<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _________ to__________
Commission file number 1-12154
USA WASTE SERVICES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 73-1309529
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1001 FANNIN STREET, SUITE 4000
HOUSTON, TEXAS 77002
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 512-6200
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
Title of each class Name of each exchange on which registered
<S> <C>
COMMON STOCK, $.01 PAR VALUE NEW YORK STOCK EXCHANGE
5% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2006
4% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2002
</TABLE>
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ___
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulations S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates
of the registrant at March 25, 1997, was approximately $5,044,347,000. The
aggregate market value was computed by using the closing price of the common
stock as of that date on the New York Stock Exchange. (For purposes of
calculating this amount only, all directors and executive officers of the
registrant have been treated as affiliates.)
The number of shares of Common Stock, $.01 par value, of the Registrant
outstanding at March 25, 1997, was 154,110,368.
DOCUMENTS INCORPORATED BY REFERENCE
<TABLE>
<CAPTION>
Document Incorporated as to
-------- ------------------
<S> <C>
PROXY STATEMENT
FOR THE 1997 ANNUAL MEETING OF STOCKHOLDERS PART III
</TABLE>
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I PAGE
<S> <C>
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . . . 12
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters . . . . . . . . . . . . . 14
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . 16
Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . 51
PART III
Item 10. Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . . . . . . 51
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Item 12. Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . . . . . 51
Item 13. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . . . . . 51
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K . . . . . . . . . . . . . . . . 52
</TABLE>
ii
<PAGE> 3
PART I
ITEM 1. BUSINESS.
GENERAL
USA Waste Services, Inc. ("USA Waste" or the "Company") is the third
largest integrated solid waste management company in North America and serves
the full spectrum of municipal, commercial, industrial, and residential
customers in 36 states, the District of Columbia, Canada, Mexico, and Puerto
Rico. 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. At December 31, 1996, USA Waste owned
or operated 123 collection operations, 61 transfer stations, 101 landfills, and
served more than 2 million customers. The Company has a diversified customer
base with no single customer accounting for more than 5% of the Company's
operating revenues during 1996. The Company employs approximately 9,800
people.
The terms "USA Waste" and the "Company" refer to USA Waste Services, Inc.,
a Delaware corporation incorporated on April 28, 1995, to become the successor
company of USA Waste Services, Inc., an Oklahoma corporation organized in 1987,
and include its predecessors, subsidiaries, and affiliates, unless the context
requires otherwise. USA Waste's executive offices are located at 1001 Fannin
Street, Suite 4000, Houston, Texas 77002, and its telephone number is (713)
512-6200.
Of the Company's revenues for the year ended December 31, 1996,
approximately 52.6% was attributable to collection operations, approximately
10.8% was from transfer operations, approximately 29.0% was attributable to
landfill operations, and approximately 7.6% from other operations. The
Company's average landfill volume for the year ended December 31, 1996, was
approximately 88,600 tons per day.
INDUSTRY BACKGROUND
USA Waste operates in the non-hazardous solid waste segment of the waste
management industry. Despite the size of this industry, it has historically
been a fragmented industry, with a multitude of local private and municipal
operators servicing relatively centralized areas. In recent years, the
industry has undergone a period of significant consolidation, however, local
private and municipal operations continue to service approximately 60% of the
domestic solid waste business.
One of the principal forces driving consolidation within the solid waste
management industry is increased regulation and enforcement of collection and
disposal activities. In October 1991, the Environmental Protection Agency
("EPA") adopted new regulations pursuant to Subtitle D of the Resource
Conservation and Recovery Act governing the disposal of solid waste. These
regulations led to a variety of requirements applicable to landfill disposal
sites, including the construction of liners and the installation of leachate
collection systems, groundwater monitoring systems, and methane gas recovery
systems. The regulations also required enhanced control systems to monitor
more closely the waste streams being disposed at the landfills, extensive
post-closure monitoring of sites, and financial assurances that landfill
operators will be able to comply with the stringent regulations. The result of
these regulatory requirements has been increased costs throughout the various
segments of the industry, with particularly significant increases for landfill
operators.
Compliance with the regulations currently in effect for the non-hazardous
solid waste industry requires significant capital expenditures. Many industry
participants have found the increased costs difficult, if not impossible, to
bear. A large number of smaller, independent operators have decided to either
close down their operations or sell them to stronger operators, and some
municipalities have chosen to discontinue, or are considering discontinuing,
their operations and turning the management of solid waste services over to
private concerns.
The rising costs associated with the new industry regulations have been a
cause of consolidation and acquisition activity within the industry. Large
waste management companies, with sufficient financial resources to absorb the
initial costs of bringing operations into compliance, have taken advantage of
discontinuations and divestitures by acquiring operations which either
complement existing businesses or otherwise increase overall strength and
flexibility. Compliance costs at the landfill/disposal level have directly
affected costs in the collection segment of the market as landfill operators
pass them on through higher fees for disposal or "tipping." In addition,
companies active in various segments of the industry continue to seek vertical
integration to enable them to become more cost effective and competitive.
Finally, the higher cost structure has also led to the merger of a number of
independent collection operations to enhance financial strength and improve
operating efficiencies.
1
<PAGE> 4
STRATEGY
The Company intends to capitalize on the consolidation in the solid waste
management industry in several ways. Key elements of the Company's strategy
include:
o Increasing productivity and operating efficiencies in existing and acquired
operations. The Company seeks to increase productivity, achieve
administrative and operating efficiencies, and improve profitability in
existing operations and acquired businesses, with the objective of becoming
the low cost operator in each of its markets. Measures taken by the
Company in this area include consolidating and implementing uniform
administrative and management systems, restructuring and consolidating
collection routes, improving equipment utilization, and increasing
employee productivity through incentive compensation and training programs.
The Company's management believes that its ability to serve markets as a
low cost operator is fundamental to achieving sustainable internal growth
and to realizing the benefits of its acquisition strategy.
o Increasing revenues and enhancing profitability through tuck-in
acquisitions. The Company continually seeks 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. These acquisitions typically involve adding collection
operations, transfer stations, or landfills that are complementary to
existing operations and that permit the Company to implement operating
efficiencies and increase asset utilization.
o Expanding into new markets through acquisitions. The Company pursues
acquisitions in new markets where the Company believes it can strengthen
its overall competitive position as a national provider of integrated solid
waste management services and where opportunities exist to apply the
Company's operating and management expertise to enhance the performance of
acquired operations.
On August 30, 1996, the Company consummated a merger agreement with
Sanifill, Inc. ("Sanifill") accounted for as a pooling of interests (the
"Sanifill Merger"). Under the terms of the Sanifill Merger, the Company issued
1.70 shares of its common stock for each share of Sanifill outstanding common
stock. The Sanifill Merger increased the Company's outstanding shares of
common stock by approximately 43,414,000 shares and the Company assumed
Sanifill's options and warrants equivalent to approximately 4,361,000
underlying shares of Company common stock. Sanifill owned and operated
nonhazardous waste disposal, treatment, collection, transfer station, and
recycling businesses and complementary operations. Since it was founded in
1989, Sanifill acquired 142 disposal, collection, and related businesses. As
of June 30, 1996, Sanifill operated 50 disposal and treatment facilities, 26
transfer stations, and 36 collection operations. In addition, Sanifill
provided sludge treatment and organic recycling services.
On May 7, 1996, the Company consummated a merger agreement with Western
Waste Industries ("Western") accounted for as a pooling of interests (the
"Western Merger"). Under the terms of the Western Merger, the Company issued
1.50 shares of its common stock for each share of Western outstanding common
stock. Prior to the Western Merger, the Company owned approximately 4.1% of
Western's outstanding shares (634,900 common shares), which were canceled on
the Western Merger's effective date. The Western Merger increased the
Company's outstanding shares of common stock by approximately 22,028,000 shares
and the Company assumed options under Western's stock option plans equivalent
to approximately 5,200,000 underlying Company shares of common stock. With the
addition of the Western operations, which include significant collection
operations, the Company significantly increased its presence in California and
added additional operations in Texas, Louisiana, Florida, Colorado, and
Arkansas. Western had 91 municipal and regional authority contracts and served
over 785,000 customers. As part of its business, Western operated six
landfills, three transfer stations, and five recycling facilities.
In addition to the consummation of public mergers with Sanifill and
Western, the Company acquired 90 collection operations, 18 transfer stations,
18 landfills, and six recycling businesses during 1996, with annualized
revenues aggregating approximately $383,000,000.
On March 12, 1997, the Company acquired all of the Canadian solid waste
subsidiaries of Allied Waste Industries, Inc. ("Allied"), representing 41
collection businesses, seven landfills, and eight transfer stations in the
provinces of Alberta, British Columbia, Manitoba, Ontario, Quebec, and
Saskatchewan, for approximately $518,000,000 in cash. These assets were
acquired by Allied in December 1996 from Laidlaw, Inc. in conjunction with
Allied's acquisition of all of Laidlaw, Inc.'s North American solid waste
businesses.
The Company's business is subject to extensive federal, state, and local
regulation and legislative initiative. Further, in some states and
municipalities, its business is subject to environmental regulation, mandatory
recycling laws, prohibitions on the deposit of certain waste in landfills, and
restrictions on the flow of solid waste. Because of continuing public awareness
and influence regarding the collection, transfer, and disposal of waste and the
preservation of the environment, and uncertainty with respect to the enactment
and enforcement of future laws and regulations, the Company cannot always
accurately predict
2
<PAGE> 5
the impact any future regulation or law may have on its operations. See
"Regulation" and "Legal Proceedings" for additional information.
OPERATIONS
USA Waste provides collection, transfer, disposal, and recycling services
to municipal, commercial, industrial, and residential customers in 36 states,
the District of Columbia, Canada, Mexico, and Puerto Rico.
Management of USA Waste's solid waste operations is achieved through an
alignment that currently includes five regions organized by geographic area.
Each region is headed by a regional vice president ("RVP"). Each RVP is
responsible for the oversight of the following departments: sales and
marketing, administration and finance, operations, and maintenance. In
addition, each RVP typically has a small staff that works interactively with
the corporate office to ensure proper regulatory compliance and reporting,
engineering services, internal and external development, and strategic
planning. Geographically, a region generally encompasses a multi-state area
and may have a concentration from approximately 15 to 50 districts. Regions
are divided into districts headed by a district manager. Each district manager
is responsible for the day-to-day oversight of the district's field operations,
with direct responsibility for customer satisfaction, employee motivation,
labor and equipment productivity, internal growth, financial budgets, and
profit and loss activity. A district generally encompasses a city, county, or
metropolitan area. In areas of substantial concentration, a divisional vice
president, reporting to a RVP, may oversee several districts.
Collection. Solid waste collection is provided under two primary types of
arrangements depending on the customer being served. Commercial and industrial
collection services are generally performed under one to three-year service
agreements, and fees are determined by such factors as collection frequency,
type of collection equipment furnished by USA Waste, type and volume or weight
of the waste collected, the distance to the disposal facility, and cost of
disposal. Most residential solid waste collection services are performed under
contracts with, or franchises granted by, municipalities or regional
authorities that have granted USA Waste exclusive rights to service all or a
portion of the homes in their respective jurisdictions. Such contracts or
franchises usually range in duration from one to five years. Recently, some
municipalities have requested bids on their residential collection contracts
based on the volume of waste collected. Residential collection fees are either
paid by the municipalities from their tax revenues or service charges or are
paid directly by the residents receiving the service.
As part of its services, the Company provides steel containers to most of
its commercial and industrial customers to store solid waste. These containers,
ranging in size from one to 45 cubic yards, are designed to be lifted
mechanically and either emptied into a collection vehicle's compaction hopper
or directly into a disposal site in the case of industrial customers. The use
of containers enables the Company to service most of its commercial and
industrial customers with collection vehicles operated by a single employee.
USA Waste often obtains waste collection accounts through acquisitions,
including the purchase of customer lists, routes, and equipment. Once a
collection operation is acquired, programs designed to improve equipment
utilization, employee productivity, operating efficiencies, and overall
profitability are implemented. USA Waste also solicits commercial and
industrial customers in areas surrounding acquired residential collection
markets as a means of further improving operating efficiencies and increasing
volumes of solid waste collection.
As of December 31, 1996, USA Waste operated collection operations in
approximately 123 locations in 32 states, Canada, Mexico, and Puerto Rico. On
an overall basis, Company collection operations deliver approximately 48% of
collected waste to landfills owned or operated by the Company. In the
remaining markets, the waste collected is delivered to a municipal, county, or
privately owned unaffiliated landfill or transfer station.
Transfer Stations. A transfer station is a facility located near
residential and commercial collection routes where solid waste is received from
collection vehicles and then transferred to and compacted in large,
specially-constructed trailers for transportation to disposal facilities. This
consolidation reduces costs by improving utilization of collection personnel
and equipment. Fees are generally based on such factors as the type and volume
or weight of the waste transferred and the transportation distance to disposal
sites. USA Waste owns or operates 61 transfer stations, most of which transfer
some or all of the waste received to a landfill owned or operated by the
Company.
Landfills. Municipal solid waste landfills are the primary depository for
solid waste in North America, Canada, and Mexico. These disposal facilities
are located on land with geological and hydrological properties that limit the
possibility of water pollution, and are operated under prescribed procedures.
A landfill must be maintained carefully to meet federal, state, and local
regulations. Maintenance includes excavation, continuous spreading and
compacting of waste, and covering of waste with earth or other inert material
at least once a day. The cost of transporting solid waste to a disposal
location places a geographic restriction on solid waste companies. Access to a
disposal facility, such as a landfill, is a necessity for all solid waste
management companies. While access can be obtained to disposal facilities
owned or operated by unaffiliated parties, USA Waste believes that it is
generally preferable for collection companies to utilize disposal facilities
owned or operated by affiliated parties so that access can be assured on
favorable terms. Customers are charged disposal charges or tipping fees
3
<PAGE> 6
based on market factors and the type and volume or weight of solid waste
deposited and the type and size of vehicles used in the conveyance of solid
waste.
The ownership or lease of a landfill site enables USA Waste to dispose of
waste without payment of disposal fees to unaffiliated parties. The Company
does not own or lease a landfill site in every metropolitan area in which it is
engaged in waste collection. To date, the Company has not experienced excessive
difficulty securing the use of disposal facilities owned or operated by
unaffiliated parties in those metropolitan areas in which it does not own or
operate its own landfill. The Company's landfills are also used by unaffiliated
waste collection companies and government agencies.
As of December 31, 1996, USA Waste owned and operated 84 non-hazardous
solid waste landfills and operated another 17 non-hazardous solid waste
landfills. Of the 101 landfills owned or operated by USA Waste, the average
remaining life based on remaining permitted capacity and current average daily
disposal volumes is approximately 25 years.
Recycling. In response to the increasing public environmental awareness
and expanding federal, state, and local regulations pertaining to waste
recycling, USA Waste has developed recycling as a component of its
environmentally responsible integrated solid waste management plan. Curbside
collection of recyclable materials for residential customers, commercial and
industrial collection of recyclable materials, and material recovery/waste
reduction facilities are services in which USA Waste has become involved to
complement its collection and transfer station operations. Although the
Company continues to provide the service of collecting recyclable products, to
date the Company has not made material capital investments in material
recovery/waste reduction facilities. Additional opportunities for expansion in
these areas will continue to be evaluated.
USA Waste operates curbside recycling programs in connection with its
residential collection operations in a number of markets and in association
with a number of its transfer stations. Fees are determined by such
considerations as market factors, frequency of collection, the type and volume
or weight of recycled material, the distance the recycled material must be
transported, and the value of the recycled material. Overall, however, USA
Waste is not materially affected financially by fluctuations in commodity
pricing for recyclable materials.
COMPETITION
The solid waste industry is highly competitive and requires substantial
amounts of capital. The industry is comprised of two large companies, WMX
Technologies, Inc. and Browning-Ferris Industries, Inc., a number of mid-sized
and small companies, numerous municipalities and other regional or multi-county
authorities, and large commercial and industrial companies handling their own
waste collection or disposal operations. WMX Technologies, Inc. and Browning-
Ferris Industries, Inc. have significantly larger operations and greater
financial resources than the Company. Municipalities and counties are often
able to offer lower direct charges to the customer for the same service by
subsidizing the cost of such services through the use of tax revenues and
tax-exempt financing. Generally, however, municipalities do not provide
significant commercial and industrial collection or waste disposal.
The Company competes for landfill business on the basis of tipping fees,
geographical location, and quality of operations. The Company's ability to
obtain landfill business may be limited by the fact that some major collection
companies also own or operate landfills to which they send their waste. The
Company competes for collection accounts primarily on the basis of price and
the quality of its services. Intense competition is encountered for both
quality of service and pricing. From time to time, competitors may reduce the
price of their services and accept lower profit margins in an effort to expand
or maintain market share or to competitively win bid contracts.
The Company provides residential collection services under a number of
municipal contracts. As is the case in the industry, such contracts come up for
competitive bidding periodically and there is no assurance that the Company
will be the successful bidder and will be able to retain such contracts. If the
Company is unable to replace any contract lost through the competitive bidding
process with a comparable contract within a reasonable time period or to use
any surplus equipment in other service areas, the earnings of the Company could
be adversely affected. However, during 1996, no one commercial customer or
municipal contract accounted for more than 5% of the operating revenues of the
Company. As the Company continues to grow, the loss of any one contract will
have less of an impact on the Company's operations as a whole.
Increased public environmental awareness and certain mandated state
regulations have resulted in increased recycling efforts in many different
areas of the country that are currently and will in the future reduce the
amount of solid waste destined for landfills. In addition, the Company could
face competition from companies engaged in waste incineration and other
alternatives to landfill disposal. Although the Company believes that
landfills will continue to be the primary depository for solid waste well into
the future, there can be no assurance that recycling, incineration, and waste
reduction efforts will not affect future landfill disposal volumes. The effect,
if any, on such volumes could also vary between different regions of the
country as well as within individual market areas in each region.
4
<PAGE> 7
PRICING
Operating costs, disposal costs, and collection fees vary widely throughout
the geographic areas in which the Company operates. The prices that the Company
charges are determined locally, and typically by the volume or weight, type of
waste collected, treatment requirements, risks involved in the handling or
disposing of waste, frequency of collections, distance to final disposal sites,
and amount and type of equipment furnished to the customer. Under certain
contracts, the Company's ability to pass on cost increases is limited.
Long-term solid waste collection contracts typically contain a formula,
generally based on published price indices, for automatic adjustment of fees to
cover increases in some, but not all, operating costs.
EMPLOYEES
At December 31, 1996, the Company had approximately 9,800 full-time
employees, of which approximately 2,300 were employed in clerical,
administrative, and sales positions, 235 in management, and the balance in
collection, transfer, and disposal operations. Approximately 1,700 of the
Company's employees at 37 operating locations are covered by collective
bargaining agreements. The Company has not experienced a work stoppage, and
management considers its employee relations to be good.
INSURANCE AND FINANCIAL ASSURANCE OBLIGATIONS
The Company carries a broad range of insurance coverages, which management
considers prudent for the protection of the Company's assets and operations.
Some of these coverages are subject to varying retentions of risk by the
Company. At December 31, 1996, the casualty coverages included $2,000,000
primary commercial general liability and $1,000,000 primary automobile
liability supported by $100,000,000 in umbrella insurance protection. The
umbrella insurance coverage was increased to $150,000,000 as of January 1,
1997. The property policy provides insurance coverages for all of the
Company's real and personal property, including California earthquake perils.
The Company also carries $200,000,000 in aircraft liability protection.
The Company maintains workers' compensation insurance in accordance with
laws of the various states in which it has employees. The Company also
currently has an environmental impairment liability ("EIL") insurance policy
for certain of its landfills and transfer stations that provides coverage for
property damages and/or bodily injuries to third parties caused by off-site
pollution emanating from such landfills or transfer stations. This policy
provides $5,000,000 of coverage per incident with a $10,000,000 aggregate
limit.
To date, the Company has not had any difficulty in obtaining insurance.
However, if the Company in the future is unable to obtain adequate insurance,
or decides to operate without insurance, a partially or completely uninsured
claim against the Company, if successful and of sufficient magnitude, could
have a material adverse effect upon the Company's financial condition or
results of operations. Additionally, continued availability of casualty and
EIL insurance with sufficient limits at acceptable terms is an important aspect
of obtaining revenue-producing waste service contracts.
Municipal and governmental waste management contracts typically require
performance bonds or bank letters of credit to secure performance. In
addition, the Company is required to provide financial assurance for closure
and post-closure obligations with respect to its landfills. The Company has
not experienced difficulty in obtaining performance bonds or letters of credit
for its current operations. At December 31, 1996, the Company had provided to
municipalities and other customers and various regulatory authorities surety
bonds of approximately $184,164,000 and letters of credit of approximately
$3,271,000 to secure its obligations, exclusive of letters of credit enhancing
industrial revenue bonds of approximately $164,639,000. Continued availability
of surety bonds and letters of credit in sufficient amounts at acceptable rates
is an important aspect of obtaining additional municipal collection contracts
and obtaining or retaining landfill operating permits.
REGULATION
General - Potential Adverse Effect of Government Regulations
All of the Company's principal business activities are subject to extensive
and evolving environmental, health, safety, and transportation laws and
regulations at the federal, state, and local levels. These regulations are
administered by the EPA in the United States and various other federal, state,
and local environmental, zoning, health, and safety agencies in the United
States and elsewhere, many of which periodically examine the Company's
operations to monitor compliance with such laws and regulations.
The development, expansion, and operation of landfills and transfer
stations are subject to extensive regulations governing siting, design,
operations, monitoring, site maintenance, corrective actions, financial
assurance, and closure and post-closure obligations. In order to construct,
expand, and operate a landfill or transfer station, the Company must obtain and
maintain one or more construction or operating permits and licenses and, in
certain instances, applicable zoning approvals. Obtaining the necessary permits
and approvals in connection with the acquisition, development, or expansion of
a landfill or transfer
5
<PAGE> 8
station is difficult, time-consuming (often taking two to three years or more),
and expensive, and is frequently opposed by local citizen and/or environmental
groups. Once obtained, operating permits are subject to modification and
revocation by the issuing agency. Compliance with current and future regulatory
requirements may require the Company, as well as others in the waste management
industry, from time to time, to make significant capital and operating
expenditures.
In the collection segment of the industry, regulation takes such forms as
licensing collection vehicles, health and safety requirements, vehicular weight
limitations, and, in certain localities, limitations on weight, area, time, and
frequency of collection.
Federal, state, and local governments have from time to time proposed or
adopted other types of laws, regulations, or initiatives with respect to the
environmental services industry, including laws, regulations, and initiatives
to ban or restrict the international, interstate, or intrastate shipment of
wastes, impose higher taxes on out-of-state waste shipments than on in-state
shipments, limit the types of wastes that may be disposed of at existing
landfills, mandate waste minimization initiatives, require recycling and yard
waste composting, reclassify certain categories of non-hazardous waste as
hazardous, and regulate disposal facilities as public utilities. Congress has
from time to time considered legislation that would enable or facilitate such
bans, restrictions, taxes, and regulations, many of which could adversely
affect the demand for the Company's services. Similar types of laws,
regulations, and initiatives have also from time to time been proposed or
adjusted in other jurisdictions in which the Company operates. The effect of
these and similar laws could be a reduction of the volume of waste that would
otherwise be disposed of in Company landfills. The Company makes a continuing
effort to anticipate regulatory, political, and legal developments that might
affect operations, but it is not always able to do so. The Company cannot
predict the extent to which any legislation or regulation that may be enacted,
amended, repealed, or enforced in the future may affect its operations. Such
actions could adversely affect the Company's operations or impact the Company's
financial condition or earnings for one or more fiscal quarters or years.
Governmental authorities have the power to enforce compliance with
regulations and permit conditions and to obtain injunctions or impose fines in
case of violations. During the ordinary course of its operations, the Company
may from time to time receive citations or notices from such authorities that a
facility is not in full compliance with applicable environmental or health and
safety regulations. Upon receipt of such citations or notices, the Company will
work with the authorities to address their concerns. Failure to correct the
problems to the satisfaction of the authorities could lead to monetary
penalties, curtailed operations, jail terms, facility closure, or inability to
obtain permits for additional sites.
As a result of changing government and public attitudes in the area of
environmental regulation and enforcement, management anticipates that
continually changing requirements in health, safety, and environmental
protection laws will require the Company and others engaged in the solid waste
management industry to continually modify or replace various facilities and
alter methods of operation at costs that may be substantial. Most of the
Company's expenditures incurred in the operation of its landfills relate to
complying with the requirements of laws concerning the environment. These
expenditures relate to facility upgrades, corrective actions, and facility
closure and post-closure care. The majority of these expenditures are made in
the normal course of the Company's business and neither materially adversely
affect the Company's earnings nor place the Company at any competitive
disadvantage. The Company has not expended any material amount to remedy the
potential impact to the public or the environment. Although the Company, to
the best of its knowledge, is currently in compliance in all material respects
with all applicable federal, state, and local laws, permits, regulations, and
orders affecting its operations, there is no assurance that the Company will
not have to expend substantial amounts for such actions in the future.
The Company expects to grow in part by acquiring existing landfills,
transfer stations, and collection operations. Although the Company conducts
due diligence investigations of the past waste management practices of the
businesses that it acquires, it can have no assurance that, through its
investigation, it will identify all potential environmental problems or risks.
As a result, the Company may have acquired, or may in the future acquire,
landfills that have unknown environmental problems and related liabilities. The
Company will be subject to similar risks and uncertainties in connection with
the acquisition of closed facilities that had been operated by businesses
acquired by the Company. The Company seeks to mitigate the foregoing risks by
obtaining environmental representations and indemnities from the sellers of the
businesses that it acquires. However, there can be no assurance that the
Company will be able to rely on any such indemnities if an environmental
liability exists.
Federal Regulation
The primary U.S. federal statutes affecting the business of the Company are
summarized below.
(1) The Solid Waste Disposal Act ("SWDA"), as amended by the Resource
Conservation and Recovery Act of 1976, as amended ("RCRA"). The SWDA and its
implementing regulations establish a framework for regulating the handling,
transportation, treatment, and disposal of hazardous and non-hazardous waste.
They also require states to develop programs to insure the safe disposal of
solid waste in landfills.
6
<PAGE> 9
Subtitle D of RCRA establishes a framework for federal, state, and local
government cooperation in controlling the management of non-hazardous solid
waste. Under Subtitle D, the EPA has adopted regulations that establish
minimum standards for solid waste disposal facilities, which include location
standards, hydrogeological investigations, facility design requirements
(including liners and leachate collection systems), enhanced operating and
control criteria, groundwater and methane gas monitoring, corrective action
standards, closure and extended post-closure requirements, and financial
assurance standards. These federal regulations must be implemented by the
states, although states may impose requirements for landfill sites that are
more stringent than the federal Subtitle D standards. The Company could incur
significant costs in complying with such regulations; however, the Company does
not believe that the costs of complying with such standards will have a
material adverse effect on its operations. All of the Company's planned
landfill expansions will be engineered to meet or exceed all applicable
Subtitle D requirements.
(2) The Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended ("CERCLA"). CERCLA, among other things, provides for
the cleanup of sites from which there is a release or threatened release of a
hazardous substance into the environment. CERCLA imposes joint and several
liability for the costs of cleanup and for damages to natural resources upon
the present and former owners or operators of facilities or sites from which
there is a release or threatened release of hazardous substances (former owners
and operators are liable only to the extent the release, and sometimes
disposal, occurred during their period of ownership). Waste generators and
transporters (including a contract carrier who has accepted a hazardous
substance for transportation) are also strictly liable. Under the authority
of CERCLA and its implementing regulations, detailed requirements apply to the
manner and degree of remediation of facilities and sites where hazardous
substances have been or are threatened to be released into the environment.
Liability under CERCLA is not dependent upon the intentional disposal of
"hazardous wastes," as defined under RCRA. It can be founded upon the release
or threatened release, even as a result of lawful, unintentional, and
non-negligent action, of any one of more than 700 "hazardous substances,"
including very small quantities of such substances. CERCLA requires the EPA to
establish a National Priorities List ("NPL") of sites at which hazardous
substances have been or are threatened to be released and which require
investigation or cleanup. More than 20% of the sites on the NPL are solid waste
landfills that ostensibly never received any regulated "hazardous wastes."
Thus, even if the Company's landfills have never received "hazardous wastes" as
such, it is likely that one or more hazardous substances have come to be
located at its landfills. Because of the extremely broad definition of
"hazardous substances," the same is true of other industrial properties with
which the Company or its predecessors has been, or with which the Company may
become, associated as an owner or operator. Consequently, if there is a release
or threatened release of such substances into the environment from a site
currently or previously owned or operated by the Company, the Company could be
liable under CERCLA for the cost of removing such hazardous substances at the
site, remediation of contaminated soil or groundwater, and for damages to
natural resources, even if those substances were deposited at the Company's
facilities before the Company acquired or operated them. The costs of a CERCLA
cleanup can be very substantial. Given the limited amount of environmental
impairment liability insurance maintained by the Company, a finding of such
liability could have a material adverse impact on the Company's business and
financial condition. Although the Company maintains environmental impairment
liability insurance in amounts the Company believes are compliant with state
and federal requirements, these coverages might be insufficient to cover a
significant CERCLA mandated cleanup.
Although the Company would not be liable under CERCLA for the cleanup of a
disposal site containing hazardous wastes transported to such site by the
Company so long as the site was selected by the generator of such waste, the
Company would be responsible for any hazardous waste during actual
transportation. Also, the Company could be liable under CERCLA for off-site
environmental contamination caused by the release of pollutants or hazardous
substances transported by the Company, or a waste transporter acquired by the
Company, where the transporter selected the disposal site. CERCLA imposes
liability for certain environmental response measures upon transporters who
arranged for the disposal site at which the release or threatened release of
hazardous substances occurred. It therefore is common in the solid waste
transport business to receive information requests from EPA about transporting
activities to third party disposal sites. USA Waste has received potentially
responsible party information requests regarding third party disposal sites.
The environmental agencies or other potentially responsible parties could
assert that USA Waste is liable for environmental response measures arising out
of disposal at a site that was selected by USA Waste, a waste transporter
acquired by USA Waste, or a waste transporter with whom USA Waste contracted.
Several bills are presently pending before the U.S. Congress to reauthorize
and substantially amend CERCLA. In addition to possible changes in the
statute's funding mechanisms and provisions for allocating cleanup
responsibility, Congress may also fundamentally alter the statute's provisions
governing the selection of appropriate site cleanup remedies. In this regard,
new approaches to cleanup, removal, treatment, and remediation of hazardous
substance contamination may be adopted which rely on nationally or
site-specific risk based standards. These types of policy changes could
significantly affect the stringency and extent of site remediation, the types
of remediation techniques employed, and the types of hazardous waste management
facilities that may be used for the treatment and disposal of hazardous
substances. Congress may additionally consider revision of the liability
imposed by CERCLA on current owners of property for contamination caused prior
to a party's acquisition of the site. This consideration could reduce the
remediation obligations of the Company for remediation obligations under
CERCLA.
7
<PAGE> 10
The EPA's primary way of determining whether a site is to be included on
the NPL is the Hazard Ranking System, which evaluates the relative potential
for uncontrolled hazardous substances to pose a threat to human health or the
environment pursuant to a scoring system based on factors grouped into three
factor categories: (1) likelihood of release, (2) waste characteristics, and
(3) targets. As of mid-1996, the EPA had proposed or identified approximately
39,000 sites for preliminary assessment (including approximately 6,500 solid
waste landfills). These sites are compiled on the Comprehensive Environmental
Response, Compensation, and Liability Information System (CERCLIS) list. The
identification of a site on the CERCLIS list indicates only that the site has
been brought to the attention of the EPA and does not necessarily mean that an
actual health or environmental threat currently exists or has ever existed.
Like many of the landfills in the State of Illinois, the Company's Countryside
and Leroy Brown landfills were placed on the CERCLIS list. In 1996, the EPA
began an effort to reduce the number of sites on the CERCLIS list and recently
announced that more than 25,000 sites would be removed from the list.
The Countryside landfill in Grayslake, Illinois, was proposed for
preliminary assessment in 1979 and underwent a preliminary assessment in 1983
and a site inspection in 1986 under the EPA's program. The EPA has not taken
any further action with respect to the evaluation of the Countryside landfill
since 1986. Based on its review of the wastes deposited at the Countryside
landfill, the hydrogeological structure of the site, the facility's design, and
a report received by the Company from its independent environmental consultant
at the time the Company acquired the landfill, the Company does not believe
that the outcome of the EPA's evaluation of the Countryside landfill will
result in it being proposed for listing on the NPL or have any material adverse
impact on the operation of the landfill.
The Company's records indicate that in 1977 and 1978, the Leroy Brown
landfill in Macomb, Illinois, accepted 40 drums of material that would now be
classified as hazardous waste, and a small quantity of hazardous waste was
accepted by the landfill between 1987 and 1989. A screening site inspection
was performed by the Illinois Environmental Protection Agency ("IEPA") in 1989.
That inspection and further testing disclosed the presence of minimal
contamination of groundwater beneath the landfill. At this time, neither the
EPA nor the IEPA has recommended or required any remedial action, beyond normal
closure and post-closure monitoring, on the part of the Company with respect to
any hazardous substance present at the disposal facility. However, because of
the acceptance of the drums and the limited amount of hazardous waste at the
site, the IEPA could demand that the Company obtain a permit for a hazardous
waste facility. The process of securing this permit could take several years
and could result in significant expenditures. The IEPA could also require the
Company to develop and execute a closure and post-closure plan, which is
separate and apart from the plan already approved by the IEPA for the
non-hazardous landfill. The costs of developing and executing a new closure and
post-closure plan are dependent, in part, on the area of the existing site that
would be required to be closed and monitored as a hazardous waste facility and
are uncertain at this time.
In November 1993, a subsidiary of the Company acquired Kitsap County
Sanitary Landfill, Inc. ("KCSL"), which owns the Olympic View landfill.
Landfill operations at the Olympic View landfill began in the 1960s, at which
time the site was known as the "Barney White" site. The Barney White site was
closed in 1985 after reaching its capacity. A flexible membrane liner was
installed in late 1991, as an enhancement to the existing natural soil cap, in
order to minimize the production of leachate following detection of a small
amount of hazardous materials in groundwater monitoring wells. The Company
believes that it can avoid costly remediation through the maintenance of the
cap on the old site, the design of an appropriate monitoring program, and the
institution of a program of controls at the site, which should prevent harmful
leaching.
In addition, from May 1979 to May 1994, KCSL operated the Hansville County
landfill under a lease agreement with Kitsap County, Washington. Under the
agreement, KCSL was required to operate the landfill until 1989, when the
operation was replaced by a transfer station. The lease agreement did not
include provisions relating to closure costs and post-closure monitoring.
However, KCSL funded the closure costs and, at the request of the
landfill-permitting agency, implemented certain measures in response to minor
groundwater contamination detected near the site. The Company believes KCSL
has met its obligations by implementing such measures. There can be no
assurance, however, that state or federal environmental authorities will not
require KCSL to finance additional investigation or remedial action at the
site. KCSL has been indemnified by the landfill's previous owner against costs
in excess of $500,000 that may be incurred by KCSL to mitigate any required
action. The Company placed $500,000 in escrow at the closing of the KCSL
acquisition to fund any indemnified costs KCSL may be required to bear relating
to the Hansville County landfill.
(3) The Federal Water Pollution Control Act of 1972 (the "Clean Water
Act"). The Clean Water Act establishes rules for regulating the discharge of
pollutants into streams, rivers, groundwater, or other surface waters from a
variety of sources, including non-hazardous solid waste disposal sites. Should
run-off from the Company's landfills or transfer stations be discharged into
surface waters, the Clean Water Act could require the Company to apply for and
obtain discharge permits, conduct sampling and monitoring, and, under certain
circumstances, reduce the quantity of pollutants in those discharges. The EPA
issued additional rules under the Clean Water Act which establish standards for
storm water runoff from landfills and which require landfills to obtain storm
water discharge permits. In addition, if a Company landfill or transfer
station discharges wastewater through a sewage system to a publicly owned
treatment works, the facility must comply with discharge limits imposed by the
treatment works. Also, if development of a landfill may alter or affect
"wetlands," a permit may have
8
<PAGE> 11
to be obtained before such development could commence. This requirement is
likely to affect the construction or expansion of many landfill sites. The
Clean Water Act provides civil, criminal, and administrative penalties for
violations of its provisions.
(4) The Clean Air Act. The Clean Air Act provides for the federal, state,
and local regulation of the emission of air pollutants. The Company's soil
remediation facilities are required to obtain air emission permits for
operation under these regulations. These regulations also may impose emission
limitations and monitoring and reporting requirements on various other
operations of the Company, including its landfills and waste collection
vehicles. The EPA has construed the Clean Air Act to apply to landfills, which
may emit methane gas and other air pollutants. The costs of compliance with
Clean Air Act permitting and emission control requirements are not anticipated
to have a material adverse effect on the Company.
(5) The Occupational Safety and Health Act of 1970 (the "OSHA Act"). The
OSHA Act authorizes the Occupational Safety and Health Administration to
promulgate occupational safety and health standards. Various of these
standards, including standards for notices of hazards, safety in excavation and
demolition work, and the handling of asbestos, may apply to the Company's
operations.
State and Local Regulation
The states in which the Company operates have their own laws and
regulations governing hazardous and non-hazardous solid waste disposal, water
and air pollution, and, in most cases, releases and cleanup of hazardous
substances and liability for such matters. The states also have adopted
regulations governing the siting, design, operation, maintenance, closure, and
post-closure maintenance of landfills and transfer stations. The Company's
facilities and operations are likely to be subject to many, if not all, of
these types of requirements. In addition, the Company's collection and landfill
operations may be affected by the trend in many states toward requiring the
development of waste reduction and recycling programs. For example, several
states recently have enacted laws that require counties to adopt comprehensive
plans to reduce, through waste planning, composting, recycling, or other
programs, the volume of solid waste deposited in landfills. Additionally, the
disposal of yard waste in solid waste landfills has recently been banned in
several states. Legislative and regulatory measures to mandate or encourage
waste reduction at the source and waste recycling have also been considered
from time to time by Congress and the EPA.
Various states have enacted, or are considering enacting, laws that
restrict the disposal within the state of hazardous and non-hazardous solid
waste generated outside the state. While laws that overtly discriminate against
out-of-state waste have been found to be unconstitutional, some laws that are
less overtly discriminatory have been upheld in court. Additionally, certain
state and local governments have enacted "flow control" regulations, which
attempt to require that all waste generated within the state or local
jurisdiction be deposited at specific disposal sites. In May 1994, the U.S.
Supreme Court ruled that a flow control ordinance was unconstitutional.
Challenges to other such laws are pending. The outcome of pending litigation
and the likelihood that other such laws will be passed and will survive
constitutional challenge are uncertain. The U.S. Congress has from time to time
and is currently considering legislation authorizing states to adopt such
regulations, restrictions, or taxes on the importation of extraterritorial
waste, and granting states and local governments authority to enact partial
flow control legislation. To date, such Congressional efforts have been
unsuccessful. The U.S. Congress' adoption of such legislation allowing for
restrictions on importation of extraterritorial waste or certain types of flow
control, or the adoption of legislation affecting interstate transportation of
waste at the federal or state level, could adversely affect the Company's solid
waste management services, including collection, transfer, disposal, and
recycling operations, and in particular the Company's ability to expand
landfill operations acquired in certain areas.
Many states and local jurisdictions in which the Company operates have
enacted "fitness" laws that allow agencies having jurisdiction over waste
services contracts or site permits to decline to award such contracts or deny
or revoke such permits on the basis of an applicant's (or permit holder's)
environmental or other legal compliance history. These laws authorize the
agencies to make determinations of an applicant's fitness to be awarded a
contract or to operate a facility and to deny or revoke a contract or permit
because of unfitness absent a showing that the applicant has been rehabilitated
through the adoption of various operating policies and procedures put in place
to assure future compliance with applicable laws and regulations.
FACTORS INFLUENCING FUTURE RESULTS AND ACCURACY OF FORWARD-LOOKING STATEMENTS
In the normal course of its business, the Company, in an effort to help
keep its stockholders and the public informed about the Company's operations,
may from time to time issue or make certain statements, either in writing or
orally, that are or contain forward-looking statements, as that term is defined
in the U.S. federal securities laws. Generally, these statements relate to
business plans or strategies, projected or anticipated benefits or other
consequences of such plans or strategies, projected or anticipated benefits
from acquisitions made by or to be made by the Company, or projections
involving anticipated revenues, earnings, or other aspects of operating
results. The words "expect," "believe," "anticipate," "project," "estimate,"
and similar expressions are intended to identify forward-looking statements.
The Company cautions readers that such statements are not guarantees of future
performance or events and are subject to a number of factors that may tend to
influence the accuracy of the statements and the projections upon which the
statements are based, including but not limited
9
<PAGE> 12
to those discussed below. As noted elsewhere in this report, all phases of the
Company's operations are subject to a number of uncertainties, risks, and other
influences, many of which are outside the control of the Company, and any one
of which, or a combination of which, could materially affect the results of the
Company's operations and whether forward-looking statements made by the Company
ultimately prove to be accurate.
The following discussion outlines certain factors that could affect the
Company's consolidated results of operations for 1997 and beyond and cause them
to differ materially from those that may be set forth in forward-looking
statements made by or on behalf of the Company:
No Assurance of Successful Management and Maintenance of Growth
USA Waste has experienced rapid growth, primarily through acquisitions.
USA Waste's future financial results and prospects depend in large part on its
ability to successfully manage and improve the operating efficiencies and
productivity of these acquired operations. In particular, whether the
anticipated benefits of acquired operations are ultimately achieved will depend
on a number of factors, including the ability of combined companies to achieve
administrative cost savings, rationalization of collection routes, insurance
and bonding cost reductions, general economies of scale, and the ability of the
Company, generally, to capitalize on its combined asset base and strategic
position. Moreover, the ability of USA Waste to continue to grow will depend
on a number of factors, including competition from other waste management
companies, availability of attractive acquisition opportunities, availability
of working capital, ability to maintain margins, and the management of costs in
a changing regulatory environment. There can be no assurance that USA Waste
will be able to continue to expand and successfully manage its growth.
Acquisition Strategy
The Company regularly pursues opportunities to expand through acquisitions.
The Company plans to continue to seek acquisitions that complement its
services, broaden its customer base, and improve its operating efficiencies.
The Company's acquisition strategy involves certain potential risks associated
with assessing, acquiring, and integrating the operations of acquired
companies. Although the Company generally has been successful in implementing
its acquisition strategy, there can be no assurance that attractive acquisition
opportunities will continue to be available, that the Company will have access
to the capital required to finance potential acquisitions on satisfactory
terms, or that any businesses acquired will prove profitable. Future
acquisitions may result in the incurrence of additional indebtedness or the
issuance of additional equity securities.
International Expansion
In 1997, a significant portion of the Company's operations will be
conducted in Canada. The Company's operations in foreign countries, including
Canada, generally are subject to a number of risks inherent in any business
operating in foreign countries, including political, social, and economic
instability, exchange rate fluctuations, and governmental regulation, all of
which are beyond the control of the Company. In particular, the Company's
Canadian operations will be subject to the various environmental, zoning,
health, and safety regulations as well as licensing and other requirements. No
prediction can be made as to how existing or future foreign governmental
regulations in any jurisdiction may affect the Company in particular or the
solid waste management industry in general.
Need for Capital; Debt Financing
The long-term debt of USA Waste, including current maturities, at December
31, 1996, was approximately $1,187,000,000. USA Waste expects to require
additional capital from time to time to pursue its acquisition strategy and to
fund internal growth. A portion of USA Waste's future capital requirements may
be provided through future debt incurrences or issuances of equity securities.
There can be no assurance that USA Waste will be able to obtain additional
capital through such debt incurrences or issuances of additional equity
securities.
Profitability May be Affected by Competition
The waste management industry is highly competitive and requires
substantial capital resources. The industry consists of a few large national
waste management companies as well as numerous local and regional companies of
varying sizes and financial resources. The two largest national waste
management companies have greater financial resources than USA Waste.
Competition may be enhanced and profitability may be adversely affected by the
increasing national emphasis on recycling, composting, incineration, and other
waste reduction programs that could reduce the volume of solid waste collected
or deposited in landfills.
10
<PAGE> 13
Potential Adverse Effect of Government Regulation
USA Waste's operations are subject to and substantially affected by
extensive federal, state, and local laws, regulations, orders, and permits,
which govern environmental protection, health and safety, zoning, and other
matters. These regulations may impose restrictions on operations that could
adversely affect the Company's results, such as limitations on the expansion of
disposal facilities, limitations on or the banning of disposal of out-of-state
waste or certain categories of waste, or mandates regarding the disposal of
solid waste. Because of heightened public concern, companies in the waste
management business may become subject to judicial and administrative
proceedings involving federal, state, or local agencies. These governmental
agencies may seek to impose fines or revoke or deny renewal of operating
permits or licenses for violations of various laws, including environmental
laws or regulations or to require remediation of environmental problems at
sites or nearby properties, or resulting from transportation or predecessors'
transportation and collection operations, all of which could have a material
adverse effect on the Company. Liability may also arise from actions brought
by individuals or community groups in connection with the permitting or
licensing of operations, any alleged violations of such permits and licenses,
or other matters.
Potential Environmental Liability
USA Waste is subject to liability for environmental damage that its
collection operations, transfer stations, and landfills cause or may cause
nearby landowners, particularly as a result of the contamination of drinking
water sources or soil, including damage resulting from conditions existing
prior to the acquisition of such assets or operations. Liability may also
arise from any off-site environmental contamination caused by pollutants or
hazardous substances under circumstances where transportation, treatment, or
disposal was arranged for USA Waste or predecessor owners of operations or
assets acquired by USA Waste. Any substantial liability for environmental
damage could materially adversely affect the operating results and financial
condition of USA Waste.
Shares Eligible for Future Sale May Adversely Affect Market Price of Stock
Sales of substantial amounts of USA Waste common stock in the public market
could adversely affect the market price of such stock. USA Waste maintains a
shelf registration statement for the benefit of certain stockholders relating
to 4,000,000 shares of USA Waste common stock. Such shares are immediately
saleable in the open market. In addition, USA Waste maintains a shelf
registration statement covering approximately 8,810,000 shares of USA Waste
common stock at March 15, 1997 that may be issued in acquisitions. In the
event the market price of USA Waste stock were adversely affected by such
sales, the Company's access to equity capital markets could be adversely
affected, and issuances of stock by USA Waste in connection with acquisitions,
or otherwise, could dilute earnings per share.
Seasonality
The Company's operating revenues tend to be somewhat lower in the winter
months. This is generally reflected in the Company's first quarter operating
results and may also be reflected in its fourth quarter operating results.
This is primarily attributed to the fact that (i) the volume of waste relating
to construction and demolition activities tends to increase in the spring and
summer months and (ii) the volume of waste relating to industrial and
residential waste in certain regions where the Company operates tends to
decrease during the winter months.
ITEM 2. PROPERTIES.
The principal property and equipment of the Company consists of land
(primarily landfill sites, transfer stations, and bases for collection
operations), buildings, and vehicles and equipment. The Company owns or leases
real property in most states in which it is doing business. At December 31,
1996, 84 solid waste landfills, aggregating approximately 30,527 total acres,
including approximately 8,258 permitted acres, were owned and operated by the
Company and 17 landfills, aggregating approximately 2,864 total acres,
including approximately 1,559 permitted acres, were operated by the Company or
leased from parties not affiliated with the Company.
The Company leases approximately 85,770 square feet of office space in
Houston, Texas, for its executive office under a ten year lease expiring in
2007. The Company owns real estate, buildings, and other physical properties
that it employs in substantially all of its solid waste collection operations.
The Company also leases a portion of its transfer stations, offices, and garage
and shop facilities. For the year ended December 31, 1996, aggregate annual
rental payments on real estate leased by the Company was approximately
$2,926,000.
The Company owns approximately 8,100 items of equipment, including waste
collection vehicles and related support vehicles, as well as bulldozers,
compactors, earth movers, and related heavy equipment and vehicles used in
landfill operations. The Company has more than 415,000 steel containers in use,
ranging from one to 45 cubic yards, and a number of stationary compactors and
self-dumping hoppers.
11
<PAGE> 14
The Company believes that its vehicles, equipment, and operating properties
are well maintained and adequate for its current operations. However, the
Company expects to make substantial investments in additional equipment and
property for expansion, for replacement of assets, and in connection with
future acquisitions. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
ITEM 3. LEGAL PROCEEDINGS.
On or about March 8, 1993, an action was filed in the United States
District Court for the Western District of Pennsylvania, captioned Option
Resource Group, et al. v. Chambers Development Company, Inc., et al., Civil
Action No. 93-354. This action was brought by a market maker in options in
Chambers stock and two of its general partners and asserts federal securities
law and common law claims alleging that Chambers, in publicly disseminated
materials, intentionally or negligently misstated its earnings and that
Chambers' officers and directors committed mismanagement and breach of
fiduciary duties. These plaintiffs allege that, as a result of large amounts
of put options traded on the Chicago Board of Options Exchange between March 13
and March 18, 1992, they engaged in offsetting transactions resulting in
approximately $2,100,000 in losses. The plaintiffs in Option Resource Group
had successfully requested exclusion from a now settled class action of
consolidated suits instituted on similar claims ("Class Action") and Option
Resource Group is continuing as a separate lawsuit. Plaintiffs filed a motion
for summary judgment which is untimely under the court's case management
procedures. The court has stayed responses to the motion for summary judgment.
In response to discovery on damages, the plaintiffs reduced their damages claim
to $433,000 in alleged losses, plus interest and attorneys' fees, for a total
damage claim of $658,000 as of August 21, 1995. Discovery has been completed
and a trial date has been set for early 1997. The Company intends to continue
to vigorously defend against this action. Management of the Company believes
the ultimate resolution of such complaint will not have a material adverse
effect on the Company's financial position or results of operations.
On August 3, 1995, Frederick A. Moran and certain related persons and entities
filed a lawsuit against Chambers, certain former officers and directors of
Chambers, and Grant Thornton, LLP, in the United States District Court for the
Southern District of New York under the caption Moran, et al. v. Chambers, et
al., Civil Action No. 95-6034. Plaintiffs, who claim to represent
approximately 484,000 shares of Chambers stock, requested exclusion from the
settlement agreements which resulted in the resolution of the Class Action and
assert that they have incurred losses attributable to shares purchased during
the class period and certain additional losses by reason of alleged management
misstatements during and after the class period. The claimed losses include
damages to Mr. Moran's business and reputation. The Judicial Panel on
Multidistrict Litigation has transferred this case to the United States
District Court for the Western District of Pennsylvania. The Company has filed
its answer to the complaint and intends to vigorously defend against these
claims. The case is currently in discovery. Management of the Company
believes the ultimate resolution of such complaint will not have a material
adverse effect on the Company's financial position or results of operations.
The Company is a party to various other litigation matters arising in the
ordinary course of business. Management believes that the ultimate resolution of
these matters will not have a material adverse impact on the Company's financial
position and results of operations. In the normal course of its business and as
a result of the extensive government regulation of the solid waste industry, the
Company periodically may become subject to various judicial and administrative
proceedings and investigations involving federal, state, or local agencies. To
date, the Company has not been required to pay any material fine or had a
judgment entered against it for violation of any environmental law. From time to
time, the Company also may be subjected to actions brought by citizen's groups
in connection with the permitting of landfills or transfer stations, or alleging
violations of the permits pursuant to which the Company operates. From time to
time, the Company is also subject to claims for personal injury or property
damage arising out of accidents involving its vehicles.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to the stockholders of USA Waste during the
fourth quarter of 1996.
EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below are the names and ages, as of March 1, 1997, of the
Company's executive officers (as defined by regulations of the Securities and
Exchange Commission), the positions they hold with the Company, and summaries
of their business experience.
John E. Drury, age 52, has been Chairman of the Board since June 30, 1995,
and Chief Executive Officer and a director of USA Waste since May 27, 1994.
From 1991 to May 1994, Mr. Drury served as a Managing Director of Sanders
Morris Mundy Inc. ("SMMI"), a Houston based investment banking firm. Mr. Drury
served as President and Chief Operating Officer of Browning-Ferris Industries,
Inc. ("BFI") from 1982 to 1991, during which time he had chief responsibility
for all solid waste operations.
12
<PAGE> 15
Rodney R. Proto, age 47, has been President, Chief Operating Officer, and a
director since joining USA Waste in August 1996. Prior to joining USA Waste,
Mr. Proto was President, Chief Operating Officer, and a director of Sanifill,
Inc. since February 1992. Prior to such time, Mr. Proto was employed by BFI
for twelve years where he served, among other positions, as President of
Browning-Ferris Industries Europe, Inc. from 1987 through 1991 and Chairman of
BFI Overseas from 1985 through 1987.
Donald F. Moorehead, Jr., age 46, has been Vice Chairman of the Board since
June 30, 1995, and Chief Development Officer since May 27, 1994. From October
1, 1990 to June 30, 1995, he was also Chairman of the Board, and from October
1, 1990 to May 27, 1994, he was Chief Executive Officer. Mr. Moorehead was
Chairman of the Board and Chief Executive Officer of Mid-American Waste
Systems, Inc. ("Mid-American") from the inception of Mid-American in December
1985 until August 1990 and continued as a director until February 1991.
Earl E. DeFrates, age 53, has been Executive Vice President and Chief
Financial Officer since May 1994. From October 1990 to April 1995, he was also
Secretary. Mr. DeFrates joined USA Waste as Vice President-Finance in October
1990 and was elected Executive Vice President in May 1994. Prior thereto, Mr.
DeFrates was employed by Acadiana Energy Inc. (formerly Tatham Oil & Gas, Inc.)
serving in various officer capacities including the company's Chief Financial
Officer, since 1980.
Gregory T. Sangalis, age 41, has been Vice President, General Counsel and
Secretary since April 4, 1995. Prior to joining USA Waste, Mr. Sangalis was
employed by a solid waste subsidiary of WMX Technologies, Inc. ("WMX") serving
in various legal capacities since 1986 and including Group Vice President and
General Counsel from August 1992 to April 1995. Prior to joining WMX, he was
General Counsel of Peavey Company and had been engaged in the private practice
of law in Minnesota.
Bruce E. Snyder, age 41, has been Vice President and Chief Accounting
Officer of USA Waste since July 1, 1992. Prior to joining USA Waste, Mr.
Snyder was employed by the international accounting firm of Coopers & Lybrand
L.L.P., serving there since 1989 as an audit manager. From 1985 to 1989, Mr.
Snyder held various financial positions with Price Edwards Henderson & Co., a
privately held real estate development and management company in Oklahoma City,
Oklahoma, and its affiliated companies, ultimately serving as Senior Vice
President.
Ronald H. Jones, age 46, has been Vice President and Treasurer since
joining USA Waste in June 1995. Prior to joining USA Waste, Mr. Jones was
employed by Chambers Development Company, Inc. ("Chambers") as Vice President
and Treasurer from July 1992 to June 1995, Director, Corporate Development from
December 1990 to July 1992, and Assistant Vice President - Finance from July
1989 to December 1990. Prior to joining Chambers, Mr. Jones was a Vice
President and Manager of the Cincinnati regional office engaged in corporate
and middle market lending with Bank of New York (formerly Irving Trust Company)
and with Chase Manhattan Bank.
13
<PAGE> 16
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's common stock is traded on the New York Stock Exchange
("NYSE") under the symbol "UW." The following table sets forth the range of
the high and low per share sales prices for the common stock as reported on the
NYSE Composite Tape.
<TABLE>
<CAPTION>
HIGH LOW
-------- --------
<S> <C> <C>
1995
- ----
First Quarter ........................ $ 12.50 $ 10.00
Second Quarter ....................... 16.63 11.50
Third Quarter ........................ 22.00 14.63
Fourth Quarter ....................... 22.50 17.00
1996
- ----
First Quarter ........................ $ 25.63 $ 17.25
Second Quarter ....................... 32.63 24.00
Third Quarter ........................ 34.13 22.75
Fourth Quarter ....................... 34.25 28.63
1997
- ----
First Quarter (through March 25, 1997) $ 38.88 $ 28.63
</TABLE>
On March 25, 1997, the closing sale price as reported on the NYSE was $37
3/8 per share. The number of holders of record of Common Stock based on the
transfer records of the Company at March 25, 1997, was 3,713.
The Company has never paid cash dividends on its common stock, and the
Company's Board of Directors presently intends to retain any earnings in the
foreseeable future for use in the Company's business. Payment of dividends on
the common stock is restricted by terms of the Company's revolving credit
facility. See Note 5 to the Consolidated Financial Statements of the Company.
14
<PAGE> 17
ITEM 6. SELECTED FINANCIAL DATA.
The Selected Financial Data set forth below include the accounts of the
Company and the businesses acquired in transactions accounted for as poolings
of interests as if such businesses had been combined since their inception.
The accounts of the businesses acquired in transactions accounted for as
purchases are included from their respective dates of acquisition.
<TABLE>
<CAPTION>
For the Years Ended December 31,
-----------------------------------------------------------------------
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
(In Thousands, Except Per Share Amounts)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Operating revenues $ 1,313,388 $ 987,705 $ 897,644 $ 778,966 $ 682,869
----------- ----------- ----------- ----------- -----------
Cost and expenses:
Operating 704,917 551,305 520,255 455,282 424,497
General and administrative 160,539 140,051 138,819 126,347 130,956
Depreciation and amortization 153,168 119,570 112,860 96,861 77,872
Merger costs 120,656 25,639 3,782 -- --
Unusual items 63,800 4,733 8,863 2,672 72,090
----------- ----------- ----------- ----------- -----------
1,203,080 841,298 784,579 681,162 705,415
----------- ----------- ----------- ----------- -----------
Income (loss) from operations 110,308 146,407 113,065 97,804 (22,546)
----------- ----------- ----------- ----------- -----------
Other income (expense):
Shareholder litigation settlement and
other litigation related costs -- -- (79,400) (5,500) (10,853)
Interest expense:
Nonrecurring interest -- (10,994) (1,254) -- --
Other (45,547) (48,558) (47,678) (46,032) (44,612)
Interest income 5,267 5,482 4,670 4,835 6,840
Other income, net 8,060 5,143 2,570 1,161 2,285
----------- ----------- ----------- ----------- -----------
(32,220) (48,927) (121,092) (45,536) (46,340)
----------- ----------- ----------- ----------- -----------
Income (loss) before income taxes 78,088 97,480 (8,027) 52,268 (68,886)
Provision for (benefit from) income taxes 45,142 44,992 1,015 24,249 (27,554)
----------- ----------- ----------- ----------- -----------
Income (loss) from continuing operations $ 32,946 $ 52,488 $ (9,042) $ 28,019 $ (41,332)
=========== =========== =========== =========== ===========
Income (loss) from continuing operations
per common share $ 0.24 $ 0.46 $ (0.09) $ 0.29 $ (0.47)
=========== =========== =========== =========== ===========
Weighted average number of common and
common equivalent shares outstanding 139,740 113,279 103,422 95,858 88,371
=========== =========== =========== =========== ===========
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital $ 20,020 $ 30,109 $ 9,971 $ 45,805 $ 75,143
Intangible assets, net 517,399 262,205 185,066 152,370 104,471
Total assets 2,830,505 1,933,557 1,588,996 1,428,444 1,311,828
Long-term debt, including current maturities 1,187,000 731,741 688,673 650,331 614,684
Stockholders' equity 1,155,276 907,622 560,616 534,989 457,745
</TABLE>
15
<PAGE> 18
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following discussion reviews the Company's operations for the three
years ended December 31, 1996, and should be read in conjunction with the
Company's consolidated financial statements and related notes thereto included
elsewhere herein. The Company has restated its previously issued financial
statements for years prior to 1996 to reflect the acquisitions of Western and
Sanifill, consummated May 7, 1996 and August 30, 1996, respectively, and
accounted for under the pooling of interests method of accounting.
The following discussion includes statements that are forward-looking in
nature. Whether such statements ultimately prove to be accurate depends upon a
variety of factors that may affect the business and operations of the Company.
Certain of these factors are discussed under "Business - Factors Influencing
Future Results and Accuracy of Forward-Looking Statements" included in Item 1
of this report.
INTRODUCTION
The Company provides non-hazardous solid waste management services,
consisting of collection, transfer, disposal, recycling, and other
miscellaneous services in 36 states, the District of Columbia, Canada, Mexico,
and Puerto Rico. Since August 1990, the Company has experienced significant
growth principally through the acquisition and integration of solid waste
businesses and is now the third largest non-hazardous solid waste company in
North America. As of December 31, 1996, the Company owned or operated 123
collection companies, 61 transfer stations, and 101 landfills serving more than
2 million customers.
The Company's revenues consist primarily of fees charged for its collection
and disposal services. Revenues for collection services include fees from
residential, commercial, industrial, and municipal collection customers. A
portion of these fees are billed in advance; a liability for future service is
recorded upon receipt of payment and revenues are recognized as services are
provided. Fees for residential services are normally based on the type and
frequency of service. Fees for commercial and industrial services are
normally based on the type and frequency of service and the volume of solid
waste collected.
The Company's revenues from its landfill operations consist of disposal
fees (known as tipping fees) charged to third parties and are normally billed
monthly. Tipping fees are based on the volume or weight of solid waste being
disposed of at the Company's landfill sites. Fees are charged at transfer
stations based on the volume or weight of solid waste deposited, taking into
account the Company's cost of loading, transporting, and disposing of the solid
waste at a landfill. Intercompany revenues between the Company's collection,
transfer, and landfill operations have been eliminated in the consolidated
financial statements presented elsewhere herein.
Operating expenses include direct and indirect labor and the related taxes
and benefits, fuel, maintenance and repairs of equipment and facilities,
tipping fees paid to third party landfills, property taxes, and accruals for
future landfill closure and post-closure costs. Certain direct landfill
development expenditures are capitalized and depreciated over the estimated
useful life of a site as capacity is consumed, and include acquisition,
engineering, upgrading, construction, and permitting costs. All indirect
development expenses, such as administrative salaries and general corporate
overhead, are expensed in the period incurred.
General and administrative costs include management salaries, clerical, and
administrative costs, professional services, facility rentals, and related
insurance costs, as well as costs related to the Company's marketing and sales
force.
16
<PAGE> 19
The following table presents, for the periods indicated, the period to
period change in dollars (in thousands) and percent for the various
Consolidated Statements of Operations line items.
<TABLE>
<CAPTION>
Period to Period Increase (Decrease)
----------------------------------------------
For the Years Ended For the Years Ended
December 31, 1996 December 31, 1995
and 1995 and 1994
--------------------- ---------------------
<S> <C> <C> <C> <C>
Operating revenues $ 325,683 33.0% $ 90,061 10.0%
--------- ---------
Costs and expenses:
Operating 153,612 27.9 31,050 6.0
General and administrative 20,488 14.6 1,232 0.9
Depreciation and amortization 33,598 28.1 6,710 5.9
Merger costs 95,017 370.6 21,857 577.9
Unusual items 59,067 1,248.0 (4,130) (46.6)
--------- ---------
361,782 43.0 56,719 7.2
--------- ---------
Income from operations (36,099) (24.7) 33,342 29.5
--------- ---------
Other income (expense):
Shareholder litigation settlement and other
litigation related costs -- -- 79,400 100.0
Interest expense:
Nonrecurring interest 10,994 100.0 (9,740) (776.7)
Other 3,011 6.2 (880) (1.8)
Interest income (215) (3.9) 812 17.4
Other income, net 2,917 56.7 2,573 100.1
--------- ---------
16,707 34.1 72,165 59.6
--------- ---------
Income (loss) before income taxes (19,392) (19.9) 105,507 1,314.4
Provision for income taxes 150 0.3 43,977 4,332.7
--------- ---------
Net income (loss) $ (19,542) (37.2) $ 61,530 680.5
========= =========
</TABLE>
17
<PAGE> 20
The following table presents, for the periods indicated, the percentage
relationship that the various Consolidated Statements of Operations line items
bear to operating revenues.
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------
1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
Operating revenues:
Collection 52.6% 52.7% 52.6%
Transfer station 10.8 9.2 10.0
Disposal 29.0 29.4 28.4
Other 7.6 8.7 9.0
----- ----- -----
100.0 100.0 100.0
----- ----- -----
Costs and expenses:
Operating 53.7 55.8 58.0
General and administrative 12.2 14.2 15.5
Depreciation and amortization 11.7 12.1 12.6
Merger costs 9.2 2.6 0.4
Unusual items 4.8 0.5 1.0
----- ----- -----
91.6 85.2 87.5
----- ----- -----
Income from operations 8.4 14.8 12.5
----- ----- -----
Other income (expense):
Shareholder litigation settlement and other
litigation related costs -- -- (8.8)
Interest expense:
Nonrecurring interest -- (1.1) (0.1)
Other (3.5) (4.9) (5.3)
Interest income 0.4 0.6 0.5
Other income, net 0.6 0.5 0.2
----- ----- -----
(2.5) (4.9) (13.5)
----- ----- -----
Income (loss) before income taxes 5.9 9.9 (1.0)
Provision for income taxes 3.4 4.6 0.1
----- ----- -----
Net income (loss) 2.5% 5.3% (1.1)%
===== ===== =====
</TABLE>
18
<PAGE> 21
RESULTS OF OPERATIONS FOR THE THREE YEARS ENDED DECEMBER 31, 1996
Operating Revenues
Operating revenues increased $325,683,000, or 33.0%, in 1996 compared to 1995.
This increase is primarily attributable to 1996 acquisitions and the full year
effect of 1995 acquisitions which resulted in increased operating revenues of
$262,974,000. Internal growth of comparable core businesses resulted in an
increase in operating revenues of $80,054,000, representing a 2% price increase
and 7% volume increase. These increases were partially offset by a decrease in
operating revenues for non-core businesses of $10,049,000 and a decrease in
operating revenues related to divestitures of $7,296,000.
Operating revenues increased $90,061,000, or 10.0%, in 1995 compared to 1994.
The increase in operating revenues is primarily attributable to the effect of
new acquisitions, net of dispositions, which resulted in an increase of
$68,960,000. Comparable operations were negatively impacted by contract
renegotiations and terminations in the New Jersey area in 1994, which resulted
in a decrease in operating revenues of $39,210,000. The remainder of the
increase in 1995 of $60,311,000 related to price and volume increases of 2%
and 5%, respectively.
Operating Costs and Expenses
Operating costs and expenses increased $153,612,000, or 27.9%, in 1996 compared
to 1995, however, have decreased as a percentage of operating revenues from
55.8% in 1995 to 53.7% in 1996. The net increase in operating costs and
expenses is primarily attributable to the effect of new acquisitions, net of
dispositions, which resulted in an increase of $217,426,000. This increase was
offset by a decrease of $14,050,000 related to increased utilization of
internal disposal capacity from 44% in 1995 to 48% in 1996, a decrease of
$12,410,000 related to reduced operating costs and expenses for existing
Chambers operations since the Company's merger with Chambers in June 1995, a
decrease of $4,506,000 related to the Company's decision to discontinue certain
non-core businesses, and a decrease of $32,848,000 related to improvements in
comparable operations primarily as a result of operating synergies realized
from tuck-in acquisitions and mergers with Sanifill and Western in August 1996
and May 1996, respectively. These decreases as well as the increase in
operating revenues resulting from internal growth resulted in the decrease of
operating costs and expenses as a percentage of operating revenues.
Operating costs and expenses increased $31,050,000, or 6.0%, in 1995 compared to
1994, however, decreased as a percentage of operating revenues from 58.0% in
1994 to 55.8% in 1995. The net increase in operating costs and expenses is
primarily attributable to the effect of new acquisitions, net of dispositions,
which resulted in an increase of $50,090,000. Operating costs and expenses for
comparable operations increased slightly by $2,460,000. These increases were
offset by a decrease of $21,500,000 related to contract renegotiations and
terminations in the New Jersey area in 1994. The increase in operating revenues
from internal growth resulted in lower operating costs and expenses as a
percentage of operating revenues.
General and Administrative
General and administrative expenses have increased $20,488,000, or 14.6%, in
1996 compared to 1995, and increased $1,232,000, or 0.9%, in 1995 compared to
1994. As a percentage of operating revenues, however, general and
administrative expenses decreased from 15.5% in 1994 to 14.2% in 1995 to 12.2%
in 1996. The decrease in general and administrative expenses as a percentage
of operating revenues is primarily the result of the Company's ability to
integrate new business acquisitions without a proportionate increase in general
and administrative expenses as well as cost reductions resulting from mergers
with Sanifill, Western, and Chambers in August 1996, May 1996, and June 1995,
respectively.
Depreciation and Amortization
Depreciation and amortization increased $33,598,000, or 28.1%, in 1996 compared
to 1995, and increased $6,710,000, or 5.9%, in 1995 compared to 1994. As a
percentage of operating revenues, however, depreciation and amortization
decreased from 12.6% in 1994 to 12.1% in 1995 to 11.7% in 1996. The increase
in depreciation and amortization is primarily related to acquisitions and
upgrades to existing operations. The decrease in depreciation and amortization
as a percentage of operating revenues is the result of the Company's improved
utilization of equipment through internal volume growth in the collection and
disposal operations without a corresponding increase in equipment and
facilities.
Merger Costs
In the third quarter of 1996, the Company recognized $82,556,000 of merger
costs, of which approximately $80,000,000 related to the acquisition of
Sanifill and the remainder related to the acquisition of two landfills and a
collection company. The $80,000,000 of merger costs related to Sanifill
includes $9,500,000 of transaction costs, $20,000,000 of relocation, severance,
and other termination benefits, $13,000,000 of costs relating to integrating
operations, and $37,500,000 of disposal
19
<PAGE> 22
of duplicate facilities. In the second quarter of 1996, the Company incurred
$35,000,000, $2,700,000, and $400,000 of merger costs related to the
acquisitions of Western, Grand Central Sanitation, Inc., and a collection
company, respectively. The $35,000,000 of merger costs related to Western
include $6,800,000 of transaction costs, $15,000,000 of severance and other
termination benefits, and $13,200,000 of costs related to integrating
operations. In the second quarter of 1995, the Company incurred $25,073,000 of
merger costs related to the Chambers acquisition, including $11,900,000 of
transaction costs, $9,473,000 of severance and other termination benefits, and
$3,700,000 of costs related to integrating operations. An additional $566,000
of merger costs was incurred in the second quarter of 1995 related to the
acquisition of a collection, materials recovery, and transfer station
operation.
Unusual Items
In the third quarter of 1996, the Company recognized unusual items of
$50,848,000, including $28,900,000 of estimated losses related to the
disposition of certain non-core business assets, $15,000,000 of project
reserves related to certain Mexico operations, and $6,948,000 of various other
terminated projects. In the second quarter of 1996, unusual items include
approximately $4,824,000 of retirement benefits associated with Western's
pre-merger retirement plan and approximately $8,128,000 of estimated future
losses related to municipal solid waste contracts in California as a result of
the continuing decline in prices of recyclable materials. In 1995, unusual
items represent $2,810,000 of severance and other termination benefits paid to
former Chambers employees in connection with its pre-merger reorganization,
$1,313,000 of estimated future losses associated with a New Jersey municipal
solid waste contract, and $610,000 of shareholder litigation settlement costs.
Income from Operations
Income from operations decreased $36,099,000 in 1996 and increased $33,342,000
in 1995 compared to the respective prior years due to the reasons discussed
above. In 1996, 1995, and 1994, the Company incurred certain nonrecurring
items reported as unusual items and merger costs. Excluding these nonrecurring
items, income from operations as a percentage of operating revenues would be
22.4%, 17.9%, and 14.0% in 1996, 1995, and 1994, respectively. The improvement
in recurring operations is the result of economies of scale realized by the
Company with respect to recent acquisitions, improved operating margins at
Chambers locations since the Chambers merger, dispositions of less profitable
businesses, and improvements in comparative operations.
Other Income and Expense
Other income and expense consists of interest expense, interest income, other
income, and shareholder litigation settlement costs. Shareholder litigation
costs were incurred in 1994 in connection with a settled class action of
consolidated suits or similar claims alleging federal securities violations
against Chambers, certain of its officers and directors, its former independent
auditors, and the underwriters of its securities. Interest expense consists
of recurring and nonrecurring interest. Nonrecurring interest of $10,994,000
and $1,254,000 in 1995 and 1994, respectively, consists of various extension
fees and other charges related to the refinancing of Chambers senior notes in
the second quarter of 1995. Overall, recurring interest expense, gross of
amounts capitalized, increased each year due to an increase in the Company's
average outstanding debt balance. Capitalized interest was $19,507,000,
$12,459,000, and $9,828,000 in 1996, 1995, and 1994, respectively. The
increase in capitalized interest is due to increased development activity
incurred in connection with disposal sites. The increase in other income in
1996 primarily relates to a gain realized on the sale of certain nonhazardous
oil field waste disposal operations in 1996.
Provision for Income Taxes
The Company recorded a provision for income taxes of $45,142,000, $44,992,000,
and $1,015,000 in 1996, 1995, and 1994, respectively. The difference in
provision for income taxes at the federal statutory rate and the reported
amounts relate primarily to nondeductible merger costs and state and local
income taxes.
Net Income (Loss)
For reasons discussed above, net income (loss) decreased $19,542,000 in 1996
and increased $61,530,000 in 1995 compared to the respective prior years.
Variation in 1996 Quarterly Results
The Company has grown significantly through acquisitions, including the
consummation of two mergers in 1996 with other publicly owned entities as
discussed in Note 2 to the consolidated financial statements included elsewhere
herein. These mergers were accounted for as poolings of interests and,
accordingly, operating results for periods prior to these mergers,
20
<PAGE> 23
including quarterly results, have been restated. Moreover, the Company
incurred nonrecurring charges related to these mergers of $35,000,000 in the
second quarter and $80,000,000 in the third quarter. In addition, the Company
recognized approximately $12,952,000 of unusual items in the second quarter and
another $50,848,000 in the third quarter as detailed in Note 11 to the
consolidated financial statements included elsewhere herein.
The merger costs and unusual items (and the results of the tax effects of such
charges) have significantly affected the quarterly trend analysis of the
Company's operating results for 1996. A comparison of the reported quarterly
earnings (loss) per share for 1996 compared to pro forma earnings per share,
which exclude such merger costs and unusual items and reflect income taxes at a
40% effective tax rate, are as follows:
<TABLE>
<CAPTION>
As Reported Pro forma
----------- ---------
<S> <C> <C>
First quarter $0.21 $0.21
Second quarter ($0.01) $0.28
Third quarter ($0.27) $0.32
Fourth quarter $0.32 $0.32
</TABLE>
The Company's business strategy is to continue to grow through acquisitions.
Consequently, future quarterly results could be impacted by additional merger
costs and related expenses associated with such merger and acquisition activity.
Liquidity and Capital Resources
The Company operates in an industry that requires a high level of capital
investment. The Company's capital requirements basically stem from (i) its
working capital needs for its ongoing operations, (ii) capital expenditures for
cell construction and expansion of its landfill sites, as well as new trucks
and equipment for its collection operations, and (iii) business acquisitions.
The Company's strategy is to meet these capital needs first from internally
generated funds and secondly from various financing sources available to the
Company, including the incurrence of debt and the issuance of its common stock.
It is further part of the Company's strategy to minimize working capital while
maintaining available commitments under bank credit agreements to fund any
capital needs in excess of internally generated cash flow.
As of December 31, 1996, the Company had working capital of $20,020,000 (a
ratio of current assets to current liabilities of 1.06:1) and a cash balance of
$23,511,000, which compares to working capital of $30,109,000 (a ratio of
current assets to current liabilities of 1.15:1) and a cash balance of
$21,058,000 as of December 31, 1995. For the year ended December 31, 1996, net
cash from operating activities was approximately $205,158,000 and net cash from
financing activities was approximately $374,709,000. These funds were used
primarily to fund investments in other businesses of $281,158,000 and for
capital expenditures of approximately $348,354,000.
The Company's capital expenditure and working capital requirements have
increased, reflecting the Company's business strategy of growth through
acquisitions and development projects. The Company intends to finance its 1997
capital expenditures through internally generated cash flow and amounts
available under its revolving credit facility.
On August 30, 1996, in connection with the Sanifill Merger, the Company
replaced its $750,000,000 senior revolving credit facility with a
$1,200,000,000 senior revolving credit facility ("Credit Facility") and retired
amounts under Sanifill's credit facility. The Credit Facility was used to
refinance existing bank loans and letters of credit and to fund additional
acquisitions and working capital. The Credit Facility was available for standby
letters of credit of up to $400,000,000. Loans under the Credit Facility bore
interest at a rate based on the Eurodollar rate plus a spread not to exceed
0.75% per annum (spread set at 0.30% per annum, or an applicable interest rate
of 5.87% per annum at December 31, 1996). The Credit Facility required a
facility fee not to exceed 0.375% per annum on the entire available Credit
Facility (facility fee set at 0.15% per annum at December 31, 1996). The Credit
Facility contained financial covenants with respect to interest rate coverage
and debt capitalization ratios. The Credit Facility also contained limitations
on dividends, additional indebtedness, liens, and asset sales. Principal
reductions were not required over the five-year term of the Credit Facility. On
March 5, 1997, the Credit Facility was replaced with a $1,600,000,000 senior
revolving credit facility with the same general terms, covenants, and
limitations, which is available for standby letters of credit of up to
$500,000,000.
On February 7, 1997, the Company issued $535,275,000 of 4% convertible
subordinated notes, due on February 1, 2002 ("Notes Offering"). Interest is
payable semi-annually in February and August. The notes are convertible into
shares of the Company's common stock at a conversion price of $43.56 per share.
The notes are subordinated in right of payment to all
21
<PAGE> 24
existing and future senior indebtedness, as defined. The notes are redeemable
after February 1, 2000 at the option of the Company at 101.6% of the principal
amount, declining to 100.8% of the principal amount on February 1, 2001 and
thereafter until maturity, plus accrued interest. Deferred offering costs of
approximately $14,000,000 were incurred and are being amortized ratably over the
life of the notes. The proceeds were used to repay debt under the Company's
Credit Facility and for general corporate purposes.
On February 7, 1997, concurrent with the Notes Offering, the Company completed a
public offering of 11,500,000 shares of its common stock, priced at $35.125 per
share. The net proceeds of approximately $387,438,000 were primarily used to
repay debt under the Company's Credit Facility and for general corporate
purposes.
On March 12, 1997, the Company acquired all of the Canadian solid waste
subsidiaries of Allied Waste Industries, Inc., representing 41 collection
businesses, seven landfills, and eight transfer stations in the provinces of
Alberta, British Columbia, Manitoba, Ontario, Quebec, and Saskatchewan, for
approximately $518,000,000 in cash. In connection with the transaction, the
Company's Canadian subsidiary borrowed $350,000,000, as evidenced by a
promissory note bearing interest at Banker's Acceptance plus 0.45%.
The Company currently intends to repay the $350,000,000 Canadian borrowings with
proceeds from its domestic credit facility prior to June 30, 1997. Reducing the
availability for this anticipated use, the Company has approximately
$824,000,000 available for additional cash borrowings under its credit facility
as of March 27, 1997.
On January 21, 1997, the Company executed a definitive agreement to acquire
substantially all of the assets of Mid-American Waste Systems, Inc.
("Mid-American") for approximately $201,000,000, consisting primarily of cash
and a limited amount of debt assumption. The assets to be acquired include
eleven collection businesses, eleven landfills, six transfer stations, and
three recycling centers. The acquisition has been approved by the Bankruptcy
Court and is expected to close during the second quarter of 1996.
On March 21, 1997, a Canadian subsidiary of the Company and WMX Technologies,
Inc.'s Waste Management unit ("WMX") jointly executed a letter of intent whereby
the Canadian subsidiary will acquire the majority of WMX's Canadian solid waste
businesses for approximately $186,000,000, including $124,000,000 in cash and
$62,000,000 in Company common stock. The assets to be acquired include 13
collection businesses, one landfill, and three transfer stations in the
provinces of Alberta, British Columbia, Ontario, and Quebec, which generate
approximately $124,000,000 in annualized operating revenues. The acquisition,
which is expected to close by May 31, 1997, is subject to regulatory approval
and final negotiation and execution of a definitive sales agreement.
The Company intends to fund the cash portions of the Mid-American and WMX
Canadian acquisitions from its existing credit facility.
The Company's business plan is to grow through acquisitions as well as
development projects. The Company has issued equity securities in business
acquisitions and expects to do so in the future. Furthermore, the Company's
future growth will depend greatly upon its ability to raise additional capital.
The Company continually reviews various financing alternatives and depending
upon market conditions could pursue the sale of debt and/or equity securities
to help effectuate its business strategy. Management believes that it can
arrange the necessary financing required to accomplish its business plan;
however, to the extent the Company is not successful in its future financing
strategies the Company's growth could be limited.
Environmental Matters
The Company also has material financial commitments for the costs associated
with its future closure and post-closure obligations with respect to the
landfills it operates or for which it is otherwise responsible. The Company
bases accruals for these commitments on periodic management reviews, typically
performed at least annually, based on input from its engineers and
interpretations of current regulatory requirements and proposed regulatory
changes. The accrual for closure and post-closure costs includes final
capping and cover for the site, methane gas control, leachate management and
ground water monitoring, and other operational and maintenance costs to be
incurred after each site discontinues accepting waste.
The Company has estimated that the aggregate final closure and post-closure
costs will be approximately $273,159,000. As of December 31, 1996 and 1995,
the Company had recorded liabilities of $117,762,000 and $98,066,000,
respectively, for closure and post-closure costs of disposal facilities. The
difference between the closure and post-closure costs accrued at December 31,
1996, and the total estimated final closure and post-closure costs to be
incurred will be accrued and charged to expense as airspace is consumed such
that the total estimated final closure and post-closure to be incurred will be
fully accrued for each landfill at the time the site stops accepting waste and
is closed. The Company also expects to incur approximately $658,121,000
related to future capping activities during the remaining operating lives of
the disposal sites, which are also being expensed over the useful lives of the
disposal sites as airspace is consumed.
22
<PAGE> 25
Management believes that the ultimate disposition of these environmental
matters will not have a material, adverse effect on the financial condition of
the Company. However, the Company's operation of landfills subjects it to
certain operational, monitoring, site maintenance, closure and post-closure
obligations that could give rise to increased costs for monitoring and
corrective measures. The Company cannot predict the effect of any regulations
or legislation enacted in the future on the Company's operations.
Seasonality and Inflation
The Company's operating revenues tend to be somewhat lower in the winter
months. This is generally reflected in the Company's first quarter operating
results and may also be reflected in its fourth quarter operating results.
This is primarily attributable to the fact that (i) the volume of waste
relating to construction and demolition activities tends to increase in the
spring and summer months and (ii) the volume of waste relating to industrial
and residential waste in certain regions where the Company operates tends to
decrease during the winter months.
The Company believes that inflation and changing prices have not had, and are
not expected to have, any material adverse effect on the results of operations
in the near future.
New Accounting Pronouncement
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings Per Share ("SFAS No. 128").
SFAS No. 128 specifies the computation, presentation, and disclosure
requirements of earnings per share and supercedes Accounting Principles Board
Opinion No. 15, Earnings Per Share. SFAS No. 128 requires a dual presentation
of basic and diluted earnings per share. Basic earnings per share, which
excludes the impact of common stock equivalents, replaces primary earnings per
share. Diluted earnings per share, which utilizes the average market price per
share as opposed to the greater of the average market price per share or ending
market price per share when applying the treasury stock method in determining
common stock equivalents, replaces fully-diluted earnings per share. SFAS No.
128 is effective for the Company in 1997. The following pro forma earnings
(loss) per common share information assumes SFAS No. 128 was adopted in 1994
(in thousands, except per share amounts):
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Reported:
Earnings (loss) per common share $ 0.24 $ 0.46 $ (0.09)
Weighted average number of common and
common equivalent shares outstanding 139,740 113,279 103,422
Pro forma:
Basic earnings (loss) per common share $ 0.25 $ 0.48 $ (0.09)
Basic weighted average shares outstanding 133,892 109,623 100,296
Diluted earnings (loss) per common share $ 0.24 $ 0.46 $ (0.09)
Diluted weighted average shares outstanding 139,740 113,279 103,422
</TABLE>
23
<PAGE> 26
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEX TO
CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
(1) Consolidated Financial Statements:
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Consolidated Balance Sheets as of
December 31, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Consolidated Statements of Operations for the
Years Ended December 31, 1996, 1995, and 1994 . . . . . . . . . . . . . . . . . . 27
Consolidated Statements of Stockholders' Equity for the
Years Ended December 31, 1996, 1995, and 1994 . . . . . . . . . . . . . . . . . 28
Consolidated Statements of Cash Flows for the
Years Ended December 31, 1996, 1995, and 1994 . . . . . . . . . . . . . . . . . 30
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
(2) Consolidated Financial Statement Schedules:
All financial statement schedules have been omitted since the required
information is not present or not present in amounts sufficient to require
submission of the schedule, or because the information required is included
in the consolidated financial statements or the notes thereto.
24
<PAGE> 27
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and Stockholders of USA Waste Services, Inc.:
We have audited the accompanying consolidated balance sheets of USA Waste
Services, Inc. and subsidiaries as of December 31, 1996 and 1995, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of USA Waste
Services, Inc. and subsidiaries as of December 31, 1996 and 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Houston, Texas
March 21, 1997
25
<PAGE> 28
USA WASTE SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Par Value Amounts)
<TABLE>
<CAPTION>
December 31,
--------------------------
1996 1995
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 23,511 $ 21,058
Accounts receivable, net of allowance for doubtful
accounts of $14,426 and $7,730, respectively 210,038 136,247
Notes and other receivables 25,579 15,704
Deferred income taxes 39,714 20,101
Prepaid expenses and other 41,139 33,026
----------- -----------
Total current assets 339,981 226,136
Notes and other receivables 49,059 19,907
Property and equipment, net 1,810,251 1,319,199
Excess of cost over net assets of acquired businesses, net 433,913 206,638
Other intangible assets, net 83,486 55,567
Deferred income taxes -- 19,023
Other assets 113,815 87,087
----------- -----------
Total assets $ 2,830,505 $ 1,933,557
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 94,900 $ 64,437
Accrued liabilities 172,916 67,198
Deferred revenues 23,450 10,876
Current maturities of long-term debt 28,695 53,516
----------- -----------
Total current liabilities 319,961 196,027
Long-term debt, less current maturities 1,158,305 678,225
Deferred income taxes 8,786 --
Closure, post-closure, and other liabilities 188,177 151,683
----------- -----------
Total liabilities 1,675,229 1,025,935
----------- -----------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $1.00 par value;
10,000,000 shares authorized; none issued -- --
Common stock, $.01 par value;
300,000,000 shares authorized;
139,609,250 and 124,019,297 shares issued, respectively 1,396 1,240
Additional paid-in capital 1,255,856 1,041,573
Accumulated deficit (85,649) (118,595)
Foreign currency translation adjustment (15,843) (14,777)
Less treasury stock at cost, 23,485 and 138,810 shares, respectively (484) (1,819)
----------- -----------
Total stockholders' equity 1,155,276 907,622
----------- -----------
Total liabilities and stockholders' equity $ 2,830,505 $ 1,933,557
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
26
<PAGE> 29
USA WASTE SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Operating revenues $ 1,313,388 $ 987,705 $ 897,644
----------- ----------- -----------
Costs and expenses:
Operating 704,917 551,305 520,255
General and administrative 160,539 140,051 138,819
Depreciation and amortization 153,168 119,570 112,860
Merger costs 120,656 25,639 3,782
Unusual items 63,800 4,733 8,863
----------- ----------- -----------
1,203,080 841,298 784,579
----------- ----------- -----------
Income from operations 110,308 146,407 113,065
----------- ----------- -----------
Other income (expense):
Shareholder litigation settlement
and other litigation related costs -- -- (79,400)
Interest expense:
Nonrecurring interest -- (10,994) (1,254)
Other (45,547) (48,558) (47,678)
Interest income 5,267 5,482 4,670
Other income, net 8,060 5,143 2,570
----------- ----------- -----------
(32,220) (48,927) (121,092)
----------- ----------- -----------
Income (loss) before income taxes 78,088 97,480 (8,027)
Provision for income taxes 45,142 44,992 1,015
----------- ----------- -----------
Net income (loss) 32,946 52,488 (9,042)
Preferred dividends -- -- 565
----------- ----------- -----------
Income (loss) available to common stockholders $ 32,946 $ 52,488 $ (9,607)
=========== =========== ===========
Earnings (loss) per common share $ 0.24 $ 0.46 $ (0.09)
=========== =========== ===========
Weighted average number of common and
common equivalent shares outstanding 139,740 113,279 103,422
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
27
<PAGE> 30
USA WASTE SERVICES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In Thousands)
<TABLE>
<CAPTION>
Foreign
Additional Currency
Preferred Common Paid-in Accumulated Translation Treasury
Stock Stock Capital Deficit Adjustment Stock
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1994 $ 14 $ 965 $ 688,199 $ (151,331) $ -- $ (2,858)
Common stock options exercised -- 3 3,486 -- -- --
Common stock warrants exercised -- 3 148 -- -- --
Common stock issued to qualified defined
contribution plan -- 8 5,277 -- -- --
Common stock issued in acquisitions -- 26 27,799 -- -- --
Common stock issued from treasury upon
exercise of stock options -- -- (597) -- -- 897
Common stock issued for preferred
stock dividends -- 1 1,390 (565) -- --
Conversion of preferred stock into
common stock (14) 19 (5) -- -- --
Adjustment for contingent consideration
under guaranteed value commitments -- -- 3,703 -- -- --
Foreign currency translation adjustment -- -- -- -- (7,354) --
Other -- 2 442 -- -- --
Net loss -- -- -- (9,042) -- --
----------- ----------- ----------- ----------- ----------- -----------
Balance, December 31, 1994 -- 1,027 729,842 (160,938) (7,354) (1,961)
Common stock options exercised -- 3 2,822 -- -- --
Common stock warrants exercised -- 9 3,692 -- -- --
Common stock issued to qualified defined
contribution plan -- 4 3,529 -- -- --
Common stock issued in acquisitions
and development projects -- 71 80,001 -- -- --
Common stock issued from treasury
upon exercise of stock options -- -- (89) -- -- 142
Common stock issued for conversion of
subordinated debentures -- 37 46,704 -- -- --
Common stock issued in public offerings -- 99 180,513 -- -- --
Elimination of investment in Western
common stock -- (10) (11,358) -- -- --
Change in Western fiscal year -- -- -- (8,865) -- --
Adjustment for contingent consideration
under guaranteed value commitments -- -- 5,340 -- -- --
Foreign currency translation adjustment -- -- -- -- (7,423) --
Transactions of pooled companies -- -- -- (1,280) -- --
Other -- -- 577 -- -- --
Net income -- -- -- 52,488 -- --
----------- ----------- ----------- ----------- ----------- ----------
Balance, December 31, 1995 $ -- $ 1,240 $ 1,041,573 $ (118,595) $ (14,777) $ (1,819)
</TABLE>
Continued
28
<PAGE> 31
USA WASTE SERVICES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY, continued
(In Thousands)
<TABLE>
<CAPTION>
Foreign
Additional Currency
Preferred Common Paid-in Accumulated Translation Treasury
Stock Stock Capital Deficit Adjustment Stock
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1995 $ -- $ 1,240 $ 1,041,573 $ (118,595) $ (14,777) $ (1,819)
Common stock options exercised -- 20 21,654 -- -- --
Common stock warrants exercised -- 5 3,700 -- -- --
Common stock issued to qualified defined
contribution plan -- 3 473 -- -- --
Common stock issued in purchase acquisitions
and development projects -- 47 118,263 -- -- --
Common stock issued for acquisitions accounted
for as poolings of interests -- 42 6,302 -- -- --
Common stock returned for acquisition
settlement -- -- -- -- -- (751)
Common stock issued for investment in company -- 4 1,588 -- -- --
Common stock issued from treasury upon
exercise of stock options -- -- (481) -- -- 1,698
Common stock issued from treasury upon
exercise of stock warrants -- -- (119) -- -- 388
Common stock issued for conversion of
subordinated debentures -- 35 59,590 -- -- --
Restricted common stock, net of forfeitures -- -- 2,204 -- -- --
Foreign currency translation adjustment -- -- -- -- (1,066) --
Other -- -- 1,109 -- -- --
Net income -- -- -- 32,946 -- --
----------- ---------- ---------- ---------- ---------- -----------
Balance, December 31, 1996 $ -- $ 1,396 1,255,856 (85,649) (15,843) (484)
=========== ========== ========== ========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
29
<PAGE> 32
USA WASTE SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 32,946 $ 52,488 $ (9,042)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 153,168 119,570 112,860
Deferred income taxes 2,903 12,358 (26,039)
Net gain on disposal of property and equipment (5,110) (1,259) (1,172)
Effect of nonrecurring charges 61,144 -- --
Change in assets and liabilities, net of effects of
acquisitions and divestitures:
Accounts receivable and other receivables (76,371) (11,833) (19,575)
Prepaid expenses and other (5,388) (2,199) (1,090)
Other assets 8,697 (3,532) (5,989)
Accounts payable and accrued liabilities 61,154 (10,761) 8,600
Accrued shareholder litigation settlement -- (85,300) 85,300
Deferred revenues and other liabilities (26,804) 4,543 7,207
Other, net (1,181) (1,773) (23)
--------- --------- ---------
Net cash provided by operating activities 205,158 72,302 151,037
--------- --------- ---------
Cash flows from investing activities:
Capital expenditures (348,354) (229,497) (186,979)
Acquisitions of businesses, net of cash acquired (281,158) (89,968) (40,480)
Proceeds from sale of property and equipment 77,223 9,701 19,860
Loans and advances to others (18,399) (19,660) (7,504)
Collection of loans and advances to others 15,010 4,880 1,785
Change in restricted funds (21,851) 7,388 11,354
Proceeds from sale of investments -- 1,200 1,200
Other -- (612) (590)
--------- --------- ---------
Net cash used in investing activities (577,529) (316,568) (201,354)
--------- --------- ---------
</TABLE>
continued
30
<PAGE> 33
USA WASTE SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS, continued
(In Thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from financing activities:
Proceeds from issuance of long-term debt $ 1,263,880 $ 503,123 $ 149,644
Principal payments on long-term debt (913,767) (454,893) (131,567)
Net proceeds from issuance of common stock -- 185,927 7,241
Proceeds from exercise of common stock options 22,891 1,964 492
Proceeds from exercise of common stock warrants 3,974 3,701 151
Elimination of investment in Western -- (12,569) --
Other (2,269) (1,718) (1,481)
----------- ----------- -----------
Net cash provided by financing activities 374,709 225,535 24,480
----------- ----------- -----------
Effect of exchange rate changes on cash and cash equivalents 115 (178) (84)
----------- ----------- -----------
Increase (decrease) in cash and cash equivalents 2,453 (18,909) (25,921)
Cash and cash equivalents at beginning of year 21,058 39,967 65,888
----------- ----------- -----------
Cash and cash equivalents at end of year $ 23,511 $ 21,058 $ 39,967
=========== =========== ===========
Supplemental cash flow information:
Cash paid during the year for:
Interest $ 62,223 $ 59,206 $ 48,030
Income taxes 27,374 41,210 26,294
Non-cash investing and financing activities:
Acquisitions of property and equipment through capital leases $ -- $ 7,600 $ 6,808
Note receivable from sale of property and equipment 27,800 -- --
Conversion of subordinated debentures to common stock 60,000 49,000 --
Issuance of common stock for preferred stock dividends -- -- 1,390
Acquisitions of businesses and development projects:
Liabilities incurred or assumed 326,493 25,332 11,028
Common stock issued 124,655 71,243 27,825
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
31
<PAGE> 34
USA WASTE SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business -- USA Waste Services, Inc. and subsidiaries (the "Company") is
engaged in the non-hazardous solid waste management business and provides solid
waste management services, consisting of collection, transfer, disposal,
recycling, and other miscellaneous services to municipal, commercial,
industrial, and residential customers. The Company conducts operations through
subsidiaries in multiple locations throughout the United States, primarily, and
in Canada, Puerto Rico, and Mexico.
Principles of consolidation -- The accompanying consolidated financial
statements include the accounts of the Company and its majority-owned
subsidiaries after elimination of all material intercompany balances and
transactions. Investments in affiliated companies in which the Company owns
50% or less are accounted for under the equity method or cost method of
accounting, as appropriate.
Use of estimates -- The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts for certain revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Cash and cash equivalents -- Cash and cash equivalents consist primarily of
cash on deposit, certificates of deposit, money market accounts, and investment
grade commercial paper purchased with original maturities of three months or
less.
Restricted funds held by trustees -- Restricted funds held by trustees of
$49,618,000 and $31,716,000 at December 31, 1996 and 1995, respectively, are
included in other assets and consist principally of funds deposited in
connection with landfill closure and post-closure obligations, insurance escrow
deposits, and amounts held for landfill construction arising from industrial
revenue financings. Amounts are principally invested in fixed income
securities of federal, state, and local governmental entities and financial
institutions. The Company considers its landfill closure, post- closure, and
construction escrow investments to be held to maturity. At December 31, 1996,
the aggregate fair value of these investments approximates their amortized
costs and substantially all of these investments mature within one year. The
Company's insurance escrow funds are invested in pooled investment accounts
that hold debt and equity securities and are considered to be available for
sale. The market value of those pooled accounts approximates their aggregate
cost at December 31, 1996.
Concentrations of credit risk -- Financial instruments that potentially subject
the Company to concentrations of credit risk consist primarily of cash
investments and accounts receivable. The Company places its cash investments
with high quality financial institutions and limits the amount of credit
exposure to any one institution. Concentrations of credit risk with respect to
accounts receivable are limited because a large number of geographically
diverse customers make up the Company's customer base, thus spreading the trade
credit risk. No single group or customer represents greater than 10% of total
accounts receivable. The Company controls credit risk through credit
approvals, credit limits, and monitoring procedures. The Company performs
in-depth credit evaluations for commercial and industrial customers and
performs ongoing credit evaluations of its customers' financial condition but
generally does not require collateral to support accounts receivable. The
Company maintains an allowance for doubtful accounts for potential credit
losses.
Interest rate swap agreements -- The Company uses interest rate swap agreements
to minimize the impact of interest rate fluctuations on floating interest rate
long-term borrowings. The differential paid or received on interest rate swap
agreements is recognized as an adjustment to interest expense.
Property and equipment -- Property and equipment are recorded at cost.
Expenditures for major additions and improvements are capitalized, while minor
replacements, maintenance, and repairs are charged to expense as incurred. When
property and equipment is retired or otherwise disposed of, the cost and
accumulated depreciation are removed from the accounts and any resulting gain
or loss is included in results of operations. Depreciation is provided over the
estimated useful lives of the related assets using the straight-line method.
The estimated useful lives are five to thirty-five years for buildings and
improvements, three to twelve years for vehicles and machinery and equipment,
three to twelve years for containers, and three to ten years for furniture and
fixtures.
32
<PAGE> 35
Disposal sites are stated at cost and amortized ratably using the
units-of-production method as airspace is consumed. Disposal site costs
include expenditures for acquisitions of land and related airspace, engineering
and permitting costs, direct site improvement costs, and capitalized interest.
During the years ended December 31, 1996, 1995, and 1994, interest costs were
$65,054,000, $72,011,000, and $58,760,000, respectively, of which $19,507,000,
$12,459,000, and $9,828,000 were capitalized, respectively, with respect to
landfills and facilities under construction.
Excess of cost over net assets of acquired businesses -- The excess of cost
over net assets of acquired businesses is amortized on a straight-line basis
over 40 years commencing on the dates of the respective acquisitions.
Accumulated amortization was $27,429,000 and $19,619,000 at December 31, 1996
and 1995, respectively.
Accounting for business combinations -- The Company assesses each acquisition
to determine whether the pooling of interests or the purchase method of
accounting is appropriate. For those acquisitions accounted for under the
pooling of interests method, the financial statements of the acquired company
are combined with those of the Company at their historical amounts, and, if
material, all periods presented are restated as if the combination occurred on
the first day of the earliest year presented. For those acquisitions accounted
for using the purchase method of accounting, the Company allocates the cost of
the acquired business to the assets acquired and the liabilities assumed based
on estimates of fair values thereof. These estimates are revised during the
allocation period as necessary when information regarding contingencies becomes
available to define and quantify assets acquired and liabilities assumed. The
allocation period varies for each acquisition, but generally does not exceed
one year. To the extent contingencies such as preacquisition environmental
matters, litigation and related legal fees, and preacquisition tax matters are
resolved or settled during the allocation period, such items are included in
the revised allocation of the purchase price. After the allocation period, the
effect of changes in such contingencies is included in results of operations in
the periods in which the adjustments are determined.
Other intangible assets -- Other intangible assets consist primarily of
customer lists, covenants not to compete, licenses, permits, and start-up
costs. Other intangible assets are recorded at cost and amortized on a
straight-line basis over three to forty years. Accumulated amortization was
$66,057,000 and $55,762,000 at December 31, 1996 and 1995, respectively.
Long-lived assets -- Long-lived assets consist primarily of excess of cost
over net assets of acquired businesses and disposal sites. The recoverability
of long-lived assets is evaluated at the operating unit level by an analysis of
operating results and consideration of other significant events or changes in
the business environment. If an operating unit has current operating losses
and based upon projections there is a likelihood that such operating losses
will continue, the Company will evaluate whether impairment exists on the basis
of undiscounted expected future cash flows from operations before interest for
the remaining amortization period. If impairment exists, the carrying amount
of the long-lived assets is reduced to its estimated fair value.
Closure, post-closure, and other liabilities -- The Company has material
financial commitments for the costs associated with its future obligations for
final closure and post-closure of landfills it operates or for which it is
otherwise responsible. While the precise amount of these future costs cannot be
determined with certainty, the Company has estimated that the aggregate final
closure and post-closure costs for all sites owned or operated as of December
31, 1996 will be approximately $273,159,000. As of December 31, 1996 and 1995,
the Company has accrued $117,762,000 and $98,066,000, respectively, for final
closure and post-closure costs of disposal facilities. The difference between
the final closure and post-closure costs accrued as of December 31, 1996 and
the total estimated final closure and post-closure costs to be incurred will
be accrued and charged to expense as airspace is consumed such that the total
estimated final closure and post-closure costs will be fully accrued for each
landfill at the time the site discontinues accepting waste and is closed. The
Company also expects to incur an estimated $658,121,000 related to future
capping activities during the remaining operating lives of these disposal
sites. These costs are also being charged to expense over the useful lives of
the disposal sites as airspace is consumed.
The Company bases its estimates for these accruals on management's reviews,
typically performed not less than annually, including input from its engineers
and accountants and interpretations of current requirements and proposed
regulatory changes. The closure and post-closure requirements are established
under the standards of the U.S. Environmental Protection Agency's Subtitle D
regulations as implemented and applied on a state-by-state basis. Final closure
and post-closure accruals consider estimates for the final cap and cover for
the site, methane gas control, leachate management and groundwater monitoring,
and other operational and maintenance costs to be incurred after the site
discontinues accepting waste, which is generally expected to be for a period of
up to thirty years after final site closure. For disposal sites that were
previously operated by others, the Company assessed and recorded a final
closure and post-closure liability at the time the Company assumed closure
responsibility based upon the estimated total closure and post-closure costs
and the percentage of airspace utilized as of such date. Thereafter, the
difference between the final closure and post-closure costs accrued and the
total estimated closure and post-closure costs to be incurred is accrued and
charged to expense as airspace is consumed.
33
<PAGE> 36
Income taxes -- Deferred income taxes are determined based on the difference
between the financial reporting and tax bases of assets and liabilities.
Deferred income tax expense represents the change during the period in the
deferred income tax assets and deferred income tax liabilities. Deferred tax
assets include tax loss and credit carryforwards and are reduced by a valuation
allowance if, based on available evidence, it is more likely than not that some
portion or all of the deferred tax assets will not be realized.
Foreign currency translation -- The functional currency of the Company's
international operations is the local currency. Adjustments resulting from the
translation of financial information are reflected as a separate component of
stockholders' equity.
Revenue recognition -- The Company recognizes revenues as services are
provided. Amounts billed and collected prior to services being performed are
included in deferred revenues.
Earnings per common share -- Earnings per common share computations are based
on the weighted average number of shares of common stock outstanding and the
dilutive effect of stock options and warrants using the treasury stock method.
Reclassifications -- Certain previously reported amounts have been reclassified
to conform to the 1996 presentation.
New accounting pronouncement -- In February 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 128,
Earnings Per Share ("SFAS No. 128"). SFAS No. 128 specifies the computation,
presentation, and disclosure requirements of earnings per share and supercedes
Accounting Principles Board Opinion No. 15, Earnings Per Share. SFAS No. 128
requires a dual presentation of basic and diluted earnings per share. Basic
earnings per share, which excludes the impact of common stock equivalents,
replaces primary earnings per share. Diluted earnings per share, which
utilizes the average market price per share as opposed to the greater of the
average market price per share or ending market price per share when applying
the treasury stock method in determining common stock equivalents, replaces
fully-diluted earnings per share. SFAS No. 128 is effective for the Company in
1997. The following pro forma earnings per common share information assumes
SFAS No. 128 was adopted in 1994 (in thousands, except per share amounts):
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Basic earnings per common share $ 0.25 $ 0.48 $ (0.09)
Basic weighted average shares outstanding 133,892 109,623 100,296
Diluted earnings per common share $ 0.24 $ 0.46 $ (0.09)
Diluted weighted average shares outstanding 139,740 113,279 103,422
</TABLE>
2. BUSINESS COMBINATIONS
1996 Pooling of Interests Acquisitions
On August 30, 1996, the Company consummated a merger agreement with Sanifill,
Inc. ("Sanifill") accounted for as a pooling of interests (the "Sanifill
Merger") and, accordingly, the accompanying consolidated financial statements
have been restated to include the accounts and operations of Sanifill for all
periods presented. Under the terms of the Sanifill Merger, the Company issued
1.70 shares of its common stock for each share of Sanifill outstanding common
stock. The Sanifill Merger increased the Company's outstanding shares of
common stock by approximately 43,414,000 shares and the Company assumed
Sanifill's options and warrants equivalent to approximately 4,361,000
underlying shares of Company common stock. In the third quarter of 1996, the
Company incurred approximately $80,000,000 in merger related costs associated
with the Sanifill Merger, of which approximately $24,280,000 is remaining in
accrued liabilities at December 31, 1996. The $80,000,000 of merger costs
includes $9,500,000 of transaction costs, $20,000,000 of relocation, severance,
and other termination benefits, $13,000,000 of costs relating to integrating
operations, and $37,500,000 of disposal of duplicate facilities. The results
of operations for Sanifill prior to consummation of the merger for the restated
periods are as follows (in thousands):
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1996 Years Ended December 31,
------------- -----------------------
(unaudited) 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Operating revenues $ 181,406 $ 256,705 $ 192,479
Net income 18,964 27,913 19,233
</TABLE>
34
<PAGE> 37
On May 15, 1996, the Company consummated a merger agreement with Grand Central
Sanitation, Inc. and related companies ("Grand Central"), accounted for as a
pooling of interests, pursuant to which the Company issued 2,067,605 shares of
its common stock in exchange for all outstanding shares of Grand Central. The
Company has restated its previously issued consolidated financial statements
for the three months ended March 31, 1996 to include the accounts and
operations of Grand Central, which had operating revenues and net income of
$8,455,000 and $1,538,000, respectively, during that period. Periods prior to
1996 were not restated as combined results are not materially different from
results as presented. Related to this merger, the Company incurred $2,700,000
of merger costs in the second quarter of 1996.
On May 7, 1996, the Company consummated a merger agreement with Western Waste
Industries ("Western") accounted for as a pooling of interests (the "Western
Merger") and, accordingly, the accompanying consolidated financial statements
have been restated to include the accounts and operations of Western for all
periods presented. Under the terms of the Western Merger, the Company issued
1.50 shares of its common stock for each share of Western outstanding common
stock. Prior to the Western Merger, the Company owned approximately 4.1% of
Western's outstanding shares (634,900 common shares), which were canceled on
the Western Merger's effective date. The Western Merger increased the
Company's outstanding shares of common stock by approximately 22,028,000 shares
and the Company assumed options under Western's stock option plans equivalent
to approximately 5,200,000 underlying Company shares of common stock. In the
second quarter of 1996, the Company incurred approximately $35,000,000 in
merger related costs associated with the Western Merger and approximately
$4,800,000 in benefits related to Western's pre-merger retirement program. The
$35,000,000 of merger costs include $6,800,000 of transaction costs,
$15,000,000 of severance and other termination benefits, and $13,200,000 of
costs related to integrating operations.
In connection with the Western Merger, Western changed its fiscal year end from
June 30 to December 31 to conform with the Company's year end. Western's
operating results for the six months ended June 30, 1995, were included in the
consolidated statements of operations for both of the years ended December 31,
1995 and 1994. The following is a consolidated summary of operations for
Western for the six months ended June 30, 1995 (in thousands):
<TABLE>
<S> <C>
Operating revenues $136,123
Net income 8,865
</TABLE>
The consolidated financial statements for 1994 have not been restated for the
change in Western's fiscal year. The consolidated financial statements for
1994 include Western for the year ended June 30, 1995. The results of
operations for Western prior to consummation of the merger for the restated
periods are as follows (in thousands):
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1996 Years Ended December 31,
-------------- -----------------------
(unaudited) 1995 1994
-------- ---------
<S> <C> <C> <C>
Operating revenues $68,441 $273,901 $270,941
Net income 4,703 17,021 17,089
</TABLE>
On May 31, 1996, July 19, 1996, and August 30, 1996, the Company consummated
mergers accounted for as poolings of interests, pursuant to which the Company
issued 900,001, 475,330, and 648,318 shares of its common stock, respectively,
in exchange for all outstanding shares of the acquired companies. Periods
prior to consummation of the mergers were not restated to include the accounts
and operations of the acquired companies as combined results are not materially
different from the results as presented.
35
<PAGE> 38
1995 Pooling of Interests Acquisitions
On June 30, 1995, the Company consummated a merger agreement with Chambers
Development Company, Inc. ("Chambers") accounted for as a pooling of interests
and, accordingly, the accompanying consolidated financial statements have been
restated to include the accounts and operations of Chambers for all periods
presented. Under the terms of the merger agreement, approximately 27,800,000
shares of the Company's common stock were issued in exchange for all
outstanding shares of Chambers common stock and Class A common stock. Related
to this merger, the Company incurred $25,073,000 in merger costs in the second
quarter of 1995, which includes $11,900,000 of transaction costs, $9,473,000 of
severance and other termination benefits, and $3,700,000 of costs related to
integrating operations. The results of operations for Chambers prior to
consummation of the merger for the restated periods are as follows (in
thousands):
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1995
-------------- Year Ended
(unaudited) December 31, 1994
-----------------
<S> <C> <C>
Operating revenues $54,734 $257,989
Net loss (5,269) (90,244)
</TABLE>
On May 31, 1995, the Company consummated a merger agreement with Metropolitan
Disposal and Recycling Corporation, Energy Reclamation, Inc., and EE Equipment,
Inc. (collectively "MDC") accounted for as a pooling of interests and,
accordingly, the accompanying consolidated financial statements have been
restated to include the accounts and operations of MDC for all periods
presented. Under the terms of the merger agreement, approximately 1,900,000
shares of the Company's common stock were issued in exchange for all
outstanding shares of MDC common stock. Related to this merger, the Company
incurred $566,000 in merger costs in the second quarter of 1995. The results
of operations for MDC prior to consummation of the merger for the restated
periods are as follows (in thousands):
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1995
-------------- Year Ended
(unaudited) December 31, 1994
-----------------
<S> <C> <C>
Operating revenues $5,256 $19,654
Net income 458 401
</TABLE>
On August 11, 1995 and November 13, 1995, the Company consummated mergers
accounted for as poolings of interests, pursuant to which the Company issued
800,000 and 1,787,502 shares of its common stock, respectively, in exchange for
all outstanding shares of the acquired companies. Periods prior to
consummation of these mergers were not restated to include the accounts and
operations of the acquired companies as combined results are not materially
different from the results as presented.
1994 Pooling of Interests Acquisition
On May 27, 1994, the Company consummated a merger agreement with Envirofil,
Inc. ("Envirofil") accounted for as a pooling of interests and, accordingly,
the accompanying consolidated financial statements have been restated to
include the accounts and operations of Envirofil for all periods presented.
Under the terms of the merger agreement, approximately 9,700,000 shares of the
Company's common stock were issued in exchange for all outstanding shares of
Envirofil common stock. Related to this acquisition, the Company incurred
$3,782,000 in merger costs in the second quarter of 1994.
1996 and 1995 Purchase Acquisitions
During 1996 and 1995, the Company consummated several acquisitions that were
accounted for under the purchase method of accounting. Results of operations of
companies that were acquired and subject to purchase accounting are included
from the dates of such acquisitions. The total costs of acquisitions accounted
for under the purchase method were $480,805,000 and $167,095,000 in 1996 and
1995, respectively. The excess of the aggregate purchase price over the fair
value of net assets acquired in 1996 and 1995 was approximately $229,074,000
and $70,751,000, respectively.
In addition, the Company has agreed in connection with certain transactions, to
pay additional amounts to the sellers upon the achievement by the acquired
businesses of certain negotiated goals, such as targeted revenue levels,
targeted disposal volumes, or the issuance of permits for expanded landfill
airspace. Although the amount and timing of any payments of additional
contingent consideration necessarily depend on whether and when these goals are
met, the maximum aggregate amount of contingent consideration potentially
payable if all payment goals are met is $72,075,000, of which $19,075,000
36
<PAGE> 39
relates to revenue and volume targets and $53,000,000 relates to permit
expansions. The contingent consideration is payable in cash or, in some
instances, in cash or stock, at the Company's option. In addition, the Company
has agreed in connection with certain acquisitions to provide royalties based
on revenues generated at the applicable disposal site to sellers of waste
disposal businesses. The foregoing quantification of contingent consideration
does not include such royalty payments.
The unaudited pro forma information set forth below assumes 1996 and 1995
acquisitions accounted for as purchases occurred at the beginning of 1995. The
unaudited pro forma information is presented for informational purposes only
and is not necessarily indicative of the results of operations that actually
would have been achieved had the acquisitions been consummated at that time (in
thousands, except per share amounts):
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------
1996 1995
---------- ----------
<S> <C> <C>
Operating revenues $1,469,136 $1,378,099
Net income 49,174 82,326
Earnings per common share 0.35 0.68
</TABLE>
3. DIVESTITURES
In August 1996, the Company sold its five nonhazardous oil field waste transfer
stations and, in December 1996, the Company sold its six nonhazardous oil field
waste treatment facilities. Total consideration for the combined sale of the
nonhazardous oil field waste business consisted of $70,500,000 in cash,
$27,800,000 in the form of a five year note bearing interest at a rate of 7.5%,
and 2,000 warrants for the purchase of the buyer's stock. These transactions
resulted in a gain of $22,080,000, of which $18,280,000 is to be recognized
over the term of the note receivable. At December 31, 1996, the deferred gain
and note receivable were approximately $17,400,000 and $26,410,000,
respectively.
On December 31, 1993, Chambers sold its two transfer stations in Morris County,
New Jersey, to the Morris County Municipal Utilities Authority ("MCMUA") for
$9,500,000 in cash, which resulted in a deferred gain of $3,950,000.
Simultaneous with entering into the agreement for the sale of these transfer
stations, Chambers and the MCMUA amended their operating and disposal service
agreement, pursuant to which Chambers operates the transfer stations and
provides waste disposal services, reducing the rates charged for such services
in 1994 and 1995. As a result of the interrelationship of the sale of the
transfer stations and the operating and disposal service agreement, the gain on
sale was deferred and recognized in 1994 as services were provided. As part of
the agreement of sale, the Company has continued to operate the transfer
stations and provide waste disposal services.
4. PROPERTY AND EQUIPMENT
Property and equipment consists of the following (in thousands):
<TABLE>
<CAPTION>
December 31,
--------------------------
1996 1995
----------- -----------
<S> <C> <C>
Disposal sites, including costs incurred for expansion projects
in process of $47,260 and $70,954, respectively $ 1,450,398 $ 1,020,388
Vehicles 327,605 220,754
Machinery and equipment 143,034 153,703
Containers 175,482 133,994
Buildings and improvements 142,460 108,081
Furniture and fixtures 35,597 29,261
Land 108,562 93,866
----------- -----------
2,383,138 1,760,047
Less accumulated depreciation and amortization (572,887) (440,848)
----------- -----------
$ 1,810,251 $ 1,319,199
=========== ===========
</TABLE>
Depreciation and amortization of property and equipment was $133,763,000,
$101,826,000, and $93,678,000 for the years ended December 31, 1996, 1995, and
1994, respectively.
37
<PAGE> 40
5. LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
December 31,
-----------------------
1996 1995
---------- ----------
<S> <C> <C>
Credit facility:
Revolving credit facility $ 637,000 $ 51,613
Term loan facility -- 215,835
Sanifill credit facility -- 58,000
Western credit facility -- 41,000
Senior notes, maturing in varying annual installments
through June 2005, interest ranging from 7.29% to 8.44% 107,500 109,416
Convertible subordinated debentures, interest at 5% 115,000 --
Convertible subordinated debentures, interest at 7 1/2% -- 58,213
Subordinated debt, maturing in varying monthly installments
through January 2008, interest ranging from 7.25% to 10% 5,589 7,493
Industrial revenue bonds, principal payable in annual installments,
maturing in 1996-2009, variable interest rates (3.76% to 3.92%
at December 31, 1996), enhanced by letters of credit 164,639 130,374
Other 157,272 59,797
---------- ----------
1,187,000 731,741
Less current maturities 28,695 53,516
---------- ----------
$1,158,305 $ 678,225
========== ==========
</TABLE>
The aggregate estimated payments, including scheduled minimum maturities, of
long-term obligations outstanding at December 31, 1996 for the five years
ending December 31, 1997 through 2001 are: 1997 -- $28,695; 1998 -- $28,393;
1999 - - $143,725; 2000 -- $34,537; and 2001 -- $752,223.
On May 7, 1996, in connection with the Western Merger, the Company replaced its
existing credit facility with a $750,000,000 senior revolving credit facility
and retired amounts outstanding under Western's credit facility. The credit
facility was used to refinance existing bank loans and letters of credit, to
fund additional acquisitions, and for working capital. The credit facility was
available for standby letters of credit of up to $300,000,000. Loans under the
credit facility bore interest at a rate based on the Eurodollar rate plus a
spread not to exceed 0.75% per annum (spread initially set at 0.405% per
annum). The credit facility required a facility fee not to exceed 0.375% per
annum on the entire available credit facility (facility fee initially set at
0.22% per annum).
On August 30, 1996, in connection with the Sanifill Merger, the Company
replaced the $750,000,000 senior revolving credit facility with a
$1,200,000,000 senior revolving credit facility ("Credit Facility") and retired
amounts under Sanifill's credit facility. The Credit Facility was used to
refinance existing bank loans and letters of credit and to fund additional
acquisitions and working capital. The Credit Facility was available for
standby letters of credit of up to $400,000,000. Loans under the Credit
Facility bore interest at a rate based on the Eurodollar rate plus a spread not
to exceed 0.75% per annum (spread set at 0.30% per annum, or an applicable
interest rate of 5.87% per annum at December 31, 1996). The Credit Facility
required a facility fee not to exceed 0.375% per annum on the entire available
Credit Facility (facility fee set at 0.15% per annum at December 31, 1996).
The Credit Facility contained financial covenants with respect to interest
coverage and debt capitalization ratios. The Credit Facility also contained
limitations on dividends, additional indebtedness, liens, and asset sales.
Principal reductions were not required during the five-year term of the Credit
Facility. On March 5, 1997, the Credit Facility was replaced with a
$1,600,000,000 senior revolving credit facility with the same general terms,
covenants, and limitations, which is available for standby letters of credit of
up to $500,000,000.
On March 4, 1996, Sanifill issued $115,000,000 of 5% convertible subordinated
debentures, due on March 1, 2006. Interest is payable semi-annually in March
and September. The debentures are convertible into shares of the Company's
common stock at a conversion price of $28.31 per share. The debentures are
subordinated in right of payment to all existing and future senior
indebtedness, as defined. The debentures are redeemable after March 15, 1999
at the option of the Company at 102.5% of the principal amount, declining
annually to par on March 1, 2002, plus accrued interest. Deferred offering
costs of approximately $2,900,000 were incurred and are being amortized ratably
over the life of the debentures. The proceeds were used to repay debt under
Sanifill's credit facility.
In May 1991, Sanifill issued $60,000,000 of 7 1/2% convertible subordinated
debentures due on June 1, 2006. Interest was payable semiannually in June and
December. The debentures were convertible into shares of the Company's common
stock
38
<PAGE> 41
at a conversion price of $16.95 per share. The debentures were subordinated in
right of payment to all existing and future senior indebtedness, as defined.
The debentures were redeemable after June 1, 1994 at the option of the Company
at 105.25% of the principal amount, declining annually to par on June 1, 2001,
plus accrued interest. Deferred offering costs of approximately $2,600,000
were incurred and were being amortized ratably over the life of the debentures.
On March 18, 1996, Sanifill called for redemption all of its $60,000,000 of
7 1/2% convertible subordinated debentures due June 1, 2006 at redemption price
of 104.5% of their face amount plus accrued interest from December 1, 1995 to,
and including, the redemption date of April 17, 1996. Alternatively, holders
of these debentures were allowed to convert their debentures into common stock
at any time prior to the close of business on April 10, 1996, at a conversion
price equal to $16.95 per share. Holders electing to convert received 34.7
shares of Sanifill's common stock for each $1,000 principal amount of
debentures surrendered. The $60,000,000 of debentures were ultimately
converted to approximately 3,570,000 shares of Company common stock. Deferred
offering costs of approximately $1,700,000 were recorded as a reduction to
additional paid-in-capital.
During 1996, the Company guaranteed specific obligations of two unconsolidated
affiliates totaling approximately $25,000,000. The Company is of the opinion
that these unconsolidated affiliates will be able to perform under their
respective obligations and that no payments will be required and, due to the
Company's ability to assume a senior debt position no losses will be incurred
under such guarantees.
On October 6, 1995, the Company completed a public offering of 6,345,625 shares
of its common stock, priced at $19.625 per share. The net proceeds of
approximately $118,000,000 were primarily used for the repayment of debt.
Approximately 75% of the proceeds were applied to the Company's credit facility
and the remainder was utilized for expansion through acquisitions.
In September 1992, the Company issued $49,000,000 of 8 1/2% convertible
subordinated debentures due October 15, 2002, with interest payable
semi-annually. The debentures were convertible into the Company's common stock
at any time on or before maturity, unless previously redeemed, at $13.25 per
share, subject to adjustment in certain events. The Company had an option to
redeem the debentures, in whole or in part, at any time on or after October 15,
1995, at an original redemption price of 105.67% of the principal amount,
declining to par over the term of the debentures. Between November 3, 1995 and
December 1, 1995, the Company converted the remaining balance of the debentures
of approximately $42,300,000 into approximately 3,193,000 shares of the
Company's common stock. The unamortized premium of $1,983,000 as of December
1, 1995, was recorded as a reduction to additional paid-in capital. Earlier in
1995, approximately $6,700,000 of debentures had been converted into
approximately 505,000 shares of the Company's common stock.
If the aforementioned public offering and subordinated debenture conversion
transactions, which occurred in October 1995 and November 1995, respectively,
had occurred on January 1, 1995, earnings per common share would have increased
by $0.03 for the year ended December 31, 1995 due to a reduction in interest
expense resulting from the retirement of long-term debt. Weighted average
number of common and common equivalent shares outstanding would have been
121,275,000.
As of December 31, 1995, the Company had borrowed $267,448,000 under its
$550,000,000 financing agreement, which consisted of a $300,000,000 five-year
revolving credit and letter of credit facility and a $250,000,000 term loan
facility. Revolving credit loans under the credit facility were limited to
$180,000,000 at December 31, 1995, less the amount of any future industrial
revenue bonds enhanced by letters of credit under the credit facility. Loans
bore interest at the Eurodollar rate or the prime rate, plus a spread not to
exceed 1.75% per annum (the applicable interest rate at December 31, 1995 was
7.31%). The credit facility was also used for letters of credit purposes with
variable fees from 0.5% to 1.75% per annum (1.5% at December 31, 1995) charged
on amounts issued. A commitment fee of up to 0.5% was required on the unused
portion of the credit facility.
In August 1995, the Company entered into a three year interest rate swap
agreement whereby the Company fixed a maximum interest rate on $125,000,000 of
its credit facility. The interest rate was a fixed annual rate of
approximately 5.9% plus the applicable spread over the Eurodollar rate (not to
exceed 1.75% per annum) as determined under the Credit Facility (6.20% at
December 31, 1996).
As of December 31, 1995, Sanifill had borrowed $58,000,000 under its
$225,000,000 credit facility, had $127,200,000 available under its credit
facility, and had utilized $39,800,000 of its credit facility for letters of
credit relating to landfill closure and post-closure obligations and securing
industrial revenue bonds and insurance contracts. Sanifill's credit facility
was paid off on August 30, 1996. The revolving credit facility provided for a
revolving credit period expiring on November 30, 1997, at which time it was to
convert to a term facility with a final maturity date of November 30, 2001.
Availability under this credit facility was tied to the Company's cash flow and
liquidity. Advances bore interest, at Sanifill's option, at the prime rate or
London Interbank Offered Rate ("LIBOR"), in each case, plus a margin which was
calculated quarterly based upon Sanifill's ratio of indebtedness to cash flow,
or, in an amount not to exceed $100,000,000, at a rate negotiated
39
<PAGE> 42
between Sanifill and certain banks party to the revolving credit facility
(6.84% at December 31, 1995). Under the terms of the credit facility, Sanifill
was required to maintain certain financial covenants regarding net worth,
coverage ratios, and additional indebtedness.
Western's credit facility consisted of a revolving line of credit and permitted
borrowings up to $100,000,000. At Western's option, borrowings under the
credit facility bore interest at the bank's prime rate and/or at LIBOR plus
0.75% to 2% per annum, depending upon certain financial ratios of Western
(6.69% at December 31, 1995). A commitment fee of 0.375% per annum was
required on the unused portion of the credit facility. Western's credit
facility was paid off on May 7, 1996. Under the terms of the credit facility,
Western was subject to various debt covenants including maintenance of certain
financial ratios, and in addition, was limited in the amount of cash dividends
it could pay.
The senior notes outstanding at December 31, 1996 are unsecured and require the
Company to maintain certain financial covenants regarding net worth, coverage
ratios, and additional indebtedness. The first principal payment was made July
30, 1996. Deferred offering costs of approximately $700,000 were incurred and
are being amortized ratably over the life of the senior notes.
The Company, Sanifill, and Western have completed several tax exempt industrial
revenue bond issues totaling $164,639,000 at December 31, 1996, with maturities
ranging up to 25 years. Certain of the bonds are subject to annual sinking
fund redemptions and proceeds of the issues are restricted to fund certain
assets of the projects. Substantially all of the bonds are supported by
irrevocable letters of credit and bear interest at floating rates (3.76% to
3.92% at December 31, 1996) with rates reset weekly by a remarketing agent. An
interest rate swap agreement with approximately three years remaining at
December 31, 1996 has fixed the rate at 6.29% on $24,000,000 of these bonds.
Other long-term debt at December 31, 1996 and 1995 consists of miscellaneous
notes payable and obligations under capital leases. Other long-term debt at
December 31, 1996 also includes $83,475,000 payable to the former owners of a
landfill and collection operation acquired by the Company in December 1996.
This amount was paid in January 1997 through additional borrowings under the
Credit Facility.
Chambers incurred nonrecurring interest expense of $10,994,000 and $1,254,000
in 1995 and 1994, respectively, as a result of amendments to its credit
facility and senior notes in November 1994. Chambers proratably accrued the
extension fees, the expected refinancing premium, and other charges incurred
upon consummation of its merger with the Company.
Letters of credit have been provided to the Company supporting industrial
revenue bonds, performance of landfill closure and post-closure requirements,
insurance contracts, and other contracts. Letters of credit outstanding at
December 31, 1996 aggregated $277,994,000.
6. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying values of cash and cash equivalents, restricted funds held by
trustees, trade accounts receivable, trade accounts payable, and financial
instruments included in notes and other receivables and other assets
approximate their fair values principally because of the short-term maturities
of these instruments.
The fair values of the Company's debt maturing within one year and the Credit
Facility approximate the carrying values due to the nature of the instruments
involved. The senior notes and subordinated debt do not have readily available
market values; however, the carrying values are considered to approximate their
respective fair values based on valuation techniques that consider cash flows
discounted at current market rates.
The 5% convertible subordinated debentures had a quoted securities exchange
market value of 100% of the $115,000,000 face value of such securities as of
December 31, 1996.
The fair value of the $125,000,000 interest rate swap approximates the carrying
value due to the interest rate swap's relatively short remaining maturity of
approximately two years and the differential between its fixed rate of 6.20% at
December 31, 1996 compared to the related Credit Facility's variable rate of
5.87% at December 31, 1996.
The fair values of the industrial revenue bonds approximate the carrying values
as the interest rates on the bonds are reset weekly based on the credit quality
of the letters of credit which collateralize the bonds. The fair value of the
related $24,000,000 interest rate swap approximates the carrying value due to
the interest rate swap's relatively short remaining maturity of approximately
three years and the differential between its fixed rate of 6.29% compared to
the average interest rate of the related industrial revenue bonds of 3.84%.
40
<PAGE> 43
In the normal course of business, the Company has letters of credit,
performance bonds, insurance policies, and other guarantees that are not
reflected in the accompanying consolidated balance sheets. In the past, no
significant claims have been made against these financial instruments.
Management believes that the likelihood of performance under these financial
instruments is minimal and expects no material losses to occur in connection
with these financial instruments.
7. PREFERRED STOCK
The Board of Directors is authorized to issue preferred stock in series, and
with respect to each series, to fix its designation, relative rights (including
voting, dividend, conversion, sinking fund, and redemption rights), preferences
(including dividends and liquidation), and limitations. The Company currently
has no issued or outstanding preferred stock.
8. COMMON STOCK OPTIONS AND WARRANTS
In accordance with the Company's 1990 Stock Option Plan (the "1990 Plan"),
options to purchase 900,000 shares of the Company's common stock may be granted
to officers, directors, and key employees. In accordance with the Company's
1993 Stock Option Incentive Plan, as amended (the "1993 Plan"), options to
purchase 6,500,000 shares of the Company's common stock may be granted to
officers, directors, and key employees. Options are granted under both the
1990 Plan and the 1993 Plan at an exercise price which equals or exceeds the
fair market value of the common stock on the date of grant, with various
vesting periods, and expire up to ten years from the date of grant. No options
are available for future grant under the 1990 Plan.
In May 1996, the Company adopted the 1996 Stock Option Plan for Non-Employee
Directors ("1996 Directors Plan") to offer its directors who are not officers,
full-time employees, or consultants of the Company an annual grant of 10,000
options on each January 1. In accordance with the 1996 Directors Plan, options
to purchase up to 400,000 shares of the Company's common stock may be granted,
with five year vesting periods, and expiration dates ten years from the date of
grant. Options may be granted at an exercise price which equals fair market
value of the common stock on the date of grant.
In accordance with the Envirofil Employees' 1993 Stock Option Plan (the "1993
Envirofil Plan"), options could be granted to purchase 600,000 shares of the
Company's common stock. The 1993 Envirofil Plan terminates in January 2003.
Options were granted under the 1993 Envirofil Plan at an exercise price which
equaled or exceeded the fair market value of the common stock at the date of
grant, with various vesting periods, and expiration dates up to ten years from
date of grant. As a result of the merger, all unexpired and unexercised options
under the 1993 Envirofil Plan converted to options to purchase shares of the
Company's common stock, as adjusted, subject to the same terms and conditions
as provided under the 1993 Envirofil Plan. No additional options may be issued
under such plan.
Chambers had two plans under which stock options for the purchase of its Class
A common stock could be granted: the 1993 Stock Incentive Plan (the "1993
Chambers Plan") and the 1991 Stock Option Plan for Non-Employee Directors (the
"Chambers Directors' Plan"). The maximum number of shares of Chambers Class A
common stock available for grant under the 1993 Chambers Plan in each calendar
year was equal to one percent of the total number of outstanding shares of
Chambers Class A common stock as of the beginning of the year plus any shares
then reserved but not subject to grant under Chambers' terminated 1988 Stock
Option Plan (the "1988 Chambers Plan"). Any unused shares available for grant
in any calendar year were carried forward and available for award in succeeding
calendar years. Under the terms of the 1993 Chambers Plan, options were granted
at fair market value on the date of grant, but in no event were options granted
at less than the stock's par value, with various vesting periods, and
expiration dates up to ten years from date of grant.
Under the Chambers Directors' Plan, options could be granted to purchase
150,000 shares of Chambers Class A common stock. The Chambers Directors' Plan
stipulates that each person serving as a director and who was not employed by
Chambers was automatically granted options for the purchase of 2,000 shares of
Chambers Class A common stock on the third business day following each annual
stockholders' meeting. In addition, each nonemployee director at the effective
date of the plan was granted options to purchase 2,000 shares of Chambers Class
A common stock for each year previously served on Chambers' Board of Directors.
As a result of the merger, all unexpired and unexercised options under the 1993
Chambers Plan, the 1988 Chambers Plan, and the Chambers Directors' Plan
converted to options to purchase shares of the Company's common stock, as
adjusted, subject to the same terms and conditions as provided under the
Chambers Plans. No additional options may be issued under such plans.
Western maintained three stock option plans ("Western Plans"), the 1992 Stock
Option Plan ("1992 Western Plan"), the Incentive Stock Option Plan, and the
Non-Qualified Stock Option Plan, which allowed key employees and directors of
Western the right to purchase shares of its common stock. Options granted
under the 1992 Western Plan were designated as incentive or non-qualified in
nature, at the discretion of the Compensation Committee of Western's Board of
Directors, though only employees were eligible to receive incentive stock
options. Western had reserved 2,000,000 shares of its common stock under
41
<PAGE> 44
each of the Western Plans. Options were granted under the Western Plans at an
exercise price which equaled or exceeded the fair market value on the date of
grant. Options were generally exercisable in installments beginning one year
after the grant date. As a result of the Western Merger, all unexpired and
unexercised options under the Western Plans converted to options to purchase
shares of the Company's common stock, as adjusted, subject to the same terms
and conditions as provided under the Western Plans. No additional options may
be issued under such plans.
Sanifill maintained an incentive compensation plan (the "Incentive Plan") which
allowed for the ability to grant non-qualified options, restricted stock,
deferred stock, incentive stock options, stock appreciation rights, and other
long-term incentive awards. Under the Incentive Plan, stock options were
typically granted at fair market value on the date of grant. The number of
shares available for issuance under the Incentive Plan was limited to 14% of
the number of outstanding shares of Sanifill's common stock at that time less
shares outstanding under the Incentive Plan and the Company's previously
utilized stock option plan (the "Stock Option Plan"). The Incentive Plan did
not provide for the granting of options to non-employee directors. The Stock
Option Plan provided for options of up to 382,500 of the authorized shares to
be granted to non-employee directors. In March 1994 and May 1995, Sanifill
granted 190,155 and 26,095 shares of restricted stock, respectively, to certain
key executives under the Incentive Plan, which were to vest at the end of eight
years or upon the achievement of certain financial objectives, if sooner.
During 1996, these financial objectives were met and all restricted shares were
vested. Sanifill incurred compensation expense of $2,204,000, $312,000, and
$234,000 in 1996, 1995, and 1994, respectively, related to restricted stock.
As a result of the Sanifill Merger, all unexpired and unexercised options under
the plans converted to options to purchase shares of the Company's common
stock, as adjusted, subject to the same terms and conditions as provided under
such plans. No additional options may be issued under such plans.
In October 1995, the Financial Accounting Standards Board issued SFAS No. 123.
SFAS No. 123 prescribes a fair value based method of determining compensation
expense related to stock-based awards granted to employees. The recognition
provisions of SFAS No. 123 are optional; however, entities electing not to
adopt the recognition provisions of SFAS No. 123 are required, beginning in
1996, to make disclosures of pro forma net income and earnings per share as if
the recognition provisions of SFAS No. 123 had been applied as of January 1,
1995, as well as disclosures regarding assumptions utilized in determining the
pro forma amounts. The Company did not adopt the recognition provisions of
SFAS No. 123, however, required disclosures are included below.
Stock options granted by the Company in 1996 and 1995 have ten year terms.
Stock options granted by Chambers and Western became fully vested upon
consummation of the related mergers. Stock options granted by Sanifill
continue to vest under varying vesting periods ranging from immediate vesting
to four years following the date of grant. The Company has issued warrants
expiring through 2002 for the purchase of shares of its common stock in
connection with private placements of debt and equity securities, acquisitions
of businesses, bank borrowings, reorganizations, and certain employment
agreements. The following table summarizes common stock options and warrants
transactions related to employees or Company directors under all of the
aforementioned plans for 1996, 1995, and 1994 (in thousands):
<TABLE>
<CAPTION>
Options and Weighted Average Option Price
Warrants Exercise Price Range
----------- ---------------- ------------
<S> <C> <C> <C>
Outstanding at January 1, 1994 10,426
Granted 2,781
Exercised (1,083) $0.55 - $14.67
Forfeited (274)
------
Outstanding at December 31, 1994 11,850 $ 8.63
Granted 4,005 18.16
Exercised (1,250) 5.17
Forfeited (118) 29.62
------
Outstanding at December 31, 1995 14,487 11.58
Granted 5,937 24.60
Exercised (2,385) 10.87
Forfeited (46) 16.53
------
Outstanding at December 31, 1996 17,993 16.11
======
Exercisable at December 31, 1995 7,892 $ 10.12
Exercisable at December 31, 1996 9,137 11.14
</TABLE>
42
<PAGE> 45
The common stock options outstanding at December 31, 1996 include 9,457,000
common stock options granted by Chambers, Western, and Sanifill, of which
7,189,000 are exercisable. The Company holds 23,485 shares of its common stock
in treasury as of December 31, 1996 for future distribution upon exercise of
options under the plans.
The weighted average fair value of common stock options and warrants granted to
employees or Company directors during 1996 and 1995 were $8.47 and $5.53,
respectively. The fair value of each common stock option or warrant granted to
employees or Company directors by the Company during 1996 and 1995 is estimated
utilizing the Black-Scholes option-pricing model. For USA Waste, the
following weighted average assumptions were used: dividend yield of 0%,
risk-free interest rates vary for each grant and range from 5.22% to 6.9%,
expected life of four years for all grants, and stock price volatility of
approximately 31% for all grants. For Chambers, Western, and Sanifill, the
following weighted average assumptions were used: dividend yield of 0%,
risk-free interest rates vary for each grant and range from 5.06% to 7.67%,
expected life of two or three years for all grants, and a stock price
volatility ranging from 16.5% to 25% for all grants.
Stock options and warrants outstanding and exercisable related to employees or
Company directors at December 31, 1996 were as follows (in thousands):
<TABLE>
<CAPTION>
Outstanding Exercisable
------------------------------------------- -------------------------
Weighted Average Weighted Average Weighted Average
Options Exercise Price Remaining Term Options Exercise Price
------- ---------------- ---------------- ------- ----------------
<S> <C> <C> <C> <C> <C>
$2.25 to $10.00 5,148 $ 6.87 4.95 years 4,871 $ 6.84
$10.01 to $20.00 6,247 14.11 7.49 years 3,225 13.31
$20.01 to $30.88 6,598 25.23 9.19 years 1,041 24.56
---------------- ------ ------------ ---------- ----- ------------
$2.25 to $30.88 17,993 $ 16.11 7.39 years 9,137 $ 11.14
====== =====
</TABLE>
The following table summarizes transactions involving common stock warrants
related to nonemployees for 1996, 1995, and 1994 (in thousands):
<TABLE>
<CAPTION>
Options and Weighted Average Option Price
Warrants Exercise Price Range
----------- ---------------- ------------
<S> <C> <C> <C>
Outstanding at January 1, 1994 724
Granted 60
Exercised (472) $0.55 - $8.80
Forfeited --
----
Outstanding at December 31, 1994 312 $ 9.33
Granted 230 11.61
Exercised (415) 9.03
Forfeited -- --
----
Outstanding at December 31, 1995 127 10.65
Granted 528 25.46
Exercised (81) 9.15
Forfeited (21) 10.50
----
Outstanding at December 31, 1996 553 19.52
====
Exercisable at December 31, 1995 75 $ 10.58
Exercisable at December 31, 1996 222 15.37
</TABLE>
The weighted average fair value of common stock warrants granted to
nonemployees during 1996 and 1995 were $10.37 and $4.27, respectively. The
fair value of each common stock warrant granted to employees or Company
directors by the Company during 1996 and 1995 is estimated utilizing the
Black-Scholes option-pricing model. For USA Waste, the following weighted
average assumptions were used: dividend yield of 0%, risk-free interest rates
vary for each grant and range from 5.06% to 7.67%, expected life of five years
for all grants, and a stock price volatility of approximately 31% for all
grants. For Chambers, Western, and Sanifill, the following weighted average
assumptions were used: dividend yield of 0%, risk-free interest rate of 7.15%
for all grants, expected life of five years for all grants, and a stock price
volatility of 16.5% for all grants.
43
<PAGE> 46
If the Company applied the recognition provisions of SFAS No. 123, the
Company's net income and earnings per common share for 1996 and 1995 would
approximate the pro forma amounts shown below (in thousands, except per share
amounts):
<TABLE>
<CAPTION>
Years ended December 31,
------------------------
1996 1995
------- -------
<S> <C> <C>
SFAS No. 123 charge, net of income taxes $11,260 $ 2,371
Net income 21,686 50,117
Earnings per common share 0.16 0.44
</TABLE>
The effects of applying SFAS No. 123 in this pro forma disclosure are not
indicative of future amounts. SFAS No. 123 does not apply to awards prior to
1995.
9. EMPLOYEE BENEFIT PLANS
Effective July 1, 1995, the Company established the USA Waste Services, Inc.
Employee Savings Plan ("the Savings Plan"), a qualified defined contribution
retirement plan, covering employees (except those working subject to a
collective bargaining agreement) 21 years of age or older who have completed
one year of service or were actively employed on the Savings Plan's
commencement date. The Savings Plan allows eligible employees to contribute up
to the lesser of 15% of their annual compensation or the maximum permitted
under IRS regulations to various investment funds. The Company matches 50% of
the first 6% an employee contributes. Both employee and Company contributions
vest immediately. In 1996 and 1995, the Company contributed approximately
$1,248,000 and $218,000, respectively, and incurred approximately $148,000 and
$25,000, respectively, in administrative fees.
Western has a qualified defined contribution plan which generally covers all
full time salaried and clerical employees not represented by a bargaining
agreement. Eligible employees are allowed to contribute up to the lesser of
20% of their annual compensation or the maximum permitted under IRS regulations
to various investment funds. At its discretion, Western can match up to 50% of
the amount contributed by employees. Contributions to this plan were
discontinued January 1, 1997. Western's contributions for 1996, 1995, and 1994,
represented by issuance of Western common stock, were $753,000, $698,000, and
$661,000, respectively.
Sanifill has a defined contribution plan for employees meeting certain
employment requirements. Eligible employees are allowed to contribute up to
the lesser of 15% of their annual compensation or the maximum permitted under
IRS regulations to various investment funds. Sanifill matches all employee
contributions up to 3%. Contributions to this plan were discontinued January
1, 1997. Sanifill matching contributions were approximately $1,049,000,
$700,000, and $500,000 for the years ended December 31, 1996, 1995, and 1994,
respectively.
Sanifill has an Employee Stock Purchase Plan ("ESPP") for all active employees
who have completed one year of continuous service. Employees may contribute
from 1% to 5% of their compensation. In addition, during any purchase period,
as defined, a single additional contribution of $25, or any multiple thereof
not exceeding $2,000, may be made by a participant to their account. At the
end of each purchase period, each participant's account balance is applied to
acquire common stock of Sanifill at 85% of the market value, as defined, on the
first day or last day of the purchase period, whichever price is lower. The
maximum amount per employee that may be contributed during any plan year, as
defined, shall not exceed $25,000. Contributions to the ESPP were discontinued
upon consummation of the Sanifill Merger. The number of shares reserved for
purchase under the ESPP is 470,886 and may be from either authorized and
unissued shares or treasury shares.
44
<PAGE> 47
10. INCOME TAXES
The provision for income taxes consists of the following (in thousands):
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Current:
Domestic $ 36,864 $ 32,227 $ 26,988
Foreign 5,375 407 66
-------- -------- --------
42,239 32,634 27,054
-------- -------- --------
Deferred:
Domestic 3,342 12,871 (26,272)
Foreign (439) (513) 233
-------- -------- --------
2,903 12,358 (26,039)
-------- -------- --------
Provision for income taxes $ 45,142 $ 44,992 $ 1,015
======== ======== ========
</TABLE>
The difference between federal income taxes at the statutory rate and the
provision for income taxes for the years presented above is as follows (in
thousands):
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C>
Provision (benefit) for income taxes at federal statutory rate $ 27,331 $ 34,118 $ (2,809)
Prior year income tax adjustment -- -- (4,300)
Nondeductible expenses 12,361 7,018 6,385
State and local income taxes, net of federal
income tax benefit 3,904 2,414 3,323
Foreign income taxes 1,977 494 --
Other (431) 948 (1,584)
-------- -------- --------
Provision for income taxes $ 45,142 $ 44,992 $ 1,015
======== ======== ========
</TABLE>
Chambers' corporate tax returns for 1988 through 1992 are currently under
examination by the Internal Revenue Service ("IRS"). The Company has reached
tentative agreement with the IRS regarding the tax treatment of certain costs
and expenses deducted for financial statement purposes in these open tax years.
That agreement is subject to the approval of the Joint Committee on Taxation.
Western's corporate tax returns for fiscal years 1991 through 1993 are
currently under examination by the IRS. The IRS has proposed adjustments for
these years, which the Company is vigorously protesting, which neither alone
nor in aggregate would have a material effect on the Company's financial
position or results of operations when resolved. Sanifill's corporate tax
returns for 1994 and 1995 are currently under examination by the IRS. The
Company has been notified that USA Waste's 1994 corporate tax return will be
examined by the IRS.
45
<PAGE> 48
The components of the net deferred tax assets are as follows (in thousands):
<TABLE>
<CAPTION>
December 31,
----------------------
1996 1995
--------- ---------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 85,449 $ 97,160
Litigation settlements -- 27,897
Closure, post-closure, and other reserves 32,176 28,794
Self insurance 5,042 5,243
Asset impairments, losses from planned asset
divestures, and other 53,764 24,704
Valuation allowance (24,000) (24,000)
--------- ---------
Deferred tax assets 152,431 159,798
Deferred tax liabilities:
Property, equipment, intangible assets, and other 121,503 120,674
--------- ---------
Net deferred tax assets $ 30,928 $ 39,124
========= =========
</TABLE>
At December 31, 1996, the Company had approximately $205,000,000 of net
operating loss ("NOL") carryforwards, primarily as a result of losses incurred
by Chambers prior to the Company's merger with Chambers. Most of the NOL
carryforwards will begin to expire in 2007. The use of the NOL carryforwards
is subject to annual limitations of approximately $39,000,000 due to an
ownership change within the meaning of Section 382 of the Internal Revenue
Code. The valuation allowance as of December 31, 1996, 1995, and 1994
primarily relates to a portion of the NOL carryforwards which could expire
prior to utilization by the Company.
In December 1996, in connection with the settlement of Chambers' shareholder
litigation (see Note 12), the Claims Administrator of the Settlement Fund
Escrow Account distributed the shareholder litigation settlement to the
claimants. The distribution resulted in a portion of the $75,300,000
shareholder litigation settlement charge in 1994 becoming deductible in 1996.
Income taxes payable included in accrued liabilities was approximately
$21,702,000 at December 31, 1996.
11. UNUSUAL ITEMS
A summary of unusual items is as follows (in thousands):
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Provision for asset impairments, abandoned projects, and
estimated losses related to the disposition of non-core
business assets $35,848 $ -- $ 9,351
Provisions for losses on contractual commitments 23,128 1,313 2,252
Reversal of prior provisions for losses on asset
divestitures and contractual commitments -- -- (3,565)
Financing and professional fees -- 610 --
Corporate and regional restructurings -- 2,810 825
Western retirement benefits 4,824 -- --
------- ------- -------
Total unusual items $63,800 $ 4,733 $ 8,863
======= ======= =======
</TABLE>
In the second quarter of 1996, unusual items include approximately $4,824,000
of retirement benefits associated with Western's pre-merger retirement plan and
approximately $8,128,000 of estimated future losses related to municipal solid
waste contracts in California as a result of the continuing decline in prices
of recyclable materials. In the third quarter of 1996, the Company also
recognized approximately $50,848,000 of unusual items. The unusual items
included $28,900,000 of estimated losses related to the disposition of certain
non-core business assets, $15,000,000 of project reserves related to certain
Mexico operations, and $6,948,000 of various other terminated projects.
In 1992, Chambers became a defendant in shareholder litigation arising out of
financial statement revisions (see Note 12) and, as a result of noncompliance
with certain covenants of its various long-term borrowing agreements, commenced
restructuring of its principal credit facilities and surety arrangements.
Chambers also initiated a major restructuring of its operations which included
a program to divest certain businesses that no longer met strategic and
performance objectives, the abandonment of
46
<PAGE> 49
various development activities, and the reorganization of its corporate and
regional operations. In 1995 and 1994, Chambers incurred substantial expenses
related to these matters as discussed below.
In 1995, Chambers recorded charges of $2,810,000 for severance and other
termination benefits paid to former Chambers employees in connection with its
pre-merger reorganization, $1,313,000 of estimated future losses associated
with the renegotiated Bergen County, New Jersey, municipal solid waste
contract, and $610,000 of shareholder litigation settlement costs.
In 1994, Chambers recorded charges of $3,366,000 for losses on asset
divestitures, including $1,114,000 to adjust a 1993 estimate of the loss on
divestiture of a collection, recycling, and transfer station operation and
$2,252,000 related to the estimated future loss on a municipal contract.
During 1994, Chambers also reversed 1993 provisions for losses on asset
divestitures and contractual commitments of $3,565,000, including $2,000,000
previously recorded for losses expected to be incurred on a municipal contract
with respect to which Chambers was able to negotiate an early termination and
$1,053,000 of excess reserve related to the sale of a recycling operation and
certain real estate.
In 1994, Chambers also recorded net charges of $8,237,000 for asset impairments
and abandoned projects, including $6,978,000 to reduce the carrying value of
Chambers' medical, special, and municipal waste incinerator facility to its
estimated net realizable value, determined as the present value of future cash
flows discounted at 12%. A permanent decline in the value of the incinerator
became evident as Chambers management determined its investment could not be
recovered through future operations, given current and forecasted pricing,
waste mix, and capacity trends as well as then recently proposed regulations
with respect to medical waste incinerator facilities and general declines in
the value of waste incinerator businesses. During 1994, Chambers also reached
a favorable settlement of previously reported litigation related to certain
contracts entered into with respect to its purchase of a landfill and its prior
purchase of a collection company. The settlement amount is included as a credit
to unusual items and includes receipt by Chambers of $1,200,000 in cash and the
forgiveness of all remaining non-compete payments totaling $525,000 that were
to have been paid by Chambers to various individuals in 1994, 1995, and 1996.
The remaining charge of $2,984,000 results from changes in 1993 estimates for
certain asset impairments and abandoned projects. In addition, Chambers
recorded a charge of $825,000 primarily relating to severance benefits paid to
employees terminated as part of Chambers' continued reorganization. With the
exception of the $1,200,000 litigation settlement received by Chambers and the
$825,000 payment of severance benefits, there was no cash flow effect related
to these unusual charges.
12. SHAREHOLDER LITIGATION SETTLEMENT
In 1994, in connection with the settlement of certain Chambers' shareholder
litigation, Chambers accrued $85,300,000 for the cost of the settlements and
$4,100,000 for other litigation related costs, of which $79,400,000 was
recorded as an expense and paid in 1995 and $10,000,000 was recorded as an
asset and ultimately paid from the proceeds of Chambers' directors and officers
liability insurance policy.
13. RELATED PARTY TRANSACTIONS
The Chambers' headquarters facility was leased from the principal stockholders
of Chambers under a lease dated December 29, 1986 with an initial term expiring
in October 2006 and a ten-year renewal option. The agreement provided for
monthly lease payments (aggregating $531,000 during 1995) prior to the Company
being released from the lease by assuming the related mortgage of $1,945,000
from the principal stockholders of Chambers in July 1995.
In August 1995 and pursuant to the terms of the Chambers merger, the Company
exercised an option to purchase real estate from John G. Rangos, Sr., a
principal stockholder of Chambers and a director of the Company, and Michael J.
Peretto, a former director of Chambers, and certain members of his family. The
real estate is adjacent to the Company's Monroeville landfill. The option to
purchase the real estate was granted pursuant to agreements among the parties
dated July 8, 1993. The total consideration paid by the Company for the real
estate was $2,986,000, of which $2,103,000 was paid to John G. Rangos, Sr. and
$883,000 was paid to Mr. Peretto and members of his family.
Pursuant to the terms of the Western Merger, the Company and the Shirvanian
Family Investment Partnership (the "Partnership"), of which Kosti Shirvanian, a
director of the Company, is a general partner, transferred to the Company the
Partnership's interests in the land and improvements constituting a portion of
a transfer station in Carson, California, in exchange for the issuance by the
Company of 337,500 shares of Company common stock.
47
<PAGE> 50
14. COMMITMENTS AND CONTINGENCIES
Operating leases -- The Company has entered into certain noncancelable
operating leases for vehicles, equipment, offices, and other facilities which
expire through 2011, certain of which contain renewal options. Lease expense
aggregated $6,609,000, $15,519,000, and $20,064,000 during 1996, 1995, and
1994, respectively. Future minimum lease payments under operating leases in
effect at December 31, 1996 are 1997 -- $6,858,000; 1998 -- $5,232,000; 1999 --
$4,265,000; 2000 -- $3,365,000; 2001 -- $3,009,000; and thereafter $10,315,000.
Environmental matters -- The Company is subject to extensive and evolving
federal, state, and local environmental laws and regulations in the United
States and elsewhere that have been enacted in response to technological
advances and the public's increased concern over environmental issues. As a
result of changing governmental attitudes in this area, management anticipates
that the Company will continually modify or replace facilities and alter methods
of operation. The majority of the expenditures necessary to comply with the
environmental laws and regulations are made in the normal course of business.
Although the Company, to the best of its knowledge, is in compliance in all
material respects with the laws and regulations affecting its operations, there
is no assurance that the Company will not have to expend substantial amounts for
compliance in the future.
Litigation -- On or about March 8, 1993, an action was filed in the United
States District Court for the Western District of Pennsylvania, captioned
Option Resource Group, et al. v. Chambers Development Company, Inc., et al.,
Civil Action No. 93-354. This action was brought by a market maker in options
in Chambers stock and two of its general partners and asserts federal
securities law and common law claims alleging that Chambers, in publicly
disseminated materials, intentionally or negligently misstated its earnings and
that Chambers' officers and directors committed mismanagement and breach of
fiduciary duties. These plaintiffs allege that, as a result of large amounts
of put options traded on the Chicago Board of Options Exchange between March 13
and March 18, 1992, they engaged in offsetting transactions resulting in
approximately $2,100,000 in losses. The plaintiffs in Option Resource Group
had successfully requested exclusion from a now settled class action of
consolidated suits instituted on similar claims ("Class Action") and Option
Resource Group is continuing as a separate lawsuit. Plaintiffs filed a motion
for summary judgment which is untimely under the court's case management
procedures. The court has stayed responses to the motion for summary judgment.
In response to discovery on damages, the plaintiffs reduced their damages claim
to $433,000 in alleged losses, plus interest and attorneys' fees, for a total
damage claim of $658,000 as of August 21, 1995. Discovery has been completed
and a trial date has been set for early 1997. The Company intends to continue
to vigorously defend against this action. Management of the Company believes
the ultimate resolution of such complaint will not have a material adverse
effect on the Company's financial position or results of operations.
On August 3, 1995, Frederick A. Moran and certain related persons and entities
filed a lawsuit against Chambers, certain former officers and directors of
Chambers, and Grant Thornton, LLP, in the United States District Court for the
Southern District of New York under the caption Moran, et al. v. Chambers, et
al., Civil Action No. 95-6034. Plaintiffs, who claim to represent
approximately 484,000 shares of Chambers stock, requested exclusion from the
settlement agreements which resulted in the resolution of the Class Action and
assert that they have incurred losses attributable to shares purchased during
the class period and certain additional losses by reason of alleged management
misstatements during and after the class period. The claimed losses include
damages to Mr. Moran's business and reputation. The Judicial Panel on
Multidistrict Litigation has transferred this case to the United States
District Court for the Western District of Pennsylvania. The Company has filed
its answer to the complaint and intends to vigorously defend against these
claims. The case is currently in discovery. Management of the Company
believes the ultimate resolution of such complaint will not have a material
adverse effect on the Company's financial position or results of operations.
The Company is a party to various other litigation matters arising in the
ordinary course of business. Management believes that the ultimate resolution
of these matters will not have a material adverse impact on the Company's
financial position and results of operations. In the normal course of its
business and as a result of the extensive government regulation of the solid
waste industry, the Company periodically may become subject to various judicial
and administrative proceedings and investigations involving federal, state, or
local agencies. To date, the Company has not been required to pay any material
fine or had a judgment entered against it for violation of any environmental
law. From time to time, the Company also may be subjected to actions brought by
citizen's groups in connection with the permitting of landfills or transfer
stations, or alleging violations of the permits pursuant to which the Company
operates. From time to time, the Company is also subject to claims for personal
injury or property damage arising out of accidents involving its vehicles.
Insurance -- The Company carries a broad range of insurance coverages, which
management considers prudent for the protection of the Company's assets and
operations. Some of these coverages are subject to varying retentions of risk
by the Company. The casualty coverages currently include $2,000,000 primary
commercial general liability and $1,000,000 primary automobile liability
supported by $100,000,000 in umbrella insurance protection. The property
policy provides insurance
48
<PAGE> 51
coverage for all of the Company's real and personal property, including
California earthquake perils. The Company also carries $200,000,000 in
aircraft liability protection.
The Company maintains workers' compensation insurance in accordance with laws
of the various states in which it has employees. The Company also currently
has an environmental impairment liability ("EIL") insurance policy for certain
of its landfills and transfer stations that provides coverage for property
damages and/or bodily injuries to third parties caused by off-site pollution
emanating from such landfills or transfer stations. This policy provides
$5,000,000 of coverage per incident with a $10,000,000 aggregate limit.
To date, the Company has not had any difficulty in obtaining insurance.
However, if the Company in the future is unable to obtain adequate insurance,
or decides to operate without insurance, a partially or completely uninsured
claim against the Company, if successful and of sufficient magnitude, could
have a material adverse effect upon the Company's financial condition or
results of operations. Additionally, continued availability of casualty and
EIL insurance with sufficient limits at acceptable terms is an important aspect
of obtaining revenue-producing waste service contracts.
15. SELECTED QUARTERLY FINANCIAL DATA, UNAUDITED
The following table summarizes the unaudited consolidated quarterly results of
operations for 1996 and 1995 (in thousands, except per share amounts):
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Operating revenues
1996 $ 282,525 $ 327,742 $ 352,754 $ 350,367
=========== =========== =========== ===========
1995 $ 222,944 $ 240,770 $ 262,434 $ 261,557
=========== =========== =========== ===========
Income (loss) from operations
1996 $ 54,164 $ 22,183 $ (50,194) $ 84,155
=========== =========== =========== ===========
1995 $ 32,626 $ 9,310 $ 51,994 $ 52,477
=========== =========== =========== ===========
Income (loss) before income taxes
1996 $ 46,082 $ 13,348 $ (58,386) $ 77,044
=========== =========== =========== ===========
1995 $ 19,398 $ (8,029) $ 41,224 $ 44,887
=========== =========== =========== ===========
Net income (loss)
1996 $ 27,652 $ (2,068) $ (38,864) $ 46,226
=========== =========== =========== ===========
1995 $ 11,639 $ (10,817) $ 24,734 $ 26,932
=========== =========== =========== ===========
Earnings (loss) per common share
1996 $ 0.21 $ (0.01) $ (0.27) $ 0.32
=========== =========== =========== ===========
1995 $ 0.11 $ (0.10) $ 0.22 $ 0.21
=========== =========== =========== ===========
</TABLE>
Earnings (loss) per common share for each of the quarters presented is based on
the weighted average number of shares of common stock outstanding for each
period and the sum of the quarters may not necessarily be equal to the full
year earnings (loss) per common share amount.
Amounts presented for 1996 and 1995 are restated for the pooling of interests
transactions with Sanifill, Western, and Chambers, discussed in Note 2, and are
different from amounts originally reported. The results of operations for 1996
and 1995 include certain nonrecurring charges for merger costs, unusual items,
and nonrecurring interest, as disclosed elsewhere herein. In 1996,
nonrecurring charges amounted to $51,052,000 and $133,404,000 in the second and
third quarters, respectively. In 1995, nonrecurring charges amounted to
$4,206,000 and $37,160,000 in the first and second quarters, respectively.
16. SUBSEQUENT EVENTS
In connection with the Sanifill Merger, the United States Department of Justice
ordered the divestiture of certain solid waste collection and disposal assets
and operations in Houston, Texas. On January 31, 1997, the Company sold these
assets to TransAmerican Waste Industries, Inc. ("TransAmerican") for
$13,600,000 in cash plus warrants to purchase 1,500,000 shares of TransAmerican
common stock at an exercise price of $1.50 per share. The warrants are
exercisable for a period of five years.
49
<PAGE> 52
On February 7, 1997, the Company issued $535,275,000 of 4% convertible
subordinated notes, due on February 1, 2002 ("Notes Offering"). Interest is
payable semi-annually in February and August. The notes are convertible into
shares of the Company's common stock at a conversion price of $43.56 per share.
The notes are subordinated in right of payment to all existing and future senior
indebtedness, as defined. The notes are redeemable after February 1, 2000 at
the option of the Company at 101.6% of the principal amount, declining to 100.8%
of the principal amount on February 1, 2001 and thereafter until maturity, plus
accrued interest. Deferred offering costs of approximately $14,000,000 were
incurred and are being amortized ratably over the life of the notes. The
proceeds were primarily used to repay debt under the Company's Credit Facility
and for general corporate purposes.
On February 7, 1997, concurrent with the Notes Offering, the Company completed
a public offering of 11,500,000 shares of its common stock, priced at $35.125
per share. The net proceeds of approximately $387,438,000 were primarily used
to repay debt under the Company's Credit Facility and for general corporate
purposes.
If the aforementioned issuance of 4% convertible subordinated debentures and
public offering had occurred on January 1, 1996, earnings per share would have
increased by $0.05 for the year ended December 31, 1996 due to a reduction in
interest expense resulting from the repayment of debt under the Company's
credit facility being offset by an increase in the weighted average number of
common and common equivalent shares outstanding, which would have been
163,529,000.
On March 12, 1997, the Company acquired all of the Canadian solid waste
subsidiaries of Allied Waste Industries, Inc., representing 41 collection
businesses, seven landfills, and eight transfer stations in the provinces of
Alberta, British Columbia, Manitoba, Ontario, Quebec, and Saskatchewan, for
approximately $518,000,000 in cash. The acquisition was accounted for under
the purchase method of accounting.
On January 21, 1997, the Company executed a definitive agreement to acquire
substantially all of the assets of Mid-American Waste Systems, Inc. for
approximately $201,000,000, consisting primarily of cash and a limited amount
of debt assumption. The assets to be acquired include eleven collection
businesses, eleven landfills, six transfer stations, and three recycling
centers. The acquisition has been approved by the Bankruptcy Court and is
expected to close during the second quarter of 1996. The acquisition will be
accounted for under the purchase method of accounting.
Subsequent to December 31, 1996, in addition to the two aforementioned
acquisitions, the Company acquired 24 collection businesses, four transfer
stations, and one landfill for approximately $39,900,000 in cash, $14,359,000
in liabilities incurred or debt assumed, and 982,964 shares of the Company's
common stock under the purchase method of accounting.
The unaudited pro forma information set forth below assumes 1997, 1996, and
1995 acquisitions accounted for as purchases occurred at the beginning of 1995.
The unaudited pro forma information is presented for informational purposes
only and is not necessarily indicative of the results of operations that
actually would have been achieved had the acquisitions been consummated at that
time (in thousands, except per share amounts):
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------
1996 1995
---------- ----------
<S> <C> <C>
Operating revenues $1,926,948 $1,835,849
Net income 87,450 120,063
Earnings per common share 0.61 0.99
</TABLE>
On March 21, 1997, a Canadian subsidiary of the Company and WMX Technologies,
Inc.'s Waste Management unit ("WMX") jointly executed a letter of
intent whereby the Company will acquire the majority of WMX's Canadian solid
waste businesses for approximately $186,000,000, including $124,000,000 in cash
and $62,000,000 in Company common stock. The assets to be acquired include 13
collection businesses, one landfill, and three transfer stations in the
provinces of Alberta, British Columbia, Ontario, and Quebec, which generate
approximately $124,000,000 in annualized operating revenues. The acquisition,
which is expected to close by May 31, 1997, is subject to regulatory approval
and final negotiation and execution of a definitive sales agreement.
50
<PAGE> 53
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information required by this Item is set forth under the caption
"Election of Directors" in the Company's definitive Proxy Statement for its
1997 Annual Meeting of Stockholders, to be filed pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (the "1997 Proxy
Statement"), and is incorporated herein by reference. Information concerning
the executive officers of the Company is set forth above under "Executive
Officers of the Registrant."
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this Item is set forth under the caption
"Election of Directors - Executive Compensation" in the 1997 Proxy Statement
and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this Item is set forth under the caption
"Election of Directors - Beneficial Ownership of USA Waste Common Stock" in the
1997 Proxy Statement and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this Item is set forth under the caption
"Election of Directors - Certain Relationships and Related Transactions" in the
1997 Proxy Statement and is incorporated herein by reference.
51
<PAGE> 54
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a)(1) Consolidated Financial Statements:
Report of Independent Accountants
Consolidated Balance Sheets as of December 31, 1996 and 1995
Consolidated Statements of Operations for the years ended December 31,
1996 1995, and 1994
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1996, 1995, and 1994
Consolidated Statements of Cash Flows for the years ended December 31,
1996, 1995, and 1994
Notes to Consolidated Financial Statements
(a)(2) Consolidated Financial Statement Schedules:
All Consolidated Financial Statement Schedules have been omitted since
the required information is not present or not present in amounts
sufficient to require submission of the schedule, or because the
information required is included in the Consolidated Financial
Statements or the notes thereto.
(a)(3) Exhibits:
2.1 - Agreement and Plan of Merger, dated as of December 18, 1995, by
and among the Registrant, Riviera Acquisition Corporation and
Western Waste Industries [Incorporated by reference to Appendix A
in the Registrant's Registration Statement on Form S-4, File No.
333-02181].
2.2 - Agreement and Plan of Merger, dated as of June 22, 1996, by and
among the Registrant, Quatro Acquisitions Corp. and Sanifill,
Inc. [Incorporated by reference to Annex A in the Registrant's
Registration Statement on Form S-4, File No. 333-08161].
2.3 - Amendment No. 1 to Agreement and Plan of Merger, dated July 18,
1996, by and among the Registrant, Quatro Acquisition Corp. and
Sanifill, Inc. [Incorporated by reference to Annex A in the
Registrant's Registration Statement on Form S-4, File
No. 333-08161].
3.1 - Restated Certificate of Incorporation, as amended [Incorporated
by reference to Exhibit 3.1(b) of the Registrant's Quarterly
Report, as amended, on Form 10-Q for the three months ended March
31, 1996].
3.2 - Bylaws [Incorporated by reference to Exhibit 3.2 to the
Post-Effective Amendment No. 1 to the Registrant's Registration
Statement on Form S-4, File No. 33-60103].
4.1 - Specimen Stock Certificate [Incorporated by reference to Exhibit
4.3 of the Registrant's Registration Statement on Form S-3, File
No. 33-76224].
4.2 - Supplemental Indenture, dated as of September 3, 1996, among USA
Waste Services, Inc., Sanifill, Inc., and Texas Commerce Bank
National Association relating to Sanifill, Inc.'s 5% Convertible
Subordinated Debentures Due March 1, 2006 [Incorporated by
reference to Exhibit 10.3 of the Registrant's Current Report on
Form 8-K dated September 3, 1996].
4.3 - Indenture for Subordinated Debt Securities dated February 3,
1997, among the Registrant and Texas Commerce Bank National
Association, as trustee [Incorporated by reference to Exhibit 4.1
of the Registrant's Current Report on Form 8-K dated February
7, 1997].
4.4 - Officers Certificate dated as of February 7, 1997, setting forth
the terms of the Registrant's 4% Convertible Subordinated Notes
due 2002 [Incorporated by reference to Exhibit 4.2 of the
Registrant's Current Report on Form 8-K dated February 7, 1997].
52
<PAGE> 55
4.5 - Form of the Registrant's 4% Convertible Subordinated Notes due
2002 [Incorporated by reference to Exhibit 4.3 of the
Registrant's Current Report on Form-8-K dated February 7, 1997].
10.1 - 1990 Stock Option Plan [Incorporated by reference to Exhibit 10.1
of the Registrant's Annual report on Form 10-K for the year
ended December 31, 1990].
10.2 - 1993 Stock Incentive Plan [Incorporated by reference to Exhibit
4.4 of the Registrants Registration Statement on Form S-8, File
No. 33-72436].
10.3 - 1996 Stock Option Plan for Non-Employee Directors [Incorporated
by reference to Exhibit 99.1 of the Registrant's Registration
Statement on Form S-8, File No. 333-14115].
10.4 - Envirofil, Inc. 1993 Stock Incentive Plan [Incorporated by
reference to Exhibit 10.3 of the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1994].
10.5 - Western Waste Industries Amended and Restated 1983 Stock Option
Plan [Incorporated by reference to Exhibit 99.1 of the
Registrant's Registration Statement on Form S-8, File No.
333-02181].
10.6 - Western Waste Industries 1983 Non-Qualified Stock Option Plan
[Incorporated by reference to Exhibit 99.2 of the Registrant's
Registration Statement on Form S-8, File No. 333-02181].
10.7 - Western Waste Industries 1992 Option Plan [Incorporated by
reference to Exhibit 99.3 of the Registrant's Registration
Statement on Form S-8, File No. 333-02181].
10.8 - Sanifill, Inc. 1994 Long-Term Incentive Plan [Incorporated by
reference to Exhibit 99.1 of the Registrant's Registration
Statement on Form S-8, File No. 333-08161].
10.9 - Sanifill, Inc. 1989 Stock Option Plan [Incorporated by reference
to Exhibit 99.2 of the Registrant's Registration Statement on
Form S-8, File No. 333-08161].
10.10 - Amended and Restated Revolving Credit Agreement dated as of
August 30, 1996, among the Registrant, its subsidiaries, The
First National Bank of Boston, Bank of America Illinois, J.P.
Morgan Canada, and Morgan Guaranty Trust Company of New York
[Incorporated by reference to Exhibit 10.2 of the Registrant's
Current Report on Form 8-K dated September 3, 1996].
10.11 - Form of Employment Agreement between the Registrant and each of
John E. Drury, Donald F. Moorehead, Jr., David Sutherland-Yoest,
and Chuck A. Wilcox [Incorporated by reference to Exhibit 10.18
of the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994].
10.12 - Employment Agreement between the Registrant and Rodney R. Proto
[Incorporated by reference to Exhibit 10.1 of the Registrant's
Current Report on Form 8-K dated September 3, 1996].
10.13 - Employment Agreement between the Registrant and Earl E. DeFrates
[Incorporated by reference to Exhibit 10.19 of the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1994].
10.14 - Employment Agreement between the Registrant and Gregory T.
Sangalis [Incorporated by reference to Exhibit 10.17 to the
Registrant's Registration Statement on Form S-4, File No.
33-59259].
10.15 - Consulting and Non-compete Agreement dated June 25, 1995, among
the Registrant, between the Registrant and John G. Rangos, Sr.
[Incorporated by reference to Exhibit 10.22 to the Registrant's
Quarterly Report on Form 10-Q/A for the period ended June 30,
1995].
10.16 - Employment Agreement dated June 25, 1995, between the Registrant
and Alexander W. Rangos [Incorporated by reference to Exhibit
10.22 to the Registrant's Quarterly Report on Form 10-Q/A for the
period ended June 30, 1995].
10.17 - Employment Agreement dated December 18, 1995, between the
Registrant and Kosti Shirvanian [Incorporated by reference to
Exhibit 10.18 to the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1995].
10.18 - Amended and Restated Revolving Credit Agreement dated as of March
5, 1997, among the Registrant, its subsidiaries, Bank of America
Illinois, Morgan Guaranty Trust Company of New York, and J. P.
Morgan Canada.
11.1 - Computation of Earnings (Loss) Per Common Share.
53
<PAGE> 56
21.1 - Subsidiaries of the Registrant.
23.1 - Consent of Coopers & Lybrand L.L.P.
24.1 - Form 10-K Limited Power of Attorney.
27.1 - Financial Data Schedule.
(b) Reports on Form 8-K:
During the last quarter of the period covered by this report, the
Company filed a Current Report on Form 8-K dated November 12, 1996.
Such Current Report is reported on Item 5. Other Events and on Item
7. Financial Statements and Exhibits. The Company filed restated
supplemental financial statements of USA Waste Services, Inc. to
include the financial statements of Sanifill, Inc. The financial
statements filed included: (i) The supplemental consolidated balance
sheets are as of December 31, 1995 and 1994, and the related
supplemental consolidated statements of operations, stockholders'
equity, and cash flows are for each of the three years in the period
ended December 31, 1995; and (ii) The supplemental interim condensed
consolidated balance sheets are as of June 30, 1996 and December 31,
1995, the related supplemental interim condensed consolidated
statements of operations are for the six months ended June 30, 1996
and 1995, the related supplemental interim condensed consolidated
statement of stockholders' equity is for the six months ended June 30,
1996, and the related supplemental interim condensed consolidated
statements of cash flows are for the six months ended June 30, 1996
and 1995.
54
<PAGE> 57
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
USA WASTE SERVICES, INC.
By: /s/ JOHN E. DRURY
--------------------------------------
John E. Drury, Chief Executive Officer
Date: March 31, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ JOHN E. DRURY Chief Executive Officer and March 31, 1997
- --------------------------------------
John E. Drury Chairman of the Board
(Principal Executive Officer)
/s/ RODNEY R. PROTO President, Chief Operating Officer, March 31, 1997
- --------------------------------------
Rodney R. Proto and Director
*
/s/ DONALD F. MOOREHEAD, JR. Chief Development Officer and March 31, 1997
- --------------------------------------
Donald F. Moorehead, Jr. Director
/s/ EARL E. DEFRATES Executive Vice President and March 31, 1997
- --------------------------------------
Earl E. DeFrates Chief Financial Officer
(Principal Financial Officer)
/s/ BRUCE E. SNYDER Vice President and March 31, 1997
- --------------------------------------
Bruce E. Snyder Chief Accounting Officer
*
/s/ KOSTI SHIRVANIAN Director March 31, 1997
- --------------------------------------
Kosti Shirvanian
*
/s/ DAVID SUTHERLAND-YOEST Director March 31, 1997
- --------------------------------------
David Sutherland-Yoest
*
/s/ RICHARD J. HECKMANN Director March 31, 1997
- --------------------------------------
Richard J. Heckmann
*
/s/ WILLIAM E. MOFFETT Director March 31, 1997
- --------------------------------------
William E. Moffett
*
/s/ ALEXANDER W. RANGOS Director March 31, 1997
- --------------------------------------
Alexander W. Rangos
</TABLE>
55
<PAGE> 58
<TABLE>
<S> <C> <C>
*
/s/ JOHN G. RANGOS, SR. Director March 31, 1997
- --------------------------------------
John G. Rangos, Sr.
*
/s/ SAVEY TUFENKIAN Director March 31, 1997
-------------------------------------
Savey Tufenkian
*
/s/ LARRY J. MARTIN Director March 31, 1997
- --------------------------------------
Larry J.Martin
*
/s/ RALPH F. COX Director March 31, 1997
- --------------------------------------
Ralph F. Cox
</TABLE>
* By Gregory T. Sangalis,
as attorney in-fact
56
<PAGE> 59
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number
-------
<S> <C> <C>
2.1 - Agreement and Plan of Merger, dated as of December 18, 1995, by
and among the Registrant, Riviera Acquisition Corporation and
Western Waste Industries [Incorporated by reference to Appendix A
in the Registrant's Registration Statement on Form S-4, File No.
333-02181].
2.2 - Agreement and Plan of Merger, dated as of June 22, 1996, by and
among the Registrant, Quatro Acquisitions Corp. and Sanifill,
Inc. [Incorporated by reference to Annex A in the Registrant's
Registration Statement on Form S-4, File No. 333-08161].
2.3 - Amendment No. 1 to Agreement and Plan of Merger, dated July 18,
1996, by and among the Registrant, Quatro Acquisition Corp. and
Sanifill, Inc. [Incorporated by reference to Annex A in the
Registrant's Registration Statement on Form S-4, File
No. 333-08161].
3.1 - Restated Certificate of Incorporation, as amended [Incorporated
by reference to Exhibit 3.1(b) of the Registrant's Quarterly
Report, as amended, on Form 10-Q for the three months ended March
31, 1996].
3.2 - Bylaws [Incorporated by reference to Exhibit 3.2 to the
Post-Effective Amendment No. 1 to the Registrant's Registration
Statement on Form S-4, File No. 33-60103].
4.1 - Specimen Stock Certificate [Incorporated by reference to Exhibit
4.3 of the Registrant's Registration Statement on Form S-3, File
No. 33-76224].
4.2 - Supplemental Indenture, dated as of September 3, 1996, among USA
Waste Services, Inc., Sanifill, Inc., and Texas Commerce Bank
National Association relating to Sanifill, Inc.'s 5% Convertible
Subordinated Debentures Due March 1, 2006 [Incorporated by
reference to Exhibit 10.3 of the Registrant's Current Report on
Form 8-K dated September 3, 1996].
4.3 - Indenture for Subordinated Debt Securities dated February 3,
1997, among the Registrant and Texas Commerce Bank National
Association, as trustee [Incorporated by reference to Exhibit 4.1
of the Registrant's Current Report on Form 8-K dated February
7, 1997].
4.4 - Officers Certificate dated as of February 7, 1997, setting forth
the terms of the Registrant's 4% Convertible Subordinated Notes
due 2002 [Incorporated by reference to Exhibit 4.2 of the
Registrant's Current Report on Form 8-K dated February 7, 1997].
4.5 - Form of the Registrant's 4% Convertible Subordinated Notes due
2002 [Incorporated by reference to Exhibit 4.3 of the
Registrant's Current Report on Form-8-K dated February 7, 1997].
10.1 - 1990 Stock Option Plan [Incorporated by reference to Exhibit 10.1
of the Registrant's Annual report on Form 10-K for the year
ended December 31, 1990].
10.2 - 1993 Stock Incentive Plan [Incorporated by reference to Exhibit
4.4 of the Registrants Registration Statement on Form S-8, File
No. 33-72436].
10.3 - 1996 Stock Option Plan for Non-Employee Directors [Incorporated
by reference to Exhibit 99.1 of the Registrant's Registration
Statement on Form S-8, File No. 333-14115].
10.4 - Envirofil, Inc. 1993 Stock Incentive Plan [Incorporated by
reference to Exhibit 10.3 of the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1994].
10.5 - Western Waste Industries Amended and Restated 1983 Stock Option
Plan [Incorporated by reference to Exhibit 99.1 of the
Registrant's Registration Statement on Form S-8, File No.
333-02181].
</TABLE>
<PAGE> 60
<TABLE>
<C> <C> <CN>
10.6 - Western Waste Industries 1983 Non-Qualified Stock Option Plan
[Incorporated by reference to Exhibit 99.2 of the Registrant's
Registration Statement on Form S-8, File No. 333-02181].
10.7 - Western Waste Industries 1992 Option Plan [Incorporated by
reference to Exhibit 99.3 of the Registrant's Registration
Statement on Form S-8, File No. 333-02181].
10.8 - Sanifill, Inc. 1994 Long-Term Incentive Plan [Incorporated by
reference to Exhibit 99.1 of the Registrant's Registration
Statement on Form S-8, File No. 333-08161].
10.9 - Sanifill, Inc. 1989 Stock Option Plan [Incorporated by reference
to Exhibit 99.2 of the Registrant's Registration Statement on
Form S-8, File No. 333-08161].
10.10 - Amended and Restated Revolving Credit Agreement dated as of
August 30, 1996, among the Registrant, its subsidiaries, The
First National Bank of Boston, Bank of America Illinois, J.P.
Morgan Canada, and Morgan Guaranty Trust Company of New York
[Incorporated by reference to Exhibit 10.2 of the Registrant's
Current Report on Form 8-K dated September 3, 1996].
10.11 - Form of Employment Agreement between the Registrant and each of
John E. Drury, Donald F. Moorehead, Jr., David Sutherland-Yoest,
and Chuck A. Wilcox [Incorporated by reference to Exhibit 10.18
of the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994].
10.12 - Employment Agreement between the Registrant and Rodney R. Proto
[Incorporated by reference to Exhibit 10.1 of the Registrant's
Current Report on Form 8-K dated September 3, 1996].
10.13 - Employment Agreement between the Registrant and Earl E. DeFrates
[Incorporated by reference to Exhibit 10.19 of the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1994].
10.14 - Employment Agreement between the Registrant and Gregory T.
Sangalis [Incorporated by reference to Exhibit 10.17 to the
Registrant's Registration Statement on Form S-4, File No.
33-59259].
10.15 - Consulting and Non-compete Agreement dated June 25, 1995, among
the Registrant, between the Registrant and John G. Rangos, Sr.
[Incorporated by reference to Exhibit 10.22 to the Registrant's
Quarterly Report on Form 10-Q/A for the period ended June 30,
1995].
10.16 - Employment Agreement dated June 25, 1995, between the Registrant
and Alexander W. Rangos [Incorporated by reference to Exhibit
10.22 to the Registrant's Quarterly Report on Form 10-Q/A for the
period ended June 30, 1995].
10.17 - Employment Agreement dated December 18, 1995, between the
Registrant and Kosti Shirvanian [Incorporated by reference to
Exhibit 10.18 to the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1995].
10.18 - Amended and Restated Revolving Credit Agreement dated as of March
5, 1997, among the Registrant, its subsidiaries, Bank of America
Illinois, Morgan Guaranty Trust Company of New York, and J. P.
Morgan Canada.
11.1 - Computation of Earnings (Loss) Per Common Share.
21.1 - Subsidiaries of the Registrant.
23.1 - Consent of Coopers & Lybrand L.L.P.
24.1 - Form 10-K Limited Power of Attorney.
27.1 - Financial Data Schedule.
</TABLE>
<PAGE> 1
EXHIBIT 10.18
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
dated as of March 5, 1997
by and among
USA WASTE SERVICES, INC.,
(the "Company")
SANIFILL, INC.
("Sanifill")
CANADIAN WASTE SERVICES INC.
("CWS")
and
BANK OF AMERICA ILLINOIS
("BAI")
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
("MGT")
J.P. MORGAN CANADA
("MBC")
and the other financial institutions which become
a party to this agreement
(Collectively, the "Banks")
and
MGT as Administrative Agent and Documentation Agent
and
MBC as Canadian Agent
(Collectively, the "Bank Agents")
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
Section 1. DEFINITIONS AND RULES OF INTERPRETATION. . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2. Rules of Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 2. THE LOAN FACILITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.1. Commitment to Lend. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.2. Facility Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.3. Reduction of Total Commitment; Increase of Total Canadian Commitment . . . . . . 22
Section 2.4. The Syndicated Notes; the Canadian Notes. . . . . . . . . . . . . . . . . . . 25
Section 2.5. Interest on Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 2.6. Requests for Syndicated Loans; Canadian Loans. . . . . . . . . . . . . . . . . 26
Section 2.7. Election of Eurodollar Rate; Notice of Election; Interest Periods;
Minimum Amounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 2.8. Funds for Syndicated Loans and Canadian Loans. . . . . . . . . . . . . . . . . 29
Section 2.9. Maturity of the Loans and Reimbursement Obligations. . . . . . . . . . . . . . 30
Section 2.10. Optional Prepayments or Repayments of Loans. . . . . . . . . . . . . . . . . 30
Section 2.11. Swing Line Loans; Settlements. . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 3. BANKERS' ACCEPTANCES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 3.1. Acceptance and Purchase. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 3.2. Refunding Bankers' Acceptances . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 3.3. Acceptance Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 3.4. Cash Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 4. LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 4.1. Letter of Credit Commitments. . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 4.2. Reimbursement Obligation of the Borrowers. . . . . . . . . . . . . . . . . . . 38
Section 4.3. Obligations Absolute. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 4.4. Reliance by the Issuing Banks. . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 4.5. Notice Regarding Letters of Credit. . . . . . . . . . . . . . . . . . . . . . 39
Section 4.6. Letter of Credit Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 5. COMPETITIVE BID LOANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 5.1. The Competitive Bid Option. . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 5.2. Competitive Bid Loan Accounts: Competitive Bid Notes. . . . . . . . . . . . . 40
Section 5.3. Competitive Bid Quote Request; Invitation for Competitive Bid Quotes . . . . . . 41
Section 5.4. Alternative Manner of Procedure. . . . . . . . . . . . . . . . . . . . . . . . 42
Section 5.5. Submission and Contents of Competitive Bid Quotes. . . . . . . . . . . . . . . 43
Section 5.6. Notice to Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 5.7. Acceptance and Notice by Company and Administrative Agent. . . . . . . . . . . . 44
Section 5.8. Allocation by Administrative Agent. . . . . . . . . . . . . . . . . . . . . . 45
Section 5.9. Funding of Competitive Bid Loans. . . . . . . . . . . . . . . . . . . . . . . 45
Section 5.10. Funding Losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 5.11. Repayment of Competitive Bid Loans; Interest. . . . . . . . . . . . . . . . . 46
Section 6. PROVISIONS RELATING TO ALL LOANS AND LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . . 46
</TABLE>
<PAGE> 3
ii
<TABLE>
<CAPTION>
<S> <C>
Section 6.1. Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 6.2. Mandatory Repayments of the Loans. . . . . . . . . . . . . . . . . . . . . . . 49
Section 6.3. Computations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 6.4. Illegality; Inability to Determine Eurodollar Rate. . . . . . . . . . . . . . 50
Section 6.5. Additional Costs, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 6.6. Capital Adequacy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 6.7. Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 6.8. Eurodollar and Competitive Bid Indemnity. . . . . . . . . . . . . . . . . . . 52
Section 6.9. Interest on Overdue Amounts. . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 6.10. Interest Limitation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 6.11. Reasonable Efforts to Mitigate. . . . . . . . . . . . . . . . . . . . . . . . 54
Section 6.12. Replacement of Banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 6.13. Advances by Administrative Agent and Canadian Agent. . . . . . . . . . . . . 55
Section 6.14. Currency Fluctuations. . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 7. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 7.1. Corporate Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 7.2. Governmental Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 7.3. Title to Properties; Leases. . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 7.4. Financial Statements; Solvency. . . . . . . . . . . . . . . . . . . . . . . . 59
Section 7.5. No Material Changes, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 7.6. Franchises, Patents, Copyrights, Etc. . . . . . . . . . . . . . . . . . . . . 60
Section 7.7. Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 7.8. No Materially Adverse Contracts, Etc. . . . . . . . . . . . . . . . . . . . . 60
Section 7.9. Compliance With Other Instruments, Laws, Etc. . . . . . . . . . . . . . . . . 60
Section 7.10. Tax Status. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 7.11. No Event of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 7.12. Holding Company and Investment Company Acts. . . . . . . . . . . . . . . . . 61
Section 7.13. Absence of Financing Statements, Etc. . . . . . . . . . . . . . . . . . . . . 61
Section 7.14. Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 7.15. Environmental Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 7.16. True Copies of Charter and Other Documents. . . . . . . . . . . . . . . . . . 64
Section 7.17. Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 7.18. Permits and Governmental Authority. . . . . . . . . . . . . . . . . . . . . . 65
Section 8. AFFIRMATIVE COVENANTS OF THE BORROWERS. . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 8.1. Punctual Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 8.2. Maintenance of U.S. Office. . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 8.3. Records and Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 8.4. Financial Statements, Certificates and Information. . . . . . . . . . . . . . 66
Section 8.5. Corporate Existence and Conduct of Business. . . . . . . . . . . . . . . . . . 67
Section 8.6. Maintenance of Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 8.7. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 8.8. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 8.9. Inspection of Properties, Books and Contracts. . . . . . . . . . . . . . . . . 69
Section 8.10. Compliance with Laws, Contracts, Licenses and Permits;
Maintenance of Material Licenses and Permits . . . . . . . . . . . . . . . . 69
</TABLE>
<PAGE> 4
iii
<TABLE>
<CAPTION>
<S> <C>
Section 8.11. Environmental Indemnification. . . . . . . . . . . . . . . . . . . . . . . . 69
Section 8.12. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 8.13. Notice of Potential Claims or Litigation. . . . . . . . . . . . . . . . . . . 70
Section 8.14. Notice of Certain Events Concerning Insurance and
Environmental Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 8.15. Notice of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 8.16. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 8.17. Certain Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 9. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS. . . . . . . . . . . . . . . . . . . . . . . 72
Section 9.1. Restrictions on Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 9.2. Restrictions on Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 9.3. Restrictions on Investments. . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 9.4. Mergers, Consolidations, Sales. . . . . . . . . . . . . . . . . . . . . . . . 76
Section 9.5. Restricted Distributions and Redemptions. . . . . . . . . . . . . . . . . . . 77
Section 9.6. Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 10. FINANCIAL COVENANTS OF THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 10.1. Interest Coverage Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 10.2. Debt to EBITDA Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 10.3. Debt to Total Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 11. CONDITIONS TO EFFECTIVENESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 11.1. Corporate Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 11.2. Loan Documents, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 11.3. Certified Copies of Charter Documents. . . . . . . . . . . . . . . . . . . . 79
Section 11.4. Incumbency Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 11.5. Certificates of Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 11.6. Opinions of Counsel and Permit Certificate. . . . . . . . . . . . . . . . . . 80
Section 11.7. Existing Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 11.8. Satisfactory Financial Condition. . . . . . . . . . . . . . . . . . . . . . . 80
11.9. Payment of Closing Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 12. CONDITIONS TO ALL LOANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 12.1. Representations True. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 12.2. Performance; No Event of Default. . . . . . . . . . . . . . . . . . . . . . . 81
Section 12.3. No Legal Impediment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 12.4. Governmental Regulation. . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 12.5. Proceedings and Documents. . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 13. EVENTS OF DEFAULT; ACCELERATION; TERMINATION OF
COMMITMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 13.1. Events of Default and Acceleration. . . . . . . . . . . . . . . . . . . . . . 82
Section 13.2. Termination of Commitments. . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 13.3. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 14. SETOFF. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 15. EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 16. THE BANK AGENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 16.1. Appointment, Powers and Immunities. . . . . . . . . . . . . . . . . . . . . . 86
Section 16.2. Actions By Bank Agents. . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
</TABLE>
<PAGE> 5
iv
<TABLE>
<CAPTION>
<S> <C>
Section 16.3 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 16.4. Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 16.5. Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 16.6. Non-Reliance on Bank Agents and Other Banks . . . . . . . . . . . . . . . . . . 88
Section 16.7. Resignation of Bank Agents. . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 16.8. Action by the Banks, Consents, Amendments, Waivers, Etc. . . . . . . . . . . . 90
Section 17. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 18. WITHHOLDING TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 19. SURVIVAL OF COVENANTS, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Section 20. ASSIGNMENT AND PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Section 21. PARTIES IN INTEREST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 22. NOTICES, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 23. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 24. CONSENTS, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 25. WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 26. GOVERNING LAW; SUBMISSION TO JURISDICTION. . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 27. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 28. Joint and Several Liability; LIMITATION OF LIABILITY . . . . . . . . . . . . . . . . . . . 98
Section 29. GUARANTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 29.1. Guaranty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 29.2. Guaranty Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 29.3. Effectiveness; Enforcement. . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 29.4. Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Section 29.5. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Section 29.6. Concerning Joint and Several Liability of the Guarantors. . . . . . . . . . . . 101
Section 29.7. Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Section 29.8. Subrogation; Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Section 29.9. Currency of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Section 30. PARI PASSU TREATMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Section 31. FINAL AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
</TABLE>
<PAGE> 6
-v-
Exhibits
Exhibit A Form of Syndicated Note
Exhibit B Form of Swing Line Note
Exhibit C Form of Canadian Note
Exhibit D Form of Competitive Bid Note
Exhibit E Form of Syndicated Loan Request
Exhibit F1 Form of Domestic Letter of Credit Request
Exhibit F2 Form of Canadian Letter of Credit Request
Exhibit G Form of Canadian Loan Request
Exhibit H Form of Bankers' Acceptance Notice
Exhibit I Form of Compliance Certificate
Exhibit J Form of Assignment and Acceptance
Exhibit K Form of Competitive Bid Quote Request
Exhibit L Form of Invitation for Competitive Bid Quotes
Exhibit M Form of Competitive Bid Quote
Exhibit N Form of Notice of Acceptance/Rejection of Competitive
Bid Quote(s)
Schedules
Schedule 1 Domestic Banks; Domestic Commitment Percentages
Schedule 2 Canadian Banks; Canadian Commitment Percentages
Schedule 3 Total Commitment Percentages; Banks' Addresses for
Notices
Schedule 4.1(a) Existing Letters of Credit
Schedule 7.7 Litigation
Schedule 7.15 Environmental Compliance
Schedule 9.1(b) Existing Indebtedness
Schedule 9.1(i) Temporary Allied Indebtedness
Schedule 9.2(a) Existing Liens
<PAGE> 7
AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
This AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT is made as of the
5th day of March, 1997, by and among USA WASTE SERVICES, INC., a Delaware
corporation having its chief executive office at 1001 Fannin Street, First City
Tower, Suite 4000, Houston, Texas 77002 (the "Company"), CANADIAN WASTE
SERVICES INC., a Canadian corporation having its chief executive office at 3525
Mavis Road, Mississauga, Ontario L5C 1T7 ("CWS"), SANIFILL, INC., a Delaware
corporation having its chief executive office at 1001 Fannin Street, First City
Tower, Suite 4000, Houston, Texas 77002 ("Sanifill"), and BANK OF AMERICA
ILLINOIS, an Illinois banking corporation having its principal place of
business at 231 South LaSalle Street Chicago, IL 60697 ("BAI"), MORGAN GUARANTY
TRUST COMPANY OF NEW YORK, a New York state banking association having its
principal place of business at 60 Wall Street, New York, New York 10260
("MGT"), J.P. MORGAN CANADA, a bank incorporated in Canada having its principal
place of business at Royal Bank Plaza, Suite 2200, South Tower, Toronto,
Ontario M5J 2J2 ("MBC"), and each of the other financial institutions party
hereto, and MGT as administrative agent (the "Administrative Agent") and
documentation agent (the "Documentation Agent") and MBC as Canadian agent (the
"Canadian Agent", and together with the Administrative Agent and the
Documentation Agent, the "Bank Agents").
W I T N E S S E T H:
WHEREAS, the Borrowers, Sanifill, the Bank Agents (as defined in the
Original Credit Agreement referred to below), BAI and certain of the Banks
(collectively, the "Original Parties") are party to that certain Amended and
Restated Revolving Credit Agreement dated as of August 30, 1996, by and among
the Original Parties (as amended by the First Amendment to Amended and Restated
Revolving Credit Agreement dated as of December 9, 1996, the "Original Credit
Agreement"); and
WHEREAS, the Company has requested, among other things, additional
financing and the Banks are willing to provide such financing on the terms and
conditions set forth herein to replace the Original Credit Agreement;
NOW, THEREFORE, in consideration of the foregoing, the mutual
covenants and agreements set forth herein below, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the parties, the parties hereto agree, and the Original Parties have
acknowledged, that on the Closing Date the Original Credit Agreement shall be
<PAGE> 8
-2-
terminated and replaced and superseded by this Credit Agreement, the terms of
which are as follows:
Section 1. DEFINITIONS AND RULES OF INTERPRETATION.
Section 1.1 DEFINITIONS. The following terms shall have the meanings
set forth in this Section 1 or elsewhere in the provisions of this
Agreement referred to below:
Absolute Competitive Bid Loan(s). See Section 5.3(a).
Acceptance Fee. See Section 3.3.
Accountants. See Section 8.4(a).
Administrative Agent. See Preamble.
Affected Bank. See Section 6.12.
Agents. BAI, BancAmerica Securities, Inc. and J.P. Morgan Securities
Inc.
Agreement. This Amended and Restated Revolving Credit Agreement,
including the Schedules and Exhibits hereto, as from time to time amended and
supplemented in accordance with the terms hereof.
Allied. Allied Waste Industries, Inc., a Delaware corporation.
Allied Acquisition. The acquisition by the Company and CWS of all the
outstanding shares of Laidlaw Waste Systems Ltd. and Laidlaw Waste Systems
(Canada) Ltd. from Allied, Allied Waste Holdings (Canada) Ltd. and Laidlaw
Waste Systems, Inc. pursuant to the terms of the Allied Purchase Agreement.
Allied Purchase Agreement. The Share Purchase Agreement dated as of
January 15, 1997, among the Company, CWS, Allied, Allied Waste Holdings
(Canada) Ltd., and Laidlaw Waste Systems, Inc.
Applicable BA Discount Rate. As applicable to a Bankers' Acceptance
being purchased by any Canadian Bank on any day, the percentage discount rate
(expressed to two decimal places and rounded upward, if necessary, to the
nearest 1/100th of 1%) quoted by the Canadian Agent as the percentage discount
rate at which the Canadian Agent would, in accordance with normal practice, at
or about 10:00 a.m. (New York time), on such day, be prepared to purchase
bankers' acceptances accepted by such Canadian Bank in an amount and having a
maturity date comparable to the amount and maturity date of such Bankers'
Acceptance.
<PAGE> 9
-3-
Applicable Canadian Pension Legislation. At any time, any pension or
retirement benefits legislation (be it federal, provincial, territorial, or
otherwise) then applicable to any of the Canadian Borrowers, including the
Pension Benefits Act (Ontario), the Income Tax Act (Canada), and all
regulations made thereunder.
Applicable Eurodollar Rate. The applicable rate per annum of interest
on the Eurodollar Loans shall be as set forth in the Pricing Table.
Applicable Facility Rate. The applicable rate per annum with respect
to the Facility Fee shall be as set forth in the Pricing Table.
Applicable L/C Rate. The applicable rate per annum on the Maximum
Drawing Amount shall be as set forth in the Pricing Table.
Applicable Requirements. See Section 8.10.
Applicable Swing Line Rate. The annual rate of interest agreed upon
from time to time by MGT and the Company with respect to Swing Line Loans.
Assignment and Acceptance. See Section 20.
BA Discount Proceeds. With respect to any Bankers' Acceptance to be
accepted and purchased by a Canadian Bank, an amount (rounded to the nearest
whole Canadian cent, and with one-half of one Canadian cent being rounded up)
calculated on such day by multiplying (a) the face amount of such Bankers'
Acceptance times (b) the quotient equal to (such quotient being rounded up or
down to the nearest fifth decimal place and .000005 being rounded up) (i) one
divided by (ii) the sum of (A) one plus (B) the product of (1) the Applicable
BA Discount Rate (expressed as a decimal) applicable to such Bankers'
Acceptance times (2) the quotient equal to (aa) the number of days remaining in
the term of such Bankers' Acceptance divided by (bb) the number of days in the
calendar year in which such Bankers' Acceptance is to mature.
BAI. See Preamble.
Balance Sheet Date. December 31, 1995.
Bank Agents. See Preamble.
Bankers' Acceptance or BA. A bill of exchange denominated in Canadian
Dollars drawn by the Canadian Borrowers on and accepted by a Canadian Bank
pursuant to Section 3 hereof.
Bankers' Acceptance Notice. See Section 3.1.
Banks. Collectively, the Canadian Banks and the Domestic Banks.
<PAGE> 10
-4-
Base Rate. The higher of (a) the annual rate of interest announced
from time to time by the Administrative Agent at its Head Office as its "prime
rate" (it being understood that such rate is a reference rate and not
necessarily the lowest rate of interest charged by the Administrative Agent),
or (b) one percent (1%) above the Overnight Federal Funds Effective Rate.
Base Rate Loans. Syndicated Loans bearing interest calculated by
reference to the Base Rate.
Borrower(s). The Company with respect to Domestic Loans and Domestic
Letters of Credit, and each of the Canadian Borrowers, jointly and severally,
with respect to Canadian Loans, Canadian Letters of Credit and Bankers'
Acceptances.
Business Day. Any day, other than a Saturday, Sunday or any day on
which banking institutions in New York, New York are authorized by law to
close, and, when used in connection with (a) a Eurodollar Loan, a Eurodollar
Business Day, and (b) a Canadian Loan or Bankers' Acceptance, a Canadian
Business Day.
Canadian Agent. See Preamble.
Canadian Banks. The Banks to be set forth on Schedule 2, in
accordance with Section 2.3 hereof, acting in their role as makers of Canadian
Loans or as participants with respect to Canadian Letters of Credit or
purchasers of Bankers' Acceptances.
Canadian Base Rate. The higher of (a) the annual rate of interest
announced from time to time by the Canadian Agent as its "prime rate" for US$
commercial loans to borrowers in Canada (it being understood that such rate is
a reference rate and not necessarily the lowest rate of interest charged by the
Canadian Agent), or (b) one percent (1%) above the Overnight Federal Funds
Effective Rate.
Canadian Base Rate Loan. A Canadian Loan that accrues interest
calculated by reference to the Canadian Base Rate.
Canadian Borrowers. Initially, CWS, and from and after the date
hereof, CWS and such other Subsidiaries of the Company as the Borrowers and the
Bank Agents shall mutually agree to add as Canadian Borrowers hereunder after
the date hereof.
Canadian Business Day. Any day, other than a Saturday, Sunday or any
day on which banking institutions in Toronto, Ontario are authorized by law to
close.
<PAGE> 11
-5-
Canadian Commitment. With respect to each Canadian Bank, the amount
to be set forth on Schedule 2 hereto as the amount of such Canadian Bank's
commitment to make Canadian Loans to, and to participate in the issuance,
extension and renewal of Canadian Letters of Credit and Bankers' Acceptances
for the account of, the Canadian Borrowers, as the same may be increased or
reduced from time to time; or if such commitment is terminated pursuant to the
provisions hereof, zero.
Canadian Commitment Percentage. With respect to each Canadian Bank,
the percentage set forth next to such Canadian Bank's name on Schedule 2
hereto, as the same may be adjusted in accordance with Section 2.3 and Section
20.
Canadian Dollar Equivalent. With respect to an amount of U.S. Dollars
on any date, the amount of Canadian Dollars that may be purchased with such
amount of U.S. Dollars at the Exchange Rate with respect to U.S. Dollars on
such date.
Canadian Dollars or C$. Dollars designated as lawful currency of
Canada.
Canadian Letters of Credit. Standby Letters of Credit issued or to be
issued by the Issuing Bank under Section 4 hereof for the account of the
Canadian Borrowers.
Canadian Loan Request. See Section 2.6(b).
Canadian Loans. Canadian Base Rate Loans, Canadian Prime Rate Loans
and Eurodollar Loans advanced pursuant to Section 2.1(b) and Section 2.1(c).
Canadian Notes. See Section 2.4(b).
Canadian Prime Rate. The higher of (a) the annual rate of interest
announced from time to time by the Canadian Agent at its Head Office as its
"prime rate" for C$ denominated commercial loans to borrowers in Canada (it
being understood that such rate is a reference rate and not necessarily the
lowest rate of interest charged by the Canadian Agent), or (b) the sum of (i)
the CDOR Rate plus (ii) 1% per annum.
Canadian Prime Rate Loan. A Canadian Loan funded in Canadian Dollars
that accrues interest calculated by reference to the Canadian Prime Rate.
Capitalized Leases. Leases under which the Company or any of its
Subsidiaries is the lessee or obligor, the discounted future rental payment
obligations under which are required to be capitalized on the balance sheet of
the lessee or obligor in accordance with GAAP.
<PAGE> 12
-6-
CDOR Rate. The annual rate of interest equal to the average 30-day
rate applicable to Canadian bankers' acceptances appearing on the "Reuters
Screen CDOR Page" (as defined in the International Swap Dealers Association,
Inc. (1991 ISDA) definitions, as modified and amended from time to time) as of
10:00 a.m. (New York time) on such day, or if such day is not a Business Day,
then on the immediately preceding Business Day; provided that if such rate does
not appear on the Reuters' Screen CDOR Page as contemplated, then the CDOR Rate
on any day shall be calculated as the arithmetic mean of the 30-day rates
applicable to Canadian bankers' acceptances quoted by the Canadian Banks which
are listed in Schedule I to the Bank Act (Canada) as of 10:00 a.m. (New York
time) on such day, or if such day is not a Business Day, then on the
immediately preceding Business Day.
CERCLA. See Section 7.15(a).
Certified or certified. With respect to the financial statements of
any Person, such statements as audited by a firm of independent auditors, whose
report expresses the opinion, without qualification, that such financial
statements present fairly the financial position of such Person.
CFO or the CAO. See Section 8.4(b).
Closing Date. The date on which the conditions precedent set forth in
Section 11 hereof are satisfied.
Code. The Internal Revenue Code of 1986, as amended and in effect
from time to time.
Commitment. With respect to any Bank, its Domestic Commitment and/or
Canadian Commitment(s).
Company. See Preamble.
Competitive Bid Loan(s). A borrowing hereunder consisting of one or
more loans made by any of the participating Domestic Banks whose offer to make
a Competitive Bid Loan as part of such borrowing has been accepted by the
Company under the auction bidding procedure described in Section 5 hereof.
Competitive Bid Loan Accounts. See Section 5.2(a).
Competitive Bid Margin. See Section 5.5(b)(iv).
Competitive Bid Notes. See Section 5.2(b).
Competitive Bid Quote. An offer by a Domestic Bank to make a
Competitive Bid Loan in accordance with Section 5.5 hereof.
<PAGE> 13
-7-
Competitive Bid Quote Request. See Section 5.3.
Competitive Bid Rate. See Section 5.5(b)(v).
Compliance Certificate. See Section 8.4(c).
Consolidated or consolidated. With reference to any term defined
herein, shall mean that term as applied to the accounts of the Company and its
Subsidiaries consolidated in accordance with GAAP.
Consolidated Earnings Before Interest and Taxes, or EBIT. For any
period, the Consolidated Net Income (or Deficit) of the Company and its
Subsidiaries on a consolidated basis plus the sum of (1) interest expense, (2)
income taxes, (3) up to $39,000,000 in pooling charges actually incurred with
respect to the Western Waste Merger taken as a special charge in the quarter
ending June 30, 1996, (4) up to $82,556,000 in pooling charges actually
incurred with respect to the Sanifill Merger, taken as a special charge in the
quarter ending September 30, 1996, and (5) up to $50,848,000 in extraordinary
charges actually incurred in the quarter ending September 30, 1996, to the
extent that each of items (1) through (5) was deducted in determining
Consolidated Net Income (or Deficit) in the relevant period; provided, however,
that EBIT shall not include (A) extraordinary gains from tax credits occurring
in any quarter commencing with the quarter ending September 30, 1996, or (B)
any cash reimbursements or payments received with respect to item (5).
Consolidated Earnings Before Interest, Taxes, Depreciation and
Amortization or EBITDA. For any period, EBIT plus (a) depreciation expense,
and (b) amortization expense to the extent the same would be included in the
calculation of EBIT for such period, determined in accordance with GAAP.
Consolidated Net Income (or Deficit). The consolidated net income (or
deficit) of the Company and its Subsidiaries on a consolidated basis, after
deduction of all expenses, taxes, and other proper charges, determined in
accordance with GAAP.
Consolidated Net Worth. The sum of the par value of the capital stock
(excluding treasury stock), capital in excess of par or stated value of shares
of capital stock, retained earnings (minus accumulated deficit) and any other
account which, in accordance with GAAP, constitute stockholders' equity, of the
Company and its Subsidiaries determined on a consolidated basis, excluding any
effect of foreign currency transaction computed pursuant to Financial
Accounting Standards Board Statement No. 52, as amended, supplemented or
modified from time to time, or otherwise in accordance with GAAP.
Consolidated Tangible Assets. Consolidated Total Assets less the sum
of:
<PAGE> 14
-8-
(a) the total book value of all assets of the Company and
its Subsidiaries properly classified as intangible assets under
generally accepted accounting principles, including such items as
goodwill, the purchase price of acquired assets in excess of the fair
market value thereof, trademarks, trade names, service marks, customer
lists, brand names, copyrights, patents and licenses, and rights with
respect to the foregoing; plus
(b) all amounts representing any write-up in the book
value of any assets of the Company or its Subsidiaries resulting from
a revaluation thereof subsequent to the Balance Sheet Date.
Consolidated Total Assets. All assets of the Company and its
Subsidiaries determined on a consolidated basis in accordance with GAAP.
Consolidated Total Capitalization. The sum of Funded Debt plus
Consolidated Net Worth.
Consolidated Total Interest Expense. For any period, the aggregate
amount of interest expense required by GAAP to be paid or accrued
during such period on all Indebtedness of the Company and its Subsidiaries
outstanding during all or any part of such period, including capitalized
interest expense for such period.
CWS. See Preamble.
Defaults. See Section 13.1.
Defaulting Bank. See Section 6.12.
Disposal. See "Release".
Distribution. The declaration or payment of any dividend or other
return on equity on or in respect of any shares of any class of capital stock,
any partnership interests or any membership interests of any Person, other than
dividends or other such returns payable solely in shares of common stock,
partnership interests or membership units of such Person, as the case may be;
the purchase, redemption, or other retirement of any shares of any class of
capital stock, partnership interests or membership units of such Person,
directly or indirectly through a Subsidiary or otherwise; the return of equity
capital by any Person to its shareholders, partners or members as such; or any
other distribution on or in respect of any shares of any class of capital
stock, partnership interest or membership unit of such Person.
Documentation Agent. See Preamble.
<PAGE> 15
-9-
Dollars or US$ or $ or U.S. Dollars. Dollars in lawful currency of the
United States of America.
Dollar Equivalent. With respect to an amount of Canadian Dollars on
any date, the amount of U.S. Dollars that may be purchased with such amount of
Canadian Dollars at the Exchange Rate with respect to Canadian Dollars on such
date.
Domestic Banks. The Banks set forth on Schedule 1, acting in their
role as makers of Domestic Loans or as participants with respect to Domestic
Letters of Credit.
Domestic Commitment. With respect to each Domestic Bank, the amount
set forth on Schedule 1 hereto as the amount of such Domestic Bank's commitment
to make Syndicated Loans to, and to participate in the issuance, extension and
renewal of Domestic Letters of Credit for the account of, the Borrowers, as the
same may be reduced from time to time; or if such commitment is terminated
pursuant to the provisions hereof, zero.
Domestic Commitment Percentage. With respect to each Domestic Bank,
the percentage initially set forth next to such Domestic Bank's name on
Schedule 1 hereto, as the same may be adjusted in accordance with Section 2.3
and Section 20.
Domestic Letters of Credit. Standby or direct pay Letters of Credit
issued or to be issued by the Issuing Bank under Section 4 hereof for the
account of the Company.
Domestic Loans. Collectively, the Syndicated Loans, the Swing Line
Loans and the Competitive Bid Loans.
Drawdown Date. The date on which any Loan is made or is to be made.
EBIT. See definition of Consolidated Earnings Before Interest and
Taxes.
EBITDA. See definition of Consolidated Earnings Before Interest,
Taxes, Depreciation and Amortization.
Eligible Canadian Assignee. Any institutional lender which is (i) a
bank named in Schedule I or Schedule II to the Bank Act (Canada) having total
assets in excess of C$500,000,000 or (ii) any other Bank approved by the Bank
Agents and the Borrowers, which approval shall not be unreasonably withheld.
Employee Benefit Plan. Any employee benefit plan within the meaning
of Section 3(3) of ERISA or Applicable Canadian Pension Legislation maintained
or
<PAGE> 16
-10-
contributed to by the Company, any of its Subsidiaries, or any ERISA Affiliate,
other than a Multiemployer Plan.
Environmental Laws. See Section 7.15(a).
EPA. See Section 7.15(b).
ERISA. The Employee Retirement Income Security Act of 1974, as
amended and in effect from time to time.
ERISA Affiliate. Any Person which is treated as a single employer
with the Company or any of its Subsidiaries under Section 414 of the Code.
ERISA Reportable Event. A reportable event within the meaning of
Section 4043 of ERISA and the regulations promulgated thereunder with respect
to a Guaranteed Pension Plan as to which the requirement of notice has not
been waived.
Eurocurrency Reserve Rate. For any day with respect to a Eurodollar
Loan, the maximum rate (expressed as a decimal) at which any lender subject
thereto would be required to maintain reserves under Regulation D of the Board
of Governors of the Federal Reserve System (or any successor or similar
regulations relating to such reserve requirements) against "Eurocurrency
Liabilities" (as that term is used in Regulation D), if such liabilities were
outstanding. The Eurocurrency Reserve Rate shall be adjusted automatically on
and as of the effective date of any change in the Eurocurrency Reserve Rate.
Eurodollar Business Day. Any day on which commercial banks are open
for international business (including dealings in Dollar deposits) in London or
such other eurodollar interbank market as may be selected by the Administrative
Agent in its sole discretion acting in good faith.
Eurodollar Interest Determination Date. For any Interest Period, the
date two Eurodollar Business Days prior to the first day of such Interest
Period.
Eurodollar Lending Office. Initially, the office of each Bank
designated as such in Schedule 1 and Schedule 2 hereto; thereafter, upon notice
to the Administrative Agent, such other office of such Bank that shall be
making or maintaining Eurodollar Loans.
Eurodollar Loans. Syndicated Loans and Canadian Loans bearing
interest calculated by reference to the Eurodollar Rate.
Eurodollar Rate. For any Interest Period with respect to a Eurodollar
Loan, the rate of interest equal to (i) the arithmetic average of the rates per
annum for each Reference Bank at which such Reference Bank's Eurodollar
<PAGE> 17
-11-
Lending Office is offered Dollar deposits at approximately 10:00 a.m. (New York
time) two Eurodollar Business Days prior to the beginning of such Interest
Period in the interbank eurodollar market where the eurodollar operations of
such Eurodollar Lending Office are customarily conducted, for delivery on the
first day of such Interest Period for the number of days comprised therein and
in an amount comparable to the amount of the Eurodollar Rate Loan of such
Reference Bank to which such Interest Period applies, divided by (ii) a number
equal to 1.00 minus the Eurocurrency Reserve Rate, if applicable (rounded
upwards to the nearest 1/16 of one percent).
Events of Default. See Section 13.1.
Exchange Rate. On any day, (a) with respect to Canadian Dollars in
relation to U.S. Dollars, the spot rate as quoted by the Bank of Canada as its
noon spot rate at which U.S. Dollars are offered on such day for Canadian
Dollars, and (b) with respect to U.S. Dollars in relation to Canadian Dollars,
the spot rate as quoted by the Bank of Canada as its noon spot rate at which
Canadian Dollars are offered on such day for U.S. Dollars.
Facility Fee. See Section 2.2.
Funded Debt. Consolidated Indebtedness of the Company and its
Subsidiaries for borrowed money and guarantees of debt for borrowed money
recorded on the Consolidated balance sheet of the Company and its Subsidiaries,
including the amount of any Indebtedness of such Persons for Capitalized Leases
which corresponds to principal.
generally accepted accounting principles or GAAP. (i) When used in
Section 10, whether directly or indirectly through reference to a capitalized
term used therein, means (A) principles that are consistent with the principles
promulgated or adopted by the Financial Accounting Standards Board and its
predecessors, in effect for the fiscal year ended on the Balance Sheet Date,
and (B) to the extent consistent with such principles, the accounting practice
of the Company reflected in its financial statements for the year ended on the
Balance Sheet Date, and (ii) when used in general, other than as provided
above, means principles that are (A) consistent with the principles promulgated
or adopted by the Financial Accounting Standards Board and its predecessors, as
in effect from time to time, and (B) consistently applied with past financial
statements of the Company adopting the same principles, provided that in each
case referred to in this definition of "generally accepted accounting
principles" a certified public accountant would, insofar as the use of such
accounting principles is pertinent, be in a position to deliver an unqualified
opinion (other than a qualification regarding changes in generally accepted
accounting principles) as to financial statements in which such principles have
been properly applied.
Guaranteed Obligations. See Section 29.1.
<PAGE> 18
-12-
Guaranteed Pension Plan. Any employee pension benefit plan within the
meaning of Section 3(2) of ERISA maintained or contributed to by the Company,
its Subsidiaries or any ERISA Affiliate the benefits of which are guaranteed on
termination in full or in part by the PBGC pursuant to Title IV of ERISA, other
than a Multiemployer Plan.
Guarantors. Each of Sanifill, with respect to the Obligations of the
Borrowers, and the Company, with respect to the Obligations of the Canadian
Borrowers only.
Hazardous Substances. See Section 7.15(b).
Head Office. When used in connection with the Administrative Agent,
the Administrative Agent's head office located in New York, New York, or at
such other location as the Administrative Agent may designate from time to
time, and when used in connection with the Canadian Agent, the Canadian Agent's
head office located in Toronto, Ontario, or at such other location as the
Canadian Agent may designate from time to time.
Increased Banks. See Section 2.3(c).
Indebtedness. Collectively without duplication, whether classified as
Indebtedness, an Investment or otherwise on the obligor's balance sheet, (a)
all indebtedness for borrowed money, (b) all obligations for the deferred
purchase price of property or services (other than trade payables not overdue
by more than ninety (90) days incurred in the ordinary course of business), (c)
all obligations evidenced by notes, bonds, debentures or other similar debt
instruments, (d) all obligations created or arising under any conditional sale
or other title retention agreement with respect to property acquired (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (e)
all obligations, liabilities and indebtedness under Capitalized Leases, (f) all
obligations, liabilities or indebtedness (contingent or otherwise) under
surety, performance bonds or any other bonding arrangements, (g) all
Indebtedness of others referred to in clauses (a) through (f) above which is
guaranteed, or in effect guaranteed, directly or indirectly in any manner,
including through an agreement (A) to pay or purchase such Indebtedness or to
advance or supply funds for the payment or purchase of such Indebtedness, (B)
to purchase, sell or lease (as lessee or lessor) property, or to purchase or
sell services, primarily for the purpose of enabling any Person to make payment
of such Indebtedness or to assure the holder of such Indebtedness against loss,
(C) to supply funds to or in any other manner invest in any Person (including
any agreement to pay for property or services irrespective of whether such
property is received or such services are rendered) or (D) otherwise to assure
any Person against loss, and (h) all Indebtedness referred to in clauses (a)
through (g) above secured or
<PAGE> 19
-13-
supported by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured or supported by) any lien or
encumbrance on (or other right of recourse to or against) property (including,
without limitation, accounts and contract rights), even though the owner of the
property has not assumed or become liable, contractually or otherwise, for the
payment of such Indebtedness.
Interest Period. With respect to each Loan (a) initially, the period
commencing on the Drawdown Date of such Loan and ending on the last day of one
of the periods set forth below, as selected by the applicable Borrower(s) in
accordance with this Agreement (i) for any Base Rate Loan, Swing Line Loan,
Canadian Base Rate Loan or Canadian Prime Rate Loan, the last day of the month;
(ii) for any Eurodollar Loan, 1, 2, 3, or 6 months; (iii) for any Absolute
Competitive Bid Loan, from 7 through 180 days; and (iv) for any LIBOR
Competitive Bid Loan, 1, 2, 3, 4, 5, or 6 months; and (b) thereafter, each
period commencing on the last day of the next preceding Interest Period
applicable to such Loan and ending on the last day of one of the periods set
forth above, as selected by the applicable Borrower(s) in accordance with this
Agreement; provided that any Interest Period which would otherwise end on a day
which is not a Business Day shall be deemed to end on the next succeeding
Business Day; provided further that for any Interest Period for any Eurodollar
Loan or LIBOR Competitive Bid Loan, if such next succeeding Business Day falls
in the next succeeding calendar month, such Interest Period shall be deemed to
end on the next preceding Business Day; and provided further that no Interest
Period shall extend beyond the Maturity Date.
Interim Balance Sheet Date. September 30, 1996.
Investments. All expenditures made by a Person and all liabilities
incurred (contingently or otherwise) by a Person for the acquisition of stock
(other than the stock of wholly owned Subsidiaries), pre-payments for use of
landfill air space in excess of usual and customary industry practice, or
Indebtedness of, or for loans, advances, capital contributions or transfers of
property to, or in respect of any guaranties or other commitments as described
under Indebtedness, or obligations of, any other Person, including without
limitation, the funding of any captive insurance company (other than loans,
advances, capital contributions or transfers of property to any wholly owned
Subsidiaries or guaranties with respect to Indebtedness of wholly owned
Subsidiaries). In determining the aggregate amount of Investments outstanding
at any particular time: (a) the amount of any Investment represented by a
guaranty shall be taken at not less than the principal amount of the
obligations guaranteed and still outstanding; (b) there shall be included as an
Investment all interest accrued with respect to Indebtedness constituting an
Investment unless and until such interest is paid; (c) there shall be deducted
in respect of each such Investment any amount received as a return of capital
(but only by
<PAGE> 20
-14-
repurchase, redemption, retirement, repayment, liquidating dividend or
liquidating distribution); (d) there shall not be deducted in respect of any
Investment any amounts received as earnings on such Investment, whether as
dividends, interest or otherwise, except that accrued interest included as
provided in the foregoing clause (b) may be deducted when paid; and (e) there
shall not be deducted from the aggregate amount of Investments any decrease in
the value thereof.
Issuance Fee. See Section 4.6.
Issuing Banks. The Bank(s) issuing Letters of Credit, which shall be
(a) with respect to Domestic Letters of Credit, The First National Bank of
Boston, MGT, BAI, Texas Commerce Bank, National Association, and Fleet Bank,
N.A., (b) with respect to Canadian Letters of Credit, MBC, and (c) such other
Banks as agreed to by the applicable Borrower(s) and the Bank Agents.
Letter of Credit Applications. Letter of credit applications in such
form as may be agreed upon by the applicable Borrower(s) and the Issuing Bank
from time to time which are entered into pursuant to Section 4 hereof, as such
Letter of Credit Applications are amended, varied or supplemented from time to
time; provided, however, in the event of any conflict or inconsistency between
the terms of any Letter of Credit Application and this Agreement, the terms of
this Agreement shall control.
Letter of Credit Fee. See Section 4.6.
Letter of Credit Participation. See Section 4.1(c).
Letters of Credit. Domestic Letters of Credit and Canadian Letters of
Credit.
LIBOR Competitive Bid Loan(s). See Section 5.3(a).
LIBOR Rate. For any Interest Period with respect to a LIBOR
Competitive Bid Loan, (a) the rate of interest equal to the rate determined by
the Administrative Agent at which Dollar deposits for such Interest Period are
offered based on information presented on Telerate Page 3750 as of 11:00 a.m.
(London time) two (2) Eurodollar Business Days prior to the first day of such
Interest Period, or (b) if such rate is not shown at such place, the rate of
interest equal to (i) the arithmetic average of the rates per annum for each
Reference Bank at which such Reference Bank's Eurodollar Lending Office is
offered Dollar deposits two Eurodollar Business Days prior to the beginning of
such Interest Period in the interbank eurodollar market where the eurodollar
operations of such Eurodollar Lending Office are customarily conducted, for
delivery on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of the Eurodollar
<PAGE> 21
-15-
Loan of such Reference Bank to which such Interest Period applies, divided by
(ii) a number equal to 1.00 minus the Eurocurrency Reserve Rate, if applicable
(rounded upwards to the nearest 1/16 of one percent).
Loan Documents. This Agreement, the Notes, the Letter of Credit
Applications, the Letters of Credit, the Bankers' Acceptances and any
documents, instruments or agreements executed in connection with any of the
foregoing, each as amended, modified, supplemented, or replaced from time to
time.
Loans. Collectively, the Domestic Loans made by the Domestic Banks
and the Canadian Loans made by the Canadian Banks.
Majority Banks. The Banks with fifty-one percent (51%) of the Total
Commitment; provided that in the event that the Total Commitment has been
terminated, the Majority Banks shall be the Banks holding fifty-one percent
(51%) of the aggregate outstanding principal amount of the Obligations on such
date.
Material Subsidiary. Any Subsidiary which, at the time such
determination is made, (a) has assets, revenues, or liabilities equal to at
least $8,000,000, or (b) is the holder of or the applicant for a permit to
operate a solid waste facility pursuant to RCRA or any analogous state law.
Maturity Date. February 28, 2002.
Maximum Drawing Amount. The maximum aggregate amount from time to time
that the beneficiaries may draw under outstanding Letters of Credit.
MBC. See Preamble.
MGT. See Preamble.
Mid-American. Mid-American Waste Systems, Inc., a Delaware
corporation.
Mid-American Acquisition. The acquisition by the Company of certain
assets, properties and business of Mid-American and certain of its subsidiaries
pursuant to the terms of the Mid-American Asset Purchase Agreement.
Mid-American Asset Purchase Agreement. The Asset Purchase Agreement
dated as of January 21, 1997, among the Company, Mid-American and certain
subsidiaries of Mid-American as amended and in effect on the Closing Date.
Moody's. Moody's Investors Service, Inc.
<PAGE> 22
-16-
Multiemployer Plan. Any multiemployer plan within the meaning of
Section 3(37) of ERISA maintained or contributed to by the Company, any of its
Subsidiaries, or any ERISA Affiliate.
New Lending Office. See Section 6.1(c).
Non-U.S. Bank. See Section 6.1(b).
Notes. Collectively, the Competitive Bid Notes, the Syndicated Notes,
the Swing Line Note, and the Canadian Notes.
Obligations. All indebtedness, obligations and liabilities of the
Borrowers to any of the Banks and the Bank Agents arising or incurred under
this Agreement or any of the other Loan Documents or in respect of any of the
Loans made or Reimbursement Obligations incurred or the Letters of Credit, the
Bankers' Acceptances, the Notes, or any other instrument at any time evidencing
any thereof individually or collectively, existing on the date of this
Agreement or arising thereafter, direct or indirect, joint or several, absolute
or contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise.
Original Credit Agreement. See Recitals.
Original Parties. See Recitals.
Overnight Federal Funds Effective Rate. The overnight federal funds
effective rate as published by the Board of Governors of the Federal Reserve
System, as in effect from time to time.
PBGC. The Pension Benefit Guaranty Corporation created by Section
4002 of ERISA and any successor entity or entities having similar
responsibilities.
Permitted Liens. See Section 9.2.
Person. Any individual, corporation, partnership, joint venture,
limited liability company, trust, unincorporated association, business, or
other legal entity, and any government or any governmental agency or political
subdivision thereof.
<PAGE> 23
-17-
Pricing Table:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Applicable
Senior Public Applicable Applicable Eurodollar
Level Debt Rating Facility Rate L/C Rate Rate
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 At least BBB+ by Standard & Poor's or 0.1100% 0.2400% Eurodollar Rate
at least Baa1 by Moody's per annum per annum plus 0.2400%
per annum
- --------------------------------------------------------------------------------------------------------
2 At least BBB by Standard & Poor's or 0.1500% 0.3000% Eurodollar Rate
at least Baa2 by Moody's per annum per annum plus 0.3000%
per annum
- --------------------------------------------------------------------------------------------------------
3 At least BBB- by Standard & Poor's or 0.2000% 0.3500% Eurodollar Rate
at least Baa3 by Moody's per annum per annum plus 0.3500%
per annum
- --------------------------------------------------------------------------------------------------------
4 At least BB+ by Standard & Poor's or 0.2500% 0.6250% Eurodollar Rate
at least Ba1 by Moody's per annum per annum plus 0.6250%
per annum
- --------------------------------------------------------------------------------------------------------
5 If no other level applies 0.3750% 0.7500% Eurodollar Rate
per annum per annum plus 0.7500%
per annum
- --------------------------------------------------------------------------------------------------------
</TABLE>
The applicable rates charged for any day shall be determined by the Senior
Public Debt Rating in effect as of that day.
Prudential Private Placement Debt. Indebtedness of the Company and
Sanifill arising under (a) that certain Amended and Restated Note Agreement
dated as of August 28, 1996 by and among the Company, Sanifill and The
Prudential Insurance Company of America and (b) that certain Amended and
Restated Master Shelf Agreement dated as of August 28, 1996 by and among the
Company, Sanifill and The Prudential Insurance Company of America, as each
shall be amended through the Closing Date, and may be further amended,
restated, supplemented, or otherwise modified with the consent of the Bank
Agents.
RCRA. See Section 7.15(a).
Real Property. All real property heretofore, now, or hereafter owned,
operated, or leased by the Company or any of its Subsidiaries.
<PAGE> 24
-18-
Reallocation Fee. See Section 2.3(d).
Reduced Banks. See Section 2.3(c).
Reference Banks. BAI and MGT.
Refunding Bankers' Acceptance. See Section 3.2.
Reimbursement Obligation. The Company's obligation to reimburse the
Issuing Bank and the Domestic Banks on account of any drawing under any
Domestic Letter of Credit and the Canadian Borrowers' joint and several
obligation to reimburse the Issuing Bank and the Canadian Banks on account of
any drawing under any Canadian Letter of Credit, all as provided in Section
4.2.
Release. Shall have the meaning specified in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
Sub Section 9601 et seq. ("CERCLA") and the term "Disposal" (or "Disposed")
shall have the meaning specified in the Resource Conservation and Recovery Act
of 1976, 42 U.S.C. Sub Section 6901 et seq. ("RCRA") and regulations
promulgated thereunder; provided, that in the event either CERCLA or RCRA is
amended so as to broaden the meaning of any term defined thereby, such broader
meaning shall apply as of the effective date of such amendment and provided
further, to the extent that the laws of Canada or a state, province, territory
or other political subdivision thereof wherein the property lies establish a
meaning for "Release" or "Disposal" which is broader than specified in either
CERCLA, or RCRA, such broader meaning shall apply to the Company's or any of
its Subsidiaries' activities in that state, province, territory or political
subdivision.
Replacement Bank. See Section 6.12.
Replacement Notice. See Section 6.12.
Sanifill. See Preamble.
Sanifill Merger. The merger of Sanifill and Quatro Acquisition Corp.,
a Subsidiary of the Company, pursuant to the terms of the Sanifill Merger
Agreement.
Sanifill Merger Agreement. The Agreement and Plan of Merger dated as
of June 22, 1996 between Sanifill, the Company and Quatro Acquisition Corp.
Sanifill Convertible Subordinated Debt. The Indebtedness arising
under that certain Indenture dated as of March 1, 1996, by and between Sanifill
and Texas Commerce Bank National Association as Trustee, as in effect on the
date hereof, provided, that the Obligations and the Guaranteed Obligations
shall be "Senior Indebtedness" thereunder.
<PAGE> 25
-19-
Senior Public Debt Rating. The rating(s) of the Company's public
unsecured long-term senior debt, without third party credit enhancement, issued
by Moody's and/or Standard & Poor's; or in the event no public unsecured
long-term senior debt is outstanding, the rating(s) of this credit facility
issued by Moody's and/or Standard & Poor's upon the request of the Company;
provided that until such time as the Company receives such rating(s) on such
public unsecured long-term senior debt or this credit facility, the Company's
corporate credit rating by Standard & Poor's shall apply.
Standard & Poor's. Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc.
Subsidiary. Any corporation, association, trust, or other business
entity of which the designated parent shall at any time own directly or
indirectly through a Subsidiary or Subsidiaries at least a majority of the
outstanding capital stock or other interest entitled to vote generally.
Swing Line Loans. See Section 2.11(a).
Swing Line Note. See Section 2.11(a).
Swing Line Settlement Amount. See Section 2.11(b).
Swing Line Settling Bank. See Section 2.11(b).
Swing Line Settlement Date. See Section 2.11(b).
Swing Line Settlement. The making or receiving of payments, in
immediately available funds, by the Domestic Banks to or from the
Administrative Agent in accordance with Section 2.11 hereof to the extent
necessary to cause each Domestic Bank's actual share of the outstanding amount
of the Syndicated Loans to be equal to such Domestic Bank's Domestic Commitment
Percentage of the outstanding amount of such Syndicated Loans, in any case
when, prior to such action, the actual share is not so equal.
Syndicated Loan Request. See Section 2.6(a).
Syndicated Loans. A borrowing hereunder consisting of one or more
loans made by the Domestic Banks to the Company under the procedure described
in Section 2.1(a), Section 2.1(c) and Section 2.11 hereof.
Syndicated Notes. See Section 2.4(a).
Total Canadian Commitment. See Section 2.1(b).
<PAGE> 26
-20-
Total Commitment. The sum of the Total Canadian Commitment and the
Total Domestic Commitment, which amount shall not exceed $1,600,000,000, and is
subject to reductions as set forth herein.
Total Commitment Percentage. The percentage initially set forth next
to each Bank's name on Schedule 3 hereto, as the same may be adjusted in
accordance with Section 2.3 or Section 20 of this Agreement.
Total Domestic Commitment. See Section 2.1(a).
U.S.Dollar Equivalent. With respect to an amount of Canadian Dollars,
on any date, the amount of U.S. Dollars that may be purchased with such amount
of Canadian Dollars at the Exchange Rate with respect to Canadian Dollars on
such date.
Western Waste. Western Waste Industries, Inc., a California
corporation.
Western Waste Merger. The merger of Western Waste and Riviera
Acquisition Corporation, a Subsidiary of the Company, pursuant to the terms of
the Western Waste Merger Agreement.
Western Waste Merger Agreement. The Agreement and Plan of Merger dated
as of December 18, 1995 between Western Waste, the Company and Riviera
Acquisition Corporation.
Section 1.2. RULES OF INTERPRETATION.
(a) A reference to any document or agreement (including
this Agreement) shall include such document or agreement as amended,
modified or supplemented from time to time in accordance with its
terms and the terms of this Agreement.
(b) The singular includes the plural and the plural
includes the singular.
(c) A reference to any law includes any amendment or
modification to such law.
(d) A reference to any Person includes its permitted
successors and permitted assigns.
(e) Accounting terms capitalized but not otherwise
defined herein have the meanings assigned to them by generally
accepted accounting principles applied on a consistent basis by the
accounting entity to which they refer.
<PAGE> 27
-21-
(f) The words "include", "includes" and "including" are
not limiting.
(g) All terms not specifically defined herein or by
generally accepted accounting principles, which terms are defined in
the Uniform Commercial Code as in effect in the State of New York,
have the meanings assigned to them therein.
(h) Reference to a particular "Section" refers to that
section of this Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words
of like import shall refer to this Agreement as a whole and not to any
particular section or subdivision of this Agreement.
SECTION 2. THE LOAN FACILITIES.
SECTION 2.1. COMMITMENT TO LEND.
(a) Subject to the terms and conditions set forth in this Agreement,
each of the Domestic Banks severally agrees to lend to the Company and the
Company may borrow, repay, and reborrow from time to time between the Closing
Date and the Maturity Date, upon notice by the Company to the Administrative
Agent given in accordance with this Section 2, its Domestic Commitment
Percentage of the Syndicated Loans as are requested by the Company; provided
that the sum of the outstanding principal amount of the Syndicated Loans
(including the Swing Line Loans) and the Maximum Drawing Amount of outstanding
Domestic Letters of Credit shall not exceed a maximum aggregate amount
outstanding of (i) $1,600,000,000 as such amount may be reduced pursuant to
Section 2.3 hereof (the "Total Domestic Commitment"), minus (ii) the aggregate
amount of Competitive Bid Loans outstanding at such time.
(b) Subject to the terms and conditions set forth in this Agreement,
each of the Canadian Banks severally agrees to lend to the Canadian Borrowers,
and the Canadian Borrowers may borrow, repay, and reborrow from time to time
between the Closing Date and the Maturity Date, upon notice by the Canadian
Borrowers to the Canadian Agent given in accordance with this Section 2, its
Canadian Commitment Percentage of the Canadian Loans as are requested by the
Canadian Borrowers; provided that the sum of the outstanding principal amount of
the Canadian Loans, the aggregate face amount of all outstanding Bankers'
Acceptances accepted and purchased, and the Maximum Drawing Amount of
outstanding Canadian Letters of Credit shall not exceed a maximum aggregate
amount outstanding equal to $0 initially, as such amount may be increased to an
aggregate maximum amount of $100,000,000 or reduced pursuant to Section 2.3
hereof (the "Total Canadian Commitment").
<PAGE> 28
-22-
(c) Each request for a Loan or Letter of Credit and each request for an
acceptance and purchase of a Bankers' Acceptance hereunder shall constitute a
representation and warranty by the applicable Borrower(s) that the conditions
set forth in Section 11 and Section 12, as the case may be, have been satisfied
on the date of such request. Any unpaid Reimbursement Obligation shall be a
Base Rate Loan, Canadian Prime Rate Loan or Canadian Base Rate Loan hereunder,
as applicable, as set forth in Section 4.2(a).
SECTION 2.2. FACILITY FEE. The Company agrees to pay to the
Administrative Agent for the account of the Banks a fee (the "Facility Fee") on
the Total Commitment equal to the Applicable Facility Rate multiplied by the
Total Commitment. The Facility Fee shall be payable for the period from and
after the Closing Date quarterly in arrears on the first day of each calendar
quarter for the immediately preceding calendar quarter commencing on April 1,
1997 with a final payment on the Maturity Date (or on the date of termination in
full of the Total Commitment, if earlier). The Facility Fee shall be
distributed pro rata among the Banks in accordance with each Bank's Total
Commitment Percentage.
SECTION 2.3. REDUCTION OF TOTAL COMMITMENT; INCREASE OF TOTAL
CANADIAN COMMITMENT.
(a) The Borrowers shall have the right at any time and from time to
time upon three (3) Business Days' prior written notice to the
Administrative Agent to reduce by $25,000,000 or a greater amount or
terminate entirely, the Total Commitment, whereupon each Bank's Commitment
shall be reduced pro rata in accordance with such Bank's Total Commitment
Percentage of the amount specified in such notice or, as the case may be,
terminated. Each of the Total Domestic Commitment and the Total Canadian
Commitment shall be reduced ratably in the event of such a reduction so that
no such reduction shall change the ratio of the Total Domestic Commitment to
the Total Canadian Commitment in effect immediately prior to such reduction
provided that at no time may (i) the Total Domestic Commitment be reduced to
an amount less than the sum of (A) the Maximum Drawing Amount of all
Domestic Letters of Credit, and (B) all Domestic Loans then outstanding, or
(ii) the Total Canadian Commitment be reduced to an amount less than the sum
of (A) the Maximum Drawing Amount of all Canadian Letters of Credit, (B) all
Canadian Loans then outstanding, and (C) the face amount of all outstanding
Bankers' Acceptances.
(b) No reduction or termination of the Total Commitment, the Total
Domestic Commitment or the Total Canadian Commitment once made may be
revoked; the portion of the Total Commitment, the Total Domestic Commitment
or the Total Canadian Commitment reduced or
<PAGE> 29
-23-
terminated may not be reinstated; and amounts in respect of such reduced or
terminated portion may not be reborrowed.
(c) Subject to the satisfaction of the conditions precedent set
forth in paragraph (d) below, the Canadian Borrowers may increase the Total
Canadian Commitment in accordance with the following procedures; provided
that no reallocation of the Commitments of the Banks shall be permitted
unless (i) each Increased Bank and each Reduced Bank (each such term as
defined below) shall have agreed to such reallocation in writing, (ii) such
reallocation would not have the effect, together with any previous
reallocations hereunder, of increasing the Total Canadian Commitment to an
amount greater than U.S. $100,000,000, and (iii) the amount of the Total
Commitment shall not be increased by such reallocations. In the case of any
such reallocation, the Total Domestic Commitment shall be reduced by the
amount of the increase in the Total Canadian Commitment. Any such
reallocation shall be subject to execution of appropriate documentation with
respect thereto by the Borrowers, the Bank Agents, the Domestic Banks whose
Domestic Commitments are reduced pursuant to such reallocation (the "Reduced
Banks") and the Canadian Banks that will assume the increased Total Canadian
Commitment resulting from such reallocation (the "Increased Banks"). Each
Reduced Bank shall be an affiliate of an Increased Bank (with the increase
of such Increased Bank's Canadian Commitment being equal to the decrease of
its affiliate's Domestic Commitment). The Administrative Agent shall notify
the Banks of any such reallocation. The Canadian Commitments of the other
Canadian Banks which are not Increased Banks and the Domestic Commitments of
the other Domestic Banks which are not Reduced Banks shall not be changed by
any such reallocation.
(d) The consummation of any reallocation pursuant to paragraph (c)
above shall be subject to satisfaction of the following conditions on the
date of such consummation:
(i) in the case of the initial increase in the Total
Canadian Commitment, the Canadian Banks and the Canadian Borrowers, as
applicable, shall have executed appropriate joinders to this Agreement
and Canadian Notes, and delivered any other documentation requested by
the Canadian Agent, including without limitation an opinion of Canadian
counsel to the Canadian Borrowers if so requested;
(ii) all of the conditions to borrowing set forth in
Section 12 shall have been satisfied;
<PAGE> 30
-24-
(iii) the Borrowers shall have given notice of such proposed
reallocation to the Bank Agents at least ten (10) Business Days in
advance of the requested date therefor;
(iv) such reallocation shall not result in the prepayment of
the Competitive Bid Loans, and, after giving effect to such
reallocation, (A) the aggregate principal amount of the Domestic Loans
outstanding plus the Maximum Drawing Amount of the outstanding Domestic
Letters of Credit shall not exceed the reduced Total Domestic
Commitment, (B) the aggregate principal amount of the Canadian Loans
outstanding plus the Maximum Drawing Amount of the outstanding Canadian
Letters of Credit and the aggregate face amount of all Bankers'
Acceptances (in each case expressed in U.S. Dollars) shall not exceed
the increased Total Canadian Commitment, and (C) the sum of the total
of clauses (A) and (B) (expressed in U.S. Dollars) shall not exceed the
Total Commitment; and
(v) each Increased Bank shall have received from the
Canadian Borrowers an applicable fee (the "Reallocation Fee") equal to
the greater of $2,500 or 1/16% of the amount of the increase in its
Canadian Commitment, as applicable.
(e) Subject to paragraph (d) above, the Canadian Agent shall
adjust the respective proportions of one or more of the Canadian Loans
funded by the Canadian Banks on or after the date of consummation of any
such reallocation in such a manner so that the sum of the outstanding
principal amount of all Canadian Loans of any Increased Bank plus such
Increased Bank's participations in the Canadian Letters of Credit plus the
aggregate face amount of all outstanding Bankers' Acceptances accepted by
such Canadian Bank shall equal such Canadian Bank's Canadian Commitment
Percentage (as modified) times the total outstandings under the Canadian
facility (as modified); provided that if the Canadian Agent shall not have
been able to achieve such equality within three months of said date of
consummation of any such reallocation for any reason, the Canadian Borrowers
shall forthwith prepay, subject to Section 6.8, one or more Canadian Loans,
and reborrow by way of one or more Canadian Loans, as the case may be, so as
to immediately achieve such equality.
(f) Subject to paragraph (d) above, the Administrative Agent shall
adjust the respective proportions of one or more of the Syndicated Loans
funded by the Domestic Banks on or after the date of consummation of any
such reallocation in such a manner so that the sum of the outstanding
principal amount of all Syndicated Loans of any Increased Bank plus such
Increased Bank's participations in the Domestic Letters of
<PAGE> 31
-25-
Credit shall equal such Domestic Bank's Domestic Commitment Percentage (as
modified) times the total outstandings under the domestic facility (as
modified); provided that if the Administrative Agent shall not have been
able to achieve such equality within three months of said date of
consummation of any such reallocation for any reason, the Company shall
forthwith prepay, subject to Section 6.8, one or more Syndicated Loans, and
reborrow by way of one or more Syndicated Loans, as the case may be, so as
to immediately achieve such equality.
(g) The Administrative Agent will notify the Banks promptly after
receiving any notice delivered by the Borrowers pursuant to this Section 2.3
and will distribute to each Bank a revised schedule of Commitments, Domestic
Commitment Percentages and Canadian Commitment Percentages.
SECTION 2.4. THE SYNDICATED NOTES; THE CANADIAN NOTES.
(a) The Syndicated Loans shall be evidenced by separate promissory
notes of the Company in substantially the form of Exhibit A hereto (each, a
"Syndicated Note"), dated as of the Closing Date and completed with
appropriate insertions. One Syndicated Note shall be payable to the order
of each Domestic Bank in an amount equal to its Domestic Commitment, and
shall represent the obligation of the Company to pay such Domestic Bank such
principal amount or, if less, the outstanding principal amount of all
Syndicated Loans made by such Domestic Bank, plus interest accrued thereon,
as set forth herein.
(b) The Canadian Loans shall be evidenced by separate promissory
notes of the Canadian Borrowers in substantially the form of Exhibit C
hereto (each, a "Canadian Note"), dated as of the Closing Date and completed
with appropriate insertions. One Canadian Note shall be payable to the
order of each Canadian Bank in an amount equal to its Canadian Commitment,
and shall represent the joint and several obligation of the Canadian
Borrowers to pay such Canadian Bank such principal amount or, if less, the
outstanding principal amount of all Canadian Loans made by such Canadian
Bank, plus interest accrued thereon, as set forth herein.
(c) The applicable Borrower(s) irrevocably authorize each Bank to
make, or cause to be made, in connection with a Drawdown Date of any
Syndicated Loan or Canadian Loan, as the case may be, and at the time of
receipt of any payment of principal on any such Note, an appropriate
notation on such Bank's records or on the schedule attached to such Bank's
Note or a continuation of such schedule attached thereto reflecting the
making of such Loan, or the receipt of such payment (as the case may
<PAGE> 32
-26-
be) and each Bank may, prior to any transfer of its Syndicated Note or
Canadian Note, as the case may be, endorse on the reverse side thereof the
outstanding principal amount of such Loans evidenced thereby. The
outstanding amount of the Loans set forth on such Bank's records shall be
prima facie evidence of the principal amount thereof owing and unpaid to
such Bank, but the failure to record, or any error in so recording, any such
amount shall not limit or otherwise affect the obligations of the applicable
Borrower(s) hereunder or under such Notes to make payments of principal of
or interest on any such Notes when due.
SECTION 2.5. INTEREST ON LOANS.
(a) The outstanding principal amount of the Syndicated Loans shall
bear interest at the rate per annum equal to (i) the Base Rate on Base Rate
Loans, (ii) the Applicable Eurodollar Rate on Eurodollar Loans to the
Company and (iii) the Applicable Swing Line Rate on Swing Line Loans.
(b) The outstanding principal amount of Canadian Loans shall bear
interest at the rate per annum equal to (i) the Canadian Prime Rate on
Canadian Loans requested to be funded in Canadian Dollars, (ii) the Canadian
Base Rate on Canadian Base Rate Loans, and (iii) the Applicable Eurodollar
Rate on Eurodollar Loans to the Canadian Borrowers.
(c) Interest shall be payable (i) monthly in arrears on the
first Business Day of each month, commencing March 1, 1997, on Base Rate
Loans, Canadian Base Rate Loans and Canadian Prime Rate Loans, (ii) on the
last day of the applicable Interest Period, and if such Interest Period is
longer than three months, also on the last day of the third month following
the commencement of such Interest Period, on Eurodollar Loans, and (iii) on
the Maturity Date for all Loans.
SECTION 2.6. REQUESTS FOR SYNDICATED LOANS; CANADIAN LOANS.
(a) The Company shall give to the Administrative Agent written
notice in the form of Exhibit E hereto (or telephonic notice confirmed in
writing or a facsimile in the form of Exhibit E hereto) of each Syndicated Loan
requested hereunder (a "Syndicated Loan Request") not later than (a) 11:00 a.m.
(New York time) on the proposed Drawdown Date of any Base Rate Loan, or (b)
11:00 a.m. (New York time) three (3) Eurodollar Business Days prior to the
proposed Drawdown Date of any Eurodollar Loan. Each such Syndicated Loan
Request shall specify (A) the principal amount of the Syndicated Loan requested,
(B) the proposed Drawdown Date of such Syndicated Loan, (C) whether such
Syndicated Loan requested is to be a Base Rate Loan or a Eurodollar Loan, (D)
the Interest Period for such Syndicated Loan, if a Eurodollar Loan, and (E) the
aggregate
<PAGE> 33
-27-
outstanding amount of all Swing Line Loans. Each Syndicated Loan requested
shall be in a minimum amount of $10,000,000. Each such Syndicated Loan Request
shall reflect the Maximum Drawing Amount of all Domestic Letters of Credit
outstanding and the amount of Domestic Loans outstanding (including Competitive
Bid Loans and Swing Line Loans). Syndicated Loan Requests made hereunder shall
be irrevocable and binding on the Company, and shall obligate the Company to
accept the Syndicated Loan requested from the Domestic Banks on the proposed
Drawdown Date.
(b) The Canadian Borrowers shall give to the Canadian Agent written
notice in the form of Exhibit G hereto (or telephone notice confirmed in
writing or a facsimile in the form of Exhibit G hereto) of each Canadian Loan
requested hereunder (a "Canadian Loan Request") not later than (a) 11:00 a.m.
(New York time) on the proposed Drawdown Date of any Canadian Prime Rate Loan or
Canadian Base Rate Loan, or (b) 11:00 a.m. (New York time) three (3) Eurodollar
Business Days prior to the proposed Drawdown Date of any Eurodollar Loan. Each
such Canadian Loan Request shall specify (A) the principal amount of the
Canadian Loan requested, (B) the proposed Drawdown Date of such Canadian Loan,
(C) whether such Canadian Loan (if in US$) is to be a Canadian Base Rate Loan or
a Eurodollar Loan, (D) the Interest Period of such Canadian Loan, and (E)
whether such Canadian Loan is to be made in U.S. Dollars or Canadian Dollars.
Each such Canadian Loan Request shall reflect the amount of Canadian Loans and
Bankers' Acceptances outstanding and the Maximum Drawing Amount of all Canadian
Letters of Credit. Each Canadian Loan Request shall be in a minimum amount of
$5,000,000. Canadian Loan Requests made hereunder shall be irrevocable and
binding on the Canadian Borrowers, and shall obligate the Canadian Borrowers to
accept the Canadian Loan Request from the Canadian Banks on the proposed
Drawdown Date.
(c) Each of the representations and warranties made by the Borrowers
to the Banks or the Bank Agents in this Agreement or any other Loan Document
shall be true and correct in all material respects when made and shall, for all
purposes of this Agreement, be deemed to be repeated by the applicable
Borrower(s) on and as of the date of the submission of a Syndicated Loan
Request, Canadian Loan Request, Competitive Bid Quote Request, Bankers'
Acceptance Notice or Letter of Credit Application and on and as of the Drawdown
Date of any Loan, the date of accepting or purchasing any Bankers' Acceptance or
the date of issuance of any Letter of Credit (except to the extent (i) of
changes resulting from transactions contemplated or permitted by this Agreement
and the other Loan Documents, (ii) of changes occurring in the ordinary course
of business that singly or in the aggregate are not materially adverse to the
business, assets or financial condition of the Company and its Subsidiaries as a
whole, or (iii) that such representations and warranties expressly relate only
to an earlier date).
<PAGE> 34
-28-
(d) The Administrative Agent shall promptly notify each Domestic
Bank of each Syndicated Loan Request received by the Administrative Agent (i) on
the proposed Drawdown Date of any Base Rate Loan, or (ii) three (3) Eurodollar
Business Days prior to the proposed Drawdown Date of any Eurodollar Loan to be
made to the Company. The Canadian Agent shall promptly notify each Canadian
Bank and the Administrative Agent of each Canadian Loan Request received by the
Canadian Agent not later than (A) on the proposed Drawdown Date of any Canadian
Prime Rate Loan or Canadian Base Rate Loan, or (B) three (3) Eurodollar Business
Days prior to the proposed Drawdown Date of any Eurodollar Loan to be made to
the Canadian Borrowers.
SECTION 2.7. ELECTION OF EURODOLLAR RATE; NOTICE OF ELECTION;
INTEREST PERIODS; MINIMUM AMOUNTS.
(a) At the Borrowers' option, so long as no Default or Event of
Default has occurred and is then continuing, the applicable Borrower(s) may
(i) elect to convert any Base Rate Loan or Canadian Base Rate Loan or a
portion thereof to a Eurodollar Loan, (ii) at the time of any Syndicated
Loan Request or Canadian Loan Request, specify that such requested Loan
shall be a Eurodollar Loan, or (iii) upon expiration of the applicable
Interest Period, elect to maintain an existing Eurodollar Loan as such,
provided that the applicable Borrower(s) give notice to the Administrative
Agent, in the case of Syndicated Loans, or the Canadian Agent, in the case
of Canadian Loans, pursuant to Section 2.7(b) hereof. Upon determining any
Eurodollar Rate, the Administrative Agent, in the case of Syndicated Loans,
and the Canadian Agent, in the case of Canadian Loans, shall forthwith
provide notice thereof to the applicable Borrower(s) and Bank(s), and each
such notice to such Borrower(s) shall be considered prima facie correct and
binding, absent manifest error.
(b) Three (3) Eurodollar Business Days prior to the making of any
Eurodollar Loan or the conversion of any Base Rate Loan to a Eurodollar
Loan, or, in the case of an outstanding Eurodollar Loan, the expiration date
of the applicable Interest Period, the applicable Borrower(s) shall give
written, telex or facsimile notice received by the Administrative Agent, in
the case of Syndicated Loans, or the Canadian Agent, in the case of Canadian
Loans, not later than 11:00 a.m. (New York time) of their election pursuant
to Section 2.7(a). Each such notice delivered to the Administrative Agent
or the Canadian Agent shall specify the aggregate principal amount of the
Syndicated Loans or Canadian Loans to be borrowed or maintained as or
converted to Eurodollar Loans and the requested duration of the Interest
Period that will be applicable to such Eurodollar Loan, and shall be
irrevocable and binding upon such Borrower(s). If the applicable
Borrower(s) shall fail to give the Administrative Agent or the Canadian
Agent, as applicable, notice of their
<PAGE> 35
-29-
election hereunder together with all of the other information required by
this Section 2.7(b) with respect to any Syndicated Loan or Canadian Loan,
whether at the end of an Interest Period or otherwise, such Syndicated Loan
or Canadian Loan shall be deemed a Base Rate Loan or Canadian Base Rate
Loan, as the case may be. The Administrative Agent or the Canadian Agent,
as the case may be, shall promptly notify the applicable Bank(s) in writing
(or by telephone confirmed in writing or by facsimile) of such election.
(c) Notwithstanding anything herein to the contrary, the Borrowers
may not specify an Interest Period that would extend beyond the Maturity
Date.
(d) No conversion of Loans pursuant to this Section 2.7 may result
in Eurodollar Loans that are less than $5,000,000. In no event shall the
Borrowers have more than eight (8) different Interest Periods for borrowings
of Eurodollar Loans outstanding at any time.
(e) Subject to the terms and conditions of Section 6.8 hereof, if
any affected Bank demands compensation under Section 6.5(c) or (d) with
respect to any Eurodollar Loan, the applicable Borrower(s) may at any time,
upon at least three (3) Business Days' prior written notice to the
applicable Bank Agent, elect to convert such Eurodollar Loan into a Base
Rate Loan or Canadian Base Rate Loan, as applicable (on which interest and
principal shall be payable contemporaneously with the related Eurodollar
Loans of the other Banks). Thereafter, and until such time as the affected
Bank notifies the applicable Bank Agent that the circumstances giving rise
to the demand for compensation under Section 6.5(c) or (d) no longer exist,
all requests for Eurodollar Loans from such affected Bank shall be deemed to
be requests for Base Rate Loans or Canadian Base Rate Loans, as the case may
be. Once the affected Bank notifies the applicable Bank Agent that such
circumstances no longer exist, the Borrower(s) may elect that the principal
amount of each such Loan converted hereunder shall again bear interest as
Eurodollar Loans beginning on the first day of the next succeeding Interest
Period applicable to the related Eurodollar Loans of the other Banks.
SECTION 2.8. FUNDS FOR SYNDICATED LOANS AND CANADIAN LOANS. Not later
than 1:00 p.m. (New York time) on the proposed Drawdown Date (a) in the case of
Syndicated Loans, each of the Domestic Banks will make available to the
Administrative Agent or (b) in the case of Canadian Loans, each of the Canadian
Banks will made available to the Canadian Agent, at its respective Head Office,
in immediately available funds, the amount of its Domestic Commitment Percentage
or Canadian Commitment Percentage, as the case may be, of the amount of the
requested Loan. Upon receipt from each Bank of such amount,
<PAGE> 36
-30-
and upon receipt of the documents required by Section 11 and Section 12 and the
satisfaction of the other conditions set forth therein, to the extent
applicable, the Administrative Agent will make available to the Company the
aggregate amount of such Syndicated Loans made available by the Domestic Banks,
and the Canadian Agent will make available to the Canadian Borrowers the
aggregate amount of such Canadian Loans made available by the Canadian Banks.
The failure or refusal of any Bank to make available to the applicable Bank
Agent at the aforesaid time and place on any Drawdown Date the amount of its
Domestic Commitment Percentage of the requested Syndicated Loan or its Canadian
Commitment Percentage of the requested Canadian Loan, as the case may be, shall
not relieve any other Bank from its several obligations hereunder to make
available to the applicable Bank Agent the amount of such Bank's Domestic
Commitment Percentage or Canadian Commitment Percentage, as the case may be, of
any requested Loan.
SECTION 2.9. MATURITY OF THE LOANS AND REIMBURSEMENT OBLIGATIONS. The
Loans shall be due and payable on the Maturity Date. The Company promises to
pay on the Maturity Date all Domestic Loans and all unpaid Reimbursement
Obligations on such date relating to Domestic Letters of Credit, and each of the
Canadian Borrowers, jointly and severally, promises to pay on the Maturity Date
all Canadian Loans, all unpaid Reimbursement Obligations relating to Canadian
Letters of Credit and all amounts owing with respect to Bankers' Acceptances.
All such payments shall be made together with any and all accrued and unpaid
interest thereon and any fees and other amounts owing hereunder.
SECTION 2.10. OPTIONAL PREPAYMENTS OR REPAYMENTS OF LOANS. Subject to
the terms and conditions of Section 6.8, the Borrowers shall have the right, at
their election, to repay or prepay the outstanding amount of the Loans, as a
whole or in part, at any time without penalty or premium. The applicable
Borrower(s) shall give the Administrative Agent or the Canadian Agent, as the
case may be, no later than 11:00 a.m. (New York time) (a) on the proposed date
of prepayment or repayment of Base Rate Loans, Canadian Base Rate Loans, and
Canadian Prime Rate Loans, and (b) one (1) Business Day prior to the proposed
date of prepayment or repayment of all other Loans, written notice (or
telephonic notice confirmed in writing or by facsimile) of any proposed
prepayment or repayment pursuant to this Section 2.10, specifying the proposed
date of prepayment or repayment of Loans and the principal amount to be paid.
Notwithstanding the foregoing, the Company may not prepay any Competitive Bid
Loans. The Administrative Agent shall promptly notify each Domestic Bank and
the Canadian Agent shall promptly notify each Canadian Bank by written notice
(or telephonic notice confirmed in writing or by facsimile) of such notice of
payment.
<PAGE> 37
-31-
SECTION 2.11. SWING LINE LOANS; SETTLEMENTS.
(a) Solely for ease of administration of the Syndicated
Loans, MGT may, but shall not be required to, fund Base Rate Loans
made in accordance with the provisions of this Agreement ("Swing Line
Loans"). The Swing Line Loans shall be evidenced by a promissory note
of the Company in substantially the form of Exhibit B hereto (the
"Swing Line Note") and, at the discretion of MGT may be in amounts
less than $10,000,000 provided that the outstanding amount of Swing
Line Loans advanced by MGT hereunder shall not exceed $10,000,000 at
any time. Each Domestic Bank shall remain severally and
unconditionally liable to fund its pro rata share (based upon each
Domestic Bank's Domestic Commitment) of such Swing Line Loans on each
Swing Line Settlement Date and, in the event MGT chooses not to fund
all Base Rate Loans requested on any date, to fund its Domestic
Commitment Percentage of the Base Rate Loans requested, subject to
satisfaction of the provisions hereof relating to the making of Base
Rate Loans. Prior to each Swing Line Settlement, all payments or
repayments of the principal of, and interest on, Swing Line Loans
shall be credited to the account of MGT.
(b) The Domestic Banks shall effect Swing Line
Settlements on (i) the Business Day immediately following any day
which MGT gives written notice to the Administrative Agent to effect a
Swing Line Settlement, (ii) the Business Day immediately following the
Administrative Agent's becoming aware of the existence of any Default
or Event of Default, (iii) the Maturity Date and (iv) the Business Day
immediately following any day on which the outstanding amount of Swing
Line Loans advanced by MGT exceeds $10,000,000 (each such date, a
"Swing Line Settlement Date"). One (1) Business Day prior to each
such Swing Line Settlement Date, the Administrative Agent shall give
telephonic notice to the Domestic Banks of (A) the respective
outstanding amount of Syndicated Loans made by each Domestic Bank as
at the close of business on the prior day, (B) the amount that any
Domestic Bank, as applicable (a "Swing Line Settling Bank"), shall pay
to effect a Swing Line Settlement (a "Swing Line Settlement Amount")
and (C) the portion (if any) of the aggregate Swing Line Settlement
Amount to be paid to each Domestic Bank. A statement of the
Administrative Agent submitted to the Domestic Banks with respect to
any amounts owing hereunder shall be prima facie evidence of the
amount due and owing. Each Swing Line Settling Bank shall, not later
than 1:00 p.m. (New York time) on each Swing Line Settlement Date,
effect a wire transfer of immediately available funds to the
Administrative Agent at its Head Office in the amount of such Domestic
Bank's Swing Line Settlement Amount. The Administrative Agent shall,
as promptly as practicable during normal business hours on each Swing
Line Settlement Date, effect a wire transfer
<PAGE> 38
-32-
of immediately available funds to each Domestic Bank of the Swing Line
Settlement Amount to be paid to such Domestic Bank. All funds advanced
by any Domestic Bank as a Swing Line Settling Bank pursuant to this
Section 2.11(b) shall for all purposes be treated as a Base Rate Loan
made by such Swing Line Settling Bank to the Company, and all funds
received by any Domestic Bank pursuant to this Section 2.11(b) shall
for all purposes be treated as repayment of amounts owed by the Company
with respect to Base Rate Loans made by such Domestic Bank.
(c) The Administrative Agent may (unless notified to the
contrary by any Swing Line Settling Bank by 12:00 noon (New York time)
one (1) Business Day prior to the Settlement Date) assume that each
Swing Line Settling Bank has made available (or will make available by
the time specified in Section 2.11(b)) to the Administrative Agent its
Swing Line Settlement Amount, and the Administrative Agent may (but
shall not be required to), in reliance upon such assumption, make
available to each applicable Domestic Bank its share (if any) of the
aggregate Swing Line Settlement Amount. If the Swing Line Settlement
Amount of such Swing Line Settling Bank is made available to the
Administrative Agent by such Swing Line Settling Bank on a date after
such Swing Line Settlement Date, such Swing Line Settling Bank shall
pay the Administrative Agent on demand an amount equal to the product
of (i) the average, computed for the period referred to in clause
(iii) below, of the weighted average annual interest rate paid by the
Administrative Agent for federal funds acquired by the Administrative
Agent during each day included in such period times (ii) such Swing
Line Settlement Amount times (iii) a fraction, the numerator of which
is the number of days that elapse from and including such Swing Line
Settlement Date to but not including the date on which such Swing Line
Settlement Amount shall become immediately available to the
Administrative Agent, and the denominator of which is 365. Upon
payment of such amount such Swing Line Settling Bank shall be deemed
to have delivered its Swing Line Settlement Amount on the Swing Line
Settlement Date and shall become entitled to interest payable by the
Company with respect to such Swing Line Settling Bank's Swing Line
Settlement Amount as if such share were delivered on the Swing Line
Settlement Date. If such Swing Line Settlement Amount is not in fact
made available to the Administrative Agent by such Swing Line Settling
Bank within three (3) Business Days of such Swing Line Settlement
Date, the Administrative Agent shall be entitled to recover such
amount from the Company, with interest thereon at the Base Rate.
(d) After any Swing Line Settlement Date, any payment by
the Company of Swing Line Loans hereunder shall be allocated among the
Domestic Banks, in amounts determined so as to provide that after such
application and the related Swing Line Settlement, the outstanding
<PAGE> 39
-33-
amount of Syndicated Loans of each Domestic Bank equals, as nearly as
practicable, such Domestic Bank's Domestic Commitment Percentage of
the aggregate amount of Syndicated Loans.
Section 3. BANKERS' ACCEPTANCES.
SECTION 3.1. ACCEPTANCE AND PURCHASE. Subject to the terms and
conditions hereof, each Canadian Bank severally agrees to accept and purchase
Bankers' Acceptances drawn upon it by the Canadian Borrowers denominated in
Canadian Dollars. The Canadian Borrowers shall notify the Canadian Agent by
irrevocable written notice (each a "Bankers' Acceptance Notice") by 10:00 a.m.
(New York time) two (2) Business Days prior to the date of any borrowing by way
of Bankers' Acceptances. Each borrowing by way of Bankers' Acceptances shall be
in a minimum aggregate face amount of C$1,000,000 and integral multiples of
C$100,000 in excess thereof. The face amount of each Bankers' Acceptance shall
be C$100,000 or any integral multiple thereof. Each Bankers' Acceptance Notice
shall be in the form of Exhibit H. In no event shall the Dollar Equivalent of
the aggregate face amount of all outstanding Bankers' Acceptances exceed the
Total Canadian Commitment minus the sum of the outstanding principal amount of
all Canadian Loans (expressed in its Dollar Equivalent thereof), plus the
Maximum Drawing Amount (expressed in its Dollar Equivalent thereof) of all
outstanding Canadian Letters of Credit.
(a) Term. Bankers' Acceptances shall be issued and shall
mature on a Business Day. Each Bankers' Acceptance shall have a term
of 30, 60, 90 or 180 days and shall mature no later than five (5) days
prior to the Maturity Date and shall be in form and substance
reasonably satisfactory to the Canadian Bank which is accepting such
Bankers' Acceptance.
(b) Bankers' Acceptances in Blank. To facilitate the
acceptance of Bankers' Acceptances under this Agreement, the Canadian
Borrowers shall, upon execution of this Agreement and from time to
time as required, provide to the Canadian Agent drafts, in form
satisfactory to the Canadian Agent, duly executed and endorsed in
blank by the Canadian Borrowers in quantities sufficient for each
Canadian Bank to fulfill its obligations hereunder. In addition, the
Canadian Borrowers hereby appoint each Canadian Bank as its attorney
to sign and endorse on its behalf, in handwriting or by facsimile or
mechanical signature as and when deemed necessary by such Canadian
Bank, blank forms of Bankers' Acceptances. The Canadian Borrowers
recognize and agree that all Bankers' Acceptances signed and/or
endorsed on their behalf by a Canadian Bank shall bind the Canadian
Borrowers as fully and effectually as if signed in the handwriting of
and duly issued by the proper signing officers of the Canadian
Borrowers. Each Canadian Bank is hereby authorized to issue such
Bankers' Acceptances endorsed in blank
<PAGE> 40
-34-
in such face amounts as may be determined by such Canadian Bank
provided that the aggregate amount thereof is equal to the aggregate
amount of Bankers' Acceptances required to be accepted by such Bank
pursuant to clause (d) below. No Canadian Bank shall be responsible or
liable for its failure to accept a Bankers' Acceptance if the cause of
such failure is, in whole or in part, due to the failure of the
Canadian Borrowers to provide duly executed and endorsed drafts to the
Canadian Agent on a timely basis nor shall any Canadian Bank or the
Canadian Agent be liable for any damage, loss or other claim arising by
reason of any loss or improper use of any such instrument except loss
or improper use arising by reason of the gross negligence or willful
misconduct of such Bank or the Canadian Agent, its officers, employees,
agents or representatives. Each Canadian Bank shall maintain a record
with respect to Bankers' Acceptances (A) received by it from the
Canadian Agent in blank hereunder, (B) voided by it for any reason, (C)
accepted by it hereunder, (D) purchased by it hereunder and (E)
cancelled at their respective maturities. Each Canadian Bank further
agrees to retain such records in the manner and for the statutory
periods provided in the various Canadian provincial or federal statutes
and regulations which apply to such Bank.
(c) Execution of Bankers' Acceptances. Drafts of the
Canadian Borrowers to be accepted as Bankers' Acceptances hereunder
shall be duly executed by one or more duly authorized officers on
behalf of the Canadian Borrowers. Notwithstanding that any person
whose signature appears on any Bankers' Acceptance as a signatory for
the Canadian Borrowers may no longer be an authorized signatory for
the Canadian Borrowers at the date of issuance of a Bankers'
Acceptance, such signature shall nevertheless be valid and sufficient
for all purposes as if such authority had remained in force at the
time of such issuance and any such Bankers' Acceptance so signed shall
be binding on the Canadian Borrowers.
(d) Issuance of Bankers' Acceptances. Promptly following
receipt of a Bankers' Acceptance Notice, the Canadian Agent shall so
advise the Canadian Banks of the face amount of each Bankers'
Acceptance to be accepted by it and the term thereof. The aggregate
face amount of Bankers' Acceptances to be accepted by a Canadian Bank
shall be determined by the Canadian Agent by reference to the
respective Canadian Commitments of the Canadian Banks, except that, if
the face amount of a Bankers' Acceptance, which would otherwise be
accepted by a Canadian Bank, would not be C$100,000 or an integral
multiple thereof, such face amount shall be increased or reduced by
the Canadian Agent in its sole and unfettered discretion to the
nearest integral multiple of C$100,000.
<PAGE> 41
-35-
(e) Acceptances of Bankers' Acceptances. Each Bankers'
Acceptance to be accepted by a Canadian Bank shall be accepted at such
Bank's office shown on Schedule 2 hereof or as otherwise designated by
said Canadian Bank from time to time.
(f) Purchase of Bankers' Acceptances. On the relevant
date of borrowing, each Canadian Bank severally agrees to purchase
from the Canadian Borrowers, at the face amount thereof discounted by
the Applicable BA Discount Rate, any Bankers' Acceptance accepted by
it and provide to the Canadian Agent, for the account of the Canadian
Borrowers, the BA Discount Proceeds in respect thereof after deducting
therefrom the amount of the Acceptance Fee payable by the Canadian
Borrowers to such Bank under Section 3.3 in respect of such Bankers'
Acceptance.
(g) Sale of Bankers' Acceptances. Each Canadian Bank may
at any time and from time to time hold, sell, rediscount or otherwise
dispose of any or all Bankers' Acceptances accepted and purchased by
it.
(h) Waiver of Presentment and Other Conditions. Each of
the Canadian Borrowers waives presentment for payment and any other
defense to payment of any amounts due to a Canadian Bank in respect of
a Bankers' Acceptance accepted by such Canadian Bank pursuant to this
Agreement which might exist solely by reason of such Bankers'
Acceptance being held, at the maturity thereof, by such Bank in its
own right. The Canadian Borrowers shall not claim or require any days
of grace or require the Canadian Agent or any Canadian Bank to claim
any days of grace for the payment of any Bankers' Acceptance.
3.2. REFUNDING BANKERS' ACCEPTANCES. With respect to each Bankers'
Acceptance, the Canadian Borrowers, prior to the occurrence and continuation of
an Event of Default, may give irrevocable telephone or written notice (or such
other method of notification as may be agreed upon between the Canadian Agent
and the Canadian Borrowers) to the Canadian Agent at or before 2:00 p.m. (New
York time) two (2) Business Days prior to the maturity date of such Bankers'
Acceptance followed by written confirmation electronically transmitted to the
Canadian Agent on the same day, of the Canadian Borrowers' intention to issue
one or more Bankers' Acceptances on such maturity date (each a "Refunding
Bankers' Acceptance") to provide for the payment of such maturing Bankers'
Acceptance (it being understood that payments by the Canadian Borrowers and
fundings by the Canadian Banks in respect of each maturing Bankers' Acceptance
and each related Refunding Bankers' Acceptance shall be made on a net basis
reflecting the difference between the face amount of such maturing Bankers'
Acceptance and the BA Discount Proceeds (net of the applicable Acceptance Fee)
of such Refunding Bankers' Acceptance). Any funding on
<PAGE> 42
-36-
account of any maturing Bankers' Acceptance must be made at or before 12:00 noon
(New York time) on the maturity date of such Bankers' Acceptance. If the
Canadian Borrowers fail to give such notice, the Canadian Borrowers shall be
irrevocably deemed to have requested and to have been advanced a Canadian Prime
Rate Loan in the face amount of such maturing Bankers' Acceptance on the
maturity date of such maturing Bankers' Acceptance from the Canadian Bank which
accepted such maturing Bankers' Acceptance, which Canadian Prime Rate Loan shall
thereafter bear interest as such in accordance with the provisions hereof and
otherwise shall be subject to all provisions of this Agreement applicable to
Canadian Prime Rate Loans until paid in full.
SECTION 3.3. ACCEPTANCE FEE. An acceptance fee (the "Acceptance Fee")
shall be payable by the Canadian Borrowers to each Canadian Bank and each
Canadian Bank shall deduct the amount of such Acceptance Fee from the BA
Discount Proceeds (in the manner specified in Section 3.1(f) in respect of each
Bankers' Acceptance), said fee to be calculated at a rate per annum equal to the
Applicable L/C Rate calculated on the face amount of such Bankers' Acceptance
and computed on the basis of the number of days in the term of such Bankers'
Acceptance and a year of 365 days.
SECTION 3.4. CASH COLLATERAL. Subject to Section 30, upon the
occurrence and during the continuance of any Event of Default, and in addition
to any other rights or remedies of any Canadian Bank and the Canadian Agent
hereunder, any Canadian Bank or the Canadian Agent as and by way of collateral
security (or such alternate arrangement as may be agreed upon by the Canadian
Borrowers and such Canadian Bank or the Canadian Agent, as applicable) shall be
entitled to deposit and retain in an account to be maintained by the Canadian
Agent (bearing interest at the Canadian Agent's rates as may be applicable in
respect of other deposits of similar amounts for similar terms) amounts which
are received by such Canadian Bank or the Canadian Agent from the Canadian
Borrowers hereunder or as proceeds of the exercise of any rights or remedies of
any Canadian Bank or the Canadian Agent hereunder against the Canadian
Borrowers, to the extent such amounts may be required to satisfy any contingent
or unmatured obligations or liabilities of the Canadian Borrowers to the
Canadian Banks or the Canadian Agent, or any of them hereunder.
SECTION 4. LETTERS OF CREDIT.
SECTION 4.1. LETTER OF CREDIT COMMITMENTS.
(a) Subject to the terms and conditions hereof and the
receipt of a Letter of Credit Application by the Issuing Bank, with a
copy to the Administrative Agent in the case of Domestic Letters of
Credit and to the Canadian Agent in the case of Canadian Letters of
Credit, reflecting the Maximum Drawing Amount of all Domestic Letters
of Credit or Canadian
<PAGE> 43
-37-
Letters of Credit, as applicable (including the requested Letter of
Credit), the Issuing Bank, on behalf of the Domestic Banks in the case
of Domestic Letters of Credit or the Canadian Banks in the case of
Canadian Letters of Credit, and in reliance upon the representations
and warranties of the Borrowers contained herein and the agreement of
the Banks contained in Section 4.1(b) hereof, agrees to issue Domestic
Letters of Credit for the account of the Company or Canadian Letters of
Credit for the account of the Canadian Borrowers, as applicable (which
may incorporate automatic renewals for periods of up to twelve (12)
months), in such form as may be requested from time to time by such
Borrower(s) and agreed to by the Issuing Bank; provided, however, that,
after giving effect to such request, (i) the aggregate Maximum Drawing
Amount of all Domestic Letters of Credit issued at any time shall not
exceed the lesser of (A) $500,000,000 or (B) the Total Domestic
Commitment minus the aggregate outstanding amount of the Domestic
Loans, and (ii) the aggregate Maximum Drawing Amount of Canadian
Letters of Credit issued at any time shall not exceed the Total
Canadian Commitment less the sum of all outstanding Canadian Loans and
the aggregate face amount of all outstanding Bankers' Acceptances, and
provided further, that no Letter of Credit shall have an expiration
date later than the earlier of (x) eighteen (18) months after the date
of issuance (which may incorporate automatic renewals for periods of up
to twelve (12) months), or (y) five (5) Business Days prior to the
Maturity Date. The letters of credit listed in Schedule 4.1(a) issued
by Issuing Banks under the Original Credit Agreement shall be Letters
of Credit under this Agreement.
(b) Each Domestic Letter of Credit shall be denominated
in Dollars, and each Canadian Letter of Credit shall be denominated in
Canadian Dollars or Dollars, at the option of the Canadian Borrowers.
With respect to any request for a Canadian Letter of Credit
denominated in Canadian Dollars, the Canadian Agent shall calculate
the U.S. Dollar Equivalent of the Maximum Drawing Amount of such
requested Canadian Letter of Credit and shall notify the Canadian
Borrowers and the Administrative Agent of the results of such
calculation. Such U.S. Dollar Equivalent of the Maximum Drawing
Amount shall be used to determine compliance with the provisions of
Section 4.1(a) and in any other calculation of compliance with
Canadian Commitments and the Total Canadian Commitment.
(c) Each Domestic Bank with respect to Domestic Letters
of Credit and each Canadian Bank with respect to Canadian Letters of
Credit severally agrees that it shall be absolutely liable, without
regard to the occurrence of any Default or Event of Default, the
termination of the Total Commitment pursuant to Section 13.2, or any
other condition precedent whatsoever, to the extent of such Bank's
Domestic Commitment
<PAGE> 44
-38-
Percentage or Canadian Commitment Percentage, as applicable, to
reimburse the Issuing Bank on demand for the amount of each draft paid
by the Issuing Bank under each Domestic Letter of Credit or Canadian
Letter of Credit, as applicable, to the extent that such amount is not
reimbursed by the applicable Borrower(s) pursuant to Section 4.2 (such
agreement for a Bank being called herein the "Letter of Credit
Participation" of such Bank). Each Bank agrees that its obligation to
reimburse the Issuing Bank pursuant to this Section 4.1(c) shall not be
affected in any way by any circumstance other than the gross negligence
or willful misconduct of the Issuing Bank.
(d) Each such reimbursement payment made by a Bank to the
Issuing Bank shall be treated as the purchase by such Bank of a
participating interest in the applicable Reimbursement Obligation
under Section 4.2 in an amount equal to such payment. Each Bank shall
share in accordance with its participating interest in any interest
which accrues pursuant to Section 4.2.
SECTION 4.2. REIMBURSEMENT OBLIGATION OF THE BORROWERS. In order to
induce the Issuing Banks to issue, extend and renew each Letter of Credit, (i)
the Company hereby agrees to reimburse or pay to each Issuing Bank, with respect
to each Domestic Letter of Credit issued, extended or renewed by such Issuing
Bank hereunder, and (ii) each of the Canadian Borrowers hereby jointly and
severally agrees to reimburse or pay to each Issuing Bank, with respect to each
Canadian Letter of Credit issued, extended or renewed by such Issuing Bank
hereunder, as follows:
(a) if any draft presented under any Letter of Credit is
honored by such Issuing Bank or such Issuing Bank otherwise makes
payment with respect thereto, the sum of (i) the amount paid by such
Issuing Bank under or with respect to such Letter of Credit, and (ii)
the amount of any taxes, fees, charges or other costs and expenses
whatsoever incurred by such Issuing Bank in connection with any
payment made by such Issuing Bank under, or with respect to, such
Letter of Credit, provided however, if the applicable Borrower(s) do
not reimburse such Issuing Bank on the Drawdown Date, such amount
shall become automatically a Syndicated Loan which is a Base Rate Loan
or a Canadian Loan which is a Canadian Base Rate Loan or Canadian
Prime Rate Loan, as applicable, advanced hereunder in an amount equal
to such sum; and
(b) upon the Maturity Date or the acceleration of the
Reimbursement Obligations with respect to all Letters of Credit in
accordance with Section 13, an amount equal to the then Maximum
Drawing Amount of (i) all Domestic Letters of Credit shall be paid by
the Company to the Administrative Agent and (ii) all Canadian Letters
of Credit shall
<PAGE> 45
-39-
be paid by the Canadian Borrowers to the Canadian Agent, in each case
to be held as cash collateral for the applicable Reimbursement
Obligations.
SECTION 4.3. OBLIGATIONS ABSOLUTE. The Borrowers' respective
obligations under this Section 4 shall be absolute and unconditional under any
and all circumstances and irrespective of the occurrence of any Default or Event
of Default or any condition precedent whatsoever or any setoff, counterclaim or
defense to payment which the Borrowers may have or have had against any Issuing
Bank, any Bank or any beneficiary of a Letter of Credit, and each of the
Borrowers expressly waives any such rights that it may have with respect
thereto. The Borrowers further agree with each Issuing Bank and the Banks that
such Issuing Bank and the Banks (i) shall not be responsible for, and the
Borrowers' respective Reimbursement Obligations under Section 4.2 shall not be
affected by, among other things, the validity or genuineness of documents or of
any endorsements thereon, even if such documents should in fact prove to be in
any or all respects invalid, fraudulent or forged (unless due to the willful
misconduct of such Issuing Bank or any other Bank), or any dispute between or
among the Borrowers and the beneficiary of any Letter of Credit or any financing
institution or other party to which any Letter of Credit may be transferred or
any claims or defenses whatsoever of the Borrowers against the beneficiary of
any Letter of Credit or any such transferee, and (ii) shall not be liable for
any error, omission, interruption or delay in transmission, dispatch or delivery
of any message or advice, however transmitted, in connection with any Letter of
Credit except to the extent of their own willful misconduct. The Borrowers
agree that any action taken or omitted by any Issuing Bank or any Bank in good
faith under or in connection with any Letter of Credit and the related drafts
and documents shall be binding upon the applicable Borrower(s) and shall not
result in any liability on the part of such Issuing Bank or any Bank (or their
respective affiliates) to the Borrowers. Nothing herein shall constitute a
waiver by the Borrowers of any of their rights against any beneficiary of a
Letter of Credit.
SECTION 4.4. RELIANCE BY THE ISSUING BANKS. To the extent not
inconsistent with Section 4.3, each Issuing Bank shall be entitled to rely, and
shall be fully protected in relying, upon any Letter of Credit, draft, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, facsimile, telex or teletype message, statement, order or other
document believed by such Issuing Bank in good faith to be genuine and correct
and to have been signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel, independent accountants and other
experts selected by such Issuing Bank.
SECTION 4.5. NOTICE REGARDING LETTERS OF CREDIT. One (1) Business Day
prior to the issuance of any Letter of Credit or amendments or extensions
thereof, the applicable Issuing Bank shall notify the Administrative Agent or
the Canadian
<PAGE> 46
-40-
Agent, as applicable, of the terms of such Letter of Credit, amendment or
extension. On the day of any drawing under any Letter of Credit, such Issuing
Bank shall notify the Administrative Agent or the Canadian Agent, as applicable,
of such drawing under any Letter of Credit.
SECTION 4.6. LETTER OF CREDIT FEE. The Company, in the case of Domestic
Letters of Credit, and the Canadian Borrowers jointly and severally, in the case
of Canadian Letters of Credit, shall pay a fee (the "Letter of Credit Fee")
equal to the Applicable L/C Rate on the Maximum Drawing Amount of applicable
Letters of Credit issued hereunder to the Administrative Agent or the Canadian
Agent, as applicable, for the account of the Banks, to be shared pro rata by
each of such Banks in accordance with their respective Domestic Commitment
Percentages or Canadian Commitment Percentages, as applicable. The Letter of
Credit Fee shall be payable quarterly in arrears on the first day of each
calendar quarter for the quarter just ended, commencing April 1, 1997, and on
the Maturity Date. In addition, an issuing fee (the "Issuance Fee") to be
agreed upon annually between the applicable Borrower(s) and an Issuing Bank
shall be payable to such Issuing Bank for its account.
SECTION 5. COMPETITIVE BID LOANS.
SECTION 5.1. THE COMPETITIVE BID OPTION. In addition to the
Syndicated Loans made pursuant to Section 2 hereof, the Company may request
Competitive Bid Loans pursuant to the terms of this Section 5. The Domestic
Banks may, but shall have no obligation to, make such offers and the Company
may, but shall have no obligation to, accept such offers in the manner set forth
in this Section 5. Notwithstanding any other provision herein to the contrary,
at no time shall the aggregate principal amount of Competitive Bid Loans
outstanding at any time exceed the lesser of (i) the Total Domestic Commitment
minus the sum of (a) the aggregate outstanding principal amount of Syndicated
Loans (including the Swing Loans), plus (b) the Maximum Drawing Amount of
Domestic Letters of Credit outstanding at such time, or (ii) $500,000,000.
SECTION 5.2. COMPETITIVE BID LOAN ACCOUNTS: COMPETITIVE BID NOTES.
(a) The obligation of the Company to repay the
outstanding principal amount of any and all Competitive Bid Loans,
plus interest at the applicable Competitive Bid Rate accrued thereon,
shall be evidenced by this Agreement and by individual loan accounts
(the "Competitive Bid Loan Accounts" and individually, a "Competitive
Bid Loan Account") maintained by the Administrative Agent on its books
for each of the Domestic Banks, it being the intention of the parties
hereto that, except as provided for in paragraph (b) of this Section
5.2, the Company's obligations with respect to Competitive Bid Loans
are to be evidenced only as stated herein and not by separate
promissory notes.
<PAGE> 47
-41-
(b) Any Domestic Bank may at any time, and from time to
time, request that any Competitive Bid Loans outstanding to such
Domestic Bank be evidenced by a promissory note of the Company in
substantially the form of Exhibit D hereto (each, a "Competitive Bid
Note"), dated as of the Closing Date and completed with appropriate
insertions. One Competitive Bid Note shall be payable to the order of
each Domestic Bank in an amount equal to $500,000,000, and
representing the obligation of the Company to pay such Domestic Bank
such principal amount or, if less, the outstanding principal amount of
any and all Competitive Bid Loans made by such Domestic Bank, plus
interest at the applicable Competitive Bid Rate or Competitive Bid
Margin accrued thereon, as set forth herein. Upon execution and
delivery by the Company of a Competitive Bid Note, the Company's
obligation to repay any and all Competitive Bid Loans made to it by
such Domestic Bank and all interest thereon shall thereafter be
evidenced by such Competitive Bid Note.
(c) The Company irrevocably authorizes (i) each Domestic
Bank to make or cause to be made, in connection with a Drawdown Date
of any Competitive Bid Loan or at the time of receipt of any payment
of principal on such Domestic Bank's Competitive Bid Note in the case
of a Competitive Bid Note, and (ii) the Administrative Agent to make
or cause to be made, in connection with a Drawdown Date of any
Competitive Bid Loan or at the time of receipt of any payment of
principal on such Domestic Bank's Competitive Bid Loan Account in the
case of a Competitive Bid Loan Account, an appropriate notation on
such Domestic Bank's records or on the schedule attached to such
Domestic Bank's Competitive Bid Note or a continuation of such
schedule attached thereto, or the Administrative Agent's records, as
applicable, reflecting the making of the Competitive Bid Loan or the
receipt of such payment (as the case may be) and such Domestic Bank
may, prior to any transfer of a Competitive Bid Note, endorse on the
reverse side thereof the outstanding principal amount of Competitive
Bid Loans evidenced thereby. The outstanding amount of the
Competitive Bid Loans set forth on such Domestic Bank's record or the
Administrative Agent's records, as applicable, shall be prima facie
evidence of the principal amount thereof owing and unpaid to such
Domestic Bank, but the failure to record, or any error in so
recording, any such amount shall not limit or otherwise affect the
obligations of the Company hereunder to make payments of principal of
or interest on any Competitive Bid Loan when due.
SECTION 5.3. COMPETITIVE BID QUOTE REQUEST; INVITATION FOR COMPETITIVE
BID QUOTES.
(a) When the Company wishes to request offers to make
Competitive Bid Loans under this Section 5, it shall transmit to the
<PAGE> 48
-42-
Administrative Agent by telex or facsimile a Competitive Bid Quote
Request substantially in the form of Exhibit K hereto (a "Competitive
Bid Quote Request") so as to be received no later than 1:00 p.m. (New
York time) (x) five (5) Eurodollar Business Days prior to the
requested Drawdown Date in the case of a LIBOR Competitive Bid Loan (a
"LIBOR Competitive Bid Loan") or (y) one (1) Business Day prior to the
requested Drawdown Date in the case of an Absolute Competitive Bid
Loan (an "Absolute Competitive Bid Loan"), specifying:
(i) the requested Drawdown Date (which must be a
Eurodollar Business Day in the case of a LIBOR Competitive Bid
Loan or a Business Day in the case of an Absolute Competitive
Bid Loan);
(ii) the aggregate amount of such Competitive Bid
Loans, which shall be $10,000,000 or larger multiple of
$1,000,000; (iii) the duration of the Interest Period(s)
applicable thereto, subject to the provisions of the definition
of Interest Period; and
(iv) whether the Competitive Bid Quotes requested
are for LIBOR Competitive Bid Loans or Absolute Competitive
Bid Loans.
The Company may request offers to make Competitive Bid Loans for more
than one Interest Period in a single Competitive Bid Quote Request.
No new Competitive Bid Quote Request shall be given until the Company
has notified the Administrative Agent of its acceptance or
non-acceptance of the Competitive Bid Quotes relating to any
outstanding Competitive Bid Quote Request.
(b) Promptly upon receipt of a Competitive Bid Quote
Request, the Administrative Agent shall send to the Domestic Banks by
telecopy or facsimile transmission an Invitation for Competitive Bid
Quotes substantially in the form of Exhibit L hereto, which shall
constitute an invitation by the Company to each Domestic Bank to
submit Competitive Bid Quotes in accordance with this Section 5.
SECTION 5.4. ALTERNATIVE MANNER OF PROCEDURE. If, after receipt by the
Administrative Agent and each of the Domestic Banks of a Competitive Bid Quote
Request from the Company in accordance with Section 5.3, the Administrative
Agent or any Domestic Bank shall be unable to complete any procedure of the
auction process described in Sub Section 5.5 through 5.6 (inclusive) due to
the inability of such Person to transmit or receive communications through the
means specified therein, such Person may rely on telephonic notice for the
transmission or receipt of such communications. In any case where such Person
shall rely on telephone transmission or receipt, any communication made by
telephone shall, as soon as possible thereafter, be followed by written
confirmation thereof.
<PAGE> 49
-43-
SECTION 5.5. SUBMISSION AND CONTENTS OF COMPETITIVE BID QUOTES.
(a) Each Domestic Bank may, but shall be under no
obligation to, submit a Competitive Bid Quote containing an offer or
offers to make Competitive Bid Loans in response to any Competitive
Bid Quote Request. Each Competitive Bid Quote must comply with the
requirements of this Section 5.5 and must be submitted to the
Administrative Agent by telex or facsimile transmission at its offices
as specified in or pursuant to Section 22 not later than (x) 2:00 p.m.
(New York time) on the fourth Eurodollar Business Day prior to the
proposed Drawdown Date, in the case of a LIBOR Competitive Bid Loan or
(y) 10:00 a.m. (New York time) on the proposed Drawdown Date, in the
case of an Absolute Competitive Bid Loan, provided that Competitive
Bid Quotes may be submitted by the Administrative Agent in its
capacity as a Domestic Bank only if it submits its Competitive Bid
Quote to the Company not later than (x) one hour prior to the deadline
for the other Domestic Banks, in the case of a LIBOR Competitive Bid
Loan or (y) 15 minutes prior to the deadline for the other Domestic
Banks, in the case of an Absolute Competitive Bid Loan. Subject to
the provisions of Sub Section 11 and 12 hereof, any Competitive
Bid Quote so made shall be irrevocable except with the written consent
of the Administrative Agent given on the instructions of the Company.
(b) Each Competitive Bid Quote shall be in substantially the
form of Exhibit M hereto and shall in any case specify:
(i) the proposed Drawdown Date;
(ii) the principal amount of the Competitive Bid
Loan for which each proposal is being made, which principal
amount (w) may be greater than or less than the Domestic
Commitment of the quoting Domestic Bank, (x) must be $5,000,000
or a larger multiple of $1,000,000, (y) may not exceed the
aggregate principal amount of Competitive Bid Loans for which
offers were requested and (z) may be subject to an aggregate
limitation as to the principal amount of Competitive Bid Loans
for which offers being made by such quoting Domestic Bank may
be accepted;
(iii) the Interest Period(s) for which Competitive
Bid Quotes are being submitted;
(iv) in the case of a LIBOR Competitive Bid Loan,
the margin above or below the applicable LIBOR Rate (the
"Competitive Bid Margin") offered for each such Competitive Bid
Loan, expressed as a percentage (specified to the nearest
1/10,000th of 1%) to be added to or subtracted from such LIBOR
Rate;
<PAGE> 50
-44-
(v) in the case of an Absolute Competitive Bid Loan,
the rate of interest per annum (specified to the nearest
1/10,000th of 1%) (the "Competitive Bid Rate") offered for
each such Absolute Competitive Bid Loan; and
(vi) the identity of the quoting Domestic Bank.
A Competitive Bid Quote may include up to five separate offers by the
quoting Domestic Bank with respect to each Interest Period specified
in the related Invitation for Competitive Bid Quotes.
(c) Any Competitive Bid Quote shall be disregarded if it:
(i) is not substantially in the form of Exhibit M
hereto;
(ii) contains qualifying, conditional or similar
language;
(iii) proposes terms other than or in addition to
those set forth in the applicable Invitation for Competitive
Bid Quotes; or
(iv) arrives after the time set forth in Section
5.5(a) hereof.
SECTION 5.6. NOTICE TO COMPANY. The Administrative Agent shall
promptly notify the Company of the terms (x) of any Competitive Bid Quote
submitted by a Domestic Bank that is in accordance with Section 5.5 and (y) of
any Competitive Bid Quote that amends, modifies or is otherwise inconsistent
with a previous Competitive Bid Quote submitted by such Domestic Bank with
respect to the same Competitive Bid Quote Request. Any such subsequent
Competitive Bid Quote shall be disregarded by the Administrative Agent unless
such subsequent Competitive Bid Quote is submitted solely to correct a manifest
error in such former Competitive Bid Quote. The Administrative Agent's notice
to the Company shall specify (A) the aggregate principal amount of Competitive
Bid Loans for which offers have been received for each Interest Period specified
in the related Competitive Bid Quote Request, (B) the respective principal
amounts and Competitive Bid Margins or Competitive Bid Rates, as the case may
be, so offered, and the identity of the respective Domestic Banks submitting
such offers, and (C) if applicable, limitations on the aggregate principal
amount of Competitive Bid Loans for which offers in any single Competitive Bid
Quote may be accepted.
SECTION 5.7. ACCEPTANCE AND NOTICE BY COMPANY AND ADMINISTRATIVE AGENT.
Not later than 11:00 a.m. (New York time) on (x) the third Eurodollar Business
Day prior to the proposed Drawdown Date, in the case of a LIBOR Competitive Bid
Loan or (y) the proposed Drawdown Date, in the case of an Absolute Competitive
Bid Loan, the Company shall notify the Administrative Agent of its acceptance or
non-acceptance of each Competitive Bid Quote in
<PAGE> 51
-45-
substantially the form of Exhibit N hereto. The Company may accept any
Competitive Bid Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Competitive Bid
Loan may not exceed the applicable amount set forth in the related
Competitive Bid Quote Request;
(ii) acceptance of offers may only be made on the basis of
ascending Competitive Bid Margins or Competitive Bid Rates, as the
case may be, and
(iii) the Company may not accept any offer that is described
in subsection 5.5(c) or that otherwise fails to comply with the
requirements of this Agreement.
The Administrative Agent shall promptly notify each Domestic Bank which
submitted a Competitive Bid Quote of the Company's acceptance or non-
acceptance thereof. At the request of any Domestic Bank which submitted a
Competitive Bid Quote and with the consent of the Company, the Administrative
Agent will promptly notify all Domestic Banks which submitted Competitive Bid
Quotes of (a) the aggregate principal amount of, and (b) the range of
Competitive Bid Rates or Competitive Bid Margins of, the accepted Competitive
Bid Loans for each requested Interest Period.
SECTION 5.8. ALLOCATION BY ADMINISTRATIVE AGENT. If offers are made by
two or more Domestic Banks with the same Competitive Bid Margin or Competitive
Bid Rate, as the case may be, for a greater aggregate principal amount than the
amount in respect of which offers are accepted for the related Interest Period,
the principal amount of Competitive Bid Loans in respect of which such offers
are accepted shall be allocated by the Administrative Agent among such Domestic
Banks as nearly as possible (in such multiples, not less than $1,000,000, as the
Administrative Agent may deem appropriate) in proportion to the aggregate
principal amounts of such offers. Determination by the Administrative Agent of
the amounts of Competitive Bid Loans shall be conclusive in the absence of
manifest error.
SECTION 5.9. FUNDING OF COMPETITIVE BID LOANS. If, on or prior to the
Drawdown Date of any Competitive Bid Loan, the Total Domestic Commitment has not
terminated in full and if, on such Drawdown Date, the applicable conditions of
Sub Section 11 and 12 hereof are satisfied, the Domestic Bank or Domestic
Banks whose offers the Company has accepted will fund each Competitive Bid Loan
so accepted. Such Domestic Bank or Domestic Banks will make such Competitive
Bid Loans by crediting the Administrative Agent for further credit to the
Company's specified account with the Administrative Agent, in immediately
available funds not later than 1:00 p.m. (New York time) on such Drawdown Date.
<PAGE> 52
-46-
SECTION 5.10. FUNDING LOSSES. If, after acceptance of any Competitive
Bid Quote pursuant to Section 5, the Company (i) fails to borrow any Competitive
Bid Loan so accepted on the date specified therefor, or (ii) repays the
outstanding amount of the Competitive Bid Loan prior to the last day of the
Interest Period relating thereto, the Company shall indemnify the Domestic Bank
making such Competitive Bid Quote or funding such Competitive Bid Loan against
any loss or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such Domestic Bank to fund or maintain such
unborrowed Loans, including, without limitation compensation as provided in
Section 6.8.
SECTION 5.11. REPAYMENT OF COMPETITIVE BID LOANS; INTEREST. The
principal of each Competitive Bid Loan shall become absolutely due and payable
by the Company on the last day of the Interest Period relating thereto, and the
Company hereby absolutely and unconditionally promises to pay to the
Administrative Agent for the account of the relevant Domestic Banks at or before
1:00 p.m. (New York time) on the last day of the Interest Periods relating
thereto the principal amount of all such Competitive Bid Loans, plus interest
thereon at the applicable Competitive Bid Rates. The Competitive Bid Loans
shall bear interest at the rate per annum specified in the applicable
Competitive Bid Quotes. Interest on the Competitive Bid Loans shall be payable
(a) on the last day of the applicable Interest Periods, and if any such Interest
Period is longer than three months, also on the last day of the third month
following the commencement of such Interest Period, and (b) on the Maturity Date
for all Loans. Subject to the terms of this Agreement, the Company may make
Competitive Bid Quote Requests with respect to new borrowings of any amounts so
repaid prior to the Maturity Date.
SECTION 6. PROVISIONS RELATING TO ALL LOANS AND LETTERS OF CREDIT.
SECTION 6.1. PAYMENTS.
(a) All payments of principal, interest, Reimbursement
Obligations, fees (other than the Issuance Fee and the Acceptance Fee)
and any other amounts due hereunder or under any of the other Loan
Documents shall be made to the Administrative Agent or the Canadian
Agent, as applicable, received at the applicable Head Office in
immediately available funds by 11:00 a.m. (New York time) on any due
date. Subject to the provisions of Section 30, if a payment is
received by such Bank Agent at or before 1:00 p.m. (New York time) on
any Business Day, such Bank Agent shall on the same Business Day
transfer in immediately available funds, as applicable, to (1) each of
the Domestic Banks, their pro rata portion of such payment in
accordance with their respective Domestic Commitment Percentages, in
the case of payments with respect to
<PAGE> 53
-47-
Syndicated Loans and Domestic Letters of Credit, (2) MGT in the case
of payments with respect to Swing Line Loans (3) each of the Canadian
Banks, their pro rata portion of such payment in accordance with their
respective Canadian Commitment Percentages, in the case of Canadian
Loans and Canadian Letters of Credit, and (4) the appropriate Domestic
Bank(s), in the case of payments with respect to Competitive Bid
Loans. If such payment is received by such Bank Agent after 1:00 p.m.
(New York time) on any Business Day, such transfer shall be made by
such Bank Agent to the applicable Bank(s) on the next Business Day.
In the event that such Bank Agent fails to make such transfer to any
Bank as set forth above, such Bank Agent shall pay to such Bank on
demand an amount equal to the product of (i) the average, computed for
the period referred to in clause (iii) below, of the weighted average
interest rate paid by such Bank for funds acquired by such Bank during
each day included in such period, times (ii) the amount (A) equal to
such Bank's Domestic Commitment Percentage of such payment in the case
of payments under clause (1) above, (B) equal to such Bank's Canadian
Commitment Percentage of such payment in the case of payments under
clause (3) above or (C) of such payment to which such Bank is entitled
in the case of payments with respect to Competitive Bid Loans and
Swing Line Loans, times (iii) a fraction, the numerator of which is
the number of days that elapse from and including the date of payment
to and including the date on which the amount due to such Bank shall
become immediately available to such Bank, and the denominator of
which is 365. A statement of such Bank submitted to the applicable
Bank Agent with respect to any amounts owing under this paragraph
shall be prima facie evidence of the amount due and owing to such Bank
by such Bank Agent.
(b) Each Domestic Bank that is not incorporated or
organized under the laws of the United States of America or a state
thereof or the District of Columbia (a "Non-U.S. Bank") agrees that,
prior to the first date on which any payment is due to it hereunder,
it will deliver to the Company and the Documentation Agent two duly
completed copies of United States Internal Revenue Service Form 1001
or 4224 or successor applicable form, as the case may be, certifying
in each case that such Non-U.S. Bank is entitled to receive payments
under this Agreement and the Notes payable to it, without deduction or
withholding of any United States federal income taxes. Each Non-U.S.
Bank that so delivers a Form 1001 or 4224 pursuant to the preceding
sentence further undertakes to deliver to each of the Company and the
Documentation Agent two further copies of Form 1001 or 4224 or
successor applicable form, or other manner of certification, as the
case may be, on or before the date that any such letter or form
expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form previously delivered by it
to the Company, and such extensions or renewals thereof as may
<PAGE> 54
-48-
reasonably be requested by the Company, certifying in the case of a
Form 1001 or 4224 that such Non-U.S. Bank is entitled to receive
payments under this Agreement and the Notes without deduction or
withholding of any United States federal income taxes, unless in any
such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any
such delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Non-U.S. Bank from duly
completing and delivering any such form with respect to it and such
Non-U.S. Bank advises the Company that it is not capable of receiving
payments without any deduction or withholding of United States federal
income tax.
(c) The Company shall not be required to pay any
additional amounts to any Non-U.S. Bank in respect of United States
Federal withholding tax pursuant to Section 18 to the extent that (i)
the obligation to withhold amounts with respect to United States
Federal withholding tax existed on the date such Non-U.S. Bank became
a party to this Credit Agreement or, with respect to payments to a
different lending office designated by the Non-U.S. Bank as its
applicable lending office (a "New Lending Office"), the date such
Non-U.S. Bank designated such New Lending Office with respect to a
Loan; provided, however, that this clause (i) shall not apply to any
transferee or New Lending Office as a result of an assignment,
transfer or designation made at the request of the Company; and
provided further, however, that this clause (i) shall not apply to the
extent the indemnity payment or additional amounts any transferee, or
Bank through a New Lending Office, would be entitled to receive
without regard to this clause (i) do not exceed the indemnity payment
or additional amounts that the Person making the assignment or
transfer to such transferee, or Bank making the designation of such
New Lending Office, would have been entitled to receive in the absence
of such assignment, transfer or designation; or (ii) the obligation to
pay such additional amounts would not have arisen but for a failure by
such Non-U.S. Bank to comply with the provisions of paragraph (c)
above.
(d) Notwithstanding the foregoing, each Bank agrees to use
reasonable efforts (consistent with legal and regulatory restrictions)
to change its lending office to avoid or to minimize any amounts
otherwise payable under Section 18 in each case solely if such change
can be made in a manner so that such Bank, in its sole determination,
suffers no legal, economic or regulatory disadvantage.
(e) Payments of principal or interest with respect to any
Loan, unpaid Reimbursement Obligation or obligation with respect to
Bankers' Acceptances shall be made in the currency in which such Loan
was advanced or in which such Letter of Credit or Bankers' Acceptance
was
<PAGE> 55
-49-
issued. Notwithstanding the foregoing, any and all fees payable
hereunder (other than Issuance Fees with respect to Letters of Credit
issued in C$) shall be payable solely in US$.
SECTION 6.2. MANDATORY REPAYMENTS OF THE LOANS. If at any time (i) the
sum of the outstanding principal amount of the Domestic Loans plus the Maximum
Drawing Amount of all outstanding Domestic Letters of Credit exceeds the Total
Domestic Commitment, whether by reduction of the Total Domestic Commitment or
otherwise, or (ii) the sum of the outstanding principal amount of the Canadian
Loans plus the Maximum Drawing Amount of all outstanding Canadian Letters of
Credit plus the aggregate face amount of all outstanding Bankers' Acceptances
exceeds the Total Canadian Commitment, then the Company shall immediately pay
the amount of such excess to the Administrative Agent in the case of clause (i)
above, or the Canadian Borrowers, jointly and severally, shall immediately pay
the amount of such excess to the Canadian Agent, in the case of clause (ii)
above, (a) for application to the Loans, in the case of clause (i) above, first
to Syndicated Loans, then to Competitive Bid Loans, subject to Section 6.8, or
(b) if no Loans shall be outstanding, to be held by the Administrative Agent or
the Canadian Agent, as the case may be for the benefit of the Banks as
collateral security for such excess Maximum Drawing Amount and/or borrowings by
way of Bankers' Acceptances; provided, however, that if the amount of cash
collateral held by the Administrative Agent or the Canadian Agent pursuant to
this Section 6.2 exceeds the Maximum Drawing Amount and/or borrowings by way of
Bankers' Acceptances required to be collateralized from time to time, such Bank
Agent shall return such excess to the applicable Borrower(s).
SECTION 6.3. COMPUTATIONS. (a) Except as otherwise expressly provided
herein, all computations of interest, Facility Fees, Letter of Credit
Fees or other fees shall be based on a 360-day year and paid for the
actual number of days elapsed, except that computations based on the
Administrative Agent's "prime rate", Canadian Prime Rate and Canadian
Base Rate shall be based on a 365 or 366, as applicable, day year and
paid for the actual number of days elapsed. Whenever a payment
hereunder or under any of the other Loan Documents becomes due on a day
that is not a Business Day, the due date for such payment shall be
extended to the next succeeding Business Day, and interest shall accrue
during such extension; provided that for any Interest Period for any
Eurodollar Loan if such next succeeding Business Day falls in the next
succeeding calendar month or after the Maturity Date, it shall be
deemed to end on the next preceding Business Day.
(b) All computations of outstanding Loans, Commitment
availability, mandatory prepayments, or other matters hereunder shall
be made in US$ or Dollar Equivalents.
<PAGE> 56
-50-
SECTION 6.4. ILLEGALITY; INABILITY TO DETERMINE EURODOLLAR RATE.
Notwithstanding any other provision of this Agreement (other than
Section 6.10), if (a) the introduction of, any change in, or any change in the
interpretation of, any law or regulation applicable to any Bank or the
Administrative Agent or the Canadian Agent shall make it unlawful, or any
central bank or other governmental authority having jurisdiction thereof shall
assert that it is unlawful, for any Bank or any such Bank Agent to perform its
obligations in respect of any Eurodollar Loans, or (b) if any Bank or any such
Bank Agent, as applicable, shall reasonably determine with respect to
Eurodollar Loans that (i) by reason of circumstances affecting any Eurodollar
interbank market, adequate and reasonable methods do not exist for ascertaining
the Eurodollar Rate which would otherwise be applicable during any Interest
Period, or (ii) deposits of Dollars in the relevant amount for the relevant
Interest Period are not available to such Bank or such Bank Agent in any
Eurodollar interbank market, or (iii) the Eurodollar Rate does not or will not
accurately reflect the cost to such Bank or such Bank Agent of obtaining or
maintaining the applicable Eurodollar Loans during any Interest Period, then
such Bank or such Bank Agent shall promptly give telephonic, telex or cable
notice of such determination to the applicable Borrower(s) (which notice shall
be conclusive and binding upon such Borrower(s)). Upon such notification by
such Bank or such Bank Agent, the obligation of the Banks and such Bank Agent
to make Eurodollar Loans shall be suspended until the Banks or such Bank Agent,
as the case may be, determine that such circumstances no longer exist, and to
the extent permitted by law the outstanding Eurodollar Loans shall continue to
bear interest at the applicable rate based on the Eurodollar Rate until the end
of the applicable Interest Period, and thereafter shall be deemed converted to
Base Rate Loans or Canadian Base Rate Loans, as applicable, in equal principal
amounts to such former Eurodollar Loans.
SECTION 6.5. ADDITIONAL COSTS, ETC. If any present or future applicable
law (which expression, as used herein, includes statutes, rules and regulations
thereunder and interpretations thereof by any competent court or by any
governmental or other regulatory body or official charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon or
otherwise issued to any Bank by any central bank or other fiscal, monetary or
other authority, whether or not having the force of law) shall:
(a) subject such Bank to any tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature with respect to
this Agreement, the other Loan Documents, such Bank's Domestic
Commitment or Canadian Commitment, or the Loans (other than taxes
based upon or measured by the income or profits of such Bank imposed
by the jurisdiction of its incorporation or organization, or the
location of its lending office); or
<PAGE> 57
-51-
(b) materially change the basis of taxation (except for
changes in taxes on income or profits of such Bank imposed by the
jurisdiction of its incorporation or organization, or the location of
its lending office) of payments to such Bank of the principal or of
the interest on any Loans or any other amounts payable to such Bank
under this Agreement or the other Loan Documents; or
(c) except as provided in Section 6.6 or as otherwise
reflected in the Base Rate, Canadian Base Rate, Canadian Prime Rate,
the Eurodollar Rate, or the Competitive Bid Rate, impose or increase
or render applicable (other than to the extent specifically provided
for elsewhere in this Agreement) any special deposit, reserve,
assessment, liquidity, capital adequacy or other similar requirements
(whether or not having the force of law) against assets held by, or
deposits in or for the account of, or loans by, or commitments of, an
office of any Bank with respect to this Agreement, the other Loan
Documents, such Bank's Domestic Commitment or Canadian Commitment, or
the Loans; or
(d) impose on such Bank any other conditions or
requirements with respect to this Agreement, the other Loan Documents,
the Loans, such Bank's Domestic Commitment or Canadian Commitment, as
applicable, or any class of loans or commitments of which any of the
Loans or such Bank's Domestic Commitment or Canadian Commitment, as
applicable, forms a part, and the result of any of the foregoing is:
(i) to increase the cost to such Bank of making,
funding, issuing, renewing, extending or maintaining the Loans
or such Bank's Domestic Commitment or Canadian Commitment, as
applicable, or issuing or participating in Letters of Credit,
or accepting and purchasing Bankers' Acceptances;
(ii) to reduce the amount of principal, interest
or other amount payable to such Bank hereunder on account of
such Bank's Domestic Commitment, Canadian Commitment or the
Loans, the Reimbursement Obligations or Bankers' Acceptances;
or
(iii) to require such Bank to make any payment or
to forego any interest or other sum payable hereunder, the
amount of which payment or foregone interest or other sum is
calculated by reference to the gross amount of any sum
receivable or deemed received by such Bank from the Borrowers
hereunder,
then, and in each such case, the Canadian Borrowers, in the
case of Canadian Loans, Canadian Letters of Credit and Bankers'
Acceptances, and the Company, in each other case, will, upon demand
made by such Bank at any time and from time to time as often as the
occasion therefore
<PAGE> 58
-52-
may arise (which demand shall be accompanied by a
statement setting forth the basis of such demand which shall be
conclusive absent manifest error), pay such reasonable additional
amounts as will be sufficient to compensate such Bank for such
additional costs, reduction, payment or foregone interest or other
sum.
SECTION 6.6. CAPITAL ADEQUACY. If any Bank shall have determined that,
after the date hereof, the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change in any such law, rule, or regulation,
or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on capital of such Bank (or any corporation controlling such
Bank) as a consequence of such Bank's obligations hereunder to a level below
that which such Bank (or any corporation controlling such Bank) could have
achieved but for such adoption, change, request or directive (taking into
consideration its policies with respect to capital adequacy) by an amount deemed
by such Bank to be material, then from time to time, within 15 days after demand
by such Bank, the Canadian Borrowers, in the case of Canadian Banks, and the
Company in the case of the Domestic Banks, shall pay to such Bank such
additional amount or amounts as will, in such Bank's reasonable determination,
fairly compensate such Bank (or any corporation controlling such Bank) for such
reduction. Each Bank shall allocate such cost increases among its customers in
good faith and on an equitable basis.
SECTION 6.7. CERTIFICATE. A certificate setting forth the additional
amounts payable pursuant to Section 6.5 or Section 6.6 and a reasonable
explanation of such amounts which are due, submitted by any Bank to the
applicable Borrower(s), shall be conclusive, absent manifest error, that such
amounts are due and owing.
SECTION 6.8. EURODOLLAR AND COMPETITIVE BID INDEMNITY. The Company
agrees to indemnify the Domestic Banks and the Administrative Agent, and the
Canadian Borrowers agree to indemnify the Canadian Banks and the Canadian Agent,
and to hold them harmless from and against any reasonable loss, cost or expense
that any such Bank and such Bank Agent may sustain or incur as a consequence of
(a) the default by such Borrower(s) in payment of the principal amount of or any
interest on any Eurodollar Loans or Competitive Bid Loans as and when due and
payable, including any such loss or expense arising from interest or fees
payable by any Bank or such Bank Agent to lenders of funds obtained by it in
order to maintain its Eurodollar Loans or Competitive Bid Loans, (b) the default
by such Borrower(s) in making a borrowing of a Eurodollar Loan or Competitive
Bid Loan or conversion of a Eurodollar Loan or a prepayment of a Eurodollar or
Competitive Bid Loan other than on an Interest
<PAGE> 59
-53-
Payment Date after such Borrower(s) has given (or is deemed to have given) a
Syndicated Loan Request, a notice pursuant to Section 2.7 or a Notice of
Acceptance/Rejection of Competitive Bid Quote(s), or a notice pursuant to
Section 2.10, and (c) the making of any payment of a Eurodollar Loan or
Competitive Bid Loan, or the making of any conversion of any Eurodollar Loan to
a Base Rate Loan or Canadian Base Rate Loan, as applicable, or the reallocation
of any Eurodollar Loan pursuant to Section 2.3(d) or Section 2.3(e) on a day
that is not the last day of the applicable Interest Period with respect thereto.
Such loss, cost, or reasonable expense shall include an amount equal to the
excess, if any, as reasonably determined by each Bank of (i) its cost of
obtaining the funds for (A) the Eurodollar Loan being paid, prepaid, converted,
not converted, reallocated, or not borrowed, as the case may be (based on the
Eurodollar Rate), or (B) the Competitive Bid Loan being paid, prepaid, or not
borrowed, as the case may be (based on the Competitive Bid Rate) for the period
from the date of such payment, prepayment, conversion, or failure to borrow or
convert, as the case may be, to the last day of the Interest Period for such
Loan (or, in the case of a failure to borrow, the Interest Period for the Loan
which would have commenced on the date of such failure to borrow) over (ii) the
amount of interest (as reasonably determined by such Bank) that would be
realized by such Bank in reemploying the funds so paid, prepaid, converted, or
not borrowed, converted, or prepaid for such period or Interest Period, as the
case may be, which determinations shall be conclusive absent manifest error.
SECTION 6.9. INTEREST ON OVERDUE AMOUNTS. Overdue principal and (to the
extent permitted by applicable law) interest on the Loans and all other overdue
amounts payable hereunder or under any of the other Loan Documents shall bear
interest compounded monthly and payable on demand at a rate per annum equal to
the Base Rate, Canadian Base Rate or Canadian Prime Rate, as applicable, plus
2%, until such amount shall be paid in full (after as well as before judgment).
SECTION 6.10. INTEREST LIMITATION.
(a) Notwithstanding any other term of this Agreement or
the Notes, any other Loan Document or any other document referred to
herein or therein, the maximum amount of interest which may be charged
to or collected from any Person liable hereunder or under the Notes by
any Bank shall be absolutely limited to, and shall in no event exceed,
the maximum amount of interest which could lawfully be charged or
collected by such Bank under applicable laws (including, to the extent
applicable, the provisions of Section 5197 of the Revised Statutes of
the United States of America, as amended, 12 U.S.C. Section 85, as
amended, and the Criminal Code (Canada)).
<PAGE> 60
-54-
(b) With respect to Canadian Loans, whenever interest is
payable hereunder on the basis of a year of 360 days, for the purposes
of the Interest Act (Canada), the yearly rate of interest which is
equivalent to the rate payable hereunder is the rate payable hereunder
multiplied by the actual number of days in the year and divided by
360. All interest will be calculated using the nominal rate method
and not the effective rate method and the deemed reinvestment
principle shall not apply to such calculations.
SECTION 6.11. REASONABLE EFFORTS TO MITIGATE. Each Bank agrees that as
promptly as practicable after it becomes aware of the occurrence of an event or
the existence of a condition that would cause it to be affected under
Sections 6.4, 6.5 or 6.6, such Bank will give notice thereof to the applicable
Borrower(s), with a copy to the Administrative Agent or the Canadian Agent, as
applicable, and, to the extent so requested by such Borrower(s) and not
inconsistent with such Bank's internal policies, such Bank shall use reasonable
efforts and take such actions as are reasonably appropriate if as a result
thereof the additional moneys which would otherwise be required to be paid to
such Bank pursuant to such sections would be materially reduced, or the
illegality or other adverse circumstances which would otherwise require a
conversion of such Loans or result in the inability to make such Loans pursuant
to such sections would cease to exist, and in each case if, as determined by
such Bank in its sole discretion, the taking such actions would not adversely
affect such Loans or such Bank or otherwise be disadvantageous to such Bank.
SECTION 6.12. REPLACEMENT OF BANKS. If any Bank (an "Affected Bank")
(i) makes demand upon the Borrowers for (or if Borrowers are otherwise required
to pay) amounts pursuant to Sections 6.5 or 6.6, (ii) is unable to make or
maintain Eurodollar Loans as a result of a condition described in Section 6.4 or
(iii) defaults in its obligation to make Loans, participate in Letters of Credit
and/or, in the case of the Canadian Banks, accept and purchase Bankers'
Acceptances, in accordance with the terms of this Agreement (such Bank being
referred to as a "Defaulting Bank"), the Borrowers may, within 90 days of
receipt of such demand, notice (or the occurrence of such other event causing
the Borrowers to be required to pay such compensation or causing Section 6.4 to
be applicable), or default, as the case may be, by notice (a "Replacement
Notice") in writing to the Bank Agents and such Affected Bank (A) request the
Affected Bank to cooperate with the Borrowers in obtaining a replacement bank
satisfactory to the Bank Agents and the Borrowers (the "Replacement Bank"); (B)
request the non-Affected Banks to acquire and assume all of the Affected Bank's
Loans and Commitment, participate in Letters of Credit and/or, in the case of
the Canadian Banks, accept and purchase Bankers' Acceptances, as provided
herein, but none of such Banks shall be under an obligation to do so; or (C)
designate a Replacement Bank reasonably satisfactory to the Bank Agents. If any
satisfactory Replacement Bank shall be obtained, and/or any of the non-Affected
<PAGE> 61
-55-
Banks shall agree to acquire and assume all of the Affected Bank's Loans and
Commitment, participate in Letters of Credit and/or, in the case of the Canadian
Banks, accept and purchase Bankers' Acceptances, then such Affected Bank shall,
so long as no Event of Default shall have occurred and be continuing, assign, in
accordance with Section 20, all of its Commitment, Loans, Notes and other rights
and obligations under this Agreement and all other Loan Documents to such
Replacement Bank or non-Affected Banks, as the case may be, in exchange for
payment of the principal amount so assigned and all interest and fees accrued on
the amount so assigned, plus all other Obligations then due and payable to the
Affected Bank; provided, however, that (x) such assignment shall be without
recourse, representation or warranty and shall be on terms and conditions
reasonably satisfactory to such Affected Bank and such Replacement Bank and/or
non-Affected Banks, as the case may be, and (y) prior to any such assignment,
the applicable Borrower(s) shall have paid to such Affected Bank all amounts
properly demanded and unreimbursed under Sections 6.5, 6.6 and 6.8. Upon
the effective date of such assignment, the Canadian Borrowers, in the case of
Canadian Banks, and the Company, in all other cases, shall issue replacement
Notes to such Replacement Bank and/or non-Affected Banks, as the case may be,
and such Replacement Bank shall become a "Bank" for all purposes under this
Agreement and the other Loan Documents.
SECTION 6.13. ADVANCES BY ADMINISTRATIVE AGENT AND CANADIAN AGENT. The
Administrative Agent or the Canadian Agent, as applicable, may
(unless earlier notified to the contrary by any Bank by 12:00 noon (New York
time) one (1) Business Day prior to any Drawdown Date) assume that each Bank
has made available (or will before the end of such Business Day make available)
to such Bank Agent the amount of such Bank's Domestic Commitment Percentage or
Canadian Commitment Percentage, as applicable, with respect to the Loans (or,
in the case of Competitive Bid Loans, the amount of such Domestic Bank's
accepted offers of such Loans, if any) to be made on such Drawdown Date, and
such Bank Agent may (but shall not be required to), in reliance upon such
assumption, make available to the applicable Borrower(s) a corresponding
amount. If any Bank makes such amount available to such Bank Agent on a date
after such Drawdown Date, such Bank shall pay such Bank Agent on demand an
amount equal to the product of (i) the average, computed for the period
referred to in clause (iii) below, of the weighted average annual interest rate
paid by such Bank Agent for federal funds acquired by such Bank Agent, or
corresponding Canadian funds in the case of the Canadian Agent, during each day
included in such period times (ii) the amount equal to such Bank's Domestic
Commitment Percentage of such Syndicated Loan and Canadian Commitment
Percentage of such Canadian Loan, as applicable (or, in the case of Competitive
Bid Loans and Swing Line Loans, the amount of such Domestic Bank's accepted
offer of such Competitive Bid Loans, if any, and portion of such Swing Line
Loans) times (iii) a fraction, the numerator of which is the number of days
that elapse from and including such Drawdown Date to
<PAGE> 62
-56-
but not including the date on which the amount equal to such Bank's Domestic
Commitment Percentage or Canadian Commitment Percentage, as applicable, of such
Loans, or the amount of such Domestic Bank's accepted offers of such Competitive
Bid Loans, if any, and portion of Swing Line Loans, shall become immediately
available to such Bank Agent, and the denominator of which is 365. A statement
of such Bank Agent submitted to such Bank with respect to any amounts owing
under this paragraph shall be prima facie evidence of the amount due and owing
to such Bank Agent by such Bank. If such amount is not in fact made available
to such Bank Agent by such Bank within three (3) Business Days of such Drawdown
Date, such Bank Agent shall be entitled to recover such amount from such
Borrower(s), with interest thereon at the applicable rate per annum.
SECTION 6.14. CURRENCY FLUCTUATIONS.
(a) Not later than 1:00 p.m. (New York time) on the last
Business Day of each calendar month (the "Calculation Date"), the
Administrative Agent shall determine the Exchange Rate as of such
date. The Exchange Rate so determined shall become effective on the
first Business Day immediately following such determination (a "Reset
Date") and shall remain effective until the next succeeding Reset
Date.
(b) Not later than 4:00 p.m. (New York time) on each
Reset Date, the Administrative Agent shall consult with the Canadian
Agent to determine the Dollar Equivalent of the outstanding Canadian
Loans, Bankers' Acceptances and Canadian Letters of Credit denominated
in Canadian Dollars.
(c) If, on any Reset Date and on the Maturity Date, the
aggregate outstanding amount (expressed in U.S. Dollars) of all
Canadian Loans, the Maximum Drawing Amount with respect to Canadian
Letters of Credit, and the aggregate face amount of all outstanding
Bankers' Acceptances exceeds the Total Canadian Commitment by more
than $100,000, then (i) the Canadian Agent shall give notice thereof
to the Canadian Borrowers and the Canadian Banks and (ii) within two
(2) Business Days thereafter, the Canadian Borrowers shall repay or
prepay Canadian Loans in accordance with this Agreement in an
aggregate principal amount such that, after giving effect thereto, the
aggregate outstanding amount (expressed in U.S. Dollars) of all
Canadian Loans, the Maximum Drawing Amount with respect to Canadian
Letters of Credit and the aggregate face amount of all outstanding
Bankers' Acceptances no longer exceeds the Total Canadian Commitment
(expressed in U.S. Dollars).
<PAGE> 63
-57-
(d) Without limiting subsection 6.14(c), if, on
any day prior to the Maturity Date, the aggregate outstanding amount
(expressed in U.S. Dollars) of all Canadian Loans, the Maximum Drawing
Amount with respect to Canadian Letters of Credit and the aggregate
face amount of all outstanding Bankers' Acceptances exceeds the Total
Canadian Commitment by five percent (5%) or more, then (i) the
Canadian Agent shall give notice thereof to the Canadian Borrowers and
the Canadian Banks and (ii) within two (2) Business Days thereafter,
the Canadian Borrowers shall repay or prepay Canadian Loans in
accordance with this Agreement in an aggregate principal amount such
that, after giving effect thereto, the aggregate outstanding amount
(expressed in U.S. Dollars) of all Canadian Loans, the Maximum Drawing
Amount with respect to Canadian Letters of Credit and the aggregate
face amount of all outstanding Bankers' Acceptances no longer exceeds
the Total Canadian Commitment (expressed in U.S. Dollars). Nothing
set forth in this Section 6.14 shall be construed to require any Bank
Agent to calculate daily compliance under this Section 6.14 unless
expressly requested to do so by a Bank.
(e) To the extent the repayments and prepayments
referenced in Section 6.14(c) and Section 6.14(d) are such that, after
giving effect thereto, the Maximum Drawing Amount with respect to
Canadian Letters of Credit and the aggregate face amount of all
outstanding Bankers' Acceptances (expressed in U.S. Dollars) still
exceeds the Total Canadian Commitment (expressed in U.S. Dollars),
then the Canadian Borrowers shall immediately upon demand provide cash
collateral to the Canadian Agent required to obtain such results.
SECTION 7. REPRESENTATIONS AND WARRANTIES. Each of the Borrowers (and
Sanifill, where identified by name) represents and warrants to the Banks that:
SECTION 7.1. CORPORATE AUTHORITY.
(a) INCORPORATION; GOOD STANDING. The Company and each
of its Subsidiaries (i) is a corporation duly organized, validly
existing and in good standing under the laws of its respective
jurisdiction of incorporation, (ii) has all requisite corporate power
to own its property and conduct its business as now conducted and as
presently contemplated, and (iii) is in good standing as a foreign
corporation and is duly authorized to do business in each jurisdiction
in which its property or business as presently conducted or
contemplated makes such qualification necessary, except where a
failure to be so qualified would not have a material adverse effect on
the business, assets or financial condition of the Company and its
Subsidiaries as a whole.
<PAGE> 64
-58-
(b) Authorization. The execution, delivery and
performance of its Loan Documents and the transactions contemplated
hereby and thereby (i) are within the corporate authority of each of
the Borrowers and Sanifill, (ii) have been duly authorized by all
necessary corporate proceedings on the part of each of the Borrowers
and Sanifill, (iii) do not conflict with or result in any breach or
contravention of any provision of law, statute, rule or regulation to
which any of the Borrowers, Sanifill or any Subsidiary of the Company
is subject or any judgment, order, writ, injunction, license or permit
applicable to any of the Borrowers, Sanifill or any such Subsidiary so
as to materially adversely affect the assets, business or any activity
of any of the Borrowers, Sanifill and their Subsidiaries as a whole,
and (iv) do not conflict with any provision of the corporate charter
or bylaws of any of the Borrowers, Sanifill or any Subsidiary or any
agreement or other instrument binding upon any of the Borrowers,
Sanifill or any of their Subsidiaries.
(c) Enforceability. The execution, delivery and
performance of the Loan Documents by each of the Borrowers and
Sanifill will result in valid and legally binding obligations of each
of the Borrowers and Sanifill enforceable against it in accordance
with the respective terms and provisions hereof and thereof, except as
enforceability is limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting generally the
enforcement of creditors' rights and except to the extent that
availability of the remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any
proceeding therefor may be brought.
SECTION 7.2. GOVERNMENTAL APPROVALS. The execution, delivery and
performance of the Loan Documents by each of the Borrowers and Sanifill and the
consummation by each of the Borrowers and Sanifill of the transactions
contemplated hereby and thereby do not require any approval or consent of, or
filing with, any governmental agency or authority other than those already
obtained and those required after the date hereof in connection with the
Company's and its Subsidiaries' performance of their covenants contained in
Section Section 8, 9 and 10 hereof.
SECTION 7.3. TITLE TO PROPERTIES; LEASES. The Company and its
Subsidiaries own all of the assets reflected in the consolidated balance sheet
as at the Interim Balance Sheet Date or acquired since that date (except
property and assets operated under capital leases or sold or otherwise disposed
of in the ordinary course of business since that date), subject to no mortgages,
Capitalized Leases, conditional sales agreements, title retention agreements,
liens or other encumbrances except Permitted Liens.
<PAGE> 65
-59-
SECTION 7.4. FINANCIAL STATEMENTS; SOLVENCY.
(a) There have been furnished to the Banks consolidated
balance sheets of the Company and its Subsidiaries and Sanifill and
its Subsidiaries dated the Balance Sheet Date and consolidated
statements of operations for the fiscal periods then ended, certified
by the Accountants. In addition, there have been furnished to the
Banks consolidated balance sheets of the Company and its Subsidiaries
dated the Interim Balance Sheet Date and the related consolidated
statements of operation for the period of three (3) consecutive fiscal
quarters ending on the Interim Balance Sheet Date. All said balance
sheets and statements of operations have been prepared in accordance
with GAAP (but, in the case of any of such financial statements which
are unaudited, only to the extent GAAP is applicable to interim
unaudited reports), fairly present the financial condition of the
Company and its Subsidiaries or Sanifill and its Subsidiaries, on a
consolidated basis, as at the close of business on the dates thereof
and the results of operations for the periods then ended, subject, in
the case of unaudited interim financial statements, to changes
resulting from audit and normal year-end adjustments and to the
absence of complete footnotes. There are no contingent liabilities of
the Company and its Subsidiaries or Sanifill and its Subsidiaries
involving material amounts, known to the officers of the Company and
Sanifill which have not been disclosed in said balance sheets and the
related notes thereto or otherwise in writing to the Banks.
(b) The Company and its Subsidiaries on a consolidated
basis (both before and after giving effect to the transactions
contemplated by this Agreement including the Mid-American Acquisition
and the Allied Acquisition) are solvent (i.e., they have assets having
a fair value in excess of the amount required to pay their probable
liabilities on their existing debts as they become absolute and
matured) and have, and expect to have, the ability to pay their debts
from time to time incurred in connection therewith as such debts
mature.
SECTION 7.5. NO MATERIAL CHANGES, ETC. Since the Interim Balance Sheet
Date, there have occurred no material adverse changes in the consolidated
financial condition, business or assets of the Company and its Subsidiaries,
taken together, or Sanifill and its Subsidiaries, taken together, as the case
may be, as shown on or reflected in the consolidated balance sheets of the
Company and its Subsidiaries or Sanifill and its Subsidiaries as at the Interim
Balance Sheet Date, or the consolidated statements of income for the period then
ended other than changes in the ordinary course of business which have not had
any material adverse effect either individually or in the aggregate on the
financial condition, business or assets of the Company and its Subsidiaries,
taken together, or Sanifill and its Subsidiaries, taken together, as the case
may be.
<PAGE> 66
-60-
Since the Interim Balance Sheet Date, there have not been any Distributions
(including Distributions by the Company or Sanifill) other than as permitted by
Section 9.5 hereof.
SECTION 7.6. FRANCHISES, PATENTS, COPYRIGHTS, ETC. The Company and each
of its Subsidiaries possess all franchises, patents, copyrights, trademarks,
trade names, licenses and permits, and rights in respect of the foregoing,
adequate for the conduct of their business substantially as now conducted (other
than those the absence of which would not have a material adverse effect on the
business, operations or financial condition of the Company and its Subsidiaries
as a whole) without known conflict with any rights of others other than a
conflict which would not have a material adverse effect on the financial
condition, business or assets of the Company and its Subsidiaries as a whole.
SECTION 7.7. LITIGATION. Except as set forth on Schedule 7.7, there are
no actions, suits, proceedings or investigations of any kind pending or, to the
knowledge of the Company or any of its Subsidiaries, threatened against the
Company or any of its Subsidiaries before any court, tribunal or administrative
agency or board which, either in any case or in the aggregate, could reasonably
be expected to have a material adverse effect on the financial condition,
business, or assets of the Company and its Subsidiaries, considered as a whole,
or materially impair the right of the Company and its Subsidiaries, considered
as a whole, to carry on business substantially as now conducted, or result in
any substantial liability not adequately covered by insurance, or for which
adequate reserves are not maintained on the consolidated balance sheet or which
question the validity of any of the Loan Documents to which the Company or any
of its Subsidiaries is a party, or any action taken or to be taken pursuant
hereto or thereto.
SECTION 7.8. NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Company
nor any of its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in the
judgment of the Company's or such Subsidiary's officers has or could reasonably
be expected in the future to have a materially adverse effect on the business,
assets or financial condition of the Company and its Subsidiaries, considered as
a whole. Neither the Company nor any of its Subsidiaries is a party to any
contract or agreement which in the judgment of the Company's or its Subsidiary's
officers has or could reasonably be expected to have any materially adverse
effect on the financial condition, business or assets of the Company and its
Subsidiaries, considered as a whole, except as otherwise reflected in adequate
reserves as required by GAAP.
SECTION 7.9. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. Neither the
Company nor any of its Subsidiaries is (a) violating any provision of its
charter documents or by-laws or (b) any agreement or instrument to which any of
them may be subject or by which any of them
<PAGE> 67
-61-
or any of their properties may be bound or any decree, order, judgment, or any
statute, license, rule or regulation, in a manner which could (in the case of
such agreements or such instruments) reasonably be expected to result in the
imposition of substantial penalties or materially and adversely affect the
financial condition, business or assets of the Company and its Subsidiaries,
considered as a whole.
SECTION 7.10. TAX STATUS. The Company and its Subsidiaries have filed
all federal, state, provincial and territorial income and all other tax returns,
reports and declarations (or obtained extensions with respect thereto) required
by applicable law to be filed by them (unless and only to the extent that the
Company or such Subsidiary has set aside on its books provisions reasonably
adequate for the payment of all unpaid and unreported taxes as required by
GAAP); and have paid all taxes and other governmental assessments and charges
(other than taxes, assessments and other governmental charges imposed by
jurisdictions other than the United States, Canada or any political subdivision
thereof which in the aggregate are not material to the financial condition,
business or assets of the Company or such Subsidiary on an individual basis or
of the Company and its Subsidiaries on a consolidated basis) that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith; and, as required by
GAAP, have set aside on their books provisions reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. Except to the extent contested in the
manner permitted in the preceding sentence, there are no unpaid taxes in any
material amount claimed by the taxing authority of any jurisdiction to be due
and owing by the Company or any Subsidiary, nor do the officers of the Company
or any of its Subsidiaries know of any basis for any such claim.
SECTION 7.11. NO EVENT OF DEFAULT. No Default or Event of Default has
occurred and is continuing.
SECTION 7.12. HOLDING COMPANY AND INVESTMENT COMPANY ACTS. Neither the
Company nor any of its Subsidiaries is a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company", as
such terms are defined in the Public Utility Holding Company Act of 1935; nor is
any of them a "registered investment company", or an "affiliated company" or a
"principal underwriter" of a "registered investment company", as such terms are
defined in the Investment Company Act of 1940, as amended.
SECTION 7.13. ABSENCE OF FINANCING STATEMENTS, ETC. Except as
permitted by Section 9.2 of this Agreement, there is no Indebtedness senior
to the Obligations, and there is no effective financing statement, security
agreement, chattel mortgage, real estate mortgage or other document filed or
recorded with any filing records, registry, or other public office, which
purports to cover, affect or give notice of
<PAGE> 68
-62-
any present or possible future lien on, or security interest in, any assets or
property of the Company or any of its Subsidiaries or right thereunder.
SECTION 7.14. EMPLOYEE BENEFIT PLANS.
(a) In General. Each Employee Benefit Plan has been
maintained and operated in compliance in all material respects with
the provisions of ERISA and/or all Applicable Canadian Pension
Legislation, as applicable, and, to the extent applicable, the Code,
including but not limited to the provisions thereunder respecting
prohibited transactions.
(b) Terminability of Welfare Plans. Under each Employee
Benefit Plan which is an employee welfare benefit plan within the
meaning of Section 3(1) or Section 3 (2)(B) of ERISA, no benefits are
due unless the event giving rise to the benefit entitlement occurs
prior to plan termination (except as required by Title I, part 6 of
ERISA.) The Company, each of its Subsidiaries, or ERISA Affiliate, as
appropriate, may terminate each such plan at any time (or at any time
subsequent to the expiration of any applicable bargaining agreement)
in the discretion of Company or such Subsidiary, or ERISA Affiliate
without material liability to any Person.
(c) Guaranteed Pension Plans. Neither the Company nor
any of its Subsidiaries is a sponsor of, or contributor to, a
Guaranteed Pension Plan.
(d) Multiemployer Plans. Neither the Company, any of its
Subsidiaries, nor any ERISA Affiliate has incurred any material
liability (including secondary liability) to any Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer
Plan under Section 4201 of ERISA or as a result of a sale of assets
described in Section 4204 of ERISA. Neither the Company, any of its
Subsidiaries, nor any ERISA Affiliate has been notified that any
Multiemployer Plan is in reorganization or is insolvent under and
within the meaning of Section 4241 or Section 4245 of ERISA or that
any Multiemployer Plan intends to terminate or has been terminated
under Section 4041A of ERISA.
SECTION 7.15. ENVIRONMENTAL COMPLIANCE. The Company and its
Subsidiaries have taken all necessary steps to investigate the past and present
condition and usage of the Real Property and the operations conducted by the
Company and its Subsidiaries and, based upon such diligent investigation, have
determined that, except as set forth on Schedule 7.15:
(a) Neither the Company, its Subsidiaries, nor any
operator of their properties, is in violation, or alleged violation,
of any judgment, decree, order, law, permit, license, rule or
regulation pertaining to
<PAGE> 69
-63-
environmental matters, including without limitation, those arising
under the Resource Conservation and Recovery Act ("RCRA"), the
Comprehensive Environmental Response, Compensation and Liability Act of
1980 as amended ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986 ("SARA"), the Federal Clean Water Act, the
Federal Clean Air Act, the Toxic Substances Control Act, or any United
States or Canadian federal, state, provincial, territorial or local
statute, regulation, ordinance, order or decree relating to health,
safety, waste transportation or disposal, or the environment (the
"Environmental Laws"), which violation would have a material adverse
effect on the business, assets or financial condition of the Company
and its Subsidiaries on a consolidated basis.
(b) Except as described on Schedule 7.15, neither the
Company nor any of its Subsidiaries has received notice from any third
party including, without limitation: any federal, state, provincial,
territorial or local governmental authority, (i) that any one of them
has been identified by the United States Environmental Protection
Agency ("EPA") as a potentially responsible party under CERCLA with
respect to a site listed on the National Priorities List, 40 C.F.R.
Part 300 Appendix B; (ii) that any hazardous waste, as defined by 42
U.S.C. Section 6903(5), any hazardous substances as defined by 42
U.S.C. Section 9601(14), any pollutant or contaminant as defined by 42
U.S.C. Section 9601(33) or any toxic substance, oil or hazardous
materials or other chemicals or substances regulated by any
Environmental Laws, excluding household hazardous waste ("Hazardous
Substances"), which any one of them has generated, transported or
disposed of, has been found at any site at which a federal, state,
provincial, territorial or local agency or other third party has
conducted or has ordered that the Company or any of its Subsidiaries
conduct a remedial investigation, removal or other response action
pursuant to any Environmental Law; or (iii) that it is or shall be a
named party to any claim, action, cause of action, complaint, legal or
administrative proceeding arising out of any third party's incurrence
of costs, expenses, losses or damages of any kind whatsoever in
connection with the Release of Hazardous Substances.
(c) (i) No portion of the Real Property or other assets
of the Company and its Subsidiaries has been used for the handling,
processing, storage or disposal of Hazardous Substances except in
accordance with applicable Environmental Laws, except as would not
reasonably be expected to have a material adverse effect on the
business, assets or financial condition of the Company and its
Subsidiaries on a consolidated basis; and no underground tank or other
underground storage receptacle for Hazardous Substances is located on
such properties; (ii) in the course of any activities conducted by the
Company, its Subsidiaries, or operators
<PAGE> 70
-64-
of the Real Property or other assets of the Company and its
Subsidiaries, no Hazardous Substances have been generated or are being
used on such properties except in accordance with applicable
Environmental Laws, except for occurrences that would not have a
material adverse effect on the business, assets or financial condition
of the Company and its Subsidiaries on a consolidated basis; (iii)
there have been no unpermitted Releases or threatened Releases of
Hazardous Substances on, upon, into or from the Real Property or other
assets of the Company or its Subsidiaries, which Releases would have a
material adverse effect on the value of such properties; (iv) to the
best of the Company's and its Subsidiaries' knowledge, there have been
no Releases on, upon, from or into any real property in the vicinity of
the Real Property or other assets of the Company or its Subsidiaries
which, through soil or groundwater contamination, may have come to be
located on, and which would reasonably be expected to have a material
adverse effect on the value of, such properties; and (v) in addition,
any Hazardous Substances that have been generated on the Real Property
or other assets of the Company or its Subsidiaries have been
transported offsite only by carriers having an identification number
issued by the EPA, treated or disposed of only by treatment or disposal
facilities maintaining valid permits as required under applicable
Environmental Laws, which transporters and facilities have been and
are, to the best of the Company's and its Subsidiaries' knowledge,
operating in compliance with such permits and applicable Environmental
Laws.
(d) None of the Real Property or other assets of the
Company or its Subsidiaries or any of the stock (or assets) being
acquired with proceeds of Loans is or shall be subject to any
applicable environmental clean-up responsibility law or environmental
restrictive transfer law or regulation, by virtue of the transactions
set forth herein and contemplated hereby.
SECTION 7.16. TRUE COPIES OF CHARTER AND OTHER DOCUMENTS. Each of the
Borrowers and Sanifill has furnished the Documentation Agent copies, in each
case true and complete as of the Closing Date, of (a) all charter and other
incorporation documents (together with any amendments thereto) and (b) by-laws
(together with any amendments thereto).
SECTION 7.17. DISCLOSURE. No representation or warranty made by any of
the Borrowers or Sanifill in this Agreement or in any agreement, instrument,
document, certificate, statement or letter furnished to the Banks or the Bank
Agents by or on behalf of or at the request of the Borrowers and Sanifill in
connection with any of the transactions contemplated by the Loan Documents
contains any untrue statement of a material
<PAGE> 71
-65-
fact or omits to state a material fact necessary in order to make the statements
contained therein not misleading in light of the circumstances in which they are
made.
SECTION 7.18. PERMITS AND GOVERNMENTAL AUTHORITY. All permits (other
than those the absence of which would not have a material adverse effect on the
business, operations or financial condition of the Company and its Subsidiaries
as a whole) required for the construction and operation of all landfills
currently owned or operated by the Company or any of its Subsidiaries have been
obtained and remain in full force and effect and are not subject to any appeals
or further proceedings or to any unsatisfied conditions that may allow material
modification or revocation. Neither the Company nor any of its Subsidiaries,
nor, to the knowledge of the Company and its Subsidiaries, the holder of such
permits is in violation of any such permits, except for any violation which
would not have a material adverse effect on the business, operations or
financial condition of the Company and its Subsidiaries as a whole.
SECTION 8. AFFIRMATIVE COVENANTS OF THE BORROWERS. Each of the Company,
and the Canadian Borrowers where applicable, agrees that, so long as any
Obligation or any Letter of Credit is outstanding or the Banks have any
obligation to make Loans, or the Canadian Banks have any further obligation with
respect to Bankers' Acceptances, or the Issuing Bank has any obligation to
issue, extend or renew any Letters of Credit hereunder, or the Banks have any
obligations to reimburse the Issuing Bank for drawings honored under any Letter
of Credit, it shall, and shall cause its Subsidiaries to, comply with the
following covenants:
SECTION 8.1. PUNCTUAL PAYMENT. The applicable Borrower(s) will duly and
punctually pay or cause to be paid the principal and interest on the Loans, all
Reimbursement Obligations, all Bankers' Acceptances, fees and other amounts
provided for in this Agreement and the other Loan Documents, all in accordance
with the terms of this Agreement and such other Loan Documents.
SECTION 8.2. MAINTENANCE OF U.S. OFFICE. The Company will, and will
cause each of its Subsidiaries in the United States of America to, maintain its
chief executive offices at Houston, Texas, or at such other place in the United
States of America as the Company shall designate upon 30 days' prior written
notice to the Bank Agents.
SECTION 8.3. RECORDS AND ACCOUNTS. The Company will, and will cause
each of its Subsidiaries to, keep true and accurate records and books of account
in which full, true and correct entries will be made in accordance with GAAP and
with the requirements of all regulatory authorities and maintain adequate
accounts and reserves for all taxes (including income taxes), depreciation,
depletion, obsolescence and amortization of its properties, all other
contingencies, and all other proper reserves.
<PAGE> 72
-66-
SECTION 8.4. FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION. The
Company will deliver to the Banks:
(a) as soon as practicable, but, in any event not later
than 92 days after the end of each fiscal year of the Company, the
consolidated balance sheet of the Company and its Subsidiaries as at
the end of such year, consolidated statements of cash flows, and the
related consolidated statements of operations, each setting forth in
comparative form the figures for the previous fiscal year, all such
consolidated financial statements to be in reasonable detail,
prepared, in accordance with GAAP and, with respect to the
consolidated financial statements, certified by Coopers & Lybrand LLP
or by other independent auditors selected by the Company and
reasonably satisfactory to the Banks (the "Accountants"). In
addition, simultaneously therewith, the Company shall provide the
Banks with a written statement from such Accountants to the effect
that they have read a copy of this Agreement, and that, in making the
examination necessary to said certification, they have obtained no
knowledge of any Default or Event of Default, or, if such Accountants
shall have obtained knowledge of any then existing Default or Event of
Default they shall disclose in such statement any such Default or
Event of Default;
(b) as soon as practicable, but in any event not later
than 47 days after the end of each of the first three fiscal quarters
of each fiscal year of the Company, copies of the consolidated balance
sheet and statement of operations of the Company and its Subsidiaries
as at the end of such quarter, subject to year-end adjustments, and
the related consolidated statement of cash flows, all in reasonable
detail and prepared in accordance with GAAP (to the extent GAAP is
applicable to interim unaudited financial statements) with a
certification by the principal financial or accounting officer of the
Company (the "CFO or the CAO") that the consolidated financial
statements are prepared in accordance with GAAP (to the extent GAAP is
applicable to interim unaudited financial statements) and fairly
present the consolidated financial condition of the Company and its
Subsidiaries on a consolidated basis as at the close of business on
the date thereof and the results of operations for the period then
ended, it being understood that no such statement need be accompanied
by complete footnotes;
(c) simultaneously with the delivery of the financial
statements referred to in (a) and (b) above, a certificate in the form
of Exhibit I hereto (the "Compliance Certificate") signed by the CFO
or the CAO or the Company's corporate treasurer, stating that the
Company and its Subsidiaries are in compliance with the covenants
contained in Section Section 8, 9 and 10 hereof as of the end of the
applicable period and setting forth in
<PAGE> 73
-67-
reasonable detail computations evidencing such compliance with respect
to the covenants contained in Section Section 9.1(e), 9.3, 9.4, 9.5,
and 10 hereof and that no Default or Event of Default exists, provided
that if the Company shall at the time of issuance of such Compliance
Certificate or at any other time obtain knowledge of any Default or
Event of Default, the Company shall include in such certificate or
otherwise deliver forthwith to the Banks a certificate specifying the
nature and period of existence thereof and what action the Company
proposes to take with respect thereto;
(d) contemporaneously with, or promptly following, the
filing or mailing thereof, copies of all material of a financial
nature filed with the Securities and Exchange Commission or sent to
the Company's and its Subsidiaries' stockholders generally; and
(e) from time to time such other financial data and other
information as the Banks may reasonably request.
The Borrowers hereby authorize each Bank to disclose any information
obtained pursuant to this Agreement to all appropriate governmental regulatory
authorities where required by law; provided, however, this authorization shall
not be deemed to be a waiver of any rights to object to the disclosure by the
Banks of any such information which any Borrower has or may have under the
federal Right to Financial Privacy Act of 1978, as in effect from time to time,
except as to matters specifically permitted therein.
SECTION 8.5. CORPORATE EXISTENCE AND CONDUCT OF BUSINESS. The Company
will, and will cause each Subsidiary, to do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate existence,
corporate rights and franchises; and effect and maintain its foreign
qualifications (except where the failure of the Company or any Subsidiary to
remain so qualified would not materially adversely impair the financial
condition, business or assets of the Company and its Subsidiaries on a
consolidated basis), licensing, domestication or authorization except as
terminated by its Board of Directors in the exercise of its reasonable judgment;
provided that such termination would not have a material adverse effect on the
financial condition, business or assets of the Company and its Subsidiaries on a
consolidated basis. The Company will not, and will cause its Subsidiaries not
to, become obligated under any contract or binding arrangement which, at the
time it was entered into, would materially adversely impair the financial
condition, business or assets of the Company and its Subsidiaries, on a
consolidated basis. The Company will, and will cause each Subsidiary to,
continue to engage primarily in the businesses now conducted by it and in
related businesses.
SECTION 8.6. MAINTENANCE OF PROPERTIES. The Company will, and will
cause its Subsidiaries to, cause all material properties used or useful in the
conduct of
<PAGE> 74
-68-
their businesses to be maintained and kept in good condition, repair and working
order (ordinary wear and tear excepted) and supplied with all necessary
equipment and cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company and
its Subsidiaries may be necessary so that the businesses carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this section shall prevent the Company or any
of its Subsidiaries from discontinuing the operation and maintenance of any of
its properties if such discontinuance is, in the judgment of the Company or such
Subsidiary, desirable in the conduct of its or their business and which does not
in the aggregate materially adversely affect the financial condition, business
or assets of the Company and its Subsidiaries on a consolidated basis.
SECTION 8.7. INSURANCE. The Company will, and will cause its
Subsidiaries to, maintain with financially sound and reputable insurance
companies, funds or underwriters, insurance of the kinds, covering the risks
(other than risks arising out of or in any way connected with personal liability
of any officers and directors thereof) and in the relative proportionate amounts
usually carried by reasonable and prudent companies conducting businesses
similar to that of the Company and its Subsidiaries, in amounts substantially
similar to the existing coverage policies maintained by the Company and its
Subsidiaries, copies of which have been provided to the Documentation Agent. In
addition, the Company will furnish from time to time, upon any Bank's request, a
summary of the insurance coverage of the Company and its Subsidiaries, which
summary shall be in form and substance satisfactory to the Banks and, if
requested by any of the Banks, will furnish to the Documentation Agent and such
Bank copies of the applicable policies.
SECTION 8.8. TAXES. The Company will, and will cause its Subsidiaries
to, duly pay and discharge, or cause to be paid and discharged, before the same
shall become overdue, all taxes, assessments and other governmental charges
(other than taxes, assessments and other governmental charges imposed by
jurisdictions other than the United States, Canada or any political subdivision
thereof, which in the aggregate are not material to the business, financial
conditions, or assets of the Company and its Subsidiaries on a consolidated
basis) imposed upon it and its real properties, sales and activities, or any
part thereof, or upon the income or profits therefrom, as well as all claims for
labor, materials, or supplies, which if unpaid might by law become a lien or
charge upon any of its property; provided, however, that any such tax,
assessment, charge, levy or claim need not be paid if the validity or amount
thereof shall currently be contested in good faith by appropriate proceedings
and if the Company or such Subsidiary shall have set aside on its books adequate
reserves with respect thereto as required by GAAP; and provided, further, that
the Company or such Subsidiary will pay all such taxes, assessments, charges,
<PAGE> 75
-69-
levies or claims forthwith upon the commencement of proceedings to foreclose
any lien which may have attached as security therefor.
SECTION 8.9. INSPECTION OF PROPERTIES, BOOKS AND CONTRACTS. The Company
will, and will cause its Subsidiaries to, permit the Bank Agents or any Bank or
any of their designated representatives, upon reasonable notice, to visit and
inspect any of the properties of the Company and its Subsidiaries, to examine
the books of account of the Company and its Subsidiaries, or contracts (and to
make copies thereof and extracts therefrom), and to discuss the affairs,
finances and accounts of the Company and its Subsidiaries with, and to be
advised as to the same by, their officers, all at such times and intervals
as may be reasonably requested.
SECTION 8.10. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES AND PERMITS;
MAINTENANCE OF MATERIAL LICENSES AND PERMITS. The Company will, and will cause
each Subsidiary to, (i) comply with the provisions of its charter documents and
by-laws; (ii) comply in all material respects with all agreements and
instruments by which it or any of its properties may be bound; (iii) comply with
all applicable laws and regulations (including Environmental Laws), decrees,
orders, judgments, licenses and permits, including, without limitation, all
environmental permits ("Applicable Requirements"), except where noncompliance
with such Applicable Requirements would not reasonably be expected to have a
material adverse effect in the aggregate on the consolidated financial
condition, properties or businesses of the Company and its Subsidiaries; and
(iv) maintain all material operating permits for all landfills now owned or
hereafter acquired; and (v) dispose of hazardous waste only at licensed disposal
facilities operating, to the best of the Company's or such Subsidiary's
knowledge after reasonable inquiry, in compliance with Environmental Laws. If
at any time any authorization, consent, approval, permit or license from any
officer, agency or instrumentality of any government shall become necessary or
required in order that the Company or any Subsidiary may fulfill any of its
obligations hereunder or under any other Loan Document, the Company will
immediately take or cause to be taken all reasonable steps within the power of
the Company or such Subsidiary to obtain such authorization, consent, approval,
permit or license and furnish the Banks with evidence thereof.
SECTION 8.11. ENVIRONMENTAL INDEMNIFICATION. The Company covenants and
agrees that it will indemnify and hold the Banks, the Issuing Bank and the Bank
Agents and their respective affiliates, and each of the representatives, agents
and officers of each of the foregoing, harmless from and against any and all
claims, expense, damage, loss or liability incurred by the Banks, the Issuing
Bank or the Bank Agents (including all costs of legal representation incurred by
the Banks, the Issuing Banks or the Bank Agents) relating to (a) any Release or
threatened Release of Hazardous Substances on the Real Property; (b) any
<PAGE> 76
-70-
violation of any Environmental Laws or Applicable Requirements with respect to
conditions at the Real Property or other assets of the Company or its
Subsidiaries, or the operations conducted thereon; or (c) the investigation or
remediation of offsite locations at which the Company, any of its Subsidiaries,
or their predecessors are alleged to have directly or indirectly Disposed of
Hazardous Substances. Further, each of the Canadian Borrowers covenants and
agrees that it will indemnify and hold the Canadian Banks and the Canadian Agent
and their respective affiliates, and each of the representatives, agents and
officers of each of the foregoing, harmless as and to the same extent as the
Company indemnifies the Banks, the Issuing Bank and Bank Agents above, provided,
that such indemnity by the Canadian Borrowers shall apply only to the extent
that matters set forth in clauses (a), (b) and (c) above relate to the Real
Property owned or operated by the Canadian Borrowers, or violations of
Environmental Laws or Disposal of Hazardous Wastes by the Canadian Borrowers.
It is expressly acknowledged by the Company and the Canadian Borrowers that this
covenant of indemnification shall survive the payment of the Loans, Bankers'
Acceptances and Reimbursement Obligations and satisfaction of all other
Obligations hereunder and shall inure to the benefit of the Banks, the Issuing
Bank, the Bank Agents and their affiliates, successors and assigns.
SECTION 8.12. FURTHER ASSURANCES. Each of the Borrowers and Sanifill
will cooperate with the Documentation Agent and execute such further instruments
and documents as the Documentation Agent shall reasonably request to carry out
to the Banks' satisfaction the transactions contemplated by this Agreement.
SECTION 8.13. NOTICE OF POTENTIAL CLAIMS OR LITIGATION. The Company
shall deliver to the Banks, within 30 days of receipt thereof, written notice of
the initiation of any action, claim, complaint, or any other notice of dispute
or potential litigation against the Company or any of its Subsidiaries wherein
the potential liability is in excess of $10,000,000 together with a copy of each
such notice received by the Company or any of its Subsidiaries.
SECTION 8.14. NOTICE OF CERTAIN EVENTS CONCERNING INSURANCE AND
ENVIRONMENTAL CLAIMS.
(a) The Company will provide the Banks with written
notice as to any material cancellation or material adverse change in
any insurance of the Company or any of its Subsidiaries within ten
(10) Business Days after the Company's or any of its Subsidiary's
receipt of any notice (whether formal or informal) of such material
cancellation or material change by any of its insurers.
(b) The Company will promptly notify the Banks in writing
of any of the following events:
<PAGE> 77
-71-
(i) upon the Company's or any Subsidiary's
obtaining knowledge of any violation of any Environmental Law
regarding the Real Property or the Company's or any
Subsidiary's operations which violation could have a material
adverse effect on the business, financial condition, or assets
of the Company and its Subsidiaries on a consolidated basis;
(ii) upon the Company's or any Subsidiary's
obtaining knowledge of any potential or known Release, or
threat of Release, of any Hazardous Substance at, from, or
into the Real Property which could materially affect the
business, financial condition, or assets of the Company and
its Subsidiaries on a consolidated basis;
(iii) upon the Company's or any Subsidiary's
receipt of any notice of any material violation of any
Environmental Law or of any Release or threatened Release of
Hazardous Substances, including a notice or claim of liability
or potential responsibility from any third party (including
any federal, state, provincial, territorial or local
governmental officials) and including notice of any formal
inquiry, proceeding, demand, investigation or other action
with regard to (A) the Company's, any Subsidiary's or any
Person's operation of the Real Property, (B) contamination on,
from, or into the Real Property, or (C) investigation or
remediation of offsite locations at which the Company, any
Subsidiary, or its predecessors are alleged to have directly
or indirectly Disposed of Hazardous Substances, and with
respect to which the liability associated therewith could be
reasonably expected to exceed $10,000,000; or
(iv) upon the Company's or any Subsidiary's
obtaining knowledge that any expense or loss which
individually or in the aggregate exceeds $10,000,000 has been
incurred by such governmental authority in connection with the
assessment, containment, removal or remediation of any
Hazardous Substances with respect to which the Company or any
Subsidiary may be liable or for which a lien may be imposed on
the Real Property.
SECTION 8.15. NOTICE OF DEFAULT. The Company will promptly notify the
Banks in writing of the occurrence of any Default or Event of Default. If any
Person shall give any notice or take any other action in respect of a claimed
default (whether or not constituting an Event of Default) under this Agreement
or any other note, evidence of indebtedness, indenture or other obligation
evidencing indebtedness in excess of $10,000,000 as to which the Company or any
of its Subsidiaries is a party or obligor, whether as principal or surety, the
Company shall forthwith upon obtaining actual knowledge thereof give written
notice
<PAGE> 78
-72-
thereof to the Banks, describing the notice of action and the nature of
the claimed default.
SECTION 8.16. USE OF PROCEEDS. The proceeds of the Domestic Loans shall
be used for general corporate purposes and in connection with the Allied
Acquisition and the Mid-American Acquisition and refinancing existing debt and
letters of credit of Allied, Mid-American, and the Company. The proceeds of the
Canadian Loans shall be used for the general corporate purposes of the Canadian
Borrowers, including refinancing existing debt and letters of credit of the
Canadian Borrowers. No proceeds of the Loans shall be used in any way that will
violate Regulations G, T, U or X of the Board of Governors of the Federal
Reserve System.
SECTION 8.17. CERTAIN TRANSACTIONS. Except as disclosed in filings made
by the Company under the Securities Exchange Act of 1934, and except for arm's
length transactions pursuant to which the Company or any Subsidiary makes
payments in the ordinary course of business upon terms no less favorable than
the Company or such Subsidiary could obtain from third parties, none of the
officers, directors, or employees of the Company or any Subsidiary are presently
or shall be a party to any transaction with the Company or any Subsidiary (other
than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company or any Subsidiary, any corporation, partnership, trust
or other entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner.
SECTION 9. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS. Each of the
Company, and the Canadian Borrowers where applicable, agrees that, so long as
any Obligation or Letter of Credit or Bankers' Acceptance is outstanding or the
Banks have any obligation to make Loans or the Canadian Banks have any further
obligations with respect to Bankers' Acceptances, or the Issuing Bank has any
obligation to issue, extend or renew any Letters of Credit hereunder, or the
Banks have any obligation to reimburse the Issuing Bank for drawings honored
under any Letter of Credit, it shall, and shall cause its Subsidiaries to,
comply with the following covenants:
SECTION 9.1. RESTRICTIONS ON INDEBTEDNESS. Neither the Company nor any
of its Subsidiaries shall become or be a guarantor or surety of, or otherwise
create, incur, assume, or be or remain liable, contingently or otherwise, with
respect to any Indebtedness, or become or be responsible in any manner (whether
by agreement to purchase any obligations, stock, assets, goods or services, or
to supply or advance any funds, assets, goods or services or otherwise) with
respect to any Indebtedness of any other Person, or incur any Indebtedness
other than:
<PAGE> 79
-73-
(a) Indebtedness arising under this Agreement or the
other Loan Documents;
(b) Existing Indebtedness of the Company and its
Subsidiaries listed on Schedule 9.1(b) hereto on the terms and
conditions in effect as of the date hereof, including extensions,
renewals and refinancing of such Indebtedness in amounts no greater
than and on terms no more restrictive than exist on the Closing Date;
(c) (i) Indebtedness incurred by the Company or any
Subsidiary with respect to any suretyship or performance bond incurred
in the ordinary course of its business (other than landfill closure
bonds); and
(ii) Guarantees of the Subsidiaries' obligations to
governmental authorities in lieu of the posting of any landfill
closure bonds;
(d) Unsecured Indebtedness of the Company, including
commercial paper, which is pari passu or subordinated to the
Obligations; provided that there does not exist a Default or Event of
Default at the time of the incurrence of such Indebtedness and no
Default or Event of Default would be created by incurrence of such
Indebtedness;
(e) (i) Indebtedness of the Company's Subsidiaries, (ii)
secured Indebtedness of the Company, and (iii) Indebtedness with
respect to landfill closure bonds of the Company's Subsidiaries;
provided that the aggregate amount of such Indebtedness in (i), (ii)
and (iii) shall not exceed 7.5% of Consolidated Tangible Assets at any
time;
(f) Indebtedness of Sanifill with respect to the Sanifill
Convertible Subordinated Debt on the terms and conditions in effect as
of the Closing Date;
(g) Other Indebtedness of the Canadian Borrowers in an
aggregate amount outstanding not in excess of $50,000,000;
(h) Indebtedness of the Company and Sanifill with respect to
the Prudential Private Placement Debt, provided that such Indebtedness
remains unsecured; and
(i) Indebtedness of CWS identified on Schedule 9.1(i)
hereto to be incurred in connection with the Allied Acquisition in an
aggregate amount outstanding not in excess of $350,000,000 (and the
"put" to the Company with respect thereto); provided, however, that
such Indebtedness shall be repaid within 90 days after the date on
which the Allied Acquisition is consummated.
<PAGE> 80
-74-
SECTION 9.2. RESTRICTIONS ON LIENS. The Company will not, and will
cause its Subsidiaries not to, create or incur or suffer to be created or
incurred or to exist any lien, encumbrance, mortgage, pledge, charge,
restriction or other security interest of any kind upon any property or assets
of any character, whether now owned or hereafter acquired, or upon the income
or profits therefrom; or transfer any of such property or assets or the income
or profits therefrom for the purpose of subjecting the same to the payment of
Indebtedness or performance of any other obligation in priority to payment of
its general creditors; or acquire, or agree or have an option to acquire, any
property or assets upon conditional sale or other title retention or purchase
money security agreement, device or arrangement; or suffer to exist for a period
of more than 30 days after the same shall have been incurred any Indebtedness or
claim or demand against it which if unpaid might by law or upon bankruptcy or
insolvency, or otherwise, be given any priority whatsoever over its general
creditors; or sell, assign, pledge or otherwise transfer any accounts, contract
rights, general intangibles or chattel paper, with or without recourse, except
as follows (the "Permitted Liens"):
(a) Liens existing on the Closing Date and listed on
Schedule 9.2(a) hereto;
(b) Liens securing Indebtedness permitted by Section
9.1(c)(i) hereof; provided that the assets subject to such liens and
security interests shall be limited to those contracts to which such
guaranty, suretyship or indemnification obligations relate and the
rights to payment thereunder;
(c) Liens securing Indebtedness permitted under Section
9.1(e), Section 9.1(g), and Section 9.1(i);
(d) Liens to secure taxes, assessments and other
government charges in respect of obligations not overdue;
(e) Deposits or pledges made in connection with, or to
secure payment of, workmen's compensation, unemployment insurance,
old age pensions or other social security obligations;
(f) Liens in respect of judgments or awards which have
been in force for less than the applicable period for taking an appeal
so long as execution is not levied thereunder or in respect of which
the Company (or any Subsidiary) shall at the time in good faith be
prosecuting an appeal or proceedings for review and in respect of
which a stay of execution shall have been obtained pending such appeal
or review and in respect of which the Company maintains adequate
reserves;
(g) Liens of carriers, warehousemen, mechanics and
materialmen, and other like liens, in existence less than 120 days
from the date of creation thereof in respect of obligations not
overdue, provided
<PAGE> 81
-75-
that such liens may continue to exist for a period of more than 120
days if the validity or amount thereof shall currently be contested by
the Company (or any Subsidiary) in good faith by appropriate
proceedings and if the Company shall have set aside on its books
adequate reserves with respect thereto as required by GAAP and provided
further that the Company (or any Subsidiary) will pay any such claim
forthwith upon commencement of proceedings to foreclose any such lien;
and
(h) Encumbrances consisting of easements, rights of way,
zoning restrictions, restrictions on the use of real property and
defects and irregularities in the title thereto, landlord's or
lessor's liens under leases to which the Company or any Subsidiary is
a party, and other minor liens or encumbrances none of which in the
opinion of the Company interferes materially with the use of the
property affected in the ordinary conduct of the business of the
Company or any of its Subsidiaries, which defects do not individually
or in the aggregate have a material adverse effect on the business of
the Company or any Subsidiary individually or of the Company and its
Subsidiaries on a consolidated basis.
The Company and Sanifill covenant and agree that if either of
them or any of their Subsidiaries shall create or assume any lien upon
any of their respective properties or assets, whether now owned or
hereafter acquired, other than Permitted Liens (unless prior written
consent shall have been obtained from the Banks), the Company and
Sanifill will make or cause to be made effective provision whereby the
Obligations and the Guaranteed Obligations will be secured by such
lien equally and ratably with any and all other Indebtedness thereby
secured so long as such other Indebtedness shall be so secured;
provided, that the covenants of the Company and Sanifill contained in
this sentence shall only be in effect for so long as the Company
and/or Sanifill shall be similarly obligated under any other
Indebtedness; provided, further, that an Event of Default shall occur
for so long as such other Indebtedness is secured notwithstanding any
actions taken by the Company and Sanifill to ratably secure the
Obligations and the Guaranteed Obligations hereunder.
SECTION 9.3. RESTRICTIONS ON INVESTMENTS. Except to the extent
provided in Section 9.4, neither the Company nor any Subsidiary may make or
permit to exist or to remain outstanding any Investment, unless both before and
after giving effect thereto (i) the Company and its Subsidiaries are in
compliance with the covenants set forth in Sections 8, 9 and 10 hereof;
(ii) there does not exist a Default or Event of Default and no Default or Event
of Default would be created by the making of such Investment; and (iii) the
aggregate amount of all Investments (excluding Investments in (A) direct
obligations of the United States of America or any agency thereof having
maturities of less than one (1) year, (B) certificates
<PAGE> 82
-76-
of deposit having maturities of less than one (1) year, issued by commercial
banks in the United States or Canada having capital and surplus of not less than
$100,000,000, and (C) wholly owned Subsidiaries) does not exceed 10% of
Consolidated Tangible Assets; provided, that the ability of the Company and its
Subsidiaries to incur any Indebtedness in connection with any Investment
permitted by this Section 9.3 shall be governed by Section 9.1.
SECTION 9.4. MERGERS, CONSOLIDATIONS, SALES.
(a) Neither the Company nor any Subsidiary shall be a party
to any merger, consolidation or exchange of stock unless the Company
shall be the surviving entity with respect to any such transaction to
which the Company is a party or a Subsidiary shall be the surviving
entity (and continue to be a Subsidiary) with respect to any such
transactions to which one or more Subsidiaries is a party (and the
conditions set forth below are satisfied), or purchase or otherwise
acquire all or substantially all of the assets or stock of any class
of, or any partnership or joint venture interest in, any other Person
except as otherwise provided in Section 9.3 or this Section 9.4.
Notwithstanding the foregoing, the Company and its Subsidiaries may
purchase or otherwise acquire all or substantially all of the assets
or stock of any class of, or joint venture interest in, any Person if
the following conditions have been met: (a) the proposed transaction
will not otherwise create a Default or an Event of Default hereunder;
(b) the business to be acquired predominantly involves the collection,
transfer, hauling, disposal or recycling of solid waste (excluding
hazardous waste as that term is defined in RCRA) or thermal soil
remediation; (c) the business to be acquired operates predominantly
(i) in North America or (ii) outside North America, provided, that the
aggregate amount of such acquisitions under this clause (ii) does not
exceed five percent (5%) of Consolidated Tangible Assets; and (d) the
board of directors and (if required by applicable law) the
shareholders, or the equivalent thereof, of the business to be
acquired has approved such acquisition. Notwithstanding the
foregoing, the Company may effect the Mid-American Acquisition and the
Allied Acquisition provided that (a) such transactions will not
otherwise create a Default or Event of Default hereunder, and (b) the
Banks shall have received as soon as is reasonably possible an
environmental permit certificate from the CFO of the Company
satisfactory to the Banks concerning principal operating permits of
Mid-American's and/or Allied's principal operating facilities to be
acquired pursuant to the Mid-American Acquisition and/or the Allied
Acquisition, as applicable. Notwithstanding anything herein to the
contrary, the ability of the Company and its Subsidiaries to incur any
Indebtedness in connection with any transaction permitted pursuant to
this Section 9.4 shall be governed by Section 9.1.
<PAGE> 83
-77-
(b) Neither the Company nor any Subsidiary shall sell,
transfer, convey or lease any assets or group of assets including the
sale or transfer of any property owned by the Company or any
Subsidiary in order then or thereafter to lease such property or lease
other property which the Company or such Subsidiary intends to use for
substantially the same purpose as the property being sold or
transferred (except (1) transfers of personal property among
Subsidiaries of the Company which are wholly owned by the Company and
(2) so long as no Default or Event of Default has occurred and is
continuing, or would result therefrom, sales of assets in the ordinary
course of business between the date hereof and the Maturity Date with
an aggregate value not greater than ten percent (10%) of Consolidated
Total Assets, as set forth in the most recent financial statements
delivered to the Banks pursuant to Section 8.4 hereof) or sell or
assign, with or without recourse, any receivables (except accounts
receivable more than sixty (60) days past due sold or assigned in the
ordinary course of collecting past due accounts).
SECTION 9.5. RESTRICTED DISTRIBUTIONS AND REDEMPTIONS. Neither the
Company nor any of its Subsidiaries will (a) declare or pay any Distributions,
or (b) redeem, convert, retire or otherwise acquire shares of any class of its
capital stock (other than in connection with a merger permitted by Section 9.4
hereof or conversion into another form of equity of any preferred shares of the
Company existing as of the Closing Date pursuant to the terms thereof);
provided that the Company and its Subsidiaries may pay cash dividends and
redeem stock in an aggregate amount not to exceed (x) $25,000,000 plus (y) on a
cumulative basis, 50% of positive Consolidated Net Income after December 31,
1995. Notwithstanding the above, any Subsidiary may make Distributions to the
Company and the Company agrees that neither the Company nor any Material
Subsidiary will enter into any agreement restricting Distributions from such
Material Subsidiary to the Company, other than restrictions set forth in the
documents governing the Prudential Private Placement Debt as in effect as
of the Closing Date.
SECTION 9.6. EMPLOYEE BENEFIT PLANS. None of the Company, any of its
Subsidiaries, or any ERISA Affiliate will:
(a) engage in any "prohibited transaction" within the
meaning of 9406 of ERISA or Section 4975 of the Code which could
result in a material liability for the Company on a consolidated
basis; or
(b) permit any Guaranteed Pension Plan to incur an
"accumulated funding deficiency", as such term is defined in Section
302 of ERISA, whether or not such deficiency is or may be waived; or
<PAGE> 84
-78-
(c) fail to contribute to any Guaranteed Pension Plan to
an extent which, or terminate any Guaranteed Pension Plan in a manner
which, could result in the imposition of a lien or encumbrance on the
assets of the Company or any guarantor pursuant to Section 302(f) or
Section 4068 of ERISA; or
(d) permit or take any action which would result in the
aggregate benefit liabilities (with the meaning of Section 4001 of
ERISA) of all Guaranteed Pension Plans exceeding the value of the
aggregate assets of such Plans, disregarding for this purpose the
benefit liabilities and assets of any such Plan with assets in excess
of benefit liabilities; or
(e) take any action referred to in paragraph (a), (b),
(c) or (d) above that would violate any provisions of Applicable
Canadian Pension Legislation.
The Company and its Subsidiaries will (i) promptly upon the request
of any Bank or Bank Agent, furnish to the Banks a copy of the most recent
actuarial statement required to be submitted under Section 103(d) of ERISA and
Annual Report, Form 5500, with all required attachments, in respect of each
Guaranteed Pension Plan and (ii) promptly upon receipt or dispatch, furnish to
the Banks any notice, report or demand sent or received in respect of a
Guaranteed Pension Plan under Section Section 302, 4041, 4042, 4043, 4063,
4065, 4066 and 4068 of ERISA, or in respect of a Multiemployer Plan, under
Section Section 4041A, 4202, 4219, or 4245 of ERISA.
SECTION 10. FINANCIAL COVENANTS OF THE COMPANY. The Company agrees
that, so long as any Obligation or Letter of Credit or Bankers' Acceptance is
outstanding or the Banks have any obligation to make Loans, or the Canadian
Banks have any further obligations with respect to Bankers' Acceptances, or any
Issuing Bank has any obligation to issue, extend or renew any Letter of Credit
hereunder, or the Banks have any obligation to reimburse the Issuing Bank for
drawings honored under any Letter of Credit, it shall, and shall cause its
Subsidiaries to, comply with the following covenants:
SECTION 10.1. INTEREST COVERAGE RATIO. As of the end of any fiscal
quarter of the Company, the ratio of (a) EBIT for the period of four
consecutive fiscal quarters ending on that date to (b) Consolidated Total
Interest Expense for such period shall not be less than 3.00:1.
SECTION 10.2. DEBT TO EBITDA RATIO. As at the end of each fiscal
quarter, commencing with the fiscal quarter ending March 31, 1997, the ratio of
(a) Funded Debt to (b) EBITDA for the period of four consecutive fiscal
quarters ending on each such date shall not be greater than (a) 3.50:1 for the
four consecutive fiscal quarters ending March 31, 1997 and June 30, 1997, and
(b) 3.25:1 for any four consecutive fiscal quarters ending thereafter.
<PAGE> 85
-79-
SECTION 10.3. DEBT TO TOTAL CAPITALIZATION.
(a) The ratio of (i) Funded Debt to (ii) Consolidated
Total Capitalization shall not exceed 0.58:1 at any time; and
(b) The ratio of (i) Funded Debt to (ii) Consolidated
Total Capitalization shall not exceed 0.55:1 at the end of any two
consecutive fiscal quarters of the Company.
SECTION 11. CONDITIONS TO EFFECTIVENESS. The effectiveness of this
Agreement and the obligations of the Banks to make any Loans, and of the
Canadian Banks with respect to Bankers' Acceptances, and of any Issuing Bank to
issue Letters of Credit and of the Banks to participate in Letters of Credit
and otherwise be bound by the terms of this Agreement shall be subject to the
satisfaction of each of the following conditions precedent:
SECTION 11.1. CORPORATE ACTION. All corporate action necessary for
the valid execution, delivery and performance by the Borrowers and Sanifill of
the Loan Documents shall have been duly and effectively taken, and evidence
thereof certified by authorized officers of the Borrowers and Sanifill and
satisfactory to the Banks shall have been provided to the Banks.
SECTION 11.2. LOAN DOCUMENTS, ETC. Each of the Loan Documents and
other documents listed on the closing agenda shall have been duly and properly
authorized, executed and delivered by the respective parties thereto and shall
be in full force and effect in a form satisfactory to the Banks.
SECTION 11.3. CERTIFIED COPIES OF CHARTER DOCUMENTS. The Banks shall
have received from each of the Borrowers and Sanifill a copy, certified by a
duly authorized officer of such Person to be true and complete on the Closing
Date, of (a) its charter or other incorporation documents as in effect on such
date of certification, and (b) its by-laws as in effect on such date.
SECTION 11.4. INCUMBENCY CERTIFICATE. The Banks shall have received
an incumbency certificate, dated as of the Closing Date, signed by duly
authorized officers giving the name and bearing a specimen signature of each
individual who shall be authorized: (a) to sign the Loan Documents on behalf of
the Borrowers and Sanifill; (b) to make Syndicated Loan Requests and Domestic
and Canadian Letter of Credit Requests; (c) to make Competitive Bid Quote
Requests; and (d) to give notices and to take other action on the Borrowers'
and Sanifill's behalf under the Loan Documents.
SECTION 11.5. CERTIFICATES OF INSURANCE. The Banks shall have received
(i) a certificate of insurance from an independent insurance broker dated as of
the Closing Date, or within 15 days prior thereto, identifying insurers, types
of insurance, insurance limits, and policy terms, and otherwise describing the
<PAGE> 86
-80-
insurance obtained in accordance with the provisions of the Loan Documents and
(ii) copies of all policies evidencing such insurance (or certificates therefor
signed by the insurer or an agent authorized to bind the insurer).
SECTION 11.6. OPINIONS OF COUNSEL AND PERMIT CERTIFICATE. The Banks
shall have received (a) favorable legal opinions from outside counsel to the
Borrowers and Sanifill, addressed to the Banks, dated the Closing Date, in form
and substance satisfactory to the Bank Agents, and (b) an environmental permit
certificate from the CFO of the Company satisfactory to the Banks concerning
principal operating permits at the Company's and its Subsidiaries' principal
operating facilities.
SECTION 11.7. EXISTING DEBT. The Bank Agents shall have received a
payoff letter in a form satisfactory to the Bank Agents with respect to the
Original Credit Agreement, such payoff letter indicating the amount of the loan
obligations of the Company and its Subsidiaries as of the Closing Date, all in
form and substance satisfactory to the Bank Agents.
SECTION 11.8. SATISFACTORY FINANCIAL CONDITION. No material adverse
change, in the judgment of the Majority Banks, shall have occurred in the
financial condition, results of operations, business, properties or prospects
of the Company and its Subsidiaries, taken as a whole, since the most recent
financial statements and projections provided to the Banks.
SECTION 11.9. PAYMENT OF CLOSING FEES. The Company shall have paid
(a) closing fees to the Administrative Agent for the account of the Banks in
accordance with the letter by BAI dated February 5, 1997, and (b) accrued
facility fees due under the letter agreement dated as of January 14, 1997
among the Agents and the Company.
SECTION 12. CONDITIONS TO ALL LOANS. The obligations of the Banks to
make any Loan, the obligations of the Canadian Banks with respect to Bankers'
Acceptances, and the obligation of the Issuing Bank to issue, extend, or renew
any Letter of Credit at the time of and subsequent to the Closing Date is
subject to the following conditions precedent:
SECTION 12.1. REPRESENTATIONS TRUE. Each of the representations and
warranties of the Borrowers and Sanifill (as applicable) contained in this
Agreement or in any document or instrument delivered pursuant to or in
connection with this Agreement shall be true as of the date as of which they
were made and shall also be true at and as of the time of the making of such
Loan, the accepting and purchasing of any Bankers' Acceptances or the issuance,
extension, or renewal of any Letter of Credit, as applicable, with the same
effect as if made at and as of that time (except to the extent of changes
resulting from transactions contemplated or permitted by this Agreement and
changes occurring in the ordinary course of business which singly or in the
aggregate are
<PAGE> 87
-81-
not materially adverse to the business, assets or financial condition of the
Company and its Subsidiaries as a whole, and to the extent that such
representations and warranties relate expressly and solely to an earlier date).
SECTION 12.2. PERFORMANCE; NO EVENT OF DEFAULT. The Borrowers shall
have performed and complied with all terms and conditions herein required to be
performed or complied with by them prior to or at the time of the making of any
Loan, the accepting and purchasing of any Bankers' Acceptances or the issuance,
extension or renewal of any Letter of Credit, and at the time of the making of
any Loan, the accepting and purchasing of any Bankers' Acceptance or the
issuance, renewal or extension of any Letter of Credit, there shall exist no
Default or Event of Default or condition which would result in a Default or an
Event of Default upon consummation of such Loan, accepting and purchasing any
Bankers' Acceptances or issuance, extension, or renewal of any Letter of
Credit, as applicable. Each request for a Loan, for the acceptance and
purchase of a Bankers' Acceptance, or for issuance, extension or renewal of a
Letter of Credit shall constitute certification by the Borrowers that the
conditions specified in Sections 12.1 and 12.2 will be duly satisfied on the
date of such Loan, Bankers' Acceptance or Letter of Credit issuance, extension
or renewal.
SECTION 12.3. NO LEGAL IMPEDIMENT. No change shall have occurred in
any law or regulations thereunder or interpretations thereof which in the
reasonable opinion of the Banks would make it illegal for the Banks to make
Loans, for the Issuing Bank to issue, extend or renew, or the Banks to
participate in, Letters of Credit hereunder or for the Canadian Banks to
accept and purchase Bankers' Acceptances.
SECTION 12.4. GOVERNMENTAL REGULATION. The Banks shall have received
from the Company and its Subsidiaries such statements in substance and form
reasonably satisfactory to the Banks as they shall require for the purpose of
compliance with any applicable regulations of the Comptroller of the Currency
or the Board of Governors of the Federal Reserve System or the Office of the
Superintendent of Financial Institutions.
SECTION 12.5. PROCEEDINGS AND DOCUMENTS. All proceedings in connection
with the transactions contemplated by this Agreement and all documents incident
thereto shall have been delivered to the Banks as of the date of the making of
any extension of credit in substance and in form satisfactory to the Banks,
including without limitation a Syndicated Loan Request in the form attached
hereto as Exhibit E, a Domestic Letter of Credit Request in the form of Exhibit
F-1, a Canadian Letter of Credit Request in the form of Exhibit F-2, a Canadian
Loan Request in the form attached hereto as Exhibit G, or a Bankers'
Acceptance Notice in the form of Exhibit H and the Banks shall have received
all information and such counterpart originals or certified or other copies of
such documents as the Banks may reasonably request.
<PAGE> 88
-82-
SECTION 13. EVENTS OF DEFAULT; ACCELERATION; TERMINATION OF COMMITMENT.
SECTION 13.1. EVENTS OF DEFAULT AND ACCELERATION. If any of the
following events ("Events of Default" or, if the giving of notice or the lapse
of time or both is required, then, prior to such notice and/or lapse of time,
"Defaults") shall occur:
(a) if the applicable Borrower(s) shall fail to pay any
principal of the Loans or Bankers' Acceptances when the same shall
become due and payable, whether at the stated date of maturity or any
accelerated date of maturity or at any other date fixed for payment;
(b) if the applicable Borrower(s) shall fail to pay any
interest or fees or other amounts owing hereunder (other than those
specified in subsection (a) above) within five (5) Business Days after
the same shall become due and payable whether at the Maturity Date or
any accelerated date of maturity or at any other date fixed for
payment;
(c) if the Borrowers shall fail to comply with any of the
covenants contained in Section Section 8, 9 and 10 hereof;
(d) if the Borrowers shall fail to perform any term,
covenant or agreement contained herein or in any of the other Loan
Documents (other than those specified in subsections (a), (b), and (c)
above) and such failure shall not be remedied within 30 days after
written notice of such failure shall have been given to the Borrowers
by the Documentation Agent or any of the Banks;
(e) if any representation or warranty contained in this
Agreement or in any document or instrument delivered pursuant to or in
connection with this Agreement shall prove to have been false in any
material respect upon the date when made or repeated;
(f) if the Company or any of its Subsidiaries shall fail
to pay when due, or within any applicable period of grace, any
Indebtedness in an aggregate amount greater than $10,000,000, or fail
to observe or perform any material term, covenant or agreement
contained in any one or more agreements by which it is bound,
evidencing or securing any Indebtedness in an aggregate amount greater
than $10,000,000 for such period of time as would, or would have
permitted (assuming the giving of appropriate notice if required) the
holder or holders thereof or of any obligations issued thereunder to
accelerate the maturity thereof or terminate its commitment with
respect thereto;
<PAGE> 89
-83-
(g) if the Company, any of the Canadian Borrowers,
Sanifill or any Material Subsidiary makes an assignment for the
benefit of creditors, or admits in writing its inability to pay or
generally fails to pay its debts as they mature or become due, or
petitions or applies for the appointment of a trustee or other
custodian, liquidator or receiver of the Company, any Canadian
Borrower, Sanifill or any Material Subsidiary, or of any substantial
part of the assets of the Company, any Canadian Borrower, Sanifill or
any Material Subsidiary or commences any case or other proceeding
relating to the Company, any of the Canadian Borrowers, Sanifill or
any Material Subsidiary under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar law of any jurisdiction, now or hereafter in
effect, or takes any action to authorize or in furtherance of any of
the foregoing, or if any such petition or application is filed or any
such case or other proceeding is commenced against the Company, any of
the Canadian Borrowers, Sanifill or any Material Subsidiary or the
Company, any of the Canadian Borrowers, Sanifill or any Material
Subsidiary indicates its approval thereof, consent thereto or
acquiescence therein;
(h) if a decree or order is entered appointing any such
trustee, custodian, liquidator or receiver or adjudicating the
Company, any of the Canadian Borrowers, Sanifill or any Material
Subsidiary bankrupt or insolvent, or approving a petition in any such
case or other proceeding, or a decree or order for relief is entered
in respect of the Company, any of the Canadian Borrowers, Sanifill or
any Material Subsidiary in an involuntary case under federal
bankruptcy laws of any jurisdiction as now or hereafter constituted,
and such decree or order remains in effect for more than 30 days,
whether or not consecutive;
(i) if there shall remain in force, undischarged,
unsatisfied and unstayed, for more than thirty days, whether or not
consecutive, any final judgment against the Company or any Subsidiary
which, with other outstanding final judgments against the Company and
its Subsidiaries exceeds in the aggregate $10,000,000 after taking
into account any undisputed insurance coverage;
(j) if, with respect to any Guaranteed Pension Plan (or
any corresponding plan described in any Applicable Canadian Pension
Legislation), an ERISA Reportable Event or similar event under
Applicable Canadian Pension Legislation shall have occurred and the
Banks shall have determined in their reasonable discretion that such
event reasonably could be expected to result in liability of the
Company or any Subsidiary to the PBGC or similar Canadian authorities
or the Plan in an aggregate amount exceeding $10,000,000 and such
event in the circumstances occurring reasonably could constitute
grounds for the
<PAGE> 90
-84-
partial or complete termination of such Plan by the PBGC or similar
Canadian authorities or for the appointment by the appropriate United
States District Court or Canadian Court of a trustee to administer
such Plan; or a trustee shall have been appointed by the appropriate
United States District Court or Canadian Court to administer such
Plan; or the PBGC or similar Canadian authorities shall have
instituted proceedings to terminate such Plan;
(k) if any of the Loan Documents shall be cancelled,
terminated, revoked or rescinded otherwise than in accordance with the
terms thereof or with the express prior written agreement, consent or
approval of the Banks, or any action at law, suit or in equity or
other legal proceeding to cancel, revoke or rescind any of the Loan
Documents shall be commenced by or on behalf of the Company, any of
the Canadian Borrowers, Sanifill or any of their respective
stockholders, or any court or any other governmental or regulatory
authority or agency of competent jurisdiction shall make a
determination that, or issue a judgment, order, decree or ruling to
the effect that, any one or more of the Loan Documents is illegal,
invalid or unenforceable in accordance with the terms thereof; or
(l) if any person or group of persons (within the meaning
of Section 13 or 14 of the Securities Exchange Act of 1934, as
amended) shall have acquired beneficial ownership (within the meaning
of Rule 13d-3 promulgated by the Securities and Exchange Commission
under said Act) of (i) 25% or more of the outstanding shares of common
voting stock of the Company or (ii) with respect to the Rangos family,
20% or more of such stock; or, during any period of twelve consecutive
calendar months, individuals who were directors of the Company on the
first day of such period shall cease to constitute a majority of the
board of directors of the Company;
then, and in any such event, so long as the same may be continuing, the Bank
Agents may, and upon the request of the Majority Banks shall, by notice in
writing to the Borrowers, declare all amounts owing with respect to this
Agreement, the Notes and the other Loan Documents and all Reimbursement
Obligations to be, and they shall thereupon forthwith become, immediately due
and payable without presentment, demand, protest, notice of intent to
accelerate, notice of acceleration to the extent permitted by law or other
notice of any kind, all of which are hereby expressly waived by the Borrowers;
provided that in the event of any Event of Default specified in Section 13.1(g)
or 13.1(h), all such amounts shall become immediately due and payable
automatically and without any requirement of notice from the Bank Agents or any
Bank. Upon demand by the Majority Banks after the occurrence of any Event of
Default, the applicable Borrower(s) shall immediately provide to the
Administrative Agent and/or the Canadian Agent, as applicable, cash in an
amount equal to the aggregate
<PAGE> 91
-85-
Maximum Drawing Amount and the aggregate face amount of outstanding Bankers'
Acceptances to be held by the Administrative Agent and/or the Canadian Agent,
as applicable as collateral security for the Reimbursement Obligations and
such Bankers' Acceptances.
SECTION 13.2. TERMINATION OF COMMITMENTS. If any Event of Default
pursuant to Sections 13.1(g) or 13.1(h) hereof shall occur, any unused
portion of the Total Commitment hereunder shall forthwith terminate and
the Banks and the Issuing Banks shall be relieved of all obligations to make
Loans, to accept and purchase Bankers' Acceptances or to issue, extend or renew
Letters of Credit hereunder; or if any other Event of Default shall occur, the
Majority Banks may by notice to the Borrowers terminate the unused portion of
the Total Commitment hereunder, and, upon such notice being given, such unused
portion of the Total Commitment hereunder shall terminate immediately and the
Banks and the Issuing Banks shall be relieved of all further obligations to
make Loans, to accept and purchase Bankers' Acceptances or to issue, extend or
renew Letters of Credit hereunder. No termination of any portion of the Total
Commitment hereunder shall relieve the Borrowers of any of their existing
Obligations to the Banks, the Issuing Banks or the Bank Agents hereunder or
elsewhere.
SECTION 13.3. REMEDIES. In case any one or more of the Events of
Default shall have occurred and be continuing, and whether or not the Banks
shall have accelerated the maturity of the Loans and other Obligations pursuant
to Section 13.1, each Bank, upon notice to the other Banks, if owed any amount
with respect to the Loans, Bankers' Acceptances or the Reimbursement
Obligations, may proceed to protect and enforce its rights by suit in equity,
action at law or other appropriate proceeding, whether for the specific
performance of any covenant or agreement contained in this Agreement and the
other Loan Documents or any instrument pursuant to which the Obligations to
such Bank are evidenced, including, without limitation, as permitted by
applicable law the obtaining of the ex parte appointment of a receiver, and, if
such amount shall have become due, by declaration or otherwise, proceed to
enforce the payment thereof or any legal or equitable right of such Bank, any
recovery being subject to the terms of Section 30 hereof. No remedy herein
conferred upon any Bank or the Bank Agents or the holder of any Note is
intended to be exclusive of any other remedy and each and every remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law or in equity or by statute or any other
provision of law.
SECTION 14. SETOFF. Regardless of the adequacy of any collateral,
during the continuance of an Event of Default, any deposits or other sums
credited by or due from any Bank to the Borrowers or any of them and any
securities or other property of the Borrowers or any of them in the possession
of such Bank may be applied to or set off against the payment of Obligations
and any and all other
<PAGE> 92
-86-
liabilities, direct, or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising, of the Borrowers to the Banks or the Bank
Agents. Any amounts set off pursuant to this Section 14 shall be distributed
ratably in accordance with Section 30 among all of the Banks by the Bank
setting off such amounts. If any Bank fails to share such setoff ratably, the
Administrative Agent and/or the Canadian Agent, as applicable, shall have the
right to withhold such Bank's share of any Borrower's payments until each of
the Banks shall have, in the aggregate, received a pro rata repayment.
SECTION 15. EXPENSES. Whether or not the transactions contemplated
herein shall be consummated, the Borrowers hereby promise to reimburse the
Documentation Agent for all reasonable out-of-pocket fees and disbursements
(including all reasonable attorneys' fees) incurred or expended in connection
with the preparation, filing or recording, or interpretation of this Agreement,
the other Loan Documents, or any amendment, modification, approval, consent or
waiver hereof or thereof. The Borrowers further promise to reimburse the Bank
Agents and the Banks for all reasonable out-of-pocket fees and disbursements
(including all reasonable legal fees and the allocable cost of in-house
attorneys' fees) incurred or expended in connection with the enforcement of any
Obligations or the satisfaction of any indebtedness of the Borrowers hereunder
or under any other Loan Document, or in connection with any litigation,
proceeding or dispute hereunder in any way related to the credit hereunder. The
Company also promises to pay the Administrative Agent all reasonable
out-of-pocket fees and disbursements, incurred or expended in connection with
the Competitive Bid Loan procedure under Section 5 hereof.
SECTION 16. THE BANK AGENTS.
SECTION 16.1. APPOINTMENT, POWERS AND IMMUNITIES. Each Bank hereby
irrevocably appoints and authorizes (a) MGT to act as Documentation Agent, (b)
MGT to act as Administrative Agent, and (c) MBC to act as Canadian Agent
hereunder and under the other Loan Documents, provided, however, the
Administrative Agent, Documentation Agent, and Canadian Agent are hereby
authorized to serve only as administrative and documentation agents, as
applicable, for the Banks and to exercise such powers as are reasonably
incidental thereto and as are set forth in this Agreement and the other Loan
Documents. The Bank Agents hereby acknowledge that they do not have the
authority to negotiate any agreement which would bind the Banks or agree to any
amendment, waiver or modification of any of the Loan Documents or bind the
Banks except as set forth in this Agreement or the Loan Documents. Except as
provided in this Agreement, and in the other Loan Documents, the Bank Agents
shall take action or refrain from acting only upon instructions of the Banks.
It is agreed that the duties, rights, privileges and immunities of the Issuing
Banks, in their capacity as issuers of Letters of Credit hereunder, shall be
identical to the duties, rights, privileges and immunities of the Bank Agents
<PAGE> 93
-87-
as provided in this Section 16. The Bank Agents shall not have any duties or
responsibilities or any fiduciary relationship with any Bank except those
expressly set forth in this Agreement and the other Loan Documents. None of
the Bank Agents nor any of their affiliates shall be responsible to the Banks
for any recitals, statements, representations or warranties made by the
Borrowers or any other Person whether contained herein or otherwise or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement, the other Loan Documents or any other document referred to or
provided for herein or therein or for any failure by the Borrowers or any other
Person to perform its obligations hereunder or thereunder or in respect of the
Notes. The Bank Agents may employ agents and attorneys-in-fact and shall not
be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. Neither the Bank Agents
nor any of their directors, officers, employees or agents shall be responsible
for any action taken or omitted to be taken by it or them hereunder or in
connection herewith, except for its or their own gross negligence or willful
misconduct. Any Bank Agent in its separate capacity as a Bank shall have the
same rights and powers hereunder as any other Bank.
SECTION 16.2. ACTIONS BY BANK AGENTS. Each Bank Agent shall be fully
justified in failing or refusing to take any action under this Agreement as
reasonably deemed appropriate unless it shall first have received the consent
of the Majority Banks (or, when expressly required hereby, all of the Banks),
and shall be indemnified to its reasonable satisfaction by the Banks against
any and all liability and expense which may be incurred by it by reason of
taking or continuing to take any such action. The Bank Agents shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement or any of the Loan Documents in accordance with the instruction of
the Majority Banks (or, when expressly required hereby or thereby, all of the
Banks), and such instruction and any action taken or failure to act pursuant
thereto shall be binding upon the Banks and all future holders of the Notes or
any Letter of Credit Participation.
SECTION 16.3. INDEMNIFICATION. Without limiting the obligations of the
Borrowers hereunder or under any other Loan Document, the Banks agree to
indemnify the Bank Agents, their affiliates and their respective directors,
officers, agents and employees (to the extent not reimbursed by the Borrowers)
ratably in accordance with their respective Domestic Commitment Percentages and
Canadian Commitment Percentages, as applicable, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may at any
time be imposed on, incurred by or asserted against the Bank Agents in any way
relating to or arising out of this Agreement or any other Loan Document or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or the enforcement of any of the
<PAGE> 94
-88-
terms hereof or thereof or of any such other documents; provided, that no Bank
shall be liable for any of the foregoing to the extent they arise from the
gross negligence or willful misconduct of the applicable Bank Agents (or any
agent thereof), IT BEING THE INTENT OF THE PARTIES HERETO THAT ALL SUCH
INDEMNIFIED PARTIES SHALL BE INDEMNIFIED FOR THEIR ORDINARY SOLE OR
CONTRIBUTORY NEGLIGENCE.
SECTION 16.4. REIMBURSEMENT. Without limiting the provisions of
Section Section 6.1(a), 6.13, and 14, no Bank Agent shall be obliged to make
available to any Person any sum which such Bank Agent is expecting to receive
for the account of that Person until such Bank Agent has determined that it has
received that sum. A Bank Agent may, however, disburse funds prior to
determining that the sums which such Bank Agent expects to receive have been
finally and unconditionally paid to such Bank Agent, if such Bank Agent wishes
to do so. If and to the extent that a Bank Agent does disburse funds and it
later becomes apparent that such Bank Agent did not then receive a payment in
an amount equal to the sum paid out, then any Person to whom such Bank Agent
made the funds available shall, on demand from such Bank Agent, refund to such
Bank Agent the sum paid to that Person. If, in the opinion of a Bank Agent,
the distribution of any amount received by it in such capacity hereunder or
under the other Loan Documents might involve it in liability, it may refrain
from making distribution until its right to make distribution shall have been
adjudicated by a court of competent jurisdiction. If a court of competent
jurisdiction shall adjudge that any amount received and distributed by a Bank
Agent is to be repaid, each Person to whom any such distribution shall have
been made shall either repay to such Bank Agent its proportionate share of the
amount so adjudged to be repaid or shall pay over the same in such manner and
to such Persons as shall be determined by such court.
SECTION 16.5. DOCUMENTS. The Bank Agents will forward to each Bank,
promptly after receipt thereof, a copy of each notice or other document
furnished to the Bank Agents for such Bank hereunder; provided, however, that,
notwithstanding the foregoing, the Administrative Agent may furnish to the
Banks a monthly summary with respect to Letters of Credit issued hereunder in
lieu of copies of the related Letter of Credit Applications.
SECTION 16.6. NON-RELIANCE ON BANK AGENTS AND OTHER BANKS. Each Bank
represents that it has, independently and without reliance on the Bank Agents,
the Agents or any other Bank, and based on such documents and information as it
has deemed appropriate, made its own appraisal of the financial condition and
affairs of the Borrowers and Sanifill and the decision to enter into this
Agreement and the other Loan Documents and agrees that it will, independently
and without reliance upon the Bank Agents, the Agents or any other Bank, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own appraisals and decisions in taking or not taking
<PAGE> 95
-89-
action under this Agreement or any other Loan Document. Except as herein
expressly provided to the contrary, the Bank Agents shall not be required to
keep informed as to the performance or observance by the Borrowers and Sanifill
of this Agreement, the other Loan Documents or any other document referred to
or provided for herein or therein or by any other Person of any other agreement
or to make inquiry of, or to inspect the properties or books of, any Person.
Except for notices, reports and other documents and information expressly
required to be furnished to the Banks by the Bank Agents hereunder, the Bank
Agents shall not have any duty or responsibility to provide any Bank with any
credit or other information concerning any person which may come into the
possession of the Bank Agents or any of their affiliates. Each Bank shall have
access to all documents relating to the Bank Agents' performance of their
duties hereunder at such Bank's request. Unless any Bank shall promptly object
to any action taken by the Bank Agents hereunder of which such Bank has actual
knowledge (other than actions which require the prior consent of such Bank in
accordance with the terms hereof or to which the provisions of Section 16.8 are
applicable and other than actions which constitute gross negligence or willful
misconduct by the Bank Agents), such Bank shall be presumed to have approved
the same.
SECTION 16.7. RESIGNATION OF BANK AGENTS. A Bank Agent may resign at
any time by giving 60 days' prior written notice thereof to the Banks and the
applicable Borrower(s). Upon any such resignation, the Banks (other than the
resigning Bank Agent) shall have the right to appoint a successor Bank Agent
from among the Banks. If no successor to such Bank Agent shall have been so
appointed by the Banks and shall have accepted such appointment within 30 days
after the retiring Bank Agent's giving of notice of resignation, then the
retiring Bank Agent may, on behalf of the Banks, appoint a successor Bank Agent
from among the remaining Banks, which shall be a financial institution having a
combined capital and surplus in excess of $1,000,000,000. Upon the acceptance
of any appointment as Bank Agent hereunder by a successor Bank Agent, such
successor Bank Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Bank Agent, and the
retiring Bank Agent shall be discharged from its duties and obligations
hereunder. After any retiring Bank Agent's resignation, the provisions of this
Agreement shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as a Bank Agent. Any
new Issuing Bank appointed pursuant to this Section 16.7 shall immediately
issue new Letters of Credit in place of Letters of Credit previously issued or,
if acceptable to the resigning Issuing Bank, issue letters of credit in favor
of the resigning Issuing Bank as security for the outstanding Letters of Credit
and shall in due course replace all Letters of Credit previously issued by
the resigning Issuing Bank.
<PAGE> 96
-90-
SECTION 16.8. ACTION BY THE BANKS, CONSENTS, AMENDMENTS, WAIVERS, ETC.
Any action to be taken (including the giving of notice) may be taken, any
consent or approval required or permitted by this Agreement or any other Loan
Document to be given by the Banks may be given, any term of this Agreement, any
other Loan Document or any other instrument, document or agreement related to
this Agreement or the other Loan Documents or mentioned therein may be amended,
and the performance or observance by the Borrowers or any other Person of any
of the terms thereof and any Default or Event of Default (as defined in any of
the above-referenced documents or instruments) may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Majority Banks; provided, however, that no such
consent or amendment which affects the rights, duties or liabilities of any
Bank Agent or Issuing Bank shall be effective without the written consent of
such Bank Agent or Issuing Bank, as the case may be. Notwithstanding the
foregoing, no amendment, waiver or consent shall do any of the following unless
in writing and signed by ALL of the Banks (a) increase the principal amount of
the Total Commitment (or subject any Bank to any additional obligations), (b)
reduce the principal of or interest on the Notes (including, without
limitation, interest on overdue amounts) or any fees payable hereunder, (c)
postpone any date fixed for any payment in respect of principal or interest
(including, without limitation, interest on overdue amounts) on the Notes or
any fee hereunder; (d) change the definition of "Majority Banks" or number of
Banks which shall be required for the Banks or any of them to take any action
under the Loan Documents; (e) amend this Section 16.8; (f) change the Canadian
Commitment Percentage of any Canadian Bank, except as permitted pursuant to
Section 2.3, (g) change the Domestic Commitment Percentage of any Domestic
Bank, except as permitted under Section 20 hereof and pursuant to Section 2.3,
(h) change the Total Commitment Percentage of any Bank, or (i) release any
Borrower or Guarantor from its obligations hereunder (except as expressly set
forth herein).
Section 17. INDEMNIFICATION. The Borrowers agree to indemnify and hold
harmless the Banks, the Agents, and the Bank Agents and their affiliates, as
well as the Banks' and the Bank Agents' and their affiliates' shareholders,
directors, agents, officers, subsidiaries and affiliates, from and against all
damages, losses, settlement payments, obligations, liabilities, claims, suits,
penalties, assessments, citations, directives, demands, judgments, actions or
causes of action, whether statutorily created or under the common law, and
reasonable costs and expenses incurred, suffered, sustained or required to be
paid by an indemnified party by reason of or resulting from the transactions
contemplated hereby, except any of the foregoing which result from the gross
negligence or willful misconduct of any indemnified party. In any
investigation, enforcement matter, proceeding or litigation, or the preparation
therefor, the Banks and the Bank Agents shall be entitled to select their own
counsel and, in addition to the foregoing indemnity, the Borrowers agree to pay
promptly the
<PAGE> 97
-91-
reasonable fees and expenses of such counsel. In the event of the commencement
of any such proceeding or litigation against the Banks or Bank Agents by third
parties, the Borrowers shall be entitled to participate in such proceeding or
litigation with counsel of their choice at their expense, provided that such
counsel shall be reasonably satisfactory to the Banks or Bank Agents. The
covenants of this Section 17 shall survive payment or satisfaction of payment
of amounts owing with respect to any Note or any other Loan Document and
satisfaction of all the Obligations hereunder, IT BEING THE INTENT OF THE
PARTIES HERETO THAT ALL SUCH INDEMNIFIED PARTIES SHALL BE INDEMNIFIED FOR
THEIR ORDINARY SOLE OR CONTRIBUTORY NEGLIGENCE.
SECTION 18. WITHHOLDING TAXES. The Borrowers hereby agree that:
(a) Any and all payments made by any of the Borrowers
hereunder shall be made free and clear of, and without deduction for,
any and all present or future taxes, levies, fees, duties, imposts,
deductions, charges or withholdings of any nature whatsoever,
excluding, in the case of the Bank Agents or the Banks or any holder
of the Notes, (i) taxes imposed on, or measured by, its net income or
profits, (ii) franchise taxes imposed on it, (iii) taxes imposed by
any jurisdiction as a direct consequence of it, or any of its
affiliates, having a present or former connection with such
jurisdiction, including, without limitation, being organized, existing
or qualified to do business, doing business or maintaining a permanent
establishment or office in such jurisdiction, and (iv) taxes imposed
by reason of its failure to comply with any applicable certification,
identification, information, documentation or other reporting
requirement (all such non-excluded taxes being hereinafter referred to
as "Indemnifiable Taxes"). In the event that any withholding or
deduction from any payment to be made by the Borrowers hereunder is
required in respect of any Indemnifiable Taxes pursuant to any
applicable law, or governmental rule or regulation, then the Borrowers
will (i) direct to the relevant taxing authority the full amount
required to be so withheld or deducted, (ii) forward to the applicable
Bank Agent for delivery to the applicable Bank an official receipt or
other documentation satisfactory to the applicable Bank Agent and the
applicable Bank evidencing such payment to such taxing authority, and
(iii) direct to the applicable Bank Agent for the account of the
relevant Banks such additional amount or amounts as is necessary to
ensure that the net amount actually received by each relevant Bank
will equal the full amount such Bank would have received had no such
withholding or deduction (including any Indemnifiable Taxes on such
additional amounts) been required. Moreover, if any Indemnifiable
Taxes are directly asserted against the applicable Bank Agent or any
Bank with respect to any payment received by the Bank Agents or such
Bank by reason of the Borrowers' failure to
<PAGE> 98
-92-
properly deduct and withhold such Indemnifiable Taxes from such
payment, the applicable Bank Agent or such Bank may pay such
Indemnifiable Taxes and the Borrowers will promptly pay all such
additional amounts (including any penalties, interest or reasonable
expenses) as is necessary in order that the net amount received by
such Person after the payment of such Indemnifiable Taxes (including
any Indemnifiable Taxes on such additional amount) shall equal the
amount such Person would have received had not such Indemnifiable
Taxes been asserted. Any such payment shall be made promptly after
the receipt by the Borrowers from the applicable Bank Agent or such
Bank, as the case may be, of a written statement setting forth in
reasonable detail the amount of the Indemnifiable Taxes and the
basis of the claim.
(b) The Borrowers shall pay any present or future stamp
or documentary taxes or any other excise or any other similar levies
which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Document ("Other Taxes").
(c) The Borrowers hereby indemnify and hold harmless the
Bank Agents and each Bank for the full amount of Indemnifiable Taxes
or Other Taxes (including, without limitation, any Indemnifiable Taxes
or Other Taxes imposed on amounts payable under this Section 18) paid
by the Bank Agents or such Bank, as the case may be, and any liability
(including penalties, interest and reasonable expenses) arising
therefrom or with respect thereto, by reason of the Borrowers' failure
to properly deduct and withhold Indemnifiable Taxes pursuant to
paragraph (a) above or to properly pay Other Taxes pursuant to
paragraph (b) above. Any indemnification payment from the Borrowers
under the preceding sentence shall be made promptly after receipt by
the Borrowers from the applicable Bank Agent or Bank of a written
statement setting forth in reasonable detail the amount of such
Indemnifiable Taxes or such Other Taxes, as the case may be, and the
basis of the claim.
(d) If the Borrowers pay any amount under this Section 18
to the Bank Agents or any Bank and such payee knowingly receives a
refund of any taxes with respect to which such amount was paid, the
Bank Agents or such Bank, as the case may be, shall pay to the
Borrowers the amount of such refund promptly following the receipt
thereof by such payee.
(e) In the event any taxing authority notifies any of the
Borrowers that any of them has improperly failed to deduct or withhold
any taxes (other than Indemnifiable Taxes) from a payment made
hereunder to the Bank Agents or any Bank, the Borrowers shall timely
and fully pay such taxes to such taxing authority.
<PAGE> 99
-93-
(f) The Bank Agents or the Banks shall, upon the request
of the Borrowers, take reasonable measures to avoid or mitigate the
amount of Indemnifiable Taxes required to be deducted or withheld from
any payment made hereunder if such measures can be taken without such
Person in its sole judgment suffering any legal, regulatory or
economic disadvantage.
(g) Without prejudice to the survival of any other
agreement of the parties hereunder, the agreements and obligations of
the Borrowers contained in this Section 18 shall survive the payment
in full of the Obligations.
SECTION 19. SURVIVAL OF COVENANTS, ETC. Unless otherwise stated
herein, all covenants, agreements, representations and warranties made herein,
in the other Loan Documents or in any documents or other papers delivered by or
on behalf of the Borrowers and Sanifill pursuant hereto shall be deemed to have
been relied upon by the Banks, the Issuing Banks and the Bank Agents,
notwithstanding any investigation heretofore or hereafter made by them, and
shall survive the making by the Banks of the Loans, the accepting and
purchasing of Bankers' Acceptances and the issuance, extension or renewal of
any Letters of Credit by any Issuing Bank, as herein contemplated, and shall
continue in full force and effect so long as any amount due under this
Agreement, any Obligation, any Letter of Credit, any Bankers' Acceptance or any
Note remains outstanding and unpaid or any Bank has any obligation to make any
Loans or any Issuing Bank has any obligation to issue, extend, or renew any
Letters of Credit hereunder or any Canadian Bank has any obligation to accept
or purchase any Bankers' Acceptances. All statements contained in any
certificate or other paper delivered by or on behalf of the Borrowers pursuant
hereto or in connection with the transactions contemplated hereby shall
constitute representations and warranties by the Borrowers hereunder.
SECTION 20. ASSIGNMENT AND PARTICIPATION. It is understood and agreed
that each Bank shall have the right to assign at any time all or a portion of
its Domestic Commitment Percentage and Canadian Commitment Percentage, as
applicable, and interests in the risk relating to the Loans, outstanding
Letters of Credit, Bankers' Acceptances and its Domestic Commitment and
Canadian Commitment, as applicable, hereunder in an amount equal to or greater
than $5,000,000 (which assignment shall be of an equal percentage of (a) the
Domestic Commitment, the Domestic Loans and outstanding Domestic Letters of
Credit, or (b) the Canadian Commitment, the Canadian Loans, the Bankers'
Acceptances, and the outstanding Canadian Letters of Credit, unless in each
case otherwise agreed to by the Bank Agents) to additional banks or other
financial institutions with the prior written approval of the Administrative
Agent or the Canadian Agent, as applicable, the Documentation Agent and, so
long as no Event of Default has occurred and is continuing, the applicable
Borrower(s), which approvals shall not be
<PAGE> 100
-94-
unreasonably withheld; provided that a Bank may assign all or a portion of its
Canadian Commitment Percentage and Canadian Loans outstanding, Canadian Letters
of Credit and Bankers' Acceptances, only to an Eligible Canadian Assignee. Any
Bank may at any time, and from time to time, assign to any branch, lending
office, or affiliate or such Bank all or any part of its rights and obligations
under the Loan Documents by notice to the Agents and the Company. It is
further agreed that each bank or other financial institution which executes and
delivers to the Documentation Agent and the Borrowers hereunder an Assignment
and Acceptance substantially in the form of Exhibit J hereto (an "Assignment
and Acceptance") together with an assignment fee in the amount of $2,500
payable by the assigning Bank to the Documentation Agent, shall, on the date
specified in such Assignment and Acceptance, become a party to this Agreement
and the other Loan Documents for all purposes of this Agreement and the other
Loan Documents, and its portion of the Domestic Commitment and Canadian
Commitment, as applicable, the Loans and Letters of Credit and Bankers'
Acceptances shall be as set forth in such Assignment and Acceptance. The Bank
assignor thereunder shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under this Agreement and the
other Loan Documents. Upon the execution and delivery of such Assignment and
Acceptance, (a) the Borrowers shall issue to the assignee bank or other
financial institution Notes in the amount of such bank's or other financial
institution's Domestic Commitment or Canadian Commitment, dated the date of the
assignment or such other date as may be specified by the Documentation Agent,
and otherwise completed in substantially the form of Exhibits A, B or C, and to
the extent any assigning Bank has retained a portion of its obligations
hereunder, a replacement Syndicated Note and Canadian Note, as applicable, to
the assigning Bank reflecting its assignment; (b) to the extent applicable, the
Company shall issue a Competitive Bid Note in substantially the form of Exhibit
D (and a replacement Competitive Bid Note) or the Administrative Agent shall
make appropriate entries on the Competitive Bid Loan Accounts to reflect such
assignment of Competitive Bid Loan(s); (c) the Documentation Agent shall
distribute to the Borrowers, the Banks and such bank or financial institution a
schedule reflecting such changes; and (d) this Agreement shall be deemed to be
appropriately amended to reflect (i) the status of the bank or financial
institution as a party hereto and (ii) the status and rights of the Banks
hereunder.
Each Bank shall also have the right to grant participations to one or
more banks or other financial institutions in its Domestic Commitment or
Canadian Commitment, the Loans, Bankers' Acceptances and outstanding Letters of
Credit. The documents evidencing any such participation shall limit such
participating bank's or financial institution's voting rights with respect to
this Agreement to the matters set forth in Section 16.8 which require the
approval of all Banks.
<PAGE> 101
-95-
Notwithstanding the foregoing, no assignment or participation shall
operate to increase the Total Commitment hereunder or otherwise alter the
substantive terms of this Agreement, and no Bank which retains a Commitment
hereunder shall have a Commitment of less than $10,000,000, as such amount may
be reduced upon reductions in the Total Commitment pursuant to Section 2.3
hereof.
Anything contained in this Section 20 to the contrary notwithstanding,
any Bank may at any time pledge all or any portion of its interest and rights
under this Agreement (including all or any portion of its Notes) to any of the
twelve Federal Reserve Banks organized under Section 4 of the Federal Reserve
Act, 12 U.S.C. Section 341. No such pledge or the enforcement thereof shall
release the pledgor Bank from its obligations hereunder or under any of the
other Loan Documents.
SECTION 21. PARTIES IN INTEREST. All the terms of this Agreement and
the other Loan Documents shall be binding upon and inure to the benefit of and
be enforceable by the respective successors and assigns of the parties hereto
and thereto; provided, that the Borrowers shall not assign or transfer their
rights or obligations hereunder or thereunder without the prior written
consent of each of the Banks.
SECTION 22. NOTICES, ETC. Except as otherwise expressly provided in
this Agreement, all notices and other communications made or required to be
given pursuant to this Agreement or the other Loan Documents shall be in
writing and shall be delivered in hand, mailed by United States or Canadian
first class mail, as applicable, postage prepaid, or sent by telegraph, telex
or facsimile and confirmed by letter, addressed as follows:
(a) if to the Borrowers or Sanifill, at 1001 Fannin
Street, First City Tower, Suite 4000, Houston, Texas 77002, Attention:
Earl E. DeFrates, facsimile number (713) 209-9710; or
(b) if to BAI, at Bank of America Illinois, 231 South
LaSalle Street, Chicago, Illinois 60697, Attention: Robert P.
Rospierski, Vice President, facsimile number (312) 828-1974; or
(c) if to MGT, J.P. Morgan Securities Inc., the
Administrative Agent, the Documentation Agent or the Canadian Agent,
at Morgan Guaranty Trust Company of New York, 60 Wall Street, New
York, New York 10260-0060, facsimile number (212) 648-5336; or
(d) if to any Bank, at the address set forth next to such
Bank's name on Schedule 3 hereto;
or such other address for notice as shall have last been furnished in writing
to the Person giving the notice.
<PAGE> 102
-96-
Any such notice or demand shall be deemed to have been duly given or
made and to have become effective (a) if delivered by hand to a responsible
officer of the party to which it is directed, at the time of the receipt
thereof by such officer, (b) if sent by registered or certified first-class
mail, postage prepaid, five Business Days after the posting thereof, and (c) if
sent by telex, facsimile, or cable, at the time of the dispatch thereof, if in
normal business hours in the country of receipt, or otherwise at the opening of
business on the following Business Day.
SECTION 23. MISCELLANEOUS. The rights and remedies herein expressed
are cumulative and not exclusive of any other rights which the Banks, the
Issuing Banks or the Bank Agents would otherwise have. The captions in this
Agreement are for convenience of reference only and shall not define or limit
the provisions hereof. This Agreement and any amendment hereof may be executed
in several counterparts and by each party on a separate counterpart, each of
which when so executed and delivered shall be an original, but all of which
together shall constitute one instrument. In proving this Agreement it shall
not be necessary to produce or account for more than one such counterpart
signed by the party against whom enforcement is sought.
SECTION 24. CONSENTS, ETC. Neither this Agreement nor any term hereof
may be changed, waived, discharged or terminated, except as provided in this
Section 24, subject to the provisions of Section 16.8. No waiver shall extend
to or affect any obligation not expressly waived or impair any right consequent
thereon. Except as otherwise expressly provided in this Agreement, any consent
or approval required or permitted by this Agreement to be given by the Banks
may be given, and any term of this Agreement or of any other instrument related
hereto or mentioned herein may be amended, and the performance or observance by
the Borrowers of any terms of this Agreement or such other instrument or the
continuance of any Default or Event of Default may be waived (either generally
or in a particular instance and either retroactively or prospectively) with,
but only with, the written consent of the Borrowers and the Majority Banks. To
the extent permitted by law, no course of dealing or delay or omission on the
part of any of the Banks, the Issuing Banks or the Bank Agents in exercising
any right shall operate as a waiver thereof or otherwise be prejudicial
thereto. No notice to or demand upon the Borrowers shall entitle the Borrowers
to other or further notice or demand in similar or other circumstances.
SECTION 25. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY
APPLICABLE LAW,EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL
RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY
DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR ANY OF THE OTHER LOAN
DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE
OF SUCH RIGHTS AND
<PAGE> 103
-97-
OBLIGATIONS. EXCEPT AS PROHIBITED BY LAW, THE BORROWERS AND THE GUARANTORS
HEREBY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO CLAIM OR RECOVER IN ANY
LITIGATION REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES. EACH OF THE BORROWERS AND THE GUARANTORS (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY BANK, ISSUING BANK OR BANK AGENT HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH BANK, ISSUING BANK OR BANK AGENT
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS
AND (B) ACKNOWLEDGES THAT THE BANK AGENTS, THE BANKS, AND THE ISSUING BANKS
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
BECAUSE OF, AMONG OTHER THINGS, THE BORROWERS' AND THE GUARANTORS' WAIVERS AND
CERTIFICATIONS CONTAINED HEREIN.
SECTION 26. GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS AGREEMENT
AND EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE STATE
OF NEW YORK AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF SAID STATE (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS
OR CHOICE OF LAW OTHER THAN GENERAL OBLIGATIONS LAW Section 5-1401). THE
BORROWERS AND THE GUARANTORS CONSENT TO THE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE
COURT SITTING IN THE CITY OF NEW YORK IN CONNECTION WITH ANY SUIT TO ENFORCE
THE RIGHTS OF THE BANKS, THE ISSUING BANKS OR THE BANK AGENTS UNDER THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH OF THE BORROWERS AND THE
GUARANTORS IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
SECTION 27. SEVERABILITY. The provisions of this Agreement are
severable and if any one clause or provision hereof shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof,
in such jurisdiction, and shall not in any manner affect such clause or
provision in any other jurisdiction, or any other clause or provision of
this Agreement in any jurisdiction.
<PAGE> 104
-98-
Section 28. JOINT AND SEVERAL LIABILITY; LIMITATION OF LIABILITY.
Notwithstanding anything herein to the contrary, each of the Canadian
Borrowers covenants and agrees that all Obligations with respect to all
Canadian Loans, Reimbursement Obligations with respect to Canadian Letters of
Credit, Bankers' Acceptances and any other Obligations payable to the Canadian
Agent or any of the Canadian Banks shall constitute the joint and several
obligation of such Canadian Borrower, and the Canadian Borrowers shall have no
liability for any such Obligations with respect to Syndicated Loans, Swing Line
Loans, Competitive Bid Loans and Reimbursement Obligations with respect to
Domestic Letters of Credit and any other Obligations payable to the
Administrative Agent or any of the Domestic Banks. Each of the Canadian
Borrowers, to the fullest extent permitted by applicable law, is accepting
joint and several liability for the Obligations of the Canadian Borrowers
hereunder and under the other Loan Documents in consideration of the financial
accommodation to be provided by the Canadian Agent and the Canadian Banks under
this Agreement, for the mutual benefit, directly or indirectly, of each of the
Canadian Borrowers and in consideration of the undertakings of each other
Canadian Borrower to accept the joint and several liability for the Obligations
of the Canadian Borrowers, and hereby waives any and all defenses with respect
thereto to the same degree and with the same force as the waiver by the
Guarantors set forth in Section 29.4 below and all rights with respect to
Article 15 Title 1 of General Obligations Law.
SECTION 29. GUARANTY.
SECTION 29.1. GUARANTY. For value received and hereby acknowledged
and as an inducement to the Banks and the Issuing Banks to make the Loans and
Letters of Credit available to the Borrowers and to accept and purchase
Bankers' Acceptances, Sanifill hereby unconditionally and irrevocably
guarantees (a) the full punctual payment when due, whether at stated maturity,
by acceleration or otherwise, of all Obligations of the Borrowers now or
hereafter existing whether for principal, interest, fees, expenses or
otherwise, and (b) the strict performance and observance by the Borrowers of
all agreements, warranties and covenants applicable to the Borrowers in the
Loan Documents and (c) the obligations of the Borrowers under the Loan
Documents (such Obligations collectively being hereafter referred to as
Sanifill's "Guaranteed Obligations"); and the Company hereby unconditionally
and irrevocably guarantees (a) the full punctual payment when due, whether at
stated maturity, by acceleration or otherwise, of all Obligations of the
Canadian Borrowers now or hereafter existing whether for principal, interest,
fees, expenses or otherwise, and (b) the strict performance and observance by
the Canadian Borrowers of all agreements, warranties and covenants applicable
to the Canadian Borrowers in the Loan Documents (such Obligations collectively
being hereinafter referred to as the Company's "Guaranteed Obligations").
<PAGE> 105
-99-
SECTION 29.2. GUARANTY ABSOLUTE. Each of the Guarantors guarantees
that its Guaranteed Obligations will be paid strictly in accordance with the
terms hereof, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of any
Bank, any Issuing Bank or any Bank Agent with respect thereto. The liability
of the Guarantors under the guaranty granted under this Agreement with regard
to the Guaranteed Obligations shall be absolute and unconditional irrespective
of:
(a) any change in the time, manner or place of payment
of, or in any other term of, all or any of its Guaranteed Obligations
or any other amendment or waiver of or any consent to departure from
this Agreement or any other Loan Document (with regard to such
Guaranteed Obligations);
(b) any release or amendment or waiver of or consent to
departure from any other guaranty for all or any of its Guaranteed
Obligations;
(c) any change in ownership of the Borrowers;
(d) any acceptance of any partial payment(s) from the
Borrowers or the other Guarantor; or
(e) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, any of the
Borrowers in respect of its Obligations under any Loan Document.
The guaranty under this Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any Guaranteed
Obligation is rescinded or must otherwise be returned by the Banks, the Issuing
Banks or the Bank Agents upon the insolvency, bankruptcy or reorganization of
any Borrower or otherwise, all as though such payment had not been made.
SECTION 29.3. EFFECTIVENESS; ENFORCEMENT. The guaranty under this
Agreement shall be effective and shall be deemed to be made with respect to
each Loan made, each Letter of Credit issued and each Bankers' Acceptance
accepted as of the time it is made, issued or accepted, as applicable. No
invalidity, irregularity or unenforceability by reason of any bankruptcy or
similar law, or any law or order of any government or agency thereof purporting
to reduce, amend or otherwise affect any liability of any Borrower, and no
defect in or insufficiency or want of powers of any Borrower or irregular or
improperly recorded exercise thereof, shall impair, affect, be a defense to or
claim against such guaranty. The guaranty under this Agreement is a continuing
guaranty and shall (a) survive any termination of this Agreement, and (b)
remain in full force and effect until payment in full of, and performance of,
all Guaranteed Obligations and all other amounts payable under the
guaranty under this
<PAGE> 106
-100-
Agreement. Notwithstanding anything set forth in this Section 29 to the
contrary, Sanifill shall be released from its guaranty obligations upon the
satisfaction (as determined in the Bank Agents' judgment and evidenced by a
release executed by the Bank Agents) of the Prudential Private Placement Debt
and the Sanifill Convertible Subordinated Debt. The guaranty under this
Agreement is made for the benefit of the Bank Agents, the Issuing Banks and the
Banks and their successors and assigns, and may be enforced from time to time as
often as occasion therefor may arise and without requirement on the part of the
Bank Agents, the Issuing Banks or the Banks first to exercise any rights against
the Borrowers, or to resort to any other source or means of obtaining payment of
any of the said obligations or to elect any other remedy.
SECTION 29.4. WAIVER. Except as otherwise specifically provided in any
of the Loan Documents, each of the Guarantors hereby waives promptness,
diligence, protest, notice of protest, all suretyship defenses, notice of
acceptance and any other notice with respect to any of its Guaranteed
Obligations and the guaranty under this Agreement and any requirement that the
Banks, the Issuing Banks or the Bank Agents protect, secure, perfect any
security interest or lien or any property subject thereto or exhaust any right
or take any action against the Borrowers or any other Person. Each of the
Guarantors also irrevocably waives, to the fullest extent permitted by law, all
defenses which at any time may be available to it in respect of its Guaranteed
Obligations by virtue of any statute of limitations, valuation, stay,
moratorium law or other similar law now or hereafter in effect.
SECTION 29.5. EXPENSES. Each of the Guarantors hereby promises to
reimburse (a) the Documentation Agent for all reasonable out-of-pocket fees and
disbursements (including all reasonable attorneys' fees), incurred or expended
in connection with the preparation, filing or recording, or interpretation of
the guaranty under this Agreement, the other Loan Documents to which such
Guarantor is a party, or any amendment, modification, approval, consent or
waiver hereof or thereof, and (b) the Bank Agents, the Issuing Banks and the
Banks and their respective affiliates for all reasonable out-of-pocket fees and
disbursements (including reasonable attorneys' fees), incurred or expended in
connection with the enforcement of its Guaranteed Obligations (whether or not
legal proceedings are instituted). The Guarantors will pay any taxes
(including any interest and penalties in respect thereof) other than the Banks'
taxes based on overall income or profits, payable on or with respect to the
transactions contemplated by the guaranty under this Agreement, each of the
Guarantors hereby agreeing jointly and severally to indemnify each Bank
with respect thereto.
<PAGE> 107
-101-
SECTION 29.6. CONCERNING JOINT AND SEVERAL LIABILITY OF THE GUARANTORS.
(a) Each of the Guarantors hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a
co-debtor, joint and several liability with the applicable
Borrower(s), with respect to the payment and performance of all of its
Guaranteed Obligations (including, without limitation, any Guaranteed
Obligations arising under this Section 29), it being the intention of
the parties hereto that all such Guaranteed Obligations shall be the
joint and several Guaranteed Obligations of such Guarantor and the
applicable Borrower(s) without preferences or distinction among them.
(b) If and to the extent that the applicable Borrower(s)
shall fail to make any payment with respect to any of its Guaranteed
Obligations as and when due or to perform any of its Guaranteed
Obligations in accordance with the terms thereof, then in each such
event the applicable Guarantor will make such payment with respect to,
or perform, such Guaranteed Obligation.
(c) The Guaranteed Obligations of each Guarantor under
the provisions of this Section 29 constitute full recourse obligations
of such Guarantor enforceable against such Guarantor to the full
extent of its properties and assets, irrespective of the validity,
regularity or enforceability of this Agreement or any other
circumstance whatsoever.
(d) Except as otherwise expressly provided in this
Agreement, each of the Guarantors hereby waives notice of acceptance
of its joint and several liability, notice of any Loans made, Bankers'
Acceptances accepted or Letters of Credit issued under this Agreement,
notice of any action at any time taken or omitted by the Bank Agents,
the Issuing Banks or the Banks under or in respect of any of the
Guaranteed Obligations, and, generally, to the extent permitted by
applicable law, all demands, notices and other formalities of every
kind in connection with this Agreement. Each of the Guarantors hereby
assents to, and waives notice of, any extension or postponement of the
time for the payment of any of the Guaranteed Obligations, the
acceptance of any payment of any of the Guaranteed Obligations, the
acceptance of any partial payment thereon, any waiver, consent or
other action or acquiescence by the Bank Agents, the Issuing Banks or
the Banks at any time or times in respect of any Default or Event of
Default by any of the Borrowers or the Guarantors in the performance
or satisfaction of any term, covenant, condition or provision of this
Agreement or any other Loan Document, any and all other indulgences
whatsoever by the Bank Agents, the Issuing Banks or the Banks in
respect of any of the Guaranteed Obligations, and the taking,
addition, substitution or release, in whole or in part, at any time
<PAGE> 108
-102-
or times, of any security for any of the Guaranteed Obligations or the
addition, substitution or release, in whole or in part, of any of the
Borrowers or any other Guarantor. Without limiting the generality of
the foregoing, each of the Guarantors assents to any other action or
delay in acting or failure to act on the part of the Banks, the
Issuing Banks or the Bank Agents with respect to the failure by any of
the Borrowers or the other Guarantor to comply with its respective
Obligations or Guaranteed Obligations, including, without limitation,
any failure strictly or diligently to assert any right or to pursue
any remedy or to comply fully with applicable laws or regulations
thereunder, which might, but for the provisions of this Section 29,
afford grounds for terminating, discharging or relieving the
Guarantors, in whole or in part, from any of the Guaranteed
Obligations under this Section 29, it being the intention of the
Guarantors that, so long as any of the Guaranteed Obligations
hereunder remain unsatisfied, the Guaranteed Obligations of each of
the Guarantors under this Section 29 shall not be discharged except by
performance and then only to the extent of such performance. The
Guaranteed Obligations of each of the Guarantors under this Section 29
shall not be diminished or rendered unenforceable by any winding up,
reorganization, arrangement, liquidation, reconstruction or similar
proceeding with respect to any of the Borrowers or the Guarantors or
the Banks, the Issuing Banks or the Bank Agents. The joint and
several liability of each of the Guarantors hereunder shall continue
in full force and effect notwithstanding any absorption, merger,
consolidation, amalgamation or any other change whatsoever in the
name, membership, constitution or place of formation of the Borrowers
or the Guarantors, the Banks, the Issuing Banks or the Bank Agents.
(e) Sanifill, and, solely in its capacity as a Guarantor
of the Obligations of the Canadian Borrowers under this Section 29,
the Company, shall be liable under the Guaranty under this Section 29
only for the maximum amount of such liabilities that can be incurred
under applicable law without rendering this Agreement, as it relates
to the guaranty under this Section 29, voidable under applicable law
relating to fraudulent conveyance and fraudulent transfer, and not for
any greater amount. Accordingly, if any obligation under any
provision of the guaranty under this Section 29 shall be declared to
be invalid or unenforceable in any respect or to any extent, it is the
stated intention and agreement of the Guarantors, the Bank Agents, the
Issuing Banks and the Banks that any balance of the obligation created
by such provision and all other obligations of the Guarantors under
this Section 29 to the Banks, the Issuing Banks or the Bank Agents
shall remain valid and enforceable, and that all sums not in excess of
those permitted under applicable law shall remain fully collectible by
the Banks, the Issuing Banks and the Bank Agents from Sanifill or the
Company, as the case may be.
<PAGE> 109
-103-
(f) The provisions of this Section 29 are made for the
benefit of the Bank Agents, the Issuing Banks and the Banks and their
successors and assigns, and may be enforced in good faith by them from
time to time against the Guarantors as often as occasion therefor may
arise and without requirement on the part of the Bank Agents, the
Issuing Banks or the Banks first to marshal any of their claims or to
exercise any of their rights against the Borrowers or the Guarantors
or to exhaust any remedies available to them against the Borrowers or
the Guarantors or to resort to any other source or means of obtaining
payment of any of the obligations hereunder or to elect any other
remedy. The provisions of this Section 29 shall remain in effect
until all of the Guaranteed Obligations shall have been paid in full
or otherwise fully satisfied and the Domestic Commitments and Canadian
Commitments have expired and all outstanding Letters of Credit and
Bankers' Acceptances have expired, matured or otherwise been
terminated. If at any time, any payment, or any part thereof, made in
respect of any of the Guaranteed Obligations, is rescinded or must
otherwise be restored or returned by the Banks, the Issuing Banks or
the Bank Agents upon the insolvency, bankruptcy or reorganization of
any of the Borrowers or the Guarantors, or otherwise, the provisions
of this Section 29 will forthwith be reinstated in effect, as though
such payment had not been made.
SECTION 29.7. WAIVER. Until the final payment and performance in full
of all of the Obligations, neither of the Guarantors shall exercise and each
of the Guarantors hereby waives any rights such Guarantor may have against the
Borrowers or the other Guarantor arising as a result of payment by such
Guarantor hereunder, by way of subrogation, reimbursement, restitution,
contribution or otherwise, and will not prove any claim in competition with the
Bank Agents, the Issuing Banks or any Bank in respect of any payment hereunder
in any bankruptcy, insolvency or reorganization case or proceedings of any
nature; such Guarantor will not claim any setoff, recoupment or counterclaim
against the Borrowers or the other Guarantor in respect of any liability of the
Borrowers to such Guarantor; and such Guarantor waives any benefit of and any
right to participate in any collateral security which may be held by the Bank
Agents, the Issuing Banks or any Bank.
SECTION 29.8. SUBROGATION; SUBORDINATION. The payment of any amounts
due with respect to any indebtedness of the Borrowers for money borrowed or
credit received now or hereafter owed to either of the Guarantors is hereby
subordinated to the prior payment in full of all of the Obligations. Each of
the Guarantors agrees that, after the occurrence of any default in the payment
or performance of any of the Obligations, such Guarantor will not demand, sue
for or otherwise attempt to collect any such indebtedness of the Borrowers or
the other Guarantor to such Guarantor until all of the Obligations shall have
been paid in full. If, notwithstanding the foregoing sentence, either of the
<PAGE> 110
-104-
Guarantors shall collect, enforce or receive any amounts in respect of such
indebtedness while any Obligations are still outstanding, such amounts shall be
collected, enforced and received by such Guarantor as trustee for the Banks,
the Issuing Banks and the Bank Agents and be paid over to the Administrative
Agent at Default, for the benefit of the Banks, the Issuing Banks, and the Bank
Agents on account of the Obligations without affecting in any manner the
liability of such Guarantor under the other provisions hereof.
SECTION 29.9. CURRENCY OF PAYMENT. Each of the Guarantors shall pay
its respective Guaranteed Obligations in the currency in which such Obligation
was incurred by the applicable Borrower(s).
SECTION 30. PARI PASSU TREATMENT.
(a) Notwithstanding anything to the contrary set forth
herein, each payment or prepayment of principal and interest received
after the occurrence of an Event of Default hereunder shall be
distributed pari passu among the Banks, in accordance with the
aggregate outstanding principal amount of the Obligations owing to
each Bank divided by the aggregate outstanding principal amount of all
Obligations..
(b) Following the occurrence and during the continuance
of any Event of Default, each Bank agrees that if it shall, through
the exercise of a right of banker's lien, setoff or counterclaim
against any Borrower (pursuant to Section 14 or otherwise), including
a secured claim under Section 506 of the Bankruptcy Code or other
security or interest arising from or in lieu of, such secured claim,
received by such Bank under any applicable bankruptcy, insolvency or
other similar law or otherwise, obtain payment (voluntary or
involuntary) in respect of the Notes, Loans, Bankers' Acceptances,
Reimbursement Obligations and other Obligations held by it (other than
pursuant to Section 6.5, Section 6.6 or Section 6.8) as a result of
which the unpaid principal portion of the Notes and the Obligations
held by it shall be proportionately less than the unpaid principal
portion of the Notes and Obligations held by any other Bank, it shall
be deemed to have simultaneously purchased from such other Bank a
participation in the Notes and Obligations held by such other Bank, so
that the aggregate unpaid principal amount of the Notes, Obligations
and participations in Notes and Obligations held by each Bank shall be
in the same proportion to the aggregate unpaid principal amount of the
Notes and Obligations then outstanding as the principal amount of the
Notes and other Obligations held by it prior to such exercise of
banker's lien, setoff or counterclaim was to the principal amount of
all Notes and other Obligations outstanding prior to such exercise of
banker's lien, setoff or counterclaim; provided, however, that if any
such purchase or purchases or adjustments shall be made pursuant to
this Section 30 and the payment
<PAGE> 111
-105-
giving rise thereto shall thereafter be recovered, such purchase or
purchases or adjustments shall be rescinded to the extent of such
recovery and the purchase price or prices or adjustments restored
without interest. Each Borrower expressly consents to the foregoing
arrangements and agrees that any Person holding such a participation
in the Notes and the Obligations deemed to have been so purchased may
exercise any and all rights of banker's lien, setoff or counterclaim
with respect to any and all moneys owing by such Borrower to such
Person as fully as if such Person had made a Loan directly to such
Borrower in the amount of such participation.
SECTION 31. FINAL AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
<PAGE> 112
-106-
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
under seal as of the date first set forth above.
THE BORROWERS AND GUARANTORS:
USA WASTE SERVICES, INC.
By: /s/ EARL E. DEFRATES
-----------------------------------
Earl E. DeFrates
Executive Vice President and CFO
SANIFILL, INC.
By: /s/ RONALD H. JONES
-----------------------------------
Ronald H. Jones
Vice President & Treasurer
CANADIAN WASTE SERVICES INC.
By: /s/ RONALD H. JONES
----------------------------------
Ronald H. Jones
Vice President & Treasurer
THE BANKS AND AGENTS:
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ ARTHUR J. OBERHEIM
----------------------------------
Vice President
BANK OF AMERICA ILLINOIS
By: /s/ ILLEGIBLE
----------------------------------
Title: Vice President
--------------------------------
<PAGE> 113
-107-
BANK OF AMERICA CANADA
By: /s/ ILLEGIBLE
-----------------------------------
Title: Vice President
--------------------------------
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, Individually and as
Administrative Agent
By: /s/ LAURA E. REIM
-----------------------------------
Title: Vice President
--------------------------------
J.P. MORGAN CANADA, individually and
as Canadian
By: /s/ JOHN MAYNARD
-----------------------------------
Title: Vice President & Controller
--------------------------------
ABN AMRO BANK, HOUSTON AGENCY
By: /s/ LAURIE C. TUZO
----------------------------------
Title: Group Vice President
-------------------------------
By: /s/ RONALD A. MAHLE
----------------------------------
Title: Group Vice President
-------------------------------
THE BANK OF NEW YORK
By: /s/ ALAN F. LYSTER, JR.
-----------------------------------
Title: Vice President
--------------------------------
THE BANK OF NOVA SCOTIA
By: /s/ F.C.H. ASHBY
----------------------------------
Title: Senior Manager Loan Operations
<PAGE> 114
-108-
CIBC INC.
By: /s/ [ILLEGIBLE]
---------------------------------
Title:
-------------------------------
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ JACQUES-YVES MULLIEZ
--------------------------------
Title: Senior Vice President
------------------------------
DEUTSCHE BANK AG, NEW YORK AND/OR
CAYMAN ISLANDS BRANCHES
By: /s/ JEAN M. HANNIGAN
---------------------------------
Title: Vice President
-------------------------------
By: /s/ VISHWANIE S. SEWSANKER
---------------------------------
Title: Associate
-------------------------------
THE FUJI BANK, LIMITED, HOUSTON AGENCY
By: /s/ DAVID KELLEY
---------------------------------
Title: Senior Vice President
-------------------------------
WELLS FARGO BANK (TEXAS),
NATIONAL ASSOCIATION
By: /s/ ILLEGIBLE
---------------------------------
Title: Vice President
-------------------------------
THE BANK OF TOKYO-MITSUBISHI LTD.
By: /s/ J. BECKWITH
---------------------------------
Title: Vice President
-------------------------------
<PAGE> 115
-109-
BANQUE PARIBAS, HOUSTON AGENCY
By: /s/ SCOTT CLINGAN
--------------------------------------
Title: Vice President
-----------------------------------
By: /s/ [ILLEGIBLE]
--------------------------------------
Title: Vice President
-----------------------------------
COMERICA BANK
By: /s/ REGINALD M. GOLDSMITH, III
--------------------------------------
Title: Vice President
-----------------------------------
THE SANWA BANK LIMITED, DALLAS AGENCY
By: /s/ MATTHEW G. PATRICK
--------------------------------------
Title: Vice President
-----------------------------------
TEXAS COMMERCE BANK, NATIONAL ASSOCIATION
By: /s/ [ILLEGIBLE]
--------------------------------------
Title: Vice President
-----------------------------------
TORONTO DOMINION (TEXAS), INC.
By: /s/ NEVA NESBITT
--------------------------------------
Title: Vice President
-----------------------------------
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK AND
CAYMAN ISLAND BRANCHES
By: /s/ [ILLEGIBLE]
--------------------------------------
Title: Vice President
-----------------------------------
<PAGE> 116
-110-
FLEET BANK, N.A.
By: /s/ ILLEGIBLE
----------------------------------
Title: Vice President
-------------------------------
BANK AUSTRIA
AKTIENGESELLSCHAFT
By: /s/ JEANINE BALL
----------------------------------
Title: Assistant Vice President
-------------------------------
By: /s/ JOSEPH A. STEINER
----------------------------------
Title: Senior Vice President
-------------------------------
THE DAI-ICHI KANGYO BANK, LTD.
By: /s/ ILLEGIBLE
----------------------------------
Title: Vice President
-------------------------------
DG BANK DEUTSCHE
GENOSSENSCHAFTSBANK
By: /s/ ILLEGIBLE
----------------------------------
Title: Vice President
-------------------------------
By: /s/ ILLEGIBLE
----------------------------------
Title: Vice President
-------------------------------
THE LONG-TERM CREDIT BANK OF
JAPAN, LIMITED, NEW YORK BRANCH
By: /s/ ILLEGIBLE
----------------------------------
Title: Joint General Manager
-------------------------------
<PAGE> 117
-111-
THE MITSUBISHI TRUST AND BANKING
CORP., CHICAGO BRANCH
By: /s/ [ILLEGIBLE]
----------------------------------
Title: Chief Manager
-------------------------------
THE SUMITOMO BANK, LIMITED
By: /s/ HARUMITSO SEKI
----------------------------------
Title: General Manager
-------------------------------
SUNTRUST BANK, ATLANTA
By: /s/ TRISHA E. HARDY
----------------------------------
Title: Corporate Banking Officer
-------------------------------
By: /s/ JOHN A. FIELDS, JR.
----------------------------------
Title: Vice President
-------------------------------
HIBERNIA NATIONAL BANK
By: /s/ TROY J. VILLAFARRA
----------------------------------
Title: Vice President
-------------------------------
ROYAL BANK OF CANADA
By: /s/ GORDON [ILLEGIBLE]
----------------------------------
Title: Manager
-------------------------------
BANK OF MONTREAL
By: /s/ MICHAEL D. PINCUS
----------------------------------
Title: Managing Director
-------------------------------
BANQUE NATIONALE DE PARIS
By: /s/ MIKE SHRYOCK
----------------------------------
Title: Vice President
-------------------------------
<PAGE> 118
-112-
WACHOVIA BANK OF GEORGIA, N.A.
By: /s/ ILLEGIBLE
--------------------------------------
Title: Vice President
-----------------------------------
PNC BANK, N.A.
By: /s/ DAVID EGAN
--------------------------------------
Title: Sr. Vice President
-----------------------------------
YASUDA TRUST AND BANKING CO.,
LTD.
By: /s/ MAKOTO TAGAWA
--------------------------------------
Title: Deputy General Manager
-----------------------------------
KREDIETBANK, N.V.
By: /s/ TOD R. ANGUS /s/ ROBERT SNAUFFER
--------------------------------------
Title: Vice President
-----------------------------------
SOCIETE GENERALE
By: /s/ THIERRY NAMUROY
--------------------------------------
Title: Vice President
-----------------------------------
THE INDUSTRIAL BANK OF JAPAN
TRUST COMPANY
By: /s/ KAZUTOSHI KUWAHARA
--------------------------------------
Title: Executive Vice President
-----------------------------------
The Industrial Bank of Japan,
Limited, Houston Office
(Authorized Representative)
<PAGE> 119
-113-
BANCA COMMERCIALE ITALIANA,
LOS ANGELES FOREIGN BRANCH
By: /s/ RICHARD E. SWANICKI
--------------------------------------
Title: Vice President
-----------------------------------
By: /s/ [ILLEGIBLE]
--------------------------------------
Title: Vice President & Manager
-----------------------------------
<PAGE> 120
EXHIBIT A
FORM OF
SYNDICATED NOTE
$________________ as of March __, 1997
FOR VALUE RECEIVED, the undersigned, USA WASTE SERVICES, INC., a
Delaware corporation (the "Company"), hereby absolutely and unconditionally
promises to pay to the order of [INSERT NAME OF PAYEE BANK] (the "Bank") at the
head office of Morgan Guaranty Trust Company of New York, as Administrative
Agent for the Banks, at 60 Wall Street, New York, New York 10260:
(a) on the Maturity Date, the principal amount of _______________
DOLLARS ($_________) or, if less, the then outstanding aggregate unpaid
principal amount of Syndicated Loans made by the Bank to the Company pursuant
to the Amended and Restated Revolving Credit Agreement, dated as of March 5,
1997 (as amended, modified, supplemented or restated and in effect from time to
time, the "Credit Agreement"), by and among the Company, the Bank, Canadian
Waste Services, Inc. (the "Canadian Borrower"), Sanifill, Inc., the
Administrative Agent, the other Bank Agents referred to therein, and such other
banks or financial institutions that are or may become parties to the Credit
Agreement from time to time in accordance with the provisions thereof; and
(b) interest on the principal balance hereof from time to time
outstanding from the date hereof through and including the date on which such
principal amount is paid in full, at the times and at the rates provided in the
Credit Agreement, subject however to the provisions of Section 6.10 of the
Credit Agreement.
This Syndicated Note evidences borrowings under, is subject to the
terms and conditions of, and has been issued by the Company in accordance with,
the Credit Agreement and is one of the Syndicated Notes referred to therein.
The Bank and any holder hereof are entitled to the benefits of the Credit
Agreement and may enforce the agreements of the Company contained therein, and
any holder hereof may exercise the respective remedies provided for thereby or
otherwise available in respect thereof, all in accordance with the respective
terms thereof. All capitalized terms used in this Syndicated Note and not
otherwise defined herein shall have the same meanings herein as in the Credit
Agreement.
The Bank shall endorse, and is hereby irrevocably authorized by the
Company to endorse, on the schedule attached to this Syndicated Note or a
continuation of such schedule attached hereto and made a part hereof, an
appropriate notation evidencing advances and repayments of principal of this
<PAGE> 121
-2-
Syndicated Note, provided that failure by the Bank to make any such notations
shall not affect any of the Company's obligations or the validity of any
repayments made by the Company in respect of this Syndicated Note.
The Company has the right in certain circumstances and the obligation
in certain other circumstances to prepay the whole or part of the principal of
this Syndicated Note on the terms and conditions specified in the Credit
Agreement.
If any one or more Events of Default shall occur, the entire unpaid
principal amount of this Syndicated Note and all of the unpaid interest accrued
thereon may become or be declared due and payable in the manner and with the
effect provided in the Credit Agreement.
The Company and every endorser of this Syndicated Note or the
obligation represented hereby waive presentment, demand, notice, protest,
notice of intent to accelerate, notice of acceleration and all other demands
and notices in connection with the delivery, acceptance, performance, default
or enforcement of this Syndicated Note, assent to any extension or postponement
of the time of payment or any other indulgence, to any substitution, exchange
or release of collateral and to the addition or release of any other party or
person primarily or secondarily liable.
This Syndicated Note shall be deemed to take effect as an instrument
under the internal laws of the State of New York, without regard to principles
of conflicts-of-laws or choice of law doctrines, and for all purposes shall be
construed in accordance with such laws.
IN WITNESS WHEREOF, the Company has caused this Syndicated Note to be
signed on its behalf by its duly authorized officer as of the day and year
first above written.
USA WASTE SERVICES, INC.
By:
--------------------------
Title:
<PAGE> 122
-3-
<TABLE>
<CAPTION>
================================================================================
Amount of
Principal Balance of
Amount of Paid or Principal Notation
Date Loan Type Loan Prepaid Unpaid Made By
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
</TABLE>
<PAGE> 123
EXHIBIT B
SWING LINE NOTE
$10,000,000 as of March __, 1997
FOR VALUE RECEIVED, the undersigned, USA WASTE SERVICES, INC., a
Delaware corporation (the "Company"), hereby absolutely and unconditionally
promises to pay to the order of MORGAN GUARANTY TRUST COMPANY OF NEW YORK (the
"Bank") at the head office of Morgan Guaranty Trust Company of New York, as
Administrative Agent for the Banks, at 60 Wall Street, New York, New York
10260:
(a) on the Maturity Date, the principal amount of TEN MILLION
DOLLARS ($10,000,000) or, if less, the then outstanding aggregate unpaid
principal amount of Swing Line Loans made by the Bank to the Company pursuant
to the Amended and Restated Revolving Credit Agreement, dated as of March 5,
1997 (as amended, modified, supplemented or restated and in effect from time to
time, the "Credit Agreement"), by and among the Company, the Bank, Canadian
Waste Services, Inc. (the "Canadian Borrower"), Sanifill, Inc., the
Administrative Agent, the other Bank Agents referred to therein, and such other
banks or financial institutions that are or may become parties to the Credit
Agreement from time to time in accordance with the provisions thereof; and
(b) interest on the principal balance hereof from time to time
outstanding from the date hereof through and including the date on which such
principal amount is paid in full, at the times and at the rates provided in the
Credit Agreement, subject however to the provisions of Section 6.10 of the
Credit Agreement.
This Swing Line Note evidences borrowings under, is subject to the
terms and conditions of, and has been issued by the Company in accordance with
the Credit Agreement and is the Swing Line Note referred to therein. The Bank
and any holder hereof are entitled to the benefits of the Credit Agreement and
may enforce the agreements of the Company contained therein, and any holder
hereof may exercise the respective remedies provided for thereby or otherwise
available in respect thereof, all in accordance with the respective terms
thereof. All capitalized terms used in this Swing Line Note and not otherwise
defined herein shall have the same meanings herein as in the Credit Agreement.
The Bank shall endorse, and is hereby irrevocably authorized by the
Company to endorse, on the schedule attached to this Swing Line Note or a
continuation of such schedule attached hereto and made a part hereof, an
appropriate notation evidencing advances and repayments of principal of this
Swing Line Note, provided that failure by the Bank to make any such notations
shall not
<PAGE> 124
-2-
affect any of the Company's obligations or the validity of any repayments made
by the Company in respect of this Swing Line Note.
The Company has the right in certain circumstances and the obligation
in certain other circumstances to prepay the whole or part of the principal of
this Swing Line Note on the terms and conditions specified in the Credit
Agreement.
If any one or more Events of Default shall occur, the entire unpaid
principal amount of this Swing Line Note and all of the unpaid interest accrued
thereon may become or be declared due and payable in the manner and with the
effect provided in the Credit Agreement.
The Company and every endorser of this Swing Line Note or the
obligation represented hereby waive presentment, demand, notice, protest,
notice of intent to accelerate, notice of acceleration and all other demands
and notices in connection with the delivery, acceptance, performance, default
or enforcement of this Swing Line Note, assent to any extension or postponement
of the time of payment or any other indulgence, to any substitution, exchange
or release of collateral and to the addition or release of any other party or
person primarily or secondarily liable.
This Swing Line Note shall be deemed to take effect as an instrument
under the internal laws of the State of New York, without regard to principles
of conflicts-of-laws or choice of law doctrines, and for all purposes shall be
construed in accordance with such laws.
IN WITNESS WHEREOF, the Company has caused this Swing Line Note to be
signed on its behalf by its duly authorized officer as of the day and year
first above written.
USA WASTE SERVICES, INC.
By:
------------------------------
Title:
<PAGE> 125
-3-
<TABLE>
<CAPTION>
================================================================================
Amount of
Principal Balance of
Amount of Paid or Principal Notation
Date Loan Prepaid Unpaid Made By
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
</TABLE>
<PAGE> 126
EXHIBIT C
FORM OF CANADIAN NOTE
U.S. $____________ as of [ ]
FOR VALUE RECEIVED, the undersigned, CANADIAN WASTE SERVICES, INC., a
Canadian corporation (the "Canadian Borrower"), hereby absolutely and
unconditionally promises to pay to the order of [INSERT NAME OF PAYEE BANK]
(the "Bank") at the head office of J.P. Morgan Canada, as Canadian Agent for
the Banks, at Royal Bank Plaza, Suite 2200, South Tower, Toronto, Ontario M5J
2J2:
(a) on the Maturity Date, the principal amount of _______________
DOLLARS ($____________) (U.S.) or, if less, the sum of (i) the then outstanding
aggregate unpaid principal amount of Canadian Loans made in U.S. Dollars by the
Bank to the Canadian Borrower pursuant to the Amended and Restated Revolving
Credit Agreement, dated as of March 5, 1997 (as amended, modified, supplemented
or restated and in effect from time to time, the "Credit Agreement"), by and
among USA Waste Services, Inc., the Canadian Borrower, the Bank, Sanifill,
Inc., the Administrative Agent, the other Bank Agents referred to therein, and
such other banks or financial institutions that are or may become parties to
the Credit Agreement from time to time in accordance with the provisions
thereof and (ii) the then outstanding aggregate unpaid principal amount of
Canadian Loans made in Canadian Dollars by the Bank to the Canadian Borrower
pursuant to the Credit Agreement; and
(b) interest on the principal balance hereof from time to time
outstanding from the date hereof through and including the date on which such
principal amount is paid in full, at the times and at the rates provided in the
Credit Agreement, subject however to the provisions of Section 6.10 of the
Credit Agreement.
This Canadian Note evidences borrowings under, is subject to the terms
and conditions of, and has been issued by the Canadian Borrower in accordance
with the Credit Agreement and is one of the Canadian Notes referred to therein.
Repayments under this Canadian Note shall be made in U.S. Dollars or Canadian
Dollars as required pursuant to the terms of the Credit Agreement. The Bank
and any holder hereof are entitled to the benefits of the Credit Agreement and
may enforce the agreements of the Canadian Borrower contained therein, and any
holder hereof may exercise the respective remedies provided for thereby or
otherwise available in respect thereof, all in accordance with the respective
terms thereof. All capitalized terms used in this Canadian Note and not
otherwise defined herein shall have the same meanings herein as in the Credit
Agreement.
<PAGE> 127
-2-
The Bank shall endorse, and is hereby irrevocably authorized by the
Canadian Borrower to endorse, on the schedule attached to this Canadian Note or
a continuation of such schedule attached hereto and made a part hereof, an
appropriate notation evidencing advances and repayments of principal of this
Canadian Note, provided that failure by the Bank to make any such notations
shall not affect the Canadian Borrower's obligations or the validity of any
repayments made by the Canadian Borrower in respect of this Canadian Note.
The Canadian Borrower has the right in certain circumstances and the
obligation in certain other circumstances to prepay the whole or part of the
principal of this Canadian Note on the terms and conditions specified in the
Credit Agreement.
If any one or more Events of Default shall occur, the entire unpaid
principal amount of this Canadian Note and all of the unpaid interest accrued
thereon may become or be declared due and payable in the manner and with the
effect provided in the Credit Agreement.
The Canadian Borrower and every endorser of this Canadian Note or the
obligation represented hereby waive presentment, demand, notice, protest,
notice of intent to accelerate, notice of acceleration and all other demands
and notices in connection with the delivery, acceptance, performance, default
or enforcement of this Canadian Note, assent to any extension or postponement
of the time of payment or any other indulgence, to any substitution, exchange
or release of collateral and to the addition or release of any other party or
person primarily or secondarily liable.
This Canadian Note shall be deemed to take effect as an instrument
under the internal laws of the State of New York, without regard to principles
of conflicts-of-laws or choice of law doctrines, and for all purposes shall be
construed in accordance with such laws.
IN WITNESS WHEREOF, the undersigned has caused this Canadian Note to
be signed on its behalf by its duly authorized officer as of the day and year
first above written.
CANADIAN WASTE SERVICES, INC.
By:
--------------------------------
Title:
<PAGE> 128
-3-
<TABLE>
<CAPTION>
================================================================================
Amount of
Principal Balance of
Amount of Paid or Principal Notation
Date Loan Type Loan Prepaid Unpaid Made By
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
</TABLE>
<PAGE> 129
EXHIBIT D
FORM OF
COMPETITIVE BID NOTE
$500,000,000 as of March __, 1997
FOR VALUE RECEIVED, the undersigned, USA WASTE SERVICES, INC., a
Delaware corporation (the "Company"), hereby absolutely and unconditionally
promises to pay to the order of [BANK NAME] (the "Bank") at the head office of
Morgan Guaranty Trust Company of New York, as Administrative Agent for the
Banks, at 60 Wall Street, New York, New York 10260:
(a) on the last date of the relevant Interest Period(s), and on
the Maturity Date, the principal amount of FIVE HUNDRED MILLION DOLLARS
($500,000,000) or, if less, the aggregate unpaid principal amount of
Competitive Bid Loans made by the Bank to the Company pursuant to the Amended
and Restated Revolving Credit Agreement, dated as of March 5, 1997 (as amended,
modified, supplemented or restated and in effect from time to time, the "Credit
Agreement"), by and among the Company, the Bank, Canadian Waste Services, Inc.
(the "Canadian Borrower"), Sanifill, Inc., the Administrative Agent, the other
Bank Agents referred to therein, and such other banks or financial institutions
that are or may become parties to the Credit Agreement from time to time in
accordance with the provisions thereof; and
(b) interest on the principal balance hereof from time to time
outstanding from the date hereof through and including the date on which such
principal amount is paid in full, at the times and at the rates provided in the
Credit Agreement, subject however to the provisions of Section 6.10 of the
Credit Agreement.
This Competitive Bid Note evidences borrowings under, is subject to
the terms and conditions of, and has been issued by the Company in accordance
with the terms of the Credit Agreement and is one of the Competitive Bid Notes
referred to therein. The Bank and any holder hereof are entitled to the
benefits of the Credit Agreement and may enforce the agreements of the Company
contained therein, and any holder hereof may exercise the respective remedies
provided for thereby or otherwise available in respect thereof, all in
accordance with the respective terms thereof. All capitalized terms used in
this Competitive Bid Note and not otherwise defined herein shall have the same
meanings herein as in the Credit Agreement.
The Bank shall endorse, and is hereby irrevocably authorized by the
Company to endorse, on the schedule attached to this Competitive Bid Note or a
<PAGE> 130
-2-
continuation of such schedule attached hereto and made a part hereof, an
appropriate notation evidencing advances and repayments of principal of this
Competitive Bid Note, provided that failure by the Bank to make any such
notations shall not affect any of the Company's obligations or the validity of
any repayments made by the Company in respect of this Competitive Bid Note.
The Company has the obligation in certain circumstances to prepay the
whole or part of the principal of this Competitive Bid Note on the terms and
conditions specified in the Credit Agreement.
If any one or more Events of Default shall occur, the entire unpaid
principal amount of this Competitive Bid Note and all of the unpaid interest
accrued thereon may become or be declared due and payable in the manner and
with the effect provided in the Credit Agreement.
The Company and every endorser of this Competitive Bid Note or the
obligation represented hereby waive presentment, demand, notice, protest,
notice of intent to accelerate, notice of acceleration and all other demands
and notices in connection with the delivery, acceptance, performance, default
or enforcement of this Competitive Bid Note, assent to any extension or
postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
This Competitive Bid Note shall be deemed to take effect as an
instrument under the internal laws of the State of New York, without regard to
principles of conflicts-of-laws or choice of law doctrines, and for all
purposes shall be construed in accordance with such laws.
IN WITNESS WHEREOF, the Company has caused this Competitive Bid Note
to be signed on its behalf by its duly authorized officer as of the day and
year first above written.
USA WASTE SERVICES, INC.
By:
--------------------------------
Title:
<PAGE> 131
-3-
<TABLE>
<CAPTION>
================================================================================
Amount of
Principal Balance of
Amount of Paid or Principal Notation
Date Loan Type Loan Prepaid Unpaid Made By
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
</TABLE>
<PAGE> 132
EXHIBIT E
FORM OF SYNDICATED LOAN REQUEST
USA WASTE SERVICES, INC.
Amended and Restated Revolving Credit Agreement
(the "Credit Agreement") dated as of March 5, 1997
Syndicated Loan Request under Section 2.6(a)
- --------------------------------------------
Total Domestic Commitment
----------------------
Domestic Loans outstanding (other than Swing
Line Loans)
----------------------
Swing Line Loans outstanding
----------------------
Amount of this Request
----------------------
Maximum Drawing Amount of
----------------------
outstanding Domestic Letters of Credit
Total of all outstanding and requested
----------------------
Domestic Loans plus Maximum
Drawing Amount of all outstanding
Domestic Letters of Credit
(must not exceed Total Domestic Commitment)
Proposed Drawdown Date
----------------------
Interest Rate Option (Base Rate or Eurodollar)
----------------------
Interest Period (if Eurodollar)
----------------------
Conversion under Section 2.7
- ----------------------------
Amount to be converted from
Eurodollar to Base Rate:
----------------------
Amount to be converted from
Base Rate to Eurodollar:
----------------------
Conversion Date
----------------------
Interest Period (if Eurodollar)
----------------------
<PAGE> 133
-2-
I certify that the above is true and correct, and that all of the conditions
set forth in Section 12 of the Credit Agreement have been satisfied as of the
date hereof.
USA WASTE SERVICES, INC.
By:
------------------------------
Name:
Title:
---------------------------------
Date
<PAGE> 134
EXHIBIT F-1
FORM OF DOMESTIC LETTER OF CREDIT REQUEST
USA WASTE SERVICES, INC.
Amended and Restated Revolving Credit
Agreement (the "Credit Agreement") dated as
of March 5, 1997
Domestic Letter of Credit Request Under Section 4.1
- ---------------------------------------------------
Total Domestic Commitment
-----------------
Maximum Drawing Amount of
-----------------
Domestic Letters of Credit outstanding
Amount of this Request from Letter of Credit
Application (attached)
-----------------
Domestic Loans outstanding
-----------------
Maximum Drawing Amount of all outstanding
---------------------------
and Requested Domestic Letters of Credit
(must not exceed the lesser of (i) $500,000,000 and (ii) Total
Domestic Commitment minus Total of all Domestic Loans outstanding)
I certify that the above is true and correct, and that all of the conditions
set forth in Section 12 of the Credit Agreement have been satisfied as of the
date hereof.
[REQUESTING PARTIES]
By:
---------------------------------
Name:
Title:
------------------------------------
Date
cc: Brian Fidler
Morgan Christiana Center
Fax: (302) 634-1838
<PAGE> 135
EXHIBIT F-2
FORM OF CANADIAN LETTER OF CREDIT REQUEST
CANADIAN WASTE SERVICES, INC. Amended
and Restated Revolving Credit Agreement
(the "Credit Agreement") dated as of March 5, 1997
Canadian Letter of Credit Request Under Section 4.1
- ---------------------------------------------------
Total Canadian Commitment -----------------
Maximum Drawing Amount of -----------------
Canadian Letters of Credit outstanding
Amount of this Request from Letter of Credit
Application (attached) -----------------
Canadian Loans outstanding -----------------
Bankers' Acceptances outstanding -----------------
Maximum Drawing Amount of all outstanding ----------------------------
and Requested Canadian Letters of Credit
(must not exceed Total Canadian Commitment minus total of all Canadian
Loans and Bankers' Acceptances outstanding)
I certify that the above is true and correct, and that all of the conditions
set forth in Section 12 of the Credit Agreement have been satisfied as of the
date hereof.
[REQUESTING PARTIES]
By:
-------------------------------
Name:
Title:
----------------------------------
Date
cc: Brian Fidler
Morgan Christiana Center
Fax: (302) 634-1838
<PAGE> 136
EXHIBIT G
FORM OF CANADIAN LOAN REQUEST
CANADIAN WASTE SERVICES, INC. Amended
and Restated Revolving Credit Agreement
(the "Credit Agreement") dated as of March 5, 1997
Canadian Loan Request under Section 2.6(b)
- ------------------------------------------
Total Canadian Commitment
------------------------
Canadian Loans outstanding
------------------------
Amount of this Request
------------------------
Maximum Drawing Amount of
outstanding Canadian Letters of Credit ------------------------
Bankers' Acceptances outstanding
------------------------
Total of all outstanding and Requested
------------------------
Canadian Loans plus Maximum
Drawing Amount of all outstanding
Canadian Letters of Credit plus Bankers' Acceptances
outstanding
(must not exceed Total Canadian Commitment)
Proposed Drawdown Date
----------------
Canadian Loan to be made in [U.S. Dollars][Canadian Dollars]
Interest Rate Option (Canadian Base Rate or Eurodollar
if Loan in U.S. Dollars/Canadian Prime Rate if Loan
in Canadian Dollars)
----------------
Interest Period (if Eurodollar)
----------------
Conversion under Section 2.7
- ----------------------------
Amount to be converted from
Eurodollar to Canadian Base Rate:
------------------------
Amount to be converted from
Canadian Base Rate to Eurodollar:
------------------------
Conversion Date
------------------------
Interest Period (if Eurodollar)
------------------------
<PAGE> 137
- 4 -
I certify that the above is true and correct, and that all of the conditions
set forth in Section 12 of the Credit Agreement have been satisfied as of the
date hereof.
CANADIAN WASTE SERVICES, INC.
By:
----------------------------
Name:
Title:
--------------------------------
Date
<PAGE> 138
EXHIBIT H
FORM OF BANKERS' ACCEPTANCE NOTICE
Date:
J.P. Morgan Canada, as Canadian Agent
c/o Morgan Guaranty Trust Company of New York
60 Wall Street
New York, NY 10260
Ladies and Gentlemen:
Reference is made to the Amended and Restated Revolving Credit
Agreement, dated as of March 5, 1997 (as amended, modified, supplemented or
restated and in effect from time to time, the "Credit Agreement"), by and among
USA Waste Services, Inc., Canadian Waste Services, Inc. (the "Canadian
Borrower"), Sanifill, Inc., the Administrative Agent, the other Bank Agents
referred to therein, and such other banks or financial institutions that are or
may become parties to the Credit Agreement from time to time in accordance with
the provisions thereof. Capitalized terms used herein and not otherwise
defined shall have the meanings assigned to such terms in the Credit Agreement.
The Canadian Borrower hereby requests a borrowing by way of Bankers'
Acceptances under the Credit Agreement and in that connection sets forth below
the information relating to such borrowing (the "Proposed Borrowing") as
required by Section 3.1 of the Credit Agreement:
(a) Aggregate Face Amount of Bankers' Acceptances(1)
C$__________________________.
(b) Date of Proposed Borrowing(2)
________________________.
(c) Term(3) ___________________ days.
The Canadian Borrower acknowledges that, as a condition precedent to
the acceptance of any of the requested Bankers' Acceptances, an Acceptance Fee
shall be payable to each of the Canadian Banks in respect thereof pursuant to
Section 3.3 of the Credit Agreement.
- -----------------------------
(1) Not less than C$1,000,000.00 and in integral multiples of C$100,000.00
in excess thereof.
(2) Must be at least two Business Days after the date of this Notice.
(3) Must be 30, 60, 90 or 180 days maturing no later than five (5) days prior
to the Maturity Date.
<PAGE> 139
-2-
By delivery of this Bankers' Acceptance Notice and the acceptance of
any or all of the Bankers' Acceptances by the Canadian Banks in response to
this Bankers' Acceptance Notice, the Canadian Borrower shall be deemed to have
represented and warranted that the conditions to lending specified in Section
12 of the Credit Agreement have been satisfied with respect to the Proposed
Borrowing.
Very truly yours,
CANADIAN WASTE SERVICES, INC.
By:
-------------------------------
Name:
Title:
<PAGE> 140
EXHIBIT I
USA WASTE SERVICES, INC.
Compliance Certificate dated ______________________
I, ____________________________, [Chief Financial Officer][Chief Accounting
Officer][Corporate Treasurer] of USA WASTE SERVICES, INC. (the "Company")
certify that no Default or Event of Default exists and that the Company is in
compliance with Sections 8, 9 & 10 of the Amended and Restated Revolving Credit
Agreement dated as of March 5, 1997 (as amended and in effect from time to
time, the "Credit Agreement"), [as of the end of the quarter ended __________].
Computations to evidence compliance with Sections 9.1(e), 9.3, 9.4, 9.5, and 10
of the Credit Agreement are detailed below. Capitalized terms used herein
without definition shall have the meanings assigned to such terms in the Credit
Agreement.
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
<TABLE>
<S> <C>
Section 9.1(e) RESTRICTIONS ON INDEBTEDNESS
Aggregate of Indebtedness of the Company's Subsidiaries $____________ (a)
Aggregate of secured Indebtedness of the Company $____________ (b)
Aggregate of Indebtedness with respect to landfill closure $____________ (c)
bonds of the Company's Subsidiaries
Sum of (a) plus (b) plus (c) $____________ (d)
Consolidated Tangible Assets $____________ (e)
Item (e) multiplied by 0.05 $____________ (f)
Difference of (d) minus (f) $____________
(not to exceed zero at any time)
</TABLE>
<PAGE> 141
-2-
<TABLE>
<S> <C>
Section 9.3 RESTRICTIONS ON INVESTMENTS
Aggregate amount of all Investments (other than
Investments specified in Sections 9.3(iii)(A), (B), and (C) $____________ (a)
Consolidated Tangible Assets $____________ (b)
Item (b) multiplied by 0.10 $____________ (c)
Difference of (a) minus (c) $____________
(not to exceed zero at any time)(See Section 9.3(iii))
Section 9.4 SALES OF ASSETS IN THE ORDINARY COURSE OF BUSINESS
Aggregate of sales of assets in the ordinary course of $____________ (a)
business during term of Credit Agreement
Consolidated Total Assets $____________ (b)
Item (b) multiplied by 0.10 $____________ (c)
Difference of (a) minus (c) $____________
(not to exceed zero at any time)
Section 9.5 RESTRICTED DISTRIBUTIONS AND REDEMPTIONS
Aggregate amount of cash dividends and stock redemptions $____________ (a)
by the Company and its Subsidiaries
Cumulative positive Consolidated Net Income after 12/31/95 $____________ (b)
Item (b) multiplied by 0.50 $____________ (c)
Sum of (c) plus $25,000,000 $____________ (d)
Difference of (a) minus (d) $____________
(not to exceed zero at any time)
</TABLE>
<PAGE> 142
-3-
<TABLE>
<S> <C>
Section 10.1 INTEREST COVERAGE RATIO
Consolidated Net Income $___________ (i)
Plus: interest expense $___________ (ii)
income tax expense $___________ (iii)
Western Waste Merger pooling $___________ (iv)
charges (maximum $39,000,000)
Sanifill Merger pooling charges $___________ (v)
(maximum $82,556,000) $___________ (vi)
extraordinary charges $___________ (vii)
(maximum $50,848,000)
Minus: extraordinary gains from tax credits
(commencing 9/30/96) $___________ (viii)
cash reimbursements or payments $___________ (ix)
received with respect to (vii)
EBIT (net of (i) through (ix)) $____________ (a)
Consolidated Total Interest Expense $____________ (b)
Ratio of (a) to (b) ______:______
Minimum ratio : 3.00:1
Section 10.2 DEBT TO EBITDA RATIO
Funded Debt $____________ (a)
EBIT $___________ (i)
Plus: amortization expense $___________ (ii)
depreciation expense $___________ (iii)
EBITDA (net of (i) through (iii)) $____________ (b)
Ratio of (a) to (b) ______:______
Maximum ratio [3.50:1] [3.25:1]
</TABLE>
<PAGE> 143
-4-
<TABLE>
<S> <C>
Section 10.3 DEBT TO TOTAL CAPITALIZATION
(A) For this fiscal quarter:
Funded Debt $____________ (a)
Consolidated Total Capitalization $____________ (b)
Ratio of (a) to (b) ______:______ (A)
Maximum ratio for any fiscal quarter 0.58:1
(B) For the prior fiscal quarter:
Funded Debt $____________ (a)
Consolidated Total Capitalization $____________ (b)
Ratio of (a) to (b) ______:______ (B)
(A+B)/2 $_____________
Maximum ratio for any two consecutive fiscal quarters 0.55:1
</TABLE>
<PAGE> 144
EXHIBIT J
FORM OF ASSIGNMENT AND ACCEPTANCE
Dated as of _______ __, ____
Reference is made to the AMENDED AND RESTATED REVOLVING CREDIT
AGREEMENT dated as of the 5th day of March, 1997 (as amended and in effect from
time to time, the "Credit Agreement"), by and among USA WASTE SERVICES, INC., a
Delaware corporation (the "Company"), CANADIAN WASTE SERVICES, INC. (the
"Canadian Borrower"), SANIFILL, INC., a Delaware corporation, and BANK OF
AMERICA ILLINOIS, an Illinois banking corporation ("BAI"), MORGAN GUARANTY
TRUST COMPANY OF NEW YORK, a New York state banking association ("MGT"), J.P.
MORGAN CANADA, a bank incorporated in Canada ("MBC"), and the other financial
institutions which become lenders thereunder (collectively, the "Banks"), and
MGT as administrative agent (the "Administrative Agent") and as documentation
agent (the "Documentation Agent"), MBC as the Canadian Agent (the "Canadian
Agent", and together with the Administrative Agent and the Documentation Agent,
the "Bank Agents"). Capitalized terms used herein and not otherwise defined
shall have the meanings assigned to such terms in the Credit Agreement.
[______________________](the "Assignor") and [_____________________]
(the "Assignee") hereby agree as follows:
1. ASSIGNMENT. Subject to the terms and conditions of this Assignment
and Acceptance, the Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes without recourse to the Assignor, the
rights, benefits, indemnities and obligations of the Assignor under the Credit
Agreement equal to [________________% of its Domestic Commitment Percentage,
___________% of its interest in the risk relating to the Domestic Loans and the
outstanding Domestic Letters of Credit] [___________% of its Canadian
Commitment Percentage and ___________% of its interest relating to the Canadian
Loans, the Bankers' Acceptances, and the outstanding Canadian Letters of
Credit], each as in effect immediately prior to the Effective Date (as
hereinafter defined).
2. ASSIGNOR'S REPRESENTATIONS. The Assignor (i) represents and warrants
that (A) it is legally authorized to enter into this Assignment and Acceptance,
(B) as of the date hereof, [its Domestic Commitment is $_______________, its
Domestic Commitment Percentage is ________________%, the aggregate outstanding
principal balance of its
<PAGE> 145
-2-
Domestic Loans equals $_______________, the aggregate outstanding amount of its
participations in Domestic Letters of Credit equals $_______________] [its
Canadian Commitment is $_______________, its Canadian Commitment Percentage is
________________%, the aggregate outstanding principal balance of its Canadian
Loans equals $_______________, the aggregate outstanding amount of its
participations in Canadian Letters of Credit equals $_______________, and the
aggregate amount of its Bankers' Acceptances equals $_______________] (in each
case before giving effect to the assignment contemplated hereby or any
contemplated assignments which have not yet become effective), and (C)
immediately after giving effect to all assignments which have not yet become
effective, the Assignor's [Domestic Commitment Percentage] [Canadian Commitment
Percentage] will be sufficient to give effect to this Assignment and
Acceptance, (ii) makes no representation or warranty, express or implied, and
assumes and shall have no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit
Agreement or any of the other Loan Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement, the other Loan Documents or any other instrument or document
furnished pursuant thereto or the attachment, perfection or priority of any
security interest or mortgage, other than that it is the legal and beneficial
owner of the interest being assigned by it hereunder free and clear of any
claim or encumbrance; (iii) makes no representation or warranty and assumes and
shall have no responsibility with respect to the financial condition of the
Borrowers or any of their Subsidiaries or any other Person primarily or
secondarily liable in respect of any of the Obligations, or the performance or
observance by the Borrowers or any of their Subsidiaries or any other Person
primarily or secondarily liable in respect of any of the Obligations of any of
its obligations under the Credit Agreement or any of the other Loan Documents
or any other instrument or document delivered or executed pursuant thereto; and
(iv) attaches hereto the Notes delivered to it under the Credit Agreement.
The Assignor requests that the Borrowers exchange the Assignor's Notes
for new Notes payable to the Assignor and the Assignee as follows:
<TABLE>
<CAPTION>
Payable to the Order of: Type of Note Amount of Note:
------------------------ ------------ ---------------
<S> <C> <C>
[Assignor Syndicated $____________________]
[Assignee Syndicated $____________________]
[Assignor Swing Line $____________________]
[Assignee Swing Line $____________________]
[Assignor Canadian $____________________]
[Assignee Canadian $____________________]
</TABLE>
<PAGE> 146
-3-
The Assignor requests that [the Company issue [a] new Competitive Bid
Note[s] payable to the Assignee and/or Assignor] or [the Administrative Agent
make the appropriate entries on the Competitive Bid Loan Accounts] to reflect
the assignment of Competitive Bid Loans.(1)
3. ASSIGNEE'S REPRESENTATIONS. The Assignee (i) represents and
warrants that (A) it is duly and legally authorized to enter into this
Assignment and Acceptance, (B) the execution, delivery and performance of this
Assignment and Acceptance do not conflict with any provision of law or of the
charter or by-laws of the Assignee, or of any agreement binding on the
Assignee, (C) all acts, conditions and things required to be done and performed
and to have occurred prior to the execution, delivery and performance of this
Assignment and Acceptance, and to render the same the legal, valid and binding
obligation of the Assignee, enforceable against it in accordance with its
terms, have been done and performed and have occurred in due and strict
compliance with all applicable laws, [and (D) if this Assignment and Acceptance
relates to any of the Canadian Commitments, the Canadian Loans, the Bankers'
Acceptances, or the Canadian Letters of Credit, that such Assignee is an
Eligible Canadian Assignee]; (ii) confirms that it has received a copy of the
Credit Agreement and each of the other Loan Documents, together with copies of
the most recent financial statements delivered pursuant to Sections 7.4 and 8.4
of the Credit Agreement and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (iii) agrees that it will, independently and
without reliance upon the Assignor, the Agents, the Bank Agents or any other
Bank and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Credit Agreement and the other Loan Documents; (iv) appoints
and authorizes the Agents and the Bank Agents to take such action as agent on
its behalf and to exercise such powers under the Credit Agreement and the other
Loan Documents as are delegated to the Agents and the Bank Agents by the terms
thereof, together with such powers as are reasonably incidental thereto; (v)
agrees that it will perform in accordance with their terms all the obligations
which by the terms of the Credit Agreement are required to be performed by it
as a Bank; (vi) acknowledges that it has made arrangements with the Assignor
satisfactory to the Assignee with respect to its pro rata share of Letter of
Credit Fees in respect of outstanding Letters of Credit [and BA Discount
Proceeds in respect of outstanding Bankers' Acceptances]; and (vii) agrees to
treat in confidence any information obtained by it pursuant to the Credit
Agreement unless such information otherwise becomes public knowledge and agrees
not to disclose such information to a third party except as required by law or
legal process.
- -----------------------------
(1) Elect applicable option.
<PAGE> 147
-4-
4. EFFECTIVE DATE. The effective date for this Assignment and
Acceptance shall be _____________________ (the "Effective Date"). Following
the execution of this Assignment and Acceptance, each party hereto shall
deliver its duly executed counterpart hereof to the Documentation Agent for
acceptance by the Agents. The Credit Agreement shall thereupon be amended to
reflect the status and rights of the Banks thereunder.
5. RIGHTS UNDER CREDIT AGREEMENT. Upon such acceptance and amendment,
from and after the Effective Date, (i) the Assignee shall be a party to the
Credit Agreement and, to the extent provided in this Assignment and Acceptance,
have the rights and obligations of a Bank thereunder, and (ii) the Assignor
shall, with respect to that portion of its interest under the Credit Agreement
assigned hereunder, relinquish its rights and be released from its obligations
under the Credit Agreement; provided, however, that the Assignor shall retain
its rights to be indemnified pursuant to Section 17 of the Credit Agreement
with respect to any claims or actions with reference to matters arising prior
to the Effective Date.
6. PAYMENTS. Upon such acceptance and amendment, from and after the
Effective Date, the Bank Agents shall make all payments in respect of the
rights and interests assigned hereby (including payments of principal,
interest, fees and other amounts) to the Assignee. The Assignor and the
Assignee shall make any appropriate adjustments in payments for periods prior
to the Effective Date by the Bank Agents or with respect to the making of this
assignment directly between themselves.
7. GOVERNING LAW. THIS ASSIGNMENT AND ACCEPTANCE IS INTENDED TO TAKE
EFFECT AS A SEALED INSTRUMENT TO BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO CONFLICT OF LAWS
OTHER THAN GENERAL OBLIGATIONS LAW Section 5-1401).
8. COUNTERPARTS. This Assignment and Acceptance may be executed in
any number of counterparts which shall together constitute but one and the
same agreement.
<PAGE> 148
-5-
IN WITNESS WHEREOF, intending to be legally bound, each of the
undersigned has caused this Assignment and Acceptance to be executed on its
behalf by its officer thereunto duly authorized, as of the date first above
written.
[ASSIGNOR]
By:
-----------------------------
Name:
Title:
[ASSIGNEE]
By:
-----------------------------
Name:
Title:
<PAGE> 149
-6-
CONSENTED TO:
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Documentation and Administrative
Agent
By:
--------------------------
Name:
Title:
[J.P. MORGAN CANADA, as Canadian Agent]
By:
--------------------------
Name:
Title:
[USA WASTE SERVICES, INC.]
By:
--------------------------
Name:
Title:
<PAGE> 150
-7-
[CANADIAN WASTE SERVICES, INC.]
By:
--------------------------
Name:
Title:
Sanifill, Inc. executes this Assignment and Acceptance solely for
purposes of ratifying its guaranty under Section 29 of the Credit Agreement.
SANIFILL, INC.
By:
--------------------------
Name:
Title:
<PAGE> 151
EXHIBIT K
FORM OF COMPETITIVE BID QUOTE REQUEST
USA WASTE SERVICES, INC.
Amended and Restated Revolving Credit
Agreement (the "Credit Agreement") dated as
of March 5, 1997
<TABLE>
<S> <C>
Competitive Bid Quote Request under Section 5.3
- -----------------------------------------------
Total Domestic Commitment
-----------------
Competitive Bid Loans outstanding
-----------------
Competitive Bid Loans Requested
-----------------
Maximum Drawing Amount of
-----------------
outstanding Domestic Letters of Credit
Syndicated Loans (including Swing Line Loans) outstanding
-----------------
Total of all outstanding and Requested
-------------------------
Competitive Bid Loans
(must not exceed the lesser of (i) $500,000,000 and
(ii) Total Domestic Commitment minus Total of all Syndicated
Loans outstanding (including Swing Line Loans) and Maximum
Drawing Amount of outstanding Domestic Letters of Credit)
Type of Competitive Bid Loans Requested LIBOR/Absolute
Requested Drawdown Date
-------------------------
</TABLE>
Principal Amount of Requested
Competitive Bid Loan Requested Interest Period(s)
- ------------------------------ ------------------
I certify that the above is true and correct, and that all of the conditions
set forth in Section 12 of the Credit Agreement have been satisfied as of the
date hereof.
USA WASTE SERVICES, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
---------------------------------
Date
<PAGE> 152
EXHIBIT L
USA WASTE SERVICES, INC.
(the "Company")
Amended and Restated Revolving Credit Agreement
(the "Credit Agreement") dated as of March 5, 1997
FORM OF INVITATION FOR COMPETITIVE BID QUOTES
ATTN:
REF:
RE: INVITATION FOR COMPETITIVE BID QUOTES
AGT DTD / /
MORGAN GUARANTY TRUST COMPANY OF NEW YORK AS ADMINISTRATIVE AGENT
INVITATION FOR COMPETITIVE BID QUOTES DATED / /
PURSUANT TO SECTION 5.3 OF THE ABOVE REFERENCED CREDIT AGREEMENT, YOU ARE
INVITED TO SUBMIT A COMPETITIVE BID QUOTE TO THE COMPANY FOR THE FOLLOWING
PROPOSED COMPETITIVE BID LOAN(S):
DATE OF BORROWING: / /
AGGREGATE AMOUNT REQUESTED:
PRINCIPAL AMOUNT INTEREST PERIOD
- ---------------- ---------------
SUCH COMPETITIVE BID QUOTES SHOULD OFFER COMPETITIVE BID RATE(S)/MARGIN(S).
PLEASE RESPOND IN WRITING TO THIS INVITATION BY NO LATER THAN A.M./P.M.
(NEW YORK TIME ON / / TO ONE OF THE FOLLOWING:
PRIMARY FAX NO. (302) 634-4051 ALTERNATE FAX NO. (302) 634-1091
NOTE: PLEASE FOLLOW-UP YOUR SUBMITTED WRITTEN BID(S) WITH PHONE VERIFICATION
TO CONFIRM. IF YOU ARE UNABLE TO SEND YOUR FAX DUE TO AN OCCUPIED FAX LINE,
PLEASE CALL BY A.M./P.M. IN ADDITION, PLEASE SUBMIT YOUR BID(S) IN
SUBSTANTIALLY THE FORM OF EXHIBIT "H" TO THE CREDIT AGREEMENT.
QUOTES RECEIVED AFTER A.M./P.M. (NEW YORK TIME) WILL NOT BE FORWARDED TO
THE COMPANY.
SUBMITTED BIDS MUST BE FIVE MILLION OR LARGER MULTIPLE OF ONE MILLION. ALSO,
PLEASE SPECIFY LIMITATION AMOUNTS, IF APPLICABLE.
<PAGE> 153
-2-
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Administrative Agent
By:
---------------------------
Name:
-------------------------
Title:
------------------------
---------------------------
Date
<PAGE> 154
EXHIBIT M
FORM OF COMPETITIVE BID QUOTE
USA WASTE SERVICES, INC.
Amended and Restated Revolving Credit Agreement
(the "Credit Agreement") dated as of March 5, 1997
<TABLE>
<S> <C> <C>
Competitive Bid Quote under Section 5.5
- ---------------------------------------
Bank
----------------------------------
Person to Contact
----------------------------------
Date of Competitive Bid Quote Request
----------------------------------
Type of Competitive Bid Loans Requested LIBOR/Absolute
Requested Drawdown Date
----------------------------------
Principal Amount Proposed Competitive
of Competitive Requested Bid Rate/Competitive
Bid Loan Offered Interest Period(s) Bid Margin
---------------- ------------------ ----------
</TABLE>
I certify that the above is true and correct, and that the offer(s) set forth
above irrevocably obligates us to make such Competitive Bid Loan(s) if such
offer(s) is/are accepted by the Company and all of the conditions set forth in
Section 12 of the Credit Agreement have been satisfied as of the requested
Drawdown Date.
[NAME OF BANK]
By:
---------------------------
Name:
-------------------------
Title:
------------------------
------------------------------
Date
<PAGE> 155
EXHIBIT N
FORM OF NOTICE OF ACCEPTANCE / REJECTION OF COMPETITIVE BID QUOTE(S)
USA WASTE SERVICES, INC.
Amended and Restated Revolving Credit Agreement
(the "Credit Agreement") dated as of March 5, 1997
<TABLE>
<S> <C>
Notice of Competitive Bid Quote(s) under Section 5.6
- ----------------------------------------------------
Date of Competitive Bid Quote(s)
----------------------------------
Type of Competitive Bid Loans Requested LIBOR/Absolute
Requested Drawdown Date
----------------------------------
We hereby accept the following Competitive Bid Quote(s):
<CAPTION>
Competitive Bid
Principal Rate/Competitive
Amount of Quote Interest Period(s) Bid Margin Bank
--------------- ------------------ ---------- ----
<S> <C> <C> <C>
We hereby reject the following Competitive Bid Quote(s):
<CAPTION>
Competitive Bid
Principal Rate/Competitive
Amount of Quote Interest Period(s) Bid Margin Bank
--------------- ------------------ ---------- ----
<S> <C> <C> <C>
</TABLE>
The accepted and rejected Competitive Bid Quotes described above
constitute all Competitive Bid Quotes submitted by the Banks in accordance with
Section 5.5 of the Credit Agreement.
USA WASTE SERVICES, INC.
By:
---------------------------
Name:
-------------------------
Title:
------------------------
------------------------------
Date
<PAGE> 1
EXHIBIT 11.1
USA WASTE SERVICES, INC.
COMPUTATION OF EARNINGS (LOSS)PER COMMON SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
For the years ended December 31,
-----------------------------------------------
1996 1995 1994
------------- ------------- -------------
(restated) (restated)
<S> <C>
PRIMARY
Income (loss) available to
common shareholders $ 32,946,000 $ 52,488,000 ($ 9,607,000)
============= ============= =============
Number of common shares outstanding 139,609,000 124,019,000 102,687,000
Effect of using weighted average common
stock outstanding (5,717,000) (14,396,000) (2,391,000)
Common stock equivalents (1) 5,848,000 3,656,000 3,126,000
------------- ------------- -------------
Total 139,740,000 113,279,000 103,422,000
============= ============= =============
Earnings (loss) per common share $ 0.24 $ 0.46 ($ 0.09)
============= ============= =============
FULLY DILUTED
Net income (loss) $ 32,946,000 $ 52,488,000 ($ 9,607,000)
Plus interest on convertible
subordinated debentures, net of taxes (2) -- -- --
------------- ------------- -------------
Fully-diluted net income (loss) $ 32,946,000 $ 52,488,000 ($ 9,607,000)
============= ============= =============
Number of common shares outstanding 139,609,000 124,019,000 102,687,000
Effect of using weighted average common
stock outstanding (5,717,000) (14,396,000) (2,391,000)
Common stock equivalents (1) 6,041,000 3,707,000 3,955,000
Convertible subordinated debentures (2) -- -- --
------------- ------------- -------------
Total 139,933,000 113,330,000 104,251,000
============= ============= =============
Earnings (loss) per common share $ 0.24 $ 0.46 ($ 0.09)
============= ============= =============
</TABLE>
(1) Common stock equivalents were determined based on the treasury stock method
as set forth in Accounting Principles Board Opinion No. 15 ("APB No. 15").
Common stock equivalents are anti-dilutive in 1994 since there is a net
loss that year, however, such amounts were not removed from the calculation
as the amounts were not material.
(2) In accordance with APB No. 15, if the exercise price is greater than the
average market price or ending market price, convertible subordinated
debentures are not considered in fully diluted earnings per common share.
Although the exercise prices of the outstanding convertible subordinated
debentures are less than the market prices during the relevant periods, the
ratio of convertible subordinated debentures interest, net of taxes, to
convertible subordinated debentures shares is anti-dilutive for all periods
shown, and is therefore excluded from the fully diluted earnings per common
share calculation.
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES OF THE REGISTRANT
(@ 12/31/96)
692612 ALBERTA LTD. (CN)
AMADOR COUNTY ENVIRONMENTAL SERVICES, INC. (CA)
ART-JO CO.(NJ)
AUTOMATED RECYCLING TECHNOLOGIES, INC. (NJ)*
BDC SERVICES, INC. (CA)
BIG DIPPER ENTERPRISES, INC. (ND)
dba "Dakota Landfill"
BIG DISPOSAL COMPANY, INC. (CA)
BRAZORIA COUNTY RECYCLING CENTER, INC. (TX)
dba "BCRC"
dba "Brazoria County Landfill"
dba "WRS Transfer Station"
BREVARD COUNTY LANDFILL CO. LLC (DE)
CANADIAN WASTE SERVICES INC. (CN)
dba "Quebec Waste Services"
dba "St. Nicephore Landfill"
CANADIAN WASTE SERVICES OF ONTARIO INC. (CN)
dba "Blenheim Landfill"
dba "Brantford Hauling"
dba "Conwaste Transfer Station"
dba "Haldimand-Norfolk MRF"
dba "Hamilton Transfer Station"
dba "London Hauling"
dba "Mississauga Transfer Station"
dba "Petrolia Landfill"
dba "Petrolia MRF"
dba "Richmond Hill"
dba "Sarnia Hauling"
dba "St. Catherine's Hauling & Transfer Station"
CHAMBERS DEVELOPMENT COMPANY, INC. (DE)
dba "North Huntingdon Hauling"
dba "Monroeville Landfill"
CDC SERVICES, INC. (FKA SECURITY BUREAU, INC.) (DE)
CHAMBERS DEVELOPMENT OF OHIO, INC. (OH)
CHAMBERS DEVELOPMENT OF VIRGINIA, INC. (VA)
dba "Charles City County Landfill"
dba "Newport News Recycling"
dba "Newport News Transfer Station"
dba "Norfolk Hauling"
dba "Richmond Hauling"
dba "USA Waste of Virginia"
CHAMBERS ENERGY, INC. (VA)
(fka Chambers Maplewood Landfill, Inc.)
dba "Amelia Landfill"
dba "Maplewood Landfill"
dba "USA Waste of Virginia"
OLD DOMINION RECYCLING SERVICES, INC. (VA)
dba "Old Dominion"
dba "Old Dominion Transfer Station"
CHAMBERS ENTERPRISES, INC. (PA)
(fka Underground Tank Services, Inc.)
CHAMBERS EUROPE BV (___)
CHAMBERS INTERNATIONAL, INC. (DE)
CHAMBERS LAUREL HIGHLANDS LANDFILL, INC. (PA)
dba "Laurel Highlands Landfill"
CHAMBERS MEDICAL TECHNOLOGIES, INC. (PA - 04/26/91)
<PAGE> 2
CHAMBERS MEDICAL TECHNOLOGIES OF SOUTH CAROLINA, INC. (SC) [Inactive]
CHAMBERS OF DELAWARE, INC. (DE)
CHAMBERS OF GEORGIA, INC. (GA)
dba "Atlanta Hauling"
dba "Atlanta Landfill"
dba "Cedartown Hauling"
dba "USA Waste Atlanta Landfill"
dba "USA Waste of Georgia"
dba "USA Waste of Georgia - Cedartown"
dba "USA Waste of Georgia - Atlanta"
CHAMBERS CLEARVIEW ENVIRONMENTAL LANDFILL, INC. (MS)
dba "Clearview Environmental Landfill"
dba "USA Clearview Environmental Landfill"
CHAMBERS R & B LANDFILL, INC. (GA)
dba "R&B Landfill"
dba "USA Waste R&B Landfill"
CHAMBERS SMYRNA LANDFILL, INC. (GA)
dba "Smyrna Landfill"
dba "USA Waste Smyrna Landfill"
CHAMBERS OF ILLINOIS, INC. (IL)
CHAMBERS OF INDIANA, INC. (IN)
CHAMBERS OF MARYLAND, INC. (MD)
dba "Mountainview Landfill"
CHAMBERS OF MASSACHUSETTS, INC. (MA)
CHAMBERS OF MISSISSIPPI, INC. (MS)
dba "Lake Mississippi Hauling"
dba "USA Waste of Mississippi"
CHAMBERS OF NEW JERSEY, INC.. (NJ)
CHAMBERS WASTE SYSTEMS OF NEW JERSEY, INC. (NJ)
dba "Atlantic City Hauling"
dba "Bergen County Transfer Station"
MORRIS COUNTY TRANSFER STATION, INC. (NJ)
dba "MCTS"
dba "Mount Olive Transfer Station"
dba "Mt. Olive Transfer Station"
dba "Par Troy Transfer Station"
CHAMBERS OF PENNSYLVANIA, INC. (PA)
(fka Truman E. Horner, Inc.)
dba "Chambers of PA - Allentown"
dba "Lehigh Hauling"
dba "Lehigh Hauling (Allentown)"
dba "Mainline Sanitation Hauling"
dba "Portage Hauling"
dba "Truman Horner"
dba "USA Waste of Harrisburg"
CHAMBERS OF TENNESSEE, INC. (TN)
REMOTE LANDFILL SERVICES, INC. (TN)
dba "Remote Landfill"
THE H. SIENKNECHT CO. (TN)
CHAMBERS OF WEST VIRGINIA, INC. (WV)
LCS SERVICES, INC. (WV)
dba "LCS Landfill"
dba "North Mountain Landfill"
CHAMBERS RESOURCES, INC. (PA)
CHAMBERS SERVICES, INC. (DE)
CHAMBERS WASTE SYSTEMS OF CALIFORNIA, INC. (CA)
CHAMBERS WASTE SYSTEMS OF FLORIDA, INC. (FL)
dba "Chambers Okeechobee Landfill"
dba "Okeechobee Landfill"
CHAMBERS ORANGE COUNTY LANDFILL, INC. (FL)
dba "Orange County Landfill"
CHAMBERS WASTE SYSTEMS OF MISSISSIPPI, INC. (MS)
dba "Jackson Disposal Services"
dba "USA Waste of Mississippi"
CHAMBERS WASTE SYSTEMS OF NEW YORK, INC. (NY)
<PAGE> 3
CHAMBERS WASTE SYSTEMS OF NORTH CAROLINA, INC. (NC)
dba "Charlotte Hauling"
dba "USA Waste of North Carolina"
dba "USA Waste Services of North Carolina"
CHAMBERS WASTE SYSTEMS OF OHIO, INC.(OH))
CHAMBERS WASTE SYSTEMS OF RHODE ISLAND, INC. (RI)
CHAMBERS WASTE SYSTEMS OF SOUTH CAROLINA, INC. (SC)
dba "Columbia Hauling"
dba "Fairfield County Transfer Station"
dba "Orangeburg Hauling"
dba "USA Waste of S.C. - Columbia Hauling"
dba "USA Waste of S.C. - Fairfield Transfer"
dba "USA Waste of S.C. - Orangeburg Division"
CHAMBERS OAKRIDGE LANDFILL, INC. (SC)
dba "Oakridge Landfill"
dba "USA Waste Oakridge Landfill"
CHAMBERS RICHLAND COUNTY LANDFILL, INC. (SC)
dba "Richland County Landfill"
dba "USA Waste Richland County Landfill"
CHAMBERS WASTE SYSTEMS OF TEXAS, INC. (TX)
DAUPHIN MEADOWS, INC. (PA)
(fka Fulkroad Landfill, Inc.)
dba "Dauphin Meadows Landfill"
RAIL-IT CORPORATION (IL)
RAIL-IT LIMITED PARTNERSHIP (IL/LP)
U.S. SERVICES CORPORATION (PA)
SOUTHERN ALLEGHENIES DISPOSAL SERVICES, INC. (PA)
dba "Altoona Transfer Station"
dba "Johnstown Hauling"
dba "Southern Alleghenies Landfill"
U.S. UTILITIES SERVICES CORP. (PA)
WILLIAM H. MARTIN, INC. (PA)
dba "Arden Landfill"
dba "Martins Hauling"
dba "Washington Hauling"
dba "William H. Martin Hauling"
CLEANSOILS FAIRLESS HILLS INC. (MN)
COCHRAN MILL ASSOCIATES, INC. (PA)
ELLESOR, INC. (NJ)
EMPIRE SANITARY LANDFILL, INC. (PA)
ENVIROFIL, INC. (DE)
BREM-AIR DISPOSAL, INC. (OR)
dba "Brem-Air Disposal"
JUAN DE FUCA CORRUGATED, LTD. (WA)
NORTH SOUND SANITATION, INC. (WA)
SOUTH SOUND SANITATION, INC. (WA)
ELLIS-SCOTT, INC. (MO)
dba "Ellis-Scott Landfill"
ENVIROFIL OF ILLINOIS, INC. (IL)
(fka LeRoy Brown & Sons, Inc.)
dba "Envirofil of Illinois Hauling"
dba "Envirofil of Illinois Landfill"
ENVIROFIL SERVICES, INC. (DE)
EVH CO. (DE)
EWA, INC. (DE)
dba "EWA"
ENVIRONMENTAL WASTE OF SKAGIT COUNTY, INC. (WA)
dba "Rural Skagit Sanitation"
STANWOOD CAMANO DISPOSAL, INC. (WA)
FORCEES, INC. (NJ)
dba "Forcees"
MEADOWBROOK CARTING CO., INC. (NJ)
MID-JERSEY DISPOSAL CO., INC. (NJ)
dba "Mid-Jersey Disposal"
dba "Mid-Jersey Disposal Co."
<PAGE> 4
dba "Mid-Jersey Disposal Company"
OLYMPIC VIEW SANITARY LANDFILL, INC. (WA)
(fka Kitsap County Sanitary Landfill, Inc.)
dba "Olympic View Landfill"
QUALITY RECYCLING CO., INC. (NJ)
SACRAMENTO VALLEY ENVIRONMENTAL WASTE COMPANY (CA)
dba "SacVal Disposal"
STOCKTON SCAVENGERS ASSOCIATION (CA)
ENVIRONMENTAL ALTERNATIVES CONCEPTS, INC. (DE)
ENVIRONMENTAL RECYCLING AND DISPOSAL, INC. (CO)
FULTON SANITATION SERVICES, INC. (AR)
dba "Fulton Sanitation"
GORE SANITATION SERVICE LIMITED (CN)
GRAND CENTRAL REAL ESTATE COMPANY, INC. (PA)
GRAND CENTRAL SANITARY LANDFILL, INC. (PA)
GRAND CENTRAL SANITATION, INC. (PA)
GRAYSON REFUSE SERVICE, INC. (VA)
dba "Grayson Refuse Service"
JENNINGS ENVIRONMENTAL SERVICES, INC. (FL)
dba "Jennings Environmental"
LAND RECLAMATION COMPANY (IL)
MODERN SANITATION, INC.(TX)
(fka EDM Corporation)
dba "Modern Sanitation"
POCONO INDEPENDENT PAPERSTOCK CO., INC. (PA)
R.A.M. ENVIRONMENTAL SERVICES, INC. (AR)
RAZORBACK DISPOSAL, INC. (AR)
dba "Razorback Disposal"
YELL COUNTY LANDFILL, INC. (AR)
RIVIERA ACQUISITION CORPORATION (CA)
RIVIERA ACQUISITION CORPORATION (DE)
SAFETY RECYCLING COMPANY, INC. (NJ)
(fka Safety Disposal Company, Inc.)
SANIFILL, INC. (DE)
ACAVERDE HOLDIING COMPANY (CAYMAN ISLANDS)
BIOSOLIDS REUSE MANAGEMENT (Joint Venture)
CALIFORNIA ASBESTOS MONOFIL, INC. (CA)
dba "California Asbestos Monofil"
CAMPBELL WELLS CORPORATION (LA)
dba "Campbell Wells - Amelia (LTS)"
dba "Campbell Wells - Bateman Landfill"
dba "Campbell Wells - Bossier Landfill"
dba "Campbell Wells - Bourg Landfill"
dba "Campbell Wells - Corpus Christi Permitting"
dba "Campbell Wells - Equipment Excavation Co."
dba "Campbell Wells - Fourchon Clean "
dba "Campbell Wells - Fourchon Transfer Station"
dba "Campbell Wells - Fourchon Transfer Station (LTS)"
dba "Campbell Wells - Intercoastal Transfer Station"
dba "Campbell Wells - Jennings Landfill"
dba "Campbell Wells - Lacassiene No."
dba "Campbell Wells - Mobile Transfer Station"
dba "Campbell Wells - Morgan City"
dba "Campbell Wells - Morgan City Transfer Station"
dba "Campbell Wells - Norm Storage"
dba "Campbell Wells - Norm Equipment/Excavation"
dba "Campbell Wells - Now Equipment/Excavating"
dba "Campbell Wells - Remediation/Residual"
dba "Campbell Wells - Remediation/Turnkey"
dba "Campbell Wells - Sabine Pass Transfer Station"
dba "Campbell Wells - South Texas Landfill"
dba "Campbell Wells - Triangle Shell"
dba "Campbell Wells - Venice Transfer Station"
dba "Campbell Wells - "G. Chen/Camer
CAMPBELL WELLS, L.P. (PARTNERSHIP) (DE)
<PAGE> 5
CAMPBELL WELLS NORM CORPORATION (LA)
CAMPBELL WELLS NORM, L.P. (PARTNERSHIP) (DE)
NOW DISPOSAL HOLDING CO. (DE)
NOW DISPOSAL OPERATING CO. (DE)
CHADWICK ROAD LANDFILL, INC. (GA)
dba "Chadwick Road Landfill"
CITIZENS DISPOSAL, INC. (MI)
dba "Citizen's Disposal"
CITY DISPOSAL, INC. (CO)
CLARKSTON DISPOSAL, INC. (MI)
dba "Citizen's Hauling"
dba "Clarkston Disposal"
COUGAR HOLDINGS, INC. (TX)
dba "Cougar Landfill"
DELAWARE RECYCLABLE PRODUCTS, INC. (DE)
dba "Delaware Recyclable Products"
E.E. EQUIPMENT, INC. (OR)
EL COQUI WASTE DISPOSAL, INC. (PR)
dba "El Coqui de San Juan"
EC WASTE, INC. (PR)
Joint Venturer in EL COQUI DE SAN JUAN (JOINT VENTURE) (PR)
ENERGY RECLAMATION, INC. (OR)
EQUIPMENT CREDIT CORPORATION (KS)
GO OF WISCONSIN COMPANY (IL)
GRAND BLANC LANDFILL, INC. (MI)
HILLSBORO LANDFILL, INC. (OR)
dba "Hillsboro Landfill"
LANDFILL HOLDINGS, LTD. (CAYMAN ISLANDS)
LG INDUSTRIES, INC. (DC)
dba "LG Industries/Garnet of Maryland"
LG-GARNET OF MARYLAND JOINT VENTURE (MD)
LIQUID WASTE MANAGEMENT, INC. (CA)
dba "McKittrick Waste Treatment"
METROPOLITAN DISPOSAL AND RECYCLING CORPORATION (OR)
dba "Metropolitan Disposal"
dba "Metropolitan Disposal Corporation"
R.M. CASH & SONS, INC. (GA)
REDWOOD LANDFILL, INC. (DE)
dba "Redwood Landfill"
REMOTE LANDFILL SERVICES, INC. (TN)
RESIDUALS PROCESSING, INC. (CA)
dba "Canyon Recycling"
RIVERBEND LANDFILL CO., INC. (OR)
S & S ENVIRONMENTAL INC. (MI)
S-N-S RECYCLING INC. (MI)
dba "S-N-S Recycling"
SANIFILL CANADA, INC. (CN)
SANIFILL DE MEXICO (US), INC. (DE)
SANIFILL DE MEXICO, S.A. DE C.V. (MX)
ACAVERDE SERVICIOS, S.A. DE C.V. (MX)
ARRENDADORA DE EQUIPO RECOLECTOR E INMUEBLES, S.A. DE C.V. (MX)
CIUDAD LIMPIA, S.A. DE C.V. (MX)
RECOLECTORA DE DESECHOS DEL NORTE, S.A. DE C.V. (MX)
RECOLECTORA DE DESECHOS Y RESIDUOS KING KONG, S.A. DE C.V. (MX)
RECOLECTORA KING KONG, S.A. DE C.V. (MX)
ROLLENOS SANITARIOS SANIFILL, S.A. DE C.V. (MX)
SANIFILL FALCON DISPOSAL SERVICE, INC. (CA)
dba "Falcon Disposal Service"
dba "Falcon Disposal Service - Long Beach"
SANIFILL FOREST PRODUCTS, INC. (CA)
SANIFILL GP HOLDING COMPANY, INC. (DE)
General Partner of SANIFILL MANAGEMENT LP (TX)
SANIFILL LANDFILL OPERATIONS AND TRANSFER, INC. (TX)
dba "SLOTI C&D"
SAM HOUSTON RECYCLING CENTER, INC. (TX)
<PAGE> 6
dba "Sam Houston Transfer"
SANIFILL LP HOLDING COMPANY, INC. (DE)
General Partner of SANIFILL MANAGEMENT LP (TX)
SANIFILL OF ARIZONA, INC. (AZ)
dba "Arizona Hauling"
dba "Citizens Hauling "
dba "Citizens Transfer Station"
dba "Deer Valley Landfill"
dba "Lone Cactus Landfill"
dba "Seventh Avenue Transfer Station"
AMERICAN GRADING, INC. (AZ)
COPPER STATE RECYCLING, INC. (AZ)
dba "Copper Mountain Landfill"
SOUTHERN SANITATION, INC. (CA)
dba "Southern Sanitation - Cocopah"
SANIFILL OF ARKANSAS, INC. (DE)
dba "Arkansas Recyclable Waste"
dba "Arkansas Recyclable Waste Transfer Station"
dba "ARW"
dba "Rolling Meadows Landfill"
SANIFILL OF CALIFORNIA, INC. (DE)
dba "Nu-Way Live Oak Landfill"
PACIFIC DISPOSAL, INC. (CA)
dba "Pacific Disposal"
SANIFILL OF COLORADO, INC. (DE)
dba "Best Trash"
dba "City Disposal"
dba "Front Range Landfill"
dba "Sanifill of Colorado"
SANIFILL OF FLORIDA HAULING, INC. (FL)
SANIFILL OF FLORIDA, INC. (FL)
dba "Orange Land"
dba "Orange Soil Cement"
dba "Orange Transportation Co."
dba "Orange Waste"
FRONTIER ENVIRONMENTAL, INC. (FL)
dba "Frontier Recycling"
SANIFILL OF GEORGIA, INC. (DE)
dba "Plant Atkinson Transfer Station"
dba "USA/Sanifill - Blue Ridge"
dba "USA/Sanifill - Hiawassee"
SANIFILL OF HAWAIII, INC. (DE)
dba "Kekaha Landfill"
SANIFILL OF IOWA, INC. (DE)
dba "Dickinson County Landfill"
SANIFILL OF MARYLAND, INC. (MD)
GARNET OF MARYLAND, INC. (MD)
dba "Annapolis Junction Transfer Station"
dba "LG Industries/Garnet of Maryland - DC"
PST RECLAMATION, INC. (MD)
dba "PST Reclamation"
dba "Doherty "
TAYLOR LAND RESOURCES, INC. (MD)
SANIFILL OF OHIO, INC. (DE)
dba "Ohio Hauling"
ENVIRONMENTAL RESTORATION CORP. (OH)
SANIFILL OF OKLAHOMA, INC. (OK)
dba "Clinton Transfer Station"
dba "Great Plains Landfill"
dba "Sanifill of Oklahoma"
dba "Sanifill of Oklahoma - Cordell"
dba "Weathorford Transfer Station"
SANIFILL OF OREGON, INC. (DE)
dba "Northern Wasco County Landfill"
MT. HOOD REFUSE REMOVAL, INC. (OR)
<PAGE> 7
dba "Mt. Hood Refuse Removal"
dba "Sandy Transfer Station"
SANIFILL OF PENNSYLVANIA, INC. (DE)
dba "Pennsylvania Hauling"
dba "Sanifill of Pennsylvania"
PELLEGRENE ENTERPRISES, INC. (PA)
dba "Pellegrene Landfill"
SANIFILL OF SAN JUAN, INC. (PR)
Joint Venturer in EL COQUI DE SAN JUAN (Joint Venture) (PR)
SANIFILL OF TENNESSEE HAULING, INC. (TN)
dba "Nashville Hauling"
dba "Nashville Transfer Station"
dba "USA/Sanifill of Lewisburg"
dba "USA/Sanifill of Winchester"
SANIFILL OF TENNESSEE, INC. (DE)
dba "Cedar Ridge Landfill"
dba "Quail Hollow Landfill"
GARNET OF VIRGINIA, INC. (VA)
dba "Garnet of Virginia Landfill"
dba "King George"
SF, INC. (DE)
SOUTHERN SERVICES OF TN, LLC (TN)*
SANIFILL OF TEXAS HAULING, INC. (TX)
dba "Sam Houston Transfer Station"
BEN-SINGER, INC. (TX)
SANIFILL OF TEXAS, INC. (DE)
dba "Fairbanks Development"
dba "Hardy Development"
dba "Houston Greenbelt Development"
dba "Indian Paintbrush Landfill"
dba "Road Runner Landfill"
dba "Texas Landfill"
dba USA/Sanifill - Crawford Road"
dba "USA/Sanifill - Houston Area Maintenance"
dba "USA/Sanifill of Texas - East Belt"
dba "USA/Sanifill of Texas - South Belt"
dba "USA/Sanifill of Texas - West Belt"
dba "USA/Sanifill of Baytown"
dba "USA/Sanifill of Texas Hauling"
S & J LANDFILL LIMITED PARTNERSHIP (TX)
SANIFILL OF VIRGINIA, INC. (DE)
dba "Bethel Landfill"
dba "James City County Transfer Station"
dba "Qualla Road Landfill"
dba "Qualla Road Collection & Disposal"
dba TRPI"
SANIFILL OF WASHINGTON, INC. (WA)
dba "Graham Road Recycling & Disposal"
SANIFILL OF WISCONSIN, INC. (DE)
dba "Advance Services"
dba "Deer Track Park Landfill"
dba "Sanifill of Wisconsin"
CONTROL DESPERDICIOS SOLIDOS, INC. (MX)
SANIFILL/GENERAL PARTNER II CORPORATION (WI)
MOELLER DISPOSAL SERVICES, INC. (WI)
dba "Waukesha Transfer"
SANIFILL/PINE BLUFF LANDFILL, INC. (GA)
dba "Pine Bluff Landfill"
SANIFILL POWER CORPORATION (DE)
RECO VENTURES, L.P. (DE)
SANIFILL SOUTHERN ACQUISITION CORPORATION (KY)
SOUTHERN SANITATION, INC. (KY)
dba "Southern Sanitation - Kentucky"
SOUTHERN WASTE SERVICES, INC. (KY)
dba "Southern Waste Services"
<PAGE> 8
SANIPAN INC. (CN)
SANITARY LANDFILL, INC. (PA)
SCHROEDER DISPOSAL, INC. (WI)
SOUTHERN SERVICES OF TN, L.P. (TN)*
SPRUCE RIDGE, INC. (MN)
dba "Spruce Ridge Landfill"
ELK RIVER LANDFILL, INC. (MN)
dba "Elk River Landfill"
SANIFILL OF MINNESOTA HAULING, INC. (MN)
dba "Burress Sanitation"
dba "Duke's Disposal"
dba "Kato Sanitation"
dba "Meeker County Transfer Station"
dba "West Side Collection"
HILGER TRANSFER, INC. (MN)
dba "Hilger Transfer"
NORTH HENNEPIN RECYCLING AND TRANSFER CORPORATION (MN)
dba "North Hennepin Transfer Station"
UNIVERSAL ASSURANCE CORPORATION (VT)
V.M. CROW & SONS, INC. (TX)
VERDE VALLE ADMINISTRACION, S.A. DE C.V. N/A (MX)
VINLAND ENTERPRISES, INC. (PA)
WEST VALLEY WASTE SERVICES, INC. (AZ)
SOIL REMEDIATION OF PHILADELPHIA, INC. (DE)
SOUTH HILLS DISPOSAL, INC. (PA)
dba "South Hills Disposal"
SUNRAY SERVICES, INC. (AR)
dba "Harrison Hauling"
dba "Houston Landfill"
dba "North County Landfill"
dba "Springdale Hauling"
dba "Sunray Services, Inc. Transfer Station (Joplin)"
dba "Sunray Services - Joplin"
dba "Sunray Services North County Landfill"
dba "Sunray Services of Texas, Inc."
dba "Sunray Services - Tontitown"
dba "Sunray Services Transfer Station"
dba "Tontitown Landfill"
THE ARNONI GROUP (PA)
U.S.A. WASTE OF FAIRLESS HILLS, INC. (DE)
UNITEC DISPOSAL INC. (CN)
dba "Unitec Landfill"
USA ILLINOIS NEWCO, INC. (IL)
CENTRAL ILLINOIS DISPOSAL, INC. (IL)
COUNTRYSIDE LANDFILL, INC. (IL)
(fka ARF Landfill)
dba "Countryside Landfill"
CRYSTAL LAKE DISPOSAL, INC. (DE)
LAKELAND PROPERTIES, INC. (IL)
USA PAPER PROCESSING, INC. (DE)
USA SOUTH HILLS LANDFILL, INC. (PA)
(fka M. C. Arnoni Co., Inc.)
dba "M.C. Arnoni Landfill"
USA WASTE HAULING OF PHILADELPHIA, INC. (DE)
dba "Kasper Brothers"
dba "Philadelphia Hauling & Transfer"
dba "Quick-Way"
dba "Quickway"
USA WASTE OF ARIZONA, INC. (AZ)
CUSTOM DISPOSAL SERVICE, INC. (AZ)
USA WASTE OF CALIFORNIA, INC. (DE)
(fka Mid-Valley Acquisition Corporation)
USA WASTE OF CONNECTICUT, INC. (DE)
dba "Connecticut Carting - Franklin"
dba "Connecticut Carting - Plainfield"
<PAGE> 9
dba "Connecticut Carting - Waterford"
USA WASTE OF ILLINOIS, INC. (IL)
dba "Northshore Waste Control"
dba "USA Waste Services"
dba "USA Waste Services of Illinois - Crestwood"
USA WASTE OF INDIANA, INC. (IN)
dba "Liberty Disposal"
EARTHMOVERS, INC. (IN)
dba "Earthmovers Landfill"
LIBERTY LANDFILL, INC. (IN)
(fka Chambers Liberty Landfill, Inc.)
dba "Liberty Landfill"
USA WASTE OF NEW YORK CITY, INC. (DE)
dba "USA Waste of New York City"
USA WASTE OF OKLAHOMA, INC. (OK)
dba "Moore Transfer Station"
dba "Norman Transfer Station"
dba "Oklahoma Collection"
dba "Pinecrest Landfill"
dba "Pinecrest Sanitary Landfill"
USA WASTE OF TEXAS, INC. (TX)
dba "ECD Waste Services"
dba "Ellis County Landfill"
dba USA Waste of Dallas/Ft. Worth"
dba USA Waste of Ft. Worth"
USA WASTE OF SAN ANTONIO, INC. (TX)
(fka Mission Disposal, Inc.)
dba "USA Waste of San Antonio"
USA WASTE SERVICES OF HOUSTON, INC. (TX)
(fka Best Pak Disposal, Inc.)
dba "Best-Pak"
dba "USA Waste of Houston"
dba "USA Waste Transfer Station"
USA WASTE SERVICES - HICKORY HILLS, INC. (DE)
USA WASTE SERVICES KANSAS LANDFILLS, INC. (DE)
USA WASTE SERVICES NORTH CAROLINA LANDFILLS, INC. (DE)
dba "USA Waste of North Carolina"
dba "USA Waste Services of North Carolina"
USA WASTE SERVICES OF ALABAMA, INC. (AL)
USA WASTE SERVICES OF EASTERN PA., INC. (PA)
(fka Danella Environmental Technologies, Inc. - N/C
USA WASTE SERVICES OF KANSAS, INC. (DE)
USA WASTE SERVICES OF MASSACHUSETTS, INC. (MA)
USA WASTE SERVICES OF NYC, INC. (DE)
dba "USA Waste of New York City"
HARLEM RIVER YARD TRANSFER, L.L.C. (NY)*
USA WASTE SERVICES OF WESTERN ILLINOIS, INC. (DE)
dba "Western Illinois Disposal"
USA WASTE TRANSFER OF PHILADELPHIA, INC. (PA)
dba "Girard Point Transfer Station"
dba "Philadelphia Hauling & Transfer"
WASTE DISPOSAL SPECIALIST, INC. (CO)
WASTE RECOVERY CORPORATION (OH)
dba "WRC"
WEST VIRGINIA WASTE SERVICES, INC. (WV)
WASTE INDUSTRIES (CA)
dba "Blue Barrel Disposal"
dba "Carson Transfer Station"
dba "Chino Basin Compost"
dba "Fresno Transfer Station"
dba "Redondo Recycling"
dba "Western Waste/USA"
dba "Western Waste Industries - Cocoa"
dba "Western Waste Industries - Denver"
dba "Western Waste Industries - Orlando"
<PAGE> 10
dba "Western Waste Industries - Shreveport"
dba "Western Waste Industries SMART Station"
dba "Western Waste Industries Tire Center"
dba "Western Waste/USA - Pasadena"
dba "Western Waste/USA - Texarkana"
dba "Western Waste/USA Conroe Landfill"
dba "Western Waste/USA New Boston Landfill"
dba "Western Waste/USA Processing Facility"
SANTA CLARA VALLEY REFUSE REMOVAL CO. (CA)
SUNSET SANITATION SERVICE (CA)
dba "Sunset Sanitation Service"
dba "Sunset Sanitation Service - Fresno"
dba "Sunset Sanitation Service - Visalia"
WESTERN WASTE INDUSTRIES OF FLORIDA, INC. (FL)
dba "Western Waste/USA"
WHITE BROS. TRUCKING COMPANY (NJ)
dba "White Bros. Trucking"
dba "White Bros. Trucking - East Orange"
dba "White Bros. Trucking - Livingston"
dba "White Bros. Trucking - Newark"
dba "White Bros. Trucking - Passaic"
WPP, INC. (OH)
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements of
USA Waste Services, Inc. on Form S-3 (File Nos. 33-42988, 33-43809, 33-76226,
33-85018, 333-00097, 333-08573, 333-17421, 333-17453, and 333-21035), on Form
S-4 (File Nos. 33-77110, 33-59259, 33-60103, 33-63981, 333-02181, 333-08161,
and 333-14109), and on Form S-8 (File Nos. 33-43619, 33-72436, 33-84988,
33-84990, 33-59807, 33-61621, 33-61625, 33-61627, 333-14115, and 333-14613), of
our report dated March 21, 1997, on our audits of the consolidated financial
statements as of December 31, 1996 and 1995, and for the years ended December
31, 1996, 1995, and 1994, which report is included in this Annual Report on
Form 10-K.
COOPERS & LYBRAND L.L.P.
Houston, Texas
March 27, 1997
<PAGE> 1
Exhibit 24.1
FORM 10-K LIMITED POWER OF ATTORNEY
USA WASTE SERVICES, INC.
KNOW ALL MEN BY THESE PRESENTS that, the undersigned director or
officer of USA Waste Services, Inc., a Delaware corporation, does hereby make,
constitute and appoint Earl E. DeFrates and Gregory T. Sangalis and each of
them acting individually, his true and lawful attorney with power to act
without the other and with full power of substitution, to execute, deliver and
file, for and on his behalf, and in his name and in his capacity or capacities
as aforesaid, the Company's annual report on Form 10-K for the year ended
December 31, 1996 for filing with the Securities and Exchange Commission under
the Securities Exchange Act of 1934, as amended, and any and all amendments
thereto or other documents in support thereof or supplemental thereto, hereby
granting to said attorneys and each of them full power and authority to do and
perform each and every act and thing whatsoever as said attorney or attorneys
may deem necessary or advisable to carry out fully the intent of the foregoing
as the undersigned might or could do personally or in the capacity or
capacities as aforesaid, hereby ratifying and confirming all acts and things
which said attorney or attorneys may do or cause to be done by virtue of these
presents.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 11th
day of March, 1997
/s/ JOHN E. DRURY
---------------------------------------
John E. Drury
/s/ RALPH F. COX
---------------------------------------
Ralph F. Cox
/s/ RICHARD J. HECKMANN
---------------------------------------
Richard J. Heckmann
/s/ LARRY J. MARTIN
---------------------------------------
Larry J. Martin
/s/ WILLIAM E. MOFFETT
---------------------------------------
William E. Moffett
/s/ DONALD F. MOOREHEAD
---------------------------------------
Donald F. Moorehead
/s/ RODNEY R. PROTO
---------------------------------------
Rodney R. Proto
/s/ ALEXANDER W. RANGOS
---------------------------------------
Alexander W. Rangos
/s/ JOHN G. RANGOS, SR.
---------------------------------------
John G. Rangos, Sr.
/s/ KOSTI SHIRVANIAN
---------------------------------------
Kosti Shirvanian
/s/ DAVID SUTHERLAND-YOEST
---------------------------------------
David Sutherland-Yoest
/s/ SAVEY TUFENKIAN
---------------------------------------
Savey Tufenkian
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF USA WASTE SERVICES, INC. FOR THE TWELVE MONTHS ENDED
DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 23,511,000
<SECURITIES> 0
<RECEIVABLES> 224,464,000
<ALLOWANCES> (14,426,000)
<INVENTORY> 0
<CURRENT-ASSETS> 339,981,000
<PP&E> 2,383,136,000
<DEPRECIATION> (572,888,000)
<TOTAL-ASSETS> 2,830,505,000
<CURRENT-LIABILITIES> 319,961,000
<BONDS> 1,187,000,000
0
0
<COMMON> 1,396,000
<OTHER-SE> 1,153,880,000
<TOTAL-LIABILITY-AND-EQUITY> 2,830,505,000
<SALES> 1,313,388,000
<TOTAL-REVENUES> 1,313,388,000
<CGS> 704,917,000
<TOTAL-COSTS> 1,203,080,000
<OTHER-EXPENSES> (13,327,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 45,547,000
<INCOME-PRETAX> 78,088,000
<INCOME-TAX> 45,142,000
<INCOME-CONTINUING> 32,946,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,946,000
<EPS-PRIMARY> .024
<EPS-DILUTED> .024
</TABLE>
