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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE 1994 FISCAL YEAR ENDED DECEMBER 31, 1994
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-8513
SAFETY-KLEEN(R) CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
WISCONSIN 39-6090019
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1000 NORTH RANDALL ROAD,ELGIN, ILLINOIS 60123
(ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE)
OFFICES)
REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE: (708) 697-8460
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
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<S> <C>
Common Stock, $.10 Par Value New York Stock Exchange
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SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
(TITLE OF CLASS)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]
The aggregate market value of voting stock held by non-affiliates of the
registrant as of March 1, 1995 was approximately $0.7 billion.
Shares of Common Stock outstanding at March 1, 1995, were 57,754,963.
DOCUMENTS INCORPORATED BY REFERENCE:
PORTIONS OF THE REGISTRANT'S PROXY STATEMENT TO BE FILED ON OR BEFORE MARCH
31, 1995, FOR THE ANNUAL MEETING TO BE HELD ON MAY 12, 1995, ARE INCORPORATED
BY REFERENCE IN PART III AND THE ANNUAL REPORT TO SHAREHOLDERS FOR THE YEAR
ENDED DECEMBER 31, 1994, ARE INCORPORATED BY REFERENCE IN PARTS I AND II.
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PART I
ITEM 1. BUSINESS
GENERAL
Safety-Kleen is a business-to-business marketing and service company focusing
on the environmental needs of business through recycling and reuse of fluid
waste. It is a leading provider of services to generators of spent solvents and
other hazardous and non-hazardous liquid wastes and byproducts, the world's
largest provider of parts cleaner services and one of the world's largest
collectors and re-refiners of used oil. The Company serves over 400,000
customers in North America and Europe, through a network of 236 branch
facilities.
The Company operates in the continental U.S., Canada, the United Kingdom, the
Republic of Ireland, Puerto Rico, Belgium, France, Italy, Spain and Germany.
The Company has licensee operations in Israel, Japan, and Korea. Safety-Kleen
Corp. was incorporated in July, 1963 under the laws of the State of Wisconsin.
As used herein, the terms "Company" or "Safety-Kleen" refer to Safety-Kleen
Corp. and its consolidated subsidiaries.
The Company groups its services into three broad categories: Small Quantity
Generator ("SQG") Resource Recovery Services, Envirosystems Services, and Oil
Recovery Services. Each of the Company's services is discussed in greater
detail below and in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" appearing on pages 20-25 of the Company's
Annual Report to Shareholders for the year ended December 31, 1994 (the "Annual
Report"), which is incorporated herein by reference.
SQG RESOURCE RECOVERY SERVICES
The Company's SQG Resource Recovery Services are divided into
Automotive/Retail Repair Services, Industrial Services, Paint Refinishing
Services, Dry Cleaner Services and Imaging Services. Solvent recycling is an
integral part of the Company's SQG Resource Recovery Services. Most fluid
wastes collected by the Company as part of these services, except Imaging
Services, are either recycled for re-use in these services or processed into
waste-derived fuel for use in the cement manufacturing industry. Imaging
Services recovers the silver contained in the spent photochemical solutions it
collects from customers. These solutions are then further treated and processed
until they can be discharged as wastewater into publicly-owned treatment works
in compliance with applicable laws and regulations. Some wastewater is also
generated by the Company's Fluid Recovery Service.
Automotive/Retail Repair Services. The primary component of the Company's
Automotive/ Retail Repair Services is its Parts Cleaner Service which enables
businesses (such as service stations, car and truck dealers, small engine
repair shops and fleet maintenance shops) to clean parts in a convenient, cost
effective, safe and environmentally sound manner. In this service, the
Company's service representative places parts cleaner equipment and solvent
with a customer, and, at regular service intervals, cleans and maintains the
equipment, delivers clean solvent for use in the degreasing process, and
removes the dirty solvent.
Industrial Services. The Company markets both its Parts Cleaner Service and
its Fluid Recovery Service to industrial customers in the U.S. through its
Industrial Services specialists. The Company's Industrial Services furnish the
same high quality parts cleaner service that is provided to Automotive/Retail
Repair customers. The Company's Fluid Recovery Service consists of the
collection of a wide variety of waste solvents and other liquid wastes
generated by industrial customers in relatively small quantities, averaging a
few 55-gallon drums per pickup. Depending
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upon the content, the material collected by the Company in its Fluid Recovery
Service is either processed into a waste-derived fuel for use in the cement
manufacturing industry, recycled into usable solvent or disposed of through
incineration.
Automotive and Industrial Parts Cleaning Equipment Conversion. The Company
provides a choice of several models of parts cleaners to customers for their
use as part of the Parts Cleaner Service. The Company also provides service to
customers who own their own parts cleaner equipment. In total, at the end of
1994, the Company was providing services for approximately 481,000 parts
cleaners at customers in the United States, of which approximately 368,000 were
owned by the Company and approximately 113,000 were owned by customers.
The Company's Model 16 and 30 parts cleaners are the most prevalent parts
cleaner models furnished by the Company. They consist of a red sink atop a 16-
gallon or 30-gallon drum of solvent, equipped with a submersible pump and a
spout through which the solvent flows.
In 1993, the Company introduced a new parts cleaning machine that was
designed to replace most of its existing Model 16 and 30 parts cleaners. This
new parts cleaner was developed in response to customer desires to minimize the
amount of waste they generate and reduce their annual cost, and is the result
of extensive research and testing conducted by the Company. The new parts
cleaner utilizes a premium nonhazardous solvent and contains a patented
cyclonic separator which mechanically separates dirt particles from the solvent
during machine operation and traps them in a container for removal during
servicing. This system extends the solvent's useful life and reduces the number
of annual services required. With the new cyclonic parts cleaner service,
customers need service less frequently and generate less waste on an annual
basis, which reduces the cost of the parts cleaner service to Safety-Kleen and
also provides customers with the potential to reduce their cost.
The Company began converting the Model 16 and 30 parts cleaners being used by
its domestic Automotive/Retail Repair and Industrial Services customers to the
new cyclonic technology in late 1993. At December 31, 1994, the Company had
placed approximately 103,000 cyclonic parts cleaners at customer locations, and
there were approximately 155,000 Model 16 and 30 parts cleaning machines
remaining in service in the United States. The Company expects to convert a
large portion of the remaining Model 16 and 30 parts cleaning machines to the
cyclonic parts cleaner in 1995 and 1996.
In conjunction with the Company's decision to convert its parts cleaning
equipment, the Company adopted a comprehensive restructuring plan during the
fourth interim period of 1993. For a discussion of this restructuring plan,
refer to "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Restructuring and Special Charges" appearing on page 24
of the Annual Report, which is incorporated herein by reference.
In 1994, the Company developed and test marketed a proprietary filtration
device which can be added to larger Safety-Kleen machines and a substantial
portion of customer-owned parts cleaners. The Company believes this filtration
device should provide these customers with the opportunity to receive waste
minimization and cost reduction benefits similar to the cyclonic parts cleaner
service.
Paint Refinishing Services. The Company's Paint Refinishing Services are
supplied to new and used car dealers, auto body repair and paint shops and
fiberglass product manufacturers. The Company provides a machine specially
designed to clean paint spray guns. Company representatives place a machine and
solvent with each customer, maintain the machine and regularly remove the
contaminated solvent and replace it with clean solvent. Waste paint is also
collected from these customers. The Company either recycles the contaminated
solvent and waste paint into clean solvent for reuse or blends it into fuel for
cement kilns. The Company representatives also provide clean buffing pads and
remove dirty pads during regularly scheduled service calls. The dirty pads are
washed, dried, inspected and returned to the Company's distribution system.
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Dry Cleaner Services. The Company collects and recycles contaminated dry
cleaner wastes consisting primarily of used filter cartridges and sludge
containing perchloroethylene and mineral spirits.
Imaging Services. Through this service, the Company provides spent
photochemical recovery and recycling services to health care, printing,
photoprocessing and other businesses. The Company's entry into this new
business was accelerated with the acquisition of Boston Recovery Company in
October 1994 and Drew Resource Corporation in February 1995.
ENVIROSYSTEMS SERVICE
The Company's Envirosystems Service consists of the collection of waste
solvent and other waste fluids from customers which generate larger quantities
of such waste fluids. The fluids are typically shipped directly from the
customer to one of the Company's recycle centers or fuel blending facilities.
Depending on the content, material collected by the Envirosystems Service is
recycled for reuse, processed into fuels for use in the cement manufacturing
industry or disposed of through incineration.
OIL RECOVERY SERVICES
The Company collects used lubricating oils from automobile and truck dealers,
automotive garages, oil change outlets, service stations, industrial plants and
other businesses and either re-refines the oil into reusable lubricating oil or
processes it into fuel for use in industrial furnaces. The Company derives
revenues both from fees it charges customers to haul away used oil and from the
sale of products it produces by processing the used oil. The Company's
extensive branch network enables it to collect waste oil in sufficient volume
to support oil re-refining operations, which produce lubricating oil that can
be sold at significantly higher prices than industrial fuels. The Company
operates oil re-refining plants in Ontario, Canada and East Chicago, Indiana.
The plants in Ontario and East Chicago have annual capacities of 34 and 85
million gallons of used oil per year, respectively. Waste oil collected in
excess of the capacity of the Company's re-refining facilities is either
processed into industrial fuels or, to a small extent, sold unprocessed for
direct use as a fuel in certain industrial applications for which such oil is
suitable.
EUROPE
The Company primarily provides its Automotive/Retail Repair and Paint
Refinishing Services in Europe. The Company's German operations also offer the
Envirosystems Service. The Company introduced its Fluid Recovery Services in
the United Kingdom during 1994.
PRIMARY RAW MATERIALS
The primary hydrocarbon material used in the Company's Parts Cleaner Service
is a paraffinic hydro-treated petroleum fraction product that is purchased from
petroleum refiners and suppliers through short-term purchase orders. It is not
possible for the Company to accurately estimate the effect of possible future
petroleum product shortages on the Company's operations or those of its
customers. At the present time, the Company expects to be able to purchase
required quantities of such solvent at acceptable prices. For a discussion of
the effect of petroleum product price changes, refer to "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Effects of Petroleum Price Changes" appearing on page 21 of the Annual Report,
which is incorporated herein by reference.
The Company purchases a wide variety of other products and raw materials and
has not experienced any major shortages in the past. The Company believes that
sufficient alternative sources are available should it become necessary to
replace its current sources of supply for these products and materials.
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COMPETITIVE CONDITIONS
The Company is the market leader in the United States in its Parts Cleaner,
Paint Refinishing, Dry Cleaner and Oil Recovery services. In these services,
the Company generally competes with local or smaller regional companies. In its
Fluid Recovery Service, the Company generally competes with many firms engaged
in the transportation, brokerage and/or disposal of hazardous wastes through
recycling, fuels programs or incineration. In its Envirosystems Services, the
Company competes with many recyclers of spent solvents, as well as many firms
engaged in hazardous waste disposal through fuels programs or incineration.
The principal methods of competition for all of the Company's services are
price, quality, reliability of service rendered and technical proficiency in
handling hazardous wastes properly. Knowledgeable customers are interested in
the reputation and financial strength of the companies they use for management
of their hazardous wastes, since the original generators of hazardous waste
remain liable under federal and state environmental laws for improper disposal
of such wastes, even if they employ companies which have proper permits and
licenses. The Company believes that its technical proficiency, reputation and
financial strength are important considerations to its customers in selecting
and continuing to utilize the Company's services.
PATENTS
The Company owns various patents covering certain of its cleaning units and
certain related accessories. The Company has an exclusive license to use a
patented cyclonic separator in parts cleaner applications. In the Company's
opinion, however, the continued conduct of its business operations does not
depend upon the existence of these patents.
EMPLOYEES
At December 31, 1994, the Company had approximately 6,600 employees.
REGULATION
Overview. Domestic and foreign governmental regulations applicable to the
Company's business govern, among other things: the handling of a number of
substances collected by the Company which are classified as hazardous or solid
wastes under these regulations; the operation of the facilities at which the
Company stores or processes the substances it collects; and the ultimate
disposal of waste the Company removes from the substances it collects. An
increase in governmental requirements for the treatment of any particular
material generally increases the value of the Company's services to its
customers, but may also increase the Company's costs.
Various permits are generally required by federal and state environmental
agencies for the Company's branch, accumulation center, solvent recycling, fuel
blending and oil processing facilities. Most of these permits must be renewed
periodically and the governmental authorities involved have the power, under
various circumstances, to revoke, modify or deny issuance or renewal of these
permits. Zoning, land use and siting restrictions also apply to these
facilities. Regulations also govern matters such as the disposal of residual
chemical wastes, operating procedures, stormwater and wastewater discharges,
fire protection, worker and community right-to-know and emergency response
plans. Air and water pollution regulations govern certain operations at the
Company's facilities. Safety standards under the Occupational Safety and Health
Act in the United States and similar foreign laws are also applicable.
Governmental regulations also apply to the operation of vehicles used by the
Company to transport the substances it collects and distributes, including
licensing requirements for the vehicles and the drivers, vehicle safety
requirements, vehicle weight limitations, shipment manifesting and vehicle
placarding requirements. Governmental authorities have the power to enforce
compliance and violators are subject to civil and criminal penalties. Private
individuals may also have the right to sue to enforce compliance with certain
of the governmental requirements.
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Regulations similar to those in the United States apply to the Company's
Canadian operations. In general, environmental requirements are not as strict
in countries in which the Company operates outside North America, but there is
a general trend in Europe and other countries to strengthen environmental
requirements.
The Company has an internal staff of lawyers, engineers, geologists,
hydrogeologists, chemists and safety professionals whose responsibility is to
continuously improve the procedures and practices to be followed by the Company
to comply with various federal, state and local laws and regulations involving
the protection of the environment and worker health and safety and to monitor
compliance.
Hazardous and Solid Waste Requirements. Safety-Kleen's services involve the
collection, transportation, storage, processing, recycling and disposal of
automotive and industrial hazardous and nonhazardous fluids. Substantially all
of these materials are regulated in the United States as "solid wastes" under
the Resource Conservation and Recovery Act of 1976 ("RCRA"). In addition to
being regulated as solid wastes, many of these materials are further regulated
as "hazardous wastes". Accordingly, the Company is subject to federal and state
regulations governing hazardous and solid wastes. RCRA established a national
program which classified various substances as "hazardous wastes", established
requirements for storage, treatment and disposal of hazardous wastes, and
imposed requirements for facilities used to store, treat or dispose of such
wastes. RCRA was amended in 1984 by the Hazardous and Solid Waste Amendments
("HSWA") which expanded the scope of RCRA to include businesses which generate
smaller quantities of waste materials (so-called "small quantity generators"),
expanded the substances classified as hazardous wastes by RCRA and prohibited
direct disposal of those wastes in landfills (thereby, in effect, requiring
that the wastes be recycled, treated, or destroyed).
The Company's customers are increasingly attempting to avoid being subject to
hazardous waste regulations by replacing hazardous materials used in their
businesses with nonhazardous materials or otherwise reducing the amount of
hazardous waste they generate. Accordingly, the Company is collecting more
substances that are not regulated as hazardous wastes but may be regulated as
solid wastes.
Hazardous and solid waste regulations impose requirements which must be met
by facilities used to store, treat and dispose of these wastes. Operators of
hazardous waste storage, disposal and treatment facilities, such as Safety-
Kleen, must obtain a RCRA permit from federal or authorized state governmental
authorities to operate those facilities. States may also require a solid waste
permit. The Company has over 100 RCRA-permitted facilities and is pursuing RCRA
permits at a small number of its other facilities. The Company does not intend
to pursue RCRA permits for its remaining facilities because it will be limiting
activities at these facilities to transfer operations.
In September, 1992, the United States Environmental Protection Agency ("EPA")
finalized regulations that govern the management of used oils. Although used
oil is not classified as a hazardous waste under federal law, certain states do
regulate used oil as hazardous. The Company builds and operates its used oil
facilities to standards similar to those required for hazardous waste
facilities, and believes that its oil management standards are more protective
of human health and the environment than current federal standards.
Fluids collected by the Company's Envirosystems and Fluid Recovery Services
are primarily recycled for reuse or processed into fuel to be burned in kilns
used in the production of cement. Fluids that are processed into waste-derived
fuel are supplied to cement kilns. The majority of such waste-derived fuel is
supplied to cement kilns with which the Company has exclusive supply contracts
with respect to such fuel. In August, 1991, cement kilns became subject to
regulations which govern the burning of hazardous wastes in boilers and
industrial furnaces ("BIF regulations"). Facilities covered
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by the BIF regulations were required to submit certifications of compliance by
August 1, 1992 or to obtain approvals from the relevant governmental authority
to extend the deadline for submission of certification. Every BIF facility that
elects to continue to burn hazardous waste will also be required to obtain a
RCRA operating permit. All of the kilns with which the Company has exclusive
supply contracts have either obtained their compliance certifications or are in
the process of doing so pursuant to an authorized extension. These kilns are
also in the process of obtaining their RCRA operating permits. None of the
kilns utilized by the Company for disposition of the waste it collects are
owned by the Company. The Company is taking an increasingly more active role in
assisting the kilns with which it has exclusive contracts in complying with
such regulations.
The United States EPA is developing regulations which will establish
management standards for cement kiln dust ("CKD"). The Company and the kilns to
which it sends waste-derived fuel have developed programs for analyzing and
characterizing CKD in anticipation of these new management standards; however,
at this time it is not clear what impact these CKD regulations will have on the
Company.
Clean Air Act. The Clean Air Act was passed by Congress to control the
emissions of pollutants to the air, and requires permits to be obtained for
certain sources. In 1990, Congress amended the Clean Air Act to require further
reductions of air pollutants with specific targets for nonattainment areas in
order to meet certain ambient air quality standards. These amendments also
require the EPA to promulgate regulations which: (i) control emissions of 189
toxic air pollutants; (ii) create uniform operating permits for major
industrial facilities similar to RCRA operating permits; (iii) mandate the
phase-out of ozone depleting chemicals; and (iv) provide for enhanced
enforcement.
The Clean Air Act requires states to promulgate regulations which will result
in the reduction of volatile organic compound (VOC) emissions by 15% by 1996 in
order to meet certain ozone attainment standards under the act. This will
require emission reductions at the Company's recycle centers and branches and
could affect its solvents used in nonattainment areas. In addition, the United
States EPA is developing Maximum Achievable Control Technology ("MACT")
standards under the Clean Air Act which will impose restrictions on the
emission of certain toxic air pollutants. These standards could impact certain
of the Company's facilities and the cement kilns to which the Company sends its
waste-derived fuels.
In order to comply with these regulations, the Company has instituted a
program to augment the air emission control equipment at its affected
facilities and to obtain operating permits, where required. The Company is also
working with the United States EPA and appropriate state and local agencies
regarding the regulation of its parts cleaner and paint spray gun cleaner
operations.
The Clean Air Act will also require a certain percentage of the new vehicles
purchased by the Company after 1995 in nonattainment areas to be clean-fuel-
burning vehicles. Furthermore, the Company will be required to implement
Employee Commute Reduction Plans by providing car and van pooling or
implementing other options in nonattainment areas where the Company has more
than 100 employees.
CERCLA and Related Requirements. The Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA") was originally enacted in
December, 1980, and amended in 1986 by the Superfund Amendments and
Reauthorization Act ("SARA"). Federal funding for the CERCLA program was
reauthorized in 1990. CERCLA creates a fund of monies ("Superfund") which can
be used by the EPA and state governments to clean up hazardous waste sites
pending recovery of those costs from defined categories of "potentially
responsible parties" ("PRPs"). Most EPA cleanup efforts are at sites listed or
proposed for listing on the National
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Priorities List ("NPL"). Various states have also enacted statutes which
contain provisions substantially similar to CERCLA.
Generators and transporters of hazardous substances, as well as past and
present owners and operators of hazardous release sites, are made strictly,
jointly and severally liable for the clean-up costs resulting from releases and
threatened releases of CERCLA-regulated "hazardous substances." Under CERCLA,
these responsible parties can be ordered to perform a clean-up, can be sued for
costs associated with private party or public agency clean-up, or can
voluntarily settle with the government concerning their liability for clean-up
costs.
A large portion of the materials collected by the Company are recycled or
converted into materials, such as industrial fuels, which may be used for
another purpose. The amount of material that the Company deposits at waste
sites is accordingly small in relation to the volume of materials collected by
the Company, and the Company is actively engaged in a waste minimization
program to reduce this small amount even further. The Company also sends some
of the materials it collects to selected third party facilities for further
treatment, processing and/or disposal. The Company audits each of these
facilities prior to shipping any materials to attempt to minimize its potential
superfund liability at these sites.
Most of the Company's CERCLA responsibilities stem from certain historic
disposal practices in the 1970's. These practices were stopped in the mid-to-
late 1970's with the development of expanded recycling technology. The Company
has been a relatively small contributor in most waste disposal sites utilized
by the Company.
Proceedings are currently pending involving several sites with respect to
which the Company has been notified by the EPA or the appropriate state agency
that the Company may be a PRP. The Company is participating in settlement
discussions with the parties and the government at these sites. The Company's
volumetric share of the total waste at a majority of these sites is among the
smallest of the PRPs and the Company has a larger volumetric share at a
minority of these sites. The EPA has requested information from the Company to
ascertain if it may be a PRP at several other sites, but the Company has no
record of having dealings with any of these other sites. The Company has
already settled its liability at eighteen superfund sites.
Costs of Increasing Regulations and Higher Fees and Taxes. State and local
authorities are increasingly adopting legislation and regulations which impose
stricter operating and performance standards and increased taxes, assessments
and fees upon the generators, transporters and handlers of hazardous and
nonhazardous waste. Although historically the Company has been able to pass
most of the costs associated with such legislation and regulations on to its
customers through price increases, there can be no assurance it will be able to
continue to do so in the future.
Capital and Certain Other Expenditures Related to the Environment. A portion
of the Company's capital expenditures are related to compliance with
environmental laws and regulations. The Company estimates capital spending of
approximately $7 million for the year 1995 and $14 million in the aggregate,
for the years 1996 through 1999 in order to comply with RCRA, the Clean Air Act
and other environmental laws and regulations currently in effect in conjunction
with the Company's existing business.
In addition to these capital expenditures, the Company may incur costs in
connection with closure activities at certain of its sites. When the Company
discontinues using or, in certain cases, changes the use of a hazardous waste
management unit, formal closure procedures must be followed. These closure
procedures must be approved by federal or state environmental authorities. In
some cases, costs are incurred to complete remedial cleanup work at the site.
In addition, at certain of the Company's other operating sites, remedial
cleanup work is required as part of the RCRA Corrective
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Action Program or other state and federal programs. As shown on the Company's
Consolidated Balance Sheet and more fully described in note 9 to the
Consolidated Financial Statements at pages 28 and 38, respectively, of the
Annual Report, the Company has accrued liabilities of approximately $50 million
as of December 31, 1994 for facility closures, remedial cleanup work, superfund
site liability and certain other environmental expenses related to its
operating and previously closed sites.
Enforcement Actions. The Company's goal is to fully comply with all
environmental regulations and other governmental requirements. The Company has
instituted several programs to enhance compliance, including suspending site
operations if appropriate corrective actions are not taken to remedy potential
defects. The Company conducts regular audits of its facilities to assess
compliance with federal and state environmental and safety laws and
regulations. Any potential deficiencies are identified and a corrective action
plan is prepared and implemented to eliminate the potential defect. In 1994 the
Company conducted over 460 such audits. The Company regularly conducts
corporate training courses and seminars focused on environmental control and
safety regulations, in addition to on-going weekly field training for its site
employees.
In spite of the Company's goal to fully comply with all environmental
regulations, given the Company's extensive operations, the technical aspects of
the regulations and the varying interpretations of the requirements from
jurisdiction to jurisdiction, the Company may incur governmental fines and
penalties from time to time. In the majority of situations where proceedings
are commenced by governmental authorities, the matters involved relate to
alleged violations of permits or orders under which the Company operates, or
laws and regulations to which its operations are subject, and are the result of
varying interpretations of the applicable requirements. Generally, these
proceedings result from routine inspections conducted by federal and state
regulatory agencies. In 1991 and 1992, throughout its United States facilities,
201 and 142 regulatory proceedings, respectively, were brought by state or
federal authorities against the Company. In 1993, this number was reduced to
136. This number was reduced again in 1994 to 130. Administrative actions are
counted in the year notice of the violation is received by the Company,
regardless of when the inspection giving rise to the action was conducted. Some
of the proceedings brought in 1994 resulted from inspections performed in
previous years. Of these administrative actions in 1994, approximately 16% of
the alleged deficiencies related to incomplete or incorrect manifests and other
shipping documents. Alleged defects in site operating records, training record
keeping and other paperwork accounted for an additional 44% of these
allegations. The Company processed over one million manifests and completed
several million individual drum labels in 1994. Throughout its facility
network, the Company maintains over 200 sets of operating records and logs in
which millions of individual entries are made annually. A clerical error on a
manifest, drum label or site paperwork can result in a violation notice.
From time to time, the Company becomes subject to proceedings in which
governmental authorities may seek fines and/or penalties from the Company which
exceed $100,000 in each case. Six such proceedings were pending against the
Company at December 31, 1994. In these cases, the governmental authorities
involved may allege, among other things, that at certain of the Company's
facilities, the Company is responsible for releases or threatened releases of
hazardous substances, that the Company engaged in soil excavation or clean-up
activities without obtaining requisite advance approvals and/or that the
Company committed certain manifesting, storage and/or waste handling
violations.
Five such cases were settled during 1994. Two of these five cases were
settled during the first three quarters of 1994 and were previously disclosed
in the Company's quarterly reports on Form 10-Q. The three remaining cases were
settled during the fourth quarter of 1994. In these three cases, the Company
and the State of Ohio entered into a settlement agreement involving alleged
hazardous waste violations at the Company's eight Ohio facilities which
resolved differences in regulatory
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interpretation and technical issues with the Ohio EPA and resolved alleged
violations dating back to 1986. Pursuant to the agreement, Safety-Kleen paid a
penalty of $825,000, agreed to expend $165,000 for household hazardous waste
collections in Ohio over the next three years and reimbursed the Ohio Attorney
General's Office $10,000 for processing costs.
The Company's practice is to attempt to negotiate resolution of claims
against the Company and its facilities. The Company has to date been able to
resolve cases on generally satisfactory terms. The Company is, however,
prepared to contest claims or remedies which the Company believes to be
inappropriate unless and until satisfactory settlement terms can be agreed
upon. The Company paid approximately $4 million in 1994 for environmental
fines, penalties and forfeitures.
Potential Environmental Liabilities. Based on its past experience and its
knowledge of pending cases, the Company believes it is unlikely that the
Company's actual liability on cases now pending (including enforcement actions
of the type described above and CERCLA or state superfund cases) will be
materially adverse to the Company's financial condition. It should be noted,
however, that many environmental laws are written in a way in which the
Company's potential liability can be large, and it is always possible that the
Company's actual liability on any particular environmental claim will prove to
be larger than anticipated or accrued for by the Company. It is also possible
that expenses incurred in any particular reporting period for remediation costs
or for fines, penalties, or judgments could have a material impact on the
Company's results of operations for that period.
FINANCIAL INFORMATION RELATING TO FOREIGN AND DOMESTIC OPERATIONS AND INDUSTRY
SEGMENTS
The Company operates primarily in one business segment: providing businesses
with environmentally safe and convenient solutions for managing fluid waste and
other recoverable resources. For a discussion of financial information relating
to foreign and domestic operations and industry segments refer to Note 3 to the
Consolidated Financial Statements appearing on pages 31 and 32 of the Annual
Report.
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company are:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Donald W. 64 Chairman of the Board
Brinckman
John G. 54 President, Chief Executive Officer and Director
Johnson
Jr.
Hyman K. 40 Senior Vice President General Counsel
Bielsky
Roy D. 46 Senior Vice President Business Management and Marketing
Bullinger
Robert J. 57 Senior Vice President Human Resources
Burian
Michael H. 47 Senior Vice President Marketing Services and Customer Care
Carney
Joseph 49 Senior Vice President Processing, Engineering and Oil Recovery
Chalhoub
David A. 54 Senior Vice President Sales and Service
Dattilo
Scott E. 40 Senior Vice President Environment, Health and Safety
Fore
F. Henry 41 Senior Vice President Strategic/Environmental Planning
Habicht II
William P. 52 Senior Vice President Operations and Information
Kasko
Robert W. 47 Senior Vice President Finance and Secretary
Willmschen
Jr.
Glenn R. 37 Vice President Engineering
Casbourne
Clark J. 57 Vice President Technical Services
Rose
Laurence M. 49 Treasurer
Rudnick
Clifford J. 43 Controller
Schulz
</TABLE>
9
<PAGE>
Mr. Brinckman relinquished his post as Chief Executive Officer of the Company
as of December 31, 1994, a position he held since 1968. He served as President
of the Company from 1968 to August, 1990, and December, 1991 to May, 1993. Mr
Brinckman was elected Chairman of the Company's Board of Directors in August,
1990. Mr. Brinckman is also a director of Johnson Worldwide Associates, Inc.,
Racine, Wisconsin, Paychex, Inc., Rochester, New York and Snap-On Incorporated,
Kenosha, Wisconsin. Mr. Brinckman is Chairman of the Executive Committee.
Mr. Johnson was elected President and a director of the Company in May 1993,
and assumed the additional responsibility of Chief Executive Officer as of
January 1, 1995. He joined Safety-Kleen in January, 1993 as Assistant to the
Chairman/CEO. Prior to joining Safety-Kleen, Mr. Johnson was employed by ARCO
since 1958. He served as Senior Vice President of ARCO Chemical Company since
1986. In 1987, he became a director and in 1988 was given the added
responsibility of President of ARCO Chemical Americas, a division of ARCO
Chemical Company.
Mr. Bielsky was elected Senior Vice President General Counsel in May, 1993.
Mr. Bielsky served as Assistant General Counsel-Commercial since January, 1990,
and as Associate Counsel since joining the Company in 1987.
Mr. Bullinger was named Senior Vice President Business Management and
Marketing in June 1994. He served as Vice President Sales--Central Division
since 1985 and as a Regional Manager since joining the Company in 1975.
Mr. Burian was appointed Senior Vice President Human Resources in May, 1993.
He served as Senior Vice President Administration since August, 1990. Mr.
Burian joined the Company in July, 1986, as Vice President Personnel.
Mr. Carney was named Senior Vice President Marketing Services and Customer
Care in June 1994. He served as Senior Vice President Marketing since August,
1990 and Vice President Marketing since May, 1987. He joined the Company in
1976, serving in various marketing positions until his appointment to Vice
President Marketing.
Mr. Chalhoub was elected Senior Vice President, Oil Recovery Division in
August, 1990. In August, 1991, Mr. Chalhoub was assigned the additional
responsibilities of overseeing the processing and engineering departments. He
served as Vice President Oil Recovery Division since February, 1990. He has
served as President of the Company's former subsidiary, Breslube Holding Corp.,
since May, 1987.
Mr. Dattilo was named Senior Vice President Sales and Service in August,
1990. He served as Vice President Corporate Branch Sales and Service since
January, 1980.
Mr. Fore was elected Senior Vice President Environment, Health and Safety in
May, 1993. He served as Vice President Environment, Health and Safety since
August, 1987, and was previously Associate General Counsel since joining the
Company in 1985.
Mr. Habicht joined the Company in March, 1993, as Senior Vice President, and
in May, 1993, he was elected Senior Vice President Strategic/Environmental
Planning. Prior to joining the Company, he served as Deputy Administrator of
the U.S. Environmental Protection Agency from 1989 to 1992. From 1987 to 1989
Mr. Habicht was Vice President of William D. Ruckelshaus Associates, an
environmental consulting firm.
Mr. Kasko was elected Senior Vice President Operations and Information in
August, 1990. He previously served as Vice President Operations since 1981.
Mr. Willmschen was named Senior Vice President Finance in August, 1990. He
served as Vice President Finance and Secretary since February, 1982.
Mr. Casbourne was named Vice President Engineering in August, 1991. He served
as Vice President Engineering for the Oil Recovery Division since January,
1990. Prior to this, he served in various engineering capacities in the
Company's Oil Recovery Division and its predecessor, Breslube Enterprises,
since 1987.
10
<PAGE>
Mr. Rose was named Vice President Technical Services in August, 1989, after
serving as Manager of Recycle Center Operations since joining the Company in
June, 1984.
Mr. Rudnick joined the Company in September, 1979, and was appointed
Treasurer in January, 1980.
Mr. Schulz was named Controller in December, 1994. He served as Controller
North American Operations and Assistant Controller Cost and Inventory since
1991 and 1987, respectively.
ITEM 2. PROPERTIES
The Company owns 12 solvent recycling plants in the U.S., Puerto Rico, the
United Kingdom and Germany. In total, these plants have an annual recycling
capacity of 64 million gallons of parts cleaner solvents and 34 million gallons
of halogenated, fluorinated and flammable solvents. The total storage capacity
of these plants is approximately 8.4 million gallons. In addition, the Company
owns 3 fuel blending facilities, located on leased land, which have combined
storage capacity of approximately 2.6 million gallons.
The Company owns 2 oil re-refining plants with a combined annual re-refining
capacity of 119 million gallons. These plants are located in Ontario, Canada
and East Chicago, Indiana.
The Company leases 5 distribution facilities and owns 3 distribution
facilities in the U.S., United Kingdom and Germany, averaging approximately
45,000 square feet. The Company has 18 accumulation centers across the U.S. Of
these, 13 are owned and 5 are leased. A typical accumulation center is
approximately 8,000 square feet. These centers serve branches by collecting
drums of waste from the Fluid Recovery Service, Dry Cleaner Service, Paint
Refinishing Service and other small quantity generator services. As truck load
quantities are collected, they are transported from the accumulation centers to
the recycling plants.
In North America, Germany, France, Belgium, Italy, Spain, the Republic of
Ireland and the United Kingdom, the Company's sales and service representatives
operate out of 236 branch facilities. Of these, approximately 50% are leased
and 50% are owned. A typical branch is approximately 8,000 square feet.
The Company owns a 106,000 square foot plant in New Berlin, Wisconsin, where
parts cleaner machines and buffing pads are manufactured.
The Company owns a 285,000 square foot corporate headquarters building
located in Elgin, Illinois and a 66,000 square foot Technical Center located in
Elk Grove Village, Illinois. The Company also owns a 128,000 square foot office
building located in Elgin, Illinois, which is being marketed for sale or lease.
The Company operates approximately 2,600 van-type vehicles, 240 straight
tanker-type service vehicles and 700 pieces of over-the-road equipment, most of
which are owned by the Company. The Company also leases approximately 480
railroad tanker cars.
ITEM 3. LEGAL PROCEEDINGS
Reference is made to "Item 1. Business," subcaption "Regulation," for
information concerning certain environmental matters.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
interim period of the fiscal year ended December 31, 1994.
11
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The "Market and Dividend Information" appearing on page 41 of the Annual
Report is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The "Selected Financial Data" appearing on page 25 of the Annual Report is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" appearing on pages 20-25 of the Annual Report is incorporated
herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The "Report of Independent Public Accountants", Consolidated Financial
Statements and "Notes to Consolidated Financial Statements" appearing on pages
26-39 of the Annual Report are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information set forth under the heading "Executive Officers of the
Registrant" in Part I, Item 1 of this Annual Report on Form 10-K and under the
headings "PROPOSAL 1: ELECTION OF DIRECTORS" and "COMMON STOCK OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" in the Company's definitive proxy
statement for the May 12, 1995 Annual Meeting of Shareholders (the "Proxy
Statement") is herein incorporated by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth under the heading "EXECUTIVE COMPENSATION" in the
Proxy Statement is herein incorporated by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth under the heading "COMMON STOCK OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" in the Proxy Statement is herein
incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth under the headings "EXECUTIVE COMPENSATION",
"CERTAIN RELATIONSHIPS" and "DIRECTORS' COMMITTEES, MEETINGS AND COMPENSATION"
in the Proxy Statement is herein incorporated by reference.
12
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
Item 14(a)1. List of Financial Statements.
The following consolidated financial statements of the Company included
on pages 26-39 of the Annual Report to Shareholders for the year ended
December 31, 1994 are incorporated by reference:
Consolidated Balance Sheets as of December 31, 1994 and January 1,
1994.
Consolidated Statements of Operations for the fiscal years ended
December 31, 1994, January 1, 1994 and January 2, 1993.
Consolidated Statements of Cash Flows for the fiscal years ended
December 31, 1994, January 1, 1994 and January 2, 1993.
Consolidated Statements of Shareholders' Equity for the fiscal years
ended December 31, 1994, January 1, 1994 and January 2, 1993.
Notes to Consolidated Financial Statements.
Item 14(a)2. Financial Statement Schedules.
The following Consolidated Financial Statement Schedules of Safety-
Kleen Corp. and Subsidiaries are included in response to Item 14(d):
<TABLE>
<CAPTION>
PAGE
NO.
----
<S> <C>
Report of Independent Public Accountants.............................. 16
Schedule II Allowance for Doubtful Accounts........................... 17
</TABLE>
Schedules other than those listed above are omitted as the information
is not required or not applicable, or the required information is shown
in the financial statements or notes thereto.
Item 14(a)3. List of Exhibits.
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<C> <S>
3.1 Articles of Incorporation of the Registrant. (4)
3.2 By-Laws of the Registrant.
4.1 Form of Rights Agreement, dated November 9, 1988, between
Safety-Kleen Corp. and the First National Bank of Chicago. (1)
4.2 Indenture Agreement dated August 15, 1989, between Safety-Kleen
Corp. and the Chase Manhattan Bank, executed in connection with
the Company's issuance and sale from time to time of up to $200
million aggregate principal amount of Debt Securities. (2)
4.2.1 Board of Directors' Resolution executed in connection with the
issuance and sale of $100 million aggregate principal amount of
9.25% Senior Notes due September 15, 1999. (2)
4.2.2 Board of Directors' Resolution executed in connection with the
future issuance and sale of up to $100 million aggregate
principal amount of Series A Medium Term Notes. (2)
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<C> <S>
4.3 Note Purchase Agreement dated as of January 15, 1995, between
Safety-Kleen Corp. and certain Purchasers, executed in
connection with the Company's issuance and sale of its 8.05%
Senior Notes due January 30, 1998 in the aggregate principal
amount of $50 million.
10.1 Safety-Kleen Corp. 1985 Stock Option Plan. (3)*
10.2 Safety-Kleen Corp. 1988 Non-Qualified Stock Option Plan for
Outside Directors. (1)*
10.3 Form of Safety-Kleen Corp. Severance Agreement. (3)*
10.3.1 Current Schedule of Participants to Safety-Kleen Corp. Severance
Agreement.*
10.4 Safety-Kleen Corp. 1993 Stock Option Plan. (5)*
10.5 Employment Agreement and Addendum to Severance Agreement dated
January 11, 1993, between John G. Johnson, Jr. and Safety-Kleen
Corp. (6)*
10.6 Safety-Kleen Corp. Excess Benefit Plan. (5)*
10.7 Safety-Kleen 1994 Management Incentive Plan. (6)
10.8 Safety-Kleen 1995 Management Incentive Plan.*
10.9 Severance Agreement dated January 1, 1995, between Donald W.
Brinckman and Safety-Kleen Corp.*
10.10 Amended and Restated Credit Agreement dated March 25, 1994,
among the Chase Manhattan Bank, N.A., the Northern Trust
Company, the NBD Bank, N.A. and the First National Bank of
Chicago.
13 Annual Report to Shareholders for the year ended December 31,
1994.
21 Subsidiaries of the Registrant. (3)
23 Consent of Experts.
27 Financial Data Schedule. (EDGAR Filing Only)
99.1 Press Release issued February 10, 1995 regarding 1994 results of
operations.
</TABLE>
-------------------------
(1) Previously filed and incorporated herein by reference from
Registrant's Current Report on Form 8-K, dated November 10, 1988.
(2) Previously filed and incorporated herein by reference from
Registrant's Quarterly Report on Form 10-Q for the twelve weeks
ended September 9, 1989.
(3) Previously filed and incorporated herein by reference from
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 29, 1990.
(4) Previously filed and incorporated herein by reference from
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 28, 1991.
(5) Previously filed and incorporated herein by reference from
Registrant's Annual Report on Form 10-K for the fiscal year ended
January 2, 1993.
(6) Previously filed and incorporated herein by reference from
Registrant's Annual Report on Form 10-K for the fiscal year ended
January 1, 1994.
*Indicates each management or compensatory plan or arrangement
required to be filed as an exhibit to this form pursuant to Item
14(c) of this report.
(Copies of these exhibits can be obtained from the Company for its
reasonable out-of-pocket expense for furnishing such copies.)
Item 14(b). Reports on Form 8-K.
None.
14
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
Safety-Kleen Corp.
Date: March 29, 1995 By: /s/ Robert W. Willmschen, Jr.
------------------------------------- -------------------------------------
Senior Vice President Finance
and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Donald W. Brinckman
------------------------------------
Donald W. Brinckman Chairman of the Board March 29, 1995
/s/ John G. Johnson, Jr.
------------------------------------
John G. Johnson, Jr. President, Chief Executive
Officer and Director March 29, 1995
/s/ Robert W. Willmschen, Jr.
------------------------------------
Robert W. Willmschen, Jr. Senior Vice President
Finance, Chief Financial
Officer March 29, 1995
/s/ Clifford J. Schulz
------------------------------------
Clifford J. Schulz Controller, Chief Accounting
Officer March 29, 1995
/s/ Richard T. Farmer
------------------------------------
Richard T. Farmer Director March 29, 1995
/s/ Russell A. Gwillim
------------------------------------
Russell A. Gwillim Director March 29, 1995
/s/ Edgar D. Jannotta
------------------------------------
Edgar D. Jannotta Director March 29, 1995
/s/ Karl G. Otzen
------------------------------------
Karl G. Otzen Director March 29, 1995
/s/ Paul D. Schrage
------------------------------------
Paul D. Schrage Director March 29, 1995
/s/ Marcia E. Williams
------------------------------------
Marcia E. Williams Director March 29, 1995
/s/ W. Gordon Wood
------------------------------------
W. Gordon Wood Director March 29, 1995
</TABLE>
15
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and
Shareholders of Safety-Kleen Corp.:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements included in the Safety-Kleen Corp. annual
report to shareholders incorporated by reference into this Form 10-K, and have
issued our report thereon dated February 9, 1995. Our report on the
consolidated financial statements includes an explanatory paragraph with
respect to the changes in the methods of accounting for post-retirement
benefits other than pensions and accounting for income taxes, effective
December 29, 1991, as discussed in Notes 7 and 8 to the consolidated financial
statements. Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The Supplemental Schedule II is
the responsibility of the Company's management and is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part
of the basic financial statements. This schedule has been subjected to the
auditing procedures applied in the audits of the basic financial statements
and, in our opinion, fairly states in all material respects, the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
/s/ Arthur Andersen LLP
Chicago, Illinois,
February 9, 1995.
16
<PAGE>
SCHEDULE II
SAFETY-KLEEN CORP. AND SUBSIDIARIES
ALLOWANCE FOR DOUBTFUL ACCOUNTS
FOR THE THREE YEARS ENDED DECEMBER 31, 1994
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
----------------------------------
DECEMBER 31, JANUARY 1, JANUARY 2,
1994 1994 1993
------------ ---------- ----------
(EXPRESSED IN THOUSANDS)
<S> <C> <C> <C>
Balance at beginning of year................. $ 8,432 $ 7,399 $ 7,250
Provision charged to operating expenses...... 5,067 6,822 7,053
Write-offs net of recoveries................. (4,631) (5,789) (6,904)
------- ------- -------
Balance at end of year....................... $ 8,868 $ 8,432 $ 7,399
======= ======= =======
</TABLE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
17
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<C> <S>
3.1 Articles of Incorporation of the Registrant. (4)
3.2 By-Laws of the Registrant.
4.1 Form of Rights Agreement, dated November 9, 1988, between
Safety-Kleen Corp. and the First National Bank of Chicago. (1)
4.2 Indenture Agreement dated August 15, 1989, between Safety-Kleen
Corp. and the Chase Manhattan Bank, executed in connection with
the Company's issuance and sale from time to time of up to $200
million aggregate principal amount of Debt Securities. (2)
4.2.1 Board of Directors' Resolution executed in connection with the
issuance and sale of $100 million aggregate principal amount of
9.25% Senior Notes due September 15, 1999. (2)
4.2.2 Board of Directors' Resolution executed in connection with the
future issuance and sale of up to $100 million aggregate
principal amount of Series A Medium Term Notes. (2)
4.3 Note Purchase Agreement dated as of January 15, 1995, between
Safety-Kleen Corp. and certain Purchasers, executed in connection
with the Company's issuance and sale of its 8.05% Senior Notes
due January 30, 1998 in the aggregate principal amount of $50
million.
10.1 Safety-Kleen Corp. 1985 Stock Option Plan. (3)*
10.2 Safety-Kleen Corp. 1988 Non-Qualified Stock Option Plan for
Outside Directors. (1)*
10.3 Form of Safety-Kleen Corp. Severance Agreement. (3)*
10.3.1 Current Schedule of Participants to Safety-Kleen Corp. Severance
Agreement.*
10.4 Safety-Kleen Corp. 1993 Stock Option Plan. (5)*
10.5 Employment Agreement and Addendum to Severance Agreement dated
January 11, 1993, between John G. Johnson, Jr. and Safety-Kleen
Corp. (6)*
10.6 Safety-Kleen Corp. Excess Benefit Plan. (5)*
10.7 Safety-Kleen 1994 Management Incentive Plan. (6)
10.8 Safety-Kleen 1995 Management Incentive Plan.*
10.9 Severance Agreement dated January 1, 1995, between Donald W.
Brinckman and Safety-Kleen Corp.*
10.10 Amended and Restated Credit Agreement dated March 25, 1994,
among the Chase Manhattan Bank, N.A., the Northern Trust
Company, the NBD Bank, N.A. and the First National Bank of
Chicago.
13 Annual Report to Shareholders for the year ended December 31,
1994.
21 Subsidiaries of the Registrant. (3)
23 Consent of Experts.
27 Financial Data Schedule. (EDGAR Filing Only)
99.1 Press Release issued February 10, 1995 regarding 1994 results of
operations.
</TABLE>
-------------------------
(1) Previously filed and incorporated herein by reference from
Registrant's Current Report on Form 8-K, dated November 10, 1988.
(2) Previously filed and incorporated herein by reference from
Registrant's Quarterly Report on Form 10-Q for the twelve weeks
ended September 9, 1989.
(3) Previously filed and incorporated herein by reference from
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 29, 1990.
(4) Previously filed and incorporated herein by reference from
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 28, 1991.
(5) Previously filed and incorporated herein by reference from
Registrant's Annual Report on Form 10-K for the fiscal year ended
January 2, 1993.
(6) Previously filed and incorporated herein by reference from
Registrant's Annual Report on Form 10-K for the fiscal year ended
January 1, 1994.
*Indicates each management or compensatory plan or arrangement
required to be filed as an exhibit to this form pursuant to Item
14(c) of this report.
<PAGE>
EXHIBIT 3.2
November 12, 1994 Sec'y Init. . . . . . .
BY-LAWS
ARTICLE I
OFFICES
The principal office of the Corporation in the State of Wisconsin shall
be located in the City of Milwaukee, County of Milwaukee. The Corporation may
have such other offices, either within or without the State of Wisconsin, as the
Board of Directors may designate or as the business of the Corporation may
require from time to time.
The registered office of the Corporation required by the Wisconsin
Business Corporation Law to be maintained in the State of Wisconsin may be, but
need not be, identical with the principal office in the State of Wisconsin, and
the address of the registered office may be changed from time to time by the
Board of Directors.
ARTICLE II
SHAREHOLDERS
Section 1 - Annual Meeting.
The annual meeting of the shareholders shall be held on a weekday on such
date and at such time as the Board of Directors may determine, for the purpose
of electing directors and for the transaction of such business as may properly
come before the meeting. If the election of directors shall not be held on the
day designated herein for any annual meeting, or at any adjournment thereof, the
Board of Directors shall cause the election to be held at a special meeting of
the shareholders as soon thereafter as conveniently is possible.
Section 2 - Special Meeting (of Shareholders).
Special meetings of the shareholders may be called by the Chairman of the
Board, or the Board of Directors, and, subject to the provisions of the second
paragraph of Article II, Section 4 below, shall be called by the President at
the request of the holders of at least one-tenth of all votes entitled to be
cast on any issue proposed at the meeting.
Section 3 - Place of Meeting.
The Board of Directors may designate any place, either within or without
the State of Wisconsin, as the place of meeting for any annual meeting or for
any special meeting called by the Board of Directors. If no designation is
made, or if a special meeting be otherwise called, the place of meeting shall be
the principal office of the Corporation, but any meeting may be adjourned to
reconvene at any place designated by the Chairman of the meeting.
1
<PAGE>
November 12, 1994 Sec'y Init. . . . . . .
Section 4 - Notice of Meeting.
Written notice stating the place, day and hour of the meeting and the
purpose or purposes for which the meeting is called, shall be delivered not less
than 10 nor more than 60 days before the day of the meeting, either personally
or by mail, by or at the direction of the President, the Secretary, or the
Officer or persons calling the meeting, to each shareholder of record entitled
to vote at such meeting. If mailed, such notice shall be deemed to be delivered
when deposited in the United States mail, addressed to the shareholder at his
address as it appears on the stock record books of the Corporation, with postage
thereon prepaid.
For a meeting to be properly called by the President at the request of
the holders of at least one-tenth of all votes entitled to be cast on any issue
proposed at the meeting, the shareholders requesting the meeting must give
notice of such request in writing containing the applicable information,
required in Sections 12 and 13 hereof, and such notice must be signed and dated
by each such requesting shareholder and delivered to the Secretary at the
principal executive offices of the Corporation. The Board of Directors shall
promptly, but in all events within 10 business days after the date on which such
notice is received, adopt a resolution (i) setting the date for such meeting,
which date shall be not more than 180 and not less than 10 days from the date on
which such resolution is adopted and (ii) fixing the record date for such
meeting in accordance with Section 5 hereof. Shareholders requesting such a
meeting shall pay for all costs incurred in connection with calling and holding
such meeting, including all reasonable costs incurred by the Corporation with
respect thereto.
Any previously scheduled meeting of shareholders may be postponed by
resolution of the Board of Directors upon public notice given prior to the date
previously scheduled for such meeting provided, however, that any special
meeting called at the request of holders of at least one tenth of all votes
entitled to be cast on any issue proposed at the meeting may not be postponed to
a date more than 180 days following the date on which the Board of Directors
adopted the resolution which fixed the original date of such meeting.
Only such business shall be conducted at a special meeting of
shareholders as shall have been set forth as the purpose or purposes of such
special meeting in the Corporation's notice of such special meeting.
Section 5 - Fixing of Record Date.
For the purpose of determining shareholders entitled to notice of or to
vote at any meeting of shareholders or any adjournment thereof, or shareholders
entitled to receive payment of any dividend, or in order to make a determination
of shareholders for any other proper purpose, the Board of Directors of the
Corporation may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than 70
days, and, in case of a meeting of shareholders, not less than 10 days, prior to
the date on which the particular action, requiring such determination of
shareholders, is to be taken. If no record date is fixed for the determination
of shareholders entitled to notice of or to vote at a meeting of shareholders or
2
<PAGE>
November 12, 1994 Sec'y Init. . . . . . .
shareholders entitled to receive payment of a dividend, the date on which notice
of the meeting is mailed or the date on which the resolution of the Board of
Directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made, as
provided in this section, such determination shall be applied to any adjournment
thereof, provided, however, that the Board of Directors will fix a new record
date if such meeting is adjourned to a date more than 120 days after the date
fixed for the original meeting.
Section 6 - Voting Lists.
The officer or agent having charge of the stock transfer books for shares
of the Corporation shall make, within two business days after notice of the
meeting is given, a complete list of the shareholders entitled to vote at such
meeting, or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each, which list, until the time of
such meeting, shall be kept on file at the registered office of the Corporation
and shall be subject to inspection by any shareholder at any time during usual
business hours. Such list shall also be produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting. The original stock transfer books shall
be prima facie evidence as to who are the shareholders entitled to examine such
list or transfer books or to vote at any meeting of shareholders. Failure to
comply with the requirements of this section shall not affect the validity of
any action taken at such meeting.
Section 7 - Quorum.
A majority of the outstanding shares of the Corporation entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
shareholders. Whether or not such quorum is present or represented at any
meeting of shareholders, the Chairman of the meeting may adjourn the meeting
from time to time without further notice other than announcement at the meeting;
provided, however, that when a meeting is so adjourned to another time or place,
notice of the adjourned meeting need not be given only if the date, time and
place thereof are announced at the original meeting, if the adjournment is for
not more than 120 days and if no new record date is fixed for the adjourned
meeting. At such adjourned meeting at which a quorum shall be present or
represented, only such business may be transacted which might have been
transacted at the meeting as originally notified. The Chairman of the Board of
Directors shall act as the Chairman of all meetings of shareholders and, in the
absence of the Chairman of the Board of Directors, the President shall preside.
In the absence of the President, the Board of Directors shall designate any
other Director, Officer or employee of the Corporation to preside at such
meeting.
Section 8 - Proxies.
At all meetings of shareholders, a shareholder entitled to vote may vote
by proxy appointed in writing by the shareholder or by his duly authorized
attorney in fact. Such proxy shall be filed with the Secretary of the
Corporation before or at the time of the meeting. No proxy shall be valid after
eleven months from the date of its execution, unless otherwise provided in the
proxy.
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Section 9 - Voting of Shares.
Subject to the Articles of Incorporation, each outstanding share entitled
to vote shall be entitled to one vote upon each matter submitted to a vote at a
meeting of shareholders. Unless otherwise required by the Articles of
Incorporation or applicable law, Directors shall be elected by a plurality of
the votes cast by the shares entitled to vote in the election at which a quorum
is present. Unless otherwise required by the Articles of Incorporation or
applicable law, the affirmative vote of the holders of a majority of the shares
present or represented at a meeting of shareholders at which a quorum is present
or represented shall be required to decide all matters brought before such
meeting other than the election of Directors.
Section 10 - Voting Company's Shares.
Shares of the Corporation belonging to it shall not be voted directly or
indirectly at any meeting and shall not be counted in determining the total
number of outstanding shares at any given time, but shares held by this
Corporation in a fiduciary capacity may be voted and shall be counted in
determining the total number of outstanding shares at any given time.
Section 11 - Shares in Other Corporation's Name.
Shares standing in the name of another corporation may be voted either in
person or by proxy, by a duly appointed officer of such corporation who has
been authorized to cast such votes or execute such proxies. A proxy executed by
any principal officer of such other corporation shall be conclusive evidence of
the signer's authority to act, in the absence of express notice to this
Corporation, given in writing to the Secretary of this Corporation, of the
designation of some other person by the board of directors or the by-laws of
such corporation.
Section 12 - Notice of Shareholder Business.
At all meetings of the shareholders, only such business shall be
conducted as shall have been brought before the meeting (a) by or at the
direction of the Board of Directors or (b) by any shareholder of the Corporation
who was a shareholder of record at the time of the giving of notice as provided
in this Section 12, who is entitled to vote at the meeting and who complies with
the notice procedures set forth in this Section 12. In order for business to be
properly brought before the meeting by a shareholder, such business, as
determined by the Chairman of the meeting, must be a proper subject under
Wisconsin law. For business to be properly brought before an annual meeting by
a shareholder, the shareholder must have given timely notice thereof in writing
to the Secretary of the Corporation. To be timely, a shareholder's notice must
be delivered to or mailed and received at the principal executive offices of the
Corporation, not less than 60 days nor more than 90 days prior to the meeting;
provided, however, that in the event that less than 70 days' notice or prior
public disclosure of the date of the meeting is given or made to shareholders,
notice by the shareholder to be timely must be received not later than the close
of business on the tenth day following the day on which such notice of the date
of the meeting was mailed or such public disclosure was made. A shareholder's
notice to the Secretary shall set forth
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as to each matter the shareholder proposes to bring before the meeting (a) a
brief description of the business desired to be brought before the meeting and
the reasons for conducting such business at the meeting, (b) the name and
address of such shareholder, as they appear on the Corporation's books, (c) the
class and number of shares of the Corporation which are beneficially owned by
the shareholder and (d) any material interest of the shareholder in such
business.
Section 13 - Notice of Shareholder Nominees.
Only persons who are nominated in accordance with the procedures set
forth in the By-Laws shall be eligible for election as directors. Nominations
of persons for election to the Board of Directors of the Corporation may be made
(a) by or at the direction of the Board of Directors or (b) by any shareholder
of the Corporation who was a shareholder of record at the time of the giving of
notice provided for in this Section 13, who is entitled to vote for the election
of directors at the meeting and who complies with the notice procedures set
forth in this Section 13. Such nominations, other than those made by or at the
direction of the Board of Directors, shall be made pursuant to timely notice in
writing to the Secretary of the Corporation. To be timely, a shareholder's
notice shall be delivered to the principal executive offices of the Corporation
not less than 60 days nor more than 90 days prior to the meeting; provided,
however, that in the event that less than 70 days' notice or prior public
disclosure of the date of the meeting is given or made to shareholders, notice
by the shareholder to be timely must be so received not later than the close of
business on the tenth day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made. Such shareholder's
notice shall set forth (a) as to each person whom the shareholder proposes to
nominate for election or re-election as a director (i) the name, age, business
address, and residence of such nominee; (ii) the principal occupation or
employment of such nominee; (iii) the class and number of shares of the
Corporation which are beneficially owned by such nominee; and (iv) any other
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (including such person's
written consent to being named in the proxy statement as a nominee and to
serving as a director if elected); and (b) as to the shareholder giving the
notice (i) the name and address, as they appear on the Corporation's books, of
such shareholder and (ii) the class and number of shares of the Corporation
which are beneficially owned by such shareholder. No person shall be eligible
for election as a director of the Corporation unless nominated in accordance
with the procedures set forth in the By-Laws.
Section 14 - Acceptance of Nominations and Proposals.
The Secretary shall have the power and duty to determine whether a
nomination or any business proposed to be brought before the meeting was made in
accordance with the procedures set forth in Sections 12 and 13. The Secretary
shall make any such determination and shall notify the interested shareholder of
such determination (including the reasons for any determination that the
interested shareholder's nomination or proposal was not made in compliance with
these Sections 12 and 13) within 15 days after the Corporation's receipt of the
shareholder's notice required by Sections 12 and 13. If the Secretary
determines that such nomination or proposal is not in compliance with Sections
12 and 13, the interested shareholder shall have until the later of
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the expiration of the applicable notice period or five days after receipt by
such shareholder of any such notice declaring that such shareholder's nomination
or proposal was not made in compliance with Sections 12 and 13 to rectify any
deficiency cited in such notice and to resubmit such shareholder's nomination or
proposal to the Secretary at the principal business office of the Corporation.
Any resubmitted nomination or proposal shall contain only such nominations or
proposals as were submitted to the Corporation in such shareholder's notice
which did not comply with Sections 12 and 13. The Secretary shall determine
whether any such resubmitted nomination or proposal is in compliance with
Sections 12 and 13, and shall notify the interested shareholder of such
determination (including the reasons for any determination that the interested
shareholder's resubmitted nomination or proposal was not made in compliance with
Sections 12 and 13), within five additional days of the Corporation's receipt of
such shareholder's resubmitted nomination or proposal.
Section 15 - Compliance with Exchange Act.
Notwithstanding the provisions of Sections 12 and 13, a shareholder shall
also comply with all applicable requirements of the Exchange Act and the rules
and regulations thereunder with respect to the matters set forth in Sections 12
and 13. Nothing in this Section 15 shall be deemed to affect any rights of
shareholders to request inclusion of proposals in the Corporation's proxy
statement pursuant to Rule 14a-8 under the Exchange Act.
Section 16 - Definitions.
For purposes of this Article II, "public announcement" or "public
disclosure" shall mean disclosure in a press release reported by the Dow Jones
News Service, Associated Press or a comparable national news service or in a
document publicly filed by the corporation with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
ARTICLE III
BOARD OF DIRECTORS
Section 1 - General Powers.
The business and affairs of the Corporation shall be managed by its Board
of Directors.
Section 2 - Number, Tenure and Qualifications.
The number of directors who shall constitute the whole Board of Directors
shall be the number fixed from time to time by the Board of Directors in
accordance with the Articles of Incorporation and shall in no event be less than
7 nor more than 11.
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The directors shall be divided into three classes as nearly equal in
number as possible. At the 1986 annual meeting of shareholders the directors
were so divided, with the term of office of the first class to expire at the
1987 annual meeting of shareholders, the term of office of the second class to
expire at the 1988 annual meeting of shareholders and the third class to expire
at the 1989 annual meeting of shareholders. At each annual meeting of
shareholders, directors elected to succeed those whose terms expire shall be
elected for a term of office expiring at the third succeeding annual meeting of
shareholders after their election and until their successors shall be elected
and shall qualify. Directors need not be residents of the State of Wisconsin or
shareholders of the Corporation.
Section 3 - Regular Meetings.
A regular meeting of the Board of Directors shall be held without other
notice than this by-law immediately after, and at the same place as, the annual
meeting of shareholders, and each adjourned session thereof. The Board of
Directors may provide by resolution, the time and place, either within or
without the State of Wisconsin, for the holding of additional regular meetings
without other notice than such resolution.
Section 4 - Special Meetings.
Special meetings of the Board of Directors may be called by or at the
request of the Chairman of the Board, Secretary or any two directors. The
person or persons authorized to call special meetings of the Board of Directors
may fix any place, either within or without the State of Wisconsin, as the place
for holding any special meeting of the Board of Directors called by them.
Section 5 - Notice.
Notice of any special meeting shall be given at least 48 hours previously
thereto by written notice delivered personally or mailed to each director at his
business address, or by telegram. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail so addressed, with postage
thereon prepaid. If Notice be given by telegram, such notice shall be deemed to
be delivered when the telegram is delivered to the telegraph company. Whenever
any notice whatever is required to be given to any director of the Corporation
under the provisions of these by-laws or under the provisions of the articles of
incorporation or under the provisions of any statute, a waiver thereof in
writing, signed at any time, whether before or after the time of meeting, by the
director entitled to such notice, shall be deemed equivalent to the giving of
such notice. The attendance of a director at a meeting shall constitute a
waiver of notice of such meeting, except where a director attends a meeting and
objects thereat to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the Board of Directors need be
specified in the notice or waiver of notice of such meeting.
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Section 6 - Quorum.
A majority of the number of directors fixed by Section 2 of this Article
III shall constitute a quorum for the transaction of business at any meeting of
the Board of Directors, but though less than such quorum is present at a
meeting, a majority of the directors present may adjourn the meeting from time
to time without further notice.
Section 7 - Resignations.
Any Director, member of a committee or other Officer may resign at any
time. Such resignation shall be made in writing and shall take effect at the
time specified therein and if no time is specified, at the time of its receipt
by the Chairman of the Board or Secretary. The acceptance of a resignation
shall not be necessary to make it effective.
Section 8 - Newly-Created Directorships and Vacancies.
Newly-created directorships resulting from any increase in the authorized
number of directors or any vacancies in the Board of Directors resulting from
death, resignation, retirement, disqualification, removal from office or other
cause shall be filled by a majority vote of the directors then in office, though
less than a quorum. Directors so chosen shall hold office for a term expiring
at the annual meeting of shareholders at which the term of the class to which
they have been elected expires and until their successors shall be elected and
shall qualify. No decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.
Section 9 - Removal.
Any director, or the entire Board of Directors, may be removed from
office at any time, but only for cause and only by the affirmative vote of the
holders of 66-2/3% of the voting power of all the shares of the Corporation
entitled to vote for the election of directors.
Section 10 - Compensation.
The Board of Directors, by affirmative vote of a majority of the
Directors then in office, and irrespective of any personal interest of any of
its members may establish reasonable compensation of all Directors for services
to the Corporation as Directors, Officers or otherwise, or may delegate such
authority to an appropriate committee.
Section 11 - Presumption of Assent.
A Director of the Corporation who is present at a meeting of the Board of
Directors or a committee thereof at which action on any corporate matter is
taken shall be presumed to have assented to the action taken unless his dissent
shall be entered in the minutes of the meeting or unless he shall file his
written dissent to such action with the person acting as the secretary of the
meeting before the adjournment thereof or shall forward such dissent by
registered mail to the
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Secretary of the Corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in favor of such
action.
Section 12 - Committees.
The Board of Directors by resolution adopted by the affirmative vote of a
majority of the number of directors fixed by Section 2 of this Article III may
designate one or more committees, each committee to consist of three or more
directors elected by the Board of Directors, which to the extent provided in
said resolution, as initially adopted, and as thereafter supplemented or amended
by further resolution adopted by a like vote, shall have and may exercise, when
the Board of Directors is not in session, the powers of the Board of Directors
in the management of the business and affairs of the Corporation, except action
in respect to dividends to shareholders, election of Officers or the filling of
vacancies in the Board of Directors or committee created pursuant to this
section. The Board of Directors may elect one or more of its members as
alternate members of any such committee who may take the place of any absent
member or members at any meeting of such committee, upon request by the Chairman
of the Board or upon request by the President or upon request by the chairman of
such meeting. Each such committee shall fix its own rules governing the conduct
of its activities and shall make such reports to the Board of Directors of its
activities as the Board of Directors may request.
Section 13 - Informal Action by Directors.
Any action required to be taken at a meeting of the Board of Directors or
any committee thereof, or any other action which may be taken at a meeting of
the Board of Directors or any committee thereof, may be taken without a meeting
if a consent in writing setting forth the action so taken shall be signed by all
of the directors or members of such committee, as the case may be, entitled to
vote with respect to the subject matter thereof.
ARTICLE IV
OFFICERS
Section 1 - Number.
The principal Officers of the Corporation shall be a Chairman of the
Board, a President, a Chief Executive Officer, one or more Vice Presidents, a
Controller, a Secretary and a Treasurer, each of whom shall be elected by the
Board of Directors. Such other Officers and assistant Officers as may be deemed
necessary may be elected or appointed by the Board of Directors. Any two or
more offices may be held by the same person. In its discretion, the Board of
Directors may choose not to fill any office for any period as it may deem
advisable.
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Section 2 - Election and Term of Office.
The Officers of the Corporation to be elected by the Board of Directors
shall be elected annually by the Board of Directors at the last meeting of the
Board of Directors held prior to the Annual Meeting of the Shareholders or at
the first meeting of the Board of Directors held after the Annual Meeting of
the Shareholders. If the election of Officers shall not be held at either of
such meetings, such election shall be held as soon thereafter as conveniently
may be. Each Officer shall hold office until a successor shall have been duly
elected and shall have qualified or until such Officers' death or until such
Officer shall resign or shall have been removed in the manner hereinafter
provided.
Section 3 - Removal, Suspension.
Any Officer or Agent elected or appointed by the Board of Directors may
be removed by the Board of Directors whenever in its judgment the best interests
of the Corporation will be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed. Election or
appointment shall not of itself create contract rights. The Chief Executive
Officer may suspend at any time any Officer other than the Chairman of the
Board. The Board of Directors will determine at the next regular Board meeting
following a suspension, whether the suspension should result in the removal of
the Officer.
Section 4 - Vacancies.
A vacancy in any principal office because of death, resignation, removal,
disqualification or otherwise, shall be filled by the Board of Directors for the
unexpired portion of the term.
Section 5 - Chairman of the Board.
The Chairman of the Board shall be selected from the persons who are
members of the Board during the term to be served by the Chairman. The Chairman
shall preside at all meetings of the Board at which the Chairman is present.
The Chairman shall also preside at the Annual Meeting of Shareholders. The
Chairman shall also have such other authority and responsibility as shall be
delegated to the Chairman from time to time by the Board. The Chairman may but
need not be an employee of the Corporation. The Chairman may sign with the
Secretary or an Assistant Secretary certificates for shares of the Corporation.
Section 6 - The President.
The President shall preside at meetings of the Board or at Annual
Meetings of Shareholders from which the Chairman shall be absent. The President
shall have such other authority and responsibilities as shall be delegated to
the President from time to time by the Board or as may otherwise be assigned in
accordance with these By-Laws. The President may sign with the Secretary or an
Assistant Secretary certificates for shares of the Corporation.
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Section 7 - Chief Executive Officer.
The Chief Executive Officer shall have the general executive
responsibility for the conduct of the business and affairs of the Corporation
and shall be the Corporation's chief policy making officer. He or she shall
have all other authority and responsibility usually incident to the office of
chief executive officer. The Chief Executive Officer shall have control over
the Corporation's Officers, other employees and agents and shall have the right
to delegate or assign such authority and responsibility (including reporting
responsibility) to any other Officer or employee of the Corporation (including
the right to make further delegations and assignments) provided that no such
delegation or assignment may be made which is contrary to an express directive
in these By-Laws or in any action by the Board of Directors. The Chief
Executive Officer may sign with the Secretary or any Assistant Secretary for
shares of the Corporation.
Section 8 - The Vice President.
Each Vice President shall have such authority and responsibility as shall
be delegated by these By-Laws, by the Board of Directors, by the Chief Executive
Officer, or by any other Officer to whom the Vice President reports. The Board
shall have the authority to add designations to any vice presidential position
to indicate the rank, function or other characteristic of that position, such as
"Executive Vice President", "Senior Vice President" or "Vice President Technical
Services".
Section 9 - The Secretary.
The Secretary shall: (a) keep the minutes of the shareholders' and of
the Board of Directors' meetings in one or more books provided for that purpose;
(b) see that all notices are duly given in accordance with the provisions of
these by-laws or as required by law; (c) be custodian of the corporate records
and of the seal of the Corporation and see that the seal of the Corporation is
affixed to all documents the execution of which on behalf of the Corporation
under its seal is duly authorized; (d) keep a register of the post office
address of each shareholder which shall be furnished to the Secretary by such
shareholder; (e) sign with the Chairman of the Board, the Chief Executive
Officer, or the President, or a Vice-President certificates for shares of the
Corporation, the issuance of which shall have been authorized by resolution of
the Board of Directors; (f) have general charge of the stock transfer books of
the Corporation and (g) in general perform all duties incident to the office of
Secretary and such other duties as from time to time may be assigned to the
Secretary by the Chairman of the Board, the Chief Executive Officer, or
President or by the Board of Directors.
Section 10 - The Treasurer.
If required by the Board of Directors, the Treasurer shall give a bond
for the faithful discharge of the duties in such sum and with such surety or
sureties as the Board of Directors shall determine. The Treasurer shall: (a)
have charge and custody of and be responsible for all funds and securities of
the Corporation; receive and give receipts for money due and payable to the
Corporation from any source whatsoever, and deposit all such moneys in the name
of the
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Corporation in such banks, trust companies or other depositories as shall be
selected in accordance with the provisions of Article V of these By-Laws; and
(b) in general perform all of the duties incident to the office of Treasurer and
such other duties as from time to time may be assigned to the Treasurer by the
President, Chief Executive Officer, Chairman of the Board, or by the Board of
Directors.
Section 11 - Assistant Secretaries and Assistant Treasurers.
The Assistant Secretaries, when authorized by the Board of Directors, may
sign with the Chairman of the Board, the Chief Executive Officer, or the
President, or a Vice President certificates for shares of the Corporation the
issuance of which shall have been authorized by a resolution of the Board of
Directors. The Assistant Treasurers shall respectively, if required by the
Board of Directors, give bonds for the faithful discharge of their duties in
such sums and with such sureties as the Board of Directors shall determine. The
Assistant Secretaries and Assistant Treasurers, in general, shall perform such
duties as shall be assigned to them by the Secretary or the Treasurer,
respectively, or by the Chairman of the Board, Chief Executive Officer,
President or the Board of Directors.
Section 12 - Compensation.
The compensation of the Officers shall be fixed from time to time by the
Board of Directors and no Officer shall be prevented from receiving such
compensation by reason of the fact that he or she is also a Director of the
Corporation.
ARTICLE V
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1 - Contracts.
The Board of Directors may authorize any Officer or Officers, agent or
agents, to enter into any contract or execute and deliver any instrument in the
name of and on behalf of the Corporation, and such authorization may be general
or confined to specific instances.
Section 2 - Loans.
No loans shall be contracted on behalf of the Corporation and no
evidences of indebtedness shall be issued in its name unless authorized by or
under the authority of a resolution of the Board of Directors. Such
authorization may be general or confined to specific instances.
Section 3 - Checks, Drafts, Etc.
All checks, drafts or other orders for the payment of money, notes or
other evidences of indebtedness issued in the name of the Corporation, shall be
signed by such Officer or Officers,
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agent or agents of the Corporation and in such manner as shall from time to time
be determined by or under the authority of resolution of the Board of Directors.
Section 4 - Deposits.
All funds of the Corporation not otherwise employed shall be deposited
from time to time to the credit of the Corporation in such banks, trust
companies or other depositories as may be selected by or under the authority of
the Board of Directors.
ARTICLE VI
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1 - Certificates for Shares.
Certificates representing shares of the Corporation shall be in such form
as shall be determined by the Board of Directors. Such certificates shall be
signed by the Chairman of the Board or President or a Vice President and by the
Secretary or an Assistant Secretary. All certificates for shares shall be
consecutively numbered or otherwise identified. The name and address of the
person to whom the shares represented thereby are issued, with the number of
shares and date of issue, shall be entered on the stock transfer books of the
Corporation. All certificates surrendered to the Corporation for transfer shall
be canceled and no new certificate shall be issued until the former certificate
for like number of shares shall have been surrendered and canceled, except that
in case of a lost, destroyed or mutilated certificate, a new one may be issued
therefore upon such terms and indemnity to the Corporation as the Board of
Directors may prescribe.
Section 2 - Transfer of Shares.
Transfer of shares of the Corporation shall be made only on the stock
transfer books of the Corporation by the holder of record thereof or by his
legal representative, who shall furnish proper evidence of authority to
transfer, or by his attorney thereunto authorized by power of attorney duly
executed and filed with the Secretary of the Corporation, and on surrender for
cancellation of the certificates for such shares. The person in whose name
shares stand on the books of the Corporation shall be deemed by the Corporation
to be the owner thereof for all purposes.
Section 3 - Stock Regulations.
The Board of Directors shall have the power and authority to make all
such further rules and regulations not inconsistent with the statutes of the
State of Wisconsin as they may deem expedient concerning the issue, transfer and
registration of certificates representing shares of the Corporation.
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ARTICLE VII
FISCAL YEAR
The fiscal year of the Corporation shall be a fifty-two (52) or fifty-
three (53) week period beginning on the Sunday closest to the 31st day of
December and ending on the Saturday closest to the 31st day of the following
December of each year.
ARTICLE VIII
DIVIDENDS
The Board of Directors may from time to time declare, and the Corporation
may pay, dividends on its outstanding shares in the manner and upon the terms
and conditions provided by law and its Articles of Incorporation.
ARTICLE IX
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
Section 1 - Certain Definitions.
All capitalized terms used in this Article and not otherwise hereinafter
defined in this Section 1 shall have the meaning set forth in Section 180.042 of
the Statute. The following capitalized terms (including any plural forms
thereof) used in this Article shall be defined as follows:
(a) "Affiliate" shall mean any person that directly or indirectly, through one
or more intermediaries, controls or is controlled by, or is under common
control with, the Corporation, which term shall include any corporation,
partnership, joint venture, employee benefit plan, trust or other
enterprise.
(b) "Authority" shall mean the entity selected by the Director or Officer to
determine his or her right to indemnification pursuant to Section 5 of this
Article.
(c) "Board" shall mean all persons then elected and serving on the Board of
Directors of the Corporation, including all members thereof who are Parties
to the subject Proceeding or any related Proceeding.
(d) "Breach of Duty" shall mean a breach or failure to perform a duty owed by a
Director or Officer to the Corporation which breach or failure is
determined, in accordance with Section
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5(b) of this Article, to constitute any of the items enumerated under
Sections 180.044(2)(a) 1, 2, 3 or 4 of the Statute.
(e) "Corporation" as defined in the Statute and as incorporated by reference
into the definitions of certain capitalized terms used herein, shall mean
this Corporation.
(f) "Director or Officer" shall have the meaning set forth in the Statute;
provided, that, for purposes of this Article, it shall be conclusively
presumed that any Director or Officer serving as a director, officer,
partner, trustee, member of any governing or decision-making committee,
employee or agent of an Affiliate shall be so serving at the request of the
Corporation.
(g) "Disinterested Committee" shall mean a committee duly appointed by the
Board and consisting solely of two or more Directors not at the time
Parties to the subject Proceeding or any related Proceeding.
(h) "Disinterested Quorum" shall mean a quorum of the Board consisting of
Directors who are not at the time Parties to the subject Proceeding or any
related Proceeding.
(i) "Proceeding" shall have the meaning set forth in the Statute and, for
purposes of this Article, "Proceeding" shall also include (i) any appeal
therefrom; (ii) all Proceedings brought under (in whole or in part) the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, their respective state counterparts, and/or any rule or regulation
promulgated under any of the foregoing; and (iii) all Proceedings brought
before an Authority or otherwise to enforce rights hereunder.
(j) "Statute" shall mean Sections 180.042 through 180.059, inclusive, of the
Wisconsin Business Corporation Law including any amendments thereto, as the
same shall then be in effect.
Section 2 - Right to Indemnification.
Each person who was or is made a Party or is threatened to be made a
Party to or is involved in or called as a witness in any Proceeding by reason of
the fact that he or she, or a person of who he or she is the legal
representative, is, was or had agreed to become a Director or Officer of the
Corporation or a director or officer of an Affiliate (who is not otherwise
serving as a Director or Officer) shall be indemnified and held harmless by the
Corporation to the fullest extent permitted under the Statute, as the same now
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Corporation to provide broader
indemnification rights than the Statute permitted the Corporation to provide
prior to such amendment) against all Expenses and Liabilities incurred or
suffered by such person in connection therewith; provided, that except with
respect to a Proceeding brought before an Authority or otherwise to enforce
rights hereunder, the Corporation shall indemnify any such person seeking
indemnity in connection with a Proceeding (or part thereof) initiated by such
person only if such Proceeding (or part thereof) was authorized by the Board.
15
<PAGE>
November 12, 1994 Sec'y Init. . . . . . .
Section 3 - Expense.
The Corporation shall pay or reimburse, within ten days after the receipt
of a written request therefore, the reasonable Expenses of any person referred
to in Section 2 of this Article as such Expenses are incurred; provided, such
person furnishes to the Corporation (i) an executed written certificate
affirming his or her good faith belief that he or she has not engaged in a
Breach of Duty, and (ii) an unsecured written undertaking ("Undertaking"),
executed personally or on his or her behalf, to repay any allowances made under
this Section 3 if it is ultimately determined by an Authority that such person
is not entitled to be indemnified by the Corporation for such Expenses;
provided, further, that in connection with a Proceeding (or part thereof)
initiated by any such person, except with respect to a Proceeding brought before
an Authority or otherwise to enforce rights hereunder, the Corporation shall pay
such Expenses as incurred only if such Proceeding (or part thereof) was
authorized by the Board. The Undertaking shall also provide that the person to
whom an allowance was paid pursuant to this Section 3 shall not be obligated to
repay the Corporation during the pendency of any Proceeding before an Authority,
and that if the Authority shall ultimately determine that such person is not
entitled to indemnification for such Expenses, such person shall not be required
to pay interest on such allowance. The Board shall not require, and shall
accept the Undertaking without any showing of the claimant's ability to repay
the allowance.
Section 4 - Procedural Requirements.
(a) Each person who seeks indemnification under Section 2 of this Article shall
make a written request therefore to the Corporation. The Board shall act on
such request at its next meeting held no less than two days, but no more
than sixty days, after the receipt of such request. Such action shall be
taken by a Disinterested Quorum or, if a Disinterested Quorum cannot be
obtained, by a Disinterested Committee, which shall determine whether the
claimant's conduct constituted a Breach of Duty. If such determination is
favorable to the claimant, the Corporation shall pay or reimburse such
claimant for the entire amount of requested Liabilities incurred by such
claimant in connection with the subject Proceeding (net of any Expenses
previously advanced pursuant to Section 3). If such determination is not
favorable to the claimant or if a Disinterested Committee cannot be
obtained, the Board by resolution shall authorize an Authority, as provided
in Section 5 of this Article, to determine whether the claimant's conduct
constituted a Breach of Duty and, therefore, whether indemnification is
required hereunder. The determination by an Authority that indemnification
is required hereunder shall be binding upon the Corporation regardless of
any prior determination that the claimant engaged in a Breach of Duty.
(b) If the Board does not authorize an Authority to determine the claimant's
right to indemnification hereunder, and indemnification of the requested
amount of Liabilities is paid by the Corporation, it shall be conclusively
presumed that a Disinterested Quorum has determined that the claimant did
not engage in misconduct constituting a Breach of Duty.
16
<PAGE>
November 12, 1994 Sec'y Init. . . . . . .
Section 5 - Determination of Indemnification.
(a) If the Board authorizes an Authority to determine a claimant's right to
indemnification pursuant to Section 4 of this Article, then the claimant
shall have the absolute discretionary authority to select one of the
following as such Authority:
(i) An independent legal counsel; provided, that such counsel shall be
mutually selected by such claimant and by a majority vote of a
Disinterested Quorum or, if a Disinterested Quorum cannot be obtained,
then by a majority vote of a Disinterested Committee or, if a
Disinterested Committee cannot be obtained, then by a majority vote of
the Board;
(ii) A panel of three arbitrators selected from the panels of arbitrators
of the American Arbitration Association in Chicago, Illinois;
provided, that (A) one arbitrator shall be selected by such claimant,
the second arbitrator shall be selected by a majority vote of a
Disinterested Quorum or, if a Disinterested Quorum cannot be obtained,
then by a majority vote of a Disinterested Committee or, if a
Disinterested Committee cannot be obtained, then by a majority vote of
the Board, and the third arbitrator shall be selected by the two
previously selected arbitrators; and (B) in all other respects such
panel shall be governed by the American Arbitration Association's then
existing Commercial Arbitration Rules; or
(iii) A court pursuant to and in accordance with Section 180.051 of the
Statute.
(b) In any such determination by the selected Authority there shall exist a
rebuttable presumption that the claimant's conduct did not constitute a
Breach of Duty and that indemnification against the requested amount of
Liabilities is required. The burden of rebutting such a presumption by
clear and convincing evidence shall be on the Corporation or such other
party asserting that such indemnification should not be allowed.
(c) The Authority shall make its determination as soon as practicable (but in
any event within sixty days of being selected) and shall submit a written
opinion of its conclusion simultaneously to both the Corporation and the
claimant.
(d) If the Authority determines that indemnification is required hereunder, the
Corporation shall pay the entire requested amount of Liabilities (net of
any Expenses previously advanced pursuant to Section 3), including interest
thereon at a reasonable rate, as determined by the Authority, within ten
days of receipt of the Authority's opinion; provided, that, if it is
determined by the Authority that a claimant is entitled to indemnification
as to some claims, issues or matters, but not as to other claims, issues or
matters involved in the subject Proceeding, the Corporation shall be
required to pay (as set forth above) only the amount of such requested
Liabilities as the Authority shall deem appropriate in light of all of the
circumstances of such Proceeding.
17
<PAGE>
November 12, 1994 Sec'y Init. . . . . . .
(e) All expenses incurred in the determination process under this Section 5 by
either the Corporation or the claimant, including, without limitation, all
Expenses of the selected Authority, shall be paid by the Corporation.
Section 6 - Employees and Agents.
The Board may, in its sole and absolute discretion as it deems
appropriate, pursuant to a majority vote thereof, indemnify against Liabilities
incurred by, and/or provide for the allowance of reasonable Expenses of, an
employee or agent of the Corporation who is not otherwise a Director or Officer.
Section 7 - Insurance.
The Corporation may purchase and maintain, at its expense, insurance on
behalf of a Director or Officer or any individual who is or was an employee or
agent of the Corporation against any Liability asserted against or incurred by
such individual in his or her capacity as such or arising from his or her status
as such, regardless of whether the Corporation is required or permitted to
indemnify or allow Expenses to such individual against any such Liability under
the Statute or this Article.
Section 8 - Non-Exclusivity of Rights.
The rights conferred on any person by this Article shall not be deemed
exclusive of any other rights to indemnification or advancement of Expenses
which such person may be entitled to under any written agreement, Board
resolution, vote of shareholders of the Corporation or otherwise, including,
without limitation, under the Statute. Nothing contained in this Article shall
be deemed to limit the Corporation's obligations to indemnify any person under
the Statute.
Section 9 - Contractual Nature.
The provisions of this Article shall be applicable to all Proceedings
commenced after its adoption, whether such arise out of events, acts or
omissions which occurred prior or subsequent to such adoption, and shall
continue as to a person who has ceased to be a Director or Officer and shall
inure to the benefit of the heirs, executors and administrators of such person.
This Article shall be deemed to be a contract between the Corporation and each
person who, at any time that this Article is in effect, serves or agrees to
serve in any capacity which entitles him to indemnification hereunder and any
repeal or other modification of this Article or any repeal or modification of
the Statute or any other applicable law shall not limit any rights of
indemnification then existing or arising out of events, acts or omissions
occurring prior to such repeal or modification, including, without limitation,
the right to indemnification for Proceedings commenced after such repeal or
modification to enforce this Article with regard to acts, omissions or events
arising prior to such repeal or modification.
18
<PAGE>
November 12, 1994 Sec'y Init. . . . . . .
Section 10 - Severability.
If any provision of this Article shall be deemed invalid or inoperative,
or if a court of competent jurisdiction determines that any of the provisions of
this Article contravene public policy, this Article shall be construed so that
the remaining provisions shall not be affected, but shall remain in full force
and effect, and any such provisions which are invalid or inoperative or which
contravene public policy shall be deemed, without further action or deed by or
on behalf of the Corporation, to be modified, amended and/or limited, but only
to the extent necessary to render the same valid and enforceable.
Section 11 - Continuation of Obligations; Amendment.
The obligations of the Corporation to indemnify any person or to advance
Expenses thereto under this Article shall continue as to the successors and
assigns of the Corporation and such obligations may only be limited by the
affirmative vote of two-thirds of the shareholders of the Corporation so
entitled to vote; provided, that any such limitation shall only apply to alleged
acts of any person for which indemnification is sought hereunder which occur
after such limitation is adopted.
ARTICLE X
SEAL
The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the corporation
and the words, "Corporate Seal, Wisconsin".
ARTICLE XI
AMENDMENTS
Section 1 - Board of Directors.
The By-Laws of this Corporation may be made, altered, amended or repealed
by the affirmative vote of a majority of the Board of Directors at any regular
meeting of the Board of Directors or at any special meeting of the Board of
Directors if notice of the proposed making, alteration, amendment or repeal to
be made is contained in the notice of such special meeting; provided, however,
that no By-Law shall be made, altered, amended or repealed so as to make such
By-Law inconsistent with or violative of any provision of the Articles of
Incorporation; provided further, however, that no By-Law adopted by shareholders
pursuant to Section 2 of this Article XI may be altered, amended or repealed by
the Board of Directors unless such By-Law confers such authority upon the Board
of Directors.
19
<PAGE>
November 12, 1994 Sec'y Init. . . . . . .
Section 2 - Shareholders.
The By-Laws of this Corporation may be made, altered, amended, or
repealed by the affirmative vote of a majority of the shareholders at a meeting
conducted in accordance with Article II, if notice of the proposed making,
alteration, amendment or repeal is contained in the notice of such meeting;
provided, however, that no By-Law shall be made, altered, amended or repealed so
as to make such By-Law inconsistent with or violative of any provision of the
Articles of Incorporation.
20
<PAGE>
EXHIBIT 4.3
================================================================================
SAFETY-KLEEN CORP.
---------------------
Note Purchase Agreement
---------------------
DATED AS OF JANUARY 15, 1995
$50,000,000 8.05% SENIOR NOTES DUE JANUARY 30, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
1. PURCHASE AND SALE OF NOTES........................................... 1
1.1 Issue of Notes.................................................. 1
1.2 The Closing..................................................... 1
1.3 Purchase for Investment; ERISA.................................. 2
1.4 Expenses........................................................ 3
2. WARRANTIES AND REPRESENTATIONS....................................... 3
2.1 Nature of Business.............................................. 3
2.2 Financial Statements; Debt; Material Adverse Change............. 3
2.3 Subsidiaries and Affiliates..................................... 4
2.4 Title to Properties............................................. 4
2.5 Taxes........................................................... 5
2.6 Pending Litigation.............................................. 5
2.7 Full Disclosure................................................. 6
2.8 Corporate Organization and Authority............................ 6
2.9 Charter Instruments, Other Agreements........................... 6
2.10 Restrictions on Company and Subsidiaries........................ 7
2.11 Compliance with Law............................................. 7
2.12 Pension Plans................................................... 7
2.13 Environmental Compliance........................................ 8
2.14 Sale of Notes is Legal and Authorized; Obligations are
Enforceable..................................................... 10
2.15 Governmental Consent to Sale of Notes........................... 10
2.16 No Defaults under Notes......................................... 11
2.17 Private Offering of Notes....................................... 11
2.18 Use of Proceeds of Notes........................................ 11
3. CLOSING CONDITIONS................................................... 12
3.1 Opinions of Counsel............................................. 12
3.2 Warranties and Representations True............................. 12
3.3 Officers' Certificates.......................................... 12
3.4 Legality........................................................ 13
3.5 Private Placement Number........................................ 13
3.6 Expenses........................................................ 13
3.7 Other Purchasers................................................ 13
3.8 Proceedings Satisfactory........................................ 13
4. PRINCIPAL PAYMENTS................................................... 13
4.1 Optional Prepayments............................................ 13
4.2 Prepayments Among Noteholders................................... 14
4.3 Notation of Notes on Prepayment................................. 14
4.4 Offer to Prepay upon Change in Control.......................... 15
4.5 No Other Prepayments; Acquisition of Notes...................... 16
5. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES........................ 16
5.1 Registration of Notes........................................... 16
5.2 Exchange of Notes............................................... 16
5.3 Replacement of Notes............................................ 17
5.4 Issuance Taxes.................................................. 18
ii Note Purchase Agreement
<PAGE>
TABLE OF CONTENTS (Cont.)
PAGE
6. COVENANTS.............................................................. 18
6.1 Payment of Taxes and Claims....................................... 18
6.2 Maintenance of Properties; Corporate Existence; etc............... 18
6.3 Payment of Notes and Maintenance of Office........................ 19
6.4 Merger............................................................ 19
6.5 Maintenance of Shareholders' Equity............................... 19
6.6 Maintenance of Debt to Capital Ratio.............................. 20
6.7 Maintenance of Interest Coverage Ratio............................ 20
6.8 Leases............................................................ 20
6.9 Liens............................................................. 20
6.10 Limitation on Sale and Lease-Back Transactions.................... 22
6.11 Investments....................................................... 23
6.12 Sale of Assets.................................................... 24
6.13 Stock of Subsidiaries............................................. 24
6.14 Designation of Subsidiaries....................................... 24
6.15 Line of Business.................................................. 25
6.16 Transactions with Affiliates...................................... 25
6.17 Environmental Compliance.......................................... 26
6.18 Restrictions on Dividends......................................... 26
6.19 Pension Plans..................................................... 27
6.20 Private Offering.................................................. 28
7. INFORMATION AS TO COMPANY.............................................. 28
7.1 Financial and Business Information................................ 28
7.2 Officer's Certificates............................................ 31
7.3 Accountants' Certificates......................................... 31
7.4 Inspection........................................................ 31
8. EVENTS OF DEFAULT...................................................... 32
8.1 Nature of Events.................................................. 32
8.2 Default Remedies.................................................. 33
8.3 Annulment of Acceleration of Notes................................ 35
9. INTERPRETATION OF THIS AGREEMENT....................................... 35
9.1 Terms Defined..................................................... 35
9.2 Accounting Principles............................................. 49
9.3 Directly or Indirectly............................................ 49
9.4 Section Headings and Table of Contents and Construction........... 50
9.5 Governing Law..................................................... 50
10. MISCELLANEOUS.......................................................... 50
10.1 Communications.................................................... 50
10.2 Reproduction of Documents......................................... 51
10.3 Survival.......................................................... 51
10.4 Successors and Assigns............................................ 51
10.5 Amendment and Waiver.............................................. 52
10.6 Expenses.......................................................... 53
10.7 Payments on Notes................................................. 53
iii Note Purchase Agreement
<PAGE>
TABLE OF CONTENTS (Cont.)
PAGE
10.8 Waiver of Jury Trial, Consent to Jurisdiction............... 54
10.9 Entire Agreement............................................ 55
10.10 Duplicate Originals, Execution in Counterpart............... 55
Annex 1 -- Information as to Purchasers
Annex 2 -- Payment Instructions at Closing; Address of Company
for Notices
Annex 3 -- Information as to Company
Exhibit A -- Form of 8.05% Senior Note Due January 30, 1998
Exhibit B1 -- Form of Company Counsel's Closing Opinion
Exhibit B2 -- Form of Special Counsel's Closing Opinion
Exhibit C -- Form of Officers' Certificate
Exhibit D -- Form of Secretary's Certificate
iv Note Purchase Agreement
<PAGE>
SAFETY-KLEEN CORP.
-----------------------
NOTE PURCHASE AGREEMENT
-----------------------
$50,000,000 8.05% SENIOR NOTES DUE JANUARY 30, 1998
Dated as of January 15, 1995
[INSERT NAME AND ADDRESS
OF EACH PURCHASER]
Ladies and Gentlemen:
SAFETY-KLEEN CORP. (together with any successors and assigns who become
such in accordance herewith, the "COMPANY"), a Wisconsin corporation, hereby
agrees with you as follows:
1. PURCHASE AND SALE OF NOTES
1.1 ISSUE OF NOTES.
The Company will authorize the issue of Fifty Million Dollars ($50,000,000)
in aggregate principal amount of its eight and five one-hundredths percent
(8.05%) Senior Notes due January 30, 1998 (all such notes, whether initially
issued, or issued in exchange or substitution for, any such note, in each case
in accordance with the Note Purchase Agreements, collectively, the "NOTES").
The Notes shall be in the form of Exhibit A, and shall have the terms as herein
and therein provided.
1.2 THE CLOSING.
(A) PURCHASE AND SALE OF NOTES. The Company hereby agrees to sell to
you and you hereby agree to purchase from the Company, in accordance with
the provisions hereof, the aggregate principal amount of Notes set forth
below your name on Annex 1 at one hundred percent (100%) of the principal
amount thereof.
(B) THE CLOSING. The closing (the "CLOSING") of the Company's sale of
Notes will be held on February 3, 1995 (the "CLOSING DATE") at 9:00 a.m.,
local time, at the office of [Hebb & Gitlin, your special counsel]. At the
Closing, the Company will deliver to you one or more Notes (as set forth
below your name on Annex 1), in the denominations indicated on Annex 1, in
the aggregate principal amount of your purchase, dated the Closing Date and
payable to you or payable as indicated on Annex 1, against payment by
federal funds wire transfer in immediately available funds of the purchase
price thereof, as directed by the Company on Annex 2.
(C) OTHER PURCHASERS. Contemporaneously with the execution and
delivery hereof, the Company is entering into separate note purchase
agreements identical
1 Note Purchase Agreement
<PAGE>
1. PURCHASE AND SALE OF NOTES
(except for the name and signature of the purchaser) hereto (such separate
note purchase agreements together with this Agreement collectively, as
amended from time to time, the "NOTE PURCHASE AGREEMENTS") with each other
purchaser (each an "OTHER PURCHASER") listed on Annex 1, providing for the
sale to each Other Purchaser of Notes in the aggregate principal amount set
forth below its name on Annex 1. The sales of the Notes to you and to each
Other Purchaser are to be separate sales.
1.3 PURCHASE FOR INVESTMENT; ERISA.
(A) PURCHASE FOR INVESTMENT. You represent that
(i) you are purchasing the Notes for investment for your own
account, for a separate account (as such term is used in Rule 144A,
17 C.F.R. (S)230.144A), for the account of another for which you have
sole investment discretion, or for a trust of which you are the
trustee, and
(ii) you are not purchasing the Notes with a view to or for sale
in connection with any distribution thereof within the meaning of the
Securities Act;
provided, that you have the right to dispose of the Notes, or any part
thereof, if you deem it advisable to do so, either pursuant to a
registration of the Notes under the Securities Act or pursuant to an
applicable exemption from the requirement of such registration (it being
understood that the Company has no obligation hereunder to effect any
registration of the Notes under the Securities Act). It is understood
that, in making the representations set out in Section 2.14 and Section
2.15, the Company is relying, to the extent applicable, upon your
representation as aforesaid.
(B) ERISA. You represent, with respect to the funds with which you
are acquiring the Notes, that all of such funds are from or are
attributable to one or more of:
(I) GENERAL ACCOUNT -- your general account assets or assets of
one or more segments of such general account, as the case may be;
(II) SEPARATE ACCOUNT -- a "separate account" (as defined in
section 3 of ERISA),
(A) 10% POOLED SEPARATE ACCOUNT -- in respect of which all
requirements for an exemption under Department of Labor
Prohibited Transaction Class Exemption 90-1 are met with respect
to the use of such funds to purchase the Notes,
(B) IDENTIFIED PLAN ASSETS -- that is comprised of employee
benefit plans identified by you in writing and with respect to
which the Company hereby warrants and represents that, as of the
Closing Date, neither the Company nor any ERISA Affiliate is a
"party in interest" (as defined in section 3 of ERISA) or a
"disqualified person" (as defined in section 4975 of the IRC)
with respect to any plan so identified, or
(C) GUARANTEED SEPARATE ACCOUNT -- that is maintained solely
in connection with fixed contractual obligations of an insurance
company,
2 Note Purchase Agreement
<PAGE>
1. PURCHASE AND SALE OF NOTES
under which any amounts payable, or credited, to any employee
benefit plan having an interest in such account and to any
participant or beneficiary of such plan (including an annuitant)
are not affected in any manner by the investment performance of
the separate account (as provided by 29 C.F.R. (S)2510.3-
101(h)(1)(iii));
(III) QUALIFIED PROFESSIONAL ASSET MANAGER -- an "investment
fund" managed by a "qualified professional asset manager" (as such
terms are defined in Part V of Department of Labor Prohibited
Transaction Class Exemption 84-14) with respect to which the
requirements of such exemption have been satisfied, provided that in
making this representation, it is assumed that the conditions set
forth in Part I(a), Part I(d) and Part I(e) of such Exemption have
been satisfied; or
(III) EXCLUDED PLAN -- an employee benefit plan that is excluded
from the provisions of section 406(a) of ERISA by virtue of section
4(b) of ERISA.
1.4 EXPENSES.
Whether or not the Notes are sold, the Company shall pay, at the Closing
(if the Notes are sold, and otherwise upon receipt of any statement or invoice
therefor), all fees, expenses and costs relating hereto, including, without
limitation, the statement presented at the Closing by your special counsel for
fees and disbursements incurred in connection herewith, each additional
statement for fees and disbursements (promptly upon receipt thereof) of your
special counsel rendered after the Closing in connection with the issuance of
the Notes, and all expenses incurred in complying with each of the conditions to
closing set forth in Section 3.
2. WARRANTIES AND REPRESENTATIONS
To induce you to enter into this Agreement and to purchase the Notes listed
on Annex 1 below your name, the Company warrants and represents, as of the
Closing Date, as follows:
2.1 NATURE OF BUSINESS.
The Placement Material (a copy of all of which previously has been
delivered to you), includes a correct description of the general nature of the
business and principal Properties of the Company and the Subsidiaries as of the
Closing Date.
2.2 FINANCIAL STATEMENTS; DEBT; MATERIAL ADVERSE CHANGE.
(A) FINANCIAL STATEMENTS. The Company has provided you with the
financial statements incorporated in the Placement Material. Such
financial statements have been prepared in accordance with GAAP
consistently applied, and present fairly, in all material respects, the
consolidated financial position of the Company and its consolidated
subsidiaries as of such dates and the results of their operations and cash
flows for the periods specified therein.
(B) DEBT. PART 2.2(B) OF ANNEX 3 lists all Debt of the Company and
the Subsidiaries as of the Closing Date, and provides the following
information with respect to each item of such Debt: the obligor, the holder
thereof, the outstanding amount, the current portion, the final maturity,
and the collateral securing such Debt, if any.
3 Note Purchase Agreement
<PAGE>
2. WARRANTIES AND REPRESENTATIONS
(C) MATERIAL ADVERSE CHANGE. Except as disclosed in PART 2.2(C) OF
ANNEX 3, since January 1, 1994, there has been no change in the business
operations, profits, financial condition, Properties or business prospects
of the Company or the Subsidiaries, except changes that, in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
2.3 SUBSIDIARIES AND AFFILIATES.
(A) OWNERSHIP OF SUBSIDIARIES. PART 2.3(a) OF ANNEX 3 states
(i) the name of each Subsidiary (indicating whether such
Subsidiary is a Restricted Subsidiary or an Unrestricted Subsidiary)
its jurisdiction of incorporation and the percentage of its Voting
Stock owned by the Company and each other Subsidiary,
(ii) the name of each officer and director of the Company and
each Restricted Subsidiary which is not listed in the Placement
Material, and
(iii) the name of each Person that owns more than five percent
(5%) of any class of capital stock of the Company or any Subsidiary.
Each of the Company and the Subsidiaries has good title to all of the
shares it purports to own of the stock of each Subsidiary, free and clear
in each case of any Lien. All such shares have been duly issued and are
fully paid and nonassessable.
(B) DIVIDEND RESTRICTIONS. No Subsidiary is a party to, or otherwise
subject to, any legal restriction or any agreement (other than this
Agreement, the agreements listed in PART 2.3(b) OF ANNEX 3 and statutory,
regulatory and common law restrictions) restricting the ability of such
Subsidiary to pay dividends out of profits or make any other similar
distributions of profits to the Company or any of the Subsidiaries which
own Voting Stock of such Subsidiary.
2.4 TITLE TO PROPERTIES.
(A) GENERAL. Each of the Company and the Subsidiaries has good title
to all of the Property reflected in the most recent balance sheet referred
to in Section 2.2 and to all of the Property purported to have been
acquired by the Company or any Subsidiary after said date (except as sold
or otherwise disposed of in the ordinary course of business), except for
such failures to have good title as are immaterial to such balance sheet
and that, in the aggregate for all such failures, could not reasonably be
expected to have a Material Adverse Effect. All Property of the Company
and the Subsidiaries is free from Liens not permitted by Section 6.9.
(B) LEASES. All leases necessary for the conduct of the respective
businesses of the Company and the Subsidiaries are valid and subsisting and
are in full force and effect, except for such failures to be valid and
subsisting that, in the aggregate for all such failures, could not
reasonably be expected to have a Material Adverse Effect.
(C) INTELLECTUAL PROPERTY. Each of the Company and the Subsidiaries
owns, possesses or has the right to use all of the licenses, permits,
franchises, patents,
4 Note Purchase Agreement
<PAGE>
2. WARRANTIES AND REPRESENTATIONS
copyrights, trademarks, service marks and trade names necessary for the
present and currently planned future conduct of its business, without any
known conflict with the rights of others, except for such failures to own,
possess, or have the right to use, that, in the aggregate for all such
failures, could not reasonably be expected to have a Material Adverse
Effect.
2.5 TAXES.
(A) RETURNS FILED; TAXES PAID.
(i) All tax returns required to be filed by or on behalf of each
of the Company and each Subsidiary and any other Person with which the
Company or any Subsidiary files or has filed a consolidated return in
any jurisdiction have been filed on a timely basis, and all taxes,
assessments, fees and other governmental charges upon each of the
Company and such Subsidiaries and upon any of their respective
Properties, income or franchises, that are due and payable have been
paid, except for such tax returns and such tax payments that, in the
aggregate for all such tax returns and payments, could not reasonably
be expected to have a Material Adverse Effect.
(ii) All liabilities of each of the Company and the Subsidiaries
with respect to United States federal income taxes have been finally
determined except for the fiscal years disclosed in PART 2.5 OF ANNEX
3, the only years not closed by the completion of an audit or the
expiration of the statute of limitations.
(B) FINANCIAL STATEMENTS. The amount of the liability for taxes
reflected in each of the consolidated balance sheets referred to in Section
2.2 is in each case a reasonable provision for taxes in accordance with
GAAP as of the dates of such balance sheets (including, without limitation,
any payment due pursuant to any tax sharing agreement) as are or may become
payable by any one or more of the Company and the other Persons
consolidated with the Company in such financial statements in respect of
all tax periods ending on or prior to such dates. The Company does not
know of any proposed additional tax assessment against it or any such
Person that is not provided for in accordance with GAAP in the most recent
balance sheet referred to in Section 2.2.
2.6 PENDING LITIGATION.
(a) There are no proceedings, actions or investigations pending or, to
the knowledge of the Company, threatened against or affecting the Company
or any Subsidiary in any court or before any Governmental Authority or
arbitration board or tribunal that, in the aggregate for all such
proceedings, actions and investigations, could reasonably be expected to
have a Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is in default with respect
to any judgment, order, writ, injunction or decree of any court,
Governmental Authority, arbitration board or tribunal that, in the
aggregate for all such defaults, could reasonably be expected to have a
Material Adverse Effect.
5 Note Purchase Agreement
<PAGE>
2. WARRANTIES AND REPRESENTATIONS
2.7 FULL DISCLOSURE.
The financial statements referred to in Section 2.2, this Agreement, the
Placement Material and each written statement (excluding page 5 through page 13,
inclusive, of the December 28 Letter) furnished by or on behalf of the Company
to you in connection with the negotiation or the closing of the sale of the
Notes, do not, taken as a whole, contain any untrue statement of a material fact
or omit a material fact necessary to make the statements contained therein and
herein not misleading. There is no fact that the Company has not disclosed to
you in writing that has had or, so far as the Company can now reasonably
foresee, could reasonably be expected to have a Material Adverse Effect.
2.8 CORPORATE ORGANIZATION AND AUTHORITY.
Each of the Company and the Subsidiaries
(a) is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation,
(b) has all corporate power and authority necessary to own and operate
its Properties and to carry on its business as now conducted and as
presently proposed to be conducted,
(c) has all licenses, certificates, permits, franchises and other
governmental authorizations necessary to own and operate its Properties and
to carry on its business as now conducted and as presently proposed to be
conducted, except where the failure to have such licenses, certificates,
permits, franchises and other governmental authorizations, in the aggregate
for all such failures, could not reasonably be expected to have a Material
Adverse Effect, and
(d) has duly qualified or has been duly licensed, and is authorized to
do business and is in good standing, as a foreign corporation, in each
state in the United States of America and in each other jurisdiction where
the failure to be so qualified or licensed and authorized and in good
standing, in the aggregate for all such failures, could reasonably be
expected to have a Material Adverse Effect.
2.9 CHARTER INSTRUMENTS, OTHER AGREEMENTS.
The Company is not in violation in any respect of any term of any charter
instrument or bylaw. No Subsidiary is in violation in any respect of any term
of any charter instrument or bylaw except for such violations that, in the
aggregate for all such violations, could not reasonably be expected to have a
Material Adverse Effect. Neither the Company nor any Subsidiary is in violation
in any respect of any term in any agreement or other instrument to which it is a
party or by which it or any of its Property may be bound except for such
violations that, in the aggregate for all such violations, could not reasonably
be expected to have a Material Adverse Effect.
6 Note Purchase Agreement
<PAGE>
2. WARRANTIES AND REPRESENTATIONS
2.10 RESTRICTIONS ON COMPANY AND SUBSIDIARIES.
Neither the Company nor any Subsidiary:
(a) is a party to any contract or agreement, or subject to any charter
or other corporate restriction that, in the aggregate for all such
contracts, agreements and charter and corporate restrictions, is reasonably
likely to have a Material Adverse Effect;
(b) is a party to any contract or agreement that restricts the right
or ability of such corporation to incur Debt, other than this Agreement and
the agreements listed in PART 2.10 OF ANNEX 3, none of which restricts the
issuance and sale of the Notes or the performance of the Company hereunder
or under the Notes, and true, correct and complete copies of each of which
have been provided to you; or
(c) has agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its Property, whether now
owned or hereafter acquired, to be subject to a Lien not permitted by
Section 6.9.
2.11 COMPLIANCE WITH LAW.
Neither the Company nor any Subsidiary is in violation of any law,
ordinance, governmental rule or regulation to which it is subject, except for
such violations that, in the aggregate, could not reasonably be expected to have
a Material Adverse Effect.
2.12 PENSION PLANS.
(A) DISCLOSURE. PART 2.12(A) OF ANNEX 3 correctly identifies all
ERISA Affiliates and all employee benefit plans with respect to which the
Company or any "affiliate" (as such term is defined in section 407(d) of
ERISA) is a "party-in-interest" (as such term is defined in section 3 of
ERISA) or in respect of which the Notes would constitute an "employer
security" (as such term is defined in section 407(d) of ERISA).
(B) PROHIBITED TRANSACTIONS. The execution and delivery of this
Agreement and the issuance and sale of the Notes hereunder will not involve
any transaction that is subject to the prohibitions of section 406 of ERISA
or in connection with which a tax could be imposed pursuant to section
4975(c)(1)(A)-(D) of the IRC. The representation by the Company in the
immediately preceding sentence is made in reliance upon the representations
in Section 1.3(b) as to the source of funds used by you.
(C) COMPLIANCE WITH ERISA. The Company and the ERISA Affiliates and
each Pension Plan are in compliance with ERISA, except for such failures to
comply that in the aggregate for all such failures could not reasonably be
expected to have a Material Adverse Effect.
(D) PLAN FUNDING STATUS AND LIABILITIES.
(I) FUNDING STATUS. Except as set forth in PART 2.12(D) OF ANNEX
3, the aggregate amount of the "benefit liabilities" (as such term is
defined in section 4001 of ERISA) under each Pension Plan, determined
as of the end of each such Pension Plan's most recently ended plan
year on the basis of the actuarial
7 Note Purchase Agreement
<PAGE>
2. WARRANTIES AND REPRESENTATIONS
assumptions specified for funding purposes in such Pension Plan's most
recent actuarial valuation report, did not exceed the aggregate
"current value" (as such term is defined in section 3 of ERISA) of the
assets of such Pension Plan allocable to such benefit liabilities.
(II) CLOSING DATE LIABILITIES. All liabilities to all Pension
Plans and Multiemployer Plans that are due and payable as of the
Closing Date have been paid, except for liabilities that, in the
aggregate for all such liabilities, could not reasonably be expected
to have a Material Adverse Effect. Neither the Company nor any ERISA
Affiliate has incurred any liability pursuant to Title I or Title IV
of ERISA or the penalty or excise tax or security provisions of the
IRC relating to "employee benefit plans" (as defined in section 3 of
ERISA), and no event, transaction, or condition has occurred or exists
that could result in the imposition of any Lien on any of the
Properties of the Company or any ERISA Affiliate, in either case
pursuant to Title I or Title IV of ERISA or pursuant to such penalty
or excise tax or security provisions of the IRC, except for such
liabilities and Liens that, in the aggregate for all such liabilities
and Liens, could not reasonably be expected to have a Material Adverse
Effect.
(III) MULTIEMPLOYER WITHDRAWAL LIABILITIES. Neither the Company
nor any ERISA Affiliate has incurred or currently expects to incur any
withdrawal liability under Title IV of ERISA with respect to any
Multiemployer Plan. There have been no "reportable events" (as such
term is defined in section 4043 of ERISA) with respect to any
Multiemployer Plan that could result in the termination of such
Multiemployer Plan and give rise to a liability of the Company or any
ERISA Affiliate in respect thereof.
(IV) PBGC. No circumstance exists that constitutes grounds under
section 4042 of ERISA entitling the PBGC to institute proceedings to
terminate, or appoint a trustee to administer, any Pension Plan or
trust created thereunder, nor has the PBGC instituted any such
proceeding.
(E) FOREIGN PENSION PLAN. All Foreign Pension Plans have been
established, operated, administered and maintained in compliance with all
laws, regulations and orders applicable thereto except for such failures,
in the aggregate for all such failures, to comply that could not reasonably
be expected to have a Material Adverse Effect. All premiums, contributions
and any other amounts required by applicable Foreign Pension Plan documents
or applicable laws have been paid or accrued as required, except for
premiums, contributions and amounts that, in the aggregate for all such
obligations, could not reasonably be expected to have a Material Adverse
Effect.
2.13 ENVIRONMENTAL COMPLIANCE.
Each of the Company and the Subsidiaries has obtained all permits, licenses
and other authorizations that are required under all Environmental Protection
Laws, except to the extent that the failure to have any such permit, license or
authorization could not reasonably be expected to have a Material Adverse
Effect. Each of the Company and the Subsidiaries is in compliance with the
terms and conditions of all such permits, licenses and authorizations and is
also in compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in each applicable Environmental
8 Note Purchase Agreement
<PAGE>
2. WARRANTIES AND REPRESENTATIONS
Protection Law and in each regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder, except for such failures to comply that could not reasonably be
expected to have a Material Adverse Effect. Except as set forth in PART 2.13 OF
ANNEX 3:
(a) no notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been filed, no
penalty has been assessed, and no investigation or review is pending or
threatened by any governmental or other entity with respect to any alleged
failure by the Company or any Subsidiary to have any permit, license or
authorization required in connection with the conduct of the business of
the Company or any of the Subsidiaries or with respect to any generation,
treatment, storage, recycling, transportation or disposal, or any release
as defined in 42 U.S.C (S) 9601(22) ("RELEASE") of any substance regulated
under Environmental Protection Laws ("HAZARDOUS MATERIALS") generated,
treated, stored, recycled, transported, disposed, or the subject of a
Release, by the Company or any of the Subsidiaries, except for such
failures that, in the aggregate for all such failures, could not reasonably
be expected to have a Material Adverse Effect;
(b) (i) neither the Company nor any of the Subsidiaries has handled
any Hazardous Material other than as a generator on any Property now
or previously owned or leased by the Company or any of the
Subsidiaries;
(ii) no polychlorinated biphenyls are or have been present at any
Property now or previously owned or leased by the Company or any of
the Subsidiaries;
(iii) no asbestos is or has been present at any Property now or
previously owned or leased by the Company or any of the Subsidiaries;
and
(iv) no Hazardous Materials have been the subject of a Release,
in a reportable quantity, where such quantity has been established by
statute, ordinance, rule, regulation or order, at, on or under any
Property now or previously owned or leased by the Company or any of
the Subsidiaries;
except for such occurrences that, in the aggregate for all such
occurrences, could not reasonably be expected to have a Material Adverse
Effect; and
(c) no oral or written notification of a Release of a Hazardous
Material has been filed by or on behalf of the Company or any of the
Subsidiaries and no Property now or previously owned or leased by the
Company or any of the Subsidiaries is listed or proposed for listing on
(i) the National Priorities List promulgated pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended,
(ii) the Comprehensive Environmental and Liability Information
System, as provided for by 40 C.F.R (S)300.5, or
(iii) any similar state list of sites requiring investigation or
clean-up;
9 Note Purchase Agreement
<PAGE>
2. WARRANTIES AND REPRESENTATIONS
except for such notices and listings that could not, in the aggregate for
all such notices and listings, reasonably be expected to have a Material
Adverse Effect; and
(d) there are no Liens arising under or pursuant to any Environmental
Protection Laws on any of the real properties owned or leased by the
Company or any of the Subsidiaries and no government actions have been
taken or are in the process of being taken that could subject any of such
real properties to such Liens, and neither the Company nor any of the
Subsidiaries would be required to place any notice or restriction relating
to the presence of Hazardous Materials at any real property owned by it in
any deed to such real property, except for such Liens and notices that
could not, in the aggregate for all such Liens and notices, reasonably be
expected to have a Material Adverse Effect.
2.14 SALE OF NOTES IS LEGAL AND AUTHORIZED; OBLIGATIONS ARE ENFORCEABLE.
(A) SALE OF NOTES IS LEGAL AND AUTHORIZED. Each of the issuance, sale
and delivery of the Notes by the Company, the execution and delivery hereof
by the Company and compliance by the Company with all of the provisions
hereof and of the Notes:
(i) is within the corporate powers of the Company; and
(ii) is legal and does not conflict with, result in any breach of
any of the provisions of, constitute a default under, or result in the
creation of any Lien upon any Property of the Company or any
Subsidiary under the provisions of,
(A) any agreement, charter instrument, bylaw or other
instrument to which it is a party or by which it or any of its
Property may be bound, or
(B) any order, judgment, decree, or ruling of any court,
arbitrator or Governmental Authority applicable to the Company or
any Subsidiary.
(B) OBLIGATIONS ARE ENFORCEABLE. Each of this Agreement and the Notes
has been duly authorized by all necessary action on the part of the
Company, has been executed and delivered by duly authorized officers of the
Company, and constitutes a legal, valid and binding obligation of the
Company, enforceable in accordance with its terms, except that the
enforceability hereof and of the Notes may be:
(i) limited by applicable bankruptcy, reorganization,
arrangement, insolvency, moratorium, or other similar laws affecting
the enforceability of creditors' rights generally; and
(ii) subject to the availability of equitable remedies.
2.15 GOVERNMENTAL CONSENT TO SALE OF NOTES.
(a) Neither the nature of the Company or any Subsidiary, or of any of
their respective businesses or Properties, nor any relationship between the
Company or any Subsidiary and any other Person, nor any circumstance in
connection with the offer,
10 Note Purchase Agreement
<PAGE>
2. WARRANTIES AND REPRESENTATIONS
issuance, sale or delivery of the Notes and the execution and delivery of
this Agreement, or the performance of the obligations hereunder and
thereunder, is such as to require a consent, approval or authorization of,
or filing, registration or qualification with, any Governmental Authority
on the part of the Company as a condition to the execution and delivery of
this Agreement, the offer, issuance, sale or delivery of the Notes, or the
performance of the obligations hereunder or thereunder.
(b) The issuance and sale of the Notes, the incurrence of the Debt
represented thereby, and the performance hereunder and thereunder, by the
Company,
(i) is not subject to regulation under the Investment Company
Act of 1940 as amended, the Public Utility Holding Company Act of 1935
as amended, the Interstate Commerce Act as amended or the Federal
Power Act as amended, and
(ii) does not violate any provision of any statute or other rule
or regulation of any Governmental Authority applicable to the Company
or any Subsidiary.
2.16 NO DEFAULTS UNDER NOTES.
No event has occurred and no condition exists that, upon the execution and
delivery of this Agreement and the issuance and sale of the Notes, would
constitute a Default or an Event of Default.
2.17 PRIVATE OFFERING OF NOTES.
(a) Neither the Company nor Cascade Capital Corporation (the only
Person authorized or employed by the Company as agent, broker, dealer or
otherwise in connection with the offering or sale of the Notes or any
similar security of the Company, other than employees of the Company) has
offered any of the Notes or any similar security of the Company for sale
to, or solicited offers to buy any thereof from, or otherwise approached or
negotiated with respect thereto with, any prospective purchaser, other than
the number of institutional investors (including you) set forth in PART
2.17 OF ANNEX 3, each of whom was offered all or a portion of the Notes at
private sale for investment.
(b) Neither the Company nor any of the Subsidiaries, nor any agent
acting on behalf of any of them, has taken any action that would subject
the issue or sale of the Notes to the registration provisions of section 5
of the Securities Act or to the registration, qualification or other
similar provisions of any securities or "blue sky" law of any applicable
jurisdiction.
2.18 USE OF PROCEEDS OF NOTES.
(A) USE OF PROCEEDS. The Company shall use the proceeds of the sale
of the Notes to repay variable-rate short-term indebtedness for money
borrowed.
(B) MARGIN SECURITIES. None of the transactions contemplated herein
and in the Notes (including, without limitation, the use of the proceeds
from the sale of the
11 Note Purchase Agreement
<PAGE>
2. WARRANTIES AND REPRESENTATIONS
Notes) violates, will violate or will result in a violation of section 7 of
the Exchange Act, or any regulation issued pursuant thereto, including,
without limitation, Regulation G, Regulation T and Regulation X of the
Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter II.
Neither the Company nor any Subsidiary intends to use the proceeds of the
sale of the Notes for the purpose of "buying or carrying" (as defined in
said Regulation G), or refinancing borrowings that were used for the
purpose of buying or carrying, any "margin stock" (as defined in said
Regulation G).
(C) ABSENCE OF FOREIGN OR ENEMY STATUS. Neither the sale of the Notes
nor the use of proceeds from the sale thereof will result in a violation of
any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended), or any ruling
issued thereunder or any enabling legislation or Presidential Executive
Order in connection therewith.
3. CLOSING CONDITIONS
Your obligation to purchase and pay for the Notes to be delivered to you at
the Closing is subject to the conditions precedent set forth in this Section 3.
The failure of the Company to satisfy such conditions shall not operate to waive
any of your rights against the Company.
3.1 OPINIONS OF COUNSEL.
You shall have received from
(a) Hyman Bielsky, general counsel of the Company, and
(b) Hebb & Gitlin, your special counsel,
closing opinions, each dated as of the Closing Date, substantially in the
respective forms set forth in Exhibit B1 and Exhibit B2 and as to such other
matters as you may reasonably request. This Section 3.1 shall constitute
direction by the Company to such counsel named in the foregoing subsection (a)
to deliver such closing opinion to you.
3.2 WARRANTIES AND REPRESENTATIONS TRUE.
The warranties and representations contained in Section 2 shall be true on
the Closing Date with the same effect as though made on and as of that date.
3.3 OFFICERS' CERTIFICATES.
You shall have received
(a) a certificate dated the Closing Date and signed by a Senior
Officer, substantially in the form of Exhibit C, and
(b) a certificate dated the Closing Date and signed by the Secretary
or an Assistant Secretary of the Company, substantially in the form of
Exhibit D.
12 Note Purchase Agreement
<PAGE>
3. CLOSING CONDITIONS
3.4 LEGALITY.
The Notes shall on the Closing Date qualify as a legal investment for you
under applicable insurance law (without regard to any "basket" or "leeway"
provisions), and the acquisition thereof shall not subject you to any penalty or
other onerous condition pursuant to any such law or regulation, and you shall
have received such evidence as you may reasonably request to establish
compliance with this condition.
3.5 PRIVATE PLACEMENT NUMBER.
The Company shall have obtained or caused to be obtained a private
placement number for the Notes from the CUSIP Service Bureau of Standard &
Poor's, a division of McGraw-Hill, Inc., and you shall have been informed of
such private placement number.
3.6 EXPENSES.
All fees and disbursements required to be paid pursuant to Section 1.4
shall have been paid in full.
3.7 OTHER PURCHASERS.
None of the Other Purchasers shall have failed to execute and deliver a
Note Purchase Agreement or to accept delivery of or make payment for the Notes
to be purchased by it on the Closing Date.
3.8 PROCEEDINGS SATISFACTORY.
All proceedings taken in connection with the issuance and sale of the Notes
and all documents and papers relating thereto shall be satisfactory to you and
your special counsel. You and your special counsel shall have received copies
of such documents and papers as you or they may reasonably request in connection
therewith or in connection with your special counsel's closing opinion, all in
form and substance satisfactory to you and your special counsel.
4. PRINCIPAL PAYMENTS
4.1 OPTIONAL PREPAYMENTS.
(A) OPTIONAL PREPAYMENTS. The Company may prepay the principal amount
of the Notes in whole or in part, at any time, in multiples of One Million
Dollars ($1,000,000) (or, if the aggregate outstanding principal amount of
the Notes is less than One Million Dollars ($1,000,000) at such time, then
such principal amount), together with
(i) an amount equal to the Make-Whole Amount due at such time in
respect of the principal amount of the Notes being so prepaid, and
(ii) interest on such principal amount then being prepaid accrued
to the prepayment date.
13 Note Purchase Agreement
<PAGE>
4. PRINCIPAL PAYMENTS
(B) NOTICE OF OPTIONAL PREPAYMENT. The Company will give notice of
any optional prepayment of the Notes to each holder of Notes not less than
thirty (30) days nor more than sixty (60) days before the specified
prepayment date, stating:
(i) the specified prepayment date;
(ii) the Section under which the prepayment is to be made;
(iii) the principal amount of each Note to be prepaid on such
date;
(iv) the interest to be paid on each such Note, accrued to the
specified prepayment date, and
(v) the calculation (with details) of an estimated Make-Whole
Amount, if any, (calculated as if the date of such notice was the
specified prepayment date) due in connection with such prepayment.
Notice of prepayment having been so given, the aggregate principal amount
of the Notes to be prepaid stated in such notice, together with the Make-
Whole Amount as of the specified prepayment date, if any, and interest
thereon accrued to the specified prepayment date, shall become due and
payable on the specified prepayment date. Two (2) Business Days prior to
the making of such prepayment, the Company shall deliver to each holder of
Notes by facsimile transmission a certificate of a Senior Financial Officer
specifying the details of the calculation of such Make-Whole Amount as of
the specified prepayment date.
4.2 PREPAYMENTS AMONG NOTEHOLDERS.
If at the time any prepayment of the principal of the Notes made pursuant
to Section 4.1 is due there is more than one Note outstanding, the aggregate
principal amount of each such optional partial prepayment of the Notes shall be
allocated among the Notes at the time outstanding pro rata in proportion to the
respective unpaid principal amounts of all such outstanding Notes.
4.3 NOTATION OF NOTES ON PREPAYMENT.
Upon any partial prepayment of a Note, the holder of such Note may (but
shall not be required to), at its option,
(a) surrender such Note to the Company pursuant to Section 5.2 in
exchange for a new Note in a principal amount equal to the principal amount
remaining unpaid on the surrendered Note,
(b) make such Note available to the Company for notation thereon of
the portion of the principal so prepaid, or
(c) mark such Note with a notation thereon of the portion of the
principal so prepaid.
14 Note Purchase Agreement
<PAGE>
4. PRINCIPAL PAYMENTS
In case the entire principal amount of any Note is prepaid, such Note shall be
surrendered to the Company for cancellation and shall not be reissued, and no
Note shall be issued in lieu of the prepaid principal amount of any Note.
4.4 OFFER TO PREPAY UPON CHANGE IN CONTROL.
(A) IN GENERAL. In the event that there occurs both
(i) a Designated Event, and
(ii) a Rating Decline attributable at least in part to such
Designated Event,
each holder of the Notes shall have the right, at the holder's option, to
require the Company to prepay all or any part of such holder's Notes on the
date (the "PREPAYMENT DATE") that is one hundred (100) days after the
occurrence of the first of any Rating Declines in respect of such
Designated Event, at one hundred percent (100%) of the principal amount
thereof, together with interest accrued to (but not including) the
Prepayment Date and a Make-Whole Amount determined as of the Prepayment
Date.
(B) NOTICE OF OFFER TO PREPAY. The Company shall notify each holder
of Notes on or before the twenty-eighth (28th) day after the date of the
occurrence of such Rating Decline of the occurrence of the Designated Event
and the Rating Decline and of the Company's offer to prepay the Notes (and
such notice shall constitute such offer). Such notice shall be executed by
a Senior Officer and shall
(i) specify the Prepayment Date;
(ii) state that such offer is made pursuant to Section 4.4;
(iii) state the principal amount of each Note offered to be
prepaid;
(iv) state the amount of interest that would be due on each
such Note offered to be prepaid, accrued to the Prepayment Date;
(v) set forth the calculation (with details) of an estimated
Make-Whole Amount, if any, due in connection with such prepayment
(calculated as if the Prepayment Date was the date of the occurrence
of the Rating Decline with respect thereto and the offer to prepay was
accepted in full);
(vi) describe, in reasonable detail, the nature and date of the
Designated Event and the relevant Rating Decline; and
(vii) contain a conspicuous legend stating that each holder of
Notes shall be deemed to have rejected such offered prepayment if such
holder shall not have sent a notice of acceptance to the Company prior
to the tenth (10th) day prior to the Prepayment Date, and specify such
tenth (10th) prior day.
15 Note Purchase Agreement
<PAGE>
4. PRINCIPAL PAYMENTS
(C) ACCEPTANCE OF OFFER. To accept such offer, the holder of a Note
must send, at least ten (10) days (the "OFFER ACCEPTANCE DATE") prior to
the Prepayment Date, a notice to the Company of the holder's acceptance of
such offer. Such notice shall specify the portion of such holder's Notes
with respect to which such acceptance applies. Such acceptance will be
irrevocable. If so accepted, the aggregate principal amount of the Notes
to be prepaid specified in such acceptance, together with the Make-Whole
Amount as of the Prepayment Date, if any, and interest thereon accrued to
the Prepayment Date, shall become due and payable on the Prepayment Date.
If a holder of Notes shall not have responded to such offered prepayment on
or prior to the Offer Acceptance Date, such holder shall be deemed to have
rejected such offered prepayment.
(D) INFORMATION RE ACCEPTANCES. The Company shall respond promptly to
all (oral and written) inquiries from holders of Notes regarding the amount
of Notes held by other holders of Notes in respect of which the Company has
received acceptances and the identity of such other holders.
(E) NOTICE CONCERNING STATUS OF HOLDERS OF NOTES. Promptly after each
Prepayment Date and the making of all prepayments contemplated on such
Prepayment Date under this Section 4.4 (and, in any event, within thirty
(30) days thereafter), the Company shall deliver to each remaining holder
of Notes a certificate signed by a Senior Officer containing a list of the
then current holders of Notes (together with their addresses) and setting
forth as to each such holder the outstanding principal amount of Notes held
by each such holder at such time.
4.5 NO OTHER PREPAYMENTS; ACQUISITION OF NOTES.
Except for prepayments made in accordance with this Section 4, the Company
may not make any prepayment of principal in respect of the Notes. The Company
will not, and will not permit any Subsidiary or any Affiliate to, directly or
indirectly, acquire or make any offer to acquire any Notes.
5. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES
5.1 REGISTRATION OF NOTES.
The Company will keep at its office, maintained pursuant to Section 6.3, a
register for the registration and transfer of Notes. The name and address of
each holder of one or more Notes, each transfer thereof and the name and address
of each transferee of one or more Notes shall be registered in such register.
The Person in whose name any Note shall be registered shall be deemed and
treated as the owner and holder thereof for all purposes hereof, and the Company
shall not be affected by any notice or knowledge to the contrary.
5.2 EXCHANGE OF NOTES.
(A) EXCHANGE OF NOTES. Upon surrender of any Note at the office of
the Company maintained pursuant to Section 6.3, duly endorsed or
accompanied by a written instrument of transfer duly executed by the
registered holder of such Note or such holder's attorney duly authorized in
writing, the Company will execute and deliver, at the
16 Note Purchase Agreement
<PAGE>
5. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES
Company's expense (except as provided in this Section 5.2(a) below), a new
Note or Notes in exchange therefor, in an aggregate principal amount equal
to the unpaid principal amount of the surrendered Note. Each such new Note
shall be payable to such Person as such holder may request and shall be
substantially in the form of Exhibit A. Each such new Note shall be dated
and bear interest from the date to which interest shall have been paid on
the surrendered Note or dated the date of the surrendered Note if no
interest shall have been paid thereon. Each such new Note shall carry the
same rights to unpaid interest and interest to accrue that were carried by
the Note so exchanged or transferred. The Company may require payment of a
sum sufficient to cover any stamp tax or governmental charge imposed in
respect of any such transfer of Notes. Notes shall not be transferred in
denominations of less than Five Hundred Thousand Dollars ($500,000),
provided that a holder of Notes may transfer its entire holding of Notes
regardless of the principal amount of such holder's Notes.
(B) COSTS. The Company will pay the cost of delivering to or from
such holder's home office or custodian bank from or to the Company, insured
to the reasonable satisfaction of such holder, the surrendered Note and any
Note issued in substitution or replacement for the surrendered Note.
(C) ACTIONS OF NOTEHOLDER. Each holder of Notes agrees that in the
event it shall sell or transfer any Note without surrendering such Note to
the Company as set forth in Section 5.2(a), it shall
(i) prior to the delivery of such Note make a notation thereon
of all principal, if any, prepaid on such Note and shall also indicate
thereon the date to which interest shall have been paid on such Note,
and
(ii) promptly notify or cause the transferee to notify the
Company of the name and address of the transferee of any such Note so
transferred and the effective date of such transfer.
5.3 REPLACEMENT OF NOTES.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be, in the case of an institutional investor, notice from
such institutional investor of such ownership (or of ownership by such
institutional investor's nominee) and such loss, theft, destruction or
mutilation), and
(a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to the Company (provided that if the holder of such Note is an
institutional investor or a nominee of an institutional investor, such
holder's own unsecured agreement of indemnity shall be deemed to be
satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense will execute and deliver, in lieu thereof, a
replacement Note, dated and bearing interest from the date to which interest
shall have been paid on such lost,
17 Note Purchase Agreement
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5. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES
stolen, destroyed or mutilated Note or dated the date of such lost, stolen,
destroyed or mutilated Note if no interest shall have been paid thereon.
5.4 ISSUANCE TAXES.
The Company will pay all taxes (if any) due (but not, in any event, income
taxes) in connection with and as the result of the initial issuance and sale of
the Notes and in connection with any modification, waiver or amendment of this
Agreement or the Notes and shall save each holder of Notes harmless without
limitation as to time against any and all liabilities with respect to all such
taxes.
6. COVENANTS
The Company covenants that on and after the Closing Date and so long as any
of the Notes shall be outstanding:
6.1 PAYMENT OF TAXES AND CLAIMS.
The Company will, and will cause each Subsidiary to, pay before they become
delinquent,
(a) all taxes, assessments and governmental charges or levies imposed
upon it or its Property, and
(b) all claims or demands of materialmen, mechanics, carriers,
warehousemen, vendors, landlords and other like Persons that, if unpaid,
might result in the creation of a statutory, regulatory or common law Lien
upon its Property,
provided, that items of the foregoing description need not be paid so long as
such items are being actively contested in good faith and by appropriate
proceedings, reasonable book reserves in accordance with GAAP have been
established and maintained with respect thereto, and such items, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
6.2 MAINTENANCE OF PROPERTIES; CORPORATE EXISTENCE; ETC.
The Company will, and will cause each Subsidiary to:
(A) PROPERTY -- maintain its Property in good condition, ordinary wear
and tear and obsolescence excepted, and make all necessary renewals,
replacements, additions, betterments and improvements thereto, provided
that this Section 6.2(a) shall not prevent the Company or any Subsidiary
from discontinuing the operation and the maintenance of any of its
Properties if such discontinuance is desirable in the conduct of its
business and such discontinuance could not reasonably be expected to have a
Material Adverse Effect;
(B) INSURANCE -- maintain, with financially sound and reputable
insurers, insurance with respect to its Property and business against such
casualties and contingencies, of such types and in such amounts as is
customary in the case of corporations of established reputations engaged in
the same or a similar business and similarly situated provided that self-
insurance, to the extent reasonable and prudent, and
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6. COVENANTS
to the extent customary among such corporations, will satisfy the
requirements of this Section 6.2(b);
(C) FINANCIAL RECORDS -- keep proper books of record and account, in
which full and correct entries shall be made of all dealings and
transactions of or in relation to the Properties and business thereof, and
which will permit the production of financial statements in accordance with
GAAP;
(D) CORPORATE EXISTENCE AND RIGHTS -- do or cause to be done all
things necessary to preserve and keep in full force and effect its
corporate existence, corporate rights (charter and statutory) and corporate
franchises except as permitted by Section 6.4; and
(E) COMPLIANCE WITH LAW -- comply with all laws, ordinances and
governmental rules and regulations to which it is subject (including,
without limitation, any Environmental Protection Law) and obtain all
licenses, certificates, permits, franchises and other governmental
authorizations necessary to the ownership of its Properties and the conduct
of its business except for such violations and failures to obtain that, in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
6.3 PAYMENT OF NOTES AND MAINTENANCE OF OFFICE.
The Company will punctually pay, or cause to be paid, the principal of and
interest (and Make-Whole Amount, if any) on, the Notes, as and when the same
shall become due according to the terms hereof and of the Notes, and will
maintain an office at the address of the Company as provided in Section 10.1
where notices, presentations and demands in respect hereof or the Notes may be
made upon it. Such office will be maintained at such address until such time as
the Company shall notify the holders of the Notes of any change of location of
such office, which will in any event be located within the United States of
America.
6.4 MERGER.
The Company will not merge into, consolidate with, or sell, lease, transfer
or otherwise dispose of all or substantially all of its Property to any other
Person, provided that the foregoing restriction does not apply an Acceptable
Acquisition, so long as the Company is the surviving corporation, and
immediately after giving effect to such transaction, no Default or Event of
Default would exist.
6.5 MAINTENANCE OF SHAREHOLDERS' EQUITY.
The Company will at all times maintain Consolidated Shareholders' Equity in
an amount not less than
(a) Three Hundred Sixty Million Dollars ($360,000,000), plus
(b) the sum of the amounts calculated with respect to each fiscal
quarter of the Company ended after January 1, 1994 equal, with respect to
each such fiscal quarter, to the greater of fifty percent (50%) of
Consolidated Net Income for such fiscal quarter or zero (0).
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6. COVENANTS
6.6 MAINTENANCE OF DEBT TO CAPITAL RATIO.
The Company will at all times maintain the ratio of Consolidated Debt to
Consolidated Total Capitalization in an amount not greater than 0.5 to 1, in
each case determined at such time.
6.7 MAINTENANCE OF INTEREST COVERAGE RATIO.
The Company will at all times maintain the ratio of Consolidated EBIT to
Consolidated Interest Expense in an amount not less than 2.5 to 1, in each case
determined in respect of the then most recently ended period of four (4) fiscal
quarters of the Company.
6.8 LEASES.
The Company will not, and will not permit any Restricted Subsidiary to,
create, incur, assume or suffer to exist, any obligation as lessee for the
rental or hire of any Property, except:
(a) leases existing on the date of this Agreement and any extensions
or renewals therefor;
(b) Capital Leases secured by Liens permitted by Section 6.9; and
(c) obligations as lessee under leases for rental payments in any
fiscal year of the Company up to an aggregate amount determined in respect
of the Company and the Restricted Subsidiaries on a consolidated basis not
exceeding ten percent (10%) of Consolidated Shareholders' Equity required
to be maintained pursuant to Section 6.5, in each case determined at the
end of such fiscal year.
6.9 LIENS.
(A) GENERALLY. The Company will not, and will not permit any
Restricted Subsidiary to, cause or permit, or agree or consent to cause or
permit in the future (upon the happening of a contingency or otherwise),
any of their Property, whether now owned or hereafter acquired, at any time
to be subject to a Lien except:
(I) CREDIT AGREEMENT -- Liens in favor of the "Agent" (as
defined in the Credit Agreement) securing "Loans" (as defined in the
Credit Agreement) made under the Credit Agreement provided that the
Company shall have caused to be made provision whereby the Notes are
secured equally and ratably with all obligations secured by such Liens
pursuant to such agreements and instruments as shall be approved by
the Required Holders, and the Company shall have caused to be
delivered to each holder of a Note an opinion of independent counsel
acceptable to the Required Holders to the effect that such agreements
and instruments are enforceable in accordance with their terms and
comply with the terms of this Agreement;
(II) TAXES, ETC. -- Liens for taxes or assessments or other
government charges or levies if not yet due and payable or if due and
payable if they are being contested in good faith by appropriate
proceedings and for which appropriate reserves are maintained;
20 Note Purchase Agreement
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6. COVENANTS
(III) ORDINARY COURSE -- Liens imposed by law, such as
mechanics', materialmen's landlord's, warehousemen's and carrier's
Liens, and other similar Liens securing obligations incurred in the
ordinary course of business that are not past due for more than thirty
(30) days, or which are being contested in good faith by appropriate
proceedings and for which appropriate reserves have been established;
(IV) WORKERS' COMPENSATION -- Liens arising under workers'
compensation, unemployment insurance, social security and similar
legislation (other than ERISA);
(V) BID AND PERFORMANCE BONDS -- Liens in the form of deposits or
pledges to secure the performance of bids, tenders, contracts (other
than contracts for the payment of money), leases (to the extent
permitted under the terms of this Agreement), public and statutory
obligations, surety, stay, appeal, indemnity, performance or other
similar bonds, and other similar obligations arising in the ordinary
course of business;
(VI) JUDGMENT LIENS -- judgment and other similar Liens arising
in connection with court proceedings; provided that the execution or
other enforcement of such Liens is effectively stayed and the claims
secured thereby are being actively contested in good faith and by
appropriate proceedings;
(VII) REAL ESTATE -- easements, rights-of-way, and other similar
restrictions and encumbrances that, in the aggregate, do not
materially interfere with the occupation, use and enjoyment by the
Company or any Restricted Subsidiary of the Property encumbered
thereby in the ordinary course of their respective businesses or
materially impair the value of the Property subject thereto;
(VIII) INTRA-GROUP LIENS -- Liens securing obligations of a
Restricted Subsidiary to the Company or another Restricted Subsidiary;
(IX) PURCHASE MONEY LIENS, ETC. -- purchase money Liens on any
Property hereafter acquired or the assumption of any Lien on Property
existing at the time of such acquisition, or a Lien incurred in
connection with any conditional sale or other title retention
agreement or a Capital Lease, so long as:
(A) such Property is acquired by the Company or a Restricted
Subsidiary in the ordinary course of its business and a purchase
money Lien on any such Property is created contemporaneously with
such acquisition;
(B) the obligation secured by any Lien so created, or
assumed or existing shall not exceed seventy-five percent (75%)
of the lesser of cost or Fair Market Value as of the time of
acquisition of the Property covered thereby to the Company or the
Restricted Subsidiary acquiring the same;
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6. COVENANTS
(C) each such Lien shall attach only to the Property so
acquired and fixed improvements thereon; and
(D) the sum, at any time, of the aggregate amount of all
obligations secured by all such Liens (including the aggregate
amount of Attributable Debt outstanding in respect of Sale and
Lease-Back Transactions secured by Liens permitted by this
Section 6.9(a)(ix)) does not exceed an amount equal to ten
percent (10%) of the amount of Consolidated Shareholders' Equity
required to be maintained pursuant to Section 6.5, in each case
determined at such time;
(X) CLOSING DATE LIENS -- Liens existing as of the Closing Date
and described in PART 6.9(A)(X) OF ANNEX 3;
(XI) BASKET LIENS -- additional Liens securing obligations
("BASKET OBLIGATIONS") not otherwise permitted to be secured by this
Section 6.9(a) so long as the sum of the aggregate amount of
outstanding Basket Obligations plus the Sale and Lease-Back Basket
Amount does not at any time exceed an amount equal to five percent
(5%) of Consolidated Shareholders' Equity required to be maintained
pursuant to Section 6.5, in each case determined at such time.
(B) EQUAL AND RATABLE LIEN; EQUITABLE LIEN. In case any Property
shall be subjected to a Lien in violation of this Section 6.9, the Company
will forthwith make or cause to be made, to the fullest extent permitted by
applicable law, provision whereby the Notes will be secured equally and
ratably as to such Property with all other obligations secured thereby
pursuant to such agreements and instruments as shall be approved by the
Required Holders, and the Company will promptly cause to be delivered to
each holder of a Note an opinion of independent counsel satisfactory to the
Required Holders to the effect that such agreements and instruments are
enforceable in accordance with their terms, and in any event the Notes
shall have the benefit, to the full extent that, and with such priority as,
the holders of Notes may be entitled under applicable law, of an equitable
Lien on such Property (and any proceeds thereof) securing the Notes. Such
violation of this Section 6.9 will constitute an Event of Default
hereunder, whether or not any such provision is made or any equitable Lien
is created pursuant to this Section 6.9(b).
(C) CONSTRUCTION. Nothing in this Section 6.9 shall be construed to
permit the incurrence or existence of any Debt not otherwise permitted by
this Agreement. Nothing in this Agreement that permits the incurrence or
existence of any Debt shall be construed to permit the incurrence or
existence of a Lien securing such Debt unless such Lien is permitted by
this Section 6.9.
6.10 LIMITATION ON SALE AND LEASE-BACK TRANSACTIONS.
The Company will not, and will not permit any Restricted Subsidiary to,
enter into any arrangement with any Person providing for the leasing by the
Company or any Restricted Subsidiary of any Principal Property, whether now
owned or hereafter acquired (except for temporary leases for a term, including
any renewal thereof, of not more than three (3) years and except for leases
between the Company and any Restricted Subsidiary, between any Restricted
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6. COVENANTS
Subsidiary and the Company or between Restricted Subsidiaries), which Property
has been or is to be sold or transferred by the Company or such Restricted
Subsidiary to such Person with the intention of taking back a lease of such
Property (a "SALE AND LEASE-BACK TRANSACTION") unless
(A) PURCHASE MONEY LIENS -- the Liens securing the obligations arising
in respect of such Sale and Lease-Back Transaction are permitted by Section
6.9(a)(ix),
(B) BASKET LIENS -- the Liens securing the obligations arising in
respect of such Sale and Lease-Back Transaction are permitted by Section
6.9(a)(xi), or
(C) DEBT REPAYMENT -- the Company shall apply, within two hundred
seventy (270) days of the effective date of any such arrangement, an amount
equal to the Attributable Debt in respect of such Sale and Lease-Back
Transaction to the prepayment or retirement (other than any mandatory
prepayment or retirement) of Debt incurred or assumed by the Company or any
Restricted Subsidiary (other than Debt owed to the Company or any
Restricted Subsidiary) which by its terms matures at or is extendible or
renewable at the option of the obligor to a date more than twelve (12)
months after the date of the creation of such indebtedness (which
prepayment, if such Debt is the Debt evidenced by the Notes, shall be made
in accordance with Section 4.1).
6.11 INVESTMENTS.
The Company will not, and will not permit any Restricted Subsidiary to,
make any loan or advance to any Person or purchase or otherwise acquire any
capital stock, Property (other than inventory, equipment or real estate
purchased in the ordinary course of business), obligations or other securities
of, make any capital contribution to, or otherwise invest in, or acquire any
interest in, any person (any of the foregoing being "INVESTMENTS"), except:
(a) direct obligations of the United States of America or any agency
thereof with maturities of one year or less from the date of acquisition;
(b) commercial paper of a domestic issuer rated at least "A-1" by
Standard & Poor's Corporation or "P-1" by Moody's Investors Service, Inc.
or participations (under asset sales programs) in loans made by banks to
borrowers whose commercial paper is so rated;
(c) certificates of deposit with maturities of one year or less from
the date of acquisition issued by any commercial bank operating within the
United States of America having capital and surplus in excess of One
Hundred Fifty Million Dollars ($150,000,000), or certificates of deposit
with maturities of one year or less from the date of acquisition and which
are covered by Federal Deposit Insurance Corporation insurance, issued by
any commercial bank operating within the United States of America, without
regard to the capital and surplus of that bank;
(d) stock, obligations or securities received in settlement of debts
(created in the ordinary course of business) owing to the Company or any
such Restricted Subsidiary;
23 Note Purchase Agreement
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6. COVENANTS
(e) any Acceptable Acquisition;
(f) direct obligations of states or municipalities of the United
States rated at least "A" by Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc. or by Moody's Investors Service, Inc.;
(g) other financial market instruments rated at least "A" by Standard
& Poor's Corporation or by Moody's Investors Service, Inc. or backed by
instruments so rated; and
(h) other Investments in an aggregate amount (valued at cost) at any
one time not exceeding an amount equal to ten percent (10%) of Consolidated
Shareholders' Equity.
Any corporation that becomes a Restricted Subsidiary after the Closing Date
shall be deemed to have made, at the time it becomes a Restricted Subsidiary,
all Investments of such corporation existing immediately after it becomes a
Restricted Subsidiary.
6.12 SALE OF ASSETS.
The Company will not, and will not permit any Restricted Subsidiary to,
sell, lease, assign, transfer or otherwise dispose of any of its now owned or
hereafter acquired Property (including, without limitation, shares of stock and
indebtedness of such Restricted Subsidiaries, receivables and leasehold
interests); provided that the foregoing prohibition will not apply to the sale,
lease assignment, transfer or other disposition of
(a) inventory in the ordinary course of business;
(b) Property no longer used or useful in the conduct of its business;
(c) Property from a Restricted Subsidiary to the Company; and
(d) other Property, so long as the aggregate book value of all such
other Property disposed of during any fiscal year of the Company does not
exceed an amount equal to fifteen percent (15%) of Consolidated
Shareholders' Equity determined as of the end of the then most recently
ended fiscal year of the Company.
6.13 STOCK OF SUBSIDIARIES.
The Company will not, and will not permit any Restricted Subsidiary to,
sell or otherwise dispose of any shares of capital stock of any of the
Restricted Subsidiaries, except in connection with a transaction permitted under
Section 6.12.
6.14 DESIGNATION OF SUBSIDIARIES.
(A) RIGHT TO DESIGNATE SUBSIDIARIES. The Company may designate each
Subsidiary as a Restricted Subsidiary or an Unrestricted Subsidiary, as
provided in this Section 6.14.
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<PAGE>
6. COVENANTS
(B) INITIAL DESIGNATION.
(I) SUBSIDIARIES IN EXISTENCE ON THE CLOSING DATE. Each
Subsidiary in existence on the Closing Date shall be deemed to have
been designated as an Unrestricted Subsidiary unless the Company shall
indicate in PART 2.3(A) OF ANNEX 3 that such Subsidiary is a
Restricted Subsidiary.
(II) SUBSIDIARIES ACQUIRED AFTER THE CLOSING DATE. The Company
may, within thirty (30) days after the acquisition or creation of any
Subsidiary, designate such Subsidiary as an Unrestricted Subsidiary or
a Restricted Subsidiary and may notify the holders of the Notes within
such thirty (30) day period. If such notice is sent to the holders of
the Notes within thirty (30) days after the acquisition or creation of
such Subsidiary, such designation shall be retroactive to the date of
such acquisition or creation. If the Company fails to so make such
designation (and send such notice) within such thirty (30) day period,
such Subsidiary shall be deemed to have been retroactively (to the
date of creation or acquisition) designated as an Unrestricted
Subsidiary.
(C) DESIGNATION OF SUBSIDIARIES AFTER INITIAL DESIGNATION. The
Company may, at any time after the initial designation of a Subsidiary as
an Unrestricted Subsidiary, designate such Subsidiary as a Restricted
Subsidiary, by notice sent (and dated the date of such sending)
simultaneously to each holder of Notes. Such designation shall take effect
upon the sending of such notice. No designation will be permitted to be
made and no notice will be permitted to be sent at any time when a Default
or an Event of Default is outstanding, and all designations made and
notices sent at any such time will be ineffective. After the designation
of a Subsidiary as a Restricted Subsidiary, no further designations of such
Subsidiary will at any time be permitted or effective.
(D) EFFECT OF DESIGNATIONS ON FINANCIAL CALCULATIONS. Calculations of
financial amounts or ratios required by this Agreement to be made as of any
date prior to the effective date of any designation of a Subsidiary as a
Restricted Subsidiary or an Unrestricted Subsidiary shall not be restated
as a result of such designation.
6.15 LINE OF BUSINESS.
The Company will, and will cause each Restricted Subsidiary to, engage in
an efficient and economical manner in a business of the same general type as
conducted by it on the Closing Date.
6.16 TRANSACTIONS WITH AFFILIATES.
The Company will not, and will not permit any Restricted Subsidiary to,
enter into any transaction, including, without limitation, the purchase, sale,
lease or exchange of Property or the rendering of any service, with any
Affiliate, except in the ordinary course of and pursuant to the reasonable
requirements of the Company's or such Restricted Subsidiary's business and upon
fair and reasonable terms no less favorable to the Company or such Restricted
Subsidiary than would obtain in a comparable arm's-length transaction with a
Person not an Affiliate.
25 Note Purchase Agreement
<PAGE>
6. COVENANTS
6.17 ENVIRONMENTAL COMPLIANCE.
(a) The Company will, and will cause each of the Subsidiaries to,
comply with, all applicable Environmental Protection Laws, except where all
such failures to comply, in the aggregate, could not reasonably be expected
to have a Material Adverse Effect.
(b) The Company will, and will cause the Subsidiaries to,
(i) keep all of their respective Properties free of any Lien
imposed pursuant to such Environmental Protection Laws; and
(ii) pay or cause to be paid when due any and all costs in
connection with the foregoing, including, without limitation, the cost
of removal, treatment and disposal of any Hazardous Materials.
(c) The Company will not, and will not permit any Subsidiary to, use
its Properties to generate, manufacture, refine, produce, treat, store,
handle, dispose of, transfer, process or transport Hazardous Materials
other than in compliance with all requirements of law, except where all
such failures to comply, individually or in the aggregate, will not have a
Material Adverse Effect.
(d) The Company agrees to indemnify and hold you and your directors,
officers, agents and employees (collectively the "INDEMNITEES") free and
harmless from and against all liability, loss, cost, damage and expense
(including, without limitation, attorneys' fees and expenses incurred in
connection with environmental compliance and clean-up obligations imposed
under applicable Environmental Protection Laws) any such Indemnitee may
sustain by reason of the assertion against it by any party of any claim in
connection with any Hazardous Materials used, generated, treated, stored or
otherwise located on any of the Properties of the Company or any of the
Subsidiaries; provided, that such liability, loss, cost, damage or expense
will not include any liability, loss, cost, damage or expense which results
from any negligent act or omission of such Indemnitee. The foregoing
indemnification will survive repayment of the Notes.
6.18 RESTRICTIONS ON DIVIDENDS, ETC.
The Company will not permit any Restricted Subsidiary to create or
otherwise cause or suffer to exist or become effective any restriction (other
than statutory, regulatory or common law restrictions) on the right or power of
any Restricted Subsidiary to
(a) pay dividends or make any other distributions on such Restricted
Subsidiary's stock,
(b) pay any Debt owed by such Restricted Subsidiary to the Company or
any Restricted Subsidiary, or
(c) transfer any of its Property to the Company or any other
Restricted Subsidiary.
26 Note Purchase Agreement
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6. COVENANTS
6.19 PENSION PLANS.
(A) COMPLIANCE. The Company will, and will cause each ERISA Affiliate
to, at all times with respect to each Pension Plan, comply with all
applicable provisions of ERISA and the IRC.
(B) PROHIBITED ACTIONS. The Company will not, and will not permit any
ERISA Affiliate to:
(i) engage in any "prohibited transaction" (as such term is
defined in section 406 of ERISA or section 4975 of the IRC) or
"reportable event" (as such term is defined in section 4043 of ERISA)
that could result in the imposition of a tax or penalty;
(ii) incur with respect to any Pension Plan any "accumulated
funding deficiency" (as such term is defined in section 302 of ERISA),
whether or not waived;
(iii) terminate any Pension Plan in a manner that could result
in the imposition of a Lien on the Property of the Company or any
Subsidiary pursuant to section 4068 of ERISA or the creation of any
liability under section 4062 of ERISA;
(iv) fail to make any payment required by section 515 of ERISA;
(v) incur any withdrawal liability under Title IV of ERISA with
respect to any Multiemployer Plan or any liability as a result of the
termination of any Multiemployer Plan; or
(vi) incur any liability or suffer the existence of any Lien on
the Property of the Company or any ERISA Affiliate, in either case
pursuant to Title I or Title IV of ERISA or pursuant to the penalty or
excise tax or security provisions of the IRC,
if the aggregate amount of the taxes, penalties, funding deficiencies,
interest, amounts secured by Liens, and other liabilities in respect of any
of the foregoing at any time could reasonably be expected to have a
Material Adverse Effect.
(C) FOREIGN PENSION PLANS. The Company will, and will cause each
Subsidiary to, at all times, comply in all material respects with all laws,
regulations and orders applicable to the establishment, operation,
administration and maintenance of all Foreign Pension Plans, and pay when
due all premiums, contributions and any other amounts required by
applicable Foreign Pension Plan documents or applicable laws, except where
the failure to comply with such laws, regulations and orders, and to make
such payments, in the aggregate for all such failures, could not be
reasonably expected to have a Material Adverse Effect.
27 Note Purchase Agreement
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6. COVENANTS
6.20 PRIVATE OFFERING.
The Company will not, and will not permit any Person acting on its behalf
to, offer the Notes or any part thereof or any similar Securities for issue or
sale to, or solicit any offer to acquire any of the same from, any Person so as
to bring the issuance and sale of the Notes within the provisions of section 5
of the Securities Act.
7. INFORMATION AS TO COMPANY
7.1 FINANCIAL AND BUSINESS INFORMATION.
The Company shall deliver to each holder of Notes:
(A) QUARTERLY STATEMENTS -- as soon as practicable after the end of
each quarterly fiscal period in each fiscal year of the Company (other than
the last quarterly fiscal period of each such fiscal year), and in any
event within sixty (60) days thereafter,
(i) a consolidated balance sheet of the Company and its
consolidated subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income, changes in shareholders'
equity and cash flows of the Company and its consolidated subsidiaries
for such quarter and (in the case of the second and third quarters)
for the portion of the fiscal year ending with such quarter,
setting forth in each case, in comparative form, the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP applicable to quarterly financial
statements generally, and certified as complete and correct, subject to
changes resulting from year-end adjustments, by a Senior Financial Officer,
and accompanied by the certificate required by Section 7.2; provided, that
delivery of copies of the Company's Quarterly Report on Form 10-Q filed
with the Securities and Exchange Commission within the time period
specified above shall be deemed to satisfy the requirements of this Section
7.1(a) so long as such Quarterly Report contains or is accompanied by the
information specified in this Section 7.1(a);
(B) ANNUAL STATEMENTS -- as soon as practicable after the end of each
fiscal year of the Company, and in any event within one hundred twenty
(120) days thereafter, a consolidated balance sheet as at the end of such
fiscal year, and consolidated statements of income, changes in
shareholders' equity and cash flows, of the Company and its consolidated
subsidiaries, and the Company and the Restricted Subsidiaries for such
year, setting forth in the case of each consolidated financial statement,
in comparative form, the figures for the previous fiscal year, all in
reasonable detail, prepared in accordance with GAAP, and accompanied by
(i) a report of independent certified public accountants of
recognized national standing, which report shall, without
qualification (including, without limitation, qualifications related
to the scope of the audit or the ability of the Company or a
subsidiary thereof to continue as a going concern), state that such
financial statements of the Company and its consolidated subsidiaries
present
28 Note Purchase Agreement
<PAGE>
7. INFORMATION AS TO COMPANY
fairly, in all material respects, the financial position of the
companies being reported upon and their results of operations and cash
flows and have been prepared in conformity with GAAP, and that the
examination of such accountants in connection with such financial
statements has been made in accordance with generally accepted
auditing standards, and that such audit provides a reasonable basis
for such report in the circumstances, and
(ii) the certificates required by Section 7.2 and Section 7.3,
provided, that the delivery of the Company's Annual Report on Form 10-K for
such fiscal year filed with the Securities and Exchange Commission within
the time period specified above shall be deemed to satisfy the requirements
of this Section 7.1(b) so long as such Annual Report contains or is
accompanied by the reports and other information otherwise specified in
this Section 7.1(b);
(C) SEC AND OTHER REPORTS -- promptly upon their becoming available,
(i) each financial statement, report, notice or proxy statement
sent by the Company or any Restricted Subsidiary to stockholders
generally,
(ii) each regular or periodic report (including, without
limitation, each Form 10-K, Form 10-Q and Form 8-K), any registration
statement which shall have become effective, and each final prospectus
and all amendments thereto filed by the Company or any Subsidiary with
the Securities and Exchange Commission (and any successor agency), and
(iii) all press releases and other statements made available by
the Company or any Restricted Subsidiary to the public concerning
material developments in the business of the Company or the Restricted
Subsidiaries;
(D) NOTICE OF DEFAULT OR EVENT OF DEFAULT -- within five (5) days of
becoming aware of the existence of any condition or event which constitutes
a Default or an Event of Default, a written notice specifying the nature
and period of existence thereof and what action the Company is taking or
proposes to take with respect thereto;
(E) NOTICE OF CLAIMED DEFAULT -- within five (5) days of becoming
aware that the holder of any Note, or of any Debt of the Company or any
Subsidiary, shall have given notice or taken any other action with respect
to a claimed Default, Event of Default or default or event of default, a
written notice specifying the notice given or action taken by such holder
and the nature of the claimed Default, Event of Default or default or event
of default and what action the Company is taking or proposes to take with
respect thereto;
(F) ERISA --
(i) within five (5) days of becoming aware of the occurrence of
any "reportable event" (as such term is defined in section 4043 of
ERISA) for which notice thereof has not been waived pursuant to
regulations of the Department of Labor, or "prohibited transaction"
(as such term is defined in section 406 of ERISA or section 4975 of
the IRC) in connection with any Pension Plan or any trust
29 Note Purchase Agreement
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7. INFORMATION AS TO COMPANY
created thereunder, a written notice specifying the nature thereof,
what action the Company is taking or proposes to take with respect
thereto, and, when known, any action taken by the Internal Revenue
Service, the Department of Labor or the PBGC with respect thereto; and
(ii) prompt written notice of and, where applicable, a
description of
(A) any notice from the PBGC in respect of the commencement
of any proceedings pursuant to section 4042 of ERISA to terminate
any Pension Plan or for the appointment of a trustee to
administer any Pension Plan, and any distress termination notice
delivered to the PBGC under section 4041 of ERISA in respect of
any Pension Plan, and any determination of the PBGC in respect
thereof,
(B) the placement of any Multiemployer Plan in
reorganization status under Title IV of ERISA, any Multiemployer
Plan becoming "insolvent" (as such term is defined in section
4245 of ERISA) under Title IV of ERISA, or the whole or partial
withdrawal of the Company or any ERISA Affiliate from any
Multiemployer Plan and the withdrawal liability incurred in
connection therewith, or
(C) the occurrence of any event, transaction or condition
that could result in the incurrence of any liability of the
Company or any ERISA Affiliate or the imposition of a Lien on the
Property of the Company or any ERISA Affiliate, in either case
pursuant to Title I or Title IV of ERISA or pursuant to the
penalty or excise tax or security provisions of the IRC,
provided that the Company shall not be required to deliver any such notice
at any time when the aggregate amount of the actual or potential liability
of the Company and the Subsidiaries in respect of all such events could not
reasonably be expected to have a Material Adverse Effect;
(G) AUDITOR'S REPORTS -- promptly after the submission of a report of
accountants delivered in connection Section 7.1(b)(i) that is not
unqualified, and until a subsequent unqualified report is submitted in
connection Section 7.1(b)(i), each report submitted to the Company or any
Subsidiary by independent accountants in connection with any annual,
interim or special audit made of the books of the Company or any
Subsidiary;
(H) ACTIONS, PROCEEDINGS -- promptly after the commencement of any
action or proceeding relating to the Company or any Subsidiary in any court
or before any Governmental Authority or arbitration board or tribunal as to
which there is a reasonable possibility of an adverse determination and
that, if adversely determined, is (together will all other such actions and
proceedings) reasonably likely to have a Material Adverse Effect, a written
notice specifying the nature and period of existence thereof and what
action the Company is taking or proposes to take with respect thereto;
(I) OTHER CREDITORS -- promptly upon the request of any holder of
Notes, copies of any statement, report or certificate furnished to any
holder of Debt of the
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7. INFORMATION AS TO COMPANY
Company or any Subsidiary to the extent that the information contained in
such statement, report or certificate has not already been delivered to
each holder of Notes;
(J) RULE 144A -- promptly upon the request of any holder of Notes,
information required to comply with 17 C.F.R. (S)230.144A, as amended from
time to time; and
(K) REQUESTED INFORMATION -- with reasonable promptness, such other
data and information as from time to time may be requested by any holder of
Notes.
7.2 OFFICER'S CERTIFICATES.
Each set of financial statements delivered to each holder of Notes pursuant
to Section 7.1(a) or Section 7.1(b) shall be accompanied by a certificate of a
Senior Financial Officer, setting forth:
(A) COVENANT COMPLIANCE -- the information (including detailed
calculations) required in order to establish whether the Company was in
compliance with the requirements of Section 6.5 through Section 6.14,
inclusive, as of the end of the period covered by the financial statements
then being furnished (including with respect to each such Section, where
applicable, the calculations of the maximum or minimum amount, ratio or
percentage, as the case may be, permissible under the terms of such
Sections, and the calculation of the amount, ratio or percentage then in
existence); and
(B) EVENT OF DEFAULT -- a statement that the signer has reviewed the
relevant terms hereof and has made, or caused to be made, under his or her
supervision, a review of the transactions and conditions of the Company and
its subsidiaries from the beginning of the accounting period covered by the
income statements being delivered therewith to the date of the certificate
and that such review shall not have disclosed the existence during such
period of any condition or event that constitutes a Default or an Event of
Default or, if any such condition or event existed or exists, specifying
the nature and period of existence thereof and what action the Company
shall have taken or proposes to take with respect thereto.
7.3 ACCOUNTANTS' CERTIFICATES.
Each set of annual financial statements delivered pursuant to Section
7.1(b) shall be accompanied by a certificate of the accountants who were engaged
to audit such financial statements, stating whether in making the examination
necessary for the audit of such financial statements, such accountants have
become aware of any condition or event that then constitutes a Default or an
Event of Default and, if such accountants are aware that any such condition or
event then exists, specifying the nature and period of existence thereof,
provided that with respect to conditions or events that may have a Material
Adverse Effect as provided in Section 6.17 and Section 6.19, such accountants
are relying on the reasonable judgment of management in making such
examinations.
7.4 INSPECTION.
The Company will permit the representatives of each holder of Notes to
visit and inspect any of the Properties of the Company or any of its
subsidiaries, to examine all their respective books of account, records, reports
and other papers, to make copies and extracts therefrom, and
31 Note Purchase Agreement
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7. INFORMATION AS TO COMPANY
to discuss their respective affairs, finances and accounts with their respective
officers, employees and independent public accountants (and by this provision
the Company authorizes said accountants to discuss the finances and affairs of
the Company and its subsidiaries) all at such reasonable times and as often as
may be reasonably requested.
8. EVENTS OF DEFAULT
8.1 NATURE OF EVENTS.
An "EVENT OF DEFAULT" shall exist if any of the following occurs and is
continuing:
(A) PRINCIPAL OR MAKE-WHOLE AMOUNT PAYMENTS -- the Company shall fail
to make any payment of principal or Make-Whole Amount on any Note on or
before the date such payment is due;
(B) INTEREST PAYMENTS -- the Company shall fail to make any payment of
interest on any Note on or before three (3) Business Days after the date
such payment is due;
(C) PARTICULAR COVENANT DEFAULTS -- the Company shall fail to perform
or observe any covenant contained in Section 6.4 through Section 6.12,
inclusive, and Section 7.1(d) and Section 7.1(e);
(D) OTHER DEFAULTS -- the Company shall fail to comply with any other
provision hereof, and such failure continues for more than thirty (30) days
after such failure shall first become known to any Senior Officer;
(E) WARRANTIES OR REPRESENTATIONS -- any warranty, representation or
other statement by or on behalf of the Company contained herein or in any
instrument furnished in compliance herewith or in reference hereto shall
have been false or misleading in any material respect when made;
(F) DEFAULT ON DEBT --
(i) the Company or any Subsidiary shall fail to make any payment
on any Debt when due; or
(ii) any event shall occur or any condition shall exist in
respect of Debt of the Company or any Subsidiary, or under any
agreement securing or relating to such Debt that has not, in the case
of any individual event or condition, been permanently waived by the
holders of such Debt, that immediately or with any one or more of the
passage of time or the giving of notice:
(A) causes (or permits any one or more of the holders
thereof or a trustee therefor to cause) such Debt, or a portion
thereof, to become due prior to its stated maturity or prior to
its regularly scheduled date or dates of payment; or
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8. EVENTS OF DEFAULT
(B) permits any one or more of the holders thereof or a
trustee therefor to require the Company or any Subsidiary to
repurchase such Debt from the holders thereof;
provided that an Event of Default under this clause (f) shall not have
occurred unless at least one of such Debts has at such time an outstanding
principal balance of at least One Million Dollars ($1,000,000) or unless
the aggregate principal amount of all such Debts is at such time at least
Five Million Dollars ($5,000,000);
(G) INVOLUNTARY BANKRUPTCY PROCEEDINGS --
(i) a receiver, liquidator, custodian or trustee of the Company
or any Subsidiary, or of all or any substantial part of the Property
of either, is appointed by court order and such order remains in
effect for more than sixty (60) days; or an order for relief shall be
entered with respect to the Company or any Subsidiary, or the Company
or any Subsidiary is adjudicated a bankrupt or insolvent;
(ii) all or any substantial part of the Property of the Company
or any Subsidiary is sequestered by court order and such order shall
remain in effect for more than sixty (60) days; or
(iii) a petition is filed against the Company or any Subsidiary
under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any
jurisdiction, whether now or hereafter in effect, and is not be
dismissed within sixty (60) days after such filing;
(H) VOLUNTARY PETITIONS -- the Company or any Subsidiary files a
petition in voluntary bankruptcy or seeks relief under any provision of any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction, whether now or
hereafter in effect, or shall consent to the filing of any petition against
it under any such law;
(I) ASSIGNMENTS FOR BENEFIT OF CREDITORS, ETC. -- the Company or a
Subsidiary makes an assignment for the benefit of its creditors, or admits
in writing its inability, or fails, to pay its debts generally as they
become due, or consents to the appointment of a receiver, liquidator or
trustee of the Company or a Subsidiary or of all or a substantial part of
its Property; or
(J) UNSATISFIED JUDGMENTS -- one or more judgments, decrees or orders
for the payment of money in excess of Five Million Dollars ($5,000,000) in
the aggregate shall be rendered against the Company or any Subsidiary and
such judgments, decrees or orders shall continue unsatisfied and in effect
for a period of thirty (30) consecutive days without being vacated,
discharged, satisfied, or stayed or bonded pending appeal.
8.2 DEFAULT REMEDIES.
(A) ACCELERATION ON EVENT OF DEFAULT.
(i) If any Event of Default specified in Section 8.1(g), Section
8.1(h) or Section 8.1(i) shall exist, all of the Notes at the time
outstanding shall
33 Note Purchase Agreement
<PAGE>
8. EVENTS OF DEFAULT
automatically become immediately due and payable together with
interest accrued thereon and, to the extent permitted by law, the
Make-Whole Amount at such time with respect to the principal amount of
such Notes, without presentment, demand, protest or notice of any
kind, all of which are hereby expressly waived, and,
(ii) If any Event of Default other than those specified in
Section 8.1(g), Section 8.1(h) and Section 8.1(i) shall exist, the
holder or holders of at least twenty-five percent (25%) in principal
amount of the Notes then outstanding (exclusive of Notes then owned by
any one or more of the Company, any Subsidiary or any Affiliate) may
exercise any right, power or remedy permitted to such holder or
holders by law, and shall have, in particular, without limiting the
generality of the foregoing, the right to declare the entire principal
of, and all interest accrued on, all the Notes then outstanding to be,
and such Notes shall thereupon become, forthwith due and payable,
without any presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived, and the Company shall
forthwith pay to the holder or holders of all the Notes then
outstanding the entire principal of, and interest accrued on, the
Notes and, to the extent permitted by law, the Make-Whole Amount at
such time with respect to such principal amount of such Notes.
(B) ACCELERATION ON PAYMENT DEFAULT. During the existence of an
Event of Default described in Section 8.1(a) or Section 8.1(b), and
irrespective of whether the Notes then outstanding shall have been declared
to be due and payable pursuant to Section 8.2(a)(ii), any holder of Notes
who or which shall have not consented to any waiver with respect to such
Event of Default may, at his or its option, by notice in writing to the
Company, declare the Notes then held by such holder to be, and such Notes
shall thereupon become, forthwith due and payable together with all
interest accrued thereon, without any presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived, and the
Company shall forthwith pay to such holder the entire principal of and
interest accrued on such Notes and, to the extent permitted by law, the
Make-Whole Amount at such time with respect to such principal amount of
such Notes.
(C) VALUABLE RIGHTS. The Company acknowledges, and the parties
hereto agree, that the right of each holder to maintain its investment in
the Notes free from repayment by the Company (except as herein specifically
provided for) is a valuable right and that the provision for payment of a
Make-Whole Amount by the Company in the event that the Notes are prepaid or
are accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.
(D) OTHER REMEDIES. During the existence of an Event of Default and
irrespective of whether the Notes then outstanding shall have been declared
to be due and payable pursuant to Section 8.2(a) or Section 8.2(b) and
irrespective of whether any holder of Notes then outstanding shall
otherwise have pursued or be pursuing any other rights or remedies, any
holder of Notes may proceed to protect and enforce its rights hereunder and
under such Notes by exercising such remedies as are available to such
holder in respect thereof under applicable law, either by suit in equity or
by action at law, or both, whether for specific performance of any
agreement contained herein or in aid of the exercise of any power granted
herein, provided that the maturity of such holder's Notes may be
accelerated only in accordance with Section 8.2(a) and Section 8.2(b).
34 Note Purchase Agreement
<PAGE>
8. EVENTS OF DEFAULT
(e) NONWAIVER. No course of dealing on the part of any holder of
Notes nor any delay or failure on the part of any holder of Notes to
exercise any right shall operate as a waiver of such right or otherwise
prejudice such holder's rights, powers and remedies.
8.3 ANNULMENT OF ACCELERATION OF NOTES.
If a declaration is made pursuant to Section 8.2(a)(ii), then and in every
such case, the holders of at least sixty-six and two-thirds percent (66 2/3%) in
aggregate principal amount of the Notes then outstanding (exclusive of Notes
then owned by any one or more of the Company, any Subsidiaries and any
Affiliates) may, by written instrument filed with the Company, rescind and annul
such declaration, and the consequences thereof, provided that at the time such
declaration is annulled and rescinded:
(a) no judgment or decree shall have been entered for the payment of
any moneys due on or pursuant hereto or the Notes;
(b) all arrears of interest upon all the Notes and all other sums
payable hereunder and under the Notes (except any principal of, or interest
or Make-Whole Amount on, the Notes which shall have become due and payable
by reason of such declaration under Section 8.2(a)(ii)) shall have been
duly paid; and
(c) each and every other Default and Event of Default shall have been
waived pursuant to Section 10.5 or otherwise made good or cured;
and provided further that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right consequent
thereon.
9. INTERPRETATION OF THIS AGREEMENT
9.1 TERMS DEFINED.
As used herein, the following terms have the respective meanings set forth
below or set forth in the Section hereof following such term:
ACCEPTABLE ACQUISITION -- means any Acquisition that has been either
approved by the board of directors of the corporation which is the subject of
such Acquisition or recommended by such board to the shareholders of such
corporation. As used in this definition,
Acquisition -- means any transaction pursuant to which the Company or
any of the Restricted Subsidiaries
(a) acquires equity securities (or warrants, options or other
rights to acquire such securities) of any corporation other than the
Company or any corporation that is not then a Subsidiary, pursuant to
a solicitation of tenders therefor, or in one or more negotiated
block, market or other transactions not involving a tender offer, or a
combination of any of the foregoing,
(b) makes any corporation a Subsidiary, or causes any such
corporation to merge into the Company or any of the Subsidiaries, in
any case
35 Note Purchase Agreement
<PAGE>
9. INTERPRETATION OF THIS AGREEMENT
pursuant to a merger, purchase of assets or any reorganization
providing for the delivery or issuance to the holders of such
corporation's then outstanding stock, in exchange for such securities,
of cash or securities of the Company, or any of the Subsidiaries or a
combination thereof, or
(c) purchases all or substantially all of the business or
Property of any corporation.
AFFILIATE -- means, at any time, a Person (other than a Wholly-Owned
Restricted Subsidiary)
(a) that directly or indirectly through one or more intermediaries
Controls, or is Controlled by, or is under common Control with, the
Company,
(b) that beneficially owns or holds five percent (5%) or more of any
class of the Voting Stock of the Company,
(c) five percent (5%) or more of the Voting Stock (or in the case of
a Person that is not a corporation, five percent (5%) or more of the equity
interest) of which is beneficially owned or held by the Company or a
Subsidiary, or
(d) that is an officer or director (or a member of the immediate
family of an officer or director) of the Company or any Subsidiary,
at such time. As used in this definition,
Control -- means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise provided that no Person shall be deemed to be in control of
another Person solely by virtue of the ownership of Notes.
AGREEMENT, THIS -- means this Note Purchase Agreement, as it may be
amended and restated from time to time.
ATTRIBUTABLE DEBT -- means, in respect of a Sale and Lease-Back
Transaction, at any time, the present value (discounted at the rate of interest
implicit in the terms of the lease involved in such Sale and Lease-Back
Transaction, as determined in good faith by the Company) of the obligation of
the lessee thereunder for rental payments (excluding, however, any amounts
required to be paid by such lessee, whether or not designated as rent or
additional rent, on account of maintenance and repairs, insurance, taxes,
assessments, water rates or similar charges or any amounts required to be paid
by such lessee thereunder contingent upon the amount of sales, maintenance and
repairs, insurance, taxes, assessments, water rates or similar charges) during
the remaining term of such lease (including any period for which such lease has
been extended or may, at the option of the lessor, be extended).
BASKET OBLIGATIONS -- Section 6.9(a)(xi).
BUSINESS DAY -- means a day other than a Saturday, a Sunday or, a day on
which the bank designated by the holder of a Note to receive for such holder's
account payments on such
36 Note Purchase Agreement
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9. INTERPRETATION OF THIS AGREEMENT
Note is required by law (other than a general banking moratorium or holiday for
a period exceeding four (4) consecutive days) to be closed.
CAPITAL LEASE -- means, at any time, a lease with respect to which the
lessee is required to recognize, for accounting purposes, the acquisition of an
asset and the incurrence of a liability at such time.
CLOSING -- Section 1.2(b).
CLOSING DATE -- Section 1.2(b).
COMPANY -- has the meaning specified in the introductory sentence hereof.
CONSOLIDATED DEBT -- means, at any time, an amount equal to the aggregate
amount of Debt and Unfunded Pension Liabilities of the Company and the
Restricted Subsidiaries, determined on a consolidated basis at such time. As
used in this definition,
Unfunded Pension Liabilities -- means, at any time, with respect to
any Person, the amount (if any) by which the present value of all benefit
liabilities (within the meaning of section 4001(a)(16) of ERISA) under each
Pension Plan of such Person exceeds the Fair Market Value of all assets
allocable to such benefit liabilities, as determined on the then most
recent valuation date of each such Pension Plan in accordance with ERISA.
CONSOLIDATED EBIT -- means, with respect to any period, an amount equal to
(a) the amount of net income for the Company and its subsidiaries
determined on a consolidated basis for such period, plus
(b) Consolidated Interest Expense for such period, plus
(c) the aggregate amount of
(i) taxes measured by income,
(ii) the amount of income or loss attributable to items properly
reportable as extraordinary items, and
(iii) the amount of losses from discontinued operations,
incurred during such period by the Company and its subsidiaries (to the
extent but only to the extent each of such items was reflected in the
computation of such Consolidated Net Income), determined on a consolidated
basis in respect of such period.
CONSOLIDATED ENTITIES -- Section 9.2(b).
CONSOLIDATED INTEREST EXPENSE -- means, for any period, the amount of
interest expense (net of interest income) incurred by the Company and its
subsidiaries during such period, determined on a consolidated basis.
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9. INTERPRETATION OF THIS AGREEMENT
CONSOLIDATED NET INCOME -- means, for any period, the amount of net
earnings of the Company and the Restricted Subsidiaries, determined on a
consolidated basis in respect of such period.
CONSOLIDATED SHAREHOLDERS' EQUITY -- means, at any time, an amount equal to
shareholders' equity of the Company and the Restricted Subsidiaries, determined
on a consolidated basis at such time.
CONSOLIDATED TOTAL CAPITALIZATION -- means, at any time, Consolidated Debt
plus Consolidated Shareholders' Equity, determined at such time.
CREDIT AGREEMENT -- means that certain Amended and Restated Credit
Agreement, dated as of March 25, 1994, among Safety-Kleen Corp., the banks
signatory thereto, and The Chase Manhattan Bank, N.A.
DEBT -- with respect to any Person means, without duplication,
(a) its liabilities for borrowed money;
(b) all indebtedness of such Person for the deferred purchase price
of property or services (except trade payables paid within one hundred
twenty (120) days from the date the goods were delivered or the services
rendered);
(c) obligations of such Person in respect of bankers acceptances,
letters of credit or instruments serving a similar function issued or
accepted by banks and other financial institutions for the account of such
Person (whether or not representing obligations for borrowed money);
(d) any Guaranty of such Person of any obligation or liability of
another Person;
(e) any liabilities for borrowed money secured by any Lien existing
on Property owned by such Person (whether or not such liabilities have been
assumed); and
(f) any obligations in respect of any Capital Lease of such Person.
As used in this definition,
Guaranty -- means with respect to any Person (for the purposes of this
definition, the "Guarantor") any obligation (except the endorsement in the
ordinary course of business of negotiable instruments for deposit or
collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person (the
"Primary Obligor") in any manner, whether directly or indirectly,
including, without limitation, obligations incurred through an agreement,
contingent or otherwise, by the Guarantor:
(a) to purchase such indebtedness or obligation or any Property
constituting security therefor;
(b) to advance or supply funds
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<PAGE>
9. INTERPRETATION OF THIS AGREEMENT
(i) for the purchase or payment of such indebtedness,
dividend or obligation, or
(ii) to maintain working capital or other balance sheet
condition or any income statement condition of the Primary
Obligor or otherwise to advance or make available funds for the
purchase or payment of such indebtedness, dividend or obligation;
(c) to lease Property or to purchase securities or other Property
or services primarily for the purpose of assuring the owner of such
indebtedness or obligation of the ability of the Primary Obligor to
make payment of the indebtedness or obligation; or
(d) otherwise to assure the owner of the indebtedness or
obligation of the Primary Obligor against loss in respect thereof.
For purposes of computing the amount of any Guaranty, in connection with
any computation of indebtedness or other liability,
(i) in each case where the obligation that is the subject of such
Guaranty is in the nature of indebtedness for money borrowed it shall
be assumed that the amount of the Guaranty is the amount of the direct
obligation then outstanding, and
(ii) in each case where the obligation that is the subject of
such Guaranty is not in the nature of indebtedness for money borrowed
it shall be assumed that the amount of the Guaranty is the amount (if
any) of the direct obligation that is then due.
DECEMBER 28 LETTER -- means the separate letters from Cascade Capital
Corporation to the Purchasers dated December 28, 1994.
DEFAULT -- means an event or condition the occurrence of which would, with
the lapse of time or the giving of notice or both, become an Event of Default.
DESIGNATED EVENT -- shall be deemed to have occurred when any one or more
of the following has occurred:
(a) a "person" or "group" (within the meaning of section 13(d) and
section 14(d)(2) of the Exchange Act, other than a holding company created
as permitted by clause (c)(i) of this definition, becomes the "beneficial
owner" (as defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of more than
(i) twenty percent (20%) of the total voting power of all classes
of stock of the Company then outstanding that are normally entitled to
vote in elections of directors ("Company Voting Stock"), in each case
where such "person" is not, and such group contains at least one
"person" which is not, an "employee benefit plan" (as defined in
section 3(3) of ERISA) maintained by the Company or any Subsidiary, or
any trust or funding vehicle maintained thereunder (a "Company Plan");
or
39 Note Purchase Agreement
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9. INTERPRETATION OF THIS AGREEMENT
(ii) thirty percent (30%) of the total voting power of all
Company Voting Stock, in each case where such "person" is, and each
person comprising such group is, a Company Plan;
(b) during any period of two (2) consecutive years, individuals who at
the beginning of such period constituted the Company's board of directors
(together with any new director whose election by the Company's board of
directors or whose nomination for election by the Company's stockholders
was approved by a vote of at least two-thirds (2/3) of the directors then
still in office who either were directors at the beginning of such period
or whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the directors then in
office;
(c) the Company consolidates with or merges into another corporation
or conveys, transfers or leases all or substantially all of its assets to
any person, or any corporation consolidates with or merges into the
Company, in either event pursuant to a transaction in which Voting Stock of
the Company is changed into or exchanged for cash, securities or other
Property, provided that transactions involving solely
(i) the creation of a public holding company or the
reincorporation of the Company in another state, or
(ii) the exchange of Company Voting Stock as consideration for
the acquisition of another business or businesses, without change or
exchange of any shares of Company Voting Stock outstanding immediately
prior to such exchange,
shall be excluded from this clause (c);
(d) the Company, any Subsidiary or any Company Plan purchases or
otherwise acquires, directly or indirectly, beneficial ownership of Company
Voting Stock and, after giving effect to such purchase or acquisition, the
Company (together with the Subsidiaries and any such Company Plans) shall
have acquired, within any twelve (12) month period, a number of shares of
the Company's Voting Stock equal to twenty percent (20%) or more of the
number of shares of Company Voting Stock outstanding on the date
immediately prior to the first such purchase or acquisition during such
twelve (12) month period (as adjusted in such manner as the Company
reasonably deems appropriate to reflect any stock dividends or stock splits
during such period); or
(e) on any date (a "Calculation Date")
(i) (A) the Company makes any distribution or distributions of
cash, Property or securities (other than regular dividends and
distributions of capital stock, or rights to acquire capital
stock, of the Company) to holders of Company Voting Stock, or
(B) the Company, any Subsidiary or any Company Plan
purchases or otherwise acquires, directly or indirectly,
beneficial ownership of Company Voting Stock, and
(ii) the sum of the Fair Market Value (as determined in good
faith by the Company's board of directors, which determination shall
be conclusive) of
40 Note Purchase Agreement
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9. INTERPRETATION OF THIS AGREEMENT
(A) such distribution or purchase, plus
(b) all other such distributions and purchases that have
occurred during the preceding twelve (12) month period,
is at least twenty percent (20%) of the Fair Market Value of the
outstanding Company Voting Stock (based on the closing sale price of
the Company Voting Stock as reported in The Wall Street Journal); such
percentage is to be calculated on each Calculation Date by determining
the percentage of the Fair Market Value of the outstanding Company
Voting Stock as of such Calculation Date which is represented by the
Fair Market Value of the distributions and purchases that have
occurred on such date and adding to that percentage all of the
percentages that have been similarly calculated on the Calculation
Dates of all such distributions and purchases during the preceding
twelve (12) month period.
ENVIRONMENTAL PROTECTION LAW -- means any law, statute or regulation
enacted by any jurisdiction in connection with or relating to the protection or
regulation of the environment, including, without limitation, those laws,
statutes and regulations regulating the disposal, removal, production, storing,
refining, handling, transferring, processing or transporting of hazardous or
toxic substances, and any orders, decrees or judgments issued by any court of
competent jurisdiction in connection with any of the foregoing.
ERISA -- means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
ERISA AFFILIATE -- means any corporation or trade or business that is a
member of the same controlled group of corporations as the Company, or is under
common control with the Company, in each case within the meaning of section
414(b) or section 414(c) of the IRC.
EVENT OF DEFAULT -- Section 8.1
EXCHANGE ACT -- means the Securities Exchange Act of 1934, as amended from
time to time.
FAIR MARKET VALUE -- means, with respect to any Property, the sale value of
such Property that would be realized in an arm's-length sale at such time
between an informed and willing buyer, and an informed and willing seller, under
no compulsion to buy or sell, respectively.
FOREIGN PENSION PLAN -- means any plan, fund or other similar program
(a) established or maintained outside of the United States of America
by any one or more of the Company or the Subsidiaries primarily for the
benefit of the employees (substantially all of whom are aliens not residing
in the United States of America) of the Company or such Subsidiaries, which
plan, fund or other similar program provides for retirement income for such
employees or results in a deferral of income for such employees in
contemplation of retirement, and
(b) not otherwise subject to ERISA.
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9. INTERPRETATION OF THIS AGREEMENT
GAAP -- means accounting principles as promulgated from time to time in
statements, opinions and pronouncements by the American Institute of Certified
Public Accountants and the Financial Accounting Standards Board and in such
statements, opinions and pronouncements of such other entities with respect to
financial accounting of for-profit entities as shall be accepted by a
substantial segment of the accounting profession in the United States.
GOVERNMENTAL AUTHORITY -- means
(a) the government of
(i) the United States of America and any State or other political
subdivision thereof, or
(ii) any other jurisdiction in which the Company or any
Subsidiary conducts all or any part of its business, or that asserts
any jurisdiction over the conduct of the affairs of, or the Property
of the Company or any Subsidiary, and
(b) any entity exercising executive, legislative, judicial, regulatory
or administrative functions of, or pertaining to, any such government.
HAZARDOUS MATERIALS -- Section 2.13(a).
INDEMNITEES -- Section 6.17(d).
INVESTMENTS -- Section 6.11.
IRC -- means the Internal Revenue Code of 1986, together with all rules
and regulations promulgated pursuant thereto, as amended from time to time.
LIEN -- means any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property (for purposes of this
definition, the "Owner"), whether such interest is based on the common law,
statute or contract, and includes but is not limited to
(a) the security interest lien arising from a mortgage, encumbrance,
pledge, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes, and the filing of any financing statement
under the Uniform Commercial Code of any jurisdiction, or an agreement to
give any of the foregoing,
(b) reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title exceptions and
encumbrances affecting real property,
(c) stockholder agreements, voting trust agreements, buy-back
agreements and all similar arrangements affecting the Owner's rights in
stock owned by the Owner, and
(d) any interest in any Property held by the Owner evidenced by a
conditional sale agreement, Capital Lease or other arrangement pursuant to
which title to such Property has been retained by or vested in some other
Person for security purposes.
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9. INTERPRETATION OF THIS AGREEMENT
The term "Lien" does not include negative pledge clauses in loan agreements and
equal and ratable security clauses in loan agreements that are substantially
similar to Section 6.9(b).
MAKE-WHOLE AMOUNT -- means, with respect to Prepaid Principal and the date
the prepayment thereof is due (the "Prepayment Date") the greater of
(a) zero (0), or
(b) an amount equal to the Present Value of the Prepaid Cash Flows
determined in respect of such Prepaid Principal as of such Prepayment Date
minus the amount of such Prepaid Principal.
As used in this definition,
Prepaid Principal -- means any portion of the principal amount of any
Debt being paid for any reason (including, without limitation,
acceleration, optional prepayment or mandatory prepayment required because
of the occurrence of a contingency) prior to its regularly scheduled
maturity date.
Present Value of the Prepaid Cash Flows -- means the sum of the
present values of the then remaining scheduled payments of principal and
interest that would have been payable in respect of such Prepaid Principal
but that are no longer payable as a result of the early prepayment of such
Prepaid Principal. In determining such present values,
(i) the amount of interest accrued through and including the day
immediately preceding such Prepayment Date on such Prepaid Principal
since the scheduled interest payment date immediately preceding such
Prepayment Date shall be deducted from the first of such payments of
interest, and
(ii) a discount rate equal to the Make-Whole Discount Rate
determined with respect to such Prepaid Principal and such Prepayment
Date divided by two (2), and a discount period of six (6) months of
thirty (30) days each, shall be used.
Make-Whole Discount Rate -- means fifty one-hundredths percent (0.50%)
per annum plus the per annum percentage rate (rounded to the nearest three
decimal (3) places) equal to the bond equivalent yield to maturity derived
from the Telerate Rate, or if the Telerate Rate is not then available, the
Applicable H.15 Rate determined as of the date that is two (2) Business
Days prior to such Prepayment Date.
Applicable H.15 -- means, at any time, the United States Federal
Reserve Statistical Release H.15(519) then most recently published and
available to the public, or if such publication is not available, then any
other source of current information in respect of interest rates on
securities of the United States of America that is generally available and,
in the judgment of the Required Holders, provides information reasonably
comparable to the H.15(519) report.
Applicable H.15 Rate -- means, at any time, the then most current
annual yield to maturity of the hypothetical United States Treasury
obligation listed in the Applicable H.15 with a Treasury Constant Maturity
(as such term is defined in such Applicable H.15) equal to the Weighted
Average Life to Maturity of such Prepaid Principal. If no such United
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9. INTERPRETATION OF THIS AGREEMENT
States Treasury obligation with a Treasury Constant Maturity corresponding
exactly to such Weighted Average Life to Maturity is listed, then the
yields for the two (2) then most current hypothetical United States
Treasury obligations with Treasury Constant Maturities most closely
corresponding to such Weighted Average Life to Maturity (one (1) with a
longer maturity and one (1) with a shorter maturity, if available) shall be
calculated pursuant to the immediately preceding sentence and the Make-
Whole Discount Rate shall be interpolated or extrapolated from such yields
on a straight-line basis.
Telerate Rate -- means the per annum yield reported on the Telerate
Service at 10:00 a.m. (New York time) on the second (2nd) Business Day
preceding such Prepayment Date for United States government securities
having a maturity (rounded to the nearest month) corresponding to the
Weighted Average Life to Maturity of such Prepaid Principal. Page 678
shall be used as the source of such yields, or if not then available, such
other screen available on the Telerate Service as shall, in the opinion of
the Required Holders, provide equivalent information.
Weighted Average Life to Maturity -- means the number of years
obtained by dividing the Remaining Dollar-Years of such Prepaid Principal
by such Prepaid Principal, determined as of such Prepayment Date.
Remaining Dollar-Years -- means the result obtained by
(a) multiplying, in the case of each then remaining scheduled
payment of principal that would have been payable in respect of
Prepaid Principal but is no longer payable as a result of the
prepayment of such Prepaid Principal,
(i) an amount equal to such scheduled payment of principal,
by
(ii) the number of years (calculated to the nearest one-
twelfth) that will elapse between such Prepayment Date and the
date such scheduled principal payment would be due if such
Prepaid Principal had not been so prepaid, and
(b) calculating the sum of each of the products obtained in the
preceding subsection (a).
MATERIAL ADVERSE EFFECT -- means a material adverse effect on
(a) the business operations, profits, financial condition, Properties
or business prospects of the Company and the Restricted Subsidiaries, in
the aggregate,
(b) the ability of the Company to perform its obligations set forth
herein and in the Notes, or
(c) the validity or enforceability of this Agreement or the Notes.
MULTIEMPLOYER PLAN -- means any "multiemployer plan" (as defined in section
3(37) of ERISA) in respect of which the Company or any ERISA Affiliate is an
"employer" (as such term is defined in section 3 of ERISA).
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9. INTERPRETATION OF THIS AGREEMENT
NOTE PURCHASE AGREEMENTS -- Section 1.2(c).
NOTES -- Section 1.1.
OFFER ACCEPTANCE DATE -- Section 4.4(c).
OTHER PURCHASER -- Section 1.2(c).
PBGC -- means the Pension Benefit Guaranty Corporation, and any Person
succeeding to the functions of the PBGC.
PENSION PLAN -- means, at any time, any "employee pension benefit plan"
(as such term is defined in section 3 of ERISA) maintained at such time by the
Company or any ERISA Affiliate for employees of the Company or such ERISA
Affiliate, excluding any Multiemployer Plan.
PERSON -- means an individual, partnership, corporation, trust,
unincorporated organization, or a government or agency or political subdivision
thereof.
PLACEMENT MATERIAL -- means:
(a) the December 28 Letter (excluding pages 5 through 13, inclusive,
thereof),
(b) the term sheet dated January 4, 1995,
(c) the Credit Agreement,
(d) certain selected excerpts from the Company's prospectus re its
9-1/4% Notes due September 15, 1999,
(e) the Company's Form 10-Q for the period ended September 10, 1994,
(f) the Company's Annual Report to shareholders for the fiscal year
January 1, 1994, and
(g) the Company's Form 10-K for the fiscal year ended January 1, 1994.
PREPAYMENT DATE -- Section 4.4(a).
PRINCIPAL PROPERTY -- means, at any time, any plant or facility located
within the United States of America, having a gross book value in excess of one
percent (1%) of Consolidated Net Tangible Assets at such time and owned by the
Company or a Restricted Subsidiary. As used in this definition,
Consolidated Net Tangible Assets -- means, at any time, an amount
equal to the total amount of assets (less applicable reserves) after
deducting therefrom
(a) the amount of all current liabilities, and
(b) the amount of all goodwill, trade names, trademarks, patents,
unamortized debt discount and expense and other like intangible
assets,
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9. INTERPRETATION OF THIS AGREEMENT
all as shown in the audited consolidated balance sheet of the Company
and its subsidiaries contained in the Company's then most recent
annual report to stockholders, except that assets shall include an
amount equal to the amount of Attributable Debt in respect of any Sale
and Lease-Back Transaction not capitalized on such balance sheet.
PROPERTY -- means any interest in any kind of property or asset, whether
real, personal or mixed, and whether tangible or intangible.
PURCHASERS -- means the Persons listed as purchasers of Notes on Annex 1.
RATING DECLINE -- shall be deemed to have occurred if a Designated Event
shall have occurred and if, at least in part because of such occurrence,
(a) any Rating Agency which shall have rated the Notes as Investment
Grade on the Rating Date (with respect to that particular Designated Event)
shall during its Evaluation Period (with respect to that particular
Designated Event) either reduce its rating of the Notes or withdraw its
rating of the Notes so that at the end of its Evaluation Period the Notes
either shall be rated by such Rating Agency as below Investment Grade or
shall not be rated by such Rating Agency, or
(b) any Rating Agency which shall have rated the Notes below
Investment Grade on such Rating Date shall at any time within its
Evaluation Period either reduce its rating of the Notes or withdraw its
rating of the Notes so that at the end of its Evaluation Period the Notes
either shall be rated by such Rating Agency at least one Full Rating
Category below its rating of the Notes on the Rating Date or shall not be
rated by such Rating Agency.
As used in this definition,
Evaluation Period -- means, with respect to any Rating Agency and any
particular Designated Event, the period beginning on the one hundred
twentieth (120th) day prior to the date of public notice of the occurrence
of that particular Designated Event and ending on the ninetieth (90th) day
subsequent to the date of such public notice, inclusive, provided that, if
during its Evaluation Period such Rating Agency shall publicly announce
that it has the Notes under consideration for possible downgrade, then its
Evaluation Period shall end at the later of
(a) the ninetieth (90) day after the date of public notice of the
occurrence of such Designated Event, or
(b) the time at which such Rating Agency shall announce
(i) a new rating for the Notes,
(ii) the withdrawal of its rating of the Notes, or
(iii) that it no longer has a downgrade of its rating of
the Notes under consideration.
Full Rating Category -- means
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9. INTERPRETATION OF THIS AGREEMENT
(i) with respect to S&P, any of the following categories: BB, B,
CCC, CC and C,
(ii) with respect to Moody's, any of the following categories:
Ba, B, Caa, Ca and C and
(iii) with respect to any other Rating Agency, the equivalent of
such category of S&P or Moody's used by such other Rating Agency.
In determining whether the rating of the Notes has decreased by the
equivalent of one Full Rating Category, gradation within Full Rating
Categories (+ and - for S&P; 1, 2, and 3 for Moody's; or the equivalent
graduation for another Rating Agency) shall be taken into account (e.g.,
with respect to S&P, a decline in a rating from BB+ to B+ will constitute
a decrease of one Full Rating Category, and a decline in a rating from BB+
to BB- or from BB to B+, will constitute a decrease of less than one Full
Rating Category).
Investment Grade -- means BBB- or higher by S&P or Baa3 or higher by
Moody's or the equivalent of such ratings by S&P or Moody's or by any other
Rating Agency.
Rating Agency -- means Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc. and its successors ("S&P"), and Moody's Investors
Service, Inc. and its successors ("Moody's"), or, if S&P or Moody's or both
shall not make a rating on the Notes publicly available, a nationally
recognized securities rating agency or agencies, as the case may be,
selected by the Company which shall be substituted for S&P or Moody's or
both, as the case may be.
Rating Date -- means, with respect to any particular Designated Event,
the date that is one hundred twenty-one (121) days prior to the date of
public notice of the occurrence of that particular Designated Event.
RELEASE -- Section 2.13(a)
REQUIRED HOLDERS -- means, at any time, the holders of at least sixty-six
and two-thirds percent (66 2/3%) in principal amount of the Notes at the time
outstanding (exclusive of Notes then owned by any one or more of the Company,
any Subsidiary or any Affiliate).
RESTRICTED SUBSIDIARY -- means, at any time, a Subsidiary with respect to
which each of the following requirements is met at such time:
(a) the Company owns, directly or indirectly, one hundred percent
(100%) (by number of votes) of each class of Voting Stock, and at least
eighty percent (80%) of all other classes of equity securities, at such
time;
(b) the Subsidiary is organized under the laws of the United States of
America, a jurisdiction thereof, Puerto Rico, Canada, or one of the member
states of the European Union;
(c) the Subsidiary is not primarily engaged in the business of
financing receivables, making loans or leasing real property; and
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9. INTERPRETATION OF THIS AGREEMENT
(d) the Subsidiary has applicable to it at such time a designation as
a "Restricted Subsidiary" in accordance with Section 6.14.
SALE AND LEASE-BACK BASKET AMOUNT -- means, at any time, an amount equal
to
(a) the aggregate amount of outstanding Attributable Debt determined
in respect of Sale and Lease-Back Transactions, minus
(b) (i) the aggregate amount of Attributable Debt outstanding in
respect of Sale and Lease-Back Transactions secured by Liens permitted
to exist pursuant to Section 6.9(a)(ix), plus
(ii) the aggregate amount of outstanding Attributable Debt
determined in respect of Sale and Lease-Back Transactions the proceeds
of which have been applied, or are to be applied as provided in, and
in compliance with, Section 6.10(c),
in each case determined at such time.
SALE AND LEASE-BACK TRANSACTION -- Section 6.10.
SECURITIES ACT -- means the Securities Act of 1933, as amended from time to
time.
SENIOR FINANCIAL OFFICER -- means any one of the chief financial officer,
the principal accounting officer and the treasurer of the Company.
SENIOR OFFICER -- means any one of the chairman of the board of directors,
the chief executive officer, the chief operating officer, and the president, of
the Company.
SUBSIDIARY -- means a corporation
(a) which qualifies as a subsidiary of the Company that is properly
included in a consolidated financial statement of the Company and its
subsidiaries in accordance with GAAP at such time, and
(b) of which the Company owns, directly or indirectly, more than fifty
percent (50%) (by number of votes) of each class of Voting Stock at such
time.
UNRESTRICTED SUBSIDIARY -- means, at any time, any Subsidiary other than a
Restricted Subsidiary, at such time.
VOTING STOCK -- means capital stock of any class or classes of a
corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to vote in the election of corporate directors (or
Persons performing similar functions).
WHOLLY-OWNED RESTRICTED SUBSIDIARY -- means, at any time, a Restricted
Subsidiary all of the capital stock of which, and securities convertible into,
exchangeable for, or representing the right to purchase, such capital stock
(other than directors' qualifying shares) is owned at such time by any one or
more of the Company and the other Wholly-Owned Restricted Subsidiaries, free of
any Lien.
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9. INTERPRETATION OF THIS AGREEMENT
9.2 ACCOUNTING PRINCIPLES.
(A) GENERALLY. Unless otherwise provided herein, all financial
statements delivered in connection herewith will be prepared in accordance
with GAAP as in effect on the date of, or during the period covered by,
such financial statements. Where the character or amount of any asset or
liability or item of income or expense, or any consolidation or other
accounting computation is required to be made for any purpose hereunder, it
shall be done in accordance with GAAP as in effect on the date of, or at
the end of the period covered by, the financial statements from which such
asset, liability, item of income, or item of expense, is derived, or, in
the case of any such computation, as in effect on the date as of which such
computation is required to be determined, provided, that if any term
defined herein includes or excludes amounts, items or concepts that would
not be included in or excluded from such term if such term was defined with
reference solely to GAAP, such term will be deemed to include or exclude
such amounts, items or concepts as set forth herein.
(B) ACCOUNTING FOR SUBSIDIARIES. Whenever a calculation based on the
consolidated financial position or consolidated results of operations of
the Company and the Restricted Subsidiaries (the "CONSOLIDATED ENTITIES")
is required hereby
(i) Investments by the Consolidated Entities in any Person other
than a Restricted Subsidiary shall be carried at the lower of cost or
Fair Market Value, and
(ii) earnings of any Person other than a Restricted Subsidiary
not distributed in the form of cash distributions to a Consolidated
Entity shall not be included in any financial calculation of the
Consolidated Entities.
(C) CURRENCY. With respect to any determination, consolidation or
accounting computation required hereby, any amounts not denominated in the
currency in which this Agreement specifies shall be converted to such
currency in accordance with the requirements of GAAP (as such requirements
relate to such determination, consolidation or computation) and, if no such
requirements shall exist, converted to such currency in accordance with
normal banking procedures, at the closing rate as reported in the most
recent Wall Street Journal as of the date of such determination,
consolidation or computation or, if no such quotation shall then be
available, as quoted on such date by any bank or trust company reasonably
acceptable to the Required Holders.
9.3 DIRECTLY OR INDIRECTLY.
Where any provision herein refers to action to be taken by any Person, or
which such Person is prohibited from taking, such provision shall be applicable
whether such action is taken directly or indirectly by such Person, including
actions taken by or on behalf of any partnership in which such Person is a
general partner.
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9. INTERPRETATION OF THIS AGREEMENT
9.4 SECTION HEADINGS AND TABLE OF CONTENTS AND CONSTRUCTION.
(A) SECTION HEADINGS AND TABLE OF CONTENTS, ETC. The titles of the
Sections of this Agreement and the Table of Contents of this Agreement
appear as a matter of convenience only, do not constitute a part hereof and
shall not affect the construction hereof. The words "herein," "hereof,"
"hereunder" and "hereto" refer to this Agreement as a whole and not to any
particular Section or other subdivision. References to Sections are,
unless otherwise specified, references to Sections of this Agreement.
References to Annexes and Exhibits are, unless otherwise specified,
references to Exhibits and Annexes attached to this Agreement.
(B) CONSTRUCTION. Each covenant contained herein shall be construed
(absent an express contrary provision herein) as being independent of each
other covenant contained herein, and compliance with any one covenant shall
not (absent such an express contrary provision) be deemed to excuse
compliance with one or more other covenants.
9.5 GOVERNING LAW.
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, INTERNAL NEW YORK LAW.
10. MISCELLANEOUS
10.1 COMMUNICATIONS.
(A) METHOD; ADDRESS. All communications hereunder or under the Notes
shall be in writing, shall be delivered by
(i) nationwide overnight courier, or
(ii) facsimile transmission (confirmed by delivery by nationwide
overnight courier sent on the day of the sending of such facsimile
transmission), and
shall be addressed, if to the Company, at the address set forth on Annex 2,
and if to any of the holders of the Notes,
(A) if such holder is a Purchaser, at the address set forth on
Annex 1 for such holder, and further including any parties referred to
on such Annex 1 which are required to receive notices in addition to
such holder, and
(B) if such holder is not a Purchaser, at the address set forth
in the register for the registration and transfer of Notes maintained
pursuant to Section 5.1 for such holder,
or to any such party at such other address as such party may designate by
notice duly given in accordance with this Section 10.1.
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10. MISCELLANEOUS
(B) WHEN GIVEN. Any communication addressed and delivered as herein
provided shall be deemed to be received when actually delivered to the
address of the addressee (whether or not delivery is accepted) or received
by the telecopy machine of the recipient. Any communication not so
addressed and delivered shall be ineffective.
10.2 REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating hereto, including, without
limitation,
(a) consents, waivers and modifications that may hereafter be
executed,
(b) documents received by you at the closing of your purchase of the
Notes (except the Notes themselves), and
(c) financial statements, certificates and other information
previously or hereafter furnished to you or any other holder of Notes,
may be reproduced by any holder of Notes by any photographic, photostatic,
microfilm, micro-card, miniature photographic, digital or other similar process
and each holder of Notes may destroy any original document so reproduced. The
Company agrees and stipulates that any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by such holder of Notes in the regular course of business)
and that any enlargement, facsimile or further reproduction of such reproduction
shall likewise be admissible in evidence. Nothing in this Section 10.2 shall
prohibit the Company or any holder of Notes from contesting the accuracy of any
such reproduction.
10.3 SURVIVAL.
All warranties, representations, certifications and covenants made by the
Company herein or in any certificate or other instrument delivered by it or on
its behalf hereunder at or prior to the Closing shall be considered to have been
relied upon by you and shall survive the delivery to you of the Notes regardless
of any investigation made by you or on your behalf. All statements in any
certificate or other instrument delivered by or on behalf of the Company
pursuant to the terms hereof shall constitute warranties and representations by
the Company hereunder. All payment obligations of the Company hereunder
(including, without limitation, reimbursement obligations in respect of costs,
expenses and fees of or incurred by the holders of the Notes) shall survive the
payment or prepayment of the Notes and the termination hereof.
10.4 SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto. The provisions hereof are
intended to be for the benefit of all holders, from time to time, of Notes, and
shall be enforceable by any such holder whether or not an express assignment of
rights has been executed by such holder, subject to Section 5.1.
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10. MISCELLANEOUS
10.5 AMENDMENT AND WAIVER.
(A) REQUIREMENTS. This Agreement may be amended, and the observance
of any term hereof may be waived, with (and only with) the written consent
of the Company and the Required Holders; provided that no such amendment or
waiver of any of the provisions of Section 1 through Section 3,
inclusive, or any defined term to the extent used therein, shall be
effective as to any holder of Notes unless consented to by such holder in
writing; and provided further that no such amendment or waiver shall,
without the written consent of the holders of all Notes (exclusive of Notes
held by the Company, any Subsidiary or any Affiliate) at the time
outstanding,
(i) change the amount or time of any prepayment or payment of
principal or Make-Whole Amount or the rate or time of payment of
interest,
(ii) amend or waive the provisions of Section 8.1(a), Section
8.1(b), Section 8.2 or Section 8.3 or any defined term to the extent
used therein,
(iii) amend or waive the definition of "Required Holders," or
(iv) amend or waive this Section 10.5 or any defined term to the
extent used herein.
(B) SOLICITATION OF NOTEHOLDERS.
(I) SOLICITATION. Each holder of the Notes (irrespective of the
amount of Notes then owned by it) shall be provided by the Company
with sufficient information to enable such holder to make an informed
decision with respect to any proposed waiver or amendment of any of
the provisions hereof or the Notes. Executed or true and correct
copies of any waiver or consent effected pursuant to the provisions of
this Section 10.5 shall be delivered by the Company to each holder of
outstanding Notes forthwith following the date on which the same shall
have been executed and delivered by all holders of outstanding Notes
required to consent or agree to such waiver or consent.
(II) PAYMENT. The Company shall not, directly or indirectly, pay
or cause to be paid any remuneration, whether by way of supplemental
or additional interest, fee or otherwise, or grant any security, to
any holder of Notes as consideration for or as an inducement to the
entering into by any holder of Notes of any waiver or amendment of any
of the provisions hereof or of the Notes unless such remuneration is
concurrently paid, or security is concurrently granted, on the same
terms, ratably to the holders of all Notes then outstanding.
(III) SCOPE OF CONSENT. Any amendment, waiver or consent made
pursuant to this Section 10.5 by a holder of Notes that has
transferred or has agreed to transfer its Notes to the Company, any
Subsidiary or any Affiliate and has provided or has agreed to provide
such amendment, waiver or consent as a condition to such transfer
shall be void and of no force and effect except solely as to such
holder, and any amendments effected or waivers or consents granted
that would not have been or would not be so effected or granted but
for such amendment, waiver or consent (and the amendments, waivers or
consents of all
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10. MISCELLANEOUS
other holders of Notes that were acquired under the same or similar
conditions) shall be void and of no force and effect, retroactive to
the date such amendment or waiver initially took or takes effect,
except solely as to such holder.
(C) BINDING EFFECT. Except as provided in Section 10.5(b)(iii), any
amendment or waiver consented to as provided in this Section 10.5 shall
apply equally to all holders of Notes and shall be binding upon them and
upon each future holder of any Note and upon the Company whether or not
such Note shall have been marked to indicate such amendment or waiver. No
such amendment or waiver shall extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or
waived or impair any right consequent thereon.
10.6 EXPENSES.
(a) The Company shall pay when billed the reasonable costs and
expenses (including reasonable attorneys' fees) incurred by the holders of
the Notes in connection with the consideration, negotiation, preparation or
execution of any amendments, waivers, consents, standstill agreements and
other similar agreements with respect hereto (whether or not any such
amendments, waivers, consents, standstill agreements or other similar
agreements are executed).
(b) At any time when the Company and the holders of Notes are
conducting restructuring or workout negotiations in respect hereof, or a
Default or Event of Default exists, the Company shall pay when billed the
reasonable costs and expenses (including reasonable attorneys' fees and the
fees of professional advisors) incurred by the holders of the Notes in
connection with inspections made pursuant to Section 7.4 and in connection
with the assessment, analysis or enforcement of any rights or remedies that
are or may be available to the holders of Notes.
(c) If the Company shall fail to pay when due any principal of, or
Make-Whole Amount or interest on, any Note, the Company shall pay to each
holder of Notes, to the extent permitted by law, such amounts as shall be
sufficient to cover the costs and expenses, including but not limited to
reasonable attorneys' fees, incurred by such holder in collecting any sums
due on such Notes.
10.7 PAYMENTS ON NOTES.
(A) MANNER OF PAYMENT. The Company shall pay all amounts payable
with respect to each Note (without any presentment of such Notes and
without any notation of such payment being made thereon) by crediting, by
federal funds bank wire transfer, the account of the holder thereof in any
bank in the United States of America as may be designated in writing by
such holder, or in such other manner as may be reasonably directed or to
such other address in the United States of America as may be reasonably
designated in writing by such holder. Annex 1 shall be deemed to
constitute notice, direction or designation (as appropriate) by each
Purchaser to the Company with respect to payments to be made to each
Purchaser as aforesaid. In the absence of such written direction, all
amounts payable with respect to each Note shall be paid by check mailed and
addressed to the registered holder of such Note at the address shown in the
register maintained by the Company pursuant to Section 5.1.
53 Note Purchase Agreement
<PAGE>
10. MISCELLANEOUS
(B) PAYMENTS DUE ON HOLIDAYS. If any payment due on, or with respect
to, any Note shall fall due on a day other than a Business Day, then such
payment shall be made on the first Business Day following the day on which
such payment shall have so fallen due; provided that if all or any portion
of such payment shall consist of a payment of interest, for purposes of
calculating such interest, such payment shall be deemed to have been
originally due on such first following Business Day, such interest shall
accrue and be payable to (but not including) the actual date of payment,
and the amount of the next succeeding interest payment shall be adjusted
accordingly. If any payment is to be made on the first Business Day
following the day on which the same shall have fallen due, as provided in
this Section 10.7(b) and is not so paid on such first Business Day,
interest shall accrue thereon (to the extent permitted by applicable law)
at the rate of ten and five one-hundredths percent (10.05%) per annum, from
(in each case) the originally scheduled day of its payment.
(C) PAYMENTS, WHEN RECEIVED. Any payment to be made to the holders
of Notes hereunder or under the Notes shall be deemed to have been made on
the Business Day such payment actually becomes available at such holder's
bank prior to the close of business of such bank, provided that interest
for one day at the non-default interest rate of the Notes shall be due on
the amount of any such payment that actually becomes available to such
holder at such holder's bank after 12:00 noon (local time of such bank).
10.8 WAIVER OF JURY TRIAL, CONSENT TO JURISDICTION.
(A) WAIVER OF JURY TRIAL. YOU AND THE COMPANY HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT EITHER OF YOU MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT, THE OTHER NOTE PURCHASE AGREEMENT OR THE
NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE COMPANY HEREBY WARRANTS
AND REPRESENTS THAT NO REPRESENTATIVE OR AGENT OF YOU, OR COUNSEL TO YOU,
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT YOU WOULD NOT, IN THE EVENT
OF SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL
PROVISION. THE COMPANY ACKNOWLEDGES THAT YOU HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, INTER ALIA, THE PROVISIONS OF THIS SECTION 10.8.
(B) CONSENT TO JURISDICTION. THE COMPANY HEREBY IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT, THE OTHER NOTE PURCHASE AGREEMENT OR THE
NOTES, OR ANY ACTION OR PROCEEDING TO EXECUTE OR OTHERWISE ENFORCE ANY
JUDGMENT IN RESPECT OF ANY BREACH HEREUNDER, UNDER THE OTHER NOTE PURCHASE
AGREEMENT OR UNDER THE NOTES, BROUGHT BY ANY REGISTERED HOLDER OF A NOTE
AGAINST THE COMPANY OR ANY OF ITS PROPERTY, MAY BE BROUGHT BY SUCH HOLDER
OF A NOTE IN ANY FEDERAL DISTRICT COURT LOCATED IN NEW YORK CITY, NEW YORK
OR ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY, NEW YORK, AS SUCH
REGISTERED HOLDER OF A NOTE MAY IN ITS SOLE DISCRETION ELECT, AND BY THE
EXECUTION AND DELIVERY OF THIS AGREEMENT, THE COMPANY IRREVOCABLY AND
UNCONDITIONALLY
54 Note Purchase Agreement
<PAGE>
10. MISCELLANEOUS
SUBMITS TO THE NON-EXCLUSIVE IN PERSONAM JURISDICTION OF EACH SUCH COURT,
AND THE COMPANY IRREVOCABLY WAIVES AND AGREES NOT TO ASSERT IN ANY
PROCEEDING BEFORE ANY TRIBUNAL, BY WAY OF MOTION, AS A DEFENSE OR
OTHERWISE, ANY CLAIM THAT IT IS NOT SUBJECT TO THE IN PERSONAM JURISDICTION
OF ANY SUCH COURT. IN ADDITION, THE COMPANY HEREBY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE IN ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER NOTE PURCHASE
AGREEMENT OR THE NOTES, BROUGHT IN ANY SUCH COURT, AND HEREBY IRREVOCABLY
WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL
IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OF ANY REGISTERED HOLDER OF A
NOTE TO SERVE ANY SUCH WRITS, PROCESS OR SUMMONSES IN ANY MANNER PERMITTED
BY APPLICABLE LAW OR TO OBTAIN JURISDICTION OVER THE COMPANY IN SUCH OTHER
JURISDICTION, AND IN SUCH MANNER, AS MAY BE PERMITTED BY APPLICABLE LAW.
(C) SERVICE OF PROCESS. THE COMPANY HEREBY IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT PROCESS SERVED EITHER PERSONALLY OR BY
REGISTERED MAIL AT ITS ADDRESS REFERRED TO IN SECTION 10.1 HEREOF SHALL
CONSTITUTE, TO THE EXTENT PERMITTED BY LAW, ADEQUATE SERVICE OF PROCESS IN
ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, THE OTHER NOTE PURCHASE AGREEMENT OR THE NOTES, OR ANY ACTION OR
PROCEEDING TO EXECUTE OR OTHERWISE ENFORCE ANY JUDGMENT IN RESPECT OF ANY
BREACH HEREUNDER, UNDER THE OTHER NOTE PURCHASE AGREEMENT OR UNDER THE
NOTES, BROUGHT BY ANY REGISTERED HOLDER OF A NOTE AGAINST THE COMPANY OR
ANY OF ITS PROPERTY. RECEIPT OF PROCESS SO SERVED SHALL BE CONCLUSIVELY
PRESUMED AS EVIDENCED BY A DELIVERY RECEIPT FURNISHED BY THE UNITED STATES
POSTAL SERVICE OR ANY COMMERCIAL DELIVERY SERVICE. NOTHING HEREIN SHALL IN
ANY WAY BE DEEMED TO LIMIT THE ABILITY OF ANY REGISTERED HOLDER OF A NOTE
TO SERVE ANY WRITS, PROCESS OR SUMMONSES IN ANY MANNER PERMITTED BY
APPLICABLE LAW OR TO OBTAIN JURISDICTION OVER THE COMPANY IN SUCH OTHER
JURISDICTION, AND IN SUCH OTHER MANNER, AS MAY BE PERMITTED BY APPLICABLE
LAW.
10.9 ENTIRE AGREEMENT.
This Agreement constitutes the final written expression of all of the terms
hereof and is a complete and exclusive statement of those terms.
10.10 DUPLICATE ORIGINALS, EXECUTION IN COUNTERPART.
Two or more duplicate originals hereof may be signed by the parties, each
of which shall be an original but all of which together shall constitute one and
the same instrument. This Agreement may be executed in one or more counterparts
and shall be effective when at least
55 Note Purchase Agreement
<PAGE>
10. MISCELLANEOUS
one counterpart shall have been executed by each party hereto, and each set of
counterparts that, collectively, show execution by each party hereto shall
constitute one duplicate original.
[Remainder of page intentionally blank. Next page is signature page.]
56 Note Purchase Agreement
<PAGE>
If this Agreement is satisfactory to you, please so indicate by signing the
acceptance at the foot of a counterpart hereof and returning such counterpart to
the Company, whereupon this Agreement shall become binding between us in
accordance with its terms.
Very truly yours,
SAFETY-KLEEN CORP.
By /s/ SAFETY-KLEEN CORP.
-----------------------------
Accepted:
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By /s/ PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
-------------------------------------------------
[Signature page for the NOTE PURCHASE AGREEMENT of SAFETY-KLEEN CORP. in
connection with the issuance of its SENIOR NOTES DUE 1998]
<PAGE>
If this Agreement is satisfactory to you, please so indicate by signing the
acceptance at the foot of a counterpart hereof and returning such counterpart to
the Company, whereupon this Agreement shall become binding between us in
accordance with its terms.
Very truly yours,
SAFETY-KLEEN CORP.
By /s/ SAFETY-KLEEN CORP.
----------------------------
Name:
Title:
Accepted:
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By /s/ PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
--------------------------------------------------
[Signature page for the NOTE PURCHASE AGREEMENT of SAFETY-KLEEN CORP. in
connection with the issuance of its SENIOR NOTES DUE 1998]
<PAGE>
If this Agreement is satisfactory to you, please so indicate by signing the
acceptance at the foot of a counterpart hereof and returning such counterpart to
the Company, whereupon this Agreement shall become binding between us in
accordance with its terms.
Very truly yours,
SAFETY-KLEEN CORP.
By /s/ SAFETY-KLEEN CORP.
--------------------------------
Accepted:
PACIFIC CORINTHIAN LIFE INSURANCE
COMPANY
By /s/ PACIFIC CORINTHIAN LIFE INSURANCE COMPANY
--------------------------------------------------
[Signature page for the NOTE PURCHASE AGREEMENT of SAFETY-KLEEN CORP. in
connection with the issuance of its SENIOR NOTES DUE 1998]
<PAGE>
If this Agreement is satisfactory to you, please so indicate by signing the
acceptance at the foot of a counterpart hereof and returning such counterpart to
the Company, whereupon this Agreement shall become binding between us in
accordance with its terms.
Very truly yours,
SAFETY-KLEEN CORP.
By /s/ SAFETY-KLEEN CORP.
-----------------------------------
Accepted:
PACIFIC CORINTHIAN LIFE INSURANCE COMPANY
By /s/ PACIFIC CORINTHIAN LIFE INSURANCE COMPANY
---------------------------------------------------
[Signature page for the NOTE PURCHASE AGREEMENT of SAFETY-KLEEN CORP. in
connection with the issuance of its SENIOR NOTES DUE 1998]
<PAGE>
ANNEX 1
INFORMATION AS TO PURCHASER
Annex 1-1 Note Purchase Agreement
<PAGE>
Annex 1-1
<PAGE>
ANNEX 2
PAYMENT INSTRUCTIONS AT CLOSING; ADDRESS OF COMPANY FOR NOTICES
PAYMENT INSTRUCTIONS OF COMPANY AT CLOSING
Annex 2-1 Note Purchase Agreement
<PAGE>
ANNEX 3
-------
2.2(a)
------
The financial statements provided you with the Placement Material are the latest
financial statements published. No additional financial statements are provided.
<PAGE>
ANNEX 3
2.2(b)
SAFETY-KLEEN CORP. & SUBSIDIARIES
SCHEDULE OF DEBT
AS OF JANUARY 31, 1995*
<TABLE>
<CAPTION>
CURRENT FINAL
OBLIGOR HOLDER AMOUNT PORTION MATURITY
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SK CORP. PUBLIC (SR. NOTES) $100,000,000 -- 09-15-99
SK CORP. BANK OF TOKYO $25,000,000 $25,000,000 02-09-95
SK CORP. CHASE MANHATTAN $4,000,000 $4,000,000 02-09-95
SK CORP. DAI-ICHI KANGYO $25,000,000 $25,000,000 02-27-95
SK CORP. MELLON BANK $23,000,000 $23,000,000 02-09-95
SK CORP. NBD BANK $15,000,000 $15,000,000 02-16-95
SK CORP. NBD BANK $4,000,000 $4,000,000 02-09-95
SK CORP. NORTHERN TRUST CO. $32,000,000 $32,000,000 02-09-95
SK CORP. NORTHERN TRUST CO. $8,000,000 $8,000,000 02-16-95
SK CORP. UNION BK OF SWITZ. $5,000,000 $5,000,000 02-27-95
SK CORP. PUBLIC (IRB's) $5,130,000 -- 12-01-09
SK DEUTSCH. DEUTSCHE BANK DM 70,000,000 DM 70,000,000 06-06-95 *
SK DEUTSCH. DEUTSCHE BANK DM 3,600,000 DM 3,600,000 01-31-95 *
ORM BERGOLD DEUTSCHE BANK DM 1,111,400 -- 1998 *
SK UK NBD LONDON (POUNDS) 1,500,000 (POUNDS) 1,500,000 01-03-95 *
</TABLE>
* SUBSIDIARIES' DEBT IS SHOWN AS OF 12-31-94.
<PAGE>
Annex 3
-------
2.2(c)
------
None
<PAGE>
Annex 3
-------
2.3(a)(i)
---------
Subsidiaries of Company
-----------------------
<TABLE>
<CAPTION>
Jurisdiction Percentage
of of
Name Incorporation Ownership
-----------------------------------------------------------------------
<C> <S> <C> <C>
Do Acquisition Co. Delaware 100%
Nucer, Inc. Delaware 100%
Restricted Safety-Kleen Envirosystems Company California 100%
Safety-Kleen Envirosystems
of Puerto Rico Indiana 100%
Phillips Acquisition Corp. Delaware 100%
Phillips Manufacturing Co. Illinois 100%
Restricted Safety-Kleen Oil Recovery Co. Delaware 100%
Restricted Petrocon, Inc. Delaware 100%
Restricted Safety-Kleen Oil Services, Inc. Delaware 100%
Safety-Kleen Transportation Co. Delaware 100%
Safety-Kleen International, Inc. Delaware 100%
Dirt Magnet, Inc. Colorado 100%
The Midway Gas and Oil Co. Colorado 100%
Safety-Kleen Aviation, Inc. Delaware 100%
The Solvents Recovery Service
of New Jersey, Inc. New Jersey 100%
Restricted Safety-Kleen Canada, Inc. Canada 100%
Safety-Kleen Canada Division Canada 100%
Breslube Division Canada 100%
Translube, Inc. Canada 100%
Safety-Kleen Ireland Limited Ireland 100%
Safety-Kleen U.K. Limited United Kingdom 100%
Safety-Kleen Beteilingungs GmbH Germany 100%
Safety-Kleen GmbH Service,
Recycling, Umweltschutz Germany 100%
Orm Bergold Chemie GmbH
& Co. KG Germany 100%
Orm Chemie GmbH Germany 100%
Niemann Chemie GmbH Germany 100%
Safety-Kleen Grundbesitz GmbH Germany 100%
Safety-Kleen GmbH Germany 100%
Safety-Kleen Belgium, S.A. Belgium 100%
Safety-Kleen France, S.A. France 100%
Safety-Kleen Italia, S.p.A. Italy 100%
</TABLE>
<PAGE>
Annex 3
2.3(a)(ii)
List of Officers and Directors of Each Restricted Subsidiary
<TABLE>
<CAPTION>
================================================================================================================================
Safety--Kleen Safety--Kleen
Safety--Kleen Envirosystems Oil Recovery Safety--Kleen Safety--Kleen
Names Corp. of Puerto Rico Co. Petrocon Oil Services Canada
================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Donald W. Brinckman D,O D D,O
--------------------------------------------------------------------------------------------------------------------------------
John G. Johnson Jr. D,O
--------------------------------------------------------------------------------------------------------------------------------
Kenneth L. Block D
--------------------------------------------------------------------------------------------------------------------------------
Richard T. Farmer D
--------------------------------------------------------------------------------------------------------------------------------
Russell A. Gwillim D
--------------------------------------------------------------------------------------------------------------------------------
Edgar D. Jannotta D
--------------------------------------------------------------------------------------------------------------------------------
Karl G. Otzen D
--------------------------------------------------------------------------------------------------------------------------------
Paul D. Schrage D
--------------------------------------------------------------------------------------------------------------------------------
W. Gordon Wood D
--------------------------------------------------------------------------------------------------------------------------------
Marcia Williams D
--------------------------------------------------------------------------------------------------------------------------------
Hyman K. Bielsky O
--------------------------------------------------------------------------------------------------------------------------------
Robert J. Burian O
--------------------------------------------------------------------------------------------------------------------------------
Michael H. Carney O
--------------------------------------------------------------------------------------------------------------------------------
Glenn R. Casbourne O
--------------------------------------------------------------------------------------------------------------------------------
Joseph Chalhoub O D,O D,O D
--------------------------------------------------------------------------------------------------------------------------------
David A. Dattilo O
--------------------------------------------------------------------------------------------------------------------------------
Scott E. Fore O
--------------------------------------------------------------------------------------------------------------------------------
F. Henry Habicht O
--------------------------------------------------------------------------------------------------------------------------------
William P. Kasko O O O O
--------------------------------------------------------------------------------------------------------------------------------
Clark J. Rose O O
--------------------------------------------------------------------------------------------------------------------------------
Robert W. Wilmschen Jr. O D,O D,O D,O D,O D,O
--------------------------------------------------------------------------------------------------------------------------------
Laurence M. Rudnick O O
--------------------------------------------------------------------------------------------------------------------------------
C. James Schulz O
--------------------------------------------------------------------------------------------------------------------------------
Burton E. Ericson D D,O D
--------------------------------------------------------------------------------------------------------------------------------
Lonsdale S. Schofield O O D
--------------------------------------------------------------------------------------------------------------------------------
William Brigger O
--------------------------------------------------------------------------------------------------------------------------------
Maureen Potvin O O
--------------------------------------------------------------------------------------------------------------------------------
S. Janice McAuley D
--------------------------------------------------------------------------------------------------------------------------------
D -- Director
O -- Officer
</TABLE>
<PAGE>
ANNEX 3
-------
2.3(A)(III)
-----------
The following Persons own more than five percent (5%) of any class of capital
stock of the Company or any Subsidiary:
Fund Asset Management (Merrill Lynch)
Fidelity Management & Research Corp.
<PAGE>
ANNEX 3
-------
2.3(B)
------
None
<PAGE>
ANNEX 3
-------
2.5
---
1988 through 1989 have been audited, however, have not yet been closed.
1990 through 1993 remain open.
<PAGE>
ANNEX 3
-------
2.10
----
Amended and Restated Credit Agreement dated as of March 25, 1994 among
Safety-Kleen Corp. the Banks signatory hereto and The Chase Manhattan Bank,
N.A., as Agent.
<PAGE>
Annex 3
-------
2.12(a)
-------
ERISA Affiliates
----------------
Safety-Kleen Corp.
Do Acquisition Co.
Nucer, Inc.
Safety-Kleen Envirosystems Company
Safety-Kleen Envirosystems of Puerto Rico
Phillips Acquistion Corp.
Phillips Manufacturing Co.
Safety-Kleen Oil Recovery Co.
Petrocon, Inc.
Safety-Kleen Oil Services, Inc.
Safety-Kleen Transportation Co.
Safety-Kleen International, Inc.
Dirt Magnet, Inc.
The Midway Gas and Oil Co.
Safety-Kleen Aviation, Inc.
The Solvents Recovery Service
of New Jersey, Inc.
Employee Benefit Plans
----------------------
Safety-Kleen Corp. Salaried Employees Pension Plan
Safety-Kleen Corp. Hourly Employees Pension Plan
Safety-Kleen Corp. Sales Employees Pension Plan
Safety-Kleen Corp. Savings and Investment Plan
Principal Mutual or Pacific Mutual is not an investment manager of any of the
above employee benefit plans.
<PAGE>
Annex 3
-------
2.12(d)
-------
None
<PAGE>
Annex 3
-------
2.13
----
None
<PAGE>
Annex 3
-------
2.17
---
A total of 20 (twenty) Institutional Investors, including you, were offered all
or a portion of the Notes at private sale for investment.
<PAGE>
Annex 3
-------
6.9(a)
-----
The attached 3 (three) pages are from the most recent Dun & Bradstreet report
and to the best of our knowledge include all liens existing or property other
than operating lease property. The total amount of the obligations secured by
these liens is less than one million dollars.
<PAGE>
DUNS: 05-106-0408 Business Information Report Page: 11
-------------------------------------------------------------------------------
A lienholder can file the same lien in more than one filing
location. The appearance of multiple liens filed by the
same lienholder against a debtor may be indicative of such
an occurrence.
-------------------------------------------------------------------------------
VOLUME/PAGE: 2811/980
AMOUNT: $35,230 STATUS: Released
TYPE: State Tax DATE STATUS ATTAINED: 11/14/1994
FILED BY: STATE OF TEXAS DATE FILED: 10/31/1994
AGAINST: SAFETY-KLEEN CORP LATEST INFO COLLECTED: 11/14/1994
WHERE FILED: EL PASO COUNTY RECORDERS OFFICE,
EL PASO, TX
-------------------------------------------------------------------------------
VOLUME/PAGE: 6213/1624
AMOUNT: $35,230 STATUS: Open
TYPE: State Tax DATE STATUS ATTAINED: 09/28/1994
FILED BY: STATE OF TEXAS DATE FILED: 09/28/1994
AGAINST: SAFETY-KLEEN CORP LATEST INFO RECEIVED: 11/08/1994
WHERE FILED: BEXAR COUNTY RECORDERS OFFICE,
SAN ANTONIO, TX
-------------------------------------------------------------------------------
VOLUME/PAGE: 2797/84
AMOUNT: $35,230 STATUS: Open
TYPE: State Tax DATE STATUS ATTAINED: 09/28/1994
FILED BY: STATE OF TEXAS DATE FILED: 09/28/1994
AGAINST: SAFETY-KLEEN CORP LATEST INFO COLLECTED: 10/31/1994
WHERE FILED: EL PASO COUNTY RECORDERS OFFICE,
EL PASO, TX
-------------------------------------------------------------------------------
BOOK/PAGE: 2700/1421
AMOUNT: $35,230 STATUS: Open
TYPE: State Tax DATE STATUS ATTAINED: 09/27/1994
FILED BY: STATE OF TEXAS DATE FILED: 09/27/1994
AGAINST: SAFETY-KLEEN CORPORATION LATEST INFO RECEIVED: 10/14/1994
WHERE FILED: FORT BEND COUNTY CLERK,
RICHMOND, TX
-------------------------------------------------------------------------------
FILING NO.: 410582
AMOUNT: $35,230 STATUS: Open
TYPE: State Tax DATE STATUS ATTAINED: 09/26/1994
FILED BY: STATE OF TEXAS DATE FILED: 09/26/1994
AGAINST: SAFETY-KLEEN CORPORATION LATEST INFO RECEIVED: 11/04/1994
WHERE FILED: HIDALGO COUNTY RECORDERS OFFICE,
EDINBURG, TX
-------------------------------------------------------------------------------
VOLUME/PAGE: 94185/4477
AMOUNT: $35,230 STATUS: Open
TYPE: State Tax DATE STATUS ATTAINED: 09/23/1994
FILED BY: STATE OF TEXAS DATE FILED: 09/23/1994
AGAINST: SAFETY-KLEEN CORP LATEST INFO COLLECTED: 10/14/1994
WHERE FILED: DALLAS COUNTY RECORDERS OFFICE,
DALLAS, TX
-------------------------------------------------------------------------------
BOOK/PAGE: 929/870
AMOUNT: $35,230 STATUS: Open
<PAGE>
DUNS: 05-106-0408 Business Information Report Page: 12
TYPE: State Tax DATE STATUS ATTAINED: 09/20/1994
FILED BY: STATE OF TEXAS DATE FILED: 09/20/1994
AGAINST: SAFETY KLEEN CORPORATION LATEST INFO RECEIVED: 09/30/1994
WHERE FILED: NUBCES COUNTY RECORDERS OFFICE,
CORPUS CHRISTI, TX
--------------------------------------------------------------------------------
VOLUME/PAGE: 11731/438
AMOUNT: $35,230 Franchise STATUS: Open
TYPE: State Tax DATE STATUS ATTAINED: 09/19/1994
FILED BY: STATE OF TEXAS DATE FILED: 09/19/1994
AGAINST: SAFETY-KLEEN CORP LATEST INFO COLLECTED: 09/27/1994
WHERE FILED: TARRANT COUNTY RECORDERS OFFICE
FORT WORTH, TX
--------------------------------------------------------------------------------
VOLUME/PAGE: 46/219
AMOUNT: $35,230 STATUS: Open
TYPE: State Tax DATE STATUS ATTAINED: 09/19/1994
FILED BY: STATE OF TEXAS DATE FILED: 09/19/1994
AGAINST: SAFETY-KLEEN CORP LATEST INFO COLLECTED: 10/03/1994
WHERE FILED: LUBBOCK COUNTY RECORDERS OFFICE
LUBBOCK, TX
--------------------------------------------------------------------------------
FILING NO.: 50104/1447
AMOUNT: $35,230 STATUS: Open
TYPE: State Tax DATE STATUS ATTAINED: 09/19/1994
FILED BY: STATE OF TEXAS DATE FILED: 09/19/1994
AGAINST: SAFETY-KLEEN CORPORATION LATEST INFO RECEIVED: 10/14/1994
WHERE FILED: HARRIS COUNTY RECORDERS OFFICE,
HOUSTON, TX
--------------------------------------------------------------------------------
* * * UCC FILING(S) * * *
--------------------------------------------------------------------------------
COLLATERAL: Specified Assets including proceeds and products - Specified
Contract rights including proceeds and products - Specified Chattel
paper including proceeds and products - Specified Equipment
including proceeds and products - Specified Transportation equipment
including proceeds and products
OPERATING LEASE
--------------------------------------------------------------------------------
COLLATERAL: Specified Consigned merchandise
FILING NO: 3138142 DATE FILED: 06/28/1993
TYPE: Original LATEST INFO RECEIVED: 07/15/1993
SEC. PARTY: HOME JUICE CO, MELROSE PARK, IL FILED WITH: SECRETARY OF
DEBTOR: SAFETY KLEEN, ELGIN, IL STATE/UCC DIVISION,
IL
--------------------------------------------------------------------------------
COLLATERAL: Specified Computer equipment including proceeds and products
FILING NO: 003222101 DATE FILED: 02/14/1994
TYPE: Original LATEST INFO RECEIVED: 02/21/1994
SEC. PARTY: LINC QUANTUM ANALYTICS INC., FILED WITH: SECRETARY OF
FOSTER CITY, CA STATE/UCC DIVISION,
DEBTOR: SAFETY KLEEN CORP., ELK GROVE IL
<PAGE>
DUNS: 05-106-0408 Business Information Report Page: 13
-------------------------------------------------------------------------------
VILLAGE, IL
-------------------------------------------------------------------------------
COLLATERAL: Specified Equipment including proceeds and products
FILING NO: 003222100 DATE FILED: 02/14/1994
TYPE: Original LATEST INFO RECEIVED: 02/21/1994
SEC. PARTY: LINC QUANTUM ANALYTICS INC., FILED WITH: SECRETARY OF
FOSTER CITY, CA STATE/UCC DIVISION,
DEBTOR: SAFETY KLEEN CORP., ELK GROVE IL
VILLAGE, IL
--------------------------------------------------------------------------------
COLLATERAL: Specified Industrial equipment/machinery including proceeds and
products
FILING NO: 1391468 DATE FILED: 11/15/1993
TYPE: Original LATEST INFO RECEIVED: 01/31/1994
SEC. PARTY: TOYOTA MOTOR CREDIT CORP FILED WITH: SECRETARY OF
TORRANCE, CA STATE/UCC DIVISION,
DEBTOR: SAFETY KLEEN CORP WI
--------------------------------------------------------------------------------
COLLATERAL: Specified Industrial equipment/machinery including proceeds and
products
FILING NO: 1385063 DATE FILED: 10/13/1993
TYPE: Original LATEST INFO RECEIVED: 11/11/1993
SEC. PARTY: TOYOTA MOTOR CREDIT CORP, FILED WITH: SECRETARY OF
TORRANCE, CA STATE/UCC DIVISION,
DEBTOR: SAFETY KLEEN CORP WI
-------------------------------------------------------------------------------
COLLATERAL: Specified Industrial equipment/machinery including proceeds and
products
FILING NO: 003170297 DATE FILED: 09/23/1993
TYPE: Original LATEST INFO RECEIVED: 09/27/1993
SEC. PARTY: CLARKLIFT OF WASHINGTON/ALASKA FILED WITH: SECRETARY OF
INC, SEATTLE, WA STATE/UCC DIVISION,
DEBTOR: SAFETY KLEEN, ELGIN, IL IL
--------------------------------------------------------------------------------
COLLATERAL: Specified Industrial equipment/machinery including proceeds and
products
FILING NO: 93-256-0520 DATE FILED: 09/13/1993
TYPE: Original LATEST INFO RECEIVED: 09/27/1993
SEC. PARTY: CLARKLIFT OF WASHINGTON/ALASKA FILED WITH: SECRETARY OF
INC, SEATTLE, WA STATE/UCC DIVISION,
DEBTOR: SAFETY KLEEN, LYNNWOOD, WA WA
--------------------------------------------------------------------------------
COLLATERAL: Specified Industrial equipment/machinery and proceeds
FILING NO: 3150185 DATE FILED: 07/30/1993
TYPE: Original LATEST INFO RECEIVED: 08/25/1993
SEC. PARTY: CATERPILLAR FINANCIAL SERVICES FILED WITH: SECRETARY OF
CORPORATION, MARIETTA, GA STATE/UCC DIVISION,
DEBTOR: SAFETY KLEEN CORP, ELGIN, IL IL
--------------------------------------------------------------------------------
COLLATERAL: Specified Computer equipment and proceeds
FILING NO: 92-01802 DATE FILED: 05/18/1992
TYPE: Original LATEST INFO RECEIVED: 06/19/1992
SEC. PARTY: COLUMBUS COMMERCIAL INC DBA THE FILED WITH: MUSCOGEE COUNTY
MCDOUGAL CO, COLUMBUS, GA SUPERIOR COURT CLERKS
DEBTOR: JEFF W HOLLADAY / SAFETY KLEEN, OFFICE, GA
COLUMBUS, GA
<PAGE>
EXHIBIT A
FORM OF NOTE
SAFETY-KLEEN CORP.
8.05% SENIOR NOTE DUE JANUARY 30, 1998
No. R-__ PPN: 786484 A@ 4
$________ ________ __, ____
SAFETY-KLEEN CORP. (the "Company"), a Wisconsin corporation, for value
received, hereby promises to pay to ______ or registered assigns the principal
sum of ______ DOLLARS ($______) on January 30, 1998 and to pay interest
(computed on the basis of a 360-day year of twelve 30-day months) on the unpaid
principal balance hereof from the date of this Note at the rate of eight and
five one-hundredths percent (8.05%) per annum, semi-annually on January 30 and
July 30 in each year, commencing on the later of July 30, 1995 or the payment
date next succeeding the date hereof, until the principal amount hereof shall
become due and payable; and to pay on demand interest on any overdue principal
(including any overdue prepayment of principal) and Make-Whole Amount, if any,
and (to the extent permitted by applicable law) on any overdue installment of
interest (the due date of such payments to be determined without giving effect
to any grace period), at a rate per annum equal to the lesser of (a) the highest
rate allowed by applicable law or (b) the greater of (i) ten and five one-
hundredths percent (10.05%), or (ii) the rate of interest publicly announced by
Morgan Guaranty Trust Company in New York City from time to time as its prime
rate.
Payments of principal, Make-Whole Amount, if any, and interest shall
be made in such coin or currency of the United States of America as at the time
of payment is legal tender for the payment of public and private debts to the
registered holder hereof at the address shown in the register maintained by the
Company for such purpose, in the manner provided in the Note Purchase Agreement
(defined below).
This Note is one of an issue of Notes of the Company issued in an
aggregate principal amount limited to Fifty Million Dollars ($50,000,000)
pursuant to the Company's separate Note Purchase Agreements (collectively, as
amended from time to time, the "Note Purchase Agreement"), each dated as of
January 15, 1995, with the purchasers listed on Annex 1 thereto, is entitled to
the benefits thereof, and the terms of which are incorporated herein by
reference. Capitalized terms used herein and not defined herein have the
meanings specified in the Note Purchase Agreement. As provided in the Note
Purchase Agreement, under certain circumstances, all or a portion of the
principal of this Note may become due and payable prior to the stated maturity
hereof, and a Make-Whole Amount may be due in connection therewith.
This Note is a registered Note and is transferable only by surrender
hereof at the principal office of the Company as specified in the Note Purchase
Agreement, duly endorsed or accompanied by a written instrument of transfer duly
executed by the registered holder of this Note or his attorney duly authorized
in writing.
Under certain circumstances, as specified in the Note Purchase
Agreement, the principal of this Note (together with any applicable Make-Whole
Amount) may be declared due and payable in the manner and with the effect
provided in the Note Purchase Agreement.
EXHIBIT A-1 Form of Note
<PAGE>
THIS NOTE AND THE NOTE PURCHASE AGREEMENT ARE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAW OF NEW YORK.
SAFETY-KLEEN CORP.
By:____________________________________
Name:
Title:
By:____________________________________
Name:
Title:
EXHIBIT A-2 Form of Note
<PAGE>
EXHIBIT B1
FORM OF COMPANY'S COUNSEL OPINION
[SK LETTERHEAD]
[Closing Date]
To the Persons Listed on
Annex I hereto
Re: Safety-Kleen Corp. (the "Company")
Ladies and Gentlemen:
Reference is made to the separate Note Purchase Agreements dated as of
January 15, 1995 (collectively, the "Note Purchase Agreement"), between the
Company and each of the purchasers listed on Annex 1 attached thereto (the
"Purchasers"), which provide, among other things, for the issuance and sale by
the Company of its 8.05% Senior Notes due January 30, 1998 in the aggregate
principal amount of Fifty Million Dollars ($50,000,000). The capitalized terms
used herein and not defined herein have the meanings specified by the Note
Purchase Agreement.
I have acted as counsel to the Company in connection with the transactions
contemplated by the Note Purchase Agreement. In acting as such counsel, I have
examined.
(a) the Note Purchase Agreement;
(b) the Company's 8.05% Senior Notes due January 30, 1998 dated the
date hereof, in the form of Exhibit A to the Note Purchase Agreement and in
the principal amounts and with the registration numbers set forth on Annex
1 to the Note Purchase Agreement (the "Notes");
(c) the documents executed and delivered by the Company in connection
with the transactions contemplated by the Note Purchase Agreement;
(d) the bylaws and minute books of the Company and a certified copy of
the articles of incorporation of the Company, as in effect on the date
hereof;
(e) a long-form good standing certificate from the state of
incorporation of the Company, good standing certificates from the
states/provinces of incorporation of each Restricted Subsidiary, and
foreign good standing certificates for each of such corporations from each
state where the Company or such Restricted Subsidiary is required to be in
good standing;
EXHIBIT B1-1 Form of Company Counsel's Opinion
<PAGE>
(f) a letter to Hebb & Gitlin from Cascade Capital Corporation dated
the date hereof, making certain representations with respect to the manner
in which the Notes were offered (the "Offeree Letter"); and
(g) originals, or copies certified or otherwise identified to my
satisfaction, of such other documents, records, instruments and
certificates of public officials as I have deemed necessary or appropriate
to enable me to render this opinion.
In rendering this opinion, I have assumed that all signatures are genuine
(other than officers of the Company), that all documents submitted to me as
originals are genuine, that all copies submitted to me conform to the originals,
that all natural Persons have legal capacity, and as to documents executed by or
on behalf of Persons other than the Company.
(i) that each such Person executing documents had the power to enter
into and perform its obligations under such documents, and
(ii) that such documents have been duly authorized, executed and
delivered by, and are binding upon and enforceable against, such Persons.
In rendering this opinion, I have relied, to the extent I deem necessary
and proper, on:
(A) warranties and representations as to factual matters contained in
the Note Purchase Agreement; and
(B) the Offeree Letter.
I have no actual knowledge of any material inaccuracies in any of the facts
contained in the documents listed in Item (A) or (B).
My opinion is based upon the laws of Wisconsin (with respect to corporate
law), Illinois, and federal law. If the Note Purchase Agreement and the Notes
were governed by the laws of Illinois, my opinion would not vary materially from
that set forth below.
Based on the foregoing, I am of the following opinions:
1. Each of the Company and each Restricted Subsidiary is a corporation
duly incorporated, validly existing and in good standing under the laws of its
state of incorporation and has all requisite corporate power and authority to
carry on its business and own its Property.
2. Each of the Company and each Restricted Subsidiary has duly qualified
and is in good standing as a foreign corporation in each jurisdiction where the
character of its Properties or the nature of its activities makes such
qualification necessary, except where the failure to so qualify and be in good
standing would not have a Material Adverse Effect.
3. To the best of my knowledge, all consents, approvals and
authorizations of, and all designations, declarations, filings, registrations,
qualifications, or recordations with, Governmental Authorities required on the
part of each of the Company and each Restricted Subsidiary have been obtained in
connection with the ownership of its Properties and the conduct of its
businesses, except where the failure to obtain any such consent, approval or
EXHIBIT B1-2 Form of Company Counsel's Opinion
<PAGE>
authorization with respect to such ownership and conduct would not have a
Material Adverse Effect.
4. There is no default or existing condition which with the passage of
time or notice, or both would result in a default by the Company or any
Restricted Subsidiary under any contract, lease or commitment known to me to
which any one or more of the Company or any Restricted Subsidiary is a party or
by which their respective Properties may be bound, except where such default
would not have a Material Adverse Effect.
5. To the best of my knowledge, there is no judgment, order, action,
suit, proceeding, inquiry, order or investigation, at law or in equity, before
any court or Governmental Authority, arbitration board or tribunal, pending or
threatened against the Company or any one or more of the Restricted
Subsidiaries, except for any such judgment, order, action, suit, proceeding,
inquiry, order or investigation that would not have a Material Adverse Effect.
6. The Company has the requisite corporate power and authority to execute
and deliver the Note Purchase Agreement, to issue and sell the Notes, and to
perform its obligations set forth in each of the Note Purchase Agreement and the
Notes.
7. Each of the Note Purchase Agreement and the Notes has been duly
authorized by all necessary corporate action on the part of the Company (no
action on the part of the stockholders of the Company being required in respect
thereof), has been executed and delivered by duly authorized officers of the
Company, and constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
8. The execution and delivery of the Note Purchase Agreement and the
Notes, and the issue and sale of the Notes, by the Company and the performance
by the Company of its obligations thereunder will not conflict with, constitute
a violation of, result in a breach of any provision of, constitute a default
under, or result in the creation or imposition of any Lien or encumbrance upon
any of its Property or the Property of a Restricted Subsidiary pursuant to the
articles of incorporation or bylaws of the Company or such Restricted
Subsidiary, any applicable statute, rule or regulation to which the Company or
any Restricted Subsidiary is subject, any agreement or instrument in respect of
borrowed money to which the Company or such Restricted Subsidiary is a party or
by which its respective Properties may be bound, or, to the best of my
knowledge, any other agreement or instrument to which the Company or such
Restricted Subsidiary is a party or by which its respective Properties may be
bound.
9. All consents, approvals and authorizations of, and all designations,
declarations, filings, registrations, qualifications and recordations with,
Governmental Authorities required on the part of the Company and the
Subsidiaries have been obtained in connection with the execution and delivery of
each of the Note Purchase Agreement and the Notes, the issue and sale of the
Notes, the use of the proceeds thereof, and the performance by the Company of
its obligations thereunder.
10. Under existing law, the Notes are not required to be registered under
the Securities Act of 1933, as amended, and the Company is not required to
qualify an indenture with respect thereto under the Trust Indenture Act of 1939,
as amended.
EXHIBIT B1-3 Form of Company Counsel's Opinion
<PAGE>
11. Neither the issuance of the Notes nor the intended use of the proceeds
of the Notes (as set forth in Section 2.18 of the Note Purchase Agreement) will
violate Regulations G, T or X of the Federal Reserve Board.
12. The Company
(a) is not an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, and
(b) is not a "holding company" or an "affiliate" of a "holding
company," or a "subsidiary company" of a "holding company," or a "public
utility" within the meaning of the Public Utility Holding Company Act of
1935, as amended.
13. The Company has good title to all of the shares it purports to own of
the capital stock of each Restricted Subsidiary, free and clear in each case of
any perfected security interest, and to the best of my knowledge, any other
Lien.
All opinions herein contained with respect to the enforceability of
documents and instruments are qualified to the extent that:
(a) the availability of equitable remedies, including without
limitation, specific enforcement and injunctive relief, is subject to the
discretion of the court before which any proceedings therefor may be
brought; and
(b) the enforceability of certain terms provided in the Note Purchase
Agreement and the Notes may be limited by
(i) applicable bankruptcy, reorganization, arrangement,
insolvency, moratorium, fraudulent conveyance or similar laws
affecting the enforcement of creditors' rights generally as at the
time in effect,
(ii) general principles of equity and the discretion of a court
in granting equitable remedies (whether enforceability is considered
in a proceeding at law or in equity).
This opinion is delivered to you pursuant to Section 3.1 of the Note
Purchase Agreement. The qualification of any opinion or statement herein by use
of the words "to the best of my knowledge" means that no information has come to
my attention which gives me actual knowledge that the matters, actions,
proceedings, items, documents or facts so qualified are not so as stated.
However, I have not undertaken any independent investigation or inquiry to
determine the existence or absence of such matters, actions, proceedings, items,
documents or facts. I am qualified to practice law in the State of Illinois,
and I do not purport to be an expert on, or to express any opinion concerning,
any laws except the internal laws (without regard to choice of law rules) of the
State of Illinois and the federal law of the United States of America; however,
I am generally familiar with the corporation law of the State of Wisconsin and,
for the limited purpose of my opinions contained herein and limited solely to
Wisconsin corporation law, did not deem it necessary to obtain the opinion of
Wisconsin counsel. My opinions express herein are limited to the effect of such
laws in effect on the date hereof, and no responsibility or undertaking is
hereby assumed to advise you of any subsequent changes in such laws or of the
EXHIBIT B1-4 Form of Company Counsel's Opinion
<PAGE>
applicability or effect of the laws of any other jurisdiction. Subsequent
holders of the Notes may rely on this opinion as if it were addressed to them.
Hebb & Gitlin may rely on this opinion for the sole purpose of rendering their
opinion to be rendered pursuant to Section 3.1 of the note Purchase Agreement.
Very truly yours,
Hyman K. Bielsky
Senior Vice President
General Counsel
EXHIBIT B1-5 Form of Company Counsel's Opinion
<PAGE>
ANNEX 1
ADDRESSEES
Pacific Corinthian Life Insurance Company
Attention: Securities Administration
P.O. Box 9000
Newport Beach, California 92658-9000
Principal Mutual Life Insurance Company
711 High Street
Des Moines, IA 50392-0960
EXHIBIT B1-6 Form of Company Counsel's Opinion
<PAGE>
EXHIBIT B2
FORM OF PURCHASER'S SPECIAL COUNSEL OPINION
[LETTERHEAD OF HEBB & GITLIN]
[Closing Date]
To the Persons Listed on
Annex 1 hereto
Re: Safety-Kleen Corp. (the "Company")
Ladies and Gentlemen:
Reference is made to the separate Note Purchase Agreements dated as of
January 15, 1995 (collectively, the "Note Purchase Agreement"), between the
Company and each of the purchasers listed on Annex 1 attached thereto (the
"Purchasers"), which provide, among other things, for the issuance and sale by
the Company of its 8.05% Senior Notes due January 30, 1998 in the aggregate
principal amount of Fifty Million Dollars ($50,000,000). The capitalized terms
used herein and not defined herein have the meanings specified by the Note
Purchase Agreement.
We have acted as special counsel to the Purchasers in connection with the
transactions contemplated by the Note Purchase Agreement. In acting as such
counsel, we have examined:
(a) the Note Purchase Agreement;
(b) the Company's 8.05% Senior Notes due January 30, 1998 dated the
date hereof, in the form of Exhibit A to the Note Purchase Agreement and in
the principal amounts and with the registration numbers set forth on Annex
1 to the Note Purchase Agreement (the "Notes");
(c) a certificate of the President and Chief Executive Officer of the
Company, substantially in the form attached to the Note Purchase Agreement
as Exhibit C;
(d) a certificate of the Secretary of the Company, substantially in
the form attached to the Note Purchase Agreement as Exhibit D;
(e) a letter to Hebb & Gitlin from Cascade Capital Corporation dated
the date hereof, making certain representations with respect to the manner
in which the Notes were offered (the "Offeree Letter");
(f) the opinion of Hyman K. Bielsky, counsel to the Company and the
Subsidiaries, dated the date hereof; and
EXHIBIT B2-1 FORM OF PURCHASER'S SPECIAL COUNSEL OPINION
<PAGE>
(g) originals, or copies certified or otherwise identified to our
satisfaction, of such other documents, records, instruments and
certificates of public officials as we have deemed necessary or appropriate
to enable us to render this opinion.
In rendering our opinion, we have assumed that all signatures are genuine,
that all documents submitted to us as originals are genuine, that all copies
submitted to us conform to the originals, that all natural Persons have legal
capacity, and as to documents executed by or on behalf of Persons other than the
Company,
(i) that each such Person executing documents had the power to enter
into and perform its obligations under such documents, and
(ii) that such documents have been duly authorized, executed and
delivered by, and are binding upon and enforceable against, such Persons.
In rendering our opinion, we have relied, to the extent we deem necessary
and proper, on:
(a) warranties and representations as to factual matters contained in
the Note Purchase Agreement;
(b) the Offeree Letter; and
(c) said opinion of Hyman K. Bielsky with respect to all questions
governed by Wisconsin law and with respect to all questions concerning the
due incorporation, valid existence, corporate power and authority of, and
the authorization, execution and delivery of instruments by, the Company
(except that we have made an independent examination of a certified copy of
the articles of incorporation of the Company, and certificates of officers
of the Company setting forth its bylaws and corporate resolutions
authorizing its participation in the transactions contemplated by the Note
Purchase Agreement); based on such investigation as we have deemed
appropriate, said opinion is satisfactory in form and scope to us and in
our opinion the Purchasers and we are justified in relying thereon.
Based on the foregoing, we are of the following opinions:
1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the state of Wisconsin.
2. The Company has all requisite corporate power and authority to
execute and deliver the Note Purchase Agreement, to issue and sell the Notes,
and to perform its obligations set forth in each of the Note Purchase Agreement
and the Notes.
3. Each of the Note Purchase Agreement and the Notes has been duly
authorized by all necessary corporate action on the part of the Company, has
been executed and delivered by one or more duly authorized officers of the
Company, and constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
EXHIBIT B2-2 FORM OF PURCHASER'S SPECIAL COUNSEL OPINION
<PAGE>
4. The execution and delivery of the Note Purchase Agreement and the
Notes, and the issue and sale of the Notes, by the Company and the performance
by the Company of its obligations thereunder will not conflict with, result in a
breach of any provision of, constitute a default under, or result in the
creation or imposition of any Lien upon any of its Properties pursuant to, the
articles of incorporation or bylaws of the Company.
5. No consents, approvals or authorizations of governmental authorities
to the Company are required under the laws of the United States of America or
the State of New York in connection with the execution and delivery of each of
the Note Purchase Agreement and the Notes and the offer, issue, sale and
delivery of the Notes and the performance of the Company thereunder. Our
opinion in this Section 5 is based solely on a review of generally applicable
laws of the United States of America and New York and not on any search with
respect to, or review of, any orders, decrees, judgments or other determinations
specifically applicable to the Company.
6. Under existing law, the Notes are not required to be registered under
the Securities Act of 1933, as amended, and the Company is not required to
qualify an indenture with respect thereto under the Trust Indenture Act of 1939,
as amended.
All opinions herein contained with respect to the enforceability of
documents and instruments are qualified to the extent that:
(a) the availability of equitable remedies, including without
limitation, specific enforcement and injunctive relief, is subject to the
discretion of the court before which any proceedings therefor may be
brought; and
(b) the enforceability of certain terms provided in the Note Purchase
Agreement and the Notes may be limited by
(i) applicable bankruptcy, reorganization, arrangement,
insolvency, moratorium, fraudulent conveyance, or similar laws
affecting the enforcement of creditors' rights generally as at the
time in effect, and
(ii) common law or statutory requirements with respect to
commercial reasonableness.
This opinion is delivered to you pursuant to Section 3.1 of the Note
Purchase Agreement. We express no opinion as to the law of any jurisdiction
other than the law of New York, United States federal law and, as expressly set
forth in the next sentence, Wisconsin. To the extent that the opinions
expressed herein involve matters governed by the laws of Wisconsin, we have
relied upon the aforementioned opinion of Hyman K. Bielsky and our conclusions
as to such matters are subject to the same assumptions, limitations and
qualifications as are contained in said opinion. Subsequent holders of the
Notes may rely on this opinion as if it were addressed to them.
Very truly yours,
FORM OF PURCHASER'S SPECIAL COUNSEL OPINION
EXHIBIT B2-3
<PAGE>
ANNEX 1
ADDRESSEES
Pacific Corinthian Life Insurance Company
Attention: Securities Administration
P.O. Box 9000
Newport Beach, California 92658-9000
Principal Mutual Life Insurance Company
711 High Street
Des Moines, IA 50392-0960
FORM OF PURCHASER'S SPECIAL COUNSEL OPINION
EXHIBIT B2-4
<PAGE>
EXHIBIT C
FORM OF OFFICERS' CERTIFICATE
SAFETY-KLEEN CORP.
CERTIFICATE OF OFFICERS
I, ______ hereby certify that I am the ______ of SAFETY-KLEEN CORP., a
Wisconsin corporation (the "Company"), and that, as such, I have access to its
corporate records and am familiar with the matters herein certified, and I am
authorized to execute and deliver this Certificate in the name and on behalf of
the Company, and that:
1. This Certificate is being delivered pursuant to Section 3.3 of the
Company's separate Note Purchase Agreements (collectively, the "Note Purchase
Agreement"), each dated as of January 15, 1995 with each of the purchasers
listed on Annex 1 thereto (the "Purchasers"). The terms used in this
Certificate and not defined herein have the respective meanings specified in the
Note Purchase Agreement.
2. The warranties and representations contained in Section 2 of the Note
Purchase Agreement are true on the date hereof with the same effect as though
made on and as of the date hereof.
3. The Company has performed and complied with all agreements and
conditions contained in the Note Purchase Agreement that are required to be
performed or complied with by the Company before or at the date hereof.
4. ______, from ______ __, 199_ [date of resolutions to sell Notes] to
the date hereof, inclusive, has been and is the duly elected, qualified and
acting Assistant Secretary of the Company, and the signature appearing on the
Certificate of Secretary dated the date hereof and delivered to the Purchasers
contemporaneously herewith is his genuine signature.
IN WITNESS WHEREOF, I have executed this Certificate in the name and on
behalf of the Company on ______ __, 19__. [Closing Date]
SAFETY-KLEEN CORP.
By:__________________________________
Name:
EXHIBIT C-1 FORM OF OFFICERS' CERTIFICATE
<PAGE>
EXHIBIT D
FORM OF SECRETARY'S CERTIFICATE
SAFETY-KLEEN CORP.
CERTIFICATE OF SECRETARY
I, ______, hereby certify that I am the duly elected, qualified and acting
Assistant Secretary of SAFETY-KLEEN CORP., a Wisconsin corporation (the
"Company"), and that, as such, I have access to its corporate records and am
familiar with the matters herein certified, and I am authorized to execute and
deliver this Certificate in the name and on behalf of the Company, and that:
1. This Certificate is being delivered pursuant to Section 3.3 of the
Company's separate Note Purchase Agreements (collectively, the "Note Purchase
Agreement"), each dated as of January 15, 1995 with each of the purchasers
listed on Annex 1 thereto (the "Purchasers"). The terms used in this
Certificate and not defined herein have the respective meanings specified in the
Note Purchase Agreement.
2. Attached hereto as Attachment A is a true and correct copy of
resolutions, and the preamble thereto, adopted by the board of directors of the
Company on ______ __, 199_, and such resolutions and preamble set forth in
Attachment A hereto were duly adopted by said Board of Directors and are in full
force and effect on and as of the date hereof, not having been amended, altered
or repealed, and such resolutions are filed with the records of the Board of
Directors.
3. The documents listed below were executed and delivered by the Company
pursuant to and in accordance with the resolutions set forth in Attachment A
hereto and said documents as executed are substantially in the form submitted to
and approved by the board of directors of the Company as aforementioned:
(a) the Company's Note Purchase Agreement providing for the sale by
the Company and the purchase by the Purchasers of the Company's 8.05%
Senior Notes due January 30, 1998 (the "Notes"); and
(b) the Notes.
4. Attached hereto as Attachment B is a true, correct and complete copy
of the bylaws of the Company as in full force and effect on and as of the date
hereof, which bylaws were last amended by the Board of Directors of the Company
on, and have been in full effect in said form at all times from ______ __, 199_
[date of resolution to sell notes] to the date hereof, inclusive, without
modification or amendment in any respect.
5. Each of the following named persons is and has been a duly elected,
qualified and acting officer of the Company holding the office or offices set
forth below opposite his or her name from ______ __, 199_ [date of resolution to
sell notes] to the date hereof, inclusive:
EXHIBIT D-1 FORM OF SECRETARY'S CERTIFICATE
<PAGE>
[List Only Officers Executing Documents]
Name Office Signature
[Chairman of the Board] /s/__________________
[President] /s/__________________
[Vice President, Finance] /s/__________________
[Secretary] /s/__________________
[Assistant Secretary] /s/__________________
[Treasurer] /s/__________________
[Comptroller] /s/__________________
6. The signature appearing opposite the name of each such person set
forth above is his or her genuine signature.
7. Attached hereto as Attachment C is a long-form good standing
certificate in respect of the Company from the State of Wisconsin which
certificate
(a) lists all corporate documents filed with the Secretary of State of
Wisconsin on or prior to the date hereof in respect of the Company,
(b) has attached copies of such documents,
(c) bears the certification of the Secretary of State of Wisconsin,
and
(d) is true, correct and complete.
8. There have been no amendments or supplements to or restatements of
the Certificate of Incorporation of the Company since ______ __, 199_ [date
preceding date of copy certified by Sec. of State].
IN WITNESS WHEREOF, I have hereunto set my hand on ______ __, 19__.
[Closing Date]
SAFETY-KLEEN CORP.
----------------------------------------
Assistant Secretary
EXHIBIT D-2 FORM OF SECRETARY'S CERTIFICATE
<PAGE>
ATTACHMENT A
BOARD OF DIRECTORS
SAFETY-KLEEN CORP.
RESOLUTIONS ADOPTED
WHEREAS, there has been submitted to this Board a draft of the form of Note
Purchase Agreement (together with all exhibits and schedules thereto, the "Note
Purchase Agreement"), to be entered into separately by the Company and each of
the purchasers listed on Annex 1 thereto (together with any affiliate of any
thereof, the "Purchasers") pursuant to which the Purchasers will purchase from
the Company the aggregate principal amount of $50,000,000 of the Company's 8.05%
Senior Notes due January 30, 1998 (the "Notes");
WHEREAS, this Board has reviewed in detail and discussed the terms and
provisions of the Note Purchase Agreement, including the forms of the Notes
specified therein;
WHEREAS, on the basis of its review of the Note Purchase Agreement and of
the principal terms and provisions of the transactions provided for therein,
this Board deems it advisable and in the best interest of the Company that the
transactions provided in the Note Purchase Agreement be consummated
substantially in accordance with the provisions of the Note Purchase Agreement;
and
WHEREAS, terms used in these preambles and resolutions and not herein
defined shall have the respective meanings ascribed to them in the Note Purchase
Agreement.
NOW THEREFORE, BE IT RESOLVED, that the form of, and each of the terms and
provisions contained in, the Note Purchase Agreement, are hereby authorized and
approved in each and every respect; and each and every transaction effected or
to be effected pursuant to and substantially in accordance with the terms of the
Note Purchase Agreement, including, but not limited to, each specific
transaction that is described, authorized and approved in these resolutions, is
hereby authorized and approved in each and every respect;
RESOLVED, that the Company enter into a Note Purchase Agreement with each
of the Purchasers or any affiliate thereof; and that each of the Chairman of the
Board, the President, any Vice President, the Treasurer and each other officer
of the Company (each an "Authorized Officer") is hereby severally authorized to
execute and deliver, in the name and on behalf of the Company, the Note Purchase
Agreements, each substantially in the form thereof presented to this Board and
heretofore approved, with such changes therein as shall be approved by the
officer executing and delivering the same, such approval to be evidenced
conclusively by such execution and delivery;
RESOLVED, that the Company borrow from the Purchasers an aggregate amount
of funds as provided in the Note Purchase Agreement, such indebtedness to be
evidenced by the Notes, in the amounts and upon the terms and conditions
provided for in the Note Purchase Agreement; and that each of the Authorized
Officers is hereby severally authorized to execute and deliver the Notes, in the
name and on behalf of the Company, substantially in the respective forms thereof
presented to this Board and heretofore approved, with such changes therein as
EXHIBIT D-3 FORM OF SECRETARY'S CERTIFICATE
<PAGE>
shall be approved by the officer or officers executing and delivering the same,
such approval to be evidenced conclusively by such execution and delivery;
RESOLVED, that this Board hereby authorizes each of the Authorized
Officers, severally, to execute and deliver for and on behalf of the Company the
certificates required by the Note Purchase Agreement;
RESOLVED, that the Authorized Officers and any person or persons designated
and authorized so to act by any Authorized Officer are hereby each severally
authorized to do and perform or cause to be done and performed, in the name and
on behalf of the Company, all other acts, to pay or cause to be paid, on behalf
of the Company, all related costs and expenses and to execute and deliver or
cause to be executed and delivered such other notices, requests, demands,
directions, consents, approvals, orders, applications, agreements, instruments,
certificates, undertakings, supplements, amendments, further assurances or other
communications of any kind, under the corporate seal of the Company or otherwise
and in the name of and on behalf of the Company or otherwise, as he, she or they
may deem necessary, advisable or appropriate to effect the intent of the
foregoing Resolutions or to comply with the requirements of the instruments
approved and authorized by the foregoing Resolutions, including but not limited
to the Note Purchase Agreement and the Notes;
RESOLVED, that any acts of any Authorized Officer of the Company and of any
person or persons designated and authorized to act by any Authorized Officer of
the Company, which acts would have been authorized by the foregoing Resolutions
except that such acts were taken prior to the adoption of such Resolutions, are
hereby severally ratified, confirmed, approved and adopted as the acts of the
Company; and
RESOLVED, that each of the Secretary and each Assistant Secretary of the
Company is hereby severally authorized and empowered to certify to the passage
of the foregoing Resolutions under the seal of this Company or otherwise.
EXHIBIT D-4 FORM OF SECRETARY'S CERTIFICATE
<PAGE>
Attachment B
Bylaws of the Company
[TO BE SUPPLIED BY COMPANY]
EXHIBIT D-5 FORM OF SECRETARY'S CERTIFICATE
<PAGE>
EXHIBIT 10.3.1
SAFETY-KLEEN CORP. SEVERANCE AGREEMENT PARTICIPANTS
John G. Johnson, Jr. President and Chief Executive Officer
Hyman K. Bielsky Senior Vice President/General Counsel
James L. Breece Vice President, Technical
Roy D. Bullinger Senior Vice President, Business Management
and Marketing
Robert J. Burian Senior Vice President, Human Resources
Michael H. Carney Senior Vice President, Marketing Services
and Customer Care
Glenn R. Casbourne Vice President, Engineering
Joseph Chalhoub Senior Vice President, Processing,
Engineering & Oil Recovery
David A. Dattilo Senior Vice President, Sales and Service
Scott E. Fore Senior Vice President,
Environment, Health & Safety
F. Henry Habicht, II Senior Vice President, Strategic/
Environmental Planning
William P. Kasko Senior Vice President, Operations and
Information
Ulisse Marini Vice President, Recycle Center Operations
Clyde R. Phillips Divisional Vice President
Clark J. Rose Vice President, Technical Services
Laurence M. Rudnick Treasurer
Clifford J. Schulz Controller
Robert W. Willmschen, Jr. Senior Vice President, Finance
<PAGE>
EXHIBIT 10.8
SAFETY-KLEEN MANAGEMENT INCENTIVE PLAN
--------------------------------------
February 3, 1995
The Directors of Safety-Kleen Corp. have heretofore decided to compensate their
officers and key management personnel under a compensation plan that will
include base salary plus incentive bonus. The purpose of the incentive plan is
to supplement by incentive bonuses the remuneration for officers and key
management personnel which is competitive externally, equitable internally, and
properly rewarding for performance in the responsibility assigned. On the
recommendation of the Compensation Committee, the following Management Incentive
Plan is hereby established for officers and key management personnel of the
Company.
I. Calculation of Management Incentive Fund
----------------------------------------------
In recognition of the fact that one of the key corporate goals is to
provide Safety-Kleen Shareholders a better-than-average return on corporate
equity, the incentive fund, consisting of both a formula and discretionary
fund, will be created as follows:
A. Utilization of the Standard & Poor's 500 as a Comparison Group
------------------------------------------------------------------
For each Plan year, the return on beginning-of-year equity (ROE) for
each firm comprising the Standard & Poor's 500 will be calculated,
arrayed and summarized in descending ROE order for the four consecutive
calendar quarters ending with the third quarter of the previous year.
B. Determination of Qualifying ROE Level for Generation of Incentive Fund
--------------------------------------------------------------------------
The ROE for the 325th company in the array will determine the
qualifying level for the minimum percentage of earnings allocable to
the formula portion of the incentive fund. In other words, in order for
any incentive fund to be created in a given year, Safety-Kleen must
attain an ROE for that year that would place it among the top 65% of
the five hundred publicly held companies comprising the Standard &
Poor's 500.
C. Determination of ROE Level Required for Maximum Incentive Fund
------------------------------------------------------------------
In order to qualify for the maximum percentage of earnings allocable to
the formula portion of the Incentive Fund in a given year, Safety-Kleen
must attain an ROE for that year that would place it among the top 25%
in the array.
1
<PAGE>
D. Determination of Formula Incentive Fund Factor
--------------------------------------------------
At the minimum qualifying ROE level (I.B.), a formula incentive fund
consisting of 1% of consolidated pretax earnings will be created. This
factor will rise on a graduated basis to a maximum of 5.0% of
Consolidated Pretax Earnings when the maximum level (I.C.) is attained
(see Table 1). The formula fund factor calculation for each ensuing
fiscal year will be reviewed by the Compensation Committee of the Board
prior to the development of that year's incentive plan.
E. Calculation of the Discretionary Element of the Plan
--------------------------------------------------------
In addition to the fund created by the above calculations, an
additional fund consisting of an amount not exceeding 50% of the
formula amount will be available for discretionary incentive
allocations. The allocation of corporate pretax earnings available for
incentive purposes, therefore, will be limited to a maximum of 7.5% of
pretax earnings.
II. Allocation of Funds
------------------------
A. Determination of Plan Participants
--------------------------------------
Determination of who will participate in the Plan will be developed
each year by the Chief Executive Officer (President) and the Chairman
of the Board (Chairman) in consultation with other corporate officers.
Such eligibility will be in accordance with job responsibility and
salary grade. The list of job classifications to be included in the
Plan will be submitted at the beginning of each calendar year for
review by the Compensation Committee.
B. Determination of Individual Fund Shares
-------------------------------------------
The percentage share of the formula incentive fund for each officer
participant will be recommended by the President and the Chairman and
submitted to the Compensation Committee for its approval at the
beginning of each calendar year. Non-officer participant percent shares
will be developed by the President and the Chairman in consultation
with other officers.
C. Payment of Annual Incentive
-------------------------------
The calculation of the formula incentive fund will be based on final
audited year-end financial statements, utilizing the method described
previously. The individual share calculations for each officer for the
formula incentive resulting from the above calculation, together with
the recommended discretionary share, which can range from 0 to 50% of
the formula amount, shall be
2
<PAGE>
submitted to the Compensation Committee for its final approval during
the first quarter of the year following the fiscal year involved.
The President and the Chairman will recommend the discretionary amount
for each officer based on his analysis of each individual's performance
during the year. A non-officer participant's discretionary share will
be recommended by the participant's immediate supervisor for approval
by the President and the Chairman.
III. Incentive Plan Participation and Communications
----------------------------------------------------
The President and the Chairman shall notify the Compensation Committee of
the Board regarding officers and the key management positions that will be
included in the Plan for the current year. Such a list should be
determined as early as possible in any fiscal year and no later than the
end of the first quarter of each fiscal year. Early identification of
participants is desirable to provide maximum opportunity for communicating
throughout the year regarding company performance and each individual
participant's related bonus opportunity, thereby maximizing the
effectiveness of the Incentive Plan.
IV. General Provisions
-----------------------
A. Plan Eligibility
--------------------
To be eligible to participate under the plan, an officer or employee
must be actively employed with the company on the last working day of
the year for which the year's compensation is payable; provided, that
in the event a participant's employment is terminated prior to year-end
by reason of death occurring after June 1, his share of the formula
incentive fund will be adjusted on the basis of his full-year share,
prorated for the period of his actual employment.
B. Less Than Full-Year's Employment
------------------------------------
In the event a participant's employment commences after January 1,
adjustment of his share of the formula incentive fund will be on the
basis of his full-year share, prorated for the period of the
participant's actual employment.
C. Definition of Consolidated Pretax Earnings
----------------------------------------------
For purposes of determining the dollar amount to be set aside for the
formula portion of the fund as above provided, consolidated pretax
earnings shall consist of the reported earnings before income tax, and
before deducting the amount calculated for both the formula and the
discretionary portions of the
3
<PAGE>
incentive fund, as reflected in the audited statements of that year,
subject to the following limitations: profits or losses on the sale or
other distribution of fixed or capital assets not in the ordinary
course of business shall be excluded in the determination of profits.
D. Definition of Return on Beginning-of-Year Equity
----------------------------------------------------
Return on beginning-of-year equity shall be calculated on the basis of
consolidated pretax earnings as defined in IV.C., less the expense
provision for both the formula and discretionary portions of the
incentive fund, and less the applicable income tax provision.
V. Final Responsibility for Plan Administration
-------------------------------------------------
Notwithstanding the foregoing provisions, all matters pertaining to the
administration of this Incentive Compensation Plan, including but not
limited to the determination of the Fund amount, selection of participants,
amounts of awards to be paid to individual participants, and other policy
matters, shall be within the sole discretion of the Board of Directors.
This plan may be revoked, amended or revised by the Board of Directors of
the Company but no revocation, amendment or revision shall affect a
participant's granted percentage share of the Fund.
4
<PAGE>
EXHIBIT 10.9
SAFETY-KLEEN CORP. SEVERANCE AGREEMENT
--------------------------------------
THIS AGREEMENT, dated this 1st day of January, 1995 is entered by and
between SAFETY-KLEEN CORP. (the "Company"), and DONALD W. BRINCKMAN, Chairman of
the Board (the "Employee").
WHEREAS, the Company desires to induce the Employee to remain in the employ
of the Company or a subsidiary thereof; and
WHEREAS, the Company and the Employee entered into an Employment Agreement
dated February 5, 1988 (the "Former Agreement") and deem it mutually beneficial
to enter into a new agreement superseding the Former Agreement in its entirely;
WHEREAS, the Company desires to enter into an agreement with the Employee
upon the terms and conditions set forth herein, and the Employee wishes to enter
into such an agreement with the Company.
NOW, THEREFORE, IN consideration of the foregoing and the mutual covenants
and conditions contained herein, the parties hereto agree as follows:
ARTICLE I.
----------
DEFINITIONS
-----------
For purposes hereof the following words and phrases, when used herein,
unless their context clearly indicates otherwise, shall have the following
respective meanings:
1.1 "Change of Control" means the occurrence of any of the following:
(a) The acquisition, by a person or group of persons acting in concert, of
an ownership interest in the Company resulting in the total ownership interest
of such
<PAGE>
person or group of persons equalling or exceeding 20% of the issued and
outstanding common (voting) stock (the "Stock") of the Company. The Change of
Control shall be deemed to occur on the date that the ownership interest of the
acquiring person or group of persons first equals or exceeds 20% of the issued
and outstanding Stock of the Company.
(b) A change, within a period of 24 months or less, in the composition of
the Board of Directors of the Company, such that at the end of such period the
majority of directors who are then serving were not serving at the beginning of
such period, unless at the end of such period, the majority of the directors in
office were nominated upon the recommendation of a majority of the Board of
Directors at the beginning of such period. The Change of Control shall be
deemed to occur on the date the last director necessary to constitute a change
of control takes office.
(c) The merger, consolidation, or other reorganization having substantially
the same effect as a merger or consolidation, or the sale of substantially all
the assets of the Company. The Change of Control shall be deemed to occur on
the date on which the transaction is approved by the Company's stockholders.
1.2 "Code" means the Internal Revenue Code of 1986, as amended.
1.3 "Discharge for Cause" means termination of employment of the Employee
by the Company, any parent or subsidiary of the Company or any successor to the
Company or any parent or subsidiary of the Company because of (a) commission by
the Employee of any felony which includes as an element of the crime a
premeditated intention to commit the act; (b) an inability to perform his duties
due to his habitual alcohol or
-2-
<PAGE>
drug addiction; (c) serious misconduct in the course of his employment involving
dishonesty; or (d) the Employee's habitual neglect of his duties. Discharge for
Cause shall not mean a discharge because of:
(a) bad judgment or negligence other than habitual neglect of duty;
(b) any act or omission believed by the Employee in good faith to have been
in or not opposed to the interest of the Company, any subsidiary of the Company
or any successor to the Company or any parent or subsidiary of the Company
(without intent of the Employee to gain therefrom, directly or indirectly, a
profit to which he was not legally entitled); or
(c) any act or omission in respect of which a determination could properly
have been made by the Board of Directors of the Company or, if employed by any
parent or subsidiary of the Company, such parent or subsidiary or, if employed
by any successor to the Company or any parent or subsidiary of the Company, such
successor that the Employee met the applicable standard of conduct for
indemnification or reimbursement under the bylaws of such company or the laws
and regulations under which such company is governed, in each case in effect at
the time of such act or omission; or
(d) any act or omission with respect to which notice of termination of
employment of the Employee is given more than twelve (12) months after the
earliest date on which any member of the Board of Directors of the Company or,
if employed by a parent or subsidiary of the Company, such parent or subsidiary
or, if employed by a successor to the Company or any parent or subsidiary of the
Company, such successor who is not a party to the act or omission knew or should
have known of such act or omission.
-3-
<PAGE>
1.4 "Voluntary Termination" means the voluntary resignation of the Employee
from employment by the Company, any parent or subsidiary of the Company or any
successor to the Company or any parent or subsidiary of the Company, but such
term shall not include a resignation by the Employee following (a) a material
reduction or adverse alteration in the nature of the Employee's position,
responsibilities or authorities, (b) the Employee becoming the holder of a
lesser office or title than that held, (c) any reduction of the Employee's
aggregate bonus opportunity, compensation and benefits, (d) the relocation of
the Employee's job more than fifty miles from his present location, or (e) any
other material adverse change to the terms and conditions of the Employee's
employment.
ARTICLE II.
-----------
TERMINATION OF FORMER AGREEMENT
-------------------------------
Employee and the Company hereby agree to terminate the Former Agreement in
its entirety, effective the date hereof. Employee and the Company agree that
the Former Agreement shall hereinafter have no force or effect and shall be
invalid.
ARTICLE III.
------------
BEST EFFORTS AND CONTINUED EMPLOYMENT
-------------------------------------
Subject to the provisions of Section 6.1, the Employee agrees that (a) he
will not Voluntarily Terminate his employment while there is an imminent Change
of Control, and (b) that during any such period of employment with the Company
he will continue to devote his full time and best efforts to the business of the
Company.
-4-
<PAGE>
ARTICLE IV.
-----------
GENERAL SEVERANCE BENEFIT
-------------------------
4.1 Entitlement. If the Employee's employment by the Company, any parent
or subsidiary of the Company or any successor to the Company or any parent or
subsidiary of the Company is terminated for reasons other than death, a
Voluntary Termination or a Discharge for Cause following a Change of Control but
not later than the third anniversary of the Change of Control, the Company shall
pay the Employee forthwith a lump sum severance benefit equal to three times the
sum of (a) and (b) where: (a) equals the Employee's annual rate of salary
(excluding bonuses) in effect on the date of the Employee's termination
(provided that such rate shall in no event be less than the rate in effect on
the date of Change of Control) and (b) equals the greater of (i) the bonus which
the Employee received in the year prior to the year in which the Employee's
termination occurs, or if larger, the year prior to the Change of Control or
(ii) the maximum bonus to which the Employee would be entitled for the year in
which the Employee's termination occurs. If the Employee's employment by the
Company, any parent or subsidiary of the Company or any successor to the Company
or any parent or subsidiary of the Company is terminated later than the third
anniversary of the Change of Control there shall be no severance benefit payable
hereunder.
4.2 No Duplication of Benefits. The severance benefits provided for herein
are in lieu of severance benefit provisions under the Company severance pay
policies and plans or under any other contract between the Company or any
parent, subsidiary or affiliate thereof and the Employee, including, but not
limited to, benefits payable under
-5-
<PAGE>
employment agreements by virtue of termination of employment prior to the
expiration of the agreement. The Employee shall not be entitled to any
severance benefits under such policies, plans or other contracts unless the
benefits provided thereunder are greater than the severance benefits payable
hereunder, in which case the severance benefits under such other policies, plans
or contracts shall be provided in lieu of the severance benefits hereunder.
ARTICLE V.
----------
TAX BENEFITS
------------
5.1 Limit On Benefits. Notwithstanding any of the provisions of this
Agreement to the contrary, if any payments under this Agreement ("Agreement
Parachute Payments") count in determining whether the Employee has received
"parachute payments" (as defined in Code Section 280G(b)(2)), and if the sum of
the present values (as determined under Code Section 280G(d)(4)) of (a) the
Agreement Parachute Payments to the Employee, plus (b) any other payments or
benefits which count in determining whether the Employee has received parachute
payments excluding payments or benefits attributable to options granted under
the Company's stock option plans ("Other Parachute Payments"), received by the
Employee from the Company or any other member of the same affiliated group as
the Company (as defined in Code Section 1504, determined without regard to Code
Section 1504(b)) equals or exceeds three (3) times the Employee's base amount
(as defined in Code Section 280G(b)(3)), then the amount of the Agreement
Parachute Payments shall be reduced to the extent necessary so that
-6-
<PAGE>
the sum of the present values of the Agreement Parachute Payments and Other
Parachute Payments equals three (3) times the Employee's base amount less $1.00.
5.2 Gross-up.
(a) If it is determined (in the reasonable opinion of the Company or in the
opinion of counsel to the Company if such an opinion is requested by the
Employee) that any payment or benefit made pursuant to this Agreement or
otherwise, received or deemed received by the Employee from the Company or any
other member of the same affiliated group as the Company (as defined in Code
Section 1504, determined without regard to Code Section 1504(b)) (collectively
referred to as the "Payments") is or will become subject to any excise tax under
Section 4999 of the Code or any similar tax payable under any federal, state,
local or other law ("Excise Taxes"), then the Company shall, immediately upon
such determination, pay the Employee an amount equal to the sum of (i) any such
Excise Taxes, plus (ii) the amount necessary to reimburse the Employee for any
federal, state, local or other income, excise or other taxes payable by the
Employee with respect to (A) the amount of Excise Taxes reimbursement herein
provided, and (B) the amount paid to the Employee as reimbursement of any such
federal, state, local or other income, excise or other taxes, as determined (for
both clauses (A) and (B) hereof) in accordance with the formula set forth on
Exhibit I attached hereto. All determinations hereunder shall be made in
adequate time to permit the Employee to prepare and file his individual tax
returns in a timely fashion.
(b) The Company, in determining whether the Payments are subject to Excise
Taxes, may have reasonably concluded that certain items are neither subject to
Excise
-7-
<PAGE>
Taxes nor to be counted in determining whether Payments are subject to Excise
Taxes (such items hereinafter referred to as "Non-Parachute Items"). If at a
later date, it is determined (pursuant to final regulations or published rulings
of the IRS, final judgment of a court of competent jurisdiction or, if requested
by Employee, an opinion of counsel to the Company) that any of the Non-Parachute
Items are subject to Excise Taxes, or are to be counted in determining whether
any of the Payments are subject to Excise Taxes, with the result that the amount
of Excise Taxes payable by the Employee is greater than the amount so determined
by the Company pursuant to paragraph (a) above, then the Company shall pay the
Employee, in accordance with the formula set forth on Exhibit I, an amount equal
to the sum of (i) such additional Excise Taxes (ii) any interest, fines,
penalties, expenses, and other costs incurred by Employee and resulting from the
Employee having taken a position that payments are not subject to Excise Taxes
in accordance with the determination made in paragraph (a), above; plus (iii) an
amount necessary to reimburse the Employee for any federal, state, local, or
other income, excise, or other taxes payable by the Employee with respect to (A)
the amounts specified in subparagraphs (i) and (ii) above, and (B) the
reimbursement provided by this subparagraph (iii).
5.3 Consultation. At the Company's reasonable request, the Employee shall
consult with the Company regarding (a) the preparation and filing of the
Employee's federal income and excise tax returns for any year in which any
Payments are received, and (b) any federal tax issues which may arise with
respect to any Payments made in connection with a Change in Control. At the
Company's request, Employee shall retain
-8-
<PAGE>
counsel and other experts and consultants reasonably satisfactory to Company in
connection with any or all of the matters described in items (a) and (b) above
and Company shall reimburse Employee (in accordance with Section 6.2 hereof) for
all fees, expenses and costs (including audit costs, attorneys' fees and
expenses, and court costs) incurred by Employee as a result of the retention of
such counsel and other experts and consultants. Anything to the contrary herein
notwithstanding, the Employee shall not in any way be restricted from making
such disclosure in his individual tax returns with respect to the Payments as he
shall deem reasonable and appropriate.
ARTICLE VI.
-----------
MISCELLANEOUS
-------------
6.1 No Employment Guarantee. This Agreement shall not be deemed to entitle
the Employee to continued employment with the Company, any parent or subsidiary
of the Company or any successor to the Company or any parent or subsidiary of
the Company and the rights of the Company, any parent or subsidiary of the
Company or any successor to the Company or any parent or subsidiary of the
Company to terminate the employment of the Employee shall continue as fully as
if this Agreement were not in effect.
6.2 Expenses.
(a) If the Employee incurs (i) legal or other fees and expenses in an effort
to establish entitlement to benefits under this Agreement, regardless of whether
the Employee ultimately prevails, or (ii) legal, accounting and other fees and
expenses in connection with the retention of counsel and other experts and
consultants as requested
-9-
<PAGE>
by the Company pursuant to Section 5.3 hereof, the Company shall reimburse him
for such fees and expenses.
(b) Reimbursement of fees and expenses described in paragraph (a), above,
shall be made monthly during the course of any action upon the written
submission of a request for reimbursement together with proof that the fees and
expenses were incurred.
6.3 Unfunded Obligation. The obligation of the Company under this
Agreement shall be unfunded and unsecured, and the Company shall not be required
to segregate any assets that may at any time be required to provide the benefits
under this Agreement.
6.4 Assignment, Successors. The Company may freely assign its respective
rights and obligations under this Agreement to a successor of the Company's
business, without the prior written consent of the Employee. This Agreement
shall be binding upon and inure to the benefit of the Employee and his estate
and the Company and any assignee of or successor to the Company.
6.5 Beneficiary. If the Employee dies prior to receiving all of the
benefits payable hereunder, such benefits when payable shall be paid to the
beneficiary designated in writing by the Employee and if no such beneficiary is
designated, to the Employee's estate.
6.6 Nonalienation of Benefits. Benefits payable under this Agreement shall
not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance charge, garnishment, execution or levy of any
kind, either voluntary or involuntary, prior to actually being received by the
Employee; and any attempt to
-10-
<PAGE>
anticipate, alienate, sell, transfer, assign, pledge, encumber, charge, garnish,
execute on, levy or otherwise dispose of any right to benefits payable
hereunder, shall be void.
6.7 Severability. If all or any part of this Agreement is declared by any
court or governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not serve to invalidate any portion of this Agreement not
declared to be unlawful or invalid. Any Section or part of a Section so
declared to be unlawful or invalid shall, if possible, be construed in a manner
which will give effect to the terms of such Section or part of a Section to the
fullest extent possible while remaining lawful and valid.
6.8 Amendment and Waiver. Subject to Section 5.9, this Agreement shall not
be altered, amended or modified except by written instrument executed by the
Company and Employee. A waiver of any term, covenant, agreement or condition
contained in this Agreement shall not be deemed a waiver of any other term,
covenant, agreement or condition, and any waiver of any default in any such
term, covenant, agreement or condition shall not be deemed a waiver of any later
default thereof or of any other term, covenant, agreement or condition.
6.9 Cancellation. The Company may, at any time prior to a Change of
Control, unilaterally cancel this Agreement on behalf of all parties hereto by
notifying the Employee of such cancellation in writing at least twelve (12)
months prior to the effective date of cancellation.
6.10 Notices. All notices required by this Agreement shall be in writing
and delivered by hand or by first class registered or certified mail, postage
prepaid, and addressed as follows:
-11-
<PAGE>
If to the Company: Safety-Kleen Corp.
1000 North Randall Road
Elgin, Illinois 60123
If to the Employee: Donald W. Brinckman
5615 Hamilton
Woodstock, Illinois 60098
Either party may from time to time designate a new address by notice given in
accordance with this Section.
6.11 No Reductions or Mitigation. Except as specifically provided herein,
all amounts payable pursuant to this Agreement shall be paid without reduction
regardless of any amounts of salary, compensation or other amounts which may be
paid or payable to Employee from any source; provided that the Company shall be
permitted to make all payments pursuant to this Agreement net of any legally
required tax withholdings.
6.12 Applicable Law. The provisions of this Agreement shall be interpreted
and construed in accordance with the laws of the state of Illinois, without
regard to its choice of law principles.
6.13 Recitals. The recitals set forth above are hereby incorporated into
and made a part hereof.
-12-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
SAFETY-KLEEN CORP.
/s/ SAFETY-KLEEN CORP.
By:_______________________________
EMPLOYEE:
/s/ DONALD W. BRINCKMAN
_________________________________
DONALD W. BRINCKMAN
CHAIRMAN OF THE BOARD
-13-
<PAGE>
EXHIBIT I
---------
Gross-up Formula
Any payment made pursuant to Section 5.2 of the Agreement (a "Gross-up
Payment") shall be calculated as follows:
A. The Gross-up Payment shall be the product of (i) the amount of the
Excise Taxes (and in the case of Section 5.2(b), any interest, fines,
penalties, expenses, and other costs relating to Excise Taxes) incurred by
the Employee times (ii) a fraction the numerator of which is 1, and the
denominator of which is 1 minus the combined total rates expressed as a
fraction, determined in accordance with paragraph B hereof, of all federal,
state, local and other income and other taxes and any Excise Taxes
applicable to such Gross-up Payment. In the event that different rates of
tax are applicable to any portion of a Gross-up Payment, the denominator of
the fraction set forth in clause (ii) above shall be 1 minus the combined
total of the weighted average rates expressed as a fraction, determined in
accordance with paragraph B hereof, of all federal, state, local and other
income and other taxes and any Excise Taxes applicable to such Gross-up
Payment.
B. For purposes of determining the denominator of the fraction set
forth in clause (ii) of paragraph A hereof, the rates of federal, state,
local and other income and other taxes and Excise Taxes shall be the actual
rates of such taxes (giving effect to the Employee's net effective tax rates
determined net of the benefit of any tax deduction or tax credit); provided,
however, that if the combined total of such rates shall exceed 75%, such
combined total shall be deemed to be 75%.
-14-
<PAGE>
EXHIBIT 10.10
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of March 25, 1994
among
SAFETY-KLEEN CORP.
the Banks signatory hereto
and
THE CHASE MANHATTAN BANK, N.A.,
as Agent
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
ARTICLE 1 DEFINITIONS; ACCOUNTING TERMS.
<S> <C> <C>
Section 1.01 Definitions................................ 1
Section 1.02 Accounting Terms........................... 11
ARTICLE 2 THE CREDIT.
Section 2.01 The Syndicated Loans....................... 11
Section 2.02 The Money Market Loans..................... 11
Section 2.03 The Notes; Repayment....................... 15
Section 2.04 Purpose.................................... 15
Section 2.05 Syndicated Borrowings...................... 15
Section 2.06 Prepayments................................ 15
Section 2.07 Interest Periods........................... 15
Section 2.08 Changes of Commitments..................... 16
Section 2.09 Certain Notices............................ 16
Section 2.10 Minimum Amounts............................ 16
Section 2.11 Interest................................... 17
Section 2.12 Fees....................................... 17
Section 2.13 Payments Generally......................... 18
Section 2.14 Extension of Termination Date.............. 18
ARTICLE 3 YIELD PROTECTION; ILLEGALITY; ETC.
Section 3.01 Additional Costs........................... 19
Section 3.02 Limitation on Types of Loans............... 20
Section 3.03 Illegality................................. 21
Section 3.04 Certain Variable Rate Loans pursuant
to Sections 3.01 and 3.03................. 21
Section 3.05 Certain Compensation....................... 21
ARTICLE 4 CONDITIONS PRECEDENT.
Section 4.01 Conditions to Effectiveness................ 22
Section 4.02 Conditions to Borrowing.................... 23
Section 4.03 Deemed Representations..................... 24
ARTICLE 5 REPRESENTATIONS AND WARRANTIES.
Section 5.01 Incorporation, Good Standing and Due
Qualification.............................. 24
Section 5.02 Corporate Power and Authority; No Conflicts 24
</TABLE>
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Section 5.03 Legally Enforceable Agreements............. 25
Section 5.04 Litigation................................. 25
Section 5.05 Financial Statements....................... 25
Section 5.06 Ownership and Liens........................ 26
Section 5.07 Taxes...................................... 26
Section 5.08 ERISA...................................... 26
Section 5.09 Subsidiaries and Ownership of Stock........ 26
Section 5.10 Credit Arrangements........................ 27
Section 5.11 Operation of Business...................... 27
Section 5.12 No Fault on Outstanding Judgments
or Orders................................. 27
Section 5.13 No Default on Other Agreements............. 27
Section 5.14 Labor Disputes and Acts of God............. 28
Section 5.15 Investment Company Act..................... 28
Section 5.16 Partner in a Partnership................... 28
Section 5.17 Hazardous Materials........................ 28
Section 5.18 No Forfeiture.............................. 30
ARTICLE 6 AFFIRMATIVE COVENANTS.
Section 6.01 Maintenance of Existence................... 30
Section 6.02 Conduct of Business........................ 30
Section 6.03 Maintenance of Properties.................. 30
Section 6.04 Maintenance of Records..................... 30
Section 6.05 Maintenance of Insurance................... 30
Section 6.06 Compliance with Laws....................... 31
Section 6.07 Right of Inspection........................ 31
Section 6.08 Reporting Requirements..................... 31
Section 6.09 No Activities Leading to Forfeiture........ 35
ARTICLE 7 NEGATIVE COVENANTS.
Section 7.01 Certain Contingent Liabilities............. 35
Section 7.02 Liens...................................... 35
Section 7.03 Leases..................................... 37
Section 7.04 Investments................................ 37
Section 7.05 Sale of Assets............................. 38
Section 7.06 Stock of Subsidiaries, Etc................. 38
Section 7.07 Transactions with Affiliates............... 38
Section 7.08 Mergers, Etc............................... 39
Section 7.09 Acquisitions............................... 39
ARTICLE 8 FINANCIAL COVENANTS.
Section 8.01 Minimum Shareholders' Equity............... 39
Section 8.02 Debt to Cash Flow.......................... 39
Section 8.03 Interest Coverage Ratio.................... 39
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ARTICLE 9 EVENTS OF DEFAULT.
Section 9.01 Events of Default.......................... 39
Section 9.02 Remedies................................... 41
ARTICLE 10 THE AGENT; RELATIONS AMONG BANKS, ETC.
Section 10.01 Appointment, Powers and Immunities of
Agent..................................... 42
Section 10.02 Reliance by Agent.......................... 42
Section 10.03 Defaults................................... 43
Section 10.04 Rights of Agent as a Bank.................. 43
Section 10.05 Indemnification of Agent................... 44
Section 10.06 Documents.................................. 44
Section 10.07 Non-Reliance on Agent
and Other Banks........................... 44
Section 10.08 Failure of Agent to Act.................... 45
Section 10.09 Resignation of Agent....................... 45
Section 10.10 Amendments Concerning
Agency Function........................... 45
Section 10.11 Liability of Agent......................... 45
Section 10.12 Transfer of Agency Function................ 46
Section 10.13 Non-Receipt of Funds by the Agent.......... 46
Section 10.14 Withholding Taxes.......................... 46
Section 10.15 Several Obligations and
Rights of Banks........................... 47
Section 10.16 Pro Rata Treatment of Loans, Etc........... 47
ARTICLE 11 MISCELLANEOUS.
Section 11.01 Amendments and Waivers..................... 47
Section 11.02 Replacement of Banks....................... 48
Section 11.03 Usury...................................... 48
Section 11.04 Expenses................................... 48
Section 11.05 Survival................................... 49
Section 11.06 Assignment; Participation.................. 49
Section 11.07 Notices.................................... 50
Section 11.08 Setoff..................................... 50
Section 11.09 Jurisdiction; Immunities................... 50
Section 11.10 Table of Contents; Headings................ 51
Section 11.11 Severability............................... 51
Section 11.12 Counterparts............................... 51
Section 11.13 Integration................................ 52
Section 11.14 Governing Law.............................. 52
Section 11.15 Treatment of Certain Information........... 52
Section 11.16 Addition of Banks.......................... 52
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EXHIBITS
Exhibit A Promissory Note
Exhibit B Money Market Note
Exhibit C Authorization Letter
Exhibit D Opinion of Counsel for Borrower
Exhibit E Request for Extension
SCHEDULES
Schedule I Restricted Subsidiaries of Borrower
Schedule II Subsidiaries of Borrower
Schedule III Credit Arrangements
Schedule IV Partnerships of Borrower
Schedule V Hazardous Materials
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AMENDED AND RESTATED CREDIT AGREEMENT dated as of March 25, 1994 among
SAFETY-KLEEN CORP., a corporation organized under the laws of Wisconsin (the
"Borrower"), each of the banks which is a signatory hereto (individually a
"Bank" and collectively the "Banks") and THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), a national banking association organized under the laws of the
United States of America, as agent for the Banks (in such capacity, together
with its successors in such capacity, the "Agent").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Borrower, the Banks and the Agent entered into a Credit
Agreement dated as of March 20, 1992, as amended by Amendment No. 1 dated as of
December 1, 1993 (the "Original Agreement");
WHEREAS, the parties hereto wish to amend and restate the Original
Agreement to make the modifications set forth below; and
WHEREAS, when all of the conditions specified in Section 4.01 hereof
have been satisfied, the Original Agreement will be automatically amended and
restated to read in full as set forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS.
Section 1.01. Definitions. As used in this Agreement the following
terms have the following meanings (terms defined in the singular to have a
correlative meaning when used in the plural and vice versa):
"Acceptable Acquisition" means any Acquisition which has been either
(a) approved by the Board of Directors of the corporation which is the subject
of such Acquisition or (b) recommended by such Board to the shareholders of such
corporation.
"Acquisition" means any transaction pursuant to which the Borrower or
any of its Subsidiaries (a) acquires equity securities (or warrants, options or
other rights to acquire such securities) of any corporation other than the
Borrower or any corporation which is not then a Subsidiary of the Borrower,
pursuant to a solicitation of tenders therefor, or in one or more negotiated
block, market or other transactions not involving a tender offer, or a
combination of any of the foregoing, or (b) makes any corporation a Subsidiary
of the Borrower, or causes any such corporation to be merged into the Borrower
or any of its Subsidiaries, in any case pursuant to a merger, purchase of assets
or any reorganization providing for the delivery or issuance to the holders of
such corporation's then outstanding securities, in exchange for such securities,
of cash or securities of the Borrower or any of its Subsidiaries, or a
combination thereof, or (c) purchases all or substantially all of the business
or assets of any corporation.
"Affiliate" means any Person: (a) which directly or indirectly
controls, or is controlled by, or is under common control with, the Borrower or
any of its Subsidiaries; (b) which directly or
<PAGE>
indirectly beneficially owns or holds 5% or more of any class of voting stock of
the Borrower or any such Subsidiary; (c) 5% or more of the voting stock of which
is directly or indirectly beneficially owned or held by the Borrower or such
Subsidiary; or (d) which is a partnership in which the Borrower or any of its
Subsidiaries is a general partner. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise.
"Agreement" means this Credit Agreement, as amended or supplemented
from time to time. References to Articles, Sections, Exhibits, Schedules and
the like refer to the Articles, Sections, Exhibits, Schedules and the like of
this Agreement unless otherwise indicated.
"Assessment Rate" means, for any Interest Period for any CD Loan, the
average of the highest and lowest annual assessment rates (determined by the
Agent as at the first day of such Interest Period and rounded upwards, if
necessary, to the nearest 1/100 of 1%) that the Federal Deposit Insurance
Corporation (or any successor) charges members of the Bank Insurance Fund
pursuant to 12 C.F.R. Part 327 (or any successor provision) for such
Corporation's (or such successor's) insuring time deposits at offices of such
members in the United States of America.
"Authorization Letter" means the letter agreement executed by the
Borrower in the form of Exhibit C.
"Banking Day" means any day on which commercial banks are not
authorized or required to close in New York City and whenever such day relates
to a Eurodollar Loan or notice with respect to any Eurodollar Loan, a day on
which dealings in Dollar deposits are also carried out in the London interbank
market.
"Base Rate" means with respect to any Fixed Rate Loan:
(a) for a Eurodollar Loan, the arithmetic mean, as calculated by the
Agent, of the respective rates per annum (rounded upwards, if necessary, to the
nearest 1/16 of 1%) quoted at approximately 11:00 a.m. London time by the
principal London branch of each of the Reference Banks two Banking Days prior to
the first day of the Interest Period for such Loan for the offering to leading
banks in the London interbank market of Dollar deposits in immediately available
funds, for a period, and in an amount, comparable to such Interest Period and
principal amount of the Eurodollar Loan which shall be made by such Reference
Bank and outstanding during such Interest Period; and
(b) for a CD Loan, the arithmetic mean, as calculated by the Agent, of
the respective rates per annum (rounded upwards, if necessary, to the nearest
1/20 of 1%) of the Reference Banks in each such case determined by the Reference
Bank to be the average of the bid rates quoted to it at its principal office at
approximately 10:00 a.m. New York City time (or as soon thereafter as
practicable) on the first day of the Interest Period for such Loan by New York
certificate of deposit dealers of recognized standing selected by such Reference
Bank for the purchase at face value of certificates of deposit of such Reference
Bank with a term, and in an amount, comparable to such Interest Period and the
principal amount of the CD Loan which shall be made by such Reference
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<PAGE>
Bank and outstanding during such Interest Period; provided that, if such
quotations from such dealers are not available to such Reference Bank, such Bank
shall notify the Agent of a reasonably equivalent rate determined by it on the
basis of another source or sources selected by it.
"Capital Lease" means any lease which has been or should be capitalized
on the books of the lessee in accordance with GAAP.
"CD Loan" means any Loan when and to the extent the interest rate
therefor is determined on the basis of clause (b) of the definition "Base Rate."
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Commitment" means, with respect to each Bank, the amount set forth
opposite the name of such Bank on the signature pages hereof, as such amount may
be reduced or otherwise modified from time to time.
"Consolidated Debt" means Debt of the Borrower and its Restricted
Subsidiaries, as determined on a consolidated basis in accordance with GAAP.
"Consolidated Shareholders' Equity" means Shareholders' Equity of the
Borrower and its Restricted Subsidiaries, as determined on a consolidated basis
in accordance with GAAP.
"Consolidated Subsidiary" means any Subsidiary whose accounts are or
are required to be consolidated with the accounts of the Borrower in accordance
with GAAP.
"Consolidated Total Capitalization" means Total Capitalization of the
Borrower and its Restricted Subsidiaries, as determined on a consolidated basis
in accordance with GAAP.
"Debt" means, with respect to any Person: (a) all indebtedness of such
Person for borrowed money; (b) all indebtedness of such Person for the deferred
purchase price of property or services (except trade payables paid within 120
days from the date the goods were delivered or the services rendered in the
ordinary course of business); (c) all Unfunded Benefit Liabilities of such
Person (if such Person is not the Borrower, determined in a manner analogous to
that of determining Unfunded Benefit Liabilities of the Borrower); (d) all
obligations of such Person arising under acceptance facilities; (e) all
guaranties, endorsements (other than for collection in the ordinary course of
business) and other contingent obligations of such Person to purchase, to
provide funds for payment, to supply funds to invest in any Person, or otherwise
to assure a creditor against loss; (f) any obligations secured by any Lien on
property of such Person; and (g) all obligations of such Person as lessee under
Capital Leases.
"Default" means any event which with the giving of notice or lapse of
time, or both, would become an Event of Default.
"Default Rate" means, with respect to the principal of any Loan and, to
the extent permitted by law, any other amount payable by the Borrower under this
Agreement or any Note
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<PAGE>
that is not paid when due (whether at stated maturity, by acceleration or
otherwise), a rate per annum during the period from and including the due date
to but excluding the date on which such amount is paid in full equal to 2% above
the Variable Rate as in effect from time to time plus the Margin (if any)
(provided that, if the amount so in default is principal of a Fixed Rate Loan
and the due date thereof is a day other than the last day of the Interest Period
therefor, the "Default Rate" for such principal shall be, for the period from
and including the due date and to but excluding the last day of the Interest
period therefor, 2% above the interest rate for such Loan as provided in Section
2.11 hereof and, thereafter, the rate provided for above in this definition).
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment including, without limitation, ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture, processing
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, including any rules and regulations promulgated
thereunder.
"ERISA Affiliate" means any corporation or trade or business which is a
member of any group of organizations (i) described in Section 414(b) or (c) of
the Code of which the Borrower is a member, or (ii) solely for purposes of
potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of
the Code and the lien created under Section 302(f) of ERISA and Section 412(n)
of the Code, described in Section 414(m) or (o) of the Code of which the
Borrower is a member.
"Eurodollar Loan" means any Loan when and to the extent the interest
rate therefor is determined on the basis of clause (a) of the definition "Base
Rate."
"Event of Default" has the meaning given such term in Section 9.01.
"Facility Documents" means this Agreement, the Notes, and the
Authorization Letter.
"Federal Funds Rate" means, for any day, the rate per annum (expressed
on a 365/366 day basis of calculation, if the rate on Variable Rate Loans is so
calculated) equal to the weighted average of the rates on overnight federal
funds transactions as published by the Federal Reserve Bank of New York for such
day (or for any day that is not a Banking Day, for the immediately preceding
Banking Day).
"Fixed Rate" means, for any Fixed Rate Loan, a rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) determined by the Agent to be
equal to the sum of (a) the quotient of (i) the Base Rate for such Loan for the
Interest Period therefor divided by (ii) one minus
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<PAGE>
the Reserve Requirement for such Loan for such Interest Period plus (b) if such
Loan is a CD Loan, the Assessment Rate in effect at the commencement of such
Interest Period.
"Fixed Rate Loan" means any Eurodollar or CD Loan.
"Forfeiture Proceeding" means any action, proceeding or investigation
affecting the Borrower or any of its Subsidiaries or Affiliates before any
court, governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or the receipt of notice by any such party
that any of them is a suspect in or a target of any governmental inquiry or
investigation, which may result in an indictment of any of them or the seizure
or forfeiture of any of their property.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect on the date hereof, applied on a basis consistent
with those used in the preparation of the financial statements referred to in
Section 5.05 (except for changes concurred in by the Borrower's independent
public accountants).
"Interest Period" means the period commencing on the date a Loan is
made and ending, (a) as the Borrower may select pursuant to Section 2.07: (i) in
the case of Variable Rate Loans, 30 days thereafter; (ii) in the case of
Eurodollar Loans, on the numerically corresponding day in the first, second,
third or sixth calendar month thereafter, provided that each such Interest
Period which commences on the last Banking Day of a calendar month (or on any
day for which there is no numerically corresponding day in the appropriate
subsequent calendar month) shall end on the last Banking Day of the appropriate
calendar month; and (iii) in the case of CD Loans, on the day 30, 60, 90 or 180
days thereafter; and (b) as the Borrower may request and any Bank may offer
pursuant to Section 2.02 in the case of Money Market Loans, on the day 1 to 360
days thereafter.
"Lending Office" means, for each Bank and for each type of Loan, the
lending office of such Bank (or of an affiliate of such Bank) designated as such
for such type of Loan on its signature page hereof or such other office of such
Bank (or of an affiliate of such Bank) as such Bank may from time to time
specify to the Agent and the Borrower as the office by which its Loans of such
type are to be made and maintained.
"Level Period" means the Level I Period, Level II Period, Level III
Period or Level IV Period and a Level I Period is the lowest Level Period, a
Level II Period is higher than a Level I Period but lower than a Level III
Period, a Level III Period is higher than a Level II Period but lower than a
Level IV Period and a Level IV Period is the highest Level Period.
"Level I Period" means any period during which the Borrower's
outstanding senior unsecured long-term debt securities are rated A- or higher by
Standard & Poor's Corporation, Inc. or A3 or higher by Moody's Investors
Service, Inc.
"Level II Period" means any period during which the Borrower's
outstanding senior unsecured long-term debt securities are rated BBB or higher
but not higher than BBB+ by Standard
-5-
<PAGE>
& Poor's Corporation, Inc. or Baa2 or higher but not higher than Baa1 by Moody's
Investors Service, Inc.
"Level III Period" means any period during which the Borrower's
outstanding senior unsecured long-term debt securities are rated BBB- by
Standard & Poor's Corporation, Inc. or Baa3 by Moody's Investors Service, Inc.
"Level IV Period" means any period during which the Borrower's
outstanding senior unsecured long-term debt securities are rated below BBB- by
Standard & Poor's Corporation, Inc. or below Baa3 by Moody's Investors Service,
Inc.
"Lien" means any lien (statutory or otherwise), security interest,
mortgage, deed of trust, priority, pledge, charge, conditional sale, title
retention agreement, financing lease or other encumbrance or similar right of
others, or any agreement to give any of the foregoing.
"Loan" means a Variable Rate Loan, a Fixed Rate Loan or a Money Market
Loan.
"Margin" means, for any day,
(a) for a Variable Rate Loan, (i) 0%, if such day falls within a Level
I Period, (ii) 0%, if such day falls within a Level II Period, (iii) 1/8 of 1%,
if such day falls within a Level III Period and (iv) 3/8 of 1%, if such day
falls within a Level IV Period;
(b) for a Eurodollar Loan, (i) .300%, if such day falls within a
Level I Period, (ii) .400%, if such day falls within a Level II Period, (iii)
.500%, if such day falls within a Level III Period and (iv) .625%, if such day
falls within a Level IV Period; and
(c) for a CD Loan, (i) .300%, if such day falls within a Level I
Period, (ii) .400%, if such day falls within a Level II Period, (iii) .500%, if
such day falls within a Level III Period and (iv) .625%, if such day falls
within a Level IV Period.
In the event that any two ratings by Standard & Poor's Corporation and Moody's
Investors Service, Inc. results in the existence of more than one Level Period,
the Margin shall be based on the rate set forth in the higher Level Period.
"Material Adverse Effect" means an event or occurrence that could have
a negative impact on: (a) the business, properties, condition (financial or
otherwise), or results of operations of the Borrower and its Subsidiaries, taken
as a whole; (b) the ability of the Borrower to perform its obligations under the
Agreement and the other Facility Documents; or (c) the validity or
enforceability of the Agreement and the other Facility Documents or the rights
or remedies of the Agent or the Banks thereunder. For the purposes of clause
(a) above, negative impact shall mean an actual or contingent reduction (whether
immediate or over time) of 25% or more of the minimum Consolidated Shareholders'
Equity required pursuant to Section 8.01.
"Money Market Borrowing" has the meaning given such term in Section
2.02(c).
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<PAGE>
"Money Market Loans" has the meaning given such term in Section
2.02(c).
"Money Market Note" means a promissory note of the Borrower in the form
of Exhibit B hereto evidencing the Money Market Loans made or remade by a Bank
hereunder.
"Money Market Quote" means an offer by a Bank to make a Money Market
Loan in accordance with Section 2.02(d).
"Money Market Quote Request" has the meaning given such term in Section
2.02(c).
"Money Market Rate" has the meaning given such term in Section 2.02(d).
"Multiemployer Plan" means a Plan defined as such in Section 3(37) of
ERISA to which contributions have been made by the Borrower or any ERISA
Affiliate and which is covered by Title IV of ERISA.
"1988 Credit Agreement" means the Credit Agreement dated as of March
25, 1988 among Safety-Kleen Corp., the banks named therein and The Chase
Manhattan Bank (National Association), as Agent, as amended to the date hereof.
"Note" means a Promissory Note or a Money Market Note.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever nature.
"Plan" means any employee benefit or other plan established or
maintained, or to which contributions have been made, by the Borrower or any
ERISA Affiliate and which is covered by Title IV of ERISA, other than a
Multiemployer Plan.
"Prime Rate" means that rate of interest from time to time announced by
the Principal Reference Bank at its principal office as its prime commercial
lending rate.
"Principal Office" means the principal office of the Agent, presently
located at 1 Chase Manhattan Plaza, New York, New York 10081.
"Principal Reference Bank" means The Chase Manhattan Bank, N.A.
"Promissory Note" means a promissory note of the Borrower in the form
of Exhibit A hereto evidencing the Syndicated Loans made or remade by a Bank
hereunder.
"Reference Banks" means The Chase Manhattan Bank, N.A. and The First
National Bank of Chicago.
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<PAGE>
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Regulatory Change" means, with respect to any Bank, any change after
the date of this Agreement in United States federal, state, municipal or foreign
laws or regulations (including without limitation Regulation D) or the adoption
or making after such date of any interpretations, directives or requests
applying to a class of banks including such Bank of or under any United States,
federal, state, municipal or foreign laws or regulations (whether or not having
the force of law) by any court or governmental or monetary authority charged
with the interpretation or administration thereof.
"Required Banks" means, unless and until the Banks have voted to
declare the Commitments to be terminated and to accelerate the Loans pursuant to
Section 9.02, Banks having at least 75% of the aggregate amount of the
Commitments and, at any time after the Banks have voted to exercise such rights,
Banks having at least 75% of the aggregate principal amount of the Loans.
"Reserve Requirement" means, for any Interest Period for any Fixed Rate
Loan, the average maximum rate at which reserves (including any marginal,
supplemental or emergency reserves) are required to be maintained during the
Interest Period for such Loan under Regulation D by member banks of the Federal
Reserve System in New York City with deposits exceeding $1,000,000,000 against
(a) in the case of Eurodollar Loans, "Eurocurrency liabilities" (as such term is
used in Regulation D) or (b) in the case of CD Loans, non-personal Dollar time
deposits in an amount of $100,000 or more. Without limiting the effect of the
foregoing, the Reserve Requirement shall also reflect any other reserves
required to be maintained by such member banks by reason of any Regulatory
Change against (i) any category of liabilities which includes deposits by
reference to which the Fixed Base Rate for Eurodollar or CD Loans (as the case
may be) is to be determined as provided in the definition of "Base Rate" in this
Section 1.01 or (ii) any category of extensions of credit or other assets which
include Eurodollar or CD Loans (as the case may be).
"Restricted Subsidiary" means a Subsidiary (i) which is organized under
the laws of the United State of America (including Puerto Rico) or Canada or
Europe or a jurisdiction thereof, (ii) which conducts substantially all of its
business and has substantially all of its property within the United States of
America and Canada and Europe, (iii) which is not engaged in the business of
financing receivables, making loans or leasing real property, (iv) of which at
least 80% (by number or votes) of the voting stock and 100% of all other capital
stock and equity securities are legally and beneficially owned by the Borrower
and its Restricted Subsidiaries and (v) which has been designated as a
"Restricted Subsidiary" by the Borrower either in Schedule I or by written
notice to the Agent. Any Subsidiary so designated as a "Restricted Subsidiary"
by the Borrower may not thereafter be redesignated as an "Unrestricted
Subsidiary"; and the value of the aggregate assets of all of the Unrestricted
Subsidiaries taken together shall not exceed an amount equal to 25% of the
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<PAGE>
consolidated total assets of the Borrower and its Consolidated Subsidiaries as
shown on the financial statements delivered pursuant to Section 6.08.
"Shareholders' Equity" means shareholders' equity as shown on the
financial statements of the Borrower delivered pursuant to Section 6.08.
"Subsidiary" means, with respect to any Person, any corporation or
other entity of which at least a majority of the securities or other ownership
interests having ordinary voting power (absolutely or contingently) for the
election of directors or other persons performing similar functions are at the
time owned directly or indirectly by such Person.
"Subtotal Statement" has the meaning given such term in Section 6.08.
"Syndicated Loan" means a Variable Rate Loan or a Fixed Rate Loan made
by a Bank pursuant to Section 2.01.
"Termination Date" means, with respect to each Bank, (a) March 24, 1997
or (b) if the Termination Date for such Bank has been extended pursuant to
Section 2.14, the date to which such Termination Date has been extended;
provided that if such date is not a Banking Day, the Termination Date shall be
the next succeeding Banking Day (or, if such next succeeding Banking Day falls
in the next calendar month, the next preceding Banking Day).
"Total Capitalization" means, at any date, the sum of Shareholders'
Equity on such date and Debt of the Borrower and its Restricted Subsidiaries on
such date.
"Unfunded Benefit Liabilities" means, with respect to any Plan, the
amount (if any) by which the present value of all benefit liabilities (within
the meaning of Section 4001(a)(16) of ERISA) under the Plan exceeds the fair
market value of all Plan assets allocable to such benefit liabilities, as
determined on the most recent valuation date of the Plan and in accordance with
the provisions of ERISA for calculating the potential liability of the Borrower
or any ERISA Affiliate under Title IV of ERISA.
"Unrestricted Subsidiary" means every Subsidiary other than a
Restricted Subsidiary.
"Variable Rate" means, for any day, the higher of (a) the Federal Funds
Rate for such day plus 1/2 of 1% and (b) the Prime Rate for such day.
"Variable Rate Loan" means any Loan when and to the extent the interest
rate for such Loan is determined in relation to the Variable Rate. The interest
rate on each Variable Rate Loan shall change when the Variable Rate changes.
Section 1.02. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP, and all financial
data required to be delivered hereunder shall be prepared in accordance with
GAAP.
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ARTICLE 2. THE CREDIT.
Section 2.01. The Syndicated Loans. Subject to the terms and
conditions of this Agreement, each of the Banks severally agrees to make
Syndicated Loans to the Borrower from time to time from and including the date
hereof to but excluding the Termination Date for such Bank up to but not
exceeding the amount of its Commitment. The Syndicated Loans may be outstanding
as Variable Rate Loans or Eurodollar Loans or CD Loans (each a "type" of Loans).
The Loans of each type of each Bank shall be made and maintained at such Bank's
Lending Office for such type of Loans.
Section 2.02. The Money Market Loans.
(a) In addition to borrowings of Syndicated Loans, the Borrower may,
as set forth in this Section 2.02, request the Banks to make offers to make
money market loans to the Borrower as provided below (the "Money Market Loans").
The Banks may, but shall have no obligation to, make such offers and the
Borrower may, but shall have no obligation to, accept any such offers in the
manner set forth in this Section 2.02.
(b) There may be no more than three different Interest Periods for
Money Market Loans outstanding at the same time; and the aggregate principal
amount of all Money Market Loans, together with the aggregate principal amount
of all Syndicated Loans, at any one time outstanding shall not exceed the
aggregate amount of the Commitments at such time.
(c) When the Borrower wishes to request offers to make Money Market
Loans, it shall give the Agent (which shall promptly notify the Banks) notice (a
"Money Market Quote Request") so as to be received no later than 11:00 a.m. New
York time on the Banking Day next preceding the date of borrowing proposed
therein, specifying with respect to each Money Market Loan offer requested:
(i) the proposed date of such borrowing (a "Money Market
Borrowing"), which shall be a Banking Day;
(ii) the aggregate amount of such Money Market Borrowing, which shall
be at least $4,000,000 (and in larger multiples of $1,000,000) but shall not
cause the limits specified in Section 2.02(b) hereof to be violated; and
(iii) the duration of the Interest Period applicable thereto.
The Borrower may request offers to make Money Market Loans to be
borrowed on no more than two different dates and for up to three different
Interest Periods in a single Money Market Quote Request; provided that the
request for each separate Interest Period shall be deemed to be a separate Money
Market Quote Request for a separate Money Market Borrowing. Except
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as otherwise provided in the preceding sentence, no more than three Money Market
Quote Requests shall be given within each calendar week.
(d)(i) Each Bank may submit a money market quote containing an offer
to make a Money Market Loan in response to any Money Market Quote Request (a
"Money Market Quote"); provided that, if the Borrower's request under Section
2.02(c) hereof specified more than one borrowing date or more than one Interest
Period, such Bank may make a single submission containing a separate offer for
each such borrowing date and Interest Period and each such separate offer shall
be deemed to be a separate Money Market Quote. Each Money Market Quote must be
submitted to the Agent not later than 11:00 a.m. New York time on the first
proposed date of borrowing; provided that any Money Market Quote submitted by
the Agent (or its Applicable Lending Office) may be submitted, and may only be
submitted, if the Agent (or such Applicable Lending Office) notifies the
Borrower of the terms of its offer not later than 10:45 a.m. New York time on
the first proposed date of borrowing. Subject to Sections 4.02, 3.01 and 9
hereof, any Money Market Quote so made shall be irrevocable.
(ii) Each Money Market Quote shall specify:
(A) the proposed date of borrowing and the Interest Period
therefor;
(B) the principal amount of the Money Market Loan for which each
such offer is being made, which principal amount (x) may be greater
than or less than the unused Commitment of the quoting Bank, (y) shall
be at least $1,000,000 or a larger multiple of $100,000, and (z) may
not exceed the principal amount of the Money Market Borrowing for which
offers were requested;
(C) the rate of interest per annum (rounded upwards, if
necessary, to the nearest 1/10,000th of 1%), which shall be a set rate
(the "Money Market Rate") offered for each such Money Market Loan;
provided, however, that if more than one Money Market Rate is offered
for such Money Market Loan, the Money Market Quote shall also specify
the portion of the principal amount of the Money Market Loan to which
each such Money Market Rate relates;
(D) the identity of the quoting Bank.
No Money Market Quote shall contain qualifying, conditional or similar language
or propose terms other than or in addition to those set forth in the applicable
Money Market Quote Request and, in particular, no Money Market Quote may be
conditioned upon acceptance by the Borrower of all (or some specified minimum)
of the principal amount of the Money Market Loan for which such Money Market
Quote is being made.
(e) The Agent shall as promptly as practicable after such Money Market
Quote is submitted (but in any event not later than 11:15 a.m. New York Time)
notify the Borrower of the terms (i) of any Money Market Quote submitted by a
Bank that is in accordance with Section 2.02(d) hereof and (ii) of any Money
Market Quote that amends, modifies or is otherwise
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inconsistent with a previous Money Market Quote submitted by such Bank with
respect to the same Money Market Quote Request. Any such subsequent Money Market
Quote shall be disregarded by the Agent unless such subsequent Money Market
Quote is submitted solely to correct a manifest error in such former Money
Market Quote. The Agent's notice to the Borrower shall specify (A) the aggregate
principal amount of the Money Market Borrowing for which offers have been
received and (B) the respective principal amounts and Money Market Rates, as the
case may be, so offered by each Bank (identifying the Bank that submitted each
Money Market Quote).
(f) Not later than 11:30 a.m. New York time on the proposed date of
borrowing the Borrower shall give the Agent irrevocable notice of its acceptance
or nonacceptance of the offers so notified to it pursuant to Section 2.02(e)
hereof and the Agent shall promptly notify each affected Bank. In the case of
acceptance, such notice shall specify the aggregate principal amount of offers
for each Interest Period that are accepted. The Borrower may accept any Money
Market Quote in whole or in part (provided that any Money Market Quote accepted
in part from any Bank shall be at least $1,000,000 and in multiples of
$100,000); provided that:
(i) the aggregate principal amount of each Money Market
Borrowing may not exceed the applicable amount set forth in the related
Money Market Quote Request;
(ii) the aggregate principal amount of each Money Market
Borrowing shall be at least $4,000,000 (and in larger multiples of
$1,000,000) but shall not cause the limits specified in Section 2.02(b)
hereof to be violated;
(iii) acceptance of offers may only be made in ascending order of
Money Market Rates except that should any Banks submit Money Market
Quotes in which the Money Market Rate is within 1/16th of 1% of the
lowest Money Market Rate received by the Agent with respect to that
Money Market Quote Request, the Borrower shall have the right to advise
the Agent that, on a selected basis, it is accepting such Money Market
Quotes from Banks whose Money Market Rates so received by the Agent are
within such range, not necessarily in ascending order, provided that:
(A) the Bank with the lowest Money Market Rate for such Money Market
Quote shall in any event be allocated at least 70% of that portion of
the principal amount to which such Money Market Rate relates quoted by
such lowest bidding Bank in the Money Market Quote; (B) all other
conditions set forth in this Section 2.02(f) hereof are met;
(iv) the Borrower may not accept any offer where the Agent has
advised the Borrower that such offer fails to comply with Section
2.02(d)(ii) hereof or otherwise fails to comply with the requirements
of this Agreement.
Subject to the provisions of Section 2.02(f)(iii), if offers are made by two or
more Banks with the same Money Market Rates for a greater aggregate principal
amount than the amount in respect of which offers are accepted for the related
Interest Period, the principal amount of Money Market Loans in respect of which
such offers are accepted shall be allocated by the Borrower among such
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Banks as nearly as possible (in minimum amounts of $1,000,000 for each Bank and
in multiples of $100,000) in proportion to the aggregate principal amount of
such offers. Determinations by the Borrower of the amounts of Money Market Loans
shall be conclusive in the absence of manifest error.
(g) Any Bank whose offer to make any Money Market Loan has been
accepted shall, not later than 3:00 p.m. New York time on the date specified for
the making of such Loan, make the amount of such Loan available to the Agent at
the Principal Office in immediately available funds. The amount so received by
the Agent shall, subject to the terms and conditions of this Agreement, be made
available to the Borrower on such date by depositing the same, in immediately
available funds, in an account designated to the Agent in writing by the
Borrower.
(h) The amount of any Money Market Loan made by any Bank shall
constitute a utilization of such Bank's Commitment.
Section 2.03. The Notes; Repayment. (a) The Syndicated Loans of each
Bank shall be evidenced by a single promissory note in favor of such Bank in the
form of Exhibit A, dated the date of this Agreement, duly completed and executed
by the Borrower.
(b) The Money Market Loans of each Bank shall be evidenced by a single
promissory note in favor of such Bank in the form of Exhibit B, dated the date
of this Agreement, duly completed and executed by the Borrower.
(c) The Borrower will pay to the Agent for account of each Bank the
principal of each Loan made by such Bank, and each Loan shall mature, on the
last day of the Interest Period therefor.
Section 2.04. Purpose. The Borrower shall use the proceeds of the
Loans for working capital. Such proceeds shall not be used for the purpose,
whether immediate, incidental or ultimate, of buying or carrying "margin stock"
within the meaning of Regulation U.
Section 2.05. Syndicated Borrowings. The Borrower shall give the
Agent notice of each borrowing of a Syndicated Loan to be made hereunder as
provided in Section 2.09. Not later than 1:00 p.m. New York City time on the
date of such borrowing, each Bank shall, through its Lending Office and subject
to the conditions of this Agreement, make the amount of the Syndicated Loan to
be made by it on such day available to the Agent, at the Principal Office and in
immediately available funds for the account of the Borrower. The amount so
received by the Agent shall, subject to the conditions of this Agreement, be
made available to the Borrower, in immediately available funds, by the Agent
crediting an account of the Borrower designated to the Agent in writing by the
Borrower.
Section 2.06. Prepayments. The Borrower shall have the right to
prepay Loans at any time or from time to time; provided that: (a) the Borrower
shall give the Agent notice of each such prepayment as provided in Section 2.09;
(b) Money Market Loans may not be prepaid and (c) Fixed Rate Loans may not be
prepaid, except that, if after the giving effect to any reduction or
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termination of the Commitments pursuant to Section 2.08, the outstanding
aggregate principal amount of the Loans exceeds the aggregate amount of the
Commitments, the Borrower shall pay or repay the Loans on the date of such
reduction or termination in an aggregate principal amount equal to the excess,
together with interest thereon accrued to the date of such payment or repayment
and any amounts payable pursuant to Section 3.05 in connection therewith.
Section 2.07. Interest Periods. In the case of each Loan, the
Borrower shall select an Interest Period of any duration in accordance with the
definition of Interest Period in Section 1.01, subject to the following
limitations: (a) no Interest Period may extend beyond the Termination Date for
each Bank; (b) notwithstanding clause (a) above, no Interest Period for a Fixed
Rate Loan shall have a duration less than one month (in the case of a Eurodollar
Loan) or 30 days (in the case of a CD Loan), and if any such proposed Interest
Period would otherwise be for a shorter period, such Interest Period shall not
be available; (c) if an Interest Period would end on a day which is not a
Banking Day, such Interest Period shall be extended to the next Banking Day,
unless, in the case of a Eurodollar Loan, such Banking Day would fall in the
next calendar month in which event such Interest Period shall end on the
immediately preceding Banking Day; and (d) only five Fixed Rate Loans of each
Bank may be outstanding at any one time.
Section 2.08. Changes of Commitments. (a) The Borrower shall have
the right to reduce or terminate the amount of unused Commitments at any time or
from time to time, provided that: (i) the Borrower shall give notice of each
such reduction or termination to the Agent as provided in Section 2.09; and (ii)
each partial reduction shall be in an aggregate amount at least equal to
$400,000.
(b) The Commitments once reduced or terminated may not be reinstated.
Section 2.09. Certain Notices. Notices by the Borrower to the Agent
of each borrowing pursuant to Section 2.05, each prepayment of a Syndicated Loan
pursuant to Section 2.06 and each reduction or termination of the Commitments
pursuant to Section 2.08(a) shall be irrevocable and shall be effective only if
received by the Agent not later than 12:00 noon New York City time, and (a) in
the case of borrowings and (in the case of Variable Rate Loans) prepayments, (i)
of Variable Rate Loans, given one Banking Day prior thereto; (ii) Eurodollar
Loans, given three Banking Days prior thereto; (iii) CD Loans, given two Banking
Days prior thereto; and (b) in the case of reductions or termination of the
Commitments, given three Banking Days prior thereto. Each such notice shall
specify the Syndicated Loans to be borrowed or prepaid and the amount (subject
to Section 2.10) and type of the Syndicated Loans to be borrowed or prepaid and
the date of borrowing or prepayment (which shall be a Banking Day). Each such
notice of reduction or termination shall specify the amount of the Commitments
to be reduced or terminated. The Agent shall promptly notify the Banks of the
contents of each such notice.
Section 2.10. Minimum Amounts. Except for borrowings of Syndicated
Loans which exhaust the full remaining amount of the Commitments, and
prepayments (in the case of Variable Rate Loans) which result in the prepayment
of all Syndicated Loans, each borrowing and prepayment of principal of Variable
Rate Loans shall be in an amount at least equal to $100,000 for
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each Bank, and each borrowing of Fixed Rate Loans of each type having concurrent
Interest Periods shall be at least equal to $1,000,000 for each Bank.
Section 2.11. Interest. (a) Interest shall accrue on the outstanding
and unpaid principal amount of each Loan for the period from and including the
date of such Loan to but excluding the date such Loan is due at the following
rates per annum: (i) for a Variable Rate Loan, at a variable rate per annum
equal to the Variable Rate plus any Margin, (ii) for a Fixed Rate Loan, at a
fixed rate equal to the Fixed Rate plus the Margin and (iii) for a Money Market
Loan, at a fixed rate equal to Money Market Rate for such Loan for the Interest
Period therefor quoted by the Bank making such Loan in accordance with Section
2.02 hereof. If the principal amount of any Loan and any other amount payable
by the Borrower hereunder or under the Notes shall not be paid when due (at
stated maturity, by acceleration or otherwise), interest shall accrue on such
amount from and including such due date to but excluding the date such amount is
paid in full at the Default Rate.
(b) Interest on each Variable Rate Loan, Fixed Rate Loan or Money
Market Loan shall be calculated on the basis of a year of 360 days for the
actual number of days elapsed. Promptly after the determination of any interest
rate provided for herein or any change therein, the Agent shall notify the
Borrower and the Banks thereof.
(c) Accrued interest shall be due and payable in arrears upon any
payment of principal and on the last day of the Interest Period with respect
thereto and, in the case of an Interest Period greater than three months or 90
days, at three-month (in the case of a Eurodollar Loan) or 90-day (in the case
of a Money Market or CD Loan) intervals after the first day of such Interest
Period; provided that interest accruing at the Default Rate shall be due and
payable from time to time on demand of the Agent.
Section 2.12. Fees. (a) The Borrower agrees to pay to the Agent for
the account of each of the Banks a facility fee on the daily average amount of
such Bank's Commitment (used and unused) for the period from and including the
date of this Agreement to and including the earlier of the date such Commitment
is terminated or the Termination Date for such Bank computed at the rate per
annum equal to (i) .15%, if such day falls within a Level I Period, (ii)
.1875%, if such day falls within a Level II Period, (iii) .25%, if such day
falls within a Level III Period and (iv) .375%, if such day falls within a Level
IV Period. In the event that any two ratings by Standard & Poor's Corporation
and Moody's Investors Service, Inc. results in the existence of more than one
Level Period, the rate per annum shall be based on the rate set forth in the
higher Level Period. Accrued facility fees for each Bank shall be payable in
arrears on the last day of each calendar quarter and on the earlier of the date
the Commitments are terminated and the Termination Date for such Bank.
(b) The Borrower agrees to pay to the Agent for its own account,
annually in advance during the term of this Agreement, an agency fee in an
amount agreed upon by the Agent and the Borrower in the Agent's March 7, 1994
letter to the Borrower.
Section 2.13. Payments Generally. All payments under this Agreement
or the Notes shall be made in Dollars in immediately available funds not later
than 1:00 p.m. New York City time on the relevant dates specified above (each
such payment made after such time on such due date to
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be deemed to have been made on the next succeeding Banking Day) to the Agent's
account number 900-9-000002 maintained at the Principal Office for the account
of the applicable Lending Office of each Bank; provided that, when a new Loan is
to be made by each Bank on a date the Borrower is to repay any principal of an
outstanding Loan, such Bank shall apply the proceeds thereof to the payment of
the principal to be repaid and only an amount equal to the difference between
the principal to be borrowed and the principal to be repaid shall be made
available by such Bank to the Borrower as provided in Section 2.05 or paid by
the Borrower to such Bank pursuant to this Section 2.13, as the case may be. The
Agent, or any Bank for whose account any such payment is to be made, may (but
shall not be obligated to) debit the amount of any such payment which is not
made by such time to any ordinary deposit account of the Borrower with the Agent
or such Bank, as the case may be, and any Bank so doing shall promptly notify
the Agent. The Borrower shall, at the time of making each payment under this
Agreement or the Notes, specify to the Agent the principal or other amount
payable by the Borrower under this Agreement or the Notes to which such payment
is to be applied (and in the event that it fails to so specify, or if a Default
or Event of Default has occurred and is continuing, the Agent may apply such
payment as it may elect in its sole discretion (subject to Section 10.16)). If
the due date of any payment under this Agreement or the Notes would otherwise
fall on a day which is not a Banking Day, such date shall be extended to the
next succeeding Banking Day and interest shall be payable for any principal so
extended for the period of such extension. Each payment received by the Agent
hereunder or under any Note for the account of a Bank shall be paid promptly to
such Bank, in immediately available funds, for the account of such Bank's
Lending Office.
Section 2.14. Extension of Termination Date. The Termination Date for
any Bank may be extended for a period of one year after the date on which the
Termination Date would otherwise have occurred in accordance with the terms of
this Section 2.14 and the definition of Termination Date. If the Borrower
wishes to have the Termination Date for any Bank extended, it must give written
notice by registered mail to the Agent and each of the Banks to such effect
within 30 days following the end of the Borrower's fiscal year. Such notice
shall be in the form attached hereto as Exhibit E. Such Bank may, in its sole
discretion, refuse to extend its Termination Date by giving written notice to
such effect to the Borrower, the Agent and each of the Banks within 45 days
following receipt by such Bank of the Borrower's request. Failure by such Bank
to respond during such 45 day time period will constitute an acceptance of the
Borrower's request. Failure by the Borrower to request an extension shall not
preclude the Borrower from requesting an extension at a later date in accordance
with the provisions of this Section 2.14.
ARTICLE 3. YIELD PROTECTION; ILLEGALITY; ETC.
Section 3.01. Additional Costs. (a) The Borrower shall pay directly
to each Bank from time to time on demand such amounts as such Bank may determine
to be necessary to compensate it for any costs which such Bank determines are
attributable to its making or maintaining any Fixed Rate Loans (or Variable Rate
Loans or Money Market Loans where noted in (ii) below) under this Agreement or
its Notes or its obligation to make any such Loans hereunder, or any reduction
in any amount receivable by such Bank hereunder in respect of any such Loans or
such obligation (such increases in costs and reductions in amounts receivable
being herein called
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"Additional Costs"), resulting from any Regulatory Change which: (i) changes the
basis of taxation of any amounts payable to such Bank under this Agreement or
its Notes in respect of any of such Loans (other than taxes imposed on the
overall net income of such Bank or of its Lending Office for any of such Loans
by the jurisdiction in which such Bank has its principal office or such Lending
Office); (ii) imposes or modifies any minimum capital, capital ratio or similar
requirements relating to any extensions of credit or other assets of, or any
deposits with or other liabilities of, such Bank (including any of such Loans or
any deposits referred to in the definition of "Base Rate" in Section 1.01 and
including any Variable Rate Loans and Money Market Loans); (iii) imposes or
modifies any reserve, special deposit, deposit insurance or assessment relating
to any extensions of credit or other assets of, or any deposits with or other
liabilities of, such Bank (including any of such Loans or any deposits referred
to in the definition of "Base Rate" in Section 1.01); or (iv) imposes any other
condition affecting this Agreement or its Notes (or any of such extensions of
credit or liabilities). Each Bank will notify the Borrower of any event
occurring after the date of this Agreement which will entitle such Bank to
compensation pursuant to this Section 3.01(a) as promptly as practicable after
it obtains knowledge thereof and determines to request such compensation. If any
Bank requests compensation from the Borrower under this Section 3.01(a), or
under Section 3.01(c), the Borrower may, by notice to such Bank (with a copy to
the Agent), suspend the obligation of such Bank to make Loans of the type with
respect to which such compensation is requested (in which case the provisions of
Section 3.04 shall be applicable).
(b) Without limiting the effect of the foregoing provisions of this
Section 3.01, in the event that, by reason of any Regulatory Change, any Bank
either (i) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities of
such Bank which includes deposits by reference to which the interest rate on
Eurodollar or CD Loans is determined as provided in this Agreement or a category
of extensions of credit or other assets of such Bank which includes Eurodollar
or CD Loans or (ii) becomes subject to restrictions on the amount of such a
category of liabilities or assets which it may hold, then, if such Bank so
elects by notice to the Borrower (with a copy to the Agent), the obligation of
such Bank to make Loans of such type hereunder shall be suspended until the date
such Regulatory Change ceases to be in effect (in which case the provisions of
Section 3.04 shall be applicable).
(c) Without limiting the effect of the foregoing provisions of this
Section 3.01 (but without duplication), the Borrower shall pay directly to each
Bank from time to time on request such amounts as such Bank may determine to be
necessary to compensate such Bank for any costs which it determines are
attributable to the maintenance by it or any of its affiliates pursuant to any
law or regulation of any jurisdiction or any interpretation, directive or
request (whether or not having the force of law and whether in effect on the
date of this Agreement or thereafter) of any court or governmental or monetary
authority of capital in respect of its Loans hereunder or its obligation to make
Loans hereunder (such compensation to include, without limitation, an amount
equal to any reduction in return on assets or equity of such Bank to a level
below that which it could have achieved but for such law, regulation,
interpretation, directive or request). Each Bank will notify the Borrower if it
is entitled to compensation pursuant to this Section 3.01(c) as promptly as
practicable after it determines to request such compensation.
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(d) Determinations and allocations by a Bank for purposes of this
Section 3.01 of the effect of any Regulatory Change pursuant to subsections (a)
or (b), or of the effect of capital maintained pursuant to subsection (c), on
its costs of making or maintaining Loans or its obligation to make Loans, or on
amounts receivable by, or the rate of return to, it in respect of Loans or such
obligation, and of the additional amounts required to compensate such Bank under
this Section 3.01, shall be conclusive, provided that such determinations and
allocations are made on a reasonable basis.
Section 3.02. Limitation on Types of Loans. Anything herein to the
contrary notwithstanding, if:
(a) the Agent determines (which determination shall be conclusive) that
quotations of interest rates for the relevant deposits referred to in the
definition of "Base Rate" in Section 1.01 are not being provided in the relevant
amounts or for the relevant maturities for purposes of determining the rate of
interest for any type of Fixed Rate Loans as provided in this Agreement; or
(b) the Required Banks determine (which determination shall be
conclusive) and notify the Agent that the relevant rates of interest referred to
in the definition of "Base Rate" in Section 1.01 upon the basis of which the
rate of interest for any type of Fixed Rate Loans is to be determined do not
adequately cover the cost to the Banks of making or maintaining such Loans;
then the Agent shall give the Borrower and each Bank prompt notice thereof, and
so long as such condition remains in effect, the Banks shall be under no
obligation to make Loans of such type.
Section 3.03. Illegality. Notwithstanding any other provision in this
Agreement, in the event that it becomes unlawful for any Bank or its Lending
Office to honor its obligation to make or maintain Eurodollar Loans hereunder,
then such Bank shall promptly notify the Borrower thereof (with a copy to the
Agent) and such Bank's obligation to make or maintain Eurodollar Loans hereunder
shall be suspended until such time as such Bank may again make and maintain such
affected Loans (in which case the provisions of Section 3.04 shall be
applicable).
Section 3.04. Certain Variable Rate Loans pursuant to Sections 3.01
and 3.03. If the obligations of any Bank to make Loans of a particular type
(Loans of such type being herein called "Affected Loans" and such type being
herein called the "Affected Type") shall be suspended pursuant to Section 3.01
or 3.03, all Loans which would otherwise be made by such Bank as Loans of the
Affected Type shall be made instead as Variable Rate Loans and, if an event
referred to in Section 3.01(b) or 3.03 has occurred and such Bank so requests by
notice to the Borrower (with a copy to the Agent), all Affected Loans of such
Bank then outstanding shall be automatically converted into Variable Rate Loans
on the date specified by such Bank in such notice, and, to the extent that
Affected Loans are so made as (or converted into) Variable Rate Loans, all
payments of principal which would otherwise be applied to such Bank's Affected
Loans shall be applied instead to its Variable Rate Loans.
Section 3.05. Certain Compensation. The Borrower shall pay to the
Agent for the account of each Bank, upon the request of such Bank through the
Agent, such amount or amounts
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as shall be sufficient (in the reasonable opinion of such Bank) to compensate it
for any loss, cost or expense which such Bank determines is attributable to:
(a) any payment of a Fixed Rate Loan made by such Bank on a date other
than the last day of an Interest Period for such Loan (whether by reason of
acceleration or otherwise); or
(b) any failure by the Borrower to borrow a Fixed Rate Loan to be made
by such Bank on the date specified therefor in the relevant notice under Section
2.05.
Without limiting the foregoing, such compensation shall include an
amount equal to the excess, if any, of: (i) the amount of interest which
otherwise would have accrued on the principal amount so paid or not borrowed for
the period from and including the date of such payment or failure to borrow to
but excluding the last day of the Interest Period for such Loan (or, in the case
of a failure to borrow, to but excluding the last day of the Interest Period for
such Loan which would have commenced on the date specified therefor in the
relevant notice) at the applicable rate of interest for such Loan provided for
herein; over (ii) the amount of interest (as reasonably determined by such Bank)
such Bank would have bid in the London interbank market (if such Loan is a
Eurodollar Loan) or the United States secondary certificate of deposit market
(if such Loan is a CD Loan) for Dollar deposits for amounts comparable to such
principal amount and maturities comparable to such period. A determination of
any Bank as to the amounts payable pursuant to this Section 3.05 shall be
conclusive absent manifest error.
ARTICLE 4. CONDITIONS.
Section 4.01. Conditions to Effectiveness. This Agreement will become
effective on the date (the "Effective Date") when the Agent shall have received
each of the following, in form and substance satisfactory to the Agent and its
counsel:
(a) the Notes duly executed by the Borrower;
(b) the Authorization Letter duly executed by the Borrower;
(c) a certificate of the Secretary or Assistant Secretary of the
Borrower, dated the Effective Date, attesting to all corporate action taken by
the Borrower, including resolutions of its Board of Directors authorizing the
execution, delivery and performance of the Facility Documents and each other
document to be delivered pursuant to this Agreement;
(d) a certificate of the Secretary or Assistant Secretary of the
Borrower, dated the Effective Date, certifying the names and true signatures of
the officers of the Borrower authorized to sign the Facility Documents and the
other documents to be delivered by the Borrower under this Agreement;
(e) a certificate of a duly authorized officer of the Borrower, dated
the Effective Date, stating that the representations and warranties in Article 5
are true and correct on such date as
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though made on and as of such date and that no event has occurred and is
continuing which constitutes a Default or Event of Default;
(f) a favorable opinion of counsel for the Borrower, dated the
Effective Date, in substantially the form of Exhibit D and as to such other
matters as the Agent or any Bank may reasonably request;
(g) copies of all agreements and other documents referred to in
Schedule III, to the extent not previously provided under the 1988 Credit
Agreement;
(h) receipt by the Agent of a notice of borrowing in an amount at least
equal to the aggregate outstanding amount owing to the banks under the 1988
Credit Agreement;
(i) receipt by the Agent of irrevocable instructions from the Borrower
to use the proceeds of the first borrowing on or after the Effective Date to
repay in full all amounts owing under the 1988 Credit Agreement; and
(j) receipt by the Agent of a notice from the Borrower terminating in
their entirety, as of the Effective Date, the commitments under the 1988 Credit
Agreement (the Banks which are party to the 1988 Credit Agreement hereby waive
compliance with Section 2.08 of the 1988 Credit Agreement to the extent
necessary to permit the Borrower to terminate the commitments under the 1988
Credit Agreement on the Effective Date).
On the Effective Date, the Original Agreement will be automatically
amended and restated in its entirety to read as set forth herein. On and after
the Effective Date the rights and obligations of the parties hereto shall be
governed by this Agreement; provided that the rights and obligations of the
parties hereto with respect to the period prior to the Effective Date shall
continue to be governed by the provisions of the Original Agreement. On or
promptly after the Effective Date, each Bank shall mark each of the notes issued
under the Original Agreement "Renewed", and shall retain such notes as
additional evidence of the indebtedness of the Borrower outstanding under this
Agreement.
Section 4.02. Conditions to Borrowing. The obligations of the Banks
to make any Loan (including the initial Loan on or after the Effective Date)
shall be subject to the further conditions precedent that on the date of such
Loan:
(a) the following statements shall be true:
(i) the representations and warranties contained in Article 5 are true
and correct on and as of the date of such Loan as though made on and as of such
date, provided that the representations and warranties in Section 5.04 and the
final sentence of Section 5.05 need not be true and correct if after such Loan
there is no net increase in the aggregate principal amount outstanding
hereunder; and
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(ii) no Default or Event of Default has occurred and is continuing, or
would result from such Loan; and
(b) the Agent shall have received such approvals, opinions or documents
as the Agent or any Bank may reasonably request; and
(c) the Agent shall have received, prior to the initial Loan, in
consideration of its costs and expenses incurred in the negotiation, preparation
and execution of this Agreement, an arrangement fee in an amount agreed to by
the Agent and the Borrower in the Agent's March 7, 1994 letter to the Borrower.
Section 4.03. Deemed Representations. Each notice of a Loan and
acceptance by the Borrower of the proceeds thereof shall constitute a
representation and warranty that the statements contained in Section 4.02(a) are
true and correct both on the date of such notice and, unless the Borrower
otherwise notifies the Agent prior to such borrowing, as of the date of such
Loan.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES.
The Borrower hereby represents and warrants that:
Section 5.01. Incorporation, Good Standing and Due Qualification.
Each of the Borrower and its Subsidiaries is duly incorporated, validly existing
and in good standing under the laws of the jurisdiction of its incorporation,
has the corporate power and authority to own its assets and to transact the
business in which it is now engaged or proposed to be engaged, and is duly
qualified as a foreign corporation and in good standing under the laws of each
other jurisdiction in which such qualification is required except to the extent
that its failure to be so qualified would not have a material adverse effect on
the condition (financial or otherwise), properties, assets, business or
operations of the Borrower and its Subsidiaries, taken as a whole.
Section 5.02. Corporate Power and Authority; No Conflicts. The
execution, delivery and performance by the Borrower of the Facility Documents
have been duly authorized by all necessary corporate action and do not and will
not: (a) require any consent or approval of its stockholders; (b) contravene
its charter or by-laws; (c) violate any provision of, or require any filing,
registration, consent or approval under, any law, rule, regulation (including,
without limitation, Regulation U), order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to the Borrower
or any of its Subsidiaries or Affiliates; (d) result in a breach of or
constitute a default or require any consent under any indenture or loan or
credit agreement or any other agreement, lease or instrument to which the
Borrower is a party or by which it or its properties may be bound or affected;
(e) result in, or require, the creation or imposition of any Lien, upon or with
respect to any of the properties now owned or hereafter acquired by the
Borrower; or (f) cause the Borrower (or any Subsidiary or Affiliate, as the case
may be) to be in default under any such law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award or any such indenture,
agreement, lease or instrument.
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Section 5.03. Legally Enforceable Agreements. Each Facility Document
is, or when delivered under this Agreement will be, a legal, valid and binding
obligation of the Borrower enforceable against the Borrower in accordance with
its terms, except to the extent that such enforcement may be limited by
applicable bankruptcy, insolvency and other similar laws affecting creditors'
rights generally and by general principles of equity.
Section 5.04. Litigation. There are no actions, suits or proceedings
pending or, to the knowledge of the Borrower, threatened, against or affecting
the Borrower or any of its Subsidiaries before any court, governmental agency or
arbitrator, which may, in the aggregate, have a reasonable likelihood of having
a Material Adverse Effect.
Section 5.05. Financial Statements. The consolidated balance sheet of
the Borrower and its Consolidated Subsidiaries as at January 2, 1993, and the
related consolidated statement of earnings and statement of cash flows and
statement of changes in shareholders' equity of the Borrower and its
Consolidated Subsidiaries for the fiscal year then ended, and the accompanying
footnotes, together with the opinion thereon, of Arthur Andersen & Co.,
independent certified public accountants, and the interim consolidated balance
sheet of the Borrower and its Consolidated Subsidiaries as at September 11,
1993, and the related consolidated statement of earnings and statement of cash
flows and changes in shareholders' equity for the 36 week period then ended,
copies of which have been furnished to each of the Banks, are complete and
correct and fairly present the financial condition of the Borrower and its
Consolidated Subsidiaries as at such dates and the results of the operations of
the Borrower and its Consolidated Subsidiaries for the periods covered by such
statements, all in accordance with GAAP consistently applied (subject to year
end adjustments in the case of the interim financial statements). There are no
liabilities of the Borrower or any of its Consolidated Subsidiaries, fixed or
contingent, which are material but are not reflected in the financial statements
or in the notes thereto or which have not otherwise been disclosed in writing to
the Banks, other than liabilities arising in the ordinary course of business
since September 11, 1993. No information, exhibit or report furnished by the
Borrower to the Banks in connection with the negotiation of this Agreement
contained any material misstatement of fact or omitted to state a material fact
or any fact necessary to make the statements contained therein not materially
misleading. Since September 11, 1993, there has been no change in the business,
properties, prospects, condition (financial or otherwise), or results of
operations of the Borrower which could reasonably be expected to have a Material
Adverse Effect.
Section 5.06. Ownership and Liens. Each of the Borrower and its
Restricted Subsidiaries has title to, or valid leasehold interests in, all of
its properties and assets, real and personal, including the properties and
assets, and leasehold interests reflected in the financial statements referred
to in Section 5.05 (other than any properties or assets disposed of in the
ordinary course of business), and none of the properties and assets owned by the
Borrower or any of its Restricted Subsidiaries and none of its leasehold
interests is subject to any Lien, except as disclosed in such financial
statements or as may be permitted hereunder.
Section 5.07. Taxes. Each of the Borrower and its Subsidiaries has
filed all tax returns (federal, state and local) required to be filed and has
paid all taxes, assessments and governmental charges and levies thereon to be
due, including interest and penalties, except to the
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extent that such failure to file returns or pay taxes and other charges would
not have a material adverse effect on the condition (financial or otherwise),
properties, assets, business or operations of the Borrower and its Subsidiaries,
taken as a whole and except for any assessment that the Borrower and its
Subsidiaries are disputing in good faith and have given notice of such dispute
to the Agent (if such assessment is material in amount). The federal income tax
liability of the Borrower and its Subsidiaries has been audited by the Internal
Revenue Service and has been finally determined and satisfied for all taxable
years up to and including the taxable year ended 1992.
Section 5.08. ERISA. Each Plan, and, to the best knowledge of the
Borrower, each Multiemployer Plan, is in compliance in all material respects
with, and has been administered in all material respects in compliance with, the
applicable provisions of ERISA, the Code and any other applicable Federal or
state law, and no event or condition is occurring or exists concerning which the
Borrower would be under an obligation to furnish a report to the Bank in
accordance with Section 6.08(h) hereof. As of the most recent valuation date
for each Plan, each Plan was "fully funded", which for purposes of this Section
5.08 shall mean that the fair market value of the assets of the Plan is not less
than the present value of the accrued benefits of all participants in the Plan,
computed on a Plan termination basis. To the best knowledge of the Borrower, no
Plan has ceased being fully funded as of the date these representations are made
with respect to any Loan under this Agreement.
Section 5.09. Subsidiaries and Ownership of Stock. Schedule II is a
complete and accurate list of the Subsidiaries of the Borrower, showing the
jurisdiction of incorporation or organization of each Subsidiary and showing the
percentage of the Borrower's ownership of the outstanding stock or other
interest of each such Subsidiary. Other than as listed on Schedule II, all of
the outstanding capital stock or other interest of each such Subsidiary has been
validly issued, is fully paid and nonassessable and is owned by the Borrower
free and clear of all Liens.
Section 5.10. Credit Arrangements. Schedule III is a complete and
correct list of all Debt and guaranties in respect of which the Borrower or any
of its Restricted Subsidiaries is in any manner directly or contingently
obligated and regarding which the maximum principal or face amount outstanding
and which can be outstanding is $1,000,000 or more; and the maximum principal or
face amounts of the credit in question, outstanding and which can be
outstanding, are correctly stated, and all Liens of any nature given or agreed
to be given as security therefor are correctly described or indicated in such
Schedule.
Section 5.11. Operation of Business. Each of the Borrower and its
Subsidiaries possesses all licenses, permits, franchises, patents, copyrights,
trademarks and trade names, or rights thereto, to conduct its business
substantially as now conducted and as presently proposed to be conducted, except
to the extent that the failure to possess such licenses, permits, franchises,
patents, copyrights, trademarks and trade names, or rights thereto would not
have a material adverse effect on the condition (financial or otherwise),
properties, assets, business or operations of the Borrower or any of its
Subsidiaries, and neither the Borrower nor any of its Subsidiaries is in
violation of any valid rights of others with respect to any of the foregoing.
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<PAGE>
Section 5.12. No Default on Outstanding Judgments or Orders. Each of
the Borrower and its Subsidiaries has satisfied all judgments and neither the
Borrower nor any of its Subsidiaries is in default with respect to any judgment,
writ, injunction, decree, rule or regulation of any court, arbitrator or
federal, state, municipal or other governmental authority, commission, board,
bureau, agency or instrumentality, domestic or foreign, except to the extent
that any of the foregoing would not have material adverse effect on the
condition (financial or otherwise), properties, assets, business or operations
of the Borrower and its Subsidiaries, taken as a whole.
Section 5.13. No Defaults on Other Agreements. Neither the Borrower
nor any of its Subsidiaries is a party to any indenture, loan or credit
agreement or any lease or other agreement or instrument or subject to any
charter or corporate restriction which could have a material adverse effect on
the business, properties, assets, operations or conditions, financial or
otherwise, of the Borrower or any of its Subsidiaries, taken as a whole, or the
ability of the Borrower to carry out its obligations under the Facility
Documents. Neither the Borrower nor any of its Subsidiaries is in default in
any respect in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any agreement or instrument
which could have material adverse effect on the condition (financial or
otherwise), properties, assets, business or operations of the Borrower and its
Subsidiaries, taken as a whole.
Section 5.14. Labor Disputes and Acts of God. Neither the business
nor the properties of the Borrower or of any of its Subsidiaries are affected by
any fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance), which could have material
adverse effect on the condition (financial or otherwise), properties, assets,
business or operations of the Borrower and its Subsidiaries, taken as a whole.
Section 5.15. Investment Company Act. Neither the Borrower nor any of
its Restricted Subsidiaries is an "investment company" within the meaning of the
United States Investment Company Act of 1940.
Section 5.16. Partner in a Partnership. Other than as listed in
Schedule IV, as amended by written notice to the Agent from time to time,
neither the Borrower nor any of its Restricted Subsidiaries is a partner in any
partnership.
Section 5.17. Hazardous Materials. The Borrower and each of its
Subsidiaries have obtained all permits, licenses and other authorizations which
are required under all Environmental Laws, except to the extent failure to have
any such permit, license or authorization would not have a Material Adverse
Effect. The Borrower and each of its Subsidiaries are in compliance with the
terms and conditions of all such permits, licenses and authorizations, and are
also in compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in any applicable Environmental Law or in any regulation, code, plan,
order, decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, except to the extent failure to comply would
not have a Material Adverse Effect.
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In addition, except as set forth in Schedule V hereto and except to the
extent that any of the following in subsections (a) through (e) would not have a
Material Adverse Effect:
(a) No notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been filed, no
penalty has been assessed and no investigation or review is pending or
threatened by any governmental or other entity with respect to any alleged
failure by the Borrower or any of its Subsidiaries to have any permit, license
or authorization required in connection with the conduct of the business of the
Borrower or any of its Subsidiaries or with respect to any generation,
treatment, storage, recycling, transportation, release or disposal, or any
release as defined in 42 U.S.C. (S) 9601(22) ("Release"), of any substance
regulated under Environmental Laws ("Hazardous Materials") generated by the
Borrower or any of its Subsidiaries.
(b) Neither the Borrower nor any of its Subsidiaries has handled any
Hazardous Material, other than as a generator, on any property now or previously
owned or leased by the Borrower or any of its Subsidiaries to an extent that it
has, or may reasonably be expected to have, a material adverse effect on the
consolidated financial condition, operations, business or prospects taken as a
whole of the Borrower and its Consolidated Subsidiaries; and
(i) no polychlorinated biphenyls is or has been present at any
property now or previously owned or leased by the Borrower or any of
its Subsidiaries;
(ii) no asbestos is or has been present at any property now or
previously owned or leased by the Borrower or any of its Subsidiaries;
(iii) no Hazardous Materials have been Released, in a reportable
quantity, where such a quantity has been established by statute,
ordinance, rule, regulation or order, at, on or under any property now
or previously owned by the Borrower or any of its Subsidiaries; and
(c) No oral or written notification of a Release of a Hazardous
Material has been filed by or on behalf of the Borrower or any of its
Subsidiaries and no property now or previously owned or leased by the Borrower
or any of its Subsidiaries is listed or proposed for listing on (i) the National
Priorities List promulgated pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, (ii) the
Comprehensive Environmental and Liability Information System, as provided for by
40 C.F.R. (S)300.5, or (iii) any similar state list of sites requiring
investigation or clean-up.
(d) There are no Liens arising under or pursuant to any Environmental
Laws on any of the real property or properties owned or leased by the Borrower
or any of its Subsidiaries, and no government actions have been taken or are in
process which could subject any of such properties to such Liens and neither the
Borrower nor any of its Subsidiaries would be required to place any notice or
restriction relating to the presence of Hazardous Materials at any property
owned by it in any deed to such property.
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<PAGE>
(e) There have been no environmental investigations, studies, audits,
test, reviews or other analyses conducted by or which are in the possession of
the Borrower or any of its Subsidiaries in relation to any property or facility
now or previously owned or leased by the Borrower or any of its Subsidiaries
which have not been made available to the Banks.
Section 5.18. No Forfeiture. Neither the Borrower nor any of its
Subsidiaries or Affiliates is engaged in or proposes to be engaged in the
conduct of any business or activity which is not permitted by any law, rule,
regulation or order (federal, state or local) and no Forfeiture Proceeding
against any of them is pending or threatened.
ARTICLE 6. AFFIRMATIVE COVENANTS.
So long as any of the Notes shall remain unpaid or any Bank shall have
any Commitment under this Agreement, the Borrower shall:
Section 6.01. Maintenance of Existence. Subject to Section 7.08,
preserve and maintain, and cause each of its Subsidiaries to preserve and
maintain, its corporate existence and good standing in the jurisdiction of its
incorporation, and qualify and remain qualified, and cause each of its
Subsidiaries to qualify and remain qualified, as a foreign corporation in each
jurisdiction in which such qualification is required, except to the extent that
its failure to so qualify would not have material adverse effect on the
condition (financial or otherwise), properties, assets, business or operations
of the Borrower and its Consolidated Subsidiaries, taken as a whole.
Section 6.02. Conduct of Business. Continue, and cause each of its
Restricted Subsidiaries to continue, to engage in an efficient and economical
manner in a business of the same general type as conducted by it on the date of
this Agreement.
Section 6.03. Maintenance of Properties. Maintain, keep and preserve,
and cause each of its Restricted Subsidiaries to maintain, keep and preserve,
all of its properties, (tangible and intangible) necessary (in the reasonable
judgment of the Board of Directors of the Borrower or such Subsidiary) or useful
in the proper conduct of its business in good working order and condition,
ordinary wear and tear excepted.
Section 6.04. Maintenance of Records. Keep, and cause each of its
Restricted Subsidiaries to keep, adequate records and books of account, in which
complete entries will be made in accordance with GAAP or, if GAAP is
inapplicable in a jurisdiction, in accordance with accounting methods that are
generally accepted in such jurisdiction of operation, reflecting all financial
transactions of the Borrower and its Restricted Subsidiaries.
Section 6.05. Maintenance of Insurance. Maintain, and cause each of
its Subsidiaries to maintain (including through self-insurance where
appropriate), insurance with financially sound and reputable insurance companies
or associations in such amounts and covering such risks as are usually carried
by companies engaged in the same or a similar business and similarly situated,
which insurance may provide for reasonable deductibility from coverage thereof.
Section 6.06. Compliance with Laws. Comply, and cause each of its
Subsidiaries to comply, in all respects with all applicable laws, rules,
regulations and orders, such compliance to include, without limitation, paying
before the same become delinquent all taxes, assessments and
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governmental charges imposed upon it or upon its property except those being
disputed in good faith.
Section 6.07. Right of Inspection. At any reasonable time (upon at
least one Banking Day's notice) and from time to time, permit the Agent or any
Bank or any agent or representative thereof, to examine and make copies and
abstracts from the records and books of account of, and visit the properties of,
the Borrower and any of its Restricted Subsidiaries, and to discuss the affairs,
finances and accounts of the Borrower and any such Restricted Subsidiary with
any of their respective officers and directors and the Borrower's independent
accountants.
Section 6.08. Reporting Requirements. Furnish directly to each
of the Banks:
(a) As soon as available and in any event within 120 days after the
end of each fiscal year of the Borrower, consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of the end of such fiscal year and
consolidated statement of earnings and statement of cash flows and statement of
shareholders' equity of the Borrower and its Consolidated Subsidiaries for such
fiscal year together with an additional column, on the balance sheet and
statement of earnings only, showing a subtotal for the Borrower and the
Restricted Subsidiaries (the "Subtotal Statement"), all in reasonable detail and
stating in comparative form the respective consolidated figures for the
corresponding date and period in the prior fiscal year and (except as to the
Subtotal Statement which shall be certified by the chief financial officer of
the Borrower) accompanied by an opinion thereon acceptable to the Agent and each
of the Banks by Arthur Andersen & Co. or other independent accountants of
national standing selected by the Borrower. The foregoing statements shall all
be prepared in accordance with GAAP except that the Subtotal Statement is
prepared in accordance with GAAP except that information as to Consolidated
Subsidiaries that are Unrestricted Subsidiaries is not included in such
statement.
(b) As soon as available and in any event within 60 days after the end
of each of the first three quarters or reporting period equivalents of each
fiscal year of the Borrower, consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of the end of such quarter or reporting period and
consolidated statement of earnings and statement of cash flows and statement of
shareholders' equity, of the Borrower and its Consolidated Subsidiaries for the
period commencing at the end of the previous fiscal year and ending with the end
of such reporting period together with an additional column showing the Subtotal
Statement, all in reasonable detail and stating in comparative form the
respective consolidated figures for the corresponding reporting period in the
previous fiscal year and all prepared in accordance with GAAP except that
information as to Consolidated Subsidiaries that are Unrestricted Subsidiaries
is not included in such statements, and certified by the chief financial officer
of the Borrower (subject to year-end adjustments);
(c) promptly upon request by the Agent after receipt of any opinion
that is not unqualified of independent accountants delivered in connection with
the financial statements referred to in (a) above, copies of any reports
submitted to the Borrower or any of its Subsidiaries by independent certified
public accountants in connection with examination of the financial statements of
the Borrower or any such Subsidiary made by such accountants;
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(d) simultaneously with the delivery of the financial statements
referred to above, a certificate of the chief financial officer of the Borrower
(i) certifying that to the best of his knowledge no Default or Event of Default
has occurred and is continuing or, if a Default or Event of Default has occurred
and is continuing, a statement as to the nature thereof and the action which is
proposed to be taken with respect thereto, and (ii) with computations
demonstrating compliance with the covenants contained in Article 8;
(e) simultaneously with the delivery of the annual financial statements
referred to in Section 6.08(a), a certificate of the independent public
accountants who audited such statements to the effect that, in making the
examination necessary for the audit of such statements, they have obtained no
knowledge of any condition or event which constitutes a Default or Event of
Default arising out of noncompliance with any of the provisions of Article 8, or
if such accountants shall have obtained knowledge of any such condition or
event, specifying in such certificate each such condition or event of which they
have knowledge and the nature and status thereof;
(f) promptly after the commencement thereof, notice of all actions,
suits, and proceedings before any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, affecting the
Borrower or any of its Subsidiaries which, if determined adversely to the
Borrower or such Subsidiary, could in the reasonable judgment of the Borrower,
have a material adverse effect on the business, properties, assets, operations
or conditions (financial or otherwise), of the Borrower and its Subsidiaries,
taken as a whole;
(g) as soon as possible and in any event within 10 days after the
Borrower or any of its Subsidiaries knows or should have known of the occurrence
of each Default or Event of Default, a written notice setting forth the details
of such Default or Event of Default and the action which is proposed to be taken
by the Borrower with respect thereto;
(h) as soon as possible, and in any event within ten days after the
Borrower knows or has reason to know that any of the events or conditions
specified below with respect to any Plan or Multiemployer Plan have occurred or
exist, a statement signed by a senior financial officer of the Borrower setting
forth details respecting such event or condition and the action, if any, which
the Borrower or its ERISA Affiliate proposes to take with respect thereto (and a
copy of any report or notice required to be filed with or given to PBGC by the
Borrower or an ERISA Affiliate with respect to such event or condition):
(i) any reportable event, as defined in Section 4043(b) of ERISA,
with respect to a Plan, as to which PBGC has not by regulation waived
the requirement of Section 4043(a) of ERISA that it be notified within
30 days of the occurrence of such event (provided that a failure to
meet the minimum funding standard of Section 412 of the Code or Section
302 of ERISA including, without limitation, the failure to make on or
before its due date a required installment under Section 412(m) of the
Code or Section 302(e) of ERISA, shall be a reportable event regardless
of the issuance of any waivers in accordance with Section 412(d) of the
Code) and any request for a waiver under Section 412(d) of the Code for
any Plan;
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(ii) the distribution under Section 4041 of ERISA of a notice of
intent to terminate any Plan or any action taken by the Borrower or an
ERISA Affiliate to terminate any Plan;
(iii) the institution by PBGC of proceedings under Section 4042
of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by the Borrower or any ERISA
Affiliate of a notice from a Multiemployer Plan that such action has
been taken by PBGC with respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal from a Multiemployer Plan
by the Borrower or any ERISA Affiliate that results in liability under
Section 4201 or 4204 of ERISA (including the obligation to satisfy
secondary liability as a result of a purchaser default) or the receipt
of the Borrower or any ERISA Affiliate of notice from a Multiemployer
Plan that it is in reorganization or insolvency pursuant to Section
4241 or 4245 of ERISA or that it intends to terminate or has terminated
under Section 4041A of ERISA;
(v) the institution of a proceeding by a fiduciary or any
Multiemployer Plan against the Borrower or any ERISA Affiliate to
enforce Section 515 of ERISA, which proceeding is not dismissed within
30 days;
(vi) the adoption of an amendment to any Plan that pursuant to
Section 401(a)(29) of the Code or Section 307 of ERISA would result in
the loss of tax-exempt status of the trust of which such Plan is a part
if the Borrower or an ERISA Affiliate fails to timely provide security
to the Plan in accordance with the provisions of said Sections;
(vii) any event or circumstance exists which may reasonably be
expected to constitute grounds for the Borrower or any ERISA Affiliate
to incur liability under Title IV of ERISA or under Sections 412(c)(11)
or 412(n) of the Code with respect to any Plan; and
(viii) the Unfunded Benefit Liabilities of one or more Plans
increase after the date of this Agreement in an amount which is
material in relation to the financial condition of the Borrower and its
Subsidiaries, on a consolidated basis; provided, however, that such
increase shall not be deemed to be material so long as it does not
exceed during any year period $5,000,000.
(i) Promptly after the request of any Bank, copies of each annual
report filed pursuant to Section 104 of ERISA with respect to each Plan
(including, to the extent required by Section 104 of ERISA, the related
financial and actuarial statements and opinions and other supporting statements,
certifications, schedules and information referred to in Section 103) and each
annual report filed with respect to each Plan under Section 4065 of ERISA;
provided, however, that
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in the case of a Multiemployer Plan, such annual reports shall be furnished only
if they are available to the Borrower or an ERISA Affiliate;
(j) promptly after the sending or filing thereof, copies of all proxy
statements, financial statements and reports which the Borrower or any of its
Subsidiaries sends to its stockholders, and copies of all regular, periodic and
special reports, and all registration statements which the Borrower or any such
Subsidiary files with the Securities and Exchange Commission or any governmental
authority which may be substituted therefor, or with any national securities
exchange; and
(k) such other information respecting the condition or operations,
financial or otherwise, of the Borrower or any of its Subsidiaries as the Agent
or any Bank may from time to time reasonably request.
Section 6.09. No Activities Leading to Forfeiture. (a) Neither the
Borrower nor any of its Subsidiaries or Affiliates shall engage in or propose to
be engaged in the conduct of any business or activity which would violate any
law, rules, regulation or order (federal, state or local) or could result in a
Forfeiture Proceeding.
(b) The Borrower shall furnish to the Banks written notice promptly
after the commencement of or threat of any Forfeiture Proceeding.
ARTICLE 7. NEGATIVE COVENANTS.
So long as any of the Notes shall remain unpaid or any Bank shall have
any Commitment under this Agreement, the Borrower shall not:
Section 7.01. Certain Contingent Liabilities. Assume, endorse or
otherwise be or become directly or contingently responsible or liable, or permit
any of its Restricted Subsidiaries to assume, endorse or otherwise be or become
directly or indirectly responsible or liable (including, but not limited to, an
agreement to purchase any obligation, stock, assets, goods or services or to
supply or advance any funds, assets, goods or services, or an agreement to
maintain or cause such Person to maintain a minimum working capital or net worth
or otherwise to assure the creditors of any Person against loss) for the
obligations of any Person, except:
(a) Any contingent liabilities defined as "Debt";
(b) Reimbursement obligations under standby letters of credit issued
for the benefit of financially sound and reputable insurance companies or
associations which are issuing policies to the Borrower or any of its
Subsidiaries in such amounts and covering such risks as are usually carried by
companies engaged in the same or a similar business and similarly situated; and
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(c) Standby or performance letters of credit (in addition to those
allowed under (b) above) and other contingent liabilities not defined as "Debt"
in an aggregate amount not exceeding 10% of Consolidated Shareholders' Equity.
Section 7.02. Liens. Create, incur, assume or suffer to exist, or
permit any of its Restricted Subsidiaries to create, incur, assume or suffer to
exist, any Lien, upon or with respect to any of its properties, now owned or
hereafter acquired, except:
(a) Liens in favor of the Agent on behalf of the Banks securing the
Loans hereunder;
(b) Liens for taxes or assessments or other government charges or
levies if not yet due and payable or if due and payable if they are being
contested in good faith by appropriate proceedings and for which appropriate
reserves are maintained;
(c) Liens imposed by law, such as mechanic's, materialmen's,
landlord's, warehousemen's and carrier's Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which are not
past due for more than 30 days, or which are being contested in good faith by
appropriate proceedings and for which appropriate reserves have been
established;
(d) Liens under workmen's compensation, unemployment insurance, social
security or similar legislation (other than ERISA);
(e) Liens, deposits or pledges to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money), leases
(permitted under the terms of this Agreement), public or statutory obligations,
surety, stay, appeal, indemnity, performance or other similar bonds, or other
similar obligations arising in the ordinary course of business;
(f) judgment and other similar Liens arising in connection with court
proceedings; provided that the execution or other enforcement of such Liens is
effectively stayed and the claims secured thereby are being actively contested
in good faith and by appropriate proceedings;
(g) easements, rights-of-way, restrictions and other similar
encumbrances which, in the aggregate, do not materially interfere with the
occupation, use and enjoyment by the Borrower or any such Restricted Subsidiary
of the property or assets encumbered thereby in the normal course of its
business or materially impair the value of the property subject thereto;
(h) Liens securing obligations of such a Restricted Subsidiary to the
Borrower or another such Restricted Subsidiary;
(i) purchase money Liens on any property hereafter acquired or the
assumption of any Lien on property existing at the time of such acquisition, or
a Lien incurred in connection with any conditional sale or other title retention
agreement or a Capital Lease; provided that:
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(i) any property subject to any of the foregoing is acquired by
the Borrower or any such Restricted Subsidiary in the ordinary course
of its business and the Lien on any such property is created
contemporaneously with such acquisition;
(ii) the obligation secured by any Lien so created, assumed or
existing shall not exceed 75% of the lesser of cost or fair market
value as of the time of acquisition of the property covered thereby to
the Borrower or such Restricted Subsidiary acquiring the same;
(iii) each such Lien shall attach only to the property so acquired
and fixed improvements thereon; and
(iv) the aggregate amount of the Debt secured by all such Liens
shall not exceed 10% of Consolidated Shareholders' Equity required to
be maintained pursuant to Section 8.01;
(j) Liens existing as of the date of this Agreement, as reported on the
financial statements of the Borrower delivered pursuant to Section 5.05;
(k) additional Liens in an aggregate amount not exceeding 5% of the
Consolidated Shareholders' Equity required to be maintained pursuant to Section
8.01.
Section 7.03. Leases. Create, incur, assume or suffer to exist, or
permit any of its Restricted Subsidiaries to create, incur, assume or suffer to
exist, any obligation as lessee for the rental or hire of any real or personal
property, except: (a) leases existing on the date of this Agreement and any
extensions or renewals thereof; (b) Capital Leases permitted by Section 7.02;
and (c) obligations as lessee under leases for rental payments in any fiscal
year of the Borrower up to an aggregate amount not exceeding 10% of Consolidated
Shareholders' Equity required for such fiscal year pursuant to Section 8.01.
Section 7.04. Investments. Make, or permit any of its Restricted
Subsidiaries to make, any loan or advance to any Person or purchase or otherwise
acquire, or permit any such Restricted Subsidiary to purchase or otherwise
acquire, any capital stock, assets (other than inventory, equipment or real
estate purchased in the ordinary course of business), obligations or other
securities of, make any capital contribution to, or otherwise invest in, or
acquire any interest in, any Person (any of the foregoing being "Investments"),
except: (a) direct obligations of the United States of America or any agency
thereof with maturities of one year or less from the date of acquisition; (b)
commercial paper of a domestic issuer rated at least "A-1" by Standard & Poor's
Corporation or "P-1" by Moody's Investors Service, Inc. or participations (under
asset sales programs) in loans made by banks to borrowers whose commercial paper
is so rated; (c) certificates of deposit with maturities of one year or less
from the date of acquisition issued by any commercial bank operating within the
United States of America having capital and surplus in excess of $150,000,000,
or certificates of deposit with maturities of one year or less from the date of
acquisition and which are covered by Federal Deposit Insurance Corporation
insurance, issued by any commercial bank operating within the United States of
America, without regard to the capital
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and surplus of that bank; (d) for stock, obligations or securities received in
settlement of debts (created in the ordinary course of business) owing to the
Borrower or any such Restricted Subsidiary; (e) any Acceptable Acquisition
permitted by Section 7.09; (f) direct obligations of states or municipalities of
the United States rated at least "A" by Standard & Poor's Corporation or by
Moody's Investors Service, Inc.; (g) other financial market instruments rated at
least "A" by Standard & Poor's Corporation or by Moody's Investors Service, Inc.
or backed by instruments so rated; and (h) other Investments in the aggregate at
any one time not exceeding 10% of Consolidated Shareholders' Equity.
Section 7.05. Sale of Assets. Sell, lease, assign, transfer or
otherwise dispose of, or permit any of its Restricted Subsidiaries to sell,
lease, assign, transfer or otherwise dispose of, any of its now owned or
hereafter acquired assets (including, without limitation, shares of stock and
indebtedness of such Restricted Subsidiaries, receivables and leasehold
interests); except: (a) for inventory disposed of in the ordinary course of
business; (b) the sale or other disposition of assets no longer used or useful
in the conduct of its business; (c) that any such Restricted Subsidiary may
sell, lease, assign, or otherwise transfer its assets to the Borrower; and (d)
other sales or dispositions of assets during any fiscal year which do not in the
aggregate exceed an amount equal to 15% of reported Consolidated Shareholders'
Equity for such fiscal year.
Section 7.06. Stock of Subsidiaries, Etc. Sell or otherwise dispose
of any shares of capital stock of any of its Restricted Subsidiaries, except in
connection with a transaction permitted under Section 7.05 or 7.08, or permit
any such Restricted Subsidiary to issue any additional shares of its capital
stock, except directors' qualifying shares.
Section 7.07. Transactions with Affiliates. Enter into any
transaction, including, without limitation, the purchase, sale or exchange of
property or the rendering of any service, with any Affiliate or permit any of
its Subsidiaries to enter into any transaction, including, without limitation,
the purchase, sale or exchange of property or the rendering of any service, with
any Affiliate, except in the ordinary course of and pursuant to the reasonable
requirements of the Borrower's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary than would
obtain in a comparable arm's length transaction with a Person not an Affiliate.
Section 7.08. Mergers, Etc. Merge or consolidate with, or sell,
assign, lease or otherwise dispose of (whether in one transaction or in a series
of transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to, any Person, or acquire all or substantially all of the
assets or the business of any Person (or enter into any agreement to do any of
the foregoing), or permit any of its Subsidiaries to do so, except that: (a)
any such Subsidiary may merge into or transfer assets to the Borrower; (b) any
Subsidiary may merge into or consolidate with or transfer assets to any other
Subsidiary; and (c) the Borrower may effect any Acceptable Acquisition permitted
by Section 7.09.
Section 7.09. Acquisitions. Make any Acquisition other than an
Acceptable Acquisition.
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ARTICLE 8. FINANCIAL COVENANTS.
So long as any of the Notes shall remain unpaid or any Bank shall have
any Commitment under this Agreement:
Section 8.01. Minimum Shareholders' Equity. The Borrower shall
maintain at all times a Consolidated Shareholders' Equity of not less than
$360,000,000 during the period ending with the fiscal quarter ending January 1,
1994 and $360,000,000 plus 50% of the consolidated net earnings, to the extent
that net earnings are greater than $0 (as stated in the financial statements
delivered pursuant to Section 6.08) earned during each fiscal quarter
thereafter, on a cumulative basis, during the period thereafter.
Section 8.02. Debt to Capitalization Ratio. The Borrower shall
maintain at all times a ratio of Consolidated Debt to Consolidated Total
Capitalization of not greater than 0.5 to 1.
Section 8.03. Interest Coverage Ratio. The Borrower shall maintain at
all times a ratio of: (i) consolidated earnings before interest, taxes,
extraordinary items and losses from discontinued operations (as stated in the
financial statements delivered pursuant to Section 6.08) to consolidated net
interest expense (as stated in the financial statements delivered pursuant to
Section 6.08) of not less than 2.5 to 1.
ARTICLE 9. EVENTS OF DEFAULT.
Section 9.01. Events of Default. Any of the following events shall be
an "Event of Default":
(a) the Borrower shall: (i) fail to pay the principal of any Note as
and when due and payable; or (ii) fail to pay interest on any Note or any fee or
other amount due hereunder within three Banking Days after such payment is due
and payable;
(b) any representation or warranty made or deemed made by the Borrower
in this Agreement or in any other Facility Document or which is contained in any
certificate, document, opinion, financial or other statement furnished at any
time under or in connection with any Facility Document shall prove to have been
incorrect in any material respect on or as of the date made or deemed made;
(c) the Borrower shall: (i) fail to perform or observe any term,
covenant or agreement contained in Section 2.04 or Articles 7 or 8; or (ii) fail
to perform or observe any term, covenant or agreement on its part to be
performed or observed (other than the obligations specifically referred to
elsewhere in this Section 9.01) in any Facility Document and such failure shall
continue for 10 consecutive Banking Days;
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(d) the Borrower or any of its Subsidiaries shall: (i) fail to pay any
indebtedness in the maximum principal or face amount outstanding and which can
be outstanding of $1,000,000 individually and $5,000,000 in the aggregate,
including but not limited to indebtedness for borrowed money (other than the
payment obligations described in (a) above), of the Borrower or such Subsidiary,
as the case may be, or any interest or premium thereon, when due (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise); or
(ii) fail to perform or observe any term, covenant or condition on its part to
be performed or observed under any agreement or instrument relating to any such
indebtedness, when required to be performed or observed, if the effect of such
failure to perform or observe is to accelerate, or to permit the acceleration
of, after the giving of notice or passage of time, or both, the maturity of such
indebtedness, unless such failure to perform or observe shall be waived by the
holder of such indebtedness; or any such indebtedness shall be declared to be
due and payable, or required to be prepaid (other than by a regularly scheduled
required prepayment), prior to the stated maturity thereof;
(e) the Borrower or any of its Subsidiaries: (i) shall generally not,
or be unable to, or shall admit in writing its inability to, pay its debts as
such debts become due; or (ii) shall make an assignment for the benefit of
creditors, petition or apply to any tribunal for the appointment of a custodian,
receiver or trustee for it or a substantial part of its assets; or (iii) shall
commence any proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect; or (iv) shall have had any
such petition or application filed or any such proceeding shall have been
commenced, against it, in which an adjudication or appointment is made or order
for relief is entered, or which petition, application or proceeding remains
undismissed for a period of 60 days or more; or (v) by any act or omission shall
indicate its consent to, approval of or acquiescence in any such petition,
application or proceeding or order for relief or the appointment of a custodian,
receiver or trustee for all or any substantial part of its property; or (vi)
shall suffer any such custodianship, receivership or trusteeship to continue
undischarged for a period of 60 days or more;
(f) one or more judgments, decrees or orders for the payment of money
in excess of $5,000,000 in the aggregate shall be rendered against the Borrower
or any of its Subsidiaries and such judgments, decrees or orders shall continue
unsatisfied and in effect for a period of 30 consecutive days without being
vacated, discharged, satisfied or stayed or bonded pending appeal;
(g) any event or condition shall occur or exist with respect to any
Plan or Multiemployer Plan concerning which the Borrower is under an obligation
to furnish a report to the Bank in accordance with Section 6.08(h) hereof and as
a result of such event or condition, together with all other such events or
conditions, the Borrower or any ERISA Affiliate has incurred or in the opinion
of the Bank is reasonably likely to incur a liability to a Plan, a Multiemployer
Plan, the PBGC, or a Section 4042 Trustee (or any combination of the foregoing)
which is material in relation to the financial position of the Borrower and its
Subsidiaries, on a consolidated basis; provided, however, that any such amount
shall not be deemed to be material so long as all such amounts do not exceed in
the aggregate during any year $5,000,000;
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(h) The Unfunded Benefit Liabilities of one or more Plans have
increased after the date of this Agreement in an amount which is material (as
specified in Section 9.01(g) hereof);
(i)(x) any Forfeiture Proceeding shall have been commenced or the
Borrower shall have given any Bank written notice of the commencement of any
Forfeiture Proceeding as provided in Section 6.09(b) or (y) any Bank has a good
faith basis to believe that a Forfeiture Proceeding has been threatened or
commenced; or
(j) a majority of the outstanding voting stock of the Borrower shall be
acquired, directly or indirectly, by a person or entity, or group of persons or
entities acting in concert, who own on the date hereof less than 5% of such
voting stock.
Section 9.02. Remedies. If any Event of Default shall occur and be
continuing, the Agent shall, upon request of the Required Banks, by notice to
the Borrower, (a) declare the Commitments to be terminated, whereupon the same
shall forthwith terminate, and/or (b) declare the outstanding principal of the
Notes, all interest thereon and all other amounts payable under this Agreement
and the Notes to be forthwith due and payable, whereupon the Notes, all such
interest and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower; provided that, in the case of an
Event of Default referred to in Section 9.01(e) or Section 9.01(i)(x) above, the
Commitments shall be immediately terminated, and the Notes, all interest thereon
and all other amounts payable under this Agreement shall be immediately due and
payable without notice, presentment, demand, protest or other formalities of any
kind, all of which are hereby expressly waived by the Borrower.
ARTICLE 10. THE AGENT; RELATIONS AMONG BANKS AND BORROWER.
Section 10.01. Appointment, Powers and Immunities of Agent. Each Bank
hereby irrevocably appoints and authorizes the Agent to act as its agent
hereunder and under any other Facility Document with such powers as are
specifically delegated to the Agent by the terms of this Agreement and any other
Facility Document, together with such other powers as are reasonably incidental
thereto. The Agent shall have no duties or responsibilities except those
expressly set forth in this Agreement and any other Facility Document, and shall
not by reason of this Agreement be a trustee for any Bank. The Agent shall not
be responsible to the Banks for any recitals, statements, representations or
warranties made by the Borrower or any officer or official of the Borrower or
any other Person contained in this Agreement or any other Facility Document, or
in any certificate or other document or instrument referred to or provided for
in, or received by any of them under, this Agreement or any other Facility
Document, or for the value, legality, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Facility Document
or any other document or instrument referred to or provided for herein or
therein, for the perfection or priority of any collateral security for the Loans
or for any failure by the Borrower to perform any of its obligations hereunder
or thereunder. The Agent may employ agents and attorneys-in-fact and shall not
be responsible, except as to money or securities received by it or its
authorized agents, for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable
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care. Neither the Agent nor any of its directors, officers, employees or agents
shall be liable or responsible for any action taken or omitted to be taken by it
or them hereunder or under any other Facility Document or in connection herewith
or therewith, except for its or their own gross negligence or willful
misconduct. The Borrower shall pay any fee agreed to by the Borrower and the
Agent with respect to the Agent's services hereunder.
Section 10.02. Reliance by Agent. The Agent shall be entitled to rely
upon any certification, notice or other communication (including any thereof by
telephone, telex, telegram or cable) believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the proper Person or Persons,
and upon advice and statements of legal counsel, independent accountants and
other experts selected by the Agent. The Agent may deem and treat each Bank as
the holder of the Loans made by it for all purposes hereof unless and until a
notice of the assignment or transfer thereof satisfactory to the Agent signed by
such Bank shall have been furnished to the Agent but the Agent shall not be
required to deal with any Person who has acquired a participation in any Loan
from a Bank. As to any matters not expressly provided for by this Agreement or
any other Facility Document, the Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder in accordance with instructions
signed by the Required Banks, and such instructions of the Required Banks and
any action taken or failure to act pursuant thereto shall be binding on all of
the Banks and any other holder of all or any portion of any Loan.
Section 10.03. Defaults. The Agent shall not be deemed to have
knowledge of the occurrence of a Default or Event of Default (other than the
non-payment of principal of or interest on the Loans to the extent the same is
required to be paid to the Agent for the account of the Banks) unless the Agent
has received notice from a Bank or the Borrower specifying such Default or Event
of Default and stating that such notice is a "Notice of Default." In the event
that the Agent receives such a notice of the occurrence of a Default or Event of
Default, the Agent shall give prompt notice thereof to the Banks (and shall give
each Bank prompt notice of each such non-payment). The Agent shall (subject to
Section 10.08) take such action with respect to such Default or Event of Default
which is continuing as shall be directed by the Required Banks; provided that,
unless and until the Agent shall have received such directions, the Agent may
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best interest of
the Banks; and provided further that the Agent shall not be required to take any
such action which it determines to be contrary to law.
Section 10.04. Rights of Agent as a Bank. With respect to its
Commitment and the Loans made by it, the Agent in its capacity as a Bank
hereunder shall have the same rights and powers hereunder as any other Bank and
may exercise the same as though it were not acting as the Agent, and the term
"Bank" or "Banks" shall, unless the context otherwise indicates, include the
Agent in its capacity as a Bank. The Agent and its affiliates may (without
having to account therefor to any Bank) accept deposits from, lend money to (on
a secured or unsecured basis), and generally engage in any kind of banking,
trust or other business with, the Borrower (and any of its affiliates) as if it
were not acting as the Agent, and the Agent may accept fees and other
consideration from the Borrower for services in connection with this Agreement
or otherwise without having to account for the same to the Banks. Although the
Agent and its affiliates may in the course of such relationships and
relationships with other Persons acquire information about the
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Borrower, its Affiliates and such other Persons, the Agent shall have no duty to
disclose such information to the Banks.
Section 10.05. Indemnification of Agent. The Banks agree to indemnify
the Agent (to the extent not reimbursed under Section 11.04 or under the
applicable provisions of any other Facility Document, but without limiting the
obligations of the Borrower under Section 11.04 or such provisions), ratably in
accordance with the aggregate unpaid principal amount of the Loans made by the
Banks (without giving effect to any participations, in all or any portion of
such Loans, sold by them to any other Person) (or, if no Loans are at the time
outstanding, ratably in accordance with their respective Commitments), for any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against the Agent in
any way relating to or arising out of this Agreement, any other Facility
Document or any other documents contemplated by or referred to herein or the
transactions contemplated hereby or thereby (including, without limitation, the
costs and expenses which the Borrower is obligated to pay under Section 11.04 or
under the applicable provisions of any other Facility Document but excluding,
unless a Default or Event of Default has occurred, normal administrative costs
and expenses incident to the performance of its agency duties hereunder) or the
enforcement of any of the terms hereof or thereof or of any such other documents
or instruments; provided that no Bank shall be liable for any of the foregoing
to the extent they arise from the gross negligence or willful misconduct of the
party to be indemnified.
Section 10.06. Documents. The Agent will forward to each Bank,
promptly after the Agent's receipt thereof, a copy of each report, notice or
other document required by this Agreement or any other Facility Document to be
delivered to the Agent for such Bank.
Section 10.07. Non-Reliance on Agent and Other Banks. Each Bank
agrees that it has, independently and without reliance on the Agent or any other
Bank, and based on such documents and information as it has deemed appropriate,
made its own credit analysis of the Borrower and its Subsidiaries and decision
to enter into this Agreement and that it will, independently and without
reliance upon the Agent or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under this Agreement or
any other Facility Document. The Agent shall not be required to keep itself
informed as to the performance or observance by the Borrower of this Agreement
or any other Facility Document or any other document referred to or provided for
herein or therein or to inspect the properties or books of the Borrower or any
Subsidiary. Except for notices, reports and other documents and information
expressly required to be furnished to the Banks by the Agent hereunder, the
Agent shall not have any duty or responsibility to provide any Bank with any
credit or other information concerning the affairs, financial condition or
business of the Borrower or any Subsidiary (or any of their Affiliates) which
may come into the possession of the Agent or any of its affiliates. The Agent
shall not be required to file this Agreement, any other Facility Document or any
document or instrument referred to herein or therein, for record or give notice
of this Agreement, any other Facility Document or any document or instrument
referred to herein or therein, to anyone.
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Section 10.08. Failure of Agent to Act. Except for action expressly
required of the Agent hereunder, the Agent shall in all cases be fully justified
in failing or refusing to act hereunder unless it shall have received further
assurances (which may include cash collateral) of the indemnification
obligations of the Banks under Section 10.05 in respect of any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action.
Section 10.09. Resignation of Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, the Agent may resign (and
shall resign if replaced as a Bank pursuant to Section 11.02) at any time by
giving written notice thereof to the Banks and the Borrower. Upon any such
resignation, the Required Banks shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Required Banks
and shall have accepted such appointment within 30 days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Banks, appoint a successor Agent. The Required Banks or the retiring
Agent, as the case may be, shall upon the appointment of a successor Agent
promptly so notify the Borrower and the other Banks. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations hereunder. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Article 10 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 the Agent.
Section 10.10. Amendments Concerning Agency Function. The Agent shall
not be bound by any waiver, amendment, supplement or modification of this
Agreement or any other Facility Document which affects its duties hereunder or
thereunder unless it shall have given its prior consent thereto.
Section 10.11. Liability of Agent. The Agent shall not have any
liabilities or responsibilities to the Borrower on account of the failure of any
Bank to perform its obligations hereunder or to any Bank on account of the
failure of the Borrower to perform its obligations hereunder or under any other
Facility Document.
Section 10.12. Transfer of Agency Function. Without the consent of
the Borrower or any Bank, the Agent may at any time or from time to time
transfer its functions as Agent hereunder to any of its offices wherever
located, provided that the Agent shall promptly notify the Borrower and the
Banks thereof.
Section 10.13. Non-Receipt of Funds by the Agent. Unless the Agent
shall have been notified by a Bank or the Borrower (either one as appropriate
being the "Payor") prior to the date on which such Bank is to make payment
hereunder to the Agent of the proceeds of a Loan or the Borrower is to make
payment to the Agent, as the case may be (either such payment being a "Required
Payment"), which notice shall be effective upon receipt, that the Payor does not
intend to make the Required Payment to the Agent, the Agent may assume that the
Required Payment has been made and may, in reliance upon such assumption (but
shall not be required to), make the amount thereof available to the intended
recipient on such date and, if the Payor has not in fact
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made the Required Payment to the Agent, the recipient of such payment (and, if
such recipient is the Borrower and the Payor Bank fails to pay the amount
thereof to the Agent forthwith upon demand, the Borrower) shall, on demand,
repay to the Agent the amount made available to it together with interest
thereon for the period from the date such amount was so made available by the
Agent until the date the Agent recovers such amount at a rate per annum equal to
the average daily Federal Funds Rate for such period.
Section 10.14. Withholding Taxes. Each Bank represents that it is
entitled to receive any payments to be made to it hereunder without the
withholding of any tax and will furnish to the Agent such forms, certifications,
statements and other documents as the Agent may request from time to time to
evidence such Bank's exemption from the withholding of any tax imposed by any
jurisdiction or to enable the Agent to comply with any applicable laws or
regulations relating thereto. Without limiting the effect of the foregoing, if
any Bank is not created or organized under the laws of the United States of
America or any state thereof, in the event that the payment of interest by the
Borrower is treated for U.S. income tax purposes as derived in whole or in part
from sources from within the U.S., such Bank will furnish to the Agent Form 4224
or Form 1001 of the Internal Revenue Service, or such other forms,
certifications, statements or documents, duly executed and completed by such
Bank as evidence of such Bank's exemption from the withholding of U.S. tax with
respect thereto. The Agent shall not be obligated to make any payments
hereunder to such Bank in respect of any Loan or such Bank's Commitment until
such Bank shall have furnished to the Agent the requested form, certification,
statement or document.
Section 10.15. Several Obligations and Rights of Banks. The failure
of any Bank to make any Loan to be made by it on the date specified therefor
shall not relieve any other Bank of its obligation to make its Loan on such
date, but no Bank shall be responsible for the failure of any other Bank to make
a Loan to be made by such other Bank. The amounts payable at any time hereunder
to each Bank shall be a separate and independent debt, and each Bank shall be
entitled to protect and enforce its rights arising out of this Agreement, and it
shall not be necessary for any other Bank to be joined as an additional party in
any proceeding for such purpose.
Section 10.16. Pro Rata Treatment of Loans, Etc. Except to the extent
otherwise provided: (a) each borrowing under Section 2.05 shall be made from
the Banks pro rata according to the amounts of their respective unused
Commitments, (b) each reduction or termination of the amount of the Commitments
under Section 2.08 shall be applied to the Commitments of the Banks, and each
payment of facility fees accruing under Section 2.12 shall be made for the
account of the Banks, pro rata according to the amounts of their respective
Commitments (whether used or unused); and (c) each prepayment and payment of
principal of or interest on Loans of a particular type and a particular Interest
Period shall be made to the Agent for the account of the Banks holding Loans of
such type and Interest Period pro rata in accordance with the respective unpaid
principal amounts of such Loans of such Interest Period held by such Banks.
ARTICLE 11. MISCELLANEOUS.
Section 11.01. Amendments and Waivers. Except as otherwise expressly
provided in this Agreement, any provision of this Agreement may be amended or
modified only by an
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<PAGE>
instrument in writing signed by the Borrower, the Agent and the Required Banks,
or by the Borrower and the Agent acting with the consent of the Required Banks
and any provision of this Agreement may be waived by the Required Banks or by
the Agent acting with the consent of the Required Banks; provided that no
amendment, modification or waiver shall, unless by an instrument signed by all
of the Banks or by the Agent acting with the consent of all of the Banks: (a)
increase or extend the term, or extend the time or waive any requirement for the
reduction or termination, of the Commitments, (b) extend the date fixed for the
payment of principal of or interest on any Loan or any fee payable hereunder,
(c) reduce the amount of any payment of principal thereof or the rate at which
interest is payable thereon or any fee payable hereunder, (d) alter the terms of
this Section 11.01, (e) amend the definition of the term "Required Banks" or (f)
waive any of the documentary conditions precedent set forth in Section 4.01
hereof and provided, further, that any amendment of Article 10 hereof or any
amendment which increases the obligations of the Agent hereunder shall require
the consent of the Agent. No failure on the part of the Agent or any Bank to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof or preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
Section 11.02. Replacement of Banks. By written notice to the Agent at
least 30 days prior to the date such replacement shall become effective (the
"Replacement Date"), the Borrower may choose to replace any of the Banks party
hereto provided, however, that:
(a) Such notice shall specify the Bank or Banks to be replaced, the
replacement bank or banks (the "Replacement Bank") and Replacement Date;
(b) The Replacement Date shall not occur during any Money Market
Interest Period with respect to a Money Market Loan made by the Bank being
replaced or during any Fixed Rate Interest Period;
(c) As a condition precedent to such replacements the Replacement Bank
shall have executed this Agreement and any additional documents deemed necessary
by the Agent;
(d) As a condition precedent to such replacements the Borrower shall
have executed a new Money Market Note and a new Promissory Note for the accounts
of each Replacement Bank and the Bank or Banks being replaced shall have
returned the Money Market Note or Notes and the Promissory Note or Notes to the
Borrower;
(e) This Agreement shall be deemed to be amended to replace the Bank
or Banks to be replaced when all of the conditions listed in this Section 11.02
shall have been complied with to the satisfaction of the Agent and no other
amendment this Agreement shall be necessary to effect the replacement; and
(f) If the Agent is replaced pursuant to the provisions of this
Section 11.02, then the Agent shall, as soon as it is notified of such
replacement, resign as Agent as set forth in Section 10.09.
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<PAGE>
Section 11.03. Usury. Anything herein to the contrary
notwithstanding, the obligations of the Borrower under this Agreement and the
Notes shall be subject to the limitation that payments of interest shall not be
required to the extent that receipt thereof would be contrary to provisions of
law applicable to a Bank limiting rates of interest which may be charged or
collected by such Bank.
Section 11.04. Expenses. The Borrower shall reimburse the Agent and
the Banks on demand for all costs, expenses, and charges (including, without
limitation, fees and charges of external legal counsel for the Agent and each
Bank and costs allocated by their respective internal legal departments)
incurred by the Agent or the Banks in connection with the performance or
enforcement of this Agreement or the Notes and incurred by the Banks (other than
the Agent) in connection with preparation, performance or enforcement of this
Agreement or the Notes. The Borrower agrees to indemnify the Agent and each
Bank and their respective directors, officers, employees and agents from, and
hold each of them harmless against, any and all losses, liabilities, claims,
damages or expenses (each an "Indemnified Liability") incurred by any of them
arising out of or by reason of any investigation or litigation or other
proceedings (including any threatened investigation or litigation or other
proceedings) relating to or arising out of this Agreement or any actual or
proposed use by the Borrower or any Subsidiary of the proceeds of the Loans,
including without limitation, the reasonable fees and disbursements of counsel
incurred in connection with any such investigation or litigation or other
proceedings (but excluding any Indemnified Liability incurred by reason of the
gross negligence or willful misconduct of the Person to be indemnified. The
Borrower agrees that any Indemnified Liability will be promptly paid to the
Person to be indemnified upon the written demand of such Person.
Section 11.05. Survival. The obligations of the Borrower under
Sections 3.01, 3.05 and 11.04 shall survive the repayment of the Loans and the
termination of the Commitments.
Section 11.06. Assignment; Participation. This Agreement shall be
binding upon, and shall inure to the benefit of, the Borrower, the Agent, the
Banks and their respective successors and assigns, except that the Borrower may
not assign or transfer its rights or obligations hereunder. Each Bank may
assign, with the consent of the Borrower (which shall not be unreasonably
withheld), or sell participations in, all or any part of any Loan to another
bank or other entity, in which event (a) in the case of an assignment, upon
notice thereof by the Bank to the Borrower with a copy to the Agent, the
assignee shall have, to the extent of such assignment (unless otherwise provided
therein), the same rights, benefits and obligations as it would have if it were
a Bank hereunder; and (b) in the case of a participation, the participant shall
have no rights under the Facility Documents and all amounts payable by the
Borrower under Article 3 shall be determined as if such Bank had not sold such
participation. The agreement executed by such Bank in favor of the participant
shall not give the participant the right to require such Bank to take or omit to
take any action hereunder except action directly relating to (i) the extension
of a payment date with respect to any portion of the principal of or interest on
any amount outstanding hereunder allocated to such participant, (ii) the
reduction of the principal amount outstanding hereunder or (iii) the reduction
of the rate of interest payable on such amount or any amount of fees payable
hereunder to a rate or amount, as the case may be, below that which the
participant is entitled to receive under its agreement with such Bank. Such
Bank may furnish any information concerning the Borrower in the
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<PAGE>
possession of such Bank from time to time to assignees and participants
(including prospective assignees and participants); provided that such Bank
shall require any such prospective assignee or such participant (prospective or
otherwise) to agree in writing to maintain the confidentiality of such
information. Notwithstanding any other language in this Agreement, any Bank may
at any time assign all or any portion of its rights under this Agreement and the
Notes to a Federal Reserve Bank as collateral in accordance with Regulation A of
the Board of Governors of the Federal Reserve System and the applicable
operating circular of such Federal Reserve Bank. In connection with any
assignment (other than an assignment to any Federal Reserve Bank or an affiliate
of the assigning Bank), the assigning Bank shall pay to the Agent an
administrative fee for processing such assignment in the amount of $3,000.
Section 11.07. Notices. Unless the party to be notified otherwise
notifies the other party in writing as provided in this Section, and except as
otherwise provided in this Agreement and except for notices given pursuant to
Section 2.02 hereof, which shall be given by telephone, confirmed in writing by
telex or telecopy by the close of business on the day the notice is given,
notices shall be given to the Agent by telephone, confirmed by telex, telecopy
or other writing, and to the Banks and to the Borrower by ordinary mail or telex
addressed to such party at its address on the signature page of this Agreement
or any amendment thereto. Notices shall be effective: (a) if given by mail, 72
hours after deposit in the mails with first class postage prepaid, addressed as
aforesaid; and (b) if given by telex, when the telex is transmitted to the telex
number as aforesaid.
Section 11.08. Setoff. The Borrower agrees that, in addition to (and
without limitation of) any right of setoff, banker's lien or counterclaim a Bank
may otherwise have, each Bank shall be entitled, at its option, to offset
balances (general or special, time or demand, provisional or final) held by it
for the account of the Borrower at any of such Bank's offices, in Dollars or in
any other currency, against any amount payable by the Borrower to such Bank
under this Agreement or such Bank's Note which is not paid when due (regardless
of whether such balances are then due to the Borrower), in which case it shall
promptly notify the Borrower and the Agent thereof; provided that such Bank's
failure to give such notice shall not affect the validity thereof. Payments by
the Borrower hereunder shall be made without setoff or counterclaim.
SECTION 11.09. JURISDICTION; IMMUNITIES. (a) THE BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE OR UNITED STATES
FEDERAL COURT SITTING IN NEW YORK COUNTY OVER ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR THE NOTES, AND THE BORROWER HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL COURT. THE BORROWER
IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO THE BORROWER AT ITS
ADDRESS SPECIFIED IN SECTION 11.07. THE BORROWER 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. THE BORROWER FURTHER WAIVES ANY OBJECTION TO
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<PAGE>
VENUE IN SUCH STATE AND ANY OBJECTION TO AN ACTION OR PROCEEDING IN SUCH STATE
ON THE BASIS OF FORUM NON CONVENIENS. THE BORROWER FURTHER AGREES THAT ANY
ACTION OR PROCEEDING BROUGHT AGAINST THE AGENT SHALL BE BROUGHT ONLY IN NEW YORK
STATE OR UNITED STATES FEDERAL COURT SITTING IN NEW YORK COUNTY. THE BORROWER
WAIVES ANY RIGHT IT MAY HAVE TO JURY TRIAL.
(b) Nothing in this Section 11.09 shall affect the right of the Agent
or any Bank to serve legal process in any other manner permitted by law or
affect the right of the Agent or any Bank to bring any action or proceeding
against the Borrower or its property in the courts of any other jurisdictions.
(c) To the extent that the Borrower has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether from
service or notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its property, the Borrower
hereby irrevocably waives such immunity in respect of its obligations under this
Agreement and the Notes.
Section 11.10. Table of Contents; Headings. Any table of contents and
the headings and captions hereunder are for convenience only and shall not
affect the interpretation or construction of this Agreement.
Section 11.11. Severability. The provisions of this Agreement are
intended to be severable. If for any reason any provision of this Agreement
shall be held invalid or unenforceable in whole or in part in any jurisdiction,
such provision shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without in any manner affecting the validity
or enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.
Section 11.12. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any party hereto may execute this Agreement by signing any
such counterpart.
Section 11.13. Integration. The Facility Documents set forth the
entire agreement among the parties hereto relating to the transactions
contemplated thereby and supersede any prior oral or written statements or
agreements with respect to such transactions.
SECTION 11.14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.
Section 11.15. Treatment of Certain Information. The Borrower (a)
acknowledges that services may be offered or provided to it (in connection with
this Agreement or otherwise) by each Bank or by one or more of their respective
subsidiaries or affiliates and (b) acknowledges that information delivered to
each Bank or its subsidiaries or affiliates regarding the Borrower may
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<PAGE>
be shared among such Bank and such subsidiaries and affiliates. This Section
11.15 shall survive the repayment of the Loans and the termination of the
Commitments.
Section 11.16. Addition of Banks. By written notice to the Agent at
least 30 days prior to the date such addition shall become effective (the
"Addition Date"), the Borrower may choose to add one or more banks to this
Agreement; provided, however, that:
(a) Such notice shall specify the bank or banks to be added, the
additional bank or banks (the "Additional Bank") and Addition Date;
(b) The Addition Date shall not occur during any Fixed Rate Interest
Period;
(c) As a condition precedent to such additions the Additional Bank
shall have executed this Agreement and any additional documents deemed necessary
by the Agent;
(d) As a condition precedent to such additions the Borrower shall have
executed a Money Market Note and a Promissory Note for the accounts of each
Additional Bank; and
(e) The aggregate amount of the Commitments after the addition of any
Additional Bank shall not exceed $160,000,000; and
(f) This Agreement shall be deemed to be amended to add the Additional
Bank or Additional Banks to be added when all of the conditions listed in this
Section 11.16 shall have been complied with to the satisfaction of the Agent and
no other amendment this Agreement shall be necessary to effect such addition.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
SAFETY-KLEEN CORP.
By /s/ SAFETY-KLEEN CORP.
---------------------------
Address for Notices:
1000 North Randall Road
Elgin, Illinois 60123
Telex No.: 910 251 4479
Telecopier No.: 708-697-8486
Telephone No.: 708-468-2408
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<PAGE>
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Agent
By /s/ THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION)
---------------------------------------------------------
Address for Notices:
New York Agency
4 Chase Metrotech Center
13th Floor
Brooklyn, New York 11245
Attention: Leonard Selanikio
Telephone No.: (718) 242-7974
Telecopier No.: (718) 242-6909
Telex No.: 6720516 CMPNYA
AMA03AFA
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<PAGE>
Commitment
-----------
$40,000,000 THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By /s/ THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
Lending Office and Address for Notices:
The Chase Manhattan Bank
(National Association)
1 Chase Manhattan Plaza, 5th Floor
New York, New York 10081
Attention: Thomas Daniels
Telephone No: 212-552-1711
Telecopier No.: 212-552-0196 or
212-552-5189
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<PAGE>
Commitment
-----------
$40,000,000 THE NORTHERN TRUST COMPANY
By /s/ THE NORTHERN TRUST COMPANY
Lending Offices:
The Northern Trust Company
50 South LaSalle Street
Chicago, Illinois 60657
Address for Notices:
The Northern Trust Company
50 South LaSalle Street
Chicago, Illinois 60657
Attention: Division Head
Chicago Division
Telephone No.: 312-444-3506
Telecopy No.: 312-444-7028
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<PAGE>
Commitment
-----------
$40,000,000 THE FIRST NATIONAL BANK OF CHICAGO
By /s/ THE FIRST NATIONAL BANK OF CHICAGO
Lending Offices:
The First National Bank of Chicago
One First National Plaza
Chicago, Illinois 60670
Address for Notices:
The First National Bank of Chicago
One First National Plaza
Mail Suite 0173
Chicago, Illinois 60670
Attention: Garland Smith
Telephone No.: 312-732-5791
Telecopy No.: 312-732-4840
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<PAGE>
Commitment
----------
$40,000,000 NBD BANK, N.A.
By /s/ NBD BANK, N.A.
Lending Offices:
NBD Bank, N.A.
611 Woodward Avenue
Detroit, Michigan 48226
Address for Notices:
NBD Bank, N.A.
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Steve Wagner
Telephone No.: 313-225-2762
Telecopy No.: 313-225-1671
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<PAGE>
EXHIBIT A
PROMISSORY NOTE
$[Commitment of Bank X] March 25, 1994
New York, New York
SAFETY-KLEEN CORP. (the "Borrower"), a corporation organized under the
laws of Wisconsin, for value received, hereby promises to pay to the order of
[BANK X] (the "Bank") at the principal office of The Chase Manhattan Bank, N.A.,
at 1 Chase Manhattan Plaza New York, New York 10081 (the "Agent') , for the
account of the appropriate Lending Office of the Bank, the principal sum of
($[Commitment amount of Bank X]) or, if less, the amount of Syndicated Loans
loaned by the Bank to the Borrower pursuant to the Credit Agreement referred to
below, in lawful money of the United States of America and in immediately
available funds, on the date(s) and in the manner provided in said Credit
Agreement. The Borrower also promises to pay interest on the unpaid principal
balance hereof, for the period such balance is outstanding, at said principal
office for the account of said Lending Office, in like money, at the rates of
interest as provided in the Credit Agreement described below, on the date(s) and
in the manner provided in said Credit Agreement.
The date and amount of each Syndicated Loan made by the Bank to the
Borrower under the Credit Agreement referred below, maturity date and each
payment of principal thereof, shall be recorded by the Bank on its books and,
prior to any transfer of this Note (or, at the discretion of the Bank, at any
other time), endorsed by the Bank on the schedule attached hereto or any
continuation thereof.
This is one of the Notes referred to in that certain Amended and
Restated Credit Agreement (as amended from time to time the "Credit Agreement")
dated as of March 25, 1994 among the Borrower, the Banks named therein
(including the Bank) and the Agent and evidences the Syndicated Loans made by
the Bank thereunder. All terms not defined herein shall have the meanings given
to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity of
principal upon the occurrence of certain Events of Default and for prepayments
on the terms and conditions specified therein.
<PAGE>
The Borrower waives presentment, notice of dishonor, protest and any
other notice or formality with respect to this Note.
This Note shall be governed by, and interpreted and construed in
accordance with, the laws of the State of New York.
SAFETY-KLEEN CORP.
By________________________________________
Name:
Title:
<PAGE>
Amount Amount of Balance Notation
Date of Loan Payment Outstanding By
<PAGE>
EXHIBIT B
MONEY MARKET NOTE
$160,000,000
March 25, 1994
New York, New York
SAFETY-KLEEN CORP. (the "Borrower"), a corporation organized under the
laws of Wisconsin, for value received, hereby promises to pay to the order of
[BANK X] (the "Bank") at the principal office of The Chase Manhattan Bank, N.A.,
at 1 Chase Manhattan Plaza New York, New York 10081 (the "Agent"), for the
account of the appropriate Lending Office of the Bank, the principal sum of
$160,000,000 or, if less, the amount of the Money Market Loans loaned by the
Bank to the Borrower pursuant to the Credit Agreement referred to below, in
lawful money of the United States of America and in immediately available funds,
on the date(s) and in the manner provided in said Credit Agreement. The
Borrower also promises to pay interest on the unpaid principal balance hereof,
for the period such balance is outstanding, at said principal office for the
account of said Lending Office, in like money, at the rates of interest as
provided in the Credit Agreement described below, on the date(s) and in the
manner provided in said Credit Agreement.
The date and amount of each Money Market Loan made by the Bank to the
Borrower under the Credit Agreement referred below, maturity date and each
payment of principal thereof, shall be recorded by the Bank on its books and,
prior to any transfer of this Note (or, at the discretion of the Bank, at any
other time), endorsed by the Bank on the schedule attached hereto or any
continuation thereof.
This is one of the Notes referred to in that certain Amended and
Restated Credit Agreement (as amended from time to time the "Credit Agreement")
dated as of March 25, 1994 among the Borrower, the Banks named therein
(including the Bank) and the Agent and evidences the Money Market Loans made by
the Bank thereunder. All terms not defined herein shall have the meanings given
to them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity of
principal upon the occurrence of certain Events of Default and for prepayments
on the terms and conditions specified therein.
<PAGE>
The Borrower waives presentment, notice of dishonor, protest and any
other notice or formality with respect to this Note.
This Note shall be governed by, and interpreted and construed in
accordance with, the laws of the State of New York.
SAFETY-KLEEN CORP.
By__________________________________________________
Name:
Title:
<PAGE>
Amount Amount of Balance Notation
Date of Loan Payment Outstanding By
<PAGE>
EXHIBIT C
__________________, 19__
The Chase Manhattan Bank, N.A.
2 Chase Manhattan Plaza
4th Floor
New York, New York 10081
Attention: Patricia Han
Re: Amended and Restated Credit Agreement dated as of March 25, 1994 (the
"Credit Agreement") among Safety-Kleen Corp., the Banks named therein,
and The Chase Manhattan Bank, N.A., as Agent for said Banks
Ladies and Gentlemen:
In connection with the captioned Credit Agreement, we hereby designate
any one of the following persons to give to you instructions, including notices
required pursuant to the Agreement, orally or by telephone or teleprocess:
NAME (Typewritten)
------------------
__________________________
__________________________
__________________________
__________________________
Instructions may be honored on the oral, telephonic or teleprocess
instructions of anyone purporting to be any one of the above designated persons
even if the instructions are for the benefit of the person delivering them. We
will furnish you with confirmation of each such instruction either by telex
(whether tested or untested) or in writing signed by any person designated above
(including any telecopy which appears to bear the signature of any person
designated above) on the same day that the instruction is provided to you but
your responsibility with respect to any instruction shall not be affected by
your failure to receive such confirmation or by its contents.
You shall be fully protected in, and shall incur no liability to us
for, acting upon any instructions which you in good faith believe to have been
given by any person designated above, and in no event shall you be liable for
special, consequential or punitive damages. In addition, we agree to hold you
and your agents harmless from any and all liability, loss and expense arising
directly or indirectly out of instructions that we provide to you in connection
with the Credit Agreement except
<PAGE>
for liability, loss or expense occasioned by the gross negligence or willful
misconduct of you or your agents.
Upon notice to us, you may, at your option, refuse to execute any
instruction, or part thereof, without incurring any responsibility for any loss,
liability or expense arising out of such refusal if you in good faith believe
that the person delivering the instruction is not one of the persons designated
above or if the instruction is not accompanied by an authentication method that
we have agreed to in writing.
We will promptly notify you in writing of any change in the persons
designated above and, until you have actually received such written notice and
have had a reasonable opportunity to act upon it, you are authorized to act upon
instructions, even though the person delivering them may no longer be
authorized.
Very truly yours,
SAFETY-KLEEN CORP.
By__________________________________________________
Name:
Title:
By__________________________________________________
Name:
Title:
<PAGE>
EXHIBIT D
(Letterhead of counsel to the Borrower)
[Date]
The Chase Manhattan Bank, N.A.
1 Chase Manhattan Plaza
New York, New York 10081
[other Banks]
Ladies and Gentlemen:
We have acted as counsel to Safety-Kleen Corp. (the "Borrower") in
connection with the execution and delivery of that certain Amended and Restated
Credit Agreement (the "Credit Agreement") dated as of March 25, 1994 among the
Borrower, the Banks signatory thereto and The Chase Manhattan Bank, N.A. as
Agent. Except as otherwise defined herein, all terms used herein and defined in
the Credit Agreement or any agreement delivered thereunder shall have the
meanings assigned to them therein.
In connection with this opinion, we have examined executed copies of
the Facility Documents and such other documents, records, agreements and
certificates as we have deemed appropriate. We have also reviewed such matters
of law as we have considered relevant for the purpose of this opinion.
Based upon the foregoing, we are of the opinion that:
1. Each of the Borrower and its Subsidiaries is a corporation duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to own
its assets and to transact the business in which it is now engaged or proposed
to be engaged, and is duly qualified as a foreign corporation and in good
standing under the laws of each other jurisdiction in which such qualification
is required except to the extent that its failure to be so qualified would not
have a material adverse effect on the condition (financial or otherwise),
properties, assets, business or operations of the Borrower and its Subsidiaries,
taken as a whole.
2. The execution, delivery and performance by the Borrower of the
Facility Documents have been duly authorized by all necessary corporate action
and do not and will not: (a) require any consent or approval of its
stockholders; (b) contravene its charter or by-laws; (c) violate
<PAGE>
any provision of, or require any filing, registration, consent or approval
under, any law, rule, regulation (including without limitation, Regulation U),
order, writ, judgment, injunction, decree, determination or award presently in
effect having applicability to the Borrower or any of its Subsidiaries or
affiliates; (d) result in a breach of or constitute a default or require any
consent under any indenture or loan or credit agreement or any other agreement,
lease or instrument to which the Borrower is a party or by which it or its
properties may be bound or affected; (e) result in, or require, the creation or
imposition of any Lien, upon or with respect to any of the properties now owned
or hereafter acquired by the Borrower; or (f) cause the Borrower (or any
Subsidiary or affiliate, as the case may be) to be in default under any such
law, rule, regulation, order, writ, judgment, injunction, decree, determination
or award or any such indenture, agreement, lease or instrument.
3. Each Facility Document is, or when delivered under the Credit
Agreement will be, a legal, valid and binding obligation of the Borrower,
enforceable against the Borrower in accordance with its terms, except to the
extent that such enforcement may be limited by applicable bankruptcy, insolvency
and other similar laws affecting creditors' rights generally.
4. To the best of our knowledge (after due inquiry), there are no
pending or threatened actions, suits or proceedings against or affecting the
Borrower or any of its Subsidiaries before any court, governmental agency or
arbitrator, which may, in the aggregate, have a reasonable likelihood of having
a materially adverse effect on the financial condition of the Borrower and the
Subsidiaries, taken as a whole, or on the ability of the Borrower to perform its
obligations under the Facility Documents.
Very truly yours,
<PAGE>
EXHIBIT E
REQUEST FOR EXTENSION
---------------------
TO THE BANKS LISTED ON THE , 19__
ATTACHED SCHEDULE:
Gentlemen:
Pursuant to Section 2.14 of the Credit Agreement dated as of March 25,
1994 among Safety-Kleen Corp., the Banks named therein and The Chase Manhattan
Bank, N.A., as Agent, as amended (the "Agreement"), we request a one year
extension of your Termination Date (as defined in the Agreement) from
_____________________ to ________________________. We acknowledge that such
extension of your Termination Date will not otherwise constitute an alteration,
amendment or waiver of any other term, condition or covenant contained in the
Agreement.
Failure by you to respond within 45 days following your receipt of this
request will constitute an acceptance of our request.
Very truly yours,
SAFETY-KLEEN CORP.
By:___________________________
[Authorized Officer]
By:___________________________
[Authorized Officer]
<PAGE>
SCHEDULE I
----------
Restricted Subsidiaries of Borrower
-----------------------------------
<TABLE>
<CAPTION>
Jurisdiction of Percentage
Name Incorporation Owned by Borrower
---- --------------- ------------------
<S> <C> <C>
Safety-Kleen Envirosystems Indiana 100%
of Puerto Rico, Inc.
Safety-Kleen Canada, Inc. Canada 100%
</TABLE>
<PAGE>
SCHEDULE II
-----------
Subsidiaries of Borrower
------------------------
<TABLE>
<CAPTION>
Jurisdiction Percentage
of of
Name Incorporation Ownership
---- ------------- ----------
<S> <C> <C>
Do Acquisition Co. Delaware 100%
Nucer, Inc. Delaware 100%
Safety-Kleen Envirosystems Company California 100%
Safety-Kleen Envirosystems
of Puerto Rico Indiana 100%
Phillips Acquisition Corp. Delaware 100%
Phillips Manufacturing Co. Illinois 100%
Breslube USA, Inc. Delaware 100%
Petrocon, Inc. Pennsylvania 100%
Safety-Kleen Oil Services, Inc. Delaware 100%
Safety-Kleen Transportation Co. Delaware 100%
Safety-Kleen International, Inc. Delaware 100%
Dirt Magnet, Inc. Colorado 100%
The Midway Gas and Oil Co. Colorado 100%
Safety-Kleen Aviation, Inc. Delaware 100%
The Solvents Recovery Service
of New Jersey, Inc. New Jersey 100%
Safety-Kleen Canada, Inc. Canada 100%
Safety-Kleen Canada Division Canada 100%
Breslube Division Canada 100%
Translube, Inc. Canada 100%
Safety-Kleen Ireland Limited Ireland 100%
Safety-Kleen U.K. Limited United Kingdom 100%
Safety-Kleen Beteilingungs GmbH Germany 100%
Safety-Kleen GmbH Service, Germany 100%
Recycling, Umweltschutz
Orm Bergold Chemie GmbH
& Co. KG Germany 100%
Orm Chemie GmbH Germany 100%
Niemann Chemie GmbH Germany 100%
Safety-Kleen Grundbesitz GmbH Germany 100%
Safety-Kleen GmbH Germany 100%
Safety-Kleen Belgium, S.A. Belgium 100%
Safety-Kleen France, S.A. France 100%
Safety-Kleen Italia, S.p.A. Italy 100%
</TABLE>
<PAGE>
SCHEDULE III
------------
Credit Arrangements
-------------------
$100,000,000 Revolving Credit Line
Balance at Dec. 28, 1991 -- $21,000,000
9.25% Senior Notes Due Sept. 15, 1999
Balance at Dec. 28, 1991 -- $100,000,000
Can $20,000,000 Credit Line
NBD Bank, Canada
Balance owing at Dec. 28, 1991 -- -0-
Can $10,000,000 Credit Line
Royal Bank of Canada
Balance owing at Dec. 28, 1991 -- Can $2,005,100
Can $5,000,000 Credit Line
Canadian Imperial Bank of Commerce
Balance owing at Dec. 28, 1991 -- -0-
DM 26,100,000 Credit Lines
Deutsche Bank AG
Balance owing at Dec. 28, 1991 -- DM 2,076,000
DM 10,000,000 Credit Line
Dresdner Bank
Balance owing at Dec. 28, 1991 -- DM 9,682,800
DM 10,000,000 Credit Line
Westdeutsche Landesbank
Balance owing at Dec. 28, 1991 -- -0-
Licking County, Ohio 8% Industrial Development
Revenue Bonds, Series 1980
Balance at Dec. 28, 1991 -- $200,000
Lexington County, South Carolina Industrial Development
Revenue Bonds, Series 1991
Balance at Dec. 28, 1991 -- $2,700,000
City of Denton, Texas Industrial Development Authority
Industrial Development Revenue Bonds, Series 1991
Balance at Dec. 28, 1991 -- $2,430,000
USA $160,000,000 Uncommitted Credit Lines
<PAGE>
Balance owing at Dec. 28, 1991 -- $85,000,000
(Pounds)3,000,000 Credit Line
Barclays Bank
Balance owing at Dec. 28, 1991 -- (Pounds)2,401,300
(Pounds)1,000,000 Credit Line
National Westminster Bank PLC
Balance owing at Dec. 28, 1991 -- (Pounds)774,000
<PAGE>
SCHEDULE IV
-----------
Partnerships of Borrower
------------------------
<TABLE>
<CAPTION>
Name Jurisdiction Percentage
---- ------------ ----------
<S> <C> <C>
Compania de Dristribucion de Spain 50%
Disolventes, S.A.
CODISA Disolventes S.A. Portugal 50%
</TABLE>
<PAGE>
SCHEDULE V
----------
Hazardous Materials
-------------------
None
<PAGE>
EXHIBIT 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
The following table sets forth for the periods indicated (i) percentages which
certain items reflected in the financial data bear to consolidated revenue of
the Company and (ii) the percentage increase (decrease) of such items as
compared to the indicated prior period:
<TABLE>
<CAPTION>
Relationship to Period to Period
Consolidated Increase
Revenue (Decrease)
Fiscal Year Fiscal Years
1994 1993 1992 1993-94 1992-93
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue 100% 100% 100% (0.5%) 0.1%
---------------------------------------------------
Costs and Expenses:
Operating costs
and expenses 73.3 76.1 75.0 (4.3) 1.7
Selling and
administrative
expenses 14.2 15.0 14.3 (5.5) 4.9
Restructuring and
special charges -- 28.8 -- N/A N/A
Interest income (0.1) (0.1) (0.2) (16.0) (36.2)
Interest expense 1.9 1.4 1.6 36.9 (11.6)
---------------------------------------------------
89.3 121.2 90.7 (26.7) 33.8
---------------------------------------------------
Earnings (loss) before
income taxes
and cumulative
effect of changes
in accounting
principles 10.7 (21.2) 9.3 N/A N/A
Income taxes 4.4 (8.5) 3.6 N/A N/A
---------------------------------------------------
Net earnings (loss) before
the cumulative
effect of changes
in accounting
principles 6.3% (12.7%) 5.7% N/A N/A
---------------------------------------------------
</TABLE>
In 1987, the Company made two long-term strategic acquisitions to enter the
North American Oil Recovery Service and expand its ability to service large and
small industrial customers' fluid waste disposal needs. Subsequent to these
acquisitions, substantial capital and other infrastructure investments were made
to accommodate future anticipated growth. In 1990, the Company made the
strategic decision to develop and expand its business in Western Europe on a
direct basis. The implementation of this strategy has required investments in
the acquisition of its joint venture partners' interests in operations in
several countries, acquisition of other related businesses and accompanying
infrastructure investments.
Summary of 1992, 1993 and 1994 Financial Results.
In 1992 and 1993, the Company's net earnings before restructuring and special
charges declined 12% and 24%, respectively. However, in 1994, the Company's net
earnings increased 45% over 1993 net earnings before restructuring and special
charges largely as a result of the restructuring plan and change in accounting
estimate for remediation costs implemented at the end of 1993, which are more
fully described below.
The cost increases underlying the 1992 and 1993 earnings declines were largely
the result of strategic and infrastructure investments mentioned above. These
investments were made primarily in anticipation of future long-term growth,
which has been realized more slowly than originally anticipated. The Company
also experienced increased environmental compliance costs.
The Company's 1992 earnings were also adversely affected by costly regulatory
problems encountered at its Puerto Rico operations. Pre-tax charges totalling
approximately $11.4 million ($7.3 million after tax) were taken in 1992 to
record the estimated costs of reducing excess storage of hazardous waste fluids
to permitted levels, providing for possible environmental remediation of waste
water discharges and paying penalties related thereto. Since this time, the
Company has incurred substantially higher costs to process waste-derived fuel
collected from its Puerto Rico customers. These higher costs are due primarily
to the local third-party cement kiln outlet's inability to burn waste-derived
fuels on a sustained basis. This has resulted in additional costs to transport
waste-derived fuels in Puerto Rico to the U.S. mainland for processing.
The Company believes that lower demand for its services has been the primary
cause of flat revenues from 1992 through 1994. A number of factors have
contributed to this lower demand, including waste and cost minimization efforts
by customers, sluggish economies in North America and Europe in 1993 and slower
than expected development of the Company's European operations. In addition,
1994 revenues were impacted by the elimination of certain product and service
lines, as the result of the restructuring plan implemented in the fourth interim
period of 1993.
Cyclonic Parts Cleaner Service.
In order to address the waste minimization concerns of its customers, the
Company began converting its existing Model 16 and 30 red sink-on-a-drum parts
cleaners in the United States to a new cyclonic parts cleaner service in 1993.
The new service employs a premium non-hazardous solvent and a patented cyclonic
separation technology that continuously removes dirt particles from the solvent
during use. As a result, the solvent stays cleaner longer,
20
<PAGE>
[LOGO]
extending the life of the solvent and reducing the number of annual services
required. With the new cyclonic parts cleaner service, customers need service
less frequently and generate less waste on an annual basis, which reduces the
cost of the Parts Cleaner Service to Safety-Kleen and also provides customers
with the potential to reduce their cost.
At December 31, 1994, the Company had placed approximately 103,000 cyclonic
machines at customer locations, and there were approximately 155,000 red Model
16 and 30 parts cleaners remaining in service with customers in the United
States. These 155,000 machines represent approximately 42% of the total
installed base of Company-owned parts cleaners in the United States. The
Company expects to convert a large portion of the remaining Model 16 and 30
parts cleaner machines to the cyclonic parts cleaner in 1995 and 1996.
The Company believes the new cyclonic service will reduce the turnover rate
of its existing parts cleaner base and result in faster penetration of the
market. The Company also anticipates the gross profit margin of its parts
cleaner service will improve as a result of a price increase that was
instituted on the red machine service in October 1994, and gains in
efficiencies associated with a growing base of cyclonic service customers.
In conjunction with the conversion of parts cleaners to new technology and a
comprehensive review of its operations, the Company adopted a restructuring plan
in the fourth interim period of 1993. The restructuring plan is more fully
described below in "Results of Operations" under the subheading "Restructuring
and Special Charges".
In 1994, the Company developed and test marketed a proprietary filtration
device which can be added to larger Safety-Kleen machines and a substantial
portion of customer-owned parts cleaners. The Company believes this filtration
device should provide these customers with the opportunity to receive waste
minimization and cost reduction benefits similar to the cyclonic parts cleaner
service.
OTHER TRENDS, EVENTS AND UNCERTAINTIES
While the Company can benefit from increased governmental regulation, as a
leading environmental services company, it is also the focus of regulatory
scrutiny. The Company's goal is to fully comply with all regulations and thus
avoid any fines or penalties, and the Company has committed significant human
and capital resources to the pursuit of this goal. Nonetheless, given its
extensive operations, the technical aspects of the regulations, and the
varying interpretations of the requirements from jurisdiction to jurisdiction,
the Company may incur fines and penalties as a natural consequence of its
business operations. While the Company does not anticipate that the amount of
fines and penalties will have a material adverse impact on its financial
condition, many environmental laws are written and enforced in a way in which
the potential liability can be large, and it is always possible that the
Company's actual liability in any particular case will prove to be larger than
anticipated by the Company. It is also possible that expenses incurred in any
particular reporting period for remediation costs or for fines, penalties or
judgments, could have a material impact on the Company's results of operations
for that period. The Company paid approximately $4 million, $1 million and $3
million in 1994, 1993 and 1992, respectively, for environmental fines, penalties
and forfeitures.
State and local authorities are increasingly adopting legislation and
regulations which impose stricter operating and performance standards and
increased taxes, assessments and fees upon the generators, transporters and
handlers of hazardous and non-hazardous waste. The Company may or may not be
able to pass on the costs associated with such legislation and regulations to
its customers through price increases.
EFFECTS OF PETROLEUM PRICE CHANGES
Through its Oil Recovery operations, the Company re-refines and markets
petroleum based products at prices positively correlated to crude oil prices
over the long-term. The Company's various service operations (such as its
Parts Cleaner Service) also consume petroleum based products, the cost of which
are positively correlated to crude oil prices over the long-term. Consequently,
any meaningful increase or decrease in crude oil prices will have both a
positive and negative effect on earnings. Generally, the Company's earnings are
positively affected by higher crude oil prices and are negatively affected by
lower crude oil prices. The speed at which the Company is able to raise prices
on its services and products is restricted somewhat by committed price
contracts.
LIQUIDITY AND CAPITAL RESOURCES
Capital spending in 1994, 1993 and 1992 for additions of equipment at
customers and property, excluding business acquisitions, totaled $88 million,
$96 million and $143 million, respectively. These capital expenditures were
financed primarily by cash from operations. Long-term debt decreased $5 million
and $12 million in 1994 and 1993, respectively.
The Company expects its capital expenditures for equipment at customers and
property additions for the full year 1995 will be less than $90 million. The
Company expects to be able to finance these expenditures entirely through
internally generated funds. As more fully described in Note 5 to the
Consolidated Financial Statements,
21
<PAGE>
[LOGO]
the Company and its subsidiaries have lines of credit aggregating approximately
$340 million. As of December 31, 1994, total borrowings under these lines were
$179 million. The Company does expect to lease equipment and property to a
greater extent than it has in the recent past.
Subsequent to year-end 1994, the Company entered into a note purchase
agreement with two insurance companies, under which the Company borrowed $50
million at a fixed interest rate of 8.05% for 3 years expiring in January,
1998. Proceeds from the note were used to repay existing bank borrowings.
A portion of the Company's capital expenditures are related to compliance with
environmental laws and regulations. The Company estimates capital spending of
approximately $7 million in 1995 and $14 million in the years 1996 through 1999
in order to comply with current environmental laws and regulations in connection
with the Company's existing business.
RESULTS OF OPERATIONS
Revenues.
Total revenue derived from the Company's North American services and
European operations for each of the three fiscal years in the period ended
December 31, 1994, are presented below:
<TABLE>
<CAPTION>
Percentage
Increase (Decrease)
(Expressed in thousands) Fiscal Years
1994 1993 1992 1993-94 1992-93
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
North America
Automotive/Retail
Repair Services $237,780 $248,700 $251,069 (4%) (1%)
Industrial Services 222,120 212,940 197,270 4% 8%
Oil Recovery
Services 117,815 113,277 114,671 4% (1%)
Other Service
Areas 128,172 141,117 150,261 (9%) (6%)
--------------------------------------------------------
Total North America 705,887 716,034 713,271 (1%) 0%
Europe 85,380 79,474 81,271 7% (2%)
--------------------------------------------------------
Consolidated $791,267 $795,508 $794,542 (1%) 0%
--------------------------------------------------------
</TABLE>
North American Automotive/Retail Repair Services.
Lack of sales from discontinued allied products accounted for $6.4 million
of the Company's North American Automotive/Retail Repair Services 1994 revenue
decline. Most of the remaining $4.5 million revenue decline was due to a 2%
decline in parts cleaner service volume caused primarily by a lengthening of
the average time interval between services. The average service charge was
flat with 1993. The 1993 revenue decline was caused by an 8% decline in
service volumes, partially offset by service charges which were, on average, 7%
higher in 1993 than 1992. The 1993 service volume decline is primarily a
result of lengthening in the average time interval between services and fewer
parts cleaner machines in service.
North American Industrial Services.
Revenue from the Company's North American Industrial Services includes Fluid
Recovery Service revenue of $109.1 million in 1994, $96.8 million in 1993, and
$85.0 million in 1992. The 13% increase in Fluid Recovery Service revenue in
1994 was due to higher volumes. A 26% increase in the number of drums collected
was partially offset by an 8% decline in the average revenue per drum which can
be attributed to drum quantity and regional discounts offered in 1994. The 14%
revenue increase in 1993 was due almost entirely to a 12% increase in the number
of drums collected. Average revenue per drum increased by 1% in 1993.
The North American Industrial Parts Cleaner Service accounts for the remaining
revenue of $113.0 million in 1994, $116.1 million in 1993 and $112.2 million in
1992. The lower revenue experienced in 1994 was due almost entirely to the lack
of sales from discontinued allied products. The favorable impact of a 5%
increase in the average parts cleaner service charge in 1994 was offset by a 6%
decline in parts cleaner service volume. The Parts Cleaner Service volume
decline in 1994 was primarily due to a lengthening in the average time interval
between services. Increased prices accounted for most of the revenue growth in
1993. Parts cleaner service volumes declined 5% in 1993 primarily as a result of
lengthening in the average time interval between services, partially offsetting
the favorable effect of increased prices.
North American Oil Recovery Services.
The increase in revenue experienced in 1994 from the North American Oil
Recovery Services was primarily due to a 16% increase in the volume of
lubricating oil sales, which was partially offset by 7% lower average lube oil
sales prices. The 1993 revenue decline was primarily the result of lower prices
realized in 1993 for sales of lubricating oil and collection of used oil. The
negative effect of lower prices in 1993 was partially offset by a shift in sales
mix from lower value industrial fuel to higher value re-refined lubricating oil.
This shift was made possible by 12% and 50% capacity expansions at the Company's
East Chicago, Indiana re-refinery in 1993 and 1992, respectively.
North American Other Service Areas.
Revenue from Other Service Areas decreased in 1994 due primarily to the lack
of sales from discontinued allied products and the planned lower volume of
Envirosystems revenue as a result of
22
<PAGE>
[LOGO]
the reduction of toll recycling capacity completed during the restructuring. The
revenue decline in 1993 from 1992 was due primarily to lower revenue from the
Company's Envirosystems operations caused mainly by lower volumes and product
mix.
Europe.
A strengthening of European currencies against the U.S. dollar increased
revenue by approximately $1.4 million in 1994. Exclusive of exchange rate
effects, revenues in Europe increased approximately 6% due to higher volumes and
prices throughout most of the European operations.
The European revenue decline in 1993 was attributable to weaker European
currencies, which lowered 1993 revenues by approximately $9.0 million. Exclusive
of the change in exchange rates, European revenues increased nearly 9%.
Approximately 50% of this 1993 revenue increase is attributable to the
acquisition of the Company's joint venture partner's 50% interest in the Spanish
joint venture completed in September, 1992. The remaining 1993 increase in
European revenues resulted from increased volumes and prices.
Operating Costs and Expenses.
The following table arrays the gross profit margins of the Company's North
American services and European operations for each of the three fiscal years in
the period ended December 31, 1994.
<TABLE>
<CAPTION>
Gross Profit Margin
-----------------------------------------------------
1994 1993 1992
-----------------------------------------------------
<S> <C> <C> <C>
North America
Automotive/Retail
Repair Services 35% 31% 36%
Industrial Services 33% 33% 33%
Oil Recovery Services 11% 8% 9%
Other Service Areas 19% 12% 8%
Total North America 27% 24% 25%
Europe 24% 22% 24%
Consolidated 27% 24% 25%
</TABLE>
North American Automotive/Retail Repair Services.
The North American Automotive/Retail Repair Services gross margin improved in
1994 from 1993 primarily due to the Company's lower cost structure which
resulted from its restructuring plan and the change in accounting estimate for
remediation costs implemented in the fourth interim period of 1993. The gross
margin decline experienced in 1993 resulted primarily from expansion costs
incurred in anticipation of growth in demand for the Company's services that was
not fully realized and higher costs for environmental compliance in its branch,
distribution and recycling networks. These higher fixed expansion and
environmental compliance costs affected all of the North American Services
except for Oil Recovery Services, in varying degrees. These costs had a
particularly adverse impact on the Automotive/Retail Repair Service gross margin
because of the decline in revenue.
North American Industrial Services.
Gross margins for the Company's North American Industrial Services remained
unchanged from 1992 through 1994. The favorable benefits realized from the lower
cost structure in 1994 as a result of the restructuring plan and change in
accounting estimate were offset by lower parts cleaner service volume and lower
average revenue per drum in the Fluid Recovery Service. In 1993, the effect of
higher average prices charged on the Industrial Parts Cleaner Service was offset
by the lower volume of services performed.
North American Oil Recovery Services.
The improvement in the Oil Recovery Services 1994 gross profit margin can be
attributed to a lower cost structure in the automotive used oil collection
business resulting from the Company's restructuring plan that was implemented in
1993, and certain plant processing improvements. The Company implemented a price
increase in the Oil Collection Service in the second quarter of 1994. The 1993
decline in gross profitability of the Company's Oil Recovery Services was
primarily due to lower prices realized in 1993 for sales of lubricating oil and
the collection of used oil.
North American Other Service Areas.
The increase in the North American Other Service Areas gross profit margin
experienced in 1994 resulted primarily from the elimination of the lower margin
allied product businesses contemplated by the Company's restructuring plan. The
1993 improvement in North American Other Service Areas gross profitability is
primarily due to a $10.5 million reduction in the gross loss of the Company's
Puerto Rico Envirosystems operations. This improvement in the Puerto Rico
operations is attributable to charges associated with the 1992 regulatory
problems discussed earlier. A $2.0 million dispute settlement with the State of
Kentucky regarding hazardous waste fees and penalties for alleged violations
also reduced gross profits in 1992. A $2.2 million increase in alternative waste
fuel processing costs in the Company's U.S. Envirosystems operations adversely
affected North American Other Service Areas gross profit margin in 1993.
Europe.
The increase in Europe's 1994 gross profit margin is mainly attributable to
work force reductions, and elimination of lower
23
<PAGE>
[LOGO]
margin businesses in connection with the Company's restructuring plan. The 1993
decline in Europe's gross profit margin was due primarily to more rapid revenue
growth in markets which have lower gross margins.
Selling and Administrative Expenses.
Selling and administrative expenses decreased 5% in 1994, primarily due to
work force reductions implemented as part of the Company's restructuring plan.
Selling and administrative expenses increased 5% in 1993, primarily due to
additional employees and employee expenses and increases in compensation and
benefits.
Restructuring and Special Charges.
During the fourth interim period of 1993, the Company adopted a restructuring
plan based on conversion of its Parts Cleaner Service to new technology and
other strategic actions to better focus the Company on its core environmental
services, reduce its cost structure and improve the value of its services to its
customers. In conjunction with the adoption of this plan, the Company recorded a
restructuring charge of $179 million ($106 million after-tax or $1.84 per
share). The pre-tax restructuring charge of $179 million included $93 million of
asset write-downs and $86 million of other restructuring charges. The after-tax
restructuring charge of $106 million included an estimated $34 million of costs
requiring cash outflows and $72 million of non-cash items. During 1994, the
Company's restructuring activities proceeded substantially in accordance with
the original plan. The Company's restructure reserves declined $25.2 million in
1994 from $84.2 million to $59.0 million. The Company incurred $20 million of
after-tax cash flows in 1994. In 1994, the Company also received a $10.8 million
refund of estimated tax payments made in 1993. The Company still expects to
incur an estimated $13 million of after tax cash flows associated with the
restructuring in 1995 and beyond.
As part of the restructuring plan, the Company provided for the write-down
of the cost of parts cleaner machines expected to be replaced with the new
cyclonic parts cleaners, as well as the cost of converting customers to the new
service.
The Company anticipated that converting a large portion of its existing parts
cleaners to the new cyclonic technology would result in less spent solvent being
collected from the Company's parts cleaner service. Accordingly, the Company
decided to convert many of its branch permitted hazardous waste storage
facilities to transfer locations, thereby eliminating the need for permits
required under the Resource Conservation and Recovery Act (RCRA) and reducing
unnecessary operating costs driven by RCRA-imposed requirements. The non-cash
restructuring charge included the write-off of the capitalized cost of the
permits at these affected facilities. The restructuring charge also included a
write-down of recycling capacity because the collection of less spent solvent
would reduce the amount of solvent recycling capacity required.
Other elements of the restructuring plan included: (i) a work force reduction
of approximately 375 jobs and payment of severance benefits; (ii) a write-down
of inventories and other assets for discontinuing certain minor business
activities, including the sale of allied products; and (iii) accrual of costs
and asset write-downs related to the curtailment or sale of certain operations.
In addition to the restructuring charge, the Company recorded a $50 million
special charge ($30 million after-tax or $.52 per share) representing a change
in estimate for remediation costs. These additional remediation costs were
estimated prior to conducting detailed individual site investigations to
ascertain the existence and extent of contamination, and were related to all
operating and previously closed sites. The Company expects the expenditures for
these remediation costs will occur over several years. Primarily as a result of
the special charge, the Company's expenses for environmental remediation
declined $11.6 million in 1994 compared to 1993. Total accrued environmental
liabilities declined from $66.5 million at the end of 1993 to $49.7 million at
the end of 1994 due to substantial remediation activities in 1994.
The Company experienced an estimated net earnings benefit of $16 million in
1994 directly attributable to cost reductions and other actions resulting from
the restructuring plan and the special charge in 1993.
Interest Income.
The $135,000 and $480,000 declines in interest income in 1994 and 1993,
respectively, are due primarily to a lower average investment balance in 1994
and lower interest rates in 1993.
Interest Expense.
Interest expense increased $4.1 million in 1994 due mainly to increased
interest rates and lower capitalized interest. Interest expense excludes $2.4,
$4.5 and $5.2 million of interest capitalized during 1994, 1993 and 1992,
respectively. Interest expense decreased $1.5 million in 1993 due to lower
rates. The impact of the interest rate swaps executed in the United States and
Germany in 1992 and 1993 and more fully explained in Note 5 to the Consolidated
Financial Statements resulted in interest expense savings of $1.8, $3.6 and $3.2
million in 1994, 1993 and 1992, respectively.
24
<PAGE>
[LOGO]
Income Taxes.
The effective income tax rate was 41% in 1994, 40% in 1993 and 39% in 1992.
The increase in the effective tax rate in 1994 is primarily due to an increase
in non-deductible expenses. The increase in the effective tax rate in 1993 is
primarily due to an increase in the U.S. statutory income tax rate.
Accounting Changes.
The Company adopted Statement of Financial Accounting Standards (SFAS) No. 112
on accounting for post-employment benefits in fiscal year 1993. The effect of
adopting this accounting change was not material. The Company adopted SFAS No.
106 on accounting for post-retirement benefits and SFAS No. 109 on accounting
for income taxes in fiscal year 1992. The cumulative prior years' effect of SFAS
No. 106 reduced net earnings by $2.9 million, or five cents per share increase
in 1992. The cumulative prior years' effect of SFAS No. 109 increased net
earnings by $3.2 million, or six cents per share in 1992. The effects of
adopting SFAS Nos. 106 and 109 are more fully discussed in Notes 7 and 8 to the
Consolidated Financial Statements.
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
FISCAL YEAR
-------------------------------------------------------------------------------------------
1994 1993 1992(4) 1991 1990
(Expressed in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
-------------------------------------------------------------------------------------------
Revenue $ 791,267 $795,508 $ 794,542 $695,001 $588,987
Net earnings (loss) 50,094 (101,346)(1) 45,637(2) 51,551 55,198
Earnings (loss) per share 0.87 (1.76)(1) 0.79(2) 0.90 1.05(3)
Cash dividends per share 0.360 0.360 0.340 0.320 0.267(3)
BALANCE SHEET DATA
-------------------------------------------------------------------------------------------
Current assets 191,394 193,724 188,717 182,275 169,772
Current liabilities 166,305 149,415 140,988 128,156 102,720
Working capital 25,089 44,309 47,729 54,119 67,052
Total assets 1,015,986 995,378 1,006,446 903,824 718,548
Long-term debt 284,125 288,633 300,724 243,724 122,158
Shareholders' equity 396,336 362,664 492,095 463,621 429,833
</TABLE>
(1) Includes restructuring and special charges, net of tax benefit, of $136
million ($229 million pre-tax) or $2.36 per share.
(2) Includes $300,000 ($.01 per share) increase in net earnings from the net
cumulative prior years effect of adopting Statement of Financial Accounting
Standards (SFAS) No. 106 on accounting for post-retirement benefits and SFAS
No. 109 on accounting for income taxes.
(3) Has been restated to reflect the three-for-two stock split on March 7, 1991.
(4) Fiscal year 1992 was a fifty-three week year. All other years presented were
fifty-two weeks.
25
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of Safety-Kleen Corp.:
We have audited the accompanying consolidated balance sheets of Safety-Kleen
Corp. (a Wisconsin corporation) and Subsidiaries as of December 31, 1994 and
January 1, 1994, and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the three fiscal years in the
period ended December 31, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Safety-Kleen Corp. and
Subsidiaries as of December 31, 1994 and January 1, 1994, and the results of
their operations and their cash flows for each of the three fiscal years in the
period ended December 31, 1994, in conformity with generally accepted accounting
principles.
As discussed in notes 7 and 8 to the consolidated financial statements,
effective December 29, 1991, the Company changed its methods of accounting for
post-retirement benefits other than pensions and income taxes.
Chicago, Illinois, Arthur Andersen LLP
February 9, 1995
26
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
Safety-Kleen Corp. and Subsidiaries
For The Years Ended December 31, 1994, January 1, 1994 and January 2, 1993
<TABLE>
<CAPTION>
Fiscal Year
------------------------------------------------------------------------------------------------------------------
1994 1993 1992
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(Expressed in thousands, except per share amounts)
------------------------------------------------------------------------------------------------------------------
REVENUE $ 791,267 $ 795,508 $ 794,542
------------------------------------------------------------------------------------------------------------------
COSTS AND EXPENSES
Operating costs and expenses 579,509 605,815 595,572
Selling and administrative expenses 112,434 119,037 113,433
Restructuring charge -- 179,000 --
Special charge for change in estimate of environmental costs -- 50,000 --
Interest income (711) (846) (1,326)
Interest expense 15,209 11,111 12,571
------------------------------------------------------------------------------------------------------------------
706,441 964,117 720,250
------------------------------------------------------------------------------------------------------------------
EARNINGS (LOSS) BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES 84,826 (168,609) 74,292
INCOME TAXES 34,732 (67,263) 28,955
------------------------------------------------------------------------------------------------------------------
NET EARNINGS (LOSS) BEFORE CUMULATIVE EFFECT
OF CHANGES IN ACCOUNTING PRINCIPLES 50,094 (101,346) 45,337
CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING
PRINCIPLES -- -- 300
------------------------------------------------------------------------------------------------------------------
NET EARNINGS (LOSS) $ 50,094 $(101,346) $ 45,637
------------------------------------------------------------------------------------------------------------------
EARNINGS (LOSS) PER COMMON AND COMMON
EQUIVALENT SHARE
Earnings (loss) before cumulative effect of changes in
accounting principles $ 0.87 $ (1.76) $ 0.78
Cumulative effect of changes in accounting principles -- -- 0.01
------------------------------------------------------------------------------------------------------------------
EARNINGS (LOSS) PER SHARE $ 0.87 $ (1.76) $ 0.79
==================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
27
<PAGE>
CONSOLIDATED BALANCE SHEETS
Safety-Kleen Corp. and Subsidiaries
As of December 31, 1994 and January 1, 1994
<TABLE>
<CAPTION>
December 31, 1994 January 1, 1994
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS (Expressed in thousands)
--------------------------------------------------------------------------------------------------------------------------
CURRENT ASSETS
Cash and cash equivalents $ 21,015 $ 17,375
Trade accounts receivable, less allowances of $8,868 and $8,432, respectively 102,908 98,678
Refundable taxes 6,091 19,500
Inventories 32,137 34,362
Deferred tax assets 12,429 10,527
Prepaid expenses and other 16,814 13,282
--------------------------------------------------------------------------------------------------------------------------
191,394 193,724
--------------------------------------------------------------------------------------------------------------------------
EQUIPMENT AT CUSTOMERS AND COMPONENTS, AT COST, LESS
accumulated depreciation of $38,917 and $30,922, respectively 96,605 63,026
--------------------------------------------------------------------------------------------------------------------------
PROPERTY, AT COST
Land 47,215 46,651
Buildings and improvements 236,125 223,081
Leasehold improvements 29,817 29,274
Machinery and equipment 365,676 341,994
Autos and trucks 132,284 146,190
--------------------------------------------------------------------------------------------------------------------------
811,117 787,190
Less accumulated depreciation and amortization 273,075 233,971
--------------------------------------------------------------------------------------------------------------------------
538,042 553,219
--------------------------------------------------------------------------------------------------------------------------
INTANGIBLE ASSETS, AT COST
Goodwill 87,484 80,913
Other 78,456 63,055
--------------------------------------------------------------------------------------------------------------------------
165,940 143,968
Less accumulated amortization 52,015 37,254
--------------------------------------------------------------------------------------------------------------------------
113,925 106,714
--------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS
Deferred tax assets 71,452 72,194
Other 4,568 6,501
--------------------------------------------------------------------------------------------------------------------------
76,020 78,695
--------------------------------------------------------------------------------------------------------------------------
$1,015,986 $995,378
==========================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
--------------------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
Current portion of long-term debt $ 10 $ 888
Trade accounts payable 61,629 58,417
Accrued salaries, wages and employee benefits 23,178 20,988
Other accrued expenses 28,298 18,836
Restructure liability 24,637 21,742
Insurance reserves 13,484 16,461
Accrued environmental liabilities 11,730 10,736
Income taxes payable 3,339 1,347
--------------------------------------------------------------------------------------------------------------------------
166,305 149,415
--------------------------------------------------------------------------------------------------------------------------
LONG-TERM DEBT, LESS CURRENT PORTION 284,125 288,633
--------------------------------------------------------------------------------------------------------------------------
DEFERRED TAX LIABILITIES 69,545 61,540
--------------------------------------------------------------------------------------------------------------------------
RESTRUCTURE LIABILITY 34,357 62,431
--------------------------------------------------------------------------------------------------------------------------
ACCRUED ENVIRONMENTAL LIABILITIES 37,954 55,768
--------------------------------------------------------------------------------------------------------------------------
OTHER LIABILITIES 27,364 14,927
COMMITMENTS AND CONTINGENT LIABILITIES (NOTE 9)
SHAREHOLDERS' EQUITY
Preferred stock ($.10 par value; authorized 1,000,000 shares; none issued) -- --
Common stock ($.10 par value; authorized 300,000,000 shares;
issued and outstanding 57,754,963 shares and 57,683,756 shares, respectively) 5,775 5,768
Additional paid-in capital 184,789 183,612
Retained earnings 223,569 194,261
Cumulative translation adjustments (17,797) (20,977)
--------------------------------------------------------------------------------------------------------------------------
396,336 362,664
--------------------------------------------------------------------------------------------------------------------------
$1,015,986 $995,378
==========================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
28
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Safety-Kleen Corp. and Subsidiaries
For The Years Ended December 31, 1994, January 1, 1994 and January 2, 1993
Total Common Additional Cumulative
Shareholders' Stock $.10 Paid-In Retained Translation
Equity Par Value Capital Earnings Adjustments
------------------------------------------------------------------------------------------------------------------------------------
(Expressed in thousands)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at December 28, 1991 $463,621 $5,695 $165,437 $290,293 $ 2,196
Net earnings 45,637 -- -- 45,637 --
Cash dividends (19,556) -- -- (19,556) --
Stock options exercised and related tax benefits 6,118 27 6,091 -- --
Stock issued for businesses acquired 11,803 45 11,758 -- --
Change in cumulative translation adjustments (15,528) -- -- -- (15,528)
------------------------------------------------------------------------------------------------------------------------------------
Balance at January 2, 1993 492,095 5,767 183,286 316,374 (13,332)
Net earnings (loss) (101,346) -- -- (101,346) --
Cash dividends (20,767) -- -- (20,767) --
Stock options exercised and related tax benefits 327 1 326 -- --
Change in cumulative translation adjustments (7,645) -- -- -- (7,645)
------------------------------------------------------------------------------------------------------------------------------------
Balance at January 1, 1994 362,664 5,768 183,612 194,261 (20,977)
Net earnings 50,094 -- -- 50,094 --
Cash dividends (20,786) -- -- (20,786) --
Stock options exercised and related tax benefits 1,184 7 1,177 -- --
Change in cumulative translation adjustments 3,180 -- -- -- 3,180
------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1994 $396,336 $5,775 $184,789 $223,569 $(17,797)
====================================================================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Safety-Kleen Corp. and Subsidiaries
For The Years Ended December 31, 1994, January 1, 1994 and January 2, 1993
Fiscal Year
-----------------------------------------------------------------------------------------------------------------------------------
1994 1993 1992
-----------------------------------------------------------------------------------------------------------------------------------
(Expressed in thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 50,094 $(101,346) $ 45,637
-----------------------------------------------------------------------------------------------------------------------------------
Adjustments to reconcile net earnings to net cash provided
by operating activities
Depreciation of equipment at customers and property 63,112 65,808 63,714
Amortization of intangible and other assets 14,618 15,673 12,011
Provisions for doubtful accounts receivable 5,067 6,822 7,053
Change in deferred income tax assets and liabilities, net 22,247 (85,856) (5,193)
Writedown of non-current assets due to restructuring -- 88,028 --
Other (2,440) 10,332 8,812
(Increase) Decrease in assets, net of effects from business acquisitions:
Trade accounts receivable (9,072) (4,601) (3,323)
Inventories 2,472 3,800 4,009
Prepaid expenses and other (2,412) (2,205) (121)
Increase (decrease) in liabilities, net of effects from business acquisitions:
Trade accounts payable and accrued expenses 18,644 (1,312) 15,265
Restructure liability (25,179) 84,173 --
Environmental liabilities (16,820) 47,804 800
Other liabilities 5,575 9,097 743
-----------------------------------------------------------------------------------------------------------------------------------
Total adjustments 75,812 237,563 103,770
-----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 125,906 136,217 149,407
-----------------------------------------------------------------------------------------------------------------------------------
Cash flows used in investing activities:
Equipment at customers additions (42,623) (20,846) (15,361)
Property additions (45,349) (74,991) (128,127)
Payment for business acquisitions, net of cash acquired (1,845) (2,414) (4,928)
Other assets additions, net (7,446) (18,557) (16,594)
-----------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (97,263) (116,808) (165,010)
-----------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net borrowings (payments) under line-of-credit agreements (5,404) (11,634) 40,655
Proceeds from common stock offering and stock option exercises 1,184 326 6,089
Cash paid for dividends (20,786) (20,767) (19,556)
-----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (25,006) (32,075) 27,188
-----------------------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash 3 (524) (1,003)
-----------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in cash and cash equivalents 3,640 (13,190) 10,582
-----------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of year 17,375 30,565 19,983
-----------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 21,015 $ 17,375 $ 30,565
===================================================================================================================================
Supplemental Information:
-----------------------------------------------------------------------------------------------------------------------------------
Cash paid during the year for:
Interest (net of amount capitalized) $ 14,241 $ 10,375 $ 13,053
Income taxes (net of refunds received) $ 10,222 $ 18,603 $ 33,556
-----------------------------------------------------------------------------------------------------------------------------------
Consideration given up and liabilities assumed in
business acquisitions $ 2,261 $ 4,823 $ 30,630
===================================================================================================================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
30
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Safety-Kleen Corp. and Subsidiaries
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The Consolidated Financial Statements include the accounts of the Company
and its subsidiaries after elimination of all significant intercompany balances
and transactions. The Company's fiscal year ends on the Saturday closest to
December 31. Fiscal year 1992 has fifty-three weeks while fiscal years 1994
and 1993 have fifty-two weeks.
Equipment at Customers and Related Depreciation
Equipment at customers is capitalized at manufactured or purchased cost.
Depreciation is computed using the straight-line method over a period of 3 to 13
years, commencing when the units are placed in service.
Property and Related Depreciation
Land, buildings and improvements, leasehold improvements, machinery and
equipment, and autos and trucks are capitalized at cost. Items of an ordinary
repair or maintenance nature are charged directly to operating expense.
Improvement costs are capitalized and charged to operations over the shorter of
the improvement life or the related asset life. Depreciation is computed
principally using the straight-line method over the estimated useful lives as
follows: Buildings and improvements 5 to 40 years; machinery and equipment 2 to
20 years; autos and trucks 4 to 10 years; and leasehold improvements over the
shorter of the 5 to 10 years, or remaining term of the lease.
Intangible Assets and Related Amortization
Goodwill consists primarily of the cost of acquired businesses in excess of
market value of net assets acquired. Goodwill is being amortized on a
straight-line basis over forty years. Subsequent to its acquisition, the
Company continually evaluates whether later events and circumstances have
occurred that indicate the remaining estimated 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 undiscounted net income over the remaining life of the goodwill in
measuring whether the goodwill is recoverable.
Other intangible assets consist primarily of costs to obtain customers,
regulatory operating permits and computer software. Amortization of other
intangible assets is computed using the straight-line method over the expected
life of the related intangible asset, which principally ranges from 3 years to
15 years.
Environmental Remediation Costs and Liabilities
The Company reviews the adequacy of its liability for environmental
remediation on a periodic basis and records adjustments to costs and
liabilities accordingly. In 1993 the Company recorded a $50 million pre-tax
charge for a change in estimate for remediation costs relating to all operating
and previously-closed sites prior to conducting detailed individual site
investigations to ascertain the existence and extent of contamination.
Earnings (Loss) Per Share
Earnings (loss) per share amounts are based on the average shares of common
stock outstanding during each year and common stock equivalents of dilutive
stock options.
Statement of Cash Flows
Short-term investments with original maturities of 90 days or less are
considered to be cash equivalents for purposes of the Consolidated Statements of
Cash Flows and Consolidated Balance Sheets. Cash flows associated with items
intended as hedges of identifiable transactions are classified in the same
categories as the cash flows of the items being hedged.
2. ACQUISITIONS
All acquisitions made during the three fiscal years ended December 31, 1994
were accounted for using the purchase method and, accordingly, their operating
results have been included in the Company's Consolidated Statements of
Operations only since the respective dates of acquisition. The acquisitions were
not material either individually or in the aggregate.
3. SEGMENT INFORMATION
The Company and its subsidiaries operate in the United States, the
Commonwealth of Puerto Rico, Canada and the seven European countries, consisting
of the United Kingdom, the Republic of Ireland, France, Belgium, Italy, Germany,
and Spain. The Company also operated in Portugal during 1992. Spain and Portugal
were operated as fifty percent owned joint ventures until September of 1992. In
September of 1992, the Spanish joint venture became a wholly-owned subsidiary of
the Company and the Company sold its interest in the Portuguese joint venture. A
summary of certain data with respect to these operations for the fiscal years
ended December 31, 1994, January 1, 1994, and January 2, 1993 is presented
below.
<PAGE>
[LOGO FOR SAFETY KLEEN]
<TABLE>
<CAPTION>
1994 1993 1992
-------------------------------------------------------------------
(Expressed in thousands)
-------------------------------------------------------------------
<S> <C> <C> <C>
REVENUE
United States and Puerto Rico $ 648,555 $ 665,592 $ 656,266
Canada 57,332 50,442 57,003
Europe 85,380 79,474 81,273
-------------------------------------------------------------------
Consolidated $ 791,267 $ 795,508 $ 794,542
-------------------------------------------------------------------
TOTAL ASSETS
United States and Puerto Rico $ 780,770 $ 770,389 $ 785,737
Canada 72,213 76,763 70,383
Europe 163,003 148,226 150,326
-------------------------------------------------------------------
Consolidated $1,015,986 $ 995,378 $1,006,446
-------------------------------------------------------------------
NET EARNINGS(LOSS) BEFORE
CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLES
United States and Puerto Rico $ 47,766 $ (84,454) $ 43,221
Canada 1,552 (4,693) 3,214
Europe 776 (12,199) (1,098)
-------------------------------------------------------------------
Consolidated $ 50,094 $(101,346) $ 45,337
-------------------------------------------------------------------
CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLES
United States and Puerto Rico $ - $ - $ (1,786)
Canada - - -
Europe - - 2,086
-------------------------------------------------------------------
Consolidated $ - $ - $ 300
-------------------------------------------------------------------
NET EARNINGS (LOSS)
United States and Puerto Rico $ 47,766 $ (84,454) $ 41,435
Canada 1,552 (4,693) 3,214
Europe 776 (12,199) 988
-------------------------------------------------------------------
Consolidated $ 50,094 $(101,346) $ 45,637
-------------------------------------------------------------------
</TABLE>
The Company operates primarily in one business segment--providing businesses
with environmentally safe and convenient solutions for managing fluid waste and
other recoverable resources.
4. INVENTORIES
The Company's inventories consist primarily of solvent, oil and supplies. LIFO
inventories at December 31, 1994 and January 1, 1994 were $5.0 million and $4.7
million, respectively. Under the FIFO method of accounting (which approximates
current or replacement cost) inventories would have been $1.0 million and $1.8
million higher, respectively.
5. FINANCIAL ARRANGEMENTS AND LONG-TERM DEBT
Long-term debt at December 31, 1994 and January 1, 1994 consisted of the
following:
<TABLE>
<CAPTION>
December 31, January 1,
1994 1994
------------------------------------------------------------
(Expressed in thousands)
------------------------------------------------------------
<S> <C> <C>
9.25% Senior Notes due in 1999 $100,000 $100,000
Unsecured notes payable to banks
under financing agreements:
Revolving lines of credit 105,085 120,576
Uncommitted lines of credit 73,533 61,557
Other 5,517 7,388
------------------------------------------------------------
284,135 289,521
Less-current portion 10 888
------------------------------------------------------------
Total long-term debt $284,125 $288,633
------------------------------------------------------------
</TABLE>
The long-term debt as of December 31, 1994 is due as follows:
In thousands
------------------------------------------------------------
1996 $ 44,752
1997 $138,496
1998 $ 732
1999 $100,015
2000 and thereafter $ 130
The $100 million of 9.25% Senior Notes ("the Notes") due September, 1999,
specify that, upon the occurrence of a credit agency rating decline below
investment grade, either in conjunction with a change in control or as a result
of other events as defined in the Notes, each holder of the Notes has the option
to require the Company to purchase all or any part of such holder's Notes at a
price equal to 100% of the principal amount plus accrued interest.
In May, 1992, the Company executed interest rate swap agreements that
effectively converted $100 million of its fixed rate borrowings into variable
rate obligations. These swap agreements expire in September, 1999. In April,
1993, the Company executed an interest rate swap agreement that converted these
$100 million variable rate obligations to a fixed rate. This agreement expires
in September, 1996. The effect of these swaps reduces the interest rate on the
Notes from 9.25% to 7.08% through September, 1996. At that time the interest
reverts to a variable rate. The variable rate is based on the U.S. Dollar London
Interbank Offered Rate (LIBOR) determined at 6-month intervals.
32
<PAGE>
[LOGO: SAFETY-KLEEN]
In May, 1992, at the same time the Company entered into the $100 million
interest rate swap agreement, the Company entered an interest rate cap
agreement, which protects the Company from rising interest rates. The cap has a
notional amount of $100 million, and expires on September 12, 1999. The cap
effectively limits the Company's interest rate exposure to 13.92% if LIBOR
exceeds 12%. The premium paid on the cap is being amortized to interest expense
over the term of the cap.
The Company has a U.S. revolving credit agreement totalling $160 million. The
agreement provides for interest rates to be determined at the time of the
borrowing based on a choice of formulas as specified in the agreement. A
facility fee based on the Company's credit ratings is paid on the total amount
of the line of credit. At December 31, 1994, $58 million of borrowings were
outstanding at an average interest rate of 6.2%.
At December 31, 1994, the Company had uncommitted lines of credit totalling
$124 million. Borrowings under these lines were $74 million at an average
interest rate of 6.4%.
The Company has the ability to convert other bank borrowings to its
revolving credit facilities. Since the committed facilities extend beyond 1995
and the Company intends to renew these obligations, $138 million of the loans
payable to banks have been classified as long-term debt.
The Company's German subsidiary has a revolving credit agreement totalling 76
million Deutschmarks (U.S. $49 million) that extend credit until December, 1997.
The interest rate determined at the time of each borrowing is LIBOR plus 0.5%. A
commitment fee of 0.125% per annum is paid quarterly on the unused portion of
the facility. At December 31, 1994, 70 million Deutschmarks ($45 million U.S.)
of borrowings were outstanding under this agreement at an average interest rate
of 5.8% (prior to the effect of the interest rate swap described below).
In May, 1992, the Company's German subsidiary executed an interest rate swap
agreement which expires in May, 1997. The interest rate on DM 70 million (U.S.
$45 million) was swapped from rates based on 6-month DM LIBOR to rates based on
6-month U.S. Dollar LIBOR. At December 31, 1994, the effective interest rate
was 8.9%.
At December 31, 1994, the Company's other subsidiary operations have
miscellaneous line of credit agreements totaling $7 million (U.S.). At December
31, 1994, borrowings under these lines were $2 million (U.S.) at an average
interest rate of 5.7%.
All of the Company's interest rate swap agreements have been entered into
with major financial institutions which are expected to fully perform under the
terms of the agreements. The Company monitors the credit ratings of these
counterparties and considers the risk of default to be remote.
The fair value of the three interest rate swap agreements and the interest cap
agreement noted above was approximately $2.7 million less and $3.8 million
greater than the Company's carrying value at December 31, 1994 and January 1,
1994. This fair value is determined by obtaining quotes from brokers who
regularly deal in these types of financial instruments. These interest rate
swaps have resulted in a net savings of $1.8, $3.6 and $3.2 million in 1994,
1993 and 1992, respectively.
Subsequent to year-end, the Company entered into a note purchase agreement
with two insurance companies, under which the Company borrowed $50 million at a
fixed interest rate of 8.05% for 3 years expiring in February, 1998. Proceeds
from the note were used to repay existing bank borrowings.
The Company's credit agreements include provisions, among others, relative to
maintenance of minimum shareholders' equity and interest coverage ratios. At
December 31, 1994, the Company was in compliance with all such loan provisions.
6. CAPITAL STOCK
Preferred Stock
The Board of Directors has the authority to issue up to 1,000,000 shares of
preferred stock, par value $.10 per share, at such time or times, in such
series, and with such designations and features thereof as it may determine,
including rate of dividend, redemption provisions and prices, conversion
conditions and prices and voting rights. No shares of preferred stock have
been issued.
Stock Option and Employee Stock Purchase Plans
The Company has the following stock option and employee stock purchase plans:
1. The 1985 and 1993 Stock Option Plans (The "Option Plans")
2. The 1988 Non-Qualified Stock Option Plan for Outside Directors (The
"Directors Plan")
3. The Employee Stock Purchase Plan (the "ESPP")
Under the Option Plans, options to purchase up to 5,937,500 shares of the
Company's common stock may be granted to officers
33
<PAGE>
[LOGO: SAFETY-KLEEN]
and other key employees at a price of 100% of the quoted market price at date of
grant. Options granted under the Option Plans may be either Incentive Stock
Options or Non-Qualified Stock Options. Stock appreciation rights (SARs) may be
granted in conjunction with Non-Qualified Stock Options whereby the grantee may
surrender exercisable Non-Qualified Options and receive a cash payment equal to
the difference between the option price and the market value of the common
stock on the exercise date. Incentive Options, Non-Qualified Options and SARs
become exercisable at such time or times, and are subject to such conditions, as
determined by the Compensation Committee of the Board of Directors.
Under the Directors' Plan, options to purchase up to 300,000 shares of the
Company's common stock may be granted to outside Directors at a price of 100% of
the quoted market price at the date of grant. Under the terms of the Directors'
Plan, each outside Director was granted an option to purchase 15,000 shares at
the time the plan was adopted. Any new outside Director elected or appointed
after the date the plan was adopted would also be granted an option to purchase
15,000 shares of the Company's common stock upon taking office. The Directors'
Plan also provides that a second option to purchase 15,000 shares be granted to
each outside Director on the fifth anniversary of the initial grant of options
to such Director if such Director is still serving on the Board at that time.
Options are exercisable 25% annually, on a cumulative basis, starting one year
from date of grant and terminating ten years after the grant date.
Under the ESPP, a total of 1,500,000 shares of the Company's common stock
may be purchased by employees of the Company and designated subsidiaries,
through payroll deductions, at 90% of the quoted market price for the date
preceding the date of grant. Under terms of the ESPP, no further grants to
purchase shares may be made after December 31, 1994. Therefore, 1,064,571
available option shares not granted as of December 31, 1994 have expired.
Officers of the Company, employees with less than six months of service or
employees who hold options under the 1985 Stock Option Plan are not eligible to
participate in this Plan.
A summary of the status of the Company's stock option plans for the three
fiscal years ended December 31, 1994, is presented below.
<TABLE>
<CAPTION>
Available
for
Price Future
Shares Range Exercisable Grants
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Outstanding Options
@ 12/28/91 2,029,823 $17.08-$32.25 990,435 2,258,665
1992 Activity:
Granted 429,080 $26.33-$28.13
Exercised (282,698) $17.08-$29.59
Cancelled (99,445) $18.58-$32.00
---------------------------------
Outstanding Options
@ 1/2/93 2,076,760 $17.08-$32.25 1,134,476 1,929,030
1993 Activity:
Authorized 2,750,000
Granted 879,101 $13.50-$24.00
Exercised (15,258) $17.33-$19.42
Cancelled (212,188) $17.33-$32.00
---------------------------------
Outstanding Options
@ 1/1/94 2,728,415 $13.50-$32.25 1,447,846 4,012,117
1994 Activity:
Expired (1,064,571)
Granted 853,408 $13.50-$15.88
Exercised (71,207) $16.65-$16.65
Cancelled (271,341) $13.50-$32.00
---------------------------------
Outstanding Options
@ 12/31/94 3,239,275 $13.50-$32.25 1,829,500 2,365,479
---------------------------------
</TABLE>
Shareholders' Rights Plan
Pursuant to a plan adopted by the Company in December, 1988, each share of the
Company's common stock carries the right to buy one share of the Company's
common stock at a price of $73.33 per share. The rights will expire on November
21, 1998, unless earlier redeemed by the Company. The rights will become
exercisable if a person becomes an "acquiring person" by acquiring 20% of the
Company's common stock or announces a tender offer that would result in such
person owning 20% or more of the Company's common stock. If someone becomes an
acquiring person (except pursuant to certain cash tender offers for all shares),
the holder of each right (other than rights owned by the acquiring person) will
be entitled to purchase common stock of the Company having a market value of
twice the exercise price of the right. In addition, if the Company is acquired
in a merger or other business combination transaction in which the Company's
common stock is exchanged for cash or securities, or 50% or more of its
consolidated assets or earning power are sold, each holder (other than the
acquiring person) will have the right to purchase
34
<PAGE>
[LOGO]
common stock of the acquiring company having a market value of twice the
exercise price. The rights may be redeemed by the Company, at a price of 0.67
cents per right, at any time prior to anyone becoming an acquiring person.
7. PENSION AND EMPLOYEE BENEFIT PLANS
The Company has noncontributory pension plans covering substantially all
full time employees in the United States. Domestic pension costs are funded in
compliance with ERISA requirements as employees become eligible to participate,
generally, after completing one year of service.
The Company's consolidated pension costs for fiscal years 1994, 1993 and
1992 were $5.5 million, $7.2 million, and $4.0 million, respectively. The 1993
pension costs include $2.4 million incurred in conjunction with a restructuring
plan more fully described in Management's Discussion and Analysis of Financial
Condition and Results of Operations--Restructuring and Special Charges on page
24.
The following table sets forth the domestic plans' combined funded status
at December 31, 1994, and January 1, 1994:
<TABLE>
<CAPTION>
December 31, 1994 January 1, 1994
-------------------------------------------------------------------------------------
<S> <C> <C>
(Expressed in thousands)
-------------------------------------------------------------------------------------
Actuarial present value of
benefit obligation:
Vested benefits $28,027 $27,700
Nonvested benefits 3,955 4,674
-------------------------------------------------------------------------------------
Accumulated benefit obligation 31,982 32,374
Effect of projected compensation
levels 12,744 18,851
-------------------------------------------------------------------------------------
Projected benefit obligation 44,726 51,225
Plan assets at fair value 38,984 33,645
-------------------------------------------------------------------------------------
Projected benefit obligation
greater than plan assets (5,742) (17,580)
Unrecognized net loss 3,266 13,036
Unrecognized net assets to be
amortized over 16-20 years (91) (99)
Unrecognized prior service cost 355 315
-------------------------------------------------------------------------------------
Unfunded accrued pension
cost recognized in the
Consolidated Balance Sheets $(2,212) $(4,328)
-------------------------------------------------------------------------------------
</TABLE>
The Plans' assets consist of cash, cash equivalents, equity funds, pooled
funds of real estate and common stock of the Company.
Net periodic pension cost for the Company's domestic plans in 1994, 1993 and
1992 includes the following components:
<TABLE>
<CAPTION>
1994 1993 1992
-----------------------------------------------------------------
<S> <C> <C> <C>
(Expressed in thousands)
-----------------------------------------------------------------
Service cost-benefits earned
during the year $ 4,235 $3,374 $2,499
Interest on projected
benefit obligation 3,909 3,339 2,818
Return on plan assets (334) (2,034) (2,243)
Charges due to restructuring -- 2,376 --
Net amortization and deferral (3,318) (1,007) (33)
-----------------------------------------------------------------
Net periodic pension cost $ 4,492 $6,048 $ 3,041
-----------------------------------------------------------------
</TABLE>
Actuarial assumptions used to determine the projected benefit obligation and
the expected net periodic pension costs were:
<TABLE>
<CAPTION>
1994 1993 1992
----------------------------------------------------------------------
<S> <C> <C> <C>
Projected Benefit
Obligation Assumptions:
Discount Rates 8.5% 7.3% 8.7%
Rates of increase in
compensation levels 5.0% 5.0% 6.0%
Net Periodic Pension Cost Assumption:
Expected long-term rate of
return on assets 10.0% 10.0% 10.0%
</TABLE>
The Company also has pension plans covering employees of its Canadian and
British subsidiaries. Those plans are funded by purchase of insurance contracts
and units in a managed fund invested in stocks, fixed income securities and real
estate. Vested benefits are fully funded. The Company's foreign subsidiaries are
not required to report under ERISA and do not otherwise determine the actuarial
value of accumulated plan benefits as disclosed above for the Company's domestic
pension plans. These plans do not have a material effect on the Company's
financial condition or results of operations.
The Safety-Kleen Corp. Savings and Investment Plan allows eligible employees
to make contributions, up to a certain limit, to the Plan on a tax-deferred
basis under Section 401(k) of the Internal Revenue Code of 1986. The Company
may, at its discretion, make matching contributions out of its profits for the
year. The Company's expense for contributions was $1.5 million in 1994, and $1.1
million in 1992. The Company did not make a matching contribution for 1993.
35
<PAGE>
The Company offers a post-retirement medical insurance plan to its domestic
employees retiring prior to the normal retirement age of 65. Retirees are
eligible to continue this medical coverage until age 65. The plan is currently
unfunded and retirees electing this coverage are required to pay a premium for
the insurance.
The Company adopted Statement of Financial Accounting Standards (SFAS) No.
106 on accounting for employees' post-retirement benefits during the fourth
quarter of 1992 retroactive to the beginning of the year. This statement
requires the accrual of the cost of providing post-retirement health care
coverage over the active service period of the employee. Prior to 1992, these
costs were charged to operating expenses in the year paid and were immaterial.
The Company elected to immediately recognize the accumulated liability in 1992.
The following table reconciles the funded status of the plan to the accrued
post-retirement benefit cost recognized in the Consolidated Balance Sheets at
December 31, 1994 and January 1, 1994:
<TABLE>
<CAPTION>
DECEMBER 31, 1994 January 1, 1994
--------------------------------------------------------------------------------
(Expressed in thousands)
--------------------------------------------------------------------------------
<S> <C> <C>
Accumulated post-retirement benefit
obligation (APBO):
Retirees, beneficiaries and dependents $ 1,505 $ 1,626
Active employees 4,494 6,345
--------------------------------------------------------------------------------
5,999 7,971
--------------------------------------------------------------------------------
Plan assets at fair value -- --
--------------------------------------------------------------------------------
APBO greater than plan assets (5,999) (7,971)
--------------------------------------------------------------------------------
Unrecognized net loss (gain) (1,399) 1,567
--------------------------------------------------------------------------------
Accrued post-retirement benefit cost $(7,398) $(6,404)
--------------------------------------------------------------------------------
APBO discount rate assumption 8.50% 7.25%
--------------------------------------------------------------------------------
</TABLE>
Net periodic post-retirement benefit cost recognized for 1994 and 1993 are
as follows:
<TABLE>
<CAPTION>
1994 1993
--------------------------------------------------------------------------------
(Expressed in thousands)
--------------------------------------------------------------------------------
<S> <C> <C>
Service costs-benefits earned
during the year $ 786 $ 735
Interest costs on APBO 498 489
Curtailment charge due to restructuring -- 581
Other (44) --
--------------------------------------------------------------------------------
Net periodic post-retirement benefit
cost $ 1,240 $ 1,805
--------------------------------------------------------------------------------
</TABLE>
Net periodic post-retirement benefit costs for 1992 were not material.
The health care cost trend was assumed to be 11% for 1994 decreasing by 2%
per year through 1997, then to an ultimate trend of 4.5% in 1998.
If the health care cost trend rate increases one percent for all future
years, the accumulated post-retirement benefit obligation as of December 31,
1994, would have increased 17.1%. The effect of this change on the aggregate
of the service and interest cost for 1994 would be an increase of 20.5%.
The Company also adopted SFAS No. 112 on accounting for post-employment
benefits during 1993. The effect of adopting this change was not material.
8. INCOME TAXES
The components of earnings before income taxes consisted of the following
for each of the last three fiscal years:
<TABLE>
<CAPTION>
1994 1993 1992
--------------------------------------------------------------------------------
(Expressed in thousands)
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Domestic $81,275 $(137,043) $73,234
Foreign 3,551 (31,566) 1,058
--------------------------------------------------------------------------------
$84,826 $(168,609) $74,292
--------------------------------------------------------------------------------
</TABLE>
Effective at the beginning of fiscal year 1992, the Company adopted SFAS No.
109 on accounting for income taxes. This adoption resulted in an increase in
net earnings of $3.2 million or $.06 per share for the cumulative effect of
prior years' income. The effect of the adoption on income for fiscal year
1992, was not material.
36
<PAGE>
Under SFAS No. 109, deferred tax assets and liabilities are computed based on
the difference between the financial statement and income tax bases of assets
and liabilities using the enacted tax rates. The provisions (benefits) for
income taxes include the following:
<TABLE>
<CAPTION>
1994 1993 1992
-----------------------------------------------------------------------------
(Expressed in thousands)
-----------------------------------------------------------------------------
<S> <C> <C> <C>
CURRENT
Federal $12,352 $ 878 $24,468
State 5,692 1,361 5,877
Commonwealth of Puerto Rico (883) (1,726) --
Foreign 1,365 -- 1,646
DEFERRED
Federal 6,590 (2,871) 5,364
Foreign 928 (15,841) 2,725
PREPAID
Federal 10,090 (35,926) (1,130)
State -- (8,340) --
Commonwealth of Puerto Rico - (5,657) (5,361)
Foreign (1,402) 859 (4,634)
-----------------------------------------------------------------------------
TOTAL PROVISION $34,732 $(67,263) $28,955
-----------------------------------------------------------------------------
</TABLE>
The following table reconciles the statutory U.S. Federal income tax rate to
the Company's consolidated effective tax rate:
<TABLE>
<CAPTION>
1994 1993 1992
-----------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory U.S. federal tax rate 35.0% (35.0%) 34.0%
Increase (decrease) resulting from:
Provision for state income tax, net of federal
benefit 4.4 (2.9) 5.3
Difference in foreign statutory rates (0.3) (3.3) (1.6)
Puerto Rico Commonwealth Tax and U.S. Federal tax
exemption, net -- -- (0.6)
Other 1.8 1.3 1.9
-----------------------------------------------------------------------------
Effective tax rate 40.9% (39.9%) 39.0%
-----------------------------------------------------------------------------
</TABLE>
Temporary differences and carryforwards which give rise to deferred tax
assets and liabilities are as follows:
<TABLE>
<CAPTION>
December 31, January 1, January 2,
1994 1994 1993
-----------------------------------------------------------------------------
(Expressed in thousands)
-----------------------------------------------------------------------------
<S> <C> <C> <C>
Deferred tax assets - current
Environmental reserves $ 1,628 $ 1,628 $ 1,580
Insurance reserves 10,004 6,551 5,275
Other 797 2,348 1,555
-----------------------------------------------------------------------------
Total deferred tax assets - current 12,429 10,527 8,410
-----------------------------------------------------------------------------
Deferred tax assets - non-current
Restructuring charges not currently
deductible $ 33,465 $ 37,084 $ --
Net operating loss (NOL)carryforwards of
subsidiaries 18,679 16,233 18,845
Environmental reserves 19,382 21,113 1,613
Other 3,143 2,324 2,869
Valuation allowance (3,217) (4,560) (6,083)
-----------------------------------------------------------------------------
Total deferred tax assets non-current 71,452 72,194 17,244
-----------------------------------------------------------------------------
Total Deferred Tax Assets $ 83,881 $ 82,721 $ 25,654
-----------------------------------------------------------------------------
Deferred Tax Liabilities
Restructuring and special charges $ 12,726 $ 14,061 $ --
Depreciation (73,187) (62,338) (51,190)
Tax lease agreements (7,539) (7,682) (7,496)
Other (1,545) (5,581) (159)
-----------------------------------------------------------------------------
Total Deferred Tax Liabilities $(69,545) $ (61,540) $(58,845)
-----------------------------------------------------------------------------
</TABLE>
The tax assets derived from Net Operating Loss carryforwards (NOLs) that
have no expiration total approximately $13.0 million or 70% of the total NOL
tax assets available to the Company. The remaining NOL tax assets of
approximately $5.6 million consist of NOL tax assets with expiration dates as
follows:
<TABLE>
<CAPTION>
In Thousands
-----------------------------------------------------------------------------
<S> <C>
1995 $1,303
1996 $1,219
1997 $ 790
1998 $ 548
1999 $1,288
2000 $ 403
2001 $ --
</TABLE>
37
<PAGE>
LOGO FOR SAFETY-KLEEN
The Company has recorded a valuation allowance of approximately $3.2 million
for unrealized NOL tax assets that may expire before the Company is able to
utilize such NOLs.
The valuation allowance account balance of $3.2 million represents
approximately 57% of the NOL tax assets that are due to expire as compared to a
valuation allowance percentage of approximately 72% of the NOLs due to expire
at the end of 1993. The valuation account balance activity is summarized in
the table below.
<TABLE>
<CAPTION>
1994
------------------------------------------------------------
(Expressed in thousands)
------------------------------------------------------------
<S> <C>
Balance - beginning of year $ 4,560
Increase (Decrease):
Adjust valuation balances (1,610)
Cumulative translation adjustment 267
------------------------------------------------------------
Balance - end of year $ 3,217
------------------------------------------------------------
</TABLE>
9. SPECIAL CHARGE FOR ENVIRONMENTAL COST, OTHER ACCRUED EXPENSES AND
LIABILITIES, COMMITMENTS AND CONTINGENT LIABILITIES
The Company operates a large number of facilities for the collection and
processing of hazardous and non-hazardous wastes and is subject to extensive and
expansive regulation by Federal, state and local authorities.
In the ordinary course of conducting its business activities, the Company
becomes involved in judicial and administrative proceedings in which
governmental authorities seek remedial actions and/or fines and penalties. The
Company also has been notified by the EPA that it may be a responsible party at
several National Priority List ("NPL") sites. Generally, these proceedings by
Federal and state regulatory agencies have been resolved by negotiation and
settlement. Based on its past experience and its knowledge of pending cases, the
Company believes it is unlikely that the Company's actual liability on cases now
pending will be materially adverse to the Company's financial condition. It
should be noted, however, that many environmental laws are written in a way in
which the Company's potential liability can be large and it is always possible
that the Company's actual liability on any particular environmental claim will
prove to be larger than anticipated or accrued for by the Company. It is also
possible that expenses incurred in any particular reporting period for
remediation costs or for fines, penalties or judgments could have a material
impact on the Company's results of operations for that period.
Under various Federal, state and local regulations, the Company can be
required to conduct an environmental investigation of any of its permitted
operating or closed facilities to determine the possible existence and extent of
environmental contamination. In the event that contamination is found, the
Company may be required to perform a remedial cleanup of the site. The Company
is currently engaged in investigation and cleanup work at many of its sites.
In 1993 the Company recorded a $50 million pre-tax special charge ($30 million
after-tax or $0.52 per share) for a change in estimate for remediation costs
relating to all operating and previously-closed sites prior to conducting
detailed individual site investigations to ascertain the existence and extent of
contamination. This change results in earlier recognition of environmental
remediation costs and liabilities as compared with the Company's previous
practice which was to accrue the estimated cost of remedial cleanup work at the
time the need for such work was specifically identified based on site
investigation.
Federal environmental regulations require that the Company demonstrate
financial responsibility for sudden and non-sudden releases, as well as closure
and post-closure liabilities. One manner by which to make this demonstration is
through Environmental Impairment Liability (EIL) insurance coverage. The Company
has EIL insurance coverage which it believes complies with the Federal
regulatory requirements. However, the Company must reimburse the insurance
carrier for all losses and expenses incurred by it under the policy. The
Company's income could be adversely affected in the future if it is unable to
obtain risk-transfer EIL insurance coverage and uninsured losses were to be
incurred.
The Company leases certain of its branches, vehicles and other equipment.
These leases are accounted for as operating leases. Related rental expenses
were $21.2 million in 1994, $20.8 million in 1993 and $20.3 million in 1992.
Aggregate minimum future rentals are payable as follows:
<TABLE>
<CAPTION>
Expressed in
Periods Millions
----------------------------------------
<S> <C>
1995 $ 17.8
1996 14.2
1997 10.8
1998 6.3
1999 4.6
Future Years 16.0
----------------------------------------
Total $ 69.7
----------------------------------------
</TABLE>
38
<PAGE>
10. 1993 RESTRUCTURING CHARGE
During the fourth interim period of 1993 the Company adopted a restructuring
plan based on conversion of its core Parts Cleaner Service to new technology
and other strategic actions. In conjunction with the adoption of this plan,
the Company recorded a special charge of $179 million ($106 million after tax
or $1.84 per share) in the fourth quarter. The pre-tax restructuring charge
included $93 million of asset write-downs and $86 million of other
restructuring charges.
11. PROPERTY PLANT & EQUIPMENT HELD FOR SALE
The net book value of property intended for sale as a result of planned
recycling capacity reductions, facility shutdowns and other restructuring
action taken during the fourth interim period of 1993 was $16.4 and $16.6
million, as of December 31, 1994 and January 1, 1994, respectively.
12. INTERIM RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Earnings (Loss)
Revenue Gross Profit Net Earnings (Loss) Per Share
-------------------------------------------------------------------------------------------------------------------
Interim Period 1994 1993 1994 1993 1994 1993/(1)/ 1994 1993/(1)/
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------------
First (12 Weeks) $176,812 $181,818 $ 45,500 $ 43,051 $ 9,705 $ 8,635 $0.17 $ 0.15
Second (12 Weeks) 183,334 189,314 48,880 47,725 11,468 10,487 0.20 0.18
Third (12 Weeks) 182,149 182,047 48,644 43,391 12,212 5,809 0.21 0.10
Fourth (16 Weeks) 248,972 242,329 68,734 55,526 16,709 (126,277) 0.29 (2.19)
-------------------------------------------------------------------------------------------------------------------
Total $791,267 $795,508 $211,758 $189,693 $50,094 $(101,346) $0.87 $(1.76)
-------------------------------------------------------------------------------------------------------------------
/(1)/ During the fourth interim period the Company recorded restructuring and special environmental charges totalling $136 million
net of tax benefits ($229 million pre-tax) or $2.36 per share which is more fully described in Notes 9 and 10 to the
Consolidated Financial Statements and the Management's Discussion and Analysis of Financial Condition and Results
of Operations section of this report.
</TABLE>
39
<PAGE>
BOARD OF DIRECTORS
Donald W. Brinckman, Founder and Chairman
Safety-Kleen Corp.
John G. Johnson Jr., President and Chief Executive Officer,
Safety Kleen Corp.
Richard T. Farmer, Chairman and Chief Executive Officer, Cintas
Corporation (uniform manufacturer and supplier)
Russell A. Gwillim, Chairman Emeritus, Safety-Kleen Corp.
Edgar D. Jannotta, Senior Partner, William Blair & Company
(investment banking firm)
Karl G. Otzen, President, Gerhard & Company
(product development consulting firm)
Paul D. Schrage, Senior Executive Vice President,
McDonald's Corporation (restaurant franchiser and operator)
Marcia Williams, President, Williams & Vanino, Inc.
(environmental/management consulting firm.)
W. Gordon Wood, Retired Vice President, Safety-Kleen Corp.
OFFICERS
Donald W. Brinckman, Founder, Chairman and Director
John G. Johnson Jr., President, Chief Executive
Officer and Director
Hyman K. Bielsky, Senior Vice President General Counsel
Roy D. Bullinger, Senior Vice President Business
Management and Marketing
Robert J. Burian, Senior Vice President Human Resources
Michael H. Carney, Senior Vice President
Marketing Services and Customer Care
Joseph Chalhoub, Senior Vice President
Processing, Engineering and Oil Recovery
David A. Dattilo, Senior Vice President Sales and Service
Scott E. Fore, Senior Vice President
Environment, Health and Safety
F. Henry Habicht II, Senior Vice President
Strategic/Environmental Planning
William P. Kasko, Senior Vice President
Operations and Information
Robert W. Willmschen Jr., Senior Vice President
Finance and Secretary
Glenn R. Casbourne, Vice President Engineering
Clark J. Rose, Vice President Technical Services
Laurence M. Rudnick, Treasurer
Clifford J. Schulz, Controller
40
<PAGE>
CORPORATE DATA
CORPORATE OFFICE
Safety-Kleen Corp., 1000 North Randall Road,
Elgin, IL 60123
Telephone: (708) 697-8460
AUDITORS
Arthur Andersen LLP, 33 W. Monroe Street,
Chicago, IL 60603.
REGISTRAR AND TRANSFER AGENT
First Chicago Trust Company of New York,
Post Office Box 2500, Jersey City, NJ 07303.
ANNUAL MEETING
The Annual Meeting of Shareholders of Safety-Kleen Corp.
will be held at 10:00 a.m., Friday, May 12, 1995, at
The Westin Hotel, O'Hare, 6100 River Road,
Rosemont, IL 60018.
STOCK LISTING
Safety-Kleen stock is traded on the New York Stock Exchange.
STOCK SYMBOL SK
FORM 10-K
Safety-Kleen's Annual Report to the Securities and Exchange Commission on form
10-K is available, on request, from Safety-Kleen's Corporate Secretary.
SHAREHOLDER DIVIDEND
REINVESTMENT PLAN
Safety-Kleen offers a dividend reinvestment plan for shareholders of record.
Further information may be obtained from the Company's Registrar and Transfer
Agent as follows:
First Chicago Trust Company of New York
Post Office Box 2598
Jersey City, NJ 07303
Telephone: (800) 446-2617
MARKET AND DIVIDEND
INFORMATION
Market and Dividend Information
The Company's common stock is traded on the New York Stock Exchange. The
approximate number of record holders of the Company's common stock at December
31, 1994 was 7,258.
The following table shows the range of common stock prices and cash dividends
for the calendar quarters indicated. The quotations represent the high and low
prices on the New York Stock Exchange as reported by The Wall Street Journal.
<TABLE>
<CAPTION>
1994 1993
-------------------------------------------------------------------
Cash Cash
Prices Dividends Prices Dividends
High Low Paid High Low Paid
<S> <C> <C> <C> <C> <C> <C>
March 31 $18.50 $13.63 $0.09 $24.75 $20.00 $0.09
June 30 18.25 13.63 0.09 21.13 16.13 0.09
September 30 18.00 15.38 0.09 18.00 14.38 0.09
December 31 16.38 12.75 0.09 18.13 13.13 0.09
-------------------------------------------------------------------
$0.36 $0.36
-------------------------------------------------------------------
</TABLE>
The Company has continuously paid quarterly cash dividends since March, 1979.
The Company expects to continue its policy of paying regular cash dividends,
although there is no assurance as to future dividends, as they are dependent
upon future earnings, capital requirements, financial condition of the Company
and other factors.
41
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
To the Board of Directors and
Management of Safety-Kleen Corp.:
As independent public accountants, we hereby consent to the incorporation of our
reports included in or incorporated by reference in this Form 10-K, into the
Company's previously filed Registration Statements on Form S-8 (File No.
2-97490, File No. 2-67421, File No. 33-34892, File No. 33-51396, File No.
2-97196, File No. 33-56371) and on Form S-3 (File No. 22-806, File No. 33-18043,
File No. 33-15010, File No. 33-27174, File No. 33-30519, File No. 33-35008 and
File No. 33-44715).
/s/ ARTHUR ANDERSEN LLP
Chicago, Illinois,
March 29, 1995.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Consolidated Balance Sheet, Consolidated Statement of Operations and
Consolidated Statement of Cash Flows located on pages 27-30 of the Company's
1994 Annual Report to Shareholders and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-02-1994
<PERIOD-END> DEC-31-1994
<EXCHANGE-RATE> 1
<CASH> 21,015
<SECURITIES> 0
<RECEIVABLES> 111,776
<ALLOWANCES> 8,868
<INVENTORY> 32,137
<CURRENT-ASSETS> 191,394
<PP&E> 811,117
<DEPRECIATION> 273,075
<TOTAL-ASSETS> 1,015,986
<CURRENT-LIABILITIES> 166,305
<BONDS> 284,125
<COMMON> 5,775
0
0
<OTHER-SE> 390,561
<TOTAL-LIABILITY-AND-EQUITY> 1,015,986
<SALES> 0
<TOTAL-REVENUES> 791,267
<CGS> 0
<TOTAL-COSTS> 579,509
<OTHER-EXPENSES> 112,434
<LOSS-PROVISION> 5,067
<INTEREST-EXPENSE> 15,209
<INCOME-PRETAX> 84,826
<INCOME-TAX> 34,732
<INCOME-CONTINUING> 50,094
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 50,094
<EPS-PRIMARY> .87
<EPS-DILUTED> 0
</TABLE>
<PAGE>
EXHIBIT 99.1
[LOGO OF SAFETY-KLEEN]
FOR RELEASE: IMMEDIATELY CONTACT: ROBERT W. WILLMSCHEN
(708) 468-2002
LARRY RUDNICK
(708) 468-2408
SAFETY-KLEEN CORP. TOPS $50 MILLION IN NET EARNINGS FOR 1994
------------------------------------------------------------
ELGIN, IL, February 10, 1995 -- Donald W. Brinckman, Chairman of Safety-Kleen
Corp., announced today that the Company achieved $50.1 million, or $.87 per
share, in net earnings for the full year 1994. This represents an increase of
45% over net earnings reported for 1993. This comparison and all of the
remaining comparisons to 1993 are before restructuring and special charges
recorded in 1993. Fourth quarter 1994 net earnings were $16.7 million, or $.29
per share, an increase of 72% from 1993 net earnings of $9.7 million, or $.17
per share . Revenue for the fourth quarter 1994 increased 3% to $249.0 million.
Revenue for the full year 1994 was $791.3 million, down $4.2 million, or 0.5%,
from last year. Revenue for the fourth quarter and the year was up 6% and 2%,
respectively, excluding the 1993 revenue of product lines and other businesses
that were discontinued in 1994.
Revenues from the North American Automotive/Retail Repair Service and the North
American Industrial Parts Cleaner Service totaled $351 million for the full year
1994, down 4% from last year. This decline in revenues is primarily due to
planned discontinuance of Allied Product sales in 1994 and an increase in the
average parts cleaner service interval. Total parts cleaners in service
worldwide increased 15,300 units, or 3%, during 1994. This compares to a net
decrease of 14,100 units, or 2%, for 1993. The fourth quarter of 1994 showed
the largest quarterly gain of the year with a net increase of 6,500 units in
service from the end of the third quarter. The improved year-to-year
performance is due primarily to a reduction in the turnover rate of existing
customers as the Company continued to convert customers to the new cyclonic
parts cleaner.
Revenue of the Industrial Fluid Recovery Service grew 13% to $109 million in
1994. However, in the fourth quarter, revenue of this service grew 18% over
1993. The Company increased the number of
<PAGE>
[LOGO OF SAFETY-KLEEN]
Branch Industrial Managers selling to this market by 17% in 1994 and plans to
add another 35% in 1995.
Revenue of the Oil Recovery Service was $118 million in 1994, up 4% from last
year. Net income for these operations was approximately $1.5 million in 1994,
as compared to a net loss of $1.3 million in 1993.
Revenue of the Company's European operations totaled $85 million, an increase of
7% from 1993. The European operations reported net earnings of approximately
$0.8 million, as compared to a net loss of $2.2 million in 1993.
Brinckman said, "The Company is in the process of rolling out its new Imaging
Services business. Subsequent to year-end we completed the acquisition of Drew
Resources Corp., a California based photochemical equipment and service provider
with approximately 2,000 customers. This acquisition, along with the previously
announced acquisition of the Boston Recovery Company, should help to accelerate
the growth of this new business area for Safety-Kleen. In January, 1995 we also
acquired a parts cleaner service business from Sparkle Corp., which should add
approximately $5 million of annual revenue. This acquisition confirms our
commitment to grow this core business."
"Our operating margin in the current quarter was 13.2% of revenue, up from 8.0%
in 1993. For the full year our operating margin increased from 8.9% in 1993 to
12.6% in 1994. These improvements are primarily the result of the restructuring
actions begun in the fourth quarter of 1993, and improved pricing in certain of
our services in 1994."
Brinckman concluded, "We experienced substantial year-to-year earnings
improvements in most of our operations in 1994. The cyclonic parts cleaner has
been well received, with almost 103,000 of these units in service at year-end
1994. This has led to renewed growth in units in service in the
Automotive/Retail Repair market and increased growth in the Industrial Parts
Cleaner market. In
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[LOGO OF SAFETY-KLEEN]
addition, we are seeing excellent growth in the Industrial Fluid Recovery
Service. We believe that the Imaging Services market offers an exciting new
growth opportunity for the Company. Further, our European operations turned
profitable in 1995, and we believe these operations should continue to improve
in profitability as we increase the customer base in Europe. We believe we are
entering 1995 with a good deal of momentum and look forward to continued
earnings growth."
Safety-Kleen Corp. is the world's largest recycler of automotive and industrial
hazardous and non-hazardous fluids. Safety-Kleen's common stock is traded on
the New York Stock Exchange under the trading symbol SK.
# # #
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[LOGO OF SAFETY-KLEEN]
CONSOLIDATED STATEMENT OF EARNINGS
(thousands, except per share amounts)
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<CAPTION>
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SIXTEEN FIFTY-TWO
WEEKS ENDED WEEKS ENDED
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Dec. 31, 1994 Jan. 1, 1994 Dec. 31, 1994 Jan. 1, 1994
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<S> <C> <C> <C> <C>
Revenue
North America
Automotive/Retail Repair Services $73,449 $76,354 $237,780 $248,700
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Industrial Services
Parts Cleaner 34,897 35,538 113,007 116,148
Fluid Recovery 35,402 29,940 109,113 96,792
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Total Industrial 70,299 65,478 222,120 212,940
Oil Recovery Services 38,230 33,590 117,815 113,277
Other 39,636 43,158 128,172 141,117
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Total North America 221,614 218,580 705,887 716,034
Europe 27,358 23,749 85,380 79,474
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Total Consolidated Revenue $248,972 $242,329 $791,267 $795,508
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Operating costs and expenses 180,238 186,803 579,509 605,815
Selling and administrative expenses 35,828 36,190 112,434 119,037
Restructuring and special charges - 229,000 - 229,000
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Operating income (loss) 32,906 (209,664) 99,324 (158,344)
Interest income 321 200 711 846
Interest expense (5,330) (3,585) (15,209) (11,111)
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Earnings (loss) before income taxes 27,897 (213,049) 84,826 (168,609)
Income taxes 11,188 (86,772) 34,732 (67,263)
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Net earnings (loss) $16,709 ($126,277) $50,094 ($101,346)
===================================================================
Earnings (loss) per common and common
equivalent share $0.29 ($2.19) $0.87 ($1.76)
===================================================================
Average number of common and common
equivalent shares outstanding 57,774 57,684 57,741 57,679
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Cash dividends per common share $0.09 $0.09 $0.36 $0.36
===================================================================
</TABLE>
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1. The Company recorded restructuring and special charges to operating expense
of $229 million ($136 million or $2.36 per share, after tax) in the fourth
interim period of 1993. The total includes $179 million of asset write-downs
and other charges related to a restructuring program announced in December,
1993, and $50 million for a change in accounting estimate for future
environmental remediation costs relating to all operating and previously
closed Company sites. The Company also recorded a $1.5 million increase in
income tax expense in the third interim period of 1993 to revalue the prior
year deferred tax balance primarily due to an increase in the statutory
income tax rate in the United States.
2. The Company's interim reporting periods are twelve weeks each for the first
three reporting periods of the year and sixteen weeks for the fourth
reporting period.
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[LOGO OF SAFETY-KLEEN]
SAFETY-KLEEN CORP.
Key Statistics
FIFTY-TWO WEEKS ENDED DEC. 31, 1994 AND JAN. 1, 1994
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<CAPTION>
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Percent
1994 1993 Change Change
===============================================================
<S> <C> <C> <C> <C>
Parts Cleaners In Service Qtr. End *
------------------------------------
Industrial 138,103 127,380 10,723 8.4%
All Other 448,458 443,846 4,612 1.0%
Total 586,561 571,226 15,335 2.7%
Average Service Interval in Weeks 7.85 6.50 1.35 20.8%
North America Fluid Recovery Service
------------------------------------
No. of Drums Collected - QTR. 110,682 83,581 27,101 32.4%
No. of Drums Collected - YTD 331,847 263,318 68,529 26.0%
Oil Recovery Service
--------------------
Used Oil Gallons Collected - QTR. 38.4 Million 35.0 Million 3.4 Million 9.7%
Used Oil Gallons Collected - YTD 124.2 Mil1ion 112.8 Million 11.4 Million 10.1%
Average Price Per Used Oil Gal. Collected - QTR.
Branch Collections $0.149 $0.142 $0.007 4.9%
Bulk/Industrial Collection ($0.099) ($0.046) ($0.053) 115.2%
Total $0.121 $0.126 ($0.005) -4.0%
Average Price Per Used Oil Gal. Collected - YTD
Branch Collections $0.140 $0.147 ($0.007) -4.8%
Bulk/Industrial Collection ($0.083) ($0.052) ($0.031) 59.6%
Total $0.115 $0.129 ($0.014) -10.9%
Avg. US Base Oil Selling Price Per Gallon - QTR. $0.955 $0.936 $0.019 2.0%
Avg. US Base Oil Selling Price Per Gallon - YTD $0.923 $0.992 ($0.069) -7.0%
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</TABLE>
* The number of Parts Cleaners does not include those from the acquisition of
Sparkle Corporation
