<PAGE> 1
Filed pursuant to Rule 424(B)(2)
Registration No. 333-32471
PROSPECTUS SUPPLEMENT
DECEMBER 12, 1997
(TO PROSPECTUS DATED AUGUST 14, 1997)
$500,000,000
USA WASTE SERVICES, INC.
$350,000,000 6 1/2% SENIOR NOTES DUE 2002
$150,000,000 7 1/8% SENIOR NOTES DUE 2017
The 6 1/2% Senior Notes due 2002 and the 7 1/8% Senior Notes due 2017 are
being issued by USA Waste Services, Inc., a Delaware corporation. Interest on
the 6 1/2% Senior Notes due 2002 and the 7 1/8% Senior Notes due 2017 is payable
semi-annually on December 15 and June 15 of each year commencing on June 15,
1998. The 6 1/2% Senior Notes due 2002 and the 7 1/8% Senior Notes due 2017
constitute senior and unsecured obligations of the Company, ranking pari passu
in right of payment with all other senior and unsecured obligations of the
Company. See "Description of Notes -- General."
The 6 1/2% Senior Notes due 2002 are not redeemable. The 7 1/8% Senior
Notes due 2017 are redeemable, in whole or in part, at the option of the Company
at any time and from time to time at a redemption price equal to the Make-Whole
Price set forth herein. See "Description of Notes -- Redemption at the Company's
Option." The 6 1/2% Senior Notes due 2002 and the 7 1/8% Senior Notes due 2017
are not subject to any sinking fund.
The 6 1/2% Senior Notes due 2002 and the 7 1/8% Senior Notes due 2017 will
each be represented by a Global Security registered in the name of the nominee
of The Depository Trust Company, which will act as securities depositary.
Beneficial interests in such Global Securities will be shown on, and transfers
thereof will be effected only through, records maintained by The Depository
Trust Company and its direct and indirect participants. Except as described
herein, the 6 1/2% Senior Notes due 2002 and the 7 1/8% Senior Notes due 2017
will not be issued in definitive form. See "Description of Notes -- Book-Entry,
Delivery and Form."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(3)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per 6 1/2% Senior Note due 2002... 99.963% 0.600% 99.363%
Total............................. $349,870,500 $2,100,000 $347,770,500
Per 7 1/8% Senior Note due 2017... 99.853% 0.875% 98.978%
Total............................. $149,779,500 $1,312,500 $148,467,000
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest, if any, from the date of issuance.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting expenses payable by the Company estimated at $300,000.
The 6 1/2% Senior Notes due 2002 and the 7 1/8% Senior Notes due 2017 are
offered by the several Underwriters when, as and if delivered to and accepted by
them, subject to certain conditions, including their rights to withdraw, cancel
or reject orders in whole or in part. It is expected that delivery of the 6 1/2%
Senior Notes due 2002 and the 7 1/8% Senior Notes due 2017 will be made in New
York, New York, on or about December 17, 1997, in book-entry form through the
facilities of The Depository Trust Company against payment therefor in
immediately available funds.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MERRILL LYNCH & CO.
J. P. MORGAN & CO.
DEUTSCHE MORGAN GRENFELL
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CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE OFFERED
SECURITIES. SPECIFICALLY, THE UNDERWRITERS MAY OVERALLOT IN CONNECTION WITH THE
OFFERING AND MAY BID FOR AND PURCHASE THE OFFERED SECURITIES IN THE OPEN MARKET.
FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING".
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PROSPECTUS SUPPLEMENT SUMMARY
The following summary is qualified in its entirety by the more detailed
information, including the Selected Consolidated Financial Data and the
Consolidated Financial Statements and Notes thereto, incorporated by reference
in this Prospectus Supplement and the accompanying Prospectus. The "Company" and
"USA Waste" refer to USA Waste Services, Inc. and its subsidiaries and
predecessors, unless otherwise indicated or the context requires otherwise.
THE COMPANY
USA Waste is the third largest integrated, non-hazardous solid waste
management company in North America, as measured by 1996 revenues, and serves
commercial, industrial, municipal and residential customers in various locations
in the United States, Canada, Puerto Rico and Mexico. The Company's solid waste
management services include collection, transfer and disposal operations and, to
a lesser extent, recycling and certain other waste management services. As of
September 30, 1997, USA Waste owned or operated 164 landfills, 159 transfer
stations and 381 collection companies and served more than 7.5 million
commercial, industrial, municipal and residential customers.
The Company believes that providing fully-integrated waste management
services gives it a competitive advantage in its markets and allows for a
relatively higher level of waste internalization and profitability. For the nine
months ended September 30, 1997, approximately 62% of the Company's revenues
were attributable to collection operations, approximately 24% was attributable
to landfill operations, approximately 10% was attributable to transfer
operations, and approximately 4% was attributable to recycling and other waste
management services. In addition, approximately 55% of the waste collected by
the Company was disposed of at the Company's landfills during such period.
The Company operates on a decentralized basis through five geographic
regions with a diversified customer base. Based on collection revenues for the
nine months ended September 30, 1997, the Company's customers were approximately
40% commercial, 30% industrial and 30% municipal and residential.
The Company's strategy includes the following key elements: (i) increasing
productivity and operating efficiencies in existing and acquired operations,
(ii) increasing revenues and enhancing profitability in its existing markets
through "tuck-in" acquisitions, and (iii) expanding into new markets through
acquisitions. The Company seeks to become the low-cost operator in each of its
markets by increasing productivity and operating efficiencies through
implementation of uniform administrative systems, consolidation of collection
routes, improvement of equipment utilization, and increases in employee
productivity through incentive compensation and training programs. The Company
regularly pursues opportunities to expand its services through the acquisition
of additional solid waste management businesses and operations that can be
effectively integrated with the Company's existing operations. In addition, the
Company regularly pursues merger or acquisition transactions, some of which are
significant, in new markets where the Company believes it can strengthen its
overall competitive position as a national provider of integrated solid waste
management services.
USA Waste was incorporated under the laws of the State of Delaware in April
1995 to become the successor to USA Waste Services, Inc., an Oklahoma
corporation organized in 1987. The principal executive offices of USA Waste are
located at 1001 Fannin Street, Suite 4000, Houston, Texas 77002 and its
telephone number is (713) 512-6200.
RECENT DEVELOPMENTS
Consistent with the Company's continuing acquisition strategy, on December
9, 1997, the Company executed a definitive agreement to acquire the waste
divisions of City Management Holdings Trust ("City Management"), with closing
expected to occur in early 1998 subject to customary closing conditions and
regulatory approvals. City Management, headquartered in Detroit, is a
comprehensive provider of waste management services primarily in Michigan, with
some operations in Alabama and Florida. City Management
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operates 12 landfills, 12 transfer stations and 20 collection companies serving
over 500,000 customers. City Management's current annualized revenues are
approximately $230 million.
THE OFFERING
Securities Offered............ $350,000,000 aggregate principal amount of
6 1/2% Senior Notes due 2002 ("2002 Notes");
and $150,000,000 aggregate principal amount of
7 1/8% Senior Notes due 2017 ("2017 Notes")
(collectively, the "Notes").
Maturity...................... December 15, 2002 with respect to the 2002
Notes, and December 15, 2017 with respect to
the 2017 Notes.
Interest Payment Dates........ December 15 and June 15 of each year,
commencing June 15, 1998.
Optional Redemption........... The 2002 Notes are not redeemable. The 2017
Notes are redeemable, in whole or in part, at
the option of the Company at any time and from
time to time at a redemption price equal to the
Make-Whole Price (as defined herein). See
"Description of Notes -- Redemption at the
Company's Option."
Sinking Fund.................. None.
Ranking....................... The Notes constitute senior and unsecured
obligations of the Company, ranking pari passu
in right of payment with all other senior and
unsecured obligations of the Company. See
"Description of Notes -- General."
Covenants..................... The indenture governing the Notes will contain
covenants, including, but not limited to,
covenants limiting (i) the creation of liens
securing indebtedness, and (ii) sale and
leaseback transactions.
Use of Proceeds............... The net proceeds from the sale of the Notes in
this offering (the "Offering") are expected to
be used to repay outstanding indebtedness under
the Credit Facility. Amounts repaid on the
Credit Facility may be reborrowed from time to
time for capital expenditures and other general
corporate purposes, including possible future
acquisitions. See "Use of Proceeds."
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USE OF PROCEEDS
The proceeds to the Company from the sale of the Notes in this Offering,
after deducting underwriting discounts and commissions and estimated offering
expenses, are $495.9 million.
The net proceeds of this Offering are expected to be used to repay
outstanding indebtedness under the Credit Facility. At November 30, 1997, the
aggregate outstanding balance of loans and letters of credit under the Credit
Facility was $1.4 billion ($455.9 million of which were letters of credit).
Borrowings under the Credit Facility bear interest at a rate (currently 6.0%)
equal to the Eurodollar rate plus an amount not in excess of 0.575% per annum
and mature on August 7, 2002. Morgan Guaranty Trust Company of New York, an
affiliate of J.P. Morgan Securities Inc., expects to receive up to $25.0 million
of repayment under the Credit Facility from the proceeds of this Offering.
Deutsche Bank AG New York Branch, an affiliate of Deutsche Morgan Grenfell Inc.,
expects to receive up to $21.2 million of repayment under the Credit Facility
from the proceeds of this Offering. See "Underwriting." Amounts currently
outstanding under the Credit Facility were incurred to refinance existing
indebtedness and for capital expenditures and other general corporate purposes,
including acquisitions. Amounts repaid on the Credit Facility may be reborrowed
from time to time for capital expenditures and other general corporate purposes,
including possible future acquisitions.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's consolidated ratios of
earnings to fixed charges for the periods shown:
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED
---------------------------------------------------------------- SEPTEMBER 30,
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- -------------
<S> <C> <C> <C> <C> <C> <C>
Actual......................... (0.1)x 1.9x 1.1x 2.4x 2.3x 3.9x
</TABLE>
The Company's consolidated ratios of earnings to fixed charges were
computed by dividing earnings by fixed charges. For this purpose, earnings are
the sum of income (loss) from continuing operations, taxes, and fixed charges,
excluding capitalized interest. Fixed charges are interest, whether expensed or
capitalized, amortization of debt expense and discount on premium relating to
indebtedness, whether expensed or capitalized, and such portion of rental
expense that can be demonstrated to be representative of the interest factor in
the particular case. For the year ended December 31, 1992, earnings were
insufficient to cover fixed charges (as evidenced by a less than one-to-one
coverage ratio) due to certain non-recurring costs as discussed below.
Additional earnings of $75.4 million were necessary for the year ended December
31, 1992 to provide a one-to-one coverage ratio.
The following table sets forth the Company's consolidated ratios of
earnings to fixed charges for the periods shown on a supplemental basis
excluding nonrecurring items:
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED
---------------------------------------------------------------- SEPTEMBER 30,
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- -------------
<S> <C> <C> <C> <C> <C> <C>
Supplemental.................... 1.1X 1.9X 2.4X 3.2X 4.5X 5.4X
</TABLE>
Nonrecurring items for the nine months ended September 30, 1997 represent
merger costs, primarily related to the Company's merger with United Waste
Systems, Inc. ("United") in August 1997, and unusual items, primarily related to
the closure of two transfer stations in Minnesota, estimated losses related to
the closure and abandonment of two landfills in Massachusetts, and various other
terminated projects. Nonrecurring items in 1996 represent merger costs,
primarily related to mergers with Sanifill, Inc. ("Sanifill") in August 1996 and
Western Waste Industries ("Western") in May 1996, and unusual items, primarily
related to retirement benefits associated with Western's pre-merger retirement
plan, estimated future losses related to municipal solid waste contracts in
California as a result of the continuing decline in prices of recyclable
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materials, estimated losses related to the disposition of certain non-core
business assets, project reserves related to Mexican operations, and various
other terminated projects. Nonrecurring items in 1995 primarily represent merger
costs related to the merger with Chambers Development Company, Inc. ("Chambers")
in June 1995 and nonrecurring interest related to extension fees and other
charges associated with the refinancing of Chambers' pre-merger debt.
Nonrecurring items in 1994 primarily represent shareholder litigation costs
incurred in connection with a settled class action of consolidated suits on
similar claims alleging federal securities law violations against Chambers,
certain of its officers and directors, its former auditors, and the underwriters
of its securities. Nonrecurring items in 1993 were not material. Nonrecurring
items in 1992 primarily represent various restructuring charges and charges to
asset reserves by Western and Chambers.
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DESCRIPTION OF NOTES
The 2002 Notes and the 2017 Notes each constitute a series of Senior Debt
Securities described in the accompanying Prospectus that will be issued under an
indenture, dated as of September 10, 1997 (the "Senior Indenture"), between the
Company and Texas Commerce Bank National Association, as trustee (the
"Trustee"). The following description of the particular terms of the Notes
offered hereby supplements, and to the extent inconsistent therewith replaces,
the description of the general terms and provisions of the Senior Debt
Securities set forth in the accompanying Prospectus, to which reference is
hereby made. Capitalized terms used but not defined herein or in the
accompanying Prospectus have the meanings given to them in the Senior Indenture.
As used in this section, the "Company" means USA Waste Services, Inc., but not
any of its Subsidiaries, unless the context otherwise requires. The following
summary of the Senior Indenture and the Notes does not purport to be complete
and such summary is subject to the detailed provisions of the Senior Indenture
and the Notes to which reference is hereby made for a full description of such
provisions.
GENERAL
The Notes offered by this Prospectus Supplement will be limited in
aggregate principal amount to $500,000,000. The Notes constitute senior and
unsecured obligations of the Company, ranking pari passu in right of payment
with all other senior and unsecured obligations of the Company. The Notes are
not guaranteed by any subsidiaries of the Company; however, the Company's
obligations under the Credit Facility are guaranteed by United and Sanifill,
both wholly-owned subsidiaries of the Company.
Substantially all of the Company's operating income and cash flow is
generated by its subsidiaries. As a result, funds necessary to meet the
Company's debt service obligations are provided in part by distributions or
advances from its subsidiaries. Under certain circumstances, contractual and
legal restrictions, as well as the financial condition and operating
requirements of the Company's subsidiaries, could limit the Company's ability to
obtain cash from its subsidiaries for the purpose of meeting its debt service
obligations, including the payment of principal and interest on the Notes. The
claims of creditors of the Company's subsidiaries (including holders of the
$150.0 million aggregate principal amount of outstanding 4 1/2% Convertible
Subordinated Notes due June 1, 2001 of United and $115.0 million aggregate
principal amount of outstanding 5% Convertible Subordinated Debentures due March
1, 2006 of Sanifill, and the lenders under the Company's current Credit
Facility) will effectively have priority with respect to the assets and earnings
of such subsidiaries, over the claims of creditors of the Company, including the
holders of the Notes. The Credit Facility has certain limitations on additional
indebtedness that can be incurred at the subsidiary level. As of September 30,
1997, the Company's aggregate subsidiary indebtedness was approximately $602
million, including approximately $265 million of convertible subordinated notes
and approximately $262 million of tax exempt bonds.
The 2002 Notes will mature December 15, 2002 and will be limited to
$350,000,000 aggregate principal amount; and the 2017 Notes will mature December
15, 2017 and will be limited to $150,000,000 aggregate principal amount. Each
series of Notes will bear interest at the respective rates per annum set forth
on the front cover of this Prospectus Supplement. Interest on the 2002 Notes and
the 2017 Notes will be payable semiannually on December 15 and June 15 of each
year, commencing June 15, 1998, to the persons in whose names such 2002 Notes
and 2017 Notes are registered at the close of business on the November 30 and
May 31 immediately preceding such Interest Payment Date. Interest will be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
The Notes will be issued only in fully registered form, without coupons, in
denominations of $1,000 and integral multiples thereof. There is no sinking fund
applicable to the Notes.
REDEMPTION AT THE COMPANY'S OPTION
The 2002 Notes are not redeemable. The 2017 Notes will be redeemable at the
option of the Company at any time and from time to time, in whole or in part,
upon not less than 30 nor more than 60 days notice to each Holder of 2017 Notes,
at a redemption price equal to the Make-Whole Price. "Make-Whole Price" means an
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amount equal to the greater of (i) 100% of the principal amount of such 2017
Notes and (ii) as determined by an Independent Investment Banker, the sum of the
present values of the remaining scheduled payments of principal and interest
thereon discounted to the date of redemption on a semi-annual basis (assuming a
360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate,
plus, in each case, accrued and unpaid interest thereon to the date of
redemption. Unless the Company defaults in payment of the redemption price, on
and after the date of redemption, interest will cease to accrue on the 2017
Notes or portions thereof called for redemption.
"Adjusted Treasury Rate" means, with respect to any date of redemption, the
rate per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such date of redemption, plus 0.20%.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the 2017 Notes to be redeemed that would be utilized, at
the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such 2017 Notes.
"Comparable Treasury Price" means, with respect to any date of redemption,
(i) the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such date of redemption, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities", or (ii) if such release (or any successor release) is
not published or does not contain such prices on such Business Day, (A) the
average of the Reference Treasury Dealer Quotations for such date of redemption,
after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (B) if the Trustee obtains fewer than three such Reference
Treasury Dealer Quotations, the average of all such Reference Treasury Dealer
Quotations.
"Independent Investment Banker" means one of the Reference Treasury Dealers
appointed by the Trustee after consultation with the Company.
"Reference Treasury Dealer" means each of Donaldson, Lufkin & Jenrette
Securities Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P.
Morgan Securities Inc. and Deutsche Morgan Grenfell Inc. and their respective
successors; provided, however, that if any of the foregoing shall not be a
primary U.S. Government securities dealer in New York City (a "Primary Treasury
Dealer"), the Company shall substitute therefor another Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any date of redemption, the average, as determined
by the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day preceding such date of redemption.
The Company may purchase the Notes in the open market, by tender or
otherwise. The Notes so purchased may be held, resold or surrendered to the
Trustee for cancellation. If applicable, the Company will comply with the
requirements of Rule 14e-1 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and other securities laws and regulations in connection
with any such purchase. The Notes may be defeased in the manner provided in the
Senior Indenture.
BOOK-ENTRY, DELIVERY AND FORM
Except as set forth below, the Notes will initially be issued in the form
of one or more registered Notes in global form (the "Global Notes"). Each Global
Note will be deposited on the date of the closing of the sale of the Notes (the
"Closing Date") with, or on behalf of, The Depository Trust Company (the
"Depositary") and registered in the name of Cede & Co., as nominee of the
Depositary.
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The Company has been advised that the Depositary is a limited-purpose trust
company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered pursuant to the provisions
of Section 17A of the Exchange Act. The Depositary holds securities that its
participants ("Participants") deposit with it. The Depositary also facilitates
the settlement among Participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct Participants include securities
brokers and dealers, banks, trust companies, clearing corporations, and certain
other organizations ("Direct Participants"). The Depositary is owned by a number
of its Direct Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the Depositary Trust Company system is also available to
others such as securities brokers and dealers, banks and trust companies that
clear through or maintain a custodial relationship with a Direct Participant,
either directly or indirectly ("Indirect Participants"). The rules applicable to
the Depositary and its Participants are on file with the Commission.
The Company expects that pursuant to procedures established by the
Depositary (i) upon deposit of the Global Notes, the Depositary will credit the
accounts of Participants designated by the Underwriters with an interest in the
Global Notes and (ii) ownership of the Notes evidenced by the Global Notes will
be shown on, and the transfer of ownership thereof will be effected only
through, records maintained by the Depositary (with respect to the interests of
Participants), the Participants and the Indirect Participants.
So long as the Depositary or its nominee is the registered owner of a Note,
the Depositary or such nominee, as the case may be, will be considered the sole
owner or holder of the Notes represented by the Global Note for all purposes
under the Senior Indenture. Except as provided below, owners of beneficial
interests in a Global Note will not be entitled to have Notes represented by
such Global Note registered in their names, will not receive or be entitled to
receive physical delivery of certificated notes (the "Certificated Notes"), and
will not be considered the owners or holders thereof under the Senior Indenture
for any purpose, including with respect to the giving of any directions,
instructions or approvals to the Trustee thereunder. As a result, the ability of
a person having a beneficial interest in Notes represented by a Global Note to
pledge such interest to persons or entities that do not participate in the
Depositary's system, or to otherwise take actions with respect to such interest,
may be affected by the lack of a physical certificate evidencing such interest.
The Company understands that under existing practices, if the Company requests
any action of Holders or if an owner of a beneficial interest in a Global Note
desires to give any notice or take any action a Holder is entitled to give or
take under the Senior Indenture, the Depositary would authorize the Participants
to give such notice or take such action, and Participants would authorize
beneficial owners owning through such Participants to give such notice or take
such action or would otherwise act upon the instructions of beneficial owners
owning through them.
Neither the Company nor the Trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of Notes by the Depositary, or for maintaining, supervising or reviewing any
records of the Depositary relating to such Notes.
Payments with respect to the principal of, premium, if any, and interest
on, any Note represented by a Global Note registered in the name of the
Depositary or its nominee on the applicable record date will be payable by the
Trustee to or at the direction of the Depositary or its nominee in its capacity
as the registered Holder of the Global Note representing such Notes under the
Senior Indenture. Under the terms of the Senior Indenture, the Company and the
Trustee may treat the persons in whose names the Notes, including the Global
Notes, are registered as the owners thereof for the purpose of receiving such
payments and for any and all other purposes whatsoever. Consequently, neither
the Company nor the Trustee has or will have any responsibility or liability for
the payment of such amounts to beneficial owners of Notes (including principal,
premium, if any, or interest), or to immediately credit the accounts of the
relevant Participants with such payment, in amounts proportionate to their
respective holdings in principal amount of beneficial interests in the Global
Note as shown on the records of the Depositary. Payments by the Participants and
the Indirect
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Participants to the beneficial owners of Notes will be governed by standing
instructions and customary practice and will be the sole responsibility of the
Participants or the Indirect Participants.
Because transactions in any Note which is represented by a Global Note (a
"Book-Entry Security") can be effected only through the Depositary, Participants
and Indirect Participants, the ability of a beneficial owner of Book-Entry
Securities to pledge such Book-Entry Security to persons or entities that do not
participate in the Depositary, or otherwise to take action in respect of such
Book-Entry Security, may be limited due to the lack of a physical certificate
representing such Book-Entry Security. Issuance of the Book-Entry Securities in
book-entry form may reduce the liquidity of such Book-Entry Securities in the
secondary trading market because investors may be unwilling to purchase
Book-Entry Securities for which they cannot obtain physical certificates.
CERTIFICATED NOTES
If (i) the Company notifies the Trustee in writing that the Depositary is
no longer willing or able to act as a depositary and the Company is unable to
locate a qualified successor, (ii) the Company, at its option, notifies the
Trustee in writing that it elects to cause the issuance of Notes in definitive
form under the Senior Indenture or (iii) there shall have occurred and be
continuing an Event of Default with respect to a series of Notes, then, upon
surrender by the Depositary of the Global Notes, Certificated Notes will be
issued to each person that the Depositary identifies as the beneficial owner of
the Notes represented by a Global Note. Upon any such issuance, the Trustee is
required to register such Certificated Notes in the name of such person or
persons (or the nominee of any thereof), and cause the same to be delivered
thereto. Certificated Notes may be presented for registration or exchange at the
offices of the Company required to be maintained under the Senior Indenture for
such purposes.
Neither the Company nor the Trustee shall be liable for any delay by the
Depositary or any Participant or Indirect Participant in identifying the
beneficial owners of the Notes, and the Company and the Trustee may conclusively
rely on, and shall be protected in relying on, instructions from the Depositary
for all purposes (including with respect to the registration and delivery, and
the respective principal amounts, of the Notes to be issued).
The information in this and the preceding section concerning the Depositary
and the Depositary's book-entry system has been obtained from sources that the
Company believes to be reliable. The Company will have no responsibility for the
performance by the Depositary or its Participants of their respective
obligations as described hereunder or under the rules and procedures governing
their respective operations.
SAME-DAY FUNDS SETTLEMENT AND PAYMENT
Payments in respect of the Notes represented by a Global Note (including
principal, premium, if any, and interest) will be made by wire transfer of
immediately available funds to the accounts specified by the Depositary. With
respect to Notes represented by Certificated Notes, all payments (including
principal, premium, if any, and interest) will be made at the office or agency
of the Company maintained for such purpose, which office or agency shall be
maintained in the Borough of Manhattan, The City of New York, except that, at
the option of the Company, any payments of interest may be made by mailing a
check on or before the due date to the address of the person entitled thereto as
such address shall appear in the Security Register. The Notes will trade in the
Depositary's Same-Day Funds Settlement System until maturity, or until the Notes
are issued in certificated form, and secondary market trading activity in the
Notes will therefore be required by the Depositary to settle in immediately
available funds. No assurance can be given as to the effect, if any, of
settlement in immediately available funds on trading activity in the Notes.
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UNDERWRITING
Subject to the terms and conditions contained in separate Underwriting
Agreements relating to the 2002 Notes and the 2017 Notes (the "Underwriting
Agreements"), the Company has agreed to sell to the several Underwriters named
below (the "Underwriters"), and the several Underwriters have agreed to purchase
from the Company, the principal amounts of 2002 Notes and 2017 Notes set forth
opposite their names below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
UNDERWRITERS 6 1/2% NOTES DUE 2002
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation......... $ 99,200,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................... 99,150,000
J.P. Morgan Securities Inc.................................. 99,150,000
Deutsche Morgan Grenfell Inc................................ 52,500,000
------------
Total.......................................... $350,000,000
============
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
UNDERWRITERS 7 1/8% NOTES DUE 2017
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation......... $ 42,500,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................... 42,500,000
J.P. Morgan Securities Inc.................................. 42,500,000
Deutsche Morgan Grenfell Inc................................ 22,500,000
------------
Total.......................................... $150,000,000
============
</TABLE>
The Underwriting Agreements provide that the obligations of the several
Underwriters to purchase and accept delivery of the Notes offered hereby are
subject to approval of certain legal matters by counsel and to certain other
conditions. If any of the Notes are purchased by the Underwriters pursuant to
the Underwriting Agreements, all such Notes must be purchased.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended,
or to contribute to payments that the Underwriters may be required to make in
respect thereof.
The Underwriters have advised the Company that they propose initially to
offer the 2002 Notes to the public at the public offering price set forth on the
cover page of this Prospectus Supplement, and to certain dealers (who may
include the Underwriters) at such price, less a concession not in excess of
0.35% of the principal amount of the 2002 Notes. The Underwriters may allow, and
such dealers may re-allow, discounts not in excess of 0.25% of the principal
amount of the 2002 Notes to any other Underwriter and certain other dealers.
After the initial offering, the offering price and other selling terms of the
2002 Notes may be changed by the Underwriters.
The Underwriters have advised the Company that they propose initially to
offer the 2017 Notes to the public at the public offering price set forth on the
cover page of this Prospectus Supplement, and to certain dealers (who may
include the Underwriters) at such price, less a concession not in excess of
0.50% of the principal amount of the 2017 Notes. The Underwriters may allow, and
such dealers may re-allow, discounts not in excess of 0.25% of the principal
amount of the 2017 Notes to any other Underwriter and certain other dealers.
After the initial offering, the offering price and other selling terms of the
2017 Notes may be changed by the Underwriters.
In connection with the Offering, the Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of any
series of the Notes. Specifically, the Underwriters may overallot the Offering,
creating a syndicate short position. Underwriters may bid for and purchase any
series of the Notes in the open market to cover such a syndicate short position.
In addition, the Underwriters may bid for and purchase any series of the Notes
in the open market to stabilize the price of any series of the Notes. These
activities may
S-11
<PAGE> 12
stabilize or maintain the market price of any series of the Notes above
independent market levels. The Underwriters are not required to engage in these
activities, and may end these activities at any time.
The Notes will constitute a new issue of securities with no established
trading market. The Notes will not be listed on any securities exchange and
there can be no assurance that there will be a secondary market for the Notes.
From time to time, one or more of the Underwriters may make a market in the
Notes; however, at this time no determination has been made as to whether any of
the Underwriters will make a market in the Notes. Accordingly, there can be no
assurance as to whether an active trading market for any of the Notes will
develop or as to the liquidity of any trading market for the Notes.
In the ordinary course of their respective businesses, certain of the
Underwriters and their affiliates have engaged, and in the future may engage, in
investment banking and commercial banking services for the Company. Donaldson,
Lufkin & Jenrette Securities Corporation was lead manager and Merrill Lynch,
Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc. and Deutsche
Morgan Grenfell Inc. were co-managers in a public offering of senior notes
completed in September 1997. Donaldson, Lufkin & Jenrette Securities Corporation
served as financial advisor to the Company in connection with its merger with
United in August 1997 and was paid customary fees in connection therewith.
Donaldson, Lufkin & Jenrette Securities Corporation was lead manager, and
Merrill Lynch, Pierce, Fenner & Smith Incorporated and Deutsche Morgan Grenfell
Inc. were co-managers in a public offering of USA Waste Common Stock and
Convertible Subordinated Notes completed in February 1997. Affiliates of J.P.
Morgan Securities Inc. and Deutsche Morgan Grenfell Inc. are lenders under the
Credit Facility. An affiliate of J.P. Morgan Securities Inc. serves as the agent
under the Credit Facility and receives customary compensation therefor. See "Use
of Proceeds."
LEGAL MATTERS
The validity of the Notes offered hereby will be passed upon for the
Company by Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P., Houston, Texas and
certain legal matters will be passed upon for the Underwriters by McDermott,
Will & Emery, Chicago, Illinois.
S-12
<PAGE> 13
PROSPECTUS
USA WASTE SERVICES, INC.
DEBT SECURITIES
COMMON STOCK
---------------------
USA Waste Services, Inc. ("USA Waste" or the "Company") may offer and sell
from time to time, in one or more series, its unsecured debt securities
consisting of notes, debentures or other evidences of indebtedness (the "Debt
Securities"). The Company may also offer and sell from time to time shares of
its common stock, par value $.01 per share (the "Common Stock"). The aggregate
initial offering prices of the Debt Securities and the Common Stock offered by
the Company hereby (the "Securities") will not exceed $1,500,000,000 or, if
applicable, the equivalent thereof in any other currency or currency unit. The
Securities will be offered in amounts, at prices and on terms to be determined
at the time of sale and set forth in a supplement to this Prospectus (a
"Prospectus Supplement").
If the offering and sale of Securities in respect of which this Prospectus
is being delivered includes a series of Debt Securities, then the terms of such
series of Debt Securities, including, where applicable, the specific
designation, aggregate principal amount, authorized denominations, ranking as
senior or subordinated Debt Securities, maturity, interest rate or rates (or
method of determining the same) and time or times of payment of any interest,
any terms for optional or mandatory redemption, which may include redemption at
the option of holders upon the occurrence of certain events, conversion into
Common Stock, or payment of additional amounts or any sinking fund provisions,
any covenants or events of default that are in addition to or different from
those described herein, any initial public offering price, the proceeds to the
Company and any other specific terms in connection with the offering and sale of
such series of Debt Securities will be set forth in a Prospectus Supplement. As
used herein, Debt Securities shall include securities denominated in United
States dollars or, at the option of the Company if so specified in an applicable
Prospectus Supplement, in any other currency or currency unit, or in amounts
determined by reference to an index.
The Securities may be sold directly by the Company to investors, through
agents designated from time to time or to or through underwriters or dealers.
See "Plan of Distribution." If any agents of the Company or any underwriters are
involved in the sale of any Securities in respect of which this Prospectus is
being delivered, the names of such agents or underwriters and any applicable
commissions or discounts will be set forth in a Prospectus Supplement. The net
proceeds to the Company from such sale also will be set forth in a Prospectus
Supplement. See "Use of Proceeds."
Debt Securities may be issued in registered form ("Registered Securities")
or bearer form ("Bearer Securities") with or without interest coupons attached,
or both. In addition, all or a portion of the Debt Securities of a series may be
issuable in temporary or permanent global form. Debt Securities in bearer form
are offered only to non-United States persons and to offices located outside the
United States of certain United States financial institutions.
---------------------
The Common Stock is traded on the New York Stock Exchange under the symbol
"UW." Any Common Stock sold pursuant to a Prospectus Supplement will be listed
on such exchange, subject to official notice of issuance.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
This Prospectus may not be used to consummate sales of the Securities
unless accompanied by a Prospectus Supplement.
THE DATE OF THIS PROSPECTUS IS AUGUST 14, 1997.
<PAGE> 14
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements, and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements, and other information filed by the Company with the Commission can
be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the following Regional Offices of the Commission: Chicago
Regional Office, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511 and New York Regional Office, Seven World Trade Center,
Suite 1300, New York, New York 10048. Copies of such material can be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission maintains an
Internet Web site at http://www.sec.gov that contains reports, proxy and
information statements, and other information regarding registrants that file
electronically with the Commission. In addition, reports, proxy statements and
other information concerning the Company can be inspected at the New York Stock
Exchange, 20 Broad Street, New York, New York 10005, on which exchange the
Common Stock is listed.
This Prospectus constitutes a part of a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed by the Company with the Commission under the Securities Act of
1933, as amended (the "Securities Act"). This Prospectus omits certain of the
information contained in the Registration Statement in accordance with the rules
and regulations of the Commission. Reference is hereby made to the Registration
Statement and exhibits thereto for further information with respect to the
Company and the securities offered hereby. Any statements contained herein
concerning the provisions of any document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission are not
necessarily complete, and in each instance reference is made to the copy of such
document so filed. Each such statement is qualified in its entirety by such
reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission under the
Exchange Act (File No. 1-12154) are incorporated by reference in this
Prospectus:
(a) the Company's Annual Report on Form 10-K for the year ended December
31, 1996 as amended by its Annual Report on Form 10-K/A (Amendment No.
1) filed April 30, 1997;
(b) the Company's Quarterly Report on Form 10-Q for the three months ended
March 31, 1997;
(c) the Company's Current Reports on Form 8-K filed January 13, 1997,
January 24, 1997, February 6, 1997, February 7, 1997, March 27, 1997
(as amended by its Current Reports on Form 8-K/A filed April 15, 1997,
and July 23, 1997) and April 17, 1997;
(d) the Company's Joint Proxy Statement and Prospectus, which is part of
the Company's Registration Statement on Form S-4 (Registration No.
333-31979) filed on July 24, 1997; and
(e) the description of the Common Stock contained in the Registration
Statement on Form 8-A dated July 1, 1993, as amended by Form 8-B dated
July 13, 1995.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Securities pursuant hereto shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of filing of such document. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
2
<PAGE> 15
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy of
any or all of the documents that are incorporated by reference in this
Prospectus (other than exhibits to such documents, unless such exhibits are
specifically incorporated by reference into such documents). Requests should be
directed to the Corporate Secretary, USA Waste Services, Inc., First City Tower,
1001 Fannin Street, Suite 4000, Houston, Texas 77002, telephone number (713)
512-6200.
THE COMPANY
USA Waste is the third largest integrated non-hazardous solid waste
management company in North America, as measured by 1996 revenues, and serves
municipal, commercial, industrial and residential customers in 35 states in the
United States, Canada, Puerto Rico and Mexico. USA Waste's solid waste
management services include collection, transfer and disposal operations and, to
a lesser extent, recycling and certain other waste management services. USA
Waste owns or operates 121 landfills, 83 transfer stations and 243 collection
companies and serves more than two million municipal, commercial, industrial and
residential customers. The principal executive offices of USA Waste are located
at First City Tower, 1001 Fannin Street, Suite 4000, Houston, Texas 77002 and
the telephone number is (713) 512-6200. The "Company" and "USA Waste" refer to
USA Waste Services, Inc. and its subsidiaries and predecessors, unless otherwise
indicated or the context requires otherwise.
USA Waste has entered into a definitive merger agreement with United Waste
Systems, Inc. ("United"). United is the sixth largest provider of integrated,
non-hazardous solid waste management services in the United States, as measured
by 1996 revenues. United owns or operates 39 landfills, 80 collection companies
and 78 transfer stations, and serves approximately 950,000 customers in 24
states. A Joint Proxy Statement and Prospectus has been distributed to
shareholders of both USA Waste and United for their approval of the merger, and
the merger is expected to close in August 1997.
USE OF PROCEEDS
Except as may otherwise be described in the Prospectus Supplement relating
to an offering of Securities, the net proceeds from the sale of the Securities
offered pursuant to this Prospectus and such Prospectus Supplement will be used
for general corporate purposes. Any specific allocation of the net proceeds of
an offering of Securities by the Company to a specific purpose will be
determined at the time of such offering and will be described in the related
Prospectus Supplement.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's consolidated ratios of
earnings to fixed charges for the periods as shown:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED
---------------------------------------------------------------- MARCH 31,
1992 1993 1994 1995 1996 1997
-------- -------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Actual.................... (0.20)x 1.68x 0.73x 2.09x 1.81x 5.11x
</TABLE>
The Company's consolidated ratios of earnings to fixed charges were
computed by dividing earnings by fixed charges. For this purpose, earnings are
the sum of income (loss) from continuing operations, taxes, and fixed charges,
excluding capitalized interest. Fixed charges are interest, whether expensed or
capitalized, amortization of debt expense and discount on premium relating to
indebtedness, whether expensed or capitalized, and such portion of rental
expense that can be demonstrated to be representative of the interest factor in
the particular case. For the years ended December 31, 1992 and 1994, earnings
were insufficient to cover fixed charges as evidenced by a less than one-to-one
coverage ratio as shown above. Additional earnings of $78,473,000 and
$17,855,000 were necessary for the years ended December 31, 1992 and 1994,
respectively,
3
<PAGE> 16
to provide a one-to-one coverage ratio. Nonrecurring costs, as discussed below,
caused the less than one-to-one coverage in each of these periods.
The following table sets forth the Company's consolidated ratios of
earnings to fixed charges for the periods shown on a supplemental basis
excluding nonrecurring items:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED
---------------------------------------------------------------- MARCH 31,
1992 1993 1994 1995 1996 1997
-------- -------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Supplemental............... 1.07X 1.81X 2.15X 2.88X 4.36X 5.11X
</TABLE>
Nonrecurring items in 1996 represent merger costs, primarily related to
mergers with Sanifill, Inc. in August 1996 and Western Waste Industries
("Western") in May 1996, and unusual items, primarily related to retirement
benefits associated with Western's pre-merger retirement plan, estimated future
losses related to municipal solid waste contracts in California as a result of
the continuing decline in prices of recyclable materials, estimated losses
related to the disposition of certain non-core business assets, project reserves
related to Mexican operations, and various other terminated projects.
Nonrecurring items in 1995 primarily represent merger costs related to the
merger with Chambers Development Company, Inc. ("Chambers") in June 1995 and
nonrecurring interest related to extension fees and other charges associated
with the refinancing of Chambers' pre-merger debt. Nonrecurring items in 1994
primarily represent shareholder litigation costs incurred in connection with a
settled class action of consolidated suits on similar claims alleging federal
securities law violations against Chambers, certain of its officers and
directors, its former auditors, and the underwriters of its securities.
Nonrecurring items in 1993 were not material. Nonrecurring items in 1992
primarily represent various restructuring charges and charges to asset reserves
by Western and Chambers.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will constitute either senior debt of the Company
("Senior Debt Securities") or subordinated debt of the Company ("Subordinated
Debt Securities"). Debt Securities may be issued from time to time under one or
more indentures, each dated as of a date on or prior to the issuance of the Debt
Securities to which it relates. Senior Debt Securities and Subordinated Debt
Securities may be issued pursuant to separate indentures (respectively, a
"Senior Debt Indenture" and a "Subordinated Debt Indenture"), in each case
between the Company and Texas Commerce Bank National Association ("Texas
Commerce Bank"), and in the form that has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part, subject to such
amendments or supplements as may be adopted from time to time. The Company
previously has entered into a Subordinated Indenture dated as of February 1,
1997 with Texas Commerce Bank in the form filed as an exhibit to the Company's
Current Report on Form 8-K (file no. 1-12154) filed with the Commission on
February 7, 1997. See "Provisions Applicable Solely to Subordinated Debt
Securities." The Senior Debt Indenture and the Subordinated Debt Indenture, as
amended or supplemented from time to time, are sometimes hereinafter referred to
individually as an "Indenture" and collectively as the "Indentures." Texas
Commerce Bank (and any successors thereto as trustees under the respective
Indentures) is hereafter referred to as the "Trustee." The following summaries
of actual or anticipated provisions of the Indentures and the Debt Securities do
not purport to be complete and such summaries are subject to the detailed
provisions of the applicable Indenture to which reference is hereby made for a
full description of such provisions, including the definition of certain terms
used herein. Section references in parentheses below are to sections in both
Indentures unless otherwise indicated. Wherever particular sections or defined
terms of the applicable Indenture are referred to, such sections or defined
terms are incorporated herein by reference as part of the statement made, and
the statement is qualified in its entirety by such reference. The Indentures are
substantially identical, except for certain covenants of the Company and
provisions relating to subordination and conversion.
The Debt Securities may be issued from time to time in one or more series.
The following description of the Debt Securities sets forth certain general
terms and provisions of the Debt Securities of all series. The
4
<PAGE> 17
particular terms of each series of Debt Securities offered by any Prospectus
Supplement will be described therein.
PROVISIONS APPLICABLE TO BOTH SENIOR AND SUBORDINATED DEBT SECURITIES
General. The Debt Securities will be unsecured senior or subordinated
obligations of the Company and may be issued from time to time in one or more
series. The Indentures do not limit the amount of Debt Securities, debentures,
notes or other types of indebtedness that may be issued by the Company or any of
its subsidiaries nor, other than as may be set forth in any Prospectus
Supplement, do they restrict transactions between the Company and its affiliates
or the payment of dividends or other distributions by the Company to its
stockholders. The rights of the Company's creditors, including holders of Debt
Securities, will be limited to the assets of the Company and will not be an
obligation of any of its Subsidiaries. In addition, other than as may be set
forth in any Prospectus Supplement, the Indentures do not and the Debt
Securities will not contain any covenants or other provisions that are intended
to afford holders of the Debt Securities special protection in the event of
either a change of control of the Company or a highly leveraged transaction by
the Company.
Reference is made to the Prospectus Supplement for the following terms of
and information relating to the Debt Securities (to the extent such terms are
applicable to such Debt Securities): (i) the title of the Debt Securities; (ii)
classification as either Senior Debt Securities or Subordinated Debt Securities;
(iii) whether the Debt Securities that constitute Subordinated Debt Securities
are convertible into Common Stock and, if so, the terms and conditions upon
which such conversion will be effected, including the initial conversion price
or conversion rate and any adjustments thereto in addition to or different from
those described herein, the conversion period and other conversion provisions in
addition to or in lieu of those described herein; (iv) any limit on the
aggregate principal amount of the Debt Securities; (v) whether the Debt
Securities are to be issuable as Registered Securities or Bearer Securities or
both, whether any of the Debt Securities are to be issuable initially in
temporary global form and whether any of the Debt Securities are to be in
permanent global form; (vi) the price or prices (expressed as a percentage of
the aggregate principal amount thereof) at which the Debt Securities will be
issued; (vii) the date or dates on which the Debt Securities will mature; (viii)
the rate or rates per annum (or the method by which such will be determined) at
which the Debt Securities will bear interest, if any, and the date from which
any such interest will accrue; (ix) the Interest Payment Dates on which any such
interest on the Debt Securities will be payable, the date on which payment of
such interest, if any, will commence and the Regular Record Dates for any
interest payable on any Debt Securities which are Registered Securities on any
Interest Payment Date and the extent to which, or the manner in which, any
interest payable on a temporary global Debt Security on an Interest Payment Date
will be paid; (x) any mandatory or optional sinking fund or analogous
provisions; (xi) each office or agency where, subject to the terms of the
Indentures as described below under "Payment and Paying Agents," the principal
of and any premium and interest on the Debt Securities will be payable and each
office or agency where, subject to the terms of the Indentures as described
below under "Form, Exchange, Registration and Transfer," the Debt Securities may
be presented for registration of transfer or exchange; (xii) the right, if any,
or obligation, if any, of the Company to redeem the Debt Securities at its
option and the period or periods, if any, within which and the price or prices
at which the Debt Securities may, pursuant to any optional or mandatory
redemption provisions, be redeemed, in whole or in part, and the other detailed
terms and provisions of any such optional or mandatory redemption; (xiii) the
denominations in which any Debt Securities which are Registered Securities will
be issuable, if other than denominations of $1,000 and any integral multiple
thereof, and the denomination or denominations in which any Debt Securities
which are Bearer Securities will be issuable, if other than the denomination of
$5,000; (xiv) the currency or currencies (including composite currencies) in
which payment of principal of and any premium and interest on the Debt
Securities is payable if other than United States dollars; (xv) any index used
to determine the amount of payments of principal of and any premium and interest
on the Debt Securities; (xvi) information with respect to book-entry procedures,
if any; (xvii) any deletions from, modification of or additions to the Events of
Default or covenants of the Company with respect to such Debt Securities; and
(xviii) any other terms of the Debt Securities not inconsistent with the
provisions of the Indentures. (Section 301) Any such Prospectus Supplement will
also describe any special provisions for the payment of additional amounts with
respect to the Debt Securities.
5
<PAGE> 18
Debt Securities may be issued as Original Issue Discount Securities. An
Original Issue Discount Security is a Debt Security, including any zero-coupon
security, which is issued at a price lower than the amount payable upon the
Stated Maturity thereof and which provides that upon redemption or acceleration
of the maturity thereof an amount less than the amount payable upon the Stated
Maturity thereof and determined in accordance with the terms of such Debt
Security shall become due and payable. Special United States federal income tax
considerations applicable to Debt Securities issued at an original issue
discount, including Original Issue Discount Securities, and special United
States tax considerations and other terms and restrictions applicable to any
Debt Securities which are issued in bearer form, offered exclusively to United
States Aliens or denominated in other than United States dollars, will be set
forth in a Prospectus Supplement relating thereto.
Form, Exchange, Registration and Transfer. Debt Securities of a series may
be issuable in definitive form solely as Registered Securities, solely as Bearer
Securities or as both Registered Securities and Bearer Securities. Unless
otherwise indicated in an applicable Prospectus Supplement, Bearer Securities
will have interest coupons attached. (Section 201) The Indentures also provide
that Debt Securities of a series may be issuable in temporary or permanent
global form. (Section 201)
Registered Securities of any series will be exchangeable for other
Registered Securities of the same series of any authorized denominations and of
a like aggregate principal amount and tenor. In addition, if Debt Securities of
any series are issuable as both Registered Securities and Bearer Securities, at
the option of the Holder, and subject to the terms of the applicable Indenture,
Bearer Securities (with all unmatured coupons, except as provided below, and all
matured coupons in default) of such series will be exchangeable for Registered
Securities of the same series of any authorized denominations and of a like
aggregate principal amount and tenor. Bearer Securities surrendered in exchange
for Registered Securities between a Regular Record Date or a Special Record Date
and the relevant date for payment of interest shall be surrendered without the
coupon relating to such date for payment of interest, and interest accrued as of
such date for payment of interest will not be payable in respect of the
Registered Security issued in exchange for such Bearer Security, but will be
payable only to the Holder of such coupon when due in accordance with the terms
of the applicable Indenture. Bearer Securities will not be issued in exchange
for Registered Securities. (Section 305)
Debt Securities may be presented for exchange as provided above, and
Registered Securities may be presented for registration of transfer (with the
form of transfer endorsed thereon duly executed), at the office of the Security
Registrar or at the office of any transfer agent designated by the Company for
such purpose with respect to any series of Debt Securities and referred to in an
applicable Prospectus Supplement, without service charge and upon payment of any
taxes and other governmental charges as described in the Indentures. Such
transfer or exchange will be effected upon the Security Registrar or such
transfer agent, as the case may be, being satisfied with the documents of title
and identity of the person making the request. Unless otherwise indicated in any
Prospectus Supplement, the Company will serve as Security Registrar. (Section
305) If a Prospectus Supplement refers to any transfer agents (in addition to
the Security Registrar) initially designated by the Company with respect to any
series of Debt Securities, the Company may at any time rescind the designation
of any such transfer agent or approve a change in the location through which any
such transfer agent acts, except that, if Debt Securities of a series are
issuable solely as Registered Securities, the Company will be required to
maintain a transfer agent in each Place of Payment for such series and, if Debt
Securities of a series are also issuable as Bearer Securities, the Company will
be required to maintain (in addition to the Security Registrar) a transfer agent
in a Place of Payment for such series located outside the United States. The
Company may at any time designate additional transfer agents with respect to any
series of Debt Securities. (Section 1002)
Title to any Bearer Securities (including Bearer Securities in permanent
global form) and any coupons appertaining thereto will pass by delivery. The
Company, the Trustee and any agent of the Company or the Trustee may treat the
bearer of any Bearer Security and the bearer of any coupon and the registered
holder of any Registered Security as the owner thereof (whether or not such Debt
Security or coupon shall be overdue and notwithstanding any notice to the
contrary) for the purpose of making payment and for all other purposes. (Section
308)
6
<PAGE> 19
In the event of any redemption in part, the Company shall not be required
to (i) issue, register the transfer of or exchange Debt Securities of any series
during a period beginning at the opening of business 15 days prior to the
selection of Debt Securities of that series for redemption and ending on the
close of business on (A) if Debt Securities of the series are issuable only as
Registered Securities, the day of mailing of the relevant notice of redemption
and (B) if Debt Securities of the series are issuable as Bearer Securities, the
date of the first publication of the relevant notice of redemption or, if
Securities of the series are also issuable as Registered Securities and there is
no publication, the mailing of the relevant notice of redemption; (ii) register
the transfer of or exchange any Registered Security, or portion thereof, called
for redemption, except the unredeemed portion of any Registered Security being
redeemed in part; or (iii) exchange any Bearer Security called for redemption,
except to exchange such Bearer Security for a Registered Security of that series
and like tenor which is immediately surrendered for redemption. (Section 305)
Replacement of Securities and Coupons. Any mutilated Debt Security or a
Debt Security with a mutilated coupon appertaining thereto will be replaced by
the Company at the expense of the Holder upon surrender of such Debt Security to
the Trustee. Debt Securities or coupons that become destroyed, stolen or lost
will be replaced by the Company at the expense of the Holder upon delivery to
the Trustee of the Debt Security and coupons or evidence of destruction, loss or
theft thereof satisfactory to the Company and the Trustee; in the case of any
coupon which becomes destroyed, stolen or lost, such coupon will be replaced by
issuance of a new Debt Security in exchange for the Debt Security to which such
coupon appertains. In the case of a destroyed, lost or stolen Debt Security or
coupon, an indemnity satisfactory to the Trustee and the Company may be required
at the expense of the Holder of such Debt Security or coupon before a
replacement Debt Security will be issued. (Section 306)
Payment and Paying Agents. Unless otherwise indicated in an applicable
Prospectus Supplement, payment of principal of and any premium and interest on
Bearer Securities will be payable, subject to any applicable laws and
regulations, at the offices of such Paying Agents outside the United States as
the Company may designate from time to time, in the manner indicated in such
Prospectus Supplement. (Section 1002) Unless otherwise indicated in an
applicable Prospectus Supplement, payment of interest on Bearer Securities on
any Interest Payment Date will be made only against surrender to the Paying
Agent of the coupon relating to such Interest Payment Date. (Section 1001) No
payment with respect to any Bearer Security will be made at any office or agency
of the Company in the United States or by check mailed to any address in the
United States or by transfer to any account maintained with a bank located in
the United States. Notwithstanding the foregoing, payments of principal of and
any premium and interest on Bearer Securities denominated and payable in U.S.
dollars will be made at the office of the Company's Paying Agent in the Borough
of Manhattan, The City of New York, if (but only if) payment of the full amount
thereof in U.S. dollars at all offices or agencies outside the United States is
illegal or effectively precluded by exchange controls or other similar
restrictions. (Section 1002)
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and any premium and interest on Registered Securities will be
made at the office of such Paying Agent or Paying Agents as the Company may
designate from time to time, except that at the option of the Company payment of
any interest may be made by check mailed on or before the due date to the
address of the Person entitled thereto as such address shall appear in the
Security Register. (Sections 307, 1002) Unless otherwise indicated in an
applicable Prospectus Supplement, payment of any installment of interest on
Registered Securities will be made to the Person in whose name such Registered
Security is registered at the close of business on the Regular Record Date for
such interest. (Section 307)
Unless otherwise indicated in an applicable Prospectus Supplement, the
Company, at its principal executive offices in Houston, Texas, will act as its
own Paying Agent for payments with respect to Debt Securities which are issuable
solely as Registered Securities and the Company will maintain a Paying Agent
outside the United States for payments with respect to Debt Securities (subject
to limitations described above in the case of Bearer Securities) which are
issuable solely as Bearer Securities or as both Registered Securities and Bearer
Securities. Any Paying Agents outside the United States and any other Paying
Agents in the United States initially designated by Company for the Debt
Securities will be named in an applicable Prospectus Supplement. The Company may
at any time designate additional Paying Agents or rescind the
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designation of any Paying Agent or approve a change in the office through which
any Paying Agent acts, except that, if Debt Securities of a series are issuable
solely as Registered Securities, the Company will be required to maintain a
Paying Agent in each Place of Payment for such series and, if Debt Securities of
a series are issuable as Bearer Securities, the Company will be required to
maintain (i) a Paying Agent in the Borough of Manhattan, The City of New York
for principal payments with respect to any Registered Securities of the series
(and for payments with respect to Bearer Securities of the series in the
circumstances described above, but not otherwise), and (ii) a Paying Agent in a
Place of Payment located outside the United States where Debt Securities of such
series and any coupons appertaining thereto may be presented and surrendered for
payment. (Section 1002)
All moneys paid by the Company to a Paying Agent for the payment of
principal of and any premium or interest on any Debt Security which remain
unclaimed at the end of two years after such principal, premium or interest
shall have become due and payable will (subject to applicable escheat laws) be
repaid to the Company, and the Holder of such Debt Security or any coupon will
thereafter look only to the Company for payment thereof. (Section 1003)
Global Debt Securities. Debt Securities of a series may be issued in whole
or in part in the form of one or more global Debt Securities that will be
deposited with, or on behalf of, a depository identified in the Prospectus
Supplement relating to such series. Global Debt Securities may be issued only in
fully registered form and in either temporary or permanent form. (Section 203)
Unless and until it is exchanged in whole or in part for the individual Debt
Securities represented thereby, a global Debt Security may not be transferred
except as a whole by the depository for such global Debt Security to a nominee
of such depository or by a nominee of such depository to such depository or
another nominee of such depository or by the depository or any nominee to a
successor depository or any nominee of such successor.
The specific terms of the depository arrangement with respect to a series
of Debt Securities in the form of one or more global Debt Securities will be
described in the Prospectus Supplement relating to such series.
Satisfaction and Discharge of Indenture. Each Indenture provides that the
Company may discharge the Indenture (except as to any surviving rights of
registration of transfer or exchange of Debt Securities and any right to receive
additional amounts) with respect to all Debt Securities issued under the
Indenture, which Debt Securities have not already been delivered to the Trustee
for cancellation and which either have become due and payable or are by their
terms due and payable within one year (or are to be called for redemption within
one year) by depositing with the Trustee as trust funds an amount sufficient to
pay when due the principal of and premium, if any, and interest, if any, on all
outstanding Debt Securities when due. (Section 401).
Defeasance and Discharge. Each Indenture provides that, if the Company so
elects by Board Resolution with respect to the Debt Securities of any series
issued under such Indenture (other than convertible Subordinated Debt
Securities), the Company will be discharged from any and all obligations in
respect of the Debt Securities of such series (except for certain obligations
relating to temporary Debt Securities and exchange of Debt Securities,
registration of transfer or exchange of Debt Securities of such series,
replacement of stolen, lost or mutilated Debt Securities of such series,
maintenance of paying agencies to hold moneys for payment in trust and payment
of additional amounts, if any, required in consequence of United States
withholding taxes imposed on payments to non-United States persons) upon the
deposit with the Trustee, in trust, of money and/or U.S. Government Obligations
which through the payment of interest and principal in respect thereof in
accordance with their terms will provide money in an amount sufficient to pay
the principal of (and premium, if any), and each installment of interest on, the
Debt Securities of such series on the Stated Maturity of such payments in
accordance with the terms of such Indenture and the Debt Securities of such
series. (Sections 1302, 1304) Such a trust may only be established if, among
other things, the Company has delivered to the Trustee an Opinion of Counsel to
the effect that (i) the Company has received from, or there has been published
by, the Internal Revenue Service a ruling, or (ii) since the date of such
Indenture there has been a change in applicable federal income tax law, in
either case to the effect that, and based thereon such Opinion of Counsel shall
confirm that, the Holders of such series will not recognize income, gain or loss
for federal income tax purposes as a result of such deposit, defeasance and
discharge, and will be subject to
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federal income tax on the same amounts and in the same manner and at the same
times as would have been the case if such deposit, defeasance and discharge had
not occurred. (Section 1304) In the event of any such defeasance and discharge
of Debt Securities of such series, Holders of such series would be entitled to
look only to such trust fund for payment of principal of and any premium and any
interest on their Debt Securities until Maturity.
Covenant Defeasance. Each Indenture also provides that, if the Company so
elects by Board Resolution with respect to the Debt Securities of any series
issued thereunder, the Company may omit to comply with certain restrictive
covenants, including (in the case of the Senior Debt Indenture) the covenants
described under "-- Provisions Applicable Solely to Senior Debt
Securities -- Limitation on Liens" and "-- Limitations on Sale and Leaseback
Transactions," but excluding (in the case of the Subordinated Debt Indenture)
any applicable obligation of the Company respecting the conversion of Debt
Securities of such series into Common Stock, and any such omission shall not be
an Event of Default with respect to the Debt Securities of such series, upon the
deposit with the Trustee, in trust, of money and/or U.S. Government Obligations
which through the payment of interest and principal in respect thereof in
accordance with their terms will provide money in an amount sufficient to pay
the principal of (and premium, if any), and each installment of interest on, the
Debt Securities of such series on the Stated Maturity of such payments in
accordance with the terms of such Indenture and the Debt Securities of such
series. The obligations of the Company under such Indenture and the Debt
Securities of such series other than with respect to such covenants shall remain
in full force and effect. (Section 1303) Such a trust may be established only
if, among other things, the Company has delivered to the Trustee an Opinion of
Counsel to the effect that the Holders of such series will not recognize income,
gain or loss for federal income tax purposes as a result of such deposit and
defeasance of certain obligations and will be subject to federal income tax on
the same amounts and in the same manner and at the same time as would have been
the case if such deposit and defeasance had not occurred. (Section 1304)
Although the amount of money and U.S. Government Obligations on deposit
with the Trustee would be intended to be sufficient to pay amounts due on the
Debt Securities of such series at the time of their Stated Maturity, in the
event the Company exercises its option to omit compliance with the covenants
defeased with respect to the Debt Securities of any series as described above,
and the Debt Securities of such series are declared due and payable because of
the occurrence of any Event of Default, such amount may not be sufficient to pay
amounts due on the Debt Securities of such series at the time of the
acceleration resulting from such Event of Default. The Company shall in any
event remain liable for such payments as provided in the applicable Indenture.
Federal Income Tax Consequences. Under current United States federal income
tax law, defeasance and discharge would likely be treated as a taxable exchange
of Debt Securities to be defeased for an interest in the defeasance trust. As a
consequence, a holder would recognize gain or loss equal to the difference
between the holder's cost or other tax basis for such Debt Securities and the
value of the holder's interest in the defeasance
trust, and thereafter would be required to include in income the holder's share
of the income, gain or loss of the defeasance trust. Under current United States
federal income tax law, covenant defeasance would ordinarily not be treated as a
taxable exchange of such Debt Securities.
Meetings, Modification and Waiver. Modifications and amendments of either
Indenture may be made by the Company and the Trustee with the consent of the
Holders of a majority in aggregate principal amount of the Outstanding
Securities of each series affected by such modification or amendment; provided,
however, that no such modification or amendment may, without the consent of the
Holder of each Outstanding Security affected thereby, (a) change the Stated
Maturity of the principal of, or any installment of principal of or interest on,
any Debt Security, (b) change the Redemption Date with respect to any Debt
Security, (c) reduce the principal amount of, or premium or interest on, any
Debt Security, (d) change any obligation of the Company to pay additional
amounts, (e) reduce the amount of principal of an Original Issue Discount
Security payable upon acceleration of the Maturity thereof, (f) change the coin
or currency in which any Debt Security or any premium or interest thereon is
payable, (g) change the redemption right of any Holder, (h) impair the right to
institute suit for the enforcement of any payment on or with respect to any Debt
Security or any conversion right with respect thereto, (i) reduce the percentage
in principal amount of Outstanding Securities of any series, the consent of
whose Holders is required for modification or amendment
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of such Indenture or for waiver of compliance with certain provisions of such
Indenture or for waiver of certain defaults, (j) reduce the requirements
contained in such Indenture for quorum or voting, (k) change any obligation of
the Company to maintain an office or agency in the places and for the purposes
required by such Indenture, (l) adversely affect the right to convert
Subordinated Debt Securities, if applicable, or (m) modify any of the above
provisions. (Section 902)
The Subordinated Debt Indenture may not be amended to alter the
subordination of any outstanding Subordinated Debt Securities without the
consent of each holder of Senior Indebtedness (as defined below under
"-- Provisions Applicable Solely to Subordinated Debt Securities") then
outstanding that would be adversely affected thereby. (Section 907 of the
Subordinated Debt Indenture)
The Holders of a majority in aggregate principal amount of the Outstanding
Securities of each series may, on behalf of all Holders of that series, waive,
insofar as that series is concerned, compliance by the Company with certain
restrictive provisions of the Indenture under which such series has been issued.
(Section 1007 of the Senior Debt Indenture; Section 1008 of the Subordinated
Debt Indenture) The Holders of a majority in aggregate principal amount of the
Outstanding Securities of each series may, on behalf of all Holders of that
series, waive any past default under the applicable Indenture with respect to
any Debt Securities of that series, except a default (a) in the payment of
principal of, or premium, if any, or any interest on any Debt Security of such
series or (b) in respect of a covenant or provision of such Indenture which
cannot be modified or amended without the consent of the Holder of each
Outstanding Security of such series affected. (Section 513)
Each Indenture provides that in determining whether the Holders of the
requisite principal amount of the Outstanding Securities have given any request,
demand, authorization, direction, notice, consent or waiver thereunder or are
present at a meeting of the Holders for quorum purposes, (i) the principal
amount of an Original Issue Discount Security that is deemed to be Outstanding
will be the amount of the principal that would be due and payable as of the date
of such determination upon acceleration of the Maturity thereof, and (ii) the
principal amount of a Debt Security denominated in a foreign currency or
currency units will be the U.S. dollar equivalent, determined on the date of
original issuance of such Debt Security, of the principal amount of such Debt
Security or, in the case of an Original Issue Discount Security, the U.S. dollar
equivalent, determined on the date of original issuance of such Security, of the
amount determined as provided in (i) above. (Section 101)
Each Indenture contains provisions for convening meetings of the Holders of
a series if Debt Securities of that series are issuable as Bearer Securities.
(Section 1401) A meeting may be called at any time by the Trustee, and also,
upon request, by the Company or the Holders of at least 10% in aggregate
principal amount of the Outstanding Securities of such series, in any such case
upon notice given in accordance with "Notices" below. (Section 1402) Except for
any consent which must be given by the Holder of each Outstanding Security
affected thereby, as described above, any resolution presented at a meeting (or
adjourned meeting at which a quorum is present) may be adopted by the
affirmative vote of the Holders of a majority in aggregate principal amount of
the Outstanding Securities of that series; provided, however, that any
resolution with respect to any request, demand, authorization, direction,
notice, consent, waiver or other action which may be made, given or taken by the
Holders of a specified percentage, which is less than a majority, in aggregate
principal amount of the Outstanding Securities of a series may be adopted at a
meeting (or adjourned meeting duly reconvened at which a quorum is present) by
the affirmative vote of the Holders of such specified percentage in aggregate
principal amount of the Outstanding Securities of that series. Any resolution
passed or decision taken at any meeting of Holders of any series duly held in
accordance with the applicable Indenture will be binding on all Holders of that
series and related coupons. The quorum at any meeting, and at any reconvened
meeting, will be Persons holding or representing a majority in aggregate
principal amount of the Outstanding Securities of a series. (Section 1404)
Notices. Except as otherwise provided in an applicable Prospectus
Supplement, notices to Holders of Bearer Securities will be given by publication
at least twice in a daily newspaper in the city of New York and in such other
city or cities as may be specified in such Bearer Securities. Notices to Holders
of Registered
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Securities will be given by first-class mail to the addresses of such Holders as
they appear in the Security Register. (Section 106)
Governing Law. The Indentures, the Debt Securities and coupons will be
governed by, and construed in accordance with, the laws of the State of New
York. (Section 113)
Regarding the Trustee. The Trustee appointed and serving as trustee
pursuant to each of the Senior Debt Indenture and the Subordinated Debt
Indenture is Texas Commerce Bank.
Each Indenture contains certain limitations on the right of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize for its own account on certain property received in
respect of any such claim as security or otherwise. (Section 613) The Trustee is
permitted to engage in certain other transactions; however, if it acquires any
conflicting interest (as described in the Indentures), it must eliminate such
conflict or resign. (Section 608)
The holders of a majority in principal amount of all outstanding Debt
Securities of a series (or if more than one series is affected thereby, all
series so affected, voting as a single class) will have the right to direct the
time, method and place of conducting any proceeding for exercising any remedy or
power available to the Trustee for such series or all such series so affected.
In case an Event of Default shall occur (and shall not be cured) under any
Indenture relating to a series of Debt Securities and is known to the Trustee
for such series, such Trustee shall exercise such of the rights and powers
vested in it by such Indenture and use the same degree of care and skill in its
exercise as a prudent person would exercise or use under the circumstances in
the conduct of his own affairs. Subject to such provisions, no Trustee will be
under any obligation to exercise any of its rights or powers under the
applicable Indenture at the request of any of the holders of Debt Securities
unless they shall have offered to such Trustee security and indemnity
satisfactory to it.
Pursuant to the Trust Indenture Act, a trustee under an indenture may be
deemed to have a conflicting interest, and may, under certain circumstances set
forth in the Trust Indenture Act, be required to resign as trustee under such
indenture, if the securities under such indenture are in default (as such term
is defined in such indenture) and the trustee is the trustee under another
indenture under which any other securities of the same obligor are outstanding,
subject to certain exceptions set forth in the Trust Indenture Act. In such
event, the obligor must take prompt steps to have a successor trustee appointed
in the manner provided in the indenture from which the trustee has resigned.
Accordingly, Texas Commerce Bank, as trustee under the Senior Debt Indenture and
the Subordinated Debt Indenture, could be required to resign as trustee under
one of such Indentures should a default occur under one of such Indentures. In
such event, the Company would be required to take prompt steps to have a
successor trustee or successor trustees appointed in the manner provided in the
applicable Indenture.
Texas Commerce Bank, as the trustee under the Senior Debt Indenture and the
Subordinated Debt Indenture, may be a depositary for funds of, may make loans to
and may perform other routine banking services for the Company and certain of
its affiliates in the normal course of business.
PROVISIONS APPLICABLE SOLELY TO SENIOR DEBT SECURITIES
General. Senior Debt Securities will be issued under the Senior Debt
Indenture, and each series will rank pari passu as to the right of payment of
principal and any premium and interest with each other series issued thereunder
and will rank senior to all series of Subordinated Debt Securities issued and
outstanding and that may be issued from time to time.
Certain Definitions. For purposes of the following discussion, the
following definitions are applicable (Section 1008 and 1009 of the Senior Debt
Indenture).
"Attributable Debt" shall mean, as of any particular time, the present
value, discounted at a rate per annum equal to (i) the implied lease rate of or
(ii) if the implied lease rate is not known to the Company, then the weighted
average interest rate of all Senior Debt Securities outstanding at the time
under the Senior Debt Indenture compounded semi-annually, in either case, of the
obligation of a lessee for rental payments during
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the remaining term of any lease (including any period for which such lease has
been extended or may, at the option of the lessor, be extended); the net amount
of rent required to be paid for any such period shall be the total amount of the
rent payable by the lessee with respect to such period, but may exclude amounts
required to be paid on account of maintenance and repairs, insurance, taxes,
assessments, water rates and similar charges; and, in the case of any lease
which is terminable by the lessee upon the payment of a penalty, such net amount
shall also include the amount of such penalty, but no rent shall be considered
as required to be paid under such lease subsequent to the first date upon which
it may be so terminated.
The term "Consolidated Net Tangible Assets" shall mean, at any date of
determination, the total amount of assets of the Company after deducting
therefrom: (i) all the current liabilities (excluding (a) any current
liabilities that by their terms are extendible or renewable at the option of the
obligor thereon to a time more than 12 months after the time as of which the
amount thereof is being computed, and (b) current maturities of long term debt)
and (ii) the value (net of any applicable reserves) of all intangible assets
such as excess of cost over net assets of acquired businesses, customer lists,
covenants not to compete, licenses, and permits, all as set forth on the
consolidated balance sheet of the Company and its consolidated Subsidiaries for
the Company's most recently completed fiscal quarter, prepared in accordance
with United States generally accepted accounting principles.
"Funded Debt" shall mean any Indebtedness which by its terms matures at or
is extendable or renewable at the sole option of the obligor without requiring
the consent of the obligee to a date more than twelve months after the date of
the creation of such Indebtedness.
"Guaranty" shall mean any agreement, undertaking or arrangement by which
any Person guarantees, endorses or otherwise becomes or is contingently liable
upon (by direct or indirect agreement, contingent or otherwise, to provide funds
for payment, to supply funds to, or otherwise to invest in, a debtor, or
otherwise to assure a creditor against loss) the debt, obligation or other
liability of any other Person (other than by endorsements of instruments in the
course of collection), or guarantees the payment of dividends or other
distributions upon the shares of any other Person. The amount of the obligor's
obligation under any Guaranty shall (subject to any limitation set forth
therein) be deemed to be the amount of such other Person's debt, obligation or
other liability or the amount of such dividends or other distributions
guaranteed.
"Indebtedness" of any Person shall mean
(a) all obligations of such Person for borrowed money (including,
without limitation, all notes payable and drafts accepted representing
extension of credit and all obligations evidenced by bonds, debentures,
notes or other similar instruments) or on which interest charges are
customarily paid, all as shown on a balance sheet of such Person as of the
date at which Indebtedness is to be determined;
(b) all other items which, in accordance with generally accepted
accounting principles, would be included as liabilities on the liability
side of a balance sheet of such Person as of the date at which Indebtedness
is to be determined; and
(c) whether or not so included as liabilities in accordance with
generally accepted accounting principles,
(i) all indebtedness (excluding, however, prepaid interest thereon)
secured by a Security Interest in property owned or being purchased by
such Person (including, without limitation, indebtedness arising under
conditional sales or other title retention agreements) whether or not
such indebtedness shall have been assumed by such Person, and
(ii) all Guaranties of such Person.
"Principal Property" shall mean any waste processing, waste disposal or
resource recovery plant or similar facility located within the United States
(other than its territories and possessions and Puerto Rico) or Canada and owned
by, or leased to, the Company or any Restricted Subsidiary, except (a) any such
plant or facility (i) owned or leased jointly or in common with one or more
persons other than the Company and its Restricted Subsidiaries in which the
interest of the Company and its Restricted Subsidiaries does not exceed 50%, or
(ii) which the Board of Directors determines in good faith is not of material
importance to the total business
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conducted, or assets owned, by the Company and its Subsidiaries as an entirety,
or (b) any portion of such plant or facility which the Board of Directors
determines in good faith not to be of material importance to the use or
operation thereof.
"Restricted Subsidiary" shall mean any Subsidiary (other than any
Subsidiary of which the Company owns directly or indirectly less than all of the
outstanding Voting Stock) (a) principally engaged in, or whose principal assets
consist of property used by the Company or any Restricted Subsidiary in, the
storage, collection, transfer, interim processing or disposal of waste within
the United States of America or Canada, or (b) which the Company shall designate
as a Restricted Subsidiary in an Officers' Certificate delivered to the Trustee.
"Security Instrument" shall mean any security agreement, chattel mortgage,
assignment, financing or similar statement or notice, continuation statement,
other agreement or instrument, or amendment or supplement to any thereof,
providing for, evidencing or perfecting any Security Interest or lien.
"Security Interest" shall mean any interest in any real or personal
property or fixture which secures payment or performance of an obligation and
shall include any mortgage, lien, encumbrance, charge or other security interest
of any kind, whether arising under a Security Instrument or as a matter of law,
judicial process or otherwise.
Consolidation, Merger, Sale. The Senior Debt Indenture provides that the
Company may not consolidate with or merge into any other Person or convey,
transfer or lease its properties and assets substantially as an entirety to any
Person, unless (1) the Person formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance or transfer, or
which leases, the properties and assets of the Company substantially as an
entirety shall be a corporation, partnership or trust which shall expressly
assume, by a supplemental indenture, executed and delivered to the Trustee, in
form satisfactory to the Trustee, the due and punctual payment of the principal
of and any premium and interest (including all additional amounts, if any,
payable pursuant to the Senior Debt Indenture) on all the Senior Debt Securities
and the performance or observance of every other covenant of the Senior Debt
Indenture on the part of the Company to be performed or observed; and (2)
immediately after giving effect to such transaction and treating any
indebtedness which becomes an obligation of the Company or a Subsidiary as a
result of such transaction as having been incurred by the Company or such
Subsidiary at the time of such transaction, no Event of Default, and no event
which, after notice or lapse of time or both, would become an Event of Default,
shall have happened and be continuing. Upon any consolidation of the Company
with, or merger of the Company into, any other Person or any conveyance,
transfer or lease of the properties and assets of the Company substantially as
an entirety, the successor Person formed by such consolidation or into which the
Company is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under the Senior Debt Indenture with the same effect as if such
successor Person had been named as the Company herein, and thereafter, except in
the case of a lease, the predecessor Person shall be relieved of all obligations
and covenants under the Senior Debt Indenture and the Senior Debt Securities and
coupons and may liquidate and dissolve. (Sections 801, 802 of the Senior Debt
Indenture)
Event of Default. Unless otherwise specified in the applicable Prospectus
Supplement, an Event of Default is defined under the Senior Debt Indenture with
respect to the Senior Debt Securities of any series issued under such Senior
Debt Indenture as being one or more of the following events:
(1) default in the payment of any interest upon any Senior Debt
Security of that series when it becomes due and payable, and continuance of
such default for a period of 30 days; or
(2) default in the payment of the principal of (or premium, if any,
on) any Senior Debt Security of that series as and when the same becomes
due and payable whether at Stated Maturity, by declaration of acceleration,
call for redemption or otherwise; or
(3) default in the deposit of any sinking fund payment, when and as
due by the terms of a Senior Debt Security of that series; or
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(4) default in the performance, or breach, of any other covenant or
warranty of the Company in the Senior Debt Indenture (other than a covenant
or warranty a default in whose performance or whose breach is elsewhere in
Section 501 of the Senior Debt Indenture specifically dealt with or which
has expressly been included in the Senior Debt Indenture solely for the
benefit of a series of Senior Debt Securities other than that series), and
continuance of such default or breach for a period of 60 days after there
has been given, by registered or certified mail, to the Company by the
Trustee or to the Company and the Trustee by the Holders of at least 25% in
principal amount of the Outstanding Senior Debt Securities of that series a
written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" under the
Senior Debt Indenture; or
(5) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company in an involuntary case
or proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company under any applicable Federal or State law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any substantial
part of its property, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order for relief or any
such other decree or order unstayed and in effect for a period of 90
consecutive days; or
(6) the commencement by the Company of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to
be adjudicated a bankrupt or insolvent, or the consent by it to the entry
of a decree or order for relief in respect of the Company in an involuntary
case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or the commencement of any
bankruptcy or insolvency case or proceeding against it, or the filing by it
of a petition or answer or consent seeking reorganization or relief under
any applicable Federal or State law, or the consent by it to the filing of
such petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or similar official
of the Company or of any substantial part of its property, or the making by
it of an assignment for the benefit of creditors, or the admission by it in
writing of its inability to pay its debts generally as they become due, or
the taking of corporate action by the Company in furtherance of any such
action; or
(7) any other Event of Default provided with respect to Senior Debt
Securities of that series. (Section 501 of the Senior Debt Indenture)
If an Event of Default with respect to Senior Debt Securities of any series
at the time Outstanding occurs and is continuing, then in every such case,
either the Trustee or the Holders of not less than 25% in principal amount of
the Outstanding Senior Debt Securities of that series may declare the principal
amount (or, if any of the Senior Debt Securities of that series are Original
Issue Discount Securities, such portion of the principal amount of such Senior
Debt Securities as may be specified in the terms thereof) of all of the Senior
Debt Securities of that series to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by Holders), and upon any
such declaration such principal amount (or specified amount) shall become
immediately due and payable. At any time after such a declaration of
acceleration with respect to the Senior Debt Securities of any series has been
made and before a judgment or decree for payment of the money due has been
obtained by the Trustee, the Holders of a majority in principal amount of the
Outstanding Senior Debt Securities of that series, by written notice to the
Company and the Trustee, may rescind and annul such declaration and its
consequences if: (1) the Company has paid or deposited with the Trustee a sum
sufficient to pay (A) all overdue interest on all Senior Debt Securities of that
series, (B) the principal of (and premium, if any, on) any Senior Debt
Securities of that series which has become due otherwise than by such
declaration of acceleration and any interest thereon at the rate or rates
prescribed therefor in such Senior Debt Securities, (C) to the extent that
payment of such interest is lawful, interest upon overdue interest at the rate
or rates prescribed therefor in such Senior Debt Securities, and (D) all sums
paid or advanced by the Trustee hereunder and the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel; and
(2) all Events of Default with respect to Senior Debt Securities of that series,
other than the
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non-payment of the principal of Senior Debt Securities of that series which has
become due solely by such declaration of acceleration, have been cured or waived
as provided in the Senior Debt Indenture. No such rescission shall affect any
subsequent default or impair any right consequent thereon. (Section 502 of the
Senior Debt Indenture) If the Trustee or any Holder of a Senior Debt Security or
coupon has instituted any proceeding to enforce any right or remedy under the
Senior Debt Indenture and such proceeding has been discontinued or abandoned for
any reason, or has been determined adversely to the Trustee or to such Holder,
then and in every such case, subject to any determination in such proceeding,
the Company, the Trustee and the Holders of Senior Debt Securities and coupons
shall be restored severally and respectively to their former positions under the
Senior Debt Indenture and the Senior Debt Securities and thereafter all rights
and remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted. (Section 509 of the Senior Debt Indenture)
The Senior Debt Indenture provides that, subject to the duty of the Trustee
during default to act with the required standard of care, the Trustee is under
no obligation to exercise any of its rights or powers under such Indenture at
the request or direction of any of the Holders, unless such Holders shall have
offered to the Trustee reasonable indemnity. (Sections 601, 603 of the Senior
Debt Indenture) No Holder of any Senior Debt Security of any series or any
related coupons shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Senior Debt Indenture, or for the appointment of
a receiver or trustee, or for any other remedy thereunder, unless (1) such
Holder has previously given written notice to the Trustee of a continuing Event
of Default with respect to the Senior Debt Securities of that series; (2) the
Holders of not less than 25% in principal amount of the Outstanding Senior Debt
Securities of that series shall have been made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee under the Senior Debt Indenture; (3) such Holder or Holders have offered
to the Trustee reasonable indemnity against the costs, expenses and liabilities
to be incurred in compliance with such request; (4) the Trustee for 60 days
after its receipt of such notice, request and offer of indemnity has failed to
institute any such proceeding; and (5) no direction inconsistent with such
written request has been given to the Trustee during such 60-day period by the
Holders of a majority in principal amount of the Outstanding Senior Debt
Securities of that series. (Section 507 of the Senior Debt Indenture)
Notwithstanding any other provisions in the Senior Debt Indenture, the right of
any Holder of any Senior Debt Security or coupon to receive payment of the
principal of and any premium and any interest on such Senior Debt Security or
payment of such coupon on the Stated Maturity or Maturities expressed in such
Senior Debt Security or coupon, or to institute suit for the enforcement of any
such payment on or after such respective dates shall not be impaired or affected
without the consent of such Holder. (Sections 508, 902 of the Senior Debt
Indenture)
The Holders of a majority in principal amount of the Outstanding Senior
Debt Securities of any series shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred on the Trustee, with respect to the
Senior Debt Securities of such series, provided that (1) such direction shall
not be in conflict with any rule of law or with the Senior Debt Indenture; (2)
the Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction; and (3) the Trustee shall not be obligated to
take any action unduly prejudicial to Holders not joining in such direction or
involving the Trustee in personal liability. (Section 512 of the Senior Debt
Indenture) The Holders of a majority in principal amount of the Outstanding
Senior Debt Securities of any series may on behalf of the Holders of all the
Senior Debt Securities of such series waive any past default under the Senior
Debt Indenture with respect to the Senior Debt Securities of such series and its
consequences, except a default in the payment of the principal of or any premium
or interest on any Senior Debt Security of such series or in respect of a
covenant or provision of the Senior Debt Indenture which, pursuant to the Senior
Debt Indenture, cannot be modified or amended without the consent of the Holder
of each Outstanding Senior Debt Security of such series affected. Upon any such
waiver, such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured, for every purpose of the Senior
Debt Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon. (Sections 513, 902 of the Senior
Debt Indenture)
If a default occurs under the Senior Debt Indenture with respect to Senior
Debt Securities of any series, the Trustee shall give the Holders of Senior Debt
Securities of such series notice of such default as and to the
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extent provided by the Trust Indenture Act; provided, however, that in the case
of any default or breach of certain covenants or warranties with respect to
Senior Debt Securities of such series, no such notice to Holders shall be given
until at least 30 days after the occurrence thereof (the term "default" for
purposes of these provisions being defined as any event which is, or after
notice or lapse of time or both would become, an Event of Default with respect
to the Senior Debt Securities of such series). (Section 602 of the Senior Debt
Indenture)
In any case in which Senior Debt Securities are Outstanding that are
denominated in more than one currency and the Trustee is directed to make
ratable payments under the Senior Debt Indenture to Holders of such Senior Debt
Securities, unless otherwise provided with respect to any series of Senior Debt
Securities, the Trustee shall calculate the amount of such payments as follows:
(i) as of the day the Trustee collects an amount under the Senior Debt
Indenture, the Trustee shall, as to each Holder of a Senior Debt Security to
whom an amount is due and payable under the Senior Debt Indenture that is
denominated in a foreign currency, determine that amount in Dollars that would
be obtained for the amount owing such Holder, using the rate of exchange at
which in accordance with normal banking procedures the Trustee could purchase in
the City of New York Dollars with such amount owing; (ii) calculate the sum of
all Dollar amounts determined under (i) and add thereto any amounts due and
payable in Dollars; and (iii) using the individual amounts determined in (i) or
any individual amounts due and payable in Dollars, as the case may be, as a
numerator, and the sum calculated in (ii) as a denominator, calculate as to each
Holder of a Senior Debt Security to whom an amount is owed under the Senior Debt
Indenture the fraction of the amount collected under the Senior Debt Indenture
payable to such Holder. Any expenses incurred by the Trustee in actually
converting amounts owing Holders of Senior Debt Securities denominated in a
currency other than that in which any amount is collected under the Senior Debt
Indenture shall be likewise (in accordance with the foregoing) borne ratably by
all Holders of Senior Debt Securities to whom amounts are payable under the
Senior Debt Indenture. (Sections 506, 902 of the Senior Debt Indenture)
To the fullest extent allowed under applicable law, if for the purpose of
obtaining judgment against the Company in any court it is necessary to convert
the sum due in respect of the principal of, or premium, if any, or interest on,
the Senior Debt Securities of any series (the "Required Currency") into a
currency in which a judgment will be rendered (the "Judgment Currency"), the
rate of exchange used shall be the rate at which in accordance with normal
banking procedures the Trustee could purchase in the City of New York the
Required Currency with the Judgment Currency on the Business Day in the City of
New York next preceding that on which final judgment is given. Neither the
Company nor the Trustee shall be liable for any shortfall nor shall either of
them benefit from any windfall in payments to Holders of Senior Debt Securities
under this provision of the Senior Debt Indenture caused by a change in exchange
rates between the time the amount of a judgment against the Company is
calculated as above and the time the Trustee converts the Judgment Currency into
the Required Currency to make payments under the foregoing provisions of the
Senior Debt Indenture to Holders of Senior Debt Securities, but payment of such
judgment shall discharge all amounts owed by the Company on the claim or claims
underlying such judgment. (Section 506 of the Senior Debt Indenture)
The Company is required to furnish to the Trustee annually a statement as
to the compliance by the Company with all conditions and covenants under the
Senior Debt Indenture. (Section 1006)
Limitation on Liens. Unless provided otherwise in the applicable Prospectus
Supplement, the provisions of this covenant shall apply to each series of Senior
Debt Securities issued under the Senior Debt Indenture:
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, create, incur, assume or suffer to exist, directly or
indirectly, any Indebtedness secured by a Security Interest upon any Principal
Property of the Company or of a Restricted Subsidiary, whether owned as of the
date of this Indenture or hereafter acquired, without making effective provision
(and the Company hereby covenants that in any such case it shall make or cause
to be made effective provision) whereby the Senior Debt Securities of that
series then outstanding and any other Indebtedness of the Company or any
Restricted Subsidiary then entitled thereto shall be secured by such Security
Interest equally and ratably with (or, in the case of the Senior Debt Securities
of that series and if the Company shall so determine, prior to) any and all
other Indebtedness of the
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Company or any Restricted Subsidiary thereby secured for so long as any such
other Indebtedness of the Company or any Restricted Subsidiary shall be so
secured; provided, that nothing in the Senior Debt Indenture shall prevent,
restrict or apply to Indebtedness secured by:
(1) (a) Any Security Interest upon property or assets which is created
prior to or contemporaneously with, or within 360 days after, (i) in the case of
the acquisition of such property or assets, the completion of such acquisition
and (ii) in the case of the construction, development or improvement of such
property or assets, the later to occur of the completion of such construction,
development or improvement or the commencement of operation or use of the
property or assets, which Security Interest secures or provides for the payment,
financing or refinancing, directly or indirectly, of all or any part of the
acquisition cost of such property or assets or the cost of construction,
development or improvement thereof; or (b) any Security Interest upon property
or assets existing at the time of the acquisition thereof, which Security
Interest secures obligations assumed by the Company or any Restricted
Subsidiary; or (c) any conditional sales agreement or other title retention
agreement with respect to any property or assets acquired by the Company or any
Restricted Subsidiary; or (d) any Security Interest existing on the property or
assets or shares of stock of a corporation or firm at the time such corporation
or firm is merged into or consolidated with the Company or any Restricted
Subsidiary or at the time of a sale, lease or other disposition of the property
or assets of such corporation or firm as an entirety or substantially as an
entirety to the Company or any Restricted Subsidiary or at the time such
corporation becomes a Restricted Subsidiary; or (e) any Security Interest
existing on the property, assets or shares of stock of any successor which shall
have become the Company in accordance with the provisions of the covenant
described in "-- Provisions Applicable Solely to Senior Debt Securities --
Consolidation, Merger and Sale of Assets"; provided, in each case, that any such
Security Interest described in the foregoing clauses (b), (c), (d) or (e) does
not attach to or affect property or assets owned by the Company or any
Restricted Subsidiary prior to the event referred to in such clauses; or
(2) Mechanics', materialmen's, carriers' or other like liens arising in the
ordinary course of business (including construction of facilities) in respect of
obligations which are not due or which are being contested in good faith; or
(3) Any Security Interest arising by reason of deposits with, or the giving
of any form of security to, any governmental agency or any body created or
approved by law or governmental regulation, which is required by law or
governmental regulation as a condition to the transaction of any business or the
exercise of any privilege, franchise or license (including, without limitation,
any Security Interest arising by reason of one or more letters of credit in
connection with any international waste management contract to be performed by
the Company or any of its Subsidiaries or their respective affiliates); or
(4) Security Interests for taxes, assessments or governmental charges or
levies not yet delinquent or Security Interests for taxes, assessments or
governmental charges or levies already delinquent but the validity of which is
being contested in good faith; or
(5) Security Interests (including judgment liens) arising in connection
with legal proceedings so long as such proceedings are being contested in good
faith and, in the case of judgment liens, execution thereon is stayed; or
(6) Landlords' liens on fixtures located on premises leased by the Company
or any Restricted Subsidiary in the ordinary course of business; or
(7) Any Security Interest in favor of any governmental authority in
connection with the financing of the cost of construction or acquisition of
property; or
(8) Any Security Interest arising by reason of deposits to qualify the
Company or any Restricted Subsidiary to conduct business, to maintain
self-insurance, or to obtain the benefit of, or comply with, laws; or
(9) Any Security Interest that secures any Indebtedness of a Restricted
Subsidiary owing to the Company or another Restricted Subsidiary or by the
Company to a Restricted Subsidiary; or
(10) Any Security Interest incurred in connection with pollution control,
sewage or solid waste disposal, industrial revenue or similar financing; or
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(11) Any Security Interest created by any program providing for the
financing, sale or other disposition of trade or other receivables qualified as
current assets in accordance with United States generally accepted accounting
principles entered into by the Company or by any Restricted Subsidiary, provided
that such program is on terms comparable for similar transactions, or any
document executed by the Company or any Restricted Subsidiary in connection
therewith, and provided that such Security Interest is limited to the trade or
other receivables in respect of which such program is created or exists and the
proceeds thereof; or
(12) Any extension, renewal or refunding (or successive extensions,
renewals or refundings) in whole or in part of any Indebtedness secured by any
Security Interest referred to in the foregoing clauses (1) through (11),
inclusive, provided that the Security Interest securing such Indebtedness shall
be limited to the property or assets which, immediately prior to such extension,
renewal or refunding, secured such Indebtedness and additions to such property
or assets.
Notwithstanding the foregoing provisions, the Company or any of its
Restricted Subsidiaries may create, incur, assume or suffer to exist any
Indebtedness secured by a Security Interest without so securing the Senior Debt
Securities of that series if, at the time such Security Interest becomes a
Security Interest upon any Principal Property of the Company or such Restricted
Subsidiary and after giving effect thereto, the aggregate outstanding principal
amount of all Indebtedness of the Company and its Restricted Subsidiaries
secured by Security Interests permitted by this sentence (excluding Indebtedness
secured by a Security Interest existing as of the date of the Senior Debt
Indenture, but including the Attributable Debt in respect of Sale and Leaseback
Transactions, other than Sale and Leaseback Transactions which, if the
Attributable Debt in respect thereof had been Indebtedness secured by a Security
Interest, would have been permitted by clause (1)(a) above, other Sale and
Leaseback Transactions the proceeds of which have been applied or committed to
be applied in accordance with the covenant described in "-- Provisions
Applicable Solely to Senior Debt Securities -- Limitations on Sale and Leaseback
Transactions" and other than Sale and Leaseback Transactions between the Company
and any Restricted Subsidiary) does not exceed 15% of Consolidated Net Tangible
Assets. (Section 1008 of the Senior Debt Indenture)
(b) If, upon any consolidation or merger of any Restricted Subsidiary with
or into any other corporation, or upon any consolidation or merger of any other
corporation with or into the Company or any Restricted Subsidiary or upon any
sale or conveyance of the Principal Property of any Restricted Subsidiary as an
entirety or substantially as an entirety to any other Person, or upon any
acquisition by the Company or any Restricted Subsidiary by purchase or otherwise
of all or any part of the Principal Property of any other Person, any Principal
Property theretofore owned by the Company or such Restricted Subsidiary would
thereupon become subject to any Security Interest not permitted by the terms of
the foregoing covenant, the Company, prior to such consolidation, merger, sale
or conveyance, or acquisition, will, or will cause such Restricted Subsidiary
to, secure payment of the principal of and interest, if any, on the Senior Debt
Securities of that series (equally and ratably with or prior to any other
Indebtedness of the Company or such Restricted Subsidiary then entitled thereto)
by a direct lien on all such Principal Property prior to all liens other than
any liens theretofore existing thereon by a supplemental indenture or otherwise.
Limitations on Sale and Leaseback Transactions. Unless provided otherwise
in the applicable Prospectus Supplement, the provisions of this covenant shall
apply to each series of Senior Debt Securities issued under the Senior Debt
Indenture:
The Company will not, and will not permit any Restricted Subsidiary to,
enter into any arrangement with any Person (other than with any Restricted
Subsidiary) providing for the leasing to the Company or any Restricted
Subsidiary of any Principal Property owned or hereafter acquired by the Company
or such Restricted Subsidiary (except for temporary leases for a term, including
any renewal thereof, of not more than three years and except for leases between
the Company and a Restricted Subsidiary or between Restricted Subsidiaries),
which Principal Property has been or is to be sold or transferred by the Company
or such Restricted Subsidiary to such person (a "Sale and Leaseback
Transaction") unless (a) the Company or such Restricted Subsidiary would be
entitled, pursuant to the covenant described in "-- Provisions Applicable Solely
to Senior Debt Securities -- Limitation on Liens," to incur Indebtedness secured
by a Security Interest on the property to be leased without equally and ratably
securing the Senior Debt Securities of that series, or
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(b) the Company shall, and in any such case the Company covenants that it will,
within 180 days after the effective date of any such arrangement, apply an
amount equal to the fair value (as determined by the Board of Directors) of such
property to the redemption of Senior Debt Securities that, by their terms, are
subject to redemption, or to the purchase and retirement of Senior Debt
Securities, or to the payment or other retirement of funded debt for money
borrowed, incurred or assumed by the Company which ranks senior to or pari passu
with the Senior Debt Securities of that series or of funded debt for money
borrowed, incurred or assumed by any Restricted Subsidiary (other than, in
either case, funded debt owed by the Company or any Restricted Subsidiary), or
(c) the Company shall within 180 days after entering into the Sale and Leaseback
Transaction, enter into a bona fide commitment or commitments to expend for the
acquisition or capital improvement of a Principal Property an amount at least
equal to the fair value (as determined by the Board of Directors) of such
property. (Section 1009 of the Senior Debt Indenture)
Notwithstanding the foregoing, the Company may, and may permit any
Restricted Subsidiary to, effect any Sale and Leaseback Transaction that is not
acceptable pursuant to clauses (a) through (c), inclusive, of the foregoing
covenant, provided that the Attributable Debt associated with such Sale and
Leaseback Transaction, together with the aggregate principal amount of
outstanding debt secured by Security Interests upon Principal Property not
acceptable pursuant to clauses (1) through (12) of the covenant described in
"-- Provisions Applicable Solely to Senior Debt Securities -- Limitation on
Liens," inclusive, do not exceed 15% of Consolidated Net Tangible Assets.
(Section 1009 of the Senior Debt Indenture)
PROVISIONS APPLICABLE SOLELY TO SUBORDINATED DEBT SECURITIES
Consolidation, Merger, Sale. The Subordinated Debt Indenture provides that
the Company may not consolidate with or merge into any other Person or convey,
transfer or lease its properties and assets substantially as an entirety to any
Person, unless (1) the Person formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance or transfer, or
which leases, the properties and assets of the Company substantially as an
entirety shall be a corporation, partnership or trust, organized and validly
existing under the laws of the United States of America, any State thereof or
the District of Columbia and shall expressly assume, by a supplemental
indenture, executed and delivered to the Trustee, in form satisfactory to the
Trustee, the due and punctual payment of the principal of and any premium and
interest (including all additional amounts, if any, payable pursuant to the
Subordinated Debt Indenture) on all the Subordinated Debt Securities and the
performance or observance of every other covenant of the Subordinated Debt
Indenture on the part of the Company to be performed or observed; and (2)
immediately after giving effect to such transaction and treating any
indebtedness which becomes an obligation of the Company or a Subsidiary as a
result of such transaction as having been incurred by the Company or such
Subsidiary at the time of such transaction, no Event of Default, and no event
which, after notice or lapse of time or both, would become an Event of Default,
shall have happened and be continuing. Upon any consolidation of the Company
with, or merger of the Company into, any other Person or any conveyance,
transfer or lease of the properties and assets of the Company substantially as
an entirety, the successor Person formed by such consolidation or into which the
Company is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under the Subordinated Debt Indenture with the same effect as if
such successor Person had been named as the Company herein, and thereafter,
except in the case of a lease, the predecessor Person shall be relieved of all
obligations and covenants under the Subordinated Debt Indenture and the
Subordinated Debt Securities and coupons and may liquidate and dissolve.
(Sections 801, 802 of the Subordinated Debt Indenture)
Event of Default. Unless otherwise specified in the applicable Prospectus
Supplement, an Event of Default is defined under the Subordinated Debt Indenture
with respect to the Subordinated Debt Securities of any series issued under such
Subordinated Debt Indenture as being one or more of the following events:
(1) default in the payment of any interest upon any Subordinated Debt
Security of that series when it becomes due and payable, and continuance of
such default for a period of 30 days; or
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(2) default in the payment of the principal of (or premium, if any,
on) any Subordinated Debt Security of that series as and when the same
becomes due and payable, whether at Stated Maturity or by declaration of
acceleration, call for redemption or otherwise; or
(3) default in the deposit of any sinking fund payment, when and as
due by the terms of a Subordinated Debt Security of that series; or
(4) default in the performance, or breach, of any other covenant or
warranty of the Company in the Subordinated Debt Indenture (other than a
covenant or warranty a default in whose performance or whose breach is
elsewhere in Section 501 of the Subordinated Debt Indenture specifically
dealt with or which has expressly been included in the Subordinated Debt
Indenture solely for the benefit of a series of Subordinated Debt
Securities other than that series), and continuance of such default or
breach for a period of 90 days after there has been given, by registered or
certified mail, to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in principal amount of the
Outstanding Subordinated Debt Securities of that series a written notice
specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" under the Subordinated
Debt Indenture; or
(5) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company in an involuntary case
or proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company under any applicable Federal or State law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any substantial
part of its property, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order for relief or any
such other decree or order unstayed and in effect for a period of 90
consecutive days; or
(6) the commencement by the Company of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to
be adjudicated a bankrupt or insolvent, or the consent by it to the entry
of a decree or order for relief in respect of the Company in an involuntary
case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or the commencement of any
bankruptcy or insolvency case or proceeding against it, or the filing by it
of a petition or answer or consent seeking reorganization or relief under
any applicable Federal or State law, or the consent by it to the filing of
such petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or similar official
of the Company or of any substantial part of its property, or the making by
it of an assignment for the benefit of creditors, or the admission by it in
writing of its inability to pay its debts generally as they become due, or
the taking of corporate action by the Company in furtherance of any such
action; or
(7) any other Event of Default provided with respect to Subordinated
Debt Securities of that series. (Section 501 of the Subordinated Debt
Indenture)
If an Event of Default with respect to Subordinated Debt Securities of any
series at the time Outstanding occurs and is continuing, then in every such
case, the Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Subordinated Debt Securities of that series may declare the
principal amount (or, if any of the Subordinated Debt Securities of that series
are Original Issue Discount Securities, such portion of the principal amount of
such Subordinated Debt Securities as may be specified in the terms thereof) of
all of the Subordinated Debt Securities of that series to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by Holders), and upon any such declaration such principal amount (or specified
amount) shall become immediately due and payable. At any time after such a
declaration of acceleration with respect to the Subordinated Debt Securities of
any series has been made and before a judgment or decree for payment of the
money due has been obtained by the Trustee, the Holders of a majority in
principal amount of the Outstanding Subordinated Debt Securities of that series,
by written notice to the Company and the Trustee, may rescind and annul such
declaration and its consequences if: (1) the Company
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has paid or deposited with the Trustee a sum sufficient to pay (A) all overdue
interest on all Subordinated Debt Securities of that series, (B) the principal
of (and premium, if any, on) any Subordinated Debt Securities of that series
which has become due otherwise than by such declaration of acceleration and any
interest thereon at the rate or rates prescribed therefor in such Subordinated
Debt Securities, (C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates prescribed therefor in such
Subordinated Debt Securities, and (D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel; and (2) all Events of Default with
respect to Subordinated Debt Securities of that series, other than the
non-payment of the principal of Subordinated Debt Securities of that series
which has become due solely by such declaration of acceleration, have been cured
or waived as provided in the Subordinated Debt Indenture. No such rescission
shall affect any subsequent default or impair any right consequent thereon.
(Section 502 of the Subordinated Debt Indenture). If the Trustee or any Holder
of a Subordinated Debt Security or coupon has instituted any proceeding to
enforce any right or remedy under the Subordinated Debt Indenture and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such
case, subject to any determination in such proceeding, the Company, the Trustee
and the Holders of Subordinated Debt Securities and coupons shall be restored
severally and respectively to their former positions under the Subordinated Debt
Indenture and the Subordinated Debt Securities and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted. (Section 509 of the Subordinated Debt Indenture)
The Subordinated Debt Indenture provides that, subject to the duty of the
Trustee during default to act with the required standard of care, the Trustee is
under no obligation to exercise any of its rights or powers under such Indenture
at the request or direction of any of the Holders, unless such Holders shall
have offered to the Trustee reasonable indemnity. (Sections 601, 603 of the
Subordinated Debt Indenture) No Holder of any Subordinated Debt Security of any
series or any related coupons shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Subordinated Debt Indenture, or for
the appointment of a receiver or trustee, or for any other remedy thereunder,
unless (1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Subordinated Debt Securities of
that series; (2) the Holders of not less than 25% in principal amount of the
Outstanding Subordinated Debt Securities of that series shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default in its own name as Trustee under the Subordinated Debt Indenture; (3)
such Holder or Holders have offered to the Trustee reasonable indemnity against
the costs, expenses and liabilities to be incurred in compliance with such
request; (4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and (5) no
direction inconsistent with such written request has been given to the Trustee
during such 60-day period by the Holders of a majority in principal amount of
the Outstanding Subordinated Debt Securities of that series. (Section 507 of the
Subordinated Debt Indenture) Notwithstanding any other provisions in the
Subordinated Debt Indenture, but subject to the subordination provisions of the
Subordinated Debt Indenture, the right of any Holder of any Subordinated Debt
Security or coupon to receive payment of the principal of and any premium and
any interest on such Subordinated Debt Security or payment of such coupon on the
Stated Maturity or Maturities expressed in such Subordinated Debt Security or
coupon and, if applicable, to convert such Subordinated Debt Security as
provided in the conversion provisions of the Subordinated Debt Indenture and to
institute suit for the enforcement of any such payment or conversion right shall
not be impaired without the consent of such Holder. (Sections 508, 902 of the
Subordinated Debt Indenture)
The Holders of a majority in principal amount of the Outstanding
Subordinated Debt Securities of any series shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee, with
respect to the Subordinated Debt Securities of such series, provided that (1)
such direction shall not be in conflict with any rule of law or with the
Subordinated Debt Indenture; (2) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such direction; and (3) the
Trustee shall not be obligated to take any action unduly prejudicial to Holders
not joining in such direction or involving the Trustee in personal liability.
(Section 512 of the Subordinated Debt Indenture). The Holders of a majority in
principal
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amount of the Outstanding Subordinated Debt Securities of any series may on
behalf of the Holders of all the Subordinated Debt Securities of such series
waive any past default under the Subordinated Debt Indenture with respect to the
Subordinated Debt Securities of such series and its consequences, except a
default in the payment of the principal of or any premium or interest on any
Subordinated Debt Security of such series or in respect of a covenant or
provision of the Subordinated Debt Indenture which, pursuant to the Subordinated
Debt Indenture, cannot be modified or amended without the consent of the Holder
of each Outstanding Subordinated Debt Security of such series affected. Upon any
such waiver, such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured, for every purpose of the
Subordinated Debt Indenture; but no such waiver shall extend to any subsequent
or other default or impair any right consequent thereon. (Sections 902, 513 of
the Subordinated Debt Indenture)
If a default occurs under the Subordinated Debt Indenture with respect to
Subordinated Debt Securities of any series, the Trustee shall give the Holders
of Subordinated Debt Securities of such series notice of such default as and to
the extent provided by the Trust Indenture Act; provided, however, that in the
case of any default or breach of certain covenants or warranties with respect to
Subordinated Debt Securities of such series, no such notice to Holders shall be
given until at least 30 days after the occurrence thereof (the term "default"
for purposes of these provisions being defined as any event which is, or after
notice or lapse of time or both would become, an Event of Default with respect
to the Subordinated Debt Securities of such series). (Section 602 of the
Subordinated Debt Indenture)
In any case in which Subordinated Debt Securities are Outstanding that are
denominated in more than one currency and the Trustee is directed to make
ratable payments under the Subordinated Debt Indenture to Holders of such
Subordinated Debt Securities, unless otherwise provided with respect to any
series of Subordinated Debt Securities, the Trustee shall calculate the amount
of such payments as follows: (i) as of the day the Trustee collects an amount
under the Subordinated Debt Indenture, the Trustee shall, as to each Holder of a
Subordinated Debt Security to whom an amount is due and payable under the
Subordinated Debt Indenture that is denominated in a foreign currency, determine
that amount in Dollars that would be obtained for the amount owing such Holder,
using the rate of exchange at which in accordance with normal banking procedures
the Trustee could purchase in the City of New York Dollars with such amount
owing; (ii) calculate the sum of all Dollar amounts determined under (i) and add
thereto any amounts due and payable in Dollars; and (iii) using the individual
amounts determined in (i) or any individual amounts due and payable in Dollars,
as the case may be, as a numerator, and the sum calculated in (ii) as a
denominator, calculate as to each Holder of a Subordinated Debt Security to whom
an amount is owed under the Subordinated Debt Indenture the fraction of the
amount collected under the Subordinated Debt Indenture payable to such Holder.
Any expenses incurred by the Trustee in actually converting amounts owing
Holders of Subordinated Debt Securities denominated in a currency other than
that in which any amount is collected under the Subordinated Debt Indenture
shall be likewise (in accordance with the foregoing) borne ratably by all
Holders of Subordinated Debt Securities to whom amounts are payable under the
Subordinated Debt Indenture. (Section 506 of the Subordinated Debt Indenture)
To the fullest extent allowed under applicable law, if for the purpose of
obtaining judgment against the Company in any court it is necessary to convert
the sum due in respect of the principal of, or premium, if any, or interest on,
the Subordinated Debt Securities of any series (the "Required Currency") into a
currency in which a judgment will be rendered (the "Judgment Currency"), the
rate of exchange used shall be the rate at which in accordance with normal
banking procedures the Trustee could purchase in the City of New York the
Required Currency with the Judgment Currency on the Business Day in the City of
New York next preceding that on which final judgment is given. Neither the
Company nor the Trustee shall be liable for any shortfall nor shall it benefit
from any windfall in payments to Holders of Subordinated Debt Securities under
the Subordinated Debt Indenture caused by a change in exchange rates between the
time the amount of a judgment against the Company is calculated as above and the
time the Trustee converts the Judgment Currency into the Required Currency to
make payments under the foregoing provisions of the Subordinated Debt Indenture
to Holders of Subordinated Debt Securities, but payment of such judgment shall
discharge all amounts owed by the Company on the claim or claims underlying such
judgment. (Section 506 of the Subordinated Debt Indenture)
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The Company is required to furnish to the Trustee annually a statement as
to the compliance by the Company with all conditions and covenants under the
Subordinated Debt Indenture. (Section 1007 of the Subordinated Debt Indenture)
Subordination. The Subordinated Debt Securities will be subordinate and
junior in right of payment, to the extent set forth in the Subordinated Debt
Indenture, to all Senior Indebtedness (as defined below) of the Company. If the
Company should default in the payment of any principal of or premium or interest
on any Senior Indebtedness when the same become due and payable, whether at
maturity or a date fixed for prepayment or by declaration of acceleration or
otherwise, then, upon written notice of such default to the Company by the
holders of such Senior Indebtedness or any trustee therefor and subject to
certain rights of the Company to dispute such default and subject to proper
notification of the Trustee, unless and until such default has been cured or
waived or ceases to exist, no direct or indirect payment (in cash, property,
securities, by set-off or otherwise) will be made or agreed to be made for
principal or premium, if any, or interest, if any, on the Subordinated Debt
Securities, or in respect of any redemption, retirement, purchase or other
acquisition of the Subordinated Debt Securities other than those made in capital
stock of the Company (or cash in lieu of fractional shares thereof) pursuant to
any conversion right of the Subordinated Debt Securities or otherwise made in
capital stock of the Company. (Sections 1601, 1604 and 1605 of the Subordinated
Debt Indenture)
"Senior Indebtedness" is defined in Section 101 of the Subordinated Debt
Indenture as Indebtedness (as defined below) of the Company outstanding at any
time except (a) any Indebtedness as to which, by the terms of the instrument
creating or evidencing the same, it is provided that such Indebtedness is not
senior in right of payment to the Subordinated Debt Securities, (b) the
Subordinated Debt Securities, (c) any Indebtedness of the Company to a
wholly-owned Subsidiary of the Company, (d) interest accruing after the filing
of a petition initiating certain bankruptcy or insolvency proceedings unless
such interest is an allowed claim enforceable against the Company in a
proceeding under federal or state bankruptcy laws, (e) obligations under
performance guarantees, support agreements and other agreements in the nature
thereof relating to the obligations of any Subsidiary of the Company, and (f)
trade accounts payable. "Indebtedness" is defined in Section 101 of the
Subordinated Debt Indenture as, with respect to any Person, (a) (i) the
principal of and interest and premium, if any, on indebtedness for money
borrowed of such Person evidenced by bonds, notes, debentures or similar
obligations, including any guaranty by such Person of any indebtedness for money
borrowed of any other Person, whether any such indebtedness or guaranty is
outstanding on the date of the Subordinated Debt Indenture or is thereafter
created, assumed or incurred, (ii) the principal of and premium and interest, if
any, on indebtedness for money borrowed, incurred, assumed or guaranteed by such
Person in connection with the acquisition by it or any of its subsidiaries of
any other businesses properties or other assets and (iii) lease obligations
which such Person capitalizes in accordance with Statement of Financial
Accounting Standards No. 13 promulgated by the Financial Accounting Standards
Board or such other generally accepted accounting principles as may be from time
to time in effect, (b) any other indebtedness of such Person, including any
indebtedness representing the balance deferred and unpaid of the purchase price
of any property or interest therein, including any such balance that constitutes
a trade account payable, and any guaranty, endorsement or other contingent
obligation of such Person in respect of any indebtedness of another, which is
outstanding on the date of the Subordinated Debt Indenture or is thereafter
created, assumed or incurred by such Person and (c) any amendments,
modifications, refundings, renewals or extensions of any indebtedness or
obligation described as Indebtedness in clause (a) or (b) above.
If (i) without the consent of the Company a court having jurisdiction shall
enter (A) an order for relief with respect to the Company under the United
States federal bankruptcy laws, (B) a judgment, order or decree adjudging the
Company a bankrupt or insolvent, or (C) an order for relief for reorganization,
arrangement, adjustment or composition of or in respect of the Company under the
United States federal bankruptcy laws or state insolvency laws or (ii) the
Company shall institute proceedings for the entry of an order for relief with
respect to the Company under the United States federal bankruptcy laws or for an
adjudication of insolvency, or shall consent to the institution of bankruptcy or
insolvency proceedings against it, or shall file a petition seeking, or seek or
consent to reorganization, arrangement, composition or similar relief under the
United States federal bankruptcy laws or any applicable state law, or shall
consent to the filing
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of such petition or to the appointment of a receiver, custodian, liquidator,
assignee, trustee, sequestrator or similar official in respect of the Company or
of substantially all of its property, or the Company shall make a general
assignment for the benefit of creditors as recognized under the United States
federal bankruptcy laws, then all Senior Indebtedness (including any interest
thereon accruing after the commencement of any such proceedings) will first be
paid in full before any payment or distribution, whether in cash, securities or
other property, may be made to any Holder of Subordinated Debt Securities on
account thereof. In such event, any payment or distribution, whether in cash,
securities or other property (other than securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment the payment
of which is subordinate, at least to the extent provided in the subordination
provisions with respect to the Subordinated Debt Securities, to the payment of
all Senior Indebtedness then outstanding and to any securities issued in respect
thereof under any such plan of reorganization or readjustment), which would
otherwise (but for the subordination provisions) be payable or deliverable in
respect of Subordinated Debt Securities of any series will be paid or delivered
directly to the holders of Senior Indebtedness in accordance with the priorities
then existing among such holders until all Senior Indebtedness (including any
interest thereon accruing after the commencement of any such proceedings) has
been paid in full. If any payment or distribution of any character, whether in
cash, securities or other property (other than securities of the Company or any
other corporation provided for by a plan of reorganization or readjustment the
payment of which is subordinate, at least to the extent provided in the
subordination provisions with respect to the Subordinated Debt Securities, to
the payment of all Senior Indebtedness then outstanding and to any securities
issued in respect thereof under any such plan of reorganization or
readjustment), shall be received by the Trustee or any holder of any
Subordinated Debt Securities in contravention of any of the terms of the
Subordinated Debt Indenture, such payment or distribution will be received in
trust for the benefit of, and will be paid over or delivered and transferred to,
the holders of the Senior Indebtedness then outstanding in accordance with the
priorities then existing among such holders for application to the payment of
all Senior Indebtedness remaining unpaid, to the extent necessary to pay all
such Senior Indebtedness in full. In the event of the failure of the Trustee or
any holder to endorse or assign any such payment, distribution or security, each
Holder of Senior Indebtedness is irrevocably authorized to endorse or assign the
same. In the event of any such proceeding, after payment in full of all sums
owing with respect to Senior Indebtedness, the holders of Subordinated Debt
Securities, together with the holders of any other obligations of the Company
ranking on a parity with the Subordinated Debt Securities, will be entitled to
be repaid from the remaining assets of the Company the amounts at that time due
and owing on account of unpaid principal of and any premium and interest on the
Subordinated Debt Securities and such other obligations before any payment or
other distribution, whether in cash, property or otherwise, shall be made on
account of any capital stock or obligations of the Company ranking junior to the
Subordinated Debt Securities and such other obligations. (Section 1601 of the
Subordinated Debt Indenture)
The Subordinated Debt Indenture provides that Senior Indebtedness shall not
be deemed to have been paid in full unless the holders thereof shall have
received cash, securities or other property equal to the amount of such Senior
Indebtedness then outstanding. Upon the payment in full of all Senior
Indebtedness, the holders of Subordinated Debt Securities of each series shall
be subrogated to all rights of any holders of Senior Indebtedness to receive any
further payments or distributions applicable to such Senior Indebtedness until
the indebtedness evidenced by the Subordinated Debt Securities of such series
shall have been paid in full, and such payments or distributions received by
such Holders, by reason of such subrogation, of cash, securities or other
property that otherwise would be paid or distributed to the holders of Senior
Indebtedness, shall, as between the Company and its creditors other than the
holders of such Senior Indebtedness, on the one hand, and such Holders, on the
other hand, be deemed to be a payment by the Company on account of such Senior
Indebtedness, and not on account of the Subordinated Debt Securities of such
series. (Section 1601 of the Subordinated Debt Indenture)
The Prospectus Supplement respecting any series of Subordinated Debt
Securities will set forth any subordination provisions applicable to such series
in addition to or different from those described above.
By reason of such subordination, in the event of a liquidation, bankruptcy,
reorganization, insolvency, receivership or similar proceeding involving the
Company or an assignment for the benefit of creditors of the Company or any of
its Subsidiaries or a marshalling of assets or liabilities of the Company and
its Subsidiaries,
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holders of Senior Indebtedness and holders of other obligations of the Company
that are not subordinated to Senior Indebtedness may receive more, ratably, than
holders of the Subordinated Debt Securities. Such subordination will not prevent
the occurrence of any Default or Event of Default or limit the rights of the
Trustee or any Holder, subject to the other provisions of the Subordinated Debt
Indenture, to pursue any other rights or remedies with respect to the
Subordinated Debt Securities.
Conversion. The Subordinated Debt Indenture may provide for a right of
conversion of Subordinated Debt Securities into Common Stock (or cash in lieu
thereof). (Sections 301 and 1501 of the Subordinated Debt Indenture). The
following provisions will apply to Debt Securities that are convertible
Subordinated Debt Securities unless otherwise provided in the applicable
Prospectus Supplement for such Debt Securities.
The holder of any convertible Subordinated Debt Securities will have the
right exercisable at any time prior to maturity, unless previously redeemed or
otherwise purchased by the Company, to convert such Subordinated Debt Securities
into shares of Common Stock at the conversion price or conversion rate set forth
in the applicable Prospectus Supplement, subject to adjustment. (Section 1502 of
the Subordinated Debt Indenture) The holder of convertible Subordinated Debt
Securities may convert any portion thereof which is $1,000 in principal amount
or any integral multiple thereof. (Section 1502 of the Subordinated Debt
Indenture)
In certain events, the conversion price or conversion rate will be subject
to adjustment as set forth in the Subordinated Debt Indenture. Such events
include the issuance of shares of Common Stock of the Company as a dividend or
distribution on the Common Stock; subdivisions, combinations and
reclassifications of the Common Stock; the issuance to all holders of Common
Stock of rights or warrants entitling the holders thereof (for a period not
exceeding 45 days) to subscribe for or purchase shares of Common Stock at a
price per share less than the then current market price per share of Common
Stock (as determined pursuant to the Subordinated Debt Indenture); and the
distribution to substantially all holders of Common Stock of evidences of
indebtedness, equity securities (including equity interests in the Company's
Subsidiaries) other than Common Stock, or other assets (excluding cash dividends
paid from surplus) or rights or warrants to subscribe for securities (other than
those referred to above). No adjustment of the conversion price or conversion
rate will be required unless an adjustment would require a cumulative increase
or decrease of at least 1% in such price or rate. (Section 1504 of the
Subordinated Debt Indenture) The Company has been advised by its counsel,
Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P., that certain adjustments in the
conversion price or conversion rate in accordance with the foregoing provisions
may result in constructive distributions to either holders of the Subordinated
Debt Securities or holders of Common Stock which would be taxable pursuant to
Treasury Regulations issued under Section 305 of the Internal Revenue Code of
1986, as amended. The amount of any such taxable constructive distribution would
be the fair market value of the Common Stock which is treated as having been
constructively received, such value being determined as of the time the
adjustment resulting in the constructive distribution is made.
Fractional shares of Common Stock will not be issued upon conversion, but,
in lieu thereof, the Company will pay a cash adjustment based on the then
current market price for the Common Stock. (Section 1503 of the Subordinated
Debt Indenture) Upon conversion, no adjustments will be made for accrued
interest or dividends, and therefore convertible Subordinated Debt Securities
surrendered for conversion between an Interest Payment Date and on or prior to
the record date pertaining to the subsequent Interest Payment Date will not be
considered Outstanding and no interest will be paid on the related Interest
Payment Date. Convertible Subordinated Debt Securities (except convertible
Subordinated Debt Securities called for redemption on a redemption date during
such period) surrendered for conversion during the period between the close of
business on any record date for an Interest Payment Date for such convertible
Subordinated Debt Security and the opening of business on the related Interest
Payment Date shall be considered Outstanding for purposes of payment of
interest, and, therefore, must be accompanied by payment of an amount equal to
the interest payable thereon on such Interest Payment Date. (Sections 1504 and
1502 of the Subordinated Debt Indenture)
In the case of any consolidation or merger of the Company (with certain
exceptions) or any conveyance, transfer or lease of the properties and assets of
the Company substantially as an entirety to any Person, each
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holder of convertible Subordinated Debt Securities, after the consolidation,
merger, conveyance, transfer or lease, will have the right to convert such
convertible Subordinated Debt Securities only into the kind and amount of
securities, cash and other property which the holder would have been entitled to
receive upon or in connection with such consolidation, merger, conveyance,
transfer or lease, if the holder had held the Common Stock issuable upon
conversion of such convertible Subordinated Debt Securities immediately prior to
such consolidation, merger, conveyance, transfer or lease. (Section 1505 of the
Subordinated Debt Indenture)
DESCRIPTION OF CAPITAL STOCK
GENERAL
The Company is currently authorized to issue 300,000,000 shares of its
Common Stock, par value $.01 per share, of which 161,270,883 shares were
outstanding on June 27, 1997 and 10,000,000 shares of Preferred Stock, par value
$.01 per share (the "Preferred Stock"), none of which were outstanding on such
date.
COMMON STOCK
Each holder of Common Stock is entitled to one vote per share held of
record on each matter submitted to stockholders. Cumulative voting for the
election of directors is not permitted, and the holders of a majority of shares
voting for the election of directors can elect all members of the Board of
Directors.
Subject to the rights of any holders of Preferred Stock, holders of record
of shares of Common Stock are entitled to receive ratably dividends when and if
declared by the Board of Directors out of funds legally available therefor. In
the event of a voluntary or involuntary winding up or dissolution, liquidation
or partial liquidation of the Company, holders of Common Stock are entitled to
participate ratably in any distribution of the assets of the Company, subject to
any prior rights of holders of any outstanding Preferred Stock.
Holders of Common Stock have no conversion, redemption or preemptive
rights. All outstanding shares of Common Stock are, and the Common Stock to be
issued hereunder will be, validly issued, fully paid and nonassessable.
PREFERRED STOCK
The Board of Directors is authorized, without further approval of the
stockholders, to issue the Preferred Stock in series and with respect to each
series, to fix its designations, relative rights (including voting, dividend,
conversion, sinking fund and redemption rights), preferences (including with
respect to dividends and upon liquidation), privileges and limitations. The
Board of Directors, without stockholder approval, may issue Preferred Stock with
voting and conversion rights, both of which could adversely affect the voting
power of the holders of Common Stock, and dividend or liquidation preferences
that would restrict Common Stock dividends or adversely affect the assets
available for distribution to holders of shares of Common Stock upon the
Company's dissolution.
AUTHORIZED BUT UNISSUED SHARES
Authorized but unissued shares of Common Stock or Preferred Stock can be
reserved for issuance by the Board of Directors from time to time without
further stockholder action for proper corporate purposes, including stock
dividends or stock splits, raising equity capital and structuring future
corporate transactions, including acquisitions.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is Boston EquiServe,
Boston, Massachusetts.
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DELAWARE ANTI-TAKEOVER LAW
Section 203 of the DGCL ("Section 203") generally provides that a person
who, together with affiliates and associates owns, or within three years did
own, at least 15% but less than 85% of the outstanding voting stock of a
corporation subject to the statute (an "Interested Stockholder") may not engage
in certain business combinations with the corporation for a period of three
years after the date on which the person became an Interested Stockholder unless
(i) prior to such date, the corporation's board of directors approved either the
business combination or the transaction in which the stockholder became an
Interested Stockholder or (ii) subsequent to such date, the business combination
is approved by the corporation's board of directors and authorized at a
stockholders' meeting by a vote of at least two-thirds of the corporation's
outstanding voting stock not owned by the Interested Stockholder. Section 203
defines the term "business combination" to encompass a wide variety of
transactions with or caused by an Interested Stockholder, including mergers,
asset sales, and other transactions in which the Interested Stockholder receives
or could receive a benefit on other than a pro rata basis with other
stockholders.
The provisions of Section 203, combined with the Board of Directors'
authority to issue Preferred Stock without further stockholder action, could
delay or frustrate a change in control of the Company. The provisions also could
discourage, impede or prevent a merger, tender offer or proxy contest, even if
such event would be favorable to the interests of stockholders. The Company's
stockholders, by adopting an amendment to the Restated Certificate of
Incorporation, may elect not to be governed by Section 203 which election would
be effective 12 months after such adoption. Neither the Company's Restated
Certificate of Incorporation nor its Bylaws exclude the Company from the
restrictions imposed by Section 203.
PLAN OF DISTRIBUTION
GENERAL
The Company may sell Securities to or through underwriters or dealers, and
also may sell Securities directly to other purchasers or through agents.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, or at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
In connection with the sale of Securities, underwriters may receive
compensation from the Company, or purchasers of Securities for whom they may act
as agents in the form of discounts, concessions or commissions. Underwriters,
dealers and agents that participate in the distribution of Securities may be
deemed to be underwriters, and any discounts or commissions received by them
from the Company or the purchasers of Securities, as the case may be, and any
profit on the resale of Securities by them may be deemed to be underwriting
discounts and commissions under the Securities Act. Any such person who may be
deemed to be an underwriter will be identified, and any such compensation
received from the Company will be described, in the applicable Prospectus
Supplement.
Debt Securities, when first issued, will have no established trading
market. Any underwriters or agents to or through whom Debt Securities are sold
by the Company for public offering and sale may make a market in such Debt
Securities, but such underwriters or agents will not be obligated to do so and
may discontinue any market making at any time without notice. No assurance can
be given as to the liquidity of the trading market for any Debt Securities.
Under agreements which may be entered into by the Company, underwriters,
dealers and agents who participate in the distribution of Securities may be
entitled to indemnification by the Company against or contribution toward
certain liabilities, including liabilities under the Securities Act.
DELAYED DELIVERY ARRANGEMENT
If so indicated in the applicable Prospectus Supplement, the Company will
authorize underwriters or other persons acting as the Company's agents to
solicit offers by certain institutions to purchase Debt
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<PAGE> 40
Securities from the Company pursuant to contracts providing for payment and
delivery on a future date. Institutions with which such contracts may be made
include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions and others, but in
all cases will be subject to the approval of the Company. The obligations of any
purchaser under any such contract will be subject to the condition that the
purchase of the Debt Securities shall not at the time of delivery be prohibited
under the laws of any jurisdiction to which such purchaser is subject. The
underwriters and such agents will not have any responsibility in respect of the
validity or performance of such contracts.
VALIDITY OF SECURITIES
The validity of the Offered Securities, as well as certain tax matters in
connection therewith, will be passed upon for the Company by Liddell, Sapp,
Zivley, Hill & LaBoon, L.L.P., Houston, Texas and certain legal matters will be
passed upon for any agents, dealers or underwriters by McDermott, Will & Emery,
Chicago, Illinois.
EXPERTS
The consolidated balance sheets of USA Waste as of December 31, 1996 and
1995 and the consolidated statements of operations, stockholders' equity, and
cash flows for each of the three years in the period ended December 31, 1996, of
USA Waste, incorporated by reference in this Prospectus, have been incorporated
herein in reliance on the report of Coopers & Lybrand L.L.P., independent
accountants, given on the authority of that firm as experts in accounting and
auditing.
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE UNDERWRITERS. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY THE SECURITIES OFFERED HEREBY BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER AND THEREUNDER SHALL CREATE ANY IMPLICATION THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PROSPECTUS SUPPLEMENT PAGE
<S> <C>
Prospectus Supplement Summary.......... S-3
Use of Proceeds........................ S-5
Ratios of Earnings to Fixed Charges.... S-5
Description of Notes................... S-7
Underwriting........................... S-11
Legal Matters.......................... S-12
PROSPECTUS
Available Information.................. 2
Incorporation of Certain Documents by
Reference............................ 2
The Company............................ 3
Use of Proceeds........................ 3
Ratios of Earnings to Fixed Charges.... 3
Description of Debt Securities......... 4
Description of Capital Stock........... 26
Plan of Distribution................... 27
Validity of Securities................. 28
Experts................................ 28
</TABLE>
======================================================
======================================================
$500,000,000
USA WASTE
SERVICES, INC.
6 1/2% SENIOR NOTES DUE 2002
7 1/8% SENIOR NOTES DUE 2017
------------------------------------------
PROSPECTUS SUPPLEMENT
------------------------------------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MERRILL LYNCH & CO.
J.P. MORGAN & CO.
DEUTSCHE MORGAN GRENFELL
DECEMBER 12, 1997
======================================================
