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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-----------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
<TABLE>
<S> <C>
April 14, 2000 April 14, 2000
(Date of earliest event reported)
</TABLE>
RURAL/METRO CORPORATION
(Exact Name of Registrant as Specified in Charter)
DELAWARE
(State or other jurisdiction of incorporation)
<TABLE>
<S> <C>
0-22056 86-0746929
(Commission File Number) (IRS Employer Identification Number)
</TABLE>
8401 EAST INDIAN SCHOOL ROAD
SCOTTSDALE, ARIZONA
85251
(Address of Principal Executive Offices)
(Zip Code)
(480) 994-3886
(Registrant's telephone number, including area code)
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Item 5. Other Events
The Company issued a press release announcing a 90 day extension of its
waiver of covenant compliance under its revolving credit facility as set forth
in its press release dated April 14, 2000. A previous extension was announced on
March 15, 2000.
Item 7C. Exhibits
10.55 Provisional Waiver and Standstill Agreement dated as of March
14, 2000
10.56 The First Amendment to Provisional Waiver and Standstill
Agreement dated as of April 13, 2000
99.3 Press Release dated April 14, 2000.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RURAL/METRO CORPORATION
Date: April 14, 2000 By: /s/ Dean Hoffman
---------------------- -------------------------------------
Dean Hoffman, Vice
President and Principal
Accounting Officer
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EXHIBIT INDEX
Exhibits
10.55 Provisional Waiver and Standstill Agreement dated as of March
14, 2000
10.56 The First Amendment to Provisional Waiver and Standstill
Agreement dated as of April 13, 2000
99.3 Press Release dated April 14, 2000.
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EXHIBIT 10.55
PROVISIONAL WAIVER AND STANDSTILL AGREEMENT
THIS PROVISIONAL WAIVER AND STANDSTILL AGREEMENT (this "Agreement") is
made and entered into as of the 14th day of March, 2000 by the Lenders party to
the Credit Agreement identified below and FIRST UNION NATIONAL BANK, as Agent
for the Lenders, and RURAL/METRO CORPORATION, a corporation organized under the
laws of Delaware (the "Borrower").
Statement of Purpose
Pursuant to the Amended and Restated Credit Agreement dated as of March
16, 1998 (as amended by First Amendment dated as of June 30, 1998 and as further
amended, restated, supplemented or otherwise modified, the "Credit Agreement")
by and among the Borrower, the Lenders party thereto (the "Lenders") and the
Agent, the Lenders agreed to make certain Extensions of Credit to the Borrower.
Capitalized terms used but not otherwise defined in this Agreement shall have
the meanings ascribed thereto in the Credit Agreement. This Agreement shall be
deemed to be one of the Loan Documents under and pursuant to the Credit
Agreement.
Pursuant to a letter from the Agent and the Lenders to the Borrower
dated as of February 11, 2000 (the "Waiver Letter"), the Agent and the Lenders
waived provisionally for a specified period ending March 14, 2000 (the "Waiver
Period") the Defaults or Events of Default which resulted, absent such waiver,
solely from the non-compliance with (i) Section 9.1 (Total Debt Leverage Ratio),
Section 9.2 (Total Debt to Total Capitalization) and Section 9.3 (Fixed Charge
Coverage Ratio) of the Credit Agreement, and (ii) the representations and
warranties contained in Section 6.1(p) (No Material Adverse Change) of the
Credit Agreement as they relate to charges taken in the second fiscal quarter
ended December 31, 1999 in connection with the restructuring program announced
by the Borrower pursuant to a news release dated January 27, 2000 (collectively,
the "Acknowledged Defaults"). The Waiver Letter shall be deemed to be one of the
Loan Documents under and pursuant to the Credit Agreement.
Pursuant to the terms of the Waiver Letter, the Borrower agreed to
enter into good faith negotiations with the Agent and the Lenders to amend the
Credit Agreement on or before March 14, 2000 (the "Waiver Termination Date").
The Borrower, the Agent and the Lenders are continuing to negotiate but have not
yet reached an agreement on the terms of such amendment, and the Borrower, as a
result, has requested an additional period of time in which to continue such
negotiations.
The Lenders and the Agent are willing to waive the Acknowledged
Defaults provisionally for an additional period of time and to defer the
exercise of remedies during such period, subject to the express terms and
provisions of this Agreement.
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Agreement
NOW, THEREFORE in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Acknowledgments by Borrower. To induce the Lenders and the
Agent to execute this Agreement, the Borrower and each of the Subsidiary
Guarantors (collectively, the "Credit Parties"), hereby respectively
acknowledge, stipulate and agree as follows:
(a) Notwithstanding any provisional waiver as otherwise provided
in the Waiver Letter, the Acknowledged Defaults constitute Defaults and Events
of Default that have occurred, remain uncured and are continuing as of the time
of this Agreement; and because such Events of Default remain uncured, neither
the Agent nor any Lender has any obligation to make any further Extensions of
Credit under the Credit Agreement.
(b) Except for the provisional waiver that is the subject of the
Waiver Letter (which shall in all events expire as of the Waiver Termination
Date), as of the time of this Agreement nothing has occurred that constitutes or
otherwise can be construed or interpreted as a waiver of, or otherwise to limit
in any respect any rights or remedies the Lenders or the Agent, or any of them,
have or may have arising as the result of Events of Default that have occurred
or may occur under the Credit Agreement, the remaining Loan Documents or
applicable law.
(c) The Loans outstanding as of the date hereof are in an amount
equal to $147,000,000 (the "Existing Loans") and the L/C Obligations outstanding
as of the date hereof are in an amount equal to $6,515,000 (the "Existing L/C
Obligations", and together with the Existing Loans, the "Existing Extensions of
Credit") and no Credit Party has any defense or right of offset with respect to
such amounts.
(d) The obligations of the Credit Parties under this Agreement of
any nature whatsoever, whether now existing or hereafter arising, are
"Obligations" as defined in the Credit Agreement.
(e) Except as expressly modified by this Agreement, all terms and
provisions of the Credit Agreement and the other Loan Documents, including
without limitation the provisions of Sections 11.3 and 13.10 of the Credit
Agreement, are valid and enforceable and remain in full force and effect
according to their respective terms.
(f) Neither Agent nor any Lender has at any time directed or
participated in any aspect of the management of any Credit Party or the conduct
of the business of any Credit Party, and the Credit Parties have made all of
their respective business decisions independently of the Agent or any Lender.
Notwithstanding any other provision of this Agreement or any other contract or
instrument between the Credit Parties, the Lenders or any of them: (i) the
relationship between each of the Agent or any Lender and each of the Credit
Parties shall be limited to the relationship of a lender to a borrower in a
commercial loan transaction; (ii) neither the Agent nor any Lender is or shall
be construed as a partner, joint venturerer, alter-ego, manager, controlling
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person or other business associate or participant of any kind of any Credit
Party (or any other Person), and neither the Agent nor any Lender intends to
assume any such status at any time; and (iii) neither the Agent not any Lender
shall be deemed responsible for (or a participant in) any acts, omissions or
decisions of any Credit Party, the Agent or any other Lender.
(g) Each Credit Party acknowledges and agrees that all
time-related defenses, such as statutes of limitations, doctrines of estoppel,
doctrines of laches or any other rules of law or equity of similar nature, are
hereby tolled with respect to all rights, claims and causes of action of any
kind whatsoever that any Agent or Lender may have against any Credit Party under
the Loan Documents as of the time of the closing of this Agreement through and
including the date which is thirty (30) days after the Waiver Maturity Date (as
defined herein).
2. Provisional Waiver and Limited Deferral. The Lenders and the
Agent respectively agree to waive the Acknowledged Defaults provisionally and to
defer the exercise of any rights or remedies arising by reason of Events of
Default that have occurred solely as a result of the occurrence of the
Acknowledged Defaults until that date (as so extended and as may be further
extended, the "Waiver Maturity Date") which is the earliest to occur of (a)
thirty (30) days after the date of this Agreement; (b) the occurrence of any
Event of Default other than (i) the Acknowledged Defaults or (ii) any breach of
the financial covenants that are the subject of the Acknowledged Defaults as of
the fiscal quarter ending March 31, 2000; (c) any Event of Default (as such term
is defined in the Senior Note Indenture (as defined below)) that shall have
occurred under the Indenture dated as of March 16, 1998, by and among the
Borrower, the subsidiaries acting as Guarantors thereto, and the First National
Bank of Chicago, as Trustee (the "Senior Note Indenture"), or (d) the breach of
any of the further conditions or agreements provided in this Agreement, it being
agreed that the breach of any such further condition or agreement shall
constitute an immediate Default and Event of Default under the Credit Agreement.
3. Aggregate Commitment; Renewal of Letters of Credit.
Notwithstanding anything in the Credit Agreement or the Waiver Letter to the
contrary and in addition to the terms and provisions thereof and without
affecting in any respect the acknowledgements of Section 1 and other
acknowledgements and agreements of the Borrower under this Agreement:
(a) The Aggregate Commitment shall hereby be permanently reduced
to an amount equal to the amount of the Existing Extensions of Credit minus any
prepayments as provided in paragraph 3(b) below minus the amount of any
outstanding Letter of Credit which is cancelled or not renewed pursuant to
paragraph 3(c) plus the amount of Five Million Dollars ($5,000,000); provided,
that any obligation of the Agent and the Lenders to make additional new Loans
shall be at the sole and absolute discretion of, and on terms and conditions
satisfactory to, the Required Lenders.
(b) The Aggregate Commitment shall hereafter be further reduced
and the Loans repaid by an amount equal to (i) 100% of the gross cash proceeds,
net of all reasonable costs of sale and taxes paid or payable as a result
thereof by the Borrower and its Subsidiaries, from the sale or other disposition
of assets by the Borrower or any of its Subsidiaries after the date hereof
(including its equity ownership in any Person); provided, that (A) up to an
aggregate amount of
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$2,000,000 of the gross cash proceeds realized upon any disposition of assets
set forth in the immediately preceding clause (i) shall be exempt from this
paragraph 3(b) and (B) the Borrower agrees that this provision shall not be
deemed to permit the sale of assets not otherwise permitted under the Credit
Agreement, and (ii) 100% of the gross cash proceeds, net of all reasonable costs
of collection, received by the Borrower or any of its Subsidiaries in connection
with disputes over certain receivables (the "Disputed Receivables") with
Medicare/Medicaid carriers in Texas. Such reductions and prepayments shall be
made immediately upon receipt of such net cash proceeds. Notwithstanding
anything to the contrary in any other Loan Document, repayments of Loans in
connection with such reductions to the Aggregate Commitment shall be applied to
the repayment of the Existing Extensions of Credit in the manner and in the
order set forth in section 2.3(b) of the Credit Agreement.
(c) Any Letter of Credit outstanding as of the date hereof, which
expires pursuant to its own terms prior to the Waiver Maturity Date, shall, at
the Borrower's request, be renewed pursuant to the terms of the Credit Agreement
as amended by this Agreement.
(d) The Existing Loans shall bear interest at a rate equal to the
Base Rate plus the Applicable Margin. From and after the Waiver Maturity Date
and at the option of the Required Lenders, all amounts due hereunder shall bear
interest at a rate equal to two percent (2%) in excess of the rate set forth in
this paragraph (d).
(e) Effective upon the execution of this Agreement, (i) elections
of or conversions to LIBOR Rate Loans are terminated and (ii) if an Interest
Period with respect to an existing LIBOR Rate Loan expires, such Loan will be
continued only as a Base Rate Loan.
4. Further Agreements. Notwithstanding anything in the Credit
Agreement or the Waiver Letter to the contrary and in addition to the terms and
provisions set forth therein:
(a) The parties hereto hereby agree that the terms and provisions
set forth in Section 13.9(b) of the Credit Agreement shall remain in full force
and effect; provided, that (i) the Borrower shall have no right to consent to
any such assignment by a Lender thereunder and (ii) there shall be no minimum
amount required to be assigned as set forth in clause (ii) thereof.
(b) In addition to the reports required in other Loan Documents,
the Borrower shall provide the following reports to the Agent and the Lenders:
(i) no later than Wednesday of each week, a report
comparing the actual cash flow for the calendar week
most recently ended to the projected cash flow for
such week set forth in the Cash Flow Projection (as
hereinafter defined);
(ii) no later than fifteen calendar days after the last
day of each fiscal month, an unaudited Consolidated
balance sheet of the Borrower and its Subsidiaries as
of the close of such fiscal month and unaudited
Consolidated statements of income, retained earnings
and cash flows and consolidating statements of income
for the fiscal month then ended and that portion of
the Fiscal Year
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then ended, all in reasonable detail setting forth in
comparative form the corresponding budgeted figures
for the portion of the Fiscal Year then ended and the
corresponding figures for the preceding Fiscal Year
for the portion of the Fiscal Year then ended and
prepared by the Borrower in accordance with GAAP,
subject to year-end adjustments and, if applicable,
containing disclosure of the effect on the financial
position or results of operations of any change in
the application of accounting principles and
practices during the period, and certified by the
chief financial officer, senior vice president of
finance or vice president of finance of the Borrower
to present fairly in all material respects the
financial condition of the Borrower and its
Subsidiaries as of their respective dates and the
results of operations of the Borrower and its
Subsidiaries for the respective periods then ended,
subject to normal year-end adjustments;
(iii) no later than fifteen calendar days after the last
day of each fiscal month, a report of accounts
receivable and accounts payable for the fiscal month
then ending;
(iv) no later than the last day of each calendar week, a
report of the collections and remittances by the
Borrower and its Subsidiaries with respect to the
Disputed Receivables;
(v) no later than the last day of each calendar week, a
cash flow projection (the "Cash Flow Projection") for
the Borrower and its Subsidiaries, prepared on a
"rolling" basis for the next succeeding thirteen-week
period; and
(vi) no later than the first day of each calendar month,
an update on the projected assets sales by the
Borrower and its Subsidiaries and information with
respect to the sale of the Borrower's Subsidiary in
Argentina.
(c) The Credit Parties agree to provide the Agent and the Lenders
with reasonable access to the each financial consultant retained by the
Credit Parties, including, without limitation, the Company Financial
Consultant (as defined herein) and the work product of such consultant.
The Credit Parties further agree and acknowledge that the Agent and the
Lenders shall retain all other information and access under the Loan
Documents and this Agreement which shall include, without limitation,
the right of the Agent and the Lenders to retain the Lender Financial
Consultant (as defined herein).
(d) The Credit Parties agree to refrain from any factoring or like
disposition of accounts receivable.
(e) The Borrower shall have identified the Disputed Receivables to
the satisfaction of the Agent, in its sole discretion, on or before
March 24, 2000.
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(f) The Borrower agrees to pay on the demand of the Agent all
outstanding fees and expenses under the Credit Agreement and under
Section 9(b) hereof.
5. Conditions. The effectiveness of this Agreement shall be
conditioned upon the following:
(a) The following documents shall have been duly authorized and
executed by the parties thereto, shall be in full force and effect and no
default shall exist thereunder, and the Borrower shall have delivered original
counterparts thereof to the Agent:
(i) this Agreement, duly executed and delivered by the
Credit Parties, the Agent and the Lenders
constituting Required Lenders; and
(ii) such other documents, certificates and instruments as
the Agent reasonably requests.
(b) The Borrower shall have engaged a financial consultant (the
"Company Financial Consultant") to assist in validating what steps are required
to be taken to restructure the business of the Credit Parties.
6. Limited Effect of Agreement. Except as expressly provided in
this Agreement, the Credit Agreement, INCLUDING WITHOUT LIMITATION PROVISIONS
FOR ARBITRATION AND WAIVER OF JURY TRIAL OF SECTIONS 13.5 AND 13.6, and each
other Loan Document shall continue to be, and shall remain, in full force and
effect. This Agreement shall not be deemed or otherwise construed: to be a
waiver of, or consent to or a modification or amendment of, any other term or
condition of the Credit Agreement or any other Loan Document; to prejudice any
other right or rights that the Agent or the Lenders, or any of them, may now
have or may have in the future under or in connection with the Credit Agreement
or the Loan Documents, as such documents may be amended, restated or otherwise
modified from time to time; to be a commitment or any other undertaking or
expression of any willingness to engage in any further discussion with any
Credit Party or any other person, firm or corporation with respect to any
waiver, amendment, modification or any other change to the Credit Agreement or
the Loan Documents or any rights or remedies arising in favor of the Lenders or
the Agent, or any of them, under or with respect to any such documents; or to be
a waiver of, or consent to or a modification or amendment of, any other term or
condition of any other agreement by and among any Credit Party, on the one hand,
and the Agent or any other Lender, on the other hand. Neither the requirements
of good faith and fair dealing nor any other theory, concept or argument shall
require any Lender to impart upon any Credit Party any further or greater
benefits; to suffer any prejudice or impairment of any kind whatsoever; or to
tolerate any noncompliance with this Agreement and the other Loan Documents,
because each Lender has bargained for and given valuable consideration for this
Agreement and the other Loan Documents and its creation of express, explicit and
objective limits of what benefits each Lender is willing to provide to the
Credit Parties, and what, in return, the Credit Parties are required to provide
to each Lender. This Agreement and the other Loan Documents provide a clear
statement of each Lender's requirements and obligations and creates an agreed
upon standard of
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performance upon which each Lender is entitled to rely in exercising and
enforcing its respective remedies under the Loan Documents.
7. Release. The Borrower, on behalf of itself and any Person
claiming by, through, or under the Borrower, and each Subsidiary of the
Borrower, on behalf of itself and Persons claiming by, through, or under such
Subsidiary, respectively, acknowledges that it has no claim, counterclaim,
setoff, action or cause of action of any kind or nature whatsoever ("Claims")
against all or any of the Agent, the Lenders or any of the Agent's or the
Lenders' directors, officers, employees, agents, attorneys, financial advisors,
legal representatives, successors and assigns (the Agent, the Lenders and their
directors, officers, employees, agents, attorneys, financial advisors, legal
representatives, successors and assigns are jointly and severally referred to as
the "Lender Group"), that directly or indirectly arise out of or are based upon
or in any manner connected with any "Prior Event" (as defined below), and the
Borrower and each Subsidiary of the Borrower hereby releases the Lender Group
from any liability whatsoever should any Claims nonetheless exist. As used
herein the term "Prior Event" means any transaction, event, circumstances,
action, failure to act or occurrence of any sort or type, whether known or
unknown, which occurred, existed, was taken, permitted or begun prior to the
execution of this Agreement and occurred, existed, was taken, permitted or begun
in accordance with, pursuant to or by virtue of any terms of this Agreement, the
transactions referred to herein, any Loan Document or oral or written agreement
relating to any of the foregoing, including without limitation any approval or
acceptance given or denied.
8. Representations and Warranties. By its execution hereof, the
Borrower hereby certifies on behalf of itself and the other Credit Parties that
each of the representations and warranties set forth in the Credit Agreement and
the other Loan Documents is true and correct as of the date hereof as if fully
set forth herein, and that as of the date hereof no Default or Event of Default
(other than Events of Default occurring as a result of the occurrence of the
Acknowledged Defaults) has occurred and is continuing. Additionally, the
Borrower represents and warrants that since March 14, 2000, no event which has
had, or could reasonably be expected to have, a Material Adverse Effect has
occurred, except as previously disclosed in writing to the Agent.
9. Fees and Expenses.
(a) The Borrower shall pay to the Agent, for distribution to the
Lenders pro rata in accordance with their Commitment Percentages, a fee in an
amount equal to $500,000 which such fee shall be fully earned on the date first
written above and shall be due and payable in full on or prior to the Waiver
Maturity Date.
(b) Notwithstanding anything set forth in any Loan Document to the
contrary and in addition to any of the terms and provisions thereof each of the
Credit Parties agrees to reimburse Agent for all out-of-pocket expenses incurred
(including the reasonable fees and expenses of all of its legal counsel,
advisors, consultants and auditors) retained in connection with the Loan
Documents and the related transactions, documentation and advice in connection
therewith in respect of the administration, default or collection of the
Existing Extensions of Credit or in connection with the Credit Agreement and
related documentation and the exercise, preservation or enforcement of any of
Agent's and Lenders' rights thereunder. Notwithstanding the
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generality of the foregoing, the Credit Parties hereby agree to reimburse the
Agent for all reasonable fees, costs and expenses, including the reasonable
fees, costs and expenses of counsel or other advisors (including management
consultants and appraisers) for advice, assistance, or other representation in
connection with: (i) the forwarding to the Borrower or any other Person on
behalf of Borrower by the Agent of the proceeds of the Existing Extensions of
Credit; (ii) any amendment, modification or waiver of, or consent with respect
to, any of the Loan Documents or related documents or advice in connection with
the administration and collection of the Existing Extensions of Credit or the
rights hereunder or thereunder; (iii) any litigation, contest, dispute, suit,
proceeding or action (whether instituted by Agent, any Lender, any Credit Party
or any other Person) in any way relating to the Existing Extensions of Credit,
any of the Loan Documents and related documentation or any other agreement to be
executed or delivered in connection therewith or herewith, whether as party,
witness, or otherwise, including any litigation, contest, dispute, suit, case,
proceeding or action, and any appeal or review thereof, in connection with a
case commenced by or against the Credit Parties or any other Person that may be
obligated to Agent or any Lender by virtue of the Loan Documents; including any
such litigation, contest, dispute, suit, proceeding or action arising in
connection with any work-out or restructuring of the Existing Extensions of
Credit during the pendency of one or more Events of Default; (iv) any attempt to
enforce any remedies of Agent or any Lender against any or all of the Persons
that may be obligated to Agent or any Lender by virtue of any of the Loan
Documents; including any such attempt to enforce any such remedies in the course
of any work-out or restructuring of the Existing Extensions of Credit during the
pendency of one or more Events of Default; (v) any work-out or restructuring of
the Existing Extensions of Credit during the pendency of one or more Events of
Default; and (vi) efforts to (A) monitor the Existing Extensions of Credit or
any of the other indebtedness obligations of the Credit Parties, and (B)
evaluate, observe or assess any of respective obligations under the Loan
Documents including as to each of clauses (i) through (vi) above, all reasonable
attorneys' and other professional and service providers' fees arising from such
services, including those in connection with any appellate proceedings; and all
expenses, costs, charges and other fees reasonably incurred by such counsel and
others in any way or respect arising in connection with or relating to any of
the events or actions described herein shall be payable, on demand, by the
Credit Parties to the Agent. Without limiting the generality of the foregoing,
such expenses, costs, charges and fees may include: fees, costs and expenses of
accountants, financial advisors, appraisers, investment bankers, management and
other consultants and paralegals; court costs and expenses; photocopying and
duplication expenses; court reporter fees, costs and expenses; long distance
telephone charges; air express charges; telegram or telecopy charges;
secretarial overtime charges; and expenses for travel, lodging and food paid or
incurred in connection with the performance of such legal or other advisory
services.
(c) In addition to the fees and expenses set forth above, the
Borrower hereby agrees that the Agent may retain, at the sole cost and expense
of the Credit Parties, a financial consultant (the "Lender Financial
Consultant") satisfactory to the Agent. The Credit Parties shall provide the
Lender Financial Consultant with all reasonable requested access to their
respective officers and senior level employees, books and records. In addition,
at the request of the Agent, the Borrower shall provide the Agent with a
retainer for the Lender Financial Consultant.
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10. Covenant of the Borrower to Amend the Credit Agreement. To
induce the Agent and the Required Lenders to agree to the terms of this
Agreement, the Borrower hereby agrees to continue negotiations with the Agent
and the Lenders to amend the Credit Agreement on or before the Waiver Maturity
Date in a manner acceptable to the Agent and the Lenders, in their sole and
absolute discretion.
THE FAILURE OF THE BORROWER TO AMEND THE CREDIT AGREEMENT IN A MANNER ACCEPTABLE
TO THE AGENT AND THE LENDERS, IN THEIR SOLE AND ABSOLUTE DISCRETION, BY THE
WAIVER TERMINATION DATE SHALL CONSTITUTE AN IMMEDIATE EVENT OF DEFAULT UNDER THE
CREDIT AGREEMENT, WHICH EVENT OF DEFAULT SHALL PERMIT THE AGENT AND THE LENDERS
THE RIGHT TO PURSUE ALL RIGHTS AND REMEDIES UNDER THE CREDIT AGREEMENT AND THE
OTHER LOAN DOCUMENTS. THE BORROWER ACKNOWLEDGES THAT THE PROVISIONS OF THIS
PARAGRAPH 10 ARE A MATERIAL AND SUBSTANTIAL INDUCEMENT TO THE AGREEMENT OF THE
PARTIES HERETO TO ENTER INTO THIS AGREEMENT.
11. No Third Party Beneficiaries. This Agreement does not and
shall not be construed to confer any rights or remedies upon any Person other
than the parties to this Agreement and their respective successors and permitted
assigns.
12. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of North Carolina.
13. Counterparts. This Agreement may be executed in separate
counterparts, each of which when executed and delivered is an original but all
of which taken together constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date and year first above written.
BORROWER:
RURAL/METRO CORPORATION, a Delaware corporation
By: /s/ DEAN HOFFMAN
--------------------------------
Name: Dean Hoffman
Title: Vice President
[Signature Pages follow]
[Waiver Letter]
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LENDERS:
FIRST UNION NATIONAL BANK,
as Agent and Lender
By: /s/ RON R. FERGUSON
-----------------------
Name: Ron R. Ferguson
Title: Director
[Signature Pages follow]
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FLEET BANK, N.A., as Lender
By:_________________________________
Name:____________________________
Title:___________________________
[Signature Pages follow]
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BANK ONE, NA, as Lender
By: /s/ DENNIS WARREN
--------------------------------
Name: Dennis Warren
Title: Vice President
[Signature Pages follow]
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ABN AMRO BANK N.V., as Lender
By: /s/ STEVEN C. WIMPENNY
----------------------------------
Name: Steven C. Wimpenny
----------------------------------
Title: Group Senior Vice President
----------------------------------
[Signature Pages follow]
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WELLS FARGO BANK, as Lender
By:_________________________________
Name:____________________________
Title:___________________________
[Signature Pages follow]
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GENERAL ELECTRIC CAPITAL CORPORATION, as Lender
By: /s/ KARL KIEFFER
---------------------------------
Name: Karl Kieffer
---------------------------------
Title: Duly Authorized Signatory
---------------------------------
[Signature Pages follow]
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BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Lender
By: /s/ KURT A. HUISMAN
---------------------------------
Name: Kurt A. Huisman
----------------------------
Title: Vice President
---------------------------
[Signature Pages follow]
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PARIBAS, as Lender
By: /s/ Don L. Unruh
_________________________________
Name: Don L. Unruh
____________________________
Title: Vice President
___________________________
By: /s/ William A. Wexler
_________________________________
Name: William A. Wexler
____________________________
Title: Director
___________________________
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By execution hereof, the undersigned Subsidiary Guarantors hereby acknowledge
and agree to the terms hereof; hereby reaffirm their obligations under the
Subsidiary Guaranty and the Intercompany Subordination Agreement; acknowledge
that the Guaranty Obligations with respect to the Subsidiary Guaranty include
the obligations under this Agreement; acknowledge that the Senior Debt as
defined in and with respect to the Intercompany Subordination Agreement include
the obligations under this Agreement; and hereby agree that the terms of the
Subsidiary Guaranty shall remain in full force and effect notwithstanding the
terms of the Waiver Letter or this Agreement or any other event or condition
which has occurred.
ACCEPTED AND AGREED TO AS OF MARCH 14, 2000.
AID AMBULANCE AT VIGO COUNTY, INC., an Indiana corporation, AMBULANCE TRANSPORT
SYSTEMS, INC., a New Jersey corporation, AMERICAN LIMOUSINE SERVICE, INC., an
Ohio corporation, ARROW AMBULANCE, INC., an Idaho corporation, BEACON
TRANSPORTATION, INC., a New York corporation, COASTAL EMS, INC., a Georgia
corporation, CORNING AMBULANCE SERVICE INC., a New York corporation, DONLOCK,
LTD., a Pennsylvania corporation, E.M.S. VENTURES, INC., a Georgia corporation,
EMS VENTURES OF SOUTH CAROLINA, INC., a South Carolina corporation, EASTERN
AMBULANCE SERVICE, INC., a Nebraska corporation, EASTERN PARAMEDICS, INC., a
Delaware corporation, GOLD CROSS AMBULANCE SERVICES, INC., a Delaware
corporation, GOLD CROSS AMBULANCE SERVICE OF PA., INC., an Ohio corporation,
KEEFE & KEEFE, INC., a New York corporation, KEEFE & KEEFE AMBULETTE, LTD., a
New York corporation, LASALLE AMBULANCE INC., a New York corporation, MEDI-CAB
OF GEORGIA, INC., a Delaware corporation, MEDICAL EMERGENCY DEVICES AND SERVICES
(MEDS), INC., an Arizona corporation, MEDICAL TRANSPORTATION SERVICES, INC., a
South Dakota corporation, MEDSTAR EMERGENCY MEDICAL SERVICES, INC., a Delaware
corporation, MERCURY AMBULANCE SERVICE, INC., a Kentucky corporation, METRO CARE
CORP., an Ohio corporation, MO-RO-KO, INC., an Arizona corporation, MULTI CAB
INC., a New Jersey corporation, MULTI-CARE INTERNATIONAL, INC., a New Jersey
corporation, MULTI-CARE MEDICAL CAR SERVICE, INC., a New Jersey corporation,
MULTI-HEALTH CORP., a Florida corporation, MYERS AMBULANCE SERVICE, INC., an
Indiana corporation, NATIONAL AMBULANCE & OXYGEN SERVICE, INC., a New York
corporation, NORTH MISS. AMBULANCE SERVICE, INC., a Mississippi corporation,
PROFESSIONAL MEDICAL SERVICES, INC., an Arkansas corporation, RISC AMERICA
ALABAMA FIRE SAFETY SERVICES, INC., a Delaware corporation, RMFD OF NEW JERSEY,
INC., a Delaware corporation, R/M MANAGEMENT CO., INC., an Arizona corporation,
R/M OF MISSISSIPPI, INC., a Delaware corporation, R/M OF TENNESSEE G.P., INC., a
Delaware corporation, R/M OF TENNESSEE L.P., INC., a Delaware corporation, R/M
OF TEXAS G.P., INC., a Delaware corporation, R/M PARTNERS, INC., a Delaware
corporation, RMC CORPORATE CENTER, L.L.C., an Arizona limited liability company,
By: RURAL/METRO CORPORATION, an Arizona corporation, Its Member, RURAL/METRO
ARGENTINA, L.L.C., an Arizona limited liability company, By: RURAL/METRO
INTERNATIONAL, INC., a Delaware corporation, Its Member, RURAL/METRO BRASIL,
L.L.C., an Arizona limited liability company, By: RURAL/METRO INTERNATIONAL,
INC., a Delaware corporation, Its Member, RURAL/METRO CANADIAN HOLDINGS, INC., a
Delaware corporation, RURAL/METRO COMMUNICATIONS SERVICES, INC., a Delaware
corporation, RURAL/METRO CORPORATION, an Arizona corporation, RURAL/METRO
CORPORATION OF FLORIDA, a Florida corporation, RURAL/METRO CORPORATION OF
TENNESSEE, a Tennessee corporation, RURAL/METRO FIRE DEPT., INC., an Arizona
corporation, RURAL/METRO HOSPITAL SERVICES, INC., a Delaware corporation
By: /s/ Dean Hoffman
________________________________
Name: Dean Hoffman
___________________________
Title: Vice President
___________________________
<PAGE> 20
RURAL/METRO INTERNATIONAL, INC., a Delaware corporation, RURAL/METRO LOGISTICS,
INC., a Delaware corporation, RURAL/METRO MID-ATLANTIC, INC., a Delaware
corporation, RURAL/METRO MID-SOUTH, L.P., a Delaware limited partnership, By:
R/M OF TENNESSEE G.P., INC., a Delaware corporation, Its General Partner,
RURAL/METRO OF ALABAMA, INC., a Delaware corporation, RURAL/METRO OF ARGENTINA,
INC., a Delaware corporation, RURAL/METRO OF ARKANSAS, INC., a Delaware
corporation, RURAL/METRO OF ARLINGTON, INC., a Delaware corporation, RURAL/METRO
OF BRASIL, INC., a Delaware corporation, RURAL/METRO OF CALIFORNIA, INC., a
Delaware corporation, RURAL/METRO OF CENTRAL ALABAMA, INC., a Delaware
corporation, RURAL/METRO OF CENTRAL COLORADO, INC., a Delaware corporation,
RURAL/METRO OF CENTRAL OHIO, INC., a Delaware corporation, RURAL/METRO OF
COLORADO, a Delaware corporation, RURAL/METRO OF GEORGIA, INC., a Delaware
corporation, RURAL/METRO OF GREATER SEATTLE, INC., a Washington corporation,
RURAL/METRO OF INDIANA, INC., a Delaware corporation, RURAL/METRO OF INDIANA,
L.P., a Delaware limited partnership, By: THE AID AMBULANCE COMPANY, INC., a
Delaware corporation, Its General Partner, RURAL/METRO OF INDIANA II, L.P., a
Delaware limited partnership, By: THE AID AMBULANCE COMPANY, INC., a Delaware
corporation, Its General Partner, RURAL/METRO OF KENTUCKY, INC., a Delaware
corporation, RURAL/METRO OF MISSISSIPPI, INC., a Delaware corporation,
RURAL/METRO OF NEBRASKA, INC., a Delaware corporation, RURAL/METRO OF NEVADA,
INC., a Delaware corporation, RURAL/METRO OF NEW YORK, INC., a Delaware
corporation, RURAL/METRO OF NORTH FLORIDA, INC., a Florida corporation,
RURAL/METRO OF NORTH TEXAS, L.P., By: R/M OF TEXAS G.P., INC., a Delaware
corporation, Its General Partner, RURAL/METRO OF NORTHERN OHIO, INC., a Delaware
corporation, RURAL/METRO OF OHIO, INC., a Delaware corporation, RURAL/METRO OF
OREGON, INC., a Delaware corporation, RURAL/METRO OF ROCHESTER, INC., a New York
corporation, RURAL/METRO OF SAN DIEGO, INC., a California corporation,
RURAL/METRO OF SOUTH CAROLINA, INC., a Delaware corporation, RURAL/METRO OF
SOUTH DAKOTA, INC., a Delaware corporation, RURAL/METRO OF SOUTHERN OHIO, INC.,
an Ohio corporation, RURAL/METRO OF TENNESSEE, L.P., a Delaware limited
partnership, By: R/M OF TENNESSEE G.P., INC., a Delaware corporation, Its
General Partner, RURAL/METRO OF TEXAS, INC., a Delaware corporation, RURAL/METRO
OF TEXAS, L.P., a Delaware limited partnership, By: R/M OF TEXAS G.P., INC., a
Delaware corporation, Its General Partner, RURAL/METRO PROTECTION SERVICES,
INC., an Arizona corporation, RURAL/METRO TEXAS HOLDINGS, INC., a Delaware
corporation, SW GENERAL, INC., an Arizona corporation, SIOUX FALLS AMBULANCE,
INC., a South Dakota corporation, SOUTH GEORGIA EMERGENCY MEDICAL SERVICES,
INC., a Georgia corporation, SOUTHWEST AMBULANCE AND RESCUE OF ARIZONA, INC., an
Arizona corporation, SOUTHWEST AMBULANCE OF CASA GRANDE, INC., an Arizona
corporation, SOUTHWEST AMBULANCE OF TUCSON, INC., an Arizona corporation,
SOUTHWEST GENERAL SERVICES, INC., an Arizona corporation, THE AID AMBULANCE
COMPANY, INC., a Delaware corporation, THE AID COMPANY, INC., an Indiana
corporation, TOWNS AMBULANCE SERVICE, INC., a New York corporation, VALLEY FIRE
SERVICE, INC., a Delaware corporation, W & W LEASING COMPANY, INC., an Arizona
corporation
By: /s/ Dean Hoffman
________________________________
Name: Dean Hoffman
___________________________
Title: Vice President
___________________________
<PAGE> 1
EXHIBIT 10.56
FIRST AMENDMENT TO
PROVISIONAL WAIVER AND STANDSTILL AGREEMENT
THIS FIRST AMENDMENT TO PROVISIONAL WAIVER AND STANDSTILL AGREEMENT
(this "First Amendment") is made and entered into as of the 13th day of April,
2000, by the Lenders party to the Credit Agreement identified below and FIRST
UNION NATIONAL BANK, as Agent for the Lenders, and RURAL/METRO CORPORATION, a
corporation organized under the laws of Delaware (the "Borrower").
Statement of Purpose
Pursuant to the Provisional Waiver and Standstill Agreement dated as of
March 14, 2000 (as amended, restated, supplemented or otherwise modified, the
"Waiver Agreement"), the Borrower, the Agent and the Lenders, each a party to
the Amended and Restated Credit Agreement dated as of March 16, 1998 (as amended
by First Amendment dated as of June 30, 1998 and as further amended, restated,
supplemented or otherwise modified, the "Credit Agreement"), agreed to waive the
Acknowledged Defaults provisionally for a period of 30 days after March 14, 2000
and to defer the exercise of remedies during such period, subject to the express
terms and provisions of the Waiver Agreement.
Pursuant to the terms of the Waiver Agreement, the Borrower agreed,
among other things, to continue negotiations with the Agent and the Lenders to
amend or otherwise restructure the Credit Agreement on or before April 14, 2000.
The Borrower, the Agent and the Lenders are continuing to negotiate but have not
yet reached an agreement on such amendment or restructuring and the Borrower
has, therefore, requested an additional period of time in which to continue such
negotiations.
The Lenders and the Agent are willing to continue to waive the
Acknowledged Defaults provisionally for an additional period of time and to
defer the exercise of remedies in respect of the Acknowledged Defaults during
such period subject to the express terms and provisions of this First Amendment.
This First Amendment shall be deemed to be one of the Loan Documents under and
pursuant to the Credit Agreement.
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Effect of Amendment. Except as expressly amended hereby, the Waiver
Agreement, the Credit Agreement and each other Loan Document, shall be and
remain in full force and effect. The amendments granted in this First Amendment
are specific and limited and shall not constitute a modification, acceptance or
waiver of any other provision of the Waiver
<PAGE> 2
Agreement, the Credit Agreement, the other Loan Documents or any other document
or instrument entered into in connection therewith, or a future modification,
acceptance or waiver of the provisions set forth therein. For avoidance of
doubt, but in no way limiting the scope and breadth of the previous sentences in
this paragraph, each Credit Party hereby reaffirms each of the acknowledgments
and agreements made by it in Sections 1 and 6 of the Waiver Agreement as if each
such acknowledgment and agreement was made as of the date hereof.
2. Capitalized Terms. All capitalized undefined terms used in this
First Amendment shall have the meanings assigned thereto in the Waiver
Agreement.
3. Amendment of Waiver Agreement. The Waiver Agreement shall be hereby
amended as follows:
a. Section 2 shall hereby be amended by deleting Section 2 and
replacing it in its entirety with the following:
"Provisional Waiver and Limited Deferral. The Lenders and the
Agent respectively agree to waive the Acknowledged Defaults
provisionally and to defer the exercise of any rights or remedies
arising by reason of Events of Default that have occurred solely as a
result of the occurrence of the Acknowledged Defaults until that date
(as so extended and as may be further extended, the "Waiver Maturity
Date") which is the earliest to occur of (a) July 14, 2000; (b) the
occurrence of any Event of Default other than (i) the Acknowledged
Defaults or (ii) any breach of the financial covenants that are the
subject of the Acknowledged Defaults as of the fiscal quarters ending
March 31, 2000 and June 30, 2000; (c) any Event of Default (as such
term is defined in the Senior Note Indenture (as defined below)) that
shall have occurred under the Indenture dated as of March 16, 1998, by
and among the Borrower, the subsidiaries acting as Guarantors thereto,
and the First National Bank of Chicago, as Trustee (the "Senior Note
Indenture"); or (d) the breach of any of the further conditions or
agreements provided in the Waiver Agreement as amended by this First
Amendment, it being agreed that the breach of any such further
condition or agreement shall constitute an immediate Default and Event
of Default under the Credit Agreement."
b. Paragraph 3(a) shall hereby be amended by deleting paragraph 3(a)
and replacing it in its entirety with the following:
"The Aggregate Commitment shall hereby be permanently reduced
to an amount equal to the amount of the Existing Extensions of Credit
minus any prepayments as provided in paragraph 3(b) below minus the
amount of any outstanding Letter of Credit which is canceled or not
renewed pursuant to paragraph 3(c)."
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<PAGE> 3
c. Paragraph 3(b) shall be amended by deleting paragraph 3(b) and
replacing it in its entirety with the following:
"(i) The Aggregate Commitment shall hereafter be further
reduced and the Existing Loans repaid by an amount equal to: (A) one
hundred percent (100%) of the gross cash proceeds, net of all
reasonable costs of sale and taxes paid or payable as a result thereof
by the Borrower and its Subsidiaries, from the sale or other
disposition of assets by the Borrower or any of its Subsidiaries from
and after March 14, 2000 (including any Borrower's or its Subsidiary's
equity ownership in any Person), (B) one hundred percent (100%) of the
gross cash proceeds received by the Borrower or any of its Subsidiaries
in connection with disputes over certain receivables (the "Disputed
Receivables") with Medicare/Medicaid carriers in Texas, and (C) one
hundred percent (100%) of the gross cash proceeds received by the
Borrower or any of its Subsidiaries from any and all receivables from
their respective business operations in Texas which the Borrower elects
to shutdown at its option (net of expenses, termination costs, costs of
professionals and other direct costs related to the shutdown of such
business operations, which expenses shall include severance and other
employee-related expenses in respect of the shutdown of such business
operations and payment of open accounts payable balances in respect of
such business operations for which services were rendered prior to such
shutdown); provided that (I) any and all receivables generated by the
Fort Worth, Texas operations shall be excluded from the requirements
set forth in this clause (C) and (II) Disputed Receivables shall be
excluded from the requirements set forth in this clause (C) and subject
to the requirements set forth in clause (B) above. Notwithstanding the
foregoing, (X) up to an aggregate amount of two million ($2,000,000)
dollars of the gross cash proceeds (the "Carve Out") realized upon any
disposition of assets or shutdown of operations set forth in the
preceding clauses (A) and (C) shall be exempt from this paragraph
3(b)(i), and (Y) the Borrower agrees that this provision shall not be
deemed to permit the sale of assets not otherwise permitted under the
Credit Agreement. All reductions and prepayments set forth in this
paragraph shall be made immediately upon receipt of the applicable cash
proceeds and, for any transactions subject to clause (C) of this
paragraph 3(b)(i), the identification of any applicable adjustments to
such proceeds; provided, that all adjustments to any proceeds received
by the Borrower or its Subsidiaries shall be completed, and the
applicable amounts turned over to the Lenders within ten (10) Business
Days after the end of the month in which such funds are received unless
the Lender Financial Consultant agrees to provide the Borrower
additional time to complete its adjustments.
(ii) The Aggregate Commitment shall, in addition to the other
reductions set forth in this paragraph 3(b), hereafter be further
reduced and the Existing Loans repaid at any time that the Borrower's
and its Subsidiaries' actual ending cash balances as reflected on the
Borrower's weekly Cash Flow Projection report provided pursuant to
Section 4(b)(i) below (the "Reported Cash Balance") is greater than ten
million ($10,000,000) dollars for any two (2) consecutive calendar
weeks in an amount equal to (A) fifty percent (50%) of the difference
between (I) the Reported Cash Balance of the calendar week most
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<PAGE> 4
recently ended minus (II) ten million ($10,000,000) dollars (the
difference between the Reported Cash Balance of the calendar week most
recently ended minus ten million ($10,000,000) dollars defined herein
as the "Excess Cash") until the aggregate amount of the Excess Cash is
equal to four million ($4,000,000) dollars, and thereafter, (B) ninety
percent (90%) of the Excess Cash. The foregoing Excess Cash amounts
shall be due and payable on the date on which the applicable Cash Flow
Projection report is due."
Notwithstanding anything to the contrary in any other Loan
Document, repayments of Existing Loans in connection with reductions to
the Aggregate Commitment pursuant to this paragraph 3(b) shall be
applied to the repayment of the Existing Extensions of Credit in the
manner and in the order set forth in Section 2.3(b) of the Credit
Agreement.
d. Paragraph 3(c) shall hereby be amended by adding the following
sentence to the end of paragraph 3(c):
"For the purposes of the Waiver Agreement, as amended hereby,
a renewal of a Letter of Credit shall include a change of the
beneficiary of the applicable Letter of Credit if, and only if, the new
beneficiary is providing the same services as the previous beneficiary
and all other terms and conditions of the new Letter of Credit are
identical to the previous Letter of Credit."
e. Paragraph 3(d) shall hereby be amended by deleting paragraph 3(d)
and replacing it in its entirety with the following:
"The Existing Loans shall bear interest at a rate equal to the
Base Rate plus the Applicable Margin (the "Applicable Base Rate") plus
two percent (2.0%) per annum (which two percent (2.0%) shall, for the
purposes hereof, be defined as "Deferred Interest"). Interest accruing
at the Applicable Base Rate shall be due and payable in arrears on the
first Business Day of each calendar month commencing on May 1, 2000.
Deferred Interest shall accrue and be payable as follows: (i) at any
time that the Reported Cash Balance is greater than ten million
($10,000,000) dollars for any two (2) consecutive weeks, the Deferred
Interest shall be due and payable on the date(s) such weekly Cash Flow
Projection report is due in an amount equal to the difference between
(A) the Reported Cash Balance of the calendar week most recently ended
minus (B) ten million ($10,000,000) dollars, and (ii) all remaining
accrued but unpaid Deferred Interest shall be due and payable in full
on the Waiver Maturity Date, if ever; provided, that, each time
subsequent to the date hereof through the Waiver Maturity Date, the
Borrower has reduced the amount of the Existing Extensions of Credit by
no less than five million ($5,000,000) dollars, the Deferred Interest
that would accrue for the next thirty (30) days shall be waived by the
Agent and Lenders, it being acknowledged and agreed that any accrued
but unpaid Deferred Interest up through the date on which the waiver of
Deferred Interest referred to above becomes applicable shall still be
due and payable in accordance with the terms hereof. In addition, from
and after the Waiver Maturity Date, and at the
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<PAGE> 5
option of Required Lenders, all amounts due under the Loan Documents
shall bear interest at a rate equal to two percent (2.0%) in excess of
the rate set forth in this paragraph 3(d).
f. Section 4 shall hereby be amended by deleting Section 4(b)(v) in its
entirety and replacing it with the following:
"No later than the last day of each calendar week, a cash flow
projection (the "Cash Flow Projection") for the Borrower and its
Subsidiaries, prepared on a "rolling basis" for the next succeeding
thirteen (13) week period, which shall be in the form of, and contain
the information set forth in, the report attached hereto as Exhibit
"A";
g. Section 4 shall hereby be further amended by adding the following
clause (vii) to the end of Section 4(b):
"; and no later than May 15, 2000, a detailed schedule
identifying on a preliminary basis the anticipated costs and expenses
and net realizable value of the receivables and sale of any assets in
connection with the voluntary shutdown of the Borrower's and
Subsidiaries' respective operations."
h. Section 4 shall hereby be further amended by adding the following
paragraphs (g), (h), (i) and (j) to the end of Section 4:
"(g) Each calendar week, the Borrower and its Subsidiaries
shall maintain a cash balance of no less than fifty percent (50%) of
the projected cash balance for such week set forth in the Cash Flow
Projection provided on the last day of the previous calendar week.
(h) The amount of disbursements in each two (2) consecutive
week period by the Borrower and its Subsidiaries shall not exceed by
more than five percent (5%) the amount of disbursements for such two
(2) week period set forth in the applicable Cash Flow Projection
reports; provided, that the Borrower and its Subsidiaries may use the
Carve Out or any Excess Cash that is not required to be turned over to
the Lenders to make any additional disbursements.
(i) The Borrower and its Subsidiaries shall maintain a
positive Consolidated operating income, except for restructuring
charges taken in accordance with GAAP, as reflected in the financial
statements prepared pursuant to Section 4(b)(ii) above.
(j) No later than April 30, 2000, the Borrower shall have
engaged a financial advisor (the "Financial Advisor") to assist the
Borrower in exploring strategic alternatives. The Agent and the Lenders
shall be provided with an executed copy of the engagement letter
between the Borrower and the Financial Advisor promptly upon such
letter's execution. The Agent and Lenders shall, in addition, shall be
provided upon request reasonable access to the Financial Advisor and
shall be further provided with copies of all
5
<PAGE> 6
reports, analyses, and other work-product of such Financial Advisor
when such information is delivered to the Borrower."
4. Release. Each Credit Party, on behalf of itself and any Person
claiming by, through, or under such Credit Party, acknowledges that it has no
claim, counterclaim, setoff, action or cause of action of any kind or nature
whatsoever ("Claims") against all or any of the Agent, the Lenders or any of the
Agent's or the Lenders' directors, officers, employees, agents, attorneys,
financial advisors, accountants, legal representatives, successors and assigns
(the Agent, the Lenders and their directors, officers, employees, agents,
attorneys, financial advisors, accountants, legal representatives, successors
and assigns are jointly and severally referred to as the "Lender Group"), that
directly or indirectly arise out of or are based upon or in any manner connected
with any "Prior Event" (as defined below), and each Credit Party, on behalf of
itself and any Person claiming by, through or under such Credit Party, hereby
releases the Lender Group from any liability whatsoever should any Claims
nonetheless exist. As used herein the term "Prior Event" means any transaction,
event, circumstances, action, failure to act or occurrence of any sort or type,
whether known or unknown, which occurred, existed, was taken, permitted or begun
prior to the execution of this First Amendment and occurred, existed, was taken,
permitted or begun in accordance with, pursuant to or by virtue of any terms of
this First Amendment, the transactions referred to herein, any Loan Document or
oral or written agreement relating to any of the foregoing, including without
limitation any approval or acceptance given or denied.
5. Representations and Warranties. By its execution hereof, the
Borrower hereby certifies on behalf of itself and the other Credit Parties that
each of the representations and warranties set forth in the Credit Agreement and
the other Loan Documents is true and correct as of the date hereof as if fully
set forth herein, and that as of the date hereof no Default or Event of Default
(other than Events of Default occurring as a result of the occurrence of the
Acknowledged Defaults) has occurred and is continuing. Additionally, the
Borrower represents and warrants that since April 13, 2000, no event which has
had, or could reasonably be expected to have, a Material Adverse Effect has
occurred, except as previously disclosed in writing to the Agent.
6. Conditions. The effectiveness of this First Amendment shall be
conditioned upon the following:
(a) The following documents shall have been duly authorized and
executed by the parties thereto, shall be in full force and effect and no
default shall exist thereunder, and the Borrower shall have delivered original
counterparts thereof the Agent:
(i) this First Amendment, duly executed and delivered by
the Credit Parties, the Agent and the Lenders
constituting Required Lenders; and
(ii) such other documents, certificates and instruments as
the Agent reasonably requests.
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<PAGE> 7
(b) The Borrower shall have paid all outstanding fees and expenses, to
the extent that the Borrower has received an invoice for such fees and expenses,
through the date hereof of Stroock & Stroock & Lavan LLP ("SSL"), Policano &
Manzo LLP, and Kennedy, Covington, Lobdell & Hickman, L.L.P. and shall, in
addition, have paid SSL a retainer of one hundred thousand ($100,0000) dollars
to be applied against any unpaid fees and expenses from and after the date
hereof through the Waiver Maturity Date.
7. Waiver of Subrogation Rights. Notwithstanding anything to the
contrary in the Subsidiary Guaranty or any other Loan Document, each Credit
Party hereby irrevocably waives any claims or other rights which it may now have
or hereafter acquire against the Borrower or any other obligor that arise from
the existence, payment, performance or enforcement of such Guarantor's
obligations under the Subsidiary Guaranty or any other Loan Document, including
any right of subrogation, reimbursement, exoneration or indemnification, any
right to participate in any claim or remedy of Agent or any Lender against the
Borrower or any other obligor or any collateral which Agent or any Lender now
has or hereafter acquires, whether or not such claim, remedy or right arises in
equity, or under contract, statute or common law, including, but not limited to,
the right to take or receive from the Borrower or any other obligor, directly or
indirectly, in cash or other property or by setoff or any manner, payment or
security on account of such claim or other rights. If any amount shall be paid
to any Guarantor in violation of the preceding sentence, such amount shall be
deemed to have been paid to such Guarantor for the benefit of, and held in trust
for, the Lenders and shall forthwith be paid to the Agent on behalf of the
Lenders to be credited and applied against the Guaranteed Obligations, whether
matured or unmatured.
8. Governing Law. THE WAIVER AGREEMENT, AS AMENDED HEREIN, AND EACH
OTHER LOAN DOCUMENT, UNLESS OTHERWISE EXPRESSLY SET FORTH THEREIN, SHALL BE
GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NORTH CAROLINA, WITHOUT REFERENCE TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES
THEREOF.
9. Miscellaneous.
a. Reversal of Payments. To the extent the Borrower makes a payment or
payments to the Agent for the ratable benefit of Lenders pursuant to the Waiver
Agreement, as amended herein, the Notes or any other Loan Document which
payments or proceeds or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside and/or required to be repaid to a
trustee, receiver or any other party under any bankruptcy law, state or federal
law, common law or equitable cause, then, to the extent of such payment or
proceeds repaid, the Obligations or part thereof intended to be satisfied shall
be revived and continued in full force and effect as if such payment or proceeds
had not been received by the Agent.
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<PAGE> 8
b. Arbitration.
(i) Binding Arbitration. Upon demand of any party,
whether made before or after institution of any judicial
proceeding, any dispute, claim or controversy arising out of,
connected with or relating to the Waiver Agreement, as amended
herein, the Notes or any other Loan Documents ("Disputes"),
between or among parties to this First Amendment, the Notes or
any other Loan Document shall be resolved by binding
arbitration as provided herein. Institution of a judicial
proceeding by a party does not waive the right of that party
to demand arbitration hereunder. Disputes may include, without
limitation, tort claims, counterclaims, claims brought as
class actions, claims arising from Loan Documents executed in
the future, or claims concerning any aspect of the past,
present or future relationships arising out or connected with
the Loan Documents. Arbitration shall be conducted under and
governed by the Commercial Financial Disputes Arbitration
Rules (the "Arbitration Rules") of the American Arbitration
Association (the "AAA") and Title 9 of the U.S. Code. All
arbitration hearings shall be conducted in Charlotte, North
Carolina. The expedited procedures set forth in Rule 51, et
seq., of the Arbitration Rules shall be applicable to claims
of less than $1,000,000. All applicable statutes of limitation
shall apply to any Dispute. A judgment upon the award may be
entered in any court having jurisdiction. The panel from which
all arbitrators are selected shall be comprised of licensed
attorneys. The single arbitrator selected for expedited
procedure shall be a retired judge from the highest court of
general jurisdiction, state or federal, of the state where the
hearing will be conducted. The arbitrators shall be appointed
as provided in the Arbitration Rules.
(ii) Preservation of Certain Remedies.
Notwithstanding the preceding binding arbitration provisions,
the Agent and the Lenders preserve, without diminution,
certain remedies that the Agent and the Lenders may employ or
exercise freely, either alone, in conjunction with or during a
Dispute. The Agent and the Lenders shall have and hereby
reserve the right to proceed in any court of proper
jurisdiction or by self help to exercise or prosecute the
following remedies: (A) all rights to foreclose against any
real or personal property or other security by exercising a
power of sale granted in the Loan Documents or under
applicable law or by judicial foreclosure and sale, (B) all
rights of self help including peaceful occupation of property
and collection of rents, set off, and peaceful possession of
property and (C) obtaining provisions or ancillary remedies
including injunctive relief, sequestration, garnishment,
attachment, appointment of receiver and in filing an
involuntary bankruptcy proceeding. Preservation of these
remedies does not limit the power of any arbitrator to grant
similar remedies that may be requested by a party in a
Dispute.
c. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
AGENT, EACH LENDER AND THE BORROWER HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY
8
<PAGE> 9
ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH
THE WAIVER AGREEMENT, AS AMENDED HEREIN, THE NOTES OR THE OTHER LOAN DOCUMENTS,
ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH
RIGHTS AND OBLIGATIONS.
d. Survival of Terms of Agreement. The waivers, agreements, covenants,
representations and warranties of each Credit Party in the Waiver Agreement, as
amended herein, shall survive the Waiver Maturity Date.
10. Counterparts. This First Amendment may be executed in separate
counterparts, each of which when executed and delivered is an original but all
of which taken together constitute one and the same instrument.
[Signature pages follow]
9
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be duly executed as of the date and year first above written.
BORROWER:
RURAL/METRO CORPORATION, a Delaware
corporation
By: /s/ Dean Hoffman
_________________________________________
Name: Dean Hoffman
_______________________________________
Title: Vice President
______________________________________
[Signature pages follow]
10
<PAGE> 11
LENDERS:
FIRST UNION NATIONAL BANK,
as Agent and Lender
By: /s/ Ron R. Ferguson
_________________________________________
Name: Ron R. Ferguson
_______________________________________
Title: Senior Vice President
______________________________________
[Signature pages follow]
11
<PAGE> 12
FLEET BANK, N.A., as Lender
By: /s/ Vincent Pitts
_________________________________________
Name: Vincent Pitts
_______________________________________
Title: Vice President
______________________________________
[Signature pages follow]
12
<PAGE> 13
BANK ONE, NA, as Lender
By: /s/ BONNIE D. WILSON
_________________________________________
Name: Bonnie D. Wilson
_______________________________________
Title: Vice President
______________________________________
[Signature pages follow]
13
<PAGE> 14
ABN AMRO BANK N.V., as Lender
By: /s/ WILLIAM J. FITZGERALD
_________________________________________
Name: William J. Fitzgerald
_______________________________________
Title: Senior Vice President
______________________________________
By: /s/ WILLIAM J. TERESKY, JR.
_________________________________________
Name: William J. Teresky, Jr.
_______________________________________
Title: Vice President
______________________________________
[Signature pages follow]
14
<PAGE> 15
WELLS FARGO BANK, as Lender
By: /s/ ART BROKX
_________________________________________
Name: Art Brokx
_______________________________________
Title: Vice President
______________________________________
[Signature pages follow]
15
<PAGE> 16
GENERAL ELECTRIC CAPITAL
CORPORATION, as Lender
By: /s/ Thomas E. Johnstone
Name: Thomas E. Johnstone
Title: Duly Authorized Signatory
[Signature pages follow]
16
<PAGE> 17
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Lender
By: /s/ Kurt A. Huisman
Name: Kurt A. Huisman
Title: Vice President
[Signature pages follow]
17
<PAGE> 18
PARIBAS, as Lender
By: /s/ William A. Wexler
Name: William A. Wexler
Title: Director
By: /s/ Edward V. Canale
Name: Edward V. Canale
Title: Managing Director
18
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By execution hereof, the undersigned Subsidiary Guarantors hereby acknowledge
and agree to the terms hereof, including, without limitation, Section 7 of this
First Amendment; hereby reaffirm their respective obligations under the
Subsidiary Guaranty and the Intercompany Subordination Agreement; acknowledge
that the Guaranty Obligations with respect to the Subsidiary Guaranty include
the obligations under this First Amendment; acknowledge that the Senior Debt as
defined in and with respect to the Intercompany Subordination Agreement include
the obligations under this First Amendment; and hereby agree that the terms of
the Subsidiary Guaranty shall remain in full force and effect notwithstanding
any event or condition which has occurred.
ACCEPTED AND AGREED TO AS OF APRIL 13, 2000.
AID AMBULANCE AT VIGO COUNTY, INC., an Indiana corporation, AMBULANCE TRANSPORT
SYSTEMS, INC., a New Jersey corporation, AMERICAN LIMOUSINE SERVICE, INC., an
Ohio corporation, ARROW AMBULANCE, INC., an Idaho corporation, BEACON
TRANSPORTATION, INC., a New York corporation, COASTAL EMS, INC., a Georgia
corporation, CORNING AMBULANCE SERVICE INC., a New York corporation, DONLOCK,
LTD., a Pennsylvania corporation, E.M.S. VENTURES, INC., a Georgia corporation,
EMS VENTURES OF SOUTH CAROLINA, INC., a South Carolina corporation, EASTERN
AMBULANCE SERVICE, INC., a Nebraska corporation, EASTERN PARAMEDICS, INC., a
Delaware corporation, GOLD CROSS AMBULANCE SERVICES, INC., a Delaware
corporation, GOLD CROSS AMBULANCE SERVICE OF PA., INC., an Ohio corporation,
KEEFE & KEEFE, INC., a New York corporation, KEEFE & KEEFE AMBULETTE, LTD., a
New York corporation, LASALLE AMBULANCE INC., a New York corporation, MEDI-CAB
OF GEORGIA, INC., a Delaware corporation, MEDICAL EMERGENCY DEVICES AND SERVICES
(MEDS), INC., an Arizona corporation, MEDICAL TRANSPORTATION SERVICES, INC., a
South Dakota corporation, MEDSTAR EMERGENCY MEDICAL SERVICES, INC., a Delaware
corporation, MERCURY AMBULANCE SERVICE, INC., a Kentucky corporation, METRO CARE
CORP., an Ohio corporation, MO-RO-KO, INC., an Arizona corporation, MULTI CAB
INC., a New Jersey corporation, MULTI-CARE INTERNATIONAL, INC., a New Jersey
corporation, MULTI-CARE MEDICAL CAR SERVICE, INC., a New Jersey corporation,
MULTI-HEALTH CORP., a Florida corporation, MYERS AMBULANCE SERVICE, INC., an
Indiana corporation, NATIONAL AMBULANCE & OXYGEN SERVICE, INC., a New York
corporation, NORTH MISS. AMBULANCE SERVICE, INC., a Mississippi corporation,
PROFESSIONAL MEDICAL SERVICES, INC., an Arkansas corporation, RISC AMERICA
ALABAMA FIRE SAFETY SERVICES, INC., a Delaware corporation, RMFD OF NEW JERSEY,
INC., a Delaware corporation, R/M MANAGEMENT CO., INC., an Arizona corporation,
R/M OF MISSISSIPPI, INC., a Delaware corporation, R/M OF TENNESSEE G.P., INC., a
Delaware corporation, R/M OF TENNESSEE L.P., INC., a Delaware corporation, R/M
OF TEXAS G.P., INC., a Delaware corporation, R/M PARTNERS, INC., a Delaware
corporation, RMC CORPORATE CENTER, L.L.C., an Arizona limited liability company,
By: RURAL/METRO CORPORATION, an Arizona corporation, Its Member, RURAL/METRO
ARGENTINA, L.L.C., an Arizona limited liability company, By: RURAL/METRO
INTERNATIONAL, INC., a Delaware corporation, Its Member, RURAL/METRO BRASIL,
L.L.C., an Arizona limited liability company, By: RURAL/METRO INTERNATIONAL,
INC., a Delaware corporation, Its Member, RURAL/METRO CANADIAN HOLDINGS, INC., a
Delaware corporation, RURAL/METRO COMMUNICATIONS SERVICES, INC., a Delaware
corporation, RURAL/METRO CORPORATION, an Arizona corporation, RURAL/METRO
CORPORATION OF FLORIDA, a Florida corporation, RURAL/METRO CORPORATION OF
TENNESSEE, a Tennessee corporation, RURAL/METRO FIRE DEPT., INC., an Arizona
corporation, RURAL/METRO HOSPITAL SERVICES, INC., a Delaware corporation
By: /s/ DEAN HOFFMAN
----------------------------------------
Name: Dean Hoffman
--------------------------------------
Title: Vice President
-------------------------------------
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RURAL/METRO INTERNATIONAL, INC., a Delaware corporation, RURAL/METRO LOGISTICS,
INC., a Delaware corporation, RURAL/METRO MID-ATLANTIC, INC., a Delaware
corporation, RURAL/METRO MID-SOUTH, L.P., a Delaware limited partnership, By:
R/M OF TENNESSEE G.P., INC., a Delaware corporation, Its General Partner,
RURAL/METRO OF ALABAMA, INC., a Delaware corporation, RURAL/METRO OF ARGENTINA,
INC., a Delaware corporation, RURAL/METRO OF ARKANSAS, INC., a Delaware
corporation, RURAL/METRO OF ARLINGTON, INC., a Delaware corporation, RURAL/METRO
OF BRASIL, INC., a Delaware corporation, RURAL/METRO OF CALIFORNIA, INC., a
Delaware corporation, RURAL/METRO OF CENTRAL ALABAMA, INC., a Delaware
corporation, RURAL/METRO OF CENTRAL COLORADO, INC., a Delaware corporation,
RURAL/METRO OF CENTRAL OHIO, INC., a Delaware corporation, RURAL/METRO OF
COLORADO, a Delaware corporation, RURAL/METRO OF GEORGIA, INC., a Delaware
corporation, RURAL/METRO OF GREATER SEATTLE, INC., a Washington corporation,
RURAL/METRO OF INDIANA, INC., a Delaware corporation, RURAL/METRO OF INDIANA,
L.P., a Delaware limited partnership, By: THE AID AMBULANCE COMPANY, INC., a
Delaware corporation, Its General Partner, RURAL/METRO OF INDIANA II, L.P., a
Delaware limited partnership, By: THE AID AMBULANCE COMPANY, INC., a Delaware
corporation, Its General Partner, RURAL/METRO OF KENTUCKY, INC., a Delaware
corporation, RURAL/METRO OF MISSISSIPPI, INC., a Delaware corporation,
RURAL/METRO OF NEBRASKA, INC., a Delaware corporation, RURAL/METRO OF NEVADA,
INC., a Delaware corporation, RURAL/METRO OF NEW YORK, INC., a Delaware
corporation, RURAL/METRO OF NORTH FLORIDA, INC., a Florida corporation,
RURAL/METRO OF NORTH TEXAS, L.P., By: R/M OF TEXAS G.P., INC., a Delaware
corporation, Its General Partner, RURAL/METRO OF NORTHERN OHIO, INC., a Delaware
corporation, RURAL/METRO OF OHIO, INC., a Delaware corporation, RURAL/METRO OF
OREGON, INC., a Delaware corporation, RURAL/METRO OF ROCHESTER, INC., a New York
corporation, RURAL/METRO OF SAN DIEGO, INC., a California corporation,
RURAL/METRO OF SOUTH CAROLINA, INC., a Delaware corporation, RURAL/METRO OF
SOUTH DAKOTA, INC., a Delaware corporation, RURAL/METRO OF SOUTHERN OHIO, INC.,
an Ohio corporation, RURAL/METRO OF TENNESSEE, L.P., a Delaware limited
partnership, By: R/M OF TENNESSEE G.P., INC., a Delaware corporation, Its
General Partner, RURAL/METRO OF TEXAS, INC., a Delaware corporation, RURAL/METRO
OF TEXAS, L.P., a Delaware limited partnership, By: R/M OF TEXAS G.P., INC., a
Delaware corporation, Its General Partner, RURAL/METRO PROTECTION SERVICES,
INC., an Arizona corporation, RURAL/METRO TEXAS HOLDINGS, INC., a Delaware
corporation, SW GENERAL, INC., an Arizona corporation, SIOUX FALLS AMBULANCE,
INC., a South Dakota corporation, SOUTH GEORGIA EMERGENCY MEDICAL SERVICES,
INC., a Georgia corporation, SOUTHWEST AMBULANCE AND RESCUE OF ARIZONA, INC., an
Arizona corporation, SOUTHWEST AMBULANCE OF CASA GRANDE, INC., an Arizona
corporation, SOUTHWEST AMBULANCE OF TUCSON, INC., an Arizona corporation,
SOUTHWEST GENERAL SERVICES, INC., an Arizona corporation, THE AID AMBULANCE
COMPANY, INC., a Delaware corporation, THE AID COMPANY, INC., an Indiana
corporation, TOWNS AMBULANCE SERVICE, INC., a New York corporation, VALLEY FIRE
SERVICE, INC., a Delaware corporation, W & W LEASING COMPANY, INC., an Arizona
corporation
By: /s/ Dean Hoffman
----------------------------------------
Name: Dean Hoffman
--------------------------------------
Title: Vice President
-------------------------------------
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EXHIBIT A
FORM OF CASH FLOW PROJECTION REPORT
21
<PAGE> 1
EXHIBIT 99.3
CONTACT: Liz Merritt, Director of Communications
(480) 606-3337
Morgen-Walke Associates
Investor Relations: John Swenson
(415) 296-7383
Media Relations: Christopher Katis
(415) 296-7383
Wire Services: Eric Gonzales
(212) 850-5600
I. FOR IMMEDIATE RELEASE
A. RURAL/METRO ANNOUNCES EXTENSION OF BANK WAIVER
SCOTTSDALE, ARIZ. (April 14, 2000) - Rural/Metro Corporation (Nasdaq:
RURL) announced today that it was granted its request for a 90-day extension of
its waiver of covenant compliance under its revolving credit facility through
July 14, 2000.
The Company has not requested nor drawn additional funding from its
lenders. In addition, the Company has determined it no longer requires the $5
million of availability that was offered by its lenders on March 15, and has
agreed to accrue additional interest expense at the rate of 2 percent per year,
with payment due on July 14. The Company continues to work toward a long-term
agreement on its revolving credit facility.
Jack Brucker, President and Chief Executive Officer, said, "We are
pleased by the progress we have made with our lenders and the confidence they
have shown in our ability to manage our cash flow. We are demonstrating to them
- - and to all of our stakeholders - that our restructuring plan is solid and
meaningful, and that we are working diligently to further build long-term value
in the Company. Rural/Metro is committed to providing the highest quality
services to the communities entrusted to our care."
Rural/Metro's previously announced restructuring plan includes closing
or scaling back unprofitable service areas, reducing overhead costs, and placing
renewed emphasis on quality of revenue.
Brucker continued, "The results of our restructuring program thus far
have been promising. Cash collections are steadily improving, and we are holding
the line on costs in order to improve cash flow. We've made significant strides;
however we are still in the early stages of implementation of our plan, which
will take several months to complete."
<PAGE> 2
Rural/Metro Corporation provides mobile healthcare services, including
911 and general ambulance transportation, fire protection and other
safety-related services to municipal, residential, commercial and industrial
customers in hundreds of communities throughout the United States and Latin
America.
This press release contains forward-looking statements regarding future
business prospects that involve risks and uncertainties, including the
current healthcare reimbursement environment, that are identified from
time to time in the Company's SEC reports and filings.
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