USA WASTE SERVICES INC, 10-Q, 1995-08-14

USA WASTE SERVICES INC
10-Q, 1995-08-14
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<PAGE> 1

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
--- EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1995
------------------

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: 1-12154
__________

USA WASTE SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 73-1309529
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

5000 QUORUM DRIVE,
SUITE 300
DALLAS, TEXAS 75240
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

(214) 383-7900
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

NO CHANGE
(FORMER NAME, FORMER ADDRESS, AND FORMER FISCAL YEAR, IF
CHANGED SINCE LAST REPORT)
__________

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL
REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.

YES X NO
--- ---

INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S
CLASSES OF COMMON STOCK AS OF AUGUST 11, 1995:

COMMON STOCK $.01 PAR VALUE 52,291,638 SHARES
<PAGE> 2
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

USA WASTE SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Amounts)
(Unaudited)

<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
--------- ---------
(restated)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $41,710 $30,161
Accounts receivable, net 52,530 48,765
Notes and other receivables 8,733 19,245
Net assets held for sale 11,428 9,298
Divestiture proceeds and other held in escrow - 2,210
Prepaid expenses and other 11,674 9,437
--------- ---------
Total current assets 126,075 119,116
Notes and other receivables 11,061 7,621
Property and equipment, net 534,645 523,557
Excess of cost over net assets of acquired
business, net 69,832 69,164
Other intangible assets, net 25,218 24,252
Restricted funds held by trustees 25,607 30,948
Other assets 21,270 10,958
--------- ---------
Total assets $813,708 $785,616
========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $17,937 $22,912
Accrued liabilities 42,664 37,346
Accrued shareholder litigation 25,000 10,000
Deferred revenues 6,415 6,664
Current maturities of long-term debt 29,655 46,795
--------- ---------
Total current liabilities 121,671 123,717
Long-term debt 444,270 363,919
Accrued shareholder litigation settlement 50,900 75,300
Closure, post-closure and other liabilities 59,158 58,331
--------- ---------
Total liabilities 675,999 621,267
--------- ---------

Commitments and contingencies - -

Stockholders' equity:
Preferred stock, $1.00 par value;
10,000,000 shares authorized;
none issued - -
Common stock, $.01 par value;
150,000,000 shares authorized;
51,025,056 and 50,557,574 shares issued, respectively 510 505
Additional paid-in capital 521,043 520,031
Accumulated deficit (381,883) (354,226)
Less treasury stock at cost, 149,285 shares (1,961) (1,961)
--------- ---------
Total stockholders' equity 137,709 164,349
--------- ---------
Total liabilities and stockholders' equity $ 813,708 $ 785,616
========= =========
</TABLE>

The accompanying notes are an integral part of these condensed
consolidated financial statements.

2
<PAGE> 3
USA WASTE SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
(Unaudited)

<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
---------------------------- -------------------------
1995 1994 1995 1994
-------- -------- -------- --------
(restated) (restated)
<S> <C> <C> <C> <C>
Operating revenues $111,229 $113,514 $212,471 $211,485
-------- -------- -------- --------
Costs and expenses:
Operating 63,597 66,754 121,877 124,987
General and administrative 16,941 18,491 33,831 34,626
Unusual items 4,040 - 4,733 -
Merger costs 25,073 3,782 25,073 3,782
Depreciation and amortization 14,222 14,795 27,201 28,455
-------- -------- -------- --------
123,873 103,822 212,715 191,850
-------- -------- -------- --------
Income (loss) from operations (12,644) 9,692 (244) 19,635
-------- -------- -------- --------
Other income (expense):
Interest expense:
Early redemption premiums, extension fees
and other nonrecurring interest (7,481) - (10,994) -
Other (7,890) (8,368) (16,103) (16,507)
Interest income 751 820 1,483 1,397
Other, net 254 381 1,367 541
-------- -------- -------- --------
(14,366) (7,167) (24,247) (14,569)
-------- -------- -------- --------

Income (loss) before provision for income taxes (27,010) 2,525 (24,491) 5,066
Provision for income taxes 829 729 3,166 2,148
-------- -------- -------- --------
Net income (loss) (27,839) 1,796 (27,657) 2,918
Preferred dividends - 185 - 565
-------- -------- -------- --------
Income (loss) available to common shareholders $(27,839) $1,611 $(27,657) $2,353
======== ======== ======== ========
Earnings (loss) per common share $(0.54) $0.03 $(0.54) $0.05
======== ======== ======== ========
Weighted average number of
common and common equivalent
shares outstanding 51,704 49,199 51,409 48,880
======== ======== ======== ========
</TABLE>

The accompanying notes are an integral part of these condensed consolidated
financial statements.

3
<PAGE> 4
USA WASTE SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six months ended June 30,
------------------------------
1995 1994
--------- --------
(restated)
<S> <C> <C>
Cash flows from operating activities:
Net cash provided by (used in) operating activities $(3,762) $15,864
--------- --------
Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired (2,400) (19,204)
Capital expenditures (38,689) (34,684)
Loans and advances to others (6,322) (3,537)
Collection of loans to others 2,304 1,459
Proceeds from sale of assets 4,695 2,721
Decrease (increase) in restricted funds (4,773) 14,219
Other (845) 658
--------- --------
Net cash used in investing activities (46,030) (38,368)
--------- --------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 342,000 35,260
Principal payments on long-term debt (281,686) (23,428)
Other 1,027 324
--------- --------
Net cash provided by financing activities 61,341 12,156
--------- --------
Increase (decrease) in cash and cash equivalents 11,549 (10,348)
Cash and cash equivalents at beginning of period 30,161 49,179
--------- --------
Cash and cash equivalents at end of period $41,710 $38,831
========= ========
</TABLE>

The accompanying notes are an integral part of these condensed
consolidated financial statements.

4
<PAGE> 5
USA WASTE SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The condensed consolidated balance sheets of USA Waste Services, Inc.
(the "Company") as of June 30, 1995 and December 31, 1994, the related
condensed consolidated statements of operations for the three and six months
ended June 30, 1995 and 1994, and condensed consolidated statements of cash
flows for the six months ended June 30, 1995 and 1994 are unaudited. In the
opinion of management, such financial statements include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of financial position, results of operations and cash flows for
the periods presented. The Company has restated the previously issued
financial statements for the three and six months ended June 30, 1994 to
reflect the acquisition of Chambers Development Company, Inc. ("Chambers"),
accounted for using the pooling of interests method of accounting. The
year-end condensed consolidated balance sheet data was derived from audited
financial statements, but does not include all disclosures required by
generally accepted accounting principles.

1. MERGER WITH CHAMBERS DEVELOPMENT COMPANY, INC.:

On June 30, 1995, the Company completed its merger with Chambers and
approximately 27,900,000 shares of the Company's common stock were issued in
exchange for all outstanding shares of Chambers Common Stock and Class A Common
Stock. The transaction has been accounted for using the pooling of interests
method of accounting, and accordingly, the accompanying condensed consolidated
financial statements include the accounts of Chambers for all periods presented.

Combined and separate results of operations of the Company and
Chambers for the restated periods included in this report are as follows (in
thousands):

<TABLE>
<CAPTION>
USA Waste Chambers Adjustments Combined
--------- -------- ----------- --------
<S> <C> <C> <C> <C>
Three months ended March 31, 1995:
Operating revenues $ 46,508 $ 54,734 $ - $ 101,242
Net income (loss) 4,788 (5,269) 665(a)(b) 184

Three months ended June 30, 1994:
Operating revenues 44,870 68,644 - 113,514
Net income (loss) 1,022 860 (86)(a)(b) 1,796

Six months ended June 30, 1994:
Operating revenues 83,075 128,410 - 211,485
Net income (loss) 3,726 (1,115) 307(a)(b) 2,918
</TABLE>

5
<PAGE> 6
USA WASTE SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(Unaudited)

1. MERGER WITH CHAMBERS DEVELOPMENT COMPANY, INC., CONTINUED:

The following adjustments have been made to the combined results of
operations:

(a) All significant intercompany transactions between the Company and
Chambers have been eliminated. In September 1993, Chambers sold certain of its
collection and landfill operations to the Company. The Company accounted for
the transaction as a purchase and allocated the purchase price to the assets
acquired. The assets acquired have been adjusted to reflect Chamber's carrying
value at the date of sale and the results for the periods presented above have
been adjusted for the effect of lower depreciation and amortization as a result
of the reduction in the asset amounts on a restated basis.

(b) The combined results reflect the transaction as a "tax-free"
reorganization for federal income tax purposes. As a result of the
transaction, certain tax net operating loss carryforwards will become available
to offset future taxable income of the combined company. Although Chambers had
not recognized any benefit with respect to these tax net operating loss
carryforwards in prior years, the condensed consolidated financial statements
recognize these benefits to the extent of previously recognized deferred tax
liabilities.

2. LONG-TERM DEBT:

Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
---------- ---------
<S> <C> <C>
Revolving credit facility $ 70,000 $ 98,000
Term loan facility 250,000 -
Senior Notes, interest at 11.45% - 133,501
Senior Notes, interest at 11.95% - 17,929
8 1/2 % Convertible Subordinated Debentures 48,995 49,000
Industrial revenue bonds 84,850 88,800
Other 20,080 23,484
-------- --------
473,925 410,714
Less current maturities 29,655 46,795
-------- --------
$444,270 $363,919
======== ========
</TABLE>

On June 30, 1995, in connection with the acquisition of Chambers, the
Company entered into a $550,000,000 financing agreement with three major banks
consisting of a $300,000,000 five-year revolving credit and letter of credit
facility and a $250,000,000 term loan facility (the "Credit Facility"). On
that date, the Company arranged to borrow $370,000,000, of which $320,000,000
had been borrowed as of June 30, 1995, the proceeds of which were used to
refinance outstanding indebtedness under the Company's revolving credit
facility, the 11.45% and 11.95% Senior Notes of Chambers, and to finance the
Chambers' shareholder litigation settlements discussed in Note 4 and certain
other merger related costs. The Credit Facility is collateralized by all the
stock of the Company's subsidiaries, whether now owned or hereafter acquired,
and intercompany receivables between the Company and its subsidiaries or
between subsidiaries.

Revolving credit loans under the Credit Facility are limited to $160,000,000
less the amount of any future industrial revenue bonds enhanced or secured by
letters of credit issued under the Credit Facility. Loans bear a rate of
interest based on the Eurodollar rate or the prime rate, plus a spread not to
exceed 1.75% per annum. The Credit Facility may also be used for letters of
credit purposes with variable rates up to 1.75% per annum charged on
outstanding balances. A commitment fee of up to .5% per annum is also required
on the unused portion of the Credit Facility.

6
<PAGE> 7
USA WASTE SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(Unaudited)

2. LONG-TERM DEBT, CONTINUED:

The Credit Facility contains financial covenants including minimum
consolidated net worth, funded debt levels, capital expenditures and interest
and debt service coverage requirements. The Credit Facility also restricts the
incurrence of additional indebtedness, liens and the payment of dividends.

Upon refinancing of the 11.45% and 11.95% Senior Notes, the Company paid an
early redemption premium of $9,400,000 to the note holders based on the
difference between the interest rates on the Senior Notes and an adjusted rate
for U.S. Treasury securities having similar maturity.

In September 1992, the Company issued $49,000,000 of 8-1/2% convertible
debentures due October 15, 2002 in an underwritten public offering. Interest on
the debentures is payable semi-annually. The debentures are convertible into
the Company's common stock before maturity, unless previously redeemed, at
$13.25 per share, subject to adjustment in certain events. The debentures are
redeemable at the option of the Company, in whole or in part, at any time on or
after October 15, 1995, at an original redemption price of 105.67% of the
principal amount, declining to par over the term of the debentures. The
debentures are subordinated to all existing and future indebtedness of the
Company and do not restrict the incurrence of additional debt.

3. CHANGE IN ACCOUNTING ESTIMATE:

As of January 1, 1995, the Company changed the estimated useful life of the
excess of cost over net assets of acquired businesses from 25 years to 40 years
to more appropriately reflect the estimated period during which the benefit of
the assets will be realized. This change in accounting estimate had the effect
of reducing amortization expense by approximately $360,000 and $720,000 for the
three and six months ended June 30, 1995, respectively.

4. SETTLEMENT OF SHAREHOLDER LITIGATION:

Between March 18, 1992 and May 7, 1992, various Chambers' shareholders filed
23 actions in the United States District Court for the Western District of
Pennsylvania asserting federal and state securities fraud claims against
Chambers, certain of its officers and directors, its auditors prior to 1992,
and the underwriters of its securities (the "Federal Class Action"). The
significant part of these actions, as amended and consolidated on November 4,
1992, under the caption In Re: Chambers Development Company, Inc. Shareholders
Litigation, Civil Action No. 92-0679, was the allegation that the decrease in
Chambers' stock price during the period from Chambers' March 17, 1992
announcement of a change in accounting method relating to capitalization of
certain costs and expenses through its October 20, 1992 announcement of a
$362,000,000 reduction in retained earnings as of December 31, 1991, as
compared to the amount previously reported and a restatement of its 1990 and
1989 consolidated financial statements, was caused by Chambers'
misrepresentation of its earnings and financial condition. One of the
original 23 complaints, Yeager v. Rangos, et al., C.A. No. 92-1081, also
asserted derivative claims on behalf of Chambers for breach of fiduciary duty
against certain of its officers and directors and negligence against its
auditors prior to 1992 (the "Federal Derivative Action"). Derivative claims
were also filed in state courts on behalf of Chambers for breach of fiduciary
duty against certain of its officers and directors and for negligence against
Chambers independent auditors prior to 1992 (the "Related Actions").

On February 24, 1995, representatives of the plaintiffs in the Federal Class
Action, representatives of the plaintiffs in the Federal Derivative Action,
Chambers and certain individual defendants entered into a Class Action
Stipulation and Agreement of Compromise and Settlement (the "Class Action
Settlement Agreement") and a Derivative Action Stipulation and Agreement of
Compromise and Settlement (the "Derivative Action Settlement Agreement" and,
together with the Class Action Settlement Agreement, the "Settlement
Agreements"), which are the definitive settlement documents for the class
actions and the derivative actions described above. After Chambers entered
into the Settlement Agreements, the class and derivative plaintiffs entered
into settlements with Chambers' independent auditors prior to 1992. Chambers
then entered into an agreement with the class plaintiffs to settle their claims
against a group of underwriters of certain of Chambers' securities offerings.
Chambers agreed to pay $300,000 to the class plaintiffs to resolve these claims
for which the underwriters sought indemnity from Chambers. Pursuant to the
Settlement Agreements, the defendants paid

7
<PAGE> 8
USA WASTE SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(Unaudited)

4. SETTLEMENT OF SHAREHOLDER LITIGATION, CONTINUED:

a total of approximately $97,000,000 on or before July 11, 1995. Of this
amount, the sum of $10,000,000 was paid from funds received from Chambers'
directors and officers liability insurance carrier and $75,900,000 was paid by
the Company as of July 11, 1995, including the $300,000 paid on behalf of the
underwriters.

Chambers had accrued $85,300,000 for the cost of the settlements and
$4,100,000 for other litigation related costs in 1994. Of that total,
$79,400,000 was recorded as a charge to unusual items as a component of other
income (expense) and $10,000,000 to be paid from the proceeds of Chambers'
directors and officers liability insurance policy was recorded as a current
asset and is included in accounts receivable-other at December 31, 1994. At
December 31, 1994, $75,300,000 of the amount accrued for settlement payments
has been classified as a noncurrent liability based on the expectation that
such amount would be funded by long-term financing in connection with the
Merger (see Note 5). The $10,000,000 of settlement payments funded by the
proceeds of Chambers' directors and officers liability insurance policy and the
$4,100,000 of other litigation related costs are included in current
liabilities at December 31, 1994.

In connection with the Federal Class Action, certain potential class
members, requested exclusion from the Class Action Settlement Agreement. These
potential class members have asserted that they have incurred losses
attributable to shares purchased during the class period and certain
additional losses by reason of alleged management misstatements during and
after the class period. On August 14, 1995, the Company learned that a
complaint was filed on August 9, 1995, in the United States District Court for
the Southern District of New York by Frederick A. Moran and certain other
related former shareholders of Chambers who had previously requested exclusion
from the Federal Class Action Settlement Agreement, against Chambers and the
other defendants in the Federal Class Action. However, the Company has not been
served with such complaint. The Company intends to vigorously defend this
complaint. Management of the Company believes that ultimate resolution of such
complaint would not have a material adverse effect on the Company's financial
position and results of operation of the Company.

Pursuant to the terms of the Derivative Action Settlement Agreement, in July
1995 the Company took title to the headquarters property formerly leased by
Chambers from Synergy Associates, a company owned by Chambers' former principal
shareholders, subject to its mortgage loan. The Company intends to sell this
property.

5. COMMITMENTS AND CONTINGENCIES:

Environmental Matters

The Company is subject to extensive and evolving federal, state and local
environmental laws and regulations that have been enacted in response to
technological advances and the public's increased concern over environmental
issues. As a result of changing governmental attitudes in this area,
management anticipates that the Company will continually modify or replace
facilities and alter methods of operation. The majority of the expenditures
necessary to comply with the environmental laws and regulations are made in the
normal course of business. Although the Company, to the best of its knowledge,
is in compliance in all material respects with the laws and regulations
affecting its operations, there is no assurance that the Company will not have
to expend substantial amounts for compliance in the future.

Litigation and Investigations

Shortly after Chambers' March 17, 1992 announcement of a change in
accounting policies concerning capitalization, the Securities and Exchange
Commission (the "Commission") initiated an informal investigation with respect
to Chambers' accounting method and the accuracy of its financial statements and
into the possibility that persons or entities had traded in Chambers'
securities on the basis of inside information prior to the announcement. On
September 30, 1992, a formal order of investigation was issued by the
Commission with respect to potential violations by Chambers and others of
sections 10(b), 13(a) and 13(b) of the Securities Exchange Act of 1934
("Exchange Act") and various rules promulgated thereunder.

8
<PAGE> 9
USA WASTE SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(Unaudited)

5. COMMITMENTS AND CONTINGENCIES, CONTINUED:

On May 9, 1995, the Commission filed a complaint against Chambers in the
United States District Court for the Western District of Pennsylvania alleging
that Chambers violated the antifraud provisions of the Securities Act of 1933
("Securities Act") and the antifraud, reporting, internal controls and
recordkeeping provisions of the Exchange Act by issuing false and misleading
earnings announcements from 1989 through March 1992 and including false and
misleading financial statements in its reports on Forms 10-K and 10-Q and its
registration statements filed from 1989 through November 1991. Chambers
simultaneously consented, without admitting or denying the Commission's
allegations, to the entry of an order enjoining it from violating certain
provisions of the Securities Act and the Exchange Act and requiring it to pay a
civil penalty of $500,000. The $500,000 was accrued as of December 31, 1994
and has been paid in 1995.

On May 9, 1995, the Commission also instituted administrative proceedings
under section 21C of the Exchange Act against four then current and former
officers of Chambers. The Commission found, among other things, that two then
former officers each were a cause of Chambers' violations of the reporting,
internal controls and recordkeeping provisions of the Exchange Act. Each of
these four persons consented to the issuance of a cease and desist order
without admitting or denying the Commission's findings.

In 1992 the American Stock Exchange and the Chicago Board of Options
Exchange also advised Chambers that they would conduct investigations into
trading activity on their respective exchanges in Chambers' securities and in
put options on Chambers' securities prior to the March 17, 1992 announcement.
On December 4, 1992, Chambers was served with a grand jury subpoena out of the
United States District Court for the Eastern District of New York seeking
production of public filings and reports disseminated to its shareholders,
documents referring to the preparation of its financial statements and other
materials. Chambers has responded to the subpoena by producing documents. To
the knowledge of the Company, the grand jury investigation is ongoing and it
appears to be focusing on issues similar to those raised by the civil
litigation discussed in Note 4 and the Commission's investigation described
above. The Company is cooperating with each of the investigations.

Insurance

The Company self-insures certain of its comprehensive general liability and
workers compensation risks, while maintaining third-party coverage to protect
against catastrophic loss. The Company has not incurred significant fines,
penalties or liabilities for pollution or environmental liabilities at any of
its facilities; however, the Company's operating results could be adversely
affected in the future in the event of uninsured losses.

Employment Agreements

The Company has entered into employment agreements with certain of its
executives and officers. These employment agreements include provisions
governing compensation and benefits to be paid upon termination of employment
with the Company or certain changes in control of the Company. Under certain
conditions, the agreements can be terminated by the Company or the employee.
Upon termination of the agreement, the employee's compensation would continue
at approximately 75% of the employee's prior compensation for periods ranging
from three to five years. During the three to five year period the employee
would be available to the Company on a part-time basis for consulting and also
would not be permitted to engage in any activities in direct competition with
the Company. If these executives were to be terminated without cause during
1995

9
<PAGE> 10
USA WASTE SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(Unaudited)

5. COMMITMENTS AND CONTINGENCIES, CONTINUED:

or if certain executives elected to terminate their agreements, the aggregate
annual compensation on a part-time basis would be approximately $1,300,000. If
a change in control were to occur in 1995 and the executives were to elect to
take the change in control payments, they would receive approximately
$4,300,000. As of June 30, 1995, the Company has not recorded any accruals in
the financial statements related to these employment agreements.

Other Commitments and Litigation

The Company has entered into certain agreements in which the Company has
committed to advance or invest up to approximately $20,000,000 for purchase
commitments, investment obligations and loans. Certain of these commitments
are dependent upon the fulfillment of certain conditions by the other party
prior to the Company's outlay of funds. These commitments, if ultimately
fulfilled, are expected to occur over a period of one to five years. The total
amount invested and advanced under these agreements amounted to $10,100,000 as
of June 30, 1995.

The Company is a party to other litigation arising in the normal course of
business. In addition, contingencies of an environmental nature currently
exist at certain of its disposal sites. Management believes that the ultimate
outcome of these matters will not have a material adverse effect on the
Company's financial position and results of operations.

10
<PAGE> 11

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following discussion reviews the Company's operations for the three and
six months ended June 30, 1995 and 1994, and should be read in conjunction with
the Company's Consolidated Financial Statements and related notes thereto
included elsewhere herein, as well as the Company's Consolidated Financial
Statements and related notes thereto included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1994, the Company's Joint Proxy
Statement and Prospectus dated May 19, 1995 included in the Company's
Registration Statement on Form S-4 filed in connection with the acquisition of
Chambers Development Company, Inc. ("Chambers") and the supplemental
consolidated financial schedules included in the Company's Form 8-K dated June
30, 1995 filed in connection with the acquisition of Chambers. As discussed
below, the Company has restated its previously issued financial statements to
reflect the acquisition of Chambers, consummated June 30, 1995, and accounted
for under the pooling of interests method of accounting.

INTRODUCTION

After consummation of the merger with Chambers on June 30, 1995, the
Company provides non-hazardous solid waste management services, consisting of
collection, transfer, disposal, soil remediation, and recycling services in 20
states. Since August 1990, the Company has experienced significant growth
principally through the acquisition and integration of solid waste businesses
and is now the fourth largest non-hazardous solid waste company in North
America The company owns 28 landfills (25 of which are currently operating), 14
transfer stations and 35 collection companies serving more than 400,000
customers.

The Company's revenues consist primarily of fees charged for its collection
and disposal services. Revenues for collection services include fees from
residential, commercial, industrial, and municipal collection customers. A
portion of these fees are billed in advance; a liability for future service is
recorded upon receipt of payment and revenues are recognized as services are
actually provided. Fees for residential services are normally based on the
type and frequency of service. Fees for commercial and industrial services are
normally based on the type and frequency of service and the volume of solid
waste collected.

The Company's revenues from its landfill operations consist of disposal
fees (known as tipping fees) charged to third parties and are normally billed
monthly. Tipping fees are based on the volume or weight of solid waste being
disposed of at the Company's landfill sites. Fees are charged at transfer
stations based on the volume of solid waste deposited, taking into account the
Company's cost of loading, transporting, and disposing of the solid waste at a
landfill. Intercompany revenues between the Company's landfill, transfer
station, and collection operations have been eliminated in the financial
statements presented herein.

Operating expenses include direct and indirect labor and the related taxes
and benefits, fuel, maintenance and repairs of equipment and facilities,
tipping fees paid to third-party landfills, certain fees and taxes, and
accruals for future landfill closure and post-closure costs. Certain direct
landfill development expenses are capitalized and depreciated over the
estimated useful life of a site as capacity is consumed, and include
acquisition, engineering, upgrading, construction, and permitting costs. All
indirect development expenses, such as administrative salaries and general
corporate overhead, are expensed in the period when incurred.

General and administrative costs include management salaries, clerical, and
administrative costs, professional services, facility rentals, and related
insurance costs, as well as costs related to the Company's marketing and sales
force.

11
<PAGE> 12
RESULTS OF OPERATIONS

The Company reported net losses of $27,839,000 and $27,657,000 for the
three and six months ended June 30, 1995, respectively. This compares to net
income of $1,796,000 and $2,918,000 for the corresponding periods in 1994. The
results of operations for 1995 and 1994 include certain nonrecurring expenses,
as discussed below, in connection with the acquisition of Chambers in June 1995
and Envirofil, Inc. in May 1994 in transactions accounted for as poolings of
interests. Earnings per share exclusive of merger costs, unusual items and
nonrecurring interest, as reported, would be $.15 and $.22 for the three and
six months ended June 30, 1995, respectively, as compared to reported earnings
per share amounts of $.03 and $.05 for the same prior year periods.

The following table presents, for the periods indicated, the period to
period change in dollars (in thousands) and percent for the various
Consolidated Statements of Income items:

<TABLE>
<CAPTION>
Period to Period Period to Period
Change for the Change for the
Three Months Ended Six Months Ended
June 30, 1994 and 1995 June 30, 1994 and 1995
------------------------ ----------------------
$ % $ %
-------- ------- -------- ------
<S> <C> <C> <C> <C>
Operating revenues $(2,285) (2.0)% $986 0.5%
-------- ------- -------- ------
Costs and expenses:
Operating (3,157) (4.7) (3,110) (2.5)
General and administrative (1,550) (8.4) (795) (2.3)
Unusual items 4,040 - 4,733 -
Merger costs 21,291 563.0 21,291 563.0
Depreciation and amortization (573) (3.9) (1,254) (4.4)
-------- ------- -------- ------
20,051 19.3 20,865 10.9
-------- ------- -------- ------
Income (loss) from operations (22,336) (230.5) (19,879) (101.2)
-------- ------- -------- ------

Other income (expense):
Interest expense:
Early redemption premium, extension fees and other
nonrecurring interest (7,481) - (10,994) -
Other 478 (5.7) 404 (2.4)
Interest income (69) (8.4) 86 6.1
Other, net (127) (33.3) 826 (152.7)
-------- ------- -------- ------
(7,199) (100.5) (9,678) 66.4
-------- ------- -------- ------
Income (loss) before income taxes (29,535) (1,169.7) (29,557) (583.4)
Provision for income taxes 100 13.7 1,018 47.4
-------- ------- -------- ------
Net income (loss) (29,635) (1,650.1) (30,575) (1,047.8)
Preferred dividends 185 (100.0) (565) (100.0)
-------- ------- -------- ------
Income (loss) available to common shareholders $(29,450) (1,828.1)% $(30,010) (1,275.4)%
======== ======= ======== ======
</TABLE>

12
<PAGE> 13
The following table presents, for the periods indicated, the percentage
relationship that the various Consolidated Statements of Income items bear to
operating revenues:

<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ---------------
1995 1994 1995 1994
----- ----- ----- -----
<S> <C> <C> <C> <C>
Operating revenues:
Disposal 31.0% 29.2% 29.6% 28.8%
Waste collection 51.7 50.7 53.5 51.4
Transfer stations 9.6 13.6 8.7 13.0
Other 7.7 6.5 8.2 6.8
----- ----- ----- -----
100.0% 100.0% 100.0% 100.0%
----- ----- ----- -----
Costs and expenses:
Operating 57.2 58.9 57.4 59.1
General and administrative 15.2 16.3 15.9 16.4
Unusual items 3.6 0.0 2.2 0.0
Merger costs 22.6 3.3 11.8 1.8
Depreciation and amortization 12.8 13.0 12.8 13.4
----- ----- ----- -----
111.4 91.5 100.1 90.7
----- ----- ----- -----
Income (loss) from operations (11.4) 8.5 (0.1) 9.3
----- ----- ----- -----

Other income (expense):
Interest expense:
Early redemption premium, extension fees and other
nonrecurring interest (6.7) 0.0 (5.1) 0.0
Other (7.1) (7.3) (7.6) (7.9)
Interest income 0.7 0.7 0.7 0.7
Other, net 0.2 0.3 0.6 0.3
----- ----- ----- -----
(12.9) (6.3) (11.4) (6.9)
----- ----- ----- -----
Income (loss) before income taxes (24.3) 2.2 (11.5) 2.4
Provision for income taxes .7 .6 1.5 1.0
----- ----- ----- -----
Net income (loss) (25.0) 1.6 (13.0) 1.4
Preferred dividends 0.0 0.2 0.0 0.3
----- ----- ----- -----
Income (loss) available to common shareholders (25.0)% 1.4% 13.0% 1.1%
===== ===== ===== =====
</TABLE>

THREE AND SIX MONTHS ENDED JUNE 30, 1995

Operating Revenues

Operating revenues for the three months and six months ended June 30, 1995
changed $(2.3) million or (2.0)% and $1.0 million or 0.5%, respectively.
Comparable operations decreased 2.5% and 1.2% for the respective quarter and
year-to-date periods. Prices and volumes changed approximately (3)% and 1%,
respectively, for the quarter, and approximately (4)% and 3%, respectively, on a
year-to-date basis. The increase in volumes was offset by the negative pricing
effects of certain businesses in New Jersey. The Company has experienced a
significant rate reduction resulting from the sale but continued operation of
the two transfer stations in Morris County, New Jersey, which also resulted in
the loss of waste volumes due to the loss of an ash transportation and disposal
contract. In addition, the Company was awarded a new three-year agreement at a
rate reduced from the prior contract for the municipal solid waste from Bergen
County, New Jersey. Disregarding the effects of these two instances in New
Jersey, operating revenues for comparable operations increased approximately
7% and 10% for the respective quarter and year-to-date periods. The remainder
of the change in operating revenues is the result of acquisitions, net of
dispositions, which increased revenues by $0.6 million and $3.5 million
for the quarter and year-to-date periods, respectively.

13
<PAGE> 14
Operating Costs and Expenses

Operating costs and expenses decreased $3.2 million and $3.1 million,
respectively, for the three months and six months ended June 30, 1995 and
also decreased as a percent of operating revenues in both comparative periods.
The decrease is attributable to strategic business decisions to exit or reduce
operations in certain markets in 1994 where margins were not as profitable.
In September 1994, the Company determined that it would exit the market in
Phoenix, Arizona, which resulted in the reduction of operating costs and
decreased the percentage of operating costs as compared to operating revenues.
To further reduce operating costs and expenses and improve operating margins,
the Company has emphasized the increased utilization of internal disposal
capacity. The related increase in costs incurred to transport waste to Company
landfills was offset by a reduction in costs as a result of the loss of the ash
contract discussed above. Another contributing factor to the decrease in the
percentage of operating costs and expenses as compared to operating revenues is
that several businesses acquired in 1994 are now operating more efficiently as
operational improvements have been effectively implemented by the Company.

General and Administrative

General and administrative expenses decreased $1.5 million and $0.8
million, respectively, for the three months and six months ended June 30, 1995
and were down as a percent of operating revenues in both comparative periods.
This is the result of the Company's ability to integrate revenue building
acquisitions without a proportionate increase in general and administrative
expenses and the cumulative benefit of Chambers' pre-merger reorganization
efforts which began in the fourth quarter of 1994 and continued through the
first half of 1995 prior to the combination of the two companies.

Unusual Items

In 1995, the unusual items include $2.8 million of severance and other
termination benefits paid to former Chambers employees in connection with its
pre-merger reorganization, $1.3 million of estimated future losses associated
with the renegotiated Bergen County, New Jersey municipal solid waste contract,
and $0.6 million of shareholder litigation settlement costs.

Merger Costs

In 1995, the Company incurred approximately $25.1 milliion in merger costs
in the second quarter related to the Chambers acquisition, which include $11.9
million of transaction costs, $9.5 million of severance and other termination
benefits, and $3.7 million of costs related to integrating operations. In 1994
the Company incurred $3.8 million of merger costs in the second quarter related
to the acquisition of Envirofil, Inc.

Depreciation and Amortization

Depreciation and amortization decreased $0.6 million and $1.3 million for
the quarter and year-to-date, respectively. The decrease was primarily the
result of the change in the estimated useful life of goodwill related to
certain acquisitions from 25 to 40 years, effective January 1, 1995. This
change resulted in decreased amortization expense of approximately $360,000
and $720,000 for the quarter and year-to-date, respectively.

14
<PAGE> 15
Income (Loss) from Operations

Excluding unusual items, merger costs, and nonrecurring interest
expense, income from operations as a percent of sales in fiscal 1995 was 14.8%
and 14.2%, respectively, on a quarter and year-to-date basis, compared to 11.9%
and 11.1% in the comparative 1994 periods. The improvement in recurring
operations is the result of economies of scale realized by the Company with
respect to recent acquisitions, dispositions of less profitable businesses, and
improvements in comparative operations.

Other Income and Expense

Other income and expense consists of interest expense, interest income, and
other income. Interest expense increased on both a comparative quarter and
year-to-date basis as a result of nonrecurring interest charges associated with
early redemption premiums, extension fees, and accelerated debt issue costs of
approximately $7.5 million and $11.0 million for the quarter and year-to-date,
respectively. Aside from this, interest expense, gross of amounts capitalized,
increased slightly as a result of additional indebtedness incurred to finance
the Company's aggressive growth through business acquisitions and capital
expenditures. The increase in other income is primarily the result of the sale
of real estate in Phoenix, Arizona during the first quarter of 1995.

Provision for Income Taxes

The provision for income taxes increased $100,000 and $1,018,000 for the
three and six months ended June 30, 1995, respectively, as compared to the
corresponding periods of 1994. The provision for income taxes represents
current income taxes of the separate companies through the date of the
combination. The increase is the result of the increase in the Company's
income before income taxes prior to the merger with Chambers. The provision for
income taxes of Chambers on a separate basis represents provisions for state
and local income taxes. There is no provision for federal income taxes for
Chambers through the date of the merger as a result of its net operating loss
carryforwards.

Net Income (Loss)

For the reasons discussed above, net income (loss) decreased $29.5 million
and $30.0 million during the three and six months ended June 30, 1995 as
compared to the corresponding periods of 1994.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 1995, the Company had working capital of $4,404,000 and a
cash balance of $41,710,000, which compares to a working capital deficit of
$4,601,000 and a cash balance of $30,161,000 as of December 31, 1994. During
the first six months of 1995, the Company used net cash from operations of
$3,762,000, which includes merger costs of $25,073,000, and received net cash
from financing activities of $61,341,000. These funds were used primarily to
fund investments in other businesses of $8,722,000 and for capital expenditures
of $38,689,000.

The Company's capital expenditure and working capital requirements have
increased reflecting the Company's business strategy of growth through
acquisitions and development projects. The Company's budgeted cash
requirements for the remainder of 1995 include estimated capital expenditures
of approximately $45,000,000. The Company intends to finance the remainder of
its 1995 capital requirements through internally generated cash flow and
amounts available under its revolving credit facility.

In connection with the merger of Chambers on June 30, 1995, the Company
entered into a $550,000,000 financing agreement consisting of a $300,000,000
five-year revolving credit facility and a $250,000,000 term loan facility. On
that date, the Company arranged to borrow $370,000,000, the proceeds of which
were used to refinance the Company's existing revolving credit facility, the
11.45% and 11.95% Senior Notes of Chambers, and to finance the Chambers'
shareholder litigation settlements of $75,900,000 and certain other merger
related costs. Borrowings under this agreement bear interest based on the
Eurodollar Rate or prime, plus a spread. Subsequent to June 30, 1995, the
Company entered into a three-year interest rate swap

15
<PAGE> 16
agreement whereby it established a fixed minimum interest rate of 7.65% on
$125,000,000 of the facility.

The Company's business plan is to grow through acquisitions as well as
development projects. The Company has issued equity securities in business
acquisitions where appropriate and expects to do so in the future.
Furthermore, the Company's future growth will depend greatly upon its ability
to raise additional capital. Management believes that it can arrange the
necessary financing required to accomplish its business plan; however, to the
extent the Company is not successful in its future financing strategies the
Company's growth could be limited.

The Company regularly engages in discussions relating to potential
acquisitions and has identified several possible acquisition opportunities, and
may announce acquisitions transactions at any time. Since June 30, 1995, the
Company has announced that it has consummated several acquisitions of businesses
and entered into agreements in principle to acquire three more. These
acquisitions are expected to add in excess of $30,000,000 of equity to the
Company through the issuance of the Company's common stock.

SEASONALITY

Because the volumes of certain types of waste, such as yard clippings and
construction debris, tend to be higher in the spring and summer, the Company
experiences seasonal variations in its revenue. As a result, during spring and
summer, the Company's revenues tend to be higher than its revenues in fall and
winter.

16
<PAGE> 17

PART II. OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

Chambers Development Company, Inc. ("Chambers")

Chambers Shareholders Litigation. Between March 18, 1992 and May 7, 1992,
various Chambers shareholders filed 23 actions in the United States District
Court for the Western District of Pennsylvania asserting federal securities
fraud claims and pendent state claims against Chambers, certain of its officers
and directors, its former auditors, and the underwriters of its securities (the
"Federal Class Action"). The significant part of these actions, as amended and
consolidated under the caption In Re: Chambers Development Company, Inc.
Shareholders Litigation, Civil Action No. 92- 0679, was the allegation that the
decrease in Chambers' stock price during the period from Chambers' announcement
on March 17, 1992, of a change in accounting method relating to capitalization
of certain costs and expenses through its announcement on October 20, 1992, of
a $362 million reduction in retained earnings as of December 31, 1991, as
compared to the amount previously reported, and a restatement of its 1990 and
1989 consolidated financial statements, was caused by Chambers'
misrepresentation of its earnings and financial condition. One of the original
23 complaints, Yeager v. Rangos, et al., No. 92-1081, also asserted derivative
claims on behalf of Chambers for breach of fiduciary duty against certain of
its officers and directors and for negligence against its former auditors (the
"Federal Derivative Action").

In addition, three parallel lawsuits were filed in state courts. Two
derivative actions, asserting waste and mismanagement claims on behalf of
Chambers against certain of its officers and directors, were filed in the
Delaware Court of Chancery for New Castle County (the "Delaware Derivative
Actions") under the caption In Re: Chambers Development Company, Inc.
Shareholders Litigation, Consolidated C.A. No. 12508. One purported class
action, alleging state securities law and common law claims, was filed in the
Court of Common Pleas of Allegheny County, Commonwealth of Pennsylvania, under
the caption Integrated Investments, Inc. et al. v. Chambers Development
Company, Inc., et al., No. G.D. 92-7036 (the "State Class Action" and,
together with the Federal Class Action, the "Class Actions").

On March 5, 1993, another state court derivative action was filed in the
Court of Common Pleas in Allegheny County, Pennsylvania, under the caption
Balaban v. Rangos, et al. (the "Pennsylvania Derivative Action" and, together
with the Federal and Delaware Derivative Actions, the "Derivative Actions").
This action asserted derivative claims on behalf of Chambers similar in nature
to those asserted in the Federal and Delaware Derivative Actions.

On November 18, 1994, Chambers and shareholder representatives executed
memoranda of understanding with respect to the settlement and dismissal of the
Class Actions and Derivative Actions. On February 24, 1995, representatives of
the plaintiffs in the Federal Class Action, representatives of the plaintiffs
in the Federal Derivative Action, Chambers and certain individual defendants
entered into a Class Action Stipulation and Agreement of Compromise and
Settlement (the "Class Action Settlement Agreement") and a Derivative Action
Stipulation and Agreement of Compromise and Settlement (the "Derivative Action
Settlement Agreement" and, together with the Class Action Settlement Agreement,
the "Settlement Agreements"), which are the definitive settlement documents for
the Class Actions and the Derivative Actions.

The Class Action Settlement Agreement provided that the sum of $8 million
would be paid by Chambers' directors and officers liability insurance carrier
and the sum of $70 million would be paid by Chambers in two installments
following final court approval of the settlement. The total settlement payment
was subject to adjustment upon consummation of the merger of Chambers with the
Company or a comparable transaction by a base increase of $5,000,000, adjusted
upward or downward by an amount equal to $16,000 for each penny above or below
$4.50 of consideration received by Chambers stockholders per share of Chambers
Common

17
<PAGE> 18
Stock. The amount, if any, by which such adjustment exceeded $5.6 million was
to be paid by John G. Rangos, Sr., Chairman and Chief Executive Officer of
Chambers.

The Derivative Action Settlement Agreement provided that the consideration
from the defendants to Chambers would include (i) payment of the sum of $2
million from Chambers' directors and officers liability insurance carrier; (ii)
the continued implementation by Chambers, for a period of at least two years
after the effective date of the settlement, of certain corporate governance
measures; and (iii) the contribution to Chambers by Synergy Associates of the
headquarters property currently leased to Chambers by Synergy Associates.

In addition, in order for the settlements to be effective, certain related
actions, as described in the Settlement Agreements, were required to be
dismissed with prejudice, including the State Class Action and the Delaware and
Pennsylvania Derivative Actions. These related actions do not include the
cases captioned Option Resource Group, et al. v. Chambers Development Company,
et al., and Southeast Investments v. Chambers Development Co., et al.

The terms of settlement also included a right to terminate the settlements
based on appeals or opt-outs with respect to the Class Action.

After the Company entered into the Settlement Agreements, the class and
derivative plaintiffs entered into settlements with Grant Thornton, which
previously served as Chambers' accountants. Chambers then entered into an
agreement with the class plaintiffs to settle their claims against a group of
underwriters of certain of Chambers' securities offerings. Chambers agreed to
pay $300,000 to the class plaintiffs to resolve these claims for which the
underwriters sought indemnity from Chambers.

On March 22, 1995, the court granted preliminary approval of the settlements
and the distribution of notices to Chambers' stockholders and the plaintiff
class members regarding the settlements. A hearing upon the fairness,
reasonableness and adequacy of the proposed settlements was held on May 19,
1995, and on May 30, 1995, the court issued a Memorandum Opinion, a Final
Judgment and an Order of Dismissal as to All Defendants in the Federal Class
Action, and a Final Order and Judgment in the Federal Derivative Action
approving the settlements. Subsequently, the Delaware Derivative Action, the
State Class Action, and the Pennsylvania Derivative Action were dismissed with
prejudice.

On July 3, 1995, the Company, on behalf of Chambers, paid the initial
$25,000,000 installment of the settlement and on July 11, 1995, the Company,
on behalf of Chambers, paid the balance of $50,900,000.

Securities and Exchange Commission Investigation. Shortly after Chambers'
announcement on March 17, 1992, of a change in accounting policies concerning
capitalization, the Securities and Exchange Commission (the "Commission")
initiated an informal investigation with respect to Chambers' accounting method
and the accuracy of its financial statements and into the possibility that
persons or entities had traded in Chambers' securities on the basis of inside
information prior to the announcement. On September 30, 1992, a formal order
of investigation was issued by the Commission with respect to potential
violations by Chambers and others of sections 10(b), 13(a) and (b) of the
Exchange Act of 1934 (the "Exchange Act") and various rules promulgated
thereunder. On May 9, 1995, the Commission filed a complaint against Chambers
in the United States District Court for the Western District of Pennsylvania
alleging that Chambers violated the antifraud provisions of the Securities Act
of 1933 (the "Securities Act") and the antifraud, reporting, internal controls
and recordkeeping provisions of the Exchange Act by issuing false and
misleading earnings announcements from 1989 through March 1992 and including
false and misleading financial statement sin its reports on Forms 10-K and 10-Q
and its registration statements filed from 1989 through November 1991.
Chambers simultaneously consented, without admitting or denying the
Commission's allegations, to the entry of an order enjoining it from violating
certain provisions of the Securities Act and the Exchange Act and requiring it
to pay a civil penalty of $500,000.

The Commission also instituted administrative proceedings under Section 21C
of the Exchange Act against

18
<PAGE> 19
four present and former officers of Chambers, including John G. Rangos, Sr.,
Chairman and Chief Executive Officer of Chambers, two of Chambers' former
corporate controllers and a former chief financial officer of Chambers. The
Commission found, among other things, that John G. Rangos, Sr. and one of the
former corporate controllers each were a cause of Chambers' violations of the
reporting, internal controls and recordkeeping provisions of the Exchange Act.
Each of these four persons consented to the issuance of a cease and desist
order without admitting or denying the Commission's findings.

Merger Litigation. Following the announcement of the proposed merger of
Chambers with the Company, three actions were filed in the Court of Chancery of
the State of Delaware in New Castle County against Chambers, its officers and
directors, and the Company. These cases were Smith v. Rangos et al., C.A. No.
13906; Krim v. Rangos et al., C.A. No. 13985; and Adams v. Rangos et al., C.A.
No. 13909. A consolidation order was entered on March 1, 1995, and the cases
were consolidated under the caption In Re Chambers Development Company, Inc.
Shareholders Litigation, Consolidated C.A. No. 13906. The consolidated case
was brought as a purported class action on behalf of the plaintiff and all
similarly situated Chambers security holders. The complaint alleges that the
individual defendants, inter alia, engaged in unfair dealing to the detriment
of the class, the merger is grossly unfair to the members of the class, the
members of the class would be irreparably damaged if the merger were to be
consummated, and the defendants' conduct constituted a breach of fiduciary and
other common law duties allegedly owed to the putative class. The complaint
seeks a declaration that the merger agreement was the result of a breach of
fiduciary duty by the individual defendants, aided and abetted by the Company,
and is thus unlawful and unenforceable; an injunction to enjoin defendants from
proceeding with the merger; an injunction to enjoin defendants from
consummating any merger or combination with a third party absent procedures or
processes such as an auction; an order invalidating certain proxy arrangements;
and an order awarding plaintiff and the class members damages, costs and
disbursements, including reasonable attorneys' fees and experts' fees. The
Company, Chambers, and the individual defendants filed answers denying the
charges and intend to contest such charges. Counsel for the parties have
engaged in settlement discussions and entered into a Stipulation of Settlement,
which was filed on June 30, 1995. Based on such settlement, the Company
consummated the merger with Chambers. The Company anticipates that the
settlement will be approved by the class and the Court in September 1995.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Annual Meeting of Shareholders of USA Waste Services, Inc. was held on
June 27, 1995. The following seven matters were voted on and approved at such
meeting:

(1) The approval and adoption of the Amended and Restated Agreement and Plan
of Merger dated as of November 28, 1994.

<TABLE>
<S> <C>
Votes cast for 15,714,194
Votes cast against 100,076
Votes withheld 0
Abstentions 403,193
Broker non-votes 3,334,058
</TABLE>

19
<PAGE> 20

(2) The election of nine members to the Board of Directors of the Company.

<TABLE>
<S> <C> <C> <C>
Donald F. Moorehead, Jr. John E. Drury Earl E. DeFrates
----------------------- ------------- ----------------
Votes cast for 19,383,567 19,376,986 19,383,567
Votes cast against 0 0 0
Votes withheld 167,954 174,535 167,954
Abstentions 0 0 0
Broker non-votes 0 0 0

Robert A. Mosley George L. Ball David Sutherland-Yoest
---------------- -------------- ----------------------
Votes cast for 19,381,867 19,374,686 19,374,986
Votes cast against 0 0 0
Votes withheld 169,654 0 176,535
Abstentions 0 176,835 0
Broker non-votes 0 0 0

John D. Spellman Gene A. Meredith Richard D. Heckmann
---------------- ---------------- -------------------
Votes cast for 19,373,086 19,373,286 19,373,786
Votes cast against 0 0 0
Votes withheld 178,435 178,235 177,735
Abstentions 0 0 0
Broker non-votes 0 0 0
</TABLE>

(3) Approval and Adoption of Changing the Domicile of the Company to Delaware.

<TABLE>
<S> <C>
Votes cast for 15,411,769
Votes cast against 200,653
Votes withheld 0
Abstentions 603,242
Broker non-votes 3,335,858
</TABLE>

(4) To amend the Certificate of Incorporation to provide for a classified Board
of Directors.

<TABLE>
<S> <C>
Votes cast for 12,513,726
Votes cast against 3,162,632
Votes withheld 0
Abstentions 539,306
Broker non-votes 3,335,858
</TABLE>

20
<PAGE> 21

(5) To amend the Certificate of Incorporation to increase the authorized shares
of USA Waste Common Stock.

<TABLE>
<S> <C>
Votes cast for 15,360,824
Votes cast against 321,700
Votes withheld 0
Abstentions 533,140
Broker non-votes 3,335,858
</TABLE>

(6) To amend the USA Waste 1993 Stock Incentive Plan.

<TABLE>
<S> <C>
Votes cast for 15,272,742
Votes cast against 305,768
Votes withheld 0
Abstentions 637,153
Broker non-votes 3,335,858
</TABLE>

(7) Ratification of the appointment of Coopers & Lybrand as independent
auditors for the fiscal year eDecember 31, 1995

<TABLE>
<S> <C>
Votes cast for 19,501,277
Votes cast against 14,162
Votes withheld 0
Abstentions 36,082
Broker non-votes 0
</TABLE>

21
<PAGE> 22

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits.

<TABLE>
<S> <C> <C>
3.1 - Restated Certificate of Incorporation [Incorporated by Reference to Exhibit 3.1 of the Registrant's
Registration Statement on Form S-4, File No. 33-60103].

3.2 - Bylaws [Incorporated by Reference to Exhibit 3.2 of the Registrant's Registration Statement on Form S-4,
File No. 33-60103].

4.1 - Indenture dated September 25, 1992, between the Registrant and The First National Bank of Boston, as
Trustee, with respect to the Registrant's 8 1/2% Convertible Subordinated Debentures Due 2002
[Incorporated by reference to Exhibit 4.1 of the Registrant's Registration Statement on Form S-1, File
No. 33-50918].

4.2 - Specimen Stock Certificate [Incorporated by reference to Exhibit 4.3 of the Registrant's Registration
Statement on Form S-3, File No. 33-76224].

10.1 - 1990 Stock Option Plan [Incorporated by reference to Exhibit 10.1 of the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1990].

10.2 - 1993 Stock Incentive Plan [Incorporated by reference to Exhibit 4.4 of the Registrants Registration
Statement on Form S-8, File No. 33-72436].

10.3 - Envirofil, Inc. 1993 Stock Incentive Plan [Incorporated by reference to Exhibit 10.3 of the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1994].

10.4 - Asset Purchase Agreement dated August 12, 1993, between Chambers of Indiana, Inc. and USA Waste of
Indiana, Inc. [Incorporated by reference to Exhibit 2.2 to Registrant's Current Report on Form 8-K dated
September 30, 1993].

10.5 - Stock Purchase Agreement dated August 12, 1993, between Chambers Development Company, Inc. and USA Waste
of Indiana, Inc. [Incorporated by reference to Exhibit 2.1 to Registrant's Current Report on Form 8-K
dated September 30, 1993].

10.6 - Agreement of Merger dated as of September 29, 1993, among USA Waste Services, Inc., USA Acquisition Co.,
Soil Remediation of Philadelphia, Inc., and Louis D. Paolino, Jr. [Incorporated by reference to Exhibit
2.3 to Registrant's Current Report on Form 8-K dated September 30, 1993].

10.7 - Agreement and Plan of Reorganization dated as of March 17, 1993, as amended on March 25, 1993, March 31,
1993, and August 20, 1993, between Envirofil, Inc. and Environmental Waste of America, Inc. [Incorporated
by reference to Exhibit (c)(i) to Envirofil's Current Report on Form 8-K filed on November 16, 1993, as
amended by a Current Report in Form 8-K/A filed on January 18, 1994].

10.8 - Stock Purchase Agreement dated March 15, 1993, between Environmental Waste of America, Inc. and Donald G.
Lindgren, as amended and assigned to Envirofil, Inc. as of November 5, 1993. [Incorporated by reference
to Exhibit (c)(i) to Envirofil's Current Report on Form 8-K filed on November 16, 1993, as amended by a
Current Report in Form 8-K/A filed on January 18, 1994].
</TABLE>

22
<PAGE> 23
<TABLE>
<S> <C> <C>
10.9 - Stock Purchase Agreement dated March 19, 1993, among Envirofil, Inc., Meadowbrook Carting Co., Inc., and
certain shareholders of Meadowbrook Carting Co., Inc. [Incorporated by reference to Exhibit (c)(ii) to
Envirofil's Current Report on Form 8-K filed February 28, 1994, as amended by Current Report on Form 8-
K/A filed on May 11, 1994].

10.10 - Stock Purchase Agreement dated March 19, 1993, among Envirofil, Inc., Mid-Jersey Disposal, Co., Inc., and
certain shareholders of Mid-Jersey Disposal Co., Inc. [Incorporated by reference to Exhibit (c)(ii) to
Envirofil's Current Report on Form 8-K filed February 28, 1994, as amended by Current Report on Form 8-
K/A filed on May 11, 1994].

10.11 - Stock Purchase Agreement dated March 19, 1993, among Envirofil, Inc., Quality Recycling Co., Inc., and
certain shareholders of Quality Recycling Co., Inc. [Incorporated by reference to Exhibit (c)(iii) to
Envirofil's Current Report on Form 8-K filed February 28, 1994, as amended by Current Report on Form 8-
K/A filed on May 11, 1994].

10.12 - Stock Purchase Agreement dated March 19, 1993, among Envirofil, Inc., Forcees, Inc., and certain
shareholders of Forcees., Inc. [Incorporated by reference to Exhibit (c)(iv) to Envirofil's Current
Report on Form 8-K filed February 28, 1994, as amended by Current Report on Form 8-K/A filed on May 11,
1994].

10.13 - Amended and Restated Plan and Agreement of Reorganization dated March 29, 1994, among the Registrant,
Envirofil Acquisition Corporation, a Delaware corporation and wholly owned subsidiary of the Registrant,
and Envirofil, Inc., a Delaware corporation [Incorporated by reference to Exhibit 2.1 to the Registrant's
Registration Statement on Form S-4 (File No. 33-77110].

10.14 - Amended and Restated Agreement and Plan of Merger dated as of November 28, 1994, among the Registrant,
Chambers Acquisition Corporation, a Delaware corporation and wholly owned subsidiary of the Registrant,
and Chambers Development Company, Inc., a Delaware corporation [Incorporated by reference to Exhibit 2.1
of the Registrant's Registration Statement on Form S-4, File No. 33-59259].

10.15 - Form of Employment Agreement between the Registrant and each of John E. Drury, Donald F. Moorehead, Jr.,
David Sutherland-Yoest, and Charles A. Wilcox [Incorporated by reference to Exhibit 10.18 of the
Registrant's Annual Report on Form 10-K for the year ended December 31, 1994].

10.16 - Employment Agreement between the Registrant and Earl E. DeFrates [Incorporated by reference to Exhibit
10.19 of the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994].

10.17 - Employment Agreement between the Registrant and Gregory T. Sangalis [Incorporated by reference to Exhibit
10.17 to the Registrant's Registration Statement on Form S-4, File No. 33-59259].

10.18 - Amendment to Amended and Restated Agreement and Plan of Merger dated June 27, 1995, among the Registrant,
Chambers Acquisition Corporation, and Chambers Development Company, Inc. [Incorporated by reference to
Exhibit 2.2 to the Registrant's Current Report on Form 8-K dated June 30, 1995].

10.19 - Revolving Credit and Term Loan Agreement dated as of June 30, 1995, among the Registrant, its
subsidiaries, The First National Bank of Boston, Bank of America Illinois, J.P. Morgan Securities Inc.,
an Morgan Guaranty Trust Company of New York.
</TABLE>

23
<PAGE> 24
<TABLE>
<S> <C> <C>
27.1 - Financial Data Schedule.
</TABLE>

(b) Reports of Form 8-K.

The Company filed a Current Report on Form 8-K dated June 30, 1995. Such
Current Report reported on Item 1. Changes in Control of Registrant, Item 2.
Acquisition or Disposition of Assets, and Item 7. Financial Statements and
Exhibits. The financial statements filed included Supplemental Consolidated
Financial Statements of the Company at December 31, 1994, and for the three
years ended December 31, 1994, and Supplemental Condensed Consolidated
Financial Statements at March 31, 1995, and for the three months ended March
31, 1995.

24
<PAGE> 25
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

USA WASTE SERVICES, INC.
Registrant

August 14 1994 BY: s/ Earl E. DeFrates
--------------------- ---------------------------
Date Earl E. DeFrates,
Executive Vice President,
Chief Financial Officer

August 14 1994 BY: s/ Bruce E. Snyder
--------------------- ---------------------------
Date Bruce E. Snyder,
Vice President - Controller
Chief Accounting Officer

<PAGE> 26
INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C> <C>
3.1 - Restated Certificate of Incorporation [Incorporated by Reference to Exhibit 3.1 of the Registrant's
Registration Statement on Form S-4, File No. 33-60103].

3.2 - Bylaws [Incorporated by Reference to Exhibit 3.2 of the Registrant's Registration Statement on Form S-4,
File No. 33-60103].

4.2 - Specimen Stock Certificate [Incorporated by reference to Exhibit 4.3 of the Registrant's Registration
Statement on Form S-3, File No. 33-76224].

10.1 - 1990 Stock Option Plan [Incorporated by reference to Exhibit 10.1 of the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1990].

10.2 - 1993 Stock Incentive Plan [Incorporated by reference to Exhibit 4.4 of the Registrants Registration
Statement on Form S-8, File No. 33-72436].

10.3 - Envirofil, Inc. 1993 Stock Incentive Plan [Incorporated by reference to Exhibit 10.3 of the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1994].

10.9 - Stock Purchase Agreement dated March 19, 1993, among Envirofil, Inc., Meadowbrook Carting Co., Inc., and
certain shareholders of Meadowbrook Carting Co., Inc. [Incorporated by reference to Exhibit (c)(ii) to
Envirofil's Current Report on Form 8-K filed February 28, 1994, as amended by Current Report on Form 8-
K/A filed on May 11, 1994].
</TABLE>
<PAGE> 27
INDEX TO EXHIBITS (Continued)

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C> <C>
10.10 - Stock Purchase Agreement dated March 19, 1993, among Envirofil, Inc., Mid-Jersey Disposal, Co., Inc., and
certain shareholders of Mid-Jersey Disposal Co., Inc. [Incorporated by reference to Exhibit (c)(ii) to
Envirofil's Current Report on Form 8-K filed February 28, 1994, as amended by Current Report on Form 8-
K/A filed on May 11, 1994].

10.17 - Employment Agreement between the Registrant and Gregory T. Sangalis [Incorporated by reference to Exhibit
10.17 to the Registrant's Registration Statement on Form S-4, File No. 33-59259].

27.1 - Financial Data Schedule.

</TABLE>

<PAGE> 1
EXHIBIT 10.19

REVOLVING CREDIT AND TERM LOAN AGREEMENT

DATED AS OF JUNE 30, 1995

BY AND AMONG
USA WASTE SERVICES, INC.,
(THE "BORROWER")

AND

THE SUBSIDIARIES OF THE BORROWER
LISTED ON SCHEDULE 1 HERETO
(THE "GUARANTORS"),

AND

THE FIRST NATIONAL BANK OF BOSTON
("FNBB"),
BANK OF AMERICA ILLINOIS
("BAI")
J.P. MORGAN SECURITIES INC.
("J.P. MORGAN")

(COLLECTIVELY, THE "AGENTS")

AND

FNBB, BAI, MORGAN GUARANTY TRUST COMPANY OF NEW YORK ("MGT")
AND THE OTHER FINANCIAL INSTITUTIONS WHICH BECOME
A PARTY TO THIS AGREEMENT

(COLLECTIVELY, THE "BANKS")

AND

MGT AS THE ADMINISTRATIVE AGENT

AND

FNBB AS DOCUMENTATION AGENT

(COLLECTIVELY, THE "BANK AGENTS")
<PAGE> 2

<TABLE>
<S> <C>
Section 1. DEFINITIONS AND RULES OF INTERPRETATION. . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Rules of Interpretation. . . . . . . . . . . . . . . . . . . . . 15
Section 2. THE REVOLVING CREDIT FACILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.1. Commitment to Lend. . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.2. Reduction of Total Revolving Credit Commitment. . . . . . . . . . 16
Section 2.3. The Revolving Credit Notes. . . . . . . . . . . . . . . . . . . . 17
Section 2.4. Requests for Revolving Credit Loans. . . . . . . . . . . . . . . 17
Section 2.5. Commitment Fee. . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.6. Funds for Revolving Credit Loans . . . . . . . . . . . . . . . . 18
Section 2.7. Maturity of the Revolving Credit Loans and Reimbursement
Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.8. Mandatory Repayments of the Revolving Credit Loans. . . . . . . . 19
Section 2.9. Optional Prepayments or Repayments of Revolving Credit Loans. . . 20
Section 3. LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.1. Letter of Credit Commitments . . . . . . . . . . . . . . . . . . . 20
Section 3.2. Reimbursement Obligation of the Borrower. . . . . . . . . . . . . 21
Section 3.3. Obligations Absolute. . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.4. Reliance by the Issuing Bank. . . . . . . . . . . . . . . . . . . 22
Section 3.5. Letter of Credit Fee. . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.6. Notice Regarding Letters of Credit. . . . . . . . . . . . . . . . 23
Section 4. THE TERM LOAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.1. Commitment to Lend. . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.2. The Term Notes. . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.3. Schedule of Installment Payments of Principal. . . . . . . . . . 23
Section 4.4. Optional Prepayment of Term Loan. . . . . . . . . . . . . . . . . 24
Section 4.5. Mandatory Prepayments on Term Loan. . . . . . . . . . . . . . . . 24
Section 5. PROVISIONS RELATING TO ALL LOANS . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.1. Interest on Loans. . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.2. Election of Eurodollar Rate; Notice of Election; Interest Periods;
Minimum Amounts. . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.3. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.4. Computations. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.5. Capital Adequacy. . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.6. Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.7. Interest on Overdue Amounts. . . . . . . . . . . . . . . . . . . 28
Section 5.8. Interest Limitation. . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.9. Eurodollar Indemnity. . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.10. Illegality; Inability to Determine Eurodollar Rate. . . . . . . 29
Section 5.11. Additional Costs, Etc. . . . . . . . . . . . . . . . . . . . . . 29
Section 5.12. Reasonable Efforts to Mitigate. . . . . . . . . . . . . . . . . 31
Section 5.13. Replacement of Banks. . . . . . . . . . . . . . . . . . . . . . 31
Section 6. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 6.1. Corporate Authority. . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
<PAGE> 3
-2-

<TABLE>
<S> <C>
Section 6.2. Governmental Approvals. . . . . . . . . . . . . . . . . . . . . . 33
Section 6.3. Title to Properties; Leases. . . . . . . . . . . . . . . . . . . 34
Section 6.4. Financial Statements; Solvency. . . . . . . . . . . . . . . . . . 34
Section 6.5. No Material Changes, Etc. . . . . . . . . . . . . . . . . . . . . 34
Section 6.6. Franchises, Patents, Copyrights, Etc. . . . . . . . . . . . . . . 35
Section 6.7. Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 6.8. No Materially Adverse Contracts, Etc. . . . . . . . . . . . . . . 35
Section 6.9. Compliance With Other Instruments, Laws, Etc. . . . . . . . . . . 36
Section 6.10. Tax Status. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 6.11. No Event of Default. . . . . . . . . . . . . . . . . . . . . . . 36
Section 6.12. Holding Company and Investment Company Acts. . . . . . . . . . . 36
Section 6.13. Absence of Financing Statements, Etc. . . . . . . . . . . . . . 37
Section 6.14. Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . 37
Section 6.15. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 6.16. Environmental Compliance. . . . . . . . . . . . . . . . . . . . 38
Section 6.17. Perfection of Security Interests. . . . . . . . . . . . . . . . 40
Section 6.18. Certain Transactions. . . . . . . . . . . . . . . . . . . . . . 40
Section 6.19. Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 6.20. Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 6.21. True Copies of Charter and Other Documents. . . . . . . . . . . 41
Section 6.22. Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 6.23. Permits and Governmental Authority. . . . . . . . . . . . . . . 41
Section 6.24. Intercompany Accounts. . . . . . . . . . . . . . . . . . . . . . 42
Section 6.25. Chambers Shareholder Litigation Settlement. . . . . . . . . . . 42
Section 7. AFFIRMATIVE COVENANTS OF THE BORROWER AND THE GUARANTORS. . . . . . . . . . . . . 42
Section 7.1. Punctual Payment. . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 7.2. Maintenance of Office. . . . . . . . . . . . . . . . . . . . . . 42
Section 7.3. Records and Accounts. . . . . . . . . . . . . . . . . . . . . . . 42
Section 7.4. Financial Statements, Certificates and Information. . . . . . . . 42
Section 7.5. Corporate Existence and Conduct of Business. . . . . . . . . . . 44
Section 7.6. Maintenance of Properties. . . . . . . . . . . . . . . . . . . . 45
Section 7.7. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 7.8. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 7.9. Inspection of Properties, Books and Contracts. . . . . . . . . . 46
Section 7.10. Compliance with Laws, Contracts, Licenses and Permits;
Maintenance of Material Licenses and Permits. . . . . . . . . . 46
Section 7.11. Environmental Indemnification. . . . . . . . . . . . . . . . . . 46
Section 7.12. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . 47
Section 7.13. Notice of Potential Claims or Litigation. . . . . . . . . . . . 47
Section 7.14. Notice of Certain Events Concerning Insurance and
Environmental Claims. . . . . . . . . . . . . . . . . . . . . . 47
Section 7.15. Response Actions. . . . . . . . . . . . . . . . . . . . . . . . 48
Section 7.16. Notice of Default. . . . . . . . . . . . . . . . . . . . . . . . 49
Section 7.17. Interest Rate Protection. . . . . . . . . . . . . . . . . . . . 49
</TABLE>
<PAGE> 4
-3-

<TABLE>
<S> <C>
Section 7.18. Environmental Reports. . . . . . . . . . . . . . . . . . . . . 49
Section 7.19. Chambers Shareholder Litigation Settlement. . . . . . . . . . 49
Section 8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER AND THE GUARANTORS. . . . . . . . . . 49
Section 8.1. Restrictions on Indebtedness. . . . . . . . . . . . . . . . . . 49
Section 8.2. Restrictions on Liens. . . . . . . . . . . . . . . . . . . . . 51
Section 8.3. Restrictions on Investments. . . . . . . . . . . . . . . . . . 53
Section 8.4. Mergers, Consolidations, Sales. . . . . . . . . . . . . . . . . 53
Section 8.5. Sale and Leaseback. . . . . . . . . . . . . . . . . . . . . . . 54
Section 8.6. Restricted Distributions and Redemptions. . . . . . . . . . . . 54
Section 8.7. Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . 55
Section 8.8. Subordinated Debt. . . . . . . . . . . . . . . . . . . . . . . 56
Section 8.9. Capital Expenditures. . . . . . . . . . . . . . . . . . . . . . 56
Section 8.10. Reliance Documents. . . . . . . . . . . . . . . . . . . . . . 56
Section 9. FINANCIAL COVENANTS OF THE BORROWER. . . . . . . . . . . . . . . . . . . . . . . 56
Section 9.1. Leverage Ratio. . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 9.2. Interest Coverage Ratio. . . . . . . . . . . . . . . . . . . . 57
Section 9.3. Consolidated Net Worth. . . . . . . . . . . . . . . . . . . . . 58
Section 9.4. Debt Service Coverage Ratio. . . . . . . . . . . . . . . . . . 58
Section 10. CONDITIONS TO INITIAL LOAN. . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 10.1. Corporate Action. . . . . . . . . . . . . . . . . . . . . . . 58
Section 10.2. Loan Documents, Etc. . . . . . . . . . . . . . . . . . . . . . 58
Section 10.3. Certified Copies of Charter Documents. . . . . . . . . . . . . 58
Section 10.4. Incumbency Certificate. . . . . . . . . . . . . . . . . . . . 58
Section 10.5. Validity of Liens. . . . . . . . . . . . . . . . . . . . . . . 59
Section 10.6. Certificates of Insurance. . . . . . . . . . . . . . . . . . . 59
Section 10.7. Opinions of Counsel and Permit Certificate. . . . . . . . . . 59
Section 10.8. Chambers Merger. . . . . . . . . . . . . . . . . . . . . . . . 59
Section 10.9. Existing Debt. . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 10.10. Satisfactory Financial Condition. . . . . . . . . . . . . . . . 60
Section 10.11. Litigation Matters. . . . . . . . . . . . . . . . . . . . . . . 60
Section 10.12. Environmental Reports. . . . . . . . . . . . . . . . . . . . . 60
Section 10.13. Reincorporation of Borrower. . . . . . . . . . . . . . . . . . 60
Section 11. CONDITIONS TO ALL LOANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 11.1. Representations True. . . . . . . . . . . . . . . . . . . . . 60
Section 11.2. Performance; No Event of Default. . . . . . . . . . . . . . . 61
Section 11.3. No Legal Impediment. . . . . . . . . . . . . . . . . . . . . . 61
Section 11.4. Governmental Regulation. . . . . . . . . . . . . . . . . . . . 61
Section 11.5. Proceedings and Documents. . . . . . . . . . . . . . . . . . . 61
Section 12. COLLATERAL SECURITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 13. EVENTS OF DEFAULT; ACCELERATION; TERMINATION OF COMMITMENT. . . . . . . . . . . 62
Section 13.1. Events of Default and Acceleration. . . . . . . . . . . . . . 62
Section 13.2. Termination of Commitments. . . . . . . . . . . . . . . . . . 65
Section 13.3. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . 65
</TABLE>
<PAGE> 5
-4-

<TABLE>
<S> <C>
Section 14. SETOFF. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 15. EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 16. THE BANK AGENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 16.1. Appointment, Powers and Immunities. . . . . . . . . . . . . . . 67
Section 16.2. Actions By Bank Agents. . . . . . . . . . . . . . . . . . . . . 68
Section 16.3. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 16.4. Reimbursement. . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 16.5. Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 16.6. Non-Reliance on Bank Agents and Other Banks. . . . . . . . . . . 69
Section 16.7. Resignation of Bank Agents. . . . . . . . . . . . . . . . . . . 70
Section 16.8. Action by the Banks, Consents, Amendments, Waivers, Etc. . . . . 70
Section 17. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 18. SURVIVAL OF COVENANTS, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 19. ASSIGNMENT AND PARTICIPATION. . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 20. PARTIES IN INTEREST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 21. NOTICES, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 22. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 23. CONSENTS, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 24. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, . . . . . . . . 75
Section 25. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 26. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 27. GUARANTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 27.1. Guaranty. . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 27.2. Guaranty Absolute. . . . . . . . . . . . . . . . . . . . . . . . 76
Section 27.3. Effectiveness; Enforcement. . . . . . . . . . . . . . . . . . . 77
Section 27.4. Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 27.5. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 27.6. Concerning Joint and Several Liability of the Guarantors. . . . 78
Section 27.7. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 27.8. Subrogation; Subordination . . . . . . . . . . . . . . . . . . . 81
Section 27.9. New Guarantors. . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 28. FINAL AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
</TABLE>

Exhibits
--------

<TABLE>
<S> <C>
Exhibit A-1 Form of Revolving Credit Note
Exhibit A-2 Form of Term Note
Exhibit B Form of Loan and Letter of Credit Request
Exhibit C Form of Compliance Certificate
</TABLE>
<PAGE> 6
-2-

<TABLE>
<S> <C>
Exhibit D Borrower's Standard Due Diligence Practice
Exhibit E Form of Assignment and Acceptance

</TABLE>

<TABLE>
<CAPTION>
Schedules
---------
<S> <C>
Schedule 1 Subsidiaries of the Borrower
Schedule 2 Eurodollar Lending Offices
Schedule 3.1(a) Existing Letters of Credit
Schedule 6.7 Litigation
Schedule 6.16 Environmental Compliance
Schedule 8.1(h) Existing Indebtedness
Schedule 8.1(i) Intercompany Accounts
Schedule 8.1(n) Existing Letters of Credit
Schedule 8.2(a) Existing Liens
</TABLE>
<PAGE> 7

REVOLVING CREDIT AND TERM LOAN AGREEMENT

This REVOLVING CREDIT AND TERM LOAN AGREEMENT is made as of the 30th
day of June, 1995, by and among USA WASTE SERVICES, INC., a Delaware
corporation (the "Borrower"), its Subsidiaries listed on Schedule 1 hereto as
amended from time to time (each a "Guarantor," and, collectively, the
"Guarantors"), each of which companies (unless otherwise listed on Schedule 1
hereto) having its chief executive offices at 5000 Quorum Drive, Suite 300,
Dallas, Texas 75240, and THE FIRST NATIONAL BANK OF BOSTON, a national banking
association having its principal place of business at 100 Federal Street,
Boston, Massachusetts 02110 ("FNBB"), BANK OF AMERICA ILLINOIS, an Illinois
banking association having its principal place of business at 231 South LaSalle
Street Chicago, IL 60697 ("BAI"), and J.P. MORGAN SECURITIES INC., a Delaware
corporation having its principal place of business at 60 Wall Street, New York,
New York 10260 ("J.P. Morgan") (collectively, the "Agents"), FNBB, BAI, Morgan
Guaranty Trust Company of New York, a New York state banking association having
its principal place of business at 60 Wall Street, New York, New York 10260
("MGT") and other financial institutions which become a lender hereunder
(collectively, the "Banks"), and MGT as the Administrative Agent and FNBB, as
Documentation Agent (collectively, the "Bank Agents").

SECTION 1. DEFINITIONS AND RULES OF INTERPRETATION.

SECTION 1.1. DEFINITIONS. The following terms shall have the
meanings set forth in this Section 1 or elsewhere in the provisions of this
Agreement referred to below:

Accountants. See Section 7.4(a).

Affected Bank. See Section 5.13.

Administrative Agent. See Preamble.

Agreement. This Revolving Credit and Term Loan Agreement, including
the Schedules and Exhibits hereto, as from time to time amended and
supplemented in accordance with the terms hereof.

Applicable Commitment Rate. The applicable rate per annum set forth
in the following table:
<PAGE> 8
-2-

<TABLE>
<CAPTION>
PRICING RATIO RATE
------------- ----
<S> <C>
less than or equal to 2:1 0.25% per annum

greater than 2:1 but less than or equal to 3:1 0.375% per annum

greater than 3:1 0.50% per annum
</TABLE>

The effective date of a change in the Applicable Commitment Rate shall be the
earlier of (a) forty-fifth day after the end of a fiscal quarter or (b) the
first day after receipt by the Administrative Agent of a Compliance Certificate
delivered pursuant to Section 7.4(c) or (d) hereof based on the Pricing Ratio
as of the end of the previous quarter.

Applicable L/C Fee. The applicable Letter of Credit Fee set forth in
the following table:

<TABLE>
<CAPTION>
APPLICABLE
PRICING RATIO L/C FEE
------------- ----------
<S> <C>
less than or equal to 2:1 0.75% per annum

greater than 2:1 but less than or equal to 2.5:1 1% per annum

greater than 2.5:1 but less than or equal to 3:1 1.25% per annum

greater than 3:1 but less than or equal to 3.5:1 1.50% per annum

greater than 3.5:1 1.75% per annum
</TABLE>

The effective date of a change in the Applicable L/C Fee shall be the earlier
of (a) forty-fifth day after the end of a fiscal quarter or (b) the first day
after receipt by the Administrative Agent of a Compliance Certificate delivered
pursuant to Section 7.4(c) or (d) hereof based on the Pricing Ratio as of the
end of the previous quarter.

Applicable Rate. The applicable rate per annum of interest on the
Loans set forth in the following table:
<PAGE> 9
-3-

APPLICABLE RATE FOR BASE APPLICABLE RATE FOR EURODOLLAR
PRICING RATIO RATE LOANS LOANS
------------- ------------------------ -------------------------------
<S> <C> <C>
less than or equal to 2:1 Base Rate Eurodollar Rate plus 0.75% per
annum

greater than 2:1 but less Base Rate Eurodollar Rate plus 1% per
than or equal to 2.5:1 annum

greater than 2.5:1 but less Base Rate Eurodollar Rate plus 1.25% per
than or equal to 3:1 annum

greater than 3:1 but less Base Rate plus 0.25% per Eurodollar Rate plus 1.50% per
than or equal to 3.5:1 annum annum

greater than 3.5:1 Base Rate plus 0.50% per Eurodollar Rate plus 1.75% per
annum annum
</TABLE>
The effective date of a change in the Applicable Rate shall be the earlier of
(a) forty-fifth day after the end of a fiscal quarter or (b) the first day
after receipt by the Administrative Agent of a Compliance Certificate delivered
pursuant to Section 7.4(c) or (d) hereof based on the Pricing Ratio as of the
end of the previous quarter.

Applicable Requirements. See Section 7.10.

Assignment and Acceptance. See Section 19.

Automated. Automated Recycling Technologies, Inc., a New Jersey
corporation.

Automated Shares. The shares of Automated which are owned by
Envirofil, Inc.

Balance Sheet Date. December 31, 1994.

Bank Agents. See Preamble.

Banks. See Preamble.
<PAGE> 10
-4-

Base Rate. The higher of (a) the annual rate of interest announced
from time to time by the Administrative Agent at its Head Office as its "prime
rate" (it being understood that such rate is a reference rate and not
necessarily the lowest rate of interest charged by the Agent) or (b) one
percent (1%) above the Overnight Federal Funds Effective Rate.

Base Rate Loans. Loans bearing interest calculated by reference to
the Base Rate.

Borrower. See preamble.

Business Day. Any day, other than a Saturday, Sunday or any day on
which banking institutions in New York, New York are authorized by law to
close, and, when used in connection with a Eurodollar Loan, a Eurodollar
Business Day.

Capital Assets. Fixed assets, both tangible (such as land, buildings,
fixtures, machinery and equipment) and intangible (such as patents, copyrights,
trademarks, franchises, customer lists, and goodwill); provided that Capital
Assets shall not include any item customarily charged directly to expense or
depreciated over a useful life of twelve (12) months or less in accordance with
GAAP.

Capital Expenditures. Amounts paid or Indebtedness incurred by any
Person in connection with the purchase or lease by such Person of Capital
Assets that would be required to be capitalized and shown on the balance sheet
of such Person in accordance with GAAP.

CERCLA. See Section 6.16(a).

Certified or certified. With respect to the financial statements of
any Person, such statements as audited by a firm of independent auditors, whose
report expresses the opinion, without qualification, that such financial
statements present fairly the financial position of such Person.

CFO. See Section 7.4(b).

Chambers. Chambers Development Company, Inc.

Chambers Judgments. See Section 13.1(n).

Chambers Merger. The merger of Chambers and Chambers Acquisition
Corporation pursuant to the terms of the Merger Agreement.

Chambers Shareholder Litigation. See Section 10.11.

Chambers Shareholder Litigation Settlement. See Section 10.11.
<PAGE> 11
-5-

Closing Date. The date on which the conditions precedent set forth in
Section 10 hereof are satisfied.

Code. The Internal Revenue Code of 1986, as amended and in effect
from time to time.

Collateral. All of the stock of and partnership interests in the
Subsidiaries of the Borrower and the Automated Shares and the Intercompany
Accounts, whether now owned or hereafter acquired, and the proceeds thereof and
other property related thereto, all as more particularly described as subject
to the security interests created by the Pledge Agreement, the Partnership
Pledge Agreement and the Security Agreement.

Commitment Fee. See Section 2.5.

Commitment Percentage. With respect to each Bank, the percentage set
forth beside its name below (subject to adjustment upon any purchases or sales
of any assignments pursuant to Section 19):
<TABLE>
<CAPTION>
BANK PERCENTAGE
---- ----------
<S> <C>
FNBB 33 1/3%
BAI 33 1/3%
MGT 33 1/3%
</TABLE>
Compliance Certificate. See Section 7.4(c).

Consolidated or consolidated. With reference to any term defined
herein, shall mean that term as applied to the accounts of the Borrower and the
Guarantors consolidated in accordance with GAAP.

Consolidated Cash Flow. For any period, on a consolidated basis, EBIT
plus (a) operating lease payments and amortization of goodwill and other
intangibles (not including landfill amortization) minus (b) cash income taxes
for such period, all as determined in accordance with GAAP.

Consolidated Debt Service. For any period, Consolidated Total
Interest Expense plus (a) scheduled payments on capitalized leases (to the
extent not already included in the calculation of Consolidated Total Interest
Expense or in the scheduled principal payments described in clause (c) of this
definition), and (b) operating lease payments and (c) scheduled principal
payments with respect to Indebtedness for borrowed money due and payable during
such period, all as determined in accordance with GAAP.

Consolidated Earnings Before Interest and Taxes, or EBIT. For any
period, the Consolidated Net Income (or Deficit) of the Borrower and the
<PAGE> 12
-6-

Guarantors on a consolidated basis plus (1) interest expense, and (2) income
taxes, and (3) up to $25,000,000 of merger expenses taken as a special charge
in the quarter in which the Chambers Merger is consummated with respect to the
Chambers Merger, to the extent each was deducted in determining Consolidated
Net Income.

Consolidated Earnings Before Interest, Taxes, Depreciation and
Amortization or EBITDA. For any period, EBIT plus (a) depreciation expense,
and (b) amortization expense to the extent the same would be included in the
calculation of EBIT for such period, determined in accordance with GAAP.

Consolidated Net Income (or Deficit) or Net Income (or Deficit). The
consolidated net income (or deficit) of the Borrower and the Guarantors, or the
net income of the Borrower or any Guarantor on an individual basis, as the case
may be, after deduction of all expenses, taxes, and other proper charges,
determined in accordance with GAAP.

Consolidated Net Worth. The excess of Consolidated Total Assets over
Consolidated Total Liabilities.

Consolidated Total Assets. All assets of the Borrower and the
Guarantors determined on a consolidated basis in accordance with GAAP.

Consolidated Total Interest Expense. For any period, the aggregate
amount of interest expense required by GAAP to be paid or accrued during such
period on all Indebtedness of the Borrower and the Guarantors outstanding
during all or any part of such period, including capitalized interest expense
for such period.

Consolidated Total Liabilities. All liabilities of the Borrower and
the Guarantors determined on a consolidated basis in accordance with GAAP.

Consulting Engineer. WHI, Inc., CH2M Hill or such other engineering
consulting firm acceptable to the Documentation Agent.

Consulting Engineer's Report. See Section 8.4.

Default. See Section 13.

Defaulting Bank. See Section 5.13.

Disposal. See "Release".

Distribution. The declaration or payment of any dividend on or in
respect of any shares of any class of capital stock of any Person, other than
dividends payable solely in shares of common stock of such Person; the
<PAGE> 13
-7-

purchase, redemption, or other retirement of any shares of any class of capital
stock of such Person, directly or indirectly through a Subsidiary or otherwise;
the return of equity capital by any Person to its shareholders as such; or any
other distribution on or in respect of any shares of any class of capital stock
of such Person.

Documentation Agent. See Preamble.

Dollars or $. Dollars in lawful currency of the United States of
America.

Drawdown Date. The date on which any Loan is made or is to be made.

EBIT. See definition of Consolidated Earnings Before Interest and
Taxes.

EBITDA. See definition of Consolidated Earnings Before Interest,
Taxes, Depreciation, and Amortization.

Employee Benefit Plan. Any employee benefit plan within the meaning
of Section 3(3) of ERISA maintained or contributed to by the Borrower, any
Guarantor, or any ERISA Affiliate, other than a Multiemployer Plan.

Enhanced IRBs. See Section 8.1(m).

Environmental Laws. See Section 6.16(a).

EPA. See Section 6.16(b).

ERISA. The Employee Retirement Income Security Act of 1974, as
amended and in effect from time to time.

ERISA Affiliate. Any Person which is treated as a single employer
with the Borrower or any Guarantor under Section 414 of the Code.

ERISA Reportable Event. A reportable event with respect to a
Guaranteed Pension Plan within the meaning of Section 4043 of ERISA and the
regulations promulgated thereunder as to which the requirement of notice has
not been waived.

Eurocurrency Reserve Rate. For any day with respect to a Eurodollar
Loan, the maximum rate (expressed as a decimal) at which any lender subject
thereto would be required to maintain reserves under Regulation D of the Board
of Governors of the Federal Reserve System (or any successor or similar
regulations relating to such reserve requirements) against "Eurocurrency
Liabilities" (as that term is used in Regulation D), if such
<PAGE> 14
-8-

liabilities were outstanding. The Eurocurrency Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in the Eurocurrency
Reserve Rate.

Eurodollar Business Day. Any day on which commercial banks are open
for international business (including dealings in Dollar deposits) in London or
such other eurodollar interbank market as may be selected by the Administrative
Agent in its sole discretion acting in good faith.

Eurodollar Interest Determination Date. For any Interest Period, the
date two Eurodollar Business Days prior to the first day of such Interest
Period.

Eurodollar Loans. Loans bearing interest calculated by reference to
the Eurodollar Rate.

Eurodollar Lending Office. Initially, the office of each Bank
designated as such in Schedule 2 hereto; thereafter, upon notice to the
Administrative Agent, such other office of such Bank that shall be making or
maintaining Eurodollar Loans.

Eurodollar Rate. For any Interest Period with respect to a Eurodollar
Loan, the rate of interest equal to (i) the arithmetic average of the rates per
annum for each Reference Bank at which such Reference Bank's Eurodollar Lending
Office is offered Dollar deposits two Eurodollar Business Days prior to the
beginning of such Interest Period in the interbank eurodollar market where the
eurodollar and foreign currency and exchange operations of such Eurodollar
Lending Office are customarily conducted, for delivery on the first day of such
Interest Period for the number of days comprised therein and in an amount
comparable to the amount of the Eurodollar Rate Loan of such Reference Bank to
which such Interest Period applies, divided by (ii) a number equal to 1.00
minus the Eurocurrency Reserve Rate, if applicable (rounded upwards to the
nearest 1/16 of one percent).

Event of Default. See Section 13.

First Amendment Date. The date on which FNBB, BAI and MTC complete
syndication of the Loans, and new financial institutions become party to this
Agreement.

generally accepted accounting principles or GAAP. When used (1) in
general, generally accepted accounting principles means principles that are
consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors as shall be concurred in by
independent certified public accountants of recognized standing whose report
expresses an unqualified opinion (other than one or more qualifications
<PAGE> 15
-9-

regarding changes in generally accepted accounting principles) as to financial
statements in which such principles have been applied; and (2) when used with
reference to the Borrower and the Guarantors with respect to the determination
of compliance with the covenants set forth in Section 9 hereof and
determination of the Pricing Ratio, such principles shall include the
accounting practices reflected in the consolidated financial statements of the
Borrower and its Subsidiaries as of the Balance Sheet Date, consistently
applied.

Guaranteed Obligations. See Section 27.1.

Guaranteed Pension Plan. Any employee pension benefit plan within the
meaning of Section 3(2) of ERISA maintained or contributed to by the Borrower,
any Guarantor, or any ERISA Affiliate the benefits of which are guaranteed on
termination in full or in part by the PBGC pursuant to Title IV of ERISA, other
than a Multiemployer Plan.

Guarantors. See preamble.

Hazardous Substances. See Section 6.16(b).

Head Office. The Administrative Agent's head office located in New
York, New York, or at such other location as the Administrative Agent may
designate from time to time.

Indebtedness. All obligations, contingent and otherwise, that in
accordance with GAAP should be classified upon the obligor's balance sheet as
liabilities, or to which reference should be made by footnotes thereto,
including in any event and whether or not so classified or so referred to by
footnotes: (a) all debt and similar monetary obligations (including all
capitalized leases and those operating leases which have a term longer than 3
years), whether direct or indirect; (b) all liabilities secured by any
mortgage, pledge, security interest, lien, charge, or other encumbrance
existing on property owned or acquired subject thereto, whether or not the
liability secured thereby shall have been assumed; (c) all obligations for the
deferred purchase price of any property or services; and (d) all guarantees,
endorsements (other than endorsements in the ordinary course of business of
negotiable instruments or documents for transfer, deposit or collection) and
other contingent obligations, whether direct or indirect, including, without
limitation, any obligation to supply funds to or in any manner to invest in,
directly or indirectly, any Person, to purchase indebtedness, or to assure the
owner of indebtedness against loss, through an agreement to purchase goods,
supplies, or services for the purpose of enabling any Person to make payment of
the indebtedness held by such owner or otherwise, and the obligations to
reimburse the issuer in respect of any letters of credit.
<PAGE> 16
-10-

Intercompany Accounts. Promissory notes or accounts evidencing the
intercompany obligations of the Borrower and Guarantors, in which the Borrower
and the Guarantors have granted a security interest to the Documentation Agent,
for the benefit of the Banks.

Interest Period. With respect to each Eurodollar Loan:

(a) initially, the period commencing on the date of a
conversion from a Base Rate Loan into a Eurodollar Loan or the making
of a Eurodollar Loan, and ending one (1), two (2), three (3), or six
(6) months thereafter, as the case may be, as the Borrower may select;
and

(b) thereafter, each subsequent Interest Period shall
begin on the last day of the preceding Interest Period, and end one
(1), two (2), three (3), or six (6) months thereafter, as the case may
be, as the Borrower may select;

(c) provided that any Interest Period which would
otherwise end on a day which is not a Business Day shall be deemed to
end on the next preceding Business Day.

Interest Rate Protection Agreements. One or more agreements providing
for a swap or cap with respect to the interest payable by the Borrower on
portions of the Term Loan hereunder in accordance with Section 7.17, and
reasonably acceptable to the Agents.

Interim Balance Sheet Date. March 31, 1995.

Interim Compliance Certificate. See Section 7.4(d).

Investments. All expenditures made by a Person and all liabilities
incurred (contingently or otherwise) by a Person for the acquisition of stock,
pre-payments for use of landfill air space in excess of usual and customary
industry practice, or Indebtedness of, or for loans, advances, capital
contributions or transfers of property to, or in respect of any guaranties (or
other commitments as described under Indebtedness), or obligations of, any
other Person, including without limitation, the funding of any captive
insurance company. In determining the aggregate amount of Investments
outstanding at any particular time: (a) the amount of any Investment
represented by a guaranty shall be taken at not less than the principal amount
of the obligations guaranteed and still outstanding; (b) there shall be
included as an Investment all interest accrued with respect to Indebtedness
constituting an Investment unless and until such interest is paid; (c) there
shall be deducted in respect of each such Investment any amount received as a
return of capital (but only by repurchase, redemption,
<PAGE> 17
-11-

retirement, repayment, liquidating dividend or liquidating distribution); (d)
there shall not be deducted in respect of any Investment any amounts received
as earnings on such Investment, whether as dividends, interest or otherwise,
except that accrued interest included as provided in the foregoing clause (b)
may be deducted when paid; and (e) there shall not be deducted from the
aggregate amount of Investments any decrease in the value thereof.

Investment Grade. Any time when the Borrower's senior unsecured debt
is rated (i) "BBB" or better by Standard & Poor's Ratings Group, or (ii) "BBB-"
or better by Standard & Poor's Ratings Group and "Baa3" or "BBB-" (or the
equivalent thereof) or better by Moody's Investors Services, Inc., Duff &
Phelps Credit Rating Co., or another national rating agency.

Issuing Bank. The Bank(s) issuing letters of credit for the Banks
which shall be FNBB, MGT (with respect to the MGT Letter of Credit) and such
other Bank(s) as agreed to by the Borrower and the Bank Agents.

Letter of Credit Applications. Letter of Credit Applications in such
form as may be agreed upon by the Borrower and the Issuing Bank from time to
time which are entered into pursuant to Section 3 hereof as such Letter of
Credit Applications are amended, varied or supplemented from time to time;
provided, however, in the event of any conflict or inconsistency between the
terms of any Letter of Credit Application and this Agreement, the terms of this
Agreement shall control.

Letter of Credit Fee. See Section 3.5.

Letters of Credit. Standby Letters of Credit issued or to be issued
by the Issuing Bank under Section 3 hereof for the account of the Borrower.

Loan Documents. This Agreement, the Notes, the Letter of Credit
Applications, the Letters of Credit, the Pledge Agreement, the Partnership
Pledge Agreement, the Security Agreement and any documents, instruments or
agreements executed in connection with any of the foregoing, each as amended,
modified, supplemented, or replaced from time to time.

Loan and Letter of Credit Request. See Section 2.4.

Loans. Revolving credit and term loans made or to be made by the
Banks to the Borrower pursuant to Section 2 and Section 4 hereof.

Maturity Date. June 30, 2000.

Majority Banks. Initially, 100% of the Banks, and after First
Amendment Date, as of any date, the Banks holding fifty-one percent (51%) of
the outstanding principal amount of the Loans on such date or to the
<PAGE> 18
-12-

extent no Loans are outstanding, the Banks with fifty-one percent (51%) of the
Total Revolving Credit Commitment.

Material Guarantor. Any Guarantor which, at the time such
determination is made, (a) has assets, revenues, or liabilities equal to at
least $8,000,000, or (b) is the holder of or the applicant for a permit to
operate a solid waste facility pursuant to RCRA or any analogous state law.

Maximum Drawing Amount. The maximum aggregate amount from time to
time that the beneficiaries may draw under outstanding Letters of Credit.

Merger Agreement. Amended and Restated Agreement and Plan of Merger
dated as of November 28, 1994, as amended June 27, 1995, between the Borrower,
Chambers Acquisition Corporation, and Chambers.

MGT Letter of Credit. The irrevocable letter of credit from MGT to
NationsBank, N.A. (Carolinas) as beneficiary in the original face amount of
$112,000,000 issued under this Agreement.

Multiemployer Plan. Any multiemployer plan within the meaning of
Section 3(37) of ERISA maintained or contributed to by the Borrower, any
Guarantor, or any ERISA Affiliate.

1992 Convertible Debt. $49,000,000 in 8 1/2% convertible subordinated
debentures issued pursuant to the prospectus of the Borrower dated as of
September 18, 1992.

Notes. The Revolving Credit Notes and Term Notes of the Borrower
evidencing the Loans, dated the date of this Agreement and in substantially the
form of Exhibits A-1 and A-2 hereto.

Obligations. All indebtedness, obligations and liabilities of the
Borrower to any of the Banks and the Bank Agents and the Guaranteed Obligations
of the Guarantors arising or incurred under this Agreement or any of the other
Loan Documents or in respect of any of the Loans made or Reimbursement
Obligations incurred or the Letters of Credit, the Notes, interest rate and
commodity swap agreements, cap agreements and collar agreements, other
agreements or arrangements designed to protect against fluctuations in interest
rates or commodity prices, or any other instrument at any time evidencing any
thereof individually or collectively, existing on the date of this Agreement or
arising thereafter, direct or indirect, joint or several, absolute or
contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise.

Overnight Federal Funds Effective Rate. The overnight federal funds
effective rate as published by the Board of Governors of the Federal Reserve
System, as in effect from time to time.
<PAGE> 19
-13-

Partnership Pledge Agreement. The Partnership Pledge Agreement, dated
as of the date hereof, among certain of the Guarantors and the Documentation
Agent, pledging all of the partnership interests in Rail-It Limited Partnership
to the Documentation Agent for the benefit of the Banks, as such agreement may
be modified, amended or supplemented from time to time.

PBGC. The Pension Benefit Guaranty Corporation created by Section
4002 of ERISA and any successor entity or entities having similar
responsibilities.

Performance Letter of Credit. Any letter of credit determined to be a
Performance Letter of Credit by the Bank Agents in their sole discretion.

Permitted Liens. See Section 8.2.

Person. Any individual, corporation, partnership, limited liability
company, trust, unincorporated association, business, or other legal entity,
and any government or any governmental agency or political subdivision thereof.

Pledge Agreement. The Pledge Agreement, dated as of the date hereof,
among the Borrower, the Guarantors, and the Documentation Agent pledging all of
the stock of the Subsidiaries of the Borrower and the Automated Shares to the
Documentation Agent for the benefit of the Banks, as such agreement may be
further amended, modified, or supplemented from time to time.

Prairie Crossing Guaranty. The home value guaranties to be given by
the Borrower pursuant to the Undertaking Regarding Home Value Guaranty dated as
of December 31, 1993, between the Borrower and Prairie Crossing Homeowners
Association, Inc.

Pricing Ratio. See Section 9.1. The Pricing Ratio shall be fixed at
greater than 3.5:1 from the Closing Date until the earlier of (a) the
forty-fifth day after the fiscal quarter ending September 30, 1995 or (b)
receipt by the Administrative Agent of the Compliance Certificate delivered
pursuant to Section 7.4(c) or (d) hereof for such quarter, at which time, and
thereafter on the earlier of (a) the forty-fifth day after each subsequent
fiscal quarter end or (b) receipt by the Administrative Agent of the Compliance
Certificate delivered pursuant to Section 7.4(c) or (d) hereof for such
quarter, the Pricing Ratio shall be the actual Pricing Ratio as set forth in
the calculation of compliance with Section 9.1 hereof on the Compliance
Certificate or estimated Pricing Ratio as set forth in the calculation of
Section 9.1 on the Interim Compliance Certificate; provided if the Pricing
Ratio as set forth on the Interim Compliance Certificate differs from the
Pricing Ratio set forth on the fourth quarter Compliance Certificate when it is
delivered pursuant to Section 7.4(c), then the
<PAGE> 20
-14-

Administrative Agent shall make appropriate adjustments (retroactive to the
earlier of (a) forty-fifth day after the end of the fourth fiscal quarter or
(b) the first day after the delivery of the Compliance Certificate delivered to
the Administrative Agent pursuant to Section 7.4(c) or (d) hereof ) on the
basis of the Pricing Ratio set forth on the fourth quarter Compliance
Certificate.

RCRA. See Section 6.16(a).

Real Property. All real property heretofore, now, or hereafter owned,
operated, or leased by the Borrower or any of the Guarantors.

Reference Banks. FNBB, BAI and MGT.

Reimbursement Obligation. The Borrower's obligation to reimburse the
Issuing Bank and the Banks on account of any drawing under any Letter of Credit
as provided in Section 3.2.

Release. Shall have the meaning specified in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
Sections 9601 et seq. ("CERCLA") and the term "Disposal" (or "Disposed")
shall have the meaning specified in the Resource Conservation and Recovery Act
of 1976, 42 U.S.C. Sections 6901 et seq. ("RCRA") and regulations
promulgated thereunder; provided, that in the event either CERCLA or RCRA is
amended so as to broaden the meaning of any term defined thereby, such broader
meaning shall apply as of the effective date of such amendment and provided
further, to the extent that the laws of a state wherein the property lies
establish a meaning for "Release" or "Disposal" which is broader than specified
in either CERCLA, or RCRA, such broader meaning shall apply to the Borrower's
or any Guarantor's activities in that state.

Replacement Bank. See Section 5.13.

Replacement Notice. See Section 5.13.

Revolving Credit Commitment. With respect to each Bank, the amount
determined by multiplying such Bank's Commitment Percentage by the aggregate
amount of the Total Revolving Credit Commitment specified in Section 2.1
hereof, as the same may be reduced from time to time.

Revolving Credit Loans. Loans advanced pursuant to Section 2.1.

Security Agreement. The Security Agreement, dated as of the date
hereof, among the Borrower, the Guarantors, and the Documentation Agent,
pursuant to which the Borrower and the Guarantors grant a security interest in
and lien on the Intercompany Accounts to the Documentation
<PAGE> 21
-15-

Agent for the benefit of the Banks, as such agreement may be amended, modified
or supplemented from time to time.

Subordinated Debt. Indebtedness of the Borrower and the Guarantors
which has been subordinated to the Obligations on terms and conditions
satisfactory to the Majority Banks including, but not limited to (i) the 1992
Convertible Debt and (ii) the Subordinated Debt listed on Schedule 8.1(b)
hereto; provided that the Borrower and the Guarantors shall have received the
prior written consent of the Majority Banks to the terms thereof.

Subsidiary. Any corporation, association, trust, or other business
entity of which the designated parent shall at any time own directly or
indirectly through a Subsidiary or Subsidiaries at least a majority of the
outstanding capital stock or other interest entitled to vote generally.

Term Loan. See Section 4.1.

Total Revolving Credit Commitment. See Section 2.1.

SECTION 1.2. RULES OF INTERPRETATION.

(a) A reference to any document or agreement (including
this Agreement) shall include such document or agreement as amended,
modified or supplemented from time to time in accordance with its
terms and the terms of this Agreement.

(b) The singular includes the plural and the plural
includes the singular.

(d) A reference to any Person includes its permitted
successors and permitted assigns.

(e) Accounting terms capitalized but not otherwise
defined herein have the meanings assigned to them by generally
accepted accounting principles applied on a consistent basis by the
accounting entity to which they refer.

(f) The words "include", "includes" and "including" are
not limiting.

(g) All terms not specifically defined herein or by
generally accepted accounting principles, which terms are defined in
the Uniform Commercial Code as in effect in the Commonwealth of
Massachusetts, have the meanings assigned to them therein.
<PAGE> 22
-16-

(h) Reference to a particular "Section " refers to that
section of this Agreement unless otherwise indicated.

(i) The words "herein", "hereof", "hereunder" and words
of like import shall refer to this Agreement as a whole and not to any
particular section or subdivision of this Agreement.

SECTION 2. THE REVOLVING CREDIT FACILITY.

SECTION 2.1. COMMITMENT TO LEND. Subject to the terms and conditions
set forth in this Agreement, each of the Banks severally agrees to lend to the
Borrower and the Borrower may borrow, repay, and reborrow from time to time
between the Closing Date and the Maturity Date, upon notice by the Borrower to
the Administrative Agent given in accordance with Section 2.4, such Bank's
Commitment Percentage of sums as are requested by the Borrower provided that
the sum of the outstanding principal amount of Revolving Credit Loans and the
Maximum Drawing Amount of outstanding Letters of Credit shall not exceed a
maximum aggregate amount outstanding of $300,000,000, as such amount may be
reduced pursuant to Section 2.2 hereof (the "Total Revolving Credit
Commitment"). Each request for a Revolving Credit Loan or Letter of Credit
hereunder shall constitute a representation and warranty by the Borrower that
the conditions set forth in Section 10 and Section 11, as the case may be, have
been satisfied on the date of such request. Any unpaid Reimbursement
Obligation with respect to any Letter of Credit shall be a Base Rate Loan
hereunder.

SECTION 2.2. REDUCTION OF TOTAL REVOLVING CREDIT COMMITMENT.

(a) The Borrower shall have the right at any time and from time to
time upon three (3) Business Day's prior written notice to the Administrative
Agent to reduce by $10,000,000 or greater amount or terminate entirely the
Total Revolving Credit Commitment, whereupon the Revolving Credit Commitment of
each Bank shall be reduced pro rata in accordance with such Bank's Commitment
Percentage of the amount specified in such notice or, as the case may be,
terminated. The Administrative Agent will notify the Banks promptly after
receiving any notice delivered by the Borrower pursuant to this Section 2.2.
Notwithstanding the foregoing, at no time may the Total Revolving Credit
Commitment be reduced to an amount less than the sum of (i) the Maximum Drawing
Amount of all Letters of Credit then outstanding and (ii) all Revolving Credit
Loans then outstanding.

(b) No reduction or termination of the Total Revolving Credit
Commitment once made may be revoked; the portion of the Total Revolving Credit
Commitment reduced or terminated may not be reinstated; and
<PAGE> 23
-17-

amounts in respect of such reduced or terminated portion may not be reborrowed.

SECTION 2.3. THE REVOLVING CREDIT NOTES. The Revolving Credit Loans
shall be evidenced by separate promissory notes of the Borrower in
substantially the form of Exhibit A-1 hereto (each, a "Revolving Credit Note"),
dated as of the Closing Date and completed with appropriate insertions. One
Revolving Credit Note shall be payable to the order of each Bank in an amount
equal to such Bank's Revolving Credit Commitment, and representing the
obligation of the Borrower to pay such Bank such principal amounts or, if less,
the outstanding principal amount of all Revolving Credit Loans made by such
Bank, plus interest accrued thereon, as set forth below. The Borrower
irrevocably authorizes each Bank to make or cause to be made, in connection
with a Drawdown Date of any Revolving Credit Loan or at the time of receipt of
any payment of principal on such Bank's Revolving Credit Note, an appropriate
notation on such Bank's records reflecting the making of the Revolving Credit
Loan or the receipt of such payment (as the case may be) and may, prior to any
transfer of its Revolving Credit Note, endorse on the reverse side thereof the
outstanding principal amount of Revolving Credit Loans evidenced thereby. The
outstanding amount of the Revolving Credit Loans set forth on such Bank's
record shall be prima facie evidence of the principal amount thereof owing and
unpaid to such Bank, but the failure to record, or any error in so recording,
any such amount shall not limit or otherwise affect the obligations of the
Borrower hereunder or under the Revolving Credit Notes to make payments of
principal of or interest on any Revolving Credit Note when due.

SECTION 2.4. REQUESTS FOR REVOLVING CREDIT LOANS. The Borrower shall
give to the Administrative Agent written notice in the form of Exhibit B hereto
(or telephonic notice confirmed in writing or a telecopy in the form of Exhibit
B hereto) of each Revolving Credit Loan requested hereunder (a "Loan and Letter
of Credit Request") not later than (a) 11:00 a.m. (New York time) on the
proposed Drawdown Date of any Base Rate Loan, or (b) 11:00 a.m. (New York time)
three (3) Eurodollar Business Days prior to the Drawdown Date of any Eurodollar
Loan. Each Revolving Credit Loan requested shall be in a minimum amount of
$5,000,000 and the total outstanding amount of the Revolving Credit Loans shall
not exceed $160,000,000 minus the outstanding amount of Enhanced IRBs at any
time. Each such request shall specify the principal amount of the Revolving
Credit Loan requested and shall reflect the Maximum Drawing Amount of all
Letters of Credit outstanding and the amount of Enhanced IRBs outstanding.
Revolving Credit Loan requests made hereunder shall be irrevocable and binding
on the Borrower, and shall obligate the Borrower to accept the Revolving Credit
Loan requested from the Banks on the proposed Drawdown Date. Each of the
representations and warranties made by or on
<PAGE> 24
-18-

behalf of the Borrower and the Guarantors to the Banks or the Agents in this
Agreement or any other Loan Document shall be true and correct in all material
respects when made and shall, for all purposes of this Agreement, be deemed to
be repeated on and as of the date of the submission of a Loan and Letter of
Credit Request and on and as of the Drawdown Date of such Revolving Credit Loan
or the date of issuance of such Letter of Credit (except to the extent (i) of
changes resulting from transactions contemplated or permitted by this Agreement
and the other Loan Documents, (ii) of changes occurring in the ordinary course
of business that singly or in the aggregate are not materially adverse to the
business, assets or financial condition of the Borrower and the Guarantors as a
whole, or (iii) that such representations and warranties expressly relate only
to an earlier date). The Administrative Agent shall promptly notify each Bank
of each Loan and Letter of Credit Request received by the Administrative Agent.

SECTION 2.5. COMMITMENT FEE. Subject in all respects to Section 5.8
hereof, the Borrower agrees to pay to the Administrative Agent for the account
of the Banks a commitment fee (the "Commitment Fee") at the Applicable
Commitment Rate on the unused portion of the Total Revolving Credit Commitment
during each calendar quarter or portion thereof from and including the Closing
Date to the Maturity Date (or to the date of termination in full of the Total
Revolving Credit Commitment, if earlier). The Commitment Fee shall be payable
quarterly in arrears on the first day of each calendar quarter for the
immediately preceding calendar quarter commencing on October 1, 1995, with a
final payment on the Maturity Date.

SECTION 2.6. FUNDS FOR REVOLVING CREDIT LOANS.

(a) Not later than 12:00 noon (New York time) on the proposed
Drawdown Date of any Revolving Credit Loan, each of the Banks will make
available to the Administrative Agent, at its Head Office, in immediately
available funds, the amount of such Bank's Commitment Percentage of the amount
of the requested Revolving Credit Loan. Upon receipt from each Bank of such
amount, and upon receipt of the documents required by Section 10 or Section 11,
as the case may be, and the satisfaction of the other conditions set forth
therein, to the extent applicable, the Administrative Agent will make available
to the Borrower the aggregate amount of such Revolving Credit Loans made
available to the Administrative Agent by the Banks. The failure or refusal of
any Bank to make available to the Administrative Agent at the aforesaid time
and place on any Drawdown Date the amount of its Commitment Percentage of the
requested Revolving Credit Loan shall not relieve any other Bank from its
several obligations hereunder to make available to the Administrative Agent the
amount of such Bank's Commitment Percentage of any requested Revolving Credit
Loan.
<PAGE> 25
-19-

(b) The Administrative Agent may (unless earlier notified to the
contrary by any Bank by 12:00 noon (New York time) on any Drawdown Date) assume
that each Bank has made available (or will before the end of such Business Day
make available) to the Administrative Agent the amount of such Bank's
Commitment Percentage with respect to the Revolving Credit Loan to be made on
such Drawdown Date, and the Administrative Agent may (but shall not be required
to), in reliance upon such assumption, make available to the Borrower a
corresponding amount. If any Bank makes such amount available to the
Administrative Agent on a date after such Drawdown Date, such Bank shall pay
the Administrative Agent on demand an amount equal to the product of (i) the
average, computed for the period referred to in clause (iii) below, of the
weighted average annual interest rate paid by the Administrative Agent for
federal funds acquired by the Administrative Agent during each day included in
such period times (ii) the amount equal to such Bank's Commitment Percentage of
such Revolving Credit Loan, times (iii) a fraction, the numerator of which is
the number of days that elapse from and including such Drawdown Date to but not
including the date on which the amount equal to such Bank's Commitment
Percentage of such Revolving Credit Loan shall become immediately available to
the Administrative Agent and the denominator of which is 365. A statement of
the Administrative Agent submitted to such Bank with respect to any amounts
owing under this paragraph shall be prima facie evidence of the amount due and
owing to the Administrative Agent by such Bank. If such amount is not in fact
made available to the Administrative Agent by such Bank within three (3)
Business Days of such Drawdown Date, the Administrative Agent shall be entitled
to debit the Borrower's accounts to recover such amount from the Borrower, with
interest thereon at the rate per annum applicable to any Revolving Credit Loan
made on such Drawdown Date.

SECTION 2.7. MATURITY OF THE REVOLVING CREDIT LOANS AND REIMBURSEMENT
OBLIGATIONS. The Revolving Credit Loans and all unpaid Reimbursement
Obligations shall be due and payable on the Maturity Date. The Borrower
promises to pay on the Maturity Date all Revolving Credit Loans and all unpaid
Reimbursement Obligations outstanding on such date, together with any and all
accrued and unpaid interest thereon and any fees and other amounts owing
hereunder.

SECTION 2.8. MANDATORY REPAYMENTS OF THE REVOLVING CREDIT LOANS. If
at any time the outstanding amount of the Revolving Credit Loans plus the
Maximum Drawing Amount of all outstanding Letters of Credit exceeds the Total
Revolving Credit Commitment whether by reduction of the Total Revolving Credit
Commitment or otherwise, or if the outstanding amount of the Revolving Credit
Loans plus the outstanding amount of Enhanced IRBs exceed $160,000,000 at any
time, then the Borrower shall immediately pay
<PAGE> 26
-20-

the amount of such excess to the Administrative Agent (a) for application to
the Revolving Credit Loans (subject to Section 5.9), or (b) if no Revolving
Credit Loans shall be outstanding, to be held by the Administrative Agent for
the benefit of the Banks as collateral security for the Reimbursement
Obligations provided, however, that if the amount of cash collateral held by
the Administrative Agent pursuant to this Section 2.8(b) exceeds the Maximum
Drawing Amount, the Administrative Agent shall return such excess to the
Borrower.

SECTION 2.9. OPTIONAL PREPAYMENTS OR REPAYMENTS OF REVOLVING CREDIT
LOANS. Subject to the terms and conditions of Section 5.9, the Borrower shall
have the right, at its election, to repay or prepay the outstanding amount of
the Revolving Credit Loans, as a whole or in part, at any time without penalty
or premium. The Borrower shall give the Administrative Agent, no later than
11:00 a.m. (New York time) three (3) Business Days prior to such proposed
prepayment or repayment, written notice (or telephonic notice confirmed in
writing or by telecopy) of any proposed prepayment or repayment pursuant to
this Section 2.9, specifying the proposed date of prepayment or repayment of
Loans and the principal amount to be paid (in integral multiples of
$5,000,000, or, if less, the balance of the Revolving Credit Loans). The
Administrative Agent shall promptly notify each Bank by written notice (or
telephonic notice confirmed in writing or by telecopy) of such payment.

SECTION 3. LETTERS OF CREDIT.

SECTION 3.1. LETTER OF CREDIT COMMITMENTS.

(a) Subject to the terms and conditions hereof and the execution
and receipt of a Loan and Letter of Credit Request by the Issuing Bank with a
copy to the Administrative Agent reflecting the Maximum Drawing Amount of all
Letters of Credit (including the requested Letter of Credit) and a Letter of
Credit Application, the Issuing Bank, on behalf of the Banks and in reliance
upon the representations and warranties of the Borrower and the Guarantors
contained herein and the agreement of the Banks contained in Section 3.1(b)
hereof, agrees to issue standby letters of credit (which may incorporate
automatic renewals for periods of up to eighteen (18) months), in such form as
may be requested from time to time by the Borrower and agreed to by the Issuing
Bank; provided, however, that, after giving effect to such request, the
aggregate Maximum Drawing Amount of all letters of credit issued at any time
under this Section 3.1(a) (the "Letters of Credit") shall not exceed
$300,000,000 less the outstanding amount of the Revolving Credit Loans, and no
Letter of Credit shall have an expiration date later than the earlier of (i)
eighteen (18) months after the date of issuance (which may incorporate
automatic renewals for periods of up to eighteen (18) months), or
<PAGE> 27
-21-

(ii) five (5) Business Days prior to the Maturity Date. The letters of credit
listed in Schedule 3.1(a) and issued by FNBB under the previous credit facility
of the Borrower shall be Letters of Credit under this Agreement.

(b) Each Bank severally agrees that it shall be absolutely liable,
without regard to the occurrence of any Default or Event of Default or any
other condition precedent whatsoever, to the extent of such Bank's Commitment
Percentage thereof, to reimburse the Issuing Bank on demand for the amount of
each draft paid by the Issuing Bank under each Letter of Credit to the extent
that such amount is not reimbursed by the Borrower pursuant to Section 3.2
(such agreement for a Bank being called herein the "Letter of Credit
Participation" of such Bank). Each Bank agrees that its obligation to
reimburse the Issuing Bank pursuant to this Section 3.1(b) shall not be
affected in any way by any circumstance other than the gross negligence or
willful misconduct of the Issuing Bank.

(c) Each such payment made by a Bank shall be treated as the
purchase by such Bank of a participating interest in the Borrower's
Reimbursement Obligation under Section 3.2 in an amount equal to such payment.
Each Bank shall share in accordance with its participating interest in any
interest which accrues pursuant to Section 3.2.

SECTION 3.2. REIMBURSEMENT OBLIGATION OF THE BORROWER. In order to
induce the Issuing Bank to issue, extend and renew each Letter of Credit, the
Borrower hereby agrees to reimburse or pay to the Issuing Bank, with respect to
each Letter of Credit issued, extended or renewed by the Issuing Bank
hereunder, as follows:

(a) if any draft presented under any Letter of Credit is
honored by the Issuing Bank or the Issuing Bank otherwise makes
payment with respect thereto, the sum of (i) the amount paid by the
Issuing Bank under or with respect to such Letter of Credit, and (ii)
the amount of any taxes, fees, charges or other costs and expenses
whatsoever incurred by the Issuing Bank in connection with any payment
made by the Issuing Bank under, or with respect to, such Letter of
Credit, shall automatically be deemed to be a request for a Base Rate
Loan hereunder, and

(b) upon the Maturity Date or the acceleration of the
Reimbursement Obligations with respect to all Letters of Credit in
accordance with Section 13, an amount equal to the then Maximum
Drawing Amount of all Letters of Credit, which amount shall be paid to
the Administrative Agent to be held as cash collateral for all
Reimbursement Obligations.
<PAGE> 28
-22-

SECTION 3.3. OBLIGATIONS ABSOLUTE. The Borrower's obligations under
this Section 3 shall be absolute and unconditional under any and all
circumstances and irrespective of the occurrence of any Default or Event of
Default or any condition precedent whatsoever or any setoff, counterclaim or
defense to payment which the Borrower may have or have had against the Issuing
Bank, any Bank or any beneficiary of a Letter of Credit. The Borrower further
agrees with the Issuing Bank and the Banks that the Issuing Bank and the Banks
(i) shall not be responsible for, and the Borrower's Reimbursement Obligations
under Section 3.2 shall not be affected by, among other things, the validity or
genuineness of documents or of any endorsements thereon, even if such documents
should in fact prove to be in any or all respects invalid, fraudulent or
forged, unless due to the willful misconduct of the Issuing Bank or any other
Banks or any dispute between or among the Borrower and the beneficiary of any
Letter of Credit or any financing institution or other party to which any
Letter of Credit may be transferred or any claims or defenses whatsoever of the
Borrower against the beneficiary of any Letter of Credit or any such
transferee, and (ii) shall not be liable for any error, omission, interruption
or delay in transmission, dispatch or delivery of any message or advice,
however transmitted, in connection with any Letter of Credit except to the
extent of their own willful misconduct. The Borrower agrees that any action
taken or omitted by the Issuing Bank or any Bank in good faith under or in
connection with each Letter of Credit and the related drafts and documents
shall be binding upon the Borrower and shall not result in any liability on the
part of the Issuing Bank or any Bank (or their respective affiliates) to the
Borrower. Nothing herein shall constitute a waiver by the Borrower of any of
its rights against any beneficiary of a Letter of Credit.

SECTION 3.4. RELIANCE BY THE ISSUING BANK. To the extent not
inconsistent with Section 3.3, the Issuing Bank shall be entitled to rely, and
shall be fully protected in relying upon, any Letter of Credit, draft, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document believed by it in good faith to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel, independent accountants and other experts selected
by the Issuing Bank.

SECTION 3.5. LETTER OF CREDIT FEE. The Borrower shall pay a fee (the
"Letter of Credit Fee") equal to the Applicable L/C Fee to the Administrative
Agent for the account of the Banks on the Maximum Drawing Amount of Letters of
Credit issued hereunder to be shared pro-rata by each of the Banks in
accordance with their respective Commitment Percentages provided however, the
Letter of Credit Fee on Letters of Credit determined to be Performance Letters
of Credit by the Bank Agents shall be the lesser of 1%
<PAGE> 29
-23-

per annum or the Applicable L/C Fee. The Letter of Credit Fee shall be payable
quarterly in arrears on the first day of each calendar quarter for the quarter
just ended, commencing October 1, 1995, and on the Maturity Date. In addition,
an issuing fee (the "Issuance Fee") to be agreed upon annually between the
Borrower and Issuing Bank shall be payable to the Issuing Bank for its account.

SECTION 3.6. NOTICE REGARDING LETTERS OF CREDIT.

Upon the issuance of any Letter of Credit or amendments or extensions
thereof, the Issuing Bank shall notify the Administrative Agent of the terms of
such Letter of Credit, amendment or extension. On the day of any drawing under
any Letter of Credit the Issuing Bank shall notify the Administrative Agent of
such drawing under any Letter of Credit and amounts due pursuant to Section
3.2(a)

SECTION 4. THE TERM LOAN.

SECTION 4.1. COMMITMENT TO LEND. Subject to the terms and conditions
set forth in this Credit Agreement, each Bank agrees to lend to the Borrower on
the Closing Date the amount of its Commitment Percentage of the principal
amount of $250,000,000 (the "Term Loan").

SECTION 4.2. THE TERM NOTES. The Term Loan shall be evidenced by
separate promissory notes of the Borrower in substantially the form of Exhibit
A-2 hereto (each a "Term Note"), dated the Closing Date and completed with
appropriate insertions. One Term Note shall be payable to the order of each
Bank in a principal amount equal to such Bank's Commitment Percentage of the
Term Loan and representing the obligation of the Borrower to pay to such Bank
such principal amount or, if less, the outstanding amount of such Bank's
Commitment Percentage of the Term Loan, plus interest accrued thereon, as set
forth below. The Borrower irrevocably authorizes each Bank to make or cause to
be made a notation on such Bank's records reflecting the original principal
amount of such Bank's Commitment Percentage of the Term Loan and, at the time
of such Bank's receipt of any principal payment on such Bank's Term Note, an
appropriate notation on such Bank's records reflecting such payment. The
aggregate unpaid amount set forth on such Bank's records shall be prima facie
evidence of the principal amount thereof owing and unpaid to such Bank, but the
failure to record, or any error in so recording, any such amount on such Bank's
records shall not affect the obligations of the Borrower hereunder or under any
Term Note to make payments of principal of and interest on any Term Note when
due.

SECTION 4.3. SCHEDULE OF INSTALLMENT PAYMENTS OF PRINCIPAL. The
Borrower promises to pay to the Administrative Agent for the account of the
<PAGE> 30
-24-

Banks the principal amount of the Term Loan in installments to be due and
payable on the last day of each quarter of each calendar year, commencing on
September 30, 1995 in the amounts set forth below, with a final payment on the
Maturity Date in an amount equal to the unpaid balance of the Term Loan:
<TABLE>
<CAPTION>
CALENDAR QUARTERLY
YEAR PAYMENT:
-------- ---------
<S> <C>
1995 $ 2.5 million
1996 $ 7.5 million
1997 $ 10 million
1998 $ 12.5 million
1999 $ 15 million
2000 $ 32.5 million
</TABLE>
SECTION 4.4. OPTIONAL PREPAYMENT OF TERM LOAN. The Borrower shall
have the right at any time to prepay the Term Loan on or before the Maturity
Date, as a whole, or in part, upon not less than three (3) Business Days prior
written notice to the Administrative Agent, without premium or penalty,
provided that (i) each partial prepayment shall be in the principal amount of
$5,000,000 or an integral multiple thereof, and (ii) each partial prepayment
shall be allocated among the Banks, in proportion to the respective outstanding
amount of each Bank's Term Note. Any prepayment of principal of the Term Loan
shall include all interest accrued to the date of prepayment and shall be
applied against the scheduled installments of principal due on the Term Loan on
a pro-rata basis.

SECTION 4.5. MANDATORY PREPAYMENTS ON TERM LOAN.

Reductions in the principal amount of the Term Loan, to be applied
against the scheduled installments of principal due on the Term Loan on a
pro-rata basis, shall be made from the following sources:

(a) 100% of the net cash proceeds of any asset sale in
excess of $5 million;

(b) 75% of the net cash proceeds of Subordinated Debt
issued after the Closing Date; and

(c) 50% of the net cash proceeds (other than proceeds
which are used to prepay the 1992 Convertible Debt)
of any equity offerings made after the Closing Date;

provided however, prepayments shall not be required if the Borrower is rated
Investment Grade at the time of such sale or debt or equity issuance.
<PAGE> 31
-25-

SECTION 5. PROVISIONS RELATING TO ALL LOANS

SECTION 5.1. INTEREST ON LOANS. The outstanding principal amount of
the Loans shall bear interest at the rate per annum equal to the Applicable
Rate. Interest shall be payable (a) monthly in arrears on the first Business
Day of each calendar month of each year, commencing August 1, 1995, on Base
Rate Loans, and (b) on the last day of the applicable Interest Period, and if
such Interest Period is longer than three months, also on the day of each three
months following the commencement of such Interest Period which corresponds to
the day of the month on which such Interest Period began, on Eurodollar Loans,
and (c) on the Maturity Date for all Loans.

SECTION 5.2. ELECTION OF EURODOLLAR RATE; NOTICE OF ELECTION;
INTEREST PERIODS; MINIMUM AMOUNTS. (a) At the Borrower's option, so long as no
Default or Event of Default has occurred and is then continuing, the Borrower
may (i) elect to convert any Base Rate Loan or a portion thereof to a
Eurodollar Loan, (ii) at the time of any Loan and Letter of Credit Request,
specify that such requested Revolving Credit Loan shall be a Eurodollar Loan,
or (iii) upon expiration of the applicable Interest Period, elect to maintain
an existing Eurodollar Loan as such, provided that the Borrower gives notice to
the Administrative Agent pursuant to Section 5.2(b) hereof. Upon determining
any Eurodollar Rate, the Administrative Agent shall forthwith provide notice
thereof to the Borrower and each Bank, and each such notice to the Borrower
shall be considered prima facie correct and binding, absent manifest error.

(b) Three (3) Eurodollar Business Days prior to the
making of any Eurodollar Loan or the conversion of any Base Rate Loan
to a Eurodollar Loan, or, in the case of an outstanding Eurodollar
Loan, the expiration date of the applicable Interest Period, the
Borrower shall give written, telex or telecopy notice received by the
Administrative Agent not later than 11:00 a.m. (New York time) of its
election pursuant to Section 5.2(a). Each such notice delivered to
the Administrative Agent shall specify the aggregate principal amount
of the Loans to be borrowed or maintained as or converted to
Eurodollar Loans and the requested duration of the Interest Period
that will be applicable to such Eurodollar Loan, and shall be
irrevocable and binding upon the Borrower. If the Borrower shall fail
to give the Administrative Agent notice of its election hereunder
together with all of the other information required by this Section
5.2(b) with respect to any Loan, whether at the end of an Interest
Period or otherwise, such Loan shall be deemed a Base Rate Loan. The
Administrative Agent shall promptly notify each Bank in writing (or by
telephone confirmed in writing or by telecopy) of such election.
<PAGE> 32
-26-

(c) Notwithstanding anything herein to the contrary, the
Borrower may not specify an Interest Period that would extend beyond
the Maturity Date.

(d) All Eurodollar Loans shall be in a minimum amount of
not less than $5,000,000. In no event shall the Borrower have more
than eight (8) different maturities of borrowings of Eurodollar Loans
outstanding at any time.

SECTION 5.3. PAYMENTS.

(a) All payments of principal, interest, Reimbursement
Obligations, fees (other than the Issuance Fee) and any other amounts
due hereunder or under any of the other Loan Documents shall be made
to the Administrative Agent, received at its Head Office in
immediately available funds by 11:00 a.m. (New York time) on any due
date. If a payment is received by the Administrative Agent from the
Borrower at or before 1:00 p.m. (New York time) on any Business Day,
the Administrative Agent shall on the same Business Day transfer in
immediately available funds to each of the Banks their pro-rata
portion of such payment in accordance with their respective Commitment
Percentages. If such payment is received by the Administrative Agent
after 1:00 p.m. (New York time) on any Business Day, such transfer
shall be made by the Administrative Agent to the Banks on the next
Business Day. In the event that the Administrative Agent fails to
make such transfer to any Bank as set forth above, the Administrative
Agent shall pay to such Bank on demand an amount equal to the product
of (i) the average, computed for the period referred to in clause
(iii) below, of the weighted average interest rate paid by such Bank
for federal funds acquired by such Bank during each day included in
such period, times (ii) the amount of equal to such Bank's Commitment
Percentage of such payment, times (iii) a fraction, the numerator of
which is the number of days that elapse from and including the date of
payment to and including the date on which the amount equal to such
Bank's Commitment Percentage of such payment shall become immediately
available to such Bank, and the denominator of which is 365. A
statement of such Bank submitted to the Administrative Agent with
respect to any amounts owing under this paragraph shall be prima facie
evidence of the amount due and owing to such Bank by the
Administrative Agent.

(b) All payments by the Borrower and the Guarantors
hereunder and under any of the other Loan Documents shall be made
without setoff or counterclaim and free and clear of and without
deduction for any taxes, levies, imposts, duties, charges, fees,
<PAGE> 33
-27-

deductions, withholdings, compulsory loans, restrictions or conditions
of any nature now or hereafter imposed or levied by any jurisdiction
or any political subdivision thereof or taxing or other authority
therein unless the Borrower or the Guarantors are compelled by law to
make such deduction or withholding. If any such obligation is imposed
upon the Borrower or any Guarantor with respect to any amount payable
by it hereunder or under any of the other Loan Documents, the Borrower
or the Guarantors will pay to the Administrative Agent for the account
of the Banks (or as the case may be, the Administrative Agent) on the
date on which such amount is due and payable hereunder or under such
other Loan Document, such additional amount in Dollars as shall be
necessary to enable the Banks or the Administrative Agent to receive
the same net amount which the Banks or the Administrative Agent would
have received on such due date had no such obligation been imposed
upon the Borrower or such Guarantor. The Borrower will deliver
promptly to the Administrative Agent certificates or other valid
vouchers for all taxes or other charges deducted from or paid with
respect to payments made by the Borrower or any Guarantor hereunder or
under such other Loan Document.

SECTION 5.4. COMPUTATIONS. All computations of interest, Letter of
Credit Fees or other fees shall be based on a 360-day year and paid for the
actual number of days elapsed, except that computations of the Administrative
Agent's "prime rate" shall be based on a 365 or 366, as applicable, day year
and paid for the actual number of days elapsed. Whenever a payment hereunder
or under any of the other Loan Documents becomes due on a day that is not a
Business Day, the due date for such payment shall be extended to the next
succeeding Business Day, and interest shall accrue during such extension;
provided that for any Interest Period for any Eurodollar Loan if such next
succeeding Business Day falls in the next succeeding calendar month, it shall
be deemed to end on the next preceding Business Day.

SECTION 5.5. CAPITAL ADEQUACY. If any Bank shall have determined
that, after the date hereof, the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change in any such law, rule, or
regulation, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or any request or directive regarding
capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on capital of such Bank (or any corporation
controlling such Bank) as a consequence of such Bank's obligations hereunder to
a level below that which such Bank (or any corporation controlling such Bank)
could have achieved but for such adoption, change, request or directive (taking
into consideration its policies
<PAGE> 34
-28-

with respect to capital adequacy) by an amount deemed by such Bank to be
material, then from time to time, within 15 days after demand by such Bank, the
Borrower shall pay to such Bank such additional amount or amounts as will, in
such Bank's reasonable determination, fairly compensate such Bank (or any
corporation controlling such Bank) for such reduction. Each Bank shall
allocate such cost increases among its customers in good faith and on an
equitable basis.

SECTION 5.6. CERTIFICATE. A certificate setting forth the additional
amounts payable pursuant to Section 5.5 and a reasonable explanation of such
amounts which are due, submitted by any Bank to the Borrower, shall be
conclusive, absent manifest error, that such amounts are due and owing.

SECTION 5.7. INTEREST ON OVERDUE AMOUNTS. Overdue principal and (to
the extent permitted by applicable law) interest on the Loans and all other
overdue amounts payable hereunder or under any of the other Loan Documents
shall bear interest compounded monthly and payable on demand at a rate per
annum equal to the Base Rate plus 4%, until such amount shall be paid in full
(after as well as before judgment).

SECTION 5.8. INTEREST LIMITATION. Notwithstanding any other term of
this Agreement or the Notes, any other Loan Document or any other document
referred to herein or therein, the maximum amount of interest which may be
charged to or collected from any person liable hereunder or under the Notes by
any Bank shall be absolutely limited to, and shall in no event exceed, the
maximum amount of interest which could lawfully be charged or collected by such
Bank under applicable laws (including, to the extent applicable, the provisions
of Section 5197 of the Revised Statutes of the United States of America, as
amended, 12 U.S.C. Section 85, as amended).

SECTION 5.9. EURODOLLAR INDEMNITY. The Borrower agrees to indemnify
the Banks and the Administrative Agent and to hold them harmless from and
against any reasonable loss, cost or expense that the Banks and the
Administrative Agent may sustain or incur as a consequence of (a) default by
the Borrower in payment of the principal amount of or any interest on any
Eurodollar Loans as and when due and payable, including any such loss or
expense arising from interest or fees payable by any Bank or the Administrative
Agent to lenders of funds obtained by it in order to maintain its Eurodollar
Loans, (b) default by the Borrower in making a borrowing or conversion after
the Borrower has given (or is deemed to have given) notice pursuant to Section
2.4 or Section 5.2, and (c) the making of any payment of a Eurodollar Loan or
the making of any conversion of any such Eurodollar Loan to a Base Rate Loan on
a day that is not the last day of the applicable Interest Period with respect
thereto. Such loss or reasonable expense shall include an amount equal to the
excess, if any, as reasonably determined by each Bank
<PAGE> 35
-29-

of (i) its cost of obtaining the funds for the Loan being paid, prepaid,
converted, or not borrowed (based on the Eurodollar Rate) for the period from
the date of such payment, prepayment, conversion, or failure to borrow to the
last day of the Interest Period for such Loan (or, in the case of a failure to
borrow, the Interest Period for the Loan which would have commenced on the date
of such failure to borrow) over (ii) the amount of interest (as reasonably
determined by such Bank) that would be realized by such Bank in reemploying the
funds so paid, prepaid, converted, or not borrowed for such period or Interest
Period, as the case may be.

SECTION 5.10. ILLEGALITY; INABILITY TO DETERMINE EURODOLLAR RATE.
Notwithstanding any other provision of this Agreement (other than Section 5.8)
if, (a) the introduction of, any change in, or any change in the interpretation
of, any law or regulation applicable to any Bank or the Administrative Agent
shall make it unlawful, or any central bank or other governmental authority
having jurisdiction thereof shall assert that it is unlawful, for any Bank or
the Administrative Agent to perform its obligations in respect of any
Eurodollar Loans, or (b) if any Bank or the Administrative Agent shall
reasonably determine with respect to Eurodollar Loans that (i) by reason of
circumstances affecting any Eurodollar interbank market, adequate and
reasonable methods do not exist for ascertaining the Eurodollar Rate which
would otherwise be applicable during any Interest Period, or (ii) deposits of
Dollars in the relevant amount for the relevant Interest Period are not
available to such Bank or the Administrative Agent in any Eurodollar interbank
market, or (iii) the Eurodollar Rate does not or will not accurately reflect
the cost to such Bank or the Administrative Agent of obtaining or maintaining
the applicable Eurodollar Loans during any Interest Period, then such Bank or
the Administrative Agent shall promptly give telephonic, telex or cable notice
of such determination to the Borrower (which notice shall be conclusive and
binding upon the Borrower). Upon such notification by such Bank or the
Administrative Agent, the obligation of the Banks and the Agent to make
Eurodollar Loans shall be suspended until the Banks or the Administrative
Agent, as the case may be, determine that such circumstances no longer exist,
and to the extent permitted by law the outstanding Eurodollar Loans shall
continue to bear interest at the applicable rate based on the Eurodollar Rate
until the end of the applicable Interest Period, and thereafter shall be deemed
converted to Base Rate Loans in equal principal amounts.

SECTION 5.11. ADDITIONAL COSTS, ETC. If any present or future
applicable law (which expression, as used herein, includes statutes, rules and
regulations thereunder and interpretations thereof by any competent court or by
any governmental or other regulatory body or official charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made
<PAGE> 36
-30-

upon or otherwise issued to any Bank by any central bank or other fiscal,
monetary or other authority, whether or not having the force of law) shall:

(a) subject such Bank to any tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature with respect to
this Agreement, the other Loan Documents, such Bank's Revolving Credit
Commitment, or the Loans (other than taxes based upon or measured by
the income or profits of such Bank); or

(b) materially change the basis of taxation (except for
changes in taxes on income or profits) of payments to such Bank of the
principal or of the interest on any Loans or any other amounts payable
to such Bank under this Agreement or the other Loan Documents; or

(c) except as provided in Section 5.5 or as otherwise
reflected in the Base Rate or the Eurodollar Rate, impose or increase
or render applicable (other than to the extent specifically provided
for elsewhere in this Agreement) any special deposit, reserve,
assessment, liquidity, capital adequacy or other similar requirements
(whether or not having the force of law) against assets held by, or
deposits in or for the account of, or loans by, or commitments of, an
office of any Bank with respect to this Agreement, the other Loan
Documents, the Revolving Credit Commitment, or the Loans; or

(d) impose on such Bank any other conditions or
requirements with respect to this Agreement, the other Loan Documents,
the Loans, such Bank's Revolving Credit Commitment, or any class of
loans or commitments of which any of the Loans or such Bank's
Revolving Credit Commitment forms a part, and the result of any of the
foregoing is
(i) to increase the cost to such Bank of making,
funding, issuing, renewing, extending or maintaining the
Loans, or such Bank's Revolving Credit Commitment;

(ii) to reduce the amount of principal, interest
or other amount payable to such Bank hereunder on account of
such Bank's Revolving Credit Commitment, or the Loans;

(iii) to require such Bank to make any payment or
to forego any interest or other sum payable hereunder, the
amount of which payment or foregone interest or other sum is
calculated by reference to the gross amount of any sum
receivable or deemed received by such Bank from the Borrower
hereunder,
<PAGE> 37
-31-

then, and in each such case, the Borrower will, upon demand
made by such Bank at any time and from time to time as often as the
occasion therefore may arise (which demand shall be accompanied by a
statement setting forth the basis of such demand), pay such reasonable
additional amounts as will be sufficient to compensate such Bank for
such additional costs, reduction, payment or foregone interest or
other sum.

(e) Subject to the terms and conditions of Section 5.9
hereof, if any affected Bank demands compensation under Section
5.11(c) or (d) with respect to any Eurodollar Loan, the Borrower may
at any time, upon at least three (3) Business Days' prior written
notice to the Administrative Agent elect to convert such Loan into a
Base Rate Loan (on which interest and principal shall be payable
contemporaneously with the related Eurodollar Loans of the other
Banks). Thereafter, and until such time as the affected Bank notifies
the Borrower that the circumstances giving rise to the demand for
compensation under Section 5.11(c) or (d) no longer exist, all
requests for Loans from such affected Bank shall be deemed to be
requests for Base Rate Loans, regardless of whether the Borrower has
requested a Eurodollar Loan from the other Banks. Once the affected
Bank notifies the Borrower that such circumstances no longer exist,
the Borrower may elect that the principal amount of each such Bank's
Loans again bear interest as Eurodollar Loans beginning on the first
day of the next succeeding Interest Period applicable to the related
Eurodollar Loans of the other Banks.

SECTION 5.12. REASONABLE EFFORTS TO MITIGATE. Each Bank agrees that
as promptly as practicable after it becomes aware of the occurrence of an event
or the existence of a condition that would cause it to be affected under
Section 5.5, 5.10 or 5.11, such Bank will give notice thereof to the Borrower,
with a copy to the Administrative Agent, and, to the extent so requested by the
Borrower and not inconsistent with such Bank's internal policies, such Bank
shall use reasonable efforts and take such actions as are reasonably
appropriate if as a result thereof the additional moneys which would otherwise
be required to be paid to such Bank pursuant to such subsections would be
materially reduced, or the illegality or other adverse circumstances which
would otherwise require a conversion of such Loans or result in the inability
to make such Loans pursuant to such sections would cease to exist, and in each
case if, as determined by such Bank in its sole discretion, the taking such
actions would not adversely affect such Loans or such Bank.

SECTION 5.13. REPLACEMENT OF BANKS. If any Bank (an "Affected Bank")
(i) makes demand upon the Borrower for (or if Borrower is otherwise required to
pay) amounts pursuant to Section 5.5 or 5.11, (ii) is unable to make or
maintain
<PAGE> 38
-32-

Eurodollar Loans as a result of a condition described in Section 5.10 or (iii)
defaults in its obligation to make Loans in accordance with the terms of this
Agreement (such Bank being referred to as a "Defaulting Bank"), the Borrower
may, within 90 days of receipt of such demand, notice (or the occurrence of
such other event causing the Borrower to be required to pay such compensation
or causing Section 5.10 to be applicable), or default, as the case may be, by
notice ( a "Replacement Notice") in writing to the Bank Agents and such
Affected Bank (A) request the Affected Bank to cooperate with the Borrower in
obtaining a replacement bank satisfactory to the Bank Agents and the Borrower
(the "Replacement Bank"); (B) request the non-Affected Banks to acquire and
assume all of the Affected Bank's Loans and Commitment, as provided herein, but
none of such Banks shall be under an obligation to do so; or (C) designate a
Replacement Bank reasonably satisfactory to the Bank Agents. If any
satisfactory Replacement Bank shall be obtained, and/or any of the non-Affected
Banks shall agree to acquire and assume all of the Affected Bank's Loans and
Commitment, then such Affected Bank shall, so long as no Event of Default shall
have occurred and be continuing, assign, in accordance with Section 19, all of
its Revolving Credit Commitment, Loans, Notes and other rights and obligations
under this Agreement and all other Loan Documents to such Replacement Bank or
non-Affected Banks, as the case may be, in exchange for payment of the
principal amount so assigned and all interest and fees accrued on the amount so
assigned, plus all other Obligations then due and payable to the Affected Bank;
provided, however, that (i) such assignment shall be without recourse,
representation or warranty and shall be on terms and conditions reasonably
satisfactory to such Affected Bank and such Replacement Bank and/or
non-Affected Banks, as the case may be, and (ii) prior to any such assignment,
the Borrower shall have paid to such Affected Bank all amounts properly
demanded and unreimbursed under Sections 5.5 and 5.11. Upon the
effective date of such assignment, the Borrower shall issue replacement Notes
to such Replacement Bank and/or non-Affected Banks, as the case may be, and
such institution shall become a "Bank" for all purposes under this Agreement
and the other Loan Documents.

SECTION 6. REPRESENTATIONS AND WARRANTIES. The Borrower and the
Guarantors (where applicable) jointly and severally represent and warrant to
the Banks that:

SECTION 6.1. CORPORATE AUTHORITY.

(a) INCORPORATION; GOOD STANDING. The Borrower and each
of the Guarantors (i) is a corporation duly organized, validly
existing and in good standing under the laws of its respective
jurisdiction of incorporation, (ii) has all requisite corporate power
to own its property and conduct its business as now conducted and as
<PAGE> 39
-33-

presently contemplated, and (iii) is in good standing as a foreign
corporation and is duly authorized to do business in each jurisdiction
in which its property or business as presently conducted or
contemplated makes such qualification necessary, except where a
failure to be so qualified would not have a material adverse effect on
the business, assets or financial condition of the Borrower and the
Guarantors as a whole.

(b) AUTHORIZATION. The execution, delivery and
performance of its Loan Documents and the transactions contemplated
hereby and thereby (i) are within the corporate authority of the
Borrower and each of the Guarantors, (ii) have been duly authorized by
all necessary corporate proceedings on the part of the respective
Borrower or Guarantor, (iii) do not conflict with or result in any
material breach or contravention of any provision of law, statute,
rule or regulation to which the Borrower or any Guarantor is subject
or any judgment, order, writ, injunction, license or permit applicable
to the Borrower or any Guarantor so as to materially adversely affect
the assets, business or any activity of the Borrower and the
Guarantors as a whole, and (iv) do not conflict with any provision of
the corporate charter or bylaws of the Borrower or any Guarantor or
any agreement or other instrument binding upon the Borrower or any
Guarantor.

(c) ENFORCEABILITY. The execution, delivery and
performance of the Loan Documents to which the Borrower or any
Guarantor is a party will result in valid and legally binding
obligations of the Borrower and the Guarantors enforceable against
each in accordance with the respective terms and provisions hereof and
thereof, except as enforceability is limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or
affecting generally the enforcement of creditors rights and except to
the extent that availability of the remedy of specific performance or
injunctive relief is subject to the discretion of the court before
which any proceeding therefor may be brought.

SECTION 6.2. GOVERNMENTAL APPROVALS. The execution, delivery and
performance by the Borrower and the Guarantors of the Loan Documents to which
any of them is a party and the consummation by the Borrower and the Guarantors
of the transactions contemplated hereby and thereby do not require any approval
or consent of, or filing with, any governmental agency or authority other than
those already obtained and those required after the date hereof in connection
with the Borrower's and the Guarantors' performance of their covenants
contained in Sections 7,8 and 9 hereof.
<PAGE> 40
-34-

SECTION 6.3. TITLE TO PROPERTIES; LEASES. The Borrower and the
Guarantors own all of the assets reflected in the consolidated balance sheets
as at the Balance Sheet Date and Interim Balance Sheet Date or acquired since
that date (except property and assets operated under capital leases or sold or
otherwise disposed of in the ordinary course of business since that date),
subject to no mortgages, capitalized leases, conditional sales agreements,
title retention agreements, liens or other encumbrances except Permitted Liens.

SECTION 6.4. FINANCIAL STATEMENTS; SOLVENCY.

(a) There has been furnished to the Banks consolidated balance
sheets of the Borrower and its Subsidiaries and of Chambers and its
Subsidiaries dated the Balance Sheet Date and consolidated statements of
operations for the fiscal years then ended, certified by the Accountants, and
(b) consolidated balance sheets and consolidated statements of operation dated
the Interim Balance Sheet Date of the Borrower and its Subsidiaries and
Chambers and its Subsidiaries. All said balance sheets and statements of
operations have been prepared in accordance with GAAP (but, in the case of any
of such financial statements which are unaudited, only to the extent GAAP is
applicable to interim unaudited reports), fairly present the financial
condition of the Borrower and its Subsidiaries or Chambers and its
Subsidiaries, on a consolidated basis, as at the close of business on the date
thereof and the results of operations for the period then ended, subject, in
the case of unaudited interim financial statements, to changes resulting from
audit and normal year-end adjustments and to the absence of complete footnotes.
There are no contingent liabilities of the Borrower and its Subsidiaries or
Chambers and its Subsidiaries as of the Balance Sheet Date or Interim Balance
Sheet Date involving material amounts, known to the officers of the Borrower,
which have not been disclosed in said balance sheets and the related notes
thereto.

(b) The Borrower and the Guarantors on a consolidated basis (both
before and after giving effect to the transactions contemplated by this
Agreement including the Chambers Merger) are solvent (i.e., they have assets
having a fair value in excess of the amount required to pay their probable
liabilities on their existing debts as they become absolute and matured) and
have, and expect to have, the ability to pay their debts from time to time
incurred in connection therewith as such debts mature.

SECTION 6.5. NO MATERIAL CHANGES, ETC. Since the Interim Balance
Sheet Date, there have occurred no material adverse changes in the consolidated
financial condition, business or assets of the Borrower and its Subsidiaries,
taken together, or Chambers and its Subsidiaries, taken together, as shown on
or reflected in the consolidated balance sheets of the Borrower and its
<PAGE> 41
-35-

Subsidiaries or Chambers and its Subsidiaries as at the Interim Balance Sheet
Date, or the consolidated statements of income for the period then ended other
than changes in the ordinary course of business which have not had any material
adverse effect either individually or in the aggregate on the financial
condition, business or assets of the Borrower and its Subsidiaries, taken
together, or Chambers and its Subsidiaries, taken together. Since the Interim
Balance Sheet Date, there have not been any Distributions (including
Distributions made by Chambers) other than as permitted by Section 8.6 hereof.

SECTION 6.6. FRANCHISES, PATENTS, COPYRIGHTS, ETC. The Borrower and
each of the Guarantors possesses all franchises, patents, copyrights,
trademarks, trade names, licenses and permits, and rights in respect of the
foregoing, adequate for the conduct of its business substantially as now
conducted without known conflict with any rights of others other than a
conflict which would not have a material adverse effect on the financial
condition, business or assets of the Borrower and the Guarantors as a whole.

SECTION 6.7. LITIGATION. Except as set forth on Schedule 6.7, there
are no actions, suits, proceedings or investigations of any kind pending or, to
the knowledge of the Borrower or any Guarantor, threatened against the Borrower
or any Guarantor before any court, tribunal or administrative agency or board
which, either in any case or in the aggregate, could reasonably be expected to
have a material adverse effect on the financial condition, business, or assets
of the Borrower and the Guarantors, considered as a whole, or materially impair
the right of the Borrower and the Guarantors, considered as a whole, to carry
on business substantially as now conducted, or result in any substantial
liability not adequately covered by insurance, or for which adequate reserves
are not maintained on the consolidated balance sheet or which question the
validity of any of the Loan Documents to which the Borrower or any Guarantor is
a party, or any action taken or to be taken pursuant hereto or thereto.

SECTION 6.8. NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the
Borrower nor any Guarantor is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in the
judgment of the Borrower's or such Guarantor's officers has or could reasonably
be expected in the future to have a materially adverse effect on the business,
assets or financial condition of the Borrower and the Guarantors, considered as
a whole. Neither the Borrower nor any Guarantor is a party to any contract or
agreement which in the judgment of the Borrower's or such Guarantor's officers
has or could reasonably be expected to have any materially adverse effect on
the financial condition, business or assets of the Borrower and the Guarantors,
considered as a
<PAGE> 42
-36-

whole, except as otherwise reflected in adequate reserves as required by GAAP.

SECTION 6.9. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. Neither
the Borrower nor any Guarantor is violating any provision of its charter
documents or by-laws or any agreement or instrument by which any of them may be
subject or by which any of them or any of their properties may be bound or any
decree, order, judgment, or any statute, license, rule or regulation, in a
manner which could reasonably be expected to result in the imposition of
substantial penalties or materially and adversely affect the financial
condition, business or assets of any of the Borrower and the Guarantors,
considered as a whole.

SECTION 6.10. TAX STATUS. The Borrower and the Guarantors have filed
all federal and state income and all other tax returns, reports and
declarations (or obtained extensions with respect thereto) required by
applicable law to be filed by them (unless and only to the extent that the
Borrower or such Guarantor has set aside on its books provisions reasonably
adequate for the payment of all unpaid and unreported taxes as required by
GAAP); and have paid all taxes and other governmental assessments and charges
(other than taxes, assessments and other governmental charges imposed by
foreign jurisdictions which in the aggregate are not material to the financial
condition, business or assets of the Borrower or such Guarantor on an
individual basis or of the Borrower and the Guarantors on a consolidated basis)
that are material in amount, shown or determined to be due on such returns,
reports and declarations, except those being contested in good faith; and, as
required by GAAP, have set aside on their books provisions reasonably adequate
for the payment of all taxes for periods subsequent to the periods to which
such returns, reports or declarations apply. Except to the extent contested in
the manner permitted in the preceding sentence, there are no unpaid taxes in
any material amount claimed by the taxing authority of any jurisdiction to be
due and owing by the Borrower or any Guarantor, nor do the officers of the
Borrower and the Guarantors know of any basis for any such claim.

SECTION 6.11. NO EVENT OF DEFAULT. No Default or Event of Default
has occurred and is continuing.

SECTION 6.12. HOLDING COMPANY AND INVESTMENT COMPANY ACTS. Neither
the Borrower nor any Guarantor is a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company", as
such terms are defined in the Public Utility Holding Company Act of 1935; nor
is any of them a "registered investment company", or an "affiliated company" or
a "principal underwriter" of a "registered investment
<PAGE> 43
-37-

company", as such terms are defined in the Investment Company Act of 1940, as
amended.

SECTION 6.13. ABSENCE OF FINANCING STATEMENTS, ETC. Except as
contemplated or permitted by Section 8.2 of this Agreement, there is no
effective financing statement, security agreement, chattel mortgage, real
estate mortgage or other document filed or recorded with any filing records,
registry, or other public office, which purports to cover, affect or give
notice of any present or possible future lien on, or security interest in, any
assets or property of the Borrower or any Guarantor or rights thereunder.

SECTION 6.14. EMPLOYEE BENEFIT PLANS.

(a) In General. Each Employee Benefit Plan has been
maintained and operated in compliance in all material respects with
the provisions of ERISA and, to the extent applicable, the Code,
including but not limited to the provisions thereunder respecting
prohibited transactions.

(b) Terminability of Welfare Plans. Under each Employee
Benefit Plan which is an employee welfare benefit plan within the
meaning of Section 3(1) or Section 3 (2)(B) of ERISA, no benefits are
due unless the event giving rise to the benefit entitlement occurs
prior to plan termination (except as required by Title I, part 6 of
ERISA.) The Borrower, each Guarantor, or ERISA Affiliate, as
appropriate, may terminate each such plan at any time (or at any time
subsequent to the expiration of any applicable bargaining agreement)
in the discretion of such Borrower, Guarantor, or ERISA Affiliate
without material liability to any Person.

(c) Guaranteed Pension Plans. Neither the Borrower nor
any Guarantor is a sponsor of, or contributor to, a Guaranteed Pension
Plan.

(d) Multiemployer Plans. None of the Borrower, the
Guarantors, nor any ERISA Affiliate has incurred any material
liability (including secondary liability) to any Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer
Plan under Section 4201 of ERISA or as a result of a sale of assets
described in Section 4204 of ERISA. Neither the Borrower, nor any
Guarantor or any ERISA Affiliate has been notified that any
Multiemployer Plan is in reorganization or is insolvent under and
within the meaning of Section 4241 or Section 4245 of ERISA or that
any Multiemployer Plan intends to terminate or has been terminated
under Section 4041A of ERISA.
<PAGE> 44
-38-

SECTION 6.15. USE OF PROCEEDS. The proceeds of the Loans shall be
used for general corporate purposes and in connection with the Chambers Merger,
including refinancing existing debt and letters of credit of Chambers and
making payments under the Chambers Shareholder Litigation Settlement, and
refinancing existing debt and letters of credit of the Borrower. No proceeds
of the Loans shall be used in any way that will violate Regulations G, T, U or
X of the Board of Governors of the Federal Reserve System.

SECTION 6.16. ENVIRONMENTAL COMPLIANCE. The Borrower and the
Guarantors have taken all necessary steps to investigate the past and present
condition and usage of the Real Properties and the operations conducted by the
Borrower and the Guarantors and, based upon such diligent investigation, have
determined that, except as set forth on Schedule 6.16:

(a) None of the Borrower, any Guarantor, nor any operator
of their properties, is in violation, or alleged violation, of any
judgment, decree, order, law, permit, license, rule or regulation
pertaining to environmental matters, including without limitation,
those arising under the Resource Conservation and Recovery Act
("RCRA"), the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 as amended ("CERCLA"), the Superfund Amendments
and Reauthorization Act of 1986 ("SARA"), the Federal Clean Water Act,
the Federal Clean Air Act, the Toxic Substances Control Act, or any
state or local statute, regulation, ordinance, order or decree
relating to health, safety, waste transportation or disposal, or the
environment (the "Environmental Laws"), which violation would have a
material adverse effect on the business, assets or financial condition
of the Borrower and the Guarantors on a consolidated basis.

(b) Except as described on Schedule 6.16, neither the
Borrower nor any Guarantor has received notice from any third party
including, without limitation: any federal, state or local
governmental authority, (i) that any one of them has been identified
by the United States Environmental Protection Agency ("EPA") as a
potentially responsible party under CERCLA with respect to a site
listed on the National Priorities List, 40 C.F.R. Part 300 Appendix B;
(ii) that any hazardous waste, as defined by 42 U.S.C. Section
6903(5), any hazardous substances as defined by 42 U.S.C. Section
9601(14), any pollutant or contaminant as defined by 42 U.S.C. Section
9601(33) and any toxic substance, oil or hazardous materials or other
chemicals or substances regulated by any Environmental Laws, excluding
household hazardous waste ("Hazardous Substances") which any one of
them has generated, transported or disposed of has been found at any
site at which a federal, state or local agency or other third party
has conducted or has
<PAGE> 45
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ordered that the Borrower or any Guarantor conduct a remedial
investigation, removal or other response action pursuant to any
Environmental Law; or (iii) that it is or shall be a named party to
any claim, action, cause of action, complaint, legal or administrative
proceeding arising out of any third party's incurrence of costs,
expenses, losses or damages of any kind whatsoever in connection with
the release of Hazardous Substances.

(c) (i) No portion of the Real Property or other assets
of the Borrower or the Guarantors has been used for the handling,
processing, storage or disposal of Hazardous Substances except in
accordance with applicable Environmental Laws, except as would not
reasonably be expected to have a material adverse effect on the
business, assets or financial conditions of the Borrower and the
Guarantors on a consolidated basis; and no underground tank or other
underground storage receptacle for Hazardous Substances is located on
such properties; (ii) in the course of any activities conducted by the
Borrower, the Guarantors, or operators of the Real Property or other
assets of the Borrower and the Guarantors, no Hazardous Substances
have been generated or are being used on such properties except in
accordance with applicable Environmental Laws, except for occurrences
that would not have a material adverse effect on the business, assets
or financial condition of the Borrower and the Guarantors on a
consolidated basis; (iii) there have been no unpermitted Releases or
threatened Releases of Hazardous Substances on, upon, into or from the
Real Property or other assets of the Borrower or the Guarantors, which
Releases would have a material adverse effect on the value of such
properties; (iv) to the best of the Borrower's and the Guarantors'
knowledge, there have been no Releases on, upon, from or into any real
property in the vicinity of the Real Property or other assets of the
Borrower or the Guarantors which, through soil or groundwater
contamination, may have come to be located on, and which would
reasonably be expected to have a material adverse effect on the value
of, such properties; and (v) in addition, any Hazardous Substances
that have been generated on the Real Property or other assets of the
Borrower or the Guarantors have been transported offsite only by
carriers having an identification number issued by the EPA, treated or
disposed of only by treatment or disposal facilities maintaining valid
permits as required under applicable Environmental Laws, which
transporters and facilities have been and are, to the best of the
Borrower's and the Guarantors' knowledge, operating in compliance with
such permits and applicable Environmental Laws.
<PAGE> 46
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(d) None of the Real Property or other assets of the
Borrower or the Guarantors or any of the stock (or assets) being
acquired with proceeds of Loans is or shall be subject to any
applicable environmental clean-up responsibility law or environmental
restrictive transfer law or regulation, by virtue of the transactions
set forth herein and contemplated hereby.

SECTION 6.17. PERFECTION OF SECURITY INTERESTS. All filings,
assignments, pledges and deposits of documents or instruments have been made
and all other actions have been taken that are necessary under applicable law,
or that have been reasonably requested by Documentation Agent, to establish and
perfect the Documentation Agent's security interests in the Collateral for the
benefit of the Banks as described in the Pledge Agreement, the Partnership
Pledge Agreement and the Security Agreement. The Documentation Agent's and
each Bank's rights with respect to the Collateral are not subject to any
setoff, claims, withholdings or other defenses, except for Permitted Liens.
The Borrower and the Guarantors are the owners of the Collateral free from any
lien, security interest, encumbrance and any other claim or demand, except for
Permitted Liens.

SECTION 6.18. CERTAIN TRANSACTIONS. Except as disclosed in filings
made by the Borrower under the Securities Exchange Act of 1934, and except for
arm's length transactions pursuant to which the Borrower or any Guarantor makes
payments in the ordinary course of business upon terms no less favorable than
the Borrower or such Guarantor could obtain from third parties, none of the
officers, directors, or employees of the Borrower or any Guarantor are
presently a party to any transaction with the Borrower or any Guarantor (other
than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or
from, or otherwise requiring payments to or from any officer, director or such
employee or, to the knowledge of the Borrower or any Guarantor, any
corporation, partnership, trust or other entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director,
trustee or partner.

SECTION 6.19. SUBSIDIARIES. Schedule 1 sets forth a complete and
accurate list of the Subsidiaries of the Borrower as of the Closing Date,
including the name of each Subsidiary and its jurisdiction of incorporation,
together with the number of authorized and outstanding shares of each
Subsidiary. Each such Subsidiary is wholly owned directly or indirectly by the
Borrower. The Borrower has good and marketable title to all of the shares it
purports to own of the stock of each Subsidiary and of Automated, free and
clear in each case of any lien. All such shares have been duly issued and are
fully paid
<PAGE> 47
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and non-assessable. The Subsidiaries of the Borrower listed on Schedule 6.19
do not conduct any operations and have no assets.

SECTION 6.20. CAPITALIZATION. As of the Closing Date, the authorized
capital stock of the Borrower consists of 150,000,000 shares of common stock
(par value $.01 per share) of which 23,022,256 shares were outstanding as of
the Closing Date and 10,000,000 shares of preferred stock (par value $0.01),
none of which were outstanding as of the Closing Date. In addition, as of the
Closing Date, the Board of Directors of the Borrower has duly reserved (i)
6,783,350 shares of Common Stock for issuance pursuant to options granted or
available for grant under the Borrower's Stock Option and Stock Incentive
Plans, (ii) 2,475,666 shares of Common Stock for issuance upon exercise of
options and warrants; (iii) 3,698,113 shares of Common Stock for issuance upon
conversion of the Subordinated Debt; and (iv) approximately 27,800,000 shares
for issuance to shareholders of Chambers. All of the shares described above
are fully paid and non-assessable.

SECTION 6.21. TRUE COPIES OF CHARTER AND OTHER DOCUMENTS. THE
Borrower and the Guarantors have furnished the Documentation Agent copies, in
each case true and complete as of the Closing Date, of (a) all charter and
other incorporation documents (together with any amendments thereto) and (b)
by-laws (together with any amendments thereto).

SECTION 6.22. DISCLOSURE. No representation or warranty made by the
Borrower or any Guarantor in this Agreement or in any agreement, instrument,
document, certificate, statement or letter furnished to the Banks or the Bank
Agents by or on behalf of or at the request of the Borrower or any Guarantor in
connection with any of the transactions contemplated by the Loan Documents
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained therein not misleading
in light of the circumstances in which they are made.

SECTION 6.23. PERMITS AND GOVERNMENTAL AUTHORITY. All permits (other
than those the absence of which would not have a material adverse effect on the
business, operations or financial condition of the Borrower and the Guarantors
as a whole) required for the construction and operation of all landfills
currently owned or operated by the Borrower or any Guarantor have been obtained
and remain in full force and effect and are not subject to any appeals or
further proceedings or to any unsatisfied conditions that may allow material
modification or revocation. Neither the Borrower nor any Guarantor, nor, to
the knowledge of the Borrower and the Guarantors, the holder of such permits is
in violation of any such permits, except for any violation which would not have
a material adverse effect on the business,
<PAGE> 48
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operations or financial condition of the Borrower and the Guarantors as a
whole.

SECTION 6.24. INTERCOMPANY ACCOUNTS. Schedule 6.24 lists all
Intercompany Accounts which exceed $1,000,000 as of the Closing Date.

SECTION 6.25. CHAMBERS SHAREHOLDER LITIGATION SETTLEMENT. The
Chambers Judgments are in full force and effect and have not been (a)
substantially modified on appeal in a manner that would have a material adverse
effect on the Borrower or the Guarantors or (b) reversed.

SECTION 7. AFFIRMATIVE COVENANTS OF THE BORROWER AND THE GUARANTORS.
The Borrower and the Guarantors (where applicable) jointly and severally
covenant and agree that, so long as any Obligation or any Letter of Credit is
outstanding or the Banks have any obligation to make Loans or the Issuing Bank
has any obligation to issue, extend or renew Letters of Credit hereunder:

SECTION 7.1. PUNCTUAL PAYMENT. The Borrower will duly and punctually
pay or cause to be paid the principal and interest on the Loans, all
Reimbursement Obligations, fees and other amounts provided for in this
Agreement and the other Loan Documents, all in accordance with the terms of
this Agreement and such other Loan Documents.

SECTION 7.2. MAINTENANCE OF OFFICE. The Borrower and the Guarantors
will maintain their chief executive offices at Dallas, Texas, or at such other
place in the United States of America as the Borrower shall designate upon 30
days prior written notice to the Bank Agents.

SECTION 7.3. RECORDS AND ACCOUNTS. The Borrower and each of the
Guarantors will keep true and accurate records and books of account in which
full, true and correct entries will be made in accordance with GAAP and with
the requirements of all regulatory authorities and maintain adequate accounts
and reserves for all taxes (including income taxes), depreciation, depletion,
obsolescence and amortization of its properties, all other contingencies, and
all other proper reserves.

SECTION 7.4. FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION. The
Borrower will deliver to the Banks:

(a) as soon as practicable, but, in any event not later than 90
days after the end of each fiscal year of the Borrower, the consolidated
balance sheet of the Borrower and the Guarantors as at the end of such year,
consolidated statements of cash flows, and the related consolidated statements
of operations, each setting forth in comparative form the figures for the
previous fiscal year, all such consolidated financial statements to be
<PAGE> 49
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in reasonable detail, prepared, in accordance with GAAP and, with respect to
the consolidated financial statements, certified by Coopers & Lybrand LLP or by
other independent auditors selected by the Borrower and reasonably satisfactory
to the Banks (the "Accountants"). In addition, simultaneously therewith, the
Borrower shall provide the Banks with a written statement from such Accountants
to the effect that they have read a copy of this Agreement, and that, in making
the examination necessary to said certification, they have obtained no
knowledge of any Default or Event of Default, or, if such Accountants shall
have obtained knowledge of any then existing Default or Event of Default they
shall disclose in such statement any such Default or Event of Default;

(b) as soon as practicable, but in any event not later than 45
days after the end of each of the first three fiscal quarters of each fiscal
year of the Borrower, copies of the consolidated balance sheet and statement of
operations of the Borrower and the Guarantors as at the end of such quarter,
subject to year end adjustments, and the related consolidated statement of cash
flows, all in reasonable detail and prepared in accordance with GAAP (to the
extent GAAP is applicable to interim unaudited financial statements) with a
certification by the principal financial or accounting officer of the Borrower
(the "CFO") that the consolidated financial statements are prepared in
accordance with GAAP (to the extent GAAP is applicable to interim unaudited
financial statements) and fairly present the consolidated financial condition
of the Borrower as at the close of business on the date thereof and the results
of operations for the period then ended, it being understood that no such
statement need be accompanied by complete footnotes;

(c) simultaneously with the delivery of the financial statements
referred to in (a) and (b) above, a certificate in the form of Exhibit C hereto
(the "Compliance Certificate") signed by the CFO, chief accounting officer or
corporate controller, stating that the Borrower and the Guarantors are in
compliance with the covenants contained in Sections 7, 8 and 9 hereof as
of the end of the applicable period setting forth in reasonable detail
computations evidencing such compliance with respect to the covenants contained
in Sections 8.1(h) and (n), 8.3(e), 8.9, and 9 hereof, provided that if
the Borrower shall at the time of issuance of such certificate or at any other
time obtain knowledge of any Default or Event of Default, the Borrower shall
include in such certificate or otherwise deliver forthwith to the Banks a
certificate specifying the nature and period of existence thereof and what
action the Borrower proposes to take with respect thereto;

(d) as soon as practicable, but in any event not later than 45
days after the end of each fiscal year a certificate (the "Interim Compliance
Certificate") signed by the CFO, chief accounting officer or corporate
<PAGE> 50
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controller, stating the Borrower's estimate of the Pricing Ratio calculated
pursuant to Section 9.1 as of the end of such fiscal year of the Borrower.

(e) contemporaneously with, or promptly following, the filing or
mailing thereof, copies of all material of a financial nature filed with the
Securities and Exchange Commission or sent to the Borrower's stockholders
generally; and

(f) not later than thirty (30) days after the end of the second
and fourth quarters of each fiscal year, an updated Schedule 6.24 listing all
Intercompany Accounts which exceed $1,000,000.

(g) from time to time such other financial data and other
information as the Banks may reasonably request.

The Borrower hereby authorizes each Bank to disclose any information
obtained pursuant to this Agreement to all appropriate governmental regulatory
authorities where required by law; provided, however, that such Bank shall, to
the extent practicable and allowable under law, notify the Borrower within a
reasonable period prior to the time any such disclosure is made; and provided
further, this authorization shall not be deemed to be a waiver of any rights to
object to the disclosure by the Banks of any such information which any
Borrower has or may have under the federal Right to Financial Privacy Act of
1978, as in effect from time to time, except as to matters specifically
permitted therein.

SECTION 7.5. CORPORATE EXISTENCE AND CONDUCT OF BUSINESS. The
Borrower and each Guarantor will do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence, corporate
rights and franchises; and effect and maintain its foreign qualifications
(except where the failure of the Borrower or any Guarantor to remain so
qualified would not materially adversely impair the financial condition,
business or assets of the Borrower and the Guarantors on a consolidated basis),
licensing, domestication or authorization except as terminated by its Board of
Directors in the exercise of its reasonable judgment; provided that such
termination would not have a material adverse effect on the financial
condition, business or assets of the Borrower and the Guarantors on a
consolidated basis. The Borrower and the Guarantors will not become obligated
under any contract or binding arrangement which, at the time it was entered
into, would materially adversely impair the financial condition, business or
assets of the Borrower and the Guarantors, on a consolidated basis. The
Borrower and each Guarantor will continue to engage primarily in the businesses
now conducted by it and in related businesses.
<PAGE> 51
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SECTION 7.6. MAINTENANCE OF PROPERTIES. The Borrower and the
Guarantors will cause all material properties used or useful in the conduct of
their businesses to be maintained and kept in good condition, repair and
working order (ordinary wear and tear excepted) and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Borrower and the Guarantors may be necessary so that the businesses carried
on in connection therewith may be properly and advantageously conducted at all
times; provided, however, that nothing in this section shall prevent the
Borrower or any Guarantor from discontinuing the operation and maintenance of
any of its properties if such discontinuance is, in the judgment of such
Borrower or Guarantor, desirable in the conduct of its or their business and
which does not in the aggregate materially adversely affect the financial
condition, business or assets of the Borrower and the Guarantors on a
consolidated basis.

SECTION 7.7. INSURANCE. The Borrower and the Guarantors will
maintain with financially sound and reputable insurance companies funds or
underwriters' insurance of the kinds, covering the risks (other than risks
arising out of or in any way connected with personal liability of any officers
and directors thereof) and in the relative proportionate amounts usually
carried by reasonable and prudent companies conducting businesses similar to
that of the Borrower and the Guarantors, in amounts not less than the existing
coverage policies maintained by the Borrower and the Guarantors, copies of
which have been provided to the Documentation Agent. In addition, the Borrower
will furnish from time to time, upon the Banks' request, a summary of the
insurance coverage of the Borrower and the Guarantors, which summary shall be
in form and substance satisfactory to the Banks and, if requested by any of the
Banks, will furnish to the Documentation Agent and such Bank copies of the
applicable policies.

SECTION 7.8. TAXES. The Borrower and the Guarantors will each duly
pay and discharge, or cause to be paid and discharged, before the same shall
become overdue, all taxes, assessments and other governmental charges (other
than taxes, assessments and other governmental charges imposed by foreign
jurisdictions which in the aggregate are not material to the business,
financial conditions, or assets of the Borrower or any Guarantor on an
individual basis or of the Borrower and the Guarantors on a consolidated basis)
imposed upon it and its real properties, sales and activities, or any part
thereof, or upon the income or profits therefrom, as well as all claims for
labor, materials, or supplies, which if unpaid might by law become a lien or
charge upon any of its property; provided, however, that any such tax,
assessment, charge, levy or claim need not be paid if the validity or amount
thereof shall currently be contested in good faith by appropriate proceedings
and if such Borrower or Guarantor shall have set aside on its books adequate
<PAGE> 52
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reserves with respect thereto as required by GAAP; and provided, further, that
such Borrower or Guarantor will pay all such taxes, assessments, charges,
levies or claims forthwith upon the commencement of proceedings to foreclose
any lien which may have attached as security therefor.

SECTION 7.9. INSPECTION OF PROPERTIES, BOOKS AND CONTRACTS. The
Borrower and the Guarantors shall permit the Bank Agents or any Bank or any of
their designated representatives, upon reasonable notice, to visit and inspect
any of the properties of the Borrower and the Guarantors, to examine the books
of account of the Borrower and the Guarantors, or contracts (and to make copies
thereof and extracts therefrom), and to discuss the affairs, finances and
accounts of the Borrower and the Guarantors with, and to be advised as to the
same by, their officers, all at such times and intervals as may be reasonably
requested.

SECTION 7.10. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES AND PERMITS;
MAINTENANCE OF MATERIAL LICENSES AND PERMITS. The Borrower and each Guarantor
will (i) comply with the provisions of its charter documents and by-laws; (ii)
comply in all material respects with all agreements and instruments by which it
or any of its properties may be bound; (iii) comply with all applicable laws
and regulations (including Environmental Laws), decrees, orders, judgments,
licenses and permits, including, without limitation, all environmental permits
("Applicable Requirements"), except where noncompliance with such Applicable
Requirements would not reasonably be expected to have a material adverse effect
in the aggregate on the consolidated financial condition, properties or
businesses of the Borrower and the Guarantors; and (iv) maintain all material
operating permits for all landfills now owned or hereafter acquired; and (v)
dispose of hazardous waste only at licensed disposal facilities operating, to
the best of such Borrower's or Guarantor's knowledge after reasonable inquiry,
in compliance with Environmental Laws. If at any time while the Notes, or any
Loan or Letter of Credit is outstanding or the Banks have any obligation to
make Loans or the Issuing Bank has any obligation to issue, extend or renew
Letters of Credit hereunder, any authorization, consent, approval, permit or
license from any officer, agency or instrumentality of any government shall
become necessary or required in order that the Borrower or any Guarantor may
fulfill any of its obligations hereunder, such Borrower or Guarantor will
immediately take or cause to be taken all reasonable steps within the power of
such Borrower or Guarantor to obtain such authorization, consent, approval,
permit or license and furnish the Banks with evidence thereof.

SECTION 7.11. ENVIRONMENTAL INDEMNIFICATION. Subject in all respects
to Section 5.8 hereof, the Borrower covenants and agrees that it will indemnify
and hold the Banks and the Bank Agents and their respective affiliates harmless
from and against any and all claims, expense, damage, loss or liability
<PAGE> 53
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incurred by the Banks or the Bank Agents (including all costs of legal
representation incurred by the Banks or the Bank Agents) relating to (a) any
Release or threatened Release of Hazardous Substances on the Real Property; (b)
any violation of any Environmental Laws with respect to conditions at the Real
Property or other assets of the Borrower or the Guarantors, or the operations
conducted thereon; or (c) the investigation or remediation of offsite locations
at which the Borrower, any Guarantor, or their predecessors are alleged to have
directly or indirectly Disposed of Hazardous Substances. It is expressly
acknowledged by the Borrower that this covenant of indemnification shall
survive any foreclosure or any modification, release or discharge of any or all
of the Pledge Agreement, the Partnership Pledge Agreement or the Security
Agreement or the payment of the Loans and shall inure to the benefit of the
Banks, the Bank Agents and their affiliates, successors and assigns.

SECTION 7.12. FURTHER ASSURANCES. The Borrower and the Guarantors
will cooperate with the Documentation Agent and execute such further
instruments and documents as the Documentation Agent shall reasonably request
to carry out to the Banks' satisfaction the transactions contemplated by this
Agreement.

SECTION 7.13. NOTICE OF POTENTIAL CLAIMS OR LITIGATION. The Borrower
shall deliver to the Banks, within 30 days of receipt thereof, written notice
of the initiation of any action, claim, complaint, or any other notice of
dispute or potential litigation wherein the potential liability is in excess of
$3,000,000 together with a copy of each such notice received by the Borrower or
any Guarantor.

SECTION 7.14. NOTICE OF CERTAIN EVENTS CONCERNING INSURANCE AND
ENVIRONMENTAL CLAIMS.

(a) The Borrower will provide the Banks with written
notice as to any cancellation or material adverse change in any
insurance of the Borrower or any Guarantor within ten (10) Business
Days after such Borrower's or Guarantor's receipt of any notice
(whether formal or informal) of such cancellation or material change
by any of its insurers.

(b) The Borrower will promptly notify the Banks in
writing of any of the following events:

(i) upon the Borrower's or any Guarantor's
obtaining knowledge of any violation of any Environmental Law
regarding the Real Property or the Borrower's or any
Guarantor's operations which violation could have a material
adverse effect
<PAGE> 54
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on the Real Property or on the Borrower's or any Guarantor's
operations;

(ii) upon the Borrower's or any Guarantor's
obtaining knowledge of any potential or known Release, or
threat of Release, of any Hazardous Substance at, from, or
into the Real Property which it reports in writing or which it
is required to report in writing to any governmental authority
and which is material in amount or nature or which could
materially affect the value of the Real Property;

(iii) upon the Borrower's or any Guarantor's
receipt of any notice of any material violation of any
Environmental Laws or of any Release or threatened Release of
Hazardous Substances, including a notice or claim of liability
or potential responsibility from any third party (including
without limitation any federal, state or local governmental
officials) and including notice of any formal inquiry,
proceeding, demand, investigation or other action with regard
to (A) the Borrower's, any Guarantor's or any Person's
operation of the Real Property, (B) contamination on, from, or
into the Real Property, or (C) investigation or remediation of
offsite locations at which the Borrower, any Guarantor, or its
predecessors are alleged to have directly or indirectly
Disposed of Hazardous Substances;

(iv) upon the Borrower's or any Guarantor's
obtaining knowledge that any expense or loss which
individually or in the aggregate exceed $3,000,000 has been
incurred by such governmental authority in connection with the
assessment, containment, removal or remediation of any
Hazardous Substances with respect to which the Borrower or any
Guarantor may be liable or for which a lien may be imposed on
the Real Property; or

(v) any setoff, claims (including, with respect
to the Real Property, environmental claims), withholdings or
other defenses to which any of the Collateral, or the Banks'
rights with respect to the Collateral, are subject.

SECTION 7.15. RESPONSE ACTIONS. The Borrower and the Guarantors
covenant and agree that if any Release or Disposal of Hazardous Substances
shall occur or shall have occurred on the Real Property or any other assets of
the Borrower or any Guarantor, the Borrower and the Guarantors will cause the
prompt containment and removal of such Hazardous Substances and remediation of
the Real Property or other assets as necessary to comply with
<PAGE> 55
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all Environmental Laws or to preserve the value of the Real Property or other
assets.

SECTION 7.16. NOTICE OF DEFAULT. The Borrower and the Guarantors
will promptly notify the Banks in writing of the occurrence of any Default or
Event of Default. If any Person shall give any notice or take any other action
in respect of a claimed default (whether or not constituting an Event of
Default) under this Agreement or any other note, evidence of indebtedness,
indenture or other obligation evidencing indebtedness in excess of $3,000,000
as to which the Borrower or any Guarantor is a party or obligor, whether as
principal or surety, the Borrower shall forthwith upon obtaining actual
knowledge thereof give written notice thereof to the Banks, describing the
notice of action and the nature of the claimed default.

SECTION 7.17. INTEREST RATE PROTECTION. On or before August 30,
1995, the Borrower shall enter into Interest Rate Protection Agreements
covering an amount equal to at least one-half the outstanding principal amount
of the Term Loan for a period of at least three years.

SECTION 7.18. ENVIRONMENTAL REPORTS. On or before July 10, 1995, the
Borrower will deliver to the Agents satisfactory environmental reports on the
facilities of the Borrower and its Subsidiaries.

SECTION 7.19. CHAMBERS SHAREHOLDER LITIGATION SETTLEMENT. The
Borrower will, or shall cause Chambers to, pay when due the settlement payments
required to be made pursuant to the Chambers Shareholder Litigation Settlement.

SECTION 8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER AND THE
GUARANTORS. The Borrower and the Guarantors (where applicable) agree that, so
long as any Obligation or Letter of Credit is outstanding or the Banks have
any obligation to make Loans or the Issuing Bank has any obligation to issue,
extend or renew any Letters of Credit hereunder or the Banks have any
obligation to reimburse the Issuing Bank for advances made under any Letter of
Credit:

SECTION 8.1. RESTRICTIONS ON INDEBTEDNESS. Neither the Borrower nor
any Guarantor shall become or be a guarantor or surety of, or otherwise create,
incur, assume, or be or remain liable, contingently or otherwise, with respect
to any Indebtedness, or become or be responsible in any manner (whether by
agreement to purchase any obligations, stock, assets, goods or services, or to
supply or advance any funds, assets, goods or services or otherwise) with
respect to any undertaking or Indebtedness of any other Person, or incur any
Indebtedness other than:
<PAGE> 56
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(a) Indebtedness arising under this Agreement or the Loan
Documents;

(b) Subject to the provisions of Section 8.8,
Indebtedness with respect to the Subordinated Debt;

(c) Current liabilities incurred in the ordinary course
of business not incurred through (i) the borrowing of money, or (ii)
the obtaining of credit except for credit on an open account basis
customarily extended and in fact extended in connection with normal
purchases of goods and services;

(d) Indebtedness in respect of taxes, assessments,
governmental charges or levies to the extent that payment therefor
shall not at the time be required to be made in accordance with the
provisions of Section 7.8 and Indebtedness of the Borrower and the
Guarantors secured by liens of carriers, warehousemen, mechanics and
materialmen permitted by Section 8.2;

(e) Indebtedness in respect of judgments or awards which
have been in force for less than the applicable period for taking an
appeal so long as execution is not levied thereunder or in respect of
which the Borrower or any Guarantor shall at the time in good faith be
prosecuting an appeal or proceedings for review and in respect of
which a stay of execution shall have been obtained pending such appeal
or review and in respect of which the Borrower or such Guarantor have
maintained adequate reserves;

(f) incurrence by the Borrower or any Guarantor of
guaranty, suretyship or indemnification obligations in connection with
such Borrower's or Guarantor's performance of services for its
respective customers in the ordinary course of its business;

(g) existing Indebtedness of the Borrower and the
Guarantors with respect to industrial revenue bonds ("IRBs") listed on
Schedule 8.1(g);

(h) Indebtedness not to exceed $40,000,000 in the
aggregate at any time with respect to (i) existing Indebtedness listed
on Schedule 8.1(h) plus (ii) other Indebtedness incurred after the
date hereof (including existing Indebtedness of any Subsidiary of the
Borrower acquired after the date hereof) through the borrowing of
money or the obtaining of credit, incurred in connection with the
lease or acquisition of property or fixed assets useful or intended to
be used in carrying on the business of the Borrower and the
Guarantors, plus
<PAGE> 57
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(iii) Indebtedness incurred in connection with IRBs (in addition to
IRBs permitted under subsection (g) or (m) hereof);

(i) Indebtedness of any Guarantor owing to the Borrower,
or of the Borrower owing to any Guarantor or of any Guarantor to any
other Guarantor; provided that such Indebtedness is clearly identified
on the books of the obligee as debt and not as an equity investment;

(j) Indebtedness with respect to landfill closure and
post closure liabilities incurred in accordance with applicable
Environmental Laws (excluding Indebtedness permitted under Section
8.1(o));

(k) Indebtedness with respect to the Prairie Crossing
Guaranty;

(l) Interest Rate Protection Agreements;

(m) Other Indebtedness not to exceed $25,000,000 incurred
in connection with IRBs enhanced or secured by Letters of Credit to be
issued hereunder (the "Enhanced IRBs");

(n) Indebtedness with respect to letters of credit listed
on Schedule 8.1(n), which (i) have been issued under the Amended,
Modified and Restated Loan Agreement among Chambers and NationsBank,
N.A. (Carolinas) dated as of June 30, 1995 and (ii) are supported by
the MGT Letter of Credit;

(o) Indebtedness with respect to surety bonds issued to
support landfill closure and post-closure obligations in an amount not
to exceed $25,000,000; and

(p) Other unsecured senior debt not to exceed $1,000,000
in the aggregate at any time.

SECTION 8.2. RESTRICTIONS ON LIENS. The Borrower and the Guarantors
will not create or incur or suffer to be created or incurred or to exist any
lien, encumbrance, mortgage, pledge, charge, restriction or other security
interest of any kind upon any property or assets of any character, whether now
owned or hereafter acquired, or upon the income or profits therefrom; or
transfer any of such property or assets or the income or profits therefrom for
the purpose of subjecting the same to the payment of Indebtedness or
performance of any other obligation in priority to payment of its general
creditors; or acquire, or agree or have an option to acquire, any property or
assets upon conditional sale or other title retention or purchase money
security agreement, device or arrangement; or suffer to exist for a period of
<PAGE> 58
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more than 30 days after the same shall have been incurred any Indebtedness or
claim or demand against it which if unpaid might by law or upon bankruptcy or
insolvency, or otherwise, be given any priority whatsoever over its general
creditors; or sell, assign, pledge or otherwise transfer any accounts, contract
rights, general intangibles or chattel paper, with or without recourse, except
as follows (the "Permitted Liens"):

(a) Liens existing on the Closing Date and listed on
Schedule 8.2(a) hereto securing Indebtedness permitted under Section
8.1(h)(i);

(b) Liens to secure taxes, assessments and other
government charges in respect of obligations not overdue;

(c) Deposits or pledges made in connection with, or to
secure payment of, workmen's compensation, unemployment insurance, old
age pensions or other social security obligations;

(d) Liens in respect of judgments or awards, the
Indebtedness with respect to which is permitted by Section 8.1(e);

(e) Liens of carriers, warehousemen, mechanics and
materialmen, and other like liens, in existence less than 120 days
from the date of creation thereof in respect of obligations not
overdue, provided that such liens may continue to exist for a period
of more than 120 days if the validity or amount thereof shall
currently be contested by the Borrower or any Guarantor in good faith
by appropriate proceedings and if the Borrower or such Guarantor shall
have set aside on its books adequate reserves with respect thereto as
required by GAAP and provided further that the Borrower or such
Guarantor will pay any such claim forthwith upon commencement of
proceedings to foreclose any such lien;

(f) Encumbrances consisting of easements, rights of way,
zoning restrictions, restrictions on the use of real property and
defects and irregularities in the title thereto, landlord's or
lessor's liens under leases to which the Borrower or any Guarantor is
a party, and other minor liens or encumbrances none of which in the
opinion of the respective Borrower or Guarantor interferes materially
with the use of the property affected in the ordinary conduct of the
business of the Borrower or such Guarantor, which defects do not
individually or in the aggregate have a material adverse effect on the
business of the Borrower or such Guarantor individually or of the
Borrower and the Guarantors on a consolidated basis;

(g) Liens in favor of the Documentation Agent and the
Banks under the Loan Documents;
<PAGE> 59
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(h) Liens securing Indebtedness permitted by Section
8.1(h)(ii) hereof; and

(i) Liens securing Indebtedness permitted by Section
8.1(f) hereof; provided that the assets subject to such liens and
security interests shall be limited to those contracts to which such
guaranty, suretyship or indemnification obligations relate and the
rights to payment thereunder.

SECTION 8.3. RESTRICTIONS ON INVESTMENTS. Except to the extent
provided in Section 8.4 or unless the Borrower is rated Investment Grade,
neither the Borrower nor any Guarantor shall make or permit to exist or to
remain outstanding any Investment other than (a) Investments in direct
obligations of the United States of America or any agency thereof having a
maturity of less than one year; (b) Investments in certificates of deposit of
maturities less than one year, issued by commercial banks in the United States
having capital and surplus equal to or in excess of $100,000,000 (c)
intercompany transfers between or among the Borrower and the Guarantors,
provided that such transfers arise in the ordinary course of business of the
Borrower and the Guarantors in accordance with their past practice; (d) travel
advances to officers and employees made in the ordinary course of business, and
(e) other Investments not to exceed $30,000,000 in the aggregate at any time
(other than Investments made by the Borrower or a Guarantor in Subsidiaries of
the Borrower that are wholly owned and are permitted under Section 8.4),
provided that, both before and after giving effect thereto (i) the Borrower and
the Guarantors are in compliance with the covenants set forth in Section
Section 7, 8 and 9 hereof; and (ii) there does not exist a Default or Event of
Default and no Default or Event of Default would be created by the making of
such Investment.

SECTION 8.4. MERGERS, CONSOLIDATIONS, SALES. Neither the Borrower
nor any Guarantor shall be a party to any merger, consolidation or exchange of
stock unless the Borrower or such Guarantor shall be the surviving entity (and
the conditions set forth below are satisfied), or purchase or otherwise acquire
all or substantially all of the assets or stock of any class of, or any
partnership or joint venture interest in, any other Person except as otherwise
provided in Section 8.3 or this Section 8.4, or sell, transfer, convey or lease
any assets or group of assets (except (1) sales of equipment in the ordinary
course of business and transfers of personal property among Subsidiaries of the
Borrower which are wholly owned by the Borrower, which are Guarantors, and the
stock of which has been pledged to the Banks under the Pledge Agreement, and
(2) sales of assets between the date hereof and the Maturity Date with an
aggregate value not greater than five percent (5%) of Consolidated Total
Assets, as set forth in the most recent financial statements delivered to the
Banks pursuant to Section 7.4 hereof) or sell or assign,
<PAGE> 60
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with or without recourse, any receivables (except accounts receivable more than
sixty (60) days past due sold or assigned in the ordinary course of collecting
past due accounts). Notwithstanding the foregoing, the Borrower or any
Guarantor may purchase or otherwise acquire all or substantially all of the
assets or stock of any class of, or joint venture interest in, any Person if
the following conditions have been met: (a) the proposed transaction will not
otherwise create a Default or an Event of Default hereunder; (b) the business
to be acquired involves the collection, transfer, hauling, disposal or
recycling of solid waste (excluding hazardous waste as that term is defined in
RCRA) or thermal soil remediation; (c) the business to be acquired operates in
North America; (d) all of the assets to be acquired shall, unless acquired
directly by the Borrower or a Guarantor, be placed in an existing or newly
created Subsidiary, 100% of the stock of which has been or will be pledged to
the Banks under the Pledge Agreement and which is or will become a Guarantor
or, in the case of a stock acquisition, the acquired company shall become, or
shall be merged with, a wholly-owned Subsidiary of the Borrower that is a
Guarantor and 100% of the stock of which is pledged to the Banks and, in the
case of a merger, the surviving entity shall be such Subsidiary; (e) each
acquisition of a landfill is preceded by the Borrower's standard due diligence
practices as set forth in Exhibit D hereto, including a review by the
Consulting Engineer (the "Consulting Engineer's Report"); (f) the cash
consideration to be paid in connection with such acquisition (including the
amount of all liabilities assumed) does not exceed $25,000,000 without the
prior written approval of the Majority Banks or unless the Borrower is rated
Investment Grade. Notwithstanding the foregoing, neither the Borrower nor any
Material Guarantor may merge into any other Person nor may any Person (i)
(other than the Borrower) acquire a controlling interest in any Material
Guarantor, or (ii) acquire a controlling interest in the Borrower, in each case
without the prior written consent of the Majority Banks. Guarantors which are
not Material Guarantors may merge with and into one another, into the Borrower,
or into a Material Guarantor, provided that in the case of a merger with the
Borrower or a Material Guarantor, the Borrower or such Material Guarantor is
the surviving corporation.

SECTION 8.5. SALE AND LEASEBACK. Neither the Borrower nor any
Guarantor shall enter into any arrangement, directly or indirectly, whereby the
Borrower or any Guarantor shall sell or transfer any property owned by it in
order then or thereafter to lease such property or lease other property which
the Borrower or such Guarantor intends to use for substantially the same
purpose as the property being sold or transferred.

SECTION 8.6. RESTRICTED DISTRIBUTIONS AND REDEMPTIONS. Unless the
Borrower is rated Investment Grade, neither the Borrower nor any Guarantor will
declare or pay any Distributions (other than (a) Distributions
<PAGE> 61
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payable solely in common stock of the Borrower, or (b) Distributions of cash by
any Guarantor to its parent or to the Borrower). In addition, unless the
Borrower is rated Investment Grade, the Borrower and the Guarantors shall not
redeem, convert, retire or otherwise acquire shares of any class of capital
stock of the Borrower and the Guarantors (other than in connection with a
merger permitted by Section 8.4 hereof or conversion into another form of
equity of any preferred shares of the Borrower existing as of the Closing Date
pursuant to the terms thereof) in an aggregate amount in excess of $5,000,000,
and no such redemption, conversion, or retirement may be undertaken at any time
a Default or Event of Default exists. Neither the Borrower nor any Guarantor
shall effect or permit any change in or amendment to any document or instrument
pertaining to the terms of its capital stock.

8.7. EMPLOYEE BENEFIT PLANS. Neither the Borrower nor any Guarantor
or ERISA Affiliate will:

(a) engage in any "prohibited transaction" within the
meaning of 9406 of ERISA or Section 4975 of the Code which could
result in a material liability for the Borrower or any Guarantor; or

(b) permit any Guaranteed Pension Plan to incur an
"accumulated funding deficiency", as such term is defined in Section
302 of ERISA, whether or not such deficiency is or may be waived; or

(c) fail to contribute to any Guaranteed Pension Plan to
an extent which, or terminate any Guaranteed Pension Plan in a manner
which, could result in the imposition of a lien or encumbrance on the
assets of the Borrower or any Guarantor pursuant to Section 302(f) or
Section 4068 of ERISA; or

(d) permit or take any action which would result in the
aggregate benefit liabilities (with the meaning of Section 4001 of
ERISA) of all Guaranteed Pension Plans exceeding the value of the
aggregate assets of such Plans, disregarding for this purpose the
benefit liabilities and assets of any such Plan with assets in excess
of benefit liabilities.

The Borrower and the Guarantors will (i) promptly upon filing the same
with the Department of Labor or Internal Revenue Service, furnish to the Banks
a copy of the most recent actuarial statement required to be submitted under
Section 103(d) of ERISA and Annual Report, Form 5500, with all required
attachments, in respect of each Guaranteed Pension Plan and (ii) promptly upon
receipt or dispatch, furnish to the Banks any notice, report or demand sent or
received in respect of a Guaranteed Pension Plan under
<PAGE> 62
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Sections 302, 4041, 4042, 4043, 4063, 4065, 4066 and 4068 of ERISA, or in
respect of a Multiemployer Plan, under Sections 4041A, 4202, 4219, or
4245 of ERISA.

SECTION 8.8. SUBORDINATED DEBT. The Borrower and the Guarantors (a)
will not amend, supplement or otherwise modify the terms of the Subordinated
Debt; (b) may make scheduled payments of principal and interest with respect to
the Subordinated Debt, provided that, no Default or Event of Default exists at
the time of, or would be created by the making of, such payment; and (c) may
prepay the 1992 Convertible Debt, provided that, no Default or Event of Default
exists at the time of, or would be created by the making of, such payment and
the funds applied to prepayment of the 1992 Convertible Debt are obtained
through an offering of equity or other Subordinated Debt and not through
borrowings hereunder.

SECTION 8.9. CAPITAL EXPENDITURES. Unless the Borrower is rated
Investment Grade, the Borrower and the Guarantors shall not make or commit to
make annual Capital Expenditures (excluding any acquisitions permitted by
Section 8.4 hereof) in excess of (a) one and three-quarters times the sum of
depreciation and landfill amortization expense in any fiscal year through 1997;
or (b) one and one-half times the sum of depreciation and landfill amortization
in any later fiscal year.

SECTION 8.10. RELIANCE DOCUMENTS. The Borrower and the Guarantors
will not make any material amendments or modifications of (a) the Underwriting
and Continuing Indemnity Agreement dated as of June 30, 1995 among the
Borrower, the Guarantors, and Reliance Insurance Company and certain of its
affiliates ("Reliance"), (b) the Security Agreement dated as of June 30, 1995
among the Borrower, the Guarantors and Reliance and (c) the Equipment and
Landfill Utilization Agreement dated as of June 30, 1995 among the Borrower,
the Guarantors, the Banks and Reliance, in each case without the prior written
consent of the Agents.

SECTION 9. FINANCIAL COVENANTS OF THE BORROWER. The Borrower agrees
that, so long as any Notes or Letters of Credit are outstanding or the Banks
have any obligation to make Loans or the Issuing Bank has any obligation to
issue, extend or renew any Letters of Credit hereunder:

SECTION 9.1. LEVERAGE RATIO.

As of the end of any fiscal quarter of the Borrower commencing with
the fiscal quarter ending March 31, 1995, the ratio of (a) Indebtedness for
borrowed money (including Indebtedness for capitalized leases which corresponds
to principal) to (b) EBITDA for the prior four consecutive fiscal quarters
ending on that date (the ratio of (a) to (b) herein referred to as the
<PAGE> 63
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"Pricing Ratio") for such periods shall not be greater than the stated ratio
for the respective periods set forth below:

<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Closing Date to 9/30/95 5.0:1

12/31/95 to 9/30/96 3.75:1

12/31/96 to 9/30/97 3.5:1

12/31/97 to 9/30/98 3.25:1

12/31/98 to 9/30/99 3.0:1

12/31/99 to Maturity Date 2.75:1
</TABLE>

For all 1995 calculations, EBITDA (and the corresponding Pricing
Ratio) will be calculated from 1/1/95 through the quarter then ended and
annualized.

SECTION 9.2. INTEREST COVERAGE RATIO.

As of the end of any fiscal quarter of the Borrower commencing with
the fiscal quarter ending September 30, 1995, the ratio of (a) EBIT (i) on a
cumulative basis with respect to fiscal quarters through March 31, 1996, and
(ii) with respect to any fiscal quarter ending on or after June 30, 1996, for
the prior four consecutive fiscal quarters ending on that date to (b)
Consolidated Total Interest Expense as at the end of such period shall not be
less than the stated ratio for the respective periods set forth below:

<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Closing Date to 9/30/96 2.0:1

12/31/96 to 9/30/97 2.25:1

12/31/97 to 9/30/98 2.50:1

12/31/98 to 9/30/99 2.75:1

12/31/99 to Maturity Date 3.0:1
</TABLE>
<PAGE> 64
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SECTION 9.3. CONSOLIDATED NET WORTH. The Borrower will not permit
Consolidated Net Worth to be less than the sum of (a) 90% of Consolidated Net
Worth shown on the balance sheet dated as of the Closing Date and (b) 75% of
each quarter's positive net income commencing with the quarter ending September
30 1995, on a cumulative basis exclusive of any quarterly losses and (c) 75% of
the amount by which Consolidated Net Worth is increased by equity issuances,
and (d) 100% of the amount by which equity increases upon the conversion of the
1992 Convertible Debt.

SECTION 9.4. DEBT SERVICE COVERAGE RATIO. Commencing with the fiscal
quarter ending September 30, 1995, the Borrower will not permit the ratio of
Consolidated Cash Flow to Consolidated Debt Service as at the end of any fiscal
quarter to be less than 1.1:1 (i) on a cumulative basis with respect to fiscal
quarters from July 1, 1995 through March 31, 1996, and (ii) with respect to any
fiscal quarter ending on or after June 30, 1996, for the prior four consecutive
fiscal quarters ending on that date.

SECTION 10. CONDITIONS TO INITIAL LOAN. The effectiveness of the
Agreement and the obligations of the Banks to make the Loans and of the Issuing
Bank to issue Letters of Credit on the Closing Date and otherwise be bound by
the terms of this Agreement shall be subject to the satisfaction of each of the
following conditions precedent:

SECTION 10.1. CORPORATE ACTION. All corporate action necessary for
the valid execution, delivery and performance by the Borrower and each
Guarantor of the Loan Documents to which it is a party shall have been duly and
effectively taken, and evidence thereof satisfactory to the Banks shall have
been provided to the Banks.

SECTION 10.2. LOAN DOCUMENTS, ETC. Each of the Loan Documents to
which the Borrower or any Guarantor is a party, including the Pledge Agreement
of even date herewith in form and substance satisfactory to the Agents and the
Banks, and related stock powers and stock certificates, shall have been duly
and properly authorized, executed and delivered by the respective parties
thereto and shall be in full force and effect in a form satisfactory to the
Banks.

SECTION 10.3. CERTIFIED COPIES OF CHARTER DOCUMENTS. The Banks shall
have received from the Borrower and the Guarantors a copy, certified by a duly
authorized officer of such Person to be true and complete on the Closing Date,
of each of (a) its charter or other incorporation documents as in effect on
such date of certification, and (b) its by-laws as in effect on such date.

SECTION 10.4. INCUMBENCY CERTIFICATE. The Banks shall have received
an incumbency certificate, dated as of the Closing Date, signed by duly
authorized officers giving the name and bearing a specimen signature of
<PAGE> 65
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each individual who shall be authorized: (a) to sign the Loan Documents on
behalf of the Borrower and the Guarantors (b) to make Loan and Letter of Credit
Requests; and (c) to give notices and to take other action on the Borrower's
and the Guarantors' behalf under the Loan Documents.

SECTION 10.5. VALIDITY OF LIENS. The Pledge Agreement, the
Partnership Pledge Agreement and the Security Agreement shall be effective to
create in favor of the Documentation Agent for the benefit of the Banks, a
legal, valid and enforceable first security interest in and lien upon the
Collateral. All filings, recordings, deliveries of instruments and other
actions necessary or desirable in the opinion of each Bank to protect and
preserve such security interests shall have been duly effected. The
Documentation Agent shall have received evidence thereof in form and substance
satisfactory to the Documentation Agent.

SECTION 10.6. CERTIFICATES OF INSURANCE. The Banks shall have
received (i) a certificate of insurance from an independent insurance broker
dated as of the Closing Date, or within 15 days prior thereto, identifying
insurers, types of insurance, insurance limits, and policy terms, and otherwise
describing the insurance obtained in accordance with the provisions of the Loan
Documents and (ii) copies of all policies evidencing such insurance (or
certificates therefor signed by the insurer or an agent authorized to bind the
insurer).

SECTION 10.7. OPINIONS OF COUNSEL AND PERMIT CERTIFICATE. The Banks
shall have received (a) a favorable legal opinion from outside counsel to the
Borrower and the Guarantors, addressed to the Banks, dated the Closing Date, in
form and substance satisfactory to the Banks, and (b) an environmental permit
certificate from the CFO of the Borrower satisfactory to the Banks concerning
principal operating permits at the Borrower's and the Guarantors' principal
operating facilities.

SECTION 10.8. CHAMBERS MERGER. The merger between Chambers
Acquisition Corporation and Chambers shall occur on terms and conditions
substantially the same as described in the Merger Agreement.

SECTION 10.9. EXISTING DEBT. The Agents shall have received a payoff
letter from each of the Borrower's and the Guarantor's lenders under the
Borrower's existing credit facility, Chamber's existing credit facilities and
Chamber's 11.45% senior notes and 11.95% senior notes, each such payoff letter
indicating the amount of the loan obligations of the Borrower or such Guarantor
to be discharged on the Closing Date, and acknowledging that upon receipt of
such funds the applicable lender will forthwith execute and deliver to the
Documentation Agent for filing all termination statements and take such other
actions as may be necessary to discharge all mortgages,
<PAGE> 66
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deeds of trust and security interests granted by the Borrower or such Guarantor
to such lenders, all in form and substance satisfactory to the Agents.

SECTION 10.10. SATISFACTORY FINANCIAL CONDITION. No material adverse
change, in the judgment of the Agents, shall have occurred in the financial
condition, results of operations, business, properties or prospects of the
Borrower and its Subsidiaries, taken as a whole, or Chambers and its
Subsidiaries, taken as a whole, since the most recent financial statements and
projections provided to the Agents. In addition, on or before the Closing
Date, the Agents shall have received a satisfactory review by Coopers & Lybrand
of the $14,000,000 overhead reductions to be implemented in 1995.

SECTION 10.11. LITIGATION MATTERS. The litigation described in note C
to the Chambers financial statement dated March 31, 1995 (the "Chambers
Shareholder Litigation") has been settled substantially in accordance with the
description of the settlement set forth in the Joint Proxy Statement of the
Borrower and Chambers (the "Proxy Statement") dated May 19, 1995 (the "Chambers
Shareholder Litigation Settlement"). The court order effecting the Chambers
Shareholder Litigation Settlement shall be in full force and effect, and the
Grant Thornton defendants (as defined in the Proxy Statement) have not
withdrawn from the Chambers Shareholder Litigation Settlement. The Borrower
shall have given to the Administrative Agent a Loan and Letter of Credit
Request for a Revolving Credit Loan in the amount necessary to pay the two
installments of the settlement payments required to be made under the terms of
the Chambers Shareholder Litigation Settlement.

SECTION 10.12. ENVIRONMENTAL REPORTS. The Agents shall have received
satisfactory environmental reports on the facilities of Chambers and its
Subsidiaries.

SECTION 10.13. REINCORPORATION OF BORROWER. The Agents shall have
received satisfactory evidence of the reincorporation of the Borrower as a
Delaware corporation.

SECTION 11. CONDITIONS TO ALL LOANS. The obligations of the Banks to
make any Loan and the obligation of the Issuing Bank to issue, extend, or renew
any Letter of Credit at the time of and subsequent to the Closing Date is
subject to the following conditions precedent:

SECTION 11.1. REPRESENTATIONS TRUE. Each of the representations and
warranties of the Borrower and each of the Guarantors contained in this
Agreement or in any document or instrument delivered pursuant to or in
connection with this Agreement shall be true as of the date as of which they
were made and shall also be true at and as of the time of the making of such
<PAGE> 67
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Loan or the issuance, extension, or renewal of such Letter of Credit, as
applicable, with the same effect as if made at and as of that time (except to
the extent of changes resulting from transactions contemplated or permitted by
this Agreement (including any supplements to Schedule 1 contemplated by this
Agreement and the other Loan Documents) and changes occurring in the ordinary
course of business which singly or in the aggregate are not materially adverse,
and to the extent that such representations and warranties relate expressly and
solely to an earlier date).

SECTION 11.2. PERFORMANCE; NO EVENT OF DEFAULT. The Borrower and the
Guarantors shall have performed and complied with all terms and conditions
herein required to be performed or complied with by them prior to or at the
time of the making of any Loan or the issuance, extension or renewal of any
Letter of Credit, and at the time of the making of any Loan, there shall exist
no Default or Event of Default or condition which would result in a Default or
an Event of Default upon consummation of such Loan or the issuance, extension,
or renewal of such Letter of Credit, as applicable. Each request by the
Borrower for a Loan and each request for issuance, extension or renewal of a
Letter of Credit shall constitute certification by the Borrower that the
conditions specified in Sections 11.1 and 11.2 will be duly satisfied on
the date of such Loan or Letter of Credit issuance, extension or renewal.

SECTION 11.3. NO LEGAL IMPEDIMENT. No change shall have occurred in
any law or regulations thereunder or interpretations thereof which in the
reasonable opinion of the Banks would make it illegal for the Banks to make
Loans or for the Issuing Bank to issue, extend or renew Letters of Credit
hereunder.

SECTION 11.4. GOVERNMENTAL REGULATION. The Banks shall have received
from the Borrower and the Guarantors such statements in substance and form
reasonably satisfactory to the Banks as they shall require for the purpose of
compliance with any applicable regulations of the Comptroller of the Currency
or the Board of Governors of the Federal Reserve System.

SECTION 11.5. PROCEEDINGS AND DOCUMENTS. All proceedings in
connection with the transactions contemplated by this Agreement and all
documents incident thereto shall have been delivered to the Banks as of the
date of the making of such Loan in substance and in form satisfactory to the
Banks, including without limitation a Letter of Credit and Loan Request in the
form attached hereto as Exhibit B, and the Banks shall have received all
information and such counterpart originals or certified or other copies of such
documents as the Banks may reasonably request.

SECTION 12. COLLATERAL SECURITY. The Obligations shall be secured
by a perfected security interest in all of the Collateral.
<PAGE> 68
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SECTION 13. EVENTS OF DEFAULT; ACCELERATION; TERMINATION OF
COMMITMENT.

SECTION 13.1. EVENTS OF DEFAULT AND ACCELERATION. If any of the
following events ("Events of Default" or, if the giving of notice or the lapse
of time or both is required, then, prior to such notice and/or lapse of time,
"Defaults") shall occur:

(a) if the Borrower shall fail to pay any principal of
the Loans when the same shall become due and payable, whether at the
stated date of maturity or any accelerated date of maturity or at any
other date fixed for payment;

(b) if the Borrower shall fail to pay any interest or
fees or other amounts owing hereunder within five (5) Business Days
after the same shall become due and payable whether at the Maturity
Date or any accelerated date of maturity or at any other date fixed
for payment;

(d) if the Borrower or any Guarantor shall fail to
perform any term, covenant or agreement contained herein or in any of
the other Loan Documents (other than those specified in subsections
(a), (b), and (c) above) and such failure shall not be remedied within
30 days after written notice of such failure shall have been given to
the Borrower and the Guarantors by the Documentation Agent or any of
the Banks;

(e) if any representation or warranty contained in this
Agreement or in any document or instrument delivered pursuant to or in
connection with this Agreement shall prove to have been false in any
material respect upon the date when made or repeated;

(f) if the Borrower or any Guarantor shall fail to pay at
maturity, or within any applicable period of grace, any and all
obligations for borrowed money or any guaranty with respect thereto in
an aggregate amount greater than $3,000,000, or fail to observe or
perform any material term, covenant or agreement contained in any one
or more agreements by which it is bound, evidencing or securing
borrowed money or bonding obligations in an aggregate amount greater
than $3,000,000 for such period of time as would, or would have
permitted (assuming the giving of appropriate notice if required) the
holder or holders thereof or of any obligations issued thereunder to
accelerate the maturity thereof; or
<PAGE> 69
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(g) if the Borrower or any Guarantor makes an assignment
for the benefit of creditors, or admits in writing its inability to
pay or generally fails to pay its debts as they mature or become due,
or petitions or applies for the appointment of a trustee or other
custodian, liquidator or receiver of the Borrower or any Guarantor or
of any substantial part of the assets of the Borrower or any Guarantor
or commences any case or other proceeding relating to the Borrower or
any Guarantor under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or
similar law of any jurisdiction, now or hereafter in effect, or takes
any action to authorize or in furtherance of any of the foregoing, or
if any such petition or application is filed or any such case or other
proceeding is commenced against the Borrower or any Guarantor or the
Borrower or any Guarantor indicates its approval thereof, consent
thereto or acquiescence therein;

(h) a decree or order is entered appointing any such
trustee, custodian, liquidator or receiver or adjudicating the
Borrower or any Guarantor bankrupt or insolvent, or approving a
petition in any such case or other proceeding, or a decree or order
for relief is entered in respect of the Borrower or any Guarantor in
an involuntary case under federal bankruptcy laws as now or hereafter
constituted, and such decree or order remains in effect for more than
30 days, whether or not consecutive;

(i) if there shall remain in force, undischarged,
unsatisfied and unstayed, for more than thirty days, whether or not
consecutive, any final judgment against the Borrower or any Guarantor
which, with other outstanding final judgments against the Borrower and
the Guarantors, exceeds in the aggregate $3,000,000 after taking into
account any undisputed insurance coverage;

(j) with respect to any Guaranteed Pension Plan, an ERISA
Reportable Event shall have occurred and the Banks shall have
determined in their reasonable discretion that such event reasonably
could be expected to result in liability of the Borrower or any
Guarantor to the PBGC or the Plan in an aggregate amount exceeding
$3,000,000 and such event in the circumstances occurring reasonably
could constitute grounds for the termination of such Plan by the PBGC
or for the appointment by the appropriate United States District Court
of a trustee to administer such Plan; or a trustee shall have been
appointed by the United States District Court to administer such Plan;
or the PBGC shall have instituted proceedings to terminate such Plan;
<PAGE> 70
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(k) any of the Subordinated Debt in an aggregate amount
greater than $3,000,000 shall be in default or all or any part of the
Subordinated Debt shall be paid, prepaid, redeemed or repurchased in
whole or in part other than as permitted under the terms hereof and
thereof;

(l) if any of the Loan Documents to which the Borrower or
any Guarantor is a party shall be canceled, terminated, revoked or
rescinded otherwise than in accordance with the terms thereof or with
the express prior written agreement, consent or approval of the Banks,
or any action at law, suit or in equity or other legal proceeding to
cancel, revoke or rescind any of the Loan Documents shall be commenced
by or on behalf of the Borrower, the Guarantors, or any of their
respective stockholders, or any court or any other governmental or
regulatory authority or agency of competent jurisdiction shall make a
determination that, or issue a judgment, order, decree or ruling to
the effect that, any one or more of the Loan Documents to which the
Borrower or any Guarantor is a party is illegal, invalid or
unenforceable in accordance with the terms thereof;

(m) any person or group of persons (within the meaning of
Section 13 or 14 of the Securities Exchange Act of 1934, as amended)
shall have acquired beneficial ownership (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission under said
Act) of (i) 25% or more of the outstanding shares of common stock of
the Borrower or (ii) with respect to the Rangos family, greater than
30% of such stock; or, during any period of twelve consecutive
calendar months, individuals who were directors of the Borrower on the
first day of such period shall cease to constitute a majority of the
board of directors of the Borrower; or

(n) if either of (i) the Final Judgment and Order of
Dismissal as to All Defendants entered by the United States District
Court for the Western District of Pennsylvania on May 30, 1995 in
Civil Action No. 92-0679 (In re: Chambers Development Company
Securities Litigation) relating to all class actions or (ii) the Final
Order and Judgment entered by the United States District Court for the
Western District of Pennsylvania on May 30, 1995 in Civil Action No.
92-0679 (In re: Chambers Development Securities Litigation) relating
to the derivative action at Civil Action No. 92-1081 (collectively,
the "Chambers Judgments"), each of which judgments implements the
Chambers Shareholder Litigation Settlement, is reversed or
substantially modified on an appeal as a result of an appeal filed
and/or docketed on or before July __, 1995;
<PAGE> 71
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then, and in any such event, so long as the same may be continuing, the Bank
Agents may, and upon the request of the Majority Banks shall, by notice in
writing to the Borrower, declare all amounts owing with respect to this
Agreement, the Notes and the other Loan Documents and all Reimbursement
Obligations to be, and they shall thereupon forthwith become, immediately due
and payable without presentment, demand, protest, notice of intent to
accelerate, notice of acceleration to the extent permitted by law or other
notice of any kind, all of which are hereby expressly waived by the Borrower;
provided that in the event of any Event of Default specified in Section 13.1(g)
or 13.1(h), all such amounts shall become immediately due and payable
automatically and without any requirement of notice from the Bank Agents or any
Bank. Upon demand by the Majority Banks after the occurrence of any Event of
Default, the Borrower shall immediately provide to the Administrative Agent
cash in an amount equal to the aggregate Maximum Drawing Amount to be held by
the Administrative Agent as collateral security for the Obligations.

SECTION 13.2. TERMINATION OF COMMITMENTS. If any Event of Default
pursuant to Sections 13.1(g) or 13.1(h) hereof shall occur, any unused portion
of the Total Revolving Credit Commitment hereunder shall forthwith terminate
and the Banks and the Issuing Bank shall be relieved of all obligations to make
Loans to or to issue, extend or renew Letters of Credit for the account of the
Borrower; or if any other Event of Default shall occur, the Majority Banks may
by notice to the Borrower terminate the unused portion of the Total Revolving
Credit Commitment hereunder, and, upon such notice being given, such unused
portion of the Total Revolving Credit Commitment hereunder shall terminate
immediately and the Banks and the Issuing Bank shall be relieved of all further
obligations to make Loans to or to issue, extend or renew Letters of Credit for
the account of the Borrower hereunder. No termination of any portion of the
Commitment Percentage hereunder shall relieve the Borrower of any of its
existing Obligations to the Banks or the Bank Agents hereunder or elsewhere.

SECTION 13.3. REMEDIES. In case any one or more of the Events of
Default shall have occurred and be continuing, and whether or not the Banks
shall have accelerated the maturity of the Loans pursuant to Section 13.1, each
Bank, upon notice to the other Banks, if owed any amount with respect to the
Loans or the Reimbursement Obligations, may proceed to protect and enforce its
rights by suit in equity, action at law or other appropriate proceeding,
whether for the specific performance of any covenant or agreement contained in
this Agreement and the other Loan Documents or any instrument pursuant to which
the Obligations to such Bank are evidenced, including, without limitation, as
permitted by applicable law the obtaining of the ex parte appointment of a
receiver, and, if such amount shall have become due, by declaration or
otherwise, proceed to enforce the
<PAGE> 72
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payment thereof or any legal or equitable right of such Bank. No remedy herein
conferred upon any Bank or the Agents or the holder of any Note is intended to
be exclusive of any other remedy and each and every remedy shall be cumulative
and shall be in addition to every other remedy given hereunder or now or
hereafter existing at law or in equity or by statute or any other provision of
law.

SECTION 14. SETOFF. Regardless of the adequacy of any collateral,
during the continuance of an Event of Default, any deposits or other sums
credited by or due from any Bank to the Borrower or any Guarantor and any
securities or other property of the Borrower or the Guarantors in the
possession of such Bank may be applied to or set off against the payment of
Obligations and any and all other liabilities, direct, or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, of the
Borrower and the Guarantors to the Banks or the Bank Agents. Any amounts set
off pursuant to this Section 14 shall be distributed ratably among all of the
Banks by the Bank setting off such amounts. If any Bank fails to share such
setoff ratably, the Administrative Agent shall have the right to withhold such
Bank's share of any Borrower or Guarantor payments or proceeds of Collateral
until each of the Banks shall have, in the aggregate, received a pro rata
repayment.

SECTION 15. EXPENSES. Whether or not the transactions contemplated
herein shall be consummated, the Borrower hereby promises to reimburse the
Documentation Agent for all reasonable out-of-pocket fees and disbursements
(including all reasonable attorneys' fees), incurred or expended in connection
with the preparation, filing or recording, or interpretation of this Agreement,
the other Loan Documents, or any amendment, modification, approval, consent or
waiver hereof or thereof. The Borrower further promises to reimburse the Bank
Agents and the Banks for all reasonable out-of-pocket fees and disbursements
(including all reasonable legal fees and the allocable cost of in-house
attorneys' fees) incurred or expended in connection with the enforcement of any
Obligations or the satisfaction of any indebtedness of the Borrower hereunder
or thereunder, or in connection with any litigation, proceeding or dispute
hereunder in any way related to the credit hereunder. The Borrower will pay
any taxes (including any interest and penalties in respect thereof) other than
any Bank's or Bank Agents' taxes based upon or measured by the income or
profits, payable on or with respect to the transactions contemplated by this
Agreement (the Borrower hereby agreeing to indemnify each Bank and Bank Agent
with respect thereto).
<PAGE> 73
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SECTION 16. THE BANK AGENTS.

SECTION 16.1. APPOINTMENT, POWERS AND IMMUNITIES. Each Bank hereby
irrevocably appoints and authorizes (a) FNBB to act as its documentation and
collateral agent and (b) MGT to act as its the Administrative Agent hereunder
and under the other Loan Documents (FNBB and MGT, in such capacities, the "Bank
Agents"), provided, however, the Administrative Agent and Documentation Agent
are hereby authorized to serve only as administrative and documentation and
collateral agents, respectively, for the Banks and to exercise such powers as
are reasonably incidental thereto and as are set forth in this Agreement and
the other Loan Documents. The Bank Agents hereby acknowledge that they do not
have the authority to negotiate any agreement which would bind the Banks or
agree to any amendment, waiver or modification of any of the Loan Documents or
bind the Banks except as set forth in this Agreement or the Loan Documents.
Except as provided in this Agreement, and in the other Loan Documents, the Bank
Agents shall take action or refrain from acting only upon instructions of the
Banks. Each Bank irrevocably authorizes the Documentation Agent to execute the
Pledge Agreement, the Partnership Pledge Agreement and the Security Agreement
and all other instruments relating thereto and to take such action on behalf of
each of the Banks and to exercise all such powers as are expressly delegated to
the Documentation Agent hereunder and in the Pledge Agreement, the Partnership
Pledge Agreement and the Security Agreement and all related documents, together
with such other powers as are reasonably incidental thereto. It is agreed that
the duties, rights, privileges and immunities of the Issuing Bank, in its
capacity as issuer of Letters of Credit hereunder, shall be identical to the
duties, rights, privileges and immunities of the Bank Agents as provided in
this Section 16. The Bank Agents shall not have any duties or responsibilities
or any fiduciary relationship with any Bank except those expressly set forth in
this Agreement. None of the Bank Agents nor any of their affiliates shall be
responsible to the Banks for any recitals, statements, representations or
warranties made by the Borrower or any other Person whether contained herein or
otherwise or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement, the other Loan Documents or
any other document referred to or provided for herein or therein or for any
failure by the Borrower or any other Person to perform its obligations
hereunder or thereunder or in respect of the Notes. The Bank Agents may employ
agents and attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it with
reasonable care. Neither the Bank Agents nor any of their directors, officers,
employees or agents shall be responsible for any action taken or omitted to be
taken by it or them hereunder or in connection herewith, except for its or
their own gross negligence or willful misconduct. Any Bank
<PAGE> 74
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Agent in its separate capacity as a Bank shall have the same rights and powers
hereunder as any other Bank.

SECTION 16.2. ACTIONS BY BANK AGENTS. Each Bank Agent shall be fully
justified in failing or refusing to take any action under this Agreement as
reasonably deemed appropriate unless it shall first have received the consent
of the Banks and shall be indemnified to its reasonable satisfaction by the
Banks against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Bank Agents shall
in all cases be fully protected in acting, or in refraining from acting, under
this Agreement or any of the Loan Documents in accordance with the instruction
of the Banks, and such instruction and any action taken or failure to act
pursuant thereto shall be binding upon the Banks and all future holders of the
Notes or any Letter of Credit Participation.

SECTION 16.3. INDEMNIFICATION. Without limiting the obligations of
the Borrower and the Guarantors hereunder or under any other Loan Document, the
Banks agree to indemnify the Bank Agents, ratably in accordance with their
respective Commitment Percentages, for any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements or any kind or nature whatsoever which may at any time be imposed
on, incurred by or asserted against the Bank Agents in any way relating to or
arising out of this Agreement or any other Loan Document or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or the enforcement of any of the terms hereof or
thereof or of any such other documents; provided, that no Bank shall be liable
for any of the foregoing to the extent they arise from the gross negligence or
willful misconduct of the Bank Agents (or any agent thereof), IT BEING THE
INTENT OF THE PARTIES HERETO THAT ALL SUCH INDEMNIFIED PARTIES SHALL BE
INDEMNIFIED FOR THEIR ORDINARY SOLE OR CONTRIBUTORY NEGLIGENCE.

SECTION 16.4. REIMBURSEMENT. Without limiting the provisions of
Section 2.6(b), Section 5.3(a) and Section 14.3, no Bank Agent shall be obliged
to make available to any Person any sum which the Bank Agent is expecting to
receive for the account of that Person until the Bank Agent has determined that
it has received that sum. A Bank Agent may, however, disburse funds prior to
determining that the sums which the Bank Agent expects to receive have been
finally and unconditionally paid to the Bank Agent, if the Bank Agent wishes to
do so. If and to the extent that a Bank Agent does disburse funds and it later
becomes apparent that the Bank Agent did not then receive a payment in an
amount equal to the sum paid out, then any Person to whom the Bank Agent made
the funds available shall, on demand from the Bank Agent, refund to
<PAGE> 75
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the Bank Agent the sum paid to that Person. If, in the opinion of a Bank
Agent, the distribution of any amount received by it in such capacity hereunder
or under the Loan Documents might involve it in liability, it may refrain from
making distribution until its right to make distribution shall have been
adjudicated by a court of competent jurisdiction. If a court of competent
jurisdiction shall adjudge that any amount received and distributed by a Bank
Agent is to be repaid, each Person to whom any such distribution shall have
been made shall either repay to the Bank Agent its proportionate share of the
amount so adjudged to be repaid or shall pay over the same in such manner and
to such Persons as shall be determined by such court.

SECTION 16.5. DOCUMENTS. The Bank Agents will forward to each Bank,
promptly after receipt thereof, a copy of each notice or other document
furnished to the Bank Agents for such Bank hereunder; provided, however, that,
notwithstanding the foregoing, the Administrative Agent may furnish to the
Banks a monthly summary with respect to Letters of Credit issued hereunder in
lieu of copies of the related Letter of Credit Applications.

SECTION 16.6. NON-RELIANCE ON BANK AGENTS AND OTHER BANKS. Each Bank
represents that it has, independently and without reliance on the Bank Agents,
or any other Bank, and based on such documents and information as it has deemed
appropriate, made its own appraisal of the financial condition and affairs of
the Borrower and the Guarantors and the decision to enter into this Agreement
and the other Loan Documents and agrees that it will, independently and without
reliance upon the Bank Agents, or any other Bank, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own appraisals and decisions in taking or not taking action under this
Agreement or any other Loan Document. Except as herein expressly provided to
the contrary, the Bank Agents shall not be required to keep informed as to the
performance or observance by the Borrower and the Guarantors of this Agreement,
the other Loan Documents or any other document referred to or provided for
herein or therein or by any other Person of any other agreement or to make
inquiry of, or to inspect the properties or books of, any Person. Except for
notices, reports and other documents and information expressly required to be
furnished to the Banks by the Bank Agents hereunder, the Bank Agents shall not
have any duty or responsibility to provide any Bank with any credit or other
information concerning any person which may come into the possession of the
Bank Agents or any of their affiliates. Each Bank shall have access to all
documents relating to the Bank Agents' performance of their duties hereunder at
such Bank's request. Unless any Bank shall promptly object to any action taken
by the Bank Agents hereunder of which such Bank has actual knowledge (other
than actions which require the prior consent of such Bank in accordance with
the terms hereof or to which the
<PAGE> 76
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provisions of Section 16.8 are applicable and other than actions which
constitute gross negligence or willful misconduct by the Bank Agents), such
Bank shall conclusively be presumed to have approved the same.

SECTION 16.7. RESIGNATION OF BANK AGENTS. A Bank Agent may resign at
any time by giving 60 days prior written notice thereof to the Banks and the
Borrower. Upon any such resignation, the Banks (other than the resigning Bank
Agent) shall have the right to appoint a successor Bank Agent. If no successor
to such Bank Agent shall have been so appointed by the Banks and shall have
accepted such appointment within 30 days after the retiring Bank Agent's giving
of notice of resignation, then the retiring Bank Agent may, on behalf of the
Banks, appoint a successor Bank Agent from among the remaining Banks, which
shall be a financial institution having a combined capital and surplus in
excess of $1,000,000,000. Upon the acceptance of any appointment as Bank Agent
hereunder by a successor Bank Agent, such successor Bank Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Bank Agent, and the retiring Bank Agent shall be discharged
from its duties and obligations hereunder. After any retiring Bank Agent's
resignation, the provisions of this Agreement shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent. Any new Issuing Bank appointed pursuant to this Section
16.7 shall immediately issue new Letters of Credit in place of Letters of
Credit previously issued, or if acceptable to the resigning Issuing Bank, issue
letters of credit in favor of the resigning Issuing Bank as security for the
outstanding Letters of Credit and shall in due course replace all Letters of
Credit previously issued by the resigning Issuing Bank.

SECTION 16.8. ACTION BY THE BANKS, CONSENTS, AMENDMENTS, WAIVERS,
ETC. Any action to be taken (including the giving of notice) may be taken, any
consent or approval required or permitted by the Agreement or any other Loan
Document to be given by the Banks may be given, any term of this Agreement, any
other Loan Document or any other instrument, document or agreement related to
this Agreement or the other Loan Documents or mentioned therein may be amended,
and the performance or observance by the Borrower, the Guarantors, or any other
Person of any of the terms thereof and any Default or Event of Default (as
defined in any of the above-referenced documents or instruments) may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Majority Banks; provided,
however, that no such consent or amendment which affects the rights, duties or
liabilities of any Bank Agent shall be effective without the written consent of
such Bank Agent. Notwithstanding the foregoing, no amendment, waiver or
consent shall do any of the following unless in writing and signed by ALL of
the Banks (a) increase the principal amount of the
<PAGE> 77
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Total Revolving Credit Commitment (or subject the Banks to any additional
obligations), (b) reduce the principal of or interest on the Notes (including,
without limitation, interest on overdue amounts) or any fees payable hereunder,
(c) postpone any date fixed for any payment in respect of principal or interest
(including, without limitation, interest on overdue amounts) on the Notes, or
any fee hereunder; (d) change the definition of "Majority Banks" or number of
Banks which shall be required for the Banks or any of them to take any action
under the Loan Documents; (e) amend this Section 16.8; (f) change the
Commitment Percentage of any Bank, except as permitted under Section 19 hereof;
or (g) except as otherwise permitted hereunder, release any Collateral.

SECTION 17. INDEMNIFICATION. The Borrower agrees to indemnify and
hold harmless the Banks and the Bank Agents and their affiliates, as well as
the Banks' and the Bank Agents' and their affiliates' shareholders, directors,
agents, officers, subsidiaries and affiliates, from and against all damages,
losses, settlement payments, obligations, liabilities, claims, suits,
penalties, assessments, citations, directives, demands, judgments, actions or
causes of action, whether statutory created or under the common law, and
reasonable costs and expenses incurred, suffered, sustained or required to be
paid by an indemnified party by reason of or resulting from the transactions
contemplated hereby, except any of the foregoing which result from the gross
negligence or willful misconduct of any indemnified party. In any
investigation, proceeding or litigation, or the preparation therefor, the Banks
and the Bank Agents shall be entitled to select their own counsel and, in
addition to the foregoing indemnity, the Borrower agrees to pay promptly the
reasonable fees and expenses of such counsel. In the event of the commencement
of any such proceeding or litigation, the Borrower shall be entitled to
participate in such proceeding or litigation with counsel of its choice at its
expense, provided that such counsel shall be reasonably satisfactory to the
Banks. The covenants of this Section 17 shall survive payment or satisfaction
of payment of amounts owing with respect to any Note or any other Loan
Document, IT BEING THE INTENT OF THE PARTIES HERETO THAT ALL SUCH INDEMNIFIED
PARTIES SHALL BE INDEMNIFIED FOR THEIR ORDINARY SOLE OR CONTRIBUTORY
NEGLIGENCE.

SECTION 18. SURVIVAL OF COVENANTS, ETC. Unless otherwise stated
herein, all covenants, agreements, representations and warranties made herein,
in the other Loan Documents or in any documents or other papers delivered by or
on behalf of the Borrower and any Guarantor pursuant hereto shall be deemed to
have been relied upon by the Banks and the Bank Agents, notwithstanding any
investigation heretofore or hereafter made by it, and shall survive the making
by the Banks of the Loans and the issuance, extension or renewal of any Letters
of Credit by the Issuing Bank, as herein
<PAGE> 78
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contemplated, and shall continue in full force and effect so long as any amount
due under this Agreement, any Obligation, any Letter of Credit or any Note
remains outstanding and unpaid or any Bank has any obligation to make any Loans
or the Issuing Bank has any obligation to issue, extend, or renew any Letters
of Credit hereunder. All statements contained in any certificate or other
paper delivered by or on behalf of the Borrower or any Guarantor pursuant
hereto or in connection with the transactions contemplated hereby shall
constitute representations and warranties by the Borrower or such Guarantor, as
the case may be, hereunder.

SECTION 19. ASSIGNMENT AND PARTICIPATION. It is understood and
agreed that each Bank shall have the right to assign at any time all or a
portion of its Commitment Percentage and interests in the risk relating to the
Loans, outstanding Letters of Credit and its Revolving Credit Commitment
hereunder in an amount equal to or greater than $5,000,000 (which assignment
shall be of an equal percentage of the Revolving Credit Commitment, the Loans
and outstanding Letters of Credit unless otherwise agreed to by the Agents) to
additional banks or other financial institutions with the prior written
approval of the Bank Agents and the Borrower which approvals shall not be
unreasonably withheld. It is further agreed that each bank or other financial
institution which executes and delivers to the Documentation Agent and the
Borrower hereunder an Assignment and Acceptance substantially in the form of
Exhibit E hereto together with an assignment fee in the amount of $2500 payable
by the assigning Bank to the Documentation Agent, shall, on the date specified
in such Assignment and Acceptance, become a party to this Agreement and the
other Loan Documents for all purposes of this Agreement and the other Loan
Documents, and its portion of the Commitment, the Loans and Letters of Credit
shall be as set forth in such Assignment and Acceptance. The Bank assignor
thereunder shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under this Agreement. Upon the
execution and delivery of such Assignment and Acceptance, (a) the Borrower
shall issue to the bank or other financial institution Notes in the amount of
such bank's or other financial institution's Revolving Credit Commitment and
portion of the Term Loan dated the date of the assignment or such other date as
may be specified by the Documentation Agent and otherwise completed in
substantially the form of Exhibits A-1 and A-2; and to the extent any assigning
Bank has retained a portion of its obligations hereunder, replacement Notes to
the assigning Bank reflecting its assignment; (b) the Documentation Agent shall
distribute to the Borrower, the Banks and such bank or financial institution a
schedule reflecting such changes; and (c) this Agreement shall be appropriately
amended to reflect (i) the status of the bank or financial institution as a
party hereto and (ii) the status and rights of the Banks hereunder.
<PAGE> 79
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Each Bank shall also have the right to grant participations to one or
more banks or other financial institutions in its Revolving Credit Commitment,
the Loans and outstanding Letters of Credit. The documents evidencing any such
participation shall limit such participating bank or financial institutions
voting rights with respect to this Agreement to the matters set forth in
Section 16.8 which require the vote of all Banks.

Notwithstanding the foregoing, no assignment or participation shall
operate to increase the Commitment hereunder or otherwise alter the substantive
terms of this Agreement, and no Bank shall have an interest of less than 1% of
the sum of the Total Revolving Credit Commitment and outstanding amount of the
Term Loan.

Anything contained in this Section 19 to the contrary notwithstanding,
any Bank may at any time pledge all or any portion of its interest and rights
under this Agreement (including all or any portion of its Notes) to any of the
twelve Federal Reserve Banks organized under Section 4 of the Federal Reserve
Act, 12 U.S.C. Section 341. No such pledge or the enforcement thereof shall
release the pledgor Bank from its obligations hereunder or under any of the
other Loan Documents.

SECTION 20. PARTIES IN INTEREST. All the terms of this Agreement and
the other Loan Documents shall be binding upon and inure to the benefit of and
be enforceable by the respective successors and assigns of the parties hereto
and thereto; provided, that neither the Borrower nor any Guarantor shall assign
or transfer its rights hereunder without the prior written consent of the
Banks.

SECTION 21. NOTICES, ETC. Except as otherwise expressly provided in
this Agreement, all notices and other communications made or required to be
given pursuant to this Agreement or the other Loan Documents shall be in
writing and shall be delivered in hand, mailed by United States first class
mail, postage prepaid, or sent by telegraph, telex or telecopier and confirmed
by letter, addressed as follows:

(a) if to the Borrower or the Guarantors, at 5000 Quorum
Drive, Suite 300, Dallas, Texas 75240, Attention: Earl E. DeFrates,
telecopy number (214) 383-7911; or

(b) if to FNBB or the Documentation Agent, at The First
National Bank of Boston, 100 Federal Street, Boston, MA 02110,
Attention: Charles C. Woodard, Managing Director, telecopy number:
(617) 434-2160; or
<PAGE> 80
-74-

(c) if to BAI, at Bank of America Illinois, 231 South
LaSalle Street, Chicago, Illinois 60697, Attention: Robert P.
Rospierski, Vice President, telecopy number (312) 828-1974;

(d) if to MGT, J.P. Morgan or the Administrative Agent,
at Morgan Guaranty Trust Company of New York, 60 Wall Street, New
York, New York 10260-0060, telecopy number (212) 648-5336;

or such other address for notice as shall have last been furnished in writing
to the Person giving the notice.

Any such notice or demand shall be deemed to have been duly given or
made and to have become effective (a) if delivered by hand to a responsible
officer of the party to which it is directed, at the time of the receipt
thereof by such officer, (b) if sent by registered or certified first-class
mail, postage prepaid, five Business Days after the posting thereof, and (c) if
sent by telex, telecopy, or cable, at the time of the dispatch thereof, if in
normal business hours in the country of receipt, or otherwise at the opening of
business on the following Business Day.

SECTION 22. MISCELLANEOUS. The rights and remedies herein expressed
are cumulative and not exclusive of any other rights which the Banks would
otherwise have. The captions in this Agreement are for convenience of
reference only and shall not define or limit the provisions hereof. This
Agreement and any amendment hereof may be executed in several counterparts and
by each party on a separate counterpart, each of which when so executed and
delivered shall be an original, but all of which together shall constitute one
instrument. In proving this Agreement it shall not be necessary to produce or
account for more than one such counterpart signed by the party against whom
enforcement is sought.

SECTION 23. CONSENTS, ETC. Neither this Agreement nor any term
hereof may be changed, waived, discharged or terminated, except as provided in
this Section 23, subject to the provisions of Section 16.8. No waiver shall
extend to or affect any obligation not expressly waived or impair any right
consequent thereon. No waiver shall extend to or affect any obligation not
expressly waived or impair any right consequent thereon. Except as otherwise
expressly provided in this Agreement, any consent or approval required or
permitted by this Agreement to be given by the Banks may be given, and any term
of this Agreement or of any other instrument related hereto or mentioned herein
may be amended, and the performance or observance by the Borrower or any
Guarantor of any terms of this Agreement or such other instrument or the
continuance of any Default or Event of Default may be waived (either generally
or in a particular instance and either retroactively or prospectively) with,
but only with, the written consent of the Borrower,
<PAGE> 81
-75-

the Guarantors and the Banks. To the extent permitted by law, no course of
dealing or delay or omission on the part of any of the Banks or the Agents in
exercising any right shall operate as a waiver thereof or otherwise be
prejudicial thereto. No notice to or demand upon the Borrower or any Guarantor
shall entitle the Borrower or any Guarantor to other or further notice or
demand in similar or other circumstances.

SECTION 24. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE BORROWER AND EACH OF THE GUARANTORS HEREBY WAIVES ITS RIGHT
TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE
IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR ANY OF THE OTHER LOAN
DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE
OF SUCH RIGHTS AND OBLIGATIONS. EXCEPT AS PROHIBITED BY LAW, THE BORROWER AND
EACH OF THE GUARANTORS HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER
IN ANY LITIGATION REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES. THE BORROWER AND THE GUARANTORS (A) CERTIFY THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY BANK OR BANK AGENT HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH BANK OR AGENT WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGE THAT THE
BANK AGENTS AND THE BANKS HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS BECAUSE OF, AMONG OTHER THINGS, THE BORROWER'S AND THE
GUARANTORS' WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.

SECTION 25. GOVERNING LAW. THIS AGREEMENT AND EACH OF THE OTHER LOAN
DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND
SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF SAID COMMONWEALTH (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF
LAW). THE BORROWER AND THE GUARANTORS CONSENT TO THE JURISDICTION OF ANY OF
THE FEDERAL OR STATE COURTS LOCATED IN THE COMMONWEALTH OF MASSACHUSETTS IN
CONNECTION WITH ANY SUIT TO ENFORCE THE RIGHTS OF THE BANKS OR THE BANK AGENTS
UNDER THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
<PAGE> 82
-76-

SECTION 26. SEVERABILITY. The provisions of this Agreement are
severable and if any one clause or provision hereof shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof,
in such jurisdiction, and shall not in any manner affect such clause or
provision in any other jurisdiction, or any other clause or provision of this
Agreement in any jurisdiction.

SECTION 27. GUARANTY. Section 27.1 Guaranty. For value received
and hereby acknowledged and as an inducement to the Banks and the Issuing Bank
to make the Loans and Letters of Credit available to the Borrower, each of the
Guarantors hereby unconditionally and irrevocably guarantees (a) the full
punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of all Obligations of the Borrower now or hereafter existing whether
for principal, interest, fees, expenses or otherwise, and (b) the strict
performance and observance by the Borrower of all agreements, warranties and
covenants applicable to the Borrower in the Loan Documents and (c) the
obligations of the Guarantors under the Loan Documents (such Obligations
collectively being hereafter referred to as the "Guaranteed Obligations").

SECTION 27.2 GUARANTY ABSOLUTE. The Guarantors guarantee that the
Guaranteed Obligations will be paid strictly in accordance with the terms
hereof, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of the Bank with
respect thereto. The liability of the Guarantors under this guaranty with
regard to the Guaranteed Obligations shall be absolute and unconditional
irrespective of:

(a) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Guaranteed Obligations
or any other amendment or waiver of or any consent to departure from
this Agreement (with regard to such Guaranteed Obligations);

(b) any release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Guaranteed
Obligations;

(d) any acceptance of any partial payment(s) from the
Borrower or any Guarantor; or

(e) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, the Borrower in
respect of its
<PAGE> 83
-77-

Obligations hereunder or of any other Guarantor's obligations as a
guarantor.

This guaranty shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any Guaranteed Obligation is
rescinded or must otherwise be returned by the Banks upon the insolvency,
bankruptcy or reorganization of any Borrower or otherwise, all as though such
payment had not been made.

SECTION 27.3. EFFECTIVENESS; ENFORCEMENT. The guaranty herein of the
Guarantors shall be effective and shall be deemed to be made with respect to
each Loan made to the Borrower and each Letter of Credit issued for the account
of the Borrower as of the time it is made or issued, as applicable. No
invalidity, irregularity or unenforceability by reason of any bankruptcy or
similar law, or any law or order of any government or agency thereof purporting
to reduce, amend or otherwise affect any liability of the Borrower, and no
defect in or insufficiency or want of powers of the Borrower or irregular or
improperly recorded exercise thereof, shall impair, affect, be a defense to or
claim against such guaranty. This guaranty is a continuing guaranty and shall
(a) survive any termination of this Agreement, and (b) remain in full force and
effect until payment in full of, and performance of, all Guaranteed Obligations
and all other amounts payable under this guaranty. This guaranty is made for
the benefit of the Bank Agents and the Banks and their successors and assigns,
and may be enforced from time to time as often as occasion therefor may arise
and without requirement on the part of the Bank Agents or the Banks first to
exercise any rights against the Borrower, or to resort to any other source or
means of obtaining payment of any of the said obligations or to elect any other
remedy.

SECTION 27.4. WAIVER. Except as otherwise specifically provided in
any of the Loan Documents, the Guarantors hereby waive promptness, diligence,
protest, notice of protest, all suretyship defenses, notice of acceptance and
any other notice with respect to any of the Guaranteed Obligations and this
guaranty and any requirement that the Banks or the Bank Agents protect, secure,
perfect any security interest or lien or any property subject thereto or
exhaust any right or take any action against the Borrower, or any other Person.
The Guarantors also irrevocably waive, to the fullest extent permitted by law,
all defenses which at any time may be available to them in respect of the
Guaranteed Obligations by virtue of any statute of limitations, valuation,
stay, moratorium law or other similar law now or hereafter in effect.

SECTION 27.5. EXPENSES. The Guarantors hereby promise to reimburse
(i) the Documentation Agent for all reasonable out-of-pocket fees and
disbursements (including all reasonable attorneys' fees), incurred
<PAGE> 84
-78-

or expended in connection with the preparation, filing or recording, or
interpretation of this Guaranty, the other Loan Documents to which any
Guarantor is a party, or any amendment, modification, approval, consent or
waiver hereof or thereof, and (ii) the Bank Agents and the Banks and their
respective affiliates for all reasonable out of pocket fees (including
reasonable attorneys' fees), incurred or expended in connection with the
enforcement of any Guaranteed Obligations (whether or not legal proceedings are
instituted). The Guarantors will pay any taxes (including any interest and
penalties in respect thereof) other than the Banks' taxes based on income or
profits, payable on or with respect to the transactions contemplated by this
Guaranty, the Guarantors hereby agreeing to indemnify each Bank with respect
thereto.

SECTION 27.6. CONCERNING JOINT AND SEVERAL LIABILITY OF THE
GUARANTORS.

(a) Each of the Guarantors is accepting joint and several
liability hereunder and under the other Loan Documents in
consideration of the financial accommodations to be provided by the
Bank Agents and the Banks under this Agreement, for the mutual
benefit, directly and indirectly, of each of the Guarantors and in
consideration of the undertakings of each other Guarantor to accept
joint and several liability for the Guaranteed Obligations.

(b) Each of the Guarantors, jointly and severally, hereby
irrevocably and unconditionally accepts, not merely as a surety but
also as a co-debtor, joint and several liability with the Borrower and
the other Guarantors, with respect to the payment and performance of
all of the Guaranteed Obligations (including, without limitation, any
Guaranteed Obligations arising under this Section 27), it being the
intention of the parties hereto that all the Guaranteed Obligations
shall be the joint and several Guaranteed Obligations of each of the
Borrower and the Guarantors without preferences or distinction among
them.

(c) If and to the extent that the Borrower or any
Guarantor shall fail to make any payment with respect to any of the
Guaranteed Obligations as and when due or to perform any of the
Guaranteed Obligations in accordance with the terms thereof, then in
each such event the other Guarantors will make such payment with
respect to, or perform, such Guaranteed Obligation.

(d) The Guaranteed Obligations of each of the Guarantors
under the provisions of this Section 27 constitute full recourse
obligations of each of the Guarantors enforceable against each such
corporation to the full extent of its properties and assets,
irrespective of the validity,
<PAGE> 85
-79-

regularity or enforceability of this Agreement or any other
circumstance whatsoever.

(e) Except as otherwise expressly provided in this
Agreement, each of the Guarantors hereby waives notice of acceptance
of its joint and several liability, notice of any Loans made or
Letters of Credit issued under this Agreement, notice of any action at
any time taken or omitted by the Bank Agents or the Banks under or in
respect of any of the Guaranteed Obligations, and, generally, to the
extent permitted by applicable law, all demands, notices and other
formalities of every kind in connection with this Agreement. Each of
the Guarantors hereby assents to, and waives notice of, any extension
or postponement of the time for the payment of any of the Guaranteed
Obligations, the acceptance of any payment of any of the Guaranteed
Obligations, the acceptance of any partial payment thereon, any
waiver, consent or other action or acquiescence by the Bank Agents,
the Issuing Bank or the Banks at any time or times in respect of any
default by any of the Borrower or the Guarantors in the performance or
satisfaction of any term, covenant, condition or provision of this
Agreement, any and all other indulgences whatsoever by the Bank
Agents, the Issuing Bank or the Banks in respect of any of the
Guaranteed Obligations, and the taking, addition, substitution or
release, in whole or in part, at any time or times, of any security
for any of the Guaranteed Obligations or the addition, substitution or
release, in whole or in part, of any of the Borrower or the
Guarantors. Without limiting the generality of the foregoing, each of
the Guarantors assents to any other action or delay in acting or
failure to act on the part of the Banks or the Bank Agents with
respect to the failure by any of the Borrower or the Guarantors to
comply with any of its respective Guaranteed Obligations, including,
without limitation, any failure strictly or diligently to assert any
right or to pursue any remedy or to comply fully with applicable laws
or regulations thereunder, which might, but for the provisions of this
Section 27, afford grounds for terminating, discharging or relieving
any of the Borrower or the Guarantors, in whole or in part, from any
of its Guaranteed Obligations under this Section 27, it being the
intention of each of the Guarantors that, so long as any of the
Guaranteed Obligations hereunder remain unsatisfied, the Guaranteed
Obligations of such Guarantors under this Section 27 shall not be
discharged except by performance and then only to the extent of such
performance. The Guaranteed Obligations of each of the Guarantors
under this Section 27 shall not be diminished or rendered
unenforceable by any winding up, reorganization, arrangement,
liquidation, reconstruction or similar proceeding with respect to any
of the Borrower or the Guarantors or the Banks or the Bank Agents.
The joint and several liability of the
<PAGE> 86
-80-

Guarantors hereunder shall continue in full force and effect
notwithstanding any absorption, merger, consolidation, amalgamation or
any other change whatsoever in the name, membership, constitution or
place of formation of any of the Borrowers or the Guarantors or the
Banks or the Bank Agents.

(f) Each Guarantor shall be liable under this Agreement
only for the maximum amount of such liabilities that can be incurred
under applicable law without rendering this Agreement, as it relates
to such Guarantor, voidable under applicable law relating to
fraudulent conveyance and fraudulent transfer, and not for any greater
amount. Accordingly, if any provisions of this Agreement creating any
obligation of any Guarantor in favor of any Bank or Bank Agent shall
be declared to be invalid or unenforceable in any respect or to any
extent, it is the stated intention and agreement of the Guarantors,
the Bank Agents, and the Banks that any balance of the obligation
created by such provision and all other obligations of the Guarantors
to the Banks or the Bank Agents created by other provisions of this
Agreement shall remain valid and enforceable, and that all sums not in
excess of those permitted under applicable law shall remain fully
collectible by the Banks and the Bank Agents from the Guarantors.

(g) The provisions of this Section 27 are made for the
benefit of the Bank Agents and the Banks and their successors and
assigns, and may be enforced in good faith by them from time to time
against any or all of the Guarantors as often as occasion therefor may
arise and without requirement on the part of the Bank Agents or the
Banks first to marshal any of their claims or to exercise any of their
rights against the Borrower or any other Guarantors or to exhaust any
remedies available to them against the Borrower or any other
Guarantors or to resort to any other source or means of obtaining
payment of any of the obligations hereunder or to elect any other
remedy. The provisions of this Section 27 shall remain in effect
until all of the Guaranteed Obligations shall have been paid in full
or otherwise fully satisfied and the Commitments have expired. If at
any time, any payment, or any part thereof, made in respect of any of
the Guaranteed Obligations, is rescinded or must otherwise be restored
or returned by the Banks, or the Bank Agents upon the insolvency,
bankruptcy or reorganization of the Borrower or any of the Guarantors,
or otherwise, the provisions of this Section 27 will forthwith be
reinstated in effect, as though such payment had not been made.

SECTION 27.7. WAIVER Until the final payment and performance in full
of all of the Obligations, none of the Guarantors shall exercise and each
Guarantor hereby waives any rights such Guarantor may have against the Borrower
<PAGE> 87
-81-

arising as a result of payment by any Guarantor hereunder, by way of
subrogation, reimbursement, restitution, contribution or otherwise, and will
not prove any claim in competition with the Bank Agents or any Bank in respect
of any payment hereunder in any bankruptcy, insolvency or reorganization case
or proceedings of any nature; none of the Guarantors will claim any setoff,
recoupment or counterclaim against the Borrower in respect of any liability of
any Guarantor to the Borrower; and each of the Guarantors waives any benefit of
and any right to participate in any collateral security which may be held by
the Bank Agents or any Bank.

SECTION 27.8. SUBROGATION; SUBORDINATION The payment of any amounts
due with respect to any indebtedness of the Borrower for money borrowed or
credit received now or hereafter owed to any of the Guarantors is hereby
subordinated to the prior payment in full of all of the Obligations. Each
Guarantor agrees that, after the occurrence of any default in the payment or
performance of any of the Obligations, such Guarantor will not demand, sue for
or otherwise attempt to collect any such indebtedness of the Borrower to such
Guarantor until all of the Obligations shall have been paid in full. If,
notwithstanding the foregoing sentence, any Guarantor shall collect, enforce or
receive any amounts in respect of such indebtedness while any Obligations are
still outstanding, such amounts shall be collected, enforced and received by
such Guarantor as trustee for the Banks and the Bank Agents and be paid over to
the Administrative Agent, for the benefit of the Banks and the Bank Agents on
account of the Obligations without affecting in any manner the liability of any
of the Guarantors under the other provisions hereof.

SECTION 27.9. NEW GUARANTORS. Any newly-created wholly-owned
Subsidiary of the Borrower shall execute and deliver a guaranty agreement, in
form and substance satisfactory to the Documentation Agent and the Banks,
wherein the newly-created wholly-owned Subsidiary shall guaranty complete
payment and performance of the Guaranteed Obligations, together with such other
documentation as the Banks or the Documentation Agent may reasonably request
including, without limitation, documentation with respect to conditions noted
in Section 10 hereof. The Borrower and Guarantors hereby agree to pledge all
of the stock of their Subsidiaries to the Documentation Agent for the benefit
of the Banks.

SECTION 28. FINAL AGREEMENT. THIS WRITTEN AGREEMENT REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
<PAGE> 88
-82-

IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
under seal as of the date first set forth above.

THE BORROWER:

USA WASTE SERVICES, INC.

By: /s/ EARL E. DEFRATES
Earl E. DeFrates, Executive Vice
President and Chief Financial
Officer

THE GUARANTORS:

BEST PAK DISPOSAL, INC.
BIG DIPPER ENTERPRISES, INC.
BREM-AIR DISPOSAL, INC.
CENTRAL ILLINOIS DISPOSAL, INC.
COUNTRYSIDE LANDFILL, INC.
CRYSTAL LAKE DISPOSAL, INC.
CUSTOM DISPOSAL SERVICES, INC.
EARTHMOVERS, INC.
ELLIS-SCOTT, INC.
ENVIROFIL, INC.

By: /s/ EARL E. DEFRATES
Earl E. DeFrates, Executive Vice
President and Chief Financial
Officer of each of the Companies
listed above
<PAGE> 89
-83-

ENVIROFIL OF ILLINOIS, INC.
(formerly Leroy Brown & Sons, Inc.)
ENVIROFIL SERVICES, INC.
ENVIRONMENTAL WASTE OF
SKAGIT COUNTY, INC.
EVH CO.
EWA, INC. (formerly MARCH
ACQUISITION CORPORATION)
FORCEES, INC.
JUAN DE FUCA CORRUGATED,
LTD.
KITSAP COUNTY SANITARY
LANDFILL, INC.
LAKELAND PROPERTIES, INC.
LIBERTY LANDFILL, INC.
MEADOWBROOK CARTING CO.,
INC.
MID-JERSEY DISPOSAL CO., INC.
MID-VALLEY ACQUISITION
CORPORATION
MISSION DISPOSAL, INC.
NORTH SOUND SANITATION, INC.
QUALITY RECYCLING CO., INC.
SACRAMENTO VALLEY
ENVIRONMENTAL WASTE
COMPANY
SOIL REMEDIATION OF
PHILADELPHIA, INC.
SOUTH SOUND SANITATION, INC.
STANWOOD CAMANO DISPOSAL, INC.
STOCKTON SCAVENGERS
ASSOCIATION

By: /s/ EARL E. DEFRATES
Earl E. DeFrates, Executive Vice
President and Chief Financial
Officer of each of the Companies
listed above
<PAGE> 90
-84-

USA WASTE HAULING OF
PHILADELPIA, INC.
USA WASTE OF OKLAHOMA, INC.
(formerly United Sanitation
Associates Waste Management,
Inc.)
USA WASTE OF ARIZONA, INC.
USA WASTE OF ILLINOIS, INC.
USA WASTE OF INDIANA, INC.
USA WASTE OF TEXAS, INC.
(formerly USA Waste Services,
Inc. of Texas)
U.S.A. WASTE OF FAIRLESS
HILLS, INC.
CLEANSOILS FAIRLESS HILLS,
INC.
WEST VIRGINIA WASTE
SERVICES, INC.
WPP, INC.
WASTE RECOVERY
CORPORATION
By: /s/ EARL E. DEFRATES
Earl E. DeFrates, Executive Vice
President and Chief Financial
Officer of each of the Companies
listed above
<PAGE> 91
-85-

CHAMBERS ACQUISITION CORP.
CHAMBERS DEVELOPMENT
COMPANY, INC.
CHAMBERS CLEARVIEW ENVIRONMENTAL LANDFILL,
INC.
CHAMBERS DEVELOPMENT OF
OHIO, INC.
CHAMBERS DEVELOPMENT OF
VIRGINIA, INC.
CHAMBERS ENTERPRISES, INC.
CHAMBERS INTERNATIONAL, INC.
CHAMBERS LAUREL HIGHLANDS
LANDFILL, INC.
CHAMBERS MAPLEWOOD
LANDFILL, INC.
CHAMBERS MEDICAL
TECHNOLOGIES, INC.
(incorporated 2/12/85)
CHAMBERS MEDICAL
TECHNOLOGIES, INC.
(incorporated 4/26/91)
CHAMBERS MEDICAL
TECHNOLOGIES OF SOUTH
CAROLINA, INC.
CHAMBERS NEW JERSEY LAND,
INC.
CHAMBERS OAKRIDGE USA
LANDFILL, INC.
CHAMBERS ORANGE COUNTY
LANDFILL, INC.
CHAMBERS RESOURCES, INC.
CHAMBERS RICHLAND COUNTY
LANDFILL, INC.
CHAMBERS SERVICES, INC.

By: /s/ EARL E. DEFRATES
Earl E. DeFrates, Executive Vice
President and Chief Financial
Officer of each of the Companies
listed above
<PAGE> 92
-86-

CHAMBERS SMYRNA LANDFILL,
INC.
CHAMBERS WASTE SYSTEMS OF
CALIFORNIA, INC.
CHAMBERS WASTE SYSTEMS OF
FLORIDA, INC.
CHAMBERS WASTE SYSTEMS OF
MISSISSIPPI, INC.
CHAMBERS WASTE SYSTEMS OF
NEW YORK, INC.
CHAMBERS WASTE SYSTEMS OF
NORTH CAROLINA, INC.
CHAMBERS WASTE SYSTEMS OF
OHIO, INC.
CHAMBERS WASTE SYSTEMS OF
NEW JERSEY, INC.
CHAMBERS WASTE SYSTEMS OF
RHODE ISLAND, INC.
CHAMBERS WASTE SYSTEMS OF
SOUTH CAROLINA, INC.
CHAMBERS WASTE SYSTEMS OF
TEXAS, INC.
CHAMBERS WASTE SYSTEMS OF
VIRGINIA, INC.
CHAMBERS OF DELAWARE, INC.
CHAMBERS OF GEORGIA, INC.
CHAMBERS OF ILLINOIS, INC.
CHAMBERS OF INDIANA, INC.
CHAMBERS OF NEW JERSEY,
INC.
CHAMBERS OF NEW JERSEY
RECYCLING, INC.
CHAMBERS OF MARYLAND, INC.
CHAMBERS OF MASSACHUSETTS, INC.
CHAMBERS OF MISSISSIPPI, INC.

By: /s/ EARL E. DEFRATES
Earl E. DeFrates, Executive Vice
President and Chief Financial
Officer of each of the Companies
listed above
<PAGE> 93
-87-

CHAMBERS OF PENNSYLVANIA, INC.
CHAMBERS OF TENNESSEE, INC.
CHAMBERS OF WEST VIRGINIA, INC.
DAUPHIN MEADOWS, INC.
THE H. SIENKNECHT CO.
LCS SERVICES, INC.
WILLIAM H. MARTIN, INC.
MORRIS COUNTY TRANSFER
STATION, INC.
RAIL-IT CORPORATION
REMOTE LANDFILL SERVICES,
INC.
CDC SERVICES, INC.
SOUTHERN ALLEGHENIES
DISPOSAL SERVICES, INC.
U.S. SERVICES CORPORATION
U.S. UTILITIES SERVICES CORP.
CHAMBERS R & B LANDFILL,
INC.

By: /s/ EARL E. DEFRATES
Earl E. DeFrates, Executive Vice
President and Chief Financial
Officer of each of the Companies
listed above

RAIL-IT LIMITED PARTNERSHIP
By: Rail-It Corporation, Its General Partner

By: /s/ EARL E. DEFRATES
Title: Vice President
<PAGE> 94
-88-

THE BANKS AND AGENTS:

THE FIRST NATIONAL BANK OF
BOSTON, Individually and as
Documentation Agent and Issuing
Bank and as Agent

By: /s/ C. PRICHARD
Title: Managing Director

BANK OF AMERICA, ILLINOIS,
Individually and as Agent

By: /s/ ROBERT P. RESPRIMLI
Title: Vice President

MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
Individually and as the Administrative
Agent

By: /s/ LAURA E. REIM
Title: Vice President

J.P. MORGAN SECURITIES INC.,
as Agent

By: /s/ E. O. JIRANCINI
Title: Vice President

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF USA WASTE FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 41,710,000
<SECURITIES> 0
<RECEIVABLES> 56,618,000
<ALLOWANCES> (4,088,000)
<INVENTORY> 0
<CURRENT-ASSETS> 126,075,000
<PP&E> 741,901,000
<DEPRECIATION> (207,256,000)
<TOTAL-ASSETS> 813,708,000
<CURRENT-LIABILITIES> 121,671,000
<BONDS> 444,270,000
<COMMON> 510,000
0
0
<OTHER-SE> 137,199,000
<TOTAL-LIABILITY-AND-EQUITY> 813,708,000
<SALES> 0
<TOTAL-REVENUES> 212,471,000
<CGS> 0
<TOTAL-COSTS> 212,715,000
<OTHER-EXPENSES> (2,850,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27,097,000
<INCOME-PRETAX> (24,491,000)
<INCOME-TAX> 3,166,000
<INCOME-CONTINUING> (27,657,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (27,657,000)
<EPS-PRIMARY> (0.54)
<EPS-DILUTED> (0.51)

</TABLE>