $ 28,737
Accrued liabilities
Income taxes payable ........................................................... 3,261 2,595
Other .......................................................................... 38,142 36,291
Current maturities of long-term and convertible subordinated debt .................... 5,263 3,371
--------- ---------
Total current liabilities ....................................................... 65,224 70,994
--------- ---------
LONG-TERM DEBT ........................................................................... 98,243 120,535
CONVERTIBLE SUBORDINATED DEBT ............................................................ 39,485 41,972
DEFERRED INCOME TAXES AND OTHER LIABILITIES .............................................. 9,296 10,441
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock ......................................................................... 397 396
Additional paid-in capital ........................................................... 55,461 54,958
Unearned compensation related to outstanding restricted stock ........................ (656) --
Retained earnings .................................................................... 78,866 73,999
Treasury stock ....................................................................... (2,516) (1,062)
--------- ---------
Total shareholders' equity ..................................................... 131,552 128,291
--------- ---------
Total liabilities and shareholders' equity ..................................... $ 343,800 $ 372,233
========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
-2-
ALLWASTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
For the Six Months Ended For the Three Months Ended
-------------------------- ---------------------------
February 29, February 28, February 29, February 28,
1996 1995 1996 1995
--------- --------- --------- ---------
(Restated) (Restated)
<S> <C> <C> <C> <C>
REVENUES ........................................................... $ 188,076 $ 161,024 $ 88,278 $ 78,433
COST OF OPERATIONS ................................................. 142,673 117,275 69,619 57,530
--------- --------- --------- ---------
Gross profit ................................................. 45,403 43,749 18,659 20,903
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ....................... 39,332 32,264 19,384 16,226
INTEREST EXPENSE ................................................... (4,821) (3,600) (2,410) (1,851)
INTEREST INCOME .................................................... 493 199 234 83
OTHER INCOME (EXPENSE), net ........................................ 728 (71) 528 (55)
--------- --------- --------- ---------
Income (loss) from continuing operations before
income tax (provision) benefit and minority interest ....... 2,471 8,013 (2,373) 2,854
INCOME TAX (PROVISION) BENEFIT ..................................... (1,137) (3,697) 994 (1,377)
MINORITY INTEREST, net of taxes .................................... 24 117 22 30
--------- --------- --------- ---------
Income (loss) from continuing operations ..................... 1,358 4,433 (1,357) 1,507
Discontinued Operations
Income from glass recycling operations,
net of applicable income taxes ...................... -- 1,619 -- 825
Gain on sale of glass recycling operations,
net of applicable income taxes ...................... 3,764 -- -- --
--------- --------- --------- ---------
Net income (loss) .................................... $ 5,122 $ 6,052 $ (1,357) $ 2,332
========= ========= ========= =========
NET INCOME (LOSS) PER COMMON SHARE:
Continuing operations ........................................ $ .03 $ .12 $ (.03) $ .04
Discontinued operations ...................................... .10 .04 -- .02
--------- --------- --------- ---------
Net income (loss) per common share ................... $ .13 $ .16 $ (.03) $ .06
========= ========= ========= =========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING ............... 39,361 38,558 39,237 38,479
========= ========= ========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
-3-
ALLWASTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
For the Six Months Ended
-------------------------------
February 29, February 28,
1996 1995
-------- --------
(Restated)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ...................................................................... $ 5,122 $ 6,052
Reconciliation of net income to cash provided by operating activities -
Depreciation and amortization .............................................. 15,814 13,359
Gain on sale of glass recycling operations ................................. (3,764) --
Gain on sale of property and equipment ..................................... (556) (105)
Unearned compensation - restricted stock ................................... 48 --
Change in assets and liabilities, net of effect of acquisitions
accounted for as purchases -
Receivables, net ................................................ 3,741 275
Prepaid expenses and other current assets ....................... (649) 1,315
Notes receivable and other assets ............................... 116 562
Accounts payable and accruals ................................... (11,098) (2,776)
Deferred income taxes and other liabilities ..................... (4,378) 580
-------- --------
Cash provided by operating activities ................................. 4,396 19,262
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuances of common stock ......................................... 424 1,051
Proceeds from borrowings ........................................................ 77 5,135
Principal payments on borrowings ................................................ (23,192) (614)
Purchases of common stock ....................................................... (2,800) --
-------- --------
Cash provided by (used in) financing activities ....................... (25,491) 5,572
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of glass recycling operations ................................ 41,500 --
Additions to property and equipment ............................................. (19,718) (24,126)
Purchase of investment .......................................................... (2,619) --
Proceeds from sale of property and equipment .................................... 1,714 1,032
Payments for acquisitions accounted for as purchases, net of cash acquired ...... (1,034) (1,696)
Cash provided by discontinued operations ........................................ -- 379
-------- --------
Cash provided by (used in) investing activities ....................... 19,843 (24,411)
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ...................................................... (152) (401)
-------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ..................................... (1,404) 22
CASH AND CASH EQUIVALENTS, beginning of period ....................................... 4,029 3,020
-------- --------
CASH AND CASH EQUIVALENTS, end of period ............................................. $ 2,625 $ 3,042
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
-4-
ALLWASTE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) Significant Accounting Policies --
The Condensed Consolidated Financial Statements include the accounts of
Allwaste, Inc. and its subsidiaries (the "Company"). There have been no
significant changes in the accounting policies of the Company during the periods
presented. For a description of these policies, see Note 1 of Notes to
Consolidated Financial Statements in the Company's Annual Report on Form 10-K
for the year ended August 31, 1995. Prior period amounts in the Condensed
Consolidated Financial Statements and Notes to Condensed Consolidated Financial
Statements have been restated to reflect the Company's glass recycling
operations as a discontinued operation, as discussed in Note 7. Additionally,
certain prior period amounts have been reclassified to conform with the current
period presentation.
(2) Acquisitions and Investments --
During the first six months of fiscal year 1996, the Company completed
three business acquisitions accounted for using the purchase method for
consideration of $1.3 million in cash and promissory notes. Additionally, the
Company made a minority investment of $2.6 million in preferred stock, common
stock and common stock warrants of a company that provides leak sealing and
valve restoration services. Such investment is accounted for using the cost
method and classified as "Investments" in the accompanying Condensed
Consolidated Balance Sheets. See Note 7 for further discussion regarding
investments.
(3) Income Taxes --
With respect to continuing operations, income tax provisions for interim
periods are estimated based upon projections of the annual effective tax rates.
Certain assumptions have been made in this regard in projecting the effective
tax rate for fiscal 1996, the outcome of which may not be resolved until the end
of the fiscal year. The effective tax rate of 46% for the six months ended
February 29, 1996 reflects the estimated U.S. federal and state income taxes and
foreign taxes on the earnings of the Company's foreign subsidiaries.
Deferred tax assets and liabilities are determined based on the
estimated future tax effects of differences between the financial statement and
tax bases of assets and liabilities. On the accompanying Condensed Consolidated
Balance Sheets, deferred tax assets and liabilities are netted within each tax
jurisdiction. The following table sets forth the gross deferred tax assets
(liabilities) recorded (in thousands):
February 29, August 31,
1996 1995
------------ --------------
Current deferred tax assets $ 8,450 $ 8,512
Non-current deferred tax assets 5,053 5,003
Valuation allowance (1,230) (1,156)
------------ --------------
Total deferred tax assets 12,273 12,359
------------ --------------
Current deferred tax liabilities -- --
Non-current deferred tax liabilities (13,599) (14,998)
------------ --------------
Total deferred tax liabilities $ (13,599) (14,998)
------------ --------------
Net deferred tax liabilities $ (1,326) $ (2,639)
============ ==============
-5-
The components of the net deferred tax assets (liabilities) are as
follows (in thousands):
February 29, August 31,
1996 1995
------------ ------------
Depreciation and amortization $ (13,072) $ (12,807)
Financial reserves and accruals
not yet deductible 11,746 10,168
------------ ------------
Total $ (1,326) $ (2,639)
============ ============
(4) Net Income (Loss) Per Common Share --
Net income per common share for the six months ended February 29, 1996
and for the three and six months ended February 28, 1995 have been computed
based on the weighted average number of shares of common stock and assumed the
exercise of dilutive stock option shares. The calculation of fully-diluted
weighted average shares outstanding is not materially different from the primary
calculation. Net loss per common share for the three months ended February 29,
1996 has been computed based on the weighted average number of shares of common
stock outstanding and did not assume the exercise of stock option shares. The
following table presents the primary weighted average number of shares
outstanding for the six and three months ended February 29, 1996 and February
28, 1995 (in thousands):
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE THREE MONTHS ENDED
----------------------------- -------------------------------
February 29, February 28, February 29, February 28,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Common shares outstanding, beginning
of fiscal period 39,359 37,741 39,359 37,741
Weighted average number of common
shares outstanding:
Stock options, treasury stock method 95 342 0 215
Purchased companies 24 558 25 559
Exercise of stock options 78 167 117 214
Purchases of common stock (195) (250) (264) (250)
------ ------ ------ ------
Total weighted average common shares
outstanding 39,361 38,558 39,237 38,479
====== ====== ====== ======
</TABLE>
(5) Long-Term Debt --
The Company has a revolving credit agreement to provide an unsecured
$160 million revolving credit line to the Company through January 31, 1999, at
which time any outstanding borrowings convert to a term loan due in equal
quarterly installments through January 31, 2003. As of April 9, 1996, the
Company had unutilized borrowing capacity under the agreement of $22.3 million
after utilizing $28.8 million of the facility for letters of credit to secure
certain insurance obligations and performance bonds. Borrowing availability is
subject to the Company maintaining certain minimum financial ratios.
-6-
(6) Incentive Plan --
On October 26, 1995, the Company's Board of Directors adopted a limited
incentive plan (the "Plan") for certain key employees ("Participants") of the
Company. Under this plan, each Participant that purchases shares of AWI common
stock, based on a designated percentage of his annual salary (the "Qualifying
Shares"), is granted a number of shares of restricted stock equal to two times
the number of Qualifying Shares purchased by the Participant. On completion of
the purchase by a Participant, the Compensation Committee may, in its discretion
and under the Company's Amended and Restated 1989 Replacement Non-qualified
Stock Option Plan, grant to such Participant an option to purchase a number of
shares of common stock equal to four times the number of Qualifying Shares
purchased by the Participant. Shares of common stock issued under this Plan are
treasury shares. At February 29, 1996, 153,680 shares of restricted stock and
options to purchase 340,248 shares of common stock have been issued to
Participants.
The market value of shares awarded under this plan was $703,725 at
February 29, 1996. These amounts were recorded as unearned compensation -
restricted stock and are shown as a separate component of Shareholders' Equity.
Unearned compensation is being amortized to expense over the vesting period and
amounted to $47,700 in the six month period ended February 29, 1996.
(7) Discontinued Operations --
In September 1995, the Company sold its glass recycling operations to a
company formed by Equus II Incorporated ("Equus"), a Houston-based,
publicly-traded business development company. In January 1996, the Company and
Equus reached an agreement in principle with respect to certain post-closing
issues which were unresolved on the date of the sales transaction. The total
consideration, as adjusted, was $56.1 million, including $41.5 million in cash,
$8.0 million of 6.5% redeemable Series A preferred stock payable in 2002, and a
$6.6 million 11% subordinated note receivable due in 2002. The preferred stock,
which is included in "Investments" in the accompanying Condensed Consolidated
Balance Sheets, and notes receivable obtained as consideration are payable by
Strategic Materials Holdings, Inc. ("SMH"), an affiliate of Equus. The Company
also received warrants to purchase shares of SMH common stock, providing the
Company the right to own up to approximately 33% of the outstanding stock of
SMH. The Company may receive additional consideration in the form of an
adjustment to the purchase price in the event that Equus' internal rate of
return, as defined, exceeds certain predetermined targets. The amount of such
additional consideration, if any, is not presently determinable. The Company
recorded a gain of $3.8 million, net of estimated applicable income taxes of
$1.6 million in the first quarter of fiscal 1996, on the sale of its glass
recycling operations. The recorded gain and applicable income taxes are
estimates which are subject to the finalization of certain post-closing issues,
including the agreement discussed above. Revenues of the glass recycling
operations, net of intercompany sales, were $32.3 million and $15.2 million for
the six and three months ended February 28, 1995, respectively.
-7-
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
For supplemental information, it is suggested that "Management's
Discussion and Analysis of Financial Condition and Results of Operations" be
read in conjunction with the corresponding section included in the Company's
Annual Report on Form 10-K for the year ended August 31, 1995. The following
information has been restated for all periods discussed to exclude the Company's
discontinued glass recycling operations.
SIX MONTHS AND THREE MONTHS ENDED FEBRUARY 29, 1996 AND
FEBRUARY 28, 1995
REVENUES - The Company's consolidated revenues increased by 17% and 13%
for the six and three months ended February 29, 1996, respectively, compared to
the corresponding periods in fiscal 1995. Of the Company's total revenue growth,
approximately $8.1 million and $220,000 for the six month and three month
periods ended February 29, 1996, respectively, was internally-generated. The
following is a summary of revenues by major service line (in thousands):
<TABLE>
<CAPTION>
For the Six Months Ended For the Three Months Ended
--------------------------------- ---------------------------------
February 29, February 28, February 29, February 28,
1996 1995 1996 1995
--------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
ON-SITE INDUSTRIAL AND WASTE MANAGEMENT
SERVICES
Hydroblasting and gritblasting $ 35,252 $ 28,914 $ 15,796 $ 13,266
Air-moving and liquid vacuuming 33,714 29,554 15,787 13,872
Dredging and dewatering 9,652 11,111 4,095 5,049
Other 25,214 18,090 11,295 9,021
-------------- ------------- ------------- --------------
Subtotal 103,832 87,669 46,973 41,208
-------------- ------------- ------------- --------------
CONTAINER SERVICES 23,302 24,893 11,732 12,460
EXCAVATION AND SITE REMEDIATION SERVICES 21,892 15,857 10,562 7,625
TRANSPORTATION, ROLL-OFF AND TANK RENTAL
SERVICES 18,163 21,449 8,682 11,195
ALL OTHER SERVICES 20,887 11,156 10,329 5,945
-------------- ------------- ------------- --------------
Total $ 188,076 $ 161,024 $ 88,278 $ 78,433
============== ============= ============= ==============
</TABLE>
On-site industrial and waste management services revenues increased
$16.2 million or 18% and $5.8 million or 14% in the six and three months ended
February 29, 1996, respectively, as compared with the corresponding periods in
fiscal 1995. Hydroblasting and gritblasting revenues increased $6.3 million or
22% in the six-month period, and $2.5 million or 19% in the three-month period.
These increases are primarily due to increased tank cleaning and other related
services provided to the refining and petrochemical industry in the United
States and to the offshore oil and gas exploration and production industry in
the Gulf of Mexico. Hydroblasting and gritblasting services performed for the
electric utility industry also increased significantly. Air-moving and liquid
vacuuming revenues increased $4.2 million or 14% in the six-month period, and
$1.9 million or 14% in the three-month period primarily in the pulp and paper
and refining industries. Approximately 90% or $3.8 million and $1.7 million of
the six and three month increases in this service line is attributable to
acquisition growth. The remaining increase is primarily due to increased sales
in the Pacific and Southeast areas of the United States. Dredging and dewatering
revenues decreased $1.5 million or 13% for the six-month period and $1.0 million
or 19% for the three-month period, due to a decline in activity related to these
services along the Pacific coast and the downsizing of the dredging service line
in the Southeastern United States. The increase in other on-site industrial and
waste management services revenues of $7.1 million or 39% in the six-month
period, and $2.3 million or 25% in the three-month period, is primarily due to
increases in labor services, chemical cleaning and chemical disposal.
-8-
Container services revenues decreased $1.6 million or 6% in the
six-month period and $728,000 or 6% in the three-month period ended February 29,
1996, compared with the corresponding periods in fiscal year 1995. Wastewater
revenues decreased $1.3 million or 24% in the six-month period and $846,000 or
29% in the three-month period, primarily due to a nonrecurring project that
positively impacted the prior year periods. An increase in intermediate bulk
container ("IBC") cleaning revenue of $314,000 and $161,000 in the six-month and
three-month periods was attributable to expansion of IBC service capabilities at
existing facilities and increased sales to two major customers
Excavation and site remediation services revenues increased $6.0 million
or 38% and $2.9 million or 39% in the six-month and three-month periods compared
to the same periods in fiscal 1995 due primarily to increased market penetration
in the Louisiana pulp and paper industry, increases in mining and environmental
remediation services and a significant public works contract in Alabama.
Transportation, roll-off and tank rental services revenues decreased
$3.3 million or 15% and $2.5 million or 22% in the six-month and three-month
periods compared to the same periods in fiscal 1995. These decreases are
primarily attributable to lower volumes in hauling services in Louisiana,
Georgia and Alabama and declines in related roll-off box rentals in Texas.
The Company's 15 other industrial service lines had aggregate revenue
increases of $9.7 million or 87% and $4.4 million or 74% in the six and three
months ended February 29, 1996, respectively, as compared with the corresponding
periods in fiscal 1995. These increases primarily resulted from increases in
sewer restoration services, a new service line offered as a result of an
acquisition in May 1995.
GROSS PROFIT MARGINS - Consolidated gross profit, as a percentage of
revenues ("gross margin"), decreased 3% to 24% for the six months and 6% to 21%
for the three months ended February 29, 1996, respectively, compared with the
corresponding periods in the prior year. The decline is a result of a higher
volume of lower-margin subcontract work primarily in excavation and site
remediation and transportation service lines and lower margins in the container
service line due to reduced revenue levels.
SELLING, GENERAL AND ADMINISTRATIVE ("SG&A") EXPENSES - SG&A expenses
increased $7.1 million or 22% and $3.2 million or 19% for the six and three
months ended February 29, 1996, respectively, compared with the same periods in
1995. Incremental SG&A from purchase acquisitions completed subsequent to
September 1, 1994 contributed approximately $3.2 million or 45% and $1.6 million
or 51% of the increase for the six and three month periods. Approximately $1.0
million of the increase for the six months and $461,000 in the three months
ended February 29, 1996 is attributable to costs associated with the Company's
restructuring plan and cost-reduction initiative which resulted in a nationwide
staff reduction, the consolidation of field offices, the realignment of certain
management functions and the implementation of other significant cost-reduction
and efficiency-enhancing initiatives. The Company anticipates savings as a
result of the restructuring and cost-reduction initiative to begin affecting
income in the third quarter of the current fiscal year.
INTEREST AND OTHER INCOME (EXPENSE) - Interest expense increased by $1.2
million and $559,000 during the six and three months ended February 29, 1996,
respectively, as compared with the same periods in fiscal 1995, primarily due to
higher average interest rates than in the corresponding prior year periods.
Interest income and other income (expense), net, increased $1.1 million in the
six-month period and $734,000 in the three-month period, respectively, as a
result of interest earned on the 11% subordinated note receivable and dividends
earned on the 6.5% redeemable Series A preferred stock received from the sale of
the glass recycling operations and dividends earned on the Company's investment
in a leak sealing and valve restoration services company.
INCOME TAXES - The effective income tax rates for the six months ended
February 29, 1996 and February 28, 1995 were 46%, while the tax rates for the
three months ended February 29, 1996 and February 28, 1995 were 42% and 48%,
respectively. The effective tax rates were higher than the statutory Federal
rate of 35% primarily due to the effect of the nondeductibility of a portion of
meal and entertainment expenses, the nondeductible amortization of a portion of
the Company's goodwill, state income taxes and Canadian earnings which are taxed
at a higher statutory rate.
-9-
LIQUIDITY AND CAPITAL RESOURCES
For the six-months ended February 29, 1996, operating activities
provided cash of $4.4 million through net earnings of $5.1 million partially
offset by the gain on sale of the glass recycling division of $3.8 million.
Financing activities utilized cash of $25.5 million, primarily due to the
repayment of long-term debt. Investing activities provided cash of $19.8
million, primarily from the proceeds on the sale of the glass recycling division
partially offset by capital expenditures of $19.7 million.
At February 29, 1996, the Company had cash and cash equivalents of $2.6
million, and working capital of $28.6 million. The Company has been able to
finance its cash requirements through its cash flow from operations and bank
borrowings. The Company's credit facility provides an unsecured $160 million
revolving line of credit to the Company through January 31, 1999, at which time
any outstanding borrowings convert to a term loan due in equal quarterly
installments through January 31, 2003. As of April 9, 1996, unutilized borrowing
capacity under the agreement was $22.3 million after utilizing $28.8 million of
the facility for letters of credit to secure certain insurance obligations and
performance bonds. Borrowing availability is subject to the Company maintaining
certain minimum financial ratios.
Long-term obligations decreased $25.9 million primarily due to $41.5
million of cash proceeds received from the sale of the glass recycling
operations which were utilized to reduce long-term debt, partially offset by
cash requirements relating to capital expenditures ($19.7 million), investments
($2.6 million), cash paid for acquisitions ($1.0 million) and treasury stock
purchases ($2.8 million) during the six-month period ended February 29, 1996.
Shareholders' equity increased $3.3 million to $131.6 million as a
result of income during the first half of fiscal 1996, including the $3.8
million of net gain from the sale of the glass recycling operations. This
increase was partially offset by treasury stock purchases of $2.8 million.
In July 1995, the Board of Directors authorized the Company to
repurchase up to 5,000,000 shares of the Company's common stock, either in the
open market or in privately negotiated transactions. In the six months ended
February 29, 1996, the Company has repurchased 597,800 shares of its common
stock at an average cost of $4.68 per share. Subsequent to second quarter, the
Company has repurchased 112,100 additional shares of its common stock at an
average cost of $3.99 per share. Future repurchases of the Company's common
stock will be dependent on prevailing market conditions and other investment
opportunities.
FISCAL 1996 OUTLOOK
The Company experienced an operating loss in its second fiscal quarter
which, seasonally, is its weakest period. Most of the Company's revenues from
its service lines are generated on a "call-up" basis or from irregularly
scheduled customer turnarounds and outages. There is neither a significant
amount of backlog for the Company's services, nor are there any significant
long-term contracts that require its customers to utilize a minimum level of the
Company's services. The Company is also affected by business cycles experienced
by its industrial customer bases and by changes in environmental laws and
regulations or by changes in the interpretation or enforcement of such laws and
regulations. The capacity of the Company's customers to defer industrial
cleaning, maintenance and disposal services in the short-term is great.
Deferrals can occur either due to a reduction in maintenance or capital funds,
customer budget restraints or, conversely, increased demand for a customer's
products that make it impractical to perform cleaning and maintenance on
anticipated schedules. These factors make it difficult to predict, on a
quarterly basis, the demand for the Company's services.
Internal growth is expected to come from new market penetration in
industrial and environmental services. To facilitate internal growth, the
Company has launched its ALLIES(TM) marketing program, which is an integrated
approach to selling the Company's full range of services, primarily to national
customers. The ALLIES(TM) program focuses on the themes of partnering,
value-added service and customer profit improvement.
The Company is also focusing on cost control and margin expansion over
the remainder of fiscal 1996. The Company intends to implement selected price
increases when market conditions permit and as a by-product of value-added
selling efforts. The Company has also identified and implemented certain cost
savings in connection
-10-
with its restructuring plan and cost-reduction initiative, including a
nationwide staff reduction, the consolidation of field offices and the
realignment of certain management functions. The Company anticipates savings as
a result of the restructuring and cost-reduction initiative to impact the
results of operations in the third quarter of the current fiscal year.
The Company has clearly defined the industrial customer as the focus of
its business strategy. The first quarter sale of the Company's former glass
recycling operations has allowed it to narrow its focus on providing services to
the industrial customer and provided additional capital for expansion of this
core business. During fiscal 1996, the Company is developing new opportunities
to serve the industrial customer independently or through partnering
arrangements in the areas of water and wastewater management, energy services,
contract labor services and leak sealing and valve restoration services. The
Company will continue to evaluate its complement of services offered and
allocate capital accordingly.
The impact of inflation on the Company has been minimal.
PART II, OTHER INFORMATION
ITEM 4 - SUBMISSION OF MATTERS TO
A VOTE OF SECURITY HOLDERS
On January 19, 1996, the Company held its annual meeting of
stockholders. At the meeting, the stockholders voted on the following matters:
1. To elect three Class III directors of the Company to hold
office until the third succeeding annual meeting of
stockholders after their election (the 1999 Annual Meeting) or
until their successors have been duly elected and qualified.
2. To ratify the appointment of Arthur Andersen LLP as the
Company's independent public accountants to audit the Company's
consolidated financial statements for the fiscal year ending
August 31, 1996.
All proposals received the affirmative vote required for approval. The
number of votes cast for, against and withheld, as well as the number of
abstentions and broker non-votes, as to each such matter were as follows:
<TABLE>
<CAPTION>
AFFIRMATIVE NEGATIVE VOTES BROKER
PROPOSAL VOTES VOTES ABSTENTIONS WITHHELD NON-VOTES
- -------- ----------- -------- ----------- -------- ---------
<S> <C> <C> <C> <C> <C>
1. Election of Directors
Thomas J. Tierney 26,114,763 N/A N/A 639,361 None
Ricardo J. Besquin 25,936,895 N/A N/A 817,229 None
John U. Clarke 26,113,253 N/A N/A 640,871 None
2. Ratification of
Auditors 26,166,925 486,911 100,288 N/A None
</TABLE>
In addition to the three directors listed in Proposal 1 who were
elected at the 1996 Annual Meeting, the following directors' terms of office
continued after the meeting and will continue through the annual meeting of
stockholders as indicated:
TERM THROUGH
NAME ANNUAL MEETING OF
---- -----------------
Michael A. Baker 1997
R.L. Nelson, Jr. 1997
Robert L. Knauss 1998
T. Michael Young 1998
Robert M. Chiste 1998
-12-
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
EXHIBIT
NO. DESCRIPTION
* 3.1 -- Amended and Restated Certificate of Incorporation of
Allwaste, Inc. ("Allwaste") effective
February 22, 1990. (Exhibit 3.1 to the Allwaste Quarterly
Report on Form 10-Q (File No. 0-15217) for the fiscal
quarter ended February 28, 1990).
3.2 -- Amendment to Amended and Restated Certificate of
Incorporation of Allwaste, effective January 20, 1995
(Filed herewith).
* 3.3 -- Corrected Bylaws of Allwaste (Exhibit 3.2 to the
Allwaste Annual Report on Form 10-K (File No. 1-11008) for
the fiscal year ended August 31, 1992, filed November 27,
1992 (the "1992 Form 10-K").
4.1 -- Specimen Common Stock certificate (Filed herewith).
* 4.2 -- Specimen debenture certificate (Exhibit 4.2 to the 1992
Form 10-K).
* 4.3 -- Form of Indenture between Allwaste and Texas Commerce
Trust Company of New York dated June 1, 1989, relating to
certain debentures of Allwaste. (Exhibit 4.1 to the
Allwaste Quarterly Report on Form 10-Q (File No. 0-15217)
for the fiscal quarter ended May 31, 1989).
* 10.1 -- Employment Agreement dated October 23, 1986, between R.L.
Nelson, Jr. and Allwaste. (Exhibit 10.1 to the Allwaste
Annual Report on Form 10-K (File No. 1-11008) for the
fiscal year ended August 31, 1994, filed November 29, 1994
(the "1994 Form 10-K").
* 10.2 -- Employment Agreement dated October 17, 1994, between
Robert M. Chiste and Allwaste (Exhibit 10.6 to the 1994
Form 10-K).
* 10.3 -- Allwaste Amended and Restated 1989 Replacement
Non-Qualified Stock Option Plan. (Exhibit A to the
Allwaste proxy statement relating to its 1995 annual
meeting of stockholders, filed December 20, 1994).
10.4 -- Allwaste Target 2000: One, Two, Four Plan
(Filed herewith).
* 10.5 -- Allwaste Employee Retirement Plan. (Exhibit 4.3 to the
Post-Effective Amendment No. 1 to Registration Statement
on Form S-8 (File No. 33-37684), filed August 7, 1995).
* 10.6 -- Credit Agreement dated as of November 30, 1993, as
amended, by and among Allwaste, the Financial Institutions
signatory thereto, and Texas Commerce Bank National
Association, a national banking association, as Agent.
(Exhibit 10.10 to the 1994 Form 10-K).
10.7 -- Agreement and First Amendment to Credit Agreement
dated January 21, 1994, by and among Allwaste, the
Financial Institutions signatory thereto, and Texas
Commerce Bank National Association, a national banking
association, as Agent (Filed herewith).
10.8 -- Agreement and Second Amendment to Credit Agreement
dated March 20, 1994, by and among Allwaste, the Financial
Institutions signatory thereto, and Texas Commerce Bank
National Association, a national banking association, as
Agent (Filed herewith).
-13-
10.9 -- Agreement and Third Amendment to Credit Agreement
dated May 31, 1994, by and among Allwaste, the Financial
Institutions signatory thereto, and Texas Commerce Bank
National Association, a national banking association, as
Agent (Filed herewith).
10.10 -- Agreement and Fourth Amendment to Credit Agreement
dated October 18, 1994, by and among Allwaste, the
Financial Institutions signatory thereto, and Texas
Commerce Bank National Association, a national banking
association, as Agent (Filed herewith).
10.11 -- Agreement and Fifth Amendment to Credit Agreement
dated August 31, 1995, by and among Allwaste, the
Financial Institutions signatory thereto, and Texas
Commerce Bank National Association, a national banking
association, as Agent (Filed herewith).
*10.12 -- First Amendment to Employment Agreement dated as of
October 26, 1995, between Robert M. Chiste and Allwaste.
(Exhibit 10.6 to the Allwaste Annual Report on Form 10-K
(File No. 1-11008) for the fiscal year ended August 31,
1995, filed November 30, 1995 (the "1995 Form 10-K").
27.1 -- Financial Data Schedule. (Filed herewith).
* Asterisk indicates exhibits incorporated by reference as shown.
(b) Reports on Form 8-K.
None.
-14-
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant, Allwaste, Inc., has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ALLWASTE, INC.
Dated: April 15, 1996 By: /s/ T. WAYNE WREN, JR.
------------------
T. Wayne Wren, Jr.
Senior Vice President - Chief Financial
Officer and Treasurer
-15-
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
ALLWASTE, INC.
Allwaste, Inc., a corporation organized and existing under the laws of
the State of Delaware, hereby certifies as follows:
1. That subparagraph (A) in Article SIXTH of the Amended and Restarted
Certificate of Incorporation of this corporation is amended in its entirety to
read as follows:
A. NUMBER, ELECTION AND TERMS. The number of members of the Board of
Directors will be fixed form time to time by the Board of Directors,
but in no event may there be less than nine (9) nor greater than (15)
directors. The directors shall be divided into three classes, each
consisting as nearly as may be, of one-third of the whole number of the
Board. At each Annual Meeting of Stockholders, directors elected to
succeed those directors whose term expires shall be elected for a term
of office expiring at the third Annual Meeting of Stockholders after
their election.
2. That said amendment has been duly adopted in accordance with the
provisions of Section 242 of the Delaware General Corporation Law and the terms
and conditions of Article SIXTH of the Amended and Restated Certificate of
Incorporation, by approval of the Board of Directors of the corporation and by
the affirmative vote of the holders of at least 66-2/3% of the outstanding
capital stock entitled to vote.
IN WITNESS WHEREOF, Allwaste, Inc. has caused this Certificate of
Amendment to be signed by the undersigned officer and attested by its Secretary
this 20th day of January, 1995.
ALLWASTE, INC.
By: /S/ ROBERT M.CHISTE
Robert M. Chiste
President and Chief Executive Officer
ATTEST:
By: /S/ WILLIAM L. FIEDLER
William L. Fiedler
Secretary
Exhibit 4.1
PAGE 1
COMMON STOCK COMMON STOCK
INCORPORATED UNDER PAR VALUE $.01
THE LAWS OF CUSIP 020047 10 6
THE STATE OF DELAWARE SEE REVERSE FOR CERTAIN DEFINITIONS
AND RESTRICTIONS ON PREEMPTIVE RIGHTS
ALLWASTE, INC.
THIS CERTIFIES THAT_____________________IS THE OWNER OF
FULLY PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK OF
Allwaste, Inc. transferable on the books of the Corporation by the holder
hereof in person or by attorney upon surrender of this Certificate properly
endorsed. This Certificate is not valid unless countersigned by the Transfer
Agent and registered by the Registrar.
In Witness Whereof, the Corporation has caused the facsimile signatures of
its duly authorized officers and the facsimile seal of the Corporation to be
affixed to this Certificate.
DATED:_____________
PRESIDENT:__________________
SECRETARY
COUNTERSIGNED AND REGISTERED:______________________
AMERICAN STOCK TRANSFER & TRUST
COMPANY TRANSFER AGENT AND REGISTRAR
BY_____________________
AUTHORIZED SIGNATURE
ALLWASTE, INC.
CORPORATE
SEAL
1986
DELAWARE
PAGE 2
ALLWASTE, INC.
The pre-emptive right of stockholders to acquire any shares of the
Corporation has been denied by a statement in the Certificate of Incorporation
which is on file in the office of the Secretary of State of Delaware. The
Corporation will furnish a copy of such statement to the recordholder of this
Certificate without charge on request to the Corporation at its principal place
of business or registered office.
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO
REQUESTS THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF AND
THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR
RIGHTS. ANY SUCH REQUEST SHOULD BE ADDRESSED TO THE SECRETARY OF THE
CORPORATION.
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT- Custodian
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to
Minors survivorship and not as tenants Act in common (State)
Additional abbreviations may also be used though not in the above list.
For Value Received _______________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER___________________
IDENTIFYING NUMBER OF ASSIGNEE
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________of the Common
Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
Attorney to transfer the said stock on the books
of within-named Corporation with
full power of substitution in the premises.
Dated _________________X______________________________
(SIGNATURE)
_________________X______________________________
(SIGNATURE)
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-15.
SIGNATURE(S) GUARANTEED BY: X_________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.
PAGE 3
Exhibit 10.4
ALLWASTE, INC.
TARGET 2000: ONE, TWO, FOUR PLAN
1. PURPOSE OF THE PLAN
This Allwaste, Inc. Target 2000: One, Two, Four Plan is intended to
promote the interests of the Company by providing certain key employees of the
Company, as set forth on SCHEDULE 1 to this Plan, who are largely responsible
for the management, growth and protection of the business of the Company, with
an incentive to increase their proprietary interest in the Company.
2. DEFINITIONS
As used in the Plan, the following definitions apply to the terms
indicated below:
(a) "BOARD OF DIRECTORS" shall mean the Board of Directors of Allwaste,
Inc.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(c) "COMMITTEE" shall mean the Compensation Committee of the Board of
Directors or such other committee as the Board of Directors may appoint from
time to time to administer the Plan.
(d) "COMMON STOCK" shall mean the Company's common stock, $.01 par
value per share.
(e) "COMPANY" shall mean Allwaste, Inc., a Delaware corporation, and
each of its Subsidiaries and its successors.
(f) "DISQUALIFYING DISPOSITION" shall mean the sale, transfer, short
sale, margin, pledge, or other disposition of any of the shares of Common Stock
acquired by a Participant in a Triggering Purchase prior to two years after such
Triggering Purchase.
(g) "EMPLOYEE" shall mean any person who is an employee of the Company
or any Parent or Subsidiary of the Company within the meaning of Section 3401(c)
of the Code and the regulations promulgated thereunder.
(h) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(i) the "FAIR MARKET VALUE" of a share of Common Stock on any date
shall be (i) the closing sales price on the immediately preceding business day
of a share of Common Stock as reported on the New York Stock Exchange.
(j) "INCENTIVE AWARD" shall mean an Option granted under the Company's
Option Plan or a share of Restricted Stock granted pursuant to the terms of the
Plan.
(k) "ISSUE DATE" shall mean the date established by the Board or the
Committee on which certificates representing shares of Restricted Stock shall be
issued by the Company pursuant to the terms of Section 7(d) hereof.
(l) "OPTION" shall mean an option to purchase shares of Common Stock of
the Company granted pursuant to the Option Plan, as contemplated by Section 6
hereof.
(m) "OPTION PLAN" shall mean the Company's Amended and Restated 1989
Replacement Non-Qualified Stock Option Plan, as the same may be amended from
time to time.
(n) "PARTICIPANT" shall mean an employee of the Company who is eligible
to participate in the Plan as set forth on SCHEDULE 1 hereto, as the same may be
amended from time to time by resolution of the Committee.
(o) "PLAN" shall mean the Allwaste, Inc. Target 2000: One, Two, Four
Plan, as it may be amended from time to time.
(p) "QUALIFYING SHARES" shall mean a number of shares of Common Stock
that increases a Participant's actual ownership of Common Stock, as certified by
such Participant from time to time as contemplated hereby, the purchase price of
which shares does not exceed the Salary Limitations applicable to a Participant.
(q) "RESTRICTED STOCK" shall mean a share of Common Stock that is
granted pursuant to the terms of Section 7 hereof and that is subject to the
restrictions set forth in Section 7(c) hereof for so long as such restrictions
continue to apply to such share.
(r) "SALARY LIMITATIONS" shall mean the maximum percentage of a
Participant's annual salary, as determined from time to time by resolution of
the Committee, that may be used to purchase Qualifying Shares.
(s) "SECURITIES ACT" shall mean the Securities Act of 1933, as amended
from time to time.
(t) "SUBSIDIARY" or "SUBSIDIARIES" shall mean any and all corporations
in which at the pertinent time the Company owns, directly or indirectly, stock
vested with more than fifty percent of the total combined voting power of all
classes of stock of such corporations within the meaning of Section 424(f) of
the Code.
(u) "TERMINATION DATE" shall mean March 31, 1996, the date by which all
Triggering Purchases under the Plan must be completed; PROVIDED, HOWEVER, that
this Termination Date may be amended or extended from time to time by resolution
of the Committee.
2
(v) "TRIGGERING PURCHASE" shall mean the acquisition by a Participant
of Qualifying Shares that does not exceed the Salary Limitations applicable to
such Participant and is consummated prior to the Termination Date.
(w) "VESTING DATE" shall mean the date established by the Board or the
Committee on which a share of Restricted Stock may vest.
3. STOCK SUBJECT TO THE PLAN
Under the Plan, the Committee shall grant to a Participant that makes a
Triggering Purchase a number of shares of Restricted Stock equal to two times
the number of Qualifying Shares purchased by the Participant in the Triggering
Purchase. Further, on completion of a Triggering Purchase by a Participant, the
Committee may, in the exercise of its discretion as provided in the Option Plan,
grant to such Participant an Option under the Option Plan.
Shares of Common Stock issued under the Plan as shares of Restricted
Stock shall be treasury shares.
4. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Committee. The Committee shall
have full authority to administer the Plan, including authority to interpret and
construe any provision of the Plan and the terms of any Incentive Award issued
thereunder and to adopt such rules and regulations for administering the Plan as
it may deem necessary. Decisions of the Committee shall be final and binding on
all parties.
The Committee may, in its absolute discretion accelerate the Vesting
Date or Issue Date, or waive any condition imposed pursuant to Section 7(b)
hereof, with respect to any share of Restricted Stock granted under the Plan.
5. ELIGIBILITY
Only those key employees designated as Participants in the Plan on
SCHEDULE 1 hereto, as the same may be amended from time to time by resolution of
the Committee, shall be eligible to receive Incentive Awards pursuant to the
Plan.
3
6. OPTIONS
On completion of a Triggering Purchase by a Participant, the Committee
may, in the exercise of its discretion as provided in the Option Plan, grant to
such Participant an Option under the Option Plan. At the time of the adoption of
this Plan, the Board of Directors and the Committee contemplated that at the
time of a Triggering Purchase, a Participant will be granted an Option to
purchase a number of shares of Common Stock equal to four times the number of
Qualifying Shares purchased in the Triggering Purchase; HOWEVER, the Committee
shall retain the absolute discretion to elect not to award a Participant any
Options under the Option Plan or to award a Participant Options to acquire such
number of shares of Common Stock as the Committee deems appropriate, at such
times and with such terms and conditions as the Committee may in its discretion
prescribe. Option grants contemplated by this Plan shall only be granted in the
absolute discretion of the Committee and shall be granted pursuant to and
governed by the Option Plan.
7. RESTRICTED STOCK
On the completion of a Triggering Purchase by a Participant, the
Committee shall grant to such Participant a number of shares of Restricted Stock
equal to two times the number of Qualifying Shares purchased by such Participant
in the Triggering Purchase. Each grant of shares of Restricted Stock shall be
evidenced by an agreement in substantially the form attached hereto as EXHIBIT
A. Unless otherwise determined by the Board of Directors or the Committee, in
its absolute discretion, and set forth in the agreement evidencing the grant,
each grant of shares of Restricted Stock shall comply with and be subject to the
following terms and conditions:
(a) ISSUE DATE AND VESTING DATE
At the time of the grant of shares of Restricted Stock, the Committee
shall establish an Issue Date or Issue Dates and a Vesting Date or Vesting Dates
with respect to such shares. Except as provided in Sections 7(c) and 7(f)
hereof, on the occurrence of the Issue Date with respect to a share of
Restricted Stock, a share of Restricted Stock shall be issued in accordance with
the provisions of Section 7(d) hereof. Provided that all conditions to the
vesting of a share of Restricted Stock imposed pursuant to Section 7(b) hereof
are satisfied, and except as provided in Sections 7(c) and 7(f) hereof, on the
occurrence of the Vesting Date with respect to a share of Restricted Stock, such
share shall vest and the restrictions of Section 7(c) hereof shall cease to
apply to such share.
(b) CONDITIONS TO VESTING
At the time of the grant of shares of Restricted Stock, the Committee
may impose such restrictions or conditions, not inconsistent with the provisions
hereof, to the vesting of such shares as it in its absolute discretion deems
appropriate.
4
(c) RESTRICTIONS ON TRANSFER PRIOR TO VESTING
Prior to the vesting of a share of Restricted Stock, no transfer of a
Participant's rights with respect to such share, whether voluntary or
involuntary, by operation of law or otherwise, shall vest the transferee with
any interest or right in or with respect to such share, but immediately on any
attempt to transfer such rights, such share, and all of the rights related
thereto, shall be forfeited by the Participant and the transfer shall be of no
force or effect.
(d) ISSUANCE OF CERTIFICATES
(1) Except as provided in Sections 7(c) or 7(f) hereof,
reasonably promptly after the Issue Date with respect to shares of
Restricted Stock, the Company shall cause to be issued a stock
certificate, registered in the name of the Participant to whom such
shares were granted, evidencing such shares; PROVIDED, that the Company
shall not cause to be issued such a stock certificate unless it has
received a stock power duly endorsed in blank with respect to such
shares. Each such stock certificate shall bear the following legend:
THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF
STOCK REPRESENTED HEREBY ARE SUBJECT TO THE RESTRICTIONS,
TERMS AND CONDITIONS (INCLUDING FORFEITURE AND RESTRICTIONS
AGAINST TRANSFER) CONTAINED IN THE ALLWASTE, INC. TARGET 2000:
ONE, TWO, FOUR PLAN AND AN AGREEMENT ENTERED INTO BETWEEN THE
REGISTERED OWNER OF SUCH SHARES AND ALLWASTE, INC. A COPY OF
THE PLAN AND THE AGREEMENT ARE ON FILE IN THE OFFICE OF THE
SECRETARY OF ALLWASTE, INC., 5151 SAN FELIPE, SUITE 1600,
HOUSTON, TEXAS 77056.
Such legend shall not be removed from the certificate evidencing such
shares until such shares vest pursuant to the terms hereof.
(2) Each certificate issued pursuant to Paragraph 7(d)(1)
hereof, together with the stock powers relating to the shares of
Restricted Stock evidenced by such certificate, shall be held by the
Company. The Company shall issue to the Participant a receipt
evidencing the certificates held by it which are registered in the name
of the Participant.
(e) CONSEQUENCES ON VESTING
On the vesting of a share of Restricted Stock pursuant to the terms
hereof, the restrictions of Section 7(c) hereof shall cease to apply to such
share. Reasonably promptly after a share of Restricted Stock vests pursuant to
the terms hereof, the Company shall cause to be issued and delivered to the
Participant to whom such shares were granted, a certificate evidencing such
share, free of the legend set forth in Paragraph 7(d)(1) hereof, together with
any other property of the Participant held by Company pursuant to Section 7(d)
hereof; PROVIDED, HOWEVER, that
5
such delivery shall be effected for all purposes when the Company shall have
deposited such certificate and other property in the United States mail,
addressed to the Participant.
(f) EFFECT OF TERMINATION OF EMPLOYMENT
In the event of the termination of a Participant's employment with the
Company, with or without cause, all shares of Restricted Stock granted to such
Participant that have not vested as of the date of such termination shall
immediately be forfeited.
(g) FORFEITURE ON DISQUALIFYING DISPOSITION
On consummation of a Disqualifying Disposition, all shares of
Restricted Stock granted to such Participant that have not vested as of the date
of such Disqualifying Disposition shall immediately be forfeited.
8. ADJUSTMENT ON CHANGES IN COMMON STOCK
(a) OUTSTANDING RESTRICTED STOCK
Unless the Committee in its absolute discretion otherwise determines,
if a Participant receives any securities or other property (including dividends
paid in cash) with respect to a share of Restricted Stock, the applicable Issue
Date that occurs prior to such event but that has not vested as of the date of
such event, as a result of any dividend, stock split, recapitalization, merger,
consolidation, combination, exchange of shares or otherwise, such securities or
other property will not vest until such share of Restricted Stock vests and
shall be held by the Company pursuant to Paragraph 7(d)(2) hereof.
The Committee may, in its absolute discretion, adjust any grant of
shares of Restricted Stock, the Issue Date with respect to which has not
occurred as of the date of the occurrence of any of the following events to
reflect any dividend, stock split, recapitalization, merger, consolidation,
combination, exchange of shares or similar corporate change as the Committee may
deem appropriate to prevent the enlargement or dilution of rights of
Participants under the grant.
(b) NO OTHER RIGHTS
Except as expressly provided in the Plan, no Participant shall have any
rights by reason of any subdivision or consolidation of shares of stock of any
class, the payment of any dividend, any increase or decrease in the number of
shares of stock of any class or any dissolution, liquidation, merger or
consolidation of the Company or any other corporation. Except as expressly
provided in the Plan, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number of shares of Restricted Stock.
6
9. RIGHTS AS A STOCKHOLDER
No person shall have any rights as a stockholder with respect to any
shares of Common Stock covered by or relating to any grant of Restricted Stock
granted pursuant to this Plan until the date of the issuance of a stock
certificate with respect to such shares. Except as otherwise expressly provided
in Section 8 hereof, no adjustment to any Restricted Stock shall be made for
dividends or other rights for which the record date occurs prior to the date
such stock certificate is issued.
10. SECURITIES MATTERS
The Company shall be under no obligation to effect the registration
pursuant to the Securities Act of any shares of Common Stock to be issued
hereunder or to effect similar compliance under any state laws. Notwithstanding
anything herein to the contrary, the Company shall not be obligated to cause to
be issued or delivered any certificates evidencing shares of Common Stock
pursuant to the Plan unless and until the Company is advised by its counsel that
the issuance and delivery of such certificates is in compliance with all
applicable laws, regulations of governmental authority and the requirements of
any securities exchange on which shares of Common Stock are traded. The
Committee may require, as a condition of the issuance and delivery of
certificates evidencing shares of Common Stock pursuant to the terms hereof,
that the recipient of such shares make such covenants, agreements and
representations, and that such certificates bear such legends, as the Committee,
in its sole discretion, deems necessary or desirable.
11. WITHHOLDING TAXES
Whenever shares of Common Stock are to be issued on the occurrence of
the Issue Date or Vesting Date with respect to a share of Restricted Stock, the
Company shall have the right to require the Participant to remit to the Company
in cash an amount sufficient to satisfy federal, state and local withholding tax
requirements, if any, attributable to such occurrence prior to the delivery of
any certificate or certificates for such shares. In lieu of remitting cash to
the Company to satisfy these withholding obligations, the Participant may (i)
request that the Company deliver the certificate representing such shares to the
Participant's broker so that a portion of such shares may be sold to pay such
taxes or (ii) request that the Company redeem a portion of such shares for the
payment of such tax obligations, which redemption will be made solely in the
discretion of the Company. In the event that the Company elects not to redeem a
portion of such shares, the Participant must either remit cash to the Company
for such tax requirements or remit sale proceeds from a portion of such shares
as provided in subparagraph (i) in the foregoing sentence.
12. AMENDMENT OF THE PLAN
The Board of Directors may at any time suspend or discontinue the Plan
or revise or amend it in any respect whatsoever.
7
13. TRANSFERS ON DEATH
On the death of a Participant, outstanding Restricted Stock grants made
to such Participant under the Plan may be held only by the executors or
administrators of the Participant's estate or by any person or persons who shall
have acquired such right to exercise by will or by the laws of descent and
distribution. No transfer by will or the laws of descent and distribution of any
shares of Restricted Stock shall be effective to bind the Company unless the
Committee shall have been furnished with (a) written notice thereof and with a
copy of the will and/or such evidence as the Committee may deem necessary to
establish the validity of the transfer and (b) an agreement by the transferee to
comply with all the terms and conditions of the Restricted Stock award that are
or would have been applicable to the Participant and to be bound by the
acknowledgements made by the Participant in connection with the grant of the
shares of Restricted Stock.
14. EXPENSES AND RECEIPTS
The expenses of the Plan shall be paid by the Company. Any proceeds
received by the Company in connection with any Incentive Award will be used for
general corporate purposes.
15. FAILURE TO COMPLY
In addition to the remedies of the Company elsewhere provided for
herein, failure by a Participant to comply with any of the terms and conditions
of the Plan or the agreement executed by such Participant evidencing a
Restricted Stock grant, unless such failure is remedied by such Participant
within ten days after having been notified of such failure by the Committee,
shall be grounds for the cancellation and forfeiture of such award, in whole or
in part as the Committee, in its absolute discretion, may determine.
16. EFFECTIVE DATE AND TERM OF PLAN
The Plan was adopted by the Compensation Committee of the Board of
Directors, pursuant to authority granted to the Committee by the Board on
October 26, 1995, on November 1, 1995. No Incentive Award may be granted under
the Plan after the Termination Date. The applicable provisions of the Plan shall
remain in effect until the last grant of Restricted Stock made under the Plan
vests in full.
8
Exhibit 10.7
AGREEMENT AND FIRST AMENDMENT TO CREDIT AGREEMENT
(January 21, 1994)
THIS AGREEMENT AND FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment")
is made and entered into as of January 21, 1994 by and among ALLWASTE, INC. (the
"Company"), a Delaware corporation, EACH OF THE FINANCIAL INSTITUTIONS WHICH IS
A SIGNATORY HERETO (individually, a "Bank" and collectively, the "Banks") and
TEXAS COMMERCE BANK NATIONAL ASSOCIATION ("TCB"), a national banking association
acting as agent for the Banks (in such capacity, together with its successors in
such capacity, the "Agent").
RECITALS:
A. The Company, the Agent and the Banks have entered into a Credit
Agreement dated as of November 30, 1993 (which such Credit Agreement, as the
same may have heretofore been amended, modified, supplemented and restated from
time to time, is hereinafter called the "Credit Agreement").
B. The Company has requested the Agent and the Banks to amend the Credit
Agreement in certain respects to, among other things, (1) permit the Company to
convert the IAM Acquisition Loan into preferred stock of IAM, (2) increase the
limit on guaranties, endorsements and other contingent liabilities to
$6,000,000, (3) permit the Company to acquire the Indebtedness of any Person in
connection with a Permitted Asset Disposition or a Permitted Stock Disposition
so long as the aggregate amount of such Indebtedness does not exceed $10,000,000
at any one time, (4) increase the limit on loans to Persons which are not
Subsidiaries of the Company to $3,000,000, (5) modify in certain respects the
list of permitted loans by the Company, and (6) make certain corrections to
Section 6.1 of the Credit Agreement. In addition, the Company has requested the
Agent and the Banks to waive any Default or Event of Default which may have
occurred as a result of the acceptance by the Company of promissory notes in
lieu of cash in connection with certain Permitted Asset Dispositions and/or
Permitted Stock Dispositions.
C. The parties now hereby desire to so amend the Credit Agreement and waive
any such Default or Event of Default, all as is more fully described
hereinbelow, which shall control over any conflicting or inconsistence recitals
above.
AGREEMENTS:
NOW, THEREFORE, in consideration of the premises and the mutual agreements,
representations and warranties herein set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the
parties hereto do hereby agree as follows:
1. DEFINITIONS DELETED. Section 1.1 of the Credit Agreement is hereby
amended by deleting therefrom the definitions of "Horton" and "Horton Loan"
where they appear therein.
2. DEFINITIONS ADDED. Section 1.1 of the Credit Agreement is hereby amended
by adding thereto between the definitions of IAM Acquisition Loan and
"Incidental Liens" where those definitions appear therein, the following new
definition:
"IAM RESTRUCTURE shall mean a restructure of IAM's debt and capital
structure involving, among other things, the simultaneous substitution of the
Indebtedness owed to The Law Companies in the principal amount of $2,000,000
with preferred stock of IAM issued to The Law Companies and the Indebtedness
owed to the Company under the IAM Acquisition Loan with preferred stock of IAM
issued to the Company."
3. PERMITTED INDEBTEDNESS. Section 6.1(o) of the Credit Agreement is hereby
amended in its entirety to be and read as follows:
"(o) in addition to and cumulative of Indebtedness described elsewhere in
this Section 6.1, notes of the Company payable to sellers of businesses or
assets which the Company is permitted to acquire under the terms hereof, with
maturities of one year or less, so long as the aggregate of such notes does not
exceed at any time $4,000,000;"
In addition, the parties hereto agree, confirm and acknowledge that at the
time of execution of the Credit Agreement and at all times since such execution,
it has been their intent that the dollar amount applicable to SECTION 6.1(r) of
the Credit Agreement be $2,000,000, notwithstanding the fact that the amount
which appears therein is $4,000,000. The parties hereto now agree that as of the
effective date hereof, Section 6.1(r) is amended in its entirety to be and read
as follows:
"(r) in addition to and cumulative of Indebtedness described elsewhere in
this SECTION 6.1, guaranties, endorsements and other contingent liabilities of
the Company not to exceed at any time $6,000,000 in the aggregate."
4. LOANS TO NON-SUBSIDIARIES. Section 6.7(g) of the Credit Agreement is
hereby amended in its entirety to be and read as follows:
"(g) so long as no Event of Default has occurred and is continuing, loans
to any Person which is not a Subsidiary of the Company or of any of the
Company's Subsidiaries, provided, that the aggregate of all of such loans does
not exceed at any time $3,000,000 on a consolidated basis;"
5. DISPOSITION RELATED LOANS. Section 6.7(j) of the Credit Agreement is
hereby amended in its entirety to be and read as follows:
"(j) in addition to and cumulative of the loans referred to in SECTION
6.7(g) hereof, loans to purchasers to finance Permitted Asset Dispositions and
Permitted Stock Dispositions, PROVIDED, that the aggregate of all such loans
does not exceed at any time $10,000,000;"
-2-
6. IAM RELATED TRANSACTIONS. SECTION 6.7(k) of the Credit Agreement is
hereby amended in its entirety to be and read as follows:
"(k) in addition to and cumulative of the loans referenced in SUBSECTION
6.7(g) above and any other loans to Persons which are not Subsidiaries of
the Company or any of the Company's Subsidiaries expressly permitted
elsewhere in this SECTION 6.7, the IAM Acquisition Loan until such time as
the IAM Restructure has been completed, and upon and after the completion
of the IAM Restructure, Stock of IAM issued to the Company in connection
with the IAM Restructure; and"
7. WAIVER. The Banks hereby waive any Default or Event of Default which may
have occurred as a result of the acceptance by the Company of (a) a promissory
note in the original principal sum of $3,125,234, payable to the order of the
Company, dated as of December 22, 1992, executed by Hoover Sales and Services,
Inc. as consideration, among other consideration, in connection with a Permitted
Asset Disposition or a Permitted Stock Disposition, and (b) a promissory note in
the original principal sum of $790,240, payable to the order of the Company,
dated as of June 11, 1993, executed by Cummings Enterprises, Inc., as
consideration, among other consideration, in connection with a Permitted Asset
Disposition or a Permitted Stock Disposition.
8. CONDITIONS. No part of this Amendment shall become effective until the
Company shall have delivered (or shall have caused to be delivered) to the Banks
each of the following, in Proper Form:
(a) certificates dated as of the date hereof of the Secretary or any
Assistant Secretary of the Company and each of the Guarantors as
of the date hereof, and such other documents and information as
the Banks may request;
(b) the written consent of all of the Guarantors to the execution and
delivery of this Amendment and such other related matters as the
Banks may reasonably require;
(c) a Notice of Entire Agreement, DTPA Waiver and Release of Claims
executed by the Company and each of the Guarantors as of the date
hereof; and
(d) Each Bank's respective amendment fee as provided in Section 2.16
of the Credit Agreement.
9. REPRESENTATIONS TRUE; No Default. The Company represents and warrants
that the representations and warranties contained in Section 4 of the Credit
Agreement and in the other Loan Documents are true and correct in all material
respects on and as of the date hereof as though made on and as of such date. The
Company hereby certifies that no Default or Event of Default under the Credit
Agreement or any of the other Loan Documents has occurred and is continuing as
of the date hereof.
-3-
10. RATIFICATION. Except as expressly amended hereby, the Credit Agreement
and the other Loan Documents shall remain in full force and effect. In the event
of any conflict between this Amendment and the Credit Agreement or any of the
other Loan Documents (or any earlier modification of any of them), this
Amendment shall control. The Credit Agreement, as hereby amended, and all rights
and powers created thereby or thereunder and under the other Loan Docu ments are
in all respects ratified and confirmed and remain in full force and effect.
11. DEFINITIONS and References. Terms used herein which are defined in the
Credit Agreement or in the other Loan Documents shall have the meanings therein
ascribed to them. The term "Credit Agreement" as used in the Credit Agreement,
the other Loan Documents or any other instrument, document or writing furnished
to the Agent or any of the Banks by the Company shall mean the Credit Agreement
as hereby amended.
12. MISCELLANEOUS. This Amendment (a) shall be binding upon and inure to
the benefit of the Company, the Banks and the Agent and their respective
successors, assigns, receivers and trustees (provided, however, that the Company
shall not assign its rights hereunder without the prior written consent of the
Agent); (b) may be modified or amended only by a writing signed by each party;
(c) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS AND THE UNITED STATES OF AMERICA; (d) may be executed in several
counterparts, and by the parties hereto on separate counterparts, and each
counterpart, when so executed and delivered, shall constitute an original
agreement, and all such separate counterparts shall constitute but one and the
same agreement; and (e) together with the other Loan Documents, embodies the
entire agreement and understanding between the parties with respect to the
subject matter hereof and supersedes all prior agreements, consents and
understandings relating to such subject matter. The headings herein shall be
accorded no significance in interpreting this Amendment.
-4-
IN WITNESS WHEREOF, the Company, the Banks and the Agent have caused this
Amendment to be signed by their respective duly authorized officers, effective
as of the date which first appears hereinabove.
ALLWASTE, INC.,
a Delaware corporation
By:_____________________
R. L. Nelson, Jr.
President
ATTEST:
_________________
Douglas M. Cerny,
Secretary
-5-
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, a national banking
association, as a Bank and as Agent
By:_______________________________
Richard L. Esdorn, III,
Senior Vice President
-6-
NATIONSBANK OF TEXAS, N.A.,
a national banking association
By:_______________________________
Frank T. Hundley,
Vice President
-7-
CITIBANK, N.A., a national
banking association
By: ____________________________
Name: ____________________________
Title:____________________________
-8-
FIRST INTERSTATE BANK OF TEXAS,
N.A, a national banking association
By:_______________________________
Carol D. Birkofer,
Corporate Banking Officer
-9-
THE BANK OF NOVA SCOTIA,
By: ____________________________
Name: ____________________________
Title:____________________________
-10-
COMERICA BANK - TEXAS,
a Texas banking association
By:_______________________________
Mitchell Schulman,
Vice President
-11-
LTCB TRUST COMPANY, a New York
Trust Company
By: ____________________________
Name: ____________________________
Title:____________________________
-12-
Exhibit 10.8
AGREEMENT AND SECOND AMENDMENT TO CREDIT AGREEMENT
(March 20, 1994)
THIS AGREEMENT AND SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment")
is made and entered into as of March 20, 1994 by and among ALLWASTE, INC. (the
"Company"), a Delaware corporation, EACH OF THE FINANCIAL INSTITUTIONS SIGNATORY
HERETO (individually, a "Bank" and collectively, the "Banks") and TEXAS COMMERCE
BANK NATIONAL ASSOCIATION ("TCB"), a national banking association acting as
agent for the Banks (in such capacity, together with its successors in such
capacity, the "Agent").
RECITALS:
A. The Company, the Agent and the Banks have entered into a Credit
Agreement dated as of November 30, 1993 (which such Credit Agreement, as the
same may have heretofore been amended, modified, supplemented and restated from
time to time, is hereinafter called the "Credit Agreement").
B. The Company, the Agent and the Banks now desire to amend the Credit
Agreement in certain respects to, among other things, (1) delete the definition
of Calculation Date contained in Section 1.1 of the Agreement, (2) amend the
definitions of Applicable Margin, Cash Flow, EBITDA, Letter of Credit Fee
Payment Date and Rolling Four Quarters, which are each contained in Section 1.1
of the Credit Agreement, (3) agree as to what the Applicable Margin and
Applicable Letter of Credit Percentage has been and shall be prior to March 20,
1994, (4) delete the requirement that the Company deliver Quarterly Unaudited
Financial Statements for the last fiscal quarter of each fiscal year of the
Company as provided in Section 5.2(b) of the Credit Agreement, and (5) make
certain other changes to the Credit Agreement, all as is more fully described
hereinbelow, which shall control over any conflicting or inconsistent recitals
above.
AGREEMENTS:
NOW, THEREFORE, in consideration of the premises and the mutual agreements,
representations and warranties herein set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the
parties hereto do hereby agree as follows:
1. CALCULATION DATE DEFINITION DELETED. The definition of "Calculation
Date" contained in Section 1.1 of the Credit Agreement is hereby amended by
deleting therefrom the definition for Calculation Date.
2. APPLICABLE MARGIN DEFINITION AMENDED. The definition of "Applicable
Margin" contained in Section 1.1 of the Credit Agreement is hereby amended in
its entirety to be and read as follows:
"APPLICABLE MARGIN shall mean with respect to any Loan:
(a) on any day occurring prior to March 20, 1994, one percent (1%)
per annum for Eurodollar Rate Borrowings, 1.125% for CD Rate
Borrowings and zero for Alternate Base Rate Loans; and
(b) beginning with March 20, 1994, on any day occurring on or after
(1) March 20 but prior to June 20, the applicable per annum
percentage corresponding to the Funded Indebtedness to EBITDA
Ratio determined as of the immediately preceding November 30, (2)
June 20 but prior to September 20, the applicable per annum
percentage corresponding to the Funded Indebtedness to EBITDA
Ratio determined as of the immediately preceding February 28, (3)
September 20 but prior to December 20, the applicable per annum
percentage corresponding to the Funded Indebtedness to EBITDA
Ratio determined as of the immediately preceding May 31, or (4)
December 20 but prior to March 20, the applicable per annum
percentage corresponding to the Funded Indebtedness to EBITDA
Ratio determined as of the immediately preceding August 31, as
provided below:
(i) from the date hereof to, but not including, the Termination
Date:
Per Annum
Per Annum Per Annum Percentage
Percentage Percentage for Alternate
Funded Indebtedness for Eurodollar for CD Rate Base Rate
to EBITDA Ratio Rate Borrowings Borrowings Borrowings
- --------------- --------------- ---------- ----------
150% or less 0.750% 0.875% 0.000%
Greater than 150% but less than 200% 0.875% 1.000% 0.000%
200% or greater but less than 250% 1.000% 1.125% 0.000%
250% or greater 1.250% 1.375% 0.250%
(ii) on the Termination Date and at all times thereafter:
150% or less 1.000% 1.125% 0.000%
Greater than 150% but less than 200% 1.125% 1.250% 0.125%
200% or greater but less than 250% 1.250% 1.375% 0.250%
250% or greater 1.500% 1.625% 0.500%
3. CASH FLOW DEFINITION AMENDED. The definition of "Cash Flow" contained in
Section 1.1 of the Credit Agreement is hereby amended in its entirety to be and
read as follows:
"CASH FLOW shall mean, as to a particular Person and for any period
for which Cash Flow is calculated, Net Income of such Person for such period
before taxes (calculated after excluding any gain or loss attributable to
Discontinued Operations as of such day), plus (a) depreciation, depletion,
obsolescence and amortization of Property of such Person determined in
accordance with Generally Accepted Accounting Principles (calculated after
excluding any depreciation, depletion, obsolescence and amortization applicable
to Discontinued Operations as of such day) for such period, (b) interest expense
of such Person for such period, all determined in accordance with Generally
Accepted Accounting Principles (calculated after excluding any interest expense
paid in connection with Discontinued Operations as of such day), and (c) if Cash
Flow is being calculated for a Rolling Four Quarters ending on or before August
31, 1994, reserves taken by the Company and its Subsidiaries during the fiscal
quarter of the Company ending November 30, 1993, less cash taxes paid by such
Person during such period (calculated after excluding any cash taxes paid in
connection with Discontinued Operations as of such day). Cash Flow shall be
determined on a consolidated basis."
4. EBITDA DEFINITION AMENDED. The definition of "EBITDA" contained in
Section 1.1 of the Credit Agreement is hereby amended in its entirety to be and
read as follows:
"EBITDA shall mean, as to a particular Person and for any period for
which EBITDA is calculated, Cash Flow of such Person for said period plus cash
taxes paid by such Person during such period (calculated after excluding any
cash taxes paid in connection with Discontinued Operations as of such day)."
5. Letter of Credit Fee Payment Date Definition Amended. The definition of
"Letter of Credit Fee Payment Date" contained in Section 1.1 of the Credit
Agreement is hereby amended in its entirety to be and read as follows:
"LETTER OF CREDIT FEE PAYMENT DATE shall mean, with respect to any
Letter of Credit, the date of issuance thereof and the last day of each March,
June, September and December which occurs after the date of issuance but prior
to the expiry date of said Letter of Credit."
6. ROLLING FOUR QUARTERS DEFINITION AMENDED. The definition of "Rolling
Four Quarters" contained in Section 1.1 of the Credit Agreement is hereby
amended in its entirety to be and read as follows:
"ROLLING FOUR QUARTERS shall mean, as of any day, the then most recently
ended four (4) consecutive fiscal quarters of the Company for which, as of such
day, financial statements are required to have been given to the Banks pursuant
to this Agreement."
7. TYPOGRAPHICAL ERROR CORRECTED. The last sentence in Section 5.15 of the
Credit Agreement is hereby amended in its entirety to correct a typographical
error therein to be and read as follows:
"The Company will, and will cause its Subsidiaries to, provide any such
consultant with access to all of its records and personnel and will cooperate
with any reasonable request for information regarding the operations and
Properties of the Company or any of its Subsidiaries in connection with such due
diligence."
8. ACKNOWLEDGMENT OF RATIO; Waiver. Each of the parties hereto acknowledges
and confirms its consent and agreement that (a) the Applicable Margin for
Eurodollar Rate Borrowings has been and shall be at all times from the date of
the Credit Agreement to but not including March 20, 1994, one percent (1%) per
annum, (b) the Applicable Margin for CD Borrowings has been and shall be at all
times from the date of the Credit Agreement to but not including March 20, 1994,
1.125% per annum, (c) the Applicable Margin for Alternate Base Rate Borrowings
has been and shall be at all times from the date of the Credit Agreement to but
not including March 20, 1994, zero, and (d) the Applicable Letter of Credit Fee
Percentage has been and shall be at all times from the date of the Credit
Agreement to but not including March 20, 1994, one percent (1%) per annum. In
addition, the Banks hereby waive any Default or Event of Default which may have
occurred under the Credit Agreement or any of the other Credit Documents solely
as a result of the failure of the Company to deliver a statement as to the
recalculation of the Applicable Margin with the Officer's Certificate dated
January 19, 1994 covering the Company's fiscal quarter ending November 30, 1993.
9. QUARTERLY UNAUDITED FINANCIAL STATEMENTS. Section 5.2(b) of the Credit
Agreement is hereby amended in its entirety to be and read as follows:
"(b) as soon as available and in any event within fifty (50) days after the
end of each quarter (other than the fourth quarter) of each fiscal year of the
Company, Quarterly Unaudited Financial Statements of the Company and its
Subsidiaries, prepared on a consolidated basis;"
10. CONDITIONS. No part of this Amendment shall become effective until the
Company shall have delivered (or shall have caused to be delivered) to the Banks
each of the following, in Proper Form:
(a) certificates dated as of the date hereof of the Secretary or any
Assistant Secretary of the Company and each of the Guarantors as
of the date hereof, and such other documents and information as
the Banks may request;
(b) the written consent of all of the Guarantors to the execution and
delivery of this Amendment and such other related matters as the
Banks may reasonably require; and
(c) a Notice of Entire Agreement, DTPA Waiver and Release of Claims
executed by the Company and each of the Guarantors as of the date
hereof.
11. AMENDMENT FEE WAIVED. Each of the Banks hereby waives the payment of
the amendment fee contemplated in Section 2.16 of the Credit Agreement, as such
amendment fee pertains to this Amendment, only.
12. REPRESENTATIONS TRUE; No Default. The Company represents and warrants
that the representations and warranties contained in Section 4 of the Credit
Agreement and in the other Loan Documents are true and correct in all material
respects on and as of the date hereof as though made on and as of such date. The
Company hereby certifies that no Default or Event of Default under the Credit
Agreement or any of the other Loan Documents has occurred and is continuing as
of the date hereof.
13. RATIFICATION. Except as expressly amended hereby, the Credit Agreement
and the other Loan Documents shall remain in full force and effect. In the event
of any conflict between this Amendment and the Credit Agreement or any of the
other Loan Documents (or any earlier modification of any of them), this
Amendment shall control. The Credit Agreement, as hereby amended, and all rights
and powers created thereby or thereunder and under the other Loan Docu ments are
in all respects ratified and confirmed and remain in full force and effect.
14. DEFINITIONS AND REFERENCES. Terms used herein which are defined in the
Credit Agreement or in the other Loan Documents shall have the meanings therein
ascribed to them. The term "Credit Agreement" as used in the Credit Agreement,
the other Loan Documents or any other instrument, document or writing furnished
to the Agent or any of the Banks by the Company shall mean the Credit Agreement
as hereby amended.
15. MISCELLANEOUS. This Amendment (a) shall be binding upon and inure to
the benefit of the Company, the Banks and the Agent and their respective
successors, assigns, receivers and trustees (provided, however, that the Company
shall not assign its rights hereunder without the prior written consent of the
Agent); (b) may be modified or amended only by a writing signed by each party;
(c) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS AND THE UNITED STATES OF AMERICA; (d) may be executed in several
counterparts, and by the parties hereto on separate counterparts, and each
counterpart, when so executed and delivered, shall constitute an original
agreement, and all such separate counterparts shall constitute but one and the
same agreement; and (e) together with the other Loan Documents, embodies the
entire agreement and understanding between the parties with respect to the
subject matter hereof and supersedes all prior agreements, consents and
understandings relating to such subject matter. The headings herein shall be
accorded no significance in interpreting this Amendment.
IN WITNESS WHEREOF, the Company, the Banks and the Agent have caused this
Amendment to be signed by their respective duly authorized officers, effective
as of the date which first appears hereinabove.
ALLWASTE, INC.,
a Delaware corporation
By:_____________________
R. L. Nelson, Jr.
President
ATTEST:
_________________
Douglas M. Cerny,
Secretary
-5-
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, a national banking
association, as a Bank and as Agent
By:_______________________________
Richard L. Esdorn, III,
Senior Vice President
-6-
NATIONSBANK OF TEXAS, N.A.,
a national banking association
By:_______________________________
Frank T. Hundley,
Vice President
-7-
CITIBANK, N.A., a national
banking association
By: ____________________________
Name: ____________________________
Title:____________________________
-8-
FIRST INTERSTATE BANK OF TEXAS,
N.A, a national banking association
By:_______________________________
Carol D. Birkofer,
Corporate Banking Officer
-9-
THE BANK OF NOVA SCOTIA,
By: ____________________________
Name: ____________________________
Title:____________________________
-10-
COMERICA BANK - TEXAS,
a Texas banking association
By:_______________________________
Mitchell Schulman,
Vice President
-11-
LTCB TRUST COMPANY, a New York
Trust Company
By: ____________________________
Name: ____________________________
Title:____________________________
-12-
Exhibit 10.9
AGREEMENT AND THIRD AMENDMENT TO CREDIT AGREEMENT
(May 31, 1994)
THIS AGREEMENT AND THIRD AMENDMENT TO CREDIT AGREEMENT (this "Amendment")
is made and entered into as of May 31, 1994 by and among ALLWASTE, INC. (the
"Company"), a Delaware corporation, EACH OF THE FINANCIAL INSTITUTIONS SIGNATORY
HERETO (individually, a "Bank" and collectively, the "Banks") and TEXAS COMMERCE
BANK NATIONAL ASSOCIATION, a national banking association acting as agent for
the Banks (in such capacity, together with its successors in such capacity, the
"Agent").
RECITALS:
A. The Company, the Agent and the Banks have entered into a Credit
Agreement dated as of November 30, 1993 (which such Credit Agreement, as the
same may have heretofore been amended, modified, supplemented and restated from
time to time, is hereinafter called the "Credit Agreement").
B. The Company, the Agent and the Banks now desire to amend the Credit
Agreement in certain respects to, among other things, modify certain financial
covenants contained in Section 5.3 of the Credit Agreement, modify the limit on
capital expenditures contained in Section 6.14 of the Credit Agreement, and make
certain other changes to the Credit Agreement, all as is more fully described
hereinbelow, which shall control over any conflicting or inconsistent recitals
above.
AGREEMENTS:
NOW, THEREFORE, in consideration of the premises and the mutual agreements,
representations and warranties herein set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the
parties hereto do hereby agree as follows:
1. FINANCIAL TESTS MODIFIED. Section 5.3 of the Credit Agreement is hereby
amended in its entirety to be and read as follows:
"5.3 Financial Tests.
"(a) Have at all times a QUICK RATIO of not less than 1.00 to 1.00;
"(b) have at all times during the periods indicated below, a TANGIBLE
NET WORTH TO DEBT RATIO of not less than (i) 0.25 to 1.00 from and including
August 1, 1994 to, but not including, November 4, 1994; (ii) 0.40 to 1.00 from
and including November 4, 1994 to, but not including, February 28, 1995, and
(iii) 0.45 to 1.00 on February 28, 1995 and at all times thereafter; provided,
that on the Step Up Date (whenever such date may occur) and at all times
thereafter, have a Tangible Net Worth to Debt Ratio of not less than 0.50 to
1.00;
"(c) have at all times during the periods indicated below, a TANGIBLE
NET WORTH of not less than (i) $23,000,000 from and including August 1, 1994 to,
but not including, November 4, 1994, and (ii) the Tangible Net Worth Floor plus
the Tangible Net Worth Floor Adjustment, on November 4, 1994 and at all times
thereafter; and
"(d) have at all times during the periods indicated below, a CASH FLOW
RATIO of not less than (i) 1.60 to 1.00 from and including August 1, 1994 to,
but not including, November 4, 1994, and (ii) 1.75 to 1.00 on November 4, 1994
and at all times thereafter.
"As used in this Section, "Step Up Date" shall mean the date occurring
after the date hereof on which any issuance of any Stock of the Company (or any
Subsidiary of the Company to any Person other then the Company or another of its
Subsidiaries) pursuant to a public or private placement offering is completed."
2. CAPITAL EXPENDITURES. The first sentence of Section 6.14 of the Credit
Agreement is hereby amended in its entirety to be and read as follows:
"Make expenditures for fixed or capital assets on a consolidated basis
during any fiscal year of the Company (beginning with its 1994 fiscal year) in
excess of (i) $38,000,000 in the aggregate for the 1994 fiscal year, and (ii)
$30,000,000 in the aggregate for all fiscal years thereafter (provided, that, in
calculating said amount for any fiscal year, expenditures for fixed or capital
assets made by Subsidiaries of the Company, which were acquired during such
fiscal year and accounted for as a pooling of interest, shall not be included to
the extent that such expenditures were made prior to the time of acquisition)."
3. CONDITIONS. No part of this Amendment shall become effective until the
Company shall have delivered (or shall have caused to be delivered) to the Banks
each of the following, in Proper Form:
(a) the written consent of all of the Guarantors to the execution and
delivery of this Amendment and such other related matters as the Banks may
reasonably require; and
(b) a Notice of Entire Agreement, DTPA Waiver and Release of Claims
executed by the Company and each of the Guarantors as of the date hereof.
4. AMENDMENT FEE WAIVED. Each of the Banks hereby waives the payment of the
amendment fee contemplated in Section 2.16 of the Credit Agreement, as such
amendment fee pertains to this Amendment, only.
5. REPRESENTATIONS TRUE; No Default. The Company represents and warrants
that the representations and warranties contained in Section 4 of the Credit
Agreement and in the other Loan Documents are true and correct in all material
respects on and as of the date hereof as though made on and as of such date. The
Company hereby certifies that no Default or Event of Default under the Credit
Agreement or any of the other Loan Documents has occurred and is continuing as
of the date hereof.
6. RATIFICATION. Except as expressly amended hereby, the Credit Agreement
and the other Loan Documents shall remain in full force and effect. In the event
of any conflict between this Amendment and the Credit Agreement or any of the
other Loan Documents (or any earlier modification of any o them), this Amendment
shall control. The Credit Agreement, as hereby amended, and all rights and
powers created thereby or thereunder and under the other Loan Docu ments are in
all respects ratified and confirmed and remain in full force and effect.
7. DEFINITIONS AND REFERENCES. Terms used herein which are defined in the
Credit Agreement or in the other Loan Documents shall have the meanings therein
ascribed to them. The term "Credit Agreement" as used in the Credit Agreement,
the other Loan Documents or any other instrument, documen or writing furnished
to the Agent or any of the Banks by the Company shall mean the Credit Agreement
as hereby amended.
8. MISCELLANEOUS. This Amendment (a) shall be binding upon and inure to the
benefit of the Company, the Banks and the Agent and their respective successors,
assigns, receivers and trustees (provided, however, that the Company shall not
assign its rights hereunder without the prior written consent of the Agent); (b)
may be modified or amended only by a writing signed by each party; (c) SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND
THE UNITED STATES OF AMERICA; (d) may be executed in several counterparts, and
by the parties hereto on separate counterparts, and each counterpart, when so
executed and delivered, shall constitute an original agreement, and all such
separate counterparts shall constitute but one and the same agreement; and (e)
together with the other Loan Documents, embodies the entire agreement and
understanding between the parties with respect to the subject matter hereof and
supersedes all prior agreements, consents and understandings relating to such
subject matter. The headings herein shall be accorded no significance in
interpreting this Amendment.
IN WITNESS WHEREOF, the Company, the Banks and the Agent have caused this
Amendment to be signed by their respective duly authorized officers, effective
as of the date which first appears hereinabove.
ALLWASTE, INC.,
a Delaware corporation
By:_____________________
R. L. Nelson, Jr.
President
ATTEST:
_________________
Douglas M. Cerny,
Secretary
-5-
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, a national banking
association, as a Bank and as Agent
By:_______________________________
Richard L. Esdorn, III,
Senior Vice President
-6-
NATIONSBANK OF TEXAS, N.A.,
a national banking association
By:_______________________________
Frank T. Hundley,
Vice President
-7-
CITIBANK, N.A., a national
banking association
By: ____________________________
Name: ____________________________
Title:____________________________
-8-
FIRST INTERSTATE BANK OF TEXAS,
N.A, a national banking association
By:_______________________________
Carol D. Birkofer,
Corporate Banking Officer
-9-
THE BANK OF NOVA SCOTIA,
By: ____________________________
Name: ____________________________
Title:____________________________
-10-
COMERICA BANK - TEXAS,
a Texas banking association
By:_______________________________
Mitchell Schulman,
Vice President
-11-
LTCB TRUST COMPANY, a New York
Trust Company
By: ____________________________
Name: ____________________________
Title:____________________________
-12-
Exhibit 10.10
AGREEMENT AND FOURTH AMENDMENT TO CREDIT AGREEMENT
(October 18, 1994)
THIS AGREEMENT AND FOURTH AMENDMENT TO CREDIT AGREEMENT (this
"AMENDMENT") is made and entered into as of October 18, 1994 by and among
ALLWASTE, INC. (the "COMPANY"), a Delaware corporation, EACH OF THE FINANCIAL
INSTITUTIONS SIGNATORY HERETO (individually, a "BANK" and collectively, the
"BANKS") and TEXAS COMMERCE BANK NATIONAL ASSOCIATION ("TCB"), a national
banking association acting as agent for the Banks (in such capacity, together
with its successors in such capacity, the "AGENT").
RECITALS:
A. The Company, the Agent and the Banks have entered into a Credit
Agreement dated as of November 30, 1993 (which such Credit Agreement, as the
same may have heretofore been amended, modified, supplemented and restated from
time to time, is hereinafter called the "CREDIT AGREEMENT").
B. The Company, the Agent and the Banks now desire to amend the Credit
Agreement in certain respects as provided hereinbelow.
AGREEMENTS:
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, representations and warranties herein set forth, and for other good
and valuable consideration, the receipt and sufficiency of which are
acknowledged, the parties hereto do hereby agree as follows:
1. COMMITMENTS; ISSUANCE OF NEW NOTES. The Commitment of each Bank is
hereby amended to be the amount set forth opposite such Bank's name on the
signature pages hereof under the caption "Commitment," subject to any reduction
in such Commitment pursuant to Section 2.2 of the Credit Agreement. The Company
agrees that simultaneously with its execution and delivery of this Amendment, it
will issue new Notes to each of the Banks in the face amount of each such Bank's
new Commitment.
2. PARTICIPATIONS IN LETTERS OF CREDIT. As of the date hereof, TCB is
deemed, without further action by any Bank, to have purchased from each of the
Banks other than TCB, and such other Banks are deemed, without further action by
any Bank, to have sold to TCB all participations which each of such other Banks
may have in any Participation Letter of Credit which are outstanding as of the
date of this Amendment and all related Letter of Credit Exposure Amount
outstanding on the date hereof under the terms of the Credit Agreement, and TCB
is deemed, without further action by any Bank, to have sold immediately
thereafter to each Bank other than TCB, and each such other Bank is deemed,
without further action by any Bank, to have purchased
-1-
from TCB, a participation to the extent of each such other Bank's Commitment
Percentage in all of such Participation Letters of Credit and all of such Letter
of Credit Exposure Amount on the date of this Amendment.
3. EXTENSION REQUEST PERIODS AMENDED. The definition of "Extension
Request Periods" contained in Section 1.1 of the Credit Agreement is hereby
amended in its entirety to be and read as follows:
"EXTENSION REQUEST PERIODS shall mean (a) the period from and
including November 30, 1995 through and including December 15, 1995 and
(b) the period from and including November 30, 1996 through and
including December 15, 1996."
4. INDEBTEDNESS DEFINITION AMENDED. The definition of "Indebtedness" is
hereby amended in its entirety to be and read as follows:
"INDEBTEDNESS shall mean and include, without duplication, (1)
all items which in accordance with Generally Accepted Accounting
Principles would be included on the liability side of a balance sheet
on the date as of which Indebtedness is to be determined (excluding
capital stock, surplus and surplus reserves), (2) all guaranties,
endorsements, letters of credit and other contingent obligations in
respect of, or any obligations to purchase or otherwise acquire,
Indebtedness of others, (3) all Indebtedness secured by any Lien
existing on any interest of the Person with respect to which
Indebtedness is being determined in Property owned subject to such Lien
whether or not the Indebtedness secured thereby shall have been assumed
and (4) all Rate Hedging Obligations; PROVIDED, that such term shall
not mean or include any Indebtedness in respect of which monies
sufficient to pay and discharge the same in full (either on the
expressed date of maturity thereof or on such earlier date as such
Indebtedness may be duly called for redemption and payment) shall be
deposited with a depository, agency or trustee acceptable to the Agent
in trust for the payment thereof and; PROVIDED, FURTHER, that when, and
only when, the term "Indebtedness" is used in connection with the
definition of Net Worth set forth herein or in the calculation of Net
Worth, as contemplated in SECTION 5.3 hereof, said term shall NOT
include items of the type described in CLAUSES (2) and (4) above or
contingent liabilities under surety bonds."
5. INTEREST COVERAGE RATIO ADDED. Section 1.1 of the Credit Agreement
is hereby amended by adding thereto a definition for "Interest Coverage Ratio"
which shall be and read as follows:
"INTEREST COVERAGE RATIO shall mean, with respect to any
Person and for any period, the ratio of EBITDA to interest expense of
such Person for such period, all determined in accordance with
Generally Accepted Accounting Principles (calculated after excluding
any interest expense paid in connection with Discontinued Operations as
of such day)."
-2-
6. MATURITY DATE EXTENDED. The definition of "Maturity Date" contained
in Section 1.1 of the Credit Agreement is hereby amended in its entirety to be
and read as follows:
"MATURITY DATE shall mean the earlier of (a) January 31, 2002
(as said date may be extended pursuant to the Extension Approval) and
(b) the date specified by the Agent pursuant to SECTION 7.1 hereof."
7. NET INCOME DEFINITION AMENDED. The definition of "Net Income"
contained in Section 1.1 of the Credit Agreement is hereby amended in its
entirety to be and read as follows:
NET INCOME shall mean gross revenues and other proper income
credits, less all proper income charges, including taxes on income, all
determined in accordance with Generally Accepted Accounting Principles;
PROVIDED, that there shall not be included in such revenues (i) any
income representing the excess of equity in any Subsidiary at the date
of acquisition over the investment in such Subsidiary, (ii) any equity
in the undistributed earnings of any Person which is not a Subsidiary,
(iii) any earnings of any Subsidiary for any period prior to the date
such Subsidiary was acquired except as may be permitted under Generally
Accepted Accounting Principles in connection with the pooling of
interest method of accounting, and (iv) any gains resulting from the
write-up of assets. Net Income shall be determined on a consolidated
basis. PROVIDED, that in no case shall Net Income in any such fiscal
year be less than $0.00 for purposes of calculating the Net Worth Floor
Adjustment."
8. NET WORTH, NET WORTH FLOOR AND NET WORTH FLOOR ADJUSTMENT
SUBSTITUTED. Section 1.1 of the Credit Agreement is hereby amended by (a)
deleting there from the definitions of Tangible Net Worth, Tangible Net Worth
Floor, Tangible Net Worth Floor Adjustment and Tangible Net Worth to Debt Ratio,
and (b) adding thereto the following definitions:
"NET WORTH shall mean total assets (valued in accordance with
Generally Accepted Accounting Principles) LESS all monies on deposit
and held in trust for the payment of liabilities, obligations and
indebtedness of the types described in items [1]-[4] of the definition
of Indebtedness, LESS all Indebtedness (as that term is defined with
respect to Net Worth). Net Worth shall be determined on a consolidated
basis."
"NET WORTH FLOOR ADJUSTMENT shall mean an amount equal to, on
any day, the sum of (a) seventy-five percent (75%) of the aggregate of
Net Income during each of the fiscal years of the Company from and
including the fiscal year ending August 31, 1995 through and including
the fiscal year ending on or immediately prior to the fiscal year in
which such day occurs plus (b) the aggregate of all equity added to the
consolidated balance sheet of the Company and its Subsidiaries
(including all equity resulting from Persons by converting Indebtedness
of the Company owed to such Persons into Stock), from August 31, 1994
through and
-3-
including such day, in accordance with Generally Accepted Accounting
Principles; PROVIDED, that in determining the amount of equity so added
neither the purchase nor any subsequent reissuance of any treasury
stock shall be included."
9. PARTIALLY OWNED SUBSIDIARIES DEFINITION ADDED. Section 1.1 of the
Credit Agreement is hereby amended by adding thereto a definition for "Partially
Owned Subsidiaries" which shall be and read as follows:
"PARTIALLY OWNED SUBSIDIARIES shall mean, as of any day, all
Persons which are Subsidiaries of the Company or of a Subsidiary of the
Company, but which are not wholly-owned by the Company or such
Subsidiary, as the case may be."
10. RATE HEDGING AGREEMENTS AND RATE HEDGING OBLIGATIONS. Section 1.1
of the Credit Agreement is hereby amended by adding thereto definitions for
"Rate Hedging Agreements" and "Rate Hedging Obligations" which shall be and read
as follows:
"RATE HEDGING AGREEMENTS shall mean (a) any and all
agreements, devices or arrangements designed to protect at least one of
the parties to such agreement, device or arrangement from the
fluctuations of interest rates, exchange rates or forward rates
applicable to such party's assets, liabilities or exchange
transactions, including, without limitation, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency
exchange agreements, interest rate cap or collar protection agreements,
forward rate currency or interest rate options, puts, warrants and
those agreements commonly known as interest rate 'swap' agreements and
(b) any and all cancellations, buybacks, reversals, terminations or
assignments of any of the foregoing."
"RATE HEDGING OBLIGATIONS shall mean, on any day, the
aggregate amount of fractional exposure of the Company arising under
Rate Hedging Agreements as of such day."
11. TERMINATION DATE EXTENDED. The definition of "Termination Date"
contained in Section 1.1 of the Credit Agreement is hereby amended in its
entirety to be and read as follows:
"TERMINATION DATE shall mean the earlier of (a) January 31,
1998 (as said date may be extended pursuant to an Extension Approval),
(b) the date the Company terminates the Commitment pursuant to SECTION
2.2 hereof and (c) the date specified by the Agent pursuant to SECTION
7.1 hereof."
12. LETTER OF CREDIT SUBLIMIT INCREASED. Section 2.4 of the Credit
Agreement is hereby amended by deleting the amount "$25,000,000" where it
appears in clause (i) and substituting therefor the amount "$40,000,000."
-4-
13. UNSECURED BORROWED DEBT DEFINITION AMENDED. The definition of
"Unsecured Borrowed Debt" contained in Section 1.1 of the Credit Agreement is
hereby amended in its entirety to be and read as follows:
"UNSECURED BORROWED DEBT shall mean (a) all Indebtedness
resulting from borrowings of the Company or any of its Subsidiaries
(exclusive of intercompany borrowings) from time to time owing to
Persons which is not secured by any Liens (excluding borrowings from
trade creditors in the ordinary course of business), including the
Indebtedness of the Company owing to the Banks or the Agent pursuant to
this Agreement and (b) all Indebtedness issued, payable to or otherwise
owed by the Company to sellers, assignors or transferors (or any of
their respective Affiliates) of Stock or assets acquired by the Company
from time to time, which is not secured by any Liens."
14. FINANCIAL TESTS AMENDED. Section 5.3 of the Credit Agreement is
hereby amended in its entirety to be and read as follows:
"5.3 FINANCIAL TESTS. (a) Have at all times a QUICK RATIO of
not less than 1.00 to 1.00; (b) have at all times a NET WORTH of not
less than $115,000,000 plus the Net Worth Floor Adjustment; (c) have a
CASH FLOW RATIO of not less than 1.50 to 1.00 at all times prior to
December 1, 1995, and at all times after November 30,1995 have a CASH
FLOW RATIO of not less than 1.75 to 1.0; (d) have at all times a FUNDED
INDEBTEDNESS TO EBITDA RATIO of not more than 2.75 to 1.00, and (e)
have an INTEREST COVERAGE RATIO at all times not less than 6.00 to
1.00."
15. ADDITIONAL GUARANTIES AND GUARANTY PROTECTION COVENANTS AMENDED.
Section 5.10 of the Credit Agreement is hereby amended by deleting the
parenthetical phrase "(other than a Foreign Subsidiary)" where it appears
therein and substituting therefor the parenthetical phrase "(other than a
Foreign Subsidiary or a Partially Owned Subsidiary)."
In addition, Section 5.11 of the Credit Agreement is hereby amended in
its entirety to be and read as follows:
"5.11 GUARANTY PROTECTION. If on any day (a) the aggregate of
Net Income before taxes of each of the Non-Guaranteeing Subsidiaries
for the Rolling Four Quarters as of such day, shall exceed twenty
percent (20%) of Net Income before taxes of the Company and its
Subsidiaries on a consolidated basis for such Rolling Four Quarters, or
(b) the aggregate of the Net Book Value of the assets of each of said
Non-Guaranteeing Subsidiaries shall exceed twenty percent (20%) of the
Net Book Value of the assets of the Company and its Subsidiaries on a
consolidated basis as of such day; then, within thirty (30) days after
such excess has been determined to exist, cause one or more of such
Non-Guaranteeing Subsidiaries to execute and deliver to the Agent a
Joinder Agreement and, in the case of a Non-Guaranteeing Subsidiary
which is also a Foreign Subsidiary, a Guaranty enforceable in the
jurisdictions where such Foreign Subsidiary is organized and its assets
are located, in each case in Proper Form (together with such related
certifi cates, opinions and documents as the Agent or any Bank may
reasonably require), so as to reduce the applicable percentage to no
greater than twenty percent (20%)."
16. ENVIRONMENTAL AUDITS AND REVIEWS AMENDED. Section 5.15 of the
Credit Agreement is hereby amended by deleting the word "twice" where it appears
in the second to the last sentence of Section 5.15 and substituting therefor the
word "once."
17. PERMITTED INDEBTEDNESS PROVISIONS AMENDED. Section 6.1 of the
Credit Agreement is hereby amended in its entirety to be and read as follows:
"6.1 INDEBTEDNESS. Create, incur, suffer or permit to exist,
or assume or guarantee, directly or indirectly, or become or remain
liable with respect to any Indebtedness, whether direct, indirect,
absolute, contingent or otherwise, EXCEPT the following:
(a) Indebtedness to the Banks and the Agent pursuant hereto;
(b) in addition to and cumulative of any other Indebtedness
permitted in this SECTION 6, in the case of the Company, ONLY,
Unsecured Borrowed Debt (subject to the limitations set forth in
SECTIONS 6.1 [O] AND [P] below);
(c) Indebtedness secured by Liens permitted by SECTION 6.2
hereof;
(d) Indebtedness of a Person outstanding at the time of
acquisition of all of the Stock of such Person by the Company or any of
its Subsidiaries or at the time of merger of such Person into the
Company or any of its Subsidiaries, as may be permitted in SECTION 6.4
hereof, and Indebtedness (and renewals and extensions thereof) which
may from time to time be outstanding after the date of such acquisition
or merger resulting from borrowings by such Person being so acquired or
merged into the Company or such Subsidiary under credit facilities in
place or committed to at the time of such acquisition or merger
pursuant to which the lender or lenders thereunder are committed to
lend to such Person (subject to compliance by such Person with standard
loan agreement covenants), PROVIDED, that, after the date of such
acquisition or merger, such credit facilities are neither increased nor
are they amended or modified in such a way as could or would materially
impact on the ability of the Company or any of its Subsidiaries to
repay its Indebtedness to the Banks or the Agent or any other Person
and, PROVIDED, FURTHER, that the aggregate amount of the Indebtedness
outstanding at any time under all such credit facilities for all such
Persons acquired or merged into the Company or such Subsidiary plus the
aggregate amount of commitments to lend monies or issue
-5-
letters of credit under all such credit facilities at such time may not
exceed $5,000,000;
(e) other liabilities existing on the date of this Agreement
and set forth on SCHEDULE IX attached hereto, and all renewals and
extensions (but not increases) thereof;
(f) current accounts payable and unsecured liabilities, not
the result of borrowings, to vendors, suppliers and persons providing
services, for expenditures on ordinary trade terms for goods and
services normally required by the Company or any of its Subsidiaries in
the ordinary course of its business;
(g) agreements of intent to acquire a Person issued by the
Company or any of its Subsidiaries in anticipation of acquiring such
Person if such acquisition is permitted under the terms and conditions
of this Agreement;
(h) the Indebtedness of any Subsidiary of the Company to the
Company or any of the Company's other Subsidiaries or the Company to
any of its Subsidiaries, in each case, as permitted in SECTION 6.7(F)
of this Agreement; PROVIDED, that, upon the occurrence of a Default and
so long as the same shall be continuing, none of such Indebtedness owed
by the Company or any other Subsidiary which is also a Guarantor to a
Non-Guaranteeing Subsidiary as of such time may be repaid and no new
extensions of credit shall be made by any Guarantor to the Company or a
Non-Guaranteeing Subsidiary as of such time, unless such Indebtedness
was incurred in the normal course of the borrowing Person's business;
(i) guarantees by the Company or any of its Subsidiaries of
the Indebtedness of any of their respective Subsidiaries permitted to
be incurred, created or existing pursuant to this SECTION 6.1,
PROVIDED, that such guarantees are not directly secured by any Liens;
(j) the Subordinated Indebtedness;
(k) current and deferred taxes;
(l) in addition to and cumulative of the Indebtedness
described in clause (d) above, Indebtedness of the Company's
Subsidiaries not in excess of $2,000,000 in the aggregate at any time;
(m) contingent liabilities under surety bonds;
(n) in addition to and cumulative of Indebtedness described
elsewhere in this SECTION 6.1, long term liabilities of the Company
(determined in accordance with
-6-
Generally Accepted Accounting Principles) not the result of borrowings,
so long as the aggregate of such long term liabilities does not exceed
at any time $500,000;
(o) Alternative Facilities Advances, PROVIDED, that the
Alternative Facilities Advances do not exceed at any time the Aggregate
Unused Commitment as of such time;
(p) in addition to and cumulative of Indebtedness described
elsewhere in this SECTION 6.1, guaranties, endorsements and other
contingent liabilities of the Company and its Subsidiaries not to
exceed at any time $6,000,000 in the aggregate, PROVIDED, that the
portion of such Indebtedness of the Company's Subsidiaries shall not
exceed at any time $1,000,000 in the aggregate;
(q) in addition to and cumulative of Indebtedness described
elsewhere in this SECTION 6.1, accrued liabilities related to insurance
plans of the Company or any of its Subsidiaries not the result of
borrowings, and
(r) in addition to and cumulative of Indebtedness described
elsewhere in this SECTION 6.1, (1) Rate Hedging Obligations of the
Company under a Rate Hedging Agreement between the Company and
NationsBank of Texas, N.A., executed effective as of September 30,
1994, in the notional amount of $30,000,000, with a maturity of June 2,
1997, and (2) Rate Hedging Obligations arising under Rate Hedging
Agreements which have been approved in advance in writing by the
Majority Banks in their sole and absolute discretion, PROVIDED that the
Rate Hedging Agreements which give rise to such Rate Hedging
Obligations are entered into solely for the hedging of the Company's
ongoing business operations.
The Company, the Agent, the Banks and each Guarantor (by its execution
of a Guaranty or a Joinder Agreement) agree that, notwithstanding
anything contained in this SECTION 6.1, in SECTION 6.7(F) or in any
other provision contained in this Agreement which may appear to be to
the contrary, any and all Indebtedness of (i) the Company or any of its
Subsidiaries from time to time owed to any other Subsidiary of the
Company or of (ii) any Subsidiary of the Company from time to time owed
to the Company (together with any and all Liens from time to time
securing the same as permitted by SECTION 6.7[F] hereof) is hereby made
and at all times hereafter shall be inferior and subordinate in all
respects to the Indebtedness from time to time owing to the Agent or
any Bank pursuant hereto and to any Lien from time to time hereafter
securing any of such Indebtedness pursuant to the terms hereof."
18. LOANS AND INVESTMENTS AMENDED. Section 6.7 of the Credit Agreement
is hereby amended by deleting therefrom in its entirety Subsection (l) contained
in Section 6.7.
-7-
19. CAPITAL EXPENDITURES AMENDED. Section 6.14 of the Credit Agreement
is hereby amended in its entirety to be and read as follows:
6.14 CAPITAL EXPENDITURES. Make expenditures for fixed or
capital assets on a consolidated basis during any fiscal year of the
Company (beginning with its 1994 fiscal year) in excess of $50,000,000
in the aggregate (PROVIDED, that, in calculating said amount for any
fiscal year, expenditures for fixed or capital assets made by
Subsidiaries of the Company, which were acquired during such fiscal
year and accounted for as a pooling of interest, shall not be included
to the extent that such expenditures were made prior to the time of
acquisition). For purposes of determining the amount of expenditures
made by the Company during any fiscal year, such expenditures shall
include the cost of any revenue producing equipment (including all
vehicles) subject to any operating lease entered into during such
fiscal year. The Banks shall review the limit on capital expenditures
on an annual basis and may agree, but shall not be obligated to, in
their sole and absolute discretion, to change the then applicable limit
on capital expenditures prospectively. Any such agreement shall be
binding only upon the execution by all of the Banks and the Company of
a writing in form and substance satisfactory to the Banks in their sole
and absolute discretion without the need to obtain the approval of any
Guarantor or any other Person or otherwise give any Guarantor or any
other Person any notice of such change."
20. TYPOGRAPHICAL ERROR CORRECTED. The Section reference to Section
6.7(j) contained in Section 6.12(a) of the Credit Agreement is hereby amended to
be and refer to Section 6.7(i) of the Credit Agreement.
21. NON-GUARANTEEING SUBSIDIARY REPRESENTATIONS. The Company hereby
warrants and represents to the Agent and the Banks that all of the Company's
Subsidiaries which are Foreign Subsidiaries or Partially Owned Subsidiaries as
of the date of this Agreement which have not executed either a Guaranty or a
Joinder Agreement are identified as such on SCHEDULE I attached hereto. The
aggregate of the Net Income before taxes for the Rolling Four Quarters as of the
date hereof of all of the Non-Guaranteeing Subsidiaries does not exceed as of
the date hereof twenty percent (20%) of the Net Income before taxes of the
Company and its Subsidiaries on a consolidated basis for such Rolling Four
Quarters, nor does the aggregate of the Net Book Value of the assets of such
Subsidiaries exceed twenty percent (20%) of the Net Book Value of the assets of
the Company and its Subsidiaries on a consolidated basis as of the date hereof.
All of the Dormant Subsidiaries are designated as such on SCHEDULE I attached
hereto.
22. REPRESENTATION MODIFIED. For purposes of any republishing or
restating, as of a date following November 30, 1993, of the representations and
warranties contained in the Credit Agreement and the other Loan Documents, the
representation contained in Section 4.18 of the Credit Agreement relating to the
aggregate Net Book Value of the Foreign Subsidiaries, such representation, as it
pertains to Foreign Subsidiaries, only, shall not be deemed restated or
republished as of any date occurring after the date of this Amendment.
-8-
23. DELIVERY OF CERTIFICATES OF EXISTENCE, GOOD STANDING, ETC. With
respect to each Guarantor, the Company hereby agrees to deliver to the Agent,
within thirty (30) days after the date hereof, certificates from the appropriate
public officials of each of the states where such Guarantor is incorporated and
conducts its business as to the continued existence, good standing and authority
to do business in those states.
24. CONDITIONS. No part of this Amendment shall become effective until
the Company shall have delivered (or shall have caused to be delivered) to the
Agent each of the following, in Proper Form:
(a) the new Notes, executed by the Company;
(b) a certificate from the Secretary of State or other appropriate
public official of the State of Delaware as to the continued
existence and good standing of the Company in the State of
Delaware;
(c) a certificate from the Secretary of State or other appropriate
public official of the State of Texas as to the qualification
of the Company to do business in the State of Texas;
(d) a certificate from the Office of the Comptroller of the State
of Texas as to the good standing of the Company in the State
of Texas;
(e) a legal opinion from the general counsel for the Company and
the Current Guarantors acceptable to the Agent in its sole and
absolute discretion; and to the further condition that, at the
time of the initial Loan, all legal matters incident to the
transactions herein contemplated shall be satisfactory to
counsel for the Agent and respective counsel for each of the
Banks;
(f) certificates dated as of the date hereof of the Secretary or
any Assistant Secretary of the Company and each of the
Guarantors as of the date hereof, and such other documents and
information as the Banks may request;
(g) an Amendment to Guaranty Agreement, in Proper Form, executed
by of all of the Guarantors to the execution and delivery of
this Amendment and such other related matters as the Banks may
reasonably require;
(h) a Notice of Entire Agreement, DTPA Waiver and Release of
Claims executed by the Company and each of the Guarantors as
of the date hereof;
(i) each Bank's amendment fee in the amount of $3,000 each, in
accordance with the provisions of Section 2.16 of the Credit
Agreement; and
-9-
(j) each Bank's closing fee in an amount equal to (i) the increase
in such Bank's Commitment provided for herein, TIMES (ii)
0.0025.
25. EXHIBITS AMENDED. The Credit Agreement is hereby amended by
deleting therefrom Exhibit B and substituting therefor a new Exhibit B, in the
form of EXHIBIT A hereto.
26. REPRESENTATIONS TRUE; NO DEFAULT. The Company represents and
warrants that the representations and warranties contained in Section 4 of the
Credit Agreement (as amended by SECTION 22 hereof) and in the other Loan
Documents are true and correct in all material respects on and as of the date
hereof as though made on and as of such date. The Company hereby certifies that
no Default or Event of Default under the Credit Agreement or any of the other
Loan Documents has occurred and is continuing as of the date hereof.
27. RATIFICATION. Except as expressly amended hereby, the Credit
Agreement and the other Loan Documents shall remain in full force and effect. In
the event of any conflict between this Amendment and the Credit Agreement or any
of the other Loan Documents (or any earlier modification of any of them), this
Amendment shall control. The Credit Agreement, as hereby amended, and all rights
and powers created thereby or thereunder and under the other Loan Docu ments are
in all respects ratified and confirmed and remain in full force and effect.
28. DEFINITIONS AND REFERENCES. Terms used herein which are defined in
the Credit Agreement or in the other Loan Documents shall have the meanings
therein ascribed to them. The term "Credit Agreement" as used in the Credit
Agreement, the other Loan Documents or any other instrument, document or writing
furnished to the Agent or any of the Banks by the Company shall mean the Credit
Agreement as hereby amended.
29. MISCELLANEOUS. This Amendment (a) shall be binding upon and inure
to the benefit of the Company, the Banks and the Agent and their respective
successors, assigns, receivers and trustees (provided, however, that the Company
shall not assign its rights hereunder without the prior written consent of the
Agent); (b) may be modified or amended only by a writing signed by each party;
(c) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS AND THE UNITED STATES OF AMERICA; (d) may be executed in several
counterparts, and by the parties hereto on separate counterparts, and each
counterpart, when so executed and delivered, shall constitute an original
agreement, and all such separate counterparts shall constitute but one and the
same agreement; and (e) together with the other Loan Documents, embodies the
entire agreement and understanding between the parties with respect to the
subject matter hereof and supersedes all prior agreements, consents and
understandings relating to such subject matter. The headings herein shall be
accorded no significance in interpreting this Amendment.
-10-
IN WITNESS WHEREOF, the Company, the Banks and the Agent have caused
this Amendment to be signed by their respective duly authorized officers,
effective as of the date which first appears hereinabove.
ALLWASTE, INC.,
a Delaware corporation
By:___________________________
Darren B. Miller, Treasurer
ATTEST:
- -----------------------------
William L. Fiedler, Secretary
Attachments:
EXHIBIT A - Officer's Certificate
(Exhibit B to Credit Agreement)
SCHEDULE I - Non-guaranteeing Subsidiaries
and Dormant Subsidiaries
-11-
Commitment: $40,000,000 TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, a national
banking association,
as a Bank and as Agent
By:_________________________
Name:_______________________
Title:______________________
-12-
Commitment: $30,000,000 NATIONSBANK OF TEXAS, N.A.,
a national banking
association
By:________________________
Frank T. Hundley,
Vice President
-13-
Commitment: $30,000,000 CITIBANK, N.A., a national
banking association
By:_________________________
Name:_______________________
Title:______________________
-14-
Commitment: $15,000,000 FIRST INTERSTATE BANK OF
TEXAS, N.A, a national
banking association
By:_________________________
Name:_______________________
Title:______________________
-15-
Commitment: $15,000,000 THE BANK OF NOVA SCOTIA
By:_________________________
Name:_______________________
Title:______________________
-16-
Commitment: $15,000,000 COMERICA BANK - TEXAS,
a Texas banking association
By:_________________________
Mitchell Schulman,
Vice President
-17-
Commitment: $15,000,000 LTCB TRUST COMPANY, a New
York Trust Company
By:_________________________
Name:_______________________
Title:______________________
-18-
OFFICER'S CERTIFICATE
Date:________
[Name and address of Bank
or Agent, as the case may be]
Attention:___________________
Re:Financial Statements Required under Credit Agreement (as the same
may have been amended, modified and restated from time to time, the
"CREDIT AGREEMENT") dated as of November 30, 1993, by and among
Allwaste, Inc., the financial institutions or party thereto from time
to time and Texas Commerce Bank National Association, as Agent
Gentlemen:
Capitalized words and phrases used herein and not defined herein and
defined in the Credit Agreement are used herein with the same meanings as are
assigned to them in the Credit Agreement.
The undersigned hereby certifies, warrants and represents to the
addressee named above that:
(1) He or she is the duly appointed and acting
*_________________of the Company;
(2) The attached financial statements dated as of_____________
were prepared in conformity with Generally Accepted Accounting
Principles consistently applied and present fairly the
financial position of the Company and its Subsidiaries on a
consolidated basis as of the date thereof and the results of
its operations for the period covered thereby.
______________
* Must be the Chairman, President, chief operating officer, chief
financial officer or chief accounting officer of the Company.
EXHIBIT B
EXHIBIT A TO AGREEMENT AND FOURTH AMENDMENT TO CREDIT AGREEMENT
(3) As of the end of the period covered by the attached financial
statements:
(a) QUICK RATIO:
------------
(i) Sum of cash, readily
available funds,
Aggregate Unused
Commitment of the Banks
LESS Alternative Facilities
----
Advances, and Current Accounts
Receivable of the Company
and its Subsidiaries on
a consolidated basis: $___________
(ii) Current Liabilities of
the Company and its
Subsidiaries on a
consolidated basis: $____________
(iii) Required Quick Ratio: 1.00 to 1.00
(iv) Actual Quick Ratio: ____ to 1.00
(b) NET WORTH:
---------
(i) 75% of aggregate of
Net Income for 1995
fiscal year and each
completed fiscal year
thereafter [Break out
by fiscal year]: $_____________
(ii) aggregate of all equity
added to the consolidated
balance sheet of the
Company and its Subsidiaries
after August 31, 1994
included in the attached
financial statements: $_____________
(iii) Required Net
Worth ([i]+[ii]+$115,000,000) $_____________
EXHIBIT B
Page 2
(iv) Net Worth of
the Company and its
Subsidiaries on a
consolidated basis: $_____________
(c) CASH FLOW RATIO:
(i) Cash Flow for the
Rolling Four Quarters: $_____________
(ii) Current Maturities: $_____________
(iii) Revolving Portion: $_____________
(iv) Interest expense on
borrowed Indebtedness
(exclusive of interest
expense paid in con-
nection with Discontinued
Operations) for the Rolling
Four Quarters: $_____________
(v) Cash expenditures (if any)
to reduce or repurchase
all or part of the out-
standing principal balance
of the Subordinated
Indebtedness made during
the Rolling Four Quarters
and not required by the
terms of such Subordinated
Indebtedness: $_____________
(vi) scheduled principal
reductions on Subordinated
Indebtedness which is payable
within one (1) year: $_____________
(vii) sum of (ii) through (vi): $_____________
(viii) Required Cash Flow Ratio: 1.__ to 1.00
EXHIBIT B
Page 3
(ix) Actual Cash Flow Ratio: ____ to 1.00
(d) FUNDED INDEBTEDNESS TO EBITDA RATIO:
(i) Funded Indebtedness: $_____________
(ii) Cash Flow for the Rolling
Four Quarters: $_____________
(iii) Cash taxes paid during the
Rolling Four Quarters: $_____________
(iv) EBITDA for the
Rolling Four Quarters
([ii]+[iii]): $_____________
(v) Funded Indebtedness to
EBITDA Ratio for the
Rolling Four Quarters: $_____________
(vi) Required Funded Indebted-
ness to EBITDA Ratio $_____________
(e) INTEREST COVERAGE RATIO:
(i) EBITDA for the Rolling
Four Quarters: $_____________
(ii) Interest Expense for the
Rolling Four Quarters: $_____________
(iii) Interest Coverage Ratio: _____ to 1.00
(iv) Actual Interest Coverage Ratio:_____ to 1.00
(4) Based on 3(d)(v) above:
(a) Applicable Letter of Credit Fee Percentage is _____%;
(b) Applicable Margin for Eurodollar Rate Borrowings
is _____%;
(c) Applicable Margin for CD Rate Borrowings is _____%;
and
EXHIBIT B
Page 4
(d) Applicable Margin for Alternate Base Rate Borrowings
is ______%.
(5) (Check EITHER [a] or [b])
[ ] (a) The Company has kept, observed, performed and
fulfilled each and every one of its obligations under
the Credit Agreement during the period covered by the
attached financial statements.
[ ] (b) The Company has kept, observed, performed and
fulfilled each and every one of its obligations under
the Credit Agreement during the period covered by the
attached financial statements except for the
following matters: [Describe all such defaults,
specifying the nature, duration and status thereof
and what action the Company has taken or proposes to
take with respect thereto.]
-------------------------
Name:_________________________
EXHIBIT B
Page 5
Exhibit 10.11
AGREEMENT AND FIFTH AMENDMENT TO CREDIT AGREEMENT
(August 31, 1995)
THIS AGREEMENT AND FIFTH AMENDMENT TO CREDIT AGREEMENT (this
"AMENDMENT") is made and entered into as of August 31, 1995 by and among
ALLWASTE, INC. (the "COMPANY"), a Delaware corporation, EACH OF THE FINANCIAL
INSTITUTIONS SIGNATORY HERETO (individually, a "BANK" and collectively, the
"BANKS"), TEXAS COMMERCE BANK NATIONAL ASSOCIATION ("TCB"), a national banking
association acting as agent for the Banks (in such capacity, together with its
successors in such capacity, the "AGENT"), and NATIONSBANK OF TEXAS, N.A., a
national banking association, as co-agent under the Credit Agreement (as defined
hereinafter) (in such capacity, the "CO-AGENT").
RECITALS:
A. The Company, the Agent and the Banks have entered into a Credit
Agreement dated as of November 30, 1993 (which such Credit Agreement, as the
same may have heretofore been amended, modified, supplemented and restated from
time to time, is hereinafter called the "CREDIT AGREEMENT").
B. The Company, the Agent, the Co-Agent and the Banks now desire to
amend the Credit Agreement in certain respects as provided hereinbelow.
AGREEMENTS:
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, representations and warranties herein set forth, and for other good
and valuable consideration, the receipt and sufficiency of which are
acknowledged, the parties hereto do hereby agree as follows:
1. COMMITMENTS; ISSUANCE OF NEW NOTES. The Commitment of each Bank is
hereby amended to be the amount set forth opposite such Bank's name on the
signature pages hereof under the caption "Commitment," subject to any reduction
in such Commitment pursuant to Section 2.2 of the Credit Agreement. The Company
agrees that simultaneously with its execution and delivery of this Amendment, it
will issue new Notes to each of the Banks in the face amount of each such Bank's
new Commitment.
2. PARTICIPATIONS IN LETTERS OF CREDIT. As of the date hereof, TCB is
deemed, without further action by any Bank, to have purchased from each of the
Banks other than TCB, and such other Banks are deemed, without further action by
any Bank, to have sold to TCB all participations which each of such other Banks
may have in any Participation Letter of Credit which are outstanding as of the
date of this Amendment and all related Letter of Credit Exposure Amount
outstanding on the date hereof under the terms of the Credit Agreement, and TCB
is deemed, without further action by any Bank, to have sold immediately
thereafter to each Bank other than TCB, and each such other Bank is deemed,
without further action by any Bank, to have purchased from TCB, a participation
to the extent of each such other Bank's Commitment Percentage in all of such
Participation Letters of Credit and all of such Letter of Credit Exposure Amount
on the date of this Amendment.
3. APPLICABLE MARGIN AMENDED. The definition of "Applicable Margin"
contained in Section 1.1 of the Credit Agreement is hereby amended in its
entirety to be and read as follows:
APPLICABLE MARGIN shall mean with respect to any Loan:
(a) beginning with June 20, 1995, on any day occurring on or after
(1) June 20 of any calendar year but prior to September 20 of
such calendar year, the applicable per annum percentage
corresponding to the Funded Indebtedness to EBITDA Ratio
determined as of the immediately preceding February 28, (2)
September 20 of any calendar year but prior to December 20 of
such calendar year, the applicable per annum percentage
corresponding to the Funded Indebtedness to EBITDA Ratio
determined as of the immediately preceding May 31, (3)
December 20 of any calendar year but prior to March 20 of the
immediately succeeding calendar year, the applicable per annum
percentage corresponding to the Funded Indebtedness to EBITDA
Ratio determined as of the immediately preceding August 31, or
(4) March 20 of any calendar year but prior to June 20 of such
calendar year, the applicable per annum percentage
corresponding to the Funded Indebtedness to EBITDA Ratio
determined as of the immediately preceding November 30, as
provided below:
(i) from the date hereof to, but not including, the Termination
Date:
Per Annum
Per Annum Per Annum Percentage
Percentage Percentage For Alternate
Funded Indebtedness For Eurodollar For Cd Rate Base Rate
To EBITDA Ratio Rate Borrowings Borrowings Borrowings
- --------------- --------------- ---------- ----------
150% or less 0.750% 0.875% 0.000%
Greater than 150% but less than 200% 0.875% 1.000% 0.000%
200% or greater but less than 250% 1.000% 1.125% 0.000%
250% or greater but less than 300% 1.250% 1.375% 0.250%
300% or greater 1.500% 1.625% 0.500%
(ii) on the Termination Date and at all times thereafter:
150% or less 1.000% 1.125% 0.000%
Greater than 150% but less than 200% 1.125% 1.250% 0.125%
200% or greater but less than 250% 1.250% 1.375% 0.250%
250% or greater but less than 300% 1.500% 1.625% 0.500%
300% or greater 1.750% 1.875% 0.750%"
-2-
4. ARI; DEFINITION ADDED. Section 1.1 of the Credit Agreement is hereby
amended by adding thereto a definition for "ARI," which shall be and read as
follows:
"ARI shall mean Allwaste Recycling, Inc., a Delaware corporation."
5. ARI GUARANTY; DEFINITION ADDED. Section 1.1 of the Credit Agreement
is hereby amended by adding thereto a definition for "ARI Guaranty," which shall
be and read as follows:
"ARI GUARANTY shall mean a guaranty in favor of NationsBank of Texas,
N.A., executed by the Company in connection with the ARI Stock Sale,
guaranteeing a loan in a amount of approximately $1,500,000 from NationsBank of
Texas, N.A., to the ARI Management Business Entity in connection with the ARI
Stock Sale."
6. ARI LOANS AND INVESTMENTS; DEFINITION ADDED. Section 1.1 of the
Credit Agreement is hereby amended by adding thereto a definition for "ARI Loans
and Investments," which shall be and read as follows:
"ARI LOANS AND INVESTMENTS shall mean any and all non-cash
consideration received by the Company in connection with the ARI Stock Sale."
7. ARI MANAGEMENT BUSINESS ENTITY; DEFINITION ADDED. Section 1.1 of the
Credit Agreement is hereby amended by adding thereto a definition for "ARI
Management Business Entity," which shall be and read as follows:
"ARI MANAGEMENT BUSINESS ENTITY shall mean the Business Entity owned,
directly or indirectly, by certain members of the management group of ARI, such
Business Entity is acquiring Stock of ARI in connection with the ARI Sale."
8. ARI SALE DEFINITION ADDED. Section 1.1 of the Credit Agreement is
hereby amended by adding thereto a definition for "ARI Sale," which shall be and
read as follows:
"ARI SALE shall mean a sale, directly or indirectly, to Equus II
Incorporated and the ARI Management Business Entity by the Company of the Stock
of ARI."
9. CERTAIN DEFINITIONS DELETED. Section 1.1 of the Credit Agreement is
hereby amended by deleting therefrom the definitions of "Adjusted Net Income",
"Cash Flow Ratio", "Current Maturities" and "Revolving Portion."
10. CASH FLOW DEFINITION AMENDED. The definition of "Cash Flow"
contained in Section 1.1 of the Credit Agreement is hereby amended in its
entirety to be and read as follows:
"CASH FLOW shall mean, as to a particular Person and for any period for
which Cash Flow is calculated, (a) the sum of (1) Net Income of such Person for
such period before taxes (calculated after excluding any gain or loss
attributable to Discontinued Operations as of such day), PLUS (2) depreciation,
depletion, obsolescence and amortization of Property of such Person determined
in accordance with Generally Accepted Accounting Principles (calculated after
excluding any depreciation, depletion, obsolescence and amortization applicable
to Discontinued Operations as of such day) for such period, PLUS (3) interest
expense of such Person for such period, all determined in accordance with
Generally Accepted Accounting Principles (calculated after excluding any
interest expense paid in connection with Discontinued Operations as of such
day), PLUS (4) if the Cash Flow of the Company and its Subsidiaries is being
calculated for any Rolling Four Quarters which includes the Company's last
fiscal quarter of its 1995 fiscal year and/or the first fiscal quarter of its
1996 fiscal year, the amount (not to exceed in the aggregate during both such
fiscal quarters $17,500,000) of any discretionary charges and/or reserves
against income taken by the Company and its Subsidiaries during such fiscal
quarters, LESS (b) cash taxes paid by such Person during such period (calculated
after excluding any cash taxes paid in connection with Discontinued Operations
as of such day). Cash Flow shall be determined on a consolidated basis."
11. EXTENSION REQUEST PERIODS AMENDED. The definition of "Extension
Request Periods" contained in Section 1.1 of the Credit Agreement is hereby
amended in its entirety to be and read as follows:
"EXTENSION REQUEST PERIODS shall mean (a) the period from and including
November 30, 1996 through and including December 15, 1996 and (b) the period
from and including November 30, 1997 through and including December 15, 1997."
12. FIXED CHARGE COVERAGE RATIO DEFINITION ADDED. Section 1.1 of the
Credit Agreement is hereby amended by adding thereto a definition for "Fixed
Charge Coverage Ratio" which shall be and read as follows:
"FIXED CHARGE COVERAGE RATIO shall mean, as of any day that the Fixed
Charge Coverage Ratio is calculated, the ratio of (a) Cash Flow for the Rolling
Four Quarters as of such day PLUS Operating Lease Expense during such Rolling
Four Quarters TO (b) the sum of (i) required amortization on Funded Indebtedness
during such Rolling Four Quarters, (ii) interest expense on all borrowed
Indebtedness during such Rolling Four Quarters (calculated after excluding any
interest expense paid in connection with Discontinued Operations), (iii) sixty
percent (60%) of expenditures for fixed or capital assets made during such
Rolling Four Quarters, (iv) cash preferred dividends paid during such Rolling
Four Quarters, and (v) Operating Lease Expense during such Rolling Four
Quarters, all determined on a consolidated basis."
13. MATURITY DATE EXTENDED. The definition of "Maturity Date" contained
in Section 1.1 of the Credit Agreement is hereby amended in its entirety to be
and read as follows:
"MATURITY DATE shall mean the earlier of (a) January 31, 2003 (as said
date may be extended pursuant to the Extension Approval) and (b) the date
specified by the Agent pursuant to SECTION 7.1 hereof."
14. NET WORTH FLOOR ADJUSTMENT AMENDED. The definition of "Net Worth
Floor Adjustment" is hereby amended in its entirety to be and read as follows:
"NET WORTH FLOOR ADJUSTMENT shall mean an amount equal to, on
any day, THE SUM OF (a) fifty percent (50%) of the aggregate of Net
Income during each of the fiscal years of the Company from and
including the fiscal year ending August 31, 1996 through and including
the fiscal year ending on or immediately prior to the fiscal year in
which such day occurs PLUS (b) the aggregate of all equity added to the
consolidated balance sheet of the Company and its Subsidiaries
(including all equity resulting from Persons by converting Indebtedness
of the Company owed to such Persons into Stock), from August 31, 1995
through and including such day, in accordance with Generally Accepted
Accounting Principles; PROVIDED, that in determining the amount of
equity so added neither the purchase nor any subsequent reissuance of
any treasury stock shall be included PLUS (c) the amount of any after
tax gain (determined in accordance with Generally Accepted Accounting
Principles) resulting from the ARI Sale, which such gain occurs during
the first fiscal quarter of the Company's 1996 fiscal year."
15. OPERATING LEASE EXPENSE DEFINITION ADDED. Section 1.1 of the Credit
Agreement is hereby amended by adding thereto a definition for "Operating Lease
Expense" which shall be and read as follows:
"OPERATING LEASE EXPENSE shall mean, as to any Person and for any
period, payments under operating leases with an original term of 12 months or
longer related to revenue producing Equipment (but including all vehicles) by
such Person during such period."
16. RESOURCE RECOVERY LETTER OF CREDIT DEFINITION ADDED. Section 1.1 of
the Credit Agreement is hereby amended by adding thereto a definition for
"Resource Recovery Letter of Credit" which shall be and read as follows:
"RESOURCE RECOVERY LETTER OF CREDIT shall mean that certain Letter of Credit
(L.C. No. I454627) dated as of August 10, 1995 in the face amount of
$4,215,833.33 issued or to be issued for the benefit of Bank One, Arizona, NA,
as trustee for the holders of the issued $4,000,000 Industrial Development
Revenue Bonds (Resource Recovery Techniques of Arizona, Inc. Project), Series
1995, for the account of the Company and on behalf of Resource Recovery
Techniques of Arizona, Inc., an Arizona corporation."
17. TERMINATION DATE EXTENDED. The definition of "Termination Date"
contained in Section 1.1 of the Credit Agreement is hereby amended in its
entirety to be and read as follows:
"TERMINATION DATE shall mean the earlier of (a) January 31, 1999 (as
said date may be extended pursuant to an Extension Approval), (b) the date the
Company terminates the Commitment pursuant to SECTION 2.2 hereof and (c) the
date specified by the Agent pursuant to SECTION 7.1 hereof."
18. COMMITMENT FEE REDUCED. The first sentence of Section 2.2 of the
Credit Agreement is hereby amended by deleting the phrase "three-eighths of one
percent (3/8%)" where it appears therein and substituting therefor the phrase
"one-fourth of one percent (1/4%)."
19. FRONTING FEE REDUCED. The last sentence of the first paragraph of
Section 2.4(b) of the Credit Agreement is hereby amended by deleting therefrom
the phrase "one-eighth of one percent (1/8%)" and substituting therefor the
phrase "one-tenth of one percent (1/10%)."
20. AMENDMENT FEE PROVISIONS AMENDED. Section 2.16 of the Credit
Agreement is hereby amended by deleting therefrom the amount "$3,000" where it
appears therein and substituting therefor the amount "$1,000." In addition,
Section 2.16 of the Credit Agreement is hereby amended by deleting therefrom the
phrase "(including a waiver of any violation of capital expenditure limits
imposed from time to time pursuant to SECTION 6.14 hereof)" wherever it appears
therein. Notwithstanding the foregoing, with respect to this Amendment, only,
the amendment fee to be paid by the Company to each Bank which was a party to
the Credit Agreement prior to the date of this Amendment shall each be paid by
the Company simultaneously with the execution and delivery of this Amendment, an
amendment fee of $10,000. No Bank becoming a party to the Credit Agreement on
the date hereof shall be entitled to any amendment fee to be paid in connection
with this Amendment.
21. FINANCIAL TESTS AMENDED. Section 5.3 of the Credit Agreement is
hereby amended in its entirety to be and read as follows:
"5.3 FINANCIAL TESTS . (a) Have at all times a QUICK
RATIO of not less than 1.00 to 1.00; (b) have at all times a
NET WORTH equal to (1) the Net Worth of the Company and its
Subsidiaries on a consolidated basis as reflected on the
Company's 1995 Annual Audited Financial Statements LESS (2)
$10,000,000 LESS (3) the amount of any discretionary charges
and/or reserves against income taken by the Company and its
Subsidiaries during the first fiscal quarter of its 1996
fiscal year, such amount not to exceed $17,500,000 less the
amount of any discretionary charges and/or reserves against
income taken by the Company and its Subsidiaries during the
fourth fiscal quarter of its 1995 fiscal year PLUS (4) the Net
Worth Floor Adjustment; (c) have at all times a FIXED CHARGE
COVERAGE RATIO of not less than 1.10 to 1.00; (d) have at all
times a FUNDED INDEBTEDNESS TO EBITDA RATIO of not more than
3.25 to 1.00, and (e) have an INTEREST COVERAGE RATIO at all
times not less than 4.50 to 1.00."
22. PERMITTED INDEBTEDNESS PROVISIONS AMENDED. Section 6.1 of the
Credit Agreement is hereby amended in its entirety to be and read as follows:
"6.1 INDEBTEDNESS. Create, incur, suffer or permit to exist,
or assume or guarantee, directly or indirectly, or become or remain
liable with respect to any Indebtedness, whether direct, indirect,
absolute, contingent or otherwise, EXCEPT the following:
"(a) Indebtedness to the Banks and the Agent pursuant hereto;
"(b) in addition to and cumulative of any other Indebtedness
permitted in this SECTION 6, in the case of the Company, ONLY,
Unsecured Borrowed Debt (subject to the limitations set forth in
SECTION 6.1 [L] below);
"(c) Indebtedness secured by Liens permitted by SECTION 6.2
hereof;
"(d) in addition to and cumulative of any other Indebtedness
of the Company's Subsidiaries permitted in this SECTION 6, Indebtedness
of the Company's Subsidiaries (including guaranties, endorsements,
letters of credit for the benefit of third parties and other contingent
liabilities) not in excess at any time of ten percent (10%) of the Net
Worth of the Company and its Subsidiaries on a consolidated basis as of
such time;
"(e) current accounts payable and unsecured liabilities, not
the result of borrowings, to vendors, suppliers and persons providing
services, for expenditures on ordinary trade terms for goods and
services normally required by the Company or any of its Subsidiaries in
the ordinary course of its business;
"(f) agreements of intent to acquire a Person issued by the
Company or any of its Subsidiaries in anticipation of acquiring such
Person if such acquisition is permitted under the terms and conditions
of this Amendment;
"(g) the Indebtedness of any Subsidiary of the Company to the
Company or any of the Company's other Subsidiaries or the Company to
any of its Subsidiaries, in each case, as permitted in SECTION 6.7(G)
of this Amendment; PROVIDED, that, upon the occurrence of a Default and
so long as the same shall be continuing, none of such Indebtedness owed
by the Company or any other Subsidiary which is also a Guarantor to a
Non-Guaranteeing Subsidiary as of such time may be repaid and no new
extensions of credit shall be made by any Guarantor to the Company or a
Non-Guaranteeing Subsidiary as of such time, unless such Indebtedness
was incurred in the normal course of the borrowing Person's business;
"(h) guarantees by the Company or any of its Subsidiaries of
the Indebtedness of any of their respective Subsidiaries permitted to
be incurred, created or existing pursuant to this SECTION 6.1,
PROVIDED, that such guarantees are not directly secured by any Liens;
"(i) the Subordinated Indebtedness;
"(j) current and deferred taxes;
"(k) contingent liabilities under surety bonds;
"(l) Alternative Facilities Advances, PROVIDED, that the
Alternative Facilities Advances do not exceed at any time the Aggregate
Unused Commitment as of such time;
"(m) in addition to and cumulative of Indebtedness described
elsewhere in this SECTION 6.1, accrued liabilities related to insurance
plans of the Company or any of its Subsidiaries not the result of
borrowings;
"(n) in addition to and cumulative of Indebtedness described
elsewhere in this SECTION 6.1, Rate Hedging Obligations arising under
Rate Hedging Agreements which have been approved in advance in writing
by the Majority Banks in their sole and absolute discretion, PROVIDED
that the Rate Hedging Agreements which give rise to such Rate Hedging
Obligations are entered into solely for the hedging of the Company's
ongoing business operations, and
"(o) in addition to and cumulative of Indebtedness described
elsewhere in this SECTION 6.1, other Indebtedness (including
guaranties, endorsements, the Resource Recovery Letter of Credit, other
letters of credit for the benefit of third parties and other contingent
liabilities) of the Company not to exceed at any time ten percent (10%)
of the Net Worth of the Company and its Subsidiaries determined on a
consolidated basis as of such time.
"(r) in addition to and cumulative of Indebtedness described
elsewhere in this SECTION 6.1, Indebtedness of the Company arising in
connection with the ARI Guaranty."
"The Company, the Agent, the Co-Agent, the Banks and each Guarantor (by
its execution of a Guaranty or a Joinder Agreement) agree that,
notwithstanding anything contained in this SECTION 6.1, in SECTION
6.7(G) or in any other provision contained in this Amendment which may
appear to be to the contrary, any and all Indebtedness of (i) the
Company or any of its Subsidiaries from time to time owed to any other
Subsidiary of the Company or of (ii) any Subsidiary of the Company from
time to time owed to the Company (together with any and all Liens from
time to time securing the same as permitted by SECTION 6.7[G] hereof)
is hereby made and at all times hereafter shall be inferior and
subordinate in all respects to the Indebtedness from time to time owing
to the Agent, the Co-Agent or any Bank pursuant hereto and to any Lien
from time to time hereafter securing any of such Indebtedness pursuant
to the terms hereof."
23. RESTRICTIONS ON ACQUISITIONS AMENDED. Section 6.4(f) of the Credit
Agreement is hereby amended by deleting therefrom the amount "$20,000,000" where
it appears therein and substituting therefor the amount "$30,000,000." In
addition, Section 6.4(z) is hereby amended by deleting therefrom the phrase "six
percent (6%)" where it appears therein and substituting therefor the phrase
"eight percent (8%)."
24. PERMITTED LOANS AND INVESTMENTS AMENDED. Section 6.7 of the Credit
Agreement is hereby amended in its entirety to be and read as follows:
"6.7 LOANS AND INVESTMENTS. Make, directly or indirectly, any loan or
advance to or have any Investment in any Person, or make any commitment
to make such loan, advance or Investment, except:
"(a) Stock of any Subsidiary;
"(b) Permitted Investment Securities;
"(c) Stock received in the settlement of debts (created in the
ordinary course of business);
"(d) travel advances in the ordinary course of business to
officers and employees;
"(e) the ARI Loans and Investments;
"(f) customer obligations and receivables owing to the Company
and arising out of sales or leases made or the rendering of services by
the Company in the ordinary course of business;
"(g) so long as no Default shall have occurred and is then
continuing, and subject to the terms of SECTION 6.2 hereof, loans by
the Company or any of its Subsidiaries to any of their respective
Subsidiaries;
"(h) so long as no Event of Default has occurred and is
continuing, loans to any Person which is not a Subsidiary of the
Company or of any of the Company's Subsidiaries; PROVIDED, that the
aggregate of all of such loans does not exceed at any time ten percent
(10%) of the Net Worth of the Company and its Subsidiaries on a
consolidated basis as of such time.
"(i) so long as no Event of Default has occurred and is
continuing, Investments in any Person which is not a Subsidiary of the
Company or of any of the Company's Subsidiaries; PROVIDED, that the
aggregate of all of such Investments does not exceed at any time ten
percent (10%) of the Net Worth of the Company and its Subsidiaries on a
consolidated basis as of such time.
"(j) so long as no Event of Default has occurred and is
continuing, issued and outstanding Stock of the Company and
Subordinated Indebtedness, provided, that the aggregate thereof does
not exceed $10,000,000 on a consolidated basis during the period from
and including August 31, 1995, and ending on the termination of this
Agreement."
25. CROSS-REFERENCES AMENDED. The reference to Section 6.7(h) and (j)
contained in Section 5.9 of the Credit Agreement is hereby amended to be and
refer to Section 6.7(j) of the Credit Agreement. The reference to Section 6.7(i)
contained in Section 6.12(a) of the Credit Agreement is hereby amended to be and
refer to Section 6.7(j) of the Credit Agreement.
26. CAPITAL EXPENDITURES RESTRICTIONS DELETED. The Credit Agreement is
hereby amended by deleting therefrom all of Section 6.14 thereof and renumbering
Section "6.15" of the Credit Agreement as Section "6.14."
27. NON-GUARANTEEING SUBSIDIARY REPRESENTATIONS. The Company hereby
warrants and represents to the Agent, the Co-Agent and the Banks that all of the
Company's Subsidiaries which are Foreign Subsidiaries or Partially Owned
Subsidiaries as of the date of this Amendment which have not executed either a
Guaranty or a Joinder Agreement are identified as such on SCHEDULE I attached
hereto. The aggregate of the Net Income before taxes for the Rolling Four
Quarters as of the date hereof of all of the Non-Guaranteeing Subsidiaries does
not exceed as of the date hereof twenty percent (20%) of the Net Income before
taxes of the Company and its Subsidiaries on a consolidated basis for such
Rolling Four Quarters, nor does the aggregate of the Net Book Value of the
assets of such Subsidiaries exceed twenty percent (20%) of the Net Book Value of
the assets of the Company and its Subsidiaries on a consolidated basis as of the
date hereof. All of the Dormant Subsidiaries are designated as such on SCHEDULE
I attached hereto.
28. DELIVERY OF CERTIFICATES OF EXISTENCE, GOOD STANDING, ETC. With
respect to each Guarantor, the Company hereby agrees to deliver to the Agent,
within thirty (30) days after the date hereof, certificates from the appropriate
public officials of each of the states where such Guarantor is incorporated and
conducts its business as to the continued existence, good standing and authority
to do business in those states.
29. EXHIBITS AMENDED. The Credit Agreement is hereby amended by
deleting therefrom Exhibit B and substituting therefor a new Exhibit B, in the
form of EXHIBIT A hereto.
30. TREASURER AND SENIOR VICE-PRESIDENTS CAN SIGN. The Credit Agreement
is hereby amended so as to provide that any and all certificates, requests,
notices and statements required or permitted to be executed by the Chairman,
President, chief operating officer, chief financial officer or chief accounting
officer of the Company may, in addition, be executed by the Treasurer and any
Senior Vice-President of the Company.
31. CONDITIONS. No part of this Amendment shall become effective until
the Company shall have delivered (or shall have caused to be delivered) to the
Agent each of the following, in Proper Form:
(a) the new Notes, executed by the Company;
(b) a Master Assignment and Acceptance Agreement, executed by the
Company and all of the Banks and Citibank, N.A.;
(c) a certificate from the Secretary of State or other appropriate
public official of the State of Delaware as to the continued
existence and good standing of the Company in the State of
Delaware;
(d) a certificate from the Secretary of State or other appropriate
public official of the State of Texas as to the qualification
of the Company to do business in the State of Texas;
(e) a certificate from the Office of the Comptroller of the State
of Texas as to the good standing of the Company in the State
of Texas;
(f) a legal opinion from the general counsel for the Company and
the Current Guarantors acceptable to the Agent in its sole and
absolute discretion; and to the further condition that, at the
time of the initial Loan, all legal matters incident to the
transactions herein contemplated shall be satisfactory to
counsel for the Agent and respective counsel for each of the
Banks;
(g) certificates dated as of the date hereof of the Secretary or
any Assistant Secretary of the Company and each of the
Guarantors as of the date hereof, and such other documents and
information as the Banks may request;
(h) a Consent, in Proper Form, executed by of all of the
Guarantors to the execution and delivery of this Amendment and
such other related matters as the Banks may reasonably
require;
(i) a Notice of Entire Agreement, DTPA Waiver and Release of
Claims executed by the Company and each of the Guarantors as
of the date hereof, and
(j) the amendment fee payable to each Bank a party to the Credit
Agreement prior to the date hereof in the amount of $10,000
each, in accordance with the provisions of SECTION 19 hereof.
32. REPRESENTATIONS TRUE; NO DEFAULT. The Company represents and
warrants that the representations and warranties contained in Section 4 of the
Credit Agreement and in the other Loan Documents are true and correct in all
material respects on and as of the date hereof as though made on and as of such
date. The Company hereby certifies that no Default or Event of Default under the
Credit Agreement or any of the other Loan Documents has occurred and is
continuing as of the date hereof.
33. RATIFICATION. Except as expressly amended hereby, the Credit
Agreement and the other Loan Documents shall remain in full force and effect. In
the event of any conflict between this Amendment and the Credit Agreement or any
of the other Loan Documents (or any earlier modification of any of them), this
Amendment shall control. The Credit Agreement, as hereby amended, and all rights
and powers created thereby or thereunder and under the other Loan Documents are
in all respects ratified and confirmed and remain in full force and effect.
34. DEFINITIONS AND REFERENCES. Terms used herein which are defined in
the Credit Agreement or in the other Loan Documents shall have the meanings
therein ascribed to them. The term "Credit Agreement" as used in the Credit
Agreement, the other Loan Documents or any other instrument, document or writing
furnished to the Agent, the Co-Agent or any of the Banks by the Company shall
mean the Credit Agreement as hereby amended.
35. MISCELLANEOUS. This Amendment (a) shall be binding upon and inure
to the benefit of the Company, the Banks, the Agent, the Co-Agent and their
respective successors, assigns, receivers and trustees (provided, however, that
the Company shall not assign its rights hereunder without the prior written
consent of the Agent); (b) may be modified or amended only by a writing signed
by each party; (c) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS AND THE UNITED STATES OF AMERICA; (d) may be executed
in several counterparts, and by the parties hereto on separate counterparts, and
each counterpart, when so executed and delivered, shall constitute an original
agreement, and all such separate counterparts shall constitute but one and the
same agreement; and (e) together with the other Loan Documents, embodies the
entire agreement and understanding between the parties with respect to the
subject matter hereof and supersedes all prior agreements, consents and
understandings relating to such subject matter. The headings herein shall be
accorded no significance in interpreting this Amendment.
IN WITNESS WHEREOF, the Company, the Banks, the Agent and the Co-Agent
have caused this Amendment to be signed by their respective duly authorized
officers, effective as of the date which first appears hereinabove.
ALLWASTE, INC.,
a Delaware corporation
By:___________________
Darren B. Miller,
Treasurer
ATTEST:
_____________________________
William L. Fiedler, Secretary
Attachments:
EXHIBIT A - Officer's Certificate
(Exhibit B to Credit Agreement)
SCHEDULE I - Non-guaranteeing Subsidiaries
and Dormant Subsidiaries
-13-
Commitment: $40,000,000 TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, a national
banking association,
as a Bank and as Agent
By: ______________________
Richard L. Esdorn, III,
Senior Vice President
-14-
Commitment: $30,000,000 NATIONSBANK OF TEXAS, N.A.,
a national banking
association, as a Bank and
as Co-Agent
By: ______________________
Name: ______________________
Title:______________________
-15-
Commitment: $10,000,000 BANK OF AMERICA TEXAS, N.A.,
a national banking
association
By: _______________________
Victor N. Tekell,
Vice President
-16-
Commitment: $15,000,000 FIRST INTERSTATE BANK OF
TEXAS, N.A, a national
banking association
By: ______________________
Name: ______________________
Title:______________________
-17-
Commitment: $15,000,000 THE BANK OF NOVA SCOTIA
By: ______________________
Name: ______________________
Title:______________________
-18-
Commitment: $20,000,000 COMERICA BANK - TEXAS, a
Texas banking association
By: _______________________
Mitchell Schulman,
Vice President
-19-
Commitment: $20,000,000 LTCB TRUST COMPANY, a New
York Trust Company
By: ______________________
Name: ______________________
Title:______________________
-20-
Commitment: $10,000,000 ABN AMRO BANK N.V., HOUSTON
AGENCY
By: ______________________
Name: ______________________
Title:______________________
By: ______________________
Name: ______________________
Title:______________________
-21-
EXHIBIT A TO AGREEMENT AND FIFTH AMENDMENT TO CREDIT AGREEMENT
OFFICER'S CERTIFICATE
Date:____________
[Name and address of Bank
or Agent, as the case may be]
Attention:__________________
Re: Financial Statements Required under Credit Agreement (as the same
may have been amended, modified and restated from time to time, the
"CREDIT AGREEMENT") dated as of November 30, 1993, by and among
Allwaste, Inc., the financial institutions or party thereto from time
to time and Texas Commerce Bank National Association, as Agent
Gentlemen:
Capitalized words and phrases used herein and not defined herein and
defined in the Credit Agreement are used herein with the same meanings as are
assigned to them in the Credit Agreement.
The undersigned hereby certifies, warrants and represents to the
addressee named above that:
1. He or she is the duly appointed and acting
*_____________________ of the Company;
2. The attached financial statements dated as of ______________
were prepared in conformity with Generally Accepted Accounting
Principles consistently applied and present fairly the
financial position of the Company and its Subsidiaries on a
consolidated basis as of the date thereof and the results of
its operations for the period covered thereby.
________________
* Must be the Chairman, President, chief operating officer, chief
financial officer, Treasurer, any Senior Vice-President or chief
accounting officer of the Company.
3. As of the end of the period covered by the attached financial
statements:
(a) QUICK RATIO:
(i) Sum of cash, readily
available funds,
Aggregate Unused
Commitment of the Banks
LESS Alternative
Facilities Advances,
and Current Accounts
Receivable of the Company
and its Subsidiaries
on a consolidated
basis: $________________
(ii) Current Liabilities of
the Company and its
Subsidiaries on a
consolidated basis: $________________
(iii) Required Quick Ratio: 1.00 to 1.00
EXHIBIT B
Page 2
(iv) Actual Quick Ratio: ____ to 1.00
b. NET WORTH:
(i) Net Worth as of August 31,
1995 less $10,000,000: $_______________
(ii) amount of any discretionary
charges and/or reserves
against income taken in 1996
first fiscal quarter (not to
exceed the difference of
$17,500,000 minus charges
and/or reserves taken in 1995
fourth fiscal quarter): $__________
(iii) 50% of aggregate of Net Income
for 1996 fiscal year and each
completed fiscal year thereafter
[Break out by fiscal year]: $_________
EXHIBIT B
Page 2
(iv) aggregate of all equity
added to the consolidated
balance sheet of the Company
and its Subsidiaries after
August 31, 1995 included in the
attached financial statements: $__________
(v) the amount of any after tax gain
resulting from the ARI Sale: $__________
(vi) Required Net Worth
([i]-[ii]+[iii] +[iv]+[v]) $__________
(vii) Net Worth of the Company and its
Subsidiaries on a consolidated
basis: $__________
(c) FIXED CHARGE COVERAGE RATIO:
(i) Cash Flow for the Rolling
Four Quarters: $__________
(ii) Operating Lease Expense
during the Rolling Four
Quarters: $__________
(iii) the sum of (i) + (ii)): $__________
(iv) required amortization on Funded
Indebtedness during the Rolling
Four Quarters: $__________
EXHIBIT B
Page 3
(v) Interest expense on borrowed
Indebtedness (exclusive of
interest expense paid in
connection with Discontinued
Operations) for the
Rolling Four Quarters: $__________
(vi) 60% of capital expenditures
made during the Rolling
Four Quarters: $__________
(vii) Cash preferred dividends
paid during Rolling
Four Quarters: $__________
(viii) Operating Lease Expense
during the Rolling
Four Quarters: $__________
(ix) sum of (iv) through (viii): $__________
(x) Required Fixed Charge Coverage
Ratio: 1.10 to 1.00
(xi) Actual Fixed Charge Coverage
Ratio (iii) / (viii): ____ to 1.00
(d) FUNDED INDEBTEDNESS TO EBITDA RATIO:
(i) Funded Indebtedness: $__________
(ii) Cash Flow for the Rolling
Four Quarters: $__________
(iii) Cash taxes paid during
the Rolling Four Quarters: $__________
(iv) EBITDA for the Rolling Four
Quarters ([ii]+[iii]): $__________
(v) Required Funded Indebtedness
to EBITDA Ratio: 3.25 to 1.00
EXHIBIT B
Page 4
(vi) Actual Funded Indebtedness to
EBITDA Ratio for the Rolling
Four Quarters: ____ to ____
(e) INTEREST COVERAGE RATIO:
(i) EBITDA for the Rolling
Four Quarters: $__________
(ii) Interest Expense for the Rolling
Four Quarters: $__________
(iii) Required Interest Coverage
Ratio: 4.50 to 1.00
(iv) Actual Interest Coverage
Ratio: ____ to 1.00
(4) Based on 3(d)(v) above:
(a) Applicable Letter of Credit
Fee Percentage is: ____________%;
(b) Applicable Margin for Eurodollar
Rate Borrowings is: ____________%;
(c) Applicable Margin for CD Rate
Borrowings is: ___________ %; and
(d) Applicable Margin for Alternate
Base Rate Borrowings is: ____________%.
(5) (Check EITHER [a] or [b])
[ ] (a)The Company has kept, observed, performed and
fulfilled each and every one of its obligations under
the Credit Agreement during the period covered by the
attached financial statements.
[ ] (b)The Company has kept, observed, performed and
fulfilled each and every one of its obligations under
the Credit Agreement during the period covered by the
attached financial statements except for the
following matters: [Describe all such defaults,
specifying the nature, duration and status thereof
and what action the Company has taken or proposes to
take with respect thereto.]
Name___________________
EXHIBIT B
Page 5
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE COMPANY'S FOR 10-Q FOR THE PERIOD ENDING FEBRUARY 29, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> FEB-29-1996
<CASH> 2,625
<SECURITIES> 0
<RECEIVABLES> 77,870
<ALLOWANCES> 2,175
<INVENTORY> 1,924
<CURRENT-ASSETS> 93,794
<PP&E> 245,897
<DEPRECIATION> (109,824)
<TOTAL-ASSETS> 343,800
<CURRENT-LIABILITIES> 65,224
<BONDS> 147,024
0
0
<COMMON> 397
<OTHER-SE> 131,155
<TOTAL-LIABILITY-AND-EQUITY> 343,800
<SALES> 188,076
<TOTAL-REVENUES> 188,076
<CGS> 142,673
<TOTAL-COSTS> 142,673
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (4,821)
<INCOME-PRETAX> 2,495
<INCOME-TAX> (1,137)
<INCOME-CONTINUING> 1,358
<DISCONTINUED> 3,764
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,122
<EPS-PRIMARY> .13
<EPS-DILUTED> .13
</TABLE>
