<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
COMMISSION FILE NUMBER 1-12154
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
SUITE 4000
HOUSTON, TEXAS 77002
(Address of principal executive offices)
(713) 512-6200
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
The number of shares of Common Stock, $.01 par value, of the Registrant
outstanding at May 8, 1998, was 220,156,013.
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<PAGE> 2
PART I.
ITEM 1. FINANCIAL STATEMENTS.
USA WASTE SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PAR VALUE AMOUNTS)
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 46,260 $ 51,241
Accounts receivable, net 468,619 442,347
Notes and other receivables 56,321 56,361
Deferred income taxes 46,196 52,592
Prepaid expenses and other 58,891 52,845
------------ ------------
Total current assets 676,287 655,386
Notes and other receivables 22,951 32,386
Property and equipment, net 4,601,573 3,955,008
Excess of cost over net assets of acquired businesses, net 1,905,285 1,539,927
Other intangible assets, net 126,526 106,058
Other assets 256,783 334,080
------------ ------------
Total assets $ 7,589,405 $ 6,622,845
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 196,735 $ 237,176
Accrued liabilities 185,631 228,771
Deferred revenues 69,484 63,417
Current maturities of long-term debt 46,527 39,286
------------ ------------
Total current liabilities 498,377 568,650
Long-term debt, less current maturities 3,584,887 2,724,443
Deferred income taxes 323,320 320,439
Closure, post-closure, and other liabilities 407,699 380,337
------------ ------------
Total liabilities 4,814,283 3,993,869
------------ ------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value; 10,000,000
shares authorized; none issued -- --
Common stock, $.01 par value;
500,000,000 shares authorized; 219,811,065 and
217,805,496 shares issued, respectively 2,198 2,178
Additional paid-in capital 2,436,447 2,392,797
Retained earnings 374,459 253,497
Accumulated other comprehensive income (37,498) (19,012)
Less treasury stock at cost, 23,485 shares (484) (484)
------------ ------------
Total stockholders' equity 2,775,122 2,628,976
------------ ------------
Total liabilities and stockholders' equity $ 7,589,405 $ 6,622,845
============ ============
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
1
<PAGE> 3
USA WASTE SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------
1998 1997
------------ ------------
(restated)
<S> <C> <C>
Operating revenues $ 769,440 $ 460,484
------------ ------------
Costs and expenses:
Operating (exclusive of depreciation
and amortization shown below) 397,492 241,318
General and administrative 81,916 53,677
Depreciation and amortization 86,110 56,178
Merger costs -- 1,996
------------ ------------
565,518 353,169
------------ ------------
Income from operations 203,922 107,315
------------ ------------
Other income (expense):
Interest expense (38,368) (16,098)
Interest and other income, net 36,050 5,699
------------ ------------
(2,318) (10,399)
------------ ------------
Income before income taxes 201,604 96,916
Provision for income taxes 80,642 38,954
------------ ------------
Net income $ 120,962 $ 57,962
============ ============
Basic earnings per common share $ 0.55 $ 0.30
============ ============
Diluted earnings per common share $ 0.52 $ 0.29
============ ============
Weighted average number of common
shares outstanding 219,201 191,125
============ ============
Weighted average number of common
and dilutive potential common shares
outstanding 244,250 214,405
============ ============
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
2
<PAGE> 4
USA WASTE SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Accumulated
Additional Other
Preferred Common Paid-in Retained Comprehensive Treasury
Stock Stock Capital Earnings Income Stock
--------- ---------- ---------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1997 $ -- $ 2,178 $2,392,797 $ 253,497 $ (19,012) $ (484)
Common stock options and warrants
exercised, including tax benefits -- 11 18,651 -- -- --
Common stock issued in business
combinations and development projects -- 9 24,896 -- -- --
Foreign currency translation adjustment -- -- -- -- (18,486) --
Other -- -- 103 -- -- --
Net income -- -- -- 120,962 -- --
--------- ---------- ---------- ---------- ------------- ----------
Balance, March 31, 1998 $ -- $ 2,198 $2,436,447 $ 374,459 $ (37,498) $ (484)
========= ========== ========== ========== ============= ==========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
3
<PAGE> 5
USA WASTE SERVICES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------
1998 1997
------------ ------------
(restated)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 120,962 $ 57,962
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 86,110 56,178
Deferred income taxes 23,276 17,345
Gain on sale of assets (940) (447)
Equity in earnings of a partnership (28,124) --
Changes in assets and liabilities, net of
effects of acquisitions and divestitures (166,156) (106,802)
------------ ------------
Net cash provided by operating activities 35,128 24,236
------------ ------------
Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired (864,434) (586,053)
Capital expenditures (105,600) (78,241)
Proceeds from sale of assets 3,489 18,983
Proceeds from partnership distribution 80,000 --
Other (1,012) 5,158
------------ ------------
Net cash used in investing activities (887,557) (640,153)
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 1,099,117 1,093,295
Principal payments on long-term debt (262,170) (921,931)
Net proceeds from issuance of common stock -- 506,348
Proceeds from exercise of common stock
options and warrants 9,438 11,520
Other 1,024 (852)
------------ ------------
Net cash provided by financing activities 847,409 688,380
------------ ------------
Effect of exchange rate changes on cash and
cash equivalents 39 850
------------ ------------
Increase (decrease) in cash and cash equivalents (4,981) 73,313
Cash and cash equivalents at beginning of period 51,241 26,079
------------ ------------
Cash and cash equivalents at end of period $ 46,260 $ 99,392
============ ============
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
4
<PAGE> 6
USA WASTE SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The condensed consolidated balance sheets of USA Waste Services, Inc. and
subsidiaries (the "Company") as of March 31, 1998 and December 31, 1997, the
condensed consolidated statements of operations for the three months ended 1998
and 1997, the condensed consolidated statement of stockholders' equity for the
three months ended March 31, 1998, and the condensed consolidated statements of
cash flows for the three months ended March 31, 1998 and 1997 are unaudited. In
the opinion of management, such financial statements include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of financial position, results of operations, and cash flows for
the periods presented. The Company has restated the previously issued financial
statements for the three months ended March 31, 1997, to reflect its merger with
United Waste Systems, Inc. ("United") consummated on August 26, 1997, accounted
for using the pooling of interests method of accounting. The financial
statements presented herein should be read in connection with the Company's
Annual Report on Form 10-K for the year ended December 31, 1997.
1. BUSINESS COMBINATIONS
On January 14, 1998, the Company acquired the solid waste divisions of City
Management Holdings Trust ("City Management") for approximately $810,000,000
consisting of cash, liabilities incurred and debt assumed. The businesses
acquired are primarily located in the state of Michigan and include several
collection operations, landfills, and transfer stations. This acquisition was
accounted for using the purchase method of accounting.
In addition to the acquisition of City Management, during the three months
ended March 31, 1998, the Company acquired 2 landfills, 32 collection
businesses, and 8 transfer stations for approximately $129,000,000 in cash,
$12,000,000 in liabilities incurred or debt assumed, and approximately 825,000
shares of the Company's common stock in business combinations accounted for
using the purchase method of accounting.
The unaudited pro forma information set forth below assumes all
acquisitions accounted for as purchases from January 1, 1997 through March 31,
1998, had occurred at the beginning of 1997. 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
purchase acquisitions been consummated at that time (in thousands, except per
share amounts):
<TABLE>
<CAPTION>
Three Months Ended March 31,
-----------------------------
1998 1997
------------ ------------
<S> <C> <C>
Operating revenues $ 793,229 $ 782,312
Net income 122,219 73,663
Basic earnings per common share 0.56 0.37
Diluted earnings per common share 0.52 0.35
</TABLE>
5
<PAGE> 7
2. LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
------------ ------------
<S> <C> <C>
Senior revolving credit facility $ 1,333,000 $ 430,000
6 1/2% Senior notes due 2002, net of unamortized discount
of $2,169 and $2,229 347,831 347,771
7% Senior notes due 2004, net of unamortized discount
of $2,307 and $2,455 297,693 297,545
7 1/8% Senior notes due 2007, net of unamortized discount
of $2,796 and $2,919 297,204 297,081
7 1/8% Senior notes due 2017, net of unamortized discount
of $1,488 and $1,533 148,512 148,467
4% Convertible subordinated notes due 2002 535,275 535,275
4 1/2% Convertible subordinated notes due 2001 149,500 149,500
5% Convertible subordinated notes due 2006 115,000 115,000
Tax-exempt bonds, principal payable in periodic installments,
maturing through 2021, fixed and variable interest rates ranging
from 3.65% to 9.25% at March 31, 1998 263,545 265,355
Other 143,854 177,735
------------ ------------
3,631,414 2,763,729
Less current maturities 46,527 39,286
------------ ------------
$ 3,584,887 $ 2,724,443
============ ============
</TABLE>
On August 7, 1997, the Company entered into a $2,000,000,000 senior
revolving credit facility with a consortium of banks (the "Credit Facility").
The Credit Facility is used for general corporate purposes and is available for
standby letters of credit of up to $650,000,000 and principal reductions are not
required during its five-year term. The Credit Facility requires a facility fee
not to exceed 0.30% per annum and loans under the Credit Facility bear interest
at a rate based on the Eurodollar rate plus a spread not to exceed 0.575% per
annum. At December 31, 1997, the Company had borrowed $430,000,000 and had
issued letters of credit of $467,029,000 under the Credit Facility. The
applicable interest rate and facility fee at December 31, 1997, was 6.1% and
0.1125% per annum, respectively. At March 31, 1998, the Company had borrowed
$1,333,000,000 and had issued letters of credit of $483,261,000 under the Credit
Facility. The applicable interest rate and facility fee was 5.92% and 0.1125%,
respectively, at March 31, 1998.
3. INCOME TAXES
The difference in federal income taxes at the statutory rate and the
provision for income taxes for the three months ended March 31, 1998 and 1997,
is primarily due to state and local income taxes.
4. EARNINGS PER COMMON SHARE
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 is based
on the weighted average number of common shares outstanding, replaces primary
earnings per share. Diluted earnings per share, which is based on the weighted
average number of common and dilutive potential common shares outstanding,
replaces fully diluted earnings per share and 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 dilutive potential shares. SFAS No. 128 was effective for the
Company for the year ended December 31, 1997, and required all prior-period
earnings per share data to be restated to conform to its presentation.
Accordingly, the Company has restated all previously reported earnings per share
amounts.
6
<PAGE> 8
Diluted earnings per common share for the three months ended March 31, 1998
and 1997, have been calculated assuming conversion of the Company's convertible
subordinated notes and debentures, and therefore interest, net of taxes, of
$5,014,000 and $3,696,000, respectively, has been added back to net income for
this calculation.
The following reconciles the number of common shares outstanding to the
weighted average number of common shares outstanding and the weighted average
number of common and dilutive potential common shares outstanding for the
purposes of calculating basic and dilutive earnings per common share,
respectively (in thousands):
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------
1998 1997
------------ ------------
<S> <C> <C>
Number of common shares outstanding 219,811 201,481
Effect of using weighted average common
shares outstanding (610) (10,356)
------------ ------------
Weighted average number of common
shares outstanding 219,201 191,125
Dilutive effect of common stock
options and warrants 3,754 7,157
Dilutive effect of convertible subordinated
notes and debentures 21,295 16,123
------------ ------------
Weighted average number of common
and dilutive potential common shares
outstanding 244,250 214,405
============ ============
</TABLE>
5. COMPREHENSIVE INCOME
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income ("SFAS
No. 130"). SFAS No. 130 establishes standards for reporting and presentation of
comprehensive income and its components. Comprehensive income is defined as the
change in equity of a business enterprise during a period from transactions and
other events and circumstances from nonowner sources and includes all changes in
equity during a period except those resulting from investments by owners and
distributions to owners. SFAS No. 130 is effective for the Company in 1998 and
requires comparative disclosure for prior periods presented. Comprehensive
income and its components for the three months ended March 31, 1998 and 1997 is
as follows (in thousands):
<TABLE>
<CAPTION>
Three months Ended March 31,
------------------------------
1998 1997
------------ ------------
<S> <C> <C>
Net income $ 120,962 $ 57,962
Foreign currency translation adjustment (18,486) (70)
------------ ------------
Comprehensive income $ 102,476 $ 57,892
============ ============
</TABLE>
Accumulated other comprehensive income at March 31, 1998 and December 31,
1997, is comprised solely of foreign currency translation adjustments.
6. PARTNERSHIP INVESTMENT
In November 1997, the Company purchased for approximately $97,000,000, a
49% limited partner interest in a partnership (the "Partnership") that was
formed for the purpose of acquiring common stock of Waste Management in the
open market. The Partnership purchased common stock of Waste Management during
November 1997 and sold substantially all of such common stock in March 1998.
Accordingly, the Company recorded other income of approximately $28,100,000
($16,900,000 after tax, or $0.07 per share on a diluted basis) for the three
months ended March 31, 1998, for its equity in the earnings of the Partnership.
Subsequent to March 31, 1998, the Partnership was dissolved.
7. COMMITMENTS AND CONTINGENCIES
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.
7
<PAGE> 9
Litigation - As of March 31, 1998, the Company or its subsidiaries has been
notified that they are potentially responsible parties ("PRPs") in connection
with six locations listed on the Superfund National Priorities List ("NPL").
None of the six NPL sites at which claims have been made against the Company are
owned by the Company, and they are at different procedural stages under
Superfund. At four of the NPL sites, the Company's liability is well defined as
a consequence of a governmental decision as to the appropriate remedy. At the
others, where investigations have not been completed, remedies not selected or
responsible parties have been unable to reach agreement, the Company's liability
is less certain. While the Company, based on its status reviews of its PRP
claims, does not currently anticipate that the amount of such liabilities will
have a material adverse effect on the Company's operations, financial condition
or cash flows, the measurement of environmental liabilities is inherently
difficult and the possibility remains that technological, regulatory or
enforcement developments, the results of environmental studies, or other factors
could materially alter this expectation at any time.
The Company and certain of its subsidiaries are parties 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 effect on the Company's financial position, results of operations or
cash flows. 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 or other equipment.
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 $300,000,000 in umbrella insurance protection. The property policy
provides insurance 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 and countries in which it has employees. The Company
also currently has an environmental impairment liability ("EIL") insurance
policy for certain of its landfills, transfer stations, and recycling facilities
that provides coverage for property damages and/or bodily injuries to third
parties caused by off-site pollution emanating from such landfills, transfer
stations, or recycling facilities. This policy provides $5,000,000 of coverage
per loss with a $10,000,000 aggregate limit.
To date, the Company has not experienced 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 on the Company's financial condition,
results of operations or cash flows. 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.
8. NEW ACCOUNTING PRONOUNCEMENT
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, Disclosures about Segments of an
Enterprise and Related Information ("SFAS No. 131"). SFAS No. 131 establishes
standards for reporting information about operating segments in annual financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports issued to shareholders. SFAS No.
131 is effective for fiscal years beginning after December 15, 1997. Adoption is
not required for interim periods in the initial year of application. Adoption
of this statement will not have a material impact on the consolidated financial
statements of the Company.
8
<PAGE> 10
9. SUBSEQUENT EVENTS
On May 6, 1998, the Company consummated a merger with TransAmerican Waste
Industries, Inc. ("TransAmerican") accounted for as a pooling of interests,
pursuant to which the Company issued approximately 1,975,000 shares of its
common stock in exchange for all outstanding shares of TransAmerican and assumed
approximately $62,000,000 of TransAmerican's outstanding indebtedness. Periods
prior to the consummation of this transaction will not be restated to include
the accounts and operations of TransAmerican as the combined results would not
be materially different from the results as presented. The businesses acquired
include five collection operations, nine landfills, and two transfer stations
located throughout the Southern region of the United States.
10. WASTE MANAGEMENT, INC.
On March 10, 1998, the Company entered into a definitive agreement and plan
of merger pursuant to which a subsidiary of the Company will be merged with and
into Waste Management, Inc. ("Waste Management") and Waste Management will
become a wholly owned subsidiary of the Company (the "Merger"). As of the
effective time of the Merger, each outstanding share of Waste Management, other
than shares held in Waste Management's treasury or owned by Waste Management,
the Company or any wholly owned subsidiaries of either of them, will be
converted into the right to receive 0.725 of a share of the Company's Common
Stock. Waste Management is a leading international provider of waste management
and related services to governmental, residential, commercial and industrial
customers in the United States and select international markets and had revenues
in 1997 of approximately $9,188,582,000. This transaction, which is expected to
close during 1998, is subject to regulatory approval and approval of the
stockholders of the Company and Waste Management. It is anticipated that the
Company will issue approximately 345,000,000 shares of its common stock related
to this transaction and that the Merger will be accounted for as a pooling of
interests.
As part of the Merger, the Company's Board of Directors will be increased
to 14 members, seven of whom will be designated by each of Waste Management's
Board of Directors and the Company's Board of Directors. Additionally, upon
consummation of the Merger, it is expected that the Company will change its name
to "Waste Management, Inc." ("New Waste Management"). The Corporate headquarters
of New Waste Management will be located in Houston, Texas, and John E. Drury,
the Company's Chairman of the Board and Chief Executive Officer, will remain as
Chief Executive Officer. It is also expected that Rodney R. Proto, the Company's
President and Chief Operating Officer, and Earl E. DeFrates, the Company's
Executive Vice President and Chief Financial Officer, will retain such positions
with New Waste Management.
9
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following discussion reviews the Company's operations for the three
months ended March 31, 1998 and 1997, and should be read in conjunction with the
Company's Condensed Consolidated Financial Statements and related notes thereto
included elsewhere herein as well as the Company's Consolidated Financial
Statements and related notes thereto included in Item 8 of the Company's Annual
Report on Form 10-K for the year ended December 31, 1997.
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
the Company's Annual Report on Form 10-K for the year ended December 31, 1997.
INTRODUCTION
The Company provides nonhazardous solid waste management services,
consisting of collection, transfer, disposal, recycling, and other miscellaneous
services in various locations throughout the United States, Canada, and Puerto
Rico. Since August 1990, the Company has experienced significant growth
principally through the acquisition and integration of solid waste businesses
and is currently the third largest nonhazardous solid waste management company
in North America, as measured by revenues for the 1997 fiscal year. As of March
31, 1998, the Company owned or operated an extensive network of landfills,
transfer stations, and collection operations serving in excess of eight million
customers.
The Company's operating revenues consist primarily of fees charged for its
collection and disposal services. Operating 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 operating revenues are
recognized as services are actually provided. Fees for residential and municipal
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 operating 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 Condensed
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 amortized over the estimated useful life of a
site as capacity is consumed, and include acquisition, engineering, upgrading,
construction, capitalized interest, and permitting costs. All indirect
development expenses, such as administrative salaries and general corporate
overhead, are charged to expense 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.
10
<PAGE> 12
RESULTS OF OPERATIONS
The following table presents, for the periods indicated, the period to
period change in dollars (in thousands) and percentages for the various
Condensed Consolidated Statement of Operations line items and for certain
supplementary data.
<TABLE>
<CAPTION>
Period to Period
Change for the
Three Months Ended
March 31,
1998 and 1997
------------------------
$ %
--------- ---------
<S> <C> <C>
STATEMENT OF OPERATIONS:
Operating revenues $ 308,956 67.1%
---------
Costs and expenses:
Operating (exclusive of depreciation
and amortization shown below) 156,174 64.7
General and administrative 28,239 52.6
Depreciation and amortization 29,932 53.3
Merger costs (1,996) (100.0)
---------
212,349 60.1
---------
Income from operations 96,607 90.0
---------
Other income (expense):
Interest expense (22,270) (138.8)
Interest and other income, net 30,351 532.6
---------
8,081 77.7
---------
Income before income taxes 104,688 108.0
Provision for income taxes 41,688 107.0
---------
Net income $ 63,000 108.7%
=========
SUPPLEMENTARY DATA:
EBITDA (1) $ 126,539 77.4%
=========
</TABLE>
- ----------
(1) EBITDA represents income from operations plus depreciation and amortization
expense. EBITDA, which is not a measure of financial performance under
generally accepted accounting principles, is provided because the Company
understands that such information is used by certain investors when
analyzing the financial position and performance of the Company.
11
<PAGE> 13
The following table presents, for the periods indicated, the percentage
relationship that the various Condensed Consolidated Statements of Operations
line items and certain supplementary data bear to operating revenues:
<TABLE>
<CAPTION>
Three Months Ended March 31,
-------------------------------
1998 1997
------------ ------------
<S> <C> <C>
STATEMENT OF OPERATIONS:
Operating revenues:
Collection 64.0% 57.2%
Transfer 11.8 10.8
Disposal 21.0 26.6
Other 3.2 5.4
------------ ------------
100.0 100.0
------------ ------------
Costs and expenses:
Operating (exclusive of depreciation
and amortization shown below) 51.7 52.4
General and administrative 10.6 11.7
Depreciation and amortization 11.2 12.2
Merger costs -- 0.4
------------ ------------
73.5 76.7
------------ ------------
Income from operations 26.5 23.3
------------ ------------
Other income (expense):
Interest expense (5.0) (3.5)
Interest and other income, net 4.7 1.3
------------ ------------
(0.3) (2.2)
------------ ------------
Income before income taxes 26.2 21.1
Provision for income taxes 10.5 8.5
------------ ------------
Net income 15.7% 12.6%
============ ============
SUPPLEMENTARY DATA:
EBITDA (1) 37.7% 35.5%
============ ============
</TABLE>
- ----------
(1) EBITDA represents income from operations plus depreciation and
amortization expense. EBITDA, which is not a measure of financial
performance under generally accepted accounting principles, is provided
because the Company understands that such information is used by certain
investors when analyzing the financial position and performance of the
Company.
12
<PAGE> 14
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
Operating Revenues
Operating revenues for the three months ended March 31, 1998, increased
$308,956,000, or 67.1%, as compared to the corresponding prior year period. This
increase was primarily attributable to the effect of acquisitions of domestic
and Canadian solid waste businesses and the internal growth of comparable
operations. Acquisitions of domestic solid waste businesses consummated during
1998 and the effect of such acquisitions consummated during 1997 accounted for
increases in operating revenues of $253,800,000, or 55.1%. Acquisitions
consummated during 1998 and the effect of such acquisitions consummated during
1997 of Canadian solid waste businesses accounted for increases in operating
revenues of $77,000,000, or 16.7%. Internal growth of comparable operations
resulted in increases in operating revenues of $40,154,000, or 8.7%, comprised
of 5.6% due to volume increases and 3.1% due to price increases. Slightly
offsetting the increase in operating revenues by approximately $4,800,000, or
1%, was the effect of the foreign currency translation differences between the
US and Canadian dollars. The remaining decrease in operating revenues was
primarily the result of dispositions during 1997 of certain non-core businesses
and certain non-strategically located solid waste businesses.
The Company's one line of business, integrated nonhazardous solid waste
management, encompasses the entire waste stream from collection to transfer
station to landfill. As a percentage of total operating revenues, the Company's
mix between collection, transfer station, and landfill, reflects an increase in
collection revenues from 57.2% to 64.0% and a decrease in disposal revenues from
26.6% to 21.0% for the three months ended March 31, 1997 and 1998, respectively.
This change is primarily the result of acquisitions consummated during 1997 with
large collections operations and includes the Canadian solid waste businesses of
Allied Waste Industries, Inc. and Waste Management, Inc. ("Waste Management")
acquired in March 1997 and June 1997, respectively.
As a result of the Company's large investments in Canadian solid waste
businesses during 1997, operating revenues from foreign operations have
increased significantly as a percentage of total operating revenues from the
three months ended March 31, 1997, to the three months ended March 31, 1998.
This increase was slightly offset by the Company's contribution during 1997 of
the net book value of its Mexico operations to a non-public solid waste entity
focusing on Mexico's solid waste market in exchange for a 37.5% interest in
that entity. The following table summarizes for these periods the Company's
operating revenues by geographic area and the percentage relationship of
operating revenues by geographic area to total operating revenues (dollars in
thousands):
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------------------------
1998 1997
--------------------- ---------------------
<S> <C> <C> <C> <C>
United States and Puerto Rico $676,555 87.9% $429,051 93.2%
Canada 92,885 12.1 28,772 6.2
Mexico -- -- 2,661 0.6
-------- -------- -------- --------
Total operating revenues $769,440 100.0% $460,484 100.0%
======== ======== ======== ========
</TABLE>
Operating Costs and Expenses (Exclusive of Depreciation and Amortization
Shown Below)
Operating costs and expenses increased $156,174,000, or 64.7%, for the
three months ended March 31, 1998, as compared to the corresponding prior year
period, primarily due to the increase in operating revenues described above.
However, as a percentage of operating revenues, operating costs and expenses
decreased from 52.4% to 51.7% for the three months ended March 31, 1997 and
1998, respectively. This decrease reflects operating synergies realized from the
Company's 1997 and 1998 tuck-in acquisition activity and its merger with United
Waste Systems, Inc. ("United") in August 1997. Additionally, this decrease also
reflects cost reductions realized from the Company's efforts to increase its
utilization of internal disposal capacity, which improved from 50% for the three
months ended March 31, 1997, to 55% for the three months ended March 31, 1998.
The improvement in operating costs and expenses as a percentage of operating
revenues was slightly offset by the change in the mix of operating revenues as
collection operations typically have higher operating costs and lower margin
returns than disposal operations.
13
<PAGE> 15
General and Administrative
General and administrative expenses increased $28,239,000, or 52.6%, for
the three months ended March 31, 1998, as compared to the corresponding prior
year period, however have these costs decreased as a percentage of operating
revenues from 11.7% to 10.6%, respectively. This improvement in general and
administrative expenses as a percentage of operating revenues is primarily the
result of the Company's ability to integrate acquisitions of solid waste
businesses without a proportionate increase in general and administrative
expenses as well as cost reductions resulting from the Company's merger with
United in August 1997.
Depreciation and Amortization
Depreciation and amortization expense increased $29,932,000, or 53.3%, for
the three months ended March 31, 1998, as compared to the prior year period.
This increase is primarily due to the effect of acquisitions of solid waste
businesses during 1997 and 1998, an increase in landfill volumes from 100,500 to
144,000 average tons per day for the three months ended March 31, 1997 and 1998,
respectively, and upgrades to existing operations. However, the incremental
depreciation and amortization due to the improved utilization of internal
disposal capacity was offset by the improved utilization of equipment through
internal growth in collection and disposal operations.
Merger Costs
In the first quarter of 1997, the Company recorded expenses of $1,996,000
related to the acquisition of certain of solid waste businesses accounted for
as poolings of interests.
Income from Operations
Income from operations increased $96,607,000, or 90.0%, for the three
months ended March 31, 1998, as compared to the respective prior year period due
to reasons discussed above. As a percentage of operating revenues, income from
operations increased from 23.3% to 26.5%. This improvement was primarily the
result of economies of scale realized by the Company from recent mergers and
acquisitions, increased utilization of internal disposal capacity, and
improvements in comparable operations.
Other Income and Expenses
Other income and expenses consists of interest expense, interest income,
and other income. Interest expense, gross of amounts capitalized, increased due
to the Company's outstanding indebtedness. Interest capitalized was $6,306,000
and $5,814,000 for the three months ended March 31, 1998 and 1997, respectively.
The increase in capitalized interest is primarily due to development activity at
disposal sites acquired during 1997 and the three months ended March 31, 1998.
Included in other income for the three months ended March 31, 1998, was
approximately $28,100,000 ($16,900,000 after tax or $0.07 per share on a diluted
basis), representing the Company's equity in earnings of a partnership formed in
1997 for the purpose of acquiring common stock of Waste Management in the open
market.
Provision for Income Taxes
The Company recorded a provision for income taxes of $80,642,000 and
$38,954,000 for the three months ended March 31, 1998 and 1997, respectively.
The primary difference in the provision for income taxes at the federal
statutory rate and the recorded amount for the periods indicated is due to state
and local income taxes.
Net Income
Net income was $120,962,000 and $57,962,000, or $0.52 and $0.29 per share
on a diluted basis, for the three months ended March 31, 1998 and 1997,
respectively. Excluding of the Company's equity in earnings of a partnership
discussed above, diluted earnings per common share was $0.45 for the three
months ended March 31, 1998.
14
<PAGE> 16
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 March 31, 1998, the Company had working capital of $177,910,000 (a
ratio of current assets to current liabilities of 1.36:1) and a cash balance of
$46,260,000 which compares to working capital of $86,736,000 (a ratio of current
assets to current liabilities of 1.15:1) and a cash balance of $51,241,000 as of
December 31, 1997. For the three months ended March 31, 1998, net cash from
operating activities was approximately $35,128,000 and net cash from financing
activities was approximately $847,409,000, as compared to $24,236,000 and
$688,380,000, respectively, for the corresponding prior year period. Net cash
from operating activities and financing activities was primarily used to fund
acquisitions of businesses of $864,434,000 and $586,053,000 and for capital
expenditures of $105,600,000 and $78,241,000 for the three months ended March
31, 1998 and 1997, respectively. For the three months ended March 31, 1998, net
cash flows from investing activities also included a cash distribution of
approximately $80,000,000 from a partnership, of which the Company owned a 49%
interest, that was formed for the purpose of acquiring common stock of Waste
Management in the open market (see "Recent Developments").
In general, the Company's capital expenditures and working capital
requirements have increased reflecting the Company's business strategy of growth
through acquisitions and development projects. The Company intends to finance
the remainder of its 1998 capital expenditures through internally generated cash
flow and amounts available under its senior revolving credit facility.
SIGNIFICANT FINANCING EVENTS
On August 7, 1997, the Company entered into a $2,000,000,000 senior
revolving credit facility with a consortium of banks (the "Credit Facility").
The Credit Facility is used for general corporate purposes and is available for
standby letters of credit of up to $650,000,000 and principal reductions are not
required during its five-year term. The Credit Facility requires a facility fee
not to exceed 0.30% per annum and loans under the Credit Facility bear interest
at a rate based on the Eurodollar rate plus a spread not to exceed 0.575% per
annum. At December 31, 1997, the Company had borrowed $430,000,000 and had
issued letters of credit of $467,029,000 under the Credit Facility. The
applicable interest rate and facility fee at December 31, 1997, was 6.1% and
0.1125% per annum, respectively. At March 31, 1998, the Company had borrowed
$1,333,000,000 and had issued letters of credit of $483,261,000 under the Credit
Facility. The applicable interest rate and facility fee was 5.92% and 0.1125%,
respectively, at March 31, 1998.
On May 8, 1998, the Company filed a universal shelf registration statement
with the Securities and Exchange Commission to provide for the issuance of up to
$2,000,000,000 of either debt or equity securities, or a combination thereof, to
be used for general corporate purposes.
ACQUISITION ACTIVITY FOR THE THREE MONTHS ENDED MARCH 31, 1998
On January 14, 1998, the Company acquired the solid waste divisions of City
Management Holding Trust ("City Management") for approximately $810,000,000
consisting of cash, liabilities incurred and debt assumed. The businesses
acquired are primarily located in the state of Michigan and include several
collection operations, landfills, and transfer stations. This acquisition was
accounted for using the purchase method of accounting.
15
<PAGE> 17
In addition to the acquisition of City Management, during the three months
ended March 31, 1998, the Company acquired 2 landfills, 32 collection
businesses, and 8 transfer stations for approximately $129,000,000 in cash,
$12,000,000 in liabilities incurred or debt assumed, and approximately 825,000
shares of the Company's common stock in business combinations accounted for as
purchases during the three months ended March 31, 1998.
RECENT DEVELOPMENTS
On May 6, 1998, the Company consummated a merger with TransAmerican Waste
Industries, Inc. ("TransAmerican") accounted for as a pooling of interests,
pursuant to which the Company issued approximately 1,975,000 shares of its
common stock in exchange for all outstanding shares of TransAmerican and assumed
approximately $62,000,000 of TransAmerican's outstanding indebtedness. Periods
prior to the consummation of this transaction will not be restated to include
the accounts and operations of TransAmerican as the combined results would not
be materially different from the results as presented. The businesses acquired
include five collection operations, nine landfills, and two transfer stations
located throughout the Southern region of the United States.
The Company entered into a definitive agreement on February 6, 1998, with
American Waste Systems, Inc. ("American"), to acquire American's solid waste
businesses for approximately $150,000,000 in cash. This transaction, which is
subject to regulatory approval and approval of American's shareholders, is
expected to close in the first half of 1998. The businesses to be acquired
include three landfills and one collection operation located in Ohio.
On March 10, 1998, the Company entered into a definitive agreement and plan
of merger pursuant to which a subsidiary of the Company will be merged with and
into Waste Management, and Waste Management will become a wholly owned
subsidiary of the Company (the "Merger"). As of the effective time of the
Merger, each outstanding share of Waste Management, other than shares held in
Waste Management's treasury or owned by Waste Management, the Company or any
wholly owned subsidiaries of either of them, will be converted into the right to
receive 0.725 of a share of the Company's Common Stock. Waste Management is a
leading international provider of waste management and related services to
governmental, residential, commercial and industrial customers in the United
States and select international markets and had revenues in 1997 of
approximately $9,188,582,000. This transaction, which is expected to close
during 1998, is subject to regulatory approval and approval of the stockholders
of the Company and Waste Management. It is anticipated that the Company will
issue approximately 345,000,000 shares of its common stock related to this
transaction and that the Merger will be accounted for as a pooling of interests.
As part of the Merger, the Company's Board of Directors will be increased
to 14 members, seven of whom will be designated by each of Waste Management's
Board of Directors and the Company's Board of Directors. Additionally, upon
consummation of the Merger, it is expected that the Company will change its name
to "Waste Management, Inc." ("New Waste Management"). The Corporate headquarters
of New Waste Management will be located in Houston, Texas, and John E. Drury,
the Company's Chairman of the Board and Chief Executive Officer, will remain as
Chief Executive Officer. It is also expected that Rodney R. Proto, the Company's
President and Chief Operating Officer, and Earl E. DeFrates, the Company's
Executive Vice President and Chief Financial Officer, will retain such positions
with New Waste Management.
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.
On August 4, 1997, the Company filed a shelf registration statement with
the Securities and Exchange Commission to provide for the issuance of up to
20,000,000 shares of the Company's common stock that may be offered and issued
by the Company from time to time in connection with the acquisition directly or
indirectly by the Company of other businesses or properties or interests
therein, and which may be reserved for issuance
16
<PAGE> 18
pursuant to, or offered and issued upon exercise or conversion of, warrants,
options, convertible notes, or other similar instruments issued by the Company
from time to time in connection with such acquisitions. As of April 30, 1998,
the Company had approximately 17,400,000 shares of its common stock available
for future offerings and issuances under this shelf registration statement.
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 and 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 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.
YEAR 2000 DATE CONVERSION
In 1997, the Company began to modify its computer information systems to
ensure proper processing of transactions relating to the year 2000 and beyond
and expects to complete the required modifications during 1998. The amount
charged to expense in the three months ended March 31, 1998 and 1997, as well as
the amounts anticipated to be charged to expense during the remainder of 1998
related to the year 2000 computer compliance modifications, have not been and
are not expected to be material to the Company's financial position, results of
operations or cash flows.
NEW ACCOUNTING PRONOUNCEMENT
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, Disclosures about Segments of an
Enterprise and Related Information ("SFAS No. 131"). SFAS No. 131 establishes
standards for reporting information about operating segments in annual financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports issued to shareholders. SFAS No.
131 is effective for fiscal years beginning after December 15, 1997. Adoption is
not required for interim periods in the initial year of application. Adoption of
this statement will not have a material impact on the consolidated financial
statements of the Company.
17
<PAGE> 19
PART II.
ITEM 1. LEGAL PROCEEDINGS.
As of March 31, 1998, the Company or its subsidiaries has been notified
that they are potentially responsible parties ("PRPs") in connection with six
locations listed on the Superfund National Priorities List ("NPL"). None of the
six NPL sites at which claims have been made against the Company are owned by
the Company, and they are at different procedural stages under Superfund. At
four of the NPL sites, the Company's liability is well defined as a consequence
of a governmental decision as to the appropriate remedy. At the others, where
investigations have not been completed, remedies not selected or responsible
parties have been unable to reach agreement, the Company's liability is less
certain. While the Company, based on its status reviews of its PRP claims, does
not currently anticipate that the amount of such liabilities will have a
material adverse effect on the Company's operations, financial condition or cash
flows, the measurement of environmental liabilities is inherently difficult and
the possibility remains that technological, regulatory or enforcement
developments, the results of environmental studies, or other factors could
materially alter this expectation at any time.
The Company and certain of its subsidiaries are parties 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 effect on the Company's financial position, results of operations or
cash flows. 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 judgment for
violation of an 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. The Company is also subject from
time to time to claims for personal injury or property damage arising out of
accidents involving its vehicles or other equipment.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters where submitted to the stockholders of the Company during the
first quarter of 1998.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
EXHIBIT NO. * DESCRIPTION
------------- -----------
10.1 Amended and Restated Revolving Credit Agreement dated as of
August 7, 1997, among the Registrant, Bank of America
National Trust and Savings Association, Morgan Guaranty
Trust Company of New York and other financial institutions
[Incorporated by reference to Exhibit 10.1 of the
Registrant's Current Report on Form 8-K dated August 26,
1997].
10.2 First Amendment dated as of March 6, 1998, to Amended and
Restated Revolving Credit Agreement, among the Registrant,
Bank of America National Trust and Savings Association,
Morgan Guaranty Trust Company of New York and other
financial institutions.
10.3 Bridge Loan Agreement dated as of January 21, 1998, among
the Registrant, Morgan Guaranty Trust Company of New York
and other financial institutions.
10.4 First Amendment dated March 6, 1998, to Bridge Loan
Agreement, among the Registrant, Morgan Guaranty Trust
Company of New York and other financial institutions.
10.5 Credit Agreement dated January 22, 1998, among the
Registrant, Bank of America National Trust and Savings
Association and various financial institutions.
18
<PAGE> 20
12 Computation of Ratio of Earnings to Fixed Charges.
27 Financial Data Schedule.
----------
* In the case of incorporation by reference to documents filed
under the Securities and Exchange Act of 1934, the
Registrant's file number under that Act is 1-12154.
(b) Reports on Form 8-K:
A report on Form 8-K dated March 10, 1998, was filed by the Company on
March 12, 1998, regarding the Company's Agreement and Plan of Merger with Waste
Management, Inc. and related press release.
19
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
USA WASTE SERVICES, INC.
By: /s/ EARL E. DEFRATES
--------------------------------------
Earl E. DeFrates,
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
By: /s/ BRUCE E. SNYDER
--------------------------------------
Bruce E. Snyder,
Vice President and
Chief Accounting Officer
(Principal Accounting Officer)
Date: May 15, 1998
20
<PAGE> 22
INDEX TO EXHIBITS
Exhibit No. * Description
------------- -----------
10.1 Amended and Restated Revolving Credit Agreement dated as of
August 7, 1997, among the Registrant, Bank of America National
Trust and Savings Association, Morgan Guaranty Trust Company
of New York and other financial institutions [Incorporated by
reference to Exhibit 10.1 of the Registrant's Current Report
on Form 8-K dated August 26, 1997].
10.2 First Amendment dated as of March 6, 1998, to Amended and
Restated Revolving Credit Agreement, among the Registrant,
Bank of America National Trust and Savings Association, Morgan
Guaranty Trust Company of New York and other financial
institutions.
10.3 Bridge Loan Agreement dated as of January 21, 1998, among the
Registrant, Morgan Guaranty Trust Company of New York and
other financial institutions.
10.4 First Amendment dated March 6, 1998, to Bridge Loan Agreement,
among the Registrant, Morgan Guaranty Trust Company of New
York and other financial institutions.
10.5 Credit Agreement dated January 22, 1998, among the Registrant,
Bank of America National Trust and Savings Association and
various financial institutions.
12 Computation of Ratio of Earnings to Fixed Charges.
27 Financial Data Schedule.
* In the case of incorporation by reference to documents filed
under the Securities and Exchange Act of 1934, the
Registrant's file number under that Act is 1-12154.
<PAGE> 1
EXHIBIT 10.2
FIRST AMENDMENT
TO AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
This FIRST AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
is made and entered into as of March 6, 1998 (this "Amendment") by and among USA
WASTE SERVICES, INC., a Delaware corporation (the "Borrower"), THE GUARANTORS,
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking
association ("BOA"), MORGAN GUARANTY TRUST COMPANY OF NEW YORK, a New York state
banking association (in its individual capacity, "MGT"), and each of the other
financial institutions party to the Credit Agreement defined below (collectively
with BOA and MGT, the "Banks"), and MGT as administrative and documentation
agent (in such capacity, the "Administrative Agent"). Capitalized terms used
herein without definition shall have the meanings assigned to such terms in the
Credit Agreement.
WHEREAS, the Borrower, the Guarantors, the Banks, and the Agents have
entered into that certain Amended and Restated Revolving Credit Agreement, dated
as of August 7, 1997 (as amended and in effect from time to time, the "Credit
Agreement"), pursuant to which the Banks have extended credit to the Borrower on
the terms set forth therein;
WHEREAS, the Banks, the Agents, the Guarantors, and the Borrower have
agreed to amend the Credit Agreement as hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
Section 1. AMENDMENT TO Section 9.2. Section 9.2 of the Credit
Agreement is hereby deleted in its entirety and the following substituted
therefor:
Section 9.2. DEBT TO TOTAL CAPITALIZATION. The ratio of Funded
Debt to Consolidated Total Capitalization shall not at any time exceed
(a) 0.62:1 from March 6, 1998 through December 31, 1998 or (b) 0.58:1
thereafter.
Section 2. NO EVENT OF DEFAULT. The Borrower represents and warrants to
the Agents and the Banks that no Default or Event of Default has occurred and is
continuing.
<PAGE> 2
-2-
Section 3. EFFECTIVENESS. This Amendment shall become effective upon
its execution and delivery by the Borrower, the Guarantors, and the Majority
Banks (the "Effective Date").
Section 4. RATIFICATION, ETC. Except as expressly amended hereby, the
Credit Agreement, the other Loan Documents and all documents, instruments and
agreements related thereto are hereby ratified and confirmed in all respects and
shall continue in full force and effect. This Amendment and the Credit Agreement
shall hereafter be read and construed together as a single document, and all
references in the Credit Agreement, any other Loan Document or any agreement or
instrument related to the Credit Agreement shall hereafter refer to the Credit
Agreement as amended by this Amendment.
Section 5. COUNTERPARTS. This Amendment may be executed in any number
of counterparts, which together shall constitute one instrument.
Section 6. GOVERNING LAW. THIS AMENDMENT SHALL BE A CONTRACT UNDER THE
LAWS OF THE STATE OF NEW YORK, SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE INTERNAL LAWS OF SAID JURISDICTION, WITHOUT REFERENCE
TO CONFLICTS OF LAW, AND IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT.
[Signature Pages Follow]
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
an instrument under seal to be effective as of the date first above written.
THE BORROWER AND GUARANTORS:
USA WASTE SERVICES, INC.
By: /s/ RONALD H. JONES
-------------------------------------
Name: Ronald H. Jones
Title: Vice President & Treasurer
SANIFILL, INC.
By: /s/ RONALD H. JONES
-------------------------------------
Name: Ronald H. Jones
Title: Vice President & Treasurer
UNITED WASTE SYSTEMS, INC.
By: /s/ RONALD H. JONES
-------------------------------------
Name: Ronald H. Jones
Title: Vice President & Treasurer
THE BANKS AND AGENTS:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK,
individually and as Administrative Agent
By: /s/ CHRISTOPHER C. KUNHARDT
-------------------------------------
Christopher C. Kunhardt
Vice President
<PAGE> 4
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ ROBERT P. ROSPIERSKI
-------------------------------------
Name: Robert P. Rospierski
Title: Managing Director
ABU DHABI INTERNATIONAL BANK
By: /s/ NAGY S. KOLTA
-------------------------------------
Name: Nagy S. Kolta
Title: Senior Vice President
By: /s/ MICHAEL L. YOUNG
-------------------------------------
Name: Michael L. Young
Title: Executive Vice President
ABN AMRO BANK, N.A.
By: /s/ LAURIE C. TUZO
-------------------------------------
Name: Laurie C. Tuzo
Title: Group Vice President
By: /s/ ERIC R. HOLLINGSWORTH
-------------------------------------
Name: Eric R. Hollingsworth
Title: Assistant Vice President
BANCA COMMERCIALE ITALIANA, LOS
ANGELES FOREIGN BRANCH
By: /s/ RICHARD E. IWANICKI
-------------------------------------
Name: Richard E. Iwanicki
Title: Vice President
By: /s/ E. BOMBIERI
-------------------------------------
Name: E. Bombieri
Title: Vice President & Manager
<PAGE> 5
BANK AUSTRIA AKTIENGESELLSCHAFT
By: /s/ JEANINE B. LONG
-------------------------------------
Name: Jeanine B. Long
Title: Vice President
By: /s/ J.D. SEARY
-------------------------------------
Name: J.D. Seary
Title: Vice President
BANKBOSTON, N.A.
By: /s/ ARTHUR J. OBERHEIM
-------------------------------------
Name: Arthur J. Oberheim
Title: Vice President
BANK OF MONTREAL
By: /s/ LEON H. SINCLAIR
-------------------------------------
Name: Leon H. Sinclair
Title: Director
BANQUE NATIONALE DE PARIS
By: /s/ MIKE STRYOCK
-------------------------------------
Name: Mike Stryock
Title: Vice President
THE BANK OF NEW YORK
By: /s/ ALAN F. LYSTER, JR.
-------------------------------------
Name: Alan F. Lyster, Jr.
Title: Vice President
<PAGE> 6
THE BANK OF NOVA SCOTIA
By: /s/ M.D. SMITH
-------------------------------------
Name: M.D. Smith
Title: Agent Operations
THE BANK OF TOKYO-MITSUBISHI, LTD.
By: /s/ J. MEARNS
-------------------------------------
Name: J. Mearns
Title: Vice President & Manager
BANK ONE, TEXAS, N.A.
By: /s/ PETE CAREY
-------------------------------------
Name: Pete Carey
Title: Vice President
BANQUE PARIBAS
By: /s/ LARRY ROBINSON
-------------------------------------
Name: Larry Robinson
Title: Vice President
By: /s/ SUSAN C. BAKER
-------------------------------------
Name: Susan C. Baker
Title: Vice President
COMERICA BANK
By: /s/ REGINALD M. GOLDSMITH, III
-------------------------------------
Name: Reginald M. Goldsmith, III
Title: Vice President
<PAGE> 7
CIBC INC.
By: /s/ TIMOTHY DOYLE
-------------------------------------
Name: Timothy Doyle
Title: Managing Director
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ ROBERT IVOSEVICH
-------------------------------------
Name: Robert Ivosevich
Title: Senior Vice President
THE DAI-ICHI KANGYO BANK, LTD.
By: /s/ MASAAKI ISHIKURA
-------------------------------------
Name: Masaaki Ishikura
Title: Vice President
DEUTSCHE BANK AG, NEW YORK
AND/OR CAYMAN ISLANDS BRANCHES
By: /s/ JEAN M. HANNIGAN
-------------------------------------
Name: Jean M. Hannigan
Title: Vice President
By: /s/ SUSAN L. PEARSON
-------------------------------------
Name: Susan L. Pearson
Title: Vice President
DG BANK
By: /s/ MARK K. CONNELLY
-------------------------------------
Name: Mark K. Connelly
Title: Vice President
By: /s/ TREVOR H. BROOKES
-------------------------------------
Name: Trevor H. Brookes
Title: Assistant Vice President
<PAGE> 8
THE FIRST NATIONAL BANK OF MARYLAND
By: /s/ ANDREW W. FISH
-------------------------------------
Name: Andrew W. Fish
Title: Vice President
FLEET BANK, N.A.
By: /s/ CHRISTOPHER J. MAYROSE
-------------------------------------
Name: Christopher J. Mayrose
Title: Vice President
THE FUJI BANK, LIMITED, HOUSTON
AGENCY
By: /s/ NATE ELLIS
-------------------------------------
Name: Nate Ellis
Title: Vice President & Manager
HIBERNIA NATIONAL BANK
By: /s/ TROY J. VILLAFARRA
-------------------------------------
Name: Troy J. Villafarra
Title: Vice President
THE INDUSTRIAL BANK OF JAPAN
TRUST COMPANY
By: /s/ KAZUTOSHI KUWAHARA
-------------------------------------
Name: Kazutoshi Kuwahara
Title: Executive Vice President
<PAGE> 9
KREDIETBANK, N.V.
By: /s/ ROBERT SNAUFFER
-------------------------------------
Name: Robert Snauffer
Title: Vice President
By: /s/ TOD R. ANGUS
-------------------------------------
Name: Tod R. Angus
Title: Vice President
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By: /s/ HACHIRO HOSODA
-------------------------------------
Name: Hachiro Hosoda
Title: Deputy General Manager
PNC BANK, NATIONAL ASSOCIATION
By: /s/ PHILIP K. LIEBSCHER
-------------------------------------
Name: Philip K. Liebscher
Title: Vice President
ROYAL BANK OF CANADA
By: /s/ GORDON MACARTHUR
-------------------------------------
Name: Gordon MacArthur
Title: Manager
THE SANWA BANK LIMITED
By: /s/ MATTHEW G. PATRICK
-------------------------------------
Name: Matthew G. Patrick
Title: Vice President
<PAGE> 10
THE SUMITOMO BANK OF CALIFORNIA
By: /s/ SHUJI ITO
-------------------------------------
Name: Shuji Ito
Title: Vice President
THE SUMITOMO BANK, LIMITED
By: /s/ WILLIAM R. MCKOWN III
-------------------------------------
Name: William R. McKown III
Title: Vice President and Manager
THE SUMITOMO TRUST & BANKING
CO., LTD., LOS ANGELES AGENCY
By: /s/ ELEANOR CHAN
-------------------------------------
Name: Eleanor Chan
Title: Manager & Vice President
SUNTRUST BANK, ATLANTA
By: JOHN A. FIELDS, JR.
-------------------------------------
Name: John A. Fields, Jr.
Title: Vice President
By: /s/ STEVEN J. NEWBY
-------------------------------------
Name: Steven J. Newby
Title: Corporate Banking Officer
CHASE BANK OF TEXAS, N.A.
By: /s/ MICHAEL ONDEUCH
-------------------------------------
Name: Michael Ondeuch
Title: Vice President
<PAGE> 11
TORONTO DOMINION (TEXAS), INC.
By: /s/ NEVA NESBITT
-------------------------------------
Name: Neva Nesbitt
Title: Vice President
WACHOVIA BANK, N.A.
By: /s/ STEVEN M. TAKEI
-------------------------------------
Name: Steven M. Takei
Title: Senior Vice President
WELLS FARGO BANK (TEXAS),
NATIONAL ASSOCIATION
By: /s/ NIPUL V. PATEL
-------------------------------------
Name: Nipul V. Patel
Title: Relationship Manager
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK BRANCH
By: /s/ RICHARD R. NEWMAN
-------------------------------------
Name: Richard R. Newman
Title: Vice President
By: /s/ JAMES VENEAM
-------------------------------------
Name: James Veneam
Title: Analyst
<PAGE> 1
EXHIBIT 10.3
BRIDGE LOAN AGREEMENT
This BRIDGE LOAN AGREEMENT (this "Agreement") is made as of January 21,
1998, by and among USA WASTE SERVICES, INC. (the "Borrower"), a Delaware
corporation having its principal place of business at 1001 Fannin Street, First
City Tower, Suite 4000, Houston, Texas 77002, and MORGAN GUARANTY TRUST COMPANY
OF NEW YORK ("Morgan"), a New York state banking association having its
principal place of business at 60 Wall Street, New York, New York 10260 (the
"Agent's Head Office") and each of the other financial institutions party hereto
(collectively, the "Banks"), and Morgan as agent for the Banks (the "Agent").
Section 1.1 DEFINITIONS. The following terms shall have the following
meanings:
Accountants. See Section 23.4(a).
Affected Bank. See Section 19(a).
Agent's Head Office. See preamble.
Agreement. See preamble.
Applicable Eurodollar Rate. The applicable rate per annum of interest
on the Eurodollar Loans as set forth in the Pricing Table.
Applicable Facility Rate. The applicable rate per annum with respect to
the Facility Fee as set forth in the Pricing Table.
Applicable Requirements. See Section 23.10.
Assignment and Acceptance. See Section 34.
Average Quarterly Utilization Amount. See Section 20(c).
Balance Sheet Date. December 31, 1996.
Banks. See preamble.
Base Rate. The higher of (a) the annual rate of interest announced from
time to time by the Agent at the Agent's Head Office as its "prime rate" (it
being understood that such rate is a reference rate and not necessarily the
lowest rate of interest charged by the Agent) or (b) one percent (1%) above the
Overnight Federal Funds Effective Rate.
<PAGE> 2
-2-
Base Rate Loans. Loans bearing interest calculated by reference to the
Base Rate.
Borrower. See preamble.
Business Day. Any day, other than a Saturday, Sunday or any day on
which banking institutions in New York, New York are authorized by law to close,
and, when used in connection with a Eurodollar Loan, a Eurodollar Business Day.
Capitalized Leases. Leases under which the Borrower 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.
CERCLA. See Section 22.15(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 23.4(b).
City Management. The "Companies" as set forth in Schedule A to the City
Management Acquisition Agreement.
City Management Acquisition. The acquisition of City Management by the
Borrower, pursuant to the terms of the City Management Acquisition Agreement.
City Management Acquisition Agreement. The Stock Purchase Agreement,
dated as of December 9, 1997, among the Borrower, City Management Holdings
Trust, Anthony L. Soave, the corporations listed on Schedule A thereto, and the
Trust under Indenture Dated August 26, 1997, between Anthony L. Soave, as Donor,
and Anthony L. Soave and Yale Levin, as Trustees.
City Management Acquisition Documents. The City Management Acquisition
Agreement and all other material agreements and documents required to be entered
into or delivered pursuant to such agreement or in connection with the City
Management Acquisition, each in the form delivered to the Agent prior to the
Closing Date.
Closing Date. The date on which the conditions precedent set forth in
Section 26 hereof are satisfied.
Code. The Internal Revenue Code of 1986, as amended and in effect from
time to time.
<PAGE> 3
-3-
Commitment. With respect to each Bank, such Bank's commitment to make
Loans to the Borrower, determined by multiplying such Bank's Line Percentage by
the Line, as the Line may be reduced hereunder.
Consolidated or consolidated. With reference to any term defined
herein, shall mean that term as applied to the accounts of the Borrower 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 Borrower and its
Subsidiaries on a consolidated basis plus the sum of (1) interest expense, (2)
income taxes, (3) up to $50,000,000 in pooling charges actually incurred with
respect to the United Merger, taken as a special charge in the quarter ending
September 30, 1997, (4) up to $6,200,000 related to prepayment penalties in
connection with the Prudential Private Placement Debt and (5) up to $4,000,000
related to prepayment penalties in connection with the United Senior Secured
Notes 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 extraordinary gains from tax
credits occurring in any quarter commencing with the quarter ending December 31,
1996.
Consolidated Net Income (or Deficit). The consolidated net income (or
deficit) of the Borrower 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
Borrower 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:
(a) the total book value of all assets of the Borrower 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 Borrower or its Subsidiaries resulting from a
revaluation thereof subsequent to the Balance Sheet Date.
<PAGE> 4
-4-
Consolidated Total Assets. All assets of the Borrower 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 Borrower and its Subsidiaries outstanding
during all or any part of such period, including capitalized interest expense
for such period.
Credit Agreement. That certain Amended and Restated Revolving Credit
Agreement dated as of August 7, 1997 by and among the Borrower, the Guarantors,
Bank of America National Trust and Savings Association, a national banking
association, Morgan, the other financial institutions party thereto and Morgan
as administrative agent and documentation agent.
Default. See Section 28.1.
Defaulting Bank. See Section 19(a).
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.
Dollars or US$ or U.S. or Dollars. Dollars in lawful currency of the
United States of America.
Drawdown Date. The date on which any Loan is made or is to be made, and
the date on which any Loan is converted or continued in accordance with Section
5.
EBIT. See definition of Consolidated Earnings Before Interest and
Taxes.
Employee Benefit Plan. Any employee benefit plan within the meaning of
Section 3(3) of ERISA maintained or contributed to by the Borrower, any of its
Subsidiaries, or any ERISA Affiliate, other than a Multiemployer Plan.
Environmental Laws. See Section 22.15(a).
<PAGE> 5
-5-
EPA. See Section 22.15(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 Borrower 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 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. The office of any Bank that shall be making
or maintaining Eurodollar Loans.
Eurodollar Loans. 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 rate per annum at which the Agent's
Eurodollar Lending Office is offered Dollar deposits at approximately 10:00 a.m.
(New York time) two (2) 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 the Agent to which such Interest Period applies, divided by (ii) a
number equal to 1.00 minus the Eurocurrency Reserve Rate, if applicable (rounded
upwards to the nearest 1/16 of one percent).
Event of Default. See Section 28.1.
<PAGE> 6
-6-
Facility Fee. See Section 20(b).
Funded Debt. Consolidated Indebtedness of the Borrower and its
Subsidiaries for borrowed money and guarantees of debt for borrowed money
recorded on the Consolidated balance sheet of the Borrower and its Subsidiaries,
including the amount of any Indebtedness of such Persons for Capitalized Leases
which corresponds to principal and any Indebtedness with respect to Permitted
Receivables Transactions.
generally accepted accounting principles or GAAP. (i) When used in
Section 25, 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 Borrower 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 Borrower 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 Pension Plan. Any employee pension benefit plan within the
meaning of Section 3(2) of ERISA maintained or contributed to by the Borrower,
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. Those parties referred to as "Guarantors" under the Credit
Agreement.
Hazardous Substances. See Section 22.15(b).
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
<PAGE> 7
-7-
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 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; provided that if a Permitted Receivables Transaction is
outstanding and is accounted for as a sale of accounts receivable under
generally accepted accounting principles, Indebtedness determined as aforesaid
shall be adjusted to include the additional Indebtedness, determined on a
consolidated basis, which would have been outstanding had such Permitted
Receivables Transaction been accounted for as a borrowing.
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 Borrower in accordance with
this Agreement (i) for any Base Rate Loan the first day of the month; and (ii)
for any Eurodollar Loan, 1, 2, 3 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 Borrower 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, 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.
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
<PAGE> 8
-8-
outstanding; (b) there shall be included as an Investment all interest accrued
with respect to Indebtedness constituting an Investment unless and until such
interest is paid; (c) there shall be deducted in respect of each such Investment
any amount received as a return of capital (but only by repurchase, redemption,
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.
Line. See Section 2(a).
Line Percentage. With respect to each Bank the percentage set forth on
Schedule 1.
Loan. Any loan made or to be made to the Borrower pursuant to Section 2
hereof.
Loan Request. See Section 2(b).
Loan Documents. This Agreement, the Notes, 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.
Majority Banks. The Banks whose Line Percentages equal fifty-one
percent (51%); provided that in the event that the Line 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. The earliest of (a) December 31, 1998, (b) the date
after January 1, 1998 on which the Borrower closes on any bond and/or equity
offering or series of bond offerings which raises net proceeds in the aggregate
in excess of $300 million or (c) such other date on which all Loans may become
due and payable pursuant to the terms hereof.
Moody's. Moody's Investors Service, Inc.
Multiemployer Plan. Any multiemployer plan within the meaning of
Section 3(37) of ERISA maintained or contributed to by the Borrower, any of its
Subsidiaries, or any ERISA Affiliate.
New Lending Office. See Section 9(c).
<PAGE> 9
-9-
Non U.S. Bank. See Section 9(b).
Notes. See Section 3.
Obligations. All indebtedness, obligations and liabilities of the
Borrower to any of the Banks and the Agent arising or incurred under this
Agreement or any other Loan Documents or in respect of any of the Loans made
under this Agreement or any other Loan Documents or any other instrument at any
time evidencing any thereof individually or collectively, existing on the date
of this Agreement or arising thereafter, direct or indirect, joint or several,
absolute or contingent, matured or unmatured, liquidated or unliquidated,
secured or unsecured, arising by contract, operation of law or otherwise.
Overnight Federal Funds Effective Rate. The overnight federal funds
effective rate as published by the Board of Governors of the Federal Reserve
System, as in effect from time to time.
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 24.2.
Permitted Receivables Transaction. Any sale or sales of, and/or
securitization of, any accounts receivable of the Borrower and/or any of its
Subsidiaries (the "Receivables") pursuant to which (a) the Borrower and its
Subsidiaries realize aggregate net proceeds of not more than $150,000,000 at any
one time outstanding, including, without limitation, any revolving purchase(s)
of Receivables where the maximum aggregate uncollected purchase price (exclusive
of any deferred purchase price) for such Receivables at any time outstanding
does not exceed $150,000,000, and (b) which Receivables shall not be discounted
more than 25%.
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.
[remainder of page left intentionally blank]
<PAGE> 10
-10-
Pricing Table:
<TABLE>
<CAPTION>
----------- --------------------------------------- -------------------- ------------------
APPLICABLE
SENIOR PUBLIC APPLICABLE EURODOLLAR
LEVEL DEBT RATING FACILITY RATE RATE
(PER ANNUM) (PER ANNUM)
----------- --------------------------------------- -------------------- ------------------
<S> <C> <C> <C>
1 At least A- by Standard & Poor's or 0.0600% Eurodollar Rate
at least A3 by Moody's plus 0.1650%
----------- --------------------------------------- -------------------- ------------------
2 At least BBB+ by Standard & Poor's or 0.0800% Eurodollar Rate
at least Baa1 by Moody's plus 0.1950%
----------- --------------------------------------- -------------------- ------------------
3 At least BBB by Standard & Poor's or 0.0900% Eurodollar Rate
at least Baa2 by Moody's plus 0.2600%
----------- --------------------------------------- -------------------- ------------------
4 At least BBB- by Standard & Poor's or 0.1250% Eurodollar Rate
at least Baa3 by Moody's plus 0.3250%
----------- --------------------------------------- -------------------- ------------------
5 At least BB+ by Standard & Poor's or 0.2000% Eurodollar Rate
at least Ba1 by Moody's plus 0.5500%
----------- --------------------------------------- -------------------- ------------------
6 If no other level applies 0.2500% Eurodollar Rate
plus 0.6250%
----------- --------------------------------------- -------------------- ------------------
</TABLE>
The applicable rates charged for any day shall be determined by the Senior
Public Debt Rating in effect as of that day.
RCRA. See Section 22.15(a).
Real Property. All real property heretofore, now, or hereafter owned,
operated, or leased by the Borrower or any of its Subsidiaries.
<PAGE> 11
-11-
Release. Shall have the meaning specified in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
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. 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 Borrower's or any of its
Subsidiaries' activities in that state, province, territory or political
subdivision.
Replacement Bank. See Section 19(a).
Replacement Notice. See Section 19(a).
Sanifill. Sanifill, Inc., a Delaware corporation having its chief
executive office at 1001 Fannin Street, First City Tower, Suite 4000, Houston,
Texas 77002.
Sanifill Convertible Subordinated Debt. 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 August 7, 1997, provided, that the
Obligations shall be "Senior Indebtedness" thereunder.
Senior Public Debt Rating. The rating(s) of the Borrower'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 Borrower;
provided that until such time as the Borrower receives such rating(s) on such
public unsecured long-term senior debt or this credit facility, the Borrower'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.
United. United Waste Systems, Inc., a Delaware corporation having its
chief executive office at Four Greenwich Office Park, Greenwich, Connecticut
06830.
United Indenture. That certain indenture dated as of June 5, 1996
between United and Bankers Trust Company, as trustee, in the principal amount of
$150,000,000 due June 1, 2001.
<PAGE> 12
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United Merger. The merger of United and Riviera Acquisition
Corporation, a Subsidiary of the Borrower, pursuant to the terms of the United
Merger Agreement.
United Merger Agreement. The Agreement and Plan of Merger dated as of
April 13, 1997 by and among United, the Borrower and Riviera Acquisition
Corporation.
United Senior Secured Notes. That certain Secured Note Agreement among
United and the purchasers listed in the schedule attached thereto dated as of
September 1, 1995 in the principal amount of $75,000,000 due September 1, 2005.
Utilization Fee. See Section 20(c).
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.
(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.
<PAGE> 13
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Section 2. REVOLVING CREDIT FACILITY.
(a) Upon the terms and pursuant to the conditions of this
Agreement, each of the Banks severally agrees to make available to the Borrower
upon request such Bank's Line Percentage of an unsecured revolving line of
credit not to exceed Three Hundred Million Dollars ($300,000,000) (the "Line").
Notwithstanding any other provision hereof, the Line shall terminate
automatically and without necessity of any demand or other action by the Agent
and the Banks on the Maturity Date. Subject to all of the foregoing, any
extension of credit under the Line shall be subject to the terms and conditions
set forth below.
(b) The Borrower shall give to the Agent written notice in the
form of Exhibit A hereto (or telephonic notice confirmed in writing or a
facsimile in the form of Exhibit A hereto) of each Loan requested hereunder (a
"Loan Request") not later than 11:00 a.m. (New York time) on the proposed
Drawdown Date (in the case of Base Rate Loans) and 11:00 a.m. (New York time)
three (3) Eurodollar Business Days prior to the proposed Drawdown Date (in the
case of Eurodollar Loans) of the principal amount of such Loan (which shall be
in a minimum amount of $10,000,000). Each such Loan Request (which shall be
irrevocable) shall specify the principal amount of the loan requested, whether
such Loan is requested as a Base Rate Loan or a Eurodollar Loan, the proposed
Drawdown Date of such Loan and, in the case of Eurodollar Loans, the Interest
Period relating thereto. Each Loan Request shall constitute a representation and
warranty by the Borrower that the conditions set forth in Section 26 and Section
27, as the case may be, have been satisfied on the date of such request. Loan
requests made hereunder shall be irrevocable and binding on the Borrower, and
shall obligate the Borrower to accept the Loan requested from the Banks on the
proposed Drawdown Date.
(c) Each of the representations and warranties made by the
Borrower to the Banks or the Agent 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 Borrower on and as
of the date of the submission of a Loan Request and on and as of the Drawdown
Date of any Loan (except to the extent (i) of changes resulting from
transactions contemplated or permitted by this Agreement and the other Loan
Documents, (ii) of changes occurring in the ordinary course of business that
singly or in the aggregate are not materially adverse to the business, assets or
financial condition of the Borrower and its Subsidiaries as a whole, or (iii)
that such representations and warranties expressly relate only to an earlier
date).
(d) The Borrower shall have the right at any time and from
time to time upon three (3) Business Days' prior written notice to the Agent to
reduce by $25,000,000 or a greater amount or terminate entirely, the Line,
whereupon each Bank's Commitment shall be reduced pro rata in accordance with
such Bank's Line Percentage of the amount specified in such notice or, as the
case may be, terminated, provided that at no time may (i) the Line be reduced to
an amount less than the sum of all Loans then outstanding. No reduction or
termination of the Line once made may be revoked; the portion of the Line
reduced or terminated may not be reinstated; and
<PAGE> 14
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amounts in respect of such reduced or terminated portion may not be reborrowed.
The Agent will notify the Banks promptly after receiving any notice delivered by
the Borrower pursuant to this Section 2(d) and will distribute to each Bank a
revised Schedule 1 to this Agreement.
(e) The Agent shall promptly notify each Bank of each Loan Request
received by the 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.
Section 3. THE NOTES. The Loans shall be evidenced by separate
promissory notes of the Borrower in substantially the form of Exhibit B attached
hereto (each, a "Note"), dated as of the date hereof and completed with the
appropriate insertions. One Note shall be payable to the order of each Bank in
an amount equal to its Line Percentage times the Line, and shall represent the
obligation of the Borrower to pay such Bank such principal amount or, if less,
the outstanding principal amount of all Loans made by such Bank, plus interest
accrued thereon, as set forth herein. The Borrower irrevocably authorizes each
Bank, to make or cause to be made, in connection with a Drawdown Date of any
Loan or at the time of receipt of any payment of principal or interest, an
appropriate notation on its records reflecting the making of the Loan or the
receipt of such payment (as the case may be). The outstanding amount of the
Loans set forth on such Bank's record shall be prima facie evidence of the
principal amount thereof owing and unpaid to such Bank, but the failure to
record, or any error in so recording, any such amount shall not limit or
otherwise affect the obligations of the Borrower hereunder to make payments of
principal or interest when due.
Section 4. INTEREST. The outstanding principal amount of the Loans
shall bear interest (to the extent permitted by applicable law) at the rate per
annum equal to the Base Rate on Base Rate Loans or the Applicable Eurodollar
Rate on Eurodollar Loans. Interest shall be payable (a) monthly in arrears on
the first Business Day of each month, commencing April 1, 1998, on Base Rate
Loans, (b) 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 (c) on the Maturity Date for all Loans. 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, and 12 U.S.C. Section 85, as amended).
Section 5. ELECTION OF EURODOLLAR RATE.
(a) At the Borrower's option, so long as no Default or Event
of Default has occurred and is then continuing, the Borrower may (i) elect to
convert any Base
<PAGE> 15
-15-
Rate Loan or a portion thereof to a Eurodollar Loan, (ii) at the time of any
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 Borrower gives notice to the
Agent pursuant to Section 5(b) hereof. Upon determining any Eurodollar Rate, the
Agent shall forthwith provide notice thereof to the Borrower and the Banks, and
such notice shall be considered prima facie evidence binding upon the Borrower,
absent manifest error.
(b) Three (3) Eurodollar Business Days prior to the making of
any Eurodollar Loan or the conversion of any Base Rate Loan to a Eurodollar
Loan, or, in the case of an outstanding Eurodollar Loan, the expiration date of
the applicable Interest Period, the Borrower shall give written, telex or
facsimile notice received by the Agent not later than 11:00 a.m. (New York time)
of its election pursuant to Section 5(a). Each such notice (which shall be
irrevocable and binding) shall specify the amount of the Loans to be borrowed or
maintained as or converted to Eurodollar Loans and the duration of the proposed
Interest Period relating thereto (which must be 1, 2, 3 or 6 months). If the
Borrower shall fail to give the Agent notice of its election hereunder together
with all of the other information required hereunder, whether at the end of an
Interest Period or otherwise, such Loan shall be deemed a Base Rate Loan. The
Agent shall promptly notify the Banks in writing (or by telephone confirmed in
writing or by facsimile) of such election.
(c) Notwithstanding anything herein to the contrary, the
Borrower may not specify an Interest Period that would extend beyond the
Maturity Date.
(d) No conversion of Loans pursuant to this Section 5 may
result in Eurodollar Loans that are less than $5,000,000. In no event shall the
Borrower 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 16 hereof,
if any affected Bank demands compensation under Section 13(c) or (d) with
respect to any Eurodollar Loan, the Borrower may at any time, upon at least
three (3) Business Days' prior written notice to the Agent, elect to convert
such Eurodollar Loan into a Base Rate Loan (on which interest and principal
shall be payable contemporaneously with the related Eurodollar Loans of the
other Banks). Thereafter, and until such time as the affected Bank notifies the
Agent that the circumstances giving rise to the demand for compensation under
Section 13(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. Once the
affected Bank notifies the Agent that such circumstances no longer exist, the
Borrower 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 6. FUNDS FOR LOANS. Not later than 1:00 p.m. (New York time) on
the proposed Drawdown Date, each of the Banks will make available to the Agent,
at the Agent's Head Office, in immediately available funds, the amount of its
Line Percentage of the amount of the requested Loan. Upon receipt from each Bank
of such amount,
<PAGE> 16
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and upon satisfaction of the other conditions set forth herein, the Agent will
make available to the Borrower the aggregate amount of such Loans made available
by the Banks. The failure or refusal of any Bank to make available to the Agent
at the aforesaid time and place on any Drawdown Date the amount of its Line
Percentage of the requested Loan shall not relieve any other Bank from its
several obligations hereunder to make available to the Agent the amount of such
Bank's Line Percentage of any requested Loan.
Section 7. MATURITY OF THE LOANS. The Loans shall be due and payable on
the Maturity Date. The Borrower promises to pay on the Maturity Date all Loans,
together with any and all accrued and unpaid interest thereon and any fees and
other amounts owing hereunder.
Section 8. OPTIONAL PREPAYMENTS OR REPAYMENTS OF LOANS. Subject to the
terms and conditions of hereunder (including, without limitation, Section 16) ,
the Borrower shall have the right, at its 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 Borrower shall give the Agent, no later than 11:00 a.m.
(New York time) on the proposed date of prepayment or repayment of any Base Rate
Loans, and no later than 11:00 a.m. (New York Time) one (1) Eurodollar Business
Day prior to the proposed date of prepayment or repayment of any Eurodollar Rate
Loans, written notice (or telephonic notice confirmed in writing or by
facsimile) of any proposed prepayment or repayment pursuant to this Section 8,
specifying the proposed date of prepayment or repayment of Loans and the
principal amount to be paid. The Agent shall promptly notify each Bank by
written notice (or telephonic notice confirmed in writing or by facsimile) of
such notice of payment.
Section 9. PAYMENTS.
(a) All payments of principal, interest, fees and any other
amounts due hereunder or under any of the other Loan Documents shall be made to
the Agent at the Agent's Head Office in immediately available funds by 11:00
a.m. (New York time) on any due date. Subject to the provisions of Section 42,
if a payment is received by the Agent at or before 1:00 p.m. (New York time) on
any Business Day, the Agent shall on the same Business Day transfer in
immediately available funds to each of the Banks, their pro-rata portion of such
payment in accordance with their respective Line Percentages. If such payment is
received by the Agent after 1:00 p.m. (New York time) on any Business Day, such
transfer shall be made by the Agent to the applicable Bank(s) on the next
Business Day. In the event that the Agent fails to make such transfer to any
Bank as set forth above, the 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 equal to such Bank's Line Percentage of such payment, times (iii) a
fraction, the numerator of which is the number of days that elapse from and
including the date of payment to and including the date on which the amount 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 Agent
with respect to any amounts owing
<PAGE> 17
-17-
under this paragraph shall be prima facie evidence of the amount due and owing
to such Bank by the Agent.
(b) Each 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 Borrower and the 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
Borrower and the 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 Borrower, and such extensions or renewals
thereof as may reasonably be requested by the Borrower, 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 Borrower that it is not capable of receiving payments without
any deduction or withholding of United States federal income tax.
(c) The Borrower 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 this Agreement 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 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
Borrower; 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 (b)
above.
<PAGE> 18
-18-
(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
this Agreement 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.
Section 10. MANDATORY REPAYMENTS OF THE LOANS. If at any time
the sum of the outstanding amount of the Loans exceeds the Line, whether by
reduction of the Line or otherwise, then the Borrower shall immediately pay the
amount of such excess to the Agent for application to the Loans subject to
Section 16 hereunder.
Section 11. COMPUTATIONS. Except as otherwise expressly
provided herein, all computations of interest or fees shall be based on a
360-day year and paid for the actual number of days elapsed, except that
computations of the Agent's "prime rate" shall be based on a 365 or 366, as
applicable, day year and paid for the actual number of days elapsed. Whenever a
payment hereunder or 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.
Section 12. ILLEGALITY; INABILITY TO DETERMINE EURODOLLAR
RATE. Notwithstanding any other provision of this Agreement (other than the last
sentence of Section 4) 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
Agent shall make it unlawful, or any central bank or other governmental
authority having jurisdiction thereof shall assert that it is unlawful, for any
Bank or the Agent to perform its obligations in respect of any Eurodollar Loans,
or (b) if any Bank or the 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 the Agent in any
Eurodollar interbank market, or (iii) the Eurodollar Rate does not or will not
accurately reflect the cost to the Bank or the Agent of obtaining or maintaining
the applicable Eurodollar Loans during any Interest Period, then such Bank or
the Agent shall promptly give telephonic, telex or cable notice of such
determination to the Borrower (which notice shall be conclusive and binding upon
the Borrower). Upon such notification by such Bank or the Agent, the obligation
of the Banks and the Agent to make Eurodollar Loans shall be suspended until the
Banks or the Agent, as the case may be, determine that such circumstances no
longer exist, and to the extent permitted by law the outstanding Eurodollar
Loans shall continue to bear interest at the applicable rate based on the
Eurodollar Rate until the end of the applicable Interest Period, and thereafter
shall be deemed converted to Base Rate Loans in equal principal amounts of such
former Eurodollar Loans.
<PAGE> 19
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Section 13. 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 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
(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 14 or as otherwise reflected
in the Base Rate or the Eurodollar Rate, impose or increase or render applicable
(other than to the extent specifically provided for elsewhere in this Agreement)
any special deposit, reserve, assessment, liquidity, capital adequacy or other
similar requirements (whether or not having the force of law) against assets
held by, or deposits in or for the account of, or loans by, or commitments of,
an office of any Bank with respect to this Agreement or the other Loan
Documents, such Bank's 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
Commitment, or any class of loans or commitments of which any of the Loans or
such Bank's Commitment, forms a part, and the result of any of the foregoing is:
(i) to increase the cost to such Bank of making,
funding, issuing, renewing, extending or maintaining the Loans or such
Bank's Commitment, as applicable;
(ii) to reduce the amount of principal, interest or
other amount payable to such Bank hereunder on account of such Bank's
Commitment or the Loans; 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 Borrower hereunder,
<PAGE> 20
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THEN, and in each such case, the Borrower, will, upon demand made by such Bank
at any time and from time to time as often as the occasion therefore may arise
(which demand shall be accompanied by a statement setting forth the basis of
such demand 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 14. 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 Borrower, shall pay to such Bank such additional amount or
amounts as will, in such Bank's reasonable determination, fairly compensate such
Bank (or any corporation controlling such Bank) for such reduction. Each Bank
shall allocate such cost increases among its customers in good faith and on an
equitable basis.
Section 15. CERTIFICATE. A certificate setting forth the additional
amounts payable pursuant to Section 13 or Section 14 and a reasonable
explanation of such amounts which are due, submitted by any Bank to the
Borrower, shall be conclusive, absent manifest error, that such amounts are due
and owing.
Section 16. EURODOLLAR INDEMNITY. The Borrower agrees to indemnify the
Banks and the Agent, and to hold them harmless from and against any reasonable
loss, cost or expense that any such Bank and the Agent may sustain or incur as a
consequence of (a) the default by the Borrower in payment of the principal
amount of or any interest on any Eurodollar Loans as and when due and payable,
including any such loss or expense arising from interest or fees payable by any
Bank or the Agent to lenders of funds obtained by it in order to maintain its
Eurodollar Loans, (b) the default by the Borrower in making a borrowing of a
Eurodollar Loan or conversion of a Eurodollar Loan or a prepayment of a
Eurodollar Loan other than pursuant to the terms hereof after the Borrower has
given (or is deemed to have given) notice hereunder, and (c) the making of any
payment of a Eurodollar Loan, or the making of any conversion of any Eurodollar
Loan to a Base Rate Loan, or the reallocation of any Eurodollar Loan on a day
that is not the last day of the applicable Interest Period with respect thereto.
Such loss or reasonable expense shall include an amount equal to the excess, if
any, as reasonably determined by each Bank of (i) its cost of obtaining the
funds for the Eurodollar Loan being paid, prepaid, converted, not converted,
reallocated, or not borrowed, as the case may be (based on the Eurodollar Rate)
for the period from the date of such payment, prepayment, conversion, or failure
to borrow or
<PAGE> 21
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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 17. INTEREST ON OVERDUE AMOUNTS. Overdue principal and (to the
extent permitted by applicable law) interest on the Loans and all other overdue
amounts payable hereunder or under any of the other Loan Documents shall bear
interest compounded monthly and payable on demand at a rate per annum equal to
the Base Rate plus two percentage points, until such amount shall be paid in
full (after as well as before judgment).
Section 18. REASONABLE EFFORTS TO MITIGATE. Each Bank agrees that as
promptly as practicable after it becomes aware of the occurrence of an event or
the existence of a condition that would cause it to be affected under Section
Section 12, 13 or 14, such Bank will give notice thereof to the Borrower, with a
copy to the Agent, and, to the extent so requested by the Borrower and not
inconsistent with such Bank's internal policies, such Bank shall use reasonable
efforts and take such actions as are reasonably appropriate if as a result
thereof the additional moneys which would otherwise be required to be paid to
such Bank pursuant to such 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 19. REPLACEMENT OF BANKS; ADVANCES BY AGENT.
(a) Replacement of Banks. If any Bank (an "Affected Bank") (i)
makes demand upon the Borrower for (or if the Borrower is otherwise required to
pay) amounts pursuant to Section Section 13 or 14, (ii) is unable to make or
maintain Eurodollar Loans as a result of a condition described in Section 12 or
(iii) defaults in its obligation to make Loans in accordance with the terms of
this Agreement (such Bank being referred to as a "Defaulting Bank"), the
Borrower may, within 90 days of receipt of such demand, notice (or the
occurrence of such other event causing the Borrower to be required to pay such
compensation or causing Section 12 to be applicable), or default, as the case
may be, by notice (a "Replacement Notice") in writing to the Agent and such
Affected Bank (A) request the Affected Bank to cooperate with the Borrower in
obtaining a replacement bank satisfactory to the Agent and the Borrower (the
"Replacement Bank"); (B) request the non-Affected Banks to acquire and assume
all of the Affected Bank's Loans, but none of such Banks shall be
under an obligation to do so; or (C) designate a Replacement Bank reasonably
satisfactory to the Agent. If any satisfactory Replacement Bank shall be
obtained, and/or any of the non-Affected Banks shall agree to acquire and assume
all of the Affected Bank's Loans and Commitment
<PAGE> 22
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then such Affected Bank shall, so long as no Event of Default shall have
occurred and be continuing, assign, in accordance with Section 34, 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 Borrower shall have paid to such Affected Bank
all amounts properly demanded and unreimbursed under Section Section 13, 14 and
16. Upon the effective date of such assignment, the Borrower shall issue
replacement Notes to such Replacement Bank and/or non-Affected Banks, as the
case may be, and such Replacement Bank shall become a "Bank" for all purposes
under this Agreement and the other Loan Documents.
(b) Advances by Agent. The Agent 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 the Agent the amount of
such Bank's Line Percentage with respect to the Loans to be made on such
Drawdown Date, and the Agent may (but shall not be required to), in reliance
upon such assumption, make available to the Borrower a corresponding amount. If
any Bank makes such amount available to the Agent on a date after such Drawdown
Date, such Bank shall pay the 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 Agent for federal funds
acquired by the Agent, during each day included in such period times (ii) the
amount equal to such Bank's Line Percentage of such Loan, times (iii) a
fraction, the numerator of which is the number of days that elapse from and
including such Drawdown Date to but not including the date on which the amount
equal to such Bank's Line Percentage of such Loans shall become immediately
available to the Agent, and the denominator of which is 365. A statement of the
Agent submitted to such Bank with respect to any amounts owing under this
paragraph shall be prima facie evidence of the amount due and owing to the Agent
by such Bank. If such amount is not in fact made available to the Agent by such
Bank within three (3) Business Days of such Drawdown Date, the Agent shall be
entitled to recover such amount from the Borrower, with interest thereon at the
applicable rate per annum.
Section 20. FEES AND EXPENSES.
(a) Whether or not the transactions contemplated herein shall
be consummated, the Borrower hereby promises to reimburse the Agent for all
reasonable out-of-pocket fees and disbursements (including all reasonable
attorneys' fees and expenses) incurred or expended in connection with the
preparation, filing or recording, or interpretation of this Agreement, the other
Loan Documents, or any amendment, modification, approval, consent or waiver
hereof or thereof. The Borrower further promises to reimburse the Agent and the
Banks for all reasonable out-of-pocket fees
<PAGE> 23
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and disbursements (including all reasonable legal fees and the allocable cost of
in-house attorneys' fees) incurred or expended in connection with the
enforcement of any Obligations or the satisfaction of any indebtedness of the
Borrower hereunder or under any other Loan Document, or in connection with any
litigation, proceeding or dispute hereunder in any way related to the credit
hereunder.
(b) The Borrower agrees to pay to the Agent for the account of
the Banks a fee (the "Facility Fee") on the Line equal to the Applicable
Facility Rate multiplied by the Line. 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, 1998 with a final payment on the Maturity Date (or on the date of
termination in full of the Line, if earlier). The Facility Fee shall be
distributed pro rata among the Banks in accordance with each Bank's Line
Percentage.
(c) In the event that the average outstanding amount of the
Loans (as defined in the Credit Agreement) plus the average Maximum Drawing
Amount of the Letters of Credit (as defined in the Credit Agreement) in any
calendar quarter (collectively, the "Average Quarterly Utilization Amount")
exceeds fifty percent (50%) of the Total Commitment (as defined in the Credit
Agreement) in effect during such calendar quarter, the Borrower agrees to pay to
the Agent for the account of the Banks a fee (the "Utilization Fee") equal to
0.05% per annum on the average utilized portion of the Line. If applicable, the
Utilization Fee shall be payable quarterly in arrears on the first day of each
calendar quarter for the immediate preceding calendar quarter (or such lesser
period of time as has elapsed since the Closing Date), commencing April 1, 1998
with a final payment on the Maturity Date (or on the date of termination in full
of the Line if earlier). The Utilization Fee shall be distributed pro rata among
the Banks in accordance with each Bank's Line Percentage.
Section 21. CHARGES TO BORROWER'S ACCOUNT. All payments to be made by
the Borrower hereunder shall be made in Dollars in immediately available funds
at the Agent's Head Office, without set-off or counterclaim and without any
withholding or deduction whatsoever. The Borrower authorizes the Agent to charge
any of its accounts with the Agent for any amounts due and payable with respect
to the Line. The Borrower may also pay such amounts by wire transfer or other
means of providing good funds to the Agent on the due date thereof.
Section 22 REPRESENTATIONS AND WARRANTIES. The Borrower represents and
warrants to the Banks that:
Section 22.1. CORPORATE AUTHORITY.
(a) Incorporation; Good Standing. The Borrower 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
<PAGE> 24
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duly authorized to do business in each jurisdiction in which its property or
business as presently conducted or contemplated makes such qualification
necessary, except where a failure to be so qualified would not have a material
adverse effect on the business, assets or financial condition of the Borrower
and its Subsidiaries as a whole.
(b) Authorization. The execution, delivery and performance of
the Loan Documents and the transactions contemplated hereby (i) are within the
corporate authority of the Borrower, (ii) have been duly authorized by all
necessary corporate proceedings on the part of the Borrower, (iii) do not
conflict with or result in any breach or contravention of any provision of law,
statute, rule or regulation to which the Borrower or any of its Subsidiaries is
subject or any judgment, order, writ, injunction, license or permit applicable
to the Borrower or any of its Subsidiaries so as to materially adversely affect
the assets, business or any activity of the Borrower and its Subsidiaries as a
whole, and (iv) do not conflict with any provision of the corporate charter or
bylaws of the Borrower or any of its Subsidiaries or any agreement or other
instrument binding upon the Borrower or any of its Subsidiaries.
(c) Enforceability. The execution, delivery and performance of
the Loan Documents by the Borrower will result in valid and legally binding
obligations of the Borrower 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 22.2 GOVERNMENTAL APPROVALS. The execution, delivery and
performance of the Loan Documents by the Borrower and the consummation by the
Borrower of the transactions contemplated hereby and thereby do not require any
approval or consent of, or filing with, any governmental agency or authority
other than those already obtained and those required after the date hereof in
connection with the Borrower's and its Subsidiaries' performance of their
covenants contained in Section Section 23, 24 and 25 hereof.
Section 22.3 TITLE TO PROPERTIES; LEASES. The Borrower and its
Subsidiaries own all of the assets reflected in the consolidated balance sheet
as at the Balance Sheet Date or acquired since that date (except property and
assets operated under capital leases or sold or otherwise disposed of in the
ordinary course of business since that date), subject to no mortgages,
Capitalized Leases, conditional sales agreements, title retention agreements,
liens or other encumbrances except Permitted Liens.
Section 22.4 FINANCIAL STATEMENTS; SOLVENCY.
(a) There have been furnished to the Banks (i) consolidated
balance sheets of the Borrower and its Subsidiaries dated the Balance Sheet Date
and consolidated statements of operations for the fiscal periods then ended,
(ii) cash flow statements, consolidated balance sheets and consolidated
statements of income of City
<PAGE> 25
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Management and its Subsidiaries dated June 30, 1997 for the fiscal year then
ended and (iii) with respect to City Management and its Subsidiaries, a "Report
on Audits of Financial Statements for the Consolidated Years Ended June 30,
1996" and a "Report on Audits of Financial Statements for the Consolidated Years
Ended June 30, 1996" (the materials described in clauses (ii) and (iii) referred
to herein as "City Management Financials"), in each case, with the exception of
the materials described in clause (ii), certified by the Accountants. All said
balance sheets, statements of operations and City Management Financials have
been prepared in accordance with GAAP (but, in the case of any of such financial
statements which are unaudited, only to the extent GAAP is applicable to interim
unaudited reports), fairly present the financial condition of the Borrower and
its Subsidiaries or City Management and its Subsidiaries, as applicable, 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 Borrower and its Subsidiaries or City
Management and its Subsidiaries involving material amounts, known to the
officers of the Borrower which have not been disclosed in said balance sheets
and the related notes thereto or otherwise in writing to the Banks.
(b) The Borrower and its Subsidiaries on a consolidated basis
(both before and after giving effect to the transactions contemplated by this
Agreement, including the City Management 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 22.5 NO MATERIAL CHANGES, ETC. Since the Balance Sheet Date,
there have occurred no material adverse changes in the consolidated financial
condition, business or assets of the Borrower and its Subsidiaries, taken
together as shown on or reflected in the consolidated balance sheets of the
Borrower and its Subsidiaries as at the Balance Sheet Date, or the consolidated
statements of income for the period then ended other than changes in the
ordinary course of business which have not had any material adverse effect
either individually or in the aggregate on the financial condition, business or
assets of the Borrower and its Subsidiaries, taken together. Since the Balance
Sheet Date, there have not been any Distributions (including Distributions by
the Borrower) other than as permitted by Section 24.5 hereof. Since June 30,
1997 there have occurred no material adverse changes in the consolidated
financial condition, business or assets of City Management and its Subsidiaries
taken together as shown on or reflected in the consolidated balance sheets of
City Management and its Subsidiaries as at June 30, 1997, 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 City Management and its Subsidiaries, taken together.
<PAGE> 26
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Section 22.6 FRANCHISES, PATENTS, COPYRIGHTS, ETC. The Borrower 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
Borrower 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 Borrower and its
Subsidiaries as a whole.
Section 22.7 LITIGATION. Except as set forth on Schedule 6.7 to the
Credit Agreement, there are no actions, suits, proceedings or investigations of
any kind pending or, to the knowledge of the Borrower or any of its
Subsidiaries, threatened against the Borrower 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 Borrower and its
Subsidiaries, considered as a whole, or materially impair the right of the
Borrower 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 Borrower or any of its Subsidiaries is a
party, or any action taken or to be taken pursuant hereto or thereto.
Section 22.8 NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Borrower
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 Borrower'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 Borrower and its Subsidiaries, considered
as a whole. Neither the Borrower nor any of its Subsidiaries is a party to any
contract or agreement which in the judgment of the Borrower'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 Borrower
and its Subsidiaries, considered as a whole, except as otherwise reflected in
adequate reserves as required by GAAP.
Section 22.9 COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. Neither the
Borrower 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 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 Borrower and its Subsidiaries, considered as a whole.
<PAGE> 27
-27-
Section 22.10 TAX STATUS. The Borrower 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
Borrower 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 Borrower or such Subsidiary on an individual basis or
of the Borrower 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 Borrower or any Subsidiary, nor do the officers of the Borrower
or any of its Subsidiaries know of any basis for any such claim.
Section 22.11 NO EVENT OF DEFAULT. No Default or Event of Default has
occurred and is continuing.
Section 22.12 HOLDING COMPANY AND INVESTMENT COMPANY ACTS. Neither the
Borrower nor any of its Subsidiaries is a "holding Company", or a "subsidiary
Company" of a "holding Borrower", 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 22.13 ABSENCE OF FINANCING STATEMENTS, ETC. Except as permitted
by Sections 24.1 and 24.2 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 any present or possible future lien
on, or security interest in, any assets or property of the Borrower or any of
its Subsidiaries or right thereunder.
Section 22.14 EMPLOYEE BENEFIT PLANS.
Section 22.14.1 IN GENERAL. Each Employee Benefit
Plan has been maintained and operated in compliance in all
material respects with the provisions of ERISA, as applicable,
and, to the extent applicable, the Code, including but not
limited to the provisions thereunder respecting prohibited
transactions. Promptly upon the request of any Bank or the
<PAGE> 28
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Agent, the Borrower will furnish to the Agent the most
recently completed annual report, Form 5500, with all required
attachments, and actuarial statement required to be submitted
under Section 103(d) of ERISA, with respect to each Guaranteed
Pension Plan.
Section 22.14.2 TERMINABILITY OF WELFARE PLANS. Under
each Employee Benefit Plan which is an employee welfare
benefit plan within the meaning of Section 3(1) or Section
3(2)(B) of ERISA, no benefits are due unless the event giving
rise to the benefit entitlement occurs prior to plan
termination (except as required by Title I, Part 6 of ERISA) .
The Borrower or an 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 the Borrower or such ERISA
Affiliate without liability to any Person.
Section 22.14.3 GUARANTEED PENSION PLANS. Each
contribution required to be made to a Guaranteed Pension Plan,
whether required to be made to avoid the incurrence of an
accumulated funding deficiency, the notice or lien provisions
of Section 302(f) of ERISA, or otherwise, has been timely
made. No waiver of an accumulated funding deficiency or
extension of amortization periods has been received with
respect to any Guaranteed Pension Plan. No liability to the
PBGC (other than required insurance premiums, all of which
have been paid) has been incurred by the Borrower or any ERISA
Affiliate with respect to any Guaranteed Pension Plan and
there has not been any ERISA Reportable Event, or any other
event or condition which presents a material risk of
termination of any Guaranteed Pension Plan by the PBGC. Based
on the latest valuation of each Guaranteed Pension Plan (which
in each case occurred within twelve months of the date of this
representation), and on the actuarial methods and assumptions
employed for that valuation, the aggregate benefit liabilities
of all such Guaranteed Pension Plans within the meaning of
Section 4001 of ERISA did not exceed the aggregate value of
the assets of all such Guaranteed Pension Plans, disregarding
for this purpose the benefit liabilities and assets of any
Guaranteed Pension Plan with assets in excess of benefit
liabilities.
Section 22.14.4 MULTIEMPLOYER PLANS. Neither the
Borrower nor any ERISA Affiliate has incurred any material
liability (including secondary liability) to any Multiemployer
Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan under Section 4201 of ERISA or as a result
of a sale of assets described in Section 4204 of ERISA.
Neither the Borrower nor any ERISA Affiliate has been notified
that any Multiemployer Plan is in reorganization or insolvent
under and within the meaning of Section 4241 or Section 4245
of ERISA or that any Multiemployer Plan intends to terminate
or has been terminated under Section 4041A of ERISA.
<PAGE> 29
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Section 22.15 ENVIRONMENTAL COMPLIANCE. The Borrower 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
Borrower and its Subsidiaries and, based upon such diligent investigation, have
determined that, except as set forth on Schedule 6.15 to the Credit Agreement:
(a) Neither the Borrower, 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
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 Borrower and its Subsidiaries on a consolidated
basis.
(b) Except as described on Schedule 6.15 to the Credit
Agreement, neither the Borrower 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 Borrower
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
Borrower 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
Borrower 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
<PAGE> 30
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activities conducted by the Borrower, its Subsidiaries, or operators of the Real
Property or other assets of the Borrower 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 Borrower 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
Borrower or its Subsidiaries, which Releases would have a material adverse
effect on the value of such properties; (iv) to the best of the Borrower'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
Borrower 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 Borrower 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 Borrower'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 Borrower
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 22.16 TRUE COPIES OF CHARTER AND CITY MANAGEMENT ACQUISITION
DOCUMENTS. The Borrower has furnished the 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 by-laws (together with any
amendments thereto) or (b) a certificate certifying that such documents have not
changed since August 7, 1997. The Borrower has heretofore furnished to the Agent
true, complete and correct copies of the City Management Acquisition Documents
(including all schedules, exhibits and annexes thereto). The City Management
Acquisition Documents have not subsequently been amended, supplemented, or
modified and constitute the complete understanding among the parties thereto in
respect of the matters and transactions covered thereby.
Section 22.17 DISCLOSURE. No representation or warranty made by the
Borrower in this Agreement or in any agreement, instrument, document,
certificate, statement or letter furnished to the Banks or the Agent by or on
behalf of or at the request of the Borrower in connection with any of the
transactions contemplated by the Loan Documents contains any untrue statement of
a material fact or omits to state a material fact necessary in order to make the
statements contained therein not misleading in light of the circumstances in
which they are made.
<PAGE> 31
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Section 22.18 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 Borrower and its Subsidiaries
as a whole) required for the construction and operation of all landfills
currently owned or operated by the Borrower 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 Borrower nor any of its Subsidiaries,
nor, to the knowledge of the Borrower 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 Borrower and its Subsidiaries as a whole.
Section 23 AFFIRMATIVE COVENANTS OF THE BORROWER. The Borrower agrees
that, so long as any Obligation is outstanding or the Banks have any obligation
to make Loans hereunder, it shall, and shall cause its Subsidiaries to, comply
with the following covenants:
Section 23.1 PUNCTUAL PAYMENT. The Borrower will duly and
punctually pay or cause to be paid the principal and interest on the
Loans, 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 23.2 MAINTENANCE OF U.S. OFFICE. The Borrower will
maintain its chief executive offices at Houston, Texas, or at such
other place in the United States of America as the Borrower shall
designate upon 30 days' prior written notice to the Agent.
Section 23.3 RECORDS AND ACCOUNTS. The Borrower 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.
Section 23.4 FINANCIAL STATEMENTS, CERTIFICATES AND
INFORMATION. The Borrower will deliver to the Banks:
(a) as soon as practicable, but, in any event not
later than 92 days after the end of each fiscal year of the
Borrower, the consolidated balance sheet of the Borrower 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
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Coopers & Lybrand LLP or by other independent auditors
selected by the Borrower and reasonably satisfactory to the
Banks (the "Accountants"). In addition, simultaneously
therewith, the Borrower shall provide the Banks with a written
statement from such Accountants to the effect that they have
read a copy of this Agreement, and that, in making the
examination necessary to said certification, they have
obtained no knowledge of any Default or Event of Default, or,
if such Accountants shall have obtained knowledge of any then
existing Default or Event of Default they shall disclose in
such statement any such Default or Event of Default;
(b) as soon as practicable, but in any event not
later than 47 days after the end of each of the first three
fiscal quarters of each fiscal year of the Borrower, copies of
the consolidated balance sheet and statement of operations of
the Borrower and 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 Borrower (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 Borrower 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 C hereto (the "Compliance Certificate")
signed by the CFO or the CAO or the Borrower's corporate
treasurer, stating that the Borrower and its Subsidiaries are
in compliance with the covenants contained in Section 23, 24
and 25 hereof as of the end of the applicable period and
setting forth in reasonable detail computations evidencing
such compliance with respect to the covenants contained in
Sections 24.1(f), 24.3, 24.4, 24.5, and 25 hereof and
that no Default or Event of Default exists, provided that if
the Borrower 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 Borrower shall include in
such certificate or otherwise deliver forthwith to the Banks a
certificate specifying the nature and period of existence
thereof and what action the Borrower proposes to take with
respect thereto;
(d) contemporaneously with, or promptly following,
the filing or mailing thereof, copies of all material of a
financial nature filed with the Securities and Exchange
Commission or sent to the Borrower's and its Subsidiaries'
stockholders generally; and
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(e) from time to time such other financial data and
other information as the Banks may reasonably request.
The Borrower hereby authorizes each Bank to disclose any
information obtained pursuant to this Agreement to all appropriate
governmental regulatory authorities where required by law; provided,
however, 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 the 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 23.5 CORPORATE EXISTENCE AND CONDUCT OF BUSINESS. The
Borrower 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 Borrower or any Subsidiary to remain so qualified would not
materially adversely impair the financial condition, business or assets
of the Borrower 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 Borrower and its
Subsidiaries on a consolidated basis. The Borrower 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 Borrower and its Subsidiaries, on a consolidated basis. The
Borrower will, and will cause each Subsidiary to, continue to engage
primarily in the businesses now conducted by it and in related
businesses.
Section 23.6 MAINTENANCE OF PROPERTIES. The Borrower will, and
will cause its Subsidiaries to, cause all material properties used or
useful in the conduct of their businesses to be maintained and kept in
good condition, repair and working order (ordinary wear and tear
excepted) and supplied with all necessary equipment and cause to be
made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Borrower 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 Borrower 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 Borrower 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 Borrower and its Subsidiaries on a
consolidated basis.
Section 23.7 INSURANCE. The Borrower 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
<PAGE> 34
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arising out of or in any way connected with personal liability of any
officers and directors thereof) and in the relative proportionate
amounts usually carried by reasonable and prudent companies conducting
businesses similar to that of the Borrower and its Subsidiaries, in
amounts substantially similar to the existing coverage policies
maintained by the Borrower and its Subsidiaries, copies of which have
been provided to the Agent. In addition, the Borrower will furnish from
time to time, upon any Bank's request, a summary of the insurance
coverage of the Borrower 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 Agent and such Bank copies of the
applicable policies.
Section 23.8 TAXES. The Borrower 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 Borrower 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 Borrower or such Subsidiary shall have set aside on its books
adequate reserves with respect thereto as required by GAAP; and
provided, further, that the Borrower or such Subsidiary will pay all
such taxes, assessments, charges, levies or claims forthwith upon the
commencement of proceedings to foreclose any lien which may have
attached as security therefor.
Section 23.9 INSPECTION OF PROPERTIES, BOOKS AND CONTRACTS.
The Borrower will, and will cause its Subsidiaries to, permit the Agent
or any Bank or any of their designated representatives, upon reasonable
notice, to visit and inspect any of the properties of the Borrower and
its Subsidiaries, to examine the books of account of the Borrower and
its Subsidiaries, or contracts (and to make copies thereof and extracts
therefrom), and to discuss the affairs, finances and accounts of the
Borrower 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 23.10 COMPLIANCE WITH LAWS, CONTRACTS, LICENSES AND
PERMITS; MAINTENANCE OF MATERIAL LICENSES AND PERMITS. The Borrower
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
<PAGE> 35
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noncompliance with such Applicable Requirements would not reasonably be
expected to have a material adverse effect in the aggregate on the
consolidated financial condition, properties or businesses of the
Borrower and 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 Borrower'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 Borrower or any Subsidiary may
fulfill any of its obligations hereunder or under any other Loan
Document, the Borrower will immediately take or cause to be taken all
reasonable steps within the power of the Borrower or such Subsidiary to
obtain such authorization, consent, approval, permit or license and
furnish the Banks with evidence thereof.
Section 23.11 ENVIRONMENTAL INDEMNIFICATION. The Borrower
covenants and agrees that it will indemnify and hold the Banks and the
Agent 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 or the Agent (including all costs of legal representation
incurred by the Banks or the Agent) relating to (a) any Release or
threatened Release of Hazardous Substances on the Real Property; (b)
any violation of any Environmental Laws or Applicable Requirements with
respect to conditions at the Real Property or other assets of the
Borrower or its Subsidiaries, or the operations conducted thereon; or
(c) the investigation or remediation of offsite locations at which the
Borrower, any of its Subsidiaries, or their predecessors are alleged to
have directly or indirectly Disposed of Hazardous Substances. It is
expressly acknowledged by the Borrower that this covenant of
indemnification shall survive the payment of the Loans and satisfaction
of all other Obligations hereunder and shall inure to the benefit of
the Banks, the Agent and their affiliates, successors and assigns.
Section 23.12 FURTHER ASSURANCES. The Borrower will cooperate
with the Agent and execute such further instruments and documents as
the Agent shall reasonably request to carry out to the Banks'
satisfaction the transactions contemplated by this Agreement.
Section 23.13 NOTICE OF POTENTIAL CLAIMS OR LITIGATION. The
Borrower shall deliver to the Banks, within 30 days of receipt thereof,
written notice of the initiation of any action, claim, complaint, or
any other notice of dispute or potential litigation against the
Borrower 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 Borrower or any of its Subsidiaries.
<PAGE> 36
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Section 23.14 NOTICE OF CERTAIN EVENTS CONCERNING INSURANCE
AND ENVIRONMENTAL CLAIMS.
(a) The Borrower will provide the Banks with written notice as
to any material cancellation or material adverse change in any
insurance of the Borrower or any of its Subsidiaries within ten (10)
Business Days after the Borrower'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 Borrower will promptly notify the Banks in writing of
any of the following events:
(i) upon the Borrower's or any Subsidiary's
obtaining knowledge of any violation of any
Environmental Law regarding the Real Property or the
Borrower's or any Subsidiary's operations which
violation could have a material adverse effect on the
business, financial condition, or assets of the
Borrower and its Subsidiaries on a consolidated
basis;
(ii) upon the Borrower'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 Borrower and its
Subsidiaries on a consolidated basis;
(iii) upon the Borrower'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 Borrower'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 Borrower, 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 Borrower'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 Borrower or any Subsidiary may
be liable or for which a lien may be imposed on the
Real Property.
<PAGE> 37
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Section 23.15 NOTICE OF DEFAULT. The Borrower 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 Borrower or any of its
Subsidiaries is a party or obligor, whether as principal or surety, the
Borrower shall forthwith upon obtaining actual knowledge thereof give
written notice thereof to the Banks, describing the notice of action
and the nature of the claimed default.
Section 23.16 USE OF PROCEEDS. The proceeds of the Loans shall
be used for general corporate purposes and to refinance certain
existing debt of the Borrower and City Management in connection with
the Borrower's acquisition of City Management. 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 23.17 CERTAIN TRANSACTIONS. Except as disclosed in
filings made by the Borrower under the Securities Exchange Act of 1934
prior to the Closing Date, and except for arm's length transactions
pursuant to which the Borrower or any Subsidiary makes payments in the
ordinary course of business upon terms no less favorable than the
Borrower or such Subsidiary could obtain from third parties, none of
the officers, directors, or employees of the Borrower or any Subsidiary
are presently or shall be a party to any transaction with the Borrower
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 Borrower 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 24 CERTAIN NEGATIVE COVENANTS OF THE BORROWER. The Borrower
agrees that, so long as any Obligation is outstanding or the Banks have any
obligation to make Loans hereunder, it shall, and shall cause its Subsidiaries
to, comply with the following covenants:
Section 24.1 RESTRICTIONS ON INDEBTEDNESS. Neither the
Borrower 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:
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(a) Indebtedness of the Borrower and Guarantors under
the Credit Agreement;
(b) Indebtedness arising under this Agreement or the
other Loan Documents;
(c) Existing Indebtedness of the Borrower and its
Subsidiaries listed on Schedule 8.1(b) to the Credit Agreement
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 existed on August 7, 1997;
(d) (i) Indebtedness incurred by the Borrower 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;
(e) Unsecured Indebtedness of the Borrower, 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;
(f) (i) Indebtedness of the Borrower's Subsidiaries,
(ii) secured Indebtedness of the Borrower, (iii) Indebtedness
with respect to landfill closure bonds of the Borrower's
Subsidiaries, and (iv) Indebtedness with respect to Permitted
Receivables Transactions; provided that the aggregate amount
of all such Indebtedness in this 24.1(f) shall not exceed 7.5%
of Consolidated Tangible Assets at any time;
(g) Indebtedness of Sanifill with respect to the
Sanifill Convertible Subordinated Debt;
(h) Other Indebtedness of the Canadian Subsidiaries
of the Borrower in an aggregate amount outstanding not in
excess of $50,000,000; and
(i) Indebtedness of United with respect to the United
Indenture.
Section 24.2 RESTRICTIONS ON LIENS. The Borrower 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
<PAGE> 39
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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 listed on Schedule 8.2(a) of the Credit
Agreement;
(b) Liens securing Indebtedness permitted by Section
24.1(d)(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 24.1(f) (provided that Liens created pursuant to a
Permitted Receivables Transaction are only on the receivables
so transferred and secure only the obligations with respect
thereto) and Section 24.1(h);
(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 Borrower (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 Borrower 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 that such liens may continue
to exist for a period of more than 120 days if the validity or
amount thereof shall currently be contested by the Borrower
(or any Subsidiary) in good faith by appropriate proceedings
and if the Borrower shall have set aside on its books adequate
reserves with respect thereto as required by GAAP and provided
further that the
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Borrower (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
Borrower or any Subsidiary is a party, and other minor liens
or encumbrances none of which in the opinion of the Borrower
interferes materially with the use of the property affected in
the ordinary conduct of the business of the Borrower or any of
its Subsidiaries, which defects do not individually or in the
aggregate have a material adverse effect on the business of
the Borrower or any Subsidiary individually or of the Borrower
and its Subsidiaries on a consolidated basis.
The Borrower covenants and agrees that if it or any of its
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 Borrower will make or
cause to be made effective provision whereby the 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 Borrower contained
in this sentence shall only be in effect for so long as the Borrower
shall be similarly obligated under any other Indebtedness; provided,
further, that an Event of Default shall occur for so long as such other
Indebtedness becomes secured notwithstanding any actions taken by the
Borrower to ratably secure the Obligations hereunder.
Section 24.3 RESTRICTIONS ON INVESTMENTS. Except to the extent
provided in Section 24.4, neither The Borrower 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 Borrower and its
Subsidiaries are in compliance with the covenants set forth in Sections
23, 24 and 25 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 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 15% of
Consolidated Tangible Assets; provided, that the ability of the
Borrower and its Subsidiaries to incur any Indebtedness in connection
with any Investment permitted by this Section 24.3 shall be governed by
Section 24.1.
Section 24.4 MERGERS, CONSOLIDATIONS, SALES.
(a) Neither the Borrower nor any Subsidiary shall be
a party to any merger, consolidation or exchange of stock
unless the Borrower shall be the surviving entity with respect
to any such transaction to which the Borrower is a party or a
Subsidiary shall be the surviving entity (and
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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, membership or joint
venture or other interest in, any other Person except as
otherwise provided in Section 24.3 or this Section 24.4.
Notwithstanding the foregoing, The Borrower and its
Subsidiaries may purchase or otherwise acquire all or
substantially all of the assets or stock of any class of, or
joint venture or other interest in, any Person if the
following conditions have been met: (i) the proposed
transaction will not otherwise create a Default or an Event of
Default hereunder; (ii) 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; (iii) the business to be acquired operates
predominantly (A) in North America or (B) outside North
America, provided, that the aggregate amount of such
acquisitions under this clause (B) does not exceed five
percent (5%) of Consolidated Tangible Assets; and (iv) 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
anything herein to the contrary, the ability of the Borrower
and its Subsidiaries to incur any Indebtedness in connection
with any transaction permitted pursuant to this Section 24.4
shall be governed by Section 24.1.
(b) Neither the Borrower 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
Borrower or any Subsidiary in order then or thereafter to
lease such property or lease other property which the Borrower
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
Borrower which are wholly owned by the Borrower 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 23.4 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, or pursuant
to a Permitted Receivables Transaction).
Section 24.5 RESTRICTED DISTRIBUTIONS AND REDEMPTIONS. Neither
the Borrower 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 24.4 hereof or conversion into another
form of equity of any preferred shares of the Borrower existing as of
the Closing Date pursuant to the terms thereof); provided that the
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Borrower 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 Borrower and the Borrower agrees that neither the
Borrower nor any Material Subsidiary will enter into any agreement
restricting Distributions from such Material Subsidiary to the
Borrower.
Section 24.6 EMPLOYEE BENEFIT PLANS. None of the Borrower, 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 Borrower 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
(c) fail to contribute to any Guaranteed Pension Plan
to an extent which, or terminate any Guaranteed Pension Plan
in a manner which, could result in the imposition of a lien or
encumbrance on the assets of the Borrower 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 (within 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
The Borrower and its Subsidiaries will (i) promptly upon the
request of any Bank or the 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 Sections 302, 4041, 4042, 4043, 4063, 4065, 4066 and
4068 of ERISA, or in respect of a Multiemployer Plan, under Sections
4041A, 4202, 4219, 4242 or 4245 of ERISA.
Section 25 FINANCIAL COVENANTS OF THE BORROWER. The Borrower agrees
that, so long as any Obligation is outstanding or the Banks have any obligation
to make Loans hereunder, it shall, and shall cause its Subsidiaries to, comply
with the following covenants:
Section 25.1 INTEREST COVERAGE RATIO. As of the end of any
fiscal quarter of the Borrower, the ratio of (a) EBIT for the period of
four consecutive fiscal
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quarters ending on that date to (b) Consolidated Total Interest Expense
for such period shall not be less than 3.00:1.
Section 25.2 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 Borrower.
Section 26 CONDITIONS PRECEDENT.
Section 26.1 CONDITIONS TO EFFECTIVENESS. The
effectiveness of this Agreement and the obligations of the Banks to
make any Loans and otherwise be bound by the terms of this Agreement
shall be subject to the satisfaction of each of the following
conditions precedent:
Section 26.1.1 CORPORATE ACTION. All corporate action
necessary for the valid execution, delivery and performance by
the Borrower of the Loan Documents shall have been duly and
effectively taken, and evidence thereof certified by
authorized officers of the Borrower and satisfactory to the
Agent shall have been provided to the Agent.
Section 26.1.2 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 Agent.
Section 26.1.3 CERTIFIED COPIES OF CHARTER DOCUMENTS.
The Agent shall have received from the Borrower (a) a copy,
certified by a duly authorized officer of the Borrower to be
true and complete on the Closing Date, of its charter or other
incorporation documents as in effect on such date of
certification and its by-laws as in effect on such date, or
(b) a certificate of a duly authorized officer of the Borrower
certifying that such documents have not changed since August
7, 1997.
Section 26.1.4 INCUMBENCY CERTIFICATE. The Agent
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 Borrower and Sanifill; and (b) to give notices, make
Loan Requests and to take other action on the Borrower's
behalf under the Loan Documents.
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Section 26.1.5 CERTIFICATES OF INSURANCE. The Agent
shall have received (i) a certificate of insurance from an
independent insurance broker dated as of the Closing Date, or
within 15 days prior thereto, identifying insurers, types of
insurance, insurance limits, and policy terms, and otherwise
describing the insurance obtained in accordance with the
provisions of the Loan Documents and (ii) copies of all
policies evidencing such insurance (or certificates therefor
signed by the insurer or an agent authorized to bind the
insurer).
Section 26.1.6 OPINIONS OF COUNSEL. The Agent shall
have received favorable legal opinions from counsel to the
Borrower addressed to the Agent, dated the Closing Date, in
form and substance satisfactory to the Agent.
Section 26.1.7 SATISFACTORY FINANCIAL CONDITION. No
material adverse change, in the judgment of the Agent, shall
have occurred in the financial condition, results of
operations, business, properties or prospects of the Borrower
and its Subsidiaries, taken as a whole, since the most recent
financial statements and projections provided to the Agent.
Section 26.1.8 CITY MANAGEMENT ACQUISITION. The City
Management Acquisition shall have been successfully completed
on terms no less favorable to the Borrower than the terms set
forth in the City Management Acquisition Agreement, and
evidence thereof satisfactory to the Agent, including, without
limitation, a legal opinion as to the completion of the City
Management Acquisition, shall have been furnished to the
Agent.
Section 26.1.9 LIEN SEARCH RESULTS. The
Administrative Agent shall have received the results of UCC
lien searches with respect to City Management and its
Subsidiaries indicating no liens or encumbrances other than
Permitted Liens.
Section 26.2 PAYMENT OF CLOSING FEES. The Borrower shall have paid all
closing fees as required under the Commitment Letter, dated as of December 12,
1997 from Morgan to the Borrower.
Section 27 CONDITIONS TO ALL LOANS. The obligations of the Banks to
make any Loan at the time of and subsequent to the Closing Date is subject to
the following conditions precedent:
Section 27.1 REPRESENTATIONS TRUE. Each of the representations
and warranties of the Borrower 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
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
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ordinary course of business which singly or in the aggregate are not
materially adverse to the business, assets or financial condition of
the Borrower and its Subsidiaries as a whole, and to the extent that
such representations and warranties relate expressly and solely to an
earlier date).
Section 27.2 PERFORMANCE; NO EVENT OF DEFAULT. The Borrower
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, and at the time of the making of any
Loan, there shall exist no Default or Event of Default or condition
which would result in a Default or an Event of Default upon
consummation of such Loan. Each request for a Loan shall constitute
certification by the Borrower that the conditions specified in Sections
27.1 and 27.2 will be duly satisfied on the date of such Loan.
Section 27.3 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 hereunder.
Section 27.4 GOVERNMENTAL REGULATION. The Banks shall have
received from the Borrower 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 27.5 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 Loan
Request in the form attached hereto as Exhibit A, and the Banks shall
have received all information and such counterpart originals or
certified or other copies of such documents as the Banks may reasonably
request.
Section 28. EVENTS OF DEFAULT; ACCELERATION; TERMINATION REMEDIES.
Section 28.1. EVENTS OF DEFAULT.
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) the Borrower shall fail to pay any principal of the Loans
when the same shall become due and payable, whether at the stated date of
maturity or any accelerated date of maturity or at any other date fixed for
payment;
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(b) the Borrower shall fail to pay any interest or fees or
other amounts owing hereunder (other than those specified in subsection (a)
above) within (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) the Borrower shall fail to comply with the provisions of
Sections 23, 24 or 25;
(d) the Borrower shall fail to perform any term, covenant or
agreement contained herein or any of the other Loan Documents (other than those
specified in subsections (a), (b) and (c) above) and such failure shall not be
remedied within 30 days after written notice of such failure shall have been
given to the Borrower by the Agent or any of the Banks;
(e) if any representation or warranty contained in this
Agreement or in any document or instrument delivered pursuant to or in
connection with this Agreement shall prove to have been false in any material
respect upon the date when made or repeated;
(f) if the Borrower or any of its Subsidiaries shall fail to
pay when due, or within any applicable period of grace, any Indebtedness in an
aggregate amount greater than $25,000,000, 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 $25,000,000 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;
(g) there shall be an "Event of Default" under the Credit
Agreement or the Credit Agreement shall be cancelled or terminated;
(h) if the Borrower 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 Borrower or any Material Subsidiary or of any
substantial part of the assets of the Borrower or any Material Subsidiary or
commences any case or other proceeding relating to the Borrower 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 Borrower or
any Material Subsidiary or the Borrower or any Material Subsidiary indicates its
approval thereof, consent thereto or acquiescence therein;
<PAGE> 47
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(i) if a decree or order is entered appointing any such
trustee, custodian, liquidator or receiver or adjudicating the Borrower 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 Borrower 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;
(j) if there shall remain in force, undischarged, unsatisfied
and unstayed, for more than thirty days, whether or not consecutive, any final
judgment against the Borrower or any Subsidiary which, with other outstanding
final judgments against the Borrower and its Subsidiaries exceeds in the
aggregate $10,000,000 after taking into account any undisputed insurance
coverage;
(k) if, with respect to any Guaranteed Pension Plan, an ERISA
Reportable Event shall have occurred and the Banks shall have determined in
their reasonable discretion that such event reasonably could be expected to
result in liability of the Borrower or any Subsidiary to the PBGC or the Plan in
an aggregate amount exceeding $10,000,000 and such event in the circumstances
occurring reasonably could constitute grounds for the partial or complete
termination of such Plan by the PBGC or for the appointment by the appropriate
United States District Court of a trustee to administer such Plan; or a trustee
shall have been appointed by the appropriate United States District Court to
administer such Plan; or the PBGC shall have instituted proceedings to terminate
such Plan;
(l) 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 Borrower or any of its 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
(m) 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 25% or more of the
outstanding shares of common voting stock of the Borrower; or, during any period
of twelve consecutive calendar months, individuals who were directors of the
Borrower on the first day of such period shall cease to constitute a majority of
the board of directors of the Borrower;
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THEN, or at any time thereafter:
so long as the same may be continuing, the Agent may, and upon the request of
the Majority Banks shall, by notice in writing to the Borrower, declare all
amounts owing with respect to this Agreement, the Notes and the other Loan
Documents to be, and they shall thereupon forthwith become, immediately due and
payable without presentment, demand, protest, notice of intent to accelerate,
notice of acceleration to the extent permitted by law or other notice of any
kind, all of which are hereby expressly waived by the Borrower; provided that in
the event of any Event of Default specified in Sections 28.1(h) or
28.1(i) hereof, all such amounts shall become immediately due And payable
automatically and without any requirement of notice from the Agent or any Bank.
Section 28.2. TERMINATION OF COMMITMENTS. If any Event of Default
pursuant to Section 28.1(h) or 28.1(i) hereof shall occur, any unused
portion of the Line hereunder shall forthwith terminate and the Banks and the
Agent shall be relieved of all obligations to make Loans hereunder; or if any
other Event of Default shall occur, the Majority Banks may by notice to the
Borrower terminate the unused portion of the Line hereunder, and, upon such
notice being given, such unused portion of the Line hereunder shall terminate
immediately and the Banks and the Agent shall be relieved of all further
obligations to make Loans hereunder. No termination of any portion of the Line
hereunder shall relieve the Borrower of any of its existing obligations
hereunder to the Banks or the Agent hereunder or elsewhere.
Section 28.3. 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 28.1, each Bank, upon notice to the other Banks, if owed any amount with
respect to the Loans, 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 42 hereof. No remedy herein conferred upon any
Bank or the Agent 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 29. SETOFF. Regardless of the adequacy of any collateral,
during the continuance of an Event of Default, any deposits or other sums
credited by or due from any Bank to the Borrower and any securities or other
property of the Borrower in the possession of such Bank may be applied to or set
off against the payment of the Obligations and any and all other liabilities,
direct, or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, of the Borrower to the Banks or the Agent. Any amounts set
off pursuant to this Section 29 shall be distributed ratably
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among all of the Banks by the Bank setting off such amounts. If any Bank fails
to share such setoff ratably, the Agent shall have the right to withhold such
Bank's share of any payments until each of the Banks shall have, in the
aggregate, received a pro rata repayment.
Section 30. THE AGENT.
Section 30.1. APPOINTMENT, POWERS AND IMMUNITIES. Each Bank hereby
irrevocably appoints and authorizes Morgan to act as Agent hereunder, provided,
however, the Agent is hereby authorized to serve only as agent 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 Agent hereby
acknowledges that it does 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 other Loan Documents. Except as provided in this Agreement and
the other Loan Documents, the Agent shall take action or refrain from acting
only upon instructions of the Banks. The Agent 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. Neither the
Agent nor any of its affiliates shall be responsible to the Banks for any
recitals, statements, representations or warranties made by the Borrower or any
other Person whether contained herein or otherwise or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement, the
other Loan Documents or any other document referred to or provided for herein or
for any failure by the Borrower or any other Person to perform its obligations
hereunder or thereunder or in respect of the Notes. The Agent 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 Agent nor any of its 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. The Agent in its separate capacity as a Bank
shall have the same rights and powers hereunder as any other Bank.
Section 30.2. ACTIONS BY AGENT. The 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 Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or any
of the other 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.
Section 30.3. INDEMNIFICATION. Without limiting the obligations of the
Borrower hereunder or under any of the other Loan Documents, the Banks agree to
indemnify the Agent, its affiliates and its respective directors, officers,
agents and employees (to
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the extent not reimbursed by the Borrower), ratably in accordance with their
respective Line Percentages, 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 Agent in any way relating to or arising out of this
Agreement or any of the other Loan Documents or any documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
or the enforcement of any of the terms hereof or thereof or of any such other
documents; provided, that no Bank shall be liable for any of the foregoing to
the extent they arise from the gross negligence or willful misconduct of the
Agent (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 30.4 REIMBURSEMENT. Without limiting the provisions of Sections
9(a), 19(b), and 29, the Agent shall not be obliged to make available to
any Person any sum which the Agent is expecting to receive for the account of
that Person until the Agent has determined that it has received that sum. The
Agent may, however, disburse funds prior to determining that the sums which the
Agent expects to receive have been finally and unconditionally paid to the
Agent, if the Agent wishes to do so. If and to the extent that the Agent does
disburse funds and it later becomes apparent that the Agent did not then receive
a payment in an amount equal to the sum paid out, then any Person to whom the
Agent made the funds available shall, on demand from the Agent, refund to the
Agent the sum paid to that Person. If, in the opinion of the Agent, the
distribution of any amount received by it in such capacity hereunder or under
any of 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 the Agent
is to be repaid, each Person to whom any such distribution shall have been made
shall either repay to the 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 30.5. NON-RELIANCE ON AGENT AND OTHER BANKS. Each Bank
represents that it has, independently and without reliance on the Agent or any
other Bank, and based on such documents and information as it has deemed
appropriate, made its own appraisal of the financial condition and affairs of
the Borrower and the decision to enter into this Agreement and the other Loan
Documents and agrees that it will, independently and without reliance upon the
Agent or any other Bank, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own appraisals and decisions
in taking or not taking action under this Agreement or any of the other Loan
Documents. Except as herein expressly provided to the contrary, the Agent shall
not be required to keep informed as to the performance or observance by the
Borrower 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 Agent hereunder, the
Agent shall not
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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
Agent or any of their affiliates. Each Bank shall have access to all documents
relating to the Agent's performance of its duties hereunder at such Bank's
request. Unless any Bank shall promptly object to any action taken by the Agent
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 30.7 are applicable and other than actions which
constitute gross negligence or willful misconduct by the Agent), such Bank shall
be presumed to have approved the same.
Section 30.6. RESIGNATION OF AGENT. The Agent may resign at any time by
giving 60 days' prior written notice thereof to the Banks and the Borrower. Upon
any such resignation, the Banks (other than the resigning Agent) shall have the
right to appoint a successor Agent from among the Banks. If no successor to the
Agent shall have been so appointed by the Banks and shall have accepted such
appointment within 30 days after the retiring Agent's giving of notice of
resignation, then the retiring Agent may, on behalf of the Banks, appoint a
successor 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 Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation, the provisions of this Agreement shall continue in
effect for its benefit in respect of any actions taken or omitted to be taken by
it while it was acting as Agent.
Section 30.7. 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
Documents to be given by the Banks may be given, any term of this Agreement or
any other Loan Document or any other instrument, document or agreement related
to this Agreement or the other Loan Documents or mentioned therein may be
amended, and the performance or observance by the Borrower 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 the Agent shall be effective without the written consent of the
Agent. Notwithstanding the foregoing, no amendment, waiver or consent shall do
any of the following unless in writing and signed by ALL of the Banks (a)
increase the principal amount of the Line (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 30.7; or (f) change the Line
Percentage of any Bank, except as permitted under Section 34 hereof.
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Section 30.8 DOCUMENTS. The Agent will forward to each Bank, promptly
after receipt thereof, a copy of each notice or other document furnished to the
Agent for such Bank hereunder.
Section 31. INDEMNIFICATION. The Borrower agrees to indemnify and hold
harmless the Banks and the Agent and their affiliates, as well as the Banks' and
the Agent's 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 and relating to
any Environmental Laws or Applicable Requirements, 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 Agent shall be entitled to select
their own counsel and, in addition to the foregoing indemnity, the Borrower
agrees to pay promptly the reasonable fees and expenses of such counsel. In the
event of the commencement of any such proceeding or litigation against the Banks
or Agent by third parties, the Borrower shall be entitled to participate in such
proceeding or litigation with counsel of its choice at its expense, provided
that such counsel shall be reasonably satisfactory to the Banks or Agent. The
covenants of this Section 31 shall survive payment or satisfaction of payment of
amounts owing with respect to any Note or other Loan Document and satisfaction
of all of the Obligations, IT BEING THE INTENT OF THE PARTIES HERETO THAT ALL
SUCH INDEMNIFIED PARTIES SHALL BE INDEMNIFIED FOR THEIR ORDINARY SOLE OR
CONTRIBUTORY NEGLIGENCE.
Section 32 WITHHOLDING TAXES. The Borrower hereby agrees that:
(a) Any and all payments made by the Borrower 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 Agent 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 Borrower hereunder is required in respect of any Indemnifiable
Taxes pursuant to any applicable law, or governmental rule or
regulation, then the Borrower will (i) direct to the relevant taxing
authority the full amount required to be so withheld or deducted, (ii)
forward to the Agent for delivery to the applicable
<PAGE> 53
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Bank an official receipt or other documentation satisfactory to the
Agent and the applicable Bank evidencing such payment to such taxing
authority, and (iii) direct to the 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 Agent or any Bank with respect to any
payment received by the Agent or such Bank by reason of the Borrower's
failure to properly deduct and withhold such Indemnifiable Taxes from
such payment, the Agent or such Bank may pay such Indemnifiable Taxes
and the Borrower 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 Borrower
from the 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 Borrower 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 Borrower hereby indemnifies and holds harmless the
Agent 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 32) paid by the
Agent 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 Borrower's 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 Borrower under the preceding sentence
shall be made promptly after receipt by the Borrower from the 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 Borrower pays any amount under this Section 32 to
the Agent or any Bank and such payee knowingly receives a refund of any
taxes with respect to which such amount was paid, the Agent or such
Bank, as the case may be, shall pay to the Borrower the amount of such
refund promptly following the receipt thereof by such payee.
<PAGE> 54
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(e) In the event any taxing authority notifies the Borrower
that it has improperly failed to deduct or withhold any taxes (other
than Indemnifiable Taxes) from a payment made hereunder to the Agent or
any Bank, the Borrower shall timely and fully pay such taxes to such
taxing authority.
(f) The Agent or the Banks shall, upon the request of the
Borrower, 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
Borrower contained in this Section 32 shall survive the payment in full
of the Obligations.
Section 33. SURVIVAL OF COVENANTS, ETC. Unless otherwise stated herein,
all covenants, agreements, representations and warranties made herein, in the
other Loan Documents or in any documents or other papers delivered by or on
behalf of the Borrower pursuant hereto or referenced herein shall be deemed to
have been relied upon by the Banks and the Agent, notwithstanding any
investigation heretofore or hereafter made by them, and shall survive the making
by the Banks of the Loans, as herein contemplated, and shall continue in full
force and effect so long as any amount due under this Agreement, any Obligation
or any Note remains outstanding and unpaid or any Bank has any obligation to
make any Loans hereunder. All statements contained in any certificate or other
paper delivered by or on behalf of the Borrower pursuant hereto or in connection
with the transactions contemplated hereby shall constitute representations and
warranties by the Borrower hereunder.
Section 34. 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 Line Percentage, and interests in the risk relating to the Loans hereunder
in an amount equal to or greater than the lesser of (a) $5,000,000 or (b) such
Bank's entire Commitment to additional banks or other financial institutions
with the prior written approval of the Agent, and, so long as no Event of
Default has occurred and is continuing, the Borrower, which approvals shall not
be unreasonably withheld. 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 Agent
and the Borrower. It is further agreed that each bank or other financial
institution which executes and delivers to the Agent, and the Borrower hereunder
an Assignment and Acceptance substantially in the form of Exhibit D hereto (an
"Assignment and Acceptance") together with an assignment fee in the amount of
$2,500 payable by the assigning Bank to the Agent, shall, on the date specified
in such Assignment and Acceptance, become a party to this Agreement and the
other Loan Documents for all purposes of this Agreement and the other Loan
Documents, and its portion of the Commitment and the Loans 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
<PAGE> 55
-55-
under this Agreement and the other Loan Documents. Upon the execution and
delivery of such Assignment and Acceptance, (a) the Borrower shall issue to the
bank or other financial institution a Note in the amount of such bank's or other
financial institution's Commitment dated the date of the assignment or such
other date as may be specified by the Agent, and otherwise completed in
substantially the form of Exhibit A, and to the extent any assigning Bank has
retained a portion of its obligations hereunder, a replacement Note to the
assigning Bank reflecting its assignment; and (b) 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 Commitment and the Loans. 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 30.7 which require the approval of all
Banks.
Notwithstanding the foregoing, no assignment or participation shall
operate to increase the Line 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 of the Line pursuant to Section 2(d) hereof.
Anything contained in this Section 34 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 35. 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 Borrower shall not assign or transfer its rights
or obligations hereunder or thereunder without the prior written consent of each
of the Banks.
Section 36. NOTICES, ETC. Except as otherwise expressly provided in
this Agreement, all notices and other communications made or required to be
given pursuant to this Agreement or the other Loan Documents shall be in writing
and shall be delivered in hand, mailed by United States first class mail, as
applicable, postage prepaid, or sent by telegraph, telex or facsimile and
confirmed by letter, addressed as follows:
(a) if to the Borrower at the address specified in Section 21
of the Credit Agreement; or
(b) if to Morgan or the Agent, at the address specified in
Section 21 of the Credit Agreement; or
<PAGE> 56
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(c) if to any other Bank, at the address set forth next to
such Bank's name on Schedule 1 hereto;
or such other address for notice as shall have last been furnished in writing to
the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or
made and to have become effective (a) if delivered by hand to a responsible
officer of the party to which it is directed, at the time of the receipt thereof
by such officer, (b) if sent by registered or certified first-class mail,
postage prepaid, five Business Days after the posting thereof, and (c) if sent
by telex, 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 37. MISCELLANEOUS. The rights and remedies herein expressed are
cumulative and not exclusive of any other rights which the Banks and the Agent
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 38. CONSENTS, ETC. Neither this Agreement nor any term hereof
may be changed, waived, discharged or terminated, except as provided in this
Section 38, subject to the provisions of Section 30.7. No waiver shall extend to
or affect any obligation not expressly waived or impair any right consequent
thereon. Except as otherwise expressly provided in this Agreement, any consent
or approval required or permitted by this Agreement to be given by the Banks may
be given, and any term of this Agreement or of any other instrument related
hereto or mentioned herein may be amended, and the performance or observance by
the Borrower of any terms of this Agreement or such other instrument or the
continuance of any Default or Event of Default may be waived (either generally
or in a particular instance and either retroactively or prospectively) with, but
only with, the written consent of the Borrower, 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 or the Agent in exercising any right shall operate as a
waiver thereof or otherwise be prejudicial thereto. No notice to or demand upon
the Borrower shall entitle the Borrower to other or further notice or demand in
similar or other circumstances.
Section 39. 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 OBLIGATIONS. EXCEPT AS
<PAGE> 57
-57-
PROHIBITED BY LAW, THE BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR
RECOVER IN ANY LITIGATION REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES. THE BORROWER (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY BANK OR THE AGENT HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH BANK OR THE AGENT WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT THE AGENT AND
THE BANKS HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS BECAUSE OF, AMONG OTHER THINGS, THE BORROWER'S WAIVERS AND
CERTIFICATIONS CONTAINED HEREIN.
SECTION 40. GOVERNING LAW. 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 BORROWER CONSENTS 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 OR THE AGENT UNDER
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. THE BORROWER 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 41. 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.
42. 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 the Borrower (pursuant to
Section 29 or otherwise),
<PAGE> 58
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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 and other Obligations held by it (other than pursuant to Section 13,
Section 14 or Section 16) 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 42 and the payment 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. The 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 the Borrower to such Person as fully as if such Person had made a Loan
directly to the Borrower in the amount of such participation.
SECTION 43. 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.
[remainder of page left intentionally blank]
<PAGE> 59
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
as a sealed instrument as of the date first above written.
USA WASTE SERVICES, INC.
By: /s/ RONALD H. JONES
-------------------------------------
Name: Ronald H. Jones
Title: Vice President & Treasurer
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, individually and as Agent
By: /s/ CHRISTOPHER C. KUNHARDT
-------------------------------------
Name: CHRISTOPHER C. KUNHARDT
Title: VICE PRESIDENT
<PAGE> 1
EXHIBIT 10.4
FIRST AMENDMENT
TO BRIDGE LOAN AGREEMENT
This FIRST AMENDMENT TO BRIDGE LOAN AGREEMENT is made and entered into
as of March 6, 1998 (this "Amendment") by and among USA WASTE SERVICES, INC., a
Delaware corporation (the "Borrower"), MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, a New York state banking association (in its individual capacity,
"Morgan") and each of the other financial institutions party to the Loan
Agreement defined below (collectively, the "Banks"), and Morgan as agent for the
Banks (in such capacity, the "Agent"). Capitalized terms used herein without
definition shall have the meanings assigned to such terms in the Loan Agreement.
WHEREAS, the Borrower, the Banks, and the Agent have entered into that
certain Bridge Loan Agreement, dated as of January 21, 1998 (as amended and in
effect from time to time, the "Loan Agreement"), pursuant to which the Banks
have extended credit to the Borrower on the terms set forth therein;
WHEREAS, the Banks, the Agent, and the Borrower have agreed to amend
the Loan Agreement as hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
SECTION 1. AMENDMENT TO SECTION 25.2. Section 25.2 of the Loan
Agreement is hereby deleted in its entirety and the following substituted
therefor:
SECTION 25.2. DEBT TO TOTAL CAPITALIZATION. The ratio of
Funded Debt to Consolidated Total Capitalization shall not at any time
exceed (a) 0.62:1 from March 6, 1998 through December 31, 1998 or (b)
0.58:1 thereafter.
SECTION 2. NO EVENT OF DEFAULT. The Borrower represents and warrants
to the Agent and the Banks that no Default or Event of Default has occurred and
is continuing.
SECTION 3. EFFECTIVENESS. This Amendment shall become effective upon
its execution and delivery by the Borrower, the Guarantors, and the Majority
Banks (the "Effective Date").
<PAGE> 2
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SECTION 4. RATIFICATION, ETC. Except as expressly amended hereby, the
Loan Agreement, the other Loan Documents and all documents, instruments and
agreements related thereto are hereby ratified and confirmed in all respects and
shall continue in full force and effect. This Amendment and the Loan Agreement
shall hereafter be read and construed together as a single document, and all
references in the Loan Agreement, any other Loan Document or any agreement or
instrument related to the Loan Agreement shall hereafter refer to the Loan
Agreement as amended by this Amendment.
SECTION 5. COUNTERPARTS. This Amendment may be executed in any number
of counterparts, which together shall constitute one instrument.
SECTION 6. GOVERNING LAW. THIS AMENDMENT SHALL BE A CONTRACT UNDER THE
LAWS OF THE STATE OF NEW YORK, SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE INTERNAL LAWS OF SAID JURISDICTION, WITHOUT REFERENCE
TO CONFLICTS OF LAW, AND IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT.
[Signature Pages Follow]
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
an instrument under seal to be effective as of the date first above written.
THE BORROWER:
USA WASTE SERVICES, INC.
By:/s/ RONALD H. JONES
---------------------------------
Name: Ronald H. Jones
Title: Vice President & Treasurer
THE BANKS:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK,
individually and as Agent
By:/s/ CHRISTOPHER C. KUNHARDT
---------------------------------
Christopher C. Kunhardt
Vice President
<PAGE> 1
EXHIBIT 10.5
================================================================================
CREDIT AGREEMENT
dated as of January 22, 1998
among
USA WASTE SERVICES, INC.,
VARIOUS FINANCIAL INSTITUTIONS,
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Agent
Arranged by
BANCAMERICA ROBERTSON STEPHENS
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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Page
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SECTION 1 DEFINITIONS, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Interpretive Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2 COMMITMENTS OF THE BANKS; TYPES OF LOANS;
BORROWING AND CONVERSION PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 Various Types of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3 Borrowing Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4 Procedures for Continuation or Conversion of Loan . . . . . . . . . . . . . . . . . . . . . . . . 8
2.5 Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.6 Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.7 Commitments Several . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3 NOTES EVIDENCING LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.1 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.2 Recordkeeping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4 INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.1 Interest Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.2 Interest Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.3 Setting and Notice of Eurodollar Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.4 Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5 FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.1 Facility Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.2 Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.3 Arranger and Agent's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 6 REDUCTION OR TERMINATION OF THE COMMITMENTS;
PREPAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.1 Reduction on Termination of the Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.1.1 Mandatory Reductions of the Commitments . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.1.2 Voluntary Reduction or Termination of the
Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.1.3 Reductions Pro Rata . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.2 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.2.1 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.2.2 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.2.3 All Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.1 Making of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.2 Application of Certain Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.3 Due Date Extension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.4 Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
7.5 Proration of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.6 Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR EURODOLLAR LOANS . . . . . . . . . . . . . . . . . . . . 16
8.1 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.2 Basis for Determining Interest Rate Inadequate
or Unfair . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8.3 Changes in Law Rendering Eurodollar Loans
Unlawful . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.4 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.5 Right of Banks to Fund through Other Offices . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.6 Discretion of Banks as to Manner of Funding . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.7 Mitigation of Circumstances; Replacement of
Affected Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.8 Conclusiveness of Statements; Survival of
Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 9 WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.1 Organization, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.2 Authorization; No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.3 Validity and Binding Nature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.4 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.5 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.7 Solvency, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.8 Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.9 Existing Credit Facility Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 10 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.1 Certain Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.1.1 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.1.2 Change in Credit Rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
10.1.3 Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
10.2 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
10.3 Existing Credit Facility Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 11 CONDITIONS OF LENDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.1 Initial Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.1.1 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.1.2 Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.1.3 Consents, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
11.1.4 Incumbency and Signature Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 24
11.1.5 Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
11.1.6 Opinion of Counsel for the Company and
the Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
11.1.7 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
11.2 All Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
11.2.1 No Default, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
11.2.2 Confirmatory Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C>
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
12.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
12.1.1 Non-Payment of the Loans, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
12.1.2 Non-Compliance with Provisions of This
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
12.1.3 Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
12.1.4 Invalidity of Guaranty, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
12.1.5 Existing Credit Facility Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
12.2 Effect of Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 13 THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
13.1 Appointment and Authorization; "Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
13.2 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
13.3 Liability of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
13.4 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
13.5 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
13.6 Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
13.7 Indemnification of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
13.8 Agent in Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
13.9 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
13.10 Withholding Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 14 GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
14.1 Waiver; Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
14.2 Confirmations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
14.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
14.4 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
14.5 Regulation U . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
14.6 Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
14.7 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
14.8 Assignments; Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
14.8.1 Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
14.8.2 Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
14.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
14.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
14.11 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
14.12 Indemnification by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
14.13 Forum Selection and Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
14.14 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
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<TABLE>
<S> <C>
SCHEDULE 1 Pricing Schedule
SCHEDULE 2.1 Commitments and Percentages
SCHEDULE 9.6 Litigation
SCHEDULE 14.3 Addresses
EXHIBIT A Form of Notice of Borrowing (Section 2.3)
EXHIBIT B Form of Notice of Continuation or Conversion
(Section 2.4)
EXHIBIT C Form of Note (Section 3.1)
EXHIBIT D Form of Guaranty (Section 11.1.5)
EXHIBIT E Form of Opinion of Snell & Smith
(Section 11.1.6)
EXHIBIT F Form of Assignment Agreement
(Section 14.8)
</TABLE>
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<PAGE> 6
CREDIT AGREEMENT
This CREDIT AGREEMENT, dated as of January 22, 1998 (this
"Agreement"), is entered into among USA WASTE SERVICES, INC., a Delaware
corporation (the "Company"), the undersigned financial institutions (together
with their respective successors and assigns, collectively the "Banks" and
individually each a "Bank") and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as agent for the Banks.
In consideration of the premises and the mutual agreements herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1 DEFINITIONS, ETC.
1.1 Certain Defined Terms. The following terms shall have the
following meanings:
Affected Bank means any Bank that has given notice to the Company
(which has not been rescinded) of (i) any obligation by the Company to pay any
amount pursuant to Section 8.1 or (ii) the occurrence of any circumstances of
the nature described in Section 8.2 or 8.3.
Affected Loan - see Section 8.3.
Affiliate of any Person means any other Person which, directly or
indirectly, controls or is controlled by or is under common control with such
Person.
Agent means BofA, in its capacity as agent for the Banks hereunder and
any successor thereto in such capacity.
Agent-Related Persons means BofA in its capacity as Agent, and any
successor agent arising under Section 13.9, together with their respective
Affiliates (including, in the case of BofA, the Arranger), and the officers,
directors, employees, agents and attorneys-in-fact of such Persons and
Affiliates.
Agreement - see the Preamble.
Arranger means BancAmerica Robertson Stephens, a Delaware corporation.
Assignee - see Section 14.8.1.
Assignment Agreement - see Section 14.8.1.
<PAGE> 7
Attorney Costs means and includes all reasonable fees and charges of
any law firm or other external counsel and, without duplication, the reasonable
allocated cost of internal legal services and all reasonable disbursements of
internal counsel.
BofA means Bank of America National Trust and Savings Association, a
national banking association.
Bank - see the Preamble.
Bank Party - see Section 14.12.
Base Rate means at any time the greater of (a) the Federal Funds Rate
plus 0.5% and (b) the rate per annum then most recently publicly announced by
BofA as its reference rate. (The "reference rate" is a rate set by BofA based
upon various factors, including BofA's costs and desired return, general
economic conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above or below such announced
rate.)
Base Rate Loan means any Loan which bears interest at or by reference
to the Base Rate.
Business Day means any day on which BofA is open for commercial banking
business in Chicago and San Francisco and, in the case of a Business Day which
relates to a Eurodollar Loan, on which dealings are carried on in the interbank
eurodollar market.
Code means the Internal Revenue Code of 1986.
Commitment means, as to any Bank, such Bank's commitment to make Loans
pursuant to this Agreement. The amount of each Bank's initial Commitment is
set forth on Schedule 2.1.
Company - see the Preamble.
Credit Rating means the rating of the Company's public unsecured
long-term senior debt, without third party credit enhancement, issued by
Moody's and/or S&P; or if no public unsecured long-term senior debt is
available, the rating of the Existing Credit Facility issued by Moody's and/or
S&P upon the request of the Company.
Dollar and the sign "$" mean lawful money of the United States of
America.
Effective Date - see Section 11.1.
Environmental Laws means all applicable federal, state or local
statutes, laws, ordinances, codes, rules, regulations and
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<PAGE> 8
guidelines (including consent decrees and administrative orders) relating to
public health and safety and protection of the environment.
Eurocurrency Reserve Percentage means, with respect to any Eurodollar
Loan for any Interest Period, a percentage (expressed as a decimal) equal to
the daily average during such Interest Period of the percentage in effect on
each day of such Interest Period, as prescribed by the Board of Governors of
the Federal Reserve System (or any successor), for determining the aggregate
maximum reserve requirements applicable to "Eurocurrency Liabilities" pursuant
to Regulation D or any other then applicable regulation of such Board of
Governors which prescribes reserve requirements applicable to "Eurocurrency
Liabilities" as presently defined in Regulation D.
Eurodollar Loan means any Loan which bears interest at a rate
determined by reference to the Eurodollar Rate (Reserve Adjusted).
Eurodollar Office means with respect to any Bank the office or offices
of such Bank which shall be making or maintaining the Eurodollar Loans of such
Bank hereunder or, if applicable, such other office or offices through which
such Bank determines the Eurodollar Rate. A Eurodollar Office of any Bank may
be, at the option of such Bank, either a domestic or foreign office.
Eurodollar Rate means, with respect to any Eurodollar Loan for any
Interest Period, the rate per annum at which Dollar deposits in immediately
available funds are offered to the Eurodollar Office of BofA two Business Days
prior to the beginning of such Interest Period by major banks in the interbank
eurodollar market as at or about 10:00 a.m., Chicago time, for delivery on the
first day of such Interest Period, for the number of days comprised therein and
in an amount equal or comparable to the amount of the Eurodollar Loan of BofA
for such Interest Period.
Eurodollar Rate (Reserve Adjusted) means, with respect to any
Eurodollar Loan for any Interest Period, a rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) determined pursuant to the following
formula:
<TABLE>
<S> <C> <C>
Eurodollar Rate = Eurodollar Rate
(Reserve Adjusted) ---------------
1-Eurocurrency
Reserve Percentage
</TABLE>
Event of Default means any of the events described in Section 12.1.
3
<PAGE> 9
Existing Credit Facility means the Amended and Restated Revolving
Credit Agreement dated as of August 7, 1997 by and among the Company, certain
guarantors, various financial institutions and Morgan Guaranty Trust Company of
New York, as administrative agent and documentation agent, as such Amended and
Restated Credit Agreement is in effect on the date hereof (without giving
effect to (a) any termination thereof or (b) any amendment thereof or waiver
thereunder unless such amendment or waiver has been approved in writing by the
Required Banks).
Facility Fee Rate means the rate per annum for the "Facility Fee Rate"
set forth on Schedule 1 based on the applicable Credit Rating.
Federal Funds Rate means, for any day, the rate set forth in the weekly
statistical release designated as H.15(519), or any successor publication,
published by the Federal Reserve Bank of New York for the preceding Business
Day under the caption "Federal Funds (Effective)". If for any day such rate is
not so published for the preceding Business Day, the rate for such day will be
the arithmetic mean as determined by the Agent of the rates for the last
transaction in overnight Federal funds arranged prior to 9:00 a.m., New York
City time, on such day by each of three leading brokers of Federal funds
transactions in New York City, selected by the Agent.
Group - see Section 2.2.
Guarantor means Sanifill, Inc., a Delaware corporation, and United
Waste Systems, Inc., a Delaware corporation.
Guaranty - see Section 11.1.5.
Hazardous Material means any hazardous, toxic or dangerous substance
or material defined as such in (or for purposes of) any Environmental Law.
Indemnifiable Taxes - see Section 7.6.
Indemnified Liabilities - see Section 14.12.
Interest Period means, as to any Eurodollar Loan, the period
commencing on the date such Loan is borrowed or on the date on which such Loan
is converted into or continued as a Eurodollar Loan, and ending on the date
one, two, three or six months thereafter as selected by the Company pursuant to
Section 2.3 or 2.4, as applicable; provided that:
(i) if any Interest Period would otherwise end on a day
that is not a Business Day, such Interest Period shall be extended to
the following Business Day unless the result
4
<PAGE> 10
of such extension would be to carry such Interest Period into another
calendar month, in which event such Interest Period shall end on the
preceding Business Day;
(ii) any Interest Period that begins on the last Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at
the end of such Interest Period; and
(iii) the Company may not select any Interest Period that
would extend beyond the scheduled Termination Date.
Loans - see Section 2.1.
Loan Documents means this Agreement, the Notes and the Guaranty.
Margin means the rate per annum for the "Margin" set forth on Schedule
1 based on the applicable Credit Rating.
Margin Stock means any "margin stock" as defined in Regulation U of the
Board of Governors of the Federal Reserve System.
Material Adverse Effect means a material adverse effect on (a) the
financial condition, operations, business, assets or business prospects of the
Company and its Restricted Subsidiaries taken as a whole or (b) the ability of
the Company or any Guarantor to timely and fully perform any of its payment or
other material obligations under this Agreement or any other Loan Document to
which it is a party.
Moody's means Moody's Investors Service, Inc.
Net Cash Proceeds means, with respect to any public offering or
offerings of equity or debt securities, or any private placement or placements
of debt securities to financial institutions (excluding industrial revenue
bonds), by the Company or any Subsidiary, the aggregate gross cash proceeds
received by the Company or the applicable Subsidiary pursuant to such issuance
or private placement, net of the direct costs relating to such issuance or
private placement (including sales and underwriter's commissions and legal,
accounting and investment banking fees).
Note - see Section 3.1.
Other Taxes - see Section 7.6.
5
<PAGE> 11
Participant - see Section 14.8.2.
Percentage means as to any Bank the percentage which (a) the aggregate
amount of such Bank's Commitment is of (b) the aggregate amount of the
Commitments of all Banks. The initial Percentage for each Bank is set forth on
Schedule 2.1.
Person means any natural person, corporation, partnership, trust,
association, governmental authority or unit, or any other entity, whether
acting in an individual, fiduciary or other capacity.
Required Banks means Banks having an aggregate Percentage of more
than 50%.
S&P means Standard & Poor's Ratings Services, a division of the
McGraw-Hill Companies, Inc.
Subsidiary of a Person means any corporation, association,
partnership, limited liability company, joint venture or other business entity
of which more than 50% of the voting stock, membership interests or other
equity interests is owned or controlled directly or indirectly by such Person,
or one or more of the Subsidiaries of such Person, or a combination thereof.
Unless the context otherwise clearly requires, references herein to a
"Subsidiary" refer to a Subsidiary of the Company.
Termination Date means October 22, 1998 or such earlier date on which
the Commitments shall terminate pursuant to Section 6 or 12.
Type of Loan or Borrowing - see Section 2.2. The Types of Loans or
borrowings under this Agreement are as follows: Base Rate Loans or borrowings
and Eurodollar Loans or borrowings.
Unmatured Event of Default means any event which if it continues
uncured will, with lapse of time or notice or both, constitute an Event of
Default.
1.2 Other Interpretive Provisions. (a) The meanings of defined terms
are equally applicable to the singular and plural forms of such terms.
(b) The term "including" is not limiting and means "including without
limitation."
(c) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including"; the words
"to" and "until" each mean "to but excluding", and the word "through" means "to
and including."
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<PAGE> 12
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall
be deemed to include all subsequent amendments and other modifications thereto,
but only to the extent such amendments and other modifications are not
prohibited by the terms of any Loan Document, and (ii) references to any
statute or regulation are to be construed as including all statutory and
regulatory provisions consolidating, amending, replacing, supplementing or
interpreting such statute or regulation.
(e) Any reference to a Section, Schedule or Exhibit is, unless
otherwise specified, a reference to a Section hereof, a Schedule hereto or an
Exhibit hereto.
SECTION 2 COMMITMENTS OF THE BANKS; TYPES OF LOANS; BORROWING AND
CONVERSION PROCEDURES.
2.1 Commitments. On and subject to the terms and conditions of this
Agreement, each Bank, severally and for itself alone, agrees to make loans on a
revolving basis ("Loans") from time to time before the Termination Date in such
Bank's Percentage of such aggregate amounts as the Company may request from all
Banks hereunder; provided that (i) the aggregate principal amount of all Loans
which all Banks shall be committed to have outstanding at any one time shall
not exceed $200,000,000 (as such amount is reduced from time to time pursuant
to Section 6.1); and (ii) the aggregate principal amount of all Loans which any
Bank shall be committed to have outstanding hereunder shall not exceed the
amount of such Bank's Commitment as in effect from time to time.
2.2 Various Types of Loans. Each Loan shall be either a Base Rate
Loan or a Eurodollar Loan (each a "Type" of Loan), as the Company shall specify
in the related notice of borrowing or conversion or continuation pursuant to
Section 2.3 or 2.4. Eurodollar Loans having the same Interest Period are
sometimes called a "Group" or collectively "Groups". Base Rate Loans and
Eurodollar Loans may be outstanding at the same time, provided that (i) not
more than five different Groups of Loans shall be outstanding at any one time
and (ii) the aggregate principal amount of each Group of Eurodollar Loans shall
at all times be at least $10,000,000 and an integral multiple of $1,000,000.
All borrowings, conversions, continuations and repayments of Loans shall be
effected so that each Bank will have a pro rata share (according to its
Percentage) of all Types and Groups of Loans.
2.3 Borrowing Procedures. The Company shall deliver a notice in the
form of Exhibit A to the Agent of each proposed borrowing not later than (a) in
the case of a Base Rate borrowing, 10:00 A.M., Chicago time, on the proposed
date of such
7
<PAGE> 13
borrowing, and (b) in the case of a Eurodollar borrowing, 11:00 A.M., Chicago
time, at least three Business Days prior to the proposed date of such
borrowing. Each such notice shall be effective upon receipt by the Agent,
shall be irrevocable, and shall specify the date, amount and Type of borrowing
and, in the case of a Eurodollar borrowing, the initial Interest Period
therefor. Promptly upon receipt of such notice, the Agent shall advise each
Bank thereof. Not later than 1:00 p.m., Chicago time, on the date of a
proposed borrowing, each Bank shall provide the Agent at the principal office
of the Agent in Chicago with immediately available funds covering such Bank's
Percentage of such borrowing and, subject to the satisfaction of the conditions
precedent set forth in Section 11 with respect to such borrowing, the Agent
shall pay over the requested amount to the Company on the requested borrowing
date. Each borrowing shall be on a Business Day and shall be in an aggregate
amount of at least $10,000,000 and an integral multiple of $1,000,000. Unless
the Company shall otherwise direct in writing, the proceeds of all borrowings
shall be deposited to the Company's demand deposit account no. 78-17169
maintained with BofA.
2.4 Procedures for Continuation or Conversion of Loan.
(a) Subject to the provisions of Section 2.2, the Company may,
upon irrevocable written notice to the Agent in accordance with subsection (b)
below,
(i) elect, as of any Business Day, to convert any Loans
(or any part thereof in an aggregate amount of $10,000,000, in the
case of conversion into Eurodollar Loans, and $1,000,000, in the case
of conversion into Base Rate Loans, or in either case a higher
integral multiple of $1,000,000), into Loans of the other Type; or
(ii) elect, as of the last day of the applicable Interest
Period, to continue any Eurodollar Loans having Interest Periods
expiring on such day (or any part thereof in an amount not less than
$10,000,000 or a higher integral multiple of $1,000,000);
provided that if at any time the aggregate amount of any Group of Eurodollar
Loans is reduced, by payment, prepayment or conversion of part thereof, to be
less than $10,000,000, such Eurodollar Loans shall automatically convert into
Base Rate Loans.
(b) The Company shall deliver a notice in the form of Exhibit B to
the Agent of each proposed conversion or continuation not later than (i) 11:00
A.M., Chicago time, at least three Business Days in advance of the date of
conversion or continuation, if the Loans are to be converted into or continued
as Eurodollar Loans; and (ii) 10:00 A.M., Chicago time, on the
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date of conversion, if the Loans are to be converted into Base Rate Loans,
specifying:
(A) the proposed date of conversion or continuation
(which shall be a Business Day);
(B) the aggregate amount of Loans to be converted or
continued;
(C) the Type of Loans resulting from the proposed
conversion or continuation; and
(D) in the case of a continuation of, or conversion into,
Eurodollar Loans, the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to
Eurodollar Loans, the Company has failed to select timely a new Interest Period
to be applicable to such Eurodollar Loans, the Company shall be deemed to have
elected to convert such Eurodollar Loans into Base Rate Loans effective as of
the expiration date of such Interest Period.
(d) The Agent will promptly notify each Bank of its receipt of a
notice of conversion or continuation pursuant to this Section 2.4, or, if no
timely notice is provided by the Company, the Agent will promptly notify each
Bank of the details of any automatic conversion.
2.5 Warranty. Each notice of borrowing, continuation or conversion
pursuant to Section 2.3 or 2.4 shall automatically constitute a warranty by the
Company to the Agent and each Bank to the effect that on the date of such
requested borrowing, continuation or conversion, no Event of Default or
Unmatured Event of Default shall have then occurred and be continuing or will
result therefrom.
2.6 Conditions. Notwithstanding any other provision of this
Agreement, (a) no Bank shall be obligated to make any Loan and (b) no Bank
shall be obligated to convert into or permit the continuation at the end of the
applicable Interest Period of any Eurodollar Loan if, in any such case, an
Event of Default or Unmatured Event of Default exists or would result
therefrom.
2.7 Commitments Several. The failure of any Bank to make a requested
Loan on any date shall not relieve any other Bank of its obligation to make a
Loan on such date, but no Bank shall be responsible for the failure of any
other Bank to make any Loan to be made by such other Bank.
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SECTION 3 NOTES EVIDENCING LOANS.
3.1 Notes. The Loans of each Bank shall be evidenced by a
promissory note (individually each a "Note" and collectively for all Banks the
"Notes") substantially in the form of Exhibit C, with appropriate insertions,
dated the Effective Date (or such earlier date as shall be satisfactory to the
Agent), payable to the order of such Bank in an amount equal to such Bank's
Commitment (or, if less, in the aggregate unpaid principal amount of all of
such Bank's Loans) on the Termination Date.
3.2 Recordkeeping. Each Bank shall record in its records the date
and amount of each Loan made by such Bank, each repayment or conversion thereof
and, in the case of each Eurodollar Loan, the dates on which each Interest
Period for such Loan shall begin and end. The aggregate unpaid principal
amount so recorded shall be rebuttable presumptive evidence of the principal
amount owing and unpaid on such Bank's Note. The failure to so record any such
amount or any error in so recording any such amount shall not, however, limit
or otherwise affect the obligations of the Company hereunder or under any Note
to repay the principal amount of the Loans evidenced by such Note together with
all interest accruing thereon.
SECTION 4 INTEREST.
4.1 Interest Rates. The Company promises to pay interest on the
unpaid principal amount of each Loan for the period from the date of such Loan
to the date such Loan is paid in full, as follows:
(a) at all times while such Loan is a Base Rate Loan, at
a rate per annum equal to the Base Rate from time to time in effect;
and
(b) at all times while such Loan is a Eurodollar Loan, at
a rate per annum equal to the sum of the Eurodollar Rate (Reserve
Adjusted) applicable to each Interest Period for such Loan plus the
Margin from time to time in effect;
provided, however, that if any Loan is not paid when due (by acceleration or
otherwise), such Loan shall thereafter bear interest at a rate per annum equal
to the sum of 2% plus the greater of (i) the rate otherwise applicable to such
Loan pursuant to the terms hereof and (ii) the Base Rate from time to time in
effect.
4.2 Interest Payment Dates. Accrued interest on each Base Rate
Loan shall be payable on the last day of each calendar quarter and at maturity,
commencing with the first of such dates to occur after the date of such Loan.
Accrued interest on each
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Eurodollar Loan shall be payable on the last day of each Interest Period
relating to such Loan (and, in the case of each Eurodollar Loan with an
Interest Period in excess of three months, on each three-month anniversary of
such Loan) and at maturity. After maturity, accrued interest on all Loans
shall be payable on demand.
4.3 Setting and Notice of Eurodollar Rates. The applicable
Eurodollar Rate for each Interest Period shall be determined by the Agent, and
notice thereof shall be given by the Agent promptly to the Company and each
Bank. Each determination of the applicable Eurodollar Rate by the Agent shall
be conclusive and binding upon the parties hereto, in the absence of
demonstrable error. The Agent shall, upon written request of the Company or
any Bank, deliver to the Company or such Bank a statement showing the
computations used by the Agent in determining any applicable Eurodollar Rate
hereunder.
4.4 Computation of Interest. Interest on Loans bearing interest
based upon BofA's reference rate shall be computed for the actual number of
days elapsed on the basis of a year of 365 days. All other interest shall be
computed for the actual number of days elapsed on the basis of a year of 360
days.
SECTION 5 FEES.
5.1 Facility Fee. The Company agrees to pay to the Agent for the
account of each Bank a facility fee, for the period from the date this
Agreement is executed and delivered by the parties hereto to the Termination
Date (or such later date on which all Loans have been repaid) at a rate per
annum equal to the Facility Fee Rate from time to time in effect, on the daily
average of the amount of such Bank's Commitment (whether used or unused). Such
facility fee shall be payable in arrears on the last day of each calendar
quarter and on the Termination Date (and thereafter on demand), in each case
for the period then ending for which such facility fee shall not have been
theretofore paid. The facility fee shall be computed for the actual number of
days elapsed on the basis of a year of 360 days.
5.2 Commitment Fee. The Company agrees to pay to the Agent for
the account of each Bank a commitment fee equal to 0.05% of the amount of such
Bank's Commitment (or, if the Commitments have terminated and any Loans remain
outstanding, of the principal amount of such Bank's Loans) on July 15, 1998 (it
being understood that no commitment fee shall be payable if the Commitments
have terminated and all Loans have been paid in full on or before such date).
5.3 Arranger and Agent's Fees. The Company agrees to pay to the
Arranger and Agent such arrangement and agent's fees as
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are mutually agreed upon by the Company, the Arranger and the Agent.
SECTION 6 REDUCTION OR TERMINATION OF THE COMMITMENTS;
PREPAYMENTS.
6.1 Reduction on Termination of the Commitments.
6.1.1 Mandatory Reductions of the Commitments. On any date on which
the Company or any Subsidiary receives any Specified Proceeds (as defined
below), the amount of the Commitments shall be reduced by an amount equal to
the amount of such Specified Proceeds (rounded upward to an integral multiple
of $1,000,000). For purposes of the foregoing, "Specified Proceeds" means Net
Cash Proceeds in excess of $200,000,000 in the aggregate during the term of
this Agreement.
6.1.2 Voluntary Reduction or Termination of the Commitments. The
Company may from time to time on at least three Business Days' prior written
notice received by the Agent (which shall promptly advise each Bank thereof)
permanently reduce the amount of the Commitments to an amount not less than the
aggregate unpaid principal amount of the Loans. Any such reduction shall be in
an integral multiple of $25,000,000. The Company may at any time on like
notice terminate the Commitments upon payment in full of all Loans and all
other obligations of the Company hereunder.
6.1.3 Reductions Pro Rata. All reductions of the Commitments shall
be pro rata among the Banks according to their respective Percentages.
6.2 Prepayments.
6.2.1 Mandatory Prepayments. On any date on which the Commitments
are reduced pursuant to Section 6.1.1, the Company shall make a prepayment of
the Loans in an amount equal to the excess, if any, of the aggregate
outstanding principal amount of the Loans over the aggregate amount of the
Commitments (as so reduced).
6.2.2 Prepayments. The Company may from time to time prepay the
Loans in whole or in part, provided that the Company shall give the Agent
(which shall promptly advise each Bank) not less than one Business Day's prior
written notice thereof, specifying the Loans to be prepaid and the date and
amount of prepayment.
6.2.3 All Prepayments. Each partial prepayment of Loans shall be in
a principal amount of at least $10,000,000 and an integral multiple of
$1,000,000. Any prepayment of a Eurodollar
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Loan shall include accrued interest to the date of prepayment on the principal
amount being prepaid (and, if not made on the last day of an Interest Period
for such Eurodollar Loan, shall be subject to Section 8.4).
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.
7.1 Making of Payments. All payments of principal of or interest
on the Loans, and of all fees, shall be made by the Company to the Agent in
immediately available funds at its office in Chicago not later than noon,
Chicago time, on the date due; and funds received after that hour shall be
deemed to have been received by the Agent on the next following Business Day.
The Company hereby authorizes the Agent to charge the Company's demand deposit
account no. 78-17169 maintained with BofA for the amount of any such payment
on the due date therefor, but the Agent's failure to so charge such account
shall in no way affect the obligation of the Company to make any such payment.
The Agent shall promptly remit to each Bank its share of all such payments
received in collected funds by the Agent for the account of such Bank.
All payments under Sections 8.1 and 8.4 shall be made by the Company
directly to the Bank or Banks entitled thereto.
7.2 Application of Certain Payments. Each payment of principal
shall be applied to such Loans as the Company shall direct by notice to be
received by the Agent on or before the date of such payment or, in the absence
of such notice, as the Agent shall determine in its reasonable discretion.
Concurrently with each remittance to any Bank of its share of any such payment,
the Agent shall advise such Bank as to the application of such payment.
7.3 Due Date Extension. If any payment of principal or interest
with respect to any of the Loans, or of any fees, falls due on a day which is
not a Business Day, then such due date shall be extended to the next following
Business Day (unless, in the case of a Eurodollar Loan, such next following
Business Day is the first Business Day of a calendar month, in which case such
due date shall be the immediately preceding Business Day) and, in the case of
principal, additional interest shall accrue and be payable for the period of
any such extension.
7.4 Setoff. The Company agrees that the Agent and each Bank have
all rights of set-off and bankers' lien provided by applicable law, and in
addition thereto, the Company agrees that at any time any Event of Default
exists, the Agent and each Bank may apply to any obligations of the Company
hereunder, whether or not then due, any and all balances, credits, deposits,
accounts
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or moneys of the Company then or thereafter with the Agent or such Bank.
7.5 Proration of Payments. If any Bank shall obtain any payment
or other recovery (whether voluntary, involuntary, by application of offset or
otherwise) on account of principal of or interest on any Loan in excess of its
pro rata share of payments and other recoveries obtained by all Banks on
account of principal of and interest on Loans then held by them (other than in
respect of an Affected Loan or as a result of replacement of a Bank pursuant to
Section 8.7), such Bank shall purchase from the other Banks such participation
in the Loans held by them as shall be necessary to cause such purchasing Bank
to share the excess payment or other recovery ratably with each of them;
provided, however, that if all or any portion of the excess payment or other
recovery is thereafter recovered from such purchasing Bank, the purchase shall
be rescinded and the purchase price restored to the extent of such recovery.
7.6 Withholding Taxes. (a) The Company agrees that any and all
payments made by the Company 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 Agent and each Bank, (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 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 are called
"Indemnifiable Taxes"). If any withholding or deduction from any payment to be
made by the Company hereunder is required in respect of any Indemnifiable Taxes
pursuant to any applicable law, or governmental rule or regulation, then the
Company will (i) direct to the relevant taxing authority the full amount
required to be so withheld or deducted, (ii) forward to the Agent for delivery
to the applicable Bank an official receipt or other documentation satisfactory
to the Agent and the applicable Bank evidencing such payment to such taxing
authority, and (iii) direct to the Agent for the account of the applicable Bank
such additional amount as is necessary to ensure that the net amount actually
received by such 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 Agent or any Bank with respect to any payment
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received by the Agent or such Bank by reason of the Company's failure to
properly deduct and withhold such Indemnifiable Taxes from such payment, the
Agent or such Bank may pay such Indemnifiable Taxes and the Company will
promptly pay all such additional amounts (including any penalties, interest or
reasonable expenses) as are 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 no such Indemnifiable Taxes been asserted. Any
such payment shall be made promptly after the receipt by the Company from the
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 Company 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 Company hereby indemnifies and holds harmless the
Agent and each Bank for the full amount of Indemnifiable Taxes or Other Taxes
(including any Indemnifiable Taxes or Other Taxes imposed on amounts payable
under this Section 7.6) paid by the Agent 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 Company's failure to
properly deduct and withhold Indemnifiable Taxes pursuant to subsection (a)
above or to properly pay Other Taxes pursuant to subsection (b) above. Any
indemnification payment from the Company under the preceding sentence shall be
made promptly after receipt by the Company from the Agent or the applicable
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 Company pays any amount under this Section 7.6
to the Agent or any Bank and such payee knowingly receives a refund of any
taxes with respect to which such amount was paid, the Agent or such Bank, as
the case may be, shall pay to the Company the amount of such refund promptly
following the receipt thereof by such payee.
(e) If any taxing authority notifies the Company, the
Agent or any Bank that any of them has improperly failed to deduct or withhold
any taxes (other than Indemnifiable Taxes) from a payment made hereunder to the
Agent or any Bank, the Company shall timely and fully pay such taxes to such
taxing authority.
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(f) The Agent and the Banks shall, upon the request of
the Company, 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 the applicable Person in its
sole judgment suffering any legal, regulatory or economic disadvantage.
(g) The agreements and obligations of the Company
contained in this Section 7.6 shall survive repayment of the Loans,
cancellation of the Notes and the termination of this Agreement.
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR
EURODOLLAR LOANS.
8.1 Increased Costs. (a) If, after the date hereof, the adoption
of, or any change in, any applicable 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 compliance by any Bank (or any Eurodollar Office of
such Bank) with any request or directive (whether or not having the force of
law) of any such authority, central bank or comparable agency
(A) shall subject any Bank (or any Eurodollar Office of
such Bank) to any tax, duty or other charge with respect to its
Eurodollar Loans, its Note or its obligation to make Eurodollar Loans,
or shall change the basis of taxation of payments to any Bank of the
principal of or interest on its Eurodollar Loans or any other amounts
due under this Agreement in respect of its Eurodollar Loans or its
obligation to make Eurodollar Loans (except for changes in the rate of
tax on the overall net income of such Bank or its Eurodollar Office
imposed by the jurisdiction in which such Bank's principal executive
office or Eurodollar Office is located); or
(B) shall impose, modify or deem applicable any reserve
(including any reserve imposed by the Board of Governors of the
Federal Reserve System, but excluding any reserve included in the
determination of interest rates pursuant to Section 4), special
deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by any Bank (or any Eurodollar
Office of such Bank); or
(C) shall impose on any Bank (or its Eurodollar Office)
any other condition affecting its Eurodollar Loans, its Note or its
obligation to make Eurodollar Loans;
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and the result of any of the foregoing is to increase the cost to (or in the
case of Regulation D of the Board of Governors of the Federal Reserve System,
to impose a cost on) such Bank (or any Eurodollar Office of such Bank) of
making or maintaining any Eurodollar Loan, or to reduce the amount of any sum
received or receivable by such Bank (or its Eurodollar Office) under this
Agreement or under its Note with respect thereto, then within 10 days after
demand by such Bank (which demand shall be accompanied by a statement setting
forth in reasonable detail the basis for and a calculation of the amount of
such demand, a copy of which shall be furnished to the Agent), the Company
shall pay directly to such Bank such reasonable additional amount or amounts as
will compensate such Bank for such increased cost or such reduction.
(b) If any Bank shall reasonably determine that, after the date of
this Agreement, the adoption or phase-in of, or any change in, any applicable
law, rule or regulation regarding capital adequacy, 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 compliance by any Bank (or its Eurodollar Office) or any Person
controlling such Bank with 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 such Bank's or such controlling Person's capital as a consequence of such
Bank's obligations hereunder to a level below that which such Bank or such
controlling Person could have achieved but for such adoption, change or
compliance (taking into consideration such Bank's or such controlling Person's
policies with respect to capital adequacy) by an amount deemed by such Bank or
such controlling Person to be material, then from time to time, within 10 days
after demand by such Bank (which demand shall be accompanied by a statement
setting forth in reasonable detail the basis for and a calculation of the
amount of such demand, a copy of which shall be furnished to the Agent), the
Company shall pay to such Bank such reasonable additional amount or amounts as
will fairly compensate such Bank or such controlling Person for such reduction.
8.2 Basis for Determining Interest Rate Inadequate or Unfair. If
with respect to any Interest Period:
(a) deposits in Dollars (in the applicable amounts) are
not being offered to the Agent in the interbank eurodollar market for
such Interest Period, or the Agent otherwise reasonably determines
(which determination shall, absent demonstrable error, be binding and
conclusive on the Company) that by reason of circumstances affecting
the interbank eurodollar market adequate and reasonable means do not
exist for ascertaining the applicable Eurodollar Rate;
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(b) Banks having an aggregate Percentage of 30% or more
advise the Agent that the Eurodollar Rate (Reserve Adjusted) as
determined by the Agent will not adequately and fairly reflect the
cost to such Banks of maintaining or funding such Loans for such
Interest Period (taking into account any amount to which such Banks
may be entitled under Section 8.1), or that the making or funding of
Eurodollar Loans has become impracticable as a result of an event
occurring after the date of this Agreement which in the opinion of
such Banks materially affects such Loans,
then the Agent shall promptly notify the other parties thereof and, so long as
such circumstances shall continue, (i) no Bank shall be under any obligation to
make or convert into Eurodollar Loans and (ii) on the last day of the current
Interest Period for each Eurodollar Loan, such Loan shall, unless then repaid
in full, automatically convert to a Base Rate Loan.
8.3 Changes in Law Rendering Eurodollar Loans Unlawful. If any
change in (including the adoption of any new) applicable laws or regulations,
or any change in the interpretation of applicable laws or regulations by any
governmental or other regulatory body charged with the administration thereof,
should make it (or in the good faith judgment of any Bank cause a substantial
question as to whether it is) unlawful for any Bank to make, maintain or fund
Eurodollar Loans, then such Bank shall promptly notify each of the other
parties hereto and, so long as such circumstances shall continue, (a) such Bank
shall have no obligation to make or convert into Eurodollar Loans (but shall
make Base Rate Loans concurrently with the making of or conversion into
Eurodollar Loans by the Banks which are not so affected, in each case in an
amount equal to such Bank's Percentage of all Eurodollar Loans which would be
made or converted into at such time in the absence of such circumstances) and
(b) on the last day of the current Interest Period for each Eurodollar Loan of
such Bank (or, in any event, on such earlier date as may be required by the
relevant law, regulation or interpretation), such Eurodollar Loan shall, unless
then repaid in full, automatically convert to a Base Rate Loan. Each Base Rate
Loan made by a Bank which, but for the circumstances described in the foregoing
sentence, would be a Eurodollar Loan (an "Affected Loan") shall remain
outstanding for the same period as the Group of Eurodollar Loans of which such
Affected Loan would be a part absent such circumstances.
8.4 Funding Losses. The Company hereby agrees that upon demand by
any Bank (which demand shall be accompanied by a statement setting forth the
basis for the calculations of the amount being claimed, a copy of which shall
be furnished to the Agent) the Company will indemnify such Bank against any net
loss or expense which such Bank may sustain or incur (including any net loss or
expense incurred by reason of the liquidation or
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reemployment of deposits or other funds acquired by such Bank to fund or
maintain any Eurodollar Loan), as reasonably determined by such Bank, as a
result of (a) any payment, prepayment or conversion of any Eurodollar Loan of
such Bank on a date other than the last day of an Interest Period for such Loan
(including any conversion pursuant to Section 8.3) or (b) any failure of the
Company to borrow, prepay, continue or convert any Loan on a date specified
therefor in a notice of borrowing, prepayment, continuation or conversion
pursuant to this Agreement. For this purpose, all notices to the Agent
pursuant to this Agreement shall be deemed to be irrevocable.
8.5 Right of Banks to Fund through Other Offices. Each Bank may,
if it so elects, fulfill its commitment as to any Eurodollar Loan by causing a
foreign branch or affiliate of such Bank to make such Loan, provided that in
such event for the purposes of this Agreement such Loan shall be deemed to have
been made by such Bank and the obligation of the Company to repay such Loan
shall nevertheless be to such Bank and shall be deemed held by it, to the
extent of such Loan, for the account of such branch or affiliate.
8.6 Discretion of Banks as to Manner of Funding. Notwithstanding
any provision of this Agreement to the contrary, each Bank shall be entitled to
fund and maintain its funding of all or any part of its Loans in any manner it
sees fit, it being understood, however, that for the purposes of this Agreement
all determinations hereunder shall be made as if such Bank had actually funded
and maintained each Eurodollar Loan during each Interest Period for such Loan
through the purchase of deposits having a maturity corresponding to such
Interest Period and bearing an interest rate equal to the Eurodollar Rate for
such Interest Period.
8.7 Mitigation of Circumstances; Replacement of Affected Bank.
(a) Each Bank shall promptly notify the Company and the Agent of any event of
which it has knowledge which will result in, and will use reasonable commercial
efforts available to it (and not, in such Bank's good faith judgment, otherwise
disadvantageous to such Bank) to mitigate or avoid, (i) any obligation by the
Company to pay any amount pursuant to Section 8.1 or (ii) the occurrence of any
circumstances of the nature described in Section 8.2 or 8.3 (and, if any Bank
has given notice of any such event described in clause (i) or (ii) above and
thereafter such event ceases to exist, such Bank shall promptly so notify the
Company and the Agent). Without limiting the foregoing, each Bank will
designate a different funding office if such designation will avoid (or reduce
the cost to the Company of) any event described in clause (i) or (ii) of the
preceding sentence and such designation will not, in such Bank's sole judgment,
be otherwise disadvantageous to such Bank.
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(b) At any time any Bank is an Affected Bank, the Company may
replace such Affected Bank as a party to this Agreement with one or more other
bank(s) or financial institution(s) reasonably satisfactory to the Agent, such
bank(s) or financial institution(s) to have Commitments in such amounts as
shall be reasonably satisfactory to the Agent (and upon notice from the Company
such Affected Bank shall assign pursuant to an Assignment Agreement, and
without recourse or warranty, its Commitment, its Loans, its Note and all of
its other rights and obligations hereunder to such replacement bank(s) or other
financial institution(s) for a purchase price equal to the sum of the principal
amount of the Loans so assigned, all accrued and unpaid interest thereon, its
ratable share of all accrued and unpaid non-use fees, any amounts payable under
Section 8.4 as a result of such Bank receiving payment of any Eurodollar Loan
prior to the end of an Interest Period therefor and all other obligations owed
to such Affected Bank hereunder).
8.8 Conclusiveness of Statements; Survival of Provisions.
Determinations and statements of any Bank pursuant to Section 8.1, 8.2, 8.3 or
8.4 shall be conclusive absent demonstrable error. Banks may use reasonable
and equitable averaging and attribution methods in determining compensation
under Sections 8.1 and 8.4, and the provisions of such Sections shall survive
repayment of the Loans, cancellation of the Notes and any termination of this
Agreement.
SECTION 9 WARRANTIES.
To induce the Agent and the Banks to enter into this Agreement and to
induce the Banks to make Loans hereunder, the Company warrants to the Agent and
the Banks that:
9.1 Organization, etc. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware; each Subsidiary is duly organized, validly existing and in good
standing under the state of its organization; the Company and each Subsidiary
is duly qualified to do business in each jurisdiction where the nature of its
business makes such qualification necessary, except where the failure to be so
qualified would not have a Material Adverse Effect; and the Company and each
Subsidiary has full power and authority to own its property and conduct its
business as presently conducted by it.
9.2 Authorization; No Conflict. The execution and delivery by the
Company of this Agreement and each other Loan Document to which it is a party,
the borrowings hereunder, the execution and delivery by each Guarantor of the
Guaranty and the performance by each of the Company and each Guarantor of its
obligations under each Loan Document to which it is a party are within the
powers
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of the Company and each Guarantor, have been duly authorized by all necessary
action on the part of the Company and each Guarantor (including any necessary
shareholder action), have received all necessary governmental approval (if any
shall be required), and do not and will not (a) violate any provision of law
applicable to the Company or any Subsidiary or any order, decree or judgment of
any court or other government agency which is binding on the Company or any
Guarantor, (b) contravene or conflict with, or result in a breach of, any
provision of the Certificate of Incorporation, By-Laws, or other organizational
documents of the Company or any Guarantor or of any agreement, indenture,
instrument or other document, or any judgment, order or decree, which is
binding on the Company, any Guarantor or any other Subsidiary or (c) result in,
or require, the creation or imposition of any lien, security interest or other
encumbrance on any property of the Company, any Guarantor or any other
Restricted Subsidiary.
9.3 Validity and Binding Nature. This Agreement is, and upon the
execution and delivery thereof each other Loan Document to which the Company is
a party will be, the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except that
enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance,
fraudulent transfer, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in equity or
at law); and the Guaranty will be, upon the execution and delivery thereof by
each Guarantor, the legal, valid and binding obligation of such Guarantor,
enforceable against such Guarantor in accordance with its terms, except that
enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance,
fraudulent transfer, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in equity or
at law).
9.4 Financial Information. The unaudited consolidated combined
financial statements of the Company and its Subsidiaries at September 30, 1997,
copies of which have been delivered to each Bank, have been prepared in
accordance with generally accepted accounting principles (subject to the
absence of footnotes and normal audit adjustments) and present fairly the
consolidated financial condition of the Company and its Subsidiaries as at such
date and the results of their operations for the period then ended.
9.5 No Material Adverse Change. Since the date of the financial
statements described in Section 9.4, no event or events
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have occurred which, individually or in the aggregate, has had or is reasonably
likely to have a Material Adverse Effect.
9.6 Litigation. No litigation (including derivative actions),
arbitration proceeding or governmental proceeding is pending or, to the
Company's knowledge, threatened against the Company or any Subsidiary which is
reasonably likely to have a Material Adverse Effect except as set forth in
Schedule 9.6.
9.7 Solvency, etc. On the Effective Date, and immediately prior to
and after giving effect to each borrowing hereunder and the use of the proceeds
thereof, (a) each of the Company's and each Guarantor's assets will exceed its
liabilities and (b) each of the Company and each Guarantor will be solvent,
will be able to pay its debts as they mature, will own property with fair
saleable value greater than the amount required to pay its debts and will have
capital sufficient to carry on its business as then constituted.
9.8 Information. All written information heretofore or
contemporaneously herewith furnished by the Company or any Subsidiary to the
Agent or any Bank for purposes of or in connection with this Agreement and the
transactions contemplated hereby is, and all written information hereafter
furnished by or on behalf of the Company or any Subsidiary to the Agent or any
Bank pursuant hereto or in connection herewith will be, true and accurate in
every material respect on the date as of which such information is dated or
certified, and none of such information is or will be incomplete by omitting to
state any material fact necessary to make such information not misleading.
9.9 Existing Credit Facility Warranties. As of the Effective Date
and as of the date of each borrowing hereunder, each of the representations and
warranties set forth in Sections 6.6 through 6.15 and in Section 6.18 of the
Existing Credit Facility will be true and correct.
SECTION 10 COVENANTS.
Until the expiration or termination of the Commitments and thereafter
until all obligations of the Company hereunder and under the other Loan
Documents are paid in full, the Company agrees that, unless at any time the
Required Banks shall otherwise expressly consent in writing, it will:
10.1 Certain Information. Furnish to the Agent and each Bank:
10.1.1 Notice of Default. Promptly (and in any event within one
Business Day) after any officer of the Company learns of the occurrence of an
Event of Default or an Unmatured Event of
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Default, written notice describing the same and the steps being taken by the
Company or the Subsidiary affected thereby with respect thereto.
10.1.2 Change in Credit Rating. Promptly upon the occurrence
thereof, the details of any change in the Company's Credit Rating by Moody's or
S&P.
10.1.3 Other Information. Promptly from time to time, such other
information concerning the Company and its Subsidiaries as any Bank or the
Agent may reasonably request.
10.2 Use of Proceeds. Not, and not permit any Subsidiary to, use any
proceeds of any Loan for the purpose, whether immediate, incidental or
ultimate, of "purchasing or carrying" any Margin Stock.
10.3 Existing Credit Facility Covenants. Observe and perform, and
cause each applicable Subsidiary to observe and perform, each covenant set
forth in Sections 7.2 through 7.15, 7.17, 8.1 through 8.6, 9.1 and 9.2 of the
Existing Credit Facility as if such covenants and all related definitions,
mutatis mutandis, were set forth in full herein (it being understood that each
reference to the "Borrower," a "Bank," the "Banks" or the "Administrative
Agent" shall be references to the Company, a Bank, the Banks and the Agent,
respectively).
SECTION 11 CONDITIONS OF LENDING.
The obligation of each Bank to make any Loan is subject to the
following conditions precedent:
11.1 Initial Loan. The obligation of each Bank to make its initial
Loan is, in addition to the conditions precedent specified in Section 11.2,
subject to the conditions precedent (and the date on which all such conditions
precedent have been satisfied or waived in writing by the Banks is called the
"Effective Date") that the Agent shall have received, on or prior to January
31, 1998, all of the following, each duly executed and dated the Effective Date
(or such earlier date as shall be satisfactory to the Agent), in form and
substance satisfactory to the Agent and the Banks, and each (except for the
Notes, of which only the originals shall be signed) in sufficient number of
signed counterparts to provide one for the Agent and each Bank:
11.1.1 Notes. The Notes.
11.1.2 Resolutions. Certified copies of resolutions of the Board of
Directors of the Company authorizing or ratifying the execution, delivery and
performance by the Company of this Agreement and the other Loan Documents to
which the Company is a
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party; and certified copies of resolutions of the Board of Directors of each
Guarantor authorizing or ratifying the execution, delivery and performance by
such Guarantor of the Guaranty.
11.1.3 Consents, etc. Certified copies of all documents evidencing
any necessary corporate action, consents and governmental approvals (if any)
required for the execution, delivery and performance of the Loan Documents by
the Company and each Guarantor.
11.1.4 Incumbency and Signature Certificates. A certificate of the
Secretary or an Assistant Secretary of the Company and each Guarantor
certifying the names of the officer or officers of such entity authorized to
sign the Loan Documents to which such entity is a party, together with a sample
of the true signature of each such officer (it being understood that the Agent
and each Bank may conclusively rely on each such certificate until formally
advised by a like certificate of any changes therein).
11.1.5 Guaranty. A guaranty, substantially in the form of Exhibit D,
executed by each Guarantor (the "Guaranty").
11.1.6 Opinion of Counsel for the Company and the Guarantors. The
opinion of Snell & Smith, substantially in the form of Exhibit E.
11.1.7 Other. Such other documents as the Agent or any Bank may
reasonably request.
11.2 All Loans. The obligation of each Bank to make each Loan is
subject to the following further conditions precedent that:
11.2.1 No Default, etc. (a) No Event of Default or Unmatured Event
of Default has occurred and is continuing or will result from the making of
such Loan and (b) the warranties of the Company contained in Section 9 are true
and correct as of the date of such requested Loan with the same effect as
though made on such date (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 have not
had, and could not reasonably expected to have, a Material Adverse Effect and
to the extent that such representations and warranties relate expressly and
solely to an earlier date).
11.2.2 Confirmatory Certificate. If requested by the Agent or any
Bank, the Agent shall have received (in sufficient counterparts to provide one
to each Bank) a certificate dated the
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date of such requested Loan and signed by a duly authorized representative of
the Company as to the matters set out in Section 11.2.1 (it being understood
that each request by the Company for the making of a Loan shall be deemed to
constitute a warranty by the Company that the conditions precedent set forth in
Section 11.2.1 will be satisfied at the time of the making of such Loan),
together with such other documents as the Agent or any Bank may reasonably
request in support thereof.
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT.
12.1 Events of Default. Each of the following shall constitute an
Event of Default under this Agreement:
12.1.1 Non-Payment of the Loans, etc. Default in the payment when
due of the principal of any Loan; or default, and continuance thereof for five
days, in the payment when due of any interest, fee or other amount payable by
the Company hereunder or under any other Loan Document.
12.1.2 Non-Compliance with Provisions of This Agreement. Failure by
the Company to comply with or to perform any covenant set forth in Section 10
(including any covenant from the Existing Credit Facility incorporated herein
by reference); or failure by the Company to comply with or to perform any other
provision of this Agreement (and not constituting an Event of Default under any
of the other provisions of this Section 12) and continuance of such failure for
30 days after written notice thereof to the Company from the Agent or any Bank.
12.1.3 Warranties. Any warranty made by the Company herein is
breached or is false or misleading in any material respect, or any schedule,
certificate, financial statement, report, notice or other writing furnished by
the Company to the Agent or any Bank is false or misleading in any material
respect on the date as of which the facts therein set forth are stated or
certified.
12.1.4 Invalidity of Guaranty, etc. The Guaranty shall cease to be
in full force and effect with respect to either Guarantor, either Guarantor
shall fail (subject to any applicable grace period) to comply with or to
perform any applicable provision of the Guaranty, or either Guarantor (or any
Person by, through or on behalf of such Guarantor) shall contest in any manner
the validity, binding nature or enforceability of the Guaranty with respect to
such Guarantor.
12.1.5 Existing Credit Facility Default. Any event which would
constitute an "Event of Default" under (and as defined in) the Existing Credit
Facility shall occur and be continuing (without regard to any waiver thereof).
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12.2 Effect of Event of Default. If any Event of Default under
Section 12.1.5 hereof relating to an "Event of Default" described in Section
12.1(g) or (h) of the Existing Credit Facility shall occur, the Commitments (if
they have not theretofore terminated) shall immediately terminate and the Notes
and all other obligations hereunder shall become immediately due and payable,
all without presentment, demand, protest or notice of any kind; and, in the
case of any other Event of Default, the Agent may (and upon written request of
the Required Banks shall) declare the Commitments (if they have not theretofore
terminated) to be terminated and/or declare all Notes and all other obligations
hereunder to be due and payable, whereupon the Commitments (if they have not
theretofore terminated) shall immediately terminate and/or all Notes and all
other obligations hereunder shall become immediately due and payable, all
without presentment, demand, protest or notice of any kind. The Agent shall
promptly advise the Company of any such declaration, but failure to do so shall
not impair the effect of such declaration. Notwithstanding the foregoing, the
effect as an Event of Default of any event described in Section 12.1.1 or
12.1.4 or in Section 12.1(g) or (h) of the Existing Credit Agreement may be
waived by the written concurrence of all of the Banks, and the effect as an
Event of Default of any other event described in this Section 12 may be waived
by the written concurrence of the Required Banks.
SECTION 13 THE AGENT.
13.1 Appointment and Authorization; "Agent". Each Bank hereby
irrevocably (subject to Section 13.9) appoints, designates and authorizes the
Agent to take such action on its behalf under the provisions of this Agreement
and each other Loan Document and to exercise such powers and perform such
duties as are expressly delegated to it by the terms of this Agreement or any
other Loan Document, together with such powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary contained elsewhere in
this Agreement or any other Loan Document, the Agent shall not have any duties
or responsibilities, except those expressly set forth herein, nor shall the
Agent have or be deemed to have any fiduciary relationship with any Bank, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agent. Without limiting the generality of the
foregoing sentence, the use of the term "agent" in this Agreement with
reference to the Agent is not intended to connote any fiduciary or other
implied (or express) obligation arising under agency doctrine of any applicable
law. Instead, such term is used merely as a matter of market custom, and is
intended to create or reflect only an administrative relationship between
independent contracting parties.
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13.2 Delegation of Duties. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
13.3 Liability of Agent. None of the Agent-Related Persons shall (i)
be liable for any action taken or omitted to be taken by any of them under or
in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or
willful misconduct), or (ii) be responsible in any manner to any of the Banks
for any recital, statement, representation or warranty made by the Company or
any Subsidiary or Affiliate of the Company, or any officer thereof, contained
in this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Agent under or in connection with, this Agreement or any other Loan Document,
or the validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Loan Document, or for any failure of the Company or
any other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Bank
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Company or any
of the Company's Subsidiaries or Affiliates.
13.4 Reliance by Agent. (a) The Agent shall be entitled to rely,
and shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or
telephone message, statement or other document or conversation believed in good
faith by it 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
(including counsel to the Company), independent accountants and other experts
selected by the Agent. The Agent shall be fully justified in failing or
refusing to take any action under this Agreement or any other Loan Document
unless it shall first receive such advice or concurrence of the Required Banks
as it deems appropriate and, if it so requests, it shall first be indemnified
to its satisfaction by the Banks (unless otherwise agreed, in accordance with
their Percentages) 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
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the Required
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Banks and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the
conditions specified in Section 11.1, each Bank that has executed this
Agreement shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter either sent by the Agent to such
Bank for consent, approval, acceptance or satisfaction, or required thereunder
to be consented to or approved by or acceptable or satisfactory to such Bank.
13.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Event of Default or Unmatured
Event of Default, except with respect to defaults in the payment of principal,
interest and fees required to be paid to the Agent for the account of the
Banks, unless the Agent shall have received written notice from a Bank or the
Company referring to this Agreement, describing such Event of Default or
Unmatured Event of Default and stating that such notice is a "notice of
default". The Agent will promptly notify the Banks of its receipt of any such
notice. The Agent shall take such action with respect to such Event of Default
or Unmatured Event of Default as may be requested by the Required Banks;
provided, however, that unless and until the Agent has received any such
request, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Event of Default or
Unmatured Event of Default as it shall deem advisable or in the best interest
of the Banks.
13.6 Credit Decision. Each Bank acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that
no act by the Agent hereinafter taken, including any review of the affairs of
the Company, shall be deemed to constitute any representation or warranty by
any Agent-Related Person to any Bank. Each Bank represents to the Agent that
it has, independently and without reliance upon any Agent-Related Person and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Company and
its Subsidiaries, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to the Company hereunder. Each Bank also
represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement
and the other Loan Documents, and to make such investigations as
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it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of the Company and
its Subsidiaries. Except for notices, reports and other documents expressly
herein required to be furnished to the Banks by the Agent, the Agent shall not
have any duty or responsibility to provide any Bank with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of the Company which may come into the
possession of any of the Agent-Related Persons.
13.7 Indemnification of Agent. Whether or not the transactions
contemplated hereby are consummated, the Banks shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Company and without limiting the obligation of the Company to do so), pro rata,
from and against any and all Indemnified Liabilities; provided, however, that
no Bank shall be liable for the payment to any Agent-Related Person of any
portion of the Indemnified Liabilities resulting from such Person's gross
negligence or willful misconduct. Without limitation of the foregoing, each
Bank shall reimburse the Agent upon demand for its ratable share of any costs
or out-of-pocket expenses (including Attorney Costs) incurred by the Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any
document contemplated by or referred to herein, to the extent that the Agent is
not reimbursed for such expenses by or on behalf of the Company. The
undertaking in this Section shall survive repayment of the Loans, cancellation
of the Notes, the termination of this Agreement and the resignation or
replacement of the Agent.
13.8 Agent in Individual Capacity. BofA and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Company and its
Subsidiaries and Affiliates as though BofA were not the Agent hereunder and
without notice to or consent of the Banks. The Banks acknowledge that,
pursuant to such activities, BofA or its Affiliates may receive information
regarding the Company or its Affiliates (including information that may be
subject to confidentiality obligations in favor of the Company or such
Subsidiary) and acknowledge that the Agent shall be under no obligation to
provide such information to them. With respect to its Loans, BofA and any
Affiliate thereof shall have the same rights and powers under this Agreement as
any other Bank and may exercise the same as though BofA were not the Agent.
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13.9 Successor Agent. The Agent may, and at the request of the
Required Banks shall, resign as Agent upon 30 days' written notice to the
Company and the Banks. If the Agent resigns under this Agreement, the Required
Banks shall appoint from among the Banks a successor agent for the Banks. If
no successor agent is appointed prior to the effective date of the resignation
of the Agent, the Agent may appoint, after consulting with the Banks and the
Company, a successor agent from among the Banks. Upon the acceptance of its
appointment as successor agent hereunder, such successor agent shall succeed to
all the rights, powers and duties of the retiring Agent and the term "Agent"
shall mean such successor agent and the retiring Agent's appointment, powers
and duties as Agent shall be terminated. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Section 13 and Sections 14.6 and
14.12 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Agent under this Agreement. If no successor agent has
accepted appointment as Agent by the date which is 30 days following a retiring
Agent's notice of resignation, the retiring Agent's resignation shall
nevertheless thereupon become effective and the Banks shall perform all of the
duties of the Agent hereunder until such time, if any, as the Required Banks
appoint a successor agent as provided for above.
13.10 Withholding Tax. (a) If any Bank is a "foreign corporation,
partnership or trust" within the meaning of the Code and such Bank claims
exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or
1442 of the Code, such Bank agrees, with and in favor of the Agent, to deliver
to the Company and the Agent:
(i) if such Bank claims an exemption from, or a
reduction of, withholding tax under a United States tax treaty,
properly completed IRS Forms 1001 and W-8 before the payment of any
interest in the first calendar year and before the payment of any
interest in each third succeeding calendar year during which interest
may be paid under this Agreement;
(ii) if such Bank claims that interest paid under
this Agreement is exempt from United States withholding tax because it
is effectively connected with a United States trade or business of
such Bank, two properly completed and executed copies of IRS Form 4224
before the payment of any interest is due in the first taxable year of
such Bank and in each succeeding taxable year of such Bank during
which interest may be paid under this Agreement; and
(iii) such other form or forms as may be required
under the Code or other laws of the United States as a
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condition to exemption from, or reduction of, United States
withholding tax.
Each such Bank agrees to promptly notify the Company and the Agent of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Bank claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001 and
such Bank sells, assigns, grants a participation in, or otherwise transfers all
or part of the obligations of the Company to such Bank hereunder, such Bank
agrees to notify the Agent of the percentage amount in which it is no longer
the beneficial owner of such obligations. To the extent of such percentage
amount, the Agent will treat such Bank's IRS Form 1001 as no longer valid.
(c) If any Bank claiming exemption from United States
withholding tax by filing IRS Form 4224 with the Agent grants a participation
in all or part of the obligations of the Company to such Bank hereunder, such
Bank agrees to undertake sole responsibility for complying with the withholding
tax requirements imposed by Sections 1441 and 1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Bank
an amount equivalent to the applicable withholding tax after taking into
account such reduction. If the forms or other documentation required by
subsection (a) of this Section are not delivered to the Agent, then the Agent
may withhold from any interest payment to such Bank not providing such forms or
other documentation an amount equivalent to the applicable withholding tax.
(e) If the Internal Revenue Service or any other
governmental authority of the United States asserts a claim that the Agent did
not properly withhold tax from amounts paid to or for the account of any Bank
(because such Bank failed to notify the Agent of a change in circumstances
which rendered the exemption from, or reduction of, withholding tax
ineffective), such Bank shall indemnify the Agent fully for all amounts paid,
directly or indirectly, by the Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the
amounts payable to the Agent under this Section, together with all costs and
expenses (including Attorney Costs). The obligations of the Banks under this
subsection shall survive repayment of the Loans, cancellation of the Notes, the
termination of this Agreement and the resignation or replacement of the Agent.
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SECTION 14 GENERAL.
14.1 Waiver; Amendments. No delay on the part of the Agent or any
Bank in the exercise of any right, power or remedy shall operate as a waiver
thereof, nor shall any single or partial exercise by any of them of any right,
power or remedy preclude other or further exercise thereof, or the exercise of
any other right, power or remedy. No amendment, modification or waiver of, or
consent with respect to, any provision of this Agreement or the Notes shall in
any event be effective unless the same shall be in writing and signed and
delivered by Banks having an aggregate Percentage of not less than the
aggregate Percentage expressly designated herein with respect thereto or, in
the absence of such designation as to any provision of this Agreement or the
Notes, by the Required Banks, and then any such amendment, modification, waiver
or consent shall be effective only in the specific instance and for the
specific purpose for which given. No amendment, modification, waiver or
consent shall (i) extend or increase the amount of the Commitments, (ii) extend
the date for payment of any principal of or interest on the Loans or any fees
payable hereunder, (iii) reduce the principal amount of any Loan, the rate of
interest thereon or any fees payable hereunder, (iv) release any Person from
its obligations under the Guaranty or (v) change the aggregate Percentage
required to effect an amendment, modification, waiver or consent without, in
each case, the consent of all Banks. No provisions of Section 13 shall be
amended, modified or waived without the consent of the Agent.
14.2 Confirmations. The Company and each holder of a Note agree from
time to time, upon written request received by it from the other, to confirm to
the other in writing (with a copy of each such confirmation to the Agent) the
aggregate unpaid principal amount of the Loans then outstanding under such
Note.
14.3 Notices. All notices hereunder shall be in writing (including
facsimile transmission) and shall be sent to the applicable party at its
address shown on Schedule 14.3 or at such other address as such party may, by
written notice received by the other parties hereto, have designated as its
address for such purpose. Notices sent by facsimile transmission shall be
deemed to have been given when sent; notices sent by mail shall be deemed to
have been given three Business Days after the date when sent by registered or
certified mail, postage prepaid; and notices sent by hand delivery shall be
deemed to have been given when received.
14.4 Confidentiality. The Agent and the Banks shall hold all
non-public information obtained pursuant to the requirements of this Agreement
which has been identified as such by the Company in accordance with their
customary procedures for handling confidential information of this nature and
in
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accordance with safe and sound banking practices and, in any event, may make
disclosure on the same confidential basis as provided for herein that is
reasonably required by any actual or bona fide potential transferee or
participant in connection with the contemplated transfer of any Note or any
participation therein or as required or requested by any governmental agency or
representative thereof or pursuant to legal process; provided that, unless
specifically prohibited by applicable law or court order, each of the Agent and
each Bank shall promptly notify the Company of any request by any governmental
agency or representative thereof (other than any such request in connection
with an examination of the financial condition of the Agent or such Bank by
such governmental agency) for disclosure of any such non-public information
prior to disclosure of such information.
14.5 Regulation U. Each Bank represents that it in good faith is not
relying, either directly or indirectly, upon any Margin Stock as collateral
security for the extension or maintenance by it of any credit provided for in
this Agreement.
14.6 Costs, Expenses and Taxes. The Company agrees to pay on demand
(a) all reasonable out-of-pocket costs and expenses (including Attorney Costs)
of the Agent and the Arranger in connection with the preparation, execution,
delivery, syndication and administration of this Agreement, the other Loan
Documents and all other documents provided for herein or delivered or to be
delivered hereunder or in connection herewith (including any amendment,
supplement or waiver to any Loan Document), and (b) all reasonable
out-of-pocket costs and expenses (including Attorney Costs) incurred by the
Agent, the Arranger and each Bank after an Event of Default in connection with
the enforcement of this Agreement, the other Loan Documents or any such other
documents. In addition, the Company agrees to pay, and to save the Agent and
the Banks harmless from all liability for, any stamp or other taxes which may
be payable in connection with the execution and delivery of this Agreement, the
borrowings hereunder, the issuance of the Notes or the execution and delivery
of any other Loan Document or any other document provided for herein or
delivered or to be delivered hereunder or in connection herewith. All
obligations provided for in this Section 14.6 shall survive repayment of the
Loans, cancellation of the Notes and any termination of this Agreement.
14.7 Captions. Section captions used in this Agreement are for
convenience only and shall not affect the construction of this Agreement.
14.8 Assignments; Participations.
14.8.1 Assignments. Any Bank may, with the prior written consents of
the Company and the Agent (which consents shall not
33
<PAGE> 39
be unreasonably delayed or withheld), at any time assign and delegate to one or
more commercial banks or other Persons (any Person to whom such an assignment
and delegation is to be made being herein called an "Assignee"), all or any
fraction of such Bank's Loans and Commitment (which assignment and delegation
shall be of a constant, and not a varying, percentage of all the assigning
Bank's Loans and of such Bank's Commitment) in a minimum aggregate amount equal
to the lesser of (i) the sum of the assigning Bank's Loans and (to the extent
not used) Commitment and (ii) the product of (A) $5,000,000 multiplied by (B) a
fraction, the numerator of which is the aggregate amount of the Commitments
(or, if the Commitments have terminated, the outstanding principal amount of
the Loans) at such time and the denominator of which is $200,000,000; provided,
however, that (a) no assignment and delegation may be made to any Person if, at
the time of such assignment and delegation, the Company would be obligated to
pay any greater amount under Section 8 to the Assignee than the Company is then
obligated to pay to the assigning Bank under such Section; (b) no assignment
and delegation may be made unless the assigning Bank is selling all of its
Commitment and Loans or is retaining a Commitment or Loans in an amount equal
to the product of $10,000,000 multiplied by the fraction determined pursuant to
clause (ii) (B) above; and (c) the Company and the Agent shall be entitled to
continue to deal solely and directly with such Bank in connection with the
interests so assigned and delegated to an Assignee until the date when all of
the following conditions shall have been met:
(x) five Business Days (or such lesser period of time as
the Agent and the assigning Bank shall agree) shall have passed after
written notice of such assignment and delegation, together with
payment instructions, addresses and related information with respect
to such Assignee, shall have been given to the Company and the Agent
by such assigning Bank and the Assignee,
(y) the assigning Bank and the Assignee shall have
executed and delivered to the Company and the Agent an assignment
agreement substantially in the form of Exhibit F (an "Assignment
Agreement"), together with any documents required to be delivered
thereunder, which Assignment Agreement shall have been accepted by the
Company and the Agent, and
(z) the assigning Bank or the Assignee shall have paid
the Agent a processing fee of $3,500.
From and after the date on which the conditions described above have been met,
(I) such Assignee shall be deemed automatically to have become a party hereto
and, to the extent that rights and obligations hereunder have been assigned and
delegated to such
34
<PAGE> 40
Assignee pursuant to such Assignment Agreement, shall have the rights and
obligations of a Bank hereunder, and (II) the assigning Bank, to the extent
that rights and obligations hereunder have been assigned and delegated by it
pursuant to such Assignment Agreement, shall be released from its obligations
hereunder. Within five Business Days after the effectiveness of any assignment
and delegation, the Company shall execute and deliver to the Agent (for
delivery to the Assignee and the assigning Bank, as applicable) a new Note in
the principal amount of the Assignee's Commitment and, if the assigning Bank
has retained a Commitment hereunder, a replacement Note in the principal amount
of the Commitment retained by the assigning Bank (such Note to be in exchange
for, but not in payment of, the predecessor Note held by such assigning Bank).
Each such Note shall be dated the effective date of such assignment. The
assigning Bank shall mark the predecessor Note "exchanged" and deliver it to
the Company. Accrued interest on that part of the predecessor Note being
assigned shall be paid as provided in the Assignment Agreement. Accrued
interest and fees on that part of the predecessor Note not being assigned shall
be paid to the assigning Bank. Accrued interest and accrued fees shall be paid
at the same time or times provided in the predecessor Note and in this
Agreement. Any attempted assignment and delegation not made in accordance with
this Section 14.8.1 shall be null and void.
Notwithstanding the foregoing provisions of this Section 14.8.1 or any
other provision of this Agreement, any Bank may at any time assign all or any
portion of its Loans and its Note to a Federal Reserve Bank (but no such
assignment shall release any Bank from any of its obligations hereunder).
14.8.2 Participations. Any Bank may, with the prior written consent
of the Company (which consent shall not be unreasonably delayed or withheld),
at any time sell to one or more commercial banks or other Persons participating
interests in any Loan owing to such Bank, the Note held by such Bank, the
Commitment of such Bank or any other interest of such Bank hereunder (any
Person purchasing any such participating interest being herein called a
"Participant"). In the event of a sale by a Bank of a participating interest
to a Participant, (x) such Bank shall remain the holder of its Note for all
purposes of this Agreement, (y) the Company and the Agent shall continue to
deal solely and directly with such Bank in connection with such Bank's rights
and obligations hereunder and (z) all amounts payable by the Company shall be
determined as if such Bank had not sold such participation and shall be paid
directly to such Bank. No Participant shall have any direct or indirect voting
rights hereunder except with respect to any of the events described in the
penultimate sentence of Section 14.1. Each Bank agrees to incorporate the
requirements of the preceding sentence into each participation agreement which
such Bank enters into with any
35
<PAGE> 41
Participant. The Company agrees that if amounts outstanding under this
Agreement and the Notes are due and payable (as a result of acceleration or
otherwise), each Participant shall be deemed to have the right of setoff in
respect of its participating interest in amounts owing under this Agreement and
any Note to the same extent as if the amount of its participating interest were
owing directly to it as a Bank under this Agreement; provided that such right
of setoff shall be subject to the obligation of each Participant to share with
the Banks, and the Banks agree to share with each Participant, as provided in
Section 7.5. The Company also agrees that each Participant shall be entitled
to the benefits of Section 8 as if it were a Bank (provided that no Participant
shall receive any greater compensation pursuant to Section 8 than would have
been paid to the participating Bank if no participation had been sold).
14.9 Governing Law. This Agreement and each Note shall be a contract
made under and governed by the laws of the State of Illinois applicable to
contracts made and to be fully performed in such State. Whenever possible each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Agreement. All obligations of the Company and rights of the
Agent and the Banks expressed herein or in any other Loan Document shall be in
addition to and not in limitation of those provided by applicable law.
14.10 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Agreement. When
counterparts executed by all of the parties hereto shall have been lodged with
the Agent (or, in the case of any Bank as to which an executed counterpart
shall not have been so lodged, the Agent shall have received confirmation from
such Bank of execution of a counterpart hereof by such Bank), this Agreement
shall become effective as of the date hereof, and at such time the Agent shall
notify the Company and each Bank.
14.11 Successors and Assigns. This Agreement shall be binding upon
the Company, the Banks and the Agent and their respective successors and
assigns, and shall inure to the benefit of the Company, the Banks and the Agent
and the permitted successors and assigns of the Banks and the Agent. The
Company may not assign any of its rights or obligations hereunder without the
prior written consent of all Banks.
36
<PAGE> 42
14.12 Indemnification by the Company.
(a) In consideration of the execution and delivery of this
Agreement by the Agent and the Banks and the agreement to extend the
Commitments provided hereunder, the Company hereby agrees to indemnify,
exonerate and hold the Agent-Related Persons, each Bank and each of their
respective officers, directors, employees and agents (collectively the "Bank
Parties" and individually each a "Bank Party") free and harmless from and
against any and all actions, claims, judgments, causes of action, suits,
losses, liabilities, damages, penalties and expenses, including Attorney Costs
(collectively the "Indemnified Liabilities"), incurred by the Bank Parties or
any of them as a result of, or arising out of, or relating to (i) any tender
offer, merger, purchase of stock, purchase of assets or other similar
transaction financed or proposed to be financed in whole or in part, directly
or indirectly, with the proceeds of any of the Loans or (ii) the execution,
delivery, performance or enforcement of this Agreement or any other Loan
Document by any of the Bank Parties, except for any such Indemnified
Liabilities arising on account of such Bank Party's bad faith, gross negligence
or willful misconduct. If and to the extent that the foregoing undertaking may
be unenforceable for any reason, the Company hereby agrees to make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. Nothing set forth above
shall be construed to relieve any Bank Party from any obligation it may have
under this Agreement.
(b) Without limiting the provisions of clause (a) above, the
Company agrees to reimburse each Bank Party against any and all Indemnified
Liabilities which any Bank Party may pay, incur or become subject to arising
out of or relating to the use, handling, release, emission, discharge,
transportation, storage, treatment or disposal of any Hazardous Material at any
real property owned or leased by the Company or any Subsidiary or used by the
Company or any Subsidiary in its business or operations, except to the extent
caused by the acts or omissions of such Bank Party.
(c) All obligations provided for in this Section 14.12 shall
survive repayment of the Loans, cancellation of the Notes and any termination
of this Agreement.
14.13 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE
COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY
37
<PAGE> 43
BE BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH OF THE COMPANY, THE AGENT AND
EACH BANK HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE
COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET
FORTH ABOVE. EACH OF THE COMPANY, THE AGENT AND EACH BANK FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY
PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. THE COMPANY HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY
SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT
THE COMPANY HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY
COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT
PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO
ITSELF OR ITS PROPERTY, THE COMPANY HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN
RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
14.14 WAIVER OF JURY TRIAL. EACH OF THE COMPANY, THE AGENT AND EACH
BANK HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN
DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR
WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR
ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE
FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE
A COURT AND NOT BEFORE A JURY.
Delivered at Chicago, Illinois, as of the day and year first above written.
USA WASTE SERVICES, INC.
By /s/ RONALD H. JONES
--------------------------------
Title Vice President and Treasurer
-----------------------------
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent
By /s/ JAY McKEOWN
--------------------------------
Title Assistant Vice President
-----------------------------
38
<PAGE> 44
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
as a Bank
By /s/ [ILLEGIBLE]
------------------------------
Title Senior Vice President
--------------------------
THE BANK OF NOVA SCOTIA
By /s/ M. D. SMITH
------------------------------
Title Agent
--------------------------
CANADIAN IMPERIAL BANK OF COMMERCE
By /s/ TIMOTHY DOYLE
------------------------------
Title Managing Director
--------------------------
COMERICA BANK
By /s/ R. M. GOLDSMITH III
------------------------------
Title Vice President
--------------------------
DEUTSCHE BANK AG, New York Branch
and/or Cayman Islands Branch
By /s/ JEAN M. HANNIGAN
------------------------------
Title Vice President
--------------------------
By /s/ NORMAN S. AMMOTH
------------------------------
Title Vice President
--------------------------
39
<PAGE> 45
CHASE BANK OF TEXAS, N.A.
By /s/ MICHAEL ANDEUCT
------------------------------
Title Vice President
--------------------------
TORONTO DOMINION (TEXAS), INC.
By /s/ NEVA NESBITT
------------------------------
Title Vice President
--------------------------
WACHOVIA BANK, N.A.
By /s/ STEVEN M. JAKIN
------------------------------
Title Vice President
--------------------------
40
<PAGE> 1
EXHIBIT 12
USA WASTE SERVICES, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS, EXCEPT RATIOS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31,
-----------------------------
1998 1997
------------ ------------
<S> <C> <C>
Income before income taxes $ 201,604 $ 96,916
------------ ------------
Fixed charges deducted from income:
Interest expense 38,368 16,098
Implicit interest in rents 4,167 1,571
------------ ------------
42,535 17,669
------------ ------------
Earnings available for fixed charges $ 244,139 $ 114,585
============ ============
Interest expense $ 38,368 $ 16,098
Capitalized interest 6,306 5,814
Implicit interest in rents 4,167 1,571
------------ ------------
Total fixed charges $ 48,841 $ 23,483
============ ============
Ratio of earnings to fixed charges 5.0 x 4.9x
============ ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF USA WASTE SERVICES, INC. FOR THE THREE MONTHS ENDED
MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 46,260,000
<SECURITIES> 0
<RECEIVABLES> 513,890,000
<ALLOWANCES> (45,271,000)
<INVENTORY> 0
<CURRENT-ASSETS> 676,287,000
<PP&E> 5,547,285,000
<DEPRECIATION> (945,712,000)
<TOTAL-ASSETS> 7,589,405,000
<CURRENT-LIABILITIES> 498,377,000
<BONDS> 3,584,887,000
0
0
<COMMON> 2,198,000
<OTHER-SE> 2,772,924,000
<TOTAL-LIABILITY-AND-EQUITY> 7,589,405,000
<SALES> 769,440,000
<TOTAL-REVENUES> 769,440,000
<CGS> 397,492,000
<TOTAL-COSTS> 565,518,000
<OTHER-EXPENSES> (36,050,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 36,368,000
<INCOME-PRETAX> 201,604,000
<INCOME-TAX> 80,642,000
<INCOME-CONTINUING> 120,962,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 120,962,000
<EPS-PRIMARY> 0.55
<EPS-DILUTED> 0.52
</TABLE>
