UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: JUNE 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________ TO ___________
COMMISSION FILE NUMBER: 0-19285
ALLIED WASTE INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 88-0228636
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION.) IDENTIFICATION NO.)
7201 EAST CAMELBACK ROAD, SUITE 375, SCOTTSDALE, ARIZONA 85251
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (602) 423-2946
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO
SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.
YES X NO ___
INDICATE THE NUMBER OF SHARES OUTSTANDING OF THE ISSUER'S CLASS OF COMMON
STOCK, AS OF THE LATEST PRACTICABLE DATE.
CLASS OUTSTANDING AS OF JUNE 30, 1996
COMMON STOCK 58,466,227
<PAGE>
ALLIED WASTE INDUSTRIES, INC.
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996
INDEX
Page
Part I Financial Information
Item 1 - Financial Statements
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Operations 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 6
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Part II Other Information
Item 1 - Legal Proceedings 24
Item 2 - Changes in Securities 24
Item 3 - Defaults Upon Senior Securities 24
Item 4 - Submission of Matters to a Vote of Securing Holders 24
Item 5 - Other Information 25
Item 6 - Exhibits and Reports on Form 8-K 25
Signature 26
<PAGE>
ALLIED WASTE INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, 1996 June 30, 1995
(unaudited)
ASSETS
Current Assets --
Cash and cash equivalents $ 4,016 $ 2,435
Accounts receivable, net of
allowance of $2,221 and $2,464 32,172 36,367
Prepaid and other current assets 5,369 5,073
Current portion of landfills 7,103 7,103
Inventories 1,960 2,107
Deferred income taxes 2,669 1,680
Total current assets 53,289 54,765
Property and equipment, net 302,352 330,112
Goodwill, net 85,230 88,535
Other assets 17,835 28,674
Total assets $ 458,706 $ 502,086
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities --
Current portion of long-term
debt to related parties $ 121 $ 121
Current portion of long-term
debt to unrelated parties 37,460 28,625
Accounts payable 23,750 20,419
Accrued interest 5,995 5,879
Other accrued liabilities 14,028 13,900
Unearned income 9,273 10,309
Total current liabilities 90,627 79,253
Long-term debt to related parties,
less current portion 1,862 1,804
Long-term debt to unrelated parties,
less current portion 176,733 171,337
Convertible subordinated debt,
net of discount 7,778 3,862
Deferred income taxes 25,649 23,769
Accrued closure and post-closure
costs 10,530 10,280
Deferred royalties and other
long-term obligations 9,222 11,262
Commitments and contingencies
Stockholders' Equity --
Preferred stock, aggregate liquidation preference
of $15,052 and $14,943 at December 31, 1995
and June 30, 1996, respectively 2 2
Common stock 480 585
Additional paid-in capital 135,823 196,270
Retained earnings -- 3,662
Total stockholders' equity 136,305 200,519
Total liabilities and stockholders'
equity $ 458,706 $ 502,086
The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these balance sheets.
<PAGE>
ALLIED WASTE INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except for per share amounts and number of shares; unaudited)
Six Months Ended Three Months Ended
June 30, June 30,
1995 1996 1995 1996
Revenues $ 104,670 $ 118,958 $ 55,299 $ 62,012
Cost of operations 58,585 65,699 30,416 33,842
Selling, general and
administrative expenses 16,607 18,464 8,315 8,779
Depreciation and amortization 12,783 15,408 6,707 7,996
Operating income before
pooling costs 16,695 19,387 9,861 11,395
Pooling costs -- 6,690 -- 5,762
Operating income 16,695 12,697 9,861 5,633
Interest income (474) (142) (176)
(61)
Interest expense 5,974 4,567 3,033 2,528
Income before income taxes 11,195 8,272 7,004 3,166
Income tax expense (including
pooling related deferred
taxes of $313 and $310,
respectively for 1996) 4,642 4,035 2,730 1,735
Net income 6,553 4,237 4,274 1,431
Dividends on preferred stock 2,127 575 983 287
Net income to common
shareholders $ 4,426 $ 3,662 $ 3,291 $ 1,144
Income per share. . $ 0.11 $ 0.06 $ 0.07 $ 0.02
Weighted average common and
common equivalent shares 41,507,957 58,873,215 47,175,716 60,451,959
The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these statements.
<PAGE>
ALLIED WASTE INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands; unaudited)
Six Months Ended
June 30,
1995 1996
Operating Activities --
Net income $ 6,553 $ 4,237
Adjustments to reconcile net income (loss)
to cash provided by (used for) operating
activities --
Provisions for:
Depreciation and amortization 12,783 15,408
Closure and post-closure costs 900 522
Doubtful accounts 640 1,175
Deferred income taxes 3,878 (637)
(Gain) loss on sale of fixed assets (64) 1,972
Change in operating assets and liabilities,
excluding the effects of purchase acquisitions --
Accounts receivable, prepaid expenses,
inventories and other (5,981) (11,710)
Accounts payable, accrued liabilities, unearned
income, closure and post-closure costs
and other (6,546) (10,491)
Cash provided by (used for) operating activities 12,163 476
Investing Activities --
Cost of acquisitions, net of cash acquired (9,860) (3,852)
Capital expenditures (23,421) (21,998)
Proceeds from sale of fixed assets 643 243
Change in deferred acquisition costs and notes
receivable (715) 695
Cash used for investing activities (33,353) (24,912)
Financing activities --
Net proceeds from sale of common stock,
stock options and warrants 29,300 48,330
Proceeds from long-term debt, net of
issuance costs 21,303 25,431
Payments of long-term debt (23,976) (51,165)
Other long-term obligations (477) 486
Dividends paid (1,639) (614)
Equity transactions of pooled companies (1,398) 387
Cash provided by financing activities 23,113 22,855
Increase (decrease) in cash and cash equivalents 1,923 (1,581)
Cash and cash equivalents, beginning of period 5,202 4,016
Cash and cash equivalents, end of period $ 7,125 $ 2,435
The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these statements.
<PAGE>
ALLIED WASTE INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Summary of Significant Accounting Policies
Allied Waste Industries, Inc. ("Allied" or the "Company"), is
incorporated under the laws of the state of Delaware. Allied is a solid waste
management company providing non-hazardous waste collection, transfer,
recycling and disposal services in selected markets.
The condensed consolidated financial statements include the accounts of
Allied and its subsidiaries. All significant intercompany accounts and
transactions are eliminated in consolidation. The condensed consolidated
balance sheet as of December 31, 1995, which has been derived from audited
consolidated financial statements, and the unaudited interim condensed
consolidated financial statements included herein have been prepared pursuant
to the rules and regulations of the Securities and Exchange Commission (the
"SEC"). As applicable under such regulations, certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed
or omitted. The Company believes that the presentations and disclosures
herein are adequate to make the information not misleading when read in
connection with the Company's Annual Report on Form 10-K. The condensed
consolidated financial statements as of June 30, 1996 and for the six months
ended June 30, 1995 and 1996 reflect, in the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
fairly state the financial position and results of operations for such
periods. The condensed consolidated financial statements and accompanying
notes have also been restated to reflect acquisitions accounted for as
poolings-of-interests (See Note 2).
Operating results for interim periods are not necessarily indicative of
the results for full years. It is suggested that these condensed consolidated
financial statements be read in conjunction with the consolidated financial
statements of Allied Waste Industries, Inc and subsidiaries for the year ended
December 31, 1995 and the related notes thereto included in the Company's
Annual Report on Form 10-K filed with the SEC on March 27, 1996.
There have been no significant additions to or changes in accounting
policies of the Company since December 31, 1995. For a description of these
policies, see Note 1 of Notes to Consolidated Financial Statements for the
year ended December 31, 1995 in the Company's Annual Report on Form 10-K.
Certain reclassifications have been made in prior period financial
statements to conform to the current presentation.
Goodwill and other assets --
Goodwill is the cost in excess of fair value of identifiable assets of
acquired businesses and has been amortized on a straight-line basis along with
certain miscellaneous intangible assets over a blended life of twenty-five
years. Miscellaneous intangible assets previously classified with goodwill
have been reclassified as Other Assets. These miscellaneous intangible assets
continue to be amortized in accordance with the terms of the respective
agreements and contracts ranging from 3 years to 10 years, while goodwill
continues to be amortized on a straight-line basis over forty years.
The Company continually evaluates whether events and circumstances have
occurred subsequent to its acquisition, that indicate the remaining useful
life of goodwill may warrant revision or that the remaining balance of
goodwill may not be recoverable. When factors indicate that goodwill should
be evaluated for possible impairment, the Company uses an estimate of the
related business segment's discounted future cash flows over the remaining
life of the goodwill in measuring whether goodwill is recoverable.
Statements of cash flows --
The supplemental cash flow disclosures and non-cash transactions for the
six months ended June 30, 1995 and 1996 are as follows (in thousands):
Six Months Ended
June 30,
1995 1996
(unaudited)
Supplemental Disclosures --
Interest paid $ 9,129 $ 10,599
Income taxes paid 1,088 5,641
Non Cash Transactions --
Common or preferred stock issued
in purchase acquisitions $ 380 $ 5,497
Common stock contributed to 401(k) plan -- 219
Capital leases 8,645 8,020
Debt and liabilities incurred or
assumed in purchase acquisitions 4,203 4,659
Debt converted to common stock 385 3,595
Capitalized interest 4,444 6,893
2. Business Combinations
Acquisitions accounted for as purchases are reflected in the results of
operations since the date of purchase in Allied's condensed consolidated
financial statements. The results of operations for acquisitions accounted
for as poolings-of-interests are included in Allied's condensed consolidated
financial statements for all periods presented. Often the final determination
of the cost of certain of the Company's acquisitions is subject to resolution
of certain contingencies. Once such contingencies are satisfied, the purchase
price may be adjusted. Shares issued in connection with business acquisitions
have been valued taking into consideration certain restrictions placed on the
common stock issued to the seller in the transaction.
The following table summarizes acquisitions for the six months ended June 30,
1995 and 1996 (unaudited):
Six Months Ended
June 30,
1995 1996
Number of businesses acquired and accounted for as:
Poolings-of-interests 1 5
Purchases 9 9
Total consideration (in millions) $ 6.5 $ 101.3
Shares of common stock issued 146,539 8,805,278 (1)
_________________
(1) Includes 779,005 shares of contingently issuable common stock.
The following table shows the effect on reported revenue and net
income of using the pooling-of-interests method of accounting for business
combinations during the six months ended June 30, 1996. Revenues and net
income as previously reported have been restated as presented in the following
table (in thousands):
Before After
Pooling Effect of Pooling
Effects Poolings Effects
Three months ended June 30, 1996 (unaudited)
Revenues 48,914 13,107 62,021
Net income 3,715 (2,284) 1,431
Six months ended June 30, 1996 (unaudited)
Revenues 93,544 25,414 118,958
Net income 6,532 (2,295) 4,237
Three months ended June 30, 1995 (unaudited)
Revenues 39,109 16,190 55,299
Net income 3,418 856 4,274
Six months ended June 30, 1995 (unaudited)
Revenues 72,855 31,815 104,670
Net income 5,124 1,429 6,553
Year ended December 31, 1995
Revenues 169,865 47,679 217,544
Net income 11,584 797 12,381
Year ended December 31, 1994
Revenues 114,814 43,540 158,354
Net loss (6,731) 696 (6,035)
Year ended December 31, 1993
Revenues 69,206 39,742 108,948
Net income 2,319 323 2,642
Pooling costs of $5.8 million and $6.7 million related to the 1996
Poolings were charged to expense during the three months and six months ended
June 30, 1996, respectively. The after-tax impact of these expenses on
earnings per share was ($0.06) on the three months ended June 30, 1996 and
($0.07) on the six months ended June 30, 1996. Pooling costs include legal,
accounting and consulting fees, stock registration costs, and integration and
other costs of business combination.
<PAGE>
Unaudited pro forma income statement data --
The following unaudited pro forma consolidated data for the year
ended December 31, 1995 and the six months ended June 30, 1996 presents the
results of operations of Allied as if the companies acquired using the
purchase method of accounting for business combinations in 1995 and through
June 30, 1996, had all occurred as of January 1, 1995 (in thousands, except
per share data). This data does not purport to be indicative of the results
of operations of Allied that might have occurred nor which might occur in the
future.
December 31, June 30,
1995 1996
(unaudited)
Revenues $ 228,998 $ 119,242
Operating income 34,269 12,724
Net income 12,897 4,481
Net income to common shareholders 6,676 3,906
Net income per common share 0.16 0.07
EBITDA (1) 63,116 28,163
EBITDA(1) before pooling costs 64,772 34,853
___________________
(1) EBITDA represents operating income plus depreciation and amortization.
The Company has included EBITDA data (which are not a measure of financial
performance under generally accepted accounting principles) because it
understands such data are used by certain investors and creditors to determine
the Company's historical ability to service its indebtedness.
3. Property and Equipment
Property and equipment at December 31, 1995 and June 30, 1996 was as
follows (in thousands):
1995 1996
(unaudited)
Land and improvements $ 16,449 $ 16,914
Land held for permitting as landfills(1) 5,640 6,686
Landfills 179,463 199,354
Buildings and improvements 24,525 29,049
Vehicles and equipment 88,410 96,572
Containers and compactors 46,412 51,681
Furniture and office equipment 5,735 6,921
366,634 407,177
Accumulated depreciation and amortization (64,282) (77,065)
$ 302,352 $ 330,112
__________________
(1) These properties have been approved for use as a landfill, and the
Company is currently in the process of obtaining the necessary permits.
<PAGE>
4. Net Income per Common Share
Net income per common share is calculated by dividing net income less
dividend requirements on preferred stock by the weighted average number of
common shares and common share equivalents outstanding during each period, as
restated to reflect acquisitions accounted for as poolings-of-interests. The
computation of weighted average common and common equivalent shares used in
the calculation of income per common share is as follows (unaudited):
Six Months Ended
June 30,
1995 1996
Common shares outstanding 38,397,373 58,466,227
Effect of using weighted average
common shares outstanding during the
period (1,942,126) (2,554,392)
Effect of stock options and warrants
assumed exercisable 4,811,965 2,166,106
Effect of Series C preferred stock
assumed converted 234,820 --
Effect of shares assumed issued pursuant
to earn-out 5,925 795,274
41,507,957 58,873,215
Conversion has not been assumed for Series D preferred stock, 9%
preferred stock, 7% preferred stock and convertible subordinated notes in 1995
and 1996, as the effect would not be dilutive. Additionally, conversion has
not been assumed for Series E preferred stock and $90 preferred stock in 1995,
as the effects would not be dilutive.
5. Subsequent Events
On July 31, 1996, the Company completed a tender offer (the "Tender
Offer") and purchased substantially all of its $100 Million 12% Senior
Subordinated Notes due 2004 (the "Notes") at the redemption price of $1,157.50
per $1,000 note. An extraordinary charge to earnings related to the Tender
Offer of approximately $11 million ($18 million before income tax effect) will
be charged to earnings in the third quarter of 1996. The Company also
received a consent from a majority of the holders of the Notes to eliminate
all substantive financialcovenants associated with the remaining Notes.
Simultaneous with the redemption and consent, the Company closed a
new $300 million revolving credit facility (the "Credit Facility") agented by
Credit Suisse which added 11 new banks to its existing six-bank, $80 million
Credit Agreement. The Credit Facility, subject to certain limitations,
provides for revolving loans up to $300 million based on certain financial
ratios of the Company and for standby letters-of-credit of up to $50 million.
The revolving credit facility may be used to repay existing debt, make
acquisitions of solid waste companies and for general corporate purposes. The
letter-of-credit facility may be used to provide financial assurances of
landfill closure and post-closure obligations. Loans outstanding under the
revolving credit facility are payable in July 1999, whereas letters-of-credit
may expire no later than one year after the maturity date, subject to certain
provisions. The Credit Facility contains a number of covenants that, among
other things, require the Company to maintain certain financial ratios, and
limit the Company's ability to make acquisitions and purchase fixed assets
above certain amounts, incur additional secured indebtedness, transfer or sell
assets, create liens, pay dividends except on certain preferred stock, make
optional payments on certain subordinated indebtedness (including the Senior
Subordinated Notes), enter into certain transactions with affiliates or enter
into a merger, consolidation or sale of substantially all its assets. The
Credit Facility is secured by a pledge of the stock of substantially all of
the Company's subsidiaries and a lien on substantially all of the Company's
personal property. Upon execution of the Credit Facility, the Company had
approximately $125 million of additional borrowings available under the Credit
Facility.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion should be read in conjunction with the Company's
Condensed Consolidated Financial Statements and the notes thereto, included
elsewhere herein.
Introduction
The Company has experienced significant growth, a substantial portion of
which has resulted from the acquisition of solid waste businesses. Since
January 1, 1992, the Company has completed 88 acquisitions. In 1995 the
Company acquired 18 businesses and has acquired 16 businesses subsequent to
1995. See Note 2 to the Company's Condensed Consolidated Financial
Statements. The Company's Condensed Consolidated Financial Statements have
been restated to reflect the acquisition of companies accounted for using the
pooling-of-interests method for business combinations. Many of the
acquisitions were accounted for under the purchase method for business
combinations and, accordingly, the results of operations for such acquired
businesses are included in the Company's financial statements only from the
applicable date of acquisition. As a result, the Company believes its
historical results of operations for the periods presented are not directly
comparable.
General
Revenues. The Company's revenues are attributable primarily to fees
charged to customers for waste collection, transfer, recycling and disposal
services. The Company's collection services are generally provided under
direct agreements with its customers or pursuant to contracts with
municipalities. Commercial and municipal contract terms, where used,
generally range from 1 to 5 years and commonly have automatic renewal options.
The Company's landfill operations include both Company-owned landfills and
those operated for municipalities for a fee. The Company's strategy is to be
vertically integrated in each geographic region in which it is located as it
provides collection, transfer and disposal services. The tables below show
for the periods indicated the percentage of the Company's total revenues
attributable to services provided and to geographic region (unaudited):
Year Ended December 31, Six Months Ended
1993 1994 1995 June 30, 1996
Collection (1) 76.8% 9.9% 64.7% 63.0%
Transfer 2.8 0.4 9.5 8.1
Landfill (1) 9.2 14.5 18.3 21.4
Other 11.2 7.2 7.5 7.5
Total revenues 100.0% 100.0% 100.0% 100.0%
Midwest 49.0% 48.7% 52.2% 49.4%
Southeast 28.8 30.2 28.0 30.5
Southwest 22.2 21.1 19.8 20.1
Total revenues 100.0% 100.0% 100.0% 100.0%
____________
(1) The portion of collection revenues attributable to disposal charges
for waste collected by the Company and disposed at the Company's landfills
have been excluded from collection revenues and included in landfill revenues.
The Company's strategy is to develop vertically integrated operations to
ensure internalization of waste it collects and thus realize higher margins
from its operations. By disposing waste at Company-operated landfills, the
Company retains the margin generated through disposal operations that would
otherwise be earned by third-party landfills. Approximately 68% of Company-
collected waste is disposed at Company-operated landfills as measured using
disposal costs in 1996. In addition, transfer stations are an integral part
of the disposal process. The Company locates its transfer stations in areas
where its landfills are outside of the population centers in which it collects
waste. Such waste is transloaded and economically transported to its
landfills. The increase in transfer and landfill revenues as a percentage of
total revenues from 2.8% and 9.2% in 1993 to 8.1% and 21.4% in 1996,
respectively, reflects the continued implementation of the Company's strategy.
Although transfer revenues typically generate lower operating margins, the
increase in transfer revenues, as a percentage of total revenues, is not
expected to have an adverse effect on the profitability of the Company.
Expenses. Cost of operations includes labor, maintenance and repairs,
equipment and facility rent, utilities and taxes, the costs of ongoing
environmental compliance, safety and insurance, disposal costs and costs of
independent haulers transporting Company waste to disposal sites. Disposal
costs include certain landfill taxes, host community fees, payments under
agreements with respect to landfill sites that are not owned, landfill site
maintenance, fuel and other equipment operating expenses, and accruals for
closure and post-closure monitoring expenses anticipated to be incurred in the
future.
Selling, general and administrative expenses includes management,
clerical and administrative compensation and overhead, sales costs, community
relations expenses, and provisions for estimated uncollectible accounts
receivable and potentially unrealizable acquisition costs.
Depreciation and amortization includes depreciation of fixed assets and
amortization of landfill, airspace, goodwill and other intangible assets.
In connection with potential acquisitions, the Company incurs transaction
and integration costs which include stock registration, legal, accounting,
consulting, engineering and other direct costs. When an acquisition is
accounted for using the pooling-of-interests method for business combinations,
these costs are charged to the statement of operations as pooling costs.
When potential acquisitions are accounted for using the purchase method for
business combinations, these costs are capitalized. The Company routinely
evaluates such capitalized costs and expenses those costs which have no
further value. Indirect acquisition costs, such as executive salaries,
general corporate overhead and other corporate services, are expensed as
incurred.
Direct landfill development costs, such as engineering, upgrading,
construction and permitting costs, are capitalized and amortized based on
consumed airspace. The Company believes that the costs associated with the
engineering, owning and operating landfills will increase in the future as a
result of federal, state and local regulation and a growing community
awareness of the landfill permitting process. Although there can be no
assurance, the Company believes, that it will be able to implement price
increases sufficient to offset these increased expenses. All indirect
landfill development costs, such as executive salaries, general corporate
overhead, public affairs and other corporate services, are expensed as
incurred.
Accrued closure and post-closure costs represent an estimate of the
current value of the future obligation associated with closure and post-
closure monitoring of non-hazardous solid waste landfills currently owned or
operated by the Company. Site specific closure and post-closure engineering
cost estimates are prepared annually for landfills owned or operated by the
Company for which it is responsible for closure and post-closure. Estimated
costs are accrued based on accepted tonnage as landfill airspace is consumed.
Effective January 1, 1994 the Company changed its accounting policy to
discount its future closure and post-closure obligations where the Company
believes that both the amounts and timing of related payments are reliably
determinable. The Company periodically updates its estimates of future
closure and post-closure costs. The impact of changes which are determined to
be changes in estimates are accounted for on a prospective basis.
The net present value of the closure and post-closure commitment is
calculated assuming inflation of 3.5% and a risk-free capital rate of 7.0%.
Discounted amounts previously recorded are accreted to reflect the effects of
the passage of time. Based on these assumptions, the Company's current
estimate of total future payments for closure and post-closure is $165
million, while the present value of such estimate is $55 million. At December
31, 1995 and June 30, 1996, respectively, accruals for landfill closure and
post-closure costs (including costs assumed through acquisitions) were
approximately $10.5 million and $10.3 million. The accruals reflect
relatively young landfills with estimated remaining lives, based on current
waste flows, that range from 3 to over 75 years, with an estimated average
remaining life of greater than 25 years.
During 1994, the Company's landfills became subject to the closure and
post-closure requirements of Subtitle D. Previously, the Company's landfills
were subject to local requirements. The principle changes under Subtitle D are
an extension of the post-closure monitoring period to 30 years and a
requirement to use clay or synthetic liners as capping materials. The
Company updated its estimates of future closure and post-closure costs in
accordance with its interpretations of Subtitle D.
<PAGE>
Results of Operations
Three Months Ended June 30, 1995 and 1996
The following table sets forth the percentage relationship that the
various items bear to revenues and the percentage change in dollar amounts for
the periods indicated. The statement of operations data have been restated to
give effect to transactions completed in 1995 and 1996, that were accounted
for using the pooling-of-interests method for business combinations. See Note
2 to the Company's Condensed Consolidated Financial Statements.
Three Months Ended June 30, 1996
Compared to 1995
% Change
1995 1996 in Amounts
(unaudited)
Statement of Operations Data:
Revenues 100.0% 100.0% 12.1%
Cost of operations 55.0 54.6 11.3
Selling, general and administrative expenses 15.1 14.1 5.6
Depreciation and amortization 12.1 12.9 19.2
Operating income before pooling costs 17.8 18.4 15.6
Pooling costs -- 9.3 N/A
Operating income 17.8 9.1 (42.9)
Interest expense, net 5.2 4.0 (13.7)
Income tax expense 4.9 2.8 (36.4)
Net income 7.7% 2.3% (66.5)
Other Data:
EBITDA(1) before pooling costs 30.0% 31.3% 17.0%
EBITDA(1) after pooling costs 30.0% 22.0% (17.7)%
_______________________
(1) EBITDA represents operating income plus depreciation and amortization.
The Company has included EBITDA data (which are not a measure of financial
performance under generally accepted accounting principles) because it
understands such data are used by certain investors and creditors to determine
the Company's historical ability to service its indebtedness.
Revenues. Revenues in 1996 were $62.0 million compared to $55.3 million
in 1995, an increase of 12.1%. Approximately 5.8% of the increase in
revenues is attributable to acquisitions and 6.3% is attributable to internal
growth. Revenues of $3.2 million in the second quarter of 1996 were generated
from companies acquired since June 1995, while increases in revenues
attributable to existing operations amounted to $3.5 million. Average price
increases as a percentage of revenue were approximately 3% of revenue while
the remainder of internal growth was from volume. Internal volume growth has
been affected by the absence of disposal volumes from the City of Chicago
which in 1995 amounted to approximately $1.7 million for the quarter.
Internal growth adjusted for this loss of volume between 1995 and 1996 is 10%.
Cost of Operations. Cost of operations in 1996 was $33.8 million compared to
$30.4 million in 1995, an increase of 11.3%. The increase in cost of
operations was primarily attributable to the increase in revenues described
above. As a percentage of revenues, cost of operations decreased to 54.6% in
1996 from 55.0% in 1995. Operating cost margins were favorably impacted by a
decrease in disposal costs paid to third-parties measured as a percentage of
revenue and other operating efficiencies resulting from the integration of
businesses acquired in the past twelve months. Company-collected waste
disposed at Company-operated landfills was 68% of revenue in 1995 compared to
70% during 1996.
Selling, General and Administrative Expenses. SG&A expenses increased to
$8.8 million in 1996 compared to $8.3 million in 1995, an increase of 5.6%.
As a percentage of revenues, SG&A decreased to 14.1% in 1996 compared to 15.1%
in 1995. The increase in SG&A expense resulted from expenses associated with
acquired companies and expenses incurred in connection with the Company's
increase in personnel and other expenses related to the anticipated growth of
the Company as it continues to acquire companies. The decrease in SG&A as a
percentage of revenues is attributable to a moderate increase in corporate
general and administrative expenses while the percentage increase in revenues
was greater.
Depreciation and amortization. Depreciation and amortization in 1996 was
$8.0 million compared to $6.7 million in 1995, an increase of 19.2%. The
increase in depreciation and amortization expense is due to acquisitions and
capital expenditures. Fixed assets have increased from $302.5 million at June
30, 1995 to $407.2 million at June 30, 1996 and goodwill has increased from
$83.0 million at June 30, 1995 to $98.0 million at June 30, 1996. As a
percentage of revenues, depreciation and amortization increased to 12.9% in
1996 from 12.1% in 1995. This increase is primarily because amortization of
landfill airspace as a percentage of revenue increased to 3.4% in 1996 from
2.5% in 1995 resulting from an increase in the rate of waste internalization.
Pooling costs. Costs of $5.8 million were incurred in 1996 for
transaction and integration costs directly related to acquisitions accounted
for using the pooling-of-interests method for business combinations.
Transaction costs include stock registration, legal, accounting, consulting,
engineering and other direct third-party costs incurred to complete the
acquisitions. Integration costs include uncollectible accounts receivable
write-offs, employee termination and relocation, write down of fixed assets,
lease termination, and deferred repairs and maintenance of vehicles and
equipment. During the second quarter of 1995, no material pooling costs were
incurred.
Net interest expense. Net interest expense was $2.5 million in 1996
compared to $2.9 million in 1995, a decrease of 13.7%. The decrease in the
second quarter of 1996 compared to 1995 is partially due to the conversion of
subordinated debt into common stock in the fourth quarter of 1995 which
resulted in a reduction to annual interest charges of approximately $800,000.
In addition, the amount of capitalized interest for the three months increased
to $3.3 million in 1996 compared to $2.2 million in 1995. The amount of
interest capitalized increased in 1996 because of an increase in transfer
stations under construction and landfill airspace under development compared
to the same period in 1995. The decrease in net interest expense was offset
by an increase in interest bearing debt to approximately $205.7 million at
June 30, 1996 from approximately $198.7 million at June 30, 1995, due
primarily to acquisitions and capital expenditures.
Income taxes. Income taxes reflect a 55% effective income tax rate in
1996 as compared to a 39% rate in 1995. The increase is primarily caused by
the accounting treatment of the conversion of an S-Corporation to a C-
Corporation when the pooling-of-interests method of accounting is used. This
resulted in a one-time impact which does not have recurring consequences, and
had the effect of increasing the total income tax provision by $310,000 but
had little impact on cash taxes. Without considering the effect of pooled
companies, the 1996 effective tax rate is 45%. The Company's effective tax
rate in 1996 and 1995 deviates from the federal statutory rate of 35%, due
primarily to the effects of differences in the treatment of goodwill for book
and tax purposes, state income taxes, and other permanent differences.
Six Months Ended June 30, 1995 and 1996
The following table sets forth the percentage relationship that the
various items bear to revenues and the percentage change in dollar amounts for
the periods indicated:
Six Months Ended June 30, 1996
Compared to 1995
% Change
1995 1996 in Amounts
(unaudited)
Statement of Operations Data:
Revenues 100.0% 100.0% 13.7%
Cost of operations 56.0 55.2 12.1
Selling, general and administrative expenses 15.9 15.5 11.2
Depreciation and amortization 12.1 13.0 20.5
Operating income before pooling costs 16.0 16.3 16.1
Pooling costs -- 5.6 N/A
Operating income 16.0 10.7 (23.9)
Interest expense, net 5.3 3.7 (19.5)
Income tax expense 4.4 3.4 (13.1)
Net income 6.3% 3.6% (35.3)%
Other Data:
EBITDA(1) before pooling costs 28.2% 9.2% 18.0%
EBITDA(1) after pooling costs 28.2% 23.6% (4.7)%
_________________________
(1) EBITDA represents operating income plus depreciation and amortization.
The Company has included EBITDA data (which are not a measure of financial
performance under generally accepted accounting principles) because it
understands such data are used by certain investors and creditors to determine
the Company's historical ability to service its indebtedness.
Revenues. Revenues in 1996 were $119.0 million compared to $104.7
million in 1995, an increase of 13.7%. Approximately 6.1% of the increase in
revenues is attributable to acquisitions and 7.6% is attributable to internal
growth. Revenues of $6.3 million in the first six months of 1996 were
generated from companies acquired since December 1994, while increases in
revenues attributable to existing operations amounted to $8.0 million.
Average price increases as a percentage of revenue were approximately 3% of
revenue while the remainder of internal growth was from volume.
Cost of Operations. Cost of operations in 1996 was $65.7 million
compared to $58.6 million in 1995, an increase of 12.1%. The increase in cost
of operations was primarily attributable to the increase in revenues described
above. As a percentage of revenues, cost of operations decreased to 55.2% in
1996 from 56.0% in 1995. Operating cost margins were favorably impacted by a
decrease in disposal costs paid to third-parties measured as a percentage of
revenue and other operating efficiencies resulting from the integration of
businesses acquired in the past twelve months. Company-collected waste
disposed at Company-operated landfills was 52% of revenue in 1995 compared to
68% in 1996.
Selling, General and Administrative Expenses. SG&A expenses increased to
$18.5 million in 1996 compared to $16.6 million in 1995, an increase of 11.2%.
As a percentage of revenues, SG&A decreased to 15.5% in 1996 compared to
15.9% in 1995. The increase in SG&A expense resulted from expenses associated
with acquired companies and expenses incurred in connection with the Company's
increase in personnel and other expenses related to the anticipated growth of
the Company as it continues to acquire companies. The decrease in SG&A as a
percentage of revenues is attributable to a moderate increase in corporate
general and administrative expenses while the percentage increase in revenues
was greater.
Depreciation and amortization. Depreciation and amortization in 1996 was
$15.4 million compared to $12.8 million in 1995, an increase of 20.5%. The
increase in depreciation and amortization expense is due to acquisitions and
capital expenditures. Fixed assets have increased from $302.5 million at June
30, 1995 to $407.2 million at June 30, 1996 and goodwill has increased from
$83.0 million at June 30, 1995 to $98.0 million at June 30, 1996. As a
percentage of revenues, depreciation and amortization increased to 13.0% in
1996 from 12.1% in 1995. This increase is primarily because amortization of
landfill airspace as a percentage of revenue increased to 3.2% in 1996 from
2.4% in 1995 resulting from an increase in the rate of waste internalization.
Pooling costs. Costs of $6.7 million were incurred in 1996 for
transaction and integration costs directly related to acquisitions accounted
for using the pooling-of-interests method for business combinations.
Transaction costs include stock registration, legal, accounting, consulting,
engineering and other direct third-party costs incurred to complete the
acquisitions. Integration costs include uncollectible accounts receivable
write-offs, employee termination and relocation, write down of fixed assets,
lease termination, and deferred repairs and maintenance of vehicles and
equipment. During the first six months of 1995, no material pooling costs
were incurred.
Net Interest Expense. Net interest expense was $4.4 million in 1996
compared to $5.5 million in 1995, a decrease of 19.5%. The decrease in the
first six months of 1996 compared to 1995 is partially due to the conversion
of subordinated debt into common stock in the fourth quarter of 1995 which
resulted in a reduction to annual interest charges of approximately $800,000.
In addition, the amount of capitalized interest for the six months increased
to $6.9 million in 1996 compared to $4.4 million in 1995. The amount of
interest capitalized increased in 1996 because of an increase in transfer
stations under construction and landfill airspace under development compared
to the same period in 1995. The decrease in net interest expense was offset
by an increase in interest bearing debt to approximately $205.7 million at
June 30, 1996 from approximately $198.7 million at June 30, 1995, due
primarily to acquisitions and capital expenditures.
Income Taxes. Income taxes reflect a 49% effective income tax rate in
1996 as compared to a 41% rate in 1995. The increase is primarily caused by
the accounting treatment of the conversion of an S-Corporation to a C-
Corporation when the pooling-of-interests method of accounting is used. This
resulted in a one-time impact which does not have recurring consequences and
had the effect of increasing the total income tax provision by $313,000 but
had little impact on cash taxes. Without considering the effect of pooled
companies, the 1996 effective tax rate is 45%. The Company's effective tax
rate in 1996 and 1995 deviates from the federal statutory rate of 35%, due
primarily to the effects of differences in the treatment of goodwill for book
and tax purposes, state income taxes, and other permanent differences.
Liquidity and Capital Resources
Because of the capital intensive nature of the solid waste industry, the
Company has used, and during periods of rapid growth expects to continue using
amounts in excess of the cash generated from operations to fund acquisitions,
capital expenditures and landfill development. In connection with
acquisitions, the Company has assumed or incurred indebtedness with relatively
short-term repayment schedules, thereby increasing its current and medium-term
liabilities. Additionally, operating equipment has been acquired using
financing leases which have short and medium-term maturities. As a result,
Company has periodically had low levels of working capital or working capital
deficits. Historically, the Company has satisfied its acquisition, working
capital and capital expenditure needs primarily through bank financing, public
offerings and private placements of debt and equity securities. Between
January 1, 1994 and July 31, 1996, the Company has completed a $100 million
public offering of the Senior Subordinated Notes (defined below), a $50
million private placement of common stock, an $80 million credit agreement, a
$48million public equity offering and the Credit Facility (defined below).
During the six months ended June 30, 1995 and 1996, the Company's cash
flows for operating, investing and financing activities were as follows
(dollars in millions; unaudited):
Six Months Ended
June 30,
1995 1996
Operating Activities:
Net income (loss) $ 6.6 $ 4.2
Non-cash operating expenses(1) 18.1 16.5
(Gain) loss on sale of fixed assets -- 2.0
Increase in operating assets and liabilities, net (12.5) (22.2)
Cash provided by (used in) operating activities 12.2 0.5
Investing Activities:
Cost of acquisitions, net of cash acquired (9.9) (3.8)
Capital expenditures (23.4) (22.0)
Proceeds from sale of fixed assets 0.6 0.2
Other (0.7) 0.7
Cash used for investing activities (33.4) (24.9)
Financing Activities:
Net proceeds from sale and redemption of preferred
stock, common stock, stock options and warrants 29.3 48.3
Net proceeds from long-term debt 21.3 25.4
Payments of long-term debt (24.0) (51.2)
Other (3.5) 0.3
Cash provided by financing activities 23.1 22.8
Increase (decrease) in cash $ 1.9 $ (1.6)
________________
(1) Consists principally of provisions for depreciation and amortization,
landfill closure and post-closure costs, doubtful accounts, potentially
unrealizable acquisition costs and deferred income taxes.
The Company's capital expenditure and working capital requirements have
increased significantly, reflecting the Company's rapid growth by acquisition
and development of revenue producing assets, and will increase further as the
Company continues to pursue its business strategy. During 1995 the Company
acquired 18 businesses in 6 states for approximately $45.3 million of which
approximately $24.3 million of such consideration was paid in common stock and
$7.8 million was paid in seller notes. Total annualized revenues of those
operations are approximately $33 million. These amounts include one landfill
acquired for approximately $9.9 million with estimated annual revenues of $3.7
million. Subsequent to December 31, 1995 the Company purchased 16 operating
solid waste businesses with estimated annual revenues of $65.1 million for an
aggregate purchase price of approximately $101.7 million of which
approximately $72.7 million of such consideration was paid in common stock.
These amounts include one acquisition in a new market for approximately $82
million which accounted for $42 million in annual revenues. For the calendar
year 1996, the Company estimates it will have an annual cash requirement of
approximately $1.2 million for preferred stock dividends and approximately
$23.0 million for interest costs. For the calendar year ended 1996, the
Company expects to acquire waste businesses with aggregate annual revenues of
approximately $70 to $80 million (inclusive of the acquisitions completed to
date), using a combination of common stock, cash and seller notes as
consideration. For the calendar year 1996, the Company expects to spend
approximately $58 million for capital expenditures, $40 million of which is
expected to relate to existing operations in order to maintain current revenue
streams and $18 million of which is expected to relate to operations
anticipated to result in growth in revenue streams. As the Company continues
to acquire waste operations, additional capital amounts will be required
during 1996 for the capital expenditure requirements related to those acquired
businesses.
The Company is also required to provide financial assurances to
governmental agencies under applicable environmental regulations relating to
its landfill operations. These financial assurances include the use of a
captive insurance subsidiary, performance bonds, letters-of-credit and trust
deposits required principally to secure the Company's estimated landfill
closure and post-closure obligations and collection contracts. At June 30,
1996, the Company had outstanding approximately $1.6 million in captive
insurance contracts, $24.0 million of performance bonds, approximately $20.3
million in letters-of-credit and approximately $0.2 million of trust deposits.
The Company expects that financial assurance obligations will increase in the
future as it acquires and expands its activities and that a greater percentage
of the financial assurances will be provided through the captive insurance
subsidiary and letters-of-credit.
In January 1994, the Company issued the Senior Subordinated Notes. The
net proceeds from the sale of the Senior Subordinated Notes after underwriting
discount and other expenses, were approximately $95 million. The Senior
Subordinated Notes were redeemable beginning February 1, 1999. On July 31,
1996, the Company completed a tender offer (the "Tender Offer") and purchase
of
substantially all of its Senior Subordinated Notes at the redemption price of
$1,157.50 per $1,000 principal amount. In connection with the Tender Offer,
the Company estimates that it will recognize an extraordinary charge of $11
million ($18 million before income tax effect) in the third quarter of 1996.
The Company also received a consent from a majority of the holders of the
Notes to eliminate all substantive financial covenants associated with the
remaining
Senior Subordinated Notes.
Simultaneous with the redemption and consent on July 31, 1996, the
Company closed a new $300 million revolving credit facility ("the Credit
Facility") agented by Credit Suisse which added 11 new banks to its existing
six-bank Credit Agreement. The Credit Facility, subject to certain
limitations, provides for revolving loans up to $300 million based on certain
financial ratios of the Company and for standby letters-of-credit of up to $50
million. The revolving credit facility may be used to repay existing debt,
make acquisitions of solid waste companies and for general corporate purposes.
The letter-of-credit facility may be used to provide financial assurances of
landfill closure and post-closure obligations. Loans outstanding under the
revolving credit facility are payable in July 1999, whereas letters-of-credit
may expire no later than one year after the maturity date, subject to certain
provisions. The Credit Facility contains a number of covenants that, among
other things, require the Company to maintain certain financial ratios, and
limit the Company's ability to make acquisitions and purchase fixed assets
above certain amounts, incur additional secured indebtedness, transfer or sell
assets, create liens, pay dividends except on certain preferred stock, make
optional payments on certain subordinated indebtedness (including the Senior
Subordinated Notes), enter into certain transactions with affiliates or enter
into a merger, consolidation or sale of substantially all its assets. The
Credit Facility is secured by a pledge of the stock of substantially all of
the Company's subsidiaries and a lien on substantially all of the Company's
personal property. Upon execution of the Credit Facility, the Company had
approximately $125 million of additional borrowings available under the Credit
Facility.
During 1995, the Company offered to holders of all of its Series D, 9%
and $90 convertible preferred stock and its 6% Convertible Subordinated notes
an inducement to exercise their conversion option to receive Allied common
stock. The inducement consisted of the payment of dividends and interest that
the holders of these securities would have received from the date of
conversion through the first call or redemption date of each security. In
total, 7,757,056 shares of common stock were issued upon conversion. All of
the $90 preferred stock was converted, substantially all of the Series D
preferred stock and 6% Convertible subordinated notes were converted, and all
but 5,029 shares of the 9% preferred stock was converted and all of the $90
preferred stock was converted. Accordingly, the Company's annual dividend and
interest requirements decreased by approximately $2.7 million and $0.8
million, respectively. The inducement resulted in a 1995 conversion fee
charge of approximately $2.2 million paid in 284,696 shares of common stock
which was charged to the 1995 statement of operations.
On January 24, 1996, the Company completed a public offering of 7.6
million shares of common stock for approximately $48 million net of $5.2
million in underwriter discounts, commissions and offering costs. The net
proceeds from the offering were used to repay amounts outstanding under the
Credit Agreement and for other general corporate purposes.
The Company has lease facilities (the "Lease Facilities") that allow it
to enter into equipment leases at rates ranging from similar term treasury
note rates plus 2.5% to 3.5% for terms of 36 to 84 months. At June 30, 1996
the Company had equipment leases outstanding of $37.5 million and available
lease commitments of approximately $9.6 million.
The Company expects that Subtitle D and other regulations that apply to
the non-hazardous waste disposal industry will require the Company, as well as
others in the industry, to alter operations and to modify or replace existing
facilities. Such expenditures have been and will continue to be substantial.
Further regulatory changes could accelerate expenditures for closure and post-
closure monitoring and obligate the Company to spend sums in addition to those
presently reserved for such purposes. These factors, together with the other
factors discussed above, could substantially increase the Company's operating
costs and impair the Company's ability to invest in its facilities.
The Company intends to meet its future capital expenditures and working
capital requirements with cash flow from operations, borrowings under the
Credit Facility and the Lease Facilities. The Company may need to raise
additional capital to fund the acquisition and integration of additional solid
waste businesses. The Company may raise such funds through lease financings,
bank financings or public or private offerings of its debt and equity
securities. There can be no assurance that the Company will be able to secure
such funding, if necessary on favorable terms, if at all. If the Company is
not successful in securing such funding, the Company's ability to pursue its
business strategy may be impaired and results of operations for future periods
may be negatively affected.
Disclosure Regarding Forward Looking Statements
This "Management's Discussion and Analysis of Financial Condition and
Results of Operations" includes forward looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended ("Forward Looking
Statements"). All statements other than statements of historical fact
included in this section, are Forward Looking Statements. Although the
Company believes that the expectations reflected in such Forward Looking
Statements are reasonable, it can give no assurance that such expectations
will prove to have been correct. Generally, these statements relate to
business plans or strategies, projected or anticipated benefits or other
consequences of such plans or strategies, number of acquisitions and projected
or anticipated benefits from acquisitions made by or to be made by the
Company, or projections involving anticipated revenues, earnings, levels of
capital expenditures or other aspects of operating results. All phases of the
Company operations are subject to a number of uncertainties, risks and other
influences, many of which are outside the control of the Company and any one
of which, or a combination of which, could materially affect the results of
the company's operations and whether Forward Looking Statements made by the
Company ultimately prove to be accurate. Such important factors ("Important
Factors") that could cause actual results to differ materially from the
Company's expectations are disclosed in this section and elsewhere in this
report. All subsequent written and oral Forward Looking Statements
attributable to the Company or persons acting on its behalf are expressly
qualified in their entirety by the Important Factors described below that
could cause actual results to differ from the Company's expectations
Competition: The solid waste collection and disposal business is highly
competitive and requires substantial amounts of capital. The Company competes
with numerous waste management companies, a number of which have significantly
larger operations and greater resources than the Company. The Company also
competes with those counties and municipalities that maintain their own waste
collection and disposal operations. Forward Looking Statements assume that
the Company will be able to effectively compete with the other waste
management companies.
Availability of Acquisition Targets: The Company's ongoing acquisition
program is a key element of its expansion strategy. In addition, obtaining
landfill permits has become increasingly difficult, time consuming and
expensive. There can be no assurance, however, that the Company will succeed
in obtaining landfill permits or locating appropriate acquisition candidates
that can be acquired at price levels that the Company considers appropriate
and that reflects historical prices. The Forward Looking Statements assume
that a number of acquisition candidates and landfill properties sufficient to
meet the Company's goals will be available for purchase and that the Company
will be able to complete the acquisition at prices that the Company has
experienced in the past two years.
Integration: The Company's financial position and results of operations
depend to a large extent on the integration of recently acquired businesses.
The Forward Looking Statements assume that integration of acquired companies,
including the internalization of waste, will require from three to nine months
from the date the acquisition closes. Failure to achieve effective
integration in the anticipated time period or at all could have an adverse
effect on the Company's future results of operations.
Ongoing Capital Requirements: To the extent that internally generated
cash and cash available under the Company's existing credit facilities are not
sufficient to provide the cash required for future operations, capital
expenditures, acquisitions, debt repayment obligations and/or financial
assurance obligations, the Company will require additional equity and/or debt
financing in order to provide such cash. The Company has incurred significant
debt obligations in the last two years, which entail substantial debt service
costs. The Forward Looking Statements assume that the Company will be able to
raise the capital necessary to finance such requirements at rates that are as
good as or better than those it is currently experiencing. There can be no
assurance, however, that such financing will be available or, if available,
will be available on terms satisfactory to the Company.
Economic Conditions: The Company's business is affected by general economic
conditions. The Forward Looking Statements assume that the Company will be
able to achieve internal volume and price growth which is not impacted by an
economic downturn. (As revenue of the Company continues to grow it is likely
that the rates of internal growth will reflect growth rates which are less
than those experienced in 1995.) There can be no assurance that an economic
downturn will not result in a reduction in the volume of waste being disposed
of at the Company's operations and/or the price that the Company can charge
for its services.
Weather Conditions: Protracted periods of inclement weather may
adversely affect the Company's operations by interfering with collection and
landfill operations, delaying the development of landfill capacity and/or
reducing the volume of waste generated by the Company's customers. In
addition, particularly harsh weather conditions may result in the temporary
suspension of certain of the Company's operations. The Forward Looking
Statements do not assume that such weather conditions will occur.
Dependence on Senior Management: The Company is highly dependent upon
its senior management team. In addition, as the Company continues to grow,
its requirements for operations management with waste industry experience will
also increase. The availability of such experienced management is not known.
The Forward Looking Statements assume that experienced management will be
available when needed by the Company at compensation levels that are within
industry norms. The loss of the services of any member of senior management
or the inability to hire experienced operations management could have a
material adverse effect on the Company.
Influence of Government Regulation: The Company's operations are subject
to and substantially affected by extensive federal, state and local laws,
regulations, orders and permits, which govern environmental protection, health
and safety, zoning and other matters. These regulations may impose
restrictions on operations that could adversely affect the Company's results,
such as limitations on the expansion of disposal facilities, limitations on or
the banning of disposal of out-of-state waste or certain categories of waste
or mandates regarding the disposal of solid waste. Because of heightened
public concern, companies in the waste management business may become subject
to judicial and administrative proceedings involving federal, state or local
agencies. These governmental agencies may seek to impose fines or to revoke
or deny renewal of operating permits or licenses for violations of
environmental laws or regulations or to require remediation of environmental
problems at sites or nearby properties, or resulting from transportation or
predecessors' transpiration and collection operations, all of which could have
a material adverse effect on the Company. Liability may also arise from
actions brought by individuals or community groups in connection with the
permitting or licensing of operations, any alleged violations of such permits
and licenses or other matters. The Forward Looking Statements assume that
there will be no materially negative impact on its operations due to
government regulation.
Potential Environmental Liability: The Company may incur liabilities for
the deterioration of the environment as a result of its operations. Any
substantial liability for environmental damage could materially adversely
affect the operating results and financial condition of the Company. Due to
the limited nature of the Company's insurance coverage of environmental
liability, if the Company were to incur liability for environmental damage,
its business and financial condition could be materially adversely affected.
The Forward Looking Statements assume that the Company will not incur any
material environmental liabilities other than those for which a provision has
been recorded in the consolidated financial statements and disclosed in the
notes thereto.
Inflation and Prevailing Economic Conditions
To date, inflation has not had a significant impact on the Company's
operations. Consistent with industry practice, most of the Company's
contracts provide for a pass through of certain costs, including increases in
landfill tipping fees and, in some cases, fuel costs. The Company therefore
believes it should be able to implement price increases sufficient to offset
most cost increases resulting from inflation. However, competitive factors
may require the Company to absorb cost increases, resulting from inflation.
The Company is unable to determine the future impact of a sustained economic
slowdown.
Seasonality
The Company believes that its collection and landfill operations can be
adversely affected by protracted periods of inclement weather which could
delay the development of landfill capacity or transfer of waste and/or reduce
the volume of waste generated.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
No changes to previously reported information.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
On May 31, 1996, the annual meeting of the stockholders of the Company was
held. The holders of 37,121,779 shares of Common Stock were present in person
or represented by proxy at the meeting. At the meeting, the stockholders took
the following action:
(a) Election of Directors
The stockholders elected the following persons to serve as directors
of
the Company until the next annual meeting of stockholders, and until their
successors are duly elected and qualified: Votes were cast as follows:
Number of Number of
Votes for Votes Withheld
Roger A. Ramsey 36,984,986 136,793
Daniel J. Ivan 36,547,874 573,905
Nolan Lehmann 36,986,136 135,643
Thomas H. Van Weelden 36,984,936 136,843
Robert G. Reedy 36,986,136 135,643
Alan B. Shepard 36,981,886 139,893
James G. Coulter 36,980,536 141,243
William K. Reilly 36,040,809 1,080,970
John M. Lewis 36,978,561 143,218
Jeffrey A. Shaw 36,980,086 141,693
(b) Approval of the Second Amendment to the 1994 Amended and Restated
Employee Stock Option Plan.
The stockholders approved the proposal to adopt the second amendment
to the 1994 Amended and Restated Employee Stock Option Plan. Votes were as
follows:
Number of Number of Number of Number of
Votes for Votes Against Votes Abstaining Votes Not Cast
33,102,054 3,627,552 71,191 320,982
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Exhibit
10.1 --- Amended and Restated 1994 Incentive Stock Plan.
10.2 --- Fifth Supplemental Indenture to the 12% Senior
Subordinated Notes
10.3 --- Revolving Credit Facility agented by Credit Suisse
11.1 --- Statement regarding the computation of per share
earnings -- primary
11.2 --- Statement regarding the computation of per share
earnings -- fully diluted
12 --- Ratio of earnings to fixed charges
27 --- Financial Data Schedule
(b) Reports on Form 8-K
May 28, 1996 The Company's Current Report on Form 8-K reports
earnings of the Company for the month of April
1996.
June 3, 1996 The Company's Current Report on Form 8-K reports the
acquisition of Container Corporation of Carolina,
Inc.
June 21, 1996 The Company's Current Report on Form 8-K/A-1 reports
the financial statements related to the acquisition
of Container Corporation of Carolina, Inc.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the Registrant, Allied Waste Industries, Inc., has caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ALLIED WASTE INDUSTRIES, INC.
By: /s/H. STEVEN UTHOFF
H. Steven Uthoff
Vice President and Controller
(Principal Financial Officer)
By: /s/PETER S. HATHAWAY
Peter S. Hathaway
Vice President, Chief Accounting Officer and Treasurer
(Principal Accounting Officer)
Date: August 14, 1996
EXHIBIT 11.1
ALLIED WASTE INDUSTRIES, INC.
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS - PRIMARY
(in thousands except for per share amounts and number of shares)
Six Months Three Months
Ended June 30, Ended June 30,
1995 1996 1995 1996
(unaudited) (unaudited)
Net income $ 6,553 $ 4,237 $ 4,274 $ 1,431
Dividends on preferred
stock (2,127) (575) (983) (287)
Adjusted net income $ 4,426 3,662 $ 3,291 $ 1,144
Historical
Weighted average common
shares outstanding 36,455,247 55,911,835 38,397,403 57,425,575
Common Stock Equivalents -
Stock options and
warrants 5,287,777 2,166,106 5,287,777 1,968,150
Series C preferred 234,820 -- 234,820 --
Issuable pursuant to
earn-out agreements 5,925 795,274 5,925 802,249
Weighted average
Common and common
equivalent shares 41,983,769 58,873,215 43,925,925 60,195,974
Primary net income
per share $ 0.11 $ 0.06 $ 0.07 $ 0.02
<PAGE>
EXHIBIT 11.2
ALLIED WASTE INDUSTRIES, INC.
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS - FULLY DILUTED
(in thousands except for per share amounts and number of shares)
Six Months Three Months
Ended June 30, Ended June 30,
1995 1996 1995 1996
(unaudited)
Net income $ 6,553 $ 4,237 $ 4,274 $ 1,431
Dividends on preferred stock (2,127) (575) (983) (287)
Interest savings upon conversion
of convertible securities -- -- 234 --
Adjusted net income $ 4,426 $ 3,662 $ 3,525 $ 1,144
Historical
Weighted average common shares
outstanding 36,455,247 55,911,835 38,397,403 57,425,575
Common stock equivalents -
Stock options and warrants 4,811,965 2,166,106 4,811,965 2,224,135
Series C preferred 234,820 -- 234,820 --
Assumed conversions -
Series D preferred -- (*) -- (*) 782,585 --
9% cumulative convertible
preferred -- (*) -- (*) -- (*) -- (*)
$90 cumulative convertible
preferred -- (*) -- -- (*) --
7% cumulative convertible
preferred -- (*) -- (*) -- (*) -- (*)
Convertible notes -- (*) -- (*) 2,943,018 -- (*)
Issuable pursuant to earn-out
agreements 5,925 795,274 5,925 802,249
Weighted average
Common and common
equivalent shares 41,507,957 58,873,215 47,175,716 60,451,959
Fully diluted net income
per share: $ 0.11 $ 0.06 $ 0.07 $ 0.02
________________________
(*) Assumed conversion of each of these securities, on an individual
basis, has an anti-dilutive effect on earnings per share.
EXHIBIT 12
ALLIED WASTE INDUSTRIES, INC.
RATIO OF EARNINGS TO FIXED CHARGES
(in thousands except for ratios)
Six Months
Ended June 30,
1995 1996
(unaudited)
Fixed Charges:
Interest expensed $ 5,740 $ 4,033
Interest capitalized 4,444 6,893
Total interest expense 10,184 10,926
Interest component of rent expense 466 755
Amortization/write-off of debt issuance costs 234 422
Total Fixed Charges $ 10,884 $ 12,103
Earnings:
Income from continuing operations
before income taxes $ 11,195 $ 8,272
Plus fixed charges 10,884 12,103
Less interest capitalized (4,444) (6,893)
Total Earnings $ 17,635 $ 13,482
Ratio of earnings to fixed charges 1.6x 1.1x
EXHIBIT 10.1
ALLIED WASTE INDUSTRIES, INC.
AMENDED AND RESTATED 1994 INCENTIVE STOCK PLAN
AS OF MAY 31, 1996
1. Purpose of the Plan
This Allied Waste Industries, Inc. Amended and Restated 1994 Incentive
Stock Plan is intended to provide a means through which the Company and its
subsidiaries may attract able persons to enter into the employ of the Company
or its subsidiaries, and to promote the interests of the Company by providing
the employees and consultants of the Company or its subsidiaries, who are
largely responsible for the management, growth and protection of the business
of the Company, with a proprietary interest in the Company, thereby
strengthening their concern for the welfare of the Company and their desire to
remain in its employ. A further purpose of the Plan is to provide such
persons with additional incentive and reward opportunities to enhance the
profitable growth of the Company.
The Plan amends and restates the Company's 1994 Incentive Stock Plan (the
"Former Plan"). Upon the effectiveness of the Plan, no further Incentive
Awards shall be granted under the Former Plan, but all outstanding Incentive
Awards granted under the Former Plan shall remain outstanding pursuant to the
terms and provisions of the agreements (if any) relating to their grant.
2. Definitions
As used in the Plan, the following definitions apply to the terms
indicated below:
(a) "Board of Directors" shall mean the Board of Directors of
Allied Waste Industries, Inc.
(b) "Cause," when used in connection with the termination of a
Participant's employment with the Company, shall mean the termination of the
Participant's employment by the Company by reason of (i) the conviction of the
Participant by a court of competent jurisdiction as to which no further appeal
can be taken of a crime involving moral turpitude; (ii) the proven commission
by the Participant of an act of fraud upon the Company; (iii) the willful and
proven misappropriation of any funds or property of the Company by the
Participant; (iv) the willful, continued and unreasonable failure by the
Participant to perform duties assigned to him and agreed to by him; (v) the
knowing engagement by the Participant in any direct, material conflict of
interest with the Company without compliance with the Company's conflict of
interest policy, if any, then in effect; (vi) the knowing engagement by the
Participant, without the written approval of the Board of Directors of the
Company, in any activity which competes with the business of the Company or
which would result in a material injury to the Company; or (vii) the knowing
engagement in any activity which would constitute a material violation of the
provisions of the Company's Policies and Procedures Manual, if any, then in
effect.
(c) "Cash Bonus" shall mean an award of a bonus payable in cash
pursuant to Section 11 hereof.
(d) "Change in Control" shall mean:
(i) a "change in control" of the Company, as that term is
contemplated in the federal securities laws; or
(ii) the occurrence of any of the following events:
(1) any Person becomes, after the effective date of this
Plan, the "beneficial owner" (as defined in Rule 13d-3 promulgated
under the Exchange Act), directly or indirectly, of securities of
the Company representing 20% or more of the combined voting power
of the Company's then
outstanding securities; provided, that the the Board of Directors
(as constituted immediately prior to such person becoming such a
beneficial owner) may determine, in its sole discretion, that a
Change in Control has not occurred; and provided further, that the
acquisition of additional voting securities, after the effective
date of this Plan, by any Person who is, as of the effective date
of this Plan, the beneficial owner, directly or indirectly, of 20%
or more of the combined voting power of the Company's then
outstanding securities, shall not constitute a "Change in Control"
of the Company for purposes of this Section 2(d).
(2) a majority of individuals who are nominated by the
Board of Directors for election to the Board of Directors on any
date, fail to be elected to the Board of Directors as a direct or
indirect result of any proxy fight or contested election for
positions on the Board of Directors; or
(3) the Board of Directors determines in its sole and
absolute discretion that there has been a change in control of the
Company.
(d) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time. Reference in the Plan to any Section of the Code
shall be deemed to include any amendments or successor provisions to any
Section and any treasury regulations thereunder.
(e) "Committee" shall mean the Compensation Committee of the Board
of Directors or such other committee as the Board of Directors shall appoint
from time to time to administer the Plan.
(f) "Common Stock" shall mean the Company's common stock, par
value $.01 per share.
(g) "Company" shall mean Allied Waste Industries, Inc., a Delaware
corporation, and each of its Subsidiaries, and its successors.
(h) "Consultant" shall mean any person who is engaged by the
Company or any Subsidiary to render consulting services and is compensated for
such services.
(i) "Employee" shall mean any person who is an employee of the
Company or any Subsidiary within the meaning of Section 3401(c) of the Code
and the applicable interpretive authority thereunder.
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
(k) the "Fair Market Value" of a share of Common Stock on any date
shall be (i) the closing sales price on the immediately preceding business day
of a share of Common Stock as reported on the principal securities exchange on
which shares of Common Stock are then listed or admitted to trading or (ii) if
not so reported, the average of the closing bid and asked prices for a share
of Common Stock on the immediately preceding business day as quoted on the
National Association of Securities Dealers Automated Quotation System
("NASDAQ") or (iii) if not quoted on NASDAQ, the average of the closing bid
and asked prices for a share of Common Stock as quoted by the National
Quotation Bureau's "Pink Sheets" or the National Association of Securities
Dealers' OTC Bulletin Board System. If the price of a share of Common Stock
shall not be so reported, the Fair Market Value of a share of Common Stock
shall be determined by the Committee in its absolute discretion.
(l) "Incentive Award" shall mean an Option, a share of Restricted
Stock, a Performance Award, a share of Phantom Stock, a Stock Bonus or Cash
Bonus granted pursuant to the terms of the Plan.
(m) "Incentive Stock Option" shall mean an Option which is an
"incentive stock option" within the meaning of Section 422 of the Code and
which is identified as an Incentive Stock Option in the agreement by which it
is evidenced.
(n) "Issue Date" shall mean the date established by the Committee
on which certificates representing shares of Restricted Stock shall be issued
by the Company pursuant to the terms of Section 7(d) hereof.
(o) "Non-Qualified Stock Option" shall mean an Option which is not
an Incentive Stock Option and which is identified as a Non-Qualified Stock
Option in the agreement by which it is evidenced.
(p) "Option" shall mean an option to purchase shares of Common
Stock of the Company granted pursuant to Section 6 hereof. Each Option shall
be identified as either an Incentive Stock Option or a Non-Qualified Stock
Option in the agreement by which it is evidenced.
(q) "Parent" shall mean a "parent corporation" of the Company,
whether now or hereafter existing, as defined in Section 424(e) of the Code.
(r) "Participant" shall mean an Employee or Consultant who is
eligible to participate in the Plan and to whom an Incentive Award is granted
pursuant to the Plan, and, upon his death, his successors, heirs, executors
and administrators, as the case may be, to the extent permitted hereby.
(s) "Performance Award" shall mean an award payable in cash or
Common Stock, which award is granted pursuant to Section 8 hereof and subject
to the terms and conditions contained therein.
(t) "Person" shall mean a "person," as such term is used in
Sections 13(d) and 14(d) of the Exchange Act, and the rules and regulations in
effect from time to time thereunder.
(u) a share of "Phantom Stock" shall represent the right to
receive in cash the Fair Market Value of a share of Common Stock of the
Company, which right is granted pursuant to Section 9 hereof and subject to
the terms and conditions contained therein.
(v) "Plan" shall mean the Allied Waste Industries, Inc. Amended
and Restated 1994 Incentive Plan, as it may be amended from time to time.
(w) a share of "Restricted Stock" shall mean a share of Common
Stock which is granted pursuant to the terms of Section 7 hereof and which is
subject to the restrictions set forth in Section 7(c) hereof for so long as
such restrictions continue to apply to such share.
(x) "Securities Act" shall mean the Securities Act of 1933, as
amended from time to time.
(y) "Stock Bonus" shall mean a grant of a bonus payable in shares
of Common Stock pursuant to Section 10 hereof.
(z) "Subsidiary" or "Subsidiaries" shall mean any and all
corporations in which at the pertinent time the Company owns, directly or
indirectly, stock vested with more than 50% of the total combined voting power
of all classes of stock of such corporations within the meaning of
Section 424(f) of the Code.
(aa) "Vesting Date" shall mean the date established by the
Committee on which a share of Restricted Stock or Phantom Stock may vest.
3. Stock Subject to the Plan
Under the Plan, the Committee may grant to Participants (i) Options, (ii)
shares of Restricted Stock, (iii) Performance Awards, (iv) shares of Phantom
Stock, (v) Stock Bonuses and (vi) Cash Bonuses.
The Committee may grant Options, shares of Restricted Stock, Performance
Awards, shares of Phantom Stock and Stock Bonuses under the Plan with respect
to a number of shares of Common Stock that in the aggregate at any time does
not exceed 2,000,000 shares of Common Stock, subject to adjustment pursuant to
Section 12 hereof. The grant of a Cash Bonus shall not reduce the number of
shares of Common Stock with respect to which Options, shares of Restricted
Stock, Performance Awards, shares of Phantom Stock or Stock Bonuses may be
granted pursuant to the Plan. Notwithstanding any provision in the Plan to
the contrary, the maximum number of shares of Common Stock that may be subject
to Incentive Awards granted to any one individual during any calendar year
shall be 1,000,000 shares of Common Stock, subject to adjustment under Section
12 hereof. The limitation set forth in the preceding sentence shall be
applied in a manner which will permit compensation generated in connection
with the exercise of Options and the payment of Performance Awards to
constitute "qualified performance-based compensation" for purposes of Section
162(m) of the Code, including, without limitation, counting against such
maximum number of shares, to the extent required under Section 162(m) of the
Code and applicable interpretive authority thereunder, any shares subject to
Options that are canceled or repriced.
If any outstanding Option expires, terminates or is canceled for any
reason, the shares of Common Stock subject to the unexercised portion of such
Option shall again be available for grant under the Plan. If any shares of
Restricted Stock or Phantom Stock, or any shares of Common Stock granted as a
Performance Award or a Stock Bonus are forfeited or canceled for any reason,
such shares shall again be available for grant under the Plan.
Shares of Common Stock issued under the Plan may be either newly issued
or treasury shares, at the discretion of the Committee.
4. Administration of the Plan
The Plan shall be administered by a Committee of the Board of Directors
consisting of two or more persons, each of whom shall be both (i) a
"disinterested person" within the meaning of Rule 16b-3(c)(2)(i) promulgated
under Section 16 of the Exchange Act and (ii) an "outside director" within the
meaning of Section 162(m) of the Code and applicable interpretive authority
thereunder. The Committee shall from time to time designate the key Employees
and Consultants who shall be granted Incentive Awards and the amount and type
of such Incentive Awards.
The Committee shall have full authority to administer the Plan, including
authority to interpret and construe any provision of the Plan and the terms of
any Incentive Award issued under it and to adopt such rules and regulations
for administering the Plan as it may deem necessary. Decisions of the
Committee shall be final and binding on all parties.
The Committee may, in its absolute discretion (i) accelerate the date on
which any Option granted under the Plan becomes exercisable, (ii) extend the
date on which any Option granted under the Plan ceases to be exercisable,
(iii) accelerate the Vesting Date or Issue Date, or waive any condition
imposed pursuant to Section 7(b) hereof, with respect to any share of
Restricted Stock granted under the Plan and (iv) accelerate the Vesting Date
or waive any condition imposed pursuant to Section 9 hereof, with respect to
any share of Phantom Stock granted under the Plan.
In addition, the Committee may, in its absolute discretion, grant
Incentive Awards to Participants on the condition that such Participants
surrender to the Committee for cancellation such other Incentive Awards
(including, without limitation, Incentive Awards with higher exercise prices)
as the Committee specifies. Notwithstanding Section 3 hereof, Incentive
Awards granted on the condition of surrender of outstanding Incentive Awards
shall not count against the limits set forth in such Section 3 until such time
as such Incentive Awards are surrendered.
Except as provided in Section 6(e)(4) hereof, whether an authorized leave
of absence, or absence in military or government service, shall constitute
termination of employment shall be determined by the Committee in its absolute
discretion.
No member of the Committee shall be liable for any action, omission, or
determination relating to the Plan, and the Company shall indemnify and hold
harmless each member of the Committee and each other director or employee of
the Company to whom any duty or power relating to the administration or
interpretation of the Plan has been delegated from and against any cost or
expense (including attorneys' fees) or liability (including any sum paid in
settlement of a claim with the approval of the Committee) arising out of any
action, omission or determination relating to the Plan, unless, in either
case, such action, omission or determination was taken or made by such member,
director or employee in bad faith and without reasonable belief that it was in
the best interests of the Company.
5. Eligibility
The persons who shall be eligible to receive Incentive Awards pursuant to
the Plan shall be (i) those Employees who are largely responsible for the
management, growth and protection of the business of the Company or any
Subsidiary (including officers of the Company, whether or not they are
directors of the Company) or (ii) any Consultant, as the Committee, in its
absolute discretion, shall select from time to time; provided, however,
Incentive Stock Options may only be granted to Employees.
6. Options
The Committee may grant Options pursuant to the Plan, which Options shall
be evidenced by agreements in such form as the Committee shall from time to
time approve. Options shall comply with and be subject to the following terms
and conditions:
(a) Identification of Options
All Options granted under the Plan shall be clearly identified in the
agreement evidencing such Options as either Incentive Stock Options or as Non-
Qualified Stock Options.
(b) Exercise Price
The exercise price of any Option granted under the Plan shall be such
price as the Committee shall determine on the date on which such Option is
granted; provided, that such price shall be not less than 100% of the Fair
Market Value of a share of Common Stock on the date on which such Option is
granted, subject to (i) the restrictions provided in Section 6(d) hereof and
(ii) the adjustments provided in Section 12 hereof.
(c) Term and Exercise of Options
(1) Each Option shall be exercisable on such date or dates, during
such period and for such number of shares of Common Stock as shall be
determined by the Committee on the day on which such Option is granted
and set forth in the agreement evidencing the Option; provided, however,
that (A) subject to the restrictions provided in Section 6(d) hereof, no
Option shall be exercisable after the expiration of ten years from the
date such Option was granted and (B) no Option shall be exercisable
until six months after the date of grant; and, provided, further, that
each Option shall be subject to earlier termination, expiration or
cancellation as provided in the Plan.
(2) Each Option shall be exercisable in whole or in part with
respect to whole shares of Common Stock. The partial exercise of an
Option shall not cause the expiration, termination or cancellation of
the remaining portion thereof. Upon the partial exercise of an Option,
the agreement evidencing such Option shall be returned to the
Participant exercising such Option together with the delivery of the
certificates described in Section 6(c)(5) hereof.
(3) An Option shall be exercised by delivering notice to the
Company's principal office, to the attention of its Secretary, no fewer
than five business days in advance of the effective date of the proposed
exercise. Such notice shall be accompanied by the agreement evidencing
the Option, shall specify the number of shares of Common Stock with
respect to which the Option is being exercised and the effective date of
the proposed exercise, and shall be signed by the Participant. The
Participant may withdraw such notice at any time prior to the close of
business on the business day immediately preceding the effective date of
the proposed exercise, in which case such agreement shall be returned to
the Participant. Payment for shares of Common Stock purchased upon the
exercise of an Option shall be made on the effective date of such
exercise either (i) in cash, by certified check, bank cashier's check or
wire transfer, (ii) subject to the approval of the Committee, in shares
of Common Stock owned by the Participant and valued at their Fair Market
Value on the effective date of such exercise, (iii) subject to the
approval of the Committee, in the form of a "cashless exercise" (as
described below) or (iv) subject to the approval of the Committee, in
any combination of the foregoing. Any payment in shares of Common Stock
shall be effected by the delivery of such shares to the Secretary of the
Company, duly endorsed in blank or accompanied by stock powers duly
executed in blank, together with any other documents and evidences as
the Secretary of the Company shall require from time to time.
The cashless exercise of an Option shall be pursuant to procedures
whereby the Participant by written notice, directs (i) an immediate
market sale or margin loan respecting all or a part of the shares of
Common Stock to which he is entitled upon exercise pursuant to an
extension of credit by the Company to the Participant of the exercise
price, (ii) the delivery of the shares of Common Stock directly from the
Company to a brokerage firm and (iii) delivery of the exercise price
from the sale or the margin loan proceeds from the brokerage firm
directly to the Company.
(4) Any Option granted under the Plan may be exercised by a
broker-dealer acting on behalf of a Participant if (i) the broker-dealer
has received from the Participant or the Company a duly endorsed
agreement evidencing such Option and instructions signed by the
Participant requesting the Company to deliver the shares of Common Stock
subject to such Option to the broker-dealer on behalf of the Participant
and specifying the account into which such shares should be deposited,
(ii) adequate provision has been made with respect to the payment of any
withholding taxes due upon such exercise and (iii) the broker-dealer and
the Participant have otherwise complied with Section 220.3(e)(4) of
Regulation T, 12 CFR Part 220.
(5) Certificates for shares of Common Stock purchased upon the
exercise of an Option shall be issued in the name of the Participant and
delivered to the Participant as soon as practicable following the
effective date on which the Option is exercised; provided, however, that
such delivery shall be effected for all purposes when a stock transfer
agent of the Company shall have deposited such certificates in the
United States mail, addressed to the Participant.
(6) During the lifetime of a Participant each Option granted to
him shall be exercisable only by him or a broker-dealer acting on behalf
of such Participant pursuant to Section 6(c)(4) hereof. No Option shall
be assignable or transferable otherwise than by will or by the laws of
descent and distribution.
(d) Limitations on Grant of Incentive Stock Options
(1) The aggregate Fair Market Value of shares of Common Stock with
respect to which "incentive stock options" (within the meaning of
Section 422, without regard to Section 422(d) of the Code) are
exercisable for the first time by a Participant during any calendar year
under the Plan (and any other stock option plan of the Company, or of
its Parent or any Subsidiary) shall not exceed $100,000. Such Fair
Market Value shall be determined as of the date on which each such
Incentive Stock Option is granted. If such aggregate Fair Market Value
of shares of Common Stock underlying such Incentive Stock Options
exceeds $100,000, then Incentive Stock Options granted hereunder to such
Participant shall, to the extent and in the order required by
Regulations promulgated under the Code (or any other authority having
the force of Regulations), automatically be deemed to be Non-Qualified
Stock Options, but all other terms and provisions of such Incentive
Stock Options shall remain unchanged. In the absence of such
Regulations (and authority), or if such Regulations (or authority)
require or permit a designation of the options which shall cease to
constitute Incentive Stock Options, Incentive Stock Options shall, to
the extent of such excess and in the order in which they were granted,
automatically be deemed to be Non-Qualified Stock Options, but all other
terms and provisions of such Incentive Stock Options shall remain
unchanged.
(2) No Incentive Stock Option may be granted to an individual if,
at the time of the proposed grant, such individual owns stock possessing
more than ten percent of the total combined voting power of all classes
of stock of the Company, or of its Parent or any Subsidiary, unless (i)
the exercise price of such Incentive Stock Option is at least 110% of
the Fair Market Value of a share of Common Stock at the time such
Incentive Stock Option is granted and (ii) such Incentive Stock Option
is not exercisable after the expiration of five years from the date such
Incentive Stock Option is granted.
(e) Effect of Termination of Employment
(1) If the employment of a Participant with the Company shall
terminate for any reason other than Cause, "permanent and total
disability" (within the meaning of Section 22(e)(3) of the Code) or the
death of the Participant (i) Options granted to such Participant, to the
extent that they were exercisable at the time of such termination, shall
remain exercisable until the expiration of one month after such
termination, on which date they shall expire, and (ii) Options granted
to such Participant, to the extent that they were not exercisable at the
time of such termination, shall expire at the close of business on the
date of such termination; provided, however, that no Option shall be
exercisable after the expiration of its term.
(2) If the employment of a Participant with the Company shall
terminate as a result of the "permanent and total disability" (within
the meaning of Section 22(e)(3) of the Code) or the death of the
Participant (i) Options granted to such Participant, to the extent that
they were exercisable at the time of such termination, shall remain
exercisable until the expiration of one year after such termination, on
which date they shall expire, and (ii) Options granted to such
Participant, to the extent that they were not exercisable at the time of
such termination, shall expire at the close of business on the date of
such termination; provided, however, that no Option shall be exercisable
after the expiration of its term.
(3) In the event of the termination of a Participant's employment
for Cause, all outstanding Options granted to such Participant shall
expire at the commencement of business on the date of such termination.
(4) A Participant's employment with the Company shall be deemed
terminated if the Participant's leave of absence (including military or
such leave or other bona fide leave of absence) extends for more than 90
days and the Participant's continued employment with the Company is not
guaranteed by contract or statute.
(f) Acceleration of Exercise Date Upon Change in Control
Upon the occurrence of a Change in Control, each Option granted under the
Plan and outstanding at such time shall become fully and immediately
exercisable and shall remain exercisable until its expiration, termination or
cancellation pursuant to the terms of the Plan.
7. Restricted Stock
The Committee may grant shares of Restricted Stock pursuant to the Plan.
Each grant of shares of Restricted Stock shall be evidenced by an agreement in
such form as the Committee shall from time to time approve. Each grant of
shares of Restricted Stock shall comply with and be subject to the following
terms and conditions:
(a) Issue Date and Vesting Date
At the time of the grant of shares of Restricted Stock, the Committee
shall establish an Issue Date or Issue Dates and a Vesting Date or Vesting
Dates with respect to such shares. The Committee may divide such shares into
classes and assign a different Issue Date and/or Vesting Date for each class.
Except as provided in Sections 7(c) and 7(f) hereof, upon the occurrence of
the Issue Date with respect to a share of Restricted Stock, a share of
Restricted Stock shall be issued in accordance with the provisions of Section
7(d) hereof. Provided that all conditions to the vesting of a share of
Restricted Stock imposed pursuant to Section 7(b) hereof are satisfied, and
except as provided in Sections 7(c) and 7(f) hereof, upon the occurrence of
the Vesting Date with respect to a share of Restricted Stock, such share shall
vest and the restrictions of Section 7(c) hereof shall cease to apply to such
share.
(b) Conditions to Vesting
At the time of the grant of shares of Restricted Stock, the Committee may
impose such restrictions or conditions, not inconsistent with the provisions
hereof, to the vesting of such shares as it in its absolute discretion deems
appropriate. By way of example and not by way of limitation, the Committee
may require, as a condition to the vesting of any class or classes of shares
of Restricted Stock, that (i) the Participant or the Company achieve certain
performance criteria, such criteria to be specified by the Committee at the
time of the grant of such shares and (ii) prohibiting an election by the
Participant under Section 83(b) of the Code.
(c) Restrictions on Transfer Prior to Vesting
Prior to the vesting of a share of Restricted Stock, no transfer of a
Participant's rights with respect to such share, whether voluntary or
involuntary, by operation of law or otherwise, shall vest the transferee with
any interest or right in or with respect to such share, but immediately upon
any attempt to transfer such rights, such share, and all of the rights related
thereto, shall be forfeited by the Participant and the transfer shall be of no
force or effect.
(d) Issuance of Certificates
(1) Except as provided in Sections 7(c) or 7(f) hereof, reasonably
promptly after the Issue Date with respect to shares of Restricted
Stock, the Company shall cause to be issued a stock certificate,
registered in the name of the Participant to whom such shares were
granted, evidencing such shares; provided, that the Company shall not
cause to be issued such a stock certificates unless it has received a
stock power duly endorsed in blank with respect to such shares. Each
such stock certificate shall bear the following legend:
The transferability of this certificate and the shares
of stock represented hereby are subject to the
restrictions, terms and conditions (including
forfeiture and restrictions against transfer)
contained in the Allied Waste Industries, Inc.
Amended and Restated 1994 Incentive Stock Plan and an
Agreement entered into between the registered owner of
such shares and Allied Waste Industries, Inc. A copy
of the Plan and Agreement is on file in the office of
the Secretary of Allied Waste Industries, Inc., 7201
East Camelback Road, #375, Scottsdale, Arizona 85251.
Such legend shall not be removed from the certificate evidencing such
shares until such shares vest pursuant to the terms hereof.
(2) Each certificate issued pursuant to Paragraph 7(d)(1) hereof,
together with the stock powers relating to the shares of Restricted
Stock evidenced by such certificate, shall be held by the Company. The
Company shall issue to the Participant a receipt evidencing the
certificates held by it which are registered in the name of the
Participant.
(e) Consequences Upon Vesting
Upon the vesting of a share of Restricted Stock pursuant to the terms
hereof, the restrictions of Section 7(c) hereof shall cease to apply to such
share. Reasonably promptly after a share of Restricted Stock vests pursuant
to the terms hereof, the Company shall cause to be issued and delivered to the
Participant to whom such shares were granted, a certificate evidencing such
share, free of the legend set forth in Paragraph 7(d)(1) hereof, together with
any other property of the Participant held by Company pursuant to Section
12(a) hereof; provided, however, that such delivery shall be effected for all
purposes when the Company shall have deposited such certificate and other
property in the United States mail, addressed to the Participant.
(f) Effect of Termination of Employment
(1) If the employment of a Participant with the Company shall
terminate for any reason other than Cause prior to the vesting of shares
of Restricted Stock granted to such Participant, a portion of such
shares, to the extent not forfeited or canceled on or prior to such
termination pursuant to any provision hereof, shall vest on the date of
such termination. The portion referred to in the preceding sentence
shall be determined by the Committee at the time of the grant of such
shares of Restricted Stock and may be based on the achievement of any
conditions imposed by the Committee with respect to such shares pursuant
to Section 7(b) hereof. Such portion may equal zero.
(2) In the event of the termination of a Participant's employment
for Cause, all shares of Restricted Stock granted to such Participant
which have not vested as of the commencement of business on the date of
such termination shall immediately be forfeited.
(g) Effect of Change in Control
Upon the occurrence of a Change in Control, all shares of Restricted
Stock which have not theretofore vested (including those with respect to which
the Issue Date has not yet occurred) shall immediately vest.
8. Performance Awards
The Committee may grant Performance Awards pursuant to the Plan. Each
grant of Performance Awards shall be evidenced by an agreement in such form as
the Committee shall from time to time approve. Each grant of Performance
Awards shall comply with and be subject to the following terms and conditions:
(a) Performance Period and Performance Award
(1) With respect to each grant of a Performance Award, the
Committee shall establish a performance period over which the
performance of the applicable Participant shall be measured.
(2) In determining the amount of the Performance Award to be
granted to a particular Participant, the Committee may take into account
such factors as the Participant's responsibility level and growth
potential, the amount of other Incentive Awards granted or received by
such Participant, and such other considerations as the Committee deems
appropriate; provided, however, the maximum value that can be granted
as a Performance Award to any one individual during any calendar year is
$10,000,000.
(b) Performance Goals
A Performance Award shall be paid solely on the attainment of certain
preestablished, objective performance goals (within the meaning of Section
162(m) of the Code). Such performance goals shall be based on any one or any
combination of the following business criteria of the Company as a whole or
any of its subsidiaries (or any division or department of the foregoing), as
determined by the Committee: revenues, profitability, earnings (including,
without limitation, earnings per share); successful acquisitions of other
companies or assets; successful dispositions of subsidiaries, divisions or
departments of the Company or any of its subsidiaries; successful financing
efforts; return to stockholders; market share; or cost or expense control.
The Committee shall establish, in writing, the applicable performance goal(s)
and the specific targets related to such goal(s) within 90 days after the
commencement of the performance period to which such goal(s) relate and at a
time when the outcome of such performance goal(s) are substantially uncertain
within the meaning of Section 162(m) of the Code, subject to adjustment by the
Committee as it deems appropriate to reflect significant unforseen events or
changes.
(c) Payment
Upon the expiration of the performance period relating to a Performance
Award granted to a Participant, such Participant shall be entitled to receive
payment of an amount not exceeding the maximum value of the Performance Award,
based on the achievement of the performance goals for such performance period,
as determined by the Committee. The Committee may, within its sole
discretion, pay a Performance Award under any one or more of the performance
goals established by the Committee with respect to such Performance Award.
The Committee shall certify in writing prior to the payment of a Performance
Award that the applicable performance goals and any other material terms of
the grant have been satisfied. Subject to Section 3 hereof, payment of a
Performance Award may be made in cash, Common Stock or a combination thereof,
as determined by the Committee. Payment shall be made in a lump sum or in
installments as prescribed by the Committee. Any payment to be made in Common
Stock shall be based on the Fair Market Value of the Common Stock on the
payment date.
(d) Effect of Termination of Employment
If the employment of a Participant shall terminate for any reason prior
to the expiration of the applicable performance period, the Performance Awards
relating to such performance period, shall immediately be forfeited as of the
commencement of business on the date of such termination, except as may be
determined by the Committee in its sole and absolute discretion, or as may be
otherwise provided in the agreement evidencing such Performance Award.
(e) Effect of Change in Control
Upon the occurrence of a Change in Control, the Committee (as constituted
immediately prior to such Change in Control) shall determine, in its sole
discretion, whether Performance Awards, which have not theretofore satisfied
the requisite performance goals or for which the performance period has not
expired, shall immediately be paid or whether such Performance Awards shall
remain outstanding according to its respective terms.
9. Phantom Stock
The Committee may grant shares of Phantom Stock pursuant to the Plan.
Each grant of shares of Phantom Stock shall be evidenced by an agreement in
such form as the Committee shall from time to time approve. Each grant of
shares of Phantom Stock shall comply with and be subject to the following
terms and conditions:
(a) Vesting Date
At the time of the grant of shares of Phantom Stock, the Committee shall
establish a Vesting Date or Vesting Dates with respect to such shares. The
Committee may divide such shares into classes and assign a different Vesting
Date for each class. Provided that all conditions to the vesting of a share
of Phantom Stock imposed pursuant to Section 9(c) hereof are satisfied, and
except as provided in Section 9(d) hereof, upon the occurrence of the Vesting
Date with respect to a share of Phantom Stock, such share shall vest.
(b) Benefit Upon Vesting
Upon the vesting of a share of Phantom Stock, a Participant shall be
entitled to receive in cash, within 90 days of the date on which such share
vests, an amount in cash in a lump sum equal to the sum of (i) the Fair Market
Value of a share of Common Stock of the Company on the date on which such
share of Phantom Stock vests and (ii) the aggregate amount of cash dividends
paid with respect to a share of Common Stock of the Company during the period
commencing on the date on which the share of Phantom Stock was granted and
terminating on the date on which such share vests.
(c) Conditions to Vesting
At the time of the grant of shares of Phantom Stock, the Committee may
impose such restrictions or conditions, not inconsistent with the provisions
hereof, to the vesting of such shares as it, in its absolute discretion deems
appropriate. By way of example and not by way of limitation, the Committee
may require, as a condition to the vesting of any class or classes of shares
of Phantom Stock, that the Participant or the Company achieve certain
performance criteria, such criteria to be specified by the Committee at the
time of the grant of such shares.
(d) Effect of Termination of Employment
(1) If the employment of a Participant with the Company shall
terminate for any reason other than Cause prior to the vesting of shares
of Phantom Stock granted to such Participant a portion of such shares,
to the extent not forfeited or canceled on or prior to such termination
pursuant to any provision hereof, shall vest on the date of such
termination. The portion referred to in the preceding sentence shall be
determined by the Committee at the time of the grant of such shares of
Phantom Stock and may be based on the achievement of any conditions
imposed by the Committee with respect to such shares pursuant to Section
9(c) hereof. Such portion may equal zero.
(2) In the event of the termination of a Participant's employment
for Cause, all shares of Phantom Stock granted to such Participant which
have not vested as of the date of such termination shall immediately be
forfeited.
(e) Effect of Change in Control
Upon the occurrence of a Change in Control, all shares of Phantom Stock
which have not theretofore vested shall immediately vest.
10. Stock Bonuses
The Committee may, in its absolute discretion, grant Stock Bonuses in
such amounts as it shall determine from time to time. A Stock Bonus shall be
paid at such time and subject to such conditions as the Committee shall
determine at the time of the grant of such Stock Bonus. Certificates for
shares of Common Stock granted as a Stock Bonus shall be issued in the name of
the Participant to whom such grant was made and delivered to such Participant
as soon as practicable after the date on which such Stock Bonus is required to
be paid.
11. Cash Bonuses
The Committee may, in its absolute discretion, grant in connection with
any grant of Restricted Stock or shares of Common Stock granted as a
Performance Award or Stock Bonus or at any time thereafter, a cash bonus,
payable promptly after the date on which the Participant is required to
recognize income for federal income tax purposes in connection with such
Restricted Stock, Performance Award or Stock Bonus, in such amounts as the
Committee shall determine from time to time; provided, however, that in no
event shall the amount of a Cash Bonus exceed the Fair Market Value of the
related shares of Restricted Stock or shares of Common Stock granted pursuant
to a Performance Award or Stock Bonus on such date. A Cash Bonus shall be
subject to such conditions as the Committee shall determine at the time of the
grant of such Cash Bonus.
12. Adjustment Upon Changes in Common Stock
(a) Outstanding Restricted Stock, Performance Awards, and Phantom
Stock
Unless the Committee in its absolute discretion otherwise determines, if
a Participant receives any securities or other property (including dividends
paid in cash) with respect to a share of Restricted Stock, the Issue Date
with respect to which occurs prior to such event, but which has not vested as
of the date of such event, as a result of any dividend, stock split
recapitalization, merger, consolidation, combination, exchange of shares or
otherwise, such securities or other property will not vest until such share of
Restricted Stock vests, and shall be held by the Company pursuant to Paragraph
7(d)(2) hereof as if such securities or other property were unvested shares of
Restricted Stock.
The Committee may, in its absolute discretion, adjust any grant of shares
of Restricted Stock, the Issue Date with respect to which has not occurred as
of the date of the occurrence of any of the following events, any shares of
Common Stock upon the grant of a Performance Award or any grant of shares of
Phantom Stock, to reflect any dividend, stock split, recapitalization, merger,
consolidation, combination, exchange of shares or similar corporate change as
the Committee may deem appropriate to prevent the enlargement or dilution of
rights of Participants under the grant.
(b) Stock Subject to Plan, Outstanding Options, Increase
or Decrease in Issued Shares Without Consideration
Subject to any required action by the shareholders of the Company, in the
event of any increase or decrease in the number of issued shares of Common
Stock resulting from a subdivision or consolidation of shares of Common Stock
or the payment of a stock dividend (but only on the shares of Common Stock),
or any other increase or decrease in the number of such shares effected
without receipt of consideration by the Company, the Committee shall
proportionally adjust (i) the number of shares of Common Stock for which
Incentive Awards may be granted under the Plan and (ii) the number of shares
and the exercise price per share of Common Stock subject to each outstanding
Option.
(c) Outstanding Options, Certain Mergers
Subject to any required action by the shareholders of the Company, if the
Company shall be the surviving corporation in any merger or consolidation
(except a merger or consolidation as a result of which the holders of shares
of Common Stock receive securities of another corporation), each Option
outstanding on the date of such merger or consolidation shall entitle the
Participant to acquire upon exercise the securities which a holder of the
number of shares of Common Stock subject to such Option would have received in
such merger or consolidation.
(d) Outstanding Options, Certain Other Transactions
In the event of a dissolution or liquidation of the Company, a sale of
all or substantially all of the Company's assets, a merger or consolidation
involving the Company in which the Company is not the surviving corporation or
a merger or consolidation involving the Company in which the Company is the
surviving corporation but the holders of shares of Common Stock receive
securities of another corporation and/or other property, including cash, the
Committee shall, in its absolute discretion, have the power to:
(i) cancel, effective immediately prior to the occurrence of such
event, each Option outstanding immediately prior to such event (whether
or not then exercisable), and, in full consideration of such
cancellation, pay to the Participant to whom such Option was granted an
amount in cash, for each share of Common Stock subject to such Option
equal to the excess of (A) the value, as determined by the Committee in
its absolute discretion, of the property (including cash) received by
the holder of a share of Common Stock as a result of such event over (B)
the exercise price of such Option; or
(ii) provide for the exchange of each Option outstanding
immediately prior to such event (whether or not then exercisable) for an
option on some or all of the property for which such Option is exchanged
and, incident thereto, make an equitable adjustment as determined by the
Committee in its absolute discretion in the exercise price of the
option, or the number of shares or amount of property subject to the
option or, if appropriate, provide for a cash payment to the Participant
to whom such Option was granted in partial consideration for the
exchange of the Option.
(e) Outstanding Options, Other Changes
In the event of any change in the capitalization of the Company or
corporate change other than those specifically referred to in Sections 12(b),
(c) or (d) hereof, the Committee may, in its absolute discretion, make such
adjustments in the number and class of shares subject to Options outstanding
on the date on which such change occurs and in the per share exercise price of
each such Option as the Committee may consider appropriate to prevent dilution
or enlargement of rights.
(f) No Other Rights
Except as expressly provided in the Plan, no Participant shall have any
rights by reason of any subdivision or consolidation of shares of stock of any
class, the payment of any dividend, any increase or decrease in the number of
shares of stock of any class or any dissolution, liquidation, merger or
consolidation of the Company or any other corporation. Except as expressly
provided in the Plan, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number of shares of Common Stock subject to an Incentive Award or the exercise
price of any Option.
13. Rights as a Stockholder
No person shall have any rights as a stockholder with respect to any
shares of Common Stock covered by or relating to any Incentive Award granted
pursuant to this Plan until the date of the issuance of a stock certificate
with respect to such shares. Except as otherwise expressly provided in
Section 12 hereof, no adjustment to any Incentive Award shall be made for
dividends or other rights for which the record date occurs prior to the date
such stock certificate is issued.
14. No Special Employment Rights; No Right to Incentive Award
Nothing contained in the Plan or any Incentive Award shall confer upon
any Participant any right with respect to the continuation of his employment
by the Company or interfere in any way with the right of the Company, subject
to the terms of any separate employment agreement to the contrary, at any time
to terminate such employment or to increase or decrease the compensation of
the Participant from the rate in existence at the time of the grant of an
Incentive Award.
No person shall have any claim or right to receive an Incentive Award
hereunder. The Committee's granting of an Incentive Award to a Participant at
any time shall neither require the Committee to grant an Incentive Award to
such Participant or any other Participant or other person at any time nor
preclude the Committee from making subsequent grants to such Participant or
any other Participant or other person.
15. Securities Matters
(a) The Company shall be under no obligation to effect the registration
pursuant to the Securities Act of any shares of Common Stock to be issued
hereunder or to effect similar compliance under any state laws.
Notwithstanding anything herein to the contrary, the Company shall not be
obligated to cause to be issued or delivered any certificates evidencing
shares of Common Stock pursuant to the Plan unless and until the Company is
advised by its counsel that the issuance and delivery of such certificates is
in compliance with all applicable laws, regulations of governmental authority
and the requirements of any securities exchange on which shares of Common
Stock are traded. The Committee may require, as a condition of the issuance
and delivery of certificates evidencing shares of Common Stock pursuant to the
terms hereof, that the recipient of such shares make such covenants,
agreements and representations, and that such certificates bear such legends,
as the Committee, in its sole discretion, deems necessary or desirable.
(b) The exercise of any Option granted hereunder shall only be effective
at such time as counsel to the Company shall have determined that the issuance
and delivery of shares of Common Stock pursuant to such exercise is in
compliance with all applicable laws, regulations of governmental authorities
and the requirements of any securities exchange on which shares of Common
Stock are traded. The Company may, in its sole discretion, defer the
effectiveness of any exercise of an Option granted hereunder in order to allow
the issuance of shares of Common Stock pursuant thereto to be made pursuant to
registration or an exemption from registration or other methods for compliance
available under federal or state securities laws. The Company shall inform
the Participant in writing of its decision to defer the effectiveness of the
exercise of an Option granted hereunder. During the period that the
effectiveness of the exercise of an Option has been deferred, the Participant
may, by written notice, withdraw such exercise and obtain the refund of any
amount paid with respect thereto.
(c) It is intended that the Plan and any grant of an Incentive Award
made to a person subject to Section 16 of the 1934 Act meet all of the
requirements of Rule 16b-3 promulgated thereunder. If any provision of the
Plan or any such Incentive Award would disqualify the Plan or such Incentive
Award under, or would otherwise not comply with, Rule 16b-3, such provision or
Incentive Award shall be construed or deemed amended to conform to Rule 16b-3
to the extent permitted by applicable law and deemed advisable by the Board of
Directors.
16. Qualified Performance-Based Compensation
It is intended that the Plan comply fully with and meet all the
requirements of Section 162(m) of the Code so that (i) Options granted
hereunder with an exercise price not less than Fair Market Value of a share of
Common Stock on the date of grant and (ii) the payment of a Performance Award
granted hereunder, shall constitute "qualified performance based compensation"
within the meaning of such Section and the interpretive authority thereunder.
If any provision of the Plan would disqualify the Plan or would not otherwise
permit the Plan to comply with Section 162(m) as so intended, such provision
shall be construed or deemed amended to conform to the requirements or
provisions of Section 162(m) to the extent permitted by applicable law and
deemed advisable by the Board of Directors; provided that no such construction
or amendment shall have an adverse effect on the economic value to a
Participant of any Incentive Award previously granted hereunder.
17. Withholding Taxes
Whenever shares of Common Stock are to be issued upon the exercise of an
Option, the occurrence of the Issue Date or Vesting Date with respect to a
share of Restricted Stock, the payment of a Performance Award in shares of
Common Stock or the payment of a Stock Bonus, the Company shall have the right
to require the Participant to remit to the Company in cash an amount
sufficient to satisfy federal, state and local withholding tax requirements,
if any, attributable to such exercise, occurrence or payment prior to the
delivery of any certificate or certificates for such shares. In addition,
upon the grant of a Cash Bonus, the payment of a Performance Award or the
making of a payment with respect to a share of Phantom Stock, the Company
shall have the right to withhold from any cash payment required to be made
pursuant thereto an amount sufficient to satisfy the federal, state and local
withholding tax requirements, if any, attributable to such exercise or grant.
18. Amendment of the Plan
The Board of Directors may at any time suspend or discontinue the Plan or
revise or amend it in any respect whatsoever, provided, however, that without
approval of the shareholders no revision or amendment shall (i) except as
provided in Section 12 hereof, increase the number of shares of Common Stock
that may be issued under the Plan, (ii) except as provided in Section 12
hereof, increase the maximum number of shares of Common Stock that may be
subject to an Incentive Award granted to any one individual for any calendar
year, (iii) increase the maximum value that can be awarded as a Performance
Award (iv) materially increase the benefits accruing to individuals holding
Incentive Awards granted pursuant to the Plan, (v) materially modify the
requirements as to eligibility for participation in the Plan, (vi) extend the
term of the Plan, or (vi) decrease any authority granted to the Committee in
contravention of Rule 16b-3 under the Exchange Act.
19. No Obligation to Exercise
The grant to a Participant of an Option shall impose no obligation upon
such Participant to exercise such Option.
20. Transfers Upon Death
Upon the death of a Participant, outstanding Incentive Awards granted to
such Participant may be exercised only by the executors or administrators of
the Participant's estate or by any person or persons who shall have acquired
such right to exercise by will or by the laws of descent and distribution. No
transfer by will or the laws of descent and distribution of any Incentive
Award, or the right to exercise any Incentive Award, shall be effective to
bind the Company unless the Committee shall have been furnished with (a)
written notice thereof and with a copy of the will and/or such evidence as the
Committee may deem necessary to establish the validity of the transfer and (b)
an agreement by the transferee to comply with all the terms and conditions of
the Incentive Award that are or would have been applicable to the Participant
and to be bound by the acknowledgments made by the Participant in connection
with the grant of the Incentive Award.
21. Expenses and Receipts
The expenses of the Plan shall be paid by the Company. Any proceeds
received by the Company in connection with any Incentive Award will be used
for general corporate purposes.
22. Failure to Comply
In addition to the remedies of the Company elsewhere provided for herein,
failure by a Participant to comply with any of the terms and conditions of the
Plan or the agreement executed by such Participant evidencing an Incentive
Award, unless such failure is remedied by such Participant within ten days
after having been notified of such failure by the Committee, shall be grounds
for the cancellation and forfeiture of such Incentive Award, in whole or in
part as the Committee, in its absolute discretion, may determine.
23. Effective Date and Term of Plan
The Plan was adopted by the Board of Directors on May 1, 1996 and shall
become effective on such date, subject to approval by the stockholders of the
Company in accordance with applicable law, the requirements of Sections 422
and 162(m) of the Code and the requirements of Rule 16b-3 under Section 16(b)
of the Exchange Act. No Incentive Award may be granted under the Plan after
May 1, 2006. Incentive Awards may be granted under the Plan at any time prior
to the receipt of such stockholder approval; provided, however, that each such
grant shall be subject to such approval. Without limitation on the foregoing,
no Option may be exercised prior to the receipt of such approval, no share
certificate shall be issued pursuant to a grant of Restricted Stock,
Performance Award or Stock Bonus prior to the receipt of such approval and no
Cash Bonus or payment with respect to a Performance Award or a share of
Phantom Stock shall be paid prior to the receipt of such approval. If the
Plan is not so approved prior to April ___, 1997, then the Plan and all
Incentive Awards then outstanding hereunder shall forthwith automatically
terminate and be of no force and effect.
<PAGE>
EXHIBIT 10.2
FIFTH SUPPLEMENTAL INDENTURE
ALLIED WASTE INDUSTRIES, INC.
ISSUER
TO
FIRST TRUST NATIONAL ASSOCIATION
TRUSTEE
Dated as of July 30, 1996
(Fifth Amendment to the Indenture Dated as of January 15, 1994)
This Supplemental Indenture dated as of the 30th day of July 1996, is
between Allied Waste Industries, Inc., a Delaware corporation (hereinafter
called the Company ), having its principal offices in Scottsdale, Arizona,
and First Trust National Association as Trustee (hereinafter called the
Trustee ).
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the Trustee
a certain Indenture dated as of January 15, 1994, as amended by a Supplemental
Indenture dated as of June 30, 1994, a Second Supplemental Indenture dated as
of January 31, 1995, a Third Supplemental Indenture dated as of July 14, 1995,
and a Fourth Supplemental Indenture dated as of January 1996 (as so amended,
hereinafter referred to as the Original Indenture ), pursuant to which 10%
(presently 12%) Senior Subordinated Notes due 2004 (the Notes ), of the
Company were issued (said Original Indenture, together with this Supplemental
Indenture and any indentures or instruments that may be given supplemental to
or amendatory of the Original Indenture, being hereinafter collectively
referred to as the Indenture ); and
WHEREAS, the Company has extended to the registered holders of the Notes,
an offer to purchase for cash the Notes upon the terms and subject to the
conditions set forth in the Offer to Purchase and Consent Solicitation dated
July 2, 1996 (as amended, the Original Offer and Consent Solicitation ); and
WHEREAS, the Original Offer and Consent Solicitation has been
supplemented by the Supplement to Offer to Purchase and Consent Solicitation
dated July 16, 1996 (the Original Offer and Consent Solicitation, as so
amended, the Offer and Consent Solicitation );
WHEREAS, the Offer and Consent Solicitation contains and constitutes a
solicitation of consents from the registered holders of the Notes to certain
amendments to the Original Indenture (the Proposed Amendments ) to eliminate
or modify certain of the covenants and other provisions of the Original
Indenture and to a conforming amendment to the Notes; and
WHEREAS, the Proposed Amendments: (a) eliminate covenants contained in
the Original Indenture relating to: (i) a limitation on restricted payments;
(ii) a limitation on transactions with related persons; (iii) a limitation on
incurrences of additional debt and issuances of disqualified capital stock;
(iv) limitations on restricting subsidiary dividends; (v) a limitation on
liens; (vi) limitations on asset sales; (vii) a restriction on sale and
issuance of subsidiary stock; and (viii) limitations on lines of business; (b)
modify the provisions in the Original Indenture relating to when the Company
may merge or transfer assets by eliminating the reference to certain debt
incurrence; (c) modify the provisions of the Notes to conform to the foregoing
changes; and (d) make certain conforming and other changes; and
WHEREAS, Section 9.2 of the Original Indenture provides, among other
things, that the Company may (with certain exceptions not applicable to the
present situation), with the consent of not less than a majority in aggregate
principal amount of then outstanding Notes, amend or supplement the Original
Indenture or enter into an indenture or indentures supplemental thereto for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of the Original Indenture; and
WHEREAS, the Company desires and has requested the Trustee to join with
it in the execution and delivery of this Supplemental Indenture for the
purpose of (a) amending the Original Indenture pursuant to the Proposed
Amendments; (b) supplementing the Original Indenture, pursuant to Section 4.19
thereof, by adding the new Subsidiaries of the Company as Guarantors under the
Indenture; and (c) reaffirming each and every other provision of the Original
Indenture; and
WHEREAS, in conjunction with the Offer and Consent Solicitation, the
Company has obtained the requisite consent of not less than a majority in
aggregate principal amount of then outstanding Notes and desires and has
requested the Trustee to join with it in the execution and delivery of this
Supplemental Indenture for the purposes stated in subsection (a) of the
preceding paragraph (the Section 9.2 Amendment ); and
WHEREAS, the execution and delivery of this Supplemental Indenture have
been duly authorized and approved by a Board resolution and the execution and
delivery of this Supplemental Indenture have been duly consented to by the
requisite aggregate principal amount of then outstanding Notes (in regard to
the Section 9.2 Amendment).
NOW, THEREFORE, in consideration of the premises, and for the equal and
proportionate benefit of all Holders of the Notes, the Original Indenture is
hereby amended, effective upon execution hereof by the Trustee as follows:
ARTICLE I
AMENDMENT
Section 1.1. The following amendments to the Original Indenture and
the Notes shall be made thereto in accordance with the terms hereof:
1. The terms Acquired Indebtedness, Consolidated EBITDA,
Consolidated Fixed Charge Coverage Ratio, Consolidated Fixed Charges,
Consolidated Interest Expense, Consolidated Net Income, Junior
Exchange Indebtedness, Non-Recourse Indebtedness, Permitted
Investment, Permitted Liens, Refinancing Indebtedness, Related
Person, Related Person Transaction, Restricted Investment,
Restricted Payment, and Seller Indebtedness contained in Section 1.1
of the Original Indenture are hereby deleted in their entirety;
2. Section 4.3 of the Original Indenture ( Limitation on Restricted
Payments ) is hereby amended by deleting such Section 4.3 in its
entirety and adding the following in lieu thereof: [intentionally
omitted] ;
3. Section 4.7 of the Original Indenture ( Compliance Certificate;
Notice of Default ) is hereby amended by deleting subsection (b)
thereof in its entirety and adding the following in lieu thereof:
[intentionally omitted] ;
4. Section 4.10 of the Original Indenture ( Limitation on
Transactions with Related Persons ) is hereby amended by deleting
such Section 4.10 in its entirety and adding the following in lieu
thereof: [intentionally omitted] ;
5. Section 4.11 of the Original Indenture ( Limitation on
Incurrences of Additional Indebtedness and Issuances of
Disqualified Capital Stock ) is hereby amended by deleting such
Section 4.11 in its entirety and adding the following in lieu
thereof: [intentionally omitted] ;
6. Section 4.12 of the Original Indenture ( Limitation on
Restricting Subsidiary Dividends ) is hereby amended by deleting
such Section 4.12 in its entirety and adding the following in lieu
thereof: [intentionally omitted] ;
7. Section 4.13 of the Original Indenture ( Limitation on Liens ) is
hereby amended by deleting such Section 4.13 in its entirety and
adding the following in lieu thereof: [intentionally omitted] ;
8. Section 4.14 of the Original Indenture ( Limitation on Asset
Sales ) is hereby amended by deleting such Section 4.14 in its
entirety and adding the following in lieu thereof: [intentionally
omitted] ;
9. Section 4.17 of the Original Indenture ( Limitation on Issuance
of Qualified Capital Stock by Subsidiaries ) is hereby amended by
deleting such Section 4.17 in its entirety and adding the
following in lieu thereof: [intentionally omitted] ;
10. Section 4.20 of the Original Indenture ( Limitation on Line of
Business ) is hereby amended by deleting such Section 4.20 in its
entirety and adding the following in lieu thereof: [intentionally
omitted] ;
11. Section 5.1 of the Original Indenture ( When Company May Merge,
Etc. ) is hereby amended by:
(i) deleting subsection (a) (3) thereof in its entirety and
adding the following in lieu thereof: [intentionally
omitted] ; and
(ii) deleting the last full paragraph thereof in its entirety;
12. Section 12 of the Notes is hereby amended by deleting in its
entirety the following phrase from the first sentence thereof:
incur additional Indebtedness or issue Disqualified Capital Stock,
make payments in respect of its Capital Stock, enter into
transactions with Related Persons, incur Liens, sell assets,
Section 1.2. The following subsidiaries are hereby added as Guarantors
under the Indenture:
CitiWaste, Inc.
Clayco Sanitation Co., Inc.
Container Corporation of Carolina
Hustler, Inc.
Illinois Recycling, Inc.
John Spot Portable Services, Inc.
Service Waste, Inc.
South Holland Scavenger Service, Inc.
United Sanitary, Inc.
ARTICLE II
MISCELLANEOUS PROVISIONS
Section 2.1. For all purposes of this Supplemental Indenture, except as
otherwise defined or unless the context otherwise requires, capitalized terms
used in this Supplemental Indenture and defined in the Original Indenture have
the meaning specified in the Original Indenture.
Section 2.2. Except as specifically amended and supplemented by this
Supplemental Indenture, the Original Indenture shall remain in full force and
effect and is hereby ratified and confirmed.
Section 2.3. This Supplemental Indenture shall be governed by and
construed in accordance with the laws of the State of New York, as applied to
contracts made and performed within the State of New York, without regard to
principles of conflicts of law.
Section 2.4. All agreements of the Company in this Supplemental
Indenture shall bind its successors. All agreements of the Trustee in this
Supplemental Indenture shall bind its successors.
Section 2.5. The Trustee accepts the modification of the Indenture as
hereby effected but only upon the terms and conditions set forth in the
Original Indenture as amended and supplemented by this Supplemental Indenture.
Section 2.6. This instrument may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same
instrument.
Section 2.7. The Guarantors shall be those Subsidiaries of the Company
set forth on the signature page of this Supplemental Indenture, and each such
Subsidiary, by execution hereof, agrees to be bound by the terms of the
Indenture, including, without limitation, Article XIII of the Original
Indenture.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
[SEAL] ALLIED WASTE INDUSTRIES, INC.
By:
Name:
Title:
Attest:
_________________________
Secretary or Assistant Secretary
<PAGE>
EXHIBIT 10.3
EXECUTION COPY
CREDIT AGREEMENT
Dated as of July 30, 1996,
among
ALLIED WASTE INDUSTRIES, INC. ,
THE EXISTING ACCOUNT PARTIES REFERRED TO HEREIN,
THE LENDERS REFERRED TO HEREIN
and
CREDIT SUISSE,
as Swingline Lender, Issuing Bank, Administrative Agent and Collateral Agent
<PAGE>
TABLE OF CONTENTS
ARTICLE I
Definitions
PAGE
SECTION 1.01. Defined Terms....................................1
SECTION 1.02. Terms Generally.................................21
ARTICLE II
The Credits
SECTION 2.01. Commitments.....................................22
SECTION 2.02. Loans...........................................22
SECTION 2.03. Borrowing Procedure.............................24
SECTION 2.04. Evidence of Debt; Repayment of Loans............24
SECTION 2.05. Fees............................................25
SECTION 2.06. Interest on Loans...............................26
SECTION 2.07. Default Interest................................26
SECTION 2.08. Alternate Rate of Interest......................27
SECTION 2.09. Termination and Reduction of Commitments........27
SECTION 2.10. Conversion and Continuation of Borrowings.......27
SECTION 2.11. Optional Prepayments............................29
SECTION 2.12. Mandatory Prepayments...........................29
SECTION 2.13. Reserve Requirements; Change in Circumstances...30
SECTION 2.14. Change in Legality..............................31
SECTION 2.15. Indemnity.......................................32
SECTION 2.16. Pro Rata Treatment..............................33
SECTION 2.17. Sharing of Setoffs..............................33
SECTION 2.18. Payments........................................34
SECTION 2.19. Taxes...........................................34
SECTION 2.20. Assignment of Commitments Under Certain
Circumstances; Duty to Mitigate............36
SECTION 2.21. Swingline Loans.................................37
SECTION 2.22. Letters of Credit...............................39
ARTICLE III
Representations and Warranties
SECTION 3.01. Organization; Powers............................43
SECTION 3.02. Authorization...................................43
SECTION 3.03. Enforceability..................................44
SECTION 3.04. Governmental Approvals..........................44
SECTION 3.05. Financial Statements............................44
SECTION 3.06. No Material Adverse Change......................44
SECTION 3.07. Title to Properties; Possession Under Leases....45
SECTION 3.08. Subsidiaries....................................45
SECTION 3.09. Litigation; Compliance with Laws................45
SECTION 3.10. Agreements......................................45
SECTION 3.11. Federal Reserve Regulations.....................46
SECTION 3.12. Investment Company Act; Public Utility
Holding Company Act........................46
SECTION 3.13. Use of Proceeds.................................46
SECTION 3.14. Tax Returns.....................................46
SECTION 3.15. No Material Misstatements.......................46
SECTION 3.16. Employee Benefit Plans..........................46
SECTION 3.17. Environmental Matters...........................47
SECTION 3.18. Insurance.......................................48
SECTION 3.19. Security Documents..............................48
SECTION 3.20. Labor Matters...................................48
SECTION 3.21. Solvency........................................49
ARTICLE IV
Conditions of Lending
SECTION 4.01. All Credit Events...............................49
SECTION 4.02. First Credit Event..............................50
ARTICLE V
Affirmative Covenants
SECTION 5.01. Existence; Businesses and Properties............53
SECTION 5.02. Insurance.......................................54
SECTION 5.03. Obligations and Taxes...........................54
SECTION 5.04. Financial Statements, Reports, etc..............55
SECTION 5.05. Litigation and Other Notices....................56
SECTION 5.06. Employee Benefits...............................57
SECTION 5.07. Maintaining Records; Access to Properties
and Inspections............................57
SECTION 5.08. Use of Proceeds.................................57
SECTION 5.09. Environmental Laws..............................57
SECTION 5.10. Preparation of Environmental Reports............58
SECTION 5.11. Further Assurances..............................58
SECTION 5.12. Interest Rate Protection Agreements.............58
SECTION 5.13. Senior Convertible Debentures...................59
ARTICLE VI
Negative Covenants
SECTION 6.01. Indebtedness....................................59
SECTION 6.02. Liens...........................................61
SECTION 6.03. Sale and Lease-Back Transactions................62
SECTION 6.04. Investments, Loans and Advances.................63
SECTION 6.05. Mergers, Consolidations, Sales of Assets
and Acquisitions...........................64
SECTION 6.06. Dividends and Distributions; Restrictions on
Ability of Subsidiaries to Pay Dividends...65
SECTION 6.07. Transactions with Affiliates....................65
SECTION 6.08. Business of Borrower and Subsidiaries...........66
SECTION 6.09. Other Indebtedness and Agreements...............66
SECTION 6.10. Capital Expenditures............................67
SECTION 6.11. Fixed Charge Coverage Ratio.....................67
SECTION 6.12. Leverage Ratio..................................67
SECTION 6.13. Interest Expense Coverage Ratio.................68
SECTION 6.14. Total Debt/Total Capitalization.................68
ARTICLE VII
Events of Default
Events of Default........................................................68
ARTICLE VIII
The Administrative Agent and the Collateral Agent
The Administrative Agent and the Collateral Agent........................71
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices.........................................73
SECTION 9.02. Survival of Agreement...........................74
SECTION 9.03. Binding Effect..................................74
SECTION 9.04. Successors and Assigns..........................74
SECTION 9.05. Expenses; Indemnity.............................77
SECTION 9.06. Right of Setoff.................................78
SECTION 9.07. Applicable Law..................................78
SECTION 9.08. Waivers; Amendment..............................79
SECTION 9.09. Interest Rate Limitation........................79
SECTION 9.10. Entire Agreement................................80
SECTION 9.11. Waiver of Jury Trial............................80
SECTION 9.12. Severability....................................80
SECTION 9.13. Counterparts....................................80
SECTION 9.14. Headings........................................81
SECTION 9.15. Jurisdiction; Consent to Service of Process.....81
SECTION 9.16. Confidentiality.................................81
Exhibits and Schedules
Exhibit A Form of Administrative Questionnaire
Exhibit B Form of Assignment and Acceptance
Exhibit C Form of Borrowing Request
Exhibit D Form of Guarantee Agreement
Exhibit E Form of Indemnity, Subrogation and Contribution
Agreement
Exhibit F Form of Pledge Agreement
Exhibit G Form of Security Agreement
Exhibit H-1 Form of Opinion of Porter & Hedges, L.L.P., counsel
for the Borrower and the Subsidiaries
Exhibit H-2 Form of Opinion of Thomas K. Kehoe, Esq., internal
counsel for the Borrower and the Subsidiaries
Exhibit I Form of Subordination Provisions
Schedule 1.01(a) Existing Letters of Credit
Schedule 1.01(b) Guarantors
Schedule 2.01 Lenders
Schedule 3.08 Subsidiaries
Schedule 3.09 Litigation
Schedule 3.17 Environmental Matters
Schedule 3.18 Insurance
Schedule 4.02(o) Existing Preferred Stock
Schedule 6.01 Indebtedness
Schedule 6.02 Liens
<PAGE>
CREDIT AGREEMENT dated as of July 30, 1996, among ALLIED WASTE INDUSTRIES,
INC., a Delaware corporation (the "Borrower"), the Existing Account Parties
(as defined in Article I), the Lenders (as defined in Article I), the Issuing
Bank (as defined in Article I) and CREDIT SUISSE, a bank organized under the
laws of Switzerland, acting through its New York branch, as swingline lender
(in such capacity, "the Swingline Lender"), as administrative agent (in such
capacity, the "Administrative Agent") and as collateral agent (in such
capacity, the "Collateral Agent") for the Lenders.
The Borrower has requested the Lenders to extend credit in the form of
Revolving Loans (such term and each other capitalized term used but not
defined herein having the meanings given to them in Article I) at any time and
from time to time prior to the Maturity Date, in an aggregate principal amount
at any time outstanding not in excess of $300,000,000. The Borrower has
requested the Swingline Lender to extend credit, at any time and from time to
time prior to the Maturity Date, in the form of Swingline Loans, in an
aggregate principal amount not in excess of $10,000,000. The Borrower has
requested the Issuing Bank to issue letters of credit, in an aggregate face
amount at any time outstanding not in excess of $50,000,000, to support
payment obligations incurred in the ordinary course of business by the
Borrower and its Subsidiaries, and to provide financial assurance as required
by state regulators for the Borrower's and its Subsidiaries' closure and post-
closure obligations. The proceeds of the Loans are to be used solely (a) on
the Closing Date (i) to refinance the principal of, and to pay all interest,
fees and other amounts payable in respect of, the outstanding loans under the
Existing Loan Agreement, (ii) to pay the principal of, and premium and
interest on, the Subordinated Notes tendered pursuant to the Debt Tender Offer
and (iii) to pay fees and expenses related thereto (clauses (i), (ii) and
(iii) are collectively referred to herein as the Refinancing Transactions)
and (b) on or after the Closing Date, for general corporate purposes of the
Borrower and the Subsidiaries, including capital expenditures and acquisitions
permitted hereunder.
The Lenders and the Swingline Lender are willing to extend such credit to
the Borrower and the Issuing Bank is willing to issue letters of credit for
the account of the Borrower on the terms and subject to the conditions set
forth herein. Accordingly, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the following
terms shall have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any Loan bearing interest at a rate determined
by reference to the Alternate Base Rate in accordance with the provisions of
Article II.
"Acquired Business" shall mean (a) any person at least a majority of
the capital stock of which is acquired on or after January 1, 1996 by the
Borrower or a wholly owned Subsidiary of the Borrower and (b) any assets
constituting a discrete business or operating unit acquired on or after
January 1, 1996 by the Borrower or a wholly owned Subsidiary of the Borrower.
"Acquired Entity" shall have the meaning assigned to such term in
Section 6.04(i).
"Acquired Indebtedness" shall have the meaning assigned to such term
in Section 6.01(d).
"Acquired Revenues" shall mean, with respect to any fiscal year, the
revenues attributable to Acquired Businesses during the twelve-month period
ended on the last day of such fiscal year, provided that in the event the
Borrower acquires, directly or indirectly, less than all the capital stock of
an Acquired Business, only the percentage of revenues of such Acquired
Business attributable to the Borrower's interest in such Acquired Business
shall be deemed Acquired Revenues for purposes of this Agreement.
"Adjusted LIBO Rate" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the product of (a) the
LIBO Rate in effect for such Interest Period and (b) Statutory Reserves.
Administrative Agent Fees shall have the meaning assigned to such term in
Section 2.05(b).
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit A.
"Affiliate" shall mean, when used with respect to a specified
person, another person that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by or is under common Control with
the person specified.
"Aggregate Revolving Credit Exposure" shall mean the aggregate
amount of the Lenders' Revolving Credit Exposures.
"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater
of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Federal
Funds Effective Rate for any reason, including the inability or failure of the
Administrative Agent to obtain sufficient quotations in accordance with the
terms of the definition thereof, the Alternate Base Rate shall be determined
without regard to clause (b) of the preceding sentence, as appropriate, until
the circumstances giving rise to such inability no longer exist. Any change
in the Alternate Base Rate due to a change in the Prime Rate or the Federal
Funds Effective Rate shall be effective on the effective date of such change
in the Prime Rate or the Federal Funds Effective Rate, respectively. The term
"Prime Rate" shall mean the rate of interest per annum publicly announced from
time to time by the Administrative Agent as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective on the date such change is publicly announced as being effective.
The term "Federal Funds Effective Rate" shall mean, for any day, the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of
New York, or, if such rate is not so published for any day that is a Business
Day, the average of the quotations for the day for such transactions received
by the Administrative Agent from three Federal funds brokers of recognized
standing selected by it.
"Applicable Fee Percentage" shall mean (a) from the Closing Date to
the First Certificate Delivery Date, 0.375% and (b) from and including the
First Certificate Delivery Date and thereafter, for any day, the applicable
percentage set forth below under the caption Fee Percentage based upon the
Leverage Ratio as of the relevant date of determination:
Leverage Ratio Fee Percentage
Category 1
Greater than or equal to 0.50%
4.00 to 1.00
Category 2
Less than 0.375%
4.00 to 1.00 and greater
than or equal to 3.00 to
1.00
Category 3
Less than 3.00 to 1.00 0.25%
Each change in the Applicable Fee Percentage resulting from a change
in the Leverage Ratio shall be effective with respect to all Commitments
outstanding on and after the date of delivery to the Administrative Agent of
the financial statements and certificates required by Section 5.04(a) or (b)
indicating such change until the date immediately preceding the next date of
delivery of such financial statements and certificates indicating another such
change. Notwithstanding the foregoing, (a) at any time during which the
Borrower has failed to deliver the financial statements and certificates
required by Section 5.04(a) or (b), or (b) at any time after the occurrence
and during the continuance of an Event of Default, the Leverage Ratio shall be
deemed to be in Category 1 for purposes of determining the Applicable Fee
Percentage.
"Applicable Percentage" shall mean (a) from the Closing Date to
the First Certificate Delivery Date, with respect to any Eurodollar Loan,
1.50%, and with respect to any ABR Loan, 0.00%, and (b) from and including the
First Certificate Delivery Date and thereafter, for any day, with respect to
any Eurodollar Loan or ABR Loan, as the case may be, the applicable percentage
set forth below under the caption Eurodollar Spread or ABR Spread , as the
case may be, based upon the Leverage Ratio as of the relevant date of
determination:
Leverage Ratio Eurodollar Spread ABR Spread
Category 1 2.00% 0.50%
Greater than or equal to
4.00 to 1.00
Category 2 1.75% 0.25%
Less than
4.00 to 1.00 and greater than
or equal to 3.50 to 1.00
Category 3 1.50% 0.00%
Less than
3.50 to 1.00 and greater than
or equal to 3.00 to 1.00
Category 4 1.25% 0.00%
Less than 3.00 to 1.00 and
greater than or equal to 2.50
to 1.00
Category 5 1.00% 0.00%
Less than
2.50 to 1.00
Each change in the Applicable Percentage resulting from a change in
the Leverage Ratio shall be effective with respect to all Loans and Letters of
Credit outstanding on and after the date of delivery to the Administrative
Agent of the financial statements and certificates required by Section 5.04(a)
or (b)indicating such change until the date immediately preceding the next
date of delivery of such financial statements and certificates indicating
another such change. Notwithstanding the foregoing, (a) at any time during
which the Borrower has failed to deliver the financial statements and
certificates required by Section 5.04(a) or (b), or (b) at any time after the
occurrence and during the continuance of an Event of Default, the Leverage
Ratio shall be deemed to be in Category 1 for purposes of determining the
Applicable Percentage.
"Asset Sale" shall mean the sale, lease, transfer or other
disposition (by way of merger or otherwise including as a result of a
Condemnation Event or a Casualty Event but excluding any sale in connection
with a sale and leaseback transaction) by the Borrower or any of the
Subsidiaries to any person other than the Borrower or any Subsidiary of (a)
any capital stock of any of the Subsidiaries or (b) any other assets of the
Borrower or any of the Subsidiaries (other than inventory, cash, obsolete or
worn out assets, scrap and Permitted Investments, in each case disposed of in
the ordinary course of business) of the Borrower or any of the Subsidiaries,
except, (i) for the sale, transfer or other disposition of Specialized Waste
and (ii) for sales, leases, transfers or other dispositions during any fiscal
year having an aggregate value not in excess of five percent of the
consolidated net fixed assets of the Borrower and its Subsidiaries on the last
day of the preceding fiscal year.
"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Lender and an assignee, and accepted by the
Administrative Agent, in the form of Exhibit B or such other form as shall be
approved by the Administrative Agent, such approval not to be unreasonably
withheld.
"Board" shall mean the Board of Governors of the Federal Reserve
System of the United States of America.
"Borrowing" shall mean a group of Loans of a single Type made by
the Lenders on a single date and as to which a single Interest Period is in
effect.
"Borrowing Request" shall mean a request by the Borrower in
accordance with the terms of Section 2.03 and substantially in the form of
Exhibit C.
"Business Day" shall mean any day other than a Saturday, Sunday or
day on which banks in New York City are authorized or required by law to
close; provided, however, that when used in connection with a Eurodollar Loan,
the term Business Day shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.
"Capital Expenditures" shall mean, for any period, the sum of the
aggregate of all expenditures (whether paid in cash or other consideration or
accrued as a liability) by the Borrower and its Subsidiaries during such
period for fixed or capital assets (excluding any capitalized interest and any
such asset acquired in connection with normal replacement and maintenance
programs properly charged to current operations and excluding any replacement
assets acquired with the proceeds of insurance), provided that any expenditure
classified as a Permitted Acquisition shall not be deemed a Capital
Expenditure for purposes of this Agreement.
"Capital Lease Obligations" of any person shall mean the obligations
of such person to pay rent or other similar amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Casualty Event" shall mean an event pursuant to which the Borrower
or any of the Subsidiaries has the right to collect insurance proceeds under
any insurance policies with respect to any insured casualty or other insured
damage to any property of the Borrower or any of the Subsidiaries.
A "Change in Control" shall be deemed to have occurred if (a) any
person or group (within the meaning of Rule 13d-5 promulgated under the
Securities Exchange Act of 1934 as in effect on the date hereof) other than
Texas Pacific Group shall have acquired directly or indirectly, beneficial
ownership of shares representing more than 35% of the aggregate ordinary
voting power represented by the issued and outstanding capital stock of the
Borrower; (b) a majority of the seats (other than vacant seats) on the board
of directors of the Borrower shall at any time be occupied by persons who
were neither (i) nominated by the board of directors of the Borrower, nor (ii)
appointed by directors so nominated; or (c) any change in control (or similar
event, however denominated) with respect to the Borrower shall occur under and
as defined in any indenture or agreement in respect of Indebtedness in an
aggregate principal amount in excess of $7,500,000 (so long as the aggregate
amount of individual items of Indebtedness less than $7,500,000 with respect
to which any change of control event has occurred does not exceed in the
aggregate $25,000,000) to which the Borrower or any Subsidiary is a party.
"Closing Date" shall mean the date of the first Credit Event.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall mean all the Collateral as defined in any
Security Document.
"Commitment" shall mean, with respect to any Lender, such Lender's
Revolving Credit Commitment and Swingline Commitment.
"Commitment Fee" shall have the meaning assigned to such term in
Section 2.05(a).
"Condemnation Event" shall mean an event pursuant to which the
Borrower or any of the Subsidiaries has the right to collect and receive
proceeds as a result of any action or proceeding for the taking of any
property of the Borrower or any Subsidiary, or any part thereof or interest
therein, for public or quasi-public use under the power of eminent domain, by
reason of any public improvement or condemnation proceeding, or
in any other manner.
"Confidential Information Memorandum" shall mean the Confidential
Information Memorandum of the Borrower dated June 1996.
"Consolidated EBITDA" shall mean, for any period, Consolidated Net
Income for such period, plus, without duplication and to the extent deducted
from revenues in determining Consolidated Net Income, the sum of (a) the
aggregate amount of Consolidated Interest Expense for such period, (b) the
aggregate amount of letter of credit fees paid during such period, (c) the
aggregate amount of income tax expense for such period, (d) all amounts
attributable to depreciation and amortization for such period, (e) all non-
cash non-recurring charges during such period, (f) all cash charges
attributable to the Refinancing Transactions during such period, and
duplication and to the extent added to revenues in determining
Consolidated Net Income for such period, all non-cash non-recurring gains
during such period, all as determined on a consolidated basis with respect to
the Borrower and the Subsidiaries in accordance with GAAP. For purposes
hereof, non-cash non-recurring charges shall not include accruals for closure
and post-closure liabilities.
"Consolidated Interest Expense" shall mean, for any period, the
gross interest expense, whether expensed or capitalized, (including the
interest component in respect of Capital Lease Obligations) accrued or paid by
the Borrower and the Subsidiaries during such period, minus any interest
income of the Borrower or the Subsidiaries, in each case, as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Income" shall mean, for any period, net income or
loss of the Borrower and the Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Worth" shall mean, as at any date of
determination, the consolidated stockholders' equity of the Borrower and its
consolidated Subsidiaries, as determined on a consolidated basis in accordance
with GAAP, plus the aggregate principal amount of the Junior Exchange
Indebtedness at such date of determination.
"Control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
person, whether through the ownership of voting securities, by contract or
otherwise, and the terms "Controlling" and "Controlled" shall have meanings
correlative thereto.
"Credit Event" shall have the meaning assigned to such term in
Section 4.01.
"Debt Tender Offer" shall mean the tender offer and consent
solicitation made by the Borrower (a) for the purchase of all issued and
outstanding Subordinated Notes at a purchase price equal to 115.75% of the
principal amount thereof (plus accrued interest) and (b) to obtain consents to
amend the Subordinated Notes Indenture, as such offer may be amended, modified
and in effect from time to time in accordance with the terms thereof and
hereof.
"Default" shall mean any event or condition which upon notice, lapse
of time or both would constitute an Event of Default.
"Designated Preferred Stock" shall mean the 9% Cumulative
Convertible Preferred Stock of the Borrower and the 7% Cumulative Convertible
Preferred Stock of the Borrower in existence on the Closing Date.
"dollars" or "$" shall mean lawful money of the United States of
America.
"environment" shall mean ambient air, surface water and groundwater
(including potable water, navigable water and wetlands), the land surface or
subsurface strata, the workplace or as otherwise defined in any Environmental
Law.
"Environmental Claim" shall mean any written accusation, allegation,
notice of violation, claim, demand, order, directive, cost recovery action or
other cause of action by, or on behalf of, any Governmental Authority or any
person for damages, injunctive or equitable relief, personal injury (including
sickness, disease or death), Remedial Action costs, tangible or intangible
property damage, natural resource damages, nuisance, pollution, any adverse
effect on the environment caused by any Hazardous Material, or for fines,
penalties or restrictions, resulting from or based upon (a) the existence, or
the continuation of the existence, of a Release (including sudden or non-
sudden, accidental or non-accidental Releases), (b) exposure to any Hazardous
Material, (c) the presence, use, handling, transportation, storage, treatment
or disposal of any Hazardous Material or (d) the violation or alleged
violation of any Environmental Law or Environmental Permit.
"Environmental Law" shall mean any and all applicable present and
future treaties, laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions, notices or binding agreements issued, promulgated or
entered into by any Governmental Authority, relating in any way to the
environment, preservation or reclamation of natural resources, the management,
Release or threatened Release of any Hazardous Material or to health and
safety matters, including the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986, 42 U.S.C. 9601 et seq. (collectively
CERCLA ), the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act of 1976 and Hazardous and Solid Waste Amendments
of 1984, 42 U.S.C. 6901 et seq., the Federal Water Pollution Control Act,
as amended by the Clean Water Act of 1977, 33 U.S.C. 1251 et seq., the
Clean Air Act of 1970, as amended 42 U.S.C. 7401 et seq., the Toxic
Substances Control Act of 1976, 15 U.S.C. 2601 et seq., the Occupational
Safety and Health Act of 1970, as amended, 29 U.S.C. 651 et seq., the
Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. 11001
et seq., the Safe Drinking Water Act of 1974, as amended, 42 U.S.C. 300(f)
et seq., the Hazardous Materials Transportation Act, 49 U.S.C. 5101 et seq.,
and any similar or implementing state or local law, and all amendments or
regulations promulgated under any of the foregoing.
"Environmental Permit" shall mean any permit, approval,
authorization, certificate, license, variance, filing or permission required
by or from any Governmental Authority pursuant to any Environmental Law.
"Equity Issuance" shall mean any issuance or sale by the Borrower or
any Subsidiary of any shares of capital stock or other equity securities of
the Borrower or any Subsidiary or any obligations convertible into or
exchangeable for, or giving any person a right, option or warrant to acquire
such securities or such convertible or exchangeable obligations, except in
each case for (a) any issuance or sale to the Borrower or any wholly owned
Subsidiary, (b) any issuance of directors' qualifying shares, and (c) sales or
issuances of common stock (i) to management or key employees of the Borrower
under any employee stock option or stock purchase plan in existence from time
to time or (ii) pursuant to other employee benefit plans in existence from
time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single
employer under Section 414(b) or (c) of the Code, or solely for purposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.
"ERISA Event" shall mean (a) any reportable event , as defined in
Section 4043 of ERISA or the regulations issued thereunder, with respect to a
Plan; (b) the adoption of any amendment to a Plan that would require the
provision of security pursuant to Section 401(a)(29) of the Code or Section
307 of ERISA; (c) the existence with respect to any Plan of an accumulated
funding deficiency (as defined in Section 412 of the Code or Section 302 of
ERISA), whether or not waived; (d) the filing pursuant to Section 412(d) of
the Code or Section 303(d) of ERISA of an application for a waiver of the
minimum funding standard with respect to any Plan; (e) the incurrence of any
liability under Title IV of ERISA with respect to the termination of any Plan
or the withdrawal or partial withdrawal of the Borrower or any of its ERISA
Affiliates from any Plan or Multiemployer Plan; (f) the receipt by the
Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any
notice relating to the intention to terminate any Plan or Plans or to appoint
a trustee to administer any Plan; (g) the receipt by the Borrower or any ERISA
Affiliate of any notice concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to be, insolvent or
in reorganization, within the meaning of Title IV of ERISA; (h) the occurrence
of a prohibited transaction with respect to which the Borrower or any of its
Subsidiaries is a disqualified person (within the meaning of Section 4975 of
the Code) or with respect to which the Borrower or any such Subsidiary could
otherwise be liable; and (i) any other event or condition with respect to a
Plan or Multiemployer Plan that could reasonably be expected to result in
liability of the Borrower.
"Eurodollar Borrowing" shall mean a Borrowing comprised of
Eurodollar Loans.
"Eurodollar Loan" shall mean any Loan bearing interest at a rate
determined by reference to the Adjusted LIBO Rate in accordance with the
provisions of Article II.
"Event of Default" shall have the meaning assigned to such term in
Article VII.
"Existing Account Parties" shall mean the Existing Account Parties,
other than the Borrower, set forth on Schedule 1.01(a).
"Existing Letter of Credit" shall mean each letter of credit that
(a) was issued under the Existing Loan Agreement for the account of the
Borrower or any Existing Account Party, (b) is outstanding on the Closing Date
and (c) is listed on Schedule 1.01(a).
"Existing Loan Agreement" shall mean (a) the Credit Agreement dated
as of March 30, 1995, as amended, among the Borrower, the Subsidiaries named
therein, the several banks and financial institutions from time to time party
thereto and Fleet Bank, N.A. (as successor in interest to NatWest Bank N.A.),
as agent, and (b) the Line of Credit Agreement dated as of July 11, 1996,
between the Borrower and Fleet Bank, N.A.
"Fee Letter" shall mean the Fee Letter dated June 20, 1996, between
the Borrower and the Administrative Agent.
"Fees" shall mean the Commitment Fees, the Administrative Agent's
Fees, the L/C Participation Fees and the Issuing Bank Fees.
"Financial Officer" of any corporation shall mean the chief
financial officer, principal accounting officer, Treasurer or Controller of
such corporation.
"First Certificate Delivery Date" shall mean the date on which the
Borrower delivers to the Administrative Agent the financial statements and
certificates required by Section 5.04(b) for the period ending September 30,
1996.
"Fixed Charge Coverage Ratio" shall mean as of the last day of any
fiscal quarter, the quotient of (A) the sum of (i) Consolidated EBITDA for the
period of four consecutive fiscal quarters ending on such day and (ii) Lease
Expense for such period divided by (B) the sum of (i) Consolidated Interest
Expense for such period, (ii) the aggregate amount of cash taxes paid by the
Borrower and the Subsidiaries, on a consolidated basis, during such period,
(iii) Lease Expense for such period, (iv) cash dividends on capital stock
declared by the Borrower or any Subsidiary during such period (other than any
such dividend payable to the Borrower or any wholly owned Subsidiary) and (v)
principal amounts that became payable (whether or not paid and whether at the
stated maturity, by acceleration or by reason of optional prepayment or
redemption or otherwise) by the Borrower or any Subsidiary in respect of
Indebtedness of the Borrower or the Subsidiaries (other than (y) the Loans and
the Letters of Credit and (z) other Indebtedness that is refinanced with
Refinancing Indebtedness or with any Loans) during such period.
"GAAP" shall mean generally accepted accounting principles applied
on a consistent basis.
"Governmental Authority" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body.
"Guarantee" of or by any person shall mean any obligation, contingent
or otherwise, of such person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other person (the primary obligor ) in
any manner, whether directly or indirectly, and including any obligation of
such person, direct or indirect, (a) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness or to purchase (or to
advance or supply funds for the purchase of) any security for the payment of
such Indebtedness, (b) to purchase or lease property, securities or services
for the purpose of assuring the owner of such Indebtedness of the payment of
such Indebtedness or (c) to maintain working capital, equity capital or any
other financial statement condition or liquidity of the primary obligor so as
to enable the primary obligor to pay such Indebtedness; provided, however,
that the term Guarantee shall not include endorsements for collection or
deposit in the ordinary course of business.
"Guarantee Agreement" shall mean the Guarantee Agreement,
substantially in the form of Exhibit D, made by the Guarantors in favor of the
Collateral Agent for the benefit of the Secured Parties.
"Guarantors" shall mean each person listed on Schedule 1.01(b) and
each other person that becomes party to a Guarantee Agreement as a Guarantor,
and the permitted successors and assigns of each such person.
"Hazardous Materials" shall mean all explosive or radioactive
substances or wastes, hazardous or toxic substances or wastes, pollutants,
solid, liquid or gaseous wastes, including petroleum or petroleum distillates,
asbestos or asbestos containing materials, polychlorinated biphenyls ( PCBs )
or PCB-containing materials or equipment, radon gas, infectious or medical
wastes and all other substances or wastes of any nature regulated pursuant to
any Environmental Law.
"Indebtedness" of any person shall mean, without duplication, (a) all
obligations of such person for borrowed money, (b) all obligations of such
person evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such person under conditional sale or other title retention
agreements relating to property or assets purchased by such person, (d) all
obligations of such person issued or assumed as the deferred purchase price of
property or services (excluding trade accounts payable and accrued obligations
incurred in the ordinary course of business and waste disposal based
royalties), (e) all Indebtedness of others secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien on property owned or acquired by such person, whether or
not the obligations secured thereby have been assumed, (f) all Guarantees by
such person of Indebtedness of others, (g) all Capital Lease Obligations of
such person, (h) all obligations of such person in respect of interest rate
protection agreements, foreign currency exchange agreements or other interest
or exchange rate hedging arrangements and (i) all obligations of such person
as an account party in respect of letters of credit and bankers' acceptances.
The Indebtedness of any person shall include the Indebtedness of any
partnership in which such person is a general partner.
"Indemnity, Subrogation and Contribution Agreement" shall mean the
Indemnity, Subrogation and Contribution Agreement, substantially in the form
of Exhibit E, among the Borrower, the Guarantors and the Collateral Agent.
"Interest Expense Coverage Ratio" shall mean, as of the last day of
any fiscal quarter, the ratio of (a) Consolidated EBITDA for the period of
four consecutive fiscal quarters ended on such day to (b) Consolidated
Interest Expense for such period.
"Interest Payment Date" shall mean, with respect to any Loan, the
last day of the Interest Period applicable to the Borrowing of which such Loan
is a part and, in the case of a Eurodollar Borrowing with an Interest Period
of more than three months' duration, each day that would have been an Interest
Payment Date had successive Interest Periods of three months' duration been
applicable to such Borrowing, and, in addition, the date of any prepayment of
such Borrowing or conversion of such Borrowing to a Borrowing of a different
Type.
"Interest Period" shall mean (a) as to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the
last day) in the calendar month that is 1, 2, 3 or 6 months thereafter, as the
Borrower may elect and (b) as to any ABR Borrowing, the period commencing on
the date of such Borrowing and ending on the earliest of (i) the last Business
Day of the next succeeding March, June, September or December, (ii) the
Maturity Date and (iii) the date such Borrowing is converted to a Borrowing of
a different Type in accordance with Section 2.10; provided, however, that if
any Interest Period would end on a day other than a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless,
in the case of a Eurodollar Borrowing only, such next succeeding Business Day
would fall in the next calendar month, in which case such Interest Period
shall end on the next preceding Business Day. Interest shall accrue from and
including the first day of an Interest Period to but excluding the last day of
such Interest Period.
"Interest Rate Protection Agreement" shall mean any interest rate
swap, cap or other agreement or arrangement satisfactory to the Administrative
Agent entered into by the Borrower with a counterparty that as of the date of
such swap, cap or other agreement is a Lender (or an affiliate of a Lender),
which such swap, cap or other agreement is designed to protect the Borrower
against fluctuations in interest rates and not for speculation.
"Issuing Bank" shall mean, as the context may require, (a) (i) Credit
Suisse, with respect to Letters of Credit issued by Credit Suisse pursuant to
this Agreement, and (ii) with respect to each Existing Letter of Credit, the
issuer thereof or (b) collectively, all the foregoing.
"Issuing Bank Fees" shall have the meaning assigned to such term in
Section 2.05(c).
"Junior Exchange Indebtedness" shall mean Indebtedness of the
Borrower or any Subsidiary incurred after the Closing Date in exchange for
Designated Preferred Stock and that (i) requires no payment of principal prior
to a date that is at least one year after the Maturity Date, (ii) provides for
interest payments not to exceed the existing dividends on the Designated
Preferred Stock exchanged therefor and (iii) contains subordination language
and intercreditor provisions no more favorable to the holders thereof than the
provisions attached hereto as Exhibit I. Notwithstanding the foregoing,
without the consent of the Required Lenders, the terms of any Junior Exchange
Indebtedness shall prohibit the holders of such Indebtedness from (A)
increasing the interest payments thereof or causing the same to occur more
frequently, (B) accelerating or amending the scheduled maturity to a date
earlier than scheduled at the time of the incurrence of such Indebtedness or
(C) otherwise exercising any remedy upon any default under such Indebtedness.
"L/C Commitment" shall mean the commitment of the Issuing Bank to
issue Letters of Credit pursuant to Section 2.22.
"L/C Disbursement" shall mean a payment or disbursement made by the
Issuing Bank pursuant to a Letter of Credit.
"L/C Exposure" shall mean at any time the sum of (a) the aggregate
undrawn amount of all outstanding Letters of Credit at such time plus (b) the
aggregate principal amount of all L/C Disbursements that have not yet been
reimbursed at such time. The L/C Exposure of any Lender at any time shall
mean its Pro Rata Percentage of the aggregate L/C Exposure at such time.
"L/C Participation Fee" shall have the meaning assigned to such term
in Section 2.05(c).
"Lease Expense" shall mean, for any period, the aggregate amount of
fixed and contingent rentals payable by the Borrower and the Subsidiaries, on
a consolidated basis, for such period with respect to operating leases of real
and personal property.
"Lenders" shall mean (a) the financial institutions listed on
Schedule 2.01 (other than any such financial institution that has ceased to be
a party hereto pursuant to an Assignment and Acceptance) and (b) any financial
institution that has become a party hereto pursuant to an Assignment and
Acceptance. Unless the context clearly indicates otherwise, the term Lenders
shall include the Swingline Lender.
"Letter of Credit" shall mean (a) any letter of credit issued
pursuant to Section 2.22 and (b) any Existing Letter of Credit.
"Leverage Ratio" shall mean, as of the last day of any fiscal
quarter, the ratio of (a) Total Debt as of such date to (b) Consolidated
EBITDA for the period of four consecutive fiscal quarters ended on such date,
all determined on a consolidated basis in accordance with GAAP.
"LIBO Rate" shall mean, with respect to any Eurodollar Borrowing for
any Interest Period, the rate per annum determined by the Administrative Agent
at approximately 11:00 a.m. (London time) on the applicable interest rate date
of determination by reference to the British Bankers' Association Interest
Settlement Rates for deposits in Dollars (as set forth by any service selected
by the Administrative Agent that has been nominated by the British Bankers'
Association as an authorized information vendor for the purpose of displaying
such rates) for a period equal to the relevant Interest Period (rounded upward
to the nearest whole multiple of one-sixteenth of one percent (0.0625%)),
provided that to the extent that an interest rate is not ascertainable
pursuant to the foregoing provisions of the definition, the "LIBO Rate" shall
be the interest rate per annum determined by the Administrative Agent to be
the average (rounded upward to the nearest whole multiple of one-sixteenth of
one percent (0.0625%) per annum, if such average is not a multiple) of the
rates per annum at which deposits in dollars are offered to major banks in the
London interbank market in London, England by the Reference Banks at
approximately 11:00 a.m. (London time) on the applicable interest rate date of
determination for such InterestPeriod.
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed
of trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing)
relating to such asset and (c) in the case of securities, any purchase option,
call or similar right of a third party with respect to such securities.
"Loan Documents" shall mean this Agreement, the Letters of Credit
(and any related Letter of Credit application or reimbursement agreement), the
Guarantee Agreement, the Security Documents and the Indemnity, Subrogation and
Contribution Agreement.
"Loan Parties" shall mean the Borrower, the Existing Account Parties
and the Guarantors.
"Loans" shall mean the Revolving Loans and the Swingline Loans.
"Margin Stock" shall have the meaning assigned to such term in
Regulation U.
"Material Adverse Effect" shall mean (a) a materially adverse effect
on the business, assets, operations, prospects or condition, financial or
otherwise, of the Borrower and the Subsidiaries taken as a whole, (b) material
impairment of the ability of the Borrower or any other Loan Party to perform
its obligations under any Loan Document to which it is or will be a party or
(c) material impairment of the rights of or benefits available to the Lenders
under any Loan Document.
"Maturity Date" shall mean the third anniversary of the Closing
Date.
"Multiemployer Plan" shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" shall mean (a) with respect to any Asset Sale,
the cash proceeds thereof (including cash and cash equivalents and cash
payments received by way of deferred payment or principal pursuant to a note
or installment receivable or otherwise, but only as and when received), net of
(i) costs of sale (including payment of the outstanding principal amount of,
premium or penalty, if any, interest and other amounts on any Indebtedness
(other than Loans) secured by a Lien permitted pursuant to Section 6.02 on
such assets and required to be repaid under the terms thereof as a result of
such Asset Sale), (ii) taxes paid or payable in the year such Asset Sale
occurs or in the following year as a result thereof and (iii) amounts provided
as a reserve, in accordance with GAAP, against any liabilities under any
indemnification obligations associated with such Asset Sale (except that, to
the extent and at the time any such amounts are released from such reserve,
such amounts shall constitute Net Cash Proceeds); provided, however, that cash
proceeds of any Asset Sale shall not include proceeds used, or committed to be
used, to replace or repair the asset which is the subject of the Asset Sale
within 360 days of receipt of such proceeds and (b) with respect to any Equity
Issuance or any issuance or other disposition of Indebtedness for borrowed
money, the cash proceeds thereof net of (i) underwriting commissions or
placement fees and expenses directly incurred in connection therewith and (ii)
the outstanding principal amount of, premium or penalty, if any, interest and
other amounts paid on Indebtedness refinanced with the proceeds of such Equity
Issuance or such Indebtedness, provided such Indebtedness, by its terms,
cannot be reborrowed.
"Obligations" shall mean all obligations defined as Obligations in
the Guarantee Agreement and the Security Documents.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred
to and defined in ERISA.
"Perfection Schedule" shall mean the Perfection Schedule
substantially in the form of Annex 1 to the Security Agreement.
"Permitted Acquisition" shall have the meaning assigned to such term
in Section 6.04(i).
"Permitted Capital Expenditures" shall mean Capital Expenditures
not in excess of: (a) for the fiscal year ending December 31, 1996, the lesser
of (i) the sum of (x) $57,600,000, plus (y) 25% of Acquired Revenues for the
fiscal year ending December 31, 1996, with respect to Acquired Businesses
acquired during 1996 and (ii) $75,000,000; (b) for the fiscal year ending
December 31, 1997, the lesser of (i) the sum of (x) $58,400,000, plus (y) 25%
of Acquired Revenues for the fiscal year ending December 31, 1997, with
respect to Acquired Businesses acquired during 1997, plus (z) 15% of Acquired
Revenues for the fiscal year ending December 31, 1996, with respect to
Acquired Businesses acquired during 1996 and (ii) $80,000,000; and (c) for the
fiscal year ending December 31, 1998, the lesser of (i) the sum of (w)
$65,600,000, plus (x) 25% of Acquired Revenues for the fiscal year ending
December 31, 1998, with respect to Acquired Businesses acquired during 1998,
plus (y) 15% of Acquired Revenues for the fiscal year ending December 31,
1997, with respect to Acquired Businesses acquired during 1997; plus (z) 15%
of Acquired Revenues for the fiscal year ending December 31, 1996, with
respect to Acquired Businesses acquired during 1996 and (ii) $85,000,000.
"Permitted Investments" shall mean: (a) direct obligations of, or
obligations the principal of and interest on which are unconditionally
guaranteed by, the United States of America (or by any agency thereof to the
extent such obligations are backed by the full faith and credit of the United
States of America), in each case maturing within one year from the date of
acquisition thereof; (b) investments in commercial paper maturing within 270
days from the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from Standard & Poor's
Ratings Service or from Moody's Investors Service, Inc.; (c) investments in
certificates of deposit, banker's acceptances, time deposits and demand
deposits maturing within one year from the date of acquisition thereof issued
or guaranteed by or placed with, and money market deposit accounts issued or
offered by, any domestic office of any commercial bank organized under the
laws of the United States of America or any State thereof that has a combined
capital and surplus and undivided profits of not less than $500,000,000; (d)
demand deposits made in the ordinary course of business and consistent with
the Borrower's customary cash management policy in any domestic office of any
commercial bank organized under the laws of the United States of America or
any State thereof; (e) insured deposits issued by commercial banks of the type
described in clause (d) above; (f) repurchase obligations with a term of not
more than 90 days for, and secured by, underlying securities of the types
described in clauses (a) through (c) above entered into with a bank meeting
the qualifications described in clause (c) above; (g) mutual funds whose
investment guidelines restrict such funds' investments primarily to those
satisfying the provisions of clauses (a) through (c) above; and (h) other
investment instruments approved in writing by the Administrative Agent and
offered by financial institutions which have a combined capital and surplus
and undivided profits of not less than $500,000,000.
"person" shall mean any natural person, corporation, business trust,
joint venture, association, company, partnership or government, or any agency
or political subdivision thereof.
"Plan" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 307 of ERISA, and in respect of which the Borrower
or any ERISA Affiliate is (or, if such plan were terminated, would under
Section 4069 of ERISA be deemed to be) an employer as defined in Section
3(5) of ERISA.
"Pledge Agreement" shall mean the Pledge Agreement, substantially in
the form of Exhibit F, between the Borrower, the Subsidiaries party thereto
and the Collateral Agent for the benefit of the Secured Parties.
"Preferred Stock" shall have the meaning assigned to such term in
Section 4.02(o).
"Pro Rata Percentage" of any Lender at any time shall mean the
percentage of the Total Revolving Credit Commitment represented by such
Lender's Revolving Credit Commitment (or, if the Revolving Credit Commitments
shall have expired or been terminated, the percentage of the aggregate
Revolving Loans held by such Lender).
"Reference Banks" shall mean Credit Suisse, Morgan Guaranty Trust
Company of New York and Texas Commerce Bank National Association.
"Refinancing Indebtedness" shall have the meaning assigned to such
term in Section 6.01(m).
"Refinancing Transactions" shall have the meaning assigned to such
term in the preamble to this Agreement.
"Register" shall have the meaning given such term in Section
9.04(d).
"Regulation G" shall mean Regulation G of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation T" shall mean Regulation T of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation U" shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation X" shall mean Regulation X of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
disposing, depositing, dispersing, emanating or migrating of any Hazardous
Material in, into, onto or through the environment.
"Remedial Action" shall mean (a) remedial action as such term is
defined in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions
required by any Governmental Authority or voluntarily undertaken to: (I)
cleanup, remove, treat, abate or in any other way address any Hazardous
Material in the environment; (ii) prevent the Release or threat of Release,
or minimize the further Release of any Hazardous Material so it does not
migrate or endanger or threaten to endanger public health, welfare or the
environment; or (iii) perform studies and investigations in connection with,
or as a precondition to, (i) or (ii) above.
"Required Lenders" shall mean, at any time, Lenders having Loans
(excluding Swingline Loans), L/C Exposure, Swingline Exposure and unused
Revolving Credit Commitments representing a majority of the sum of all Loans
outstanding (excluding Swingline Loans), L/C Exposure, Swingline Exposure and
unused Revolving Credit Commitments at such time.
"Responsible Officer" of any corporation shall mean any executive
officer or Financial Officer of such corporation and any other officer or
similar official thereof responsible for the administration of the obligations
of such corporation in respect of this Agreement.
"Revolving Credit Borrowing" shall mean a Borrowing comprised of
Revolving Loans.
"Revolving Credit Commitment" shall mean, with respect to each
Lender, the commitment of such Lender to make Revolving Loans hereunder as set
forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which
such Lender assumed its Revolving Credit Commitment, as applicable, as the
same may be (a) reduced from time to time pursuant to Section 2.09 and (b)
reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section 9.04.
"Revolving Credit Exposure" shall mean, with respect to any Lender at
any time, the aggregate principal amount at such time of all outstanding
Revolving Loans of such Lender, plus the aggregate amount at such time of such
Lender's L/C Exposure, plus the aggregate amount at such time of such Lender's
Swingline Exposure.
"Revolving Loans" shall mean the revolving loans made by the Lenders
to the Borrower pursuant to Section 2.01. Each Revolving Loan shall be a
Eurodollar Revolving Loan or an ABR Revolving Loan.
"Secured Parties" shall have the meaning assigned to such term in the
Security Agreement.
"Security Agreement" shall mean the Security Agreement, substantially
in the form of Exhibit G, between the Borrower, the Subsidiaries party thereto
and the Collateral Agent for the benefit of the Secured Parties.
"Security Documents" shall mean the Security Agreement, the Pledge
Agreement and each of the security agreements and other instruments and
documents executed and delivered pursuant to any of the foregoing or pursuant
to Section 5.11.
"Senior Convertible Debentures" shall mean the 8-1/2% Senior
Convertible Subordinated Debentures due 2002 of the Borrower.
"Specialized Waste" shall mean Specialized Waste Systems, Inc., a
Texas corporation.
"Statutory Reserves" shall mean a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the applicable reserve percentages
(including any marginal, special, emergency or supplemental reserves)
expressed as a decimal established by the Board and any other banking
authority, domestic or foreign, to which the Administrative Agent (including
any branch, Affiliate, or other fronting office making or holding a Loan) is
subject with respect to the Adjusted LIBO Rate, for Eurocurrency Liabilities
(as defined in Regulation D of the Board). Such reserve percentages shall
include those imposed pursuant to such Regulation D. Eurodollar Loans shall
be deemed to constitute Eurocurrency Liabilities and to be subject to such
reserve requirements without benefit of or credit for proration, exemptions or
offsets that may be available from time to time to any Lender under such
Regulation D. Statutory Reserves shall be adjusted automatically on and as of
the effective date of any change in any reserve percentage.
"Subordinated Indebtedness" shall mean all Indebtedness of the
Borrower subordinated in right of payment to any of the Obligations (other
than the Subordinated Notes, the Senior Convertible Debentures and Junior
Exchange Indebtedness), provided that (i) such Indebtedness shall not have any
principal payments due on a date that is earlier than twelve months after the
Maturity Date, (ii) the subordination and intercreditor provisions of such
Indebtedness are no more favorable to the holders thereof than the
subordination and intercreditor provisions attached hereto as Exhibit I, (iii)
such Indebtedness bears interest at a fixed rate, which rate shall be, in the
good faith judgment of the Borrower's board of directors, consistent with the
market at the time of issuance for similar subordinated indebtedness and (iv)
the negative and financial covenants (if any) of such Indebtedness shall not
require the Borrower to maintain any specified financial condition except as a
condition to the taking of certain actions.
"Subordinated Notes" shall mean the 12% Senior Subordinated Notes due
2004 of the Borrower.
"Subordinated Notes Indenture" shall mean the Indenture dated as of
January 15, 1994, as amended by Supplemental Indenture dated as of June 30,
1994, by the Second Supplemental Indenture dated as of January 31, 1995, by
the Third Supplemental Indenture dated as of July 14, 1995, and by the Fourth
Supplemental Indenture dated January 23, 1996, between the Borrower and First
Trust National Association, as trustee, relating to the Subordinated Notes.
"subsidiary" shall mean, with respect to any person (herein referred
to as the parent), any corporation, partnership, association or other business
entity of which securities or other ownership interests representing more than
50% of the equity or more than 50% of the ordinary voting power or more than
50% of the general partnership interests are, at the time any determination is
being made, owned, controlled or held.
"Subsidiary" shall mean any subsidiary of the Borrower.
"Swingline Commitment" shall mean the commitment of the Swingline
Lender to make loans pursuant to Section 2.21, as the same may be reduced from
time to time pursuant to Section 2.09.
"Swingline Exposure" shall mean at any time the aggregate principal
amount at such time of all outstanding Swingline Loans. The Swingline
Exposure of any Lender at any time shall equal its Pro Rata Percentage of the
aggregate Swingline Exposure at such time.
"Swingline Loan" shall mean any loan made by the Swingline Lender
pursuant to Section 2.21.
"Texas Pacific Group" shall mean TPG Advisors, Inc. and any
investment fund or investment partnership controlled by TPG Advisors, Inc.
"Total Debt" shall mean, with respect to the Borrower and the
Subsidiaries on a consolidated basis at any time, all Indebtedness (other than
Junior Exchange Indebtedness and Indebtedness described in clauses (h) and (i)
of the definition of the term Indebtedness , provided that Indebtedness
described in clause (i) of the term "Indebtedness" shall not be excluded from
Total Debt for purposes of the definition of the term Leverage Ratio ) of the
Borrower and the Subsidiaries which at such time, would be required to be
reflected as a liability for borrowed money on a consolidated balance sheet of
the Borrower and its consolidated Subsidiaries prepared in accordance with
GAAP.
"Total Revolving Credit Commitment" shall mean, at any time, the
aggregate amount of the Revolving Credit Commitments, as in effect at such
time.
"Transactions" shall have the meaning assigned to such term in
Section 3.02.
"Type", when used in respect of any Loan or Borrowing, shall refer to
the Rate by reference to which interest on such Loan or on the Loans
comprising such Borrowing is determined. For purposes hereof, the term Rate
shall include the Adjusted LIBO Rate and the Alternate Base Rate.
"wholly owned Subsidiary" of any person shall mean a subsidiary of
such person of which securities (except for directors' qualifying shares) or
other ownership interests representing 100% of the equity or 100% of the
ordinary voting power or 100% of the general partnership interests are, at the
time any determination is being made, owned, controlled or held by such person
or one or more wholly owned subsidiaries of such person or by such person and
one or more wholly owned subsidiaries of such person.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan,
as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Terms Generally. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include" , "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Except as
otherwise expressly provided herein, (a) any reference in this Agreement to
any Loan Document shall mean such document as amended, restated, supplemented
or otherwise modified from time to time and (b) all terms of an accounting or
financial nature shall be construed in accordance with GAAP, as in effect from
time to time; provided, however, that for purposes of determining compliance
with the covenants contained in Article VI, all accounting terms herein shall
be interpreted and all accounting determinations hereunder shall be made in
accordance with GAAP as in effect on the date of this Agreement and applied on
a basis consistent with the application used in the financial statements
referred to in Section 3.05.
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each Lender
agrees, severally and not jointly, to make Revolving Loans to the Borrower, at
any time and from time to time on or after the date hereof, and until the
earlier of the Maturity Date and the termination of the Revolving Credit
Commitment of such Lender in accordance with the terms hereof, in an aggregate
principal amount at any time outstanding that will not result in (i) such
Lender's Revolving Credit Exposure exceeding (ii) such Lender's Revolving
Credit Commitment. Within the limits set forth in the preceding sentence
and subject to the terms, conditions and limitations set forth herein, the
Borrower may borrow, pay or prepay and reborrow Revolving Loans.
SECTION 2.02. Loans. (a) Each Loan (other than Swingline Loans) shall
be made as part of a Borrowing consisting of Loans made by the Lenders ratably
in accordance with their respective Revolving Credit Commitments; provided,
however, that the failure of any Lender to make any Loan shall not in itself
relieve any other Lender of its obligation to lend hereunder (it being
understood, however, that no Lender shall be responsible for the failure of
any other Lender to make any Loan required to be made by such other Lender).
Except for Loans deemed made pursuant to Section 2.02(f) and Swingline Loans,
the Loans comprising any Borrowing shall be in an aggregate principal amount
that is (i) an integral multiple of $500,000 and not less than $2,000,000 or
(ii) equal to the remaining available balance of the applicable Commitments.
(b) Subject to Sections 2.08 and 2.14, each Borrowing shall be comprised
entirely of ABR Loans or Eurodollar Loans as the Borrower may request pursuant
to Section 2.03. Each Lender may at its option make any Eurodollar Loan by
causing any domestic or foreign branch or Affiliate of such Lender to make
such Loan; provided that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
this Agreement. Borrowings of more than one Type may be outstanding at the
same time; provided, however, that the Borrower shall not be entitled to
request any Borrowing that, if made, would result in more than five Eurodollar
Borrowings outstanding hereunder at any time. For purposes of the foregoing,
Borrowings having different Interest Periods, regardless of whether they
commence on the same date, shall be considered separate Borrowings.
(c) Except with respect to Loans made pursuant to Section 2.02(f), each
Lender shall make each Loan to be made by it hereunder on the proposed date
thereof by wire transfer of immediately available funds to such account in New
York City as the Administrative Agent may designate not later than 12:00
(noon), New York City time, and the Administrative Agent shall by 1:00 p.m.,
New York City time, credit the amounts so received to an account in the name
of the Borrower, designated by the Borrower in the applicable Borrowing
Request or, if a Borrowing shall not occur on such date because any condition
precedent herein specified shall not have been met, return the amounts so
received to the respective Lenders. (d) Unless the Administrative Agent shall
have received notice from a Lender prior to the date of any Borrowing that
such Lender will not make available to the Administrative Agent such Lender's
portion of such Borrowing, the Administrative Agent may assume that such
Lender has made such portion available to the Administrative Agent on the date
of such Borrowing in accordance with paragraph (c) above and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower on such date a corresponding amount. If the Administrative Agent
shall have so made funds available then, to the extent that such Lender shall
not have made such portion available to the Administrative Agent, such Lender
and the Borrower severally agree to repay to the Administrative Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available to the Borrower until
the date such amount is repaid to the Administrative Agent at (i) in the case
of the Borrower, the interest rate applicable at the time to the Loans
comprising such Borrowing and (ii) in the case of such Lender, a rate
determined by the Administrative Agent to represent its cost of overnight or
short-term funds (which determination shall be conclusive absent manifest
error). If such Lender shall repay to the Administrative Agent such
corresponding amount, such amount shall constitute such Lender's Loan as part
of such Borrowing for purposes of this Agreement, and the Borrower shall be
relieved of its obligation pursuant to the preceding sentence to repay such
amount or, if such amount has theretofore been repaid by the Borrower to the
Administrative Agent, the Administrative Agent shall make such corresponding
amount available to the Borrower. 9e) Notwithstanding any other provision of
this Agreement, the Borrower shall not be entitled to request any Borrowing if
the Interest Period requested with respect thereto would end after the
Maturity Date. (f) If the Issuing Bank shall not have received the
payment required to be made by Section 2.22(e) within the time specified in
such Section, the Issuing Bank will promptly notify the Administrative Agent
of the L/C Disbursement and the Administrative Agent will promptly notify each
Lender of such L/C Disbursement and its Pro Rata Percentage thereof. Each
Lender shall pay by wire transfer of immediately available funds to the
Administrative Agent not later than 2:00 p.m., New York City time, on such
date (or, if such Lender shall have received such notice later than 12:00
(noon), New York City time, on any day, not later than 10:00 a.m., New York
City time, on the immediately following Business Day), an amount equal to such
Lender's Pro Rata Percentage of such L/C Disbursement (it being understood
that such amount shall be deemed to constitute an ABR Loan of such Lender and
such payment shall be deemed to have reduced the L/C Exposure), and the
Administrative Agent will promptly pay to the Issuing Bank amounts so received
by it from the Lenders. The Administrative Agent will promptly pay to the
Issuing Bank any amounts received by it pursuant to Section 2.22(e) prior to
the time that any Lender makes any payment pursuant to this paragraph (f); any
such amounts received by the Administrative Agent thereafter will be promptly
remitted by the Administrative Agent to the Lenders that shall have made such
payments and to the Issuing Bank, as their interests may appear. If any Lender
shall not have made its Pro Rata Percentage of such L/C Disbursement available
to the Administrative Agent as provided above, such Lender and the Borrower or
the applicable Existing Account Party, as the case may be, severally agree to
pay interest on such amount, for each day from and including the date such
amount is required to be paid in accordance with this paragraph to but
excluding the date such amount is paid, to the Administrative Agent for the
account of the Issuing Bank at (i) in the case of the Borrower or such
Existing Account Party, as the case may be, a rate per annum equal to the
interest rate applicable to Revolving Loans pursuant to Section 2.06(a), and
(ii) in the case of such Lender, for the first such day, the Federal Funds
Effective Rate, and for each day thereafter, the Alternate Base Rate.
SECTION 2.03. Borrowing Procedure. In order to request a Borrowing
(other than a Swingline Loan or a deemed Borrowing pursuant to Section
2.02(f), as to which this Section 2.03 shall not apply), the Borrower shall
hand deliver or telecopy to the Administrative Agent a duly completed
Borrowing Request (a) in the case of a Eurodollar Borrowing, not later than
11:00 a.m., New York City time, three Business Days before a proposed
Borrowing, and (b) in the case of an ABR Borrowing, not later than 12:00 noon,
New York City time, one Business Day before a proposed Borrowing. Each
Borrowing Request shall be irrevocable, shall be signed by or on behalf of the
Borrower and shall specify the following information: (i) whether the
borrowing then being requested is to be a Eurodollar Borrowing or an ABR
Borrowing; (ii) the date of such Borrowing (which shall be a Business
Day), (iii) the number and location of the account to which funds are to be
disbursed (which shall be an account that complies with the requirements of
Section 2.02(c)); (iv) the amount of such Borrowing; and (v) if such Borrowing
is to be a Eurodollar Borrowing, the Interest Period with respect thereto;
provided, however, that, notwithstanding any contrary specification in any
Borrowing Request, each requested Borrowing shall comply with the requirements
set forth in Section 2.02. If no election as to the Type of Borrowing is
specified in any such notice, then the requested Borrowing shall be an ABR
Borrowing. If no Interest Period with respect to any Eurodollar Borrowing is
specified in any such notice, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration. The Administrative Agent
shall promptly advise the Lenders of any notice given pursuant to this Section
2.03 (and the contents thereof), and of each Lender's portion of the requested
Borrowing.
SECTION 2.04. Evidence of Debt; Repayment of Loans. (a) The Borrower
hereby unconditionally promises to pay to the Administrative Agent for the
account of each Lender (i) the then unpaid principal amount of each Swingline
Loan, on the last day of the Interest Period applicable to such Loan or, if
earlier, on the Maturity Date and (ii) the then unpaid principal amount of
each Revolving Loan on the Maturity Date. (b) Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each Loan made by
such Lender from time to time, including the amounts of principal and interest
payable and paid such Lender from time to time under this Agreement. (c) The
Administrative Agent shall maintain accounts in which it will record (i) the
amount of each Loan made hereunder, the Type thereof and the Interest Period
applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder from the Borrower or any Guarantor and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraphs (b)
and (c) above shall be prima facie evidence of the existence and amounts of
the obligations therein recorded; provided, however, that the failure of any
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligations of the Borrower to
repay the Loans in accordance with their terms. (e) Notwithstanding any
other provision of this Agreement, in the event any Lender shall request and
receive a promissory note payable to such Lender and its registered assigns,
the interests represented by such note shall at all times (including after any
assignment of all or part of such interests pursuant to Section 9.04) be
represented by one or more promissory notes payable to the payee named therein
or its registered assigns.
SECTION 2.05. Fees. (a) The Borrower agrees to pay to each Lender,
through the Administrative Agent, on the last Business Day of March, June,
September and December in each year and on each date on which the Revolving
Credit Commitment of such Lender shall expire or be terminated as provided
herein, a commitment fee (a "Commitment Fee") equal to the Applicable Fee
Percentage per annum in effect from time to time on the average daily
difference between (i) the Revolving Credit Commitment of such Lender and (ii)
the sum of (A) the outstanding Revolving Loans of such Lender and (B) the L/C
Exposure of such Lender during the preceding quarter (or other period
commencing with the date hereof or ending with the Maturity Date or the date
on which the Revolving Credit Commitment of such Lender shall expire or be
terminated). All Commitment Fees shall be computed on the basis of the actual
number of days elapsed in a year of 360 days. The Commitment Fee due to each
Lender shall commence to accrue on the date hereof and shall cease to accrue
on the date on which the Revolving Credit Commitment of such Lender shall
expire or be terminated as provided herein. For purposes of calculating
Commitment Fees only, no portion of the Revolving Credit Commitments shall be
deemed utilized under Section 2.16 as a result of outstanding Swingline Loans.
(b) The Borrower agrees to pay to the Administrative Agent, for its own
account, the administrative fees set forth in the Fee Letter at the times and
in the amounts specified therein (the "Administrative Agent Fees"). (c) The
Borrower agrees to pay (i) to each Lender, through the Administrative Agent,
on the last Business Day of March, June, September and December of each year
and on the date on which the Revolving Credit Commitment of such Lender shall
be terminated as provided herein, a fee (an "L/C Participation Fee")
calculated on such Lender's Pro Rata Percentage of the average daily aggregate
L/C Exposure (excluding the portion thereof attributable to unreimbursed L/C
Disbursements) during the preceding quarter (or shorter period commencing with
the date hereof or ending with the Maturity Date or the date on which all
Letters of Credit have been canceled or have expired and the Revolving Credit
Commitments of all Lenders shall have been terminated) at a rate equal to the
Applicable Percentage from time to time used to determine the interest rate on
Revolving Credit Borrowings comprised of Eurodollar Loans pursuant to Section
2.06, and (ii) to the Issuing Bank with respect to each Letter of Credit (x) a
fronting fee equal to 1/8 of 1% per annum of the face amount of such Letter of
Credit, payable quarterly in arrears and (y) the standard issuance and drawing
fees specified from time to time by the Issuing Bank (the "Issuing Bank
Fees"). All L/C Participation Fees and Issuing Bank Fees shall be computed on
the basis of the actual number of days elapsed in a year of 360 days. All
Fees shall be paid on the dates due, in immediately available funds, to the
Administrative Agent for distribution, if and as appropriate, among the
Lenders, except that the Issuing Bank Fees shall be paid directly to the
Issuing Bank. Once paid, none of the Fees shall be refundable under any
circumstances.
SECTION 2.06. Interest on Loans. (a) Subject to the provisions of
Section 2.07, the Loans comprising each ABR Borrowing, including each
Swingline Loan, shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 365 or 366 days, as the case may be,
when the Alternate Base Rate is determined by reference to the Prime Rate and
over a year of 360 days at all other times) at a rate per annum equal to the
Alternate Base Rate plus the Applicable Percentage in effect from time to
time. (b) Subject to the provisions of Section 2.07, the Loans comprising
each Eurodollar Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 360 days) at a rate per annum
equal to the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus the Applicable Percentage in effect from time to time. (c)
Interest on each Loan shall be payable on the Interest Payment Dates
applicable to such Loan except as otherwise provided in this Agreement. The
applicable Alternate Base Rate or Adjusted LIBO Rate for each Interest Period
or day within an Interest Period, as the case may be, shall be determined by
the Administrative Agent, and such determination shall be conclusive absent
manifest error.
SECTION 2.07. Default Interest. If the Borrower shall default in the
payment of the principal of or interest on any Loan or any other amount
becoming due hereunder, by acceleration or otherwise, or under any other Loan
Document, the Borrower shall on demand from time to time pay interest, to the
extent permitted by law, on such defaulted amount to but excluding the date of
actual payment (after as well as before judgment) at the greater of (a) in the
case of overdue principal of or interest or any Loan, the rate otherwise
applicable to such Loan pursuant to Section 2.06 plus 2.00% per annum or (b)
the rate per annum (computed on the basis of the actual number of days elapsed
over a year of 365 or 366 days, as the case may be, when determined by
reference to the Prime Rate and over a year of 360 days at all other times)
equal to the sum of the Alternate Base Rate plus the Applicable Percentage
applicable to ABR Loans at such time plus 2.00%.
SECTION 2.08. Alternate Rate of Interest. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Administrative Agent shall have
determined that dollar deposits in the principal amounts of the Loans
comprising such Borrowing are not generally available in the London interbank
market, or that the rates at which such dollar deposits are being offered will
not adequately and fairly reflect the cost to any Lender of making or
maintaining its Eurodollar Loan during such Interest Period, or that
reasonable means do not exist for ascertaining the Adjusted LIBO Rate, the
Administrative Agent shall, as soon as practicable thereafter, give written or
telecopy notice of such determination to the Borrower and the Lenders. In the
event of any such determination, until the Administrative Agent shall have
advised the Borrower and the Lenders that the circumstances giving rise to
such notice no longer exist, any request by the Borrower for a Eurodollar
Borrowing pursuant to Section 2.03 shall be deemed to be a request for an ABR
Borrowing. Each determination by the Administrative Agent hereunder shall be
conclusive absent manifest error.
SECTION 2.09. Termination and Reduction of Commitments. (a) The
Revolving Credit Commitments, the Swingline Commitment and the L/C Commitment
shall automatically terminate on the Maturity Date. Notwithstanding the
foregoing, all the Commitments shall automatically terminate at 5:00 p.m., New
York City time, on August 15, 1996, if the initial Credit Event shall not have
occurred by such time. (b) Upon at least three Business Days' prior
irrevocable written or telecopy notice to the Administrative Agent, the
Borrower may at any time in whole permanently terminate, or from time to time
in part permanently reduce, the Revolving Credit Commitments; provided,
however, that (i) each partial reduction of the Revolving Credit Commitments
shall be in an integral multiple of $500,000 and in a minimum amount of
$2,000,000 and (ii) the Total Revolving Credit Commitment shall not be reduced
to an amount that is less than the sum of the Aggregate Revolving Credit
Exposure at the time. (c) Each reduction in the Revolving Credit Commitments
hereunder shall be made ratably among the Lenders in accordance with their
respective Commitments. The Borrower shall pay to the Administrative Agent for
the account of the applicable Lenders, on the date of each termination or
reduction, the Commitment Fees on the amount of the Commitments so terminated
or reduced accrued to but excluding the date of such termination or reduction.
SECTION 2.10. Conversion and Continuation of Borrowings. The Borrower
shall have the right at any time upon prior irrevocable notice to the
Administrative Agent (a) not later than 12:00 (noon), New York City time, one
Business Day prior to conversion, to convert any Eurodollar Borrowing into an
ABR Borrowing, (b) not later than 10:00 a.m., New York City time, three
Business Days prior to conversion or continuation, to convert any ABR
Borrowing into a Eurodollar Borrowing or to continue any Eurodollar Borrowing
as a Eurodollar Borrowing for an additional Interest Period, and (c) not later
than 10:00 a.m., New York City time, three Business Days prior to conversion,
to convert the Interest Period with respect to any Eurodollar Borrowing to
another permissible Interest Period, subject in each case to the following:
(i) each conversion or continuation shall be made pro rata among the Lenders
in accordance with the respective principal amounts of the Loans comprising
the converted or continued Borrowing; (ii) if less than all the outstanding
principal amount of any Borrowing shall be converted or continued, then each
resulting Borrowing shall satisfy the limitations specified in Sections
2.02(a) and 2.02(b) regarding the principal amount and maximum number
of Borrowings of the relevant Type;(iii) each conversion shall be effected by
each Lender and the Administrative Agent by recording for the account of such
Lender the new Loan of such Lender resulting from such conversion and reducing
the Loan (or portion thereof) of such Lender being converted by an equivalent
principal amount; accrued interest on any Eurodollar Loan (or portion thereof)
being converted shall be paid by the Borrower at the time of conversion; (iv)
if any Eurodollar Borrowing is converted at a time other than the end of the
Interest Period applicable thereto, the Borrower shall pay, upon demand, any
amounts due to the Lenders pursuant to Section 2.15; (v) any portion of a
Borrowing maturing or required to be repaid in less than one month may not be
converted into or continued as a Eurodollar Borrowing; (vi) any portion of a
Eurodollar Borrowing that cannot be converted into or continued as a
Eurodollar Borrowing by reason of the immediately preceding clause shall be
automatically converted at the end of the Interest Period in effect for such
Borrowing into an ABR Borrowing; and (vii) upon notice to the Borrower from
the Administrative Agent given at the request of the Required Lenders, after
the occurrence and during the continuance of a Default or Event of Default,
no outstanding Loan may be converted into, or continued as, a Eurodollar Loan.
Each notice pursuant to this Section 2.10 shall be irrevocable and shall refer
to this Agreement and specify (i) the identity and amount of the Borrowing
that the Borrower requests be converted or continued, (ii) whether such
Borrowing is to be converted to or continued as a Eurodollar Borrowing or an
ABR Borrowing, (iii) if such notice requests a conversion, the date of such
conversion (which shall be a Business Day) and (iv) if such Borrowing is to be
converted to or continued as a Eurodollar Borrowing, the Interest Period with
respect thereto. If no Interest Period is specified in any such notice with
respect to any conversion to or continuation as a Eurodollar Borrowing, the
Borrower shall be deemed to have selected an Interest Period of one month's
duration. The Administrative Agent shall advise the Lenders of any notice
given pursuant to this Section 2.10 and of each Lender's portion of any
converted or continued Borrowing. If the Borrower shall not have given notice
in accordance with this Section 2.10 to continue any Borrowing into a
subsequent Interest Period (and shall not otherwise have given notice in
accordance with this Section 2.10 to convert such Borrowing), such Borrowing
shall, at the end of the Interest Period applicable thereto (unless repaid
pursuant to the terms hereof), automatically be continued into a new Interest
Period as an ABR Borrowing.
SECTION 2.11. Optional Prepayments. (a) The Borrower shall have the
right at any time and from time to time to prepay any Borrowing, in whole or
in part, upon at least three Business Days' prior written or telecopy notice
(or telephone notice promptly confirmed by written or telecopy notice) to the
Administrative Agent before 11:00 a.m., New York City time; provided, however,
that each partial prepayment shall be in an amount that is an integral
multiple of $500,000 and not less than $2,000,000. (b) Each notice of
prepayment shall specify the prepayment date and the principal amount of each
Borrowing (or portion thereof) to be prepaid, shall be irrevocable and shall
commit the Borrower to prepay such Borrowing by the amount stated therein on
the date stated therein. All prepayments under this Section 2.11 shall be
subject to Section 2.15 but otherwise without premium or penalty. All
prepayments of Eurodollar Loans under this Section 2.11 shall be accompanied
by accrued interest on the principal amount being prepaid to the date of
payment.
SECTION 2.12. Mandatory Prepayments. (a) In the event of any
termination of all the Revolving Credit Commitments, the Borrower shall repay
or prepay all its outstanding Revolving Credit Borrowings and all outstanding
Swingline Loans on the date of such termination. In the event of any partial
reduction of the Revolving Credit Commitments, then (i) at or prior to the
effective date of such reduction, the Administrative Agent shall notify the
Borrower and the Lenders of the Aggregate Revolving Credit Exposure after
giving effect thereto and (ii) if the Aggregate Revolving Credit Exposure
would exceed the Total Revolving Credit Commitment after giving effect to such
reduction, then the Borrower shall, on the date of such reduction, repay or
prepay Revolving Credit Borrowings or Swingline Loans (or a combination
thereof) in an amount sufficient to eliminate such excess. (b) Not later
than the third Business Day following the receipt of any Net Cash
Proceeds from any Asset Sale, the Borrower shall apply 100% of the Net Cash
Proceeds received with respect thereto to reduce the Revolving Credit
Commitments in accordance with paragraph (a) above. (c) In the event and on
each occasion that an Equity Issuance occurs and the Leverage Ratio as of the
last day of the fiscal quarter most recently preceding the applicable date of
determination shall be greater than 3.00 to 1.00, the Borrower shall,
substantially simultaneously with (and in any event not later than the third
Business Day next following) the occurrence of such Equity Issuance, apply 50%
of the Net Cash Proceeds therefrom to reduce the Revolving Credit Commitments
in accordance with paragraph (a) above. (d) In the event that the Borrower
or any Subsidiary shall receive Net Cash Proceeds from the issuance of
Indebtedness for money borrowed (other than Indebtedness the issuance of which
also constitutes an Equity Issuance) of the Borrower or any Subsidiary (other
than Indebtedness for money borrowed permitted pursuant to Section 6.01), the
Borrower shall, substantially simultaneously with (and in any event not later
than the third Business Day next following) the receipt of such Net Cash
Proceeds, apply an amount equal to 50% of such Net Cash Proceeds to reduce the
Revolving Credit Commitments in accordance with paragraph (a) above.
(e) The Borrower shall deliver to the Administrative Agent, at the time of
each prepayment required under this Section 2.12, (i) a certificate signed by
a Financial Officer of the Borrower setting forth in reasonable detail the
calculation of the amount of such prepayment and (ii) to the extent reasonably
practicable, at least three days prior written notice of such prepayment.
Each notice of prepayment shall specify the prepayment date, the Type of each
Loan being prepaid and the principal amount of each Loan (or portion thereof)
to be prepaid. All prepayments of Borrowings under this Section 2.12 shall be
subject to Section 2.15, but shall otherwise be without premium or penalty.
All prepayments of Eurodollar Borrowings under this Section 2.12 shall be
accompanied by accrued interest on the principal amount being prepaid to the
date of payment.
SECTION 2.13. Reserve Requirements; Change in Circumstances. (a)
Notwithstanding any other provision of this Agreement, if after the date
of this Agreement any change in applicable law or regulation or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof (whether or not having the
force of law) shall change the basis of taxation of payments to any Lender or
the Issuing Bank of the principal of or interest on any Eurodollar Loan made
by such Lender or any Fees or other amounts payable hereunder (other than
changes in respect of taxes imposed on the overall net income of such Lender
or the Issuing Bank by the jurisdiction in which such Lender or the Issuing
Bank has its principal office or by any political subdivision or taxing
authority therein), or shall impose, modify or deem applicable any reserve,
special deposit or similar requirement against assets of, deposits with or for
the account of or credit extended by any Lender or the Issuing Bank (except
any such reserve requirement which is reflected in the Adjusted LIBO Rate) or
shall impose on such Lender or the Issuing Bank or the London interbank market
any other condition affecting this Agreement or Eurodollar Loans made by such
Lender or any Letter of Credit or participation therein, and the result of any
of the foregoing shall be to increase the cost to such Lender or the Issuing
Bank of making or maintaining any Eurodollar Loan or increase the cost to any
Lender of issuing or maintaining any Letter of Credit or purchasing or
maintaining a participation therein or to reduce the amount of any sum
received or receivable by such Lender or the Issuing Bank hereunder (whether
of principal, interest or otherwise) by an amount deemed by such Lender or
the Issuing Bank to be material, then the Borrower will pay to such Lender or
the Issuing Bank, as the case may be, upon demand such additional amount or
amounts as will compensate such Lender or the Issuing Bank, as the case may
be, for such additional costs incurred or reduction suffered. (b) If any
Lender or the Issuing Bank shall have determined that the adoption after the
date hereof of any law, rule, regulation, agreement or guideline regarding
capital adequacy, or any change after the date hereof in any such law, rule,
regulation, agreement or guideline (whether such law, rule, regulation,
agreement or guideline has been adopted) or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by any Lender (or any
lending office of such Lender) or the Issuing Bank or any Lender's or the
Issuing Bank's holding company with any request or directive regarding capital
adequacy (whether or not having the force of law) of any Governmental
Authority has or would have the effect of reducing the rate of return on such
Lender's or the Issuing Bank's capital or on the capital of such Lender's or
the Issuing Bank's holding company, if any, as a consequence of this Agreement
or the Loans made or participations in Letters of Credit purchased by such
Lender pursuant hereto or the Letters of Credit issued by the Issuing Bank
pursuant hereto to a level below that which such Lender or the Issuing Bank or
such Lender's or the Issuing Bank's holding company would have achieved but
for such applicability, adoption, change or compliance (taking into
consideration such Lender's or the Issuing Bank's policies and the policies of
such Lender's or the Issuing Bank's holding company with respect to capital
adequacy) by an amount deemed by such Lender or the Issuing Bank to be
material, then from time to time the Borrower shall pay to such Lender or the
Issuing Bank, as the case may be, such additional amount or amounts as will
compensate such Lender or the Issuing Bank or such Lender's or the Issuing
Bank's holding company for any such reduction suffered. (c) A certificate of
a Lender or the Issuing Bank setting forth the amount or amounts necessary to
compensate such Lender or the Issuing Bank or its holding company, as
applicable, as specified in paragraph (a) or (b) above shall be delivered to
the Borrower and shall be conclusive absent manifest error. The Borrower
shall pay such Lender or the Issuing Bank the amount shown as due on any such
certificate delivered by it within 10 days after its receipt of the same. (d)
Failure or delay on the part of any Lender or the Issuing Bank to demand
compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital shall not constitute a waiver of
such Lender's or the Issuing Bank's right to demand such compensation. The
protection of this Section shall be available to each Lender and the Issuing
Bank regardless of any possible contention of the invalidity or applicability
of the law, rule, regulation, agreement, guideline or other change or
condition that shall have occurred or been imposed.
SECTION 2.14. Change in Legality. (a) Notwithstanding any other
provision of this Agreement, if, after the date hereof, any change in any law
or regulation or in the interpretation thereof by any Governmental Authority
charged with the administration or interpretation thereof shall make it
unlawful for any Lender to make or maintain any Eurodollar Loan or to give
effect to its obligations as contemplated hereby with respect to any
Eurodollar Loan, then, by written notice to the Borrower and to the
Administrative Agent: (i) such Lender may declare that Eurodollar Loans will
not thereafter (for the duration of such unlawfulness) be made by such Lender
hereunder (or be continued for additional Interest Periods and ABR Loans will
not thereafter (for such duration) be converted into Eurodollar Loans),
hereupon any request for a Eurodollar Borrowing (or to convert an ABR
borrowing to a Eurodollar Borrowing or to continue a Eurodollar Borrowing for
an additional Interest Period) shall, as to such Lender only, be deemed a
request for an ABR Loan (or a request to continue an ABR Loan as such for an
additional Interest Period or to convert a Eurodollar Loan into an ABR Loan,
as the case may be), unless such declaration shall be subsequently withdrawn;
and (ii) such Lender may require that all outstanding Eurodollar Loans made by
it be converted to ABR Loans, in which event all such Eurodollar Loans shall
be automatically converted to ABR Loans as of the effective date of such
notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii)
above, all payments and prepayments of principal that would otherwise have
been applied to repay the Eurodollar Loans that would have been made by such
Lender or the converted Eurodollar Loans of such Lender shall instead be
applied to repay the ABR Loans made by such Lender in lieu of, or resulting
from the conversion of, such Eurodollar Loans. (b) For purposes of this
Section 2.14, a notice to the Borrower by any Lender shall be effective as to
each Eurodollar Loan made by such Lender, if lawful, on the last day of the
Interest Period currently applicable to such Eurodollar Loan; in all other
cases such notice shall be effective on the date of receipt by the Borrower.
SECTION 2.15. Indemnity. The Borrower shall indemnify each Lender
against any loss or expense that such Lender may sustain or incur as a
consequence of (a) any event, other than a default by such Lender in the
performance of its obligations hereunder, which results in (i) such Lender
receiving or being deemed to receive any amount on account of the principal of
any Eurodollar Loan prior to the end of the Interest Period in effect
therefor, (ii) the conversion of any Eurodollar Loan to an ABR Loan, or the
conversion of the Interest Period with respect to any Eurodollar Loan, in
each case other than on the last day of the Interest Period in effect
therefor, or (iii) any Eurodollar Loan to be made by such Lender (including
any Eurodollar Loan to be made pursuant to a conversion or continuation under
Section 2.10) not being made after notice of such Loan shall have been given
by the Borrower hereunder (any of the events referred to in this clause (a)
being called a "Breakage Event") or (b) any default in the making of any
payment or prepayment required to be made hereunder. In the case of any
Breakage Event, such loss shall include an amount equal to the excess, as
reasonably determined by such Lender, of (i) its cost of obtaining funds for
the Eurodollar Loan that is the subject of such Breakage Event for the period
from the date of such Breakage Event to the last day of the Interest Period in
effect (or that would have been in effect) for such Loan over (ii) the amount
of interest likely to be realized by such Lender in redeploying the funds
released or not utilized by reason of such Breakage Event for such period. A
certificate of any Lender setting forth any amount or amounts which such
Lender is entitled to receive pursuant to this Section 2.15 shall be delivered
to the Borrower and shall be conclusive absent manifest error.
SECTION 2.16. Pro Rata Treatment. Except as provided below in this
Section 2.16 with respect to Swingline Loans and as required under Section
2.14, each Borrowing, each payment or prepayment of principal of any
Borrowing, each payment of interest on the Loans, each payment of the
Commitment Fees, each reduction of the Revolving Credit Commitments and each
conversion of any Borrowing to or continuation of any Borrowing as a Borrowing
of any Type shall be allocated pro rata among the Lenders in accordance with
their respective Pro Rata Percentages. For purposes of determining the
available Revolving Credit Commitments of the Lenders at any time, each
outstanding Swingline Loan shall be deemed to have utilized the Revolving
Credit Commitments of the Lenders (including those Lenders which shall not
have made Swingline Loans) pro rata in accordance with such respective
Revolving Credit Commitments. Each Lender agrees that in computing such
Lender's portion of any Borrowing to be made hereunder, the Administrative
Agent may, in its discretion, round each Lender's percentage of such Borrowing
to the next higher or lower whole dollar amount.
SECTION 2.17. Sharing of Setoffs. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim
against the Borrower or any other Loan Party, or pursuant to a secured claim
under Section 506 of Title 11 of the United States Code or other security or
interest arising from, or in lieu of, such secured claim, received by such
Lender under any applicable bankruptcy, insolvency or other similar law or
otherwise, or by any other means, obtain payment (voluntary or involuntary) in
respect of any Loan or Loans or L/C Disbursement as a result of which the
unpaid principal portion of its Revolving Loans and participations in L/C
Disbursements shall be proportionately less than the unpaid principal portion
of the Revolving Loans and participations in L/C Disbursements of any other
Lender, it shall be deemed simultaneously to have purchased from such other
Lender at face value, and shall promptly pay to such other Lender the purchase
price for, a participation in the Revolving Loans and L/C Exposure of such
other Lender, so that the aggregate unpaid principal amount of the Revolving
Loans and L/C Exposure and participations in Revolving Loans and L/C Exposure
held by each Lender shall be in the same proportion to the aggregate unpaid
principal amount of all Revolving Loans and L/C Exposure then outstanding as
the principal amount of its Revolving Loans and L/C Exposure prior to such
exercise of banker's lien, setoff or counterclaim or other event was to the
principal amount of all Revolving Loans and L/C Exposure outstanding prior to
such exercise of banker's lien, setoff or counterclaim or other event;
provided, however, that if any such purchase or purchases or adjustments shall
be made pursuant to this Section 2.17 and the payment giving rise thereto
shall thereafter be recovered, such purchase or purchases or adjustments shall
be rescinded to the extent of such recovery and the purchase price or prices
or adjustment restored without interest. The Borrower expressly consents to
the foregoing arrangements and agrees that any Lender holding a participation
in a Revolving Loan or L/C Disbursement deemed to have been so purchased may
exercise any and all rights of banker's lien, setoff or counterclaim with
respect to any and all moneys owing by the Borrower to such Lender by reason
thereof as fully as if such Lender had made a Loan directly to the Borrower in
the amount of such participation.
SECTION 2.18. Payments. (a) The Borrower shall make each payment
(including principal of or interest on any Borrowing or any L/C Disbursement
or any Fees or other amounts) hereunder and under any other Loan Document not
later than 12:00 (noon), New York City time, on the date when due in
immediately available dollars, without setoff, defense or counterclaim. Each
such payment (other than (i) issuing Bank Fees, which shall be paid directly
to the Issuing Bank, and (ii) principal of and interest on Swingline Loans,
which shall be paid directly to the Swingline Lender except as otherwise
provided in Section 2.20(e)) shall be made to the Administrative Agent at its
offices at Tower 49, 12 East 49th Street, New York, New York. (b) Whenever
any payment (including principal of or interest on any Borrowing or any Fees
or other amounts) hereunder or under any other Loan Document shall become due,
or otherwise would occur, on a day that is not a Business Day, such payment
may be made on the next succeeding Business Day, and such extension of time
shall in such case be included in the computation of interest or Fees, if
applicable.
SECTION 2.19. Taxes. (a) Any and all payments by or on behalf of the
Borrower or any Loan Party hereunder and under any other Loan Document shall
be made, in accordance with Section 2.18, free and clear of and without
deduction for any and all current or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding (i) income taxes imposed on the net income of the Administrative
Agent, any Lender or the Issuing Bank (or any transferee or assignee thereof,
including a participation holder (any such entity a Transferee )) and (ii)
franchise taxes imposed on the net income of the Administrative Agent, any
Lender or the Issuing Bank (or Transferee), in each case by the jurisdiction
under the laws of which the Administrative Agent, such Lender or the Issuing
Bank (or Transferee) is organized or is operating (other than operations from
such person's having executed, delivered or performed its obligations
hereunder) or any political sub-division thereof (all such nonexcluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities,
collectively or individually, being called "Taxes"). If the Borrower or any
Loan Party shall be required to deduct any Taxes from or in respect of any sum
payable hereunder or under any other Loan Document to the Administrative
Agent, any Lender or the Issuing Bank (or any Transferee), (i) the sum payable
shall be increased by the amount (an "additional amount") necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.19) the Administrative Agent,
such Lender or the Issuing Bank (or Transferee), as the case may be, shall
receive an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower or such Loan Party shall make such
deductions and (iii) the Borrower or such Loan Party shall pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
law. (b) In addition, the Borrower agrees to pay to the relevant Governmental
Authority in accordance with applicable law any current or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or under any other Loan
Document or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement or any other Loan Document (Other Taxes). (c) The
Borrower will indemnify the Administrative Agent, each Lender and the Issuing
Bank (or Transferee) for the full amount of Taxes and Other Taxes paid by the
Administrative Agent, such Lender or the Issuing Bank (or Transferee), as the
case may be, and any liability (including penalties, interest and expenses
(including reasonable attorney's fees and expenses)) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted by the relevant Governmental Authority (it being understood
that such indemnification shall not impair any right that the Borrower may
have to contest with the relevant Governmental Authority such Taxes or Other
Taxes). A certificate as to the amount of such payment or liability prepared
by the Administrative Agent, a Lender or the Issuing Bank (or Transferee), or
the Administrative Agent on its behalf, absent manifest error, shall be final,
conclusive and binding for all purposes. Such indemnification shall be made
within 30 days after the date the Administrative Agent, any Lender or the
Issuing Bank (or Transferee), as the case may be, makes written demand
therefor. (d) As soon as practicable after the date of any payment of Taxes
or Other Taxes by the Borrower or any other Loan Party to the relevant
Governmental Authority, the Borrower or such other Loan Party will deliver to
the Administrative Agent, at its address referred to in Section 9.01, the
original or a certified copy of a receipt issued by such Governmental
Authority evidencing payment thereof. (e) Each Lender (or Transferee) that is
organized under the laws of a jurisdiction other than the United States, any
State thereof or the District of Columbia (a "Non-U.S. Lender") shall deliver
to the Borrower and the Administrative Agent two copies of either United
States Internal Revenue Service Form 1001 or Form 4224, or, in the case of a
Non-U.S. Lender claiming exemption from U.S. Federal withholding tax under
Section 871(h) or 881(c) of the Code with respect to payments of portfolio
interest , a Form W-8, or any subsequent versions thereof or successors
thereto (and, if such Non-U.S. Lender delivers a Form W-8, a certificate
representing that such Non-U.S. Lender is not a bank for purposes of Section
881(c) of the Code, is not a 10-percent shareholder (within the meaning of
Section 871(h)(3)(B) of the Code) of the Borrower and is not a controlled
foreign corporation related to the Borrower (within the meaning of Section
864(d)(4) of the Code)), properly completed and duly executed by such Non-U.S.
Lender claiming complete exemption from, or reduced rate of, U.S. Federal
withholding tax on payments by the Borrower under this Agreement and the
other Loan Documents. Such forms shall be delivered by each Non-U.S. Lender
on or before the date it becomes a party to this Agreement (or, in the case of
a Transferee that is a participation holder, on or before the date such
participation holder becomes a Transferee hereunder) and on or before the
date, if any, such Non-U.S. Lender changes its applicable lending office by
designating a different lending office (a "New Lending Office"). In addition,
each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence
or invalidity of any form previously delivered by such Non-U.S. Lender.
Notwithstanding any other provision of this Section 2.19(e), a Non-U.S. Lender
shall not be required to deliver any form pursuant to this Section 2.19(e)
that such Non-U.S. Lender is not legally able to deliver. (f) The Borrower
shall not be required to indemnify any Non-U.S. Lender or to pay any
additional amounts to any Non-U.S. Lender, in respect of United States
Federal withholding tax pursuant to paragraph (a) or (c) above to the extent
that (i) the obligation to withhold amounts with respect to United States
Federal withholding tax existed on the date such Non-U.S. Lender became a
party to this Agreement (or, in the case of a Transferee that is a
participation holder, on the date such participation holder became a
Transferee hereunder) or, with respect to payments to a New Lending Office,
the date such Non-U.S. Lender designated such New Lending Office with respect
to a Loan; provided, however, that this paragraph (f) shall not apply (x) to
any Transferee or New Lending Office that becomes a Transferee or New Lending
Office as a result of an assignment, participation, transfer or designation
made at the request of the Borrower and (y) to the extent the indemnity
payment or additional amounts any Transferee, or any Lender (or Transferee),
acting through a New Lending Office, would be entitled to receive (without
regard to this paragraph (f)) do not exceed the indemnity payment or
additional amounts that the person making the assignment, participation or
transfer to such Transferee, or Lender (or Transferee) making the designation
of such New Lending Office, would have been entitled to receive in the absence
of such assignment, participation, transfer or designation or (ii) the
obligation to pay such additional amounts would not have arisen but for a
failure by such Non-U.S. Lender to comply with the provisions of paragraph (e)
above. (g) Nothing contained in this Section 2.19 shall require any Lender or
the Issuing Bank (or any Transferee) or the Administrative Agent to make
available any of its tax returns (or any other information that it deems to be
confidential or proprietary).
SECTION 2.20. Assignment of Commitments Under Certain Circumstances;
Duty to Mitigate. (a) In the event (i) any Lender or the Issuing Bank
delivers a certificate requesting compensation pursuant to Section 2.13, (ii)
any Lender or the Issuing Bank delivers a notice described in Section 2.14 or
(iii) the Borrower is required to pay any additional amount to any Lender or
the Issuing Bank or any Governmental Authority on account of any Lender or the
Issuing Bank pursuant to Section 2.19, the Borrower may, at its sole expense
and effort (including with respect to the processing and recordation fee
referred to in Section 9.04(b)), upon notice to such Lender or the Issuing
Bank and the Administrative Agent, require such Lender or the Issuing Bank to
transfer and assign, without recourse (in accordance with and subject to the
restrictions contained in Section 9.04), all of its interests, rights and
obligations under this Agreement to an assignee that shall assume such
assigned obligations (which assignee may be another Lender, if a Lender
accepts such assignment); provided that (x) such assignment shall not conflict
with any law, rule or regulation or order of any court or other Governmental
Authority having jurisdiction, (y) the Borrower shall have received the prior
written consent of the Administrative Agent (and, if a Revolving Credit
Commitment is being assigned, of the Issuing Bank and the Swingline Lender),
which consent shall not unreasonably be withheld, and (z) the Borrower or such
assignee shall have paid to the affected Lender or the Issuing Bank in
immediately available funds an amount equal to the sum of the principal of and
interest accrued to the date of such payment on the outstanding Loans or L/C
Disbursements of such Lender or the Issuing Bank, respectively, plus all Fees
and other amounts accrued for the account of such Lender or the Issuing Bank
hereunder (including any amounts under Section 2.13 and Section 2.15). (b)
If (i) any Lender or the Issuing Bank shall request compensation under Section
2.13, (ii) any Lender or the Issuing Bank delivers a notice described in
Section 2.14 or (iii) the Borrower is required to pay any additional amount
to any Lender or the Issuing Bank or any Governmental Authority on account of
any Lender or the Issuing Bank, pursuant to Section 2.19, then such Lender or
the Issuing Bank shall use reasonable efforts (which shall not require such
Lender or the Issuing Bank to incur an unreimbursed loss or unreimbursed cost
or expense or otherwise take any action inconsistent with its internal
policies or legal or regulatory restrictions or suffer any disadvantage or
burden deemed by it to be significant) (x) to file any certificate or document
reasonably requested in writing by the Borrower or (y) to assign its rights
and delegate and transfer its obligations hereunder to another of its offices,
branches or affiliates, if such filing or assignment would reduce its claims
for compensation under Section 2.13 or enable it to withdraw its notice
pursuant to Section 2.14 or would reduce amounts payable pursuant to Section
2.19, as the case may be, in the future. The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender or the Issuing Bank in
connection with any such filing or assignment, delegation and transfer.
SECTION 2.21. Swingline Loans. (a) Swingline Commitment. Subject to
the terms and conditions and relying upon the representations and warranties
herein set forth, the Swingline Lender agrees to make loans to the Borrower at
any time and from time to time on and after the Closing Date and until the
earlier of the Maturity Date and the termination of the Revolving Credit
Commitments in accordance with the terms hereof, in an aggregate principal
amount at any time outstanding that will not result in (i) the aggregate
principal amount of all Swingline Loans exceeding $10,000,000 in the aggregate
or (ii) the Aggregate Revolving Credit Exposure, after giving effect to any
Swingline Loan, exceeding the Total Revolving Credit Commitment. Each
Swingline Loan shall be for a minimum principal amount of $1,000,000 and in an
integral multiple of $100,000. The Swingline Commitment may be terminated or
reduced from time to time as provided herein. Within the foregoing limits,
the Borrower may borrow, pay or prepay and reborrow Swingline Loans hereunder,
subject to the terms, conditions and limitations set forth herein. (b)
Swingline Loans. The Borrower shall notify the Administrative Agent by
telecopy, or by telephone (confirmed by telecopy), not later than 10:00 a.m.,
New York City time, on the day of a proposed Swingline Loan. Such notice
shall be delivered on a Business Day, shall be irrevocable and shall refer to
this Agreement and shall specify the requested date (which shall be a Business
Day) and amount of such Swingline Loan. The Administrative Agent will
promptly advise the Swingline Lender of any notice received from the Borrower
pursuant to this paragraph (b). The Swingline Lender shall make each
Swingline Loan available to the Borrower by means of a credit to an account in
the name of the Borrower designated by the Borrower by 3:00 p.m. on the date
such Swingline Loan is so requested. (c) Prepayment. The Borrower shall have
the right at any time and from time to time to prepay any Swingline Loan, in
whole or in part, upon giving written or telecopy notice (or telephone notice
promptly confirmed by written, or telecopy notice) to the Swingline Lender and
to the Administrative Agent before 12:00 (noon), New York City time on the
date of prepayment at the Swingline Lender's address for notices specified on
Schedule 2.01. All principal payments of Swingline Loans shall be accompanied
by accrued interest on the principal amount being repaid to the date of
payment. (d) Interest. Each Swingline Loan shall be an ABR Loan and,
subject to the provisions of Section 2.07, shall bear interest as provided in
Section 2.06(a). (e) Participations. The Swingline Lender may by written
notice given to the Administrative Agent not later than 10:00 a.m., New York
City time, on any Business Day require the Lenders to acquire participations
on such Business Day in all or a portion of the Swingline Loans outstanding.
Such notice shall specify the aggregate amount of Swingline Loans in which
Lenders will participate. The Administrative Agent will, promptly upon
receipt of such notice, give notice to each Lender, specifying in such notice
such Lender's Pro Rata Percentage of such Swingline Loan or Loans. In
furtherance of the foregoing, each Lender hereby absolutely and
unconditionally agrees, upon receipt of notice as provided above, to pay to
the Administrative Agent, for the account of the Swingline Lender, such
Lender's Pro Rata Percentage of such Swingline Loan or Loans. Each Lender
acknowledges and agrees that its obligation to acquire participations in
Swingline Loans pursuant to this paragraph is absolute and unconditional and
shall not be affected by any circumstance whatsoever, including the occurrence
and continuance of a Default or an Event of Default, and that each such
payment shall be made without any offset, abatement, withholding or reduction
whatsoever. Each Lender shall comply with its obligation under this paragraph
by wire transfer of immediately available funds, in the same manner as
provided in Section 2.02(c) with respect to Loans made by such Lender (and
Section 2.02(c) shall apply, mutatis mutandis, to the payment obligations of
the Lenders) and the Administrative Agent shall promptly pay to the Swingline
Lender the amounts so received by it from the Lenders. The Administrative
Agent shall notify the Borrower of any participations in any Swingline Loan
acquired pursuant to this paragraph and thereafter payments in respect of such
Swingline Loan shall be made to the Administrative Agent and not to the
Swingline Lender. Any amounts received by the Swingline Lender from the
Borrower (or other party on behalf of the Borrower) in respect of a Swingline
Loan after receipt by the Swingline Lender of the proceeds of a sale of
participations therein shall be promptly remitted to the Administrative Agent;
any such amounts received by the Administrative Agent shall be promptly
remitted by the Administrative Agent to the Lenders that shall have made their
payments pursuant to this paragraph and to the Swingline Lender, as their
interests may appear. The purchase of participations in a Swingline Loan
pursuant to this paragraph shall not relieve the Borrower (or other party
liable for obligations of the Borrower) of any default in the payment thereof.
SECTION 2.22. Letters of Credit. (a) General. The Borrower may
request the issuance of a Letter of Credit for its own account or for the
account of any Subsidiary (provided that the Borrower shall be a co-applicant
and co-obligor with respect to each Letter of Credit issued for the account of
any such Subsidiary), in a form reasonably acceptable to the Administrative
Agent and the Issuing Bank, at any time and from time to time while the
Revolving Credit Commitments remain in effect. This Section shall not be
construed to impose an obligation upon the Issuing Bank to issue any Letter of
Credit that is inconsistent with the terms and conditions of this Agreement.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions.
In order to request the issuance of a Letter of Credit (or to amend, renew or
extend an existing Letter of Credit), the Borrower shall hand deliver or
telecopy to the Issuing Bank and the Administrative Agent (reasonably in
advance of the requested date of issuance, amendment, renewal or extension) a
notice requesting the issuance of a Letter of Credit, or identifying the
Letter of Credit to be amended, renewed or extended, the date of issuance,
amendment, renewal or extension, the date on which such Letter of Credit is to
expire (which shall comply with paragraph (c) below), the amount of such
Letter of Credit, the name and address of the beneficiary thereof and such
other information as shall be necessary to prepare such Letter of Credit.
Following receipt of such notice and prior to the issuance of the requested
Letter of Credit or the applicable amendment, renewal or extension, the
Administrative Agent shall notify the Issuing Bank of the amount of the
Aggregate Revolving Credit Exposure after giving effect to (i) the issuance,
amendment, renewal or extension of such Letter of Credit, (ii) the issuance or
expiration of any other Letter of Credit that is to be issued or will expire
prior to the requested date of issuance of such Letter of Credit and (iii) the
borrowing or repayment of any Revolving Credit Loans or Swingline Loans that
(based upon notices delivered to the Administrative Agent by the Borrower) are
to be borrowed or repaid prior to the requested date of issuance of such
Letter of Credit. A Letter of Credit shall be issued, amended, renewed or
extended only if, and upon issuance, amendment, renewal or extension of each
Letter of Credit the Borrower shall be deemed to represent and warrant that,
after giving effect to such issuance, amendment, renewal or extension (A) the
L/C Exposure shall not exceed $50,000,000 and (B) the Aggregate Revolving
Credit Exposure shall not exceed the Total Revolving Credit Commitment. (c)
Expiration Date. Each Letter of Credit shall expire no later than the close
of business on the date one year after the date of the issuance of such Letter
of Credit; provided, however, that each Letter of Credit may, upon the request
of the Borrower, include a provision whereby such Letter of Credit shall be
renewed automatically for additional consecutive periods 12 months or less
unless the Issuing Bank notifies the beneficiary thereof not more than 45, nor
fewer than 30, days prior to the then applicable expiry date (or such other
notification periods as set forth in the Existing Letters of Credit) that such
Letter of Credit will not be renewed; provided further, however, that no
Letter of Credit may expire or be extended beyond the Maturity Date unless on
the later of (i) the date of the issuance or extension of such Letter of
Credit and (ii) the date that is 90 days prior to the Maturity Date the
Borrower shall have deposited an amount equal to 110% of the face amount of
such Letter of Credit in cash in a cash collateral account established with
the Collateral Agent for the benefit of the Secured Parties. (d)
Participations. By the issuance of a Letter of Credit and without any further
action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby
grants to each Lender, and each such Lender hereby acquires from the
applicable Issuing Bank, a participation in such Letter of Credit equal to
such Lender's Pro Rata Percentage of the aggregate amount available to be
drawn under such Letter of Credit, effective upon the issuance of such Letter
of Credit. In addition, the Issuing Bank hereby grants to each Lender, and
each Lender hereby acquires from the Issuing Bank, a participation in each
Existing Letter of Credit equal to such Lender's Pro Rata Percentage of the
face amount of such Existing Letter of Credit, effective on the Closing Date.
In consideration and in furtherance of the foregoing, each Lender hereby
absolutely and unconditionally agrees to pay to the Administrative Agent, for
the account of the Issuing Bank, such Lender's Pro Rata Percentage of each L/C
Disbursement made by the Issuing Bank and not reimbursed by the Borrower or
the applicable Existing Account Party, as the case may be (or, if applicable,
another party pursuant to its obligations under any other Loan Document),
forthwith on the date due as provided in Section 2.02(f). Each Lender
acknowledges and agrees that its obligation to acquire participations pursuant
to this paragraph in respect of Letters of Credit is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including the occurrence and continuance of a Default or an Event of Default,
and that each such payment shall be made without any offset, abatement,
withholding or reduction whatsoever. (e) Reimbursement. If the Issuing Bank
shall make any L/C Disbursement in respect of a Letter of Credit, the Borrower
or the applicable Existing Account Party, as the case may be, shall pay to the
Administrative Agent an amount equal to such L/C Disbursement not later than
two hours after the Borrower or the applicable Existing Account Party, as the
case may be, shall have received notice from the Issuing Bank that payment of
such draft will be made, or, if the Borrower or the applicable Existing
Account Party, as the case may be, shall have received such notice later than
10:00 a.m., New York City time, on any Business Day, not later than 10:00
a.m., New York City time, on the immediately following Business Day.
(f) Obligations Absolute. The Borrower's and each Existing Account Party's
obligations, as the case may be, to reimburse L/C Disbursements as provided in
paragraph (e) above shall be absolute, unconditional and irrevocable, and
shall be performed strictly in accordance with the terms of this Agreement,
under any and all circumstances whatsoever, and irrespective of: (i) any lack
of validity or enforceability of any Letter of Credit or any Loan Document, or
any term or provision therein; (ii) any amendment or waiver of or any consent
to departure from all or any of the provisions of any Letter of Credit or any
Loan Document; (iii) the existence of any claim, setoff, defense or other
right that the Borrower or such Existing Account Party, any other party
guaranteeing, or otherwise obligated with, the Borrower or such Existing
Account Party, any Subsidiary or other Affiliate thereof or any other person
may at any time have against the beneficiary under any Letter of Credit, the
Issuing Bank, the Administrative Agent or any Lender or any other person,
whether in connection with this Agreement, any other Loan Document or any
other related or unrelated agreement or transaction; (iv) any draft or other
document presented under a Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue
or inaccurate in any respect; (v) payment by the Issuing Bank under a Letter
of Credit against presentation of a draft or other document that does not
comply with the terms of such Letter of Credit; and (vi) any other act or
omission to act or delay of any kind of the Issuing Bank, the Lenders, the
Administrative Agent or any other person or any other event or circumstance
whatsoever (other than payment against presentation of drafts or documents
that, as a result of the Issuing Bank's negligence, do not comply with the
terms of such Letter of Credit), whether or not similar to any of the
foregoing, that might, but for the provisions of this Section, constitute a
legal or equitable discharge of the Borrower's or such Existing Account
Party's obligations hereunder.
Without limiting the generality of the foregoing, it is expressly
understood and agreed that the absolute and unconditional obligation of the
Borrower and each Existing Account Party, as the case may be, hereunder to
reimburse L/C Disbursements will not be excused by the gross negligence or
wilful misconduct of the Issuing Bank. However, the foregoing shall not be
construed to excuse the Issuing Bank from liability to the Borrower or such
Existing Account Party to the extent of any direct damages (as opposed to
consequential damages, claims in respect of which are hereby waived by the
Borrower or such Existing Account Party to the extent permitted by applicable
law) suffered by the Borrower or such Existing Account Party that are caused
by the Issuing Bank's gross negligence or wilful misconduct in determining
whether drafts and other documents presented under a Letter of Credit comply
with the terms thereof; it is understood that the Issuing Bank may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary
and, in making any payment under any Letter of Credit (i) the Issuing Bank's
exclusive reliance on the documents presented to it under such Letter of
Credit as to any and all matters set forth therein, including reliance on the
amount of any draft presented under such Letter of Credit, whether or not the
amount due to the beneficiary thereunder equals the amount of such draft and
whether or not any document presented pursuant to such Letter of Credit proves
to be insufficient in any respect, if such document on its face appears to be
in order, and whether or not any other statement or any other document
presented pursuant to such Letter of Credit proves to be forged or invalid or
any statement therein proves to be inaccurate or untrue in any respect
whatsoever and (ii) any noncompliance in any immaterial respect of the
documents presented under such Letter of Credit with the terms thereof shall,
in each case, be deemed not to constitute wilful misconduct or gross
negligence of the Issuing Bank. (g) Disbursement Procedures. The Issuing
Bank shall, promptly following its receipt thereof, examine all documents
purporting to represent a demand for payment under a Letter of Credit. The
Issuing Bank shall as promptly as possible give telephonic notification,
confirmed by telecopy, to the Administrative Agent and the Borrower or the
applicable Existing Account Party, as the case may be, of such demand for
payment and whether the Issuing Bank has made or will make an L/C Disbursement
thereunder; provided that any failure to give or delay in giving such notice
shall not relieve the Borrower or applicable Existing Account Party, as the
case may be, of its obligation to reimburse the Issuing Bank and the Revolving
Credit Lenders with respect to any such L/C Disbursement. The Administrative
Agent shall promptly give each Revolving Credit Lender notice thereof.
(h) Interim Interest. If the Issuing Bank shall make any L/C Disbursement in
respect of a Letter of Credit, then, unless the Borrower or the applicable
Existing Account Party, as the case may be, shall reimburse such L/C
Disbursement in full on such date, the unpaid amount thereof shall bear
interest for the account of the Issuing Bank, for each day from and including
the date of such L/C Disbursement, to but excluding the earlier of the date of
payment by the Borrower or the date on which interest shall commence to accrue
thereon as provided in Section 2.02(f), at the rate per annum that would apply
to such amount if such amount were an ABR Loan. (i) Resignation or Removal of
the Issuing Bank. Any Issuing Bank may resign at any time by giving 180 days'
prior written notice to the Administrative Agent, the Lenders and the
Borrower, and may be removed at any time by the Borrower by notice to the
Issuing Bank, the Administrative Agent and the Lenders. Subject to the next
succeeding paragraph, upon the acceptance of any appointment as the Issuing
Bank hereunder by a Lender that shall agree to serve as successor Issuing
Bank, such successor shall succeed to and become vested with all the
interests, rights and obligations of the retiring Issuing Bank and the
retiring Issuing Bank shall be discharged from its obligations to issue
additional Letters of Credit hereunder. At the time such removal or
resignation shall become effective, the Borrower shall pay all accrued and
unpaid fees pursuant to Section 2.05(c)(ii). The acceptance of any
appointment as the Issuing Bank hereunder by a successor Lender shall be
evidenced by an agreement entered into by such successor, in a form
satisfactory to the Borrower and the Administrative Agent, and, from and after
the effective date of such agreement, (i) such successor Lender shall have all
the rights and obligations of the previous Issuing Bank under this Agreement
and the other Loan Documents and (ii) references herein and in the other Loan
Documents to the term "Issuing Bank" shall be deemed to refer to such
successor or to any previous Issuing Bank, or to such successor and all
previous Issuing Banks, as the context shall require. After the resignation
or removal of the Issuing Bank hereunder, the retiring Issuing Bank shall
remain a party hereto and shall continue to have all the rights and
obligations of an Issuing Bank under this Agreement and the other Loan
Documents with respect to Letters of Credit issued by it prior to such
resignation or removal, but shall not be required to issue or renew additional
Letters of Credit. (j) Cash Collateralization. If any Event of Default shall
occur and be continuing, the Borrower shall, on the Business Day following
which it receives notice from the Administrative Agent or the Required Lenders
thereof and of the amount to be deposited, deposit in an account with the
Collateral Agent, for the benefit of the Lenders, an amount in cash equal to
the L/C Exposure as of such date. Such deposit shall be held by the
Collateral Agent as collateral for the payment and performance of the
Obligations. The Collateral Agent shall have exclusive dominion and control,
including the exclusive right of withdrawal, over such account. Other than
any interest earned on the investment of such deposits in Permitted
Investments, which investments shall be made at the option and sole discretion
of the Collateral Agent, such deposits shall not bear interest. Interest or
profits, if any, on such investments shall accumulate in such account. Moneys
in such account shall (i) automatically be applied by the Administrative Agent
to reimburse the Issuing Bank for L/C Disbursements (and all accrued interest
thereon) for which it has not been reimbursed, (ii) be held for the
satisfaction of the reimbursement obligations of the Borrower for the
L/C Exposure at such time and (iii) if the maturity of the Loans has been
accelerated, be applied to satisfy the Obligations. If the Borrower is
required to provide an amount of cash collateral hereunder as a result of the
occurrence of an Event of Default, such amount (to the extent not applied as
aforesaid) shall be returned to the Borrower within three Business Days after
all Events of Default have been cured or waived.
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to the Administrative Agent, the
Collateral Agent, the Issuing Bank and each of the Lenders that:
SECTION 3.01. Organization; Powers. The Borrower and each of the
Subsidiaries (a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has all
requisite power and authority to own its property and assets and to carry on
its business as now conducted and as proposed to be conducted, (c) is
qualified to do business in, and is in good standing in, every jurisdiction
where such qualification is required, except where the failure so to qualify
could not reasonably be expected to result in a Material Adverse Effect, and
(d) has the corporate power and authority to execute, deliver and perform its
obligations under each of the Loan Documents and each other agreement or
instrument contemplated hereby to which it is or will be a party and, in the
case of the Borrower, to borrow hereunder.
SECTION 3.02. Authorization. The execution, delivery and performance by
each Loan Party of each of the Loan Documents and the borrowings hereunder and
the consummation of the Refinancing Transactions (collectively, the
"Transactions") (a) have been duly authorized by all requisite corporate and,
if required, stockholder action and (b) will not (i) violate (A) any provision
of law, statute, rule or regulation, or of the certificate or articles of
incorporation or other constitutive documents or bylaws of the Borrower or any
Subsidiary, (B) any order of any Governmental Authority or (C) any provision
of any indenture, agreement or other instrument to which the Borrower or any
Subsidiary is a party or by which any of them or any of their property
is or may be bound, (ii) be in conflict with, result in a breach of or
constitute (alone or with notice or lapse of time or both) a default under, or
give rise to any right to accelerate or to require the prepayment, repurchase
or redemption of any obligation under any such indenture, agreement or other
instrument or (iii) result in the creation or imposition of any Lien upon or
with respect to any property or assets now owned or hereafter acquired by the
Borrower or any Subsidiary (other than any Lien created hereunder or under the
Security Documents).
SECTION 3.03. Enforceability. This Agreement has been duly executed and
delivered by the Borrower and each Existing Account Party and constitutes, and
each other Loan Document when executed and delivered by the each Loan Party
thereto will constitute, a legal, valid and binding obligation of such Loan
Party enforceable against such Loan Party in accordance with its terms.
SECTION 3.04. Governmental Approvals. No action, consent or approval
of, registration or filing with or any other action by any Governmental
Authority is or will be required in connection with the Transactions, except
for (a) the filing of Uniform Commercial Code financing statements and other
similar filings to perfect the interest of the Secured Parties in the
Collateral, (b) such as will have been made or obtained and will be in full
force and effect as of the Closing Date and (c) such as may be required in the
ordinary course of business in connection with the performance of the
obligations of the Borrower hereunder and in connection with the Transactions.
SECTION 3.05. Financial Statements. The Borrower has heretofore
furnished to the Lenders its consolidated balance sheets and consolidated
statements of operations, cash flows and (with respect to the statements
referred to in clause (a) below) stockholders' equity (a) as of and for the
fiscal year ended December 31, 1995, audited by and accompanied by the opinion
of Arthur Andersen LLP, independent public accountants, and (b) as of and for
the fiscal quarter and the portion of the fiscal year ended March 31, 1996,
certified by a Financial Officer of the Borrower. Such financial statements
present fairly in all material respects the financial condition and results of
operations and cash flows of the Borrower and its consolidated Subsidiaries as
of such dates and for such periods. Such financial statements were prepared
in accordance with GAAP applied on a consistent basis.
SECTION 3.06. No Material Adverse Change. There has been no material
adverse change in the business, assets, operations, prospects, condition,
financial or otherwise, or material agreements of the Borrower and the
Subsidiaries, taken as a whole, since December 31, 1995.
SECTION 3.07. Title to Properties; Possession Under Leases. (a) Each
of the Borrower and the Subsidiaries has good and indefeasible title to, or
valid leasehold interests in, all its material properties and assets, except
for minor defects in title that do not materially interfere with its ability
to conduct its business as currently conducted or to utilize such properties
and assets for their intended purposes. All such material properties and
assets are free and clear of Liens, other than Liens expressly permitted
by Section 6.02. (b) Each of the Borrower and the Subsidiaries has complied
with all obligations under all material leases to which it is a party and all
such leases are in full force and effect, except where failure to do so would
not have a Material Adverse Effect. Each of the Borrower and the Subsidiaries
enjoys peaceful and undisturbed possession under all such material leases
except where failure to do so would not have a Material Adverse Effect.
SECTION 3.08. Subsidiaries. Schedule 3.08 sets forth as of the Closing
Date a list of all Subsidiaries. Each such Subsidiary is a wholly owned
Subsidiary except as otherwise indicated on such Schedule 3.08. The shares of
capital stock or other ownership interests issued by the Subsidiaries and
owned by the Borrower or the Subsidiaries are fully paid and non-assessable
and are owned by the Borrower, directly or indirectly, free and clear of all
Liens (other than Liens permitted by this Agreement).
SECTION 3.09. Litigation; Compliance with Laws. (a) Except as set
forth on Schedule 3.09, there are not any actions, suits or proceedings at law
or in equity or by or before any Governmental Authority now pending or, to the
knowledge of the Borrower, threatened against or affecting the Borrower or any
Subsidiary or any business, property or rights of any such person (i) that
involve any Loan Document or the Transactions or (ii) as to which there is a
reasonable possibility of an adverse determination and that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect. (b) None of the Borrower or any of the
Subsidiaries or any of their respective material properties or assets is in
violation of, nor will the continued operation of their material properties
and assets as currently conducted violate, any law, rule or regulation, or is
in default with respect to any judgment, writ, injunction, decree or order of
any Governmental Authority, where such violation or default could reasonably
be expected to result in a Material Adverse Effect.
SECTION 3.10. Agreements. (a) Neither the Borrower nor any of the
Subsidiaries is a party to any agreement or instrument or subject to any
corporate restriction that has resulted or could reasonably be expected to
result in a Material Adverse Effect. (b) Neither the Borrower nor any of the
Subsidiaries is in default in any manner under any provision of any indenture
or other agreement or instrument evidencing Indebtedness, or any other
material agreement or instrument to which it is a party or by which it or any
of its properties or assets are or may be bound, where such default could
reasonably be expected to result in a Material Adverse Effect.
SECTION 3.11. Federal Reserve Regulations. (a) Neither the
Borrower nor any of the Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
buying or carrying Margin Stock. (b) No part of the proceeds of any Loan or
any Letter of Credit will be used, whether directly or indirectly, and whether
immediately, incidentally or ultimately, for any purpose that entails a
violation of, or that is inconsistent with, the provisions of the Regulations
of the Board, including Regulation G, T, U or X.
SECTION 3.12. Investment Company Act; Public Utility Holding Company
Act. Neither the Borrower nor any Subsidiary is (a) an investment company
as defined in, or subject to regulation under, the Investment Company Act of
1940 or (b) a "holding company" as defined in, or subject to regulation under,
the Public Utility Holding Company Act of 1935.
SECTION 3.13. Use of Proceeds. The Borrower will use the proceeds
of the Loans and will request the issuance of Letters of Credit only for the
purposes specified in the preamble to this Agreement.
SECTION 3.14. Tax Returns. Each of the Borrower and the Subsidiaries
has filed or caused to be filed all Federal, state and other material tax
returns or materials required to have been filed by it and has paid or caused
to be paid all taxes due and payable by it and all assessments received by it,
except taxes that are being contested in good faith by appropriate proceedings
and for which the Borrower or such Subsidiary, as applicable, shall have set
aside on its books adequate reserves.
SECTION 3.15. No Material Misstatements. None of (a) the Confidential
Information Memorandum or (b) any other information, report, financial
statement, exhibit or schedule furnished by or on behalf of the Borrower to
the Administrative Agent or any Lender in connection with the negotiation of
any Loan Document or included therein or delivered pursuant thereto contained,
contains or will contain any material misstatement of fact or omitted, omits
or will omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were, are or will
be made, not misleading; provided that to the extent any such information,
report, financial statement, exhibit or schedule was based upon or constitutes
a forecast, projection or expressions of opinion, the Borrower represents only
that it acted in good faith and utilized reasonable assumptions and due care
in the preparation of such information, report, financial statement, exhibit
or schedule.
SECTION 3.16. Employee Benefit Plans. Each of the Borrower and its
ERISA Affiliates is in compliance with the applicable provisions of ERISA and
the Code and the regulations and published interpretations thereunder except
where non-compliance would not have a Material Adverse Effect. No ERISA Event
has occurred or is reasonably expected to occur that, when taken together with
all other such ERISA Events, could reasonably be expected to result in
liability of the Borrower or any of its ERISA Affiliates, except where such
liability would not have a Material Adverse Effect. The present value of all
benefit liabilities under each Plan (based on those assumptions used to fund
such Plan) did not, as of the last annual valuation date applicable thereto,
exceed by more than $500,000 the fair market value of the assets of such Plan,
and the present value of all benefit liabilities of all underfunded Plans
(based on those assumptions used to fund each such Plan) did not, as of the
last annual valuation dates applicable thereto, exceed by more than $1,000,000
the fair market value of the assets of all such underfunded Plans.
SECTION 3.17. Environmental Matters. Except as set forth in Schedule
3.17: (a) the properties owned or operated by the Borrower and the
Subsidiaries (the "Properties") do not contain to the Borrower's best
knowledge (actual or constructive) any Hazardous Materials in amounts or
concentrations which (i) constitute, or constituted a violation of, (ii)
require Remedial Action under, or (iii) could give rise to liability under,
Environmental Laws, which violations, Remedial Actions and liabilities, in the
aggregate, could reasonably be expected to result in a Material Adverse
Effect; (b) the Properties and all operations of the Borrower and the
Subsidiaries are in compliance, and in the last five years have been in
compliance to the Borrower's best knowledge (actual or constructive), with all
Environmental Laws and all necessary Environmental Permits have been obtained
and are in effect, except to the extent that such non-compliance or failure to
obtain any necessary permits, in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect; (c) there have been no
Releases or threatened Releases at, from, under or proximate to the Properties
or otherwise in connection with the operations of the Borrower or the
Subsidiaries, which Releases or threatened Releases, in the aggregate, could
reasonably be expected to result in a Material Adverse Effect; (d) neither the
Borrower nor any of the Subsidiaries has received any notice of an
Environmental Claim in connection with the Properties or the operations of the
Borrower or the Subsidiaries or with regard to any person whose liabilities
for environmental matters the Borrower or the Subsidiaries has retained or
assumed, in whole or in part, contractually, by operation of law or otherwise,
which, in the aggregate, could reasonably be expected to result in a Material
Adverse Effect, nor do the Borrower or the Subsidiaries have reason to believe
that any such notice will be received or is being threatened; and (e)
Hazardous Materials to the Borrower's best knowledge (actual or constructive)
have not been transported from the Properties, nor have Hazardous Materials
been generated, treated, stored or disposed of at, on or under any of the
Properties in a manner that could give rise to liability under any
Environmental Law, nor have the Borrower or the Subsidiaries retained or
assumed any liability, contractually, by operation of law or otherwise, with
respect to the generation, treatment, storage or disposal of Hazardous
Materials, which transportation, generation, treatment, storage or disposal,
or retained or assumed liabilities, in the aggregate, could reasonably be
expected to result in a Material Adverse Effect.
SECTION 3.18. Insurance. Schedule 3.18 sets forth a true, complete and
correct description of all insurance maintained by the Borrower or by the
Borrower for its Subsidiaries as of the date hereof and the Closing Date. As
of each such date, such insurance is in full force and effect and all premiums
have been duly paid. The Borrower and its Subsidiaries have insurance in such
amounts and covering such risks and liabilities as are in accordance with
normal industry practice.
SECTION 3.19. Security Documents. (a) On and after the Closing Date,
the Pledge Agreement will be effective to create in favor of the Collateral
Agent, for the ratable benefit of the Secured Parties, a legal, valid and
enforceable security interest in the Collateral (as defined in the Pledge
Agreement) and, when the certificates evidencing the investment securities
that constitute the Pledged Securities (as defined in the Pledge Agreement)
are delivered to the Collateral Agent, the Collateral Agent shall have a fully
perfected first priority Lien on, and security interest in, all right, title
and interest of the pledgors thereunder in such Collateral, in each case prior
and superior in right to any other person. (b) On and after the Closing Date,
the Security Agreement will be effective to create in favor of the Collateral
Agent, for the ratable benefit of the Secured Parties, a legal, valid and
enforceable security interest in the Collateral (as defined in the Security
Agreement) and, when financing statements in appropriate form are filed in the
offices specified in the Perfection Schedule, the Security Agreement shall
constitute a perfected Lien on, and security interest in, all right, title and
interest of the grantors thereunder in all such Collateral in which a security
interest may be perfected by filing, in each case prior and superior in right
to any other person, other than with respect to Liens expressly permitted by
Section 6.02.
SECTION 3.20. Labor Matters. As of the date hereof and the Closing
Date, there are no strikes, lockouts or slowdowns against the Borrower or any
Subsidiary pending or, to the knowledge of the Borrower, threatened. The
hours worked by and payments made to employees of the Borrower and the
Subsidiaries have not been in violation of the Fair Labor Standards Act or any
other applicable Federal, state, local or foreign law dealing with such
matters except where such violation would not result in a Material Adverse
Effect. All payments due from the Borrower or any Subsidiary, or for which
any claim may be made against the Borrower or any Subsidiary, on account of
wages and employee health and welfare insurance and other benefits, have been
paid or accrued as a liability on the books of the Borrower or such
Subsidiary, except where such event would not result in a Material Adverse
Effect. The consummation of the Refinancing Transactions will not give rise
to any right of termination or right of renegotiation on the part of any union
under any collective bargaining agreement to which the Borrower or any
Subsidiary is bound, except where such event would not result in a Material
Adverse Effect.
SECTION 3.21. Solvency. (a) Immediately after the consummation of the
Transactions to occur on the Closing Date and immediately following the making
of each Loan made on the Closing Date and after giving effect to the
application of the proceeds of such Loans (i) the fair value of the assets of
the Borrower and its Subsidiaries on a consolidated basis, at a fair
valuation, will exceed its debts and liabilities, subordinated, contingent or
otherwise; (ii) the present fair saleable value of the property of the
Borrower and its Subsidiaries on a consolidated basis will be greater than the
amount that will be required to pay the probable liability of its debts and
other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; (iii) the Borrower and its
Subsidiaries on a consolidated basis will be able to pay its debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (iv) the Borrower and its
Subsidiaries on a consolidated basis will not have unreasonably small capital
with which to conduct the business in which it is engaged as such business is
now conducted and is proposed to be conducted following the Closing Date.
ARTICLE IV
Conditions of Lending
The obligations of the Lenders to make Loans and of the Issuing Bank to
issue Letters of Credit hereunder are subject to the satisfaction of the
following conditions:
SECTION 4.01. All Credit Events. On the date of each Borrowing,
including each Borrowing of a Swingline Loan and on the date of each issuance,
amendment, renewal or extension of a Letter of Credit (each such event being
called a "Credit Event"): (a) The Administrative Agent shall have received a
notice of such Borrowing as required by Section 2.03 (or such notice shall
have been deemed given in accordance with Section 2.03) or, in the case
of the issuance, amendment, renewal or extension of a Letter of Credit, the
Issuing Bank and the Administrative Agent shall have received a notice
requesting the issuance, amendment, renewal or extension of such Letter of
Credit as required by Section 2.22(b) or, in the case of the Borrowing of a
Swingline Loan, the Swingline Lender and the Administrative Agent shall have
received a notice requesting such Swingline Loan as required by Section
2.21(b). (b) Except in the case of a Borrowing that does not increase the
aggregate principal amount of Loans outstanding of any Lender, the
representations and warranties set forth in Article III hereof shall be true
and correct in all material respects on and as of the date of such Credit
Event with the same effect as though made on and as of such date, except to
the extent such representations and warranties expressly relate to an earlier
date. (c) The Borrower and each other Loan Party shall be in compliance with
all the terms and provisions set forth herein and in each other Loan Document
on its part to be observed or performed, and at the time of and immediately
after such Credit Event, no Event of Default or Default shall have occurred
and be continuing. Each Credit Event shall be deemed to constitute a
representation and warranty by the Borrower on the date of such Credit Event
as to the matters specified in paragraphs (b) (except as aforesaid) and (c) of
this Section 4.01.
SECTION 4.02. First Credit Event. On the Closing Date: (a) The
Administrative Agent shall have received, on behalf of itself, the Lenders and
the Issuing Bank, a favorable written opinion of (i) Porter & Hedges, L.L.P.,
counsel for the Borrower, substantially to the effect set forth in Exhibits H-
1 and (ii) Thomas K. Kehoe, Esq., internal counsel of the Borrower,
substantially to the effect set forth in Exhibit H-2, in each case (A) dated
the Closing Date, (B) addressed to the Issuing Bank, the Administrative Agent
and the Lenders and (C) covering such other matters relating to the Loan
Documents and the Transactions as the Administrative Agent shall reasonably
request, and the Borrower hereby requests such counsel to deliver such
opinions. (b) All legal matters incident to this Agreement, the Borrowings
and extensions of credit hereunder and the other Loan Documents shall be
satisfactory to the Administrative Agent. (c) The Administrative Agent shall
have received (i) a copy of the certificate or articles of incorporation,
including all amendments thereto, of the Borrower, certified as of a recent
date by the Secretary of State of the state of its organization, and a
certificate as to the good standing of the Borrower as of a recent date, from
such Secretary of State; (ii) a certificate of the Secretary or Assistant
Secretary of each Loan Party dated the Closing Date and certifying (A) that
attached thereto is a true and complete copy of the by-laws of the Borrower as
in effect on the Closing Date and at all times since a date prior to the date
of the resolutions described in clause (B) below, (B) that attached thereto is
a true and complete copy of resolutions duly adopted by the Board of Directors
of the Loan Parties authorizing the execution, delivery and performance of the
Loan Documents to which such person is a party and the borrowings hereunder,
and that such resolutions have not been modified, rescinded or amended and are
in full force and effect, (C) that the certificate or articles of
incorporation of such Loan Party have not been amended since the date of the
last amendment thereto shown on the certificate of good standing furnished
pursuant to clause (i) above, and (D) as to the incumbency and specimen
signature of each officer executing any Loan Document or any other document
delivered in connection herewith on behalf of such Loan Party; (iii) a
certificate of another officer as to the incumbency and specimen signature of
the Secretary or Assistant Secretary executing the certificate pursuant to
(ii) above; and (iv) such other documents as the Administrative Agent or
Cravath, Swaine & Moore, counsel for the Administrative Agent, may reasonably
request. (d) The Administrative Agent shall have received a certificate,
dated the Closing Date and signed by a Financial Officer of the Borrower,
confirming compliance with the conditions precedent set forth in paragraphs
(b) and (c) of Section 4.01. (e) The Administrative Agent shall have
received all Fees and other amounts due and payable on or prior to the Closing
Date, including, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses required to be reimbursed or paid by the Borrower
hereunder or under any other Loan Document (it being understood that, to the
extent not invoiced, such expense shall be paid after the Closing Date
promptly upon the presentation of invoices therefor). (f) The Pledge
Agreement shall have been duly executed by the parties thereto and delivered
to the Collateral Agent and shall be in full force and effect, and all the
outstanding capital stock of the Subsidiaries shall have been duly and validly
pledged thereunder to the Collateral Agent for the ratable benefit of the
Secured Parties and certificates representing such shares, accompanied by
instruments of transfer and stock powers endorsed in blank, shall be in the
actual possession of the Collateral Agent. (g) The Security Agreement shall
have been duly executed by the Loan Parties party thereto and shall have been
delivered to the Collateral Agent and shall be in full force and effect on
such date and each document (including each Uniform Commercial Code financing
statement) required by law or reasonably requested by the Administrative Agent
to be filed, registered or recorded in order to create in favor of the
Collateral Agent for the benefit of the Secured Parties a valid, legal and
perfected first-priority security interest in and lien on the Collateral
(subject to any Lien expressly permitted by Section 6.02) described in such
agreement shall have been delivered to the Collateral Agent. (h) The
Guarantee Agreement shall have been duly executed by each Guarantor, shall
have been delivered to the Collateral Agent and shall be in full force and
effect. (i) The Indemnity, Subrogation and Contribution Agreement shall have
been duly executed by each Loan Party, shall have been delivered to the
Collateral Agent and shall be in full force and effect. (j) The Collateral
Agent shall have received the results of a search of the Uniform Commercial
Code (or equivalent filings) filings made with respect to the Loan Parties in
the states (or other jurisdictions) in which the chief executive office of
each such person is located, any offices of such persons in which records have
been kept relating to Accounts and the other jurisdictions in which Uniform
Commercial Code filings (or equivalent filings) are to be made pursuant to the
preceding paragraph, together with copies of the financing statements (or
similar documents) disclosed by such search, and accompanied by evidence
satisfactory to the Collateral Agent that the Liens indicated in any such
financing statement (or similar document)would be permitted under Section 6.02
or have been released. (k) The Collateral Agent shall have received a
Perfection Schedule with respect to the Loan Parties dated the Closing Date.
(l) The Borrower shall have purchased (or contemporaneously with the first
Credit Event shall purchase) each issued and outstanding Subordinated Notes
tendered (and not withdrawn) pursuant to the Debt Tender Offer and if fewer
than all such notes shall have been so purchased, the Subordinated Notes
Indenture shall have been amended as provided in the Debt Tender Offer, all in
accordance with applicable law and on terms reasonably satisfactory to the
Administrative Agent. (m) The Senior Convertible Debentures shall have been
amended, in accordance with applicable law and on the terms reasonably
satisfactory to the Administrative Agent. (n) Substantially contemporaneously
with the first Credit Event, the Borrower shall have repaid in full the
principal of all loans outstanding, interest thereon and other amounts due and
payable under the Existing Loan Agreement and under each other agreement
related thereto, and the Administrative Agent shall have received duly
executed documentation either evidencing or necessary for (i) the termination
of the Existing Loan Agreement and each other agreement related thereto (other
than the Existing Letters of Credit and all applications and reimbursement
agreements related thereto), (ii) the cancellation of all commitments
thereunder and (iii) the termination of all related agreements (other than the
Existing Letters of Credit and all applications and reimbursement agreements
related thereto) and guarantees and security interests granted by any Loan
Party or any Subsidiary or any other person in connection therewith and the
discharge of all obligations or interests thereunder. (o) After giving effect
to the Refinancing Transactions, the Borrower and the Subsidiaries shall have
outstanding no Indebtedness or preferred stock other than (a) the Loans
hereunder, (b) the Indebtedness shown on Schedule 6.01 or otherwise permitted
pursuant to Section 6.01 and (c) the preferred stock (the "Preferred Stock")
of the Borrower set forth on Schedule 4.02(o). (p) There shall be no
litigation or administrative proceedings or the other legal or regulatory
developments, actual or threatened, that, in the reasonable judgment of the
Administrative Agent or the Required Lenders could have a Material Adverse
Effect or which would be materially inconsistent with the assumptions
underlying the projections contained in the Confidential Information
Memorandum. (q) The Lenders shall be satisfied that the consummation of the
Refinancing Transactions will not (i) violate any applicable law, statute,
rule or regulation or (ii) conflict with, or result in a default or event of
default under, (A) any indenture relating to any existing Indebtedness of any
Loan Party or any subsidiary of any Loan Party that is not being repaid,
repurchased or redeemed in full on or prior to the Closing Date in connection
with the Refinancing Transactions or any other indenture of any Loan Party or
any subsidiary of any Loan Party to be in effect after the Closing Date or (B)
any other material agreement of any Loan Party or any subsidiary of any Loan
Party. (r) The Administrative Agent shall have received such environmental
reports in form, scope and substance reasonably satisfactory to it, as to any
environmental hazards, liabilities or Remedial Action to which the Borrower or
any of the Subsidiaries may be subject and the Required Lenders shall be
reasonably satisfied with the nature and cost of any such hazards, liabilities
or Remedial Action and with the Borrower's plans with respect thereto. (s)
There shall not have occurred any event, or none of the Administrative Agent
or the Lenders shall have discovered or otherwise become aware of information
not previously known by the Administrative Agent or any such Lender that, in
each case, in the reasonable judgment of the Administrative Agent or the
Required Lenders, could reasonably be expected to have a Material Adverse
Effect.
ARTICLE V
Affirmative Covenants
The Borrower covenants and agrees with each Lender that so long as this
Agreement shall remain in effect and until the Commitments have been
terminated and the principal of and interest on each Loan, all Fees and all
other expenses or amounts payable under any Loan Document shall have been paid
in full and all Letters of Credit have been canceled or have expired and all
amounts drawn thereunder have been reimbursed in full, unless the Required
Lenders shall otherwise consent in writing, the Borrower will, and will cause
each of the Subsidiaries to:
SECTION 5.01. Existence; Businesses and Properties. (a) Do or cause to
be done all things necessary to preserve, renew and keep in full force and
effect its legal existence, except as otherwise expressly permitted under
Section 6.05. (b) Do or cause to be done all things necessary to obtain,
preserve, renew, extend and keep in full force and effect the rights,
licenses, permits, franchises, authorizations, patents, copyrights, trademarks
and trade names material to the conduct of its business; maintain and operate
such business in substantially the manner in which it is presently conducted
and operated; comply in all material respects with all applicable laws, rules,
regulations and decrees and orders of any Governmental Authority, whether now
in effect or hereafter enacted; and at all times maintain and preserve all
property material to the conduct of such business and keep such property in
good repair, working order and condition and from time to time make, or cause
to be made, all needful and proper repairs, renewals, additions, improvements
and replacements thereto necessary in order that the business carried on in
connection therewith may be properly conducted at all times.
SECTION 5.02. Insurance. Keep its insurable properties adequately
insured at all times by financially sound and reputable insurers; maintain
such other insurance, to such extent and against such risks, including fire
and other risks insured against by extended coverage, as is customary with
companies in the same or similar businesses operating in the same or similar
locations, including public liability insurance against claims for personal
injury or death or property damage occurring upon, in, about or in connection
with the use of any properties owned, occupied or controlled by it; and
maintain such other insurance as may be required by law. (a) Cause all such
policies to be endorsed or otherwise amended to include a standard or New York
lender's loss payable endorsement, in form and substance satisfactory to the
Administrative Agent and the Collateral Agent, which endorsement shall provide
that, from and after the Closing Date, if the insurance carrier shall have
received written notice from the Administrative Agent or the Collateral Agent
of the occurrence of an Event of Default, the insurance carrier shall pay all
proceeds otherwise payable to the Borrower or the Loan Parties under such
policies directly to the Collateral Agent; cause all such policies to provide
that neither the Borrower, the Administrative Agent, the Collateral Agent nor
any other party shall be a coinsurer thereunder and to contain a "Replacement
Cost Endorsement", without any deduction for depreciation, and such other
provisions as the Administrative Agent or the Collateral Agent may reasonably
require from time to time to protect their interests; deliver original or
certified copies of all such policies to the Collateral Agent; cause each such
policy to provide that it shall not be canceled, modified or not renewed (i)
by reason of nonpayment of premium upon not less than 10 days' prior written
notice thereof by the insurer to the Administrative Agent and the Collateral
Agent (giving the Administrative Agent and the Collateral Agent the right to
cure defaults in the payment of premiums) or (ii) for any other reason upon
not less than 30 days' prior written notice thereof by the insurer to the
Administrative Agent and the Collateral Agent; deliver to the Administrative
Agent and the Collateral Agent, prior to the cancellation, modification or
nonrenewal of any such policy of insurance, a copy of a renewal or replacement
policy (or other evidence of renewal of a policy previously delivered to the
Administrative Agent and the Collateral Agent) together with evidence
satisfactory to the Administrative Agent and the Collateral Agent of payment
of the premium therefor.
SECTION 5.03. Obligations and Taxes. Pay its Indebtedness and other
obligations promptly and in accordance with their terms and pay and discharge
promptly when due all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or in respect of its property,
before the same shall become delinquent or in default, as well as all lawful
claims for labor, materials and supplies or otherwise that, if unpaid, might
give rise to a Lien upon such properties or any part thereof; provided,
however, that such payment and discharge shall not be required with respect to
any such tax, assessment, charge, levy or claim so long as the validity or
amount thereof shall be contested in good faith by appropriate proceedings and
the Borrower shall have set aside on its books adequate reserves with respect
thereto in accordance with GAAP and such contest operates to suspend
collection of the contested obligation, tax, assessment or charge and
enforcement of a Lien.
SECTION 5.04. Financial Statements, Reports, etc. In the case of
the Borrower, furnish to the Administrative Agent and each Lender:
(a) within 95 days after the end of each fiscal year, its consolidated
balance sheet and related statements of operations, stockholders' equity and
cash flows showing the financial condition of the Borrower and its
consolidated Subsidiaries as of the close of such fiscal year and the results
of its operations and the operations of such Subsidiaries during such year,
all audited by Arthur Andersen LLP or other independent public accountants of
recognized national standing acceptable to the Administrative Agent and
accompanied by an opinion of such accountants (which shall not be qualified in
any material respect) to the effect that such consolidated financial
statements fairly present the financial condition and results of operations
of the Borrower and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied; (b) within 50 days after the end of
each of the first three fiscal quarters of each fiscal year, its consolidated
balance sheet and related statements of operations, stockholders' equity and
cash flows showing the financial condition of the Borrower and its
consolidated Subsidiaries as of the close of such fiscal quarter and the
results of its operations and the operations of such Subsidiaries during such
fiscal quarter and the then elapsed portion of the fiscal year, all certified
by one of its Financial Officers as fairly presenting the financial condition
and results of operations of the Borrower and its consolidated Subsidiaries on
a consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments; (c) concurrently with any delivery of
financial statements under subparagraph (a) or (b) above, a certificate of the
accounting firm or Financial Officer opining on or certifying such statements
(which certificate, when furnished by an accounting firm, may be limited to
accounting matters and disclaim responsibility for legal interpretations) (i)
certifying that in making its examination in connection with rendering such
opinion or certificate with respect to such statements, such person has not
obtained knowledge that an Event of Default or Default has occurred or, if
such Financial Officer has obtained knowledge that an Event of Default
or Default has occurred, specifying the nature and extent thereof and any
corrective action taken or proposed to be taken with respect thereto, (ii)
setting forth computations in reasonable detail satisfactory to the
Administrative Agent demonstrating compliance with the covenants contained in
Section 6.01, 6.02, 6.03, 6.04, 6.10, 6.11, 6.12, 6.13 and 6.14, (iii) setting
forth any change in the Applicable Percentage or the Applicable Fee Percentage
and (iv) setting forth the Acquired Revenues for the applicable fiscal year
(it being understood that the information referred to in this clause (iv)
shall only be provided with the delivery of financial statements under sub-
paragraph (a) above); (d) promptly after the same become publicly available,
copies of all periodic and other reports, proxy statements and other materials
filed by the Borrower or any Subsidiary with the Securities and Exchange
Commission, or any Governmental Authority succeeding to any or all of the
functions of said Commission, or with any national securities exchange, or
distributed to its shareholders, as the case may be; (e) as soon as available
but in any event not later than 50 days after the end of each fiscal quarter,
a report in form and substance satisfactory to the Administrative Agent, of
(i) all Permitted Acquisitions consummated during such quarter of $1,000,000
or more, which shall include the following information by acquisition: (A) the
total consideration (including a breakdown of Indebtedness permitted under
Section 6.01(e), Acquired Indebtedness and contingent payments) and (B)
historic and projected revenues, earnings before interest expense and income
tax expense and earnings before interest expense, income tax expense,
depreciation and amortization; (ii) the aggregate amount expended for
Permitted Acquisitions for such fiscal quarter and for the portion of the
fiscal year through the end of such quarter; and (iii) the aggregate net book
value of property sold or disposed of in transactions during such fiscal
quarter and during the portion of the fiscal year through the end of such
fiscal quarter and a schedule which identifies each sale or disposition during
such fiscal quarter where the net book value of the asset or assets sold or
disposed of exceeds $500,000; (f) promptly, from time to time, such other
information regarding the operations, business affairs and financial condition
of the Borrower or any Subsidiary, or compliance with the terms of any
Loan Document, as the Administrative Agent or any Lender may reasonably
request; and (g) within 15 fifteen days after the beginning of each fiscal
year, a copy of the Borrower's budget for such fiscal year, including a
consolidated budgeted balance sheet and related statement of income.
SECTION 5.05. Litigation and Other Notices. Furnish to the
Administrative Agent, the Issuing Bank and each Lender prompt written notice
of the following: (a) any Event of Default or Default, specifying the nature
and extent thereof and the corrective action (if any) taken or proposed to be
taken with respect thereto; (b) the filing or commencement of, or any threat
or notice of intention of any person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any Governmental
Authority, against the Borrower or any Affiliate thereof that could reasonably
be expected to result in a Material Adverse Effect; and (c) any development
that has resulted in, or could reasonably be expected to result in, a Material
Adverse Effect.
SECTION 5.06. Employee Benefits. (a) Comply in all material respects
with the applicable provisions of ERISA and the Code and (b) furnish to the
Administrative Agent (i) as soon as possible after, and in any event within 10
days after any Responsible Officer of the Borrower or any ERISA Affiliate
knows or has reason to know that, any ERISA Event has occurred that, alone or
together with any other ERISA Event could reasonably be expected to result in
liability of the Borrower in an aggregate amount exceeding $5,000,000 or
requiring payments exceeding $2,500,000 in any year, a statement of a
Financial Officer of the Borrower setting forth details as to such ERISA Event
and the action, if any, that the Borrower proposes to take with respect
thereto.
SECTION 5.07. Maintaining Records; Access to Properties and Inspections.
Keep proper books of record and account in which full, true and correct
entries in conformity with GAAP and all requirements of law are made of all
dealings and transactions in relation to its business and activities. Each
Loan Party will, and will cause each of its Subsidiaries to, permit any
representatives designated by the Administrative Agent or any Lender to visit
and inspect the financial records and the properties of the Borrower or any
Subsidiary at reasonable times and as often as reasonably requested and to
make extracts from and copies of such financial records, and permit any
representatives designated by the Administrative Agent or any Lender to
discuss the affairs, finances and condition of the Borrower or any Subsidiary
with the officers thereof and independent accountants therefor.
SECTION 5.08. Use of Proceeds. Use the proceeds of the Loans and
request the issuance of Letters of Credit only for the purposes set forth in
the preamble to this Agreement.
SECTION 5.09. Environmental Laws. (a) Comply, and cause all lessees and
other persons occupying its Properties to comply, in all material respects
with all Environmental Laws and Environmental Permits applicable to its
operations and Properties; obtain and renew all material Environmental Permits
necessary for its operations and Properties; and conduct any Remedial Action
in accordance with Environmental Laws, except where failure to do so would not
have a Material Adverse Effect. (b) With respect to any Permitted
Acquisition and any acquisition of any other ownership or leasehold interest
in, or the entry into any agreement to conduct operations of, any landfill,
transfer station or other waste treatment or disposal facility: (i) prior to
any such acquisition or entry into any such agreement, obtain and review a
favorable written assessment, prepared by an environmental consulting firm
recognized within the municipal solid waste industry and among environmental
professionals as competent and reputable and which the Borrower has reasonably
determined to be suitable, that reasonably addresses the environmental
compliance and liability issues associated with the subject of such
acquisition or agreement (an "Environmental Assessment"); and (ii) furnish
such Environmental Assessment to the Administrative Agent promptly following
such acquisition or the entry into such an agreement.
SECTION 5.10. Preparation of Environmental Reports. If a Default caused
by reason of a breach of Section 3.17 or 5.09 shall have occurred and be
continuing, at the request of the Required Lenders through the Administrative
Agent, provide to the Lenders within 45 days after such request, at the
expense of the Borrower, an environmental site assessment report for the
Properties which are the subject of such default prepared by an environmental
consulting firm acceptable to the Administrative Agent and indicating the
presence or absence of Hazardous Materials and the estimated cost of any
compliance or Remedial Action in connection with such Properties.
SECTION 5.11. Further Assurances. Execute any and all further
documents, financing statements, agreements and instruments, and take all
further action (including filing Uniform Commercial Code and other financing
statements) that may be required under applicable law, or that the Required
Lenders, the Administrative Agent or the Collateral Agent may reasonably
request, in order to effectuate the transactions contemplated by the Loan
Documents and in order to grant, preserve, protect and perfect the validity
and priority of the security interests created or intended to be created by
the Security Documents. The Borrower will cause any subsequently acquired or
organized Subsidiary (other than any Subsidiary that conducts no operations,
has total assets not in excess of $5,000 and has no Indebtedness) to execute a
Subsidiary Guarantee Agreement, Indemnity Subrogation and Contribution
Agreement and each applicable Security Document in favor of the Collateral
Agent. In addition, from time to time, the Borrower will, at its cost and
expense, promptly secure the Obligations by pledging or creating, or causing
to be pledged or created, perfected security interests with respect to such of
its non-real estate assets and properties as the Administrative Agent or the
Required Lenders shall designate (it being understood that it is the intent of
the parties that the Obligations shall be secured by, among other things,
substantially all the non-real estate assets of the Borrower (including such
assets acquired subsequent to the Closing Date)). Such security interests and
Liens will be created under the Security Documents and other security
Agreements and other instruments and documents in form and substance
satisfactory to the Collateral Agent, and the Borrower shall deliver or cause
to be delivered to the Lenders all such instruments and documents (including
legal opinions and lien searches) as the Collateral Agent shall reasonably
request to evidence compliance with this Section. The Borrower agrees to
provide such evidence as the Collateral Agent shall reasonably request as to
the perfection and priority status of each such security interest and Lien.
SECTION 5.12. Interest Rate Protection Agreements. As promptly as
practicable and in any event within 90 days after the Closing Date, enter
into, and thereafter maintain in full force and effect through the Maturity
Date, one or more Interest Rate Protection Agreements in form reasonably
satisfactory to the Administrative Agent, the effect of which shall be to set
at fixed rates the interest cost to the Borrower and its Subsidiaries with
respect to at least $100,000,000 (less any permanent reduction in the
Revolving Credit Commitments) notional principal amount of Indebtedness and
deliver evidence of the execution and delivery thereof to the Administrative
Agent.
SECTION 5.13. Senior Convertible Debentures. Prior to the end of each
fiscal year, commencing with the fiscal year ending on December 31, 1997, the
Borrower shall deliver to the Administrative Agent evidence reasonably
satisfactory to the Administrative Agent that the Borrower will be in
compliance with the financial covenants of the Senior Convertible Debentures
(including compliance as a result of a waiver or amendment of the terms
thereof), provided that the Borrower shall not be obligated to deliver such
evidence if prior to any such fiscal year-end, the Borrower shall have prepaid
all Senior Convertible Debentures not converted prior to such prepayment, in
each case in accordance with the terms thereof.
ARTICLE VI
Negative Covenants
The Borrower covenants and agrees with each Lender that, so long as this
Agreement shall remain in effect and until the Commitments have been
terminated and the principal of and interest on each Loan, all Fees and all
other expenses or amounts payable under any Loan Document have been paid in
full and all Letters of Credit have been cancelled or have expired and all
amounts drawn thereunder have been reimbursed in full, unless the Required
Lenders shall otherwise consent in writing, the Borrower will not, and will
not cause or permit any of the Subsidiaries to:
SECTION 6.01. Indebtedness. Incur, create, assume or permit to exist
any Indebtedness, except: (a) Indebtedness for borrowed money existing on the
date hereof and set forth on Schedule 6.01; (b) Indebtedness created hereunder
and under the other Loan Documents; (c) in the case of the Borrower,
Indebtedness under the Interest Rate Protection Agreements entered into in
accordance with Section 5.12; (d) Indebtedness of a Subsidiary acquired after
the date hereof and Indebtedness of a corporation merged or consolidated with
or into the Borrower or a Subsidiary after the date hereof ("Acquired
Indebtedness"), which Indebtedness in each case exists at the time of such
acquisition, merger, consolidation or conversion into a Subsidiary and is not
created in contemplation of such event and where such acquisition, merger or
consolidation is permitted by this Agreement, provided that the Borrower and
the Subsidiaries comply with the provisions of Section 5.11 with respect to
such acquired or newly formed Subsidiary; (e) Indebtedness of the Borrower or
any Subsidiary that is issued to a seller of an Acquired Entity and incurred
in connection with a Permitted Acquisition, provided that such Indebtedness
shall not exceed $30,000,000 at any time outstanding; (f) Guarantees in
respect of Indebtedness permitted pursuant to this Section 6.01; (g)
Indebtedness of the Borrower or any wholly owned Subsidiary to any other
wholly owned Subsidiary or the Borrower, so long as such Indebtedness is
subordinated to all Indebtedness incurred pursuant hereto and pursuant to the
Guarantee Agreement; (h) the Subordinated Notes, to the extent not repurchased
in the Debt Tender Offer; (i) Indebtedness (including tax exempt financings
and Capital Lease Obligations) to purchase, construct, develop or improve
assets in the ordinary course of business after the Closing Date incurred in
the ordinary course of business after the Closing Date to finance Permitted
Capital Expenditures, provided that the aggregate principal amount of any
Indebtedness or Capital Lease Obligations incurred pursuant to this paragraph
(i) outstanding at any time shall not exceed 15% of the consolidated net fixed
assets of the Borrower and the Subsidiaries as of such time; (j) Indebtedness
incurred pursuant to any sale and leaseback transaction permitted by Section
6.03; (k) Junior Exchange Indebtedness; (l) Subordinated Indebtedness in an
aggregate principal amount not to exceed $150,000,000 at any time outstanding
(less the aggregate amount (rounded down to the nearest $10,000,000 or to
zero, as the case may be) of Indebtedness permitted pursuant to Section
6.01(h)); (m) extensions, renewals or refinancings of Indebtedness under
paragraphs (a) and (d) so long as (i) such Indebtedness ("Refinancing
Indebtedness") is in an aggregate principal amount not greater than the
aggregate principal amount of the Indebtedness being extended, renewed or
refinanced plus the amount of any premiums required to be paid thereon and
fees and expenses associated therewith, (ii) such Refinancing Indebtedness has
a later or equal final maturity and a longer or equal weighted average life
than the Indebtedness being extended, renewed or refinanced, (iii) the
interest rate applicable to such Refinancing Indebtedness shall be a market
interest rate(as determined in good faith by the Board of Directors of the
Parent Borrower) as of the time of such extension, renewal or refinancing,
(iv) if the Indebtedness being extended, renewed or refinanced is subordinated
to the Obligations, such Refinancing Indebtedness is subordinated to the
Obligations to the extent of the Indebtedness being extended, renewed or
refinanced, (v) the covenants, events of default and other provisions thereof
(including any Guarantees thereof), taken as a whole, shall be no less
favorable to the Lenders than those contained in the Indebtedness being
refinanced and (vi) at the time and after giving effect to such extension,
renewal or refinancing, no Default or Event of Default shall have occurred and
be continuing; and (n) unsecured Indebtedness in addition to that permitted by
paragraphs (a) through (m) above in an aggregate principal amount not to
exceed $20,000,000 at any time outstanding.
SECTION 6.02. Liens. Create, incur, assume or permit to exist any Lien
on any property or assets (including stock or other securities of any person,
including any Subsidiary) now owned or hereafter acquired by it or on any
income or revenues or rights in respect of any thereof, except:(a) Liens on
property or assets of the Borrower and its Subsidiaries xisting on the date
hereof and set forth in Schedule 6.02; provided that such Liens shall secure
only those obligations which they secure on the date hereof; (b) any Lien
created under the Loan Documents; (c) any Lien existing on any property or
asset prior to the acquisition thereof by the Borrower or any Subsidiary;
provided that (i) such Lien is not created in contemplation of or in
connection with such acquisition and (ii) such Lien does not apply to any
other property or assets of the Borrower or any Subsidiary (other than
proceeds of the property or asset subject to the Lien); (d) any Lien on the
property or assets of an Acquired Entity securing Indebtedness permitted by
Section 6.01(e); provided that the aggregate amount of Indebtedness secured by
such Liens shall not exceed $15,000,000 at any time outstanding; (e) Liens for
taxes not yet due or which are being contested in compliance with Section
5.03;(f) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business and securing
obligations that are not due and payable or which are being contested in
compliance with Section 5.03; (g) pledges and deposits made in the ordinary
course of business in compliance with workmen's compensation, unemployment
insurance and other social security laws or regulations; (h) deposits to
secure the performance of bids, trade contracts (other than for Indebtedness),
leases (other than Capital Lease Obligations), statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business; (i) zoning restrictions,
easements, rights-of-way, restrictions on use of real property and other
similar encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and do not materially detract from
the value of the property subject thereto or interfere with the ordinary
conduct of the business of the Borrower or any of its Subsidiaries; (j)
purchase money security interests in real property, improvements thereto
equipment or other fixed assets hereafter acquired (or, in the case of
improvements, equipment or other fixed assets, constructed) by the Borrower or
any Subsidiary; provided that (i) such security interests secure Indebtedness
permitted by Section 6.01, (ii) such security interests are incurred, and the
Indebtedness secured thereby is created, within 90 days after such acquisition
(or completion of such construction), (iii) the Indebtedness secured thereby
does not exceed 100% of the cost of such real property, improvements or
equipment at the time of such acquisition (or construction) and (iv) such
security interests do not apply to any other property or assets of the
Borrower or any Subsidiary (other than the proceeds of the real property,
improvements, equipment or other fixed assets subject to the Lien); (k) Liens
securing Refinancing Indebtedness, to the extent that the Indebtedness being
refinanced was originally permitted to be secured pursuant to this Section
6.02, provided that such Lien does not apply to any property or assets of the
Borrower or any Subsidiary (other than the proceeds of the property or asset
subject to the Lien); (l) Liens arising out of Capitalized Lease Obligations
permitted under Section 6.01(i), so long as such Liens (i) attach only to the
property subject to such capitalized lease and (ii) do not interfere with the
business of the Borrower or any of the Subsidiaries in any material respect;
and (m) Liens arising out of judgments or awards (other than any judgment
that is described in clause (i) of Article VII which constitutes an Event of
Default thereunder) in respect of which the Borrower shall in good faith be
prosecuting an appeal or proceedings for review and in respect of which it
shall have secured a subsisting stay of execution pending such appeal or
proceedings for review, provided the Borrower shall have set aside on its
books adequate reserves, in accordance with GAAP, with respect to such
judgment or award.
SECTION 6.03. Sale and Lease-Back Transactions. Enter into any
arrangement, directly or indirectly, with any person whereby it shall sell or
transfer any property, real or personal, used or useful in its business,
whether now owned or hereafter acquired, and thereafter rent or lease such
property or other property which it intends to use for substantially the same
purpose or purposes as the property being sold or transferred; provided that
the Borrower may enter into any such transaction with respect to any lease
that is required to be capitalized in accordance with GAAP, and in compliance
with Section 6.02(l), so long as the aggregate principal amount of Capital
Lease Obligations associated therewith does not exceed $10,000,000 at any time
outstanding.
SECTION 6.04. Investments, Loans and Advances. Purchase, hold or
acquire any capital stock, evidences of indebtedness or other securities of,
make or permit to exist any loans or advances to, or make or permit to exist
any investment or any other interest in, any other person, except: (a)
investments by the Borrower (i) existing on the date hereof in the capital
stock of the Subsidiaries and (ii) after the date hereof in the capital stock
of Guarantors; (b) Permitted Investments; (c) loans and advances to employees
of the Borrower or its Subsidiaries for travel, entertainment and relocation
expenses in the ordinary course of business for the Borrower and its
Subsidiaries; (d) loans by the Borrower or any Subsidiary to its employees in
connection with management incentive plans not to exceed $8,000,000 at any
time outstanding; (e) investments constituting Permitted Capital Expenditures;
(f) loans or advances by the Borrower or any wholly owned Subsidiary to the
Borrower or any wholly owned Subsidiary that are permitted under Section
6.01(g); (g) the capital stock or other ownership interests of any Subsidiary
formed after the date hereof by the Borrower, provided that (i) such capital
stock or interest is pledged to the Collateral Agent (for the benefit of the
Lenders) pursuant to the Pledge Agreement and (ii) the Borrower and such
Subsidiary comply with the applicable provisions of Section 5.11 with respect
to such newly formed Subsidiary; (h) Interest Rate Protection Agreements
permitted under Section 6.01(c); and (i) one or more non-hostile acquisitions
by the Borrower or any Subsidiary in which the Borrower or any Subsidiary is
the surviving entity of a business unit (with any associated assets)
located in the United States, Canada or Mexico or capital stock or other
equity interests (other than Margin Stock) of any other person organized under
the laws of (x) the United States, any State thereof or the District of
Columbia or (y) Canada or Mexico or any political subdivision thereof (such
assets, in the case of an asset acquisition, or person, in the case of the
acquisition of capital stock or other equity interests, is referred to herein
as the "Acquired Entity") so long as (i) in the case of an acquisition of
assets, such assets are to be used, and in the case of an acquisition of
capital stock or other equity interests, the person so acquired is engaged in,
the same line of business as the Borrower and the Subsidiaries and other
business activities incidental thereto, (ii) the Acquired Entity conducts
its business exclusively in the United States, Canada or Mexico, (iii) the
Borrower is on the date of such acquisition in compliance, after giving effect
to such acquisition, with Article V and Article VI, (iv) promptly after any
such acquisition, the Collateral Agent for the benefit of the Secured Parties
shall be granted a first priority security interest in all personal property
(including capital stock and other securities or interests, but subject to
Liens permitted by Section 6.02(c) and Section 6.02(d) and other customary and
reasonable permitted encumbrances), except as otherwise provided by the
Security Agreement, acquired by the Borrower as part of such acquisition,
and the Borrower shall, and shall cause any applicable Subsidiary to, execute
any documents (including supplements to the Guarantee Agreement, Security
Agreement and Indemnity, Subrogation and Contribution Agreement, if
applicable), financing statements, agreements and instruments, and take all
action (including filing financing statements and obtaining and providing
consents and legal opinions) that may be required under applicable law, or
that the Collateral Agent may request, in order to grant, preserve, protect
and perfect such security interests and (v) in the case of an acquisition of
capital stock or other equity interests of a person, the Borrower acquires a
majority of the capital stock or other equity interests of such person,
provided, however, that if the consideration (including assumption of
indebtedness and other contingent payments other than waste disposal-based
royalties, Acquired Indebtedness and Indebtedness issued pursuant Section
6.01(e) but excluding capital stock issued by the Borrower) in any such
acquisition exceeds $25,000,000, the prior written consent of the
Administrative Agent and the Required Lenders shall be required with respect
to such acquisition. Any acquisition satisfying each of the criteria set
forth in the preceding sentence is referred to herein as a Permitted
Acquisition. (j) investments in joint ventures engaged in the same line of
business as the Borrower and the Subsidiary or other business activities
incidental thereto in an aggregate amount of not to exceed $10,000,000; and
(k) loans or advances to any third party not exceeding in the aggregate
$10,000,000 at any time outstanding for the purpose of funding the purchase
and construction of improvements to property owned by such third party,
provided that the Borrower or any Subsidiaries shall have a contractual option
to purchase such property or acquire such third party.
SECTION 6.05. Mergers, Consolidations, Sales of Assets and Acquisitions.
Merge into or consolidate with any other person, or permit any other person to
merge into or consolidate with it, or conduct any Asset Sale of (in one
transaction or in a series of transactions) all or any substantial part of its
assets (whether now owned or hereafter acquired), or purchase, lease or
otherwise acquire (in one transaction or a series of transactions) all or any
substantial part of the assets of any other person, except that, (a) if at the
time thereof and immediately after giving effect thereto no Event of Default
or Default shall have occurred and be continuing (i) any wholly owned
Subsidiary may merge into the Borrower in a transaction in which the Borrower
is the surviving corporation and (ii) any wholly owned Subsidiary may merge
into or consolidate with any other wholly owned Subsidiary in a transaction in
which the surviving entity is a wholly owned Subsidiary and no person other
than the Borrower or a wholly owned Subsidiary receives any consideration, (b)
the Borrower or any Subsidiary may make Permitted Acquisitions and (c) the
Borrower or any Subsidiary may conduct an Asset Sale of a type not described
above, provided that the Net Cash Proceeds of such Asset Sale shall be applied
to reduce the Revolving Credit Commitments to the extent required by Section
2.12(b); provided, further, that any sale, transfer or other disposition of
assets or stock with a fair market value in excess of $1,000,000 and not
otherwise prohibited by this Section 6.05 shall not be permitted unless such
sale, transfer or other disposition is for consideration at least equal to the
fair market value of the assets, transferred or disposed of (as determined in
good faith by the board of directors or officers of the Borrower).
SECTION 6.06. Dividends and Distributions; Restrictions on Ability of
Subsidiaries to Pay Dividends. (a) Declare or pay, directly or indirectly,
any dividend or make any other distribution (by reduction of capital or
otherwise), whether in cash, property, securities or a combination thereof,
with respect to any shares of its capital stock or directly or indirectly
redeem, purchase, retire or otherwise acquire for value (or permit any
Subsidiary to purchase or acquire) any shares of any class of its capital
stock or set aside any amount for any such purpose; provided, however, that
(i) any Subsidiary may declare and pay dividends or make other distributions
to the Borrower, (ii) the Borrower or any Subsidiary may declare and pay
dividends solely in shares of its common stock; (iii) the Borrower may issue
Junior Exchange Indebtedness in exchange for Designated Preferred Stock and
(iv) so long as no Default or Event of Default shall have occurred and be
continuing, (A) the Borrower may declare and pay any cash dividend on any
shares of Preferred Stock outstanding on the Closing Date in an amount not to
exceed the stated dividend rate on the Closing Date on such Preferred Stock
(which payments in the aggregate shall not exceed $1,100,000 for the fiscal
year ending December 31, 1996 and $700,000 for each fiscal year thereafter)
and (B) may call for redemption any convertible preferred stock if the
conversion price for such preferred stock is no greater than 80% of the then
market price of the stock into which such preferred stock is redeemable and
may redeem any such shares not converted prior to the applicable date of
redemption. (b) Permit its Subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any such Subsidiary to (i) pay any dividends or
make any other distributions on its capital stock or any other interest or
(ii) make or repay any loans or advances to the Borrower or the parent of such
Subsidiary.
SECTION 6.07. Transactions with Affiliates. Sell or transfer any
property or assets to, or purchase or acquire any property or assets from, or
otherwise engage in any other transactions with, any of its Affiliates, except
that the Borrower or any Subsidiary may engage in any of the foregoing
transactions in the ordinary course of business at prices and on terms and
conditions not less favorable to the Borrower or such Subsidiary than could be
obtained on an arm's-length basis from unrelated third parties.
SECTION 6.08. Business of Borrower and Subsidiaries. Engage at any time
in any business or business activity other than the business currently
conducted by it and business activities reasonably incidental thereto.
SECTION 6.09. Other Indebtedness and Agreements. (a) Permit any
waiver, supplement, modification, amendment, termination or release of any
indenture, instrument or agreement pursuant to which any Indebtedness or
preferred stock of the Borrower or any Subsidiary is outstanding in an
aggregate outstanding principal amount in excess of $5,000,000, or modify its
charter or by-laws, in each case to the extent that any such waiver,
supplement, modification, amendment, termination or release would be adverse
to the Lenders in any material respect. (b) Make any distribution, whether
in cash, property, securities or a combination thereof, other than scheduled
(or with respect to senior indebtedness held by a person that is not an
Affiliate of the obligor, mandatory) payments or principal and interest as and
when due (to the extent not prohibited by applicable subordination
provisions), in respect of, or pay, or offer or commit to pay, or directly or
indirectly redeem, repurchase, retire or otherwise acquire for consideration,
or set apart any sum for the aforesaid purposes, any Indebtedness for borrowed
money (other than Indebtedness permitted under Section 6.01(a), (d) or (e) and
intercompany Indebtedness permitted under Section 6.01(g)) of any Loan Party
or any Subsidiary in an outstanding principal amount exceeding $1,000,000,
except for (i) the refinancing of Indebtedness in connection with the
consummation of the Refinancing Transactions, (ii) refinancings permitted by
Section 6.01(m) and (iii) the Loans.
SECTION 6.10. Capital Expenditures. Permit the aggregate amount of
Capital Expenditures made by the Borrower and the Subsidiaries taken as a
whole in any fiscal year to exceed the amount of Permitted Capital
Expenditures for such fiscal year.
SECTION 6.11. Fixed Charge Coverage Ratio. Permit the Fixed Charge
Coverage Ratio as of the end of any fiscal quarter set forth below to be less
than the ratio set forth below for such quarter.
Date Ratio
September 30, 1996 1.10 to 1.00
December 31, 1996 1.10 to 1.00
March 31, 1997 1.10 to 1.00
June 30, 1997 1.20 to 1.00
September 30, 1997 1.20 to 1.00
December 31, 1997 1.30 to 1.00
March 31, 1998 1.30 to 1.00
June 30, 1998 1.35 to 1.00
September 30, 1998 1.35 to 1.00
December 31, 1998 1.35 to 1.00
March 31, 1999 1.35 to 1.00
June 30, 1999 1.50 to 1.00
SECTION 6.12. Leverage Ratio. Permit the Leverage Ratio as of the
end of any fiscal quarter set forth below to be in excess of the ratio set
forth below for such quarter.
Date Ratio
September 30, 1996 4.25 to 1.00
December 31, 1996 4.25 to 1.00
March 31, 1997 4.25 to 1.00
June 30, 1997 3.75 to 1.00
September 30, 1997 3.75 to 1.00
December 31, 1997 3.75 to 1.00
March 31, 1998 3.75 to 1.00
June 30, 1998 3.75 to 1.00
September 30, 1998 3.75 to 1.00
December 31, 1998 3.75 to 1.00
March 31, 1999 3.75 to 1.00
June 30, 1999 3.50 to 1.00
SECTION 6.13. Interest Expense Coverage Ratio. Permit the Interest
Expense Coverage Ratio as of the end of any fiscal quarter set forth below to
be less than the ratio set forth below for such quarter.
Date Ratio
September 30, 1996 2.25 to 1.00
December 31, 1996 2.25 to 1.00
March 31, 1997 2.25 to 1.00
June 30, 1997 2.25 to 1.00
September 30, 1997 2.25 to 1.00
December 31, 1997 3.00 to 1.00
March 31, 1998 3.00 to 1.00
June 30, 1998 3.00 to 1.00
September 30, 1998 3.00 to 1.00
December 31, 1998 3.00 to 1.00
March 31, 1999 3.00 to 1.00
June 30, 1999 3.50 to 1.00
SECTION 6.14. Total Debt/Total Capitalization. Permit the ratio of
(i) Total Debt to (ii) the sum of Consolidated Net Worth and Total Debt as of
the end of any fiscal quarter to exceed 60.0%.
ARTICLE VII
Events of Default
In case of the happening of any of the following events (Events of Default):
(a) any representation or warranty made or deemed made in or in connection
with any Loan Document or the borrowings or issuances of Letters of Credit
hereunder, or any representation, warranty, statement or information contained
in any report, certificate, financial statement or other instrument furnished
in connection with or pursuant to any Loan Document, shall prove to have been
false or misleading in any material respect when so made, deemed made or
furnished; (b) default shall be made in the payment of any principal of
any Loan or the reimbursement with respect to any L/C Disbursement when and as
the same shall become due and payable, whether at the due date thereof or at a
date fixed for prepayment thereof or by acceleration thereof or otherwise, or
in the requirement to deposit cash collateral with the Collateral Agent
pursuant to Section 2.22(c); (c) default shall be made in the payment of any
interest on any Loan or L/C Disbursement or any Fee or any other amount (other
than an amount referred to in (b) above) due under any Loan Document, when and
as the same shall become due and payable, and such default shall continue
unremedied for a period of three Business Days; (d) default shall be made in
the due observance or performance by the Borrower or any Subsidiary of any
covenant, condition or agreement contained in Section 5.01(a), 5.05 or 5.08 or
in Article VI; (e) default shall be made in the due observance or performance
by the Borrower or any Subsidiary of any covenant, condition or agreement
contained in any Loan Document (other than those specified in (b), (c) or (d)
above) and such default shall continue unremedied for a period of 15 days
after notice thereof from the Administrative Agent or any Lender to the
Borrower;(f) the Borrower or any Subsidiary shall (i) fail to pay any
principal or interest, regardless of amount, due in respect of any
Indebtedness in a principal amount in excess of $5,000,000, when and as the
same shall become due and payable, or (ii) fail to observe or perform any
other term, covenant, condition or agreement contained in any agreement or
instrument evidencing or governing any such Indebtedness if the effect of any
failure referred to in this clause (ii) is to cause, or to permit the holder
or holders of such Indebtedness or a trustee on its or their behalf (with or
without the giving of notice, the lapse of time or both) to cause, such
Indebtedness to become due prior to its stated maturity; (g) an involuntary
proceeding shall be commenced or an involuntary petition shall be filed in a
court of competent jurisdiction seeking (i) relief in respect of the Borrower
or any Subsidiary, or of a substantial part of the property or assets of the
Borrower or a Subsidiary, under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other Federal, state or foreign
bankruptcy, insolvency, receivership or similar law, (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official
for the Borrower or any Subsidiary or for a substantial part of the property
or assets of the Borrower or a Subsidiary or (iii) the winding-up or
liquidation of the Borrower or any Subsidiary; and such proceeding or petition
shall continue undismissed for 60 days or an order or decree approving or
ordering any of the foregoing shall be entered; (h) the Borrower or any
Subsidiary shall (i) voluntarily commence any proceeding or file any petition
seeking relief under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other Federal, state or foreign bankruptcy,
insolvency, receivership or similar law, (ii) consent to the institution of,
or fail to contest in a timely and appropriate manner, any proceeding or the
filing of any petition described in (g) above, (iii) apply for or consent to
the appointment of a receiver, trustee, custodian, sequestrator, conservator
or similar official for the Borrower or any Subsidiary or for a substantial
part of the property or assets of the Borrower or any Subsidiary,(iv) file an
answer admitting the material allegations of a petition filed against it in
any such proceeding, (v) make a general assignment for the benefit of
creditors, (vi) become unable, admit in writing its inability or fail
generally to pay its debts as they become due or (vii) take any action for the
purpose of effecting any of the foregoing; (i) one or more judgments for the
payment of money in an aggregate amount in excess of $5,000,000 shall be
rendered against the Borrower, any Subsidiary or any combination thereof and
the same shall remain undischarged for a period of 30 consecutive days during
which execution shall not be effectively stayed, or any action shall be
legally taken by a judgment creditor to levy upon assets or properties of the
Borrower or any Subsidiary to enforce any such judgment; (j) any security
interest purported to be created by any Security Document shall cease to be,
or shall be asserted by the Borrower or any other Loan Party not to be, a
valid, perfected, first priority (except as otherwise expressly provided in
this Agreement or such Security Document) security interest in the securities,
assets or properties covered thereby, except to the extent that any such loss
of perfection or priority results from the failure of the Collateral Agent to
maintain possession of certificates representing securities pledged under the
Pledge Agreement; (k) any Loan Document shall not be for any reason, or shall
be asserted by any Loan Party not to be, in full force and effect and
enforceable in accordance with its terms; or (l) there shall have occurred a
Change in Control; then, and in every such event (other than an event with
respect to the Borrower described in paragraph (g) or (h) above), and at any
time thereafter during the continuance of such event, the Administrative Agent
may, and at the request of the Required Lenders shall, by notice to the
Borrower, take either or both of the following actions, at the same or
different times: (i) terminate forthwith the Commitments and (ii) declare the
Loans then outstanding to be forthwith due and payable in whole or in part,
whereupon the principal of the Loans so declared to be due and payable,
together with accrued interest thereon and any unpaid accrued Fees and all
other liabilities of the Borrower accrued hereunder and under any other Loan
Document, shall become forthwith due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived by the Borrower, anything contained herein or in any other Loan
Document to the contrary notwithstanding; and in any event with respect to the
Borrower described in paragraph (g) or (h) above, the Commitments shall
automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and any unpaid accrued Fees and all
other liabilities of the Borrower accrued hereunder and under any other Loan
Document, shall automatically become due and payable, without presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived by the Borrower, anything contained herein or in any other
Loan Document to the contrary notwithstanding.
ARTICLE VIII
The Administrative Agent and the Collateral Agent
In order to expedite the transactions contemplated by this Agreement, Credit
Suisse is hereby appointed to act as Administrative Agent and Collateral Agent
on behalf of the Lenders and the Issuing Bank (for purposes of this Article
VIII, the Administrative Agent and the Collateral Agent are referred to
collectively as the "Agents"). Each of the Lenders and each assignee of any
such Lender, hereby irrevocably authorizes the Agents to take such actions on
behalf of such Lender or assignee or the Issuing Bank and to exercise such
powers as are specifically delegated to the Agents by the terms and provisions
hereof and of the other Loan Documents, together with such actions and powers
as are reasonably incidental thereto. The Administrative Agent is hereby
expressly authorized by the Lenders and the Issuing Bank, without hereby
limiting any implied authority, (a) to receive on behalf of the Lenders and
the Issuing Bank all payments of principal of and interest on the Loans, all
payments in respect of L/C Disbursements and all other amounts due to the
Lenders hereunder, and promptly to distribute to each Lender or the Issuing
Bank its proper share of each payment so received; (b) to give notice on
behalf of each of the Lenders to the Borrower of any Event of Default
specified in this Agreement of which the Administrative Agent has actual
knowledge acquired in connection with its agency hereunder; and (c) to
distribute to each Lender copies of all notices, financial statements and
other materials delivered by the Borrower or any other Loan Party pursuant to
this Agreement or the other Loan Documents as received by the Administrative
Agent.
Without limiting the generality of the foregoing, the Agents are hereby
expressly authorized to execute any and all documents (including releases)
with respect to the Collateral and the rights of the Secured Parties
with respect thereto, as contemplated by and in accordance with the provisions
of this Agreement and the Security Documents.
Neither the Agents nor any of their respective directors, officers,
employees or agents shall be liable as such for any action taken or omitted by
any of them except for its or his own gross negligence or wilful misconduct,
or be responsible for any statement, warranty or representation herein or the
contents of any document delivered in connection herewith, or be required to
ascertain or to make any inquiry concerning the performance or observance by
the Borrower or any other Loan Party of any of the terms, conditions,
covenants or agreements contained in any Loan Document. The Agents shall not
be responsible to the Lenders for the due execution, genuineness, validity,
enforceability or effectiveness of this Agreement or any other Loan Documents,
instruments or agreements. The Agents shall in all cases be fully protected
in acting, or refraining from acting, in accordance with written instructions
signed by the Required Lenders and, except as otherwise specifically provided
herein, such instructions and any action or inaction pursuant thereto shall be
binding on all the Lenders. Each Agent shall, in the absence of knowledge to
the contrary, be entitled to rely on any instrument or document believed by it
in good faith to be genuine and correct and to have been signed or sent by the
proper person or persons. Neither the Agents nor any of their respective
directors, officers, employees or agents shall have any responsibility to the
Borrower or any other Loan Party on account of the failure of or delay in
performance or breach by any Lender or the Issuing Bank of any of its
obligations hereunder or to any Lender or the Issuing Bank on account of the
failure of or delay in performance or breach by any other Lender or the
Issuing Bank or the Borrower or any other Loan Party of any of their
respective obligations hereunder or under any other Loan Document or in
connection herewith or therewith. Each of the Agents may execute any and all
duties hereunder by or through agents or employees and shall be entitled to
rely upon the advice of legal counsel selected by it with respect to all
matters arising hereunder and shall not be liable for any action taken or
suffered in good faith by it in accordance with the advice of such counsel.
The Lenders hereby acknowledge that neither Agent shall be under any duty
to take any discretionary action permitted to be taken by it pursuant to the
provisions of this Agreement unless it shall be requested in writing to do so
by the Required Lenders.
Subject to the appointment and acceptance of a successor Agent as
provided below, either Agent may resign at any time by notifying the Lenders
and the Borrower. Upon any such resignation, the Required Lenders shall have
the right to appoint a successor. If no successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within 30 days after the retiring Agent gives notice of its resignation, then
the retiring Agent may, on behalf of the Lenders, appoint a successor Agent
which shall be a bank with an office in New York, New York, having a combined
capital and surplus of at least $500,000,000 or an Affiliate of any such bank.
Upon the acceptance of any appointment as Agent hereunder by a successor bank,
such successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent and the retiring Agent shall be
discharged from its duties and obligations hereunder. After the Agent's
resignation hereunder, the provisions of this Article and Section 9.05 shall
continue in effect for its benefit in respect of any actions taken or omitted
to be taken by it while it was acting as Agent.
With respect to the Loans made by it hereunder, each Agent in its
individual capacity and not as Agent shall have the same rights and powers as
any other Lender and may exercise the same as though it were not an Agent, and
the Agents and their Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower or any Subsidiary
or other Affiliate thereof as if it were not an Agent.
Each Lender agrees (a) to reimburse the Issuing Bank and the Agents, on
demand, in the amount of its pro rata share (based on its Commitment
hereunder) of any expenses incurred for the benefit of the Lenders by the
Issuing Bank or the Agents, including counsel fees and compensation of agents
and employees paid for services rendered on behalf of the Lenders, that shall
not have been reimbursed by the Borrower and (b) to indemnify and hold
harmless the Issuing Bank and each Agent and any of their respective
directors, officers, employees or agents, on demand, in the amount of
such pro rata share, from and against any and all liabilities, taxes,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by or asserted against It in its capacity as Issuing Bank or
Agent or any of them in any way relating to or arising out of this Agreement
or any other Loan Document or any action taken or omitted by it or any of them
under this Agreement or any other Loan Document, to the extent the same shall
not have been reimbursed by the Borrower or any other Loan Party, provided
that no Lender shall be liable to the Issuing Bank or an Agent or any such
other indemnified person for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or wilful
misconduct of the Issuing Bank or such Agent or any of their respective
directors, officers, employees or agents.
Each Lender acknowledges that it has, independently and without reliance
upon the Agents or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agents or any other Lender
and based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement or any other Loan Document, any related
agreement or any document furnished hereunder or thereunder.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. Notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopy, as
follows: (a) if to the Borrower, to it at 7201 East Camelback Road, Suite
375, Scottsdale, Arizona 85251, Attention of Henry Hirvela (Telecopy No.
(602)481-6038); (b) if to the Administrative Agent, to Credit Suisse, Tower
49, 12 East 49th Street, New York, New York 10017, Attention of Ira Lubinsky
(Telecopy No. (212) 238-5073, with a copy to Credit Suisse, Tower 49, 12 East
49th Street, New York, NY 10017, Attention of Richard Carey (Telecopy No.
(212) 238-5073); (c) if to an Issuing Bank (other than Credit Suisse), to the
address of such Issuing Bank set forth on Schedule 2.01 or in the Assignment
and Acceptance pursuant to which such Issuing Bank shall have become a party
hereto; and if to Credit Suisse, as Issuing Bank, to the address set forth in
paragraph (b) above; and (d) if to a Lender, to it at its address (or telecopy
number) set forth on Schedule 2.01 or in the Assignment and Acceptance
pursuant to which such Lender shall have become a party hereto. All notices
and other communications given to any party hereto in accordance with the
provisions of this Agreement shall be deemed to have been given on the date of
receipt if delivered by hand or overnight courier service or sent by telecopy
or on the date five Business Days after dispatch by certified or registered
mail if mailed, in each case delivered, sent or mailed (properly addressed) to
such party as provided in this Section 9.01 or in accordance with the latest
unrevoked direction from such party given in accordance with this Section
9.01.
SECTION 9.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Borrower herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Lenders and the Issuing Bank and shall survive
the making by the Lenders of the Loans and the issuance of Letters of Credit
by the Issuing Bank, regardless of any investigation made by the Lenders or
the Issuing Bank or on their behalf, and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loan or any
Fee or any other amount payable under this Agreement or any other Loan
Document is outstanding and unpaid or any Letter of Credit is outstanding
and so long as the Commitments have not been terminated. The provisions of
Sections 2.13, 2.15, 2.19 and 9.05 shall remain operative and in full force
and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the expiration of the Commitments, the expiration of any Letter of
Credit, the invalidity or unenforceability of any term or provision of this
Agreement or any other Loan Document, or any investigation made by or on
behalf of the Administrative Agent, the Collateral Agent, any Lender or the
Issuing Bank.
SECTION 9.03. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Borrower, each Existing Account Party
and the Administrative Agent and when the Administrative Agent shall have
received counterparts hereof which, when taken together, bear the signatures
of each of the other parties hereto, and thereafter shall be binding upon and
inure to the benefit of the parties hereto and their respective permitted
successors and assigns.
SECTION 9.04. Successors and Assigns. (a) Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the permitted successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Borrower, the Administrative
Agent, the Issuing Bank or the Lenders that are contained in this Agreement
shall bind and inure to the benefit of their respective successors and
assigns. (b) Each Lender may assign to one or more assignees all or a portion
of its interests, rights and obligations under this Agreement (including all
or a portion of its Commitment and the Loans at the time owing to it);
provided, however, that (i) the parties to each such assignment shall execute
and deliver to the Administrative Agent an Assignment and Acceptance, (ii)
except in the case of an assignment to a Lender, an Affiliate of such Lender
or a Federal Reserve Bank pursuant to paragraph (h) below, (x) the Borrower
(so long as no Event of Default shall have occurred and be continuing) and the
Administrative Agent (and, in the case of any assignment of a Revolving Credit
Commitment, the Issuing Bank and the Swingline Lender) must give their prior
written consent to such assignment (in each case, which consent shall not be
unreasonably withheld), (y) the amount of the Commitment of the assigning
Lender subject to each such assignment (determined as of the date the
Assignment and Acceptance with respect to such assignment is delivered to
the Administrative Agent) shall not be less than $5,000,000 (or, if less, the
entire remaining amount of such Lender's Commitment), and (z) the
Administrative Agent shall have received from the assignor and/or the assignee
a processing and recordation fee of $3,500 and (iii) the assignee, if it shall
not be a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire. Upon acceptance and recording pursuant to paragraph (e) of
this Section 9.04, from and after the effective date specified in each
Assignment and Acceptance, which effective date shall be at least five
Business Days after the execution thereof, (A) the assignee thereunder shall
be a party hereto and, to the extent of the interest assigned by such
Assignment and Acceptance, have the rights and obligations of a Lender under
this Agreement and (B) the assigning Lender thereunder shall, to the extent of
the interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Sections
2.13, 2.15, 2.19 and 9.05, as well as to any Fees accrued for its account
and not yet paid). (c) By executing and delivering an Assignment and
Acceptance, the assigning Lender thereunder and the assignee thereunder shall
be deemed to confirm to and agree with each other and the other parties hereto
as follows: (i) such assigning Lender warrants that it is the legal and
beneficial owner of the interest being assigned thereby free and clear of any
adverse claim and that its Revolving Credit Commitment, and the outstanding
balance of its Revolving Loans, in each case without giving effect to
assignments thereof which have not become effective, are as set forth in such
Assignment and Acceptance, (ii) except as set forth in (i) above, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any other Loan Document or any other instrument or document furnished pursuant
hereto, or the financial condition of the Borrower or any Subsidiary or the
performance or observance by the Borrower or any Subsidiary of any of its
obligations under this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto; (iii) such assignee
represents and warrants that it is legally authorized to enter into such
Assignment and Acceptance; (iv) such assignee confirms that it has received a
copy of this Agreement, together with copies of the most recent financial
statements referred to in Section 3.05 or delivered pursuant to Section 5.04
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such Assignment and
Acceptance; (v) such assignee will independently and without reliance upon the
Administrative Agent, the Collateral Agent, such assigning Lender or any other
Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking
or not taking action under this Agreement; (vi) such assignee appoints and
authorizes the Administrative Agent and the Collateral Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to the Administrative Agent and the Collateral Agent,
respectively, by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vii) such assignee agrees that it will perform in
accordance with their terms all the obligations which by the terms of this
Agreement are required to be performed by it as a Lender. (d) The
Administrative Agent, acting for this purpose as an agent of the Borrower,
shall maintain at one of its offices in The City of New York a copy of each
Assignment and Acceptance delivered to it and a register for the recordation
of the names and addresses of the Lenders, and the Commitment of, and
principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time ("the Register"). The entries in the Register shall
be conclusive and the Borrower, the Administrative Agent, the Issuing Bank,
the Collateral Agent and the Lenders may treat each person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder
for all purposes of this Agreement, notwithstanding notice to the contrary.
The Register shall be available for inspection by the Borrower, the Issuing
Bank, the Collateral Agent and any Lender, at any reasonable time and from
time to time upon reasonable prior notice. (e) Upon its receipt of a duly
completed Assignment and Acceptance executed by an assigning Lender and an
assignee, an Administrative Questionnaire completed in respect of the assignee
(unless the assignee shall already be a Lender hereunder), the processing and
recordation fee referred to in paragraph (b) above and, if required, the
written consent of the Borrower, the Swingline Lender, the Issuing Bank and
the Administrative Agent to such assignment, the Administrative Agent shall
(i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
Lenders, the Issuing Bank and the Swingline Lender. No assignment shall be
effective unless it has been recorded in the Register as provided in this
paragraph (e). (f) Each Lender may without the consent of the Borrower, the
Swingline Lender, the Issuing Bank or the Administrative Agent sell
participations to one or more banks or other entities in all or a portion of
its rights and obligations under this Agreement (including all or a portion of
its Commitment and the Loans owing to it); provided, however, that (i) such
Lender's obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) the participating banks or other
entities shall be entitled to the benefit of the cost protection provisions
contained in Sections 2.13, 2.15 and 2.19 to the same extent as if they were
Lenders and (iv) the Borrower, the Administrative Agent, the Issuing Bank and
the Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement, and
such Lender shall retain the sole right to enforce the obligations of the
Borrower relating to the Loans or L/C Disbursements and to approve any
amendment, modification or waiver of any provision of this Agreement (other
than amendments, modifications or waivers decreasing any fees payable
thereunder or the amount of principal of or the rate at which interest is
payable on the Loans, extending any scheduled principal payment date or date
fixed for the payment of fees hereunder or interest on the Loans or increasing
or extending the Commitments). (g) Any Lender or participant may, in
connection with any assignment or participation or proposed assignment or
participation pursuant to this Section 9.04, disclose to the assignee or
participant or proposed assignee or participant any information relating to
the Borrower furnished to such Lender by or on behalf of the Borrower;
provided that, prior to any such disclosure of information designated by the
Borrower as confidential, each such assignee or participant or proposed
assignee or participant shall execute an agreement whereby such assignee or
participant shall agree (subject to customary exceptions) to preserve the
confidentiality of such confidential information on terms no less restrictive
than those applicable to the Lenders pursuant to Section 9.16. (h) Any Lender
may at any time assign all or any portion of its rights under this Agreement
to a Federal Reserve Bank to secure extensions of credit by such Federal
Reserve Bank to such Lender; provided that no such assignment shall release a
Lender from any of its obligations hereunder or substitute any such Bank for
such Lender as a party hereto. In order to facilitate such an assignment to a
Federal Reserve Bank, the Borrower shall, at the request of the assigning
Lender, duly execute and deliver to the assigning Lender a promissory note or
notes evidencing the Loans made to the Borrower by the assigning Lender
hereunder. (i) The Borrower shall not assign or delegate any of its rights or
duties hereunder without the prior written consent of the Administrative
Agent, the Issuing Bank and each Lender, and any attempted assignment without
such consent shall be null and void.
SECTION 9.05. Expenses; Indemnity. (a) The Borrower agrees to pay all
out-of-pocket expenses incurred by the Administrative Agent, the Collateral
Agent, the Issuing Bank and the Swingline Lender in connection with the
syndication of the credit facilities provided for herein and the preparation
and administration of this Agreement and the other Loan Documents or in
connection with any amendments, modifications or waivers of the provisions
hereof or thereof (whether or not the transactions hereby or thereby
contemplated shall be consummated) or incurred by the Administrative Agent,
the Collateral Agent or any Lender in connection with the enforcement or
protection of its rights in connection with this Agreement and the other Loan
Documents or in connection with the Loans made or Letters of Credit issued
hereunder, including the fees, charges and disbursements of Cravath, Swaine &
Moore, counsel for the Administrative Agent and the Collateral Agent, and, in
connection with any such enforcement or protection, the fees, charges and
disbursements of any other counsel for the Administrative Agent, the
Collateral Agent, the Issuing Bank or any Lender. (b) The Borrower agrees to
indemnify the Administrative Agent, the Collateral Agent, each Lender and the
Issuing Bank, each Affiliate of any of the foregoing persons and each of their
respective directors, officers, employees and agents (each such person being
called an "Indemnitee") against, and to hold each Indemnitee harmless from,
any and all losses, claims, damages, liabilities and related expenses,
including reasonable counsel fees, charges and disbursements, incurred by or
asserted against any Indemnitee arising out of, in any way connected with, or
as a result of (i) the execution or delivery of this Agreement or any other
Loan Document or any agreement or instrument contemplated thereby, the
performance by the parties thereto of their respective obligations thereunder
or the consummation of the Transactions and the other transactions
contemplated thereby, (ii) the use of the proceeds of the Loans or issuance of
Letters of Credit, (iii) any claim, litigation, investigation or proceeding
relating to any of the foregoing, whether or not any Indemnitee is a party
thereto, or (iv) any actual or alleged presence or Release of Hazardous
Materials on any property owned or operated by the Borrower or any of the
Subsidiaries, or any Environmental Claim related in any way to the Borrower or
the Subsidiaries; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the
gross negligence or wilful misconduct of such Indemnitee. (c) The provisions
of this Section 9.05 shall remain operative and in full force and effect
regardless of the expiration of the term of this Agreement, the consummation
of the transactions contemplated hereby, the repayment of any of the Loans,
the expiration of the Commitments, the expiration of any Letter of Credit, the
invalidity or unenforceability of any term or provision of this Agreement or
any other Loan Document, or any investigation made by or on behalf of the
Administrative Agent, the Collateral Agent, any Lender or the Issuing Bank.
All amounts due under this Section 9.05 shall be payable on written demand
therefor.
SECTION 9.06. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, except to the extent prohibited by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such
Lender to or for the credit or the account of the Borrower against any of and
all the obligations of the Borrower now or hereafter existing under this
Agreement and other Loan Documents held by such Lender, irrespective of
whether or not such Lender shall have made any demand under this Agreement or
such other Loan Document and although such obligations may be unmatured. The
rights of each Lender under this Section 9.06 are in addition to other rights
and remedies (including other rights of setoff) which such Lender may have.
SECTION 9.07. Applicable Law. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (OTHER THAN LETTERS OF CREDIT AND AS EXPRESSLY SET FORTH IN OTHER
LOAN DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK. EACH LETTER OF CREDIT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED IN SUCH
LETTER OF CREDIT, OR IF NO SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM
CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION), INTERNATIONAL
CHAMBER OF COMMERCE, PUBLICATION NO. 500 (THE UNIFORM CUSTOMS) AND, AS TO
MATTERS NOT GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS OF THE STATE OF NEW
YORK.
SECTION 9.08. Waivers; Amendment. (a) No failure or delay of the
Administrative Agent, the Collateral Agent, any Lender or the Issuing Bank in
exercising any power or right hereunder or under any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the
Administrative Agent, the Collateral Agent, the Issuing Bank and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver
of any provision of this Agreement or any other Loan Document or consent to
any departure by the Borrower or any other Loan Party therefrom shall in
any event be effective unless the same shall be permitted by paragraph (b)
below, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice or demand on the
Borrower in any case shall entitle the Borrower to any other or further notice
or demand in similar or other circumstances. (b) Neither this Agreement nor
any provision hereof may be waived, amended or modified except pursuant to an
agreement or agreements in writing entered into by the Borrower and the
Required Lenders; provided, however, that no such agreement shall (i) decrease
the principal amount of, or extend the maturity of or any scheduled principal
payment date or date for the payment of any interest on any Loan or any date
for reimbursement of an L/C Disbursement, or waive or excuse any such payment
or any part thereof, or decrease the rate of interest on any Loan or L/C
Disbursement, without the prior written consent of each Lender affected
thereby, (ii) change or extend the Commitment or decrease or extend the date
for payment of the Commitment Fees or L/C Participation Fees of any Lender
without the prior written consent of such Lender, (iii) decrease or extend the
date for payment of the Issuing Bank Fees without the prior written consent of
each affected Issuing Bank or (iv) amend or modify the provisions of Section
2.16 or 9.04(i), the provisions of this Section, the definition of the term
"Required Lenders" or release any Guarantor or all or any substantial part of
the Collateral, without the prior written consent of each Lender; provided
further that no such agreement shall amend, modify or otherwise affect the
rights or duties of the Administrative Agent, the Collateral Agent, the
Issuing Bank or the Swingline Lender hereunder or under any other Loan
Document without the prior written consent of the Administrative Agent, the
Collateral Agent, the Issuing Bank or the Swingline Lender.
SECTION 9.09. Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any
Loan or participation in any L/C Disbursement, together with all fees, charges
and other amounts which are treated as interest on such Loan or participation
in such L/C Disbursement under applicable law (collectively the "Charges"),
shall exceed the maximum lawful rate (the "Maximum Rate") which may be
contracted for, charged, taken, received or reserved by the Lender holding
such Loan or participation in accordance with applicable law, the rate of
interest payable in respect of such Loan or participation hereunder, together
with all Charges payable in respect thereof, shall be limited to the Maximum
Rate and, to the extent lawful, the interest and Charges that would have been
payable in respect of such Loan or participation but were not payable as a
result of the operation of this Section 9.09 shall be cumulated and the
interest and Charges payable to such Lender in respect of other Loans or
participations or periods shall be increased (but not above the Maximum Rate
therefor) until such cumulated amount, together with interest thereon at the
Federal Funds Effective Rate to the date of repayment, shall have been
received by such Lender.
SECTION 9.10. Entire Agreement. This Agreement, the Fee Letter and
the other Loan Documents constitute the entire contract between the parties
relative to the subject matter hereof. Any other previous agreement among the
parties with respect to the subject matter hereof is superseded by this
Agreement and the other Loan Documents. Nothing in this Agreement or in the
other Loan Documents, expressed or implied, is intended to confer upon any
party other than the parties hereto and thereto any rights, remedies,
obligations or liabilities under or by reason of this Agreement or the other
Loan Documents.
SECTION 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS,
AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
IN THIS SECTION 9.11.
SECTION 9.12. Severability. In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby (it being understood that
the invalidity of a particular provision in a particular jurisdiction shall
not in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the
invalid, illegal or unenforceable provisions.
SECTION 9.13. Counterparts. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original but all of which when taken together
shall constitute a single contract, and shall become effective as provided in
Section 9.03. Delivery of an executed signature page to this Agreement by
facsimile transmission shall be as effective as delivery of a manually signed
counterpart of this Agreement.
SECTION 9.14. Headings. Article and Section headings and the Table
of Contents used herein are for convenience of reference only, are not part of
this Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 9.15. Jurisdiction; Consent to Service of Process. (a) The
Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and
any appellate court from any thereof, in any action or proceeding arising out
of or relating to this Agreement or the other Loan Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of
any such action or proceeding may be heard and determined in such
New York State or, to the extent permitted by law, in such Federal court.
Each of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement shall affect any right that the Administrative Agent, the Collateral
Agent, the Issuing Bank or any Lender may otherwise have to bring any action
or proceeding relating to this Agreement or the other Loan Documents against
the Borrower or its properties in the courts of any jurisdiction. (b) The
Borrower hereby irrevocably and unconditionally waives, to the fullest extent
it may legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in
any New York State or Federal court. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court. (c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 9.16. Confidentiality. The Administrative Agent, the Collateral
Agent, the Issuing Bank and each of the Lenders agrees to keep confidential
(and to use its best efforts to cause its respective agents and
representatives to keep confidential) the Information (as defined below) and
all copies thereof, extracts therefrom and analyses or other materials based
thereon, except that the Administrative Agent, the Collateral Agent, the
Issuing Bank or any Lender shall be permitted to disclose Information (a) to
such of its respective officers, directors, employees, agents, affiliates and
representatives as need to know such Information, (b) to the extent requested
by any regulatory authority, (c) to the extent otherwise required by
applicable laws and regulations or by any subpoena or similar legal process,
(d) in connection with any suit, action or proceeding relating to the
enforcement of its rights hereunder or under the other Loan Documents or (e)
to the extent such Information (i) becomes publicly available other than as a
result of a breach of this Section 9.16 or (ii) becomes available to the
Administrative Agent, the Issuing Bank, any Lender or the Collateral Agent on
a nonconfidential basis from a source other than the Borrower. For the
purposes of this Section, "Information" shall mean all financial statements,
certificates, reports, agreements and information (including all analyses,
compilations and studies prepared by the Administrative Agent, the Collateral
Agent, the Issuing Bank or any Lender based on any of the foregoing) that are
received from the Borrower and related to the Borrower, any shareholder of the
Borrower or any employee, customer or supplier of the Borrower, other than any
of the foregoing that were available to the Administrative Agent, the
Collateral Agent, the Issuing Bank or any Lender on a nonconfidential basis
prior to its disclosure thereto by the Borrower, and which are in the case of
Information provided after the date hereof, clearly identified at the time of
delivery as confidential. The provisions of this Section 9.16 shall remain
operative and in full force and effect regardless of the expiration and term
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
ALLIED WASTE INDUSTRIES, INC.,
by
/s/ Peter S. Hathaway
Name: Peter Hathaway
Title: VP, Treasurer, CAO
ALLIED WASTE INDUSTRIES(MISSOURI) INC.
LEMON'S LANDFILL CORPORATION
POPLAR BLUFF CONSTRUCTION & DEVELOPMENT, INC.
SOUTHERN STATES ENVIRONMENTAL SERVICES, INC.
each as an Existing Account Party
by /s/ Curtis T. Ramsey
Name: Curtis T. Ramsey
Title: Vice President
<PAGE>
CREDIT SUISSE, as Issuing Bank and
Bank,
by /s/ Joel Glodowski
Name: Joel Glodowski
Title: Member of Senior Management
CREDIT SUISSE, as Administrative
Agent,
by /s/ Heather Rikenberg
Name: Heather Hiekenberg
Title: Member of Senior Management
by /s/ Ira Lubinsky
Name: Ira Lubinsky
Title: Associate
CREDIT SUISSE, as Collateral Agent,
by /s/ Heather Rikenberg
Name: Heather Hiekenberg
Title: Member of Senior Management
by /s/ Ira Lubinsky
Name: Ira Lubinsky
Title: Associate
CREDIT SUISSE, as Swingline Lender,
by /s/ Joel Glodowski
Name: Joel Glodowski
Title: Member of Senior Management
by /s/ Andreas Tschopp
Name: Andreas Tschopp
Title: Associate
ABN AMRO BANK N.V. HOUSTON AGENCY
by ABN AMRO NORTH AMERICA, INC., as Agent
by /s/ Lila Jordan
Name: Lila Jordan
Title: Vice President and Director
by /s/ David P. Orr
Name: David P. Orr
Title: Vice President and Director
ALLIED IRISH BANK CAYMAN
ISLANDS BRANCH,
by /s/ Marcia Meeker
Name: Marcia Meeker
Title: Vice President
by /s/ William J. Strickland
Name: William J. Strickland
Title: Senior Vice President
BANK OF BOSTON,
by /s/ Ennis J. Walter
Name: Ennis J. Walter
Title: Vice President
BANK ONE, ARIZONA NA,
by /s/ Michael V. McCann
Name: Michael V. McCann
Title: Vice President
BANK PARIBAS HOUSTON AGENCY,
by /s/ Cheryl Johnson
Name: Cheryl Johnson
Title: Assistant Vice President
by /s/ Scott Clingan
Name: Scott Clingan
Title: Vice President
BHF-BANK AKTIENGESELLSCHAFT,
by /s/ Evan Contos
Name: Evan Contos
Title: VP
by /s/ Dan Dobrjanskyl
Name: Dan Dobrjanskyl
Title: Assistant Treasurer
CREDIT LYONNAIS LOS ANGELES BRANCH,
by /s/ Thierry Vincent
Name: Thierry Vincent
Title: Vice President
FLEET BANK, N.A.,
by /s/ Kathleen Weiss
Name: Kathleen Weiss
Title: Vice President
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
by /s/ Michael J. Gibbons
Name: Michael J. Gibbons
Title: Managing Director
SUMITOMO BANK OF CALIFORNIA,
by /s/ Steven K. Sloan
Name: Steven K. Sloan
Title: Vice President
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
by /s/ Diane Duplichan
Name: Diane Duplichan
Title: Vice President
THE BANK OF NOVA SCOTIA,
by /s/ John Quick
Name: John Quick
Title: Officer
THE FUJI BANK, LTD., HOUSTON AGENCY,
by /s/ David Kelley
Name: David Kelley
Title: Sr. Vice President
THE LONG-TERM CREDIT BANK OF JAPAN, LTD. LOS ANGELES AGENCY,
by /s/ T. Morgan Edwards, III
Name: T. Morgan Edwards, III
Title: Deputy General Manager
UNION BANK OF CALIFORNIA, N.A.,
by /s/ Vicente C. Bendanillo
Name: Vicente C. Bendanillo
Title: Vice President
WELLS FARGO BANK OF ARIZONA, NATIONAL ASSOCIATION,
by /s/ Brenda K. Testerman
Name: Brenda K. Testerman
Title: Assistant Vice President
<TABLE> <S> <C>
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<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,435
<SECURITIES> 0
<RECEIVABLES> 38,831
<ALLOWANCES> 2,464
<INVENTORY> 2,107
<CURRENT-ASSETS> 54,765
<PP&E> 407,177
<DEPRECIATION> 77,065
<TOTAL-ASSETS> 502,086
<CURRENT-LIABILITIES> 79,253
<BONDS> 171,337
0
2
<COMMON> 585
<OTHER-SE> 199,932
<TOTAL-LIABILITY-AND-EQUITY> 502,086
<SALES> 118,958
<TOTAL-REVENUES> 118,958
<CGS> 65,699
<TOTAL-COSTS> 65,699
<OTHER-EXPENSES> 40,562
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,567
<INCOME-PRETAX> 8,272
<INCOME-TAX> 4,035
<INCOME-CONTINUING> 4,237
<DISCONTINUED> 0
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<CHANGES> 0
<NET-INCOME> 4,237
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
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