FILED PURSUANT TO RULE 424(B)(5)
REGISTRATION NUMBER 333-80063
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED
FEBRUARY 14, 2000)
1,125,000 SHARES
WASTE MANAGEMENT, INC.
COMMON STOCK
------------------------------
Our common stock is listed on the New York Stock Exchange under the
trading symbol "WMI." On February 14, 2000, the last reported sale price of
the common stock on the New York Stock Exchange was $14.75 per share.
We will issue the shares directly to certain persons in order to
settle litigation and other claims or to satisfy judgments or arbitration
awards. The shares will be issued to those persons based upon an agreed
number of shares or an agreed dollar value of shares in relation to the
closing price of our common stock on the New York Stock Exchange on a
specific trading date. We will not receive any proceeds from the issuance
of these shares.
INVESTING IN THE COMMON STOCK INVOLVES RISKS THAT ARE DESCRIBED IN
THE "RISK FACTORS" SECTION BEGINNING ON PAGE 4 OF THE ACCOMPANYING
PROSPECTUS.
------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS SUPPLEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------------
WE EXPECT TO DELIVER THE SHARES AGAINST PAYMENT THEREFOR IN HOUSTON,
TEXAS ON OR ABOUT FEBRUARY 16, 2000.
------------------------------
Prospectus Supplement dated February 15, 2000
<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY WASTE MANAGEMENT. THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF ANY OFFER TO BUY ANY SECURITY OTHER THAN THE SHARES OFFERED
HEREBY, NOR DO THEY CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION
TO SUCH PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL
UNDER ANY CIRCUMSTANCES IMPLY THAT THE INFORMATION CONTAINED HEREIN OR
THEREIN IS CORRECT AS OF A DATE SUBSEQUENT TO THEIR RESPECTIVE DATES.
TABLE OF CONTENTS
PAGE
PROSPECTUS SUPPLEMENT
The Company................................................................S-3
Plan of Distribution.......................................................S-6
PROSPECTUS
Where To Find More Information.............................................. 2
Our Company................................................................. 4
Risk Factors................................................................ 4
Special Note Regarding Forward-Looking Statements.......................... 11
Use of Proceeds............................................................ 12
Ratios of Earnings to Fixed Charges........................................ 12
Description of Debt Securities............................................. 13
Description of Capital Stock............................................... 41
Plan of Distribution....................................................... 43
Validity of Securities..................................................... 44
Experts.................................................................... 44
<PAGE>
THE COMPANY
OVERVIEW
We are a global leader in providing integrated waste management
services. In North America, we provide solid waste management services
throughout the United States, as well as in Canada, Mexico and Puerto Rico,
including collection, transfer, recycling and resource recovery services,
and disposal services, including the landfill disposal of hazardous wastes.
In addition, we are a leading developer, operator and owner of
waste-to-energy facilities in the United States. We also engage in other
hazardous waste management services throughout North America, as well as
low-level and other radioactive waste services. Internationally, we operate
throughout Europe, the Pacific Rim, South America and other select
international markets. Our diversified customer base includes commercial,
industrial, municipal and residential customers, other waste management
companies, governmental entities and independent power markets.
RECENT DEVELOPMENTS
On July 6, 1999, we announced that we had lowered our expected
earnings per share for the three-month period ended June 30, 1999. On July
29, 1999, we announced a further reduction in our expected earnings for
that period. On August 3, 1999, we announced that our reported operating
income for the three-month period ended March 31, 1999 may have included
certain non-recurring pretax income items. Between July 8, 1999 and
September 3, 1999, numerous lawsuits that purport to be based on one or
more of these announcements have been filed against us and certain of our
officers and directors. Taken together, the plaintiffs of these lawsuits
purport to assert claims on behalf of a class of purchasers of our common
stock between June 10, 1998 and August 2, 1999. Among other things, the
plaintiffs allege that Waste Management and certain of its officers and
directors (i) made knowingly false earnings projections for the three
months ended June 30, 1999 and (ii) failed to adequately disclose facts
relating to its earnings projections that the plaintiffs allege would have
been material to purchasers of Waste Management's common stock. The
plaintiffs also claim that certain of Waste Management's officers and
directors sold common stock at prices known to be inflated by the alleged
material misstatements and omissions. The plaintiffs in these actions seek
damages with interest, costs and such other relief as the respective courts
deem proper.
In addition, three of Waste Management's stockholders have filed
lawsuits against certain of our officers and directors in connection with
the events surrounding our second quarter 1999 earnings projections and
July 6, 1999 earnings announcement. The plaintiffs in these actions purport
to allege derivative claims on behalf of Waste Management against these
officers and directors for alleged breaches of fiduciary duty resulting
from their alleged stock sales during the three-month period ended June 30,
1999 and/or their oversight of Waste Management's affairs. The lawsuits
name Waste Management, Inc. as a nominal defendant and seek compensatory
and punitive damages with interest, equitable and/or injunctive relief,
costs and such other relief as the respective courts deem proper.
In addition, the Securities and Exchange Commission has notified us
of an informal inquiry into the period ended June 30, 1999, as well as
certain sales of our common stock that preceded our July 6, 1999 earnings
announcement.
The New York Stock Exchange has notified us that its market Trading
Analysis Department is reviewing transactions in our common stock prior to
the July 6, 1999 earnings forecast announcement.
We are conducting a thorough investigation of each of the allegations
that have been made in connection with our second quarter 1999 earnings
communications. As part of this investigation, our Board of Directors has
authorized a review of the allegations that have been made against certain
of our officers and directors. Roderick M. Hills, a former chairman of the
Commission and chairman of our audit committee, is directing the review.
It is not possible at this time to predict the impact that the above
lawsuits may have on Waste Management Holdings or Waste Management, nor is
it possible to predict whether any other suits or claims may arise out of
these matters in the future. However, it is reasonably possible that the
outcome of any present or future litigation may have a material adverse
impact on our financial condition or results of operations in one or more
future periods. Waste Management and Waste Management Holdings intend to
defend themselves vigorously in all the above matters.
On November 10, 1999, we announced the selection of A. Maurice Myers
as our Chairman, Chief Executive Officer and President. Mr. Myers, 59,
joins us from Yellow Corporation, where he has been Chairman, CEO and
President since April 1996. Yellow Corporation is the parent company of
Yellow Freight, one of the nation's oldest and largest trucking companies.
Under Mr. Myers' leadership, Yellow Corporation returned to profitability
in just one year, after three years of negative earnings. Mr. Myers also
implemented a productivity initiative and a re-structuring of the company's
largest subsidiary, Yellow Freight, dividing that company into five
regionally-based business units and reducing operating costs, while
significantly increasing the company's ability to meet changing customer
needs. Mr. Myers is a recognized leader in integrating information
technology with business operations. He directed the re-engineering of
Yellow Corporation's information systems, providing the company with
greater financial accountability and a distinct competitive advantage over
other freight haulers. In 1999, Yellow Corporation was named one of the
nation's top 100 Information Technology companies, the only freight
transportation company to be so recognized. Prior to joining Yellow
Corporation in 1996, Mr. Myers served as President and Chief Operating
Officer of America West Airlines and is credited in part for that company's
financial turnaround. Mr. Myers also served as President and CEO of Aloha
Airlines, and held a senior management position with Continental Airlines.
On November 23, 1999, we announced the appointment of Thomas L. Smith
as Senior Vice President-Information Systems. Mr. Smith will report to Mr.
Myers and will be responsible for our information systems strategies and
implementation efforts. Mr. Smith joins us from Yellow Services, Inc., a
wholly owned subsidiary of Yellow Corporation, where he served as
President. Under Mr. Smith's leadership, Yellow Corporation was named as a
recipient of the 1999 CIO-100 Award by CIO Magazine for having information
systems best positioned to succeed beyond 2000.
An Executive Committee of our Board of Directors has been formed,
consisting of A. Maurice Myers, Ralph V. Whitworth, Roderick M. Hills and
Jerome P. York. The Board of Directors has appointed Mr. Whitworth, a
managing member of Relational Investors LLC, as Chairman of the Executive
Committee.
The Board of Directors has initiated a strategic initiative aimed at
increasing shareholder value. We have engaged Chase Securities Inc. and
Donaldson, Lufkin and Jenrette Securities Corporation as financial advisors
to assist us in this matter. The plan calls for disposition of some or all
of our international assets, a substantial majority of our non-core assets,
and certain non-strategic North American solid waste assets that account
for 10% of our operating revenues in that sector. We intend immediately to
initiate the disposition of these assets and plan to substantially complete
these asset sales in the first half of 2000, although there can be no
assurance that these dispositions will be completed in the contemplated
time frame. We expect to use the proceeds of these dispositions primarily
to reduce debt and over time to repurchase shares and make selective
tuck-in acquisitions of solid waste businesses in North America.
In the second quarter of 1999, we entered into an agreement to
purchase all of the Canadian solid waste assets of Allied Waste Industries,
Inc. ("Allied") that Allied acquired upon its acquisition of
Browning-Ferris Industries, Inc. The purchase price of these assets was to
be approximately $501 million in cash. On November 8, 1999, we entered into
revised agreements with Allied, which replace the original agreement.
Under the terms of the revised agreements, Allied has agreed to sell
to us all of the shares of Browning-Ferris Industries Limited ("BFIL"),
which owns the solid waste operations of Browning-Ferris in Canada,
including collection operations, transfer stations, landfill operations and
recycling facilities. Annual run rate revenues generated from these
operations are approximately US $176 million. Allied will continue to
operate certain of the Canadian operations that we are being required to
divest by the Competition Bureau of Canada and market those operations for
sale, on behalf of BFIL, after the closing. The sale of the BFIL shares is
subject to final approval pursuant to the Competition Act and the
Investment Canada Act. Additionally, we have agreed to sell to Allied
certain U.S. solid waste services assets with combined reported historical
revenue of approximately $132 million, including nine landfill operations,
19 collection operations, five transfer stations and a landfill operating
contract. The sale of such assets is subject to final approval pursuant to
the Hart-Scott Rodino Act. We expect to receive net cash proceeds as a
result of the revised transactions.
On December 15 and 16, 1999, we permanently amended our two domestic
bank credit facilities and two Euro facilities, respectively, for which
waivers were sought in the third quarter 1999. The amended terms and
conditions of the facilities also contain the necessary provisions for us
to follow through with our strategy of divesting our international and
non-core assets. Initial proceeds from the sales of such assets will be
used to reduce debt and improve our financial position.
On January 24, 2000, we announced the appointment of Lawrence
O'Donnell, III as Senior Vice President, General Counsel and Secretary. In
this role, Mr. O'Donnell will have primary responsibility for the
management of all legal matters relating to us and our operating
subsidiaries and will report to Mr. Myers. He will direct the Company's
legal staff at its corporate headquarters and in its worldwide operating
units and will have senior responsibility for the supervision and
management of our network of outside legal counsel. Mr. O'Donnell joins us
from Houston-based Baker Hughes Incorporated, where he has been Vice
President and General Counsel since 1995. Baker Hughes, a New York Stock
Exchange company with revenues of more than $6 billion in 1998, is a
leading supplier of reservoir-centered products, services and systems to
the worldwide oil and gas industry and a leading supplier of separation
technologies to process industries globally. There he directed a legal
staff of 24 attorneys and an international staff of 65 individuals.
On January 31, 2000, we announced that we had reached an agreement to
sell our waste services operations in Finland to Lassila & Tikanoja plc for
approximately $100 million. We expect to complete the transaction in the
first half of 2000. The sale is subject to the approval of the Finnish
Competition Authority. Lassila & Tikanoja, based in Helsinki, Finland and
traded on the Finnish Stock Exchange, is a provider of environmental
services and materials for healthcare and hygiene products. The sale of our
Finnish business is part of our previously announced strategic initiative
to divest of some or all of our international assets and re-focus on our
North American solid waste operations.
PLAN OF DISTRIBUTION
We will issue the shares directly to certain persons in order to
settle litigation and other claims or to satisfy judgments or arbitration
awards. We will not receive any cash proceeds from these issuances but will
eliminate an actual or potential liability.
<PAGE>
PROSPECTUS
$3,000,000,000
WASTE MANAGEMENT, INC.
DEBT SECURITIES
COMMON STOCK
We may offer from time to time
o Debt securities
o Shares of our common stock
Our shares of common stock are listed on the New York Stock Exchange under
the symbol "WMI."
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 4.
We will provide a prospectus supplement each time we issue the
securities covered by this prospectus. The prospectus supplement will
provide specific information about the terms of that offering and also may
add, update or change information contained in this prospectus.
You should read this prospectus and the related prospectus supplement
carefully before you invest in our securities. This prospectus may not be
used to offer and sell our securities unless accompanied by a prospectus
supplement.
The information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any jurisdiction where the
offer or sale is not permitted.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS FEBRUARY 14, 2000.
<PAGE>
TABLE OF CONTENTS
Where To Find More Information.............................................. 2
Our Company................................................................. 4
Risk Factors................................................................ 4
Special Note Regarding Forward-Looking Statements.......................... 11
Use of Proceeds............................................................ 12
Ratios of Earnings to Fixed Charges........................................ 12
Description of Debt Securities............................................. 13
Description of Capital Stock............................................... 41
Plan of Distribution....................................................... 43
Validity of Securities..................................................... 44
Experts.................................................................... 44
WHERE TO FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a
registration statement on Form S-3 (Reg. No. 333-80063) with respect to the
securities we are offering. This prospectus does not contain all the
information contained in the registration statement, including its exhibits
and schedules. You should refer to the registration statement, including
the exhibits and schedules, for further information about us and the
securities we are offering. Statements we make in this prospectus about
certain contracts or other documents are not necessarily complete. When we
make such statements, we refer you to the copies of the contracts or
documents that are filed as exhibits to the registration statement, because
those statements are qualified in all respects by reference to those
exhibits. The registration statement, including exhibits and schedules, is
on file at the offices of the Commission and may be inspected without
charge. We file annual, quarterly and current reports, proxy statements and
other information with the Commission. Our Commission filings, including
the registration statement, are available to the public over the Internet
at the SEC's web site at http://www.sec.gov. You can also read and copy any
document we file at:
o the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, and
o the regional offices of the Commission located at:
o 500 West Madison Street, Suite 1400, Chicago, Illinois
60661, and
o 7 World Trade Center, Suite 1300, New York, New York 10048.
Please call the Commission at 1-800-SEC-0330 for more information
about the public reference facilities.
You can also inspect material filed by us at the offices of the New
York Stock Exchange, 20 Broad Street, New York, New York 10005, on which
shares of our common stock are listed.
We are incorporating by reference in this prospectus some information
we file with the Commission. This means that we are disclosing important
information to you by referring you to those documents. Specifically, we
incorporate by reference the documents set forth below that we have
previously filed with the Commission:
COMMISSION FILINGS (FILE NO. 1-12154) PERIOD/DATE
- ------------------------------------- -----------
o Annual Report on Form 10-K Year ended December 31, 1998
o Quarterly Report on Form 10-Q Quarter ended March 31, 1999
(certain items in financial
statements were revised in June 30,
1999 Form 10-Q)
o Quarterly Report on Form 10-Q Quarter ended June 30, 1999
o Quarterly Report on Form 10-Q Quarter ended September 30, 1999
(as amended on Form 10-Q/A)
o Current Report on Form 8-K August 13, 1999
o Current Report on Form 8-K September 16, 1999
o Current Report on Form 8-K February 10, 2000
o Proxy Statement for the 1999 April 5, 1999
Annual Meeting of Stockholders
We also incorporate by reference the information contained in any
future filings made with the Commission under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act until we sell all of the securities
covered by this prospectus, which information will be deemed to
automatically update and supersede this information.
YOU MAY REQUEST A COPY OF THESE FILINGS AT NO COST, BY WRITING OR
TELEPHONING US AT THE FOLLOWING ADDRESS:
WASTE MANAGEMENT, INC.
1001 FANNIN STREET, SUITE 4000
HOUSTON, TEXAS 77002
(713) 512-6200
ATTN: SECRETARY
<PAGE>
OUR COMPANY
We are a global leader in providing integrated waste management
services.
In North America, where we have our principal operations, we provide
solid waste collection, transfer, recycling, resource recovery and disposal
services. We also are a leading operator and owner of waste-to-energy and
waste-fuel powered independent power facilities in the United States. We
conduct other operations in North America, including landfill disposal of
hazardous wastes, additional hazardous waste management services and
low-level and other radioactive waste services.
Outside of North America, we operate in Europe, the Pacific Rim,
South America and other select international markets, where we provide
collection and transportation services for solid, hazardous and medical
wastes and collection, treatment and disposal services for recyclable
materials. We also operate solid and hazardous waste landfills, municipal
and hazardous waste incinerators, waste and wastewater treatment facilities
and hazardous waste treatment facilities, as well as construct waste
treatment or disposal facilities for third parties.
Our diversified customer base includes commercial, industrial,
municipal and residential customers, other waste management companies,
governmental entities and independent power markets.
On July 16, 1998, we changed our name to "Waste Management, Inc.,"
from "USA Waste Services, Inc." On that date, we acquired all of the shares
of Waste Management Holdings, Inc., which at the time was the largest
publicly traded waste management services company in North America and
which operated under the "Waste Management" name.
Our executive offices are located at 1001 Fannin Street, Suite 4000,
Houston, Texas 77002, and our telephone number is (713) 512-6200.
RISK FACTORS
In addition to the information set forth in this prospectus, you
should carefully consider the risks described below before making an
investment in the securities offered. The risks described below are not the
only ones facing us. There may be additional risks not presently known to
us or that we currently deem immaterial which may also impair our business
operations.
ACCOUNTING CHARGES HAVE NEGATIVELY IMPACTED REPORTED FINANCIAL RESULTS,
RESULTED IN THE IMPAIRMENT OF THE VALUE OF CERTAIN ASSETS AND MAY DECREASE
OUR FUTURE CASH FLOWS
During the third quarter of 1999, we initiated a comprehensive review
of our accounting records, systems, processes and controls at the direction
of our Board of Directors, which was completed in November 1999. As a
result of this review, we recorded certain charges and adjustments in the
quarter ended September 30, 1999 totaling $1.23 billion after tax. Because
of the size of the charges, generally accepted accounting principles
require us to attempt to determine whether portions of the charges apply to
prior periods. While we believe that certain of these charges may relate to
prior periods, we do not currently have sufficient information to identify
all specific charges attributable to prior periods. Producing the
information required to identify these charges would be cost prohibitive
and disruptive to our operations.
Some of the charges and adjustments we recorded in the third quarter
1999, such as certain increases in insurance reserves, environmental
reserves, loss contract provisions and adjustments resulting from
completing account reconciliations, are recurring in nature, and should
therefore be expected to occur in future periods. Additionally, certain of
these charges and adjustments, including receivables-related adjustments
and insurance reserves, could have an impact on our future cash flows.
Because some of the charges discussed above affect account balances
applicable to periods prior to the quarter ended September 30, 1999, we
concluded, after consultation with our independent public accountants, that
our internal controls for the preparation of interim financial information
did not provide an adequate basis for them to complete reviews of the
quarterly data for the quarters in the nine months ended September 30,
1999. The review was completed in November 1999, and we do not anticipate
any additional material adjustments to our financial statements based on
the review. However, we may not be able to successfully stabilize our
accounting systems and procedures, and close our accounting records and
report our 1999 annual results in accordance with year end audit
procedures. Any failure to stabilize our accounting systems could result in
additional material charges and adjustments in the future.
WE MAY ENCOUNTER DIFFICULTIES IN IMPLEMENTING OUR PROPOSED STRATEGIC INITIATIVE
Our ability to successfully implement our proposed strategic
initiative may be affected by the willingness of prospective purchasers to
purchase the assets we identify as divestiture candidates on terms we find
acceptable, the timing and terms on which such assets may be sold,
uncertainties relating to regulatory approvals and other factors affecting
the ability of prospective purchasers to consummate such transactions. The
success of our strategic initiative could also be affected by the
availability of financing, and uncertainties relating to the impact of the
proposed strategic initiative on our credit ratings and, consequently, the
availability and cost of debt and equity financing to us.
WE ARE UNDERGOING CHANGES IN MANAGEMENT
Our business may be affected by our ability to attract and retain
qualified individuals to serve in senior management positions.
WE FACE UNCERTAINTIES RELATING TO PENDING LITIGATION AND INVESTIGATIONS
We face uncertainties relating to pending litigation and
investigations. We are unable to predict the outcome or impact of these
matters and there can be no assurance that they will not have a material
adverse effect on us and our business.
WE FACE POTENTIAL DIFFICULTIES IN CONTINUING TO EXPAND AND MANAGE OUR GROWTH
We have grown rapidly, primarily through acquisitions. We cannot
guarantee that we will be able to continue to expand and successfully
manage our growth. We also cannot guarantee that our existing or acquired
operations will not be adversely affected by the pace of our growth.
Improving the productivity of our acquired operations and using our asset
base and strategic position to operate more efficiently is very important
to our financial results and prospects. In particular, whether we will
ultimately achieve the anticipated benefits of acquired operations will
depend on a number of factors, including our ability to effect:
o administrative costs savings;
o rationalization of collection routes;
o insurance and bonding cost reductions; and
o general economies of scale.
Moreover, our ability to continue to grow will depend on a number of
factors, including:
o competition from other waste management companies;
o the availability of attractive acquisition opportunities;
o our ability to mitigate antitrust concerns related to acquisitions
in several markets;
o the availability of working capital;
o our ability to maintain margins on existing or acquired operations;
and
o our ability to manage costs in a changing regulatory environment.
OUR ACQUISITION STRATEGY INVOLVES POTENTIAL RISKS
We regularly pursue opportunities to expand by acquiring additional
waste management businesses and operations that can be effectively
integrated with our existing operations. In addition, we regularly pursue
mergers and acquisition transactions, some of which are significant, in new
markets where we believe that we can successfully become a provider of
integrated waste management services. As one of the leading industry
consolidators, we could announce transactions with either publicly or
privately owned businesses at any time.
Our acquisition strategy involves potential risks. These risks
include:
o our failure to accurately assess all of the pre-existing
liabilities of acquired companies;
o unexpected difficulties in successfully integrating the operations
of acquired companies with our existing operations;
o a lack of attractive acquisition opportunities;
o our inability to obtain the capital required to finance potential
acquisitions on satisfactory terms;
o the businesses we acquire not proving profitable; and
o our incurring additional indebtedness or issuing additional
equity securities as a result of future acquisitions.
WE MAY NEED ADDITIONAL CAPITAL IF OUR CASH FLOW IS LESS THAN EXPECTED
We expect to generate sufficient cash flow from our operations in
1999 to cover our anticipated cash needs for capital expenditures and
acquisitions. If our cash flow from operations during 1999 is less than
currently expected, or our capital requirements increase, either due to
strategic decisions or otherwise, we may elect to incur indebtedness or
issue equity securities to cover any additional capital needs. However, we
cannot guarantee that we will be successful in obtaining additional capital
in this manner on acceptable terms.
We also cannot guarantee that we will be successful in renewing our
existing credit facilities, or that we will be able to renew the credit
facilities on terms acceptable to us. If we are unable to renew our
existing credit facilities, or to obtain other financing sources, our
business and operating results could be affected adversely to a material
extent.
FLUCTUATING INTEREST RATES COULD AFFECT US
In the past, we have used variable rate debt under revolving bank
credit arrangements as one method of financing our rapid growth. Although
our recent financings have reduced the amount of variable rate debt as a
percentage of total indebtedness outstanding, issuing variable rate debt
will continue to be an alternative for us. Fluctuations in variable
interest rates, which may occur as general interest rates change, could
have a material adverse effect on us.
INTENSE COMPETITION COULD REDUCE OUR PROFITABILITY
We encounter intense competition from governmental,
quasi-governmental and private sources in all aspects of our operations.
In North America, the waste management services industry consists of
large national companies and local and regional companies of varying sizes
and financial resources. We compete with numerous waste management
companies as well as with counties and municipalities that maintain their
own waste collection and disposal operations. These counties and
municipalities may have financial competitive advantages because tax
revenues and tax-exempt financing are available to them. In addition,
competitors may reduce their prices to expand sales volume or to win
competitively bid municipal contracts. Profitability may decline because of
the national emphasis on recycling, composting, and other waste reduction
programs that could reduce the volume of solid waste collected or deposited
in disposal facilities.
Outside of North America, the waste management services industry is
very decentralized and highly fragmented. In some markets, however, we
compete with substantial companies that hold significant market shares,
particularly in Finland, Germany, the Netherlands, Sweden and the United
Kingdom. Some of our international competitors may have greater financial
resources and greater technical resources than we do with respect to
specific matters. Especially in the case of larger contracts, we may be
required to commit substantial resources over a long period of time during
the proposal phase without any assurance that the contract will be awarded
to us. Examples include contracts for city- cleaning services, contracts or
bids with respect to the construction or development of water and
wastewater facilities, or permitting and development of a new treatment
facility, waste-to-energy facility, incinerator or landfill.
OUR ACCOUNTING POLICIES CONCERNING UNAMORTIZED CAPITALIZED EXPENDITURES COULD
RESULT IN A MATERIAL CHARGE AGAINST OUR EARNINGS
In accordance with generally accepted accounting principles, we
capitalize certain expenditures and advances relating to acquisitions,
pending acquisitions, and disposal site development and expansion projects.
We expense indirect acquisition costs, such as executive salaries, general
corporate overhead, public affairs and other corporate services, as
incurred. Our policy is to charge against earnings any unamortized
capitalized expenditures and advances relating to any facility or operation
that is permanently shut down, any pending acquisition that is not
consummated, and any disposal site development or expansion project that is
not completed. The charge against earnings is reduced by any portion of the
capitalized expenditure and advances that we estimate will be recoverable,
through sale or otherwise. In future periods, we may be required to incur a
charge against earnings in accordance with our policy. Depending on its
magnitude, any such charge could have a material adverse effect on our
consolidated financial statements.
GOVERNMENTAL REGULATIONS MAY RESTRICT OUR OPERATIONS OR INCREASE THE LEVEL OF
COSTS OF OUR OPERATIONS
Stringent government regulations at the federal, state and local
level in the United States and in other countries have a substantial impact
on our operations. A large number of complex laws, rules, orders and
interpretations govern environmental protection, health and safety, land
use, zoning and related matters. Among other things, they may restrict our
operations and adversely affect our operating results and financial
condition by imposing conditions such as:
o limitations on the siting and construction of new waste disposal,
transfer or processing facilities or the expansion of existing
facilities;
o limitations or bans on disposal of out-of-state waste or certain
categories of waste; or
o mandates regarding the disposal of solid waste.
Regulations also affect the siting, design and closure of landfills
and could require us to undertake investigatory or remedial activities,
curtail operations or close a landfill temporarily or permanently. Future
changes in these regulations may require us to modify, supplement or
replace equipment or facilities. The costs of complying with these
regulations could be substantial.
In order to develop, expand or operate a landfill or other waste
management facility, we must have various facility permits and other
governmental approvals, including those relating to zoning, environmental
protection and land use. These permits and approvals are difficult, time
consuming and costly to obtain, in part because of possible opposition by
governmental officials or citizens. In addition, these permits and
approvals may contain conditions that limit operations and our ability to
change the facility or are otherwise difficult to comply with. We cannot
guarantee that we will be successful in obtaining and maintaining in effect
permits and approvals required for the successful operation and growth of
our business, including permits and approvals for the development of
additional disposal capacity needed to replace existing capacity that is
exhausted.
Courts in the United States, basing their decisions on constitutional
law, have ruled that state and local governments may not use regulatory
flow control laws to restrict the free movement of waste in interstate
commerce. We cannot predict what impact, if any, these decisions will have
on our disposal facilities.
WE COULD BE LIABLE FOR ENVIRONMENTAL DAMAGES RESULTING FROM OUR DISPOSAL
FACILITIES AND COLLECTION OPERATIONS
We could be liable if our disposal facilities or collection
operations cause environmental damage to our properties or to nearby
landowners, particularly as a result of the contamination of drinking water
sources or soil. Under current law, we could even be held liable for damage
caused by conditions that existed before we acquired the assets or
operations involved. Also, we could be liable if we arrange for the
transportation, disposal or treatment of hazardous substances that cause
environmental contamination, or if a predecessor owner made such
arrangements and under applicable law we are treated as a successor to the
prior owner. Any substantial liability for environmental damage could have
a material adverse effect on our operating results and financial condition.
In the ordinary course of our business, we may become involved in a
variety of legal and administrative proceedings relating to land use and
environmental laws and regulations. These may include proceedings in which:
o agencies of federal, state, local or foreign governments seek
to impose liability on us under applicable statutes, sometimes
involving civil or criminal penalties for violations, or to
revoke or deny renewal of a permit we need; and
o citizen groups, adjacent landowners or governmental agencies
oppose the issuance of a permit or approval we need, allege
violations of the permits under which we operate or laws or
regulations to which we are subject, or seek to impose
liability on us for environmental damage for which we may be
responsible.
The adverse outcome of one or more of these proceedings could have a
material adverse effect on our financial position, results of operations or
cash flows.
From time to time we have received citations or notices from
governmental authorities that our operations are not in compliance with our
permits or certain applicable environmental or land use laws and
regulations. In the future we may receive additional citations or notices.
We generally seek to work with the authorities to resolve the issues raised
by such citations or notices. However, we cannot guarantee that we will
always be successful in this regard. Where we are not, we may incur fines,
penalties or other sanctions that could have a material adverse effect on
our financial position, results of operations or cash flows.
Our insurance for environmental liability meets or exceeds statutory
requirements. However, because we believe that the cost for such insurance
is high relative to the coverage it would provide, our coverages are
generally maintained at statutorily required levels. Due to the limited
nature of such insurance coverage for environmental liability, if we were
to incur liability for environmental damage, such liability could have a
material adverse effect on our financial position, results of operations or
cash flows.
THE DEVELOPMENT AND ACCEPTANCE OF ALTERNATIVES TO LANDFILL DISPOSAL AND
WASTE-TO-ENERGY FACILITIES COULD REDUCE OUR ABILITY TO OPERATE AT FULL
CAPACITY
Our customers are increasingly using alternatives to landfill
disposal, such as recycling and composting. In addition, state and local
governments are increasingly mandating recycling and waste reduction at the
source and prohibiting the disposal of certain types of wastes, such as
yard wastes, at landfills or waste-to-energy facilities. These developments
could reduce the volume of waste going to landfills and waste-to-energy
facilities in certain areas, which may affect our ability to operate our
landfills and waste-to-energy facilities at full capacity as well as the
prices that we can charge for landfill disposal and waste-to-energy
services.
FLUCTUATIONS IN THE PRICE OF RECYCLABLE MATERIALS AFFECT OUR OPERATING REVENUES
Recyclable materials that we process for sale, including paper,
plastics, aluminum and other commodities, are subject to significant price
fluctuations. These fluctuations will affect our future operating revenues
and income.
THE COMMISSION IS INVESTIGATING THE ACCOUNTING PRACTICES OF WASTE MANAGEMENT
HOLDINGS
The Commission has commenced a formal investigation with respect to
the previously filed financial statements (which were subsequently
restated) and the related accounting policies, procedures and system of
internal controls of Waste Management Holdings, Inc., or "WM Holdings,"
which we acquired through a merger in July 1998. Several lawsuits and
claims have been filed against WM Holdings and some of its former officers
and directors in connection with the restatement of WM Holdings' financial
statements. We are unable to predict the outcome or impact of the
investigation or any previously filed or future lawsuits or claims arising
out of the restatement. However, it is reasonably possible that they could
have a material adverse impact on our financial condition or results of
operations in one or more future periods.
OUR INTERNATIONAL OPERATIONS ENCOUNTER SOCIAL, POLITICAL AND ECONOMIC RISKS
Our operations in foreign countries generally are subject to a number
of risks inherent in any business operating in foreign countries, all of
which are beyond our control. These risks include:
o political, social and economic instability;
o inflation;
o general strikes;
o nationalization of assets;
o currency restrictions and exchange rate fluctuations;
o nullification, modification or renegotiation of contracts; and
o governmental regulation.
We can make no prediction as to how existing or future foreign
governmental regulations in any jurisdiction may affect us in particular or
the waste management industry in general.
OUR BUSINESS IS SEASONAL IN NATURE AND OUR REVENUES AND RESULTS VARY FROM
QUARTER TO QUARTER
Our operating revenues are usually lower in the winter months,
primarily because the volume of waste relating to construction and
demolition activities usually increases in the spring and summer months and
the volume of industrial and residential waste in certain regions where we
operate usually decreases during the winter months. Our first and fourth
quarter results of operations typically reflect this seasonality.
POTENTIAL EFFECT OF CERTAIN ANTI-TAKEOVER PROVISIONS
Certain provisions of our Restated Certificate of Incorporation and
Bylaws may make it more difficult for a third party to acquire us in a
transaction that is not approved by our Board of Directors. For example,
our Board of Directors has the power to issue up to 10,000,000 shares of
our preferred stock in one or more series, and to fix the rights and
preferences of any series, without further authorization by the holders of
our common stock. In addition, our Board of Directors is divided into three
classes, and each class serves for a staggered three-year term. This makes
it more difficult for a third party to gain control of our Board of
Directors. Generally, these provisions are designed to permit us to develop
our businesses and foster our long-term growth without the disruption
caused by the threat of a takeover that our Board of Directors does not
think is in our best interests or in the best interests of our
stockholders. Also, these provisions may discourage a third party from
making a tender offer or otherwise attempting to gain control of us even
though the attempt might be beneficial economically to us and our
stockholders.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
In the normal course of our business, we, in an effort to help keep
our stockholders and the public informed about our operations, may from
time to time issue or make certain statements, either in writing or orally,
that are or contain "forward-looking statements," as that term is defined
in the U.S. federal securities laws. Generally, these statements relate to
business plans or strategies, projected or anticipated benefits or other
consequences of such plans or strategies, projected or anticipated benefits
from acquisitions made by or to be made by us, or projections involving
anticipated revenues, earnings, or other aspects of operating results.
Certain statements contained in this prospectus or in the accompanying
prospectus supplement and in the reports and filings with the Commission
that we incorporated by reference may be forward-looking statements. The
words "may," "expect," "believe," "anticipate," "project," "estimate,"
their opposites and similar expressions are intended to identify
forward-looking statements. We caution readers that such statements are not
guarantees of future performance or events and are subject to a number of
factors that may tend to influence the accuracy of the statements and the
projections upon which the statements are based, including, but not limited
to, those discussed above under "Risk Factors." All phases of our
operations are subject to a number of uncertainties, risks and other
influences, many of which are outside our control, and any one of which, or
a combination of which, could materially affect our consolidated financial
statements and operations and whether forward- looking statements made by
us ultimately prove to be accurate.
These factors are discussed more completely in our filings with the
Commission, including our annual report on Form 10-K for the year ended
December 31, 1998, and our quarterly reports on Form 10-Q for the quarters
ended March 31, 1999, June 30, 1999 and September 30, 1999, which are
incorporated by reference into this prospectus.
USE OF PROCEEDS
Except as otherwise described in any prospectus supplement, we will
use the net proceeds from the sale of our debt securities or common stock
for general corporate purposes. We will determine any specific allocation
of the net proceeds of an offering to a specific purpose at the time of
such offering and will describe the specific allocation in the related
prospectus supplement.
We may also issue shares of our common stock to settle litigation and
other claims or to satisfy judgments or arbitration awards. We will not
receive any cash proceeds from these issuances but will eliminate an actual
or potential liability.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth our consolidated ratios of earnings to
fixed charges for the periods as shown:
YEAR ENDED DECEMBER 31, NINE MONTHS ENDED
1994 1995 1996 1997 1998 SEPTEMBER 30, 1999
---- ---- ---- ---- ---- ------------------
Actual 2.7x 2.6x 2.1x N/A(1) N/A(2) N/A(3)
(1) Earnings were insufficient to cover fixed charges in 1997. Additional
earnings of $660.4 million were necessary to cover fixed charges for
this period. The earnings available for fixed charges were negatively
impacted by merger costs of $112.7 million (primarily related to our
merger with United Waste Systems, Inc. in August 1997), and asset
impairments and unusual items of $1.8 billion. The asset impairments
and unusual items primarily related to a comprehensive review
performed by Waste Management Holdings of its operating assets and
investments.
(2) Earnings were insufficient to fund fixed charges in 1998. Additional
earnings of $720.4 million were necessary to cover fixed charges for this
period. The earnings available for fixed charges were negatively impacted
by merger costs of $1.8 billion and asset impairments and unusual items of
$864.1 million related primarily to the mergers between Waste Management,
Inc. and Waste Management Holdings in July 1998, and Waste Management,
Inc. and Eastern Environmental Services, Inc. in December 1998.
(3) Earnings were insufficient to fund fixed charges for the nine months
ended September 30, 1999. Additional earnings of $155.0 million were
necessary to cover fixed charges for this period. The earnings
available for fixed charges were negatively impacted by merger costs
of $111.3 million related to the merger between Waste Management, Inc.
and Waste Management Holdings, Inc. in July 1998 and $700.0 million
related to the comprehensive review we performed of our operating
assets and investments.
We computed our consolidated ratios of earnings to fixed charges by
dividing earnings available for fixed charges by fixed charges. For this
purpose, earnings available for fixed charges are the sum of income
available for fixed charges before income taxes, undistributed earnings
from affiliated companies' minority interests, cumulative effect of
accounting changes, and fixed charges, excluding capitalized interest.
Fixed charges are interest, whether expensed or capitalized, amortization
of debt expense and discount on premium relating to indebtedness, and such
portion of rental expense that can be demonstrated to be representative of
the interest factor in the particular case.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will constitute either our senior debt, or
"Senior Debt Securities," or our subordinated debt, or "Subordinated Debt
Securities." Debt Securities may be issued from time to time under one or
more indentures, each dated as of a date on or prior to the issuance of the
Debt Securities to which it relates. Senior Debt Securities and
Subordinated Debt Securities may be issued pursuant to separate indentures,
respectively, a "Senior Debt Indenture" and a "Subordinated Debt
Indenture," in each case between us and Texas Commerce Bank National
Association, now known as Chase Bank of Texas, National Association, or
"Chase Bank," and in the form filed as an exhibit to the Registration
Statement of which this prospectus is a part, subject to such amendments or
supplements as may be adopted from time to time.
We have previously entered into a Senior Indenture dated as of
September 10, 1997 with Chase Bank in the form filed as an exhibit to our
Current Report on Form 8-K (file no. 1-12154) filed with the Commission on
September 24, 1997. We have previously entered into a Subordinated
Indenture dated as of February 1, 1997 with Chase Bank in the form filed as
an exhibit to our Current Report on Form 8-K (file no. 1-12154) filed with
the Commission on February 7, 1997. The Senior Debt Indenture and the
Subordinated Debt Indenture, as amended or supplemented from time to time,
are sometimes hereinafter referred to individually as an "Indenture" and
collectively as the "Indentures." Chase Bank (and any successors thereto as
trustees under the respective Indentures) is hereafter referred to as the
"Trustee." The following summaries of actual or anticipated provisions of
the Indentures and the Debt Securities do not purport to be complete and
such summaries are subject to the detailed provisions of the applicable
Indenture to which reference is hereby made for a full description of such
provisions, including the definition of certain terms used herein. Section
references in parentheses below are to sections in both Indentures unless
otherwise indicated. Wherever particular sections or defined terms of the
applicable Indenture are referred to, such sections or defined terms are
incorporated herein by reference as part of the statement made, and the
statement is qualified in its entirety by such reference. The Indentures
are substantially identical, except for certain of our covenants and
provisions relating to subordination and conversion.
The Debt Securities may be issued from time to time in one or more
series. The following description of the Debt Securities sets forth certain
general terms and provisions of the Debt Securities of all series. The
particular terms of each series of Debt Securities offered by any
prospectus supplement will be described therein.
PROVISIONS APPLICABLE TO BOTH SENIOR AND SUBORDINATED DEBT SECURITIES
General. The Debt Securities will be our unsecured senior or
subordinated obligations and may be issued from time to time in one or more
series. The Indentures do not limit the amount of Debt Securities,
debentures, notes or other types of indebtedness that we may issue or that
any of our subsidiaries may issue. The Indentures do not, other than as may
be set forth in any prospectus supplement, restrict transactions between us
and our affiliates or the payment of dividends or other distributions by us
to our stockholders. The rights of our creditors, including holders of Debt
Securities, will be limited to our assets and will not be an obligation of
any of our Subsidiaries. In addition, other than as may be set forth in any
prospectus supplement, the Indentures do not and the Debt Securities will
not contain any covenants or other provisions that are intended to afford
holders of the Debt Securities special protection in the event we
experience either a change of control or a highly leveraged transaction.
Reference is made to the prospectus supplement for the following
terms of and information relating to the Debt Securities (to the extent
such terms are applicable to such Debt Securities):
o the title of the Debt Securities;
o classification as either Senior Debt Securities or Subordinated Debt
Securities;
o whether the Debt Securities that constitute Subordinated Debt
Securities are convertible into common stock and, if so, the
terms and conditions upon which such conversion will be effected,
including the initial conversion price or conversion rate and any
adjustments thereto in addition to or different from those
described herein, the conversion period and other conversion
provisions in addition to or in lieu of those described herein;
o any limit on the aggregate principal amount of the Debt Securities;
o whether the Debt Securities are to be issuable as Registered
Securities or Bearer Securities or both, whether any of the Debt
Securities are to be issuable initially in temporary global form
and whether any of the Debt Securities are to be in permanent
global form;
o the price or prices (expressed as a percentage of the aggregate
principal amount thereof) at which the Debt Securities will be
issued;
o the date or dates on which the Debt Securities will mature;
o the rate or rates per annum (or the method by which such will be
determined) at which the Debt Securities will bear interest, if
any, and the date from which any such interest will accrue;
o the Interest Payment Dates on which any such interest on the Debt
Securities will be payable, the date on which payment of such
interest, if any, will commence and the Regular Record Dates for
any interest payable on any Debt Securities which are Registered
Securities on any Interest Payment Date and the extent to which,
or the manner in which, any interest payable on a temporary
global Debt Security on an Interest Payment Date will be paid;
o any mandatory or optional sinking fund or analogous provisions;
o each office or agency where, subject to the terms of the
Indentures as described below under "Payment and Paying Agents,"
the principal of and any premium and interest on the Debt
Securities will be payable and each office or agency where,
subject to the terms of the Indentures as described below under
"Form, Exchange, Registration and Transfer," the Debt Securities
may be presented for registration of transfer or exchange;
o our right, if any, or our obligation, if any, to redeem the Debt
Securities and the period or periods, if any, within which and
the price or prices at which the Debt Securities may, pursuant to
any optional or mandatory redemption provisions, be redeemed, in
whole or in part, and the other detailed terms and provisions of
any such optional or mandatory redemption;
o the denominations in which any Debt Securities which are
Registered Securities will be issuable, if other than
denominations of $1,000 and any integral multiple thereof, and
the denomination or denominations in which any Debt Securities
which are Bearer Securities will be issuable, if other than the
denomination of $5,000;
o the currency or currencies (including composite currencies) in
which payment of principal of and any premium and interest on the
Debt Securities is payable if other than United States dollars;
o any index used to determine the amount of payments of principal of
and any premium and interest on the Debt Securities;
o information with respect to book-entry procedures, if any;
o any deletions from, modification of or additions to the Events of
Default or our covenants with respect to such Debt Securities; and
o any other terms of the Debt Securities not inconsistent with the
provisions of the Indentures. (Section 301) Any prospectus
supplement will also describe any special provisions for the
payment of additional amounts with respect to the Debt
Securities.
Debt Securities may be issued as Original Issue Discount Securities.
An Original Issue Discount Security is a Debt Security, including any
zero-coupon security, which is issued at a price lower than the amount
payable upon the Stated Maturity thereof and which provides that upon
redemption or acceleration of the maturity thereof an amount less than the
amount payable upon the Stated Maturity thereof and determined in
accordance with the terms of such Debt Security shall become due and
payable. We will set forth any special United States federal income tax
considerations applicable to Debt Securities issued at an original issue
discount, including Original Issue Discount Securities, and special United
States tax considerations and other terms and restrictions applicable to
any Debt Securities which are issued in bearer form, offered exclusively to
United States Aliens or denominated in other than United States dollars, in
a prospectus supplement.
Form, Exchange, Registration and Transfer. Debt Securities of a
series may be issuable in definitive form solely as Registered Securities,
solely as Bearer Securities or as both Registered Securities and Bearer
Securities. Unless otherwise indicated in an applicable prospectus
supplement, Bearer Securities will have interest coupons attached. The
Indentures also provide that Debt Securities of a series may be issuable in
temporary or permanent global form. (Section 201)
Registered Securities of any series will be exchangeable for other
Registered Securities of the same series of any authorized denominations
and of a like aggregate principal amount and tenor. In addition, if Debt
Securities of any series are issuable as both Registered Securities and
Bearer Securities, at the option of the Holder, and subject to the terms of
the applicable Indenture, Bearer Securities (with all unmatured coupons,
except as provided below, and all matured coupons in default) of such
series will be exchangeable for Registered Securities of the same series of
any authorized denominations and of a like aggregate principal amount and
tenor. Bearer Securities surrendered in exchange for Registered Securities
between a Regular Record Date or a Special Record Date and the relevant
date for payment of interest shall be surrendered without the coupon
relating to such date for payment of interest, and interest accrued as of
such date for payment of interest will not be payable in respect of the
Registered Security issued in exchange for such Bearer Security, but will
be payable only to the Holder of such coupon when due in accordance with
the terms of the applicable Indenture. Bearer Securities will not be issued
in exchange for Registered Securities. (Section 305)
Debt Securities may be presented for exchange as provided above, and
Registered Securities may be presented for registration of transfer (with
the form of transfer endorsed thereon duly executed), at the office of the
Security Registrar or at the office of any transfer agent designated by us
for such purpose with respect to any series of Debt Securities and referred
to in an applicable prospectus supplement, without service charge and upon
payment of any taxes and other governmental charges as described in the
Indentures. Such transfer or exchange will be effected upon the Security
Registrar or such transfer agent, as the case may be, being satisfied with
the documents of title and identity of the person making the request.
Unless otherwise indicated in any prospectus supplement, the Trustee for
the series of Debt Securities will serve as Security Registrar. (Section
305) If a prospectus supplement refers to any transfer agents (in addition
to the Security Registrar) initially designated by us with respect to any
series of Debt Securities, we may at any time rescind the designation of
any such transfer agent or approve a change in the location through which
any such transfer agent acts, except that, if Debt Securities of a series
are issuable solely as Registered Securities, we will be required to
maintain a transfer agent in each Place of Payment for such series and, if
Debt Securities of a series are also issuable as Bearer Securities, we will
be required to maintain (in addition to the Security Registrar) a transfer
agent in a Place of Payment for such series located outside the United
States. We may at any time designate additional transfer agents with
respect to any series of Debt Securities. (Section 1002)
Title to any Bearer Securities (including Bearer Securities in
permanent global form) and any coupons appertaining thereto will pass by
delivery. We, the Trustee, our agents and the agents of the Trustee may
treat the bearer of any Bearer Security and the bearer of any coupon and
the registered holder of any Registered Security as the owner thereof
(whether or not such Debt Security or coupon shall be overdue and
notwithstanding any notice to the contrary) for the purpose of making
payment and for all other purposes. (Section 308)
In the event of any redemption in part, we shall not be required to:
o issue, register the transfer of or exchange Debt Securities of
any series during a period beginning at the opening of business
15 days prior to the selection of Debt Securities of that
series for redemption and ending on the close of business on:
o if Debt Securities of the series are issuable only as Registered
Securities, the day of mailing of the relevant notice of
redemption; and
o if Debt Securities of the series are issuable as Bearer
Securities, the date of the first publication of the relevant
notice of redemption or, if Securities of the series are also
issuable as Registered Securities and there is no publication,
the mailing of the relevant notice of redemption;
o register the transfer of or exchange any Registered Security,
or portion thereof, called for redemption, except the
unredeemed portion of any Registered Security being redeemed in
part; or
o exchange any Bearer Security called for redemption, except to
exchange such Bearer Security for a Registered Security of that
series and like tenor which is immediately surrendered for
redemption. (Section 305)
Replacement of Securities and Coupons. We will replace any mutilated
Debt Security or any Debt Security with a mutilated coupon at the expense
of the Holder upon surrender of the Debt Security to the Trustee. We will
replace Debt Securities or coupons that become destroyed, stolen or lost at
the expense of the Holder upon delivery to the Trustee of the Debt Security
and coupons or evidence of destruction, loss or theft thereof satisfactory
to us and the Trustee; in the case of any coupon which becomes destroyed,
stolen or lost, such coupon will be replaced by issuance of a new Debt
Security in exchange for the Debt Security to which such coupon appertains.
In the case of a destroyed, lost or stolen Debt Security or coupon, an
indemnity satisfactory to the Trustee and to us may be required at the
expense of the Holder of such Debt Security or coupon before a replacement
Debt Security will be issued. (Section 306)
Payment and Paying Agents. Unless otherwise indicated in an
applicable prospectus supplement, payment of principal of and any premium
and interest on Bearer Securities will be payable, subject to any
applicable laws and regulations, at the offices of such Paying Agents
outside the United States as we may designate from time to time, in the
manner indicated in such prospectus supplement. (Section 1002) Unless
otherwise indicated in an applicable prospectus supplement, payment of
interest on Bearer Securities on any Interest Payment Date will be made
only against surrender to the Paying Agent of the coupon relating to such
Interest Payment Date. (Section 1001) No payment with respect to any Bearer
Security will be made at any of our offices or agencies in the United
States or by check mailed to any address in the United States or by
transfer to any account maintained with a bank located in the United
States. Notwithstanding the foregoing, payments of principal of and any
premium and interest on Bearer Securities denominated and payable in U.S.
dollars will be made at the office of our Paying Agent in the Borough of
Manhattan, the City of New York, if (but only if) payment of the full
amount thereof in U.S. dollars at all offices or agencies outside the
United States is illegal or effectively precluded by exchange controls or
other similar restrictions. (Section 1002)
Unless otherwise indicated in an applicable prospectus supplement,
payment of principal of and any premium and interest on Registered
Securities will be made at the office of the Paying Agent or Paying Agents
as we may designate from time to time, except that at our option, payment
of any interest may be made by check mailed on or before the due date to
the address of the Person entitled thereto as such address shall appear in
the Security Register. (Rule 307, 1002) Unless otherwise indicated in an
applicable prospectus supplement, payment of any installment of interest on
Registered Securities will be made to the Person in whose name such
Registered Security is registered at the close of business on the Regular
Record Date for such interest. (Section 307)
Unless otherwise indicated in an applicable prospectus supplement,
the Trustee for the series of Debt Securities will act as our Paying Agent
for payments with respect to Debt Securities which are issuable solely as
Registered Securities and we will maintain a Paying Agent outside the
United States for payments with respect to Debt Securities (subject to
limitations described above in the case of Bearer Securities) which are
issuable solely as Bearer Securities or as both Registered Securities and
Bearer Securities. Any Paying Agents outside the United States and any
other Paying Agents in the United States that we initially designate for
the Debt Securities will be named in an applicable prospectus supplement.
We may at any time designate additional Paying Agents or rescind the
designation of any Paying Agent or approve a change in the office through
which any Paying Agent acts, except that, if Debt Securities of a series
are issuable solely as Registered Securities, we will be required to
maintain a Paying Agent in each Place of Payment for such series and, if
Debt Securities of a series are issuable as Bearer Securities, we will be
required to maintain (i) a Paying Agent in the Borough of Manhattan, The
City of New York for principal payments with respect to any Registered
Securities of the series (and for payments with respect to Bearer
Securities of the series in the circumstances described above, but not
otherwise), and (ii) a Paying Agent in a Place of Payment located outside
the United States where Debt Securities of such series and any coupons
appertaining thereto may be presented and surrendered for payment. (Section
1002)
All moneys paid by us to a Paying Agent for the payment of principal
of and any premium or interest on any Debt Security which remain unclaimed
at the end of two years after such principal, premium or interest shall
have become due and payable will (subject to applicable escheat laws) be
repaid to us, and the Holder of such Debt Security or any coupon will
thereafter look only to us for payment thereof. (Section 1003)
Global Debt Securities. Debt Securities of a series may be issued in
whole or in part in the form of one or more global Debt Securities that
will be deposited with, or on behalf of, a depository identified in the
prospectus supplement relating to such series. Global Debt Securities may
be issued only in fully registered form and in either temporary or
permanent form. (Section 203) Unless and until it is exchanged in whole or
in part for the individual Debt Securities represented thereby, a global
Debt Security may not be transferred except as a whole by the depository
for such global Debt Security to a nominee of such depository or by a
nominee of such depository to such depository or another nominee of such
depository or by the depository or any nominee to a successor depository or
any nominee of such successor.
The specific terms of the depository arrangement with respect to a
series of Debt Securities in the form of one or more global Debt Securities
will be described in the prospectus supplement relating to that series.
Satisfaction and Discharge of Indenture. Each Indenture provides that
we may discharge the Indenture (except as to any surviving rights of
registration of transfer or exchange of Debt Securities and any right to
receive additional amounts) with respect to all Debt Securities issued
under the Indenture, which Debt Securities have not already been delivered
to the Trustee for cancellation and which either have become due and
payable or are by their terms due and payable within one year (or are to be
called for redemption within one year) by depositing with the Trustee as
trust funds an amount sufficient to pay when due the principal of and
premium, if any, and interest, if any, on all outstanding Debt Securities
when due. (Section 401)
Defeasance and Discharge. Each Indenture provides that, if we so
elect by Board Resolution with respect to the Debt Securities of any series
issued under such Indenture (other than convertible Subordinated Debt
Securities), we will be discharged from any and all obligations in respect
of the Debt Securities of such series (except for certain obligations
relating to temporary Debt Securities and exchange of Debt Securities,
registration of transfer or exchange of Debt Securities of such series,
replacement of stolen, lost or mutilated Debt Securities of such series,
maintenance of paying agencies to hold moneys for payment in trust and
payment of additional amounts, if any, required in consequence of United
States withholding taxes imposed on payments to non-United States persons)
upon the deposit with the Trustee, in trust, of money and/or U.S.
Government Obligations which through the payment of interest and principal
in respect thereof in accordance with their terms will provide money in an
amount sufficient to pay the principal of (and premium, if any), and each
installment of interest on, the Debt Securities of such series on the
Stated Maturity of such payments in accordance with the terms of such
Indenture and the Debt Securities of such series. (Sections 1302, 1304)
Such a trust may only be established if, among other things, we have
delivered to the Trustee an Opinion of Counsel to the effect that (i) we
have received from, or there has been published by, the Internal Revenue
Service a ruling, or (ii) since the date of such Indenture there has been a
change in applicable federal income tax law, in either case to the effect
that, and based thereon such Opinion of Counsel shall confirm that, the
Holders of such series will not recognize income, gain or loss for federal
income tax purposes as a result of such deposit, defeasance and discharge,
and will be subject to federal income tax on the same amounts and in the
same manner and at the same times as would have been the case if such
deposit, defeasance and discharge had not occurred. (Section 1304) In the
event of any such defeasance and discharge of Debt Securities of such
series, Holders of such series would be entitled to look only to such trust
fund for payment of principal of and any premium and any interest on their
Debt Securities until Maturity.
Covenant Defeasance. Each Indenture also provides that, if we so
elect by Board Resolution with respect to the Debt Securities of any series
issued thereunder, we may omit to comply with certain restrictive
covenants, including (in the case of the Senior Debt Indenture) the
covenants described under "--Provisions Applicable Solely to Senior Debt
Securities--Limitation on Liens" and "--Limitations on Sale and Leaseback
Transactions," but excluding (in the case of the Subordinated Debt
Indenture) any of our applicable obligations respecting the conversion of
Debt Securities of such series into common stock, and any such omission
shall not be an Event of Default with respect to the Debt Securities of
such series, upon the deposit with the Trustee, in trust, of money and/or
U.S. Government Obligations which through the payment of interest and
principal in respect thereof in accordance with their terms will provide
money in an amount sufficient to pay the principal of (and premium, if
any), and each installment of interest on, the Debt Securities of such
series on the Stated Maturity of such payments in accordance with the terms
of such Indenture and the Debt Securities of such series. Our obligations
under such Indenture and the Debt Securities of such series other than with
respect to such covenants shall remain in full force and effect. (Section
1303) Such a trust may be established only if, among other things, we have
delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of such series will not recognize income, gain or loss for federal
income tax purposes as a result of such deposit and defeasance of certain
obligations and will be subject to federal income tax on the same amounts
and in the same manner and at the same time as would have been the case if
such deposit and defeasance had not occurred. (Section 1304)
Although the amount of money and U.S. Government Obligations on
deposit with the Trustee would be intended to be sufficient to pay amounts
due on the Debt Securities of such series at the time of their Stated
Maturity, in the event we exercise our option to omit compliance with the
covenants defeased with respect to the Debt Securities of any series as
described above, and the Debt Securities of such series are declared due
and payable because of the occurrence of any Event of Default, such amount
may not be sufficient to pay amounts due on the Debt Securities of such
series at the time of the acceleration resulting from such Event of
Default. We shall in any event remain liable for such payments as provided
in the applicable Indenture.
Federal Income Tax Consequences. Under current United States federal
income tax law, defeasance and discharge would likely be treated as a
taxable exchange of Debt Securities to be defeased for an interest in the
defeasance trust. As a consequence, a holder would recognize gain or loss
equal to the difference between the holder's cost or other tax basis for
such Debt Securities and the value of the holder's interest in the
defeasance trust, and thereafter would be required to include in income the
holder's share of the income, gain or loss of the defeasance trust. Under
current United States federal income tax law, covenant defeasance would
ordinarily not be treated as a taxable exchange of such Debt Securities.
Meetings, Modification and Waiver. We and the Trustee may modify and
amend either Indenture with the consent of the Holders of a majority in
aggregate principal amount of the Outstanding Securities of each series
affected by such modification or amendment; provided, however, that no such
modification or amendment may, without the consent of the Holder of each
Outstanding Security affected thereby:
(a) change the Stated Maturity of the principal of, or any installment
of principal of or interest on, any Debt Security;
(b) change the Redemption Date with respect to any Debt Security;
(c) reduce the principal amount of, or premium or interest on, any
Debt Security;
(d) change our obligation, if any, to pay additional amounts;
(e) reduce the amount of principal of an Original Issue Discount
Security payable upon acceleration of the Maturity thereof;
(f) change the coin or currency in which any Debt Security or any
premium or interest thereon is payable;
(g) change the redemption right of any Holder;
(h) impair the right to institute suit for the enforcement of any
payment on or with respect to any Debt Security or any conversion
right with respect thereto;
(i) reduce the percentage in principal amount of Outstanding
Securities of any series, the consent of whose Holders is required for
modification or amendment of such Indenture or for waiver of
compliance with certain provisions of such Indenture or for waiver of
certain defaults;
(j) reduce the requirements contained in such Indenture for quorum or
voting;
(k) change our obligation, if any, to maintain an office or agency in
the places and for the purposes required by such Indenture;
(l) adversely affect the right to convert Subordinated Debt
Securities, if applicable; or
(m) modify any of the above provisions. (Section 902)
The Subordinated Debt Indenture may not be amended to alter the
subordination of any outstanding Subordinated Debt Securities without the
consent of each holder of Senior Indebtedness (as defined below under
"--Provisions Applicable Solely to Subordinated Debt Securities") then
outstanding that would be adversely affected thereby. (Section 907 of the
Subordinated Debt Indenture)
The Holders of a majority in aggregate principal amount of the
Outstanding Securities of each series may, on behalf of all Holders of that
series, waive, insofar as that series is concerned, our compliance with
certain restrictive provisions of the Indenture under which such series has
been issued. (Section 1007 of the Senior Debt Indenture; Section 1008 of
the Subordinated Debt Indenture) The Holders of a majority in aggregate
principal amount of the Outstanding Securities, of each series may, on
behalf of all Holders of that series, waive any past default under the
applicable Indenture with respect to any Debt Securities of that series,
except a default (a) in the payment of principal of, or premium, if any, or
any interest on any Debt Security of such series or (b) in respect of a
covenant or provision of such Indenture which cannot be modified or amended
without the consent of the Holder of each Outstanding Security of such
series affected. (Section 513)
Each Indenture provides that in determining whether the Holders of
the requisite principal amount of the Outstanding Securities have given any
request, demand, authorization, direction, notice, consent or waiver
thereunder or are present at a meeting of the Holders for quorum purposes,
(i) the principal amount of an Original Issue Discount Security that is
deemed to be Outstanding will be the amount of the principal that would be
due and payable as of the date of such determination upon acceleration of
the Maturity thereof, and (ii) the principal amount of a Debt Security
denominated in a foreign currency or currency units will be the U.S. dollar
equivalent, determined on the date of original issuance of such Debt
Security, of the principal amount of such Debt Security or, in the case of
an Original Issue Discount Security, the U.S. dollar equivalent, determined
on the date of original issuance of such Security, of the amount determined
as provided in (i) above. (Section 101)
Each Indenture contains provisions for convening meetings of the
Holders of a series if Debt Securities of that series are issuable as
Bearer Securities. (Section 1401) A meeting may be called at any time by
the Trustee, and also, upon request, by us or the Holders of at least 10%
in aggregate principal amount of the Outstanding Securities of such series,
in any such case upon notice given in accordance with "Notices" below.
(Section 1402) Except for any consent which must be given by the Holder of
each Outstanding Security affected thereby, as described above, any
resolution presented at a meeting (or adjourned meeting at which a quorum
is present) may be adopted by the affirmative vote of the Holders of a
majority in aggregate principal amount of the Outstanding Securities of
that series; provided, however, that any resolution with respect to any
request, demand, authorization, direction, notice, consent, waiver or other
action which may be made, given or taken by the Holders of a specified
percentage, which is less than a majority, in aggregate principal amount of
the Outstanding Securities of a series may be adopted at a meeting (or
adjourned meeting duly reconvened at which a quorum is present) by the
affirmative vote of the Holders of such specified percentage in aggregate
principal amount of the Outstanding Securities of that series. Any
resolution passed or decision taken at any meeting of Holders of any series
duly held in accordance with the applicable Indenture will be binding on
all Holders of that series and related coupons. The quorum at any meeting,
and at an reconvened meeting, will be Persons holding or representing a
majority in aggregate principal amount of the Outstanding Securities of a
series. (Section 1404)
Notices. Except as otherwise provided in an applicable prospectus
supplement, notices to Holders of Bearer Securities will be given by
publication at least twice in a daily newspaper in the City of New York and
in such other city or cities as may be specified in such Bearer Securities.
Notices to Holders of Registered Securities will be given by first-class
mail to the addresses of such Holders as they appear in the Security
Register. (Section 106)
Governing Law. The Indentures, the Debt Securities and coupons will
be governed by, and construed in accordance with, the laws of the State of
New York. (Section 113)
Regarding the Trustee. The Trustee appointed and serving as trustee
pursuant to each of the Senior Debt Indenture and the Subordinated Debt
Indenture is Chase Bank.
Each Indenture contains certain limitations on the right of the
Trustee, should it become our creditor, to obtain payment of claims in
certain cases, or to realize for its own account on certain property
received in respect of any such claim as security or otherwise. (Section
613) The Trustee is permitted to engage in certain other transactions;
however, if it acquires any conflicting interest (as described in the
Indentures), it must eliminate such conflict or resign. (Section 608)
The holders of a majority in principal amount of all outstanding Debt
Securities of a series (or if more than one series is affected thereby, all
series so affected, voting as a single class) will have the right to direct
the time, method and place of conducting any proceeding for exercising any
remedy or power available to the Trustee for such series or all such series
so affected.
In case an Event of Default shall occur (and shall not be cured)
under any Indenture relating to a series of Debt Securities and is known to
the Trustee for such series, such Trustee shall exercise such of the rights
and powers vested in it by such Indenture and use the same degree of care
and skill in its exercise as a prudent person would exercise or use under
the circumstances in the conduct of his own affairs. Subject to such
provisions, no Trustee will be under any obligation to exercise any of its
rights or powers under the applicable Indenture at the request of any of
the holders of Debt Securities unless they shall have offered to such
Trustee security and indemnity satisfactory to it.
Pursuant to the Trust Indenture Act, a trustee under an indenture may
be deemed to have a conflicting interest, and may, under certain
circumstances set forth in the Trust Indenture Act, be required to resign
as trustee under such indenture, if the securities under such indenture are
in default (as such term is defined in such indenture) and the trustee is
the trustee under another indenture under which any other securities of the
same obligor are outstanding, subject to certain exceptions set forth in
the Trust Indenture Act. In such event, the obligor must take prompt steps
to have a successor trustee appointed in the manner provided in the
indenture from which the trustee has resigned. Accordingly, Chase Bank, as
trustee under the Senior Debt Indenture and the Subordinated Debt
Indenture, could be required to resign as trustee under one of such
Indentures should a default occur under one of such Indentures. In such
event, we would be required to take prompt steps to have a successor
trustee or successor trustees appointed in the manner provided in the
applicable Indenture.
Chase Bank, as the trustee under the Senior Debt Indenture and the
Subordinated Debt Indenture, may be a depositary for funds of, may make
loans to and may perform other routine banking services for us and certain
of our affiliates in the normal course of business.
PROVISIONS APPLICABLE SOLELY TO SENIOR DEBT SECURITIES
General. Senior Debt Securities will be issued under the Senior Debt
Indenture, and each series will rank pari passu as to the right of payment
of principal and any premium and interest with each other series issued
thereunder and will rank senior to all series of Subordinated Debt
Securities issued and outstanding and that may be issued from time to time.
Certain Definitions. For purposes of the following discussion, the
following definitions are applicable (Section 1008 and 1009 of the Senior
Debt Indenture).
"Attributable Debt" shall mean, as of any particular time, the
present value, discounted at a rate per annum equal to (i) the implied
lease rate of or (ii) if the implied lease rate is not known to us, then
the weighted average interest rate of all Senior Debt Securities
outstanding at the time under the Senior Debt Indenture compounded
semi-annually, in either case, of the obligation of a lessee for rental
payments during the remaining term of any lease (including any period for
which such lease has been extended or may, at the option of the lessor, be
extended); the net amount of rent required to be paid for any such period
shall be the total amount of the rent payable by the lessee with respect to
such period, but may exclude amounts required to be paid on account of
maintenance and repairs, insurance, taxes, assessments, water rates and
similar charges; and, in the case of any lease which is terminable by the
lessee upon the payment of a penalty, such net amount shall also include
the amount of such penalty, but no rent shall be considered as required to
be paid under such lease subsequent to the first date upon which it may be
so terminated.
"Consolidated Net Tangible Assets" shall mean, at any date of
determination, the total amount of our assets after deducting therefrom:
(i) all the current liabilities (excluding (a) any current liabilities that
by their terms are extendible or renewable at the option of the obligor
thereon to a time more than 12 months after the time as of which the amount
thereof is being computed, and (b) current maturities of long term debt)
and (ii) the value (net of any applicable reserves) of all intangible
assets such as excess of cost over net assets of acquired businesses,
customer lists, covenants not to compete, licenses, and permits, all as set
forth on our and our consolidated subsidiaries' consolidated balance sheet
for our most recently completed fiscal quarter, prepared in accordance with
United States generally accepted accounting principles.
"Guaranty" shall mean any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is
contingently liable upon (by direct or indirect agreement, contingent or
otherwise, to provide funds for payment, to supply funds to, or otherwise
to invest in, a debtor, or otherwise to assure a creditor against loss) the
debt, obligation or other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other
Person. The amount of the obligor's obligation under any Guaranty shall
(subject to any limitation set forth therein) be deemed to be the amount of
such other Person's debt, obligation or other liability or the amount of
such dividends or other distributions guaranteed.
"Indebtedness" of any Person shall mean
(a) all obligations of such Person for borrowed money (including,
without limitation, all notes payable and drafts accepted
representing extension of credit and all obligations evidenced by
bonds, debentures, notes or other similar instruments) or on which
interest charges are customarily paid, all as shown on a balance
sheet of such Person as of the date at which Indebtedness is to be
determined;
(b) all other items which, in accordance with generally accepted
accounting principles, would be included as liabilities on the
liability side of a balance sheet of such Person as of the date at
which Indebtedness is to be determined; and
(c) or not so included as liabilities in accordance with generally
accepted accounting principles,
(i) all indebtedness (excluding, however, prepaid interest
thereon) secured by a Security Interest in property owned or being
purchased by such Person (including, without limitation, indebtedness
arising under conditional sales or other title retention agreements)
whether or not such indebtedness shall have been assumed by such
Person, and
(ii) all Guaranties of such Person.
"Principal Property" shall mean any waste processing, waste disposal
or resource recovery plant or similar facility located within the United
States (other than its territories and possessions and Puerto Rico) or
Canada and owned by, or leased to, us or any Restricted Subsidiary, except
(a) any such plant or facility (i) owned or leased jointly or in common
with one or more persons other than us and any Restricted Subsidiaries in
which our and our Restricted Subsidiaries' interest does not exceed 50%, or
(ii) which the Board of Directors determines in good faith is not of
material importance to our and our subsidiaries', as an entity, total
business conducted, or assets owned, or (b) any portion of such plant or
facility which the Board of Directors determines in good faith not to be of
material importance to the use or operation thereof.
"Restricted Subsidiary" shall mean any Subsidiary (other than any
Subsidiary of which we own directly or indirectly less than all of the
outstanding Voting Stock) (a) principally engaged in, or whose principal
assets consist of property used by us or any Restricted Subsidiary in, the
storage, collection, transfer, interim processing or disposal of waste
within the United States or Canada, or (b) which we shall designate as a
Restricted Subsidiary in an Officers' Certificate delivered to the Trustee.
"Security Instrument" shall mean any security agreement, chattel
mortgage, assignment, financing or similar statement or notice,
continuation statement, other agreement or instrument, or amendment or
supplement to any thereof, providing for, evidencing or perfecting any
Security Interest or lien.
"Security Interest" shall mean any interest in any real or personal
property or fixture which secures payment or performance of an obligation
and shall include any mortgage, lien, encumbrance, charge or other security
interest of any kind, whether arising under a Security Instrument or as a
matter of law, judicial process or otherwise.
Consolidation, Merger, Sale. The Senior Debt Indenture provides that
we may not consolidate with or merge into any other Person or convey,
transfer or lease our properties and assets substantially as an entirety to
any Person, unless (1) the Person formed by such consolidation or into
which we are merged or the Person which acquires by conveyance or transfer,
or which leases, our properties and assets we are substantially as an
entirety shall be a corporation, partnership or trust which shall expressly
assume, by a supplemental indenture, executed and delivered to the Trustee,
in form satisfactory to the Trustee, the due and punctual payment of the
principal of and any premium and interest (including all additional
amounts, if any, payable pursuant to the Senior Debt Indenture) on all the
Senior Debt Securities and the performance or observance of every other
covenant of the Senior Debt Indenture to be performed or observed on our
part; and (2) immediately after giving effect to such transaction and
treating any indebtedness which becomes our or our Subsidiary's obligation
as a result of such transaction as having been incurred by us or our
Subsidiary at the time of such transaction, no Event of Default, and no
event which, after notice or lapse of time or both, would become an Event
of Default, shall have happened and be continuing. Upon any consolidation
of us with, or merger of us into, any other Person or any, conveyance,
transfer or lease of our properties and assets substantially as an
entirety, the successor Person formed by such consolidation or into which
we are merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise our every right and
power under the Senior Debt Indenture with the same effect as if such
successor Person had been named as us herein, and thereafter, except in the
case of a lease, the predecessor Person shall be relieved of all
obligations and covenants under the Senior Debt Indenture and the Senior
Debt Securities and coupons and may liquidate and dissolve. (Sections 801,
802 of the Senior Debt Indenture)
Limitation on Liens. Unless provided otherwise in the applicable
prospectus supplement, the provisions of this covenant shall apply to each
series of Senior Debt Securities issued under the Senior Debt Indenture:
(a) We will not, and we will not permit any of our Restricted
Subsidiaries to, create, incur, assume or suffer to exist, directly
or indirectly, any Indebtedness secured by a Security Interest upon
any Principal Property of us or of a Restricted Subsidiary, whether
owned as of the date of this Indenture or hereafter acquired, without
making effective provision (and we hereby covenant that in any such
case we shall make or cause to be made effective provision) whereby
the Senior Debt Securities of that series then outstanding and any
other Indebtedness of us or any Restricted Subsidiary then entitled
thereto shall be secured by such Security Interest equally and
ratably with (or, in the case of the Senior Debt Securities of that
series and if we shall so determine, prior to) any and all other
Indebtedness of us or any Restricted Subsidiary thereby secured for
so long as any such other Indebtedness of us or any Restricted
Subsidiary shall be so secured; provided, that nothing in the Senior
Debt Indenture shall prevent, restrict or apply to Indebtedness
secured by:
(1) (a) Any Security Interest upon property or assets which is
created prior to or contemporaneously with, or within 360 days after,
(i) in the case of the acquisition of such property or assets, the
completion of such acquisition and (ii) in the case of the
construction, development or improvement of such property or assets,
the later to occur of the completion of such construction,
development or improvement or the commencement of operation or use of
the property or assets, which Security Interest secures or provides
for the payment, financing or refinancing, directly or indirectly, of
all or any part of the acquisition cost of such property or assets or
the cost of construction, development or improvement thereof; or (b)
any Security Interest upon property or assets existing at the time of
the acquisition thereof, which Security Interest secures obligations
assumed by us or any Restricted Subsidiary; or (c) any conditional
sales agreement or other title retention agreement with respect to
any property or assets acquired by us or any Restricted Subsidiary,
or (d) any Security Interest existing on the property or assets
or shares of stock of a corporation or firm at the time such
corporation or firm is merged into or consolidated with us or any
Restricted Subsidiary or at the time of a sale, lease or other
disposition of the property or assets of such corporation or firm as
an entirety or substantially as an entirety to us or any Restricted
Subsidiary or at the time such corporation becomes a Restricted
Subsidiary; or (e) any Security Interest existing on the property,
assets or shares of stock of any successor which shall have become us
in accordance with the provisions of the covenant described in
"--Provisions Applicable Solely to Senior Debt
Securities--Consolidation, Merger and Sale of Assets"; provided, in
each case, that any such Security Interest described in the foregoing
clauses (b), (c), (d) or (e) does not attach to or affect property or
assets owned by us or any Restricted Subsidiary prior to the event
referred to in such clauses; or
(2) Mechanics', materialmen's, carriers' or other like liens
arising in the ordinary course of business (including construction of
facilities) in respect of obligations which are not due or which are
being contested in good faith; or
(3) Any Security Interest arising by reason of deposits with,
or the giving of any form of security to, any governmental agency or
any body created or approved by law or governmental regulation, which
is required by law or governmental regulation as a condition to the
transaction of any business or the exercise of any privilege,
franchise or license (including, without limitation, any Security
Interest arising by reason of one or more letters of credit in
connection with any international waste management contract to be
performed by us or any of our Subsidiaries or our or their respective
affiliates); or
(4) Security Interests for taxes, assessments or governmental
charges or levies not yet delinquent or Security Interests for taxes,
assessments or governmental charges or levies already delinquent but
the validity of which is being contested in good faith; or
(5) Security Interests (including judgment liens) arising in
connection with legal proceedings so long as such proceedings are
being contested in good faith and, in the case of judgment liens,
execution thereon is stayed; or
(6) Landlords' liens on fixtures located on premises leased by
us or any Restricted Subsidiary in the ordinary course of business; or
(7) Any Security Interest in favor of any governmental
authority in connection with the financing of the cost of
construction or acquisition of property; or
(8) Any Security Interest arising by reason of deposits to
qualify us or any Restricted Subsidiary to conduct business, to
maintain self-insurance, or to obtain the benefit of, or comply with,
laws; or
(9) Any Security Interest that secures any Indebtedness of a
Restricted Subsidiary owing to us or another Restricted Subsidiary or
by us to a Restricted Subsidiary, or
(10) Any Security Interest incurred in connection with
pollution control, sewage or solid waste disposal, industrial revenue
or similar financing; or
(11) Any Security Interest created by any program providing for
the financing, sale or other disposition of trade or other
receivables qualified as current assets in accordance with United
States generally accepted accounting principles entered into by
us or by any Restricted Subsidiary, provided that such program is
on terms comparable for similar transactions, or any document
executed by us or any Restricted Subsidiary in connection
therewith, and provided that such Security Interest is limited to
the trade or other receivables in respect of which such program
is created or exists and the proceeds thereof, or
(12) Any extension, renewal or refunding (or successive
extensions, renewals or refundings) in whole or in part of any
Indebtedness secured by any Security Interest referred to in the
foregoing clauses (1) through (11), inclusive, provided that the
Security Interest securing such Indebtedness shall be limited to the
property or assets which, immediately prior to such extension,
renewal or refunding, secured such Indebtedness and additions to such
property or assets.
Notwithstanding the foregoing provisions, we or any of our Restricted
Subsidiaries may create, incur, assume or suffer to exist any Indebtedness
secured by a Security Interest without so securing the Senior Debt
Securities of that series if, at the time such Security Interest becomes a
Security Interest upon any of our or our Restricted Subsidiaries' Principal
Property and after giving effect thereto, the aggregate outstanding
principal amount of all Indebtedness of us and our Restricted Subsidiaries
secured by Security Interests permitted by this sentence (excluding
Indebtedness secured by a Security Interest existing as of the date of the
Senior Debt Indenture, but including the Attributable Debt in respect of
Sale and Leaseback Transactions, other than Sale and Leaseback Transactions
which, if the Attributable Debt in respect thereof had been Indebtedness
secured by a Security Interest, would have been permitted by clause (1)(a)
above, other Sale and Leaseback Transactions the proceeds of which have
been applied or committed to be applied in accordance with the covenant
described in "--Provisions Applicable Solely to Senior Debt
Securities--Limitations on Sale and Leaseback Transactions" and other than
Sale and Leaseback Transactions between us and any Restricted Subsidiary)
does not exceed 15% of Consolidated Net Tangible Assets. (Section 1008 of
the Senior Debt Indenture)
(b) If, upon any consolidation or merger of any Restricted Subsidiary
with or into any other corporation, or upon any consolidation or
merger of any other corporation with or into us or any Restricted
Subsidiary or upon any sale or conveyance of the Principal Property
of any Restricted Subsidiary as an entirety or substantially as an
entirety to any other Person, or upon any acquisition by us or any
Restricted Subsidiary by purchase or otherwise of all or any part of
the Principal Property of any other Person, any Principal Property
theretofore owned by us or such Restricted Subsidiary would thereupon
become subject to any Security Interest not permitted by the terms of
the foregoing covenant, we, prior to such consolidation, merger, sale
or conveyance, or acquisition, will, or will cause such Restricted
Subsidiary to, secure payment of the principal of and interest, if
any, on the Senior Debt Securities of that series (equally and
ratably with or prior to any other Indebtedness of us or such
Restricted Subsidiary then entitled thereto) by a direct lien on all
such Principal Property prior to all liens other than any liens
theretofore existing thereon by a supplemental indenture or
otherwise. (Section 1008 of the Senior Debt Indenture)
Limitations on Sale and Leaseback Transactions. Unless provided
otherwise in the applicable prospectus supplement, the provisions of this
covenant shall apply to each series of Senior Debt Securities issued under
the Senior Debt Indenture:
We will not, and will not permit a Restricted Subsidiary to, enter
into any arrangement with any Person (other than with any Restricted
Subsidiary) providing for the leasing to us or any Restricted Subsidiary of
any Principal Property owned or hereafter acquired by us or such Restricted
Subsidiary (except for temporary leases for a term, including any renewal
thereof, of not more than three years and except for leases between us and
a Restricted Subsidiary or between Restricted Subsidiaries), which
Principal Property has been or is to be sold or transferred by us or such
Restricted Subsidiary to such person (a "Sale and Leaseback Transaction")
unless (a) we or such Restricted Subsidiary would be entitled, pursuant to
the covenant described in "--Provisions Applicable Solely to Senior Debt
Securities--Limitation on Liens," to incur Indebtedness secured by a
Security Interest on the property to be leased without equally and ratably
securing the Senior Debt Securities of that series, or (b) we shall, and in
any such case we covenant that we will, within 180 days after the effective
date of any such arrangement, apply an amount equal to the fair value (as
determined by the Board of Directors) of such property to the redemption of
Senior Debt Securities that, by their terms, are subject to redemption, or
to the purchase and retirement of Senior Debt Securities, or to the payment
or other retirement of funded debt for money borrowed, incurred or assumed
by us which ranks senior to or pari passu with the Senior Debt Securities
of that series or of funded debt for money borrowed, incurred or assumed by
any Restricted Subsidiary (other than, in either case, funded debt owed by
us or any Restricted Subsidiary), or (c) we shall within 180 days after
entering into the Sale and Leaseback Transaction, enter into a bona fide
commitment or commitments to expend for the acquisition or capital
improvement of a Principal Property an amount at least equal to the fair
value (as determined by the Board of Directors) of such property. (Section
1009 of the Senior Debt Indenture)
Notwithstanding the foregoing, we may, and may permit any Restricted
Subsidiary to, effect any Sale and Leaseback Transaction that is not
acceptable pursuant to clauses (a) through (c), inclusive, of the foregoing
covenant, provided that the Attributable Debt associated with such Sale and
Leaseback Transaction, together with the aggregate principal amount of
outstanding debt secured by Security Interests upon Principal Property not
acceptable pursuant to clauses (1) through (12) of the covenant described
in "--Provisions Applicable Solely to Senior Debt Securities--Limitation on
Liens," inclusive, do not exceed 15% of Consolidated Net Tangible Assets.
(Section 1009 of the Senior Debt Indenture)
Events of Default. Unless otherwise specified in the applicable
prospectus supplement, an Event of Default is defined under the Senior Debt
Indenture with respect to the Senior Debt Securities of any series issued
under such Senior Debt Indenture as being one or more of the following
events:
(1) default in the payment of any interest upon any Senior Debt
Security of that series when it becomes due and payable, and
continuance of such default for a period of 30 days; or
(2) default in the payment of the principal of (or premium, if
any, on) any Senior Debt Security of that series as and when the same
becomes due and payable whether at Stated Maturity, by declaration of
acceleration, call for redemption or otherwise; or
(3) default in the deposit of any sinking fund payment, when and
as due by the terms of a Senior Debt Security of that series; or
(4) default in the performance, or breach, of any of our other
covenants or warranties in the Senior Debt Indenture (other than a
covenant or warranty a default in whose performance or whose breach
is elsewhere in Section 501 of the Senior Debt Indenture specifically
dealt with or which has expressly been included in the Senior Debt
Indenture solely for the benefit of a series of Senior Debt
Securities other than that series), and continuance of such default
or breach for a period of 60 days after there has been given, by
registered or certified mail, to us by the Trustee or to us and the
Trustee by the Holders of at least 25% in principal amount of the
Outstanding Senior Debt Securities of that series a written notice
specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" under the Senior
Debt Indenture; or
(5) the entry by a court having jurisdiction in the premises of
(A) a decree or order for relief in respect of us in an involuntary
case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or
(B) a decree or order adjudging us a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of us
under any applicable Federal or State law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator
or other similar official of us or of any substantial part of our
property, or ordering the winding up or liquidation of our
affairs, and the continuance of any such decree or order for
relief or any such other decree or order unstayed and in effect
for a period of 90 consecutive days; or
(6) the commencement by us of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent, or the consent
by it to the entry of a decree or order for relief in respect of us
in an involuntary case or proceeding under any applicable Federal or
State bankruptcy, insolvency, reorganization or other similar law or
the commencement of any bankruptcy or insolvency case or proceeding
against it, or the filing by it of a petition or answer or consent
seeking reorganization or relief under any applicable Federal or
State law, or the consent by it to the filing of such petition or to
the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or similar official of us
or of any substantial part of our property, or the making by us of an
assignment for the benefit of creditors, or the admission by us in
writing of our inability to pay our debts generally as they become
due, or the taking of corporate action by us in furtherance of any
such action; or
(7) any other Event of Default provided with respect to Senior
Debt Securities of that series. (Section 501 of the Senior Debt
Indenture)
Remedies. If an Event of Default with respect to Senior Debt
Securities of any series at the time Outstanding occurs and is continuing,
then in every such case, either the Trustee or the Holders of not less than
25% in principal amount of the Outstanding Senior Debt Securities of that
series may declare the principal amount (or, if any of the Senior Debt
Securities of that series are Original Issue Discount Securities, such
portion of the principal amount of such Senior Debt Securities as may be
specified in the terms thereof) of all of the Senior Debt Securities of
that series to be due and payable immediately, by a notice in writing to us
(and to the Trustee if given by Holders), and upon any such declaration
such principal amount (or specified amount) shall become immediately due
and payable. At any time after such a declaration of acceleration with
respect to the Senior Debt Securities of any series has been made and
before a judgment or decree for payment of the money due has been obtained
by the Trustee, the Holders of a majority in principal amount of the
Outstanding Senior Debt Securities of that series, by written notice to us
and the Trustee, may rescind and annul such declaration and its
consequences if:
(1) we have paid or deposited with the Trustee a sum sufficient
to pay:
(A) all overdue interest on all Senior Debt Securities of that
series;
(B) the principal of (and premium, if any, on) any Senior Debt
Securities of that series which has become due otherwise than
by such declaration of acceleration and any interest thereon at
the rate or rates prescribed therefor in such Senior Debt
Securities;
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates prescribed
therefor in such Senior Debt Securities; and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel; and
(2) all Events of Default with respect to Senior Debt
Securities of that series, other than the non-payment of the
principal of Senior Debt Securities of that series which has become
due solely by such declaration of acceleration, have been cured or
waived as provided in the Senior Debt Indenture.
No such rescission shall affect any subsequent default or impair any
right consequent thereon. (Section 502 of the Senior Debt Indenture) If the
Trustee or any Holder of a Senior Debt Security or coupon has instituted
any proceeding to enforce any right or remedy under the Senior Debt
Indenture and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to such Holder,
then and in every such case, subject to any determination in such
proceeding, we, the Trustee and the Holders of Senior Debt Securities and
coupons shall be restored severally and respectively to their former
positions under the Senior Debt Indenture and the Senior Debt Securities
and thereafter all rights and remedies of the Trustee and the Holders shall
continue as though no such proceeding had been instituted. (Section 509 of
the Senior Debt Indenture)
The Senior Debt Indenture provides that, subject to the duty of the
Trustee during default to act with the required standard of care, the
Trustee is under no obligation to exercise any of its rights or powers
under such Indenture at the request or direction of any of the Holders,
unless such Holders shall have offered to the Trustee reasonable indemnity.
(Sections 601, 603 of the Senior Debt Indenture) No Holder of any Senior
Debt Security of any series or any related coupons shall have any right to
institute any proceeding, judicial or otherwise, with respect to the Senior
Debt Indenture, or for the appointment of a receiver or trustee, or for any
other remedy thereunder, unless:
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default with respect to the Senior
Debt Securities of that series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Senior Debt Securities of that series shall have been
made written request to the Trustee to institute proceedings in
respect of such Event of Default in its own name as Trustee under the
Senior Debt Indenture;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to
be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of
a majority in principal amount of the Outstanding Senior Debt
Securities of that series. (Section 507 of the Senior Debt Indenture)
Notwithstanding any other provisions in the Senior Debt Indenture,
the right of any Holder of any Senior Debt Security or coupon to receive
payment of the principal of and any premium and any interest on such Senior
Debt Security or payment of such coupon on the Stated Maturity or
Maturities expressed in such Senior Debt Security or coupon, or to
institute suit for the enforcement of any such payment on or after such
respective dates shall not be impaired or affected without the consent of
such Holder. (Sections 508, 902 of the Senior Debt Indenture)
The Holders of a majority in principal amount of the Outstanding
Senior Debt Securities of any series shall have the right to direct the
time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee, with respect to the Senior Debt Securities of such series,
provided that (1) such direction shall not be in conflict with any rule of
law or with the Senior Debt Indenture; (2) the Trustee may take any other
action deemed proper by the Trustee which is not inconsistent with such
direction; and (3) the Trustee shall not be obligated to take any action
unduly prejudicial to Holders not joining in such direction or involving
the Trustee in personal liability. (Section 512 of the Senior Debt
Indenture) The Holders of a majority in principal amount of the Outstanding
Senior Debt Securities of any series may on behalf of the Holders of all
the Senior Debt Securities of such series waive any past default under the
Senior Debt Indenture with respect to the Senior Debt Securities of such
series and its consequences, except a default in the payment of the
principal of or any premium or interest on any Senior Debt Security of such
series or in respect of a covenant or provision of the Senior Debt
Indenture which, pursuant to the Senior Debt Indenture, cannot be modified
or amended without the consent of the Holder of each Outstanding Senior
Debt Security of such series affected. Upon any such waiver, such default
shall cease to exist, and any Event of Default arising therefrom shall be
deemed to have been cured, for every purpose of the Senior Debt Indenture;
but no such waiver shall extend to any subsequent or other default or
impair any right consequent thereon. (Sections 513, 902 of the Senior Debt
Indenture)
If a default occurs under the Senior Debt Indenture with respect to
Senior Debt Securities of any series, the Trustee shall give the Holders of
Senior Debt Securities of such series notice of such default as and to the
extent provided by the Trust Indenture Act; provided, however. that in the
case of any default or breach of certain covenants or warranties with
respect to Senior Debt Securities of such series, no such notice to Holders
shall be given until at least 30 days after the occurrence thereof (the
term "default" for purposes of these provisions being defined as any event
which is, or after notice or lapse of time or both would become, an Event
of Default with respect to the Senior Debt Securities of such series).
(Section 602 of the Senior Debt Indenture)
In any case in which Senior Debt Securities are Outstanding that are
denominated in more than one currency and the Trustee is directed to make
ratable payments under the Senior Debt Indenture to Holders of such Senior
Debt Securities, unless otherwise provided with respect to any series of
Senior Debt Securities, the Trustee shall calculate the amount of such
payments as follows:
(i) as of the day the Trustee collects an amount under the
Senior Debt Indenture, the Trustee shall, as to each Holder of a
Senior Debt Security to whom an amount is due and payable under the
Senior Debt Indenture that is denominated in a foreign currency,
determine that amount in Dollars that would be obtained for the
amount owing such Holder, using the rate of exchange at which in
accordance with normal banking procedures the Trustee could purchase
in the City of New York Dollars with such amount owing;
(ii) calculate the sum of all Dollar amounts determined under
(i) and add thereto any amounts due and payable in Dollars; and
(iii) using the individual amounts determined in (i) or any
individual amounts due and payable in Dollars, as the case may be, as
a numerator, and the sum calculated in (ii) as a denominator,
calculate as to each Holder of a Senior Debt Security to whom an
amount is owed under the Senior Debt Indenture the fraction of the
amount collected under the Senior Debt Indenture payable to such
Holder.
Any expenses incurred by the Trustee in actually converting amounts
owing Holders of Senior Debt Securities denominated in a currency other
than that in which any amount is collected under the Senior Debt Indenture
shall be likewise (in accordance with the foregoing) borne ratably by all
Holders of Senior Debt Securities to whom amounts are payable under the
Senior Debt Indenture. (Sections 506, 902 of the Senior Debt Indenture)
To the fullest extent allowed under applicable law, if for the
purpose of obtaining judgment against us in any court it is necessary to
convert the sum due in respect of the principal of, or premium, if any, or
interest on, the Senior Debt Securities of any series (the "Required
Currency") into a currency in which a judgment will be rendered (the
"Judgment Currency"), the rate of exchange used shall be the rate at which
in accordance with normal banking procedures the Trustee could purchase in
the City of New York the Required Currency with the Judgment Currency on
the Business Day in the City of New York next preceding that on which final
judgment is given. Neither we nor the Trustee shall be liable for any
shortfall nor shall either of them benefit from any windfall in payments to
Holders of Senior Debt Securities under this provision of the Senior Debt
Indenture caused by a change in exchange rates between the time the amount
of a judgment against us is calculated as above and the time the Trustee
converts the Judgment Currency into the Required Currency to make payments
under the foregoing provisions of the Senior Debt Indenture to Holders of
Senior Debt Securities, but payment of such judgment shall discharge all
amounts owed by us on the claim or claims underlying such judgment.
(Section 506 of the Senior Debt Indenture)
We are required to furnish to the Trustee annually a statement as to
our compliance with all conditions and covenants under the Senior Debt
Indenture. (Section 1006)
PROVISIONS APPLICABLE SOLELY TO SUBORDINATED DEBT SECURITIES
Consolidation, Merger, Sale. The Subordinated Debt Indenture provides
that we may not consolidate with or merge into any other Person or convey,
transfer or lease its properties and assets substantially as an entirety to
any Person, unless (1) the Person formed by such consolidation or into
which we merge or the Person which acquires by conveyance or transfer, or
which leases, our properties and assets substantially as an entirety shall
be a corporation, partnership or trust, organized and validly existing
under the laws of the United States, any State thereof or the District of
Columbia and shall expressly assume, by a supplemental indenture, executed
and delivered to the Trustee, in form satisfactory to the Trustee, the due
and punctual payment of the principal of and any premium and interest
(including all additional amounts, if any, payable pursuant to the
Subordinated Debt Indenture) on all the Subordinated Debt Securities and
the performance or observance of every other covenant of the Subordinated
Debt Indenture to be performed or observed on our part; and (2) immediately
after giving effect to such transaction and treating any indebtedness which
becomes our or our subsidiaries' obligation as a result of such transaction
as having been incurred by us or such Subsidiary at the time of such
transaction, no Event of Default, and no event which, after notice or lapse
of time or both, would become an Event of Default, shall have happened and
be continuing. Upon any consolidation of us with, or merger of us into, any
other Person or any conveyance, transfer or lease of our properties and
assets substantially as an entirety, the successor Person formed by such
consolidation or into which we are merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise our every right and power under the Subordinated Debt Indenture
with the same effect as if such successor Person had been named as us
herein, and thereafter, except in the case of a lease, the predecessor
Person shall be relieved of all obligations and covenants under the
Subordinated Debt Indenture and the Subordinated Debt Securities and
coupons and may liquidate and dissolve. (Sections 801, 802 of the
Subordinated Debt Indenture)
Events of Default. Unless otherwise specified in the applicable
prospectus supplement, an Event of Default is defined under the
Subordinated Debt Indenture with respect to the Subordinated Debt
Securities of any series issued under such Subordinated Debt Indenture as
being one or more of the following events:
(1) default in the payment of any interest upon any
Subordinated Debt Security of that series when it becomes due and
payable, and continuance of such default for a period of 30 days; or
(2) default in the payment of the principal of (or premium, if
any, on) any Subordinated Debt Security of that series as and when
the same becomes due and payable, whether at Stated Maturity or by
declaration of acceleration, call for redemption or otherwise; or
(3) default in the deposit of any sinking fund payment, when and
as due by the terms of a Subordinated Debt Security of that series; or
(4) default in the performance, or breach, of any of our other
covenants or warranties in the Subordinated Debt Indenture (other
than a covenant or warranty a default in whose performance or whose
breach is elsewhere in Section 501 of the Subordinated Debt Indenture
specifically dealt with or which has expressly been included in the
Subordinated Debt Indenture solely for the benefit of a series of
Subordinated Debt Securities other than that series), and continuance
of such default or breach for a period of 90 days after there has
been given, by registered or certified mail, to us by the Trustee or
to us and the Trustee by the Holders of at least 25% in principal
amount of the Outstanding Subordinated Debt Securities of that series
a written notice specifying such default or breach and requiring it
to be remedied and stating that such notice is a "Notice of Default"
under the Subordinated Debt Indenture; or
(5) the entry by a court having jurisdiction in the premises of
(A) a decree or order for relief in respect of us in an involuntary
case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or (B) a decree or
order adjudging us a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of us under any applicable Federal or
State law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of us or of any
substantial part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or
order for relief or any such other decree or order unstayed and in
effect for a period of 90 consecutive days; or
(6) the commencement by us of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent, or the consent
by us to the entry of a decree or order for relief in respect of us
in an involuntary case or proceeding under any applicable Federal or
State bankruptcy, insolvency, reorganization or other similar law or
the commencement of any bankruptcy or insolvency case or proceeding
against us, or the filing by us of a petition or answer or consent
seeking reorganization or relief under any applicable Federal or
State law, or the consent by us to the filing of such petition or to
the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or similar official of us
or of any substantial part of our property, or the making by us of an
assignment for the benefit of creditors, or the admission by us in
writing of our inability to pay our debts generally as they become
due, or the taking of corporate action by us in furtherance of any
such action; or
(7) any other Event of Default provided with respect to
Subordinated Debt Securities of that series. (Section 501 of the
Subordinated Debt Indenture)
Remedies. If an Event of Default with respect to Subordinated Debt
Securities of any series at the time Outstanding occurs and is continuing,
then in every such case, the Trustee or the Holders of not less than 25% in
principal amount of the Outstanding Subordinated Debt Securities of that
series may declare the principal amount (or, if any of the Subordinated
Debt Securities of that series are Original Issue Discount Securities, such
portion of the principal amount of such Subordinated Debt Securities as may
be specified in the terms thereof) of all of the Subordinated Debt
Securities of that series to be due and payable immediately, by a notice in
writing to us (and to the Trustee if given by Holders), and upon any such
declaration such principal amount (or specified amount) shall become
immediately due and payable. At any time after such a declaration of
acceleration with respect to the Subordinated Debt Securities of any series
has been made and before a judgment or decree for payment of the money due
has been obtained by the Trustee, the Holders of a majority in principal
amount of the Outstanding Subordinated Debt Securities of that series, by
written notice to us and the Trustee, may rescind and annul such
declaration and its consequences if:
(1) we have paid or deposited with the Trustee a sum sufficient
to pay:
(A) all overdue interest on all Subordinated Debt Securities of
that series;
(B) the principal of (and premium, if any, on) any Subordinated
Debt Securities of that series which has become due
otherwise than by such declaration of acceleration and any
interest thereon at the rate or rates prescribed therefor in
such Subordinated Debt Securities;
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates
prescribed therefor in such Subordinated Debt Securities,
and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel; and
(2) all Events of Default with respect to Subordinated Debt
Securities of that series, other than the non-payment of the
principal of Subordinated Debt Securities of that series which has
become due solely by such declaration of acceleration, have been
cured or waived as provided in the Subordinated Debt Indenture.
No such rescission shall affect any subsequent default or impair any
right consequent thereon. (Section 502 of the Subordinated Debt Indenture)
If the Trustee or any Holder of a Subordinated Debt Security or coupon has
instituted any proceeding to enforce any right or remedy under the
Subordinated Debt Indenture and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee
or to such Holder, then and in every such case, subject to any
determination in such proceeding, we, the Trustee and the Holders of
Subordinated Debt Securities and coupons shall be restored severally and
respectively to their former positions under the Subordinated Debt
Indenture and the Subordinated Debt Securities and thereafter all rights
and remedies of the Trustee and the Holders shall continue as though no
such proceeding had been instituted. (Section 509 of the Subordinated Debt
Indenture)
The Subordinated Debt Indenture provides that, subject to the duty of
the Trustee during default to act with the required standard of care, the
Trustee is under no obligation to exercise any of its rights or powers
under such Indenture at the request or direction of any of the Holders,
unless such Holders shall have offered to the Trustee reasonable indemnity.
(Sections 601, 603 of the Subordinated Debt Indenture) No Holder of any
Subordinated Debt Security of any series or any related coupons shall have
any right to institute any proceeding, judicial or otherwise, with respect
to the Subordinated Debt Indenture, or for the appointment of a receiver or
trustee, or for any other remedy thereunder, unless:
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default with respect to the
Subordinated Debt Securities of that series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Subordinated Debt Securities of that series shall have
made written request to the Trustee to institute proceedings in
respect of such Event of Default in its own name as Trustee under the
Subordinated Debt Indenture;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to
be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Subordinated Debt
Securities of that series. (Section 507 of the Subordinated Debt
Indenture)
Notwithstanding any other provisions in the Subordinated Debt
Indenture, but subject to the subordination provisions of the Subordinated
Debt Indenture, the right of any Holder of any Subordinated Debt Security
or coupon to receive payment of the principal of and any premium and any
interest on such Subordinated Debt Security or payment of such coupon on
the Stated Maturity or Maturities expressed in such Subordinated Debt
Security or coupon and, if applicable, to convert such Subordinated Debt
Security as provided in the conversion provisions of the Subordinated Debt
Indenture and to institute suit for the enforcement of any such payment or
conversion right shall not be impaired without the consent of such Holder.
(Sections 508, 902 of the Subordinated Debt Indenture)
The Holders of a majority in principal amount of the Outstanding
Subordinated Debt Securities of any series shall have the right to direct
the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee, with respect to the Subordinated Debt Securities of such series,
provided that (1) such direction shall not be in conflict with any rule of
law or with the Subordinated Debt Indenture; (2) the Trustee may take any
other action deemed proper by the Trustee which is not inconsistent with
such direction; and (3) the Trustee shall not be obligated to take any
action unduly prejudicial to Holders not joining in such direction or
involving the Trustee in personal liability. (Section 512 of the
Subordinated Debt Indenture) The Holders of a majority in principal amount
of the Outstanding Subordinated Debt Securities of any series may on behalf
of the Holders of all the Subordinated Debt Securities of such series waive
any past default under the Subordinated Debt Indenture with respect to the
Subordinated Debt Securities of such series and its consequences, except a
default in the payment of the principal of or any premium or interest on
any Subordinated Debt Security of such series or in respect of a covenant
or provision of the Subordinated Debt Indenture which, pursuant to the
Subordinated Debt Indenture, cannot be modified or amended without the
consent of the Holder of each Outstanding Subordinated Debt Security of
such series affected. Upon any such waiver, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have
been cured, for every purpose of the Subordinated Debt Indenture; but no
such waiver shall extend to any subsequent or other default or impair any
right consequent thereon. (Sections 902, 513 of the Subordinated Debt
Indenture)
If a default occurs under the Subordinated Debt Indenture with
respect to Subordinated Debt Securities of any series, the Trustee shall
give the Holders of Subordinated Debt Securities of such series notice of
such default as and to the extent provided by the Trust Indenture Act;
provided, however, that in the case of any default or breach of certain
covenants or warranties with respect to Subordinated Debt Securities of
such series, no such notice to Holders shall be given until at least 30
days after the occurrence thereof (the term "default" for purposes of these
provisions being defined as any event which is, or after notice or lapse of
time or both would become, an Event of Default with respect to the
Subordinated Debt Securities of such series). (Section 602 of the
Subordinated Debt Indenture)
In any case in which Subordinated Debt Securities are Outstanding
that are denominated in more than one currency and the Trustee is directed
to make ratable payments under the Subordinated Debt Indenture to Holders
of such Subordinated Debt Securities, unless otherwise provided with
respect to any series of Subordinated Debt Securities, the Trustee shall
calculate the amount of such payments as follows:
(i) as of the day the Trustee collects an amount under the
Subordinated Debt Indenture, the Trustee shall, as to each Holder of
a Subordinated Debt Security to whom an amount is due and payable
under the Subordinated Debt Indenture that is denominated in a
foreign currency, determine that amount in Dollars that would be
obtained for the amount owing such Holder, using the rate of exchange
at which in accordance with normal banking procedures the Trustee
could purchase in the City of New York Dollars with such amount
owing;
(ii) calculate the sum of all Dollar amounts determined under
(i) and add thereto any amounts due and payable in Dollars; and
(iii) using the individual amounts determined in (i) or any
individual amounts due and payable in Dollars, as the case may be, as
a numerator, and the sum calculated in (ii) as a denominator,
calculate as to each Holder of a Subordinated Debt Security to whom
an amount is owed under the Subordinated Debt Indenture the fraction
of the amount collected under the Subordinated Debt Indenture payable
to such Holder.
Any expenses incurred by the Trustee in actually converting amounts
owing Holders of Subordinated Debt Securities denominated in a currency
other than that in which any amount is collected under the Subordinated
Debt Indenture shall be likewise (in accordance with the foregoing) borne
ratably by all Holders of Subordinated Debt Securities to whom amounts are
payable under the Subordinated Debt Indenture. (Section 506 of the
Subordinated Debt Indenture)
To the fullest extent allowed under applicable law, if for the
purpose of obtaining judgment against us in any court it is necessary to
convert the sum due in respect of the principal of, or premium, if any, or
interest on, the Subordinated Debt Securities of any series (the "Required
Currency") into a currency in which a judgment will be rendered (the
"Judgment Currency"), the rate of exchange used shall be the rate at which
in accordance with normal banking procedures the Trustee could purchase in
the City of New York the Required Currency with the Judgment Currency on
the Business Day in the City of New York next preceding that on which final
judgment is given. Neither we nor the Trustee shall be liable for any
shortfall nor shall we benefit from any windfall in payments to Holders of
Subordinated Debt Securities under the Subordinated Debt Indenture caused
by a change in exchange rates between the time the amount of a judgment
against us is calculated as above and the time the Trustee converts the
Judgment Currency into the Required Currency to make payments under the
foregoing provisions of the Subordinated Debt Indenture to Holders of
Subordinated Debt Securities, but payment of such judgment shall discharge
all amounts owed by us on the claim or claims underlying such judgment.
(Section 506 of the Subordinated Debt Indenture)
We are required to furnish to the Trustee annually a statement as to our
compliance with all conditions and covenants under the Subordinated Debt
Indenture. (Section 1007 of the Subordinated Debt Indenture)
Subordination. The Subordinated Debt Securities will be subordinate
and junior in right of payment, to the extent set forth in the Subordinated
Debt Indenture, to all our Senior Indebtedness (as defined below). If we
should default in the payment of any principal of or premium or interest on
any Senior Indebtedness when the same become due and payable, whether at
maturity or a date fixed for prepayment or by declaration of acceleration
or otherwise, then, upon written notice of such default to us by the
holders of such Senior Indebtedness or any trustee therefor and subject to
certain of our rights to dispute such default and subject to proper
notification of the Trustee, unless and until such default has been cured
or waived or ceases to exist, no direct or indirect payment (in cash,
property, securities, by set-off or otherwise) will be made or agreed to be
made for principal or premium, if any, or interest, if any, on the
Subordinated Debt Securities, or in respect of any redemption, retirement,
purchase or other acquisition of the Subordinated Debt Securities other
than those made in our capital stock (or cash in lieu of fractional shares
thereof) pursuant to any conversion right of the Subordinated Debt
Securities or otherwise made in our capital stock. (Sections 1601, 1604 and
1605 of the Subordinated Debt Indenture)
"Senior Indebtedness" is defined in Section 101 of the Subordinated
Debt Indenture as our Indebtedness (as defined below) outstanding at any
time except:
(a) any Indebtedness as to which, by the terms of the instrument
creating or evidencing the same, it is provided that such
Indebtedness is not senior in right of payment to the Subordinated
Debt Securities;
(b) the Subordinated Debt Securities;
(c) any of our Indebtedness to any wholly-owned Subsidiary;
(d) interest accruing after the filing of a petition initiating
certain bankruptcy or insolvency proceedings unless such interest is
an allowed claim enforceable against us in a proceeding under federal
or state bankruptcy laws;
(e) obligations under performance guarantees, support agreements and
other agreements in the nature thereof relating to the obligations of
any Subsidiary, and
(f) trade accounts payable.
"Indebtedness" is defined in Section 101 of the Subordinated Debt
Indenture as, with respect to any Person:
(a) (i) the principal of and interest and premium, if any, on
indebtedness for money borrowed of such Person evidenced by bonds,
notes, debentures or similar obligations, including any guaranty by
such Person of any indebtedness for money borrowed of any other
Person, whether any such indebtedness or guaranty is outstanding on
the date of the Subordinated Debt Indenture or is thereafter created,
assumed or incurred;
(ii) the principal of and premium and interest, if any, on
indebtedness for money borrowed, incurred, assumed or guaranteed by
such Person in connection with the acquisition by it or any of its
subsidiaries of any other businesses properties or other assets; and
(iii) lease obligations which such Person capitalizes in
accordance with Statement of Financial Accounting Standards No. 13
promulgated by the Financial Accounting Standards Board or such other
generally accepted accounting principles as may be from time to time
in effect,
(b) any other indebtedness of such Person, including any indebtedness
representing the balance deferred and unpaid of the purchase price of
any property or interest therein, including any such balance that
constitutes a trade account payable, and any guaranty, endorsement or
other contingent obligation of such Person in respect of any
indebtedness of another, which is outstanding on the date of the
Subordinated Debt Indenture or is thereafter created, assumed or
incurred by such Person; and
(c) any amendments, modifications, refundings, renewals or extensions
of any indebtedness or obligation described as Indebtedness in clause
(a) or (b) above.
If (i) without our consent a court having jurisdiction shall enter
(A) an order for relief with respect to us under the United States federal
bankruptcy laws, (B) a judgment, order or decree adjudging us a bankrupt or
insolvent, or (C) an order for relief for reorganization, arrangement,
adjustment or composition of or in respect of us under the United States
federal bankruptcy laws or state insolvency laws or (ii) we shall institute
proceedings for the entry of an order for relief with respect to us under
the United States federal bankruptcy laws or for an adjudication of
insolvency, or shall consent to the institution of bankruptcy or insolvency
proceedings against us, or shall file a petition seeking, or seek or
consent to reorganization, arrangement, composition or similar relief under
the United States federal bankruptcy laws or any applicable state law, or
shall consent to the filing of such petition or to the appointment of a
receiver, custodian, liquidator, assignee, trustee, sequestrator or similar
official in respect of us or of substantially all of our property, or we
shall make a general assignment for the benefit of creditors as recognized
under the United States federal bankruptcy laws, then all Senior
Indebtedness (including any interest thereon accruing after the
commencement of any such proceedings) will first be paid in full before any
payment or distribution, whether in cash, securities or other property, may
be made to any Holder of Subordinated Debt Securities on account thereof.
In such event, any payment or distribution, whether in cash, securities or
other property (other than our securities or any other corporation provided
for by a plan of reorganization or readjustment the payment of which is
subordinate, at least to the extent provided in the subordination
provisions with respect to the Subordinated Debt Securities, to the payment
of all Senior Indebtedness then outstanding and to any securities issued in
respect thereof under any such plan of reorganization or readjustment),
which would otherwise (but for the subordination provisions) be payable or
deliverable in respect of Subordinated Debt Securities of any series will
be paid or delivered directly to the holders of Senior Indebtedness in
accordance with the priorities then existing among such holders until all
Senior Indebtedness (including any interest thereon accruing after the
commencement of any such proceedings) has been paid in full. If any payment
or distribution of any character, whether in cash, securities or other
property (other than our securities or any other corporation provided for
by a plan of reorganization or readjustment the payment of which is
subordinate, at least to the extent provided in the subordination
provisions with respect to the Subordinated Debt Securities, to the payment
of all Senior Indebtedness then outstanding and to any securities issued in
respect thereof under any such plan of reorganization or readjustment),
shall be received by the Trustee or any holder of any Subordinated Debt
Securities in contravention of any of the terms of the Subordinated Debt
Indenture, such payment or distribution will be received in trust for the
benefit of, and will be paid over or delivered and transferred to, the
holders of the Senior Indebtedness then outstanding in accordance with the
priorities then existing among such holders for application to the payment
of all Senior Indebtedness remaining unpaid, to the extent necessary to pay
all such Senior Indebtedness in full. In the event of the failure of the
Trustee or any holder to endorse or assign any such payment, distribution
or security, each Holder of Senior Indebtedness is irrevocably authorized
to endorse or assign the same. In the event of any such proceeding, after
payment in full of all sums owing with respect to Senior Indebtedness, the
holders of Subordinated Debt Securities, together with the holders of any
of our other obligations ranking on a parity with the Subordinated Debt
Securities, will be entitled to be repaid from our remaining assets the
amounts at that time due and owing on account of unpaid principal of and
any premium and interest on the Subordinated Debt Securities and such other
obligations before any payment or other distribution, whether in cash,
property or otherwise, shall be made on account of any of our capital stock
or obligations ranking junior to the Subordinated Debt Securities and such
other obligations. (Section 1601 of the Subordinated Debt Indenture)
The Subordinated Debt Indenture provides that Senior Indebtedness
shall not be deemed to have been paid in full unless the holders thereof
shall have received cash, securities or other property equal to the amount
of such Senior Indebtedness then outstanding. Upon the payment in full of
all Senior Indebtedness, the holders of Subordinated Debt Securities of
each series shall be subrogated to all rights of any holders of Senior
Indebtedness to receive any further payments or distributions applicable to
such Senior Indebtedness until the indebtedness evidenced by the
Subordinated Debt Securities of such series shall have been paid in full,
and such payments or distributions received by such Holders, by reason of
such subrogation, of cash, securities or other property that otherwise
would be paid or distributed to the holders of Senior Indebtedness, shall,
as between us and our creditors other than the holders of such Senior
Indebtedness, on the one hand, and such Holders, on the other hand, be
deemed to be a payment by us on account of such Senior Indebtedness, and
not on account of the Subordinated Debt Securities of such series. (Section
1601 of the Subordinated Debt Indenture)
The prospectus supplement respecting any series of Subordinated Debt
Securities will set forth any subordination provisions applicable to such
series in addition to or different from those described above.
By reason of such subordination, in the event of a liquidation,
bankruptcy, reorganization, insolvency, receivership or similar proceeding
involving us or an assignment for the benefit of creditors of us or any of
our Subsidiaries or a marshaling of assets or liabilities of us and our
Subsidiaries, holders of Senior Indebtedness and holders of our other
obligations that are not subordinated to Senior Indebtedness may receive
more, ratably, than holders of the Subordinated Debt Securities. Such
subordination will not prevent the occurrence of any Default or Event of
Default or limit the rights of the Trustee or any Holder, subject to the
other provisions of the Subordinated Debt indenture, to pursue any other
rights or remedies with respect to the Subordinated Debt Securities.
Conversion. The Subordinated Debt Indenture may provide for a right
of conversion of Subordinated Debt Securities into common stock (or cash in
lieu thereof). (Sections 301 and 1501 of the Subordinated Debt Indenture)
The following provisions will apply to Debt Securities that are convertible
Subordinated Debt Securities unless otherwise provided in the applicable
prospectus supplement for such Debt Securities.
The holder of any convertible Subordinated Debt Securities will have
the right exercisable at any time prior to maturity, unless previously
redeemed or otherwise purchased by us, to convert such Subordinated Debt
Securities into shares of common stock at the conversion price or
conversion rate set forth in the applicable prospectus supplement, subject
to adjustment. (Section 1502 of the Subordinated Debt Indenture) The holder
of convertible Subordinated Debt Securities may convert any portion thereof
which is $1,000 in principal amount or any integral multiple thereof.
(Section 1502 of the Subordinated Debt Indenture)
In certain events, the conversion price or conversion rate will be
subject to adjustment as set forth in the Subordinated Debt Indenture. Such
events include the issuance of shares of our common stock as a
dividend or distribution on the common stock; subdivisions, combinations
and reclassifications of the common stock; the issuance to all holders of
common stock of rights or warrants entitling the holders thereof (for a
period not exceeding 45 days) to subscribe for or purchase shares of common
stock at a price per share less than the then current market price per
share of common stock (as determined pursuant to the Subordinated Debt
Indenture); and the distribution to substantially all holders of common
stock of evidences of indebtedness, equity securities (including equity
interests in our Subsidiaries) other than common stock, or other assets
(excluding cash dividends paid from surplus) or rights or warrants to
subscribe for securities (other than those referred to above). No
adjustment of the conversion price or conversion rate will be required
unless an adjustment would require a cumulative increase or decrease of at
least 1% in such price or rate. (Section 1504 of the Subordinated Debt
Indenture) We have been advised by our counsel that certain adjustments in
the conversion price or conversion rate in accordance with the foregoing
provisions may result in constructive distributions to either holders of
the Subordinated Debt Securities or holders of common stock which would be
taxable pursuant to Treasury Regulations issued under Section 305 of the
Internal Revenue Code of 1986, as amended. The amount of any such taxable
constructive distribution would be the fair market value of the common
stock which is treated as having been constructively received, such value
being determined as of the time the adjustment resulting in the
constructive distribution is made.
Fractional shares of common stock will not be issued upon conversion,
but, in lieu thereof, we will pay a cash adjustment based on the then
current market price for the common stock. (Section 1503 of the
Subordinated Debt Indenture) Upon conversion, no adjustments will be made
for accrued interest or dividends, and therefore convertible Subordinated
Debt Securities surrendered for conversion between an Interest Payment Date
and on or prior to the record date pertaining to the subsequent Interest
Payment Date will not be considered Outstanding and no interest will be
paid on the related Interest Payment Date. Convertible Subordinated Debt
Securities (except convertible Subordinated Debt Securities called for
redemption on a redemption date during such period) surrendered for
conversion during the period between the close of business on any record
date for an Interest Payment Date for such convertible Subordinated Debt
Security and the opening of business on the related Interest Payment Date
shall be considered Outstanding for purposes of payment of interest, and,
therefore, must be accompanied by payment of an amount equal to the
interest payable thereon on such Interest Payment Date. (Sections 1504 and
1502 of the Subordinated Debt Indenture)
In the case of any consolidation or merger of us (with certain
exceptions) or any conveyance, transfer or lease of our properties and
assets substantially as an entirety to any Person, each holder of
convertible Subordinated Debt Securities, after the consolidation, merger,
conveyance, transfer or lease, will have the right to convert such
convertible Subordinated Debt Securities only into the kind and amount of
securities, cash and other property which the holder would have been
entitled to receive upon or in connection with such consolidation, merger,
conveyance, transfer or lease, if the holder had held the common stock
issuable upon conversion of such convertible Subordinated Debt Securities
immediately prior to such consolidation, merger, conveyance, transfer or
lease. (Section 1505 of the Subordinated Debt Indenture)
DESCRIPTION OF CAPITAL STOCK
GENERAL
We are authorized to issue 1,500,000,000 shares of common stock, of
which 627,807,809 shares were outstanding at January 4, 2000. We are also
authorized to issue 10,000,000 shares of preferred stock, none of which
were outstanding on that date.
COMMON STOCK
Dividends. Holders of common stock are entitled to receive dividends
when declared by our Board of Directors. In certain cases, common
stockholders may not receive dividends until we satisfy our obligations to
any preferred stockholders.
Voting Rights. Each share of common stock is entitled to one vote in
the election of directors and in each other matter we may ask stockholders
to vote on. Common stockholders do not have cumulative voting rights.
Accordingly, the holders of a majority of shares voting for the election of
directors can elect all of the directors standing for election. Because
members of our Board of Directors serve staggered three-year terms, only
about one third of our directors are elected each year.
Fully Paid Status. All outstanding shares of our common stock are
validly issued, fully paid and non-assessable. The shares offered hereby
will also be, upon issuance and sale, validly issued, fully paid and
non-assessable.
Liquidation or Dissolution. If we liquidate, dissolve or wind up our
business, whether or not voluntarily, common stockholders will share
ratably in the assets remaining after we pay our creditors and any
preferred stockholders.
Listing. Our common stock is listed on the New York Stock Exchange
under the trading symbol "WMI."
Transfer Agent and Registrar. The transfer agent and registrar for the
common stock is Harris Trust and Savings Bank, Chicago, Illinois.
PREFERRED STOCK
The Board of Directors is authorized, without obtaining stockholder
approval, to issue one or more series of preferred stock. The Board's
authority includes determining the number of shares of each series and the
rights, preferences and limitations of each series, including voting
rights, dividend rights, conversion rights, redemption rights and any
liquidation preferences. In this regard, the Board may issue preferred
stock with voting and conversion rights that could adversely affect the
voting power of the holders of common stock, and dividend or liquidation
preferences that would restrict common stock dividends or adversely affect
the assets available for distribution to holders of shares of common stock
in the event of our dissolution.
AUTHORIZED BUT UNISSUED SHARES
Authorized but unissued shares of common stock or preferred stock can
be reserved for issuance by the Board of Directors from time to time,
without stockholder action, for stock dividends or stock splits, to raise
equity capital and to structure future corporate transactions, including
acquisitions, as well as for other proper corporate purposes. Stockholders
have no preemptive rights.
DELAWARE LAW AND CERTAIN PROVISIONS OF THE RESTATED CERTIFICATE OF
INCORPORATION
We are a Delaware corporation and are governed by the Delaware
General Corporation Law, in addition to our Restated Certificate of
Incorporation and Bylaws, certain provisions of which are summarized below.
You should read the actual provisions of these documents.
Section 203 of the Delaware law provides that an "Interested
Stockholder," which is generally defined to mean any beneficial owner of
15% to 85% of the corporation's voting stock, may not engage in any
"business combination" with the corporation for a period of three years
after the date on which the person became an Interested Stockholder,
unless:
o prior to such date, the corporation's board of directors approved
either the business combination or the transaction in which the
stockholder became an Interested Stockholder; or
o subsequent to such date, the business combination is approved by
the corporation's board of directors and authorized at a
stockholders' meeting by a vote of at least two-thirds of the
corporation's outstanding voting stock not owned by the Interested
Stockholder.
Section 203 defines the term "business combination" to include
mergers, asset sales and other transactions resulting in a financial
benefit to the Interested Stockholder.
The provisions of Section 203, combined with the Board of Directors'
authority to issue preferred stock without further stockholder action,
could delay or frustrate a change in control or discourage, impede or
prevent a merger, tender offer or proxy contest involving us, even if such
an event would be favorable to the interests of our stockholders. Our
stockholders, by adopting an amendment to the Restated Certificate of
Incorporation, may elect not to be governed by Section 203. Such an
election would be effective 12 months after its adoption.
LIMITATION OF LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS
Our Restated Certificate of Incorporation provides that our directors
are not liable for monetary damages for breaches of their fiduciary duty as
directors, unless they violated their duty of loyalty to us or our
stockholders, acted in bad faith, knowingly or intentionally violated the
law, authorized illegal dividends or redemptions or derived an improper
personal benefit from their action as directors.
In addition, our Bylaws provide for indemnification of each officer
and director to the fullest extent permitted by Delaware law. Section 145
of the Delaware General Corporation Law grants us the power to indemnify
each officer and director against liabilities and expenses incurred by
reason of the fact that he is or was an officer or director if the
individual (1) acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the company, and (2) with
respect to any criminal action or proceeding, he had no reasonable cause to
believe his conduct was unlawful.
We have also purchased directors' and officers' liability insurance.
Section 145 of the Delaware General Corporation Law allows us to purchase
such insurance whether or not we would have the power to indemnify an
officer or director under the provisions of Section 145.
We also have entered into contracts with certain of our directors and
executive officers to pay the reasonable fees and expenses of his or her
counsel, as well as any judgments, fines, penalties, excise taxes, amounts
paid in settlement and other liabilities, which the individual may incur in
any claim or proceeding (including an action on our behalf) by reason of
having served us as a director, officer, agent or fiduciary. These
agreements also provide for us to pay the individual's defense costs before
the proceeding is over, so long as the director or officer undertakes to repay
us should a court later determine that the director or officer was not
entitled to indemnification.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to our directors, officers or
controlling persons pursuant to the foregoing provisions, we have been
informed that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
PLAN OF DISTRIBUTION
We may sell the securities to or through underwriters or dealers, and
we also may sell the securities directly to other purchasers or through
agents. We may also issue shares of our common stock directly to certain
persons in order to settle litigation and other claims or to satisfy
judgments or arbitration awards.
The distribution of the securities may be effected from time to time
in one or more transactions at a fixed price or prices, which may be
changed, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices.
In connection with the sale of the securities, underwriters may
receive compensation from us, or purchasers of securities for whom they may
act as agents in the form of discounts, concessions or commissions.
Underwriters, dealers and agents that participate in the distribution of
securities may be deemed to be underwriters, and any discounts or
commissions they receive from us or the purchasers of securities, and any
profit on their resale of securities may be deemed to be underwriting
discounts and commissions under the Securities Act. We will identify any
person deemed to be an underwriter and will describe the compensation they
receive from us in a prospectus supplement.
Debt securities, when first issued, will have no established trading
market. If we sell debt securities to or through any underwriters or agents
for public offering and sale, they may make a market in those debt
securities. However, the underwriters or agents will not be obligated to do
so and may discontinue any market making at any time without notice. There
can be no assurance as to the liquidity of any market that may develop for
the debt securities.
We may enter into agreements with underwriters, dealers and agents
who participate in the distribution of securities that could entitle them
to indemnification by us against or contribution from us toward certain
liabilities, including liabilities under the Securities Act.
DELAYED DELIVERY ARRANGEMENT
If so indicated in a prospectus supplement, we will authorize
underwriters or other persons acting as our agents to solicit offers by
certain institutions to purchase debt securities from us pursuant to
contracts providing for payment and delivery on a future date. Institutions
with which such contracts may be made include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions and others, but in all cases will be subject to our
approval. The obligations of any purchaser under any such contract will be
subject to the condition that the purchase of the debt securities shall not
at the time of delivery be prohibited under the laws of any jurisdiction to
which such purchaser is subject. The underwriters and such agents will not
be responsible for the validity or performance of those contracts.
VALIDITY OF SECURITIES
The validity of the securities has been passed upon for us by Locke
Liddell & Sapp LLP, and certain legal matters will be passed upon for any
agents, dealers or underwriters, by counsel named in the applicable
prospectus supplement.
EXPERTS
The audited consolidated financial statements for the year ended
December 31, 1998 appearing in Waste Management's Current Report on Form
8-K dated September 16, 1999 incorporated by reference in this prospectus
have been audited by Arthur Andersen LLP, independent public accountants,
as set forth in their report. In their report, that firm states that, with
respect to USA Waste Services, Inc. and its Subsidiaries as of December 31,
1997 and for each of the years in the two-year period then ended, its
opinion is based on reports of other auditors, namely
PricewaterhouseCoopers LLP. The financial statements of Waste Management
referred to above have been included herein in reliance upon the authority
of those firms as experts in giving said reports.
During the quarter ended September 30, 1999, the Company conducted a
review of its accounting records, systems, processes and controls. Based on
that review, the Company has concluded that its internal controls for the
preparation of interim financial information did not provide its
independent public accountants an adequate basis to complete reviews of the
quarterly data for the quarters in the nine-month period ended September
30, 1999. Our independent public accountants have advised the Company that
their report on the December 31, 1999 financial statements will include the
following paragraph:
"The selected quarterly financial data included in the
Company's financial statements contain information that we did
not audit, and accordingly, we do not express an opinion on
that data. We attempted, but were unable to, review that
quarterly data in accordance with standards established by the
American Institute of Certified Public Accountants because we
believe that the Company's internal controls for the
preparation of interim financial information do not provide an
adequate basis to enable us to complete such a review."
The audited consolidated financial statements of USA Waste Services,
Inc. as of December 31, 1997 and for the years ended December 31, 1997 and
1996, not separately incorporated by reference in this prospectus, have
been audited by PricewaterhouseCoopers LLP, independent accountants, whose
report thereon is incorporated by reference herein. Such financial
statements, to the extent they have been included in the financial
statements of Waste Management, Inc., have been so included in reliance on
the report of such independent accountants given on the authority of said
firm as experts in auditing and accounting.
