<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE TO
TENDER OFFER STATEMENT UNDER SECTION 14(D)(1) OR
SECTION 13(E)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
KTI, INC.
(Name of Subject Company (issuer))
KTI, INC. (issuer)
CASELLA WASTE SYSTEMS, INC. (affiliate of issuer)
(Name of Person(s) Filing Statement)
8 3/4% CONVERTIBLE SUBORDINATED NOTES DUE 2004
(Title of Class of Securities)
8 3/4% CONVERTIBLE SUBORDINATED NOTES DUE 2004: 482689 AA 4
(CUSIP Number of Class of Securities)
JOHN W. CASELLA
CHIEF EXECUTIVE OFFICER
CASELLA WASTE SYSTEMS, INC.
25 GREENS HILL LANE
RUTLAND, VERMONT
(802) 775-0325
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of the Person(s) Filing Statement)
COPY TO:
JEFFREY A. STEIN, ESQ.
HALE AND DORR LLP
60 STATE STREET
BOSTON, MA 02109
JANUARY 24, 2000
(Date Tender Offer First Published, Sent or Given to Security Holders)
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE
<S> <C>
$6,830,883 $1,366
</TABLE>
* The transaction value shown is only for the purpose of calculating the
filing fee. The amount shown reflects the cost of purchasing $6,770,000
principal amount of Notes at the purchase price (100% of the principal
amount of the Notes, plus accrued and unpaid interest up to but excluding
the date of payment) as of March 8, 2000 (the expected date of payment). The
amount of the filing fee is calculated in accordance with Section
13(e)(3) of the Securities Exchange Act of 1934, as amended.
/ / Check the box if any part of the fee is offset as provided by
Rule 0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
<TABLE>
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Amount Previously Paid:
Form or Registration No.:
Filing Party:
Date Filed:
/ / Check the box if the filing relates solely to preliminary
communications made before the commencement of a tender
offer.
Check the appropriate boxes below to designate any transactions to
which the statement relates:
third-party tender offer subject to Rule 14d-1.
/ /
issuer tender offer subject to Rule 13e-4.
/X/
going-private transaction subject to Rule 13e-3.
/ /
amendment to Schedule 13D under Rule 13d-2.
/ /
Check the following box if the filing is a final amendment
reporting the results of the tender offer. / /
</TABLE>
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<PAGE>
INTRODUCTORY STATEMENT
This Schedule TO relates to a change of control offer (the "Offer") by KTI,
Inc., a New Jersey corporation (the "Company"), to purchase for cash, on the
terms and subject to the conditions set forth in the attached Offer to Purchase
dated January 24, 2000 (the "Offer to Purchase") and the related Letter of
Transmittal (the "Letter of Transmittal"), all of the outstanding 8 3/4%
Convertible Subordinated Notes due 2004 of the Company (the "Notes"). Prior to
the Effective Time (as defined in the Offer to Purchase), the Notes were
convertible into shares of common stock, par value $.01 per share, of the
Company (the "Company Common Stock"), at a conversion price of $11.75 per share
of Company Common Stock. Since the Effective Time, the Notes have been
convertible into shares of Class A Common Stock of Casella Waste Systems, Inc.
at a conversion price of $23.04 per share. Copies of the Offer to Purchase and
the Letter of Transmittal are filed as exhibits (a)(1) and (a)(2) hereto.
ITEM 1. SUMMARY TERM SHEET
The information set forth in the section of the Offer to Purchase entitled
"Summary" is incorporated herein by reference.
ITEM 2. SUBJECT COMPANY INFORMATION
(a) The name of the Company is KTI, Inc.. The address of its principal
executive office is 25 Greens Hill Lane, Rutland, Vermont 05702. The Company is
a wholly owned subsidiary of Casella Waste Systems, Inc., a Delaware corporation
("Casella"). Casella's principal executive office is 25 Greens Hill Lane,
Rutland, Vermont 05702. The telephone number for both Casella and the Company is
(802) 775-0325.
(b) The securities which are the subject of the Offer are the 8 3/4%
Convertible Subordinated Notes due 2004 issued by the Company. The Notes are
convertible into shares of Casella Class A Common Stock at a conversion price of
$23.04 per share. As of January 20, 2000, there was $6,770,000 aggregate
principal amount of Notes outstanding. The Offer is for any and all Notes, in
denominations of $1,000 or integral multiples thereof, at 100% of the principal
amount of the Notes, plus accrued and unpaid interest up to but excluding the
date of payment.
(c) The information set forth in the section of the Offer to Purchase
entitled "Market Price Information" is incorporated herein by reference.
(d) The Notes bear interest at 8 3/4% per annum. Interest has been paid in
arrears on February 1, May 1, August 1 and November 1 of each year since the
Notes were issued on July 31, 1998.
(e) Not applicable.
(f) In November 1998, $14,329,000 of the Notes were exchanged for 1,219,489
shares of KTI Common Stock at $11.75 per share. The conversion included a
premium equal to 3.0% of the face value of the Notes and nine months forward
interest at 8 3/4%, paid to the noteholders in the form of 63,910 shares of KTI
common stock valued at $21.44 per share.
ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON
The Company and Casella are filing this statement. The information required
by this item is set forth in item 2(a) above.
ITEM 4. TERMS OF THE TRANSACTION
The information set forth in the Offer to Purchase is incorporated herein by
reference. To the best knowledge of the Company, no Notes are being purchased
from any officer, director or affiliate of the Company.
<PAGE>
ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS
The Notes are governed by the Indenture dated as of July 31, 1998 between
the Company and SunTrust Bank, Central Florida, National Association, as
trustee, and by the First Supplemental Indenture dated as of December 14, 1999
between the Company and SunTrust Bank, Central Florida, National Association, as
trustee.
ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS
The information set forth in the section of the Offer to Purchase entitled
"Purpose and Effects of the Offer" is incorporated herein by reference.
ITEM 7. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The information set forth in the section of the Offer to Purchase entitled
"Sources and Amount of Funds" is incorporated herein by reference.
ITEM 8. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
To the best knowledge of the Company and Casella, no Notes are owned by any
person whose ownership would be required to be disclosed by this item. In
addition, to the knowledge of the Company, none of such persons engaged in any
transactions in the Notes during the 60 days preceding the date of this
Schedule.
ITEM 9. PERSONS/ASSETS RETAINED, EMPLOYED, COMPENSATED OR USED
The information set forth in the section of the Offer to Purchase entitled
"The Depositary" is incorporated herein by reference.
ITEM 10. FINANCIAL STATEMENT
Not applicable.
ITEM 11. ADDITIONAL INFORMATION
Not applicable.
ITEM 12. MATERIAL TO BE FILED AS EXHIBITS
(a)(1) Offer to Purchase, dated January 24, 2000.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to clients.
(a)(5) Letter to brokers, dealers, commercial banks, trust companies and
other nominees.
(b) Amended and Restated Revolving Credit and Term Loan Agreement between
Casella and various financial institutions named therein, dated as of
December 14, 1999.
(d)(1) Indenture, dated as of July 31, 1998, between the Company, as issuer,
and SunTrust Bank, Central Florida, National Association, as trustee.
(2) First Supplemental Indenture, dated as of December 14, 1999, between
the Company, as issuer, and SunTrust Bank, Central Florida, National
Association, as trustee.
(g) Not applicable.
(h) Not applicable.
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
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Dated: January 24, 2000
KTI, INC.
By: /s/ JOHN W. CASELLA
----------------------------------------
John W. Casella, President
CASELLA WASTE SYSTEMS, INC.
By: /s/ JOHN W. CASELLA
----------------------------------------
John W. Casella, Chief Executive Officer
</TABLE>
<PAGE>
INDEX TO EXHIBITS
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<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
(a)(1) Offer to Purchase, dated January 24, 2000
(a)(2) Letter of Transmittal
(a)(3) Notice of Guaranteed Delivery
(a)(4) Letter to clients
(a)(5) Letter to brokers, dealers, commercial banks, trust
companies and other nominees
(b) Amended and Restated Revolving Credit and Term Loan
Agreement between Casella and various financial institutions
named therein, dated as of December 14, 1999
(d)(1) Indenture, dated as of July 31, 1998, between the Company,
as issuer, and SunTrust Bank, Central Florida, National
Association, as trustee
(d)(2) First Supplemental Indenture, dated as of December 14, 1999,
between the Company, as issuer, and SunTrust Bank, Central
Florida, National Association, as trustee
(g) Not applicable
(h) Not applicable
</TABLE>
<PAGE>
EXHIBIT 99.(A)(1)
KTI, INC.
OFFER TO PURCHASE
FOR CASH ANY AND ALL OF THE OUTSTANDING
8 3/4% CONVERTIBLE SUBORDINATED NOTES DUE 2004
OF KTI, INC.
AT
100% OF THE PRINCIPAL AMOUNT
OF THE NOTES
SUMMARY OF THE OFFER
The attached materials relate to an offer being made by KTI, Inc. to
purchase the 8 3/4% Convertible Subordinated Notes due 2004 held by you. We are
making this offer because it is required under the terms of the indenture
relating to the notes. The indenture is the document which sets forth KTI's
obligations with respect to the Notes.
The following is a summary of the most material terms of the offer.
- WHAT PRICE WILL YOU RECEIVE FOR YOUR NOTES IF YOU TENDER THEM TO US? We
are offering to repurchase your notes for a price, in cash, equal to 100%
of the principal amount of the notes plus accrued and unpaid interest up
to the date of repurchase. See "Certain Offer Matters--Purpose and Effects
of the Offer".
- WHAT ARE OUR REASONS FOR THE OFFER? The indenture relating to the notes
requires us to offer to repurchase your notes following a change of
control of KTI. A change of control took place on December 14, 1999, when
KTI became a wholly-owned subsidiary of Casella Waste Systems, Inc. See
"Certain Offer Matters--Purpose and Effects of the Offer".
- WHEN DOES THE OFFER EXPIRE? In order to tender your notes, you must
deliver them, along with the documents described in the attached
materials, on or prior to March 3, 2000, unless we extend the offer. We
will make a public announcement if we choose to extend the offer. See
"Certain Offer Matters--Expiration Date; Extensions; Amendments;
Termination".
- WHEN WILL YOU RECEIVE PAYMENT FOR TENDERED NOTES? If we accept your
tender, we will make the payment for the tendered notes on March 8, 2000
or three business days after your right to tender them expires, if the
offer is extended. See "Certain Offer Matters--Acceptance for Payment."
- MAY YOU WITHDRAW YOUR TENDER? You may withdraw your decision to tender at
any time prior to the close of business on March 6, 2000. If we extend the
offer as described above, you may withdraw your tender at any time prior
to the close of business on the business day following the date to which
the offer has been extended. To withdraw your tender, you must follow the
procedures described in the attached materials. See "Procedures for
Tendering Notes--Withdrawal Rights".
- WHAT HAPPENS TO YOUR NOTES IF YOU DO NOT TENDER THEM? If you do not
tender your notes, they will remain outstanding pursuant to their terms
and will continue to accrue interest. You will continue to have the right
to convert the notes into shares of Casella Class A Common Stock. The
conversion price is approximately $23.04 per share. This means that every
$1,000 principal amount of the notes is convertible into approximately
43.4 shares of Casella Class A Common Stock. See the introductory
paragraphs of this Offer to Purchase immediately following this summary.
However, because KTI is no longer subject to the reporting requirements of
the Securities Exchange Act of 1934, the amount of information available
as to KTI will be substantially reduced. See "Available Information".
<PAGE>
- HOW DO YOU TENDER YOUR NOTES? To tender your notes, you must carefully
follow the instructions in the attached materials. Persons holding notes
through DTC will need to follow a different process than those persons who
are themselves record holders of the notes. See "Procedures for Tendering
Notes--Tendering Notes."
- WHO SHOULD YOU CALL IF YOU NEED MORE INFORMATION? If you have any
questions regarding the attached materials, please call the trustee named
in the indenture, as follows:
SUNTRUST BANK
225 EAST ROBINSON STREET, SUITE 250
ORLANDO, FLORIDA 32801
TELECOPY: (407) 237-5299
ATTENTION: MS. LISA DERRYBERRY
TELEPHONE: (407) 237-4791
<PAGE>
KTI, INC.
OFFER TO PURCHASE
FOR CASH ANY AND ALL OF THE OUTSTANDING
8 3/4% CONVERTIBLE SUBORDINATED NOTES DUE 2004
OF KTI, INC.
AT
100% OF THE PRINCIPAL AMOUNT
OF THE NOTES
SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THIS OFFER TO PURCHASE, THE
OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
MARCH 3, 2000, UNLESS EXTENDED (THE "EXPIRATION DATE"). NOTES TENDERED IN THE
OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE CLOSE OF BUSINESS ON THE
BUSINESS DAY FOLLOWING THE EXPIRATION DATE.
KTI, Inc. (the "Company") hereby offers (the "Offer") to purchase for cash
at the Repurchase Price (as defined below), and upon the terms and subject to
the conditions set forth in this Offer to Purchase (the "Offer to Purchase") and
in the accompanying Letter of Transmittal (the "Letter of Transmittal"), any and
all of the outstanding 8 3/4% Convertible Subordinated Notes due 2004 of the
Company (the "Notes"). As a result of the Merger (as defined below), each $1,000
principal amount of Notes is convertible into shares of Class A common stock of
Casella Waste Systems, Inc. as described below. The "Repurchase Price" equals
100% of the principal amount of the Notes, plus accrued and unpaid interest up
to but excluding March 8, 2000 (the "Repurchase Date"), unless the Expiration
Date is extended as set forth herein under "Certain Offer Matters--Expiration
Date; Extensions; Amendments; Termination." Unless the Company fails to pay the
Repurchase Price, any Notes properly tendered pursuant to the Offer and accepted
for payment will cease to accrue interest on the Repurchase Date. Any Notes not
tendered in the Offer (or tendered and withdrawn prior to the Expiration Date)
will remain obligations of the Company and will continue to accrue interest and
have all of the benefits of the Indenture.
Any holder of Notes (a "Holder") desiring to tender all or any portion of
such Holder's Notes must comply with the procedures for tendering Notes set
forth herein in "Procedures for Tendering Notes" and in the Letter of
Transmittal. Tenders of Notes may be withdrawn at any time prior to the
Expiration Date. In the event of a withdrawal of Notes, the Notes so withdrawn
will be returned to the Holder promptly.
The date of this Offer to Purchase is January 24, 2000
<PAGE>
The Offer is being made pursuant to the Indenture, dated as of July 31,
1998, between the Company, as issuer, and SunTrust Bank, Central Florida,
National Association (now known as SunTrust Bank), as trustee, as supplemented
by a supplemental Indenture, dated as of December 14, 1999, between the Company,
as issuer, and SunTrust Bank, as trustee (the indenture, as supplemented by the
Supplemental Indenture, is referred to herein as the "Indenture") which provides
that, following a Change of Control (as defined below), each Holder will have
the right, at such Holder's option, to require the Company to purchase all or
any part of such Holder's Notes at the Repurchase Price (a "Change of Control
Right"). A Change of Control occurred on December 14, 1999 as a result of the
consummation of the merger (the "Merger") of Rutland Acquisition Sub, a New
Jersey corporation ("Acquisition Sub") and wholly-owned subsidiary of Casella,
with and into the Company. As a result of the Merger, the Company as the
surviving entity, became a wholly-owned subsidiary of Casella.
The Merger was consummated on December 14, 1999 (the "Effective Time")
pursuant to an Agreement and Plan of Merger, dated as of January 12, 1999, as
amended, by and among the Company, Casella and Acquisition Sub (the "Merger
Agreement") which provided for the Merger of Acquisition Sub with and into the
Company. Upon the consummation of the Merger, stockholders of the Company
received the right to receive .51 of one share of Casella Class A common stock
for each share of the Company's common stock held by them (the "Exchange
Ratio").
Prior to the Effective Time, the Notes were convertible into shares of the
Company's common stock at a conversion price of $11.75 per share. As a result of
the Merger and pursuant to the Supplemental Indenture, the Notes are no longer
convertible into shares of the Company's common stock. Instead, each Holder has
the right (during the period the Notes are convertible as specified in
Article 11 of the Indenture) to convert such Notes only into Casella Class A
common stock. Based on the Exchange Ratio, each $1,000 principal amount of Notes
is now convertible into approximately 43.4 shares of Casella Class A common
stock, reflecting a conversion price of approximately $23.04 per share, subject
to adjustment as provided in the Indenture. Information with respect to
historical and recent stock prices of Casella Class A common stock is set forth
below under "Market Price Information--Casella Common Stock."
In November 1998, $14,329,000 of the Notes were exchanged for 1,219,489
shares of KTI Common Stock at $11.75 per share. The conversion included a
premium equal to 3.0% of the face value of the Notes and nine months forward
interest at 8 3/4%, paid to the noteholders in the form of 63,910 shares of KTI
common stock valued at $21.44 per share.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment) and applicable law, the Company will purchase, by accepting for
payment, and will pay for all Notes validly tendered (and not properly
withdrawn) pursuant to the Offer promptly after the Expiration Date, such
payment to be made by the deposit of immediately available funds by the Company
with SunTrust Bank (the "Depositary").
No person has been authorized to give any information or to make any
representations other than those contained in this Offer to Purchase and, if
given or made, such information or representations must not be relied upon as
having been authorized. This Offer to Purchase and related documents do not
constitute an offer to buy or the solicitation of an offer to sell securities in
any circumstances in which such offer or solicitation is unlawful. The delivery
of this Offer to Purchase shall not, under any circumstances, create any
implication that the information contained herein is current as of any time
subsequent to the date of such information.
Neither the Company nor Casella makes any recommendation as to whether or
not Holders should exercise their Change of Control Right and tender Notes
pursuant to this Offer.
Any questions or requests for assistance or for additional copies of this
Offer to Purchase or related documents may be directed to the Depositary at its
telephone number set forth below under "Depositary." Any beneficial owner owning
interests in Notes may also contact such beneficial owner's broker, dealer,
commercial bank, trust company or other nominee for assistance concerning this
Offer.
ii
<PAGE>
AVAILABLE INFORMATION
Casella is, and prior to December 14, 1999, the Company was, subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith each has filed reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission"). Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at
the Commission's Regional Office at Seven World Trade Center, Suite 1300, New
York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such material also can be obtained, at
prescribed rates, from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. The Commission maintains a website
at http://www.sec.gov. that contains reports, proxy and information statements
and other information regarding registrants that file electronically with the
Commission.
Casella's Registration Statement on Form S-4, filed on November 12, 1999, as
amended by Forms S-4/A-1 and S-4/A-2, both of which were filed on November 15,
1999, and Casella's Quarterly Report on Form 10-Q for the quarter ended
October 31, 1999 are incorporated in this offer to purchase by reference. In
addition, KTI's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999 is incorporated in this offer to purchase by reference.
Any future filings by Casella under Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of this offer to purchase and prior to the
date on which tenders may be withdrawn will be deemed to be incorporated in this
offer to purchase by reference. Any such filings will automatically update and
replace the information that appears, or is incorporated in this offer to
purchase.
The common stock of the Company has been delisted from the Nasdaq National
Market and application has been made pursuant to the Exchange Act to terminate
the registration of the Company's common stock under the Exchange Act. Such
termination will substantially reduce the information required to be furnished
by the Company to the Commission.
This Offer to Purchase constitutes a part of an Issuer Tender Offer
Statement on Schedule TO (the "Schedule TO") filed with the Commission by the
Company and Casella pursuant to Section 13(e) of the Exchange Act and the
rules and regulations promulgated thereunder. The Schedule TO and all exhibits
thereto are incorporated in this Offer to Purchase by reference.
iii
<PAGE>
CAUTIONARY STATEMENT CONCERNING FORWARD LOOKING STATEMENTS
Certain statements in this Offer to Purchase, including the information
incorporated by reference herein, constitute "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Among these
statements are those included in Casella's Form S-4 filed on November 12, 1999
(the "Casella S-4"), including under the following captions:
- "Risk Factors";
- "The Merger--Reasons for the merger";
- "The Companies";
- "Combined Unaudited Pro Forma Financial Information"; and
- "Notes to Combined Unaudited Pro Forma Financial Information".
Casella may also be making forward-looking statements when it makes
statements that include the words "believes", "expects", "anticipates" or
similar expressions. Additionally, the discussion in the Casella S-4 of
anticipated operational efficiencies from the Merger appearing in "Risk Factors"
and "The Merger--Reasons for the merger" and the projected operating results for
the current fiscal year and future fiscal years appearing in "The
Merger--Reasons for the merger", including projected operating results for the
combined company and for each company as a stand alone entity, constitute
forward-looking statements. These differences could arise as a result of many
factors, including those set forth in the Casella S-4 under "Risk Factors".
Many of the foregoing risks and factors have been discussed in the Company's
and Casella's prior filings with the Securities and Exchange Commission. The
foregoing review of factors pursuant to the Private Securities Litigation Reform
Act of 1995 should not be construed as exhaustive.
iv
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TABLE OF CONTENTS
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PAGE
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AVAILABLE INFORMATION....................................... iii
CAUTIONARY STATEMENT CONCERNING FORWARD LOOKING
STATEMENTS................................................ iv
CERTAIN OFFER MATTERS....................................... 1
Purpose and Effects of the Offer.......................... 1
Expiration Date; Extensions; Amendments; Termination...... 1
Acceptance for Payment.................................... 2
PROCEDURES FOR TENDERING NOTES.............................. 2
Tendering Notes........................................... 2
Guaranteed Delivery Procedures............................ 5
Withdrawal Rights......................................... 6
CERTAIN INFORMATION CONCERNING THE COMPANY AND CASELLA...... 7
SOURCES AND AMOUNT OF FUNDS................................. 11
MARKET PRICE INFORMATION.................................... 12
CERTAIN FEDERAL INCOME TAX CONSEQUENCES..................... 17
General................................................... 17
Sale of Notes Pursuant to the Offer....................... 17
THE DEPOSITARY.............................................. 19
MISCELLANEOUS............................................... 19
</TABLE>
v
<PAGE>
CERTAIN OFFER MATTERS
PURPOSE AND EFFECTS OF THE OFFER
The Offer is being made pursuant to the Indenture, which provides that,
following a Change of Control, each Holder of Notes will have the right, at such
Holder's option, to require the Company to repurchase all or a portion of such
Holder's Notes, in integral multiples of $1,000, at a purchase price equal to
100% of the principal amount thereof plus accrued and unpaid interest up to but
excluding the Repurchase Date. A "Change of Control" as defined in the Indenture
occurs when, among other things, there shall be consummated any consolidation or
merger of the Company pursuant to which the Company's common stock would be
converted into cash, securities or other property other than a consolidation or
merger of the Company in which the holders of the Company's common stock
immediately prior to the consolidation or merger have, directly or indirectly,
at least a majority of the total voting power of all classes of capital stock
entitled to vote generally in the election of directors of the continuing or
surviving corporation immediately after such consolidation or merger in
substantially the same proportion as their ownership of the Company's common
stock immediately before such transaction.
A "Change of Control" occurred on December 14, 1999 as a result of the
consummation of the Merger, pursuant to which the Company, as the surviving
entity, became a wholly-owned subsidiary of Casella. This Offer to Purchase
serves as the Offer to Purchase required by Section 4.8 of the Indenture.
The Notes purchased in the Offer will cease to be outstanding and will be
delivered to the Trustee for cancellation immediately after such purchase.
Holders of Notes that are not tendered pursuant to the Offer will not have
the right after the Expiration Date to exercise their Change of Control Rights
in respect of such Notes in connection with the Merger.
If less than all the principal amount of Notes held by a Holder is tendered
and accepted pursuant to the Offer, the Company will issue, and the Trustee will
authenticate and deliver to or on the order of the Holder thereof, at the
expense of the Company, new Notes of authorized denominations, in a principal
amount equal to the portion of the Notes not tendered or not accepted, as the
case may be, as promptly as practicable after the Expiration Date.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS; TERMINATION
The Offer will expire on March 3, 2000, unless extended (the "Expiration
Date"). During any extension of the Offer, all Notes previously tendered
pursuant to the Offer (and not properly withdrawn) will remain subject to the
Offer and may be accepted for payment by the Company, subject to the withdrawal
rights of Holders.
The Company also expressly reserves the right, subject to the requirements
of the Indenture, to amend the terms of the Offer in any respect.
Any extension, termination or amendment of the Offer will be followed as
promptly as practicable by a public announcement thereof. Without limiting the
manner in which the Company may choose to make a public announcement of any
extension, termination or amendment of the Offer, the Company shall have no
obligation to publish, advertise or otherwise communicate any such public
announcement, other than by issuing a release to the Business Wire, except in
the case of an announcement of an extension of the Offer, in which case the
Company shall have no obligation to publish, advertise or otherwise communicate
such announcement other than by issuing a notice of such extension by press
release or other public announcement, which notice shall be issued no later than
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date.
1
<PAGE>
ACCEPTANCE FOR PAYMENT
For purposes of the Offer, the Company shall be deemed to have accepted for
payment (and thereby to have purchased) tendered Notes as, if and when the
Company gives oral or written notice to the Depositary of the Company's
acceptance of such Notes for payment. Subject to the terms and conditions of the
Offer, payment for Notes so accepted will be made by deposit of the
consideration therefor with the Depositary. The Depositary will act as agent for
tendering Holders for the purpose of receiving payment from the Company and then
transmitting payment to such tendering Holders. The Company will deposit the
consideration with the Depositary on March 8, 2000 or three business days after
the Expiration Date, if extended.
PROCEDURES FOR TENDERING NOTES
TENDERING NOTES
The tender of Notes pursuant to any of the procedures set forth in this
Offer to Purchase and in the Letter of Transmittal will constitute a binding
agreement between the tendering Holder and the Company upon the terms and
subject to the conditions of the Offer. The tender of Notes will constitute an
agreement to deliver good and marketable title to all tendered Notes prior to
the Expiration Date free and clear of all liens, charges, claims, encumbrances,
interests and restrictions of any kind.
EXCEPT AS PROVIDED IN "--GUARANTEED DELIVERY PROCEDURES", UNLESS THE NOTES
BEING TENDERED ARE DEPOSITED BY THE HOLDER WITH THE DEPOSITARY PRIOR TO THE
EXPIRATION DATE (ACCOMPANIED BY A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF
TRANSMITTAL), THE COMPANY MAY, AT ITS OPTION, REJECT SUCH TENDER. PAYMENT FOR
NOTES WILL BE MADE ONLY AGAINST DEPOSIT OF TENDERED NOTES AND DELIVERY OF ALL
OTHER REQUIRED DOCUMENTS.
Only record Holders of Notes are authorized to exercise a Change of Control
Right and tender their Notes pursuant to the Offer. Accordingly, to properly
exercise a Change of Control Right and tender Notes or cause Notes to be
tendered, the following procedures must be followed:
NOTES HELD THROUGH DTC. Each beneficial owner of Notes held through a
participant (a "DTC Participant") of The Depository Trust Company ("DTC") (i.e.,
a custodian bank, depositary, broker, trust company or other nominee) must
instruct such DTC Participant to cause its Notes to be tendered in accordance
with the procedures set forth in this Offer to Purchase.
Pursuant to an authorization given by DTC to the DTC Participants, each DTC
Participant that holds Notes through DTC must (i) transmit its acceptance
through the DTC Automated Tender Offer Program ("ATOP") (for which the
transaction will be eligible), and DTC will then edit and verify the acceptance,
execute a book-entry delivery to the Depositary's account at DTC and send an
Agent's Message (as defined below) to the Depositary for its acceptance, or (ii)
comply with the guaranteed delivery procedures set forth in this Offer to
Purchase. The Depositary will (promptly after the date of this Offer to
Purchase) establish accounts at DTC for purposes of the Offer with respect to
Notes held through DTC, and any financial institution that is a DTC Participant
may make book-entry delivery of interests in Notes into the Depositary's account
through ATOP. However, although delivery of interests in the Notes may be
effected through book-entry transfer into the Depositary's account through ATOP,
an Agent's Message in connection with such book-entry transfer and any other
required documents must be, in any case, transmitted to and received by the
Depositary at its address set forth on the back cover of this Offer to Purchase,
or the guaranteed delivery procedures set forth below must be complied with, in
each case, prior to the Expiration Date. Delivery of documents to DTC does not
constitute delivery to the Depositary. The confirmation of a book-entry transfer
into the Depositary's account at DTC as described above is referred to herein as
a "Book-Entry Confirmation."
2
<PAGE>
The term "Agent's Message" means a message transmitted by DTC to, and
received by, the Depositary and forming a part of the Book-Entry Confirmation,
which states that DTC has received an express acknowledgment from each DTC
Participant tendering through ATOP that such DTC Participants have received a
Letter of Transmittal and agree to be bound by the terms of the Letter of
Transmittal and that the Company may enforce such agreement against such DTC
Participants.
All of the Notes currently held through DTC have been issued in the form of
a global note registered in the name of Cede & Co. ("Cede"), DTC's nominee (the
"Global Note"). At or as of the close of business on the second business day
after the Expiration Date, DTC will deliver to the Depositary the Global Note
(with the form entitled "Option of Holder to Elect Purchase" on the reverse of
the certificate completed). At or as of the close of business on the second
business day after the Expiration Date, DTC will deliver the aggregate principal
amount of Notes as to which it has delivered Agent's Messages in respect of
Notices of Guaranteed Delivery as described under "--Guaranteed Delivery
Procedures." Thereafter, the aggregate principal amount of the Global Note will
be reduced to represent the aggregate principal amount of Notes held through DTC
and not tendered pursuant to the Offer and the Global Note will be returned to
Cede.
NOTES HELD BY RECORD HOLDERS. Each record Holder must complete and sign a
Letter of Transmittal, and mail or deliver such Letter of Transmittal, and any
other documents required by the Letter of Transmittal, together with
certificate(s) representing all tendered Notes (with the form entitled "Option
of Holder to Elect Purchase" on the reverse of the certificate completed), to
the Depositary at its address set forth below under "The Depositary", or the
Holder must comply with the guaranteed delivery procedures set forth in this
Offer to Purchase.
All signatures on a Letter of Transmittal must be guaranteed by a recognized
participant in the Securities Transfer Agents Medallion Program, the NYSE
Medallion Signature Program or the Stock Exchange Medallion Program; provided,
however, that signatures on a Letter of Transmittal need not be guaranteed if
such Notes are tendered for the account of an Eligible Institution (as defined
below). If a Letter of Transmittal or any Note is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, agent, officer of a corporation or
other person acting in a fiduciary or representative capacity, such person must
so indicate when signing, and proper evidence satisfactory to the Company of the
authority of such person so to act must be submitted.
No alternative, conditional, irregular or contingent tenders will be
accepted (unless waived). By executing a Letter of Transmittal or transmitting
an acceptance through ATOP, each tendering Holder waives any right to receive
any notice of the acceptance for purchase of its Notes.
LOST OR MISSING CERTIFICATES. If a record Holder desires to tender Notes
pursuant to the Offer, but the certificates representing such Notes have been
mutilated, lost, stolen or destroyed, such Holder should write to or telephone
the Depositary about procedures in accordance with the provision of the
Indenture for obtaining replacement certificates representing such Notes.
BACKUP FEDERAL INCOME TAX WITHHOLDING. Under the "backup withholding"
provisions of Federal income tax law, unless a tendering Holder, or his or her
assignee (in either case, the "Payee"), satisfies the conditions described in
Instruction 5 of the Letter of Transmittal or is otherwise exempt, the aggregate
purchase price may be subject to backup withholding tax at a rate of 31%. To
prevent backup withholding, each Payee should complete and sign the Substitute
Form W-9 provided in the Letter of Transmittal. See Instruction 5 of the Letter
of Transmittal.
EFFECT OF LETTER OF TRANSMITTAL. Subject to and effective upon the
acceptance for payment of the Notes tendered thereby, by executing and
delivering a Letter of Transmittal a tendering Holder of Notes (i) irrevocably
sells, assigns and transfers to the Company all right, title and interest in and
to all the Notes tendered thereby, (ii) waives any and all rights with respect
to the Notes (including without limitation any existing or past defaults and
their consequences in respect of the Notes and the
3
<PAGE>
Indenture under which the Notes were issued), (iii) releases and discharges the
Company from any and all claims such Holder may have now, or may have in the
future arising out of, or related to, the Notes including without limitation any
claims that such Holder is entitled to receive additional principal or interest
payments with respect to the Notes or to participate in any redemption or
defeasance of the Notes and (iv) irrevocably constitutes and appoints the
Depositary the true and lawful agent and attorney-in-fact of such Holder with
respect to any such tendered Notes, with full power of substitution and
resubstitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest) to (a) deliver certificates representing such Notes,
or transfer ownership of such Notes on the account books maintained by DTC,
together, in any such case, with all accompanying evidences of transfer and
authenticity, to the Company, (b) present such Notes for transfer on the
relevant security register and (c) receive all benefits or otherwise exercise
all rights of beneficial ownership of such Notes (except that the Depositary
will have no rights to, or control over, funds from the Company, except as agent
for the Company, for the Repurchase Price for any tendered Notes that are
purchased by the Company), all in accordance with the terms of the Offer.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of tendered Notes will be resolved by the Company, whose
determination will be final and binding. The Company reserves the absolute right
to reject any or all tenders that are not in proper form or the acceptance of
which may, in the opinion of counsel for the Company, be unlawful. The Company
also reserves the absolute right to waive any condition to the Offer and any
irregularities or conditions of tender as to particular Notes. The Company's
interpretation of the terms and conditions of the Offer (including the
instructions in the Letter of Transmittal) will be final and binding. Unless
waived, any irregularities in connection with tenders must be cured within such
time as the Company shall determine. The Company and the Depositary shall not be
under any duty to give notification of defects in such tenders and shall not
incur liabilities for failure to give such notification. Tenders of Notes will
not be deemed to have been made until such irregularities have been cured or
waived. Any Notes received by the Depositary that are not properly tendered and
as to which the irregularities have not been cured or waived will be returned by
the Depositary to the tendering Holder, unless otherwise provided in the Letter
of Transmittal, as soon as practicable following the Expiration Date.
LETTERS OF TRANSMITTAL AND NOTES MUST BE SENT ONLY TO THE DEPOSITARY.
DO NOT SEND LETTERS OF TRANSMITTAL OR NOTES TO THE COMPANY.
THE METHOD OF DELIVERY OF NOTES AND LETTERS OF TRANSMITTAL, ANY REQUIRED
SIGNATURE GUARANTEES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY
THROUGH DTC AND ANY ACCEPTANCE THROUGH ATOP, IS AT THE ELECTION AND RISK OF THE
PERSONS TENDERING AND DELIVERING ACCEPTANCES OR LETTERS OF TRANSMITTAL AND,
EXCEPT AS OTHERWISE PROVIDED IN THE LETTER OF TRANSMITTAL, DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, IT IS SUGGESTED THAT THE HOLDER USE PROPERLY INSURED, REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, AND THAT THE MAILING BE MADE SUFFICIENTLY IN ADVANCE
OF THE EXPIRATION DATE TO PERMIT DELIVERY TO THE DEPOSITARY PRIOR TO THE
EXPIRATION DATE.
GUARANTEED DELIVERY PROCEDURES
DTC PARTICIPANTS. A DTC Participant who wishes to cause its Notes to be
tendered, but who cannot transmit its acceptance through ATOP prior to the
Expiration Date, may cause a tender to be effected if:
(a) guaranteed delivery is made by or through a firm or other entity
identified in Rule 17Ad-15 under the Exchange Act (an "Eligible
Institution"), including (as such terms are defined
4
<PAGE>
therein): (i) a bank; (ii) a broker, dealer, municipal securities dealer,
municipal securities broker, government securities dealer or government
securities broker, (iii) a credit union; (iv) a national securities
exchange, registered securities association or clearing agency; or (v) a
savings institution that is a participant in a Securities Transfer
Association recognized program;
(b) prior to 12:00 a.m., New York City time, on the Expiration Date, the
Depositary receives from such Eligible Institution a properly completed
and duly executed Notice of Guaranteed Delivery (by mail, hand delivery,
facsimile transmission or overnight courier) substantially in the form
provided herewith; and
(c) Book-Entry Confirmation of the transfer into the Depositary's account at
DTC, and all other documents required by the Letter of Transmittal, are
received by the Depositary within three NYSE trading days after the date
of receipt by the Depositary of such Notice of Guaranteed Delivery.
RECORD HOLDERS. A record Holder who wishes to tender its Notes but (i)
whose Notes are not immediately available and will not be available for
tendering prior to the Expiration Date, or (ii) who cannot deliver its Notes,
the Letter of Transmittal or any other required documents to the Depositary
prior to the Expiration Date, may effect a tender if:
(a) the tender is made by or through an Eligible Institution;
(b) prior to 12:00 a.m., New York City time, on the Expiration Date, the
Depositary receives from such Eligible Institution a properly completed
and duly executed Notice of Guaranteed Delivery (by mail, hand delivery,
facsimile transmission or overnight courier) substantially in the form
provided herewith; and
(c) a properly completed and executed Letter of Transmittal, as well as the
certificate(s) representing all tendered Notes in proper form for
transfer, and all other documents required by the Letter of Transmittal,
are received by the Depositary within three NYSE trading days after the
date of receipt by the Depositary of such Notice of Guaranteed Delivery.
Under no circumstances will interest be paid by the Company by reason of any
delay in making payment to any person using the guaranteed delivery procedures
described above.
WITHDRAWAL RIGHTS
Tenders of Notes (or any portion of such Notes in integral multiples of
$1,000) may be withdrawn at any time prior to the close of business on the
business day following the Expiration Date.
NOTES HELD THROUGH DTC. A DTC Participant who has transmitted its
acceptance through ATOP in respect of Notes held through DTC may, prior to the
Expiration Date, withdraw the instruction given thereby by (i) withdrawing its
acceptance through ATOP, or (ii) delivering to the Depositary by mail, hand
delivery or facsimile transmission a notice of withdrawal of such instruction.
Such notice of withdrawal must contain the name and number of the DTC
Participant, the principal amount of Notes to which such withdrawal relates and
the signature of the DTC Participant. Withdrawal of such an instruction will be
effective upon receipt of such notice of withdrawal by the Depositary.
NOTES HELD BY RECORD HOLDERS. A Holder may withdraw its tender of Notes
prior to the Expiration Date by delivering to the Depositary by mail, hand
delivery or facsimile transmission a notice of withdrawal. Any such notice of
withdrawal must (i) specify the name of the person who tendered the Notes to be
withdrawn, (ii) contain a description of the Notes to be withdrawn and identify
the certificate number or numbers shown on the particular certificates
evidencing such Notes and the aggregate principal amount represented by such
Notes and (iii) be signed by the Holder of such Notes
5
<PAGE>
in the same manner as the original signature on the Letter of Transmittal by
which such Notes were tendered (including any required signature guarantees), or
be accompanied by (x) documents of transfer in a form acceptable to the Company,
in its sole discretion, and (y) a properly completed irrevocable proxy that
authorized such person to effect such revocation on behalf of such Holder. If
the Notes to be withdrawn have been delivered or otherwise identified to the
Depositary, a signed notice of withdrawal is effective immediately upon receipt
by the Depositary even if physical release is not yet effected. Any Notes
properly withdrawn will be deemed to be not validly tendered for purposes of the
Offer.
All signatures on a notice of withdrawal must be guaranteed by a recognized
participant in the Securities Transfer Agents Medallion Program, the NYSE
Medallion Signature Program or the Stock Exchange Medallion Program; provided,
however, that signatures on the notice of withdrawal need not be guaranteed if
the Notes being withdrawn are held for the account of an Eligible Institution.
A withdrawal of an instruction or a withdrawal of a tender must be executed
by a DTC Participant or a Holder, as the case may be, in the same manner as the
person's name appears on its transmission through ATOP or Letter of Transmittal,
as the case may be, to which such withdrawal relates. If a notice of withdrawal
is signed by a trustee, partner, executor, administrator, guardian,
attorney-in-fact, agent, officer of a corporation or other person acting in a
fiduciary or representative capacity, such person must so indicate when signing
and must submit with the revocation appropriate evidence of authority to execute
the notice of withdrawal. A Holder or DTC Participant may withdraw a tender only
if such withdrawal complies with the provisions of this Offer to Purchase.
A withdrawal of an instruction previously given pursuant to the transmission
of an acceptance through ATOP or a withdrawal of a tender by a Holder may be
rescinded only by (i) a new transmission of acceptance through ATOP, or
(ii) execution and delivery of a new Letter of Transmittal, as the case may be,
in accordance with the procedures described herein.
CERTAIN INFORMATION CONCERNING
THE COMPANY AND CASELLA
Casella Waste Systems, Inc.
25 Greens Hill Lane
Rutland, Vermont 05701
(802) 775-0325
Casella is a regional, integrated, non-hazardous solid waste services
company that provides collection, transfer, disposal and recycling services in
Vermont, New Hampshire, Maine, upstate New York, northern Pennsylvania and
Massachusetts. At September 1, 1999, Casella owned and/or operated five Subtitle
D landfills and two permitted construction and demolition debris landfills, 54
transfer stations, 24 recycling processing facilities and 38 collection
operations which together serve over 500,000 commercial, municipal and
residential customers.
KTI, Inc.
25 Greens Hill Lane
Rutland, Vermont 05701
(802) 775-0325
KTI is an integrated solid waste processing company serving commercial,
industrial and residential customers primarily in the eastern United States. At
September 1, 1999, KTI processed solid waste through a network of 50 facilities
in 19 states, including six waste-to-energy plants, 22 material recycling
facilities and 11 finished products facilities. KTI is a wholly-owned subsidiary
of Casella.
6
<PAGE>
Specific reference is made to the Casella S-4, including for a summary of
the terms of and reasons for the Merger and risk factors relating to Casella
following the Merger.
SOURCES AND AMOUNT OF FUNDS
The precise amount of funds required by the Company to purchase Notes
tendered pursuant to the Offer and to pay the fees and expenses related to the
Offer will not be known until the Expiration Date. If all outstanding Notes were
tendered and purchased, the aggregate amount of funds required to pay the
Repurchase Price would be approximately $6,830,883. Such funds are expected to
be provided through a capital contribution by Casella.
Casella intends to provide such capital contribution from cash on hand and
cash borrowed under its existing credit facility. There are no conditions to
Casella's use of the credit facility for purposes of repurchasing the Notes.
Casella's credit facility provides Casella with revolving credit loans of up to
$300,000,000, plus a term loan in the maximum amount of $150,000,000. The loans
are secured by a pledge of stock of all of Casella's subsidiaries, and by a
security interest in all assets other than real estate and motor vehicles. The
interest rates on the loans is BankBoston, N.A.'s base rate or, if higher,
1 1/2% above the overnight federal funds effective rate, plus in either case an
additional amount between 0.125% and 0.750% per annum. The maturity date of the
term loan is December 14, 2006. The maturity date of the revolving credit loans
is December 14, 2004. The credit facility is between Casella and BankBoston,
N.A. as administrative agent, KeyBank National Association as documentation
agent, Bank of America, N.A., as syndication agent and Canadian Imperial Bank of
Commerce as Canadian agent, along with the following participating banks:
Comerica Bank, Lasalle Bank National Association, Credit Lyonnais, First Vermont
Bank and Trust Company and CIBC, Inc.
The Company estimates that its expenses incurred in connection with the
offer will be approximately as follows:
<TABLE>
<S> <C>
SEC Filing Fee.............................................. $ 1,366
Legal Fees and Expenses..................................... 10,000
Printing Fees............................................... 5,000
Miscellaneous Expenses...................................... 3,634
-------
Total....................................................... $20,000
</TABLE>
MARKET PRICE INFORMATION
THE NOTES
The Notes are not traded in an established market. To the extent that the
Notes are traded, prices of the Notes may fluctuate widely depending on the
trading volume and the balance between buy and sell orders.
HOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE NOTES PRIOR TO
MAKING ANY DECISION WITH RESPECT TO THE OFFER.
7
<PAGE>
CASELLA CLASS A COMMON STOCK
Casella Class A common stock is traded on the Nasdaq National Market under
the symbol "CWST". The table below sets forth, for the quarterly periods
indicated, the range of high and low sale prices of Casella Class A common stock
as reported on the Nasdaq National Market.
<TABLE>
<CAPTION>
HIGH LOW
-------- --------
<S> <C> <C>
Quarter ended October 31, 1997*............................. 22.750 20.250
Quarter ended January 31, 1998.............................. 26.375 19.000
Quarter ended April 30, 1998................................ 34.000 23.750
Quarter ended July 31, 1998................................. 31.500 24.375
Quarter ended October 31, 1998.............................. 34.000 24.000
Quarter ended January 31, 1999.............................. 39.000 25.000
Quarter ended April 30, 1999................................ 27.000 17.250
Quarter ended July 31, 1999................................. 26.875 19.063
Quarter ended October 31, 1999.............................. 26.625 12.750
Quarter ended January 31, 2000+............................. 19.313 13.125
</TABLE>
- ------------------------
* Casella Class A common stock was not publicly traded until October 29, 1997.
+ Through January 21, 2000.
8
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following discussion is for general information only and is based on the
federal income tax law now in effect, which is subject to change, possibly
retroactively. This summary does not discuss all aspects of federal income
taxation which may be relevant to any particular Holder of the Notes in light of
such Holder's individual investment circumstances or to certain types of Holders
subject to special tax rules (e.g., financial institutions, broker-dealers,
pass-through entities, insurance companies, tax-exempt organizations and Holders
who hold their Notes as part of a hedge, straddle, conversion, or other
integrated transaction, and Holders who are not citizens or residents of the
United States or who are foreign corporations or foreign estates or trusts as to
the United States), nor does it address specific state, local or foreign tax
consequences. This summary assumes that the Holders of the Notes have held their
Notes as "capital assets" as defined under the Internal Revenue Code of 1986, as
amended.
EACH HOLDER IS URGED TO CONSULT SUCH HOLDER'S TAX ADVISOR REGARDING THE SPECIFIC
FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX CONSEQUENCES OF THE
OFFER.
SALE OF NOTES PURSUANT TO THE OFFER
The receipt of cash by a Holder in exchange for the Notes will be a taxable
transaction for federal income tax purposes and may also be a taxable
transaction under applicable state, local or foreign tax laws. Such Holder will
recognize gain or loss in an amount equal to the difference between (i) the
amount of cash received (other than in respect of accrued interest) and (ii)
such Holder's adjusted tax basis in the Notes. Subject to the rules discussed
below, such gain or loss will be capital gain or loss and will be long-term gain
or loss if such Holder has held such Notes for more than one year.
The payment of interest or amounts treated as interest for tax purposes with
respect to a Note generally will be treated as ordinary income to the extent not
previously included in income.
An exception to the capital gain treatment described above applies to a
Holder who holds a Note with a "market discount." Market discount is the amount
by which the stated redemption price of the Note at maturity exceeds the
Holder's basis in the Note immediately after its acquisition. (However, a Note
will be considered to have no market discount if such excess is less than 1/4 of
1% of the stated redemption price of the Note at maturity multiplied by the
number of complete years from the Holder's acquisition date of the Note to its
maturity date.) The gain realized by the Holder of a Note with a market discount
will be treated as ordinary income to the extent that market discount has
accrued (on a straight line basis or, at the election of the Holder, on a
constant interest basis) from the Holder's acquisition date to the date of sale,
unless the Holder has elected to include market discount in income currently as
it accrues. Gain in excess of such accrued market discount will be subject to
the capital gains rules described above.
The receipt by a Holder of cash in exchange for the Notes may be subject to
backup withholding at the rate of 31% with respect to the gross proceeds from
the sale of such Notes unless such Holder (a) is a corporation or comes within
certain other exempt categories and, when required, demonstrates this fact or
(b) provides a correct taxpayer identification number, certifies as to no loss
of exemption from backup withholding and otherwise complies with applicable
requirements of the backup withholding rules. A Holder of Notes who does not
provide his correct taxpayer identification number may be subject to penalties
imposed by the IRS. Any amount withheld under these rules will be creditable
against the Holder's federal income tax liability.
The Company will provide information statements to the IRS and to tendering
Holders reporting the cash payments, as required by law.
8
<PAGE>
THE DEPOSITARY
The Depositary for the Offer is SunTrust Bank. All deliveries and
correspondence sent or presented to the Depositary relating to the Offer should
be directed to the following address:
SunTrust Bank
225 East Robinson Street, Suite 250
Orlando, FL 32801
Telecopier No: (407)237-5299
Attention: Ms. Lisa Derryberry
Telephone: (407) 237-4791
Requests for information or additional copies of the Offer to Purchase and the
related Letter of Transmittal should be directed to the Depositary. The Company
will reimburse the Depositary for reasonable out-of-pocket expenses incurred in
connection with the Offer.
Brokers, dealers, commercial banks and trust companies will be reimbursed by
the Company for customary mailing and handling expenses incurred by them in
forwarding material to their customers. The Company will not pay any fees or
commissions to any broker, dealer or other person in connection with the
solicitation of tenders of Notes pursuant to the Offer.
MISCELLANEOUS
Neither the Company nor Casella is aware of any jurisdiction where the
making of this Offer is not in compliance with the laws of such jurisdiction. If
the Company becomes aware of any jurisdiction where the making of this Offer
would not be in compliance with such laws, the Company will make a good faith
effort to comply with any such laws or seek to have such laws declared
inapplicable to this Offer. If, after such good faith effort, the Company cannot
comply with any such applicable laws, this Offer will not be made to (nor will
tenders be accepted from or on behalf of) the Holders of the Notes residing in
such jurisdiction.
9
<PAGE>
EXHIBIT 99.(A)(2)
LETTER OF TRANSMITTAL
TO TENDER
8 3/4% CONVERTIBLE SUBORDINATED NOTES DUE 2004
OF KTI, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED JANUARY 24, 2000
SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THE OFFER TO PURCHASE, THE
OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
MARCH 3, 2000, UNLESS EXTENDED (THE "EXPIRATION DATE"). NOTES TENDERED IN THE
OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE CLOSE OF BUSINESS ON THE
BUSINESS DAY FOLLOWING THE EXPIRATION DATE.
THE DEPOSITARY FOR THE OFFER IS:
SUNTRUST BANK
225 EAST ROBINSON STREET, SUITE 250
ORLANDO, FLORIDA 32801
TELECOPY: (407)237-5299
ATTENTION: MS. LISA DERRYBERRY
TELEPHONE: (407) 237-4791
Delivery of this Letter of Transmittal to an address, or transmission of
instructions via facsimile, other than as set forth above will not constitute
valid delivery. THE INSTRUCTIONS CONTAINED HEREIN AND IN THE OFFER TO PURCHASE
(AS DEFINED BELOW) SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS
COMPLETED.
By execution hereof, the undersigned acknowledges receipt of the Offer to
Purchase, dated January 24, 2000 (as the same may be amended from time to time,
the "Offer to Purchase"), of KTI, Inc. (the "Company") and this Letter of
Transmittal and instructions hereto (the "Letter of Transmittal"), which
together constitute the Company's offer to purchase (the "Offer") all of the
outstanding 8 3/4% Convertible Subordinated Notes due 2004 of the Company (the
"Notes"), upon the terms and subject to the conditions set forth in the Offer to
Purchase.
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE PAYMENT FOR NOTES TO BE PURCHASED
PURSUANT TO THE OFFER MUST VALIDLY TENDER (AND NOT WITHDRAW) THEIR NOTES TO THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE.
This Letter of Transmittal is to be used by holders of Notes if certificates
representing Notes are to be physically delivered to the Depositary herewith by
holders of Notes. This Letter of Transmittal is also being supplied for
informational purposes only to persons who hold notes in book-entry form through
the facilities of The Depository Trust Company ("DTC"). Tender of Notes held
through DTC must be made pursuant to the procedures described under "Procedures
for Tendering Notes--Tendering Notes--Notes held through DTC" in the Offer to
Purchase.
In order to properly complete this Letter of Transmittal, a holder of Notes
must (i) complete the box entitled "Description of Notes"; (ii) if appropriate,
check and complete the boxes relating to Guaranteed Delivery, Special Issuance
Instructions and Special Delivery Instructions; (iii) sign the Letter of
Transmittal; and (iv) complete Substitute Form W-9. Each holder of Notes should
carefully read the detailed Instructions contained herein prior to completing
this Letter of Transmittal.
The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Offer.
<PAGE>
If holders desire to tender Notes pursuant to the Offer and (i) certificates
representing such holder's Notes are not lost but are not immediately available
or time will not permit this Letter of Transmittal, certificates representing
such Notes or other required documents to reach the Depositary prior to the
Expiration Date, or (ii) the procedures for book-entry transfer cannot be
completed prior to the Expiration Date, such holders may effect a tender of such
Notes in accordance with the guaranteed delivery procedures described under
"Procedure for Tendering Notes --Guaranteed Delivery Procedures" in the Offer to
Purchase. See Instruction 1 below.
All capitalized terms used herein and not defined herein shall have the
meaning ascribed to them in the Offer to Purchase.
Your bank or broker can assist you in completing this form. The instructions
included with this Letter of Transmittal must be followed. Questions and
requests for assistance or for additional copies of the Offer to Purchase, this
Letter of Transmittal and the Notice of Guaranteed Delivery may be directed to
SunTrust Bank, the Depositary for the Offer. See Instruction 9 below.
The Company is not aware of any jurisdiction where the making of the Offer
would not be in compliance with applicable laws. If the Company becomes aware of
any jurisdiction where the making of the Offer would not be in compliance with
such laws, the Company will make a good faith effort to comply with any such
laws or seek to have such laws declared inapplicable to the Offer. If after such
good faith effort, the Company cannot comply with any such applicable laws, the
Offer will not be made to, nor will tenders be accepted from or on behalf of,
the holders of Notes residing in such jurisdiction.
2
<PAGE>
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL CAREFULLY
BEFORE CHECKING ANY BOX BELOW
List below the Notes to which this Letter of Transmittal relates. If the
space provided below is inadequate, list the certificate numbers and principal
amounts on a separately executed schedule and affix the schedule to this Letter
of Transmittal.
<TABLE>
<S> <C> <C> <C>
DESCRIPTION OF NOTES
AGGREGATE
PRINCIPAL PRINCIPAL
NAME(S) AND ADDRESS(ES) OF HOLDER(S) CERTIFICATE AMOUNT AMOUNT
(PLEASE FILL IN, IF BLANK) NUMBERS* REPRESENTED** TENDERED**
<S> <C> <C> <C>
</TABLE>
* Need not be completed by Holders tendering by book-entry transfer (see
below).
** Unless otherwise indicated in the column labeled "Principal Amount Tendered"
and subject to the terms and conditions of the Offer to Purchase, a Holder
will be deemed to have tendered the entire aggregate principal amount
represented by the Notes indicated in the column labeled "Aggregate
Principal Amount Represented." See Instruction 2.
/ / CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder:
- --------------------------------------------------------------------------------
Window Ticket Number (if any):
- --------------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
- --------------------------------------------------------------------------------
Name of Eligible Institution which Guaranteed Delivery:
- --------------------------------------------------------------------------------
3
<PAGE>
LADIES AND GENTLEMEN:
Upon the terms and subject to the conditions of the Offer, the undersigned
hereby tenders to the Company the principal amount of Notes indicated above.
Subject to and effective upon the acceptance for payment of Notes tendered
hereby, by executing and delivering a Letter of Transmittal a tendering holder
of Notes (i) irrevocably sells, assigns and transfers to the Company, all right,
title and interest in and to all the Notes tendered thereby, (ii) waives any and
all rights with respect to the Notes (including without limitation any existing
or past defaults and their consequences in respect of the Note and the Indenture
under which the Notes were issued), (iii) releases and discharges the Company
from any and all claims such holder may have now, or may have in the future
arising out of, or related to, the Notes including without limitation any claims
that such holder is entitled to receive additional principal or interest
payments with respect to the Notes or to participate in any repurchase,
redemption or defeasance of the Notes and (iv) irrevocably constitutes and
appoints the Depositary the true and lawful agent and attorney-in-fact of such
holder with respect to any such tendered Notes, with full power of substitution
and resubstitution (such power of attorney being deemed to be an irrevocable
power coupled with an interest) to (a) deliver certificates representing such
Notes, or transfer ownership of such Notes, on the account books maintained by
DTC, together, in any such case, with all accompanying evidences of transfer and
authenticity, to the Company, (b) present such Notes for transfer on the
relevant security register and (c) receive all benefits or otherwise exercise
all rights of beneficial ownership of such Notes (except that the Depositary
will have no rights to, or control over, funds from the Company, except as agent
for the Company, for the purchase price for any tendered Notes that are
purchased by the Company), all in accordance with the terms of the Offer.
The undersigned understands that tenders of Notes may be withdrawn by
written notice of withdrawal received by the Depositary at any time prior to the
close of business on the business day following the Expiration Date. See
Instruction 1.
The undersigned hereby represents and warrants that the undersigned (i) owns
the Notes tendered and is entitled to tender such Notes and (ii) has full power
and authority to tender, sell, assign and transfer the Notes tendered hereby and
that when such Notes are accepted for purchase and payment by the Company, the
Company will acquire good title thereto, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claim or
right. The undersigned will, upon request, execute and deliver any additional
documents deemed by the Depositary or the Company to be necessary or desirable
to complete the sale, assignment and transfer of the Notes tendered hereby.
For the purposes of the Offer, the undersigned understands that the Company
will be deemed to have accepted for purchase validly tendered Notes (or
defectively tendered Notes with respect to which the Company has waived such
defect) only if, as and when the Company gives oral or written notice thereof to
the Depositary. Payment for Notes purchased pursuant to the Offer will be made
by deposit of the purchase price for such Notes with the Depositary, which will
act as agent for tendering holders for the purpose of receiving payments from
the Company and transmitting such payments to such holders.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death or incapacity of the undersigned and every
obligation of the undersigned under this Letter of Transmittal shall be binding
upon the undersigned's heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives.
The undersigned understands that valid tender of Notes pursuant to any one
of the procedures described under "Procedures for Tendering Notes" in the Offer
to Purchase and in the instructions hereto will constitute a binding agreement
between the undersigned and the Company upon the terms and subject to the
conditions of the Offer, including the undersigned's waiver of any existing
defaults
4
<PAGE>
and their consequences in respect of the Notes and the Indenture (including,
without limitation, a default in the payment of interest).
The undersigned understands that the delivery and surrender of the Notes is
not effective, and the risk of loss of the Notes does not pass to the
Depositary, until receipt by the Depositary of this Letter of Transmittal, or a
facsimile hereof, properly completed and duly executed, together with all
accompanying evidences of authority and any other required documents in form
satisfactory to the Company. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance for payment of any tender of Notes
pursuant to the procedures described in the Offer to Purchase and the form and
validity (including time of receipt of notices of withdrawal) of all documents
will be determined by the Company, in its sole direction, which determination
shall be final and binding on all parties.
Unless otherwise indicated herein under "Special Issuance Instructions," the
undersigned hereby requests that any Notes representing principal amounts not
tendered be issued in the name(s) of the undersigned, and checks constituting
payments for Notes purchased in connection with the Offer be issued to the order
of the undersigned. Similarly, unless otherwise indicated herein under "Special
Delivery Instructions," the undersigned hereby requests that any Notes
representing principal amounts not tendered and checks constituting payments for
Notes to be purchased in connection with the Offer be delivered to the
undersigned at the address(es) shown herein. In the event that the "Special
Issuance Instructions" box or the "Special Delivery Instructions" box, or both,
are completed, the undersigned hereby requests that any Notes representing
principal amounts not tendered be issued in the name(s) of, certificates for
such Notes be delivered to, and checks constituting payments for Notes purchased
in connection with the Offer be issued in the name(s) of, and be delivered to,
the person(s) at the address(es) so indicated, as applicable.
5
<PAGE>
- --------------------------------------------------------------------------------
- -------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
To be completed ONLY if any checks and/or any certificates for Notes in
a principal amount not tendered are to be issued in the name of and sent to
someone other than the person(s) whose name(s) appear(s) in the "Description
of Notes above Tendered" box above.
Issue to: / / Notes / / Checks
(COMPLETE AS APPLICABLE)
Name _______________________________________________________________________
(PLEASE PRINT)
Address ____________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
__________________________________________________________________________
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9 HEREIN)
- ------------------------------------------------------
- ------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
To be completed ONLY if any checks and/or any certificates for Notes in
a principal amount not tendered are to be sent to someone other than the
undersigned or to the undersigned at an address other than that shown in the
"Description of Notes above Tendered" box above.
Deliver: / / Notes / / Checks
(COMPLETE AS APPLICABLE)
Name _______________________________________________________________________
(PLEASE PRINT)
Address ____________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
__________________________________________________________________________
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9 HEREIN)
- -----------------------------------------------------
6
<PAGE>
HOLDERS WHO WISH TO ACCEPT THE OFFER AND TENDER THEIR NOTES MUST COMPLETE THIS
LETTER OF TRANSMITTAL IN ITS ENTIRETY.
NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE ACCOMPANYING
INSTRUCTIONS CAREFULLY.
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS OF NOTES PURSUANT TO THE OFFER
REGARDLESS OF WHETHER NOTES ARE BEING PHYSICALLY DELIVERED HEREWITH)
This Letter of Transmittal must be signed by the holder(s) of Notes
exactly as their name(s) appear(s) on certificate(s) for Notes or by
person(s) authorized to become holder(s) by endorsements and documents
transmitted with this Letter of Transmittal. If signature is by a trustee,
executor, administrator, guardian, attorney-in-fact, officer or other person
acting in a fiduciary or representative capacity, such person must set forth
his or her full title below under "Capacity" and submit evidence
satisfactory to the Company of such person's authority to so act. See
Instruction 3 below.
If the signature appearing below is not of the holder(s) of the Notes,
then the holder(s) must sign a valid power of attorney.
X __________________________________________________________________________
X __________________________________________________________________________
SIGNATURE(S) OF HOLDER(S) OR AUTHORIZED SIGNATORY
Date: ______________________________________________________________________
Name(s): ___________________________________________________________________
____________________________________________________________________________
(PLEASE PRINT)
Capacity ___________________________________________________________________
Address ____________________________________________________________________
____________________________________________________________________________
(INCLUDING ZIP CODE)
Area Code and Telephone No. ( )___________________________________________
SIGNATURE GUARANTEE
(See Instruction 3 Below)
Certain Signatures Must Be Guaranteed by an Eligible Institution.
____________________________________________________________________________
(NAME OF ELIGIBLE INSTITUTION GUARANTEEING SIGNATURES)
__________________________________________________________________________
(ADDRESS (INCLUDING ZIP CODE) AND TELEPHONE NUMBER
(INCLUDING AREA CODE) OF FIRM)
__________________________________________________________________________
(AUTHORIZED SIGNATURE)
__________________________________________________________________________
(PRINTED NAME)
__________________________________________________________________________
(TITLE)
Date: _________________________, 2000
- --------------------------------------------------------------------------------
7
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. PROCEDURES FOR TENDERING NOTES; GUARANTEED DELIVERY PROCEDURES;
WITHDRAWAL OF TENDERS. To tender the Notes in the Offer, certificates
representing such Notes, together with a properly completed and duly executed
copy (or facsimile) of this Letter of Transmittal, and any other documents
required by this Letter of Transmittal must be received by the Depositary at the
address set forth herein prior to the Expiration Date. The method of delivery of
this Letter of Transmittal, certificates for Notes and all other required
documents to the Depositary is at the election and risk of holders. If such
delivery is to be made by mail, it is suggested that holders use properly
insured registered mail, return receipt requested, and that the mailing be made
sufficiently in advance of the Expiration Date to permit delivery to the
Depositary prior to such date. Except as otherwise provided below, the delivery
will be deemed made when actually received or confirmed by the Depositary. THIS
LETTER OF TRANSMITTAL AND NOTES SHOULD BE SENT ONLY TO THE DEPOSITARY, AND NOT
TO THE COMPANY.
This Letter of Transmittal is also being supplied for informational purposes
only to persons who hold notes in book-entry form through the facilities of DTC.
Tender of Notes held through DTC must be made pursuant to the procedures
described under "Procedures for Tendering Notes --Tendering Notes-- Notes held
through DTC" in the Offer to Purchase.
Except as provided herein for the book-entry or guaranteed delivery
procedures, unless the Notes being tendered are deposited with the Depositary on
or prior to the Expiration Date (accompanied by the appropriate, properly
completed and duly executed Letter of Transmittal and any required signature
guarantees and other documents required by this Letter of Transmittal), the
Company may, in its sole discretion, reject such tender. Payment for Notes will
be made only against deposit of tendered Notes.
By executing this Letter of Transmittal (or a facsimile thereof), a
tendering holder waives any right to receive any notice of the acceptance for
payment of tendered Notes.
For a full description of the procedures for tendering Notes, see
"Procedures for Tendering Notes--Tendering Notes" in the Offer to Purchase.
If a holder desires to tender Notes pursuant to the Offer and (i)
certificates representing such holder's Notes are not lost but are not
immediately available or time will not permit this Letter of Transmittal,
certificates representing Notes or other required documents to reach the
Depositary on or prior to the Expiration Date or (ii) the procedures for
book-entry transfer cannot be completed on or prior to the Expiration Date, such
holder may effect a tender of such Notes in accordance with the guaranteed
delivery procedures described under "Procedures for Tendering Notes-- Guaranteed
Delivery Procedures" in the Offer to Purchase.
Tenders of Notes may be withdrawn at any time prior to the Expiration Date
pursuant to the procedures described under "Procedures For Tendering Notes
- --Withdrawal Rights" in the Offer to Purchase.
2. PARTIAL TENDERS. Tenders of Notes pursuant to the Offer will be accepted
only in principal amounts equal to $1,000 or integral multiples thereof. If less
than the entire principal amount of any Notes evidenced by a submitted
certificate is tendered, the tendering holder must fill in the principal amount
tendered in the last column of the box entitled "Description of Notes" herein.
The entire principal amount represented by the certificates for all Notes
delivered to the Depositary will be deemed to have been tendered unless
otherwise indicated. If the entire principal amount of all Notes is not
tendered, certificates for the principal amount of Notes not tendered will be
sent to the holder unless otherwise provided in the appropriate box on this
Letter of Transmittal (see Instruction 4), promptly after the Notes are accepted
for purchase.
8
<PAGE>
3. SIGNATURES ON THIS LETTER OF TRANSMITTAL, BOND POWERS AND ENDORSEMENT;
GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed by the
registered holder(s) of the Notes tendered hereby, the signature(s) must
correspond with the name(s) as written on the face of the certificate(s) without
alteration, enlargement or any change whatsoever.
IF THIS LETTER OF TRANSMITTAL IS EXECUTED BY A HOLDER OF NOTES WHO IS NOT
THE REGISTERED HOLDER, THEN THE REGISTERED HOLDER MUST SIGN A VALID POWER OF
ATTORNEY, WITH THE SIGNATURE OF SUCH REGISTERED HOLDER GUARANTEED BY AN ELIGIBLE
INSTITUTION.
If any of the Notes tendered hereby are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal. If any tendered
Notes are registered in different names on several certificates, it will be
necessary to complete, sign and submit as many copies of this Letter of
Transmittal and any necessary accompanying documents as there are different
names in which certificates are held.
If this Letter of Transmittal is signed by the holder, and the certificates
for any principal amount of Notes not tendered for purchase are to be issued (or
if a principal amount of Notes that is not tendered for purchase is to be
reissued or returned) to the holder, and checks constituting payments for Notes
to be purchased in connection with the Offer are to be issued to the order of
the holder, then the holder need not endorse any certificates for tendered Notes
nor provide a separate bond power. In any other case (including if this Letter
of Transmittal is not signed by the holder), the holder must either properly
endorse the certificates for Notes tendered or transmit a separate properly
completed bond power with this Letter of Transmittal (in either case, executed
exactly as the name(s) of the registered holder(s) appear(s) on such Notes),
with the signature on the endorsement or bond power guaranteed by an Eligible
Institution, unless such certificates or bond powers are executed by an Eligible
Institution.
If this Letter of Transmittal or any certificates representing Notes or bond
powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and
proper evidence satisfactory to the Company of their authority so to act must be
submitted with this Letter of Transmittal.
Endorsements on certificates for Notes and signatures on bond powers
provided in accordance with this Instruction 3 by registered holders not
executing this Letter of Transmittal must be guaranteed by an Eligible
Institution.
No signature guarantee is required if: (i) this Letter of Transmittal is
signed by the registered holder(s) of the Notes tendered herewith and the
payments for the Notes to be purchased are to be made, or any Notes for
principal amounts not tendered for purchase are to be issued, directly to such
registered holder(s) and neither the "Special Issuance Instructions" box nor the
"Special Delivery Instructions" box of this Letter of Transmittal has been
completed; or (ii) such Notes are tendered for the account of an Eligible
Institution. In all other cases, all signatures on Letters of Transmittal
accompanying Notes must be guaranteed by an Eligible Institution.
4. SPECIAL ISSUANCE AND SPECIAL DELIVERY INSTRUCTIONS. Tendering holders
should indicate in the applicable box or boxes the name and address to which
Notes for principal amounts not tendered or not accepted for purchase or checks
constituting payments for Notes to be purchased in connection with the Offer are
to be issued or sent, if different from the name and address of the holder
signing this Letter of Transmittal. In the case of issuance in a different name,
the taxpayer identification or social security number of the person named must
also be indicated. If no instructions are given, Notes not tendered or not
accepted for purchase will be returned to the holder of the Notes tendered.
9
<PAGE>
5. TAXPAYER IDENTIFICATION NUMBER AND SUBSTITUTE FORM W-9. Each tendering
holder is required to provide the Depositary with the holder's correct taxpayer
identification number ("TIN"), generally the holder's social security or federal
employer identification number, on Substitute Form W-9, which is provided under
"Important Tax Information" below, or, alternatively, to establish another basis
for exemption from backup withholding. A holder must cross out item (2) in the
Certification box on Substitute Form W-9 if such holder is subject to backup
withholding. Failure to provide the information on the form may subject the
tendering holder to 31% federal income tax backup withholding on the payments
made to the holder or other payee with respect to Notes purchased pursuant to
the Offer. The box in Part 3 of the form should be checked if the tendering
holder has not been issued a TIN and has applied for a TIN or intends to apply
for a TIN in the near future. If the box in Part 3 is checked and the Depositary
is not provided with a TIN within 60 days, thereafter the Depositary will
withhold 31% from all such payments with respect to the Notes to be purchased
until a TIN is provided to the Depositary.
6. TRANSFER TAXES. The Company will pay all transfer taxes, if any, payable
on the purchase and transfer of Notes purchased pursuant to the Offer, except in
the case of deliveries of certificates for Notes for principal amounts not
tendered for payment that are to be registered or issued in the name of any
person other than the holder of Notes tendered hereby, in which case the amount
of any transfer taxes (whether imposed on the registered holder or such other
person) payable on account of the transfer to such person will be deducted from
the purchase price unless satisfactory evidence of the payment of such taxes or
exemption therefrom is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer stamps to be affixed to the certificates listed in this Letter of
Transmittal.
7. IRREGULARITIES. All questions as to the validity, form, eligibility
(including the time of receipt) and acceptance for payment of any tenders of
Notes pursuant to the procedures described in the Offer to Purchase and the form
and validity (including the time of receipt of notices of withdrawal) of all
documents will be determined by the Company, in its sole discretion, which
determination shall be final and binding on all parties. The Company reserves
the absolute right to reject any or all tenders determined by it not to be in
proper form or the acceptance of or payment for which may be unlawful. The
Company also reserves the absolute right to waive any of the conditions of the
Offer and any defect or irregularity in the tender of any particular Notes. The
Company's interpretations of the terms and conditions of the Offer (including
without limitation the instructions in this Letter of Transmittal) shall be
final and binding. No alternative, conditional or contingent tenders will be
accepted. Unless waived, any irregularities in connection with tenders must be
cured within such time as the Company shall determine. None of the Company, the
Depositary or any other person will be under any duty to give notification of
any defects or irregularities in such tenders or will incur any liability to
holders for failure to give such notification. Tenders of such Notes shall not
be deemed to have been made until such irregularities have been cured or waived.
Any Notes received by the Depositary that are not properly tendered and as to
which the irregularities have not been cured or waived will be returned by the
Depositary to the tendering holders, unless such holders have otherwise provided
herein, as promptly as practical following the Expiration Date.
8. MUTILATED, LOST, STOLEN OR DESTROYED CERTIFICATES FOR NOTES. Any holder
of Notes whose certificates for Notes have been mutilated, lost, stolen or
destroyed should contact the Depositary for further instruction at the address
or telephone numbers included herein.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the
procedure for tendering Notes and requests for assistance or additional copies
of the Offer to Purchase and this Letter of Transmittal may be directed to, and
additional information about the Offer may be obtained from, the Depositary,
whose address and telephone number appears on the first page of this Letter of
Transmittal.
10
<PAGE>
IMPORTANT TAX INFORMATION
Under federal income tax laws, a holder whose tendered Notes are accepted
for payment is required by law to provide the Depositary (as payer) with such
holder's correct TIN on Substitute Form W-9 included herein or otherwise
establish a basis for exemption from backup withholding. If such holder is an
individual, the TIN is his social security number. If the Depositary is not
provided with the correct TIN, a penalty may be imposed by the Internal Revenue
Service, and payments made with respect to Notes purchased pursuant to the Offer
may be subject to backup withholding. Failure to comply truthfully with the
backup withholding requirements also may result in the imposition of severe
criminal and/or civil fines and penalties.
Certain holders (including, among others, all corporations and certain
foreign persons) are not subject to these backup withholding and reporting
requirements. Exempt holders should furnish their TIN, write "Exempt" on the
face of the Substitute Form W-9, and sign, date and return the Substitute
Form W-9 to the Depositary. A foreign person, including a foreign entity, may
qualify as an exempt recipient by submitting to the Depositary a properly
completed Internal Revenue Service Form W-8 BEN or other appropriate Form W-8,
signed under penalties of perjury, attesting to that holder's foreign status. A
Form W-8 can be obtained from the Depositary. See the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the holder or other payee. Backup withholding is not an
additional federal income tax. Rather, the federal income tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments made with respect to Notes
purchased pursuant to the Offer, the holder is required to provide the
Depositary with either: (i) the holder's correct TIN by completing the form
included herein, certifying that the TIN provided on Substitute Form W-9 is
correct (or that such holder is awaiting a TIN) and that (A) the holder has not
been notified by the Internal Revenue Service that the holder is subject to
backup withholding as a result of failure to report all interest or dividends or
(B) the Internal Revenue Service has notified the holder that the holder is no
longer subject to backup withholding; or (ii) an adequate basis for exemption.
11
<PAGE>
NUMBER TO GIVE THE DEPOSITARY
The holder is required to give the Depositary the TIN (e.g., social security
number or employer identification number) of the registered holder of the Notes.
If the Notes are held in more than one name or are held not in the name of the
actual owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
number to report.
<TABLE>
<C> <S> <C>
- ------------------------------------------------------------------------------------------------------------
PAYER'S NAME: SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION, AS DEPOSITARY
- ------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1: Please provide Social Security Number
FORM W-9 your TIN in the box at
right and certify by OR
signing and dating below Employer Identification Number
------------------------------------------------------------------
PART 2: For Payees NOT subject to backup withholding, see the
enclosed Guidelines for Certification of Taxpayer Identification
PAYER'S REQUEST FOR TAXPAYER Number on Substitute Form W-9 and complete as instructed therein
IDENTIFICATION NUMBER (TIN)
------------------------------------------------------------------
PART 3: Awaiting TIN / /
- ------------------------------------------------------------------------------------------------------------
CERTIFICATION. Under penalty of perjury, I certify that:
(1) the number above on this form is my correct Taxpayer Identification Number (or I am waiting for a
number to be issued to me) and
(2) I am not subject to backup withholding either because (a) I am exempt from backup withholding or (b) I
have not been notified by the IRS that I am subject to backup withholding as a result of a failure to
report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup
withholding.
CERTIFICATION INSTRUCTIONS. You must cross out item (2) above if you have been notified by the IRS that you
are subject to backup withholding because of underreporting of interest or dividends on your tax return.
However, if after being notified by the IRS that you were subject to backup withholding, you received
another notification from the IRS that you are no longer subject to backup withholding, do not cross out
item (2). (Also see the enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9)
- ------------------------------------------------------------------------------------------------------------
Signature Date
Name:
(PLEASE PRINT)
Address:
(INCLUDE ZIP CODE)
-----------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER AND THE
SOLICITATION. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
12
<PAGE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate IRS
Center or Social Security Administration Office or (b) I intend to mail or
deliver an application in the near future. I understand that if I do not provide
a taxpayer identification number within sixty (60) days, 31% of all reportable
payments made to me thereafter will be withheld until I provide a taxpayer
identification number.
_______________________________________________________________________________
SIGNATURE
_______________________________________________________________________________
DATE
_______________________________________________________________________________
NAME (PLEASE PRINT)
_______________________________________________________________________________
13
<PAGE>
Facsimile copies of this Letter of Transmittal, properly completed and duly
executed, will be accepted. This Letter of Transmittal, certificates for the
Notes and any other required documents should be sent or delivered by each
holder of Notes or such person's broker, dealer, commercial bank or other
nominee to the Depositary at the address set forth above.
14
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYOR. -- Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e. 00-0000000. The table below will help determine the number
to give the payor.
<TABLE>
<CAPTION>
--------------------------------------------------------- -----------------------------------------------------------------
<S> <C> <C> <C>
GIVE THE GIVE THE EMPLOYER
SOCIAL SECURITY IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF-- FOR THIS TYPE OF ACCOUNT: NUMBER OF--
-------------------------------------------------------- --------------------------------------------------------
1. An individual's account The individual 9. A valid trust, estate, or pension The legal entity (Do not
trust
furnish the identifying
2. Two or more individuals The actual owner of the number of the personal
(joint account)
account or, if combined representative or
trustee
funds, any one of the unless the legal entity
individuals(1) itself is not designated
in
the account title.)(5)
3. Husband and wife (joint The actual owner of the
account)
account or, if joint 10. Corporate account The corporation
funds,
either person(1)
11. Religious, charitable, or The organization
educational
4. Custodian account of a minor The minor(2) organization account
(Uniform Gift to Minors Act)
12. Partnership account held in the
name of
5. Adult and minor (joint The adult or, if the the business The partnership
account) minor
is the only contributor,
the minor(1) 13. Association, club, or other The organization
tax-exempt
organization
6. Account in the name of The ward, minor, or
guardian or
committee for a designated incompetent person(3) 14. A broker or registered nominee The broker or nominee
ward,
minor, or incompetent person
15. Account with the Department of The public entity
7. a. The usual revocable The grantor-trustee(1) Agriculture in the name of a public
savings trust
account (grantor is also entity (such as a State or local
trustee)
b. So-called trust account The actual owner(1) government, school district, or prison)
that is not a
legal or valid trust under that receives agricultural program
State law
payments
8. Sole proprietorship account The owner(4)
--------------------------------------------------------- -----------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for an Employer Identification Number, at the local
office of the Social Security Administration or the Internal Revenue Service
(the "IRS") and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from the tax under section 501(a), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
- An international organization or any agency, or instrumentality thereof.
- A registered dealer in securities or commodities registered in the United
States or a possession of the United States.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a) of the Internal
Revenue Code of 1986, as amended (the "Code").
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1) of the Code.
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441 of
the Code.
- Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payor's trade or business and you have not provided your
correct taxpayer identification number to the payor.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852 of the Code).
- Payments described in section 6049(b)(5) of the Code to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451 of the Code.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt payees described above should file a Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYOR, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYOR. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A of the Code.
PRIVACY ACT NOTICE.--Section 6109 of the Code requires most recipients of
dividend, interest, or other payments to give taxpayer identification numbers to
payers who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. Payors must be given the numbers whether or not
recipients are required to file tax returns. Beginning January 1, 1993, payors
must generally withhold 31% of taxable interest, dividend, and certain other
payments to a payee who does not furnish a taxpayer identification number to a
payor. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payor, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) PENALTY FOR FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If
you fail to include any portion of an includible payment for interest,
dividends, or patronage dividends in gross income and such failure is due to
negligence, a penalty of 20% is imposed on any portion of an underpayment
attributable to that failure.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4)CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
EXHIBIT 99.(A)(3)
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF CERTIFICATES FOR
8 3/4% CONVERTIBLE SUBORDINATED NOTES DUE 2004
OF
KTI, INC.
Capitalized terms used but not defined herein have the meanings given them
in the Offer to Purchase, dated January 24, 2000 (the "Offer to Purchase").
This Notice of Guaranteed Delivery may be used to cause a tender of 8 3/4%
Convertible Subordinated Debentures due 2004 of KTI, Inc. (the "Notes") by
(i) a record holder of Notes if certificates for the Notes are not immediately
available or time will not permit all required documents to reach the Depositary
on or prior to the Expiration Date or (ii) by a DTC Participant if the
procedures for book-entry transfer described in the Offer to Purchase cannot be
completed on a timely basis.
The Depositary for the Offer is:
SUNTRUST BANK
225 EAST ROBINSON STREET, SUITE 250
ORLANDO, FLORIDA 32801
TELECOPY: (407)237-5299
ATTENTION: MS. LISA DERRYBERRY
TELEPHONE: (407) 237-4791
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THE OFFER TO PURCHASE, THE
OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
MARCH 3, 2000, UNLESS EXTENDED (THE "EXPIRATION DATE"). NOTES TENDERED IN THE
OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE CLOSE OF BUSINESS ON THE
BUSINESS DAY FOLLOWING THE EXPIRATION DATE.
<PAGE>
LADIES AND GENTLEMEN:
By execution hereof, the undersigned acknowledges receipt of the Offer to
Purchase and the Letter of Transmittal. On the terms and subject to the
conditions of the Offer to Purchase and the Letter of Transmittal, the
undersigned hereby represents that it is the holder of the Notes (or the holder
of interests in the Global Note) being tendered (or caused to be tendered)
hereby and is entitled to tender (or cause to be tendered) such Notes as
contemplated by the Offer and, pursuant to the guaranteed delivery procedures
described in the Offer to Purchase and Letter of Transmittal, hereby tenders (or
causes a tender) to the Company the aggregate principal amount of Notes
indicated below.
Except as stated in the Offer to Purchase, all authority herein conferred or
agreed to be conferred shall survive the death or incapacity of the undersigned,
and any obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned.
A record holder must execute this Notice of Guaranteed Delivery exactly as
its name appears on its Notes and a DTC Participant must execute this Notice of
Guaranteed Delivery exactly as its name is registered with DTC. If signature is
by a trustee, executor, administrator, guardian, attorney-in-fact, agent,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person must set forth his or her name, address and capacity as
indicated below and submit evidence to the Company of such person's authority so
to act.
Signed _________________________________________________________________________
Name(s): _______________________________________________________________________
(PLEASE TYPE OR PRINT)
Company: _______________________________________________________________________
Capacity: ______________________________________________________________________
Address: _______________________________________________________________________
Dated: _________________________________________________________________________
Aggregate Principal Amount of Notes Tendered: __________________________________
Certificate Nos. for Notes (if applicable):
If being executed by a DTC Participant:
DTC Participant's Number: ______________________________________________________
Account Number: ________________________________________________________________
Transaction Code Number: _______________________________________________________
THE GUARANTEE ON THE NEXT PAGE MUST BE COMPLETED
2
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member of a registered national securities exchange or of
the National Association of Securities Dealers, Inc., or a commercial bank or
trust company having an office or correspondent in the United States or another
"Eligible Guarantor Institution" as defined in Rule 17Ad-15 under the Securities
Exchange Act of 1934, as amended, hereby guarantees that, within three New York
Stock Exchange trading days from the date of receipt by the Depositary of this
Notice of Guaranteed Delivery, a properly completed and validly executed Letter
of Transmittal (or a facsimile thereof), together with Notes tendered hereby in
proper form for transfer (or confirmation of the book-entry transfer of such
Notes into the Depositary's account at the Depositary Trust Company, pursuant to
the procedures for book-entry transfer set forth under "Procedure for Tendering
Notes" in the Offer to Purchase), and all other required documents will be
delivered by the undersigned to the Depositary.
<TABLE>
<S> <C>
Name of Firm:
AUTHORIZED SIGNATURE
Address: Name:
(PLEASE TYPE OR PRINT)
Title:
ZIP CODE
Date:
Area Code and Telephone No.:
</TABLE>
The institution which completes this form must deliver to the Depositary the
guarantee, the Letter of Transmittal (or facsimile thereof) and certificates for
Notes within the time periods specified herein. Failure to do so could result in
a financial loss to such institution.
DO NOT SEND CERTIFICATES FOR NOTES WITH THIS FORM--THEY SHOULD BE SENT WITH
THE LETTER OF TRANSMITTAL.
3
<PAGE>
EXHIBIT 99.(A)(4)
KTI, INC.
OFFER TO PURCHASE FOR CASH ANY AND ALL OF THE OUTSTANDING 8 3/4%
CONVERTIBLE SUBORDINATED NOTES DUE 2004 OF KTI, INC.
AT 100% OF THE PRINCIPAL AMOUNT OF THE NOTES
SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THE OFFER TO PURCHASE, THE
OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
MARCH 3, 2000 UNLESS EXTENDED (THE "EXPIRATION DATE"). NOTES TENDERED IN THE
OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE CLOSE OF BUSINESS ON THE
BUSINESS DAY FOLLOWING THE EXPIRATION DATE.
January 24, 2000
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated January 24,
2000 (as the same may be amended from time to time, the "Offer to Purchase"),
and a Letter of Transmittal and instructions thereto (the "Letter of
Transmittal"), relating to the offer (the "Offer") by KTI, Inc. (the "Company")
to purchase for cash all of its outstanding 8 3/4% Convertible Subordinated
Debentures due 2004 (the "Notes") at 100% of the principal amount thereof, plus
accrued and unpaid interest thereon up to but excluding the date of payment.
The materials are being forwarded to you as the beneficial owner of Notes
carried by us for your account or benefit but not registered in your name. A
tender of any Notes may only be made by us as the registered holder and pursuant
to your instructions.
Accordingly, we request instructions as to whether you wish us to tender any
or all such Notes held by us for your account or benefit pursuant to the terms
and conditions set forth in the Offer to Purchase and the Letter of Transmittal.
We urge you to read carefully the Offer to Purchase and Letter of Transmittal
before instructing us to tender your Notes.
Your instructions to us should be forwarded as promptly as possible in order
to permit us to tender Notes on your behalf in accordance with the provisions of
the Offer. Notes tendered pursuant to the Offer may be validly withdrawn,
subject to the procedures described in the Offer to Purchase, at any time prior
to the close of business on the business day following the Expiration Date.
Your attention is directed to the following:
1. The Offer is for all outstanding Notes.
2. The Offer will expire on the Expiration Date.
3. Any transfer taxes incident to the transfer of Notes from the tendering
holder to the Company will be paid by the Company, except as provided in
the Offer to Purchase and the instructions to the Letter of Transmittal.
If you wish to have us tender any or all of your Notes held by us for your
account or benefit, please so instruct us by completing, executing and returning
to us the instruction form that appears below. If you authorize the tender of
your Notes, all such Notes will be tendered unless otherwise specified below.
The accompanying Letter of Transmittal is furnished to you for informational
purposes only and may not be used by you to tender Notes held by us and
registered in our name for your account or benefit.
1
<PAGE>
INSTRUCTIONS
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Offer.
This will instruct you to tender the principal amount of Notes indicated
below held by you for the account or benefit of the undersigned pursuant to the
terms of and conditions set forth in the Offer to Purchase and the Letter of
Transmittal.
Box 1 / / Please tender ALL my Notes held by you for my account or benefit.
Box 2 / / Please tender LESS than all my Notes. I wish to tender $
principal amount of Notes (tenders must be in increments of $1,000 principal
amount).
Box 3 / / Please do not tender any Notes held by you for my account or benefit.
Date: __________________________________________________________________________
Signature: _____________________________________________________________________
Name (please print): ___________________________________________________________
UNLESS A SPECIFIC CONTRARY INSTRUCTION IS GIVEN, YOUR SIGNATURE(S) HEREON SHALL
CONSTITUTE AN INSTRUCTION TO US TO TENDER ALL OF YOUR NOTES.
2
<PAGE>
EXHIBIT (A)(5)
KTI, INC.
OFFER TO PURCHASE FOR CASH ANY AND ALL OF THE OUTSTANDING
8 3/4% CONVERTIBLE SUBORDINATED NOTES DUE 2004 OF KTI, INC.
AT 100% OF THE PRINCIPAL AMOUNT OF THE NOTES
SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THE OFFER TO PURCHASE, THE
OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
MARCH 3, 2000 UNLESS EXTENDED (THE "EXPIRATION DATE"). NOTES TENDERED IN THE
OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE CLOSE OF BUSINESS ON THE
BUSINESS DAY FOLLOWING THE EXPIRATION DATE.
JANUARY 24, 2000
To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
Enclosed for your consideration is an Offer to Purchase, dated January 24,
2000 (as the same may be amended from time to time, the "Offer to Purchase"),
and a form of Letter of Transmittal and instructions thereto (the "Letter of
Transmittal") relating to the offer (the "Offer") by KTI, Inc. (the "Company")
to purchase for cash all of the outstanding 8 3/4% Convertible Subordinated
Debentures due 2004 of the Company (the "Notes") at 100% of the principal amount
thereof, plus accrued and unpaid interest thereon up to but excluding the date
of payment.
We are asking you to contact your clients for whom you hold Notes registered
in your name or in the name of your nominee. In addition, we ask you to contact
your clients who, to your knowledge, hold Notes registered in their own name.
You will be reimbursed by the Company for customary mailing and handling
expenses incurred by you in forwarding any of the enclosed materials to your
clients. The Company will pay all transfer taxes, if any, applicable to the
tender of Notes, except as otherwise provided in the Offer to Purchase and the
Letter of Transmittal.
Enclosed is a copy of each of the following documents for forwarding to your
clients:
1. The Offer to Purchase.
2. A Letter of Transmittal, including Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9, for your use in
connection with the tender of Notes by record holders and for the information of
your clients.
3. A form of letter addressed "To Our Clients" that may be sent to your
clients for whose accounts you hold Notes registered in your name or the name of
your nominee, with space provided for obtaining the clients' instructions with
regard to the Offer.
4. A Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Notes are not lost but not immediately available, or if the
procedure for book-entry transfer cannot be completed on or prior to the
Expiration Date.
Your prompt action is requested. Notes tendered pursuant to the Offer may be
validly withdrawn, subject to the procedures described in the Offer to Purchase,
at any time prior to the Expiration Date.
Please refer to "Procedures for Tendering Notes" in the Offer to Purchase
for a description of the procedures which must be followed to tender Notes in
the Offer.
<PAGE>
Additional copies of the enclosed materials may be obtained from Lisa
Derryberry at SunTrust Bank, the Depositary for the Offer, at (407) 237-4791.
<TABLE>
<S> <C>
Very truly yours,
KTI, Inc.
</TABLE>
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF THE COMPANY, THE TRUSTEE, OR THE DEPOSITARY, OR AUTHORIZE
YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM WITH
RESPECT TO THE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE OFFER TO
PURCHASE OR THE LETTER OF TRANSMITTAL.
2
<PAGE>
Exhibit 99(b)
AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT
DATED AS OF DECEMBER 14, 1999
BY AND AMONG
CASELLA WASTE SYSTEMS, INC.,
AND ITS SUBSIDIARIES (OTHER THAN EXCLUDED SUBSIDIARIES)
AND
FINANCIAL INSTITUTIONS
PARTY HERETO (THE "BANKS")
AND
BANKBOSTON, NA., AS ADMINISTRATIVE AGENT
KEYBANK NATIONAL ASSOCIATION, AS DOCUMENTATION AGENT
BANK OF AMERICA, N.A., AS SYNDICATION AGENT
WITH
BANCBOSTON ROBERTSON STEPHENS INC.,
ACTING AS ARRANGER
AND
CANADIAN IMPERIAL BANK OF COMMERCE, AS CANADIAN AGENT
<PAGE>
<TABLE>
TABLE OF CONTENTS
<S> <C> <C>
Section 1. DEFINITIONS AND RULES OF INTERPRETATION.....................................................2
Section 1.1. Definitions......................................................................2
Section 1.2. Rules of Interpretation.........................................................28
Section 2. THE REVOLVING CREDIT LOANS.................................................................28
Section 2.1. Commitment to Lend..............................................................29
Section 2.2. Reduction of Total Commitment and Reallocations.................................30
Section 2.2.1. Reduction of Total Commitment........................................30
Section 2.2.2. Reallocations........................................................30
Section 2.3. The Notes.......................................................................32
Section 2.4. Reducing Revolver; Maturity of the Revolving Credit Loans.......................33
Section 2.5. Mandatory Repayments of the Revolving Credit Loans..............................34
Section 2.6. Requests for Revolving Credit Loans.............................................34
Section 2.7. Funds for Domestic Revolving Credit Loans and Canadian Loans....................36
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Section 2.8. Swing Line Loans; Settlements...................................................37
Section 2.9. Optional Prepayments or Repayments of Loans.....................................40
Section 3 BANKERS' ACCEPTANCES.......................................................................41
Section 3.1. Acceptance and Purchase.........................................................41
Section 3.2. Refunding Bankers' Acceptances..................................................44
Section 3.3 Acceptance Fee...................................................................44
Section 3.4 Cash Collateral..................................................................45
Section 3.5. Circumstances Making Bankers' Acceptances Unavailable...........................45
Section 4. LETTERS OF CREDIT..........................................................................45
Section 4.1. Letter of Credit Commitments....................................................45
Section 4.2. Reimbursement Obligation of the Borrowers.......................................47
Section 4.3. Letter of Credit Payments.......................................................48
Section 4.4. Obligations Absolute............................................................49
Section 4.5. Reliance by Issuing Bank........................................................49
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Section 4A. THE TERM LOAN.............................................................................50
Section 4A.1. Commitment to Lend.............................................................50
Section 4A.2. The Term Notes.................................................................50
Section 4A.3. Schedule of Installment Payments of Principal of Term Loan.....................50
Section 4A.4. Mandatory Prepayments of Term Loan.............................................51
Section 4A.4.1. Mandatory Prepayments...............................................51
Section 4A.4.2. Payment Provisions..................................................51
Section 4A.5. Optional Prepayment of Term Loan...............................................52
Section 4A.6. Interest on Term Loan..........................................................52
Section 4A.6.1. Interes Rates.......................................................52
Section 4A.6.2. Notification by Borrowers...........................................53
Section 4A.6.3. Amounts, etc........................................................53
Section 5. INTEREST, FEES, PAYMENTS, COMPUTATIONS; JOINT AND SEVERAL LIABILITY;
CERTAIN GENERAL PROVISIONS......................................................................50
Section 5.1. Interest........................................................................53
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Section 5.2. Fees............................................................................54
Section 5.3. Payments........................................................................55
Section 5.4. Computations....................................................................57
Section 5.5. Capital Adequacy................................................................58
Section 5.6. Certificate.....................................................................59
Section 5.7. Interest on Overdue Amounts.....................................................59
Section 5.8. Interest Limitation.............................................................59
Section 5.9. Additional Costs, Etc...........................................................59
Section 5.10. Concerning Joint and Several Liability of the Borrowers........................60
Section 5.11 Currency Matters................................................................64
Section 5.11.1 Currency Fluctuations................................................64
Section 5.11.2 Currency of Account..................................................66
Section 5.12. New Borrowers..................................................................66
Section 5.13. Election of Eurodollar Rate; Notice of Election; Interest Periods; Minimum As..67
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Section 5.14. Eurodollar Indemnity...........................................................68
Section 5.15. Illegality; Inability to Determine Eurodollar Rate.............................68
Section 6. REPRESENTATIONS AND WARRANTIES............................................................69
Section 6.1. Corporate Authority.............................................................69
Section 6.2. Governmental Approvals..........................................................70
Section 6.3. Title to Properties; Leases.....................................................70
Section 6.4. Financial Statements; Solvency..................................................70
Section 6.5. No Material Changes, Etc........................................................71
Section 6.6. Permits, Franchises, Patents, Copyrights, Etc...................................71
Section 6.7. Litigation......................................................................71
Section 6.8. No Materially Adverse Contracts, Etc............................................72
Section 6.9. Compliance With Other Instruments, Laws, Etc....................................72
Section 6.10. Tax Status.....................................................................72
Section 6.11. No Event of Default............................................................73
Section 6.12. Holding Company and Investment Company Acts....................................73
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Section 6.13. Absence of Financing Statements, Etc...........................................73
Section 6.14. Employee Benefit Plans.........................................................73
Section 6.15. Use of Proceeds................................................................75
Section 6.16. Environmental Compliance.......................................................75
Section 6.17. Perfection of Security Interests...............................................76
Section 6.18. Certain Transactions...........................................................76
Section 6.19. Subsidiaries...................................................................76
Section 6.20. Capitalization.................................................................76
Section 6.21. True Copies of Charter and Other Documents.....................................77
Section 6.22. Disclosure.....................................................................77
Section 6.23. Guarantees of Excluded Subsidiaries............................................77
Section 6.24. Year 2000 Issue................................................................77
Section 7. AFFIRMATIVE COVENANTS OF THE BORROWERS.....................................................78
Section 7.1. Punctual Payment................................................................78
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Section 7.2. Maintenance of Office...........................................................78
Section 7.3. Records and Accounts............................................................78
Section 7.4. Financial Statements, Certificates and Information..............................78
Section 7.5. Corporate Existence and Conduct of Business.....................................80
Section 7.6. Maintenance of Properties.......................................................81
Section 7.7. Insurance.......................................................................81
Section 7.8. Taxes...........................................................................81
Section 7.9. Inspection of Properties, Books, and Contracts..................................82
Section 7.10. Compliance with Laws, Contracts, Licenses and Permits; Maintenance
of Material Licenses and Permits....................................................82
Section 7.11. Environmental Indemnification..................................................83
Section 7.12. Further Assurances.............................................................83
Section 7.13. Notice of Potential Claims or Litigation.......................................83
Section 7.14. Notice of Certain Events Concerning Insurance and Environmental Claims.........83
Section 7.15. Notice of Default..............................................................83
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Section 7.16. Closure and Post Closure Liabilities...........................................85
Section 7.17. Subsidiaries...................................................................85
Section 7.18. Interest Rate Protection.......................................................85
Section 8. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS................................................85
Section 8.1. Restrictions on Indebtedness....................................................85
Section 8.2. Restrictions on Liens...........................................................87
Section 8.3. Restrictions on Investments.....................................................88
Section 8.4. Mergers, Consolidations, Sales..................................................89
Section 8.5. Sale and Leaseback..............................................................92
Section 8.6. Restricted Distributions and Redemptions........................................92
Section 8.7. Employee Benefit Plans..........................................................92
Section 8.8. Capital Expenditures............................................................93
Section 8.9. Prepayments of Certain Obligations..............................................93
Section 8.10. Negative Pledge................................................................93
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Section 9. FINANCIAL COVENANTS OF THE BORROWERS.......................................................94
Section 9.1. Interest Coverage Ratios........................................................94
Section 9.2. Profitable Operations...........................................................94
Section 9.3. Borrowers' Funded Debt to EBITDA Ratio..........................................94
Section 9.4. Borrowers' Senior Funded Debt to EBITDA Ratio...................................94
Section 9.5. Funded Debt to Capitalization...................................................94
Section 9.6. Total Funded Debt to EBITDA Ratio...............................................95
Section 10. CLOSING CONDITIONS.........................................................................95
Section 10.1. Corporate Action...............................................................96
Section 10.2. Loan Documents, Etc............................................................96
Section 10.3. Officer's Certificate; Certified Copies of Charter Documents...................96
Section 10.4. Incumbency Certificate.........................................................96
Section 10.5. Validity of Liens..............................................................96
Section 10.6 Search Results.................................................................97
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Section 10.7. KTI Purchase...................................................................97
Section 10.8. Certificates of Insurance......................................................97
Section 10.9. Opinion of Counsel.............................................................97
Section 10.10. Payment of Fees...............................................................97
Section 10.11. Good Standing Certificates....................................................97
Section 10.12. Payoff........................................................................97
Section 10.13. Financial Statements..........................................................97
Section 11. CONDITIONS OF ALL LOANS...................................................................98
Section 11.1. Representations True; No Event of Default......................................98
Section 11.2 Performance; No Event of Default...............................................98
Section 11.3. No Legal Impediment............................................................99
Section 11.4. Governmental Regulation........................................................99
Section 11.5. Proceedings and Documents......................................................99
Section 12. COLLATERAL SECURITY.......................................................................99
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Section 13. EVENTS OF DEFAULT; ACCELERATION; TERMINATION OF COMMITMENT................................100
Section 13.1. Events of Default and Acceleration.............................................100
Section 13.2. Termination of Commitments.....................................................104
Section 13.3. Remedies.......................................................................104
Section 14. SETOFF....................................................................................105
Section 15. THE BANK AGENTS...........................................................................105
Section 15.1 Appointment, Powers and Immunities..............................................105
Section 15.2. Actions By Bank Agents.........................................................106
Section 15.3. Indemnification................................................................107
Section 15.4. Reimbursement..................................................................107
Section 15.5. Documents......................................................................107
Section 15.6. Non-Reliance on Agents and Other Banks.........................................108
Section 15.7. Resignation of Agent...........................................................108
Section 15.8. Action by the Banks, Consents, Amendments, Waivers, Etc........................109
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Section 15.9. Documentation Agent and Syndication Agent......................................109
Section 16. EXPENSES..................................................................................110
Section 17. INDEMNIFICATION...........................................................................110
Section 18. SURVIVAL OF COVENANTS, ETC................................................................111
Section 19. SYNDICATION AND PARTICIPATION.............................................................111
Section 20. PARTIES IN INTEREST.......................................................................112
Section 21. NOTICES, ETC..............................................................................113
Section 22. MISCELLANEOUS.............................................................................113
Section 23. ENTIRE AGREEMENT, ETC.....................................................................113
Section 24. WAIVER OF JURY TRIAL......................................................................114
Section 25. GOVERNING LAW.............................................................................114
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Section 26. SEVERABILITY..............................................................................115
Section 27. [INTENTIONALLY OMITTED.]..................................................................115
Section 28. PARI PASSU TREATMENT......................................................................115
</TABLE>
<PAGE>
EXHIBITS
Exhibit A-1 -- Form of Domestic Revolving Credit Note
Exhibit A-2 -- Form of Canadian Note
Exhibit A-3 -- Form of Swing Line Note
Exhibit A-4 -- Form of Term Note
Exhibit B-1 -- Form of Loan and Letter of Credit Request
Exhibit B-2 -- Form of Canadian Loan and Letter of Credit Request
Exhibit B-3 -- Form of Bankers' Acceptance Notice
Exhibit C -- [Intentionally Omitted]
Exhibit D -- Form of Compliance Certificate
Exhibit E -- Form of Environmental Compliance Certificate
Exhibit F -- Form of Subordination Agreement
Exhibit G -- Form of Joinder and Affirmation Agreement
SCHEDULES
Schedule 1 - Subsidiaries of the Parent
Schedule 2 - Domestic Banks; Domestic Commitment Percentages
Schedule 3 - Canadian Banks; Canadian Commitment Percentages
Schedule 6.7 - Litigation
Schedule 6.16 - Environmental Compliance
Schedule 6.18 - Certain Transactions
Schedule 6.20(b) - Options, Etc.
Schedule 7.7 - Insurance
Schedule 8.1(c) - Existing Debt
Schedule 8.2(f) - Existing Liens
Schedule 8.3(f) - Existing Investments
<PAGE>
AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT
This AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT
is made as of the 14th day of December, 1999 by and among CASELLA WASTE
SYSTEMS, INC., a Delaware corporation (the "Parent"), its Subsidiaries (other
than the Excluded Subsidiaries) listed on SCHEDULE 1 hereto (the Parent and
such Subsidiaries herein collectively referred to as the "Borrowers"), each
of which Borrowers (unless otherwise listed on SCHEDULE 1 hereto) having its
principal place of business at 25 Greens Hill Lane, Rutland, Vermont and
BANKBOSTON, N.A., ("BankBoston"), a national banking association having its
principal place of business at 100 Federal Street, Boston, Massachusetts
02110, KEYBANK NATIONAL ASSOCIATION ("KeyBank"), individually and as
Documentation Agent, BANK OF AMERICA, N.A. ("BOA"), individually and as
Syndication Agent, COMERICA BANK, LASALLE BANK NATIONAL ASSOCIATION, CREDIT
LYONNAIS, FIRST VERMONT BANK AND TRUST COMPANY, CIBC, INC. and CANADIAN
IMPERIAL BANK OF COMMERCE ("CIBC Canada"), a Canadian chartered bank (acting
in its individual capacity), and such banks or other financial institutions
which may become a party hereto pursuant to Section 19 hereof (the "Banks"),
BANKBOSTon as Administrative Agent for the Banks (the "Administrative
Agent"), and CIBC CANADA as the Canadian Agent (the "Canadian Agent", and
together with the Administrative Agent, the "Bank Agents").
WHEREAS, certain of the Domestic Borrowers (as defined below),
BankBoston, USTrust, KeyBank, BOA, Comerica Bank and the Administrative Agent
are parties to that certain Amended and Restated Revolving Credit Agreement
dated as of January 12, 1998 (the "January 1998 Credit Agreement"), pursuant to
which such Banks agreed to make loans to the Domestic Borrowers as set forth
therein;
WHEREAS, the parties to this Agreement wish to increase the Total
Commitment, add a term loan facility and a Canadian facility, add new Banks and
replace an existing Bank;
WHEREAS, the Borrowers have requested, and the Banks and the
Administrative Agent have agreed to amend and restate the January 1998 Credit
Agreement in its entirety as set forth herein;
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 hereto hereby agree as follows:
<PAGE>
Section 1. DEFINITIONS AND RULES OF INTERPRETATION.
Section 1.1. DEFINITIONS. The following terms shall have the
meanings set forth in this Section 1 or elsewhere in the provisions of this
Agreement referred to below:
AAR. American Ash Recycling of Tennessee, Ltd., a Tennessee limited
partnership of which KTI owns a 50% limited partnership interest.
ACCEPTANCE FEE. See Section 3.3.
ACCOUNTANTS. See Section 6.4(a).
ACQUIRED BUSINESS See definition of EBITDA.
ADMINISTRATIVE AGENT. BankBoston acting as administrative agent for
the Banks.
ADMINISTRATIVE AGENT'S HEAD OFFICE. The Administrative Agent's head
office is located at 100 Federal Street, Boston, Massachusetts 02110, or at such
other location as the Administrative Agent may designate from time to time.
AGREEMENT. This Amended and Restated Revolving Credit and Term Loan
Agreement, including the Schedules and Exhibits hereto.
APPLICABLE BA DISCOUNT RATE. As applicable to a Bankers' Acceptance
being purchased by any Canadian Bank on any day, the percentage discount rate
(expressed to two decimal places and rounded upward, if necessary, to the
nearest 1/100th of 1%) quoted by the Canadian Agent as the percentage discount
rate at which the Canadian Agent would, in accordance with normal practice, at
or about 10:00 a.m. (Boston time), on such day, be prepared to purchase bankers'
acceptances to be accepted by such Canadian Bank in an amount and having a
maturity date comparable to the amount and maturity date of such Bankers'
Acceptance.
APPLICABLE CANADIAN PENSION LEGISLATION. At any time, any pension or
retirement benefits legislation (be it federal, provincial, territorial, or
otherwise) then applicable to any of the Canadian Borrowers, including the
Pension Benefits Act (Ontario), the Income Tax Act (Canada), and all
regulations made thereunder.
APPLICABLE LAWS. See Section 7.10.
<PAGE>
APPLICABLE RATE. The applicable rate per annum set forth in the
following table:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
LEVEL PRICING APPLICABLE APPLICABLE RATE APPLICABLE RATE APPLICABLE RATE FOR APPLICABLE
RATIO RATE FOR FOR REVOLVING FOR CANADIAN BASE CANADIAN PRIME RATE FACILITY FEE RATE
REVOLVING CREDIT RATE LOANS LOANS
CREDIT BASE EURODOLLAR RATE
RATE LOANS LOANS
I less than Base Rate plus Eurodollar Rate Canadian Base Canadian Prime Rate 0.375%
2.50:1 0.125% per plus 1.625% per Rate plus 0.125% plus 0.125% per annum
annum annum per annum
II greater Base Rate plus Eurodollar Rate Canadian Base Canadian Prime Rate 0.375%
than or 0.375% per plus 1.875% per Rate plus 0.375% plus 0.375% per annum
equal to annum annum per annum
2.50:1 and
less than
3.00:1
III greater Base Rate plus Eurodollar Rate Canadian Base Canadian Prime Rate 0.500%
than or 0.500% per plus 2.000% per Rate plus 0.500% plus 0.500% per annum
equal to annum annum per annum
3.00:1 and
less than
3.50:1
IV greater Base Rate plus Eurodollar Rate Canadian Base Canadian Prime Rate 0.500%
than or 0.750% per plus 2.250% per Rate plus 0.750% plus 0.750% per annum
equal to annum annum per annum
3.50:1 and
less than
4.00:1
</TABLE>
Each Applicable Rate shall become effective on the first day after
receipt by the Banks of financial statements delivered pursuant to Sections
7.4(a) or (b) hereof which indicate a change in the Pricing Ratio and in the
Applicable Rate in accordance with the above table, PROVIDED that for the
period from the Effective Date through six (6) months from the Effective
Date, the Applicable Rate shall be Level IV. If at any time the financial
statements required to be delivered pursuant Sections 7.4(a) or (b) hereof
are not delivered within 10 days
<PAGE>
after the time periods specified in such subsections, the Applicable Rate
shall be the rate set forth for Level IV, subject to adjustment upon actual
receipt of such financial statements. In the event that after the Effective Date
and by March 31, 2000, the Parent shall have received Net Equity Proceeds of at
least $100,000,000 from the Equity Offering, the Applicable Rate for Loans
across all Levels in the above table and the Acceptance Fee for Bankers'
Acceptances will be reduced by 0.250%, provided that under no circumstance shall
the Applicable Rate for Base Rate Loans, Canadian Base Rate Loans or Canadian
Prime Rate Loans be less than the Base Rate, Canadian Base Rate or Canadian
Prime Rate, as applicable.
APPLICABLE SWING LINE RATE. The Applicable Rate set forth for Base Rate
Loans.
ARRANGER. BancBoston Robertson Stephens Inc., acting as Arranger.
BA DISCOUNT PROCEEDS. With respect to any Bankers' Acceptance to be
accepted and purchased by a Canadian Bank, an amount (rounded to the nearest
whole Canadian cent, and with one-half of one Canadian cent being rounded up)
calculated on such day by multiplying (a) the face amount of such Bankers'
Acceptance TIMES (b) the quotient equal to (such quotient being rounded up or
down to the nearest fifth decimal place and .000005 being rounded up) (i) one
DIVIDED BY (ii) the sum of (A) one PLUS (B) the product of (1) the Applicable BA
Discount Rate (expressed as a decimal) applicable to such Bankers' Acceptance
TIMES (2) the quotient equal to (aa) the number of days remaining in the term of
such Bankers' Acceptance DIVIDED BY (bb) 365.
BALANCE SHEET DATE. April 30, 1999.
BANGOR WARRANTS. 713,000 warrants for Bangor Hydro common stock at an
exercise price of $5.35, held by --------------- -------- KTI.
BANK AGENTS. The Administrative Agent and the Canadian Agent.
BANKBOSTON. See preamble.
BANKERS' ACCEPTANCE OR BA. A bill of exchange denominated in
Canadian Dollars drawn by the Canadian Borrowers on and accepted by a
Canadian Bank pursuant to Section 3 hereof, and for greater certainty, and
provided the applicable Canadian Bank elects to use a clearing house as
contemplated by the DEPOSITORY BILLS AND NOTES ACT (S.C. 1998 c.13),
"Bankers' Acceptance" shall mean a depository bill (as defined therein) in
Canadian Dollars signed by the Canadian Borrower and accepted by the Canadian
Bank. Drafts that become depository bills may nevertheless be
<PAGE>
referred to herein as "drafts".
BANKERS' ACCEPTANCE NOTICE. See Section 3.1.
BANKS. Collectively, the Canadian Banks and the Domestic Banks.
BASE RATE. The higher of (a) the annual rate of interest announced from
time to time by the Administrative Agent at its head office in Boston,
Massachusetts, as its "base rate" (it being understood that such rate is a
reference rate and not necessarily the lowest rate of interest charged by the
Bank) or (b) one-half of one percent (1/2%) above the overnight federal funds
effective rate, as published by the Board of Governors of the Federal Reserve
System, as in effect from time to time.
BASE RATE LOANS. Domestic Loans bearing interest calculated by
reference to the Base Rate.
BOA. See preamble.
BORROWERS. The Domestic Borrowers, jointly and severally, with respect
to Domestic Loans and Domestic Letters of Credit, and each of the Canadian
Borrowers, jointly and severally, to the fullest extent permitted by law, with
respect to Canadian Loans, Canadian Letters of Credit and Bankers' Acceptances.
BUSINESS DAY. Any day on which banking institutions in Boston,
Massachusetts are open for the transaction of banking business, and, in the case
of (a) Eurodollar Rate Loans, also a day which is a Eurodollar Business Day, and
(b) Canadian Loans or Bankers' Acceptances, also a day which is a Canadian
Business Day.
CANADIAN AGENT. See Preamble.
CANADIAN AGENT'S HEAD OFFICE. The Canadian Agent's head office located
in Toronto, Ontario, or at such other location as the Canadian Agent may
designate from time to time.
CANADIAN BANKS. The Banks set forth on SCHEDULE 3 and any other
Eligible Canadian Assignee who becomes an assignee of any rights and
obligations of a Canadian Bank pursuant to Section 19, acting in their role
as makers of Canadian Loans or as participants with respect to Canadian
Letters of Credit or purchasers of Bankers' Acceptances, none of which Banks
shall be a non-resident for purposes of the Income Tax Act (Canada).
CANADIAN BASE RATE. The higher of (a) the annual rate of interest
<PAGE>
announced from time to time by the Canadian Agent as its "prime rate" for US$
commercial loans to borrowers in Canada (it being understood that such rate
is a reference rate and not necessarily the lowest rate of interest charged
by the Canadian Agent), or (b) one-half of one percent (1/2%) above the
Overnight Federal Funds Effective Rate.
CANADIAN BASE RATE LOAN. A Canadian Loan that accrues interest
calculated by reference to the Canadian Base Rate.
CANADIAN BORROWERS. Initially, KTI Recycling of Canada, Inc., an
Ontario corporation ("KTI Canada"), and 1316991 Ontario, Inc., an Ontario
corporation, and from and after the date hereof, KTI Canada and any other
Subsidiaries (other than Excluded Subsidiaries) which conduct all or
substantially all of their business in Canada or which are incorporated under
the laws of Canada or a province thereof.
CANADIAN BUSINESS DAY. Any day, other than a Saturday, Sunday or any
day on which banking institutions in Toronto, Ontario are authorized by law to
close.
CANADIAN COMMITMENT. With respect to each Canadian Bank, the amount
determined by multiplying such Canadian Bank's Canadian Commitment Percentage
by the aggregate amount of the Total Canadian Commitment specified in Section
2.1(b) hereof, as the same may be increased or reduced from time to time.
CANADIAN COMMITMENT PERCENTAGE. With respect to each Canadian Bank,
the percentage initially set forth next to each such Canadian Bank on
SCHEDULE 3 hereto, as the same may be adjusted in accordance with Section 2.2
or Section 19.
CANADIAN DOLLAR EQUIVALENT. With respect to an amount of U.S. Dollars
on any date, the amount of Canadian Dollars that may be purchased with such
amount of U.S. Dollars at the Exchange Rate with respect to U.S.
Dollars on such date.
CANADIAN DOLLARS OR C$. Dollars designated as lawful currency of
Canada.
CANADIAN LETTERS OF CREDIT. Standby Letters of Credit issued or to
be issued by the Issuing Bank under Section 4 hereof for the account of the
Canadian Borrowers.
CANADIAN LOAN AND LETTER OF CREDIT REQUEST. See Section 2.6(b).
<PAGE>
CANADIAN LOANS. Canadian Base Rate Loans and Canadian Prime Rate Loans
advanced pursuant to Section 2.
CANADIAN NOTES. See Section 2.3(b).
CANADIAN OBLIGATIONS. All indebtedness, obligations and liabilities of
the Canadian Borrowers to any of the Canadian Banks, the Bank Agents, or the
Issuing Banks (with respect to Canadian Letters of Credit), individually or
collectively, existing on the date of this Agreement or arising thereafter,
direct or indirect, joint or several, absolute or contingent, matured or
unmatured, liquidated or unliquidated, secured or unsecured, arising by
contract, operation of law or otherwise, arising or incurred under this
Agreement or any of the other Loan Documents to which the Canadian Borrowers are
party, or under any Swap Contract between the Canadian Borrowers and any
Canadian Bank, or in respect of any of the Canadian Loans made, Reimbursement
Obligations incurred in respect of Canadian Letters of Credit, any of the Letter
of Credit Applications for Canadian Letters of Credit, the Canadian Letters of
Credit, Bankers' Acceptances, the Canadian Notes or any other instrument at any
time evidencing any thereof.
CANADIAN PLEDGE AGREEMENT. The pledge agreement among the Parent,
its Canadian Subsidiaries and the Administrative Agent (in its capacity as
Canadian collateral agent) in form and substance satisfactory to the
Administrative Agent, as amended and in effect from time to time, and
pursuant to which the capital stock of the Canadian Borrowers shall be
pledged to the Administrative Agent for the benefit of the Banks, as further
described in Section 12(d) and (e) hereof.
CANADIAN PRIME RATE. The higher of (a) the annual rate of interest
announced from time to time by the Canadian Agent at its Head Office as its
"prime rate" for C$ denominated commercial loans to borrowers in Canada (it
being understood that such rate is a reference rate and not necessarily the
lowest rate of interest charged by the Canadian Agent) or (b) the sum of (i) the
CDOR Rate and (ii) 1% per annum.
CANADIAN PRIME RATE LOAN. A Canadian Loan funded in Canadian Dollars
that accrues interest calculated by reference to the Canadian Prime Rate.
CANADIAN SECURITY AGREEMENT(S). Individually or collectively, the
security agreements dated as of the Effective Date among KTI Canada, 1316991
Ontario, Inc. and the Administrative Agent (in its capacity as Canadian
collateral agent) and any security agreement dated and delivered after the
Effective Date among any other Canadian Borrower and the
<PAGE>
Administrative Agent (in its capacity as Canadian collateral agent), as
supplemented, amended and effective from time to time, securing the Canadian
Obligations.
CAPITAL ASSETS. Fixed assets, both tangible (such as land, buildings,
fixtures, machinery and equipment) and intangible (such as patents, copyrights,
trademarks, franchises and good will); PROVIDED that Capital Assets shall not
include any item customarily charged directly to expense or depreciated over a
useful life of twelve (12) months or less in accordance with GAAP.
CAPITAL EXPENDITURES. Amounts paid or indebtedness incurred by any
Person in connection with the purchase or lease by such Person of Capital Assets
that would be required to be capitalized and shown on the balance sheet of such
Person in accordance with GAAP.
CAPITALIZATION. See Section 9.4.
CAPITALIZED LEASES. Leases under which any Borrower is the lessee or
obligor, the discounted future rental payment obligations under which are
required to be capitalized on the balance sheet of the lessee or obligor in
accordance with GAAP.
CDOR RATE. The annual rate of interest equal to the average 30 day rate
applicable to Canadian bankers' acceptances appearing on the "Reuters Screen
CDOR Page" (as defined in the International Swaps and Derivatives Association,
Inc. 1991 ISDA definitions, as modified and amended from time to time) as of
10:00 am. (Boston time) on such day, or if such day is not a Business Day, then
on the immediately preceding Business Day; PROVIDED that if such rate does not
appear on the Reuters' Screen CDOR Page as contemplated, then the CDOR Rate on
any day shall be calculated as the arithmetic mean of the 30 day rates
applicable to Canadian bankers' acceptances quoted by the Canadian Banks which
are listed in Schedule I to the Bank Act (Canada) as of 10:00 a.m. (Boston time)
on such day, or if such day is not a Business Day, then on the immediately
preceding Business Day.
CERTIFIED. With respect to the financial statements of any Person, such
statements as audited by a firm of independent auditors, whose report expresses
the opinion, without qualification, that such financial statements present
fairly the financial position of such Person.
CFO. See Section 7.4(b).
CIBC CANADA. See preamble.
<PAGE>
CLINTON LEASE. The Operation, Management and Lease Agreement dated as
of July 10, 1996 between the Parent and Clinton County, New York for the lease
of the Clinton County Landfill and related assets.
CODE. The Internal Revenue Code of 1986, as amended and in effect from
time to time.
COLLATERAL. All of the property, rights and interests of the Borrowers
that are or are intended to be subject to the security interests and mortgages
created by the Security Documents.
COMBINED FIRST QUARTER AMOUNT. See the definition of "Pricing Ratio".
COMMITMENT. With respect to each Bank, its Domestic Commitment and/or
Canadian Commitment(s).
COMMITMENT PERCENTAGE. With respect to each Domestic Revolving Credit
Bank, its Domestic Commitment Percentage, and with respect to each Canadian
Bank, its Canadian Commitment Percentage.
COMPLIANCE CERTIFICATE. See Section 7.4(c).
CONSOLIDATED or CONSOLIDATED. With reference to any term defined
herein, shall mean that term as applied to the accounts of the Borrowers
consolidated in accordance with GAAP.
CONSOLIDATED EARNINGS BEFORE INTEREST AND TAXES OR EBIT. For any
period, the Consolidated Net Income (or Deficit) of the Borrowers determined in
accordance with GAAP, PLUS (a) interest expense, and (b) income tax expense.
CONSOLIDATED EARNINGS BEFORE INTEREST TAXES DEPRECIATION AND
AMORTIZATION OR EBITDA. For any period, the Consolidated Net Income (or
Deficit) of the Borrowers determined in accordance with GAAP, PLUS; to the
extent that such charge was deducted in determining Consolidated Net Income
(or Deficit) in the relevant period, (a) interest expense, (b) income taxes,
(c) amortization expense, and (d) depreciation expense for such period, PLUS
(e) EBITDA of the businesses acquired by any Borrower (through asset
purchases or otherwise) (each an "Acquired Business"), but not including KTI,
or the Subsidiaries of a Borrower acquired or formed during the period
reported in the most recent financial statements delivered to the Banks
pursuant to Section 7.4 (each a "New Subsidiary") shall be included in the
calculation of EBITDA if (i) the Acquired Businesses or New Subsidiaries had
<PAGE>
annual revenue of at least $5,000,000 for the most recent fiscal year ended,
(ii) the Administrative Agent receives a letter in form and substance
satisfactory to the Administrative Agent from the Borrowers' Accountants as
to adjustments for non-recurring expenses, and (iii) (A) the financial
statements of such Acquired Businesses or New Subsidiaries have been audited
for the most recent fiscal year ended of such Acquired Businesses or New
Subsidiaries, a portion of which fiscal year is sought to be included in the
calculation of EBITDA, or (B) the Administrative Agent consents to such
inclusion after being furnished with other acceptable financial statements,
and, in each case, a Compliance Certificate and other reasonably appropriate
documentation, in form and substance reasonably satisfactory to the
Administrative Agent, with respect to the historical operating results and
balance sheet of such Acquired Businesses or New Subsidiaries (which
information to the knowledge of the CFO is correct in all material respects)
are provided to the Administrative Agent, (f) write off of existing financing
charges not to exceed $1,600,000 in connection with existing Bank debt taken
in the fiscal quarter ending January 31, 2000, (g) non-cash non-recurring
charges related to a loss on asset sales or asset impairment charges related
to KTI acceptable to the Administrative Agent not exceeding $5,000,000 in the
aggregate taken in the four (4) fiscal quarters after the Effective Date (it
being understood that such excluded charges shall be deemed non-cash charges
until the period that cash disbursements attributable to such charges are
made, at which point such excluded charges shall be deemed cash charges and
deducted from Consolidated Net Income accordingly), (h) one-time charges
relating to transaction costs of not more than $3,500,000 for acquisitions
completed as poolings, PROVIDED that such costs are taken no later than the
calendar quarter ended December 31, 2000, and (i) solely for the purposes of
determining compliance with Section 9.5 hereof, the EBITDA of Excluded
Subsidiaries.
CONSOLIDATED FUNDED INDEBTEDNESS. Collectively, without duplication,
whether classified as Indebtedness, an Investment or otherwise on the Borrowers'
consolidated balance sheet (excluding that portion of assets and liabilities or
Investments of the Parent attributable to non-Borrowers, PROVIDED that such
Investments are not guaranteed by any Borrower), (a) all indebtedness for
borrowed money or credit obtained or other similar monetary obligations, direct
or indirect, (b) all obligations evidenced by notes, bonds, debentures or other
similar debt instruments (other than Performance Bonds), (c) any unpaid
reimbursement obligations under any letter of credit, (d) all obligations,
liabilities and indebtedness under Capitalized Leases which correspond to
principal, and (e) guarantees of the Indebtedness of others referred to in
clauses (a) through (d) above.
CONSOLIDATED NET INCOME (OR DEFICIT). The consolidated net income (or
<PAGE>
deficit) of the Borrowers after deduction of all expenses, taxes and proper
charges determined in accordance with GAAP.
CONSOLIDATED TOTAL ASSETS. All assets of the Borrowers determined on
a consolidated basis in accordance with GAAP.
CONSOLIDATED TOTAL INTEREST EXPENSE. For any period, the aggregate
amount of interest expense required to be paid or accrued by the Borrowers
during such period on all Indebtedness of the Borrowers outstanding during
all or any part of such period, including capitalized interest expense for
such period, but excluding therefrom the non-cash amortization of debt
issuance costs.
CONSOLIDATED TOTAL LIABILITIES. All liabilities of the Borrowers
determined on a consolidated basis in accordance with GAAP.
CONSULTING ENGINEER. An environmental consulting firm acceptable to
the Banks.
CONVERSION REQUEST. A notice given by the Parent on behalf of the
Borrowers to the applicable Bank Agent of such Borrowers' election to convert
or continue a Loan in accordance with Section 5.13.
DEFAULT. See Section 13.
DE MINIMIS SUBSIDIARIES. Those Subsidiaries listed on Schedule 1 as
"De Minimis Subsidiaries," PROVIDED that the aggregate assets, liabilities
and/or annual gross revenues of all such Subsidiaries does not exceed
$1,000,000.
DISPOSAL. See "Release".
DISTRIBUTION. The declaration or payment of any dividend on or in
respect of any shares of any class of capital stock of any Person, other than
dividends payable solely in shares of common stock of such Person; the
purchase, redemption, or other retirement of any shares of any class of
capital stock of such Person, directly or indirectly through a Subsidiary or
otherwise; the return of capital by any Person to its shareholders as such;
or any other distribution on or in respect of any shares of any class of
capital stock of such Person.
DOLLARS, $, U.S. DOLLARS OR U.S.$. Dollars in lawful currency of the
United States of America. <PAGE>
DOMESTIC BANKS. The Banks set forth on SCHEDULE 2, acting in their
role as makers of Domestic Loans or as participants with respect to Domestic
Letters of Credit.
DOMESTIC BORROWERS. The Parent and its Subsidiaries (other than
Excluded Subsidiaries) which conduct all or substantially all of their
business in the United States or which are incorporated under the laws of the
United States or a jurisdiction thereof.
DOMESTIC COMMITMENT. With respect to each Domestic Revolving Credit
Bank, the amount determined by multiplying such Bank's Domestic Commitment
Percentage by the Total Domestic Commitment, as the same may be reduced or
reallocated hereunder from time to time, or if such commitment is terminated
pursuant to the provisions hereof, zero.
DOMESTIC COMMITMENT PERCENTAGE. With respect to each Domestic Bank,
the percentage set forth beside its name on SCHEDULE 2 hereto as the amount
of such Domestic Bank's percentage of the Total Domestic Commitments (subject
to adjustment upon any assignment pursuant to Section 19 or reallocation
pursuant to Section 2.2).
DOMESTIC LETTERS OF CREDIT. Standby Letters of Credit issued or to
be issued by the Issuing Banks under Section 4 hereof for the account of the
Domestic Borrowers.
DOMESTIC LOANS. Domestic Revolving Credit Loans pursuant to Section
2 and the Term Loan pursuant to Section 4A made or to be made by the
applicable Domestic Banks to the Domestic Borrowers.
DOMESTIC OBLIGATIONS. All Obligations other than Canadian
Obligations.
DOMESTIC REVOLVING CREDIT BANKS. The Banks set forth on SCHEDULE 2
as Domestic Revolving Credit Banks, acting in their role as makers of
Domestic Revolving Credit Loans or as participants with respect to Domestic
Letters of Credit.
DOMESTIC REVOLVING CREDIT LOANS. Domestic Revolving Credit Loans
pursuant to Section 2 made or to be made by the Domestic Revolving Credit
Banks to the Domestic Borrowers.
DOMESTIC SECURITY AND PLEDGE AGREEMENT. The Amended and Restated
Domestic Security and Pledge Agreement, dated the Effective Date, among the
Domestic Borrowers and the Administrative Agent in form and substance
<PAGE>
satisfactory to the Administrative Agent.
DRAWDOWN DATE. The date on which any Loan is made or is to be made,
and the date on which any Loan is converted or continued in accordance with
Sections 5.13 or 4A.6.2, or the date that any draft or other form of
demand for payment is honored with respect to a Letter of Credit or the date
of acceptance and purchase of any Bankers' Acceptance.
EBIT. See definition of Consolidated Earnings Before Interest and
Taxes.
EBITDA. See definition of Consolidated Earnings Before Interest,
Taxes, Depreciation and Amortization.
EFFECTIVE DATE. The date on which the conditions precedent set forth
in Section 10 are satisfied.
ELIGIBLE CANADIAN ASSIGNEE. Any institutional lender which is (i) a
bank named in SCHEDULE I or SCHEDULE II to the Bank Act (Canada) having total
assets in excess of C$500,000,000 or (ii) any other Bank approved by the Bank
Agents and the Canadian Borrowers, which approval shall not be unreasonably
withheld.
EMPLOYEE BENEFIT PLAN. Any employee benefit plan within the meaning
of Section 3(3) of ERISA or Applicable Canadian Pension Legislation
maintained or contributed to by any Borrower or any ERISA Affiliate, other
than a Multiemployer Plan.
ENVIRONMENTAL LAWS. See Section 6.16(a).
EQUITY OFFERING. The proposed sale or issuance by the Parent of any
of its capital stock or equity interests or any warrants, rights or options
to acquire its capital stock or equity interests.
ERISA. The Employee Retirement Income Security Act of 1974, as
amended and in effect from time to time.
ERISA AFFILIATE. Any Person which is treated as a single employer
with any Borrower under Section 414 of the Code.
ERISA REPORTABLE EVENT. A reportable event with respect to a
Guaranteed Pension Plan within the meaning of Section 4043 of ERISA and the
regulations promulgated thereunder as to which the requirement of notice has
not been waived.
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EUROCURRENCY RESERVE RATE. For any day with respect to a Eurodollar
Rate Loan, the maximum rate (expressed as a decimal) at which any Bank
subject thereto would be required to maintain reserves under Regulation D of
the Board of Governors of the Federal Reserve System (or any successor or
similar regulations relating to such reserve requirements) against
"Eurocurrency Liabilities" (as that term is used in Regulation D), if such
liabilities were outstanding. The Eurocurrency Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in the
Eurocurrency Reserve Rate.
EURODOLLAR BUSINESS DAY. Any day on which commercial banks are open
for international business (including dealings in Dollar deposits) in London
or such other Dollar interbank market as may be selected by the
Administrative Agent in its sole discretion acting in good faith.
EURODOLLAR RATE. For any Interest Period with respect to a
Eurodollar Rate Loan, the rate of interest equal to (i) the arithmetic rate
per annum (rounded upwards to the nearest 1/16 of one percent) at which
Dollar deposits are offered to the Administrative Agent by prime banks in
whatever Eurodollar market may be selected by the Administrative Agent in its
sole discretion, acting in good faith at or about 10:00 a.m. local time in
such interbank market two Eurodollar Business Days prior to the beginning of
such Interest Period, for delivery on the first day of such Interest Period
for the number of days comprised therein and in an amount comparable to the
amount of the Eurodollar Rate Loan to which such Interest Period applies,
divided by (ii) a number equal to 1.00 minus the Eurocurrency Reserve Rate,
if applicable.
EURODOLLAR RATE LOANS. Domestic Loans bearing interest calculated by
reference to the Eurodollar Rate.
EVENT OF DEFAULT. See Section 13.
EXCESS OPERATING CASH FLOW. For any period, EBITDA MINUS (a) capital
expenditures, (b) interest expenses, (c) cash taxes, and (d) scheduled
payments of long term debt for such period. For the purposes of this
definition, excess operating cash flow (a) for the period ending April 30,
2001, shall be measured from May 1, 2000 through April 30, 2001, and (b) for
each fiscal year thereafter, shall be for such fiscal year.
EXCHANGE RATE. On any day, (a) with respect to Canadian Dollars in
relation to U.S. Dollars, the Spot Rate as quoted by the Bank of Canada as
its noon Spot Rate at which U.S. Dollars are offered on such day for Canadian
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Dollars, and (b) with respect to U.S. Dollars in relation to Canadian
Dollars, the Spot Rate as quoted by the Bank of Canada as its noon Spot Rate
at which Canadian Dollars are offered on such day for U.S. Dollars.
EXCLUDED SUBSIDIARIES. PERC, Timber, MERC, AAR, the Insurance
Subsidiary and the De Minimis Subsidiaries.
FINANCIAL L/C(S). Letter(s) of credit where the event which triggers
payment is financial, such as the failure to pay money, and not performance
related, such as failure to ship a product or provide a service, as set forth
in greater detail in the letter dated March 30, 1995 from the Board of
Governors of the Federal Reserve System or in any applicable directive or
letter ruling of the Board of Governors of the Federal Reserve System issued
subsequent thereto.
FINANCIAL L/C FEE. See Section 5.2 (b).
FIRST REVOLVER REDUCTION DATE. See Section 2.4(a).
FIRST TIER CANADIAN BORROWERS. Collectively, all Canadian Borrowers
that are direct Subsidiaries of Domestic Borrowers.
FUEL DERIVATIVES OBLIGATIONS. See Section 8.1(h).
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES OR GAAP. When used in
general, Generally Accepted Accounting Principles means (1) principles that
are consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, in effect for the fiscal
year ended on the Balance Sheet Date, as shall be concurred in by independent
certified public accountants of recognized standing whose report expresses an
unqualified opinion (other than a qualification regarding changes in
Generally Accepted Accounting Principles) as to financial statements in which
such principles have been applied; and (2) when used with reference to the
Borrowers, such principles shall include (to the extent consistent with such
principles) the accounting practices reflected in the consolidated financial
statements for the year ended on the Balance Sheet Date.
GUARANTEED PENSION PLAN. Any employee pension benefit plan within
the meaning of Section 3(2) of ERISA maintained or contributed to by any
Borrower or any ERISA Affiliate the benefits of which are guaranteed on
termination in full or in part by the PBGC pursuant to Title IV of ERISA,
other than a Multiemployer Plan.
HAZARDOUS SUBSTANCES. Any hazardous waste, as defined by 42 U.S.C.
<PAGE>
Section 6903(5), any hazardous substances as defined by 42 U.S.C. Section
9601(14), any pollutant or contaminant as defined by 42 U.S.C. Section
9601(33) and any waste, hazardous waste, dangerous goods, contaminants,
pollutants, toxic substance, oil or hazardous materials or other chemicals or
substances regulated by any Environmental Laws.
INDEBTEDNESS. As to any Person and whether recourse is secured by or
is otherwise available against all or only a portion of the assets of such
Person and whether or not contingent, but without duplication:
(i) every obligation of such Person for money borrowed,
(ii) every obligation of such Person evidenced by bonds,
debentures, notes or other similar instruments, including obligations
incurred in connection with the acquisition of property, assets or
businesses.
(iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of such Person,
(iv) every obligation of such Person issued or assumed as the
deferred purchase price of property or services (including securities
repurchase agreements but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business which are not
overdue in accordance with their terms or the Borrowers' normal or
ordinary business practices or which are being contested in good
faith),
(v) every obligation of such Person under any Capitalized
Lease,
(vi) every obligation of such Person under any lease (a
"synthetic lease") treated as an operating lease under GAAP and as a
loan or financing for U.S. income tax purposes,
(vii) all sales by such Person of (A) accounts or general
intangibles for money due or to become due, (B) chattel paper,
instruments or documents creating or evidencing a right to payment of
money or (C) other receivables (collectively "receivables"), whether
pursuant to a purchase facility or otherwise, other than in connection
with the disposition of the business operations of such Person relating
thereto or a disposition of defaulted receivables for collection and
not as a financing arrangement, and together with any obligation of
such Person to pay any discount, interest, fees, indemnities,
penalties,
<PAGE>
recourse, expenses or other amounts in connection therewith,
(viii) every obligation of such Person (an "equity related
purchase obligation") to purchase, redeem, retire or otherwise acquire
for value any shares of capital stock of any class issued by such
Person, any warrants, options or other rights to acquire any such
shares, or any rights measured by the value of such shares, warrants,
options or other rights,
(ix) every obligation of such Person under any forward
contract, futures contract, swap, option or other financing agreement
or arrangement (including, without limitation, caps, floors, collars
and similar agreements), the value of which is dependent upon interest
rates, currency exchange rates, commodities or other indices (a
"derivative contract"),
(x) every obligation in respect of Indebtedness of any other
entity (including any partnership in which such Person is a general
partner) to the extent that such Person is liable therefor as a result
of such Person's ownership interest in or other relationship with such
entity, except to the extent that the terms of such Indebtedness
provide that such Person is not liable therefor and such terms are
enforceable under applicable law,
(xi) every obligation, contingent or otherwise, of such Person
guaranteeing, or having the economic effect of guarantying or otherwise
acting as surety for, any obligation of a type described in any of
clauses (i) through (x) (the "primary obligation") of another Person
(the "primary obligor"), in any manner, whether directly or indirectly,
and including, without limitation, any obligation of such Person (A) to
purchase or pay (or advance or supply funds for the purchase of) any
security for the payment of such primary obligation, (B) to purchase
property, securities or services for the purpose of assuring the
payment of such primary obligation, or (C) to maintain working capital,
equity capital or other financial statement condition or liquidity of
the primary obligor so as to enable the primary obligor to pay such
primary obligation.
The "amount" or "principal amount" of any Indebtedness at any time of
determination represented by (u) any Indebtedness, issued at a price that is
less than the principal amount at maturity thereof, shall be the amount of the
liability in respect thereof determined in accordance with GAAP, (v) any
Capitalized Lease shall be the principal component of the aggregate of the
rentals obligation under such Capitalized Lease payable over the term thereof
that is not subject to termination by the lessee, (w) any sale of
<PAGE>
receivables shall be the amount of unrecovered capital or principal investment
of the purchaser (other than the Borrower or any of its wholly-owned
Subsidiaries) thereof, excluding amounts representative of yield or interest
earned on such investment, (x) any synthetic lease shall be the stipulated loss
value, termination value or other equivalent amount, (y) any derivative contract
shall be the maximum amount of any termination or loss payment required to be
paid by such Person if such derivative contract were, at the time of
determination, to be terminated by reason of any event of default or early
termination event thereunder, whether or not such event of default or early
termination event has in fact occurred and (z) any equity related purchase
obligation shall be the maximum fixed redemption or purchase price thereof
inclusive of any accrued and unpaid dividends to be comprised in such redemption
or purchase price.
ING L/C. The letter of credit issued by ING to Central Maine Power in
the maximum drawing amount of $30,000,000, as the same shall be reduced annually
by $3,750,000.
INSURANCE SUBSIDIARY. Casella Insurance Company, a Vermont
corporation.
INTEREST PERIOD. With respect to each Eurodollar Rate Loan:
(a) initially, the period commencing on the date of a
conversion from a Base Rate Loan into a Eurodollar Rate Loan or the
making of a Eurodollar Rate Loan, and ending one (1), two (2), three
(3) months or six (6) thereafter, as the case may be, as the Borrowers
may select pursuant to the provisions of this Agreement; and
(b) thereafter, each subsequent Interest Period shall begin on
the last day of the preceding Interest Period, and end one (1), two
(2), three (3) or six (6) months thereafter, as the case may be, as the
Borrowers may select pursuant to the provisions of this Agreement;
PROVIDED that all of the foregoing provisions relating to Interest
Periods are subject to the following:
(A) if any Interest Period would otherwise end on a
day that is not a Eurodollar Business Day, that Interest Period shall
be extended to the next succeeding Eurodollar Business Day unless the
result of such extension would be to carry such Interest Period into
another calendar month, in which event such Interest Period shall end
on the immediately preceding Eurodollar Business Day;
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(B) if the Borrowers shall fail to give notice as
provided in Section 5.13, the Borrowers shall be deemed to have
requested a conversion of the affected Eurodollar Rate Loan to a Base
Rate Loan and the continuance of all Base Rate Loans as Base Rate Loans
on the last day of the then current Interest Period with respect
thereto;
(C) any Interest Period relating to any Eurodollar
Rate Loan that begins on the last Eurodollar Business Day of a calendar
month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on
the last Eurodollar Business Day of a calendar month; and
(D) no Interest Period shall extend beyond the
Maturity Date.
INTERIM BALANCE SHEET DATE. October 31, 1999.
INTERIM KTI BALANCE SHEET DATE. September 30, 1999.
INVESTMENTS. All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock or Indebtedness of,
or for loans, advances, capital contributions or transfers of property to, or
in respect of any guarantees (or other commitments as described under
Indebtedness), or obligations of, any Person. In determining the aggregate
amount of Investments outstanding at any particular time: (a) the amount of
any Investment represented by a guaranty shall be taken at not less than the
principal amount of the obligations guaranteed and still outstanding; (b)
there shall be included as an Investment all interest accrued with respect to
Indebtedness constituting an Investment unless and until such interest is
paid; (c) there shall be deducted in respect of each such Investment any
amount received as a return of capital (but only by repurchase, redemption,
retirement, repayment, liquidating dividend or liquidating distribution); (d)
there shall not be deducted in respect of any Investment any amounts received
as earnings on such Investment, whether as dividends, interest or otherwise,
except that accrued interest included as provided in the foregoing clause (b)
may be deducted when paid; and (e) there shall not be deducted from the
aggregate amount of Investments any decrease in the value thereof.
ISSUANCE FEE. See Section 5.2(b).
ISSUING BANKS. The Banks issuing Letters of Credit, which shall be
(a) BankBoston (in the case of Domestic Letters of Credit), and (b) CIBC
Canada and such other Canadian Banks as agreed to by the Administrative Agent
and the Parent (in the case of Canadian Letters of Credit).
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KEYBANK. See preamble.
KTI. KTI, Inc., a New Jersey corporation.
KTI BALANCE SHEET DATE. March 31, 1999.
KTI NOTES. The 8 3/4% Convertible Notes of KTI, Inc. due August 15,
2004.
KTI PLASTIC. FCR Plastics, Inc., a wholly-owned Subsidiary of KTI.
KTI PURCHASE. See Section 10.6.
LETTERS OF CREDIT. Domestic Letters of Credit and Canadian Letters of
Credit.
LETTER OF CREDIT APPLICATIONS. Letter of Credit Applications in such
form as may be agreed upon by any Borrower and either Issuing Bank from time
to time which are entered into pursuant to Section 4 hereof as such Letter of
Credit Applications are amended, varied or supplemented from time to time.
LETTER OF CREDIT FEE. See Section 5.2(b).
LETTER OF CREDIT PARTICIPATION. See Section 4.1(c).
LETTER OF CREDIT PERCENTAGE. The percentage per annum equal to the
margin above the Eurodollar Rate charged on Revolving Credit Eurodollar Rate
Loans, as in effect from time to time, as set forth in the column "Applicable
Rate for Revolving Credit Eurodollar Rate Loans" in the Applicable Rate table
above.
LOAN DOCUMENTS. This Agreement, the Notes, the Letter of Credit
Applications, the Letters of Credit, the Bankers' Acceptances, the Security
Documents, the Subordination Agreements, and any documents, instruments or
agreements executed in connection with any of the foregoing, each as amended,
modified, supplemented, or replaced from time to time.
LOAN AND LETTER OF CREDIT REQUEST. See Section 2.6(a).
LOANS. Collectively, the Domestic Loans made by the Domestic Banks and
the Canadian Loans made by the Canadian Banks.
LOAN PERCENTAGE. With respect to each Bank as of a particular date,
such Bank's portion of and participating interests in (calculated as a
<PAGE>
percentage) the sum, expressed in Dollars or U.S. Dollar Equivalents, of (i)
the outstanding principal amount of the Revolving Credit Loans on such date,
(ii) the outstanding principal amount of the Term Loan on such date, (iii)
the outstanding principal amount of the Swing Line Loans on such date, (iv)
the Maximum Drawing Amount of Letters of Credit, any unpaid Reimbursement
Obligations and Bankers' Acceptances outstanding on such date and, (v) with
respect to the definition of Required Banks and Section 15.3 only, the unused
Commitments on such date.
MATURITY DATE. The Revolving Credit Maturity Date or the Term Loan
Maturity Date, as applicable.
MAXIMUM DRAWING AMOUNT. The maximum aggregate amount from time to time
that the beneficiaries may draw under outstanding Letters of Credit.
MERC. Maine Energy Recovery Company, Limited Partnership, a Maine
limited partnership of which KTI Environmental Group, Inc. owns a 83.75% limited
partnership interest.
MERC L/C. The Domestic Letter of Credit issued hereunder in the amount
of $30,000,000 for the benefit of MERC.
MULTIEMPLOYER PLAN. Any multiemployer plan within the meaning of
Section 3(37) of ERISA maintained or contributed to by any Borrower or any
ERISA Affiliate.
NET CASH PROCEEDS. With respect to any sale of any assets of the
Borrowers or the Excluded Subsidiaries, the gross consideration received by the
Borrowers or any of the Excluded Subsidiaries (in cash) from such sale, net of
commissions, direct sales costs, normal closing adjustments, the amount used to
repay any Indebtedness secured by such assets, income taxes attributable to such
sale and professional fees and expenses incurred directly in connection
therewith, to the extent the foregoing are actually paid in connection with such
sale.
NET EQUITY PROCEEDS. With respect to any equity offering, including the
Equity Offering, the excess of the gross cash proceeds received by such Person
from such equity offering after deduction of reasonable and customary
transaction expenses (including without limitation, underwriting discounts and
commissions) actually incurred in connection with the equity offering.
NEW BORROWER(S). Any Borrower hereunder who was not also a Borrower
under the January 1998 Agreement.
<PAGE>
NEW SUBSIDIARY. See definition of EBITDA.
NON-U.S. LENDER. See Section 5.3(c).
NOTES. Collectively, the Domestic Revolving Credit Notes, the Term
Notes, the Swing Line Note, and the Canadian Notes.
OAKHURST. Oakhurst Company, Inc., a New Jersey corporation of which KTI
owns a 35% interest.
OBLIGATIONS. All indebtedness, obligations and liabilities of the
Borrowers to any of the Banks, the Bank Agents and the Issuing Banks,
individually or collectively, existing on the date of this Agreement or arising
thereafter, direct or indirect, joint or several, absolute or contingent,
matured or unmatured, liquidated or unliquidated, secured or unsecured, arising
by contract, operation of law or otherwise, arising or incurred under this
Agreement or any of the other Loan Documents or in respect of any of the Loans
made or Reimbursement Obligations incurred or the Letters of Credit, Bankers'
Acceptances, the Notes, Swap Contracts, Fuel Derivatives Obligations and similar
agreements or arrangements provided by any of the Banks or any other instrument
at any time evidencing any thereof.
PARENT. See Preamble.
PBGC. The Pension Benefit Guaranty Corporation created by Section 4002
of ERISA and any successor entity or entities having similar responsibilities.
PERC. Penobscot Energy Recovery Co., Ltd., a Maine limited partnership
of which PERC, Inc. owns a 70.36% limited partnership interest.
PERFORMANCE BONDS. See Section 8.1(d).
PERMITTED LIENS. See Section 8.2.
PERSON. Any individual, corporation, partnership, trust, unincorporated
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
POST-CLOSING LETTER. The post-closing letter agreement executed by and
between the Parent and the Administrative Agent, dated as of the date hereof.
POWER PURCHASE AGREEMENT. Collectively, (a) the Power Purchase
<PAGE>
Agreement between MERC and Central Maine Power, and (b) the Power Purchase
Agreement between PERC and Bangor Hydro.
PRICING RATIO. At the end of any fiscal quarter of the Borrowers,
the ratio of (a) Consolidated Funded Indebtedness to (b) EBITDA, as
calculated on the Compliance Certificate delivered by the Borrowers pursuant
to Section 7.4(c). For the purposes of the Pricing Ratio, EBITDA (a) for the
fiscal quarter ending January 31, 2000, shall be actual combined EBITDA of
the Parent and its Subsidiaries and KTI and its Subsidiaries (as approved by
the Administrative Agent) (the "Combined First Quarter Amount") for such
quarter multiplied by four (4), (b) for the fiscal quarter ending April 30,
2000, shall be the Combined First Quarter Amount PLUS EBITDA for the fiscal
quarter ending on such date multiplied by two (2), (c) for the fiscal quarter
ending July 31, 2000, shall be the Combined First Quarter Amount PLUS EBITDA
for the period of two consecutive fiscal quarters ending on such date
multiplied by 1.33, (d) for the fiscal quarter ending October 31, 2000, shall
be the Combined First Quarter Amount PLUS EBITDA for the period of three
fiscal quarters ending on such date, and (e) for the fiscal quarter ending
January 31, 2001 and all fiscal quarters ending thereafter, shall be the
EBITDA for the period of four (4) consecutive fiscal quarters ending on such
date.
REAL PROPERTY. All real property heretofore, now, or hereafter owned or
leased by the Borrowers.
REIMBURSEMENT OBLIGATION. The Domestic Borrowers' joint and several
obligations to reimburse the Issuing Banks and the Domestic Revolving Credit
Banks on account of any drawing under any Domestic Letter of Credit and (to
the fullest extent permitted by law) the Canadian Borrowers' joint and
several obligations to reimburse the Issuing Banks and the Canadian Banks on
account of any drawing under any Canadian Letter of Credit, all as provided
in Section 4.2.
REFUNDING BANKERS' ACCEPTANCE. See Section 3.2.
RELEASE. Shall mean the broader of (i) the meaning specified for the
term "Release" (or "Released") in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Sections 9601 ET SEQ.
("CERCLA") and (ii) the meaning specified for the term "DISPOSAL" (or
"DISPOSED") in the Resource Conservation and Recovery Act of 1976, 42 U.S.C.
Sections 6901 ET SEQ. ("RCRA") and regulations promulgated thereunder;
provided, that in the event either CERCLA or RCRA is amended so as to broaden
the meaning of any term defined thereby, such broader meaning shall apply as
of the effective date of such amendment and provided further,
<PAGE>
to the extent that the laws of a state or province (or the Federal laws of
Canada applicable therein) wherein the property lies establishes a meaning
for "Release" or "Disposal" or any analogous term which is broader than
specified in either CERCLA or RCRA, such broader meaning shall apply.
REQUIRED BANKS. As of any date, the Banks whose aggregate
percentages constitute at least fifty-one percent (51%) of the Loan
Percentages, PROVIDED that for purposes of this definition "Bank" shall not
include any delinquent Bank until such Bank is no longer deemed a delinquent
Bank under Section 15.4.
REVOLVER REDUCTION DATES. See Section 2.4(a).
REVOLVING CREDIT BANKS. The Domestic Revolving Credit Banks and the
Canadian Banks.
REVOLVING CREDIT LOANS. The Domestic Revolving Credit Loans and the
Canadian Loans.
REVOLVING CREDIT MATURITY DATE. December 14, 2004.
SECOND REVOLVER REDUCTION DATE. See Section 2.4(a).
SECOND TIER CANADIAN BORROWERS. Collectively, all Canadian Borrowers
that are direct Subsidiaries of other Canadian Borrowers.
SECURITY DOCUMENTS. The Domestic Security and Pledge Agreement, the
Canadian Pledge Agreement and the Canadian Security Agreements, each as amended
and in effect from time to time, and any additional documents evidencing or
perfecting the Administrative Agent's lien on the assets of the applicable
Borrowers for the benefit of the applicable Banks (including Uniform Commercial
Code financing statements and the Canadian equivalent thereof).
SELLER SUBORDINATED DEBT. Indebtedness of the Borrowers which has been
subordinated and made junior to the payment and performance in full of the
Obligations, and evidenced as such by a subordination agreement containing
subordination provisions substantially in the form of Exhibit F (the
"Subordination Agreement") hereto; PROVIDED that (a) at the time such Seller
Subordinated Debt is incurred, no Default or Event of Default has occurred or
would occur as a result of such incurrence, and (b) the documentation evidencing
such Seller Subordinated Debt shall have been delivered to the Administrative
Agent and shall contain ALL of the following characteristics: (i) it shall be
unsecured, (ii) it shall bear a market rate of interest, (iii) it shall have a
final maturity of at least five (5) years, (iv) it
<PAGE>
shall not require unscheduled principal repayments thereof prior to the
maturity date, (v) it shall have financial covenants (including covenants
relating to incurrence of indebtedness) which are meaningfully less
restrictive than those set forth herein, (vi) it shall have no restrictions
on the Borrower's ability to grant liens securing indebtedness ranking senior
to such Seller Subordinated Debt, (vii) it shall permit the incurrence of
senior indebtedness under this Agreement, (viii) it may be cross-accelerated
with the Obligations and other senior indebtedness of the Borrowers (but
shall not be cross-defaulted except for payment defaults which the senior
lenders have not waived) and may be accelerated upon bankruptcy, (ix) it
shall provide for the complete, automatic and unconditional release of any
and all guarantees of such Seller Subordinated Debt granted by any Borrower
in the event of the sale by any Person of such Borrower or the sale by any
Person of all or substantially all of such Borrower's assets (including in
the case of a foreclosure), (x) it shall provide that (A) upon any payment or
distribution of the assets of the Borrowers (including after the commencement
of a bankruptcy proceeding) of any kind or character, all of the Obligations
(including interest accruing after the commencement of any bankruptcy
proceeding at the rate specified for the applicable Obligation, whether or
not such interest is an allowable claim in any such proceeding) shall be paid
in full prior to any payment being received by the holders of the Seller
Subordinated Debt and (B) until all of the Obligations (including the
interest described in subclause (A) above) are paid in full in cash, any
payment or distribution to which the holders of the Seller Subordinated Debt
would be entitled but for the subordination provisions of the type described
in clauses (xi) and (xii) hereof shall be made to the holders of the
Obligations, (xi) it shall provide that in the event of a payment default
under Section 13.1(a) or (b) hereof, the Borrowers shall not be required to
pay the principal of, or any interest, fees and all other amounts payable
with respect to the Seller Subordinated Debt until the Obligations have been
paid in full in cash, (xii) it shall provide that in the event of any other
Event of Default, the Banks shall be permitted to block with respect to the
Seller Subordinated Debt for a period of 180 days (A) payments of principal,
interest, fees and all other amounts payable, and (B) enforcement of remedies
for Seller Subordinated Debt in excess of $1,000,000, and (xiii) it shall
acknowledge that none of the provisions outlined in part (b) of this
definition can be amended, modified or otherwise altered without the prior
written consent of the Required Banks.
SETTLEMENT. The making or receiving of payments, in immediately
available funds, by the Domestic Revolving Credit Banks to or from the
Administrative Agent in accordance with Section 2.8 hereof to the extent
necessary to cause each such Bank's actual share of the outstanding amount of
the Domestic Loans to be equal to such Bank's Domestic Commitment Percentage
of the outstanding amount of such Domestic Loans, in any case when,
<PAGE>
prior to such action, the actual share is not so equal.
SETTLEMENT AMOUNT. See Section 2.8(b).
SETTLEMENT DATE. See Section 2.8(b).
SETTLING BANK. See Section 2.8(b).
SUBSIDIARY. Any corporation, association, trust, or other business
entity of which the designated parent shall at any time own directly or
indirectly through a Subsidiary or Subsidiaries at least a majority of the
outstanding capital stock or other interest entitled to vote generally.
SWAP CONTRACTS. Any agreement (including any master agreement and any
agreement, whether or not in writing, relating to any single transaction) that
is an interest rate swap agreement, basis swap, forward rate agreement,
commodity swap, commodity option, equity or equity index swap or option, bond
option, interest rate option, forward foreign exchange agreement, rate cap,
collar or floor agreement, currency swap agreement, cross-currency rate swap
agreement, swaption, currency option or other similar agreement (including any
option to enter into any of the foregoing).
SWING LINE LOANS. See Section 2.8(a).
SWING LINE NOTE. See Section 2.8(a).
TERM LOAN. The term loan made or to be made by the Term Loan Lenders to
the Domestic Borrowers pursuant to Section 4A in the maximum principal amount of
$150,000,000.
TERM LOAN BASE RATE MARGIN. See Section 4A.6.1(a).
TERM LOAN EURODOLLAR MARGIN. See Section 4A.6.1(b).
TERM LOAN LENDERS. Each of the Domestic Banks holding a portion of
the Term Loan as set forth on SCHEDULE 2 hereto and any other Person who
becomes an assignee of any rights and obligations of a Term Loan Lender
pursuant to Section 19.
TERM LOAN PERCENTAGE. With respect to each Term Loan Lender, the
percentage set forth on SCHEDULE 2 (subject to adjustment in accordance with
Section 19 and Section 4A.4.3 hereof) as such Bank's percentage of the Term
Loan.
TERM LOAN MATURITY DATE. December 14, 2006.
TERM NOTES. See Section 4A.2.
<PAGE>
TERM NOTE RECORD. A record with respect to a Term Note.
TIMBER. Timber Energy Resources, Inc. a Florida corporation.
TIMBER ENVIRONMENTAL LIABILITY. The environmental liabilities of
Timber disclosed on SCHEDULE 6.18 to be assumed by the Parent, in an amount
not to exceed $500,000.
TOTAL CANADIAN COMMITMENT. See Section 2.1(b).
TOTAL COMMITMENT. The sum of the Total Canadian Commitment and the
Total Domestic Commitment, which amount shall initially equal $300,000,000,
as such amount may be reduced pursuant to Section 2.2 and Section 2.4 hereof.
TOTAL CONSOLIDATED FUNDED INDEBTEDNESS. Collectively, without
duplication, whether classified as indebtedness, an Investment or otherwise
on the Borrowers' and the Excluded Subsidiaries' consolidated balance sheet,
(a) all indebtedness for borrowed money or credit obtained or other similar
monetary obligations, direct or indirect, (b) all obligations evidenced by
notes, bonds, debentures or other similar debt instruments (other than
Performance Bonds), (c) the face amount of all Financial L/Cs and any unpaid
reimbursement obligations under any Financial L/C, (d) all obligations,
liabilities and indebtedness under capitalized leases which correspond to
principal, and (e) guarantees of the Indebtedness of others referred to in
clauses (a) through (d) above.
TOTAL DOMESTIC COMMITMENT. See Section 2.1(a).
TYPE. As to any Domestic Loan, its nature as a Base Rate Loan or a
Eurodollar Rate Loan.
UNDRAWN TERM LOAN FEE. See Section 5.2(d).
U.S. DOLLAR EQUIVALENT. With respect to an amount of Canadian Dollars,
on any date, the amount of U.S. Dollars that may be purchased with such amount
of Canadian Dollars at the Exchange Rate with respect to Canadian Dollars on
such date.
YEAR 2000 ISSUE. The risk that computer applications used by the
Borrowers may be unable to recognize and properly perform date-sensitive
functions involving certain dates prior to, and any date after, December 31,
1999.
<PAGE>
Section 1.2. RULES OF INTERPRETATION.
(a) A reference to any document or agreement shall include
such document or agreement as amended, modified or supplemented from time to
time in accordance with its terms and the terms of this Agreement.
(b) The singular includes the plural and the plural includes
the singular.
(c) A reference to any law includes any amendment or
modification to such law.
(d) A reference to any Person includes its permitted
successors and permitted assigns.
(e) Accounting terms capitalized but not otherwise defined
herein have the meanings assigned to them by Generally Accepted Accounting
Principles applied on a consistent basis by the accounting entity to which they
refer.
(f) The words "include", "includes" and "including" are not
limiting.
(g) All terms not specifically defined herein or by Generally
Accepted Accounting Principles, which terms are defined in the Uniform
Commercial Code as in effect in the State of New York or the Canadian
equivalent, if applicable, have the meanings assigned to them therein.
(h) Reference to a particular "Section" refers to that
section of this Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of
like import shall refer to this Agreement as a whole and not to any particular
section or subdivision of this Agreement.
Section 2. THE REVOLVING CREDIT LOANS.
Section 2.1. COMMITMENT TO LEND.
(a) Subject to the terms and conditions set forth in this
Agreement, each of the Domestic Revolving Credit Banks severally agrees
to lend to the Domestic Borrowers and the Domestic Borrowers may
borrow, repay, and reborrow from time to time between the
<PAGE>
Effective Date and the Revolving Credit Maturity Date upon notice by
the Domestic Borrowers to the Administrative Agent given in accordance
with Section 2.6, such Bank's Domestic Commitment Percentage of such
sums as are requested by the Domestic Borrowers in the minimum
aggregate amount of $500,000 or an integral multiple thereof; PROVIDED,
that except as otherwise provided herein, the outstanding amount of
Domestic Revolving Credit Loans (including the Swing Line Loans) and
the Maximum Drawing Amount of the Domestic Letters of Credit shall not
exceed a maximum aggregate amount outstanding equal to $300,000,000,
as such amount may be reduced or reallocated pursuant to Section 2.2 or
Section 2.4 hereof (the "Total Domestic Commitment") at any time,
PROVIDED that so long as the ING L/C is outstanding, the outstanding
amount of Domestic Revolving Credit Loans (including the Swing Line
Loans) and the Maximum Drawing Amount of the Domestic Letters of Credit
shall not exceed a maximum aggregate amount outstanding equal to
$300,000,000 MINUS the maximum drawing amount of the ING L/C. Domestic
Revolving Credit Loans made hereunder shall be made PRO RATA in
accordance with each Domestic Revolving Credit Bank's Domestic
Commitment Percentage.
(b) Subject to the terms and conditions set forth in this
Agreement, including, without limitation Section 11.6, and upon the
request of the Canadian Borrowers, each of the Canadian Banks severally
agrees to lend to the Canadian Borrowers, and the Canadian Borrowers
may borrow, repay, and reborrow from time to time between the Effective
Date and the Revolving Credit Maturity Date, upon notice by the
Canadian Borrowers to the Bank Agents given in accordance with this
Section 2, its Canadian Commitment Percentage of the Canadian Loans as
are requested by the Canadian Borrowers; PROVIDED THAT the sum of the
outstanding principal amount of the Canadian Loans, the aggregate face
amount of all outstanding Bankers' Acceptances accepted and purchased,
and the Maximum Drawing Amount of outstanding Canadian Letters of
Credit shall not exceed a maximum aggregate amount outstanding equal to
US$0, PROVIDED that , as such amount may be reduced or reallocated
pursuant to Section 2.2 or Section 2.4 hereof (the "Total Canadian
Commitment").
(c) Each request for a Loan or Letter of Credit and each
request for an acceptance and purchase of a Bankers' Acceptance
hereunder shall constitute a representation and warranty by the
applicable Borrowers that the conditions set forth in Section 10 and
Section 11, as the case may be, have been satisfied on the date of
such request.
<PAGE>
Section 2.2. REDUCTION OF TOTAL COMMITMENT AND REALLOCATIONS.
Section 2.2.1. REDUCTION OF TOTAL COMMITMENT.
(a) The Borrowers shall have the right at any time and from
time to time upon five (5) Business Days' prior written notice to the
Administrative Agent to reduce by $5,000,000 or an integral multiple of
$1,000,000 in excess thereof or terminate entirely the Total
Commitment, whereupon the Commitments of the Revolving Credit Banks
shall be reduced PRO RATA in accordance with their respective
Commitment Percentages of the amount specified in such notice or, as
the case may be, terminated. Each of the Total Domestic Commitment and
the Total Canadian Commitment shall be reduced ratably in the event of
such a reduction so that no such reduction shall change the ratio of
the Total Domestic Commitment to the Total Canadian Commitment in
effect immediately prior to such reduction, and further provided that
at no time may (i) the Total Domestic Commitment be reduced to an
amount less than the sum of (A) the Maximum Drawing Amount of all
Domestic Letters of Credit, and (B) all Domestic Revolving Credit Loans
then outstanding, or (ii) the Total Canadian Commitment be reduced to
an amount less than the sum of (A) the Maximum Drawing Amount of all
Canadian Letters of Credit, (B) all Canadian Loans then outstanding,
and (C) the face amount of all outstanding Bankers' Acceptances.
(b) No reduction or termination of the Total Commitment, the
Total Domestic Commitment or the Total Canadian Commitment once made
may be revoked; the portion of the Total Commitment, the Total Domestic
Commitment or the Total Canadian Commitment reduced or terminated may
not be reinstated; and amounts in respect of such reduced or terminated
portion may not be reborrowed.
(c) The Administrative Agent will notify the Revolving Credit
Banks promptly after receiving any notice of the Borrowers delivered
pursuant to this Section 2.2.1 and will distribute to each such Bank a
revised schedule of Commitments, Domestic Commitment Percentages and
Canadian Commitment Percentages, as applicable.
Section 2.2.2. REALLOCATIONS.
(a) Upon the request of the Borrowers, with the approval of
the Administrative Agent and the Canadian Agent, and at the sole
discretion of (i) the Canadian Banks, such Banks may reallocate all or
a portion of their Canadian Commitments to their Domestic Bank
<PAGE>
affiliates' Domestic Commitments, or (ii) the Domestic Revolving Credit
Banks, such Banks may reallocate all or a portion of their Domestic
Commitments to their Canadian Bank affiliates' Canadian Commitments,
subject to payment by the Borrowers to the appropriate Bank Agent of a
fee as agreed from time to time in respect thereof. The Total Canadian
Commitment or Total Domestic Commitment, as applicable, shall be
permanently reduced by the amount of such reallocation, and the Total
Domestic Commitment or Total Canadian Commitment, as applicable, shall
be increased by the same amount.
(b) Each of the Revolving Credit Banks and the Borrowers
further agrees that the Administrative Agent may make such conforming
changes to this Agreement as the Administrative Agent may determine are
necessary to accomplish the reallocations authorized herein, including,
without limitation, revisions to SCHEDULES 2 and 3 hereto, PROVIDED
THAT prior to giving effect to any such changes, the Administrative
Agent shall have provided written notice to the applicable Banks and
the Borrowers of such changes. If requested by the Administrative
Agent, or any affected Bank, the Borrowers hereby agree to issue new
Notes, and the applicable Banks agree to cancel and return any old
Notes that are replaced by such new Notes, as applicable in connection
with any such reallocations.
(c) Unless a Default or Event of Default has occurred and is
continuing, from the Effective Date through and including January 31,
2000, the Canadian Borrowers may request that the Total Canadian
Commitment be increased to up to $25,000,000, hereunder, PROVIDED that
the Total Commitment does not exceed $300,000,000, subject to the
approval of the Administrative Agent, and PROVIDED, further, that (i)
any Canadian Bank which is a party to this Agreement prior to any such
increase may elect to fund its pro rata share of the increase, thereby
increasing its Commitment hereunder, but no Canadian Bank shall be
required to do so, (ii) in the event that it becomes necessary to
include a new Canadian Bank to provide additional funding under this
Section 2.2.2, such new Canadian Bank, as applicable, must be
reasonably acceptable to the Canadian Agent and the Canadian Borrowers,
and (iii) the Domestic Banks' Domestic Commitment Percentages and
Canadian Banks' Canadian Commitment Percentages, as applicable, shall
be correspondingly adjusted and Canadian Notes, issued or amended and
such other changes shall be made to the Loan Documents, as necessary,
to reflect any such increase(s) in the Total Canadian Commitment, and
concomitant decreases in the Total Domestic Commitment.
<PAGE>
Section 2.3. THE REVOLVING CREDIT NOTES.
(a) The Domestic Revolving Credit Loans shall be evidenced by
promissory notes of the Domestic Borrowers in substantially the form of
EXHIBIT A-1 hereto (each a "Domestic Revolving Credit Note"), dated as
of the Effective Date (or such later date as a Domestic Revolving
Credit Bank becomes a party hereto pursuant to Section 19) and
completed with appropriate insertions. One Domestic Revolving Credit
Note shall be payable to the order of each Domestic Revolving Credit
Bank in a principal amount equal to such Domestic Revolving Credit
Bank's Domestic Commitment or, if less, the outstanding amount of all
Domestic Loans made by such Domestic Revolving Credit Bank, plus
interest accrued thereon, as set forth below.
(b) The Canadian Loans shall be evidenced by either (i)
separate promissory notes of the Canadian Borrowers in substantially
the form of EXHIBIT A-2 hereto (each, a "Canadian Note"), dated as of
the date such facility is activated and completed with appropriate
insertions, or (ii) this Agreement and by individual loan accounts
maintained by the Canadian Agent on its books for each of the Canadian
Banks, it being the intention of the parties hereto that, unless a
Canadian Note is requested by a Canadian Bank, the Canadian Borrowers'
obligations with respect to Canadian Loans are to be evidenced only as
stated herein and not by separate promissory notes. If a Canadian Bank
requests a Canadian Note, one Canadian Note shall be payable to the
order of such Canadian Bank in an amount equal to its Canadian
Commitment, and shall represent the joint and several obligations, to
the fullest extent permitted by law, of the Canadian Borrowers to pay
such Canadian Bank such principal amount or, if less, the outstanding
principal amount of all Canadian Loans made by such Canadian Bank, plus
interest accrued thereon, as set forth herein.
(c) The applicable Borrowers irrevocably authorize the
applicable Banks to make, or cause to be made, in connection with a
Drawdown Date of any Domestic Revolving Credit Loan or Canadian Loan,
as the case may be, at the time of receipt of any payment of principal
on any such Note, an appropriate notation on such Bank's records or on
the schedule attached to such Bank's Note or a continuation of such
schedule attached thereto reflecting the making of such Loan, or the
receipt of such payment (as the case may be) and may, prior to any
transfer of its Note, endorse on the reverse side thereof the
outstanding principal amount of such Revolving Credit
<PAGE>
Loans evidenced thereby. The outstanding amount of the Revolving Credit
Loans set forth on such Bank's record shall be PRIMA FACIE evidence of
the principal amount thereof owing and unpaid to such Bank, but the
failure to record, or any error in so recording, any such amount shall
not limit or otherwise affect the obligations of the applicable
Borrowers hereunder or under such Notes to make payments of principal
of or interest on any such Notes when due.
Section 2.4. REDUCING REVOLVER; MATURITY OF THE REVOLVING CREDIT
LOANS.
(a) On December 14, 2002 (the "First Revolver Reduction Date"), the
Total Commitment shall be irrevocably reduced to $275,000,000, and on
December 14, 2003 (the "Second Revolver Reduction Date", and together with
the First Revolver Reduction Date, the "Revolver Reduction Dates") , the
Total Commitment shall be irrevocably reduced to $250,000,000, and any
payments required by Section 2.5 shall be made on each such date, with a
final payment on the Revolving Credit Maturity Date in an amount equal to the
unpaid balance of the Revolving Credit Loans, together with any and all
accrued and unpaid interest thereon. On each such reduction date, each
Revolving Bank's Domestic Commitment or Canadian Commitment (as applicable)
shall be reduced PRO RATA in accordance with such Bank's Domestic Commitment
Percentage or Canadian Commitment Percentage. The Domestic Borrowers jointly
and severally promise to pay on (a) each Revolver Reduction Date, all
Domestic Revolving Credit Loans, unpaid Reimbursement Obligations with
respect to Domestic Letters of Credit and any and all unpaid interest accrued
thereon, exceeding the amount of the reduced Total Domestic Commitment, and
(b) the Revolving Credit Maturity Date all Domestic Revolving Credit Loans
outstanding, unpaid Reimbursement Obligations with respect to Domestic
Letters of Credit and any and all unpaid interest accrued thereon. The
Canadian Borrowers jointly and severally, to the fullest extent permitted by
law, promise to pay on (a) each Revolver Reduction Date, all Canadian Loans,
unpaid Reimbursement Obligations with respect to Canadian Letters of Credit,
any amounts owing with respect to Bankers' Acceptances, and any and all
unpaid interest accrued thereon, as applicable, exceeding the amount of the
reduced Total Canadian Commitment, and (b) the Revolving Credit Maturity Date
all Canadian Loans outstanding, unpaid Reimbursement Obligations with respect
to Canadian Letters of Credit, any amounts owing with respect to Bankers'
Acceptances, and any and all unpaid interest accrued thereon. The Revolving
Credit Loans shall be due and payable on each Revolver Reduction Date and the
Revolving Credit Maturity Date, as set forth above.
(b) Any payments made by the Borrowers pursuant to this Section 2.4
<PAGE>
shall ratably reduce each of the Total Domestic Commitment and the
Total Canadian Commitment so that no such reduction shall change the
ratio of the Total Domestic Commitment to the Total Canadian
Commitment in effect immediately prior to such reduction.
Section 2.5. MANDATORY REPAYMENTS OF THE REVOLVING CREDIT LOANS. If
at any time (i) the sum of the outstanding amount of the Domestic Revolving
Credit Loans PLUS the Maximum Drawing Amount of all outstanding Domestic
Letters of Credit exceeds the Total Domestic Commitment, whether by reduction
of the Total Domestic Commitment or otherwise, or (ii) the sum of the
outstanding amount of the Canadian Loans, PLUS the Maximum Drawing Amount of
all outstanding Canadian Letters of Credit, PLUS the aggregate face amount of
all outstanding Bankers' Acceptances, exceeds the Total Canadian Commitment,
whether by reduction of the Total Canadian Commitment, due to currency
fluctuations or otherwise, then the Domestic Borrowers, jointly and
severally, shall immediately pay the amount of such excess to the
Administrative Agent in the case of clause (i) above, and the Canadian
Borrowers, jointly and severally, to the fullest extent permitted by law,
shall immediately pay the amount of such excess to the Canadian Agent, in the
case of clause (ii) above, within two (2) Business Days of notice thereof if
due to currency fluctuations, (A) for application to the applicable Revolving
Credit Loans, in the case of clause (i) above, first to Domestic Revolving
Credit Loans, or in the case of clause (ii) above, first to the Canadian
Loans, subject to Section 5.14, or (B) if no Revolving Credit Loans shall be
outstanding, to be held by the Administrative Agent or the Canadian Agent, as
the case may be, for the benefit of the applicable Banks as collateral
security for such excess Maximum Drawing Amount and/or borrowing by way of
Bankers' Acceptances; PROVIDED, HOWEVER, that if the amount of cash
collateral held by the Administrative Agent or the Canadian Agent pursuant to
this Section 2.5 exceeds the Maximum Drawing Amount and/or borrowings by way
of Bankers' Acceptances required to be collateralized from time to time, such
Bank Agent shall return such excess to the applicable Borrowers.
Section 2.6. REQUESTS FOR REVOLVING CREDIT LOANS.
(a) The Domestic Borrowers shall give to the Administrative
Agent written notice in the form of EXHIBIT B-1 hereto (or telephonic
notice confirmed by telecopy on the same Business Day in the form of
EXHIBIT B-1 hereto) of each Domestic Revolving Credit Loan requested
hereunder (a "Loan and Letter of Credit Request") not later than 11:00
a.m. Boston time (i) no less than one (1) Business Day prior to the
proposed Drawdown Date of any Base Rate Loan and (ii) no less than
three (3) Eurodollar Business Days prior to the proposed Drawdown Date
of any Eurodollar Rate Loan. Each such notice shall specify (A)
<PAGE>
the amount of such Domestic Revolving Credit Loan, (B) the proposed
Drawdown Date of such Domestic Revolving Credit Loan, (C) the Type of
such Domestic Revolving Credit Loan, (D) the Interest Period for such
Domestic Revolving Credit Loan (if a Eurodollar Rate Loan), and (E)
the aggregate outstanding amount of all Swing Line Loans. Each
Domestic Revolving Credit Loan requested shall be in a minimum amount
of $5,000,000, or in $1,000,000 additional increments thereof. Each
such Domestic Loan request shall reflect the Maximum Drawing Amount of
all Domestic Letters of Credit outstanding and the amount of Domestic
Revolving Credit Loans outstanding (including Swing Line Loans).
Domestic Revolving Credit Loan requests made hereunder shall be
irrevocable and binding on the Domestic Borrowers, and shall obligate
the Domestic Borrowers to accept the Domestic Revolving Credit Loan
requested from the Domestic Revolving Credit Banks on the proposed
Drawdown Date.
(b) The Canadian Borrowers shall give to the Bank Agents
written notice in the form of EXHIBIT B-2 hereto (or telephone notice
confirmed in writing or a facsimile in the form of EXHIBIT B-2 hereto)
of each Canadian Loan requested hereunder (a "Canadian Loan and Letter
of Credit Request") not later than 11:00 a.m. (Boston time) no less
than one (1) Business Day prior to the Drawdown Date of any Canadian
Prime Rate Loan or Canadian Base Rate Loan. Each such Canadian Loan and
Letter of Credit Request shall specify (A) the principal amount of the
Canadian Loan requested, (B) the proposed Drawdown Date of such
Canadian Loan, and (C) whether such Canadian Loan is to be a Canadian
Prime Rate Loan or a Canadian Base Rate Loan. Each such Canadian Loan
and Letter of Credit Request shall reflect the amount of Canadian Loans
and Bankers' Acceptances outstanding and the Maximum Drawing Amount of
all Canadian Letters of Credit. Each Canadian Loan and Letter of Credit
Request shall be in a minimum amount of C$1,000,000, or C$500,000
additional increments thereof for Canadian Loans and in C$100,000 for
Canadian Letters of Credit. Canadian Loan and Letter of Credit Requests
made hereunder shall be irrevocable and binding on the Canadian
Borrowers, and shall obligate the Canadian Borrowers to accept the
Canadian Loan requested from the Canadian Banks on the proposed
Drawdown Date.
Section 2.7. FUNDS FOR DOMESTIC REVOLVING CREDIT LOANS AND CANADIAN
LOANS.
<PAGE>
(a) Not later than 2:00 p.m. (Boston time) on the proposed
Drawdown Date of any Revolving Credit Loan, (i) in the case of Domestic
Revolving Credit Loans, each of the Domestic Revolving Credit Banks
will make available to the Administrative Agent, at the Administrative
Agent's Head Office, or, (ii) in the case of Canadian Loans, each of
the Canadian Banks will make available to the Canadian Agent, at the
Canadian Agent's Head Office, in each case in immediately available
funds, the amount of such Bank's Domestic Commitment Percentage or
Canadian Commitment Percentage, as the case may be, of the amount of
the requested Revolving Credit Loans. Upon receipt from each applicable
Bank of such amount, and upon receipt of the documents required by
Sections 10 and 11 and the satisfaction of the other conditions set
forth therein, to the extent applicable, the Administrative Agent will
make available to the Domestic Borrowers in immediately available funds
the aggregate amount of such Domestic Revolving Credit Loans made
available to the Administrative Agent by the Domestic Revolving Credit
Banks, and the Canadian Agent will make available to the Canadian
Borrowers in immediately available funds the aggregate amount of such
Canadian Loans made available to the Canadian Agent by the Canadian
Banks. The failure or refusal of any Revolving Credit Bank to make
available to the Administrative Agent or the Canadian Agent, as the
case may be, at the aforesaid time and place on any Drawdown Date the
amount of its Domestic Commitment Percentage of the requested Domestic
Revolving Credit Loans or the amount of its Canadian Commitment
Percentage of the requested Canadian Loans shall not relieve any other
Revolving Credit Bank from its several obligation hereunder to make
available to the Administrative Agent, or the Canadian Agent, as the
case may be, the amount of such other Revolving Credit Bank's
Commitment Percentage of any requested Revolving Credit Loan.
(b) The Administrative Agent or the Canadian Agent, as the
case may be, may, unless notified to the contrary by any Revolving
Credit Bank prior to a Drawdown Date, assume that such Bank has made
available to the Administrative Agent or the Canadian Agent, as the
case may be, on such Drawdown Date the amount of such Bank's Commitment
Percentage of the Revolving Credit Loans to be made on such Drawdown
Date, and the Administrative Agent or the Canadian Agent, as the case
may be, may (but shall not be required to), in reliance upon such
assumption, make available to the applicable Borrowers a corresponding
amount. If any Revolving Credit Bank makes available to the
Administrative Agent or the Canadian Agent, as the case may be, such
amount on a date after such Drawdown Date,
<PAGE>
such Bank shall pay to the Administrative Agent or the Canadian Agent,
as the case may be, on demand an amount equal to the product of (i)
the average computed for the period referred to in clause (iii) below,
of the weighted average interest rate paid by the Administrative Agent
for federal funds acquired by the Administrative Agent, or
corresponding Canadian funds in the case of the Canadian Agent, during
each day included in such period, TIMES (ii) the amount of such Bank's
Commitment Percentage of such Loans, TIMES (iii) a fraction, the
numerator of which is the number of days that elapse from and
including such Drawdown Date to the date on which the amount of such
Bank's Commitment Percentage of such Loans shall become immediately
available to the Administrative Agent or the Canadian Agent, as
applicable, and the denominator of which is 365. A statement of the
Administrative Agent or the Canadian Agent, as the case may be,
submitted to such Bank with respect to any amounts owing under this
paragraph shall be PRIMA FACIE evidence, absent manifest error, of the
amount due and owing to such Bank Agent by such Bank. If the amount of
such Bank's Commitment Percentage of such Loans is not made available
to such Bank Agent by such Bank within three (3) Business Days
following such Drawdown Date, such Bank Agent shall be entitled to
recover such amount from such Borrowers on demand, with interest
thereon at the rate per annum applicable to the Revolving Credit Loans
made on such Drawdown Date.
Section 2.8. SWING LINE LOANS; SETTLEMENTS.
(a) Solely for ease of administration of the Domestic
Revolving Credit Loans, BankBoston may, upon receipt of a Domestic Loan
and Letter of Credit Request requesting a Swing Line Loan no later than
2:30 p.m. (Boston time) on the proposed date of funding, but shall not
be required to, fund Base Rate Loans made in accordance with the
provisions of this Agreement ("Swing Line Loans") for periods not to
exceed seven (7) days in any one case, bearing interest as set forth in
Section 5.1. The Swing Line Loans shall be evidenced by a promissory
note of the Domestic Borrowers in substantially the form of EXHIBIT A-3
hereto (the "Swing Line Note") dated as of the Effective Date, and
shall each be in a minimum amount of $100,000 or greater, PROVIDED
THAT the outstanding amount of Swing Line Loans advanced by BankBoston
hereunder shall not exceed $10,000,000 at any time. Each Domestic
Revolving Credit Bank shall remain severally and unconditionally liable
to fund its PRO RATA share (based upon such
<PAGE>
Bank's Domestic Commitment Percentage) of such Swing Line Loans on
each Settlement Date and, in the event BankBoston chooses not to fund
all Base Rate Loans requested on any date, to fund its Domestic
Commitment Percentage of the Base Rate Loans requested, subject to
satisfaction of the provisions hereof relating to the making of Base
Rate Loans. Prior to each Settlement, all payments or repayments of
the principal of, and interest on, Swing Line Loans shall be credited
to the account of BankBoston.
(b) The Domestic Revolving Credit Banks shall effect
Settlements on (i) the Business Day immediately following any day which
BankBoston gives written notice to the Administrative Agent to effect a
Settlement, (ii) the Business Day immediately following the
Administrative Agent's becoming aware of the existence of any Default
or Event of Default, (iii) the Revolving Credit Maturity Date, (iv) any
date on which the Borrowers wish to convert a Swing Line Loan into a
Eurodollar Rate Loan, and (v) in any event, the seventh day on which
any Swing Line Loan remains outstanding (each such date, a "Settlement
Date"). One (1) Business Day prior to each such Settlement Date, the
Administrative Agent shall give telephonic notice to the Domestic
Revolving Credit Banks of (A) the respective outstanding amount of
Domestic Revolving Credit Loans made by each Domestic Revolving Credit
Bank as at the close of business on the prior day, (B) the amount that
any Domestic Revolving Credit Bank, as applicable (a "Settling Bank"),
shall pay to effect a Settlement (a "Settlement Amount"). A statement
of the Administrative Agent submitted to the Domestic Revolving Credit
Banks with respect to any amounts owing hereunder shall be PRIMA FACIE
evidence of the amount due and owing. Each Settling Bank shall, not
later than 1:00 p.m. (Boston time) on each Settlement Date, effect a
wire transfer of immediately available funds to the Administrative
Agent at the Administrative Agent's Head Office in the amount of such
Bank's Settlement Amount. All funds advanced by any Domestic Revolving
Credit Bank as a Settling Bank pursuant to this Section 2.8 shall for
all purposes be treated as a Base Rate Loan to the Borrowers.
(c) The Administrative Agent may (unless notified to the
contrary by any Settling Bank by 12:00 noon (Boston time) one (1)
Business Day prior to the Settlement Date) assume that each Settling
Bank has made available (or will make available by the time specified
in Section 2.8(b)) to the Administrative Agent its Settlement Amount,
and the Administrative Agent may (but shall not be required to), in
reliance upon such assumption, effect Settlements. If the Settlement
Amount of such Settling Bank is made available to the Administrative
Agent
<PAGE>
on a date after such Settlement Date, such Settling Bank shall
pay the Administrative Agent on demand an amount equal to the product
of (i) the average, computed for the period referred to in clause (iii)
below, of the weighted average annual interest rate paid by the
Administrative Agent for federal funds acquired by the Administrative
Agent during each day included in such period TIMES (ii) such
Settlement Amount TIMES (iii) a fraction, the numerator of which is the
number of days that elapse from and including such Settlement Date to
but not including the date on which such Settlement Amount shall become
immediately available to the Administrative Agent, and the denominator
of which is 365. Upon payment of such amount such Settling Bank shall
be deemed to have delivered its Settlement Amount on the Settlement
Date and shall become entitled to interest payable by the Domestic
Borrowers with respect to such Settling Bank's Settlement Amount as if
such share were delivered on the Settlement Date. If such Settlement
Amount is not in fact made available to the Administrative Agent by
such Settling Bank within five (5) Business Days of such Settlement
Date, the Administrative Agent shall be entitled to recover such amount
from the Domestic Borrowers, with interest thereon at the Base Rate.
(d) After any Settlement Date, any payment by the Domestic
Borrowers of Swing Line Loans hereunder shall be allocated PRO RATA
among the Domestic Revolving Credit Banks, in accordance with such
Banks' Domestic Commitment Percentages.
(e) If, prior to the making of a Domestic Revolving Credit Loan
pursuant to paragraph (b) of this Section 2.8, a Default or Event of
Default has occurred and is continuing, each Domestic Revolving Credit
Bank will, on the date such Loan was to have been made, purchase an
undivided participating interest in the outstanding Swing Line Loans in
an amount equal to its Domestic Commitment Percentage of such Swing
Line Loans. Each Domestic Revolving Credit Bank will immediately
transfer to the Administrative Agent, in immediately available funds,
the amount of its participation and upon receipt thereof the
Administrative Agent will deliver to such Domestic Revolving Credit
Bank a Swing Line participation certificate dated the date of receipt
of such funds and in such amount.
(f) Whenever, at any time after the Administrative Agent has
received from any Domestic Revolving Credit Bank such Bank's
participating interest in the Swing Line Loans pursuant to clause (e)
above, the Administrative Agent receives any payment on account
thereof, the Administrative Agent will distribute to such Bank its
<PAGE>
participating interest in such amount (appropriately adjusted, in the
case of interest payments, to reflect the period of time during which
such Bank's participating interest was outstanding and funded) in like
funds as received; PROVIDED, HOWEVER, that in the event that such
payment received by the Administrative Agent is required to be
returned, such Bank will return to the Administrative Agent any portion
thereof previously distributed by the Administrative Agent to it in
like funds as such payment is required to be returned by the
Administrative Agent.
(g) Each Domestic Revolving Credit Bank's obligation to
purchase participating interests pursuant to clause (e) above shall be
absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, (i) any set-off,
counterclaim, recoupment, defense or other right which such Bank may
have against the Administrative Agent, the Borrowers or any other
Person for any reason whatsoever; (ii) the occurrence or continuance of
a Default or Event of Default; (iii) any adverse change in the
condition (financial or otherwise) of the Borrowers or any other
Person; (iv) any breach of this Agreement by the Borrowers or any other
Bank or Bank Agent; or (v) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing.
Section 2.9. OPTIONAL PREPAYMENTS OR REPAYMENTS OF REVOLVING CREDIT
LOANS.
The applicable Borrowers shall have the right, at their election, to
repay or prepay the outstanding amount of the Revolving Credit Loans, as a
whole or in part, at any time without penalty or premium; PROVIDED (i) each
partial prepayment shall be in the principal amount of $250,000 or an
integral multiple thereof, and (ii) that the full or partial prepayment of
the outstanding amount of any Eurodollar Rate Loans pursuant to this Section
2.9 may be made only on the last day of the Interest Period relating thereto.
The Borrowers shall give the appropriate Bank Agent(s), no later than 11:00
a.m. (Boston time) (a) at least one (1) Business Day written notice (or
telephonic notice confirmed in writing) of such proposed prepayment or
repayment, written notice (or telephonic notice confirmed in writing) of any
proposed prepayment or repayment pursuant to this Section 2.9 of Base Rate
Loans, Canadian Prime Rate Loans or Canadian Base Rate Loans and (b) at least
three (3) Eurodollar Business Days written notice (or telephonic notice
confirmed in writing) of any proposed prepayment or repayment pursuant to
this Section 2.9 of Eurodollar Rate Loans, in each case, specifying the
proposed date of prepayment or repayment of Revolving Credit Loans and the
principal amount to be paid. Each such partial prepayment shall be applied
first to the principal of Base Rate Loans, Canadian Prime Rate Loans or
Canadian Base
<PAGE>
Rate Loans (as applicable) and then to the principal of Eurodollar Rate Loans.
Payments received from Domestic Borrowers shall be applied pro rata to each
Domestic Revolving Credit Bank in respect of its outstanding Domestic
Commitment. Payments received from Canadian Borrowers shall be applied pro rata
to each Canadian Bank in respect of its outstanding Canadian Commitment.
Section 3 BANKERS' ACCEPTANCES.
Section 3.1. ACCEPTANCE AND PURCHASE.
Subject to the terms and conditions hereof, each Canadian
Bank severally agrees to accept and purchase Bankers' Acceptances drawn upon
it by the Canadian Borrowers denominated in Canadian Dollars. The Canadian
Borrowers shall notify the Canadian Agent by irrevocable written notice (each
a "Bankers' Acceptance Notice") by 10:00 a.m. (Boston time) three (3)
Business Days prior to the date of any borrowing by way of Bankers'
Acceptances. Each borrowing by way of Bankers' Acceptances shall be in a
minimum aggregate face amount of C$1,000,000 and integral multiples of
C$500,000 in excess thereof. The face amount of each Bankers' Acceptance
shall be C$100,000 or any integral multiple thereof. Each Bankers' Acceptance
Notice shall be in the form of EXHIBIT B-3. In no event shall the U.S. Dollar
Equivalent of the aggregate face amount of all outstanding Bankers'
Acceptances exceed the Total Canadian Commitment minus the sum of the
outstanding principal amount of all Canadian Loans (expressed in its U.S.
Dollar Equivalent thereof), plus the Maximum Drawing Amount (expressed in its
U.S. Dollar Equivalent thereof) of all outstanding Canadian Letters of
Credit. If clearing services acceptable to the Canadian Banks and the
Canadian Agent are available, all Bankers' Acceptances may be issued in the
form of a depository bill and deposited with a clearing house, both terms as
defined in the DEPOSITORY BILLS AND NOTES ACT (S.C. 1998 c.13). The Canadian
Agent shall notify the Canadian Borrowers and the Canadian Banks of the
procedures to be adopted to implement such change. The Canadian Banks are
also authorized at such time to issue depository bills as replacements for
previously issued Bankers' Acceptances, on the same terms as those replaced,
and deposit them with a clearing house against cancellation of the previously
issued Bankers' Acceptances.
(a) TERM. Bankers' Acceptances shall be issued and shall
mature on a Business Day. Each Bankers' Acceptance shall have a term of
about 30, 60, 90 or 180 days and shall mature no later than five (5)
days prior to the Revolving Credit Maturity Date and shall be in form
and substance reasonably satisfactory to the Canadian Bank which is
accepting such Bankers' Acceptance.
<PAGE>
(b) BANKERS' ACCEPTANCES IN BLANK. To facilitate the
acceptance of Bankers' Acceptances under this Agreement, the Canadian
Borrowers shall, upon execution of this Agreement and from time to time
as required, provide to the Canadian Agent drafts, in form satisfactory
to the Canadian Agent, duly executed and endorsed in blank by the
Canadian Borrowers in quantities sufficient for each Canadian Bank to
fulfill its obligations hereunder. In addition, the Canadian Borrowers
hereby appoint each Canadian Bank as its attorney to sign and endorse
on its behalf, in handwriting or by facsimile or mechanical signature
as and when deemed necessary by such Canadian Bank, blank forms of
Bankers' Acceptances. The Canadian Borrowers recognize and agree that
all Bankers' Acceptances signed and/or endorsed on their behalf by a
Canadian Bank shall bind the Canadian Borrowers as fully and
effectually as if signed in the handwriting of and duly issued by the
proper signing officers of the Canadian Borrowers. Each Canadian Bank
is hereby authorized to issue such Bankers' Acceptances endorsed in
blank in such face amounts as may be determined by such Canadian Bank
provided that the aggregate amount thereof is equal to the aggregate
amount of Bankers' Acceptances required to be accepted by such Bank
pursuant to clause (d) below. No Canadian Bank shall be responsible or
liable for its failure to accept a Bankers' Acceptance if the cause of
such failure is, in whole or in part, due to the failure of the
Canadian Borrowers to provide duly executed and endorsed drafts to the
Canadian Agent on a timely basis nor shall any Canadian Bank or the
Canadian Agent be liable for any damage, loss or other claim arising by
reason of any loss or improper use of any such instrument except loss
or improper use arising by reason of the gross negligence or willful
misconduct of such Bank or the Canadian Agent, its officers, employees,
agents or representatives. Each Canadian Bank shall maintain a record
with respect to Bankers' Acceptances (A) received by it from the
Canadian Agent in blank hereunder, (B) voided by it for any reason, (C)
accepted by it hereunder, (D) purchased by it hereunder and (E)
cancelled at their respective maturities. Each Canadian Bank further
agrees to retain such records in the manner and for the statutory
periods provided in the various Canadian provincial or federal statutes
and regulations which apply to such Bank.
(c) EXECUTION OF BANKERS' ACCEPTANCES. Drafts of the Canadian
Borrowers to be accepted as Bankers' Acceptances hereunder shall be
duly executed by one or more duly authorized officers on behalf of the
Canadian Borrowers. Notwithstanding that any Person
<PAGE>
whose signature appears on any Bankers' Acceptance as a signatory for
the Canadian Borrowers may no longer be an authorized signatory for
the Canadian Borrowers at the date of issuance of a Bankers'
Acceptance, such signature shall nevertheless be valid and sufficient
for all purposes as if such authority had remained in force at the
time of such issuance and any such Bankers' Acceptance so signed shall
be binding on the Canadian Borrowers.
(d) ISSUANCE OF BANKERS' ACCEPTANCES. Promptly following
receipt of a Bankers' Acceptance Notice, the Canadian Agent shall so
advise the Canadian Banks of the face amount of each Bankers'
Acceptance to be accepted by it and the term thereof. The aggregate
face amount of Bankers' Acceptances to be accepted by a Canadian Bank
shall be determined by the Canadian Agent by reference to the
respective Canadian Commitments of the Canadian Banks, except that, if
the face amount of a Bankers' Acceptance, which would otherwise be
accepted by a Canadian Bank, would not be C$100,000 or an integral
multiple thereof, such face amount shall be increased or reduced by
the Canadian Agent in its sole and unfettered discretion to the
nearest integral multiple of C$100,000.
(e) ACCEPTANCES OF BANKERS' ACCEPTANCES. Each Bankers'
Acceptance to be accepted by a Canadian Bank shall be accepted at such
Bank's office shown on SCHEDULE 3 hereof or as otherwise designated by
said Canadian Bank from time to time.
(f) PURCHASE OF BANKERS' ACCEPTANCES. On the relevant date of
borrowing, each Canadian Bank severally agrees to purchase from the
Canadian Borrowers, at the face amount thereof discounted by the
Applicable BA Discount Rate, any Bankers' Acceptance accepted by it and
provide to the Canadian Agent, for the account of the Canadian
Borrowers, the BA Discount Proceeds in respect thereof after deducting
therefrom the amount of the Acceptance Fee payable by the Canadian
Borrowers to such Bank under Section 3.3 in respect of such Bankers'
Acceptance.
(g) SALE OF BANKERS' ACCEPTANCES. Each Canadian Bank may at
any time and from time to time hold, sell, rediscount or otherwise
dispose of any or all Bankers' Acceptances accepted and purchased by
it.
(h) WAIVER OF PRESENTMENT AND OTHER CONDITIONS. Each of the
Canadian Borrowers waives presentment for payment and any other defense
to payment of any amounts due to a Canadian Bank in respect of a
Bankers' Acceptance accepted by such Canadian Bank
<PAGE>
pursuant to this Agreement which might exist solely by reason of such
Bankers' Acceptance being held, at the maturity thereof, by such Bank
in its own right. The Canadian Borrowers shall not claim or require
any days of grace or require the Canadian Agent or any Canadian Bank
to claim any days of grace for the payment of any Bankers' Acceptance.
Section 3.2. REFUNDING BANKERS' ACCEPTANCES.
With respect to each Bankers' Acceptance, the Canadian
Borrowers, prior to the occurrence and continuation of an Event of Default,
may give irrevocable telephone or written notice (or such other
method of notification as may be agreed upon between the Canadian Agent
and the Canadian Borrowers) to the Canadian Agent at or before 2:00 p.m. (Boston
time) two (2) Business Days prior to the maturity date of such Bankers'
Acceptance followed by written confirmation electronically transmitted to the
Canadian Agent on the same day, of the Canadian Borrowers' intention to issue
one or more Bankers' Acceptances on such maturity date (each a "Refunding
Bankers' Acceptance") to provide for the payment of such maturing Bankers'
Acceptance (it being understood that payments by the Canadian Borrowers and
fundings by the Canadian Banks in respect of each maturing Bankers' Acceptance
and each related Refunding Bankers' Acceptance shall be made on a net basis
reflecting the difference between the face amount of such maturing Bankers'
Acceptance and the BA Discount Proceeds (net of the applicable Acceptance Fee)
of such Refunding Bankers' Acceptance). Any funding on account of any maturing
Bankers' Acceptance must be made at or before 12:00 noon (Boston time) on the
maturity date of such Bankers' Acceptance. If the Canadian Borrowers fail to
give such notice, the Canadian Borrowers shall be irrevocably deemed to have
requested and to have been advanced a Canadian Prime Rate Loan in the face
amount of such maturing Bankers' Acceptance on the maturity date of such
maturing Bankers' Acceptance from the Canadian Bank which accepted such maturing
Bankers' Acceptance, which Canadian Prime Rate Loan shall thereafter bear
interest as such in accordance with the provisions hereof and otherwise shall be
subject to all provisions of this Agreement applicable to Canadian Prime Rate
Loans until paid in full.
Section 3.3 ACCEPTANCE FEE.
An acceptance fee (the "Acceptance Fee") shall be payable
by the Canadian Borrowers to each Canadian Bank and each Canadian Bank shall
deduct the amount of such Acceptance Fee from the BA Discount Proceeds (in
the manner specified in Section 3.1(f) in respect of each Bankers'
Acceptance), said fee to be calculated at a rate per annum equal to the
Letter of Credit
<PAGE>
Percentage calculated on the face amount of such Bankers' Acceptance
and computed on the basis of the number of days in the term of such Bankers'
Acceptance and a year of 365 days.
Section 3.4 CASH COLLATERAL.
Subject to Section 28, upon the occurrence and during
the continuance of any Event of Default, and in addition to any other rights
or remedies of any Canadian Bank and the Canadian Agent hereunder, any
Canadian Bank or the Canadian Agent as and by way of collateral security (or
such alternate arrangement as may be agreed upon by the Canadian Borrowers
and such Canadian Bank or the Canadian Agent, as applicable) shall be
entitled to deposit and retain in an account to be maintained by the Canadian
Agent (bearing interest at the Canadian Agent's rates as may be applicable in
respect of other deposits of similar amounts for similar terms) amounts which
are received by such Canadian Bank or the Canadian Agent from the Canadian
Borrowers hereunder or as proceeds of the exercise of any rights or remedies
of any Canadian Bank or the Canadian Agent hereunder against the Canadian
Borrowers, to the extent such amounts may be required to satisfy any
contingent or unmatured obligations or liabilities of the Canadian Borrowers
to the Canadian Banks or the Canadian Agent, or any of them hereunder in
respect of outstanding Bankers' Acceptances.
Section 3.5. CIRCUMSTANCES MAKING BANKERS' ACCEPTANCES UNAVAILABLE.
If, by reason of circumstances affecting money markets generally, there is no
market for bankers' acceptances (i) the right of the Canadian Borrowers to draw
Bankers' Acceptances shall be suspended until the circumstances causing a
suspension no longer exist, and (ii) any Bankers' Acceptance Notice which is
outstanding shall be cancelled and the requested drawing shall not be made. The
Canadian Agent shall promptly notify the Canadian Borrowers of the suspension of
the Canadian Borrowers' right to request a drawing and of the termination of any
such suspension.
Section 4. LETTERS OF CREDIT.
Section 4.1. LETTER OF CREDIT COMMITMENTS.
(a) Subject to the terms and conditions hereof and the
execution and receipt of a Loan and Letter of Credit Request reflecting
the Maximum Drawing Amount of all Domestic Letters of Credit (including
the requested Domestic Letter of Credit) and a Letter of Credit
Application, the applicable Issuing Banks, on behalf of the Domestic
Revolving Credit Banks and in reliance upon the agreement of such Banks
set forth in Section 4.1(c) and upon the representations and
<PAGE>
warranties of the Domestic Borrowers contained herein, agrees to issue
standby letters of credit, in such form as may be requested from time
to time by the Domestic Borrowers and agreed to by such Issuing Bank;
PROVIDED, HOWEVER, that, after giving effect to such request, (i) the
aggregate Maximum Drawing Amount of all letters of credit issued at
any time under this Section 4.1(a) (the "Domestic Letters of Credit")
shall not exceed $50,000,000 and (ii) the aggregate Maximum Drawing
Amount of all Domestic Letters of Credit PLUS the sum of the
outstanding amount of the Domestic Revolving Credit Loans shall not
exceed the Total Domestic Commitment; and PROVIDED FURTHER that no
Domestic Letter of Credit shall have an expiration date later than
the earlier of (i) one year after the date of issuance of the
Domestic Letter of Credit, or (ii) thirty (30) days prior to the
Revolving Credit Maturity Date.
(b) Subject to the terms and conditions hereof and the
execution and receipt of a Canadian Loan and Letter of Credit Request
reflecting the Maximum Drawing Amount of all Canadian Letters of Credit
(including the requested Canadian Letter of Credit) and a Letter of
Credit Application, the applicable Issuing Bank, on behalf of the
applicable Canadian Banks and in reliance upon the agreement of the
Canadian Banks set forth in Section 4.1(c) and upon the
representations and warranties of the Canadian Borrowers contained
herein, agrees to issue standby letters of credit, in such form as
may be requested from time to time by the Canadian Borrowers and
agreed to by the applicable Issuing Bank; PROVIDED, HOWEVER, that,
after giving effect to such request, (i) the aggregate Maximum Drawing
Amount of all letters of credit issued at any time under this Section
4.1(b) (the "Canadian Letters of Credit") shall not exceed $1,000,000,
and (ii) the aggregate Maximum Drawing Amount of all Canadian Letters
of Credit PLUS the sum of the outstanding amount of the Canadian Loans
PLUS all amounts owing with respect to Bankers' Acceptances shall not
exceed the Total Canadian Commitment; and PROVIDED FURTHER that no
Canadian Letter of Credit shall have an expiration date later than the
earlier of (i) one year after the date of issuance of the Canadian
Letter of Credit, or (ii) thirty (30) days prior to the Revolving
Credit Maturity Date.
(c) Each Domestic Revolving Credit Bank and each Canadian
Bank, as applicable, severally agrees that it shall be absolutely
liable, without regard to the occurrence of any Default or Event of
Default or any other condition precedent whatsoever, to the extent of
such Bank's Commitment Percentage thereof, to reimburse the applicable
Issuing Bank on demand for the amount of each draft paid by such
Issuing
<PAGE>
Bank under each applicable Letter of Credit to the extent that such
amount is not reimbursed by the applicable Borrowers pursuant to
Section 4.2 (such agreement for a Bank being called herein the
"Letter of Credit Participation" of such Bank). The Issuing Banks
shall not issue any Letter of Credit unless all of the conditions
precedent under Section 11 hereof have been satisfied.
(d) Each such payment made by a Bank shall be treated as the
purchase by such Bank of a participating interest in the applicable
Borrowers' Reimbursement Obligation under Section 4.2 in an amount
equal to such payment. Each Bank shall share in accordance with its
participating interest in any interest which accrues pursuant to
Section 4.2.
(e) All "Letters of Credit" (as defined in the January 1998
Credit Agreement) outstanding under the January 1998 Credit Agreement
on the Effective Date shall become Domestic Letters of Credit
hereunder. The Domestic Revolving Credit Banks' participations in such
Letters of Credit will be reallocated on the Effective Date in
accordance with each such Bank's applicable Domestic Commitment
Percentage hereunder.
Section 4.2. REIMBURSEMENT OBLIGATION OF THE BORROWERS.
In order to induce the applicable Issuing Banks to issue, extend and renew
Letters of Credit and the Banks to participate therein, (i) the Domestic
Borrowers hereby agree to reimburse or pay to the applicable Issuing Bank with
respect to each Domestic Letter of Credit, and (ii) each of the Canadian
Borrowers hereby jointly and severally agrees (to the fullest extent permitted
by law) to reimburse or pay to the applicable Issuing Bank, with respect to each
Canadian Letter of Credit issued, extended or renewed by such Issuing Bank
hereunder as follows:
(a) if any draft presented under any Letter of Credit is
honored by the applicable Issuing Bank or the applicable Issuing Bank
otherwise makes payment with respect thereto, the sum of (i) the amount
paid by such Issuing Bank under or with respect to such Letter of
Credit, and (ii) the amount of any taxes, fees, charges or other costs
and expenses whatsoever incurred by such Issuing Bank in connection
with any payment made by such Issuing Bank under, or with respect to,
such Letter of Credit, PROVIDED HOWEVER, if the applicable Borrowers do
not reimburse the applicable Issuing Bank on the Drawdown Date, such
amount shall, provided that no Event of Default under Section 13.1(g)
or 13.1(h) has occurred, become automatically a Domestic Revolving
Credit Loan which is a Base Rate Loan or a Canadian Loan which is a
Canadian Base Rate Loan, as applicable,
<PAGE>
advanced hereunder in an amount equal to such sum;
(b) upon the Revolving Credit Maturity Date or the
acceleration of the Reimbursement Obligations with respect to all
Letters of Credit in accordance with Section 13, an amount equal to
the then Maximum Drawing Amount of (i) all Domestic Letters of Credit
shall be paid by the Domestic Borrowers to the Administrative Agent
and (ii) all Canadian Letters of Credit shall be paid by the Canadian
Borrowers to the Canadian Agent, in each case to be held as cash
collateral for the applicable Reimbursement Obligations; and
(c) the Domestic Borrowers promise to pay on the Revolving
Credit Maturity Date all unpaid Reimbursement Obligations on such date
relating to Domestic Letters of Credit, and each of the Canadian
Borrowers, jointly and severally, (to the fullest extent permitted by
law) promises to pay on the Revolving Credit Maturity Date all unpaid
Reimbursement Obligations relating to Canadian Letters of Credit and
all amounts owing with respect to Bankers' Acceptances. All such
payments shall be made together with any and all accrued and unpaid
interest thereon and any fees and other amounts owing hereunder.
Each such payment shall be made to the applicable Bank Agent at such
Bank Agent's Head Office in immediately available funds. Interest on any and all
amounts remaining unpaid by the Borrowers under this Section 4.2 at any time
from the date such amounts become due and payable (whether as stated in this
Section 4.2, by acceleration or otherwise) until payment in full (whether
before or after judgment) shall be payable to the applicable Bank Agent on
demand at the rate specified in Section 5.7 for overdue amounts.
Section 4.3. LETTER OF CREDIT PAYMENTS.
If any draft shall be presented or other demand for payment shall be made
under any Letter of Credit, the applicable Issuing Bank shall notify the
applicable Borrowers of the date and amount of the draft presented or demand
for payment and of the date and time when it expects to pay such draft or
honor such demand for payment. On the date that such draft is paid or other
payment is made by the applicable Issuing Bank, such Issuing Bank shall
promptly notify the applicable Banks of the amount of any unpaid
Reimbursement Obligation. All such unpaid Reimbursement Obligations with
respect to Letters of Credit shall, PROVIDED that no Event of Default under
Section 13(g) or 13(h) has occurred, become automatically a Loan. No later
than 3:00 p.m. (Boston time) on the Business Day next following the receipt
of such notice, each applicable Bank shall make available to the applicable
Issuing Bank, at such Issuing Bank's Head Office, in immediately available
funds, such Bank's Commitment Percentage of such unpaid Reimbursement
<PAGE>
Obligation, together with an amount equal to the product of (a) the average,
computed for the period referred to in clause (c) below, of the weighted average
interest rate paid by such Issuing Bank for federal funds or corresponding
Canadian funds, as applicable acquired by such Issuing Bank during each day
included in such period, TIMES (b) the amount equal to such Bank's Commitment
Percentage of such unpaid Reimbursement Obligation, TIMES (c) a fraction, the
numerator of which is the number of days that have elapsed from and including
the date the applicable Issuing Bank paid the draft presented for honor or
otherwise made payment until the date on which such Bank's Commitment Percentage
of such unpaid Reimbursement Obligation shall become immediately available to
such Issuing Bank, and the denominator of which is 365. The responsibility of
the applicable Issuing Bank to the applicable Borrowers and the applicable Banks
shall be only to determine that the documents (including each draft) delivered
under each Letter of Credit in connection with such presentment shall be in
conformity in all material respects with such Letter of Credit.
Section 4.4. OBLIGATIONS ABSOLUTE.
The Borrowers' respective obligations under this Section 4 shall be absolute
and unconditional under any and all circumstances and irrespective of the
occurrence of any Default or Event of Default or any condition precedent
whatsoever or any setoff, counterclaim or defense to payment which the
Borrowers may have or have had against the applicable Issuing Bank, any Bank
or any beneficiary of a Letter of Credit. The Borrowers further agree with
the Issuing Banks and the Revolving Credit Banks that the Issuing Banks and
the Revolving Credit Banks shall not be responsible for, and the Borrowers'
Reimbursement Obligations under Section 3.2 shall not be affected by, among
other things, the validity or genuineness of documents or of any endorsements
thereon, even if such documents should in fact prove to be in any or all
respects invalid, fraudulent or forged, or any dispute between or among the
Borrowers, the beneficiary of any Letter of Credit or any financing
institution or other party to which any Letter of Credit may be transferred
or any claims or defenses whatsoever of the Borrowers against the beneficiary
of any Letter of Credit or any such transferee. The Issuing Banks and the
Revolving Credit Banks shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit. The
Borrowers agree that any action taken or omitted by any Issuing Bank or any
Revolving Credit Bank under or in connection with each Letter of Credit and
the related drafts and documents, if done in good faith, shall be binding
upon the Borrowers and shall not result in any liability on the part of any
Issuing Bank or any Revolving Credit Bank to the Borrowers.
Section 4.5. RELIANCE BY ISSUING BANK.
<PAGE>
To the extent not inconsistent with Section 4.3, the Issuing Banks shall be
entitled to rely, and shall be fully protected in relying upon, any Letter of
Credit, draft, writing, resolution, notice, consent, certificate, affidavit,
letter, cablegram, telegram, telecopy, telex or teletype message, statement,
order or other document believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel, independent accountants and other experts
selected by such Issuing Bank.
Section 4A. THE TERM LOAN.
Section 4A.1. COMMITMENT TO LEND.
Subject to the terms and conditions set forth in this Agreement, each Term Loan
Lender agrees to lend to the Domestic Borrowers (a) on the Effective Date the
amount of its Term Loan Percentage of the principal amount of $75,000,000, and
(b) on the earlier of (i) January 31, 2000, or (ii) the completion of
syndication, as reasonably determined by the Arranger, the amount of its Term
Loan Percentage of the principal amount of $75,000,000.
Section 4A.2. THE TERM NOTES.
The Term Loan shall be evidenced by separate promissory notes of the Domestic
Borrowers in substantially the form of EXHIBIT A-4 hereto (each a "Term
Note"), dated the Effective Date (or such other date on which a Term Loan
Lender may become a party hereto in accordance with Section 19 hereof) and
completed with appropriate insertions. One Term Note shall be payable to the
order of each Term Loan Lender in a principal amount equal to such Bank's
Term Loan Percentage of the Term Loan and representing the obligation of the
Domestic Borrowers to pay to such Bank such principal amount or, if less, the
outstanding amount of such Bank's Term Loan Percentage of the Term Loan, plus
interest accrued thereon, as set forth below. The Domestic Borrowers
irrevocably authorize each Term Loan Lender to make or cause to be made a
notation on such Bank's Term Note Record reflecting the original principal
amount of such Bank's Term Loan Percentage of the Term Loan and, at or about
the time of such Bank's receipt of any principal payment on such Bank's Term
Note, an appropriate notation on such Bank's Term Note Record reflecting such
payment. The aggregate unpaid amount set forth on such Bank's Term Note
Record shall be PRIMA FACIE evidence of the principal amount thereof owing
and unpaid to such Bank, but the failure to record, or any error in so
recording, any such amount on such Bank's Term Note Record shall not affect
the obligations of the Domestic Borrowers hereunder or under any Term Note to
make payments of principal of and interest on any Term Note when due.
<PAGE>
Section 4A.3. SCHEDULE OF INSTALLMENT PAYMENTS OF PRINCIPAL OF TERM
LOAN.
The Domestic Borrowers jointly and severally promise to pay to the
Administrative Agent for the account of the Term Loan Lenders, in accordance
with their respective Term Loan Percentages, the principal amount of the Term
Loan in six (6) consecutive payments, each such payment equal to one percent
(1%) of the notional amount of the Term Loan, and due and payable on each
anniversary of the Term Loan, commencing on the first anniversary of such Term
Loan, with a final additional payment on the Term Loan Maturity Date in an
amount equal to the unpaid balance of the Term Loan.
Section 4A.4. MANDATORY PREPAYMENTS OF TERM LOAN.
Section 4A.4.1. MANDATORY PREPAYMENTS.
(a) In the event that Net Cash Proceeds received from the
restructuring of a Power Purchase Agreement exceed $5,000,000, the
Domestic Borrowers will use any such excess amount to pay down the Term
Loan.
(b) In the event that Net Cash Proceeds received from the
asset sales exceed $5,000,000 per annum (other than sales in the
ordinary course of business and sales permitted under Section
8.4.2(a) - (d)), the Domestic Borrowers will use any such excess
amount to pay down the Term Loan.
(c) One-hundred percent (100%) of the Net Cash Proceeds of any
permitted debt offering shall be used by the Domestic Borrowers to pay
down the Term Loan.
(d) Fifty-percent (50%) of the Net Equity Proceeds of any
issuance of new common stock by the Parent, including the Equity
Offering, but excluding stock issued as payment for acquisitions
permitted pursuant Section 8.4, shall be used by the Domestic
Borrowers to pay down the Term Loan.
(e) Seventy-five percent (75%) of Excess Operating Cash Flow
in each fiscal year shall be used to pay down the Term Loan within
three (3) days of delivery of the year-end financial statements to
<PAGE>
the Administrative Agent.
Section 4A.4.2. PAYMENT PROVISIONS.
Each prepayment of the Term Loan required by this Section 4A.4 shall
be allocated among the Term Loan Lenders in accordance with each such Bank's
Term Loan Percentage. Any prepayment of principal of the Term Loan shall
include all interest accrued to the date of prepayment and shall be applied
against the scheduled installments of principal due on the Term Loan in the
inverse order of maturity. No amount repaid with respect to the Term Loan may
be reborrowed. Any Term Loan Lender may decline to accept any payments due to
such Term Loan Lender pursuant to this Section 4A.4. Any such payments
declined with respect to Section 4A.4.1(a) shall be used to repay the
Domestic Revolving Credit Loans (but not permanently reduce the Total
Commitment) on a pro rata basis.
Section 4A.5. OPTIONAL PREPAYMENT OF TERM LOAN.
The Domestic Borrowers shall have the right at any time to prepay the
Term Notes on or before the Term Loan Maturity Date, as a whole, or in part,
upon not less than three (3) Business Days prior written notice to the
Administrative Agent, without premium or penalty (other than the obligation
to reimburse the Term Loan Lenders and the Administrative Agent pursuant to
Section 5.14 hereof), PROVIDED that (i) each partial prepayment shall be in
the principal amount of $1,000,000 or an integral multiple of $500,000
thereof, and (ii) each partial prepayment shall be allocated among the Term
Loan Lenders in accordance with such Bank's Term Loan Percentage. Any
prepayment of principal of the Term Loan shall include all interest accrued
to the date of prepayment and shall be applied against the scheduled
installments of principal due on the Term Loan in the inverse order of
maturity. No amount repaid with respect to the Term Loan may be reborrowed.
Section 4A.6. INTEREST ON TERM LOAN.
Section 4A.6.1. INTEREST RATES.
Except as otherwise provided in Section 5.7, the Term Loan shall bear
interest during each Interest Period relating to all or any portion of the Term
Loan at the following rates:
(a) To the extent that all or any portion of the Term Loan
bears interest during such Interest Period at the Base Rate, the Term
Loan or such portion thereof shall bear interest during such Interest
Period at the rate of 1.750% per annum (the "Term Loan Base Rate
<PAGE>
Margin") above the Base Rate.
(b) At the option of the Domestic Borrowers, and upon notice
given to the Administrative Agent pursuant to Section 4A.6.2, so long
as no Default or Event of Default has occurred or is continuing, to the
extent that all or any portion of the Term Loan bears interest during
such Interest Period at the Eurodollar Rate, the Term Loan or such
portion shall bear interest during such Interest Period at the rate of
3.250% per annum (the "Term Loan Eurodollar Margin") above the
Eurodollar Rate.
In the event that after the Effective Date and by March 31, 2000, the Parent
shall have received Net Equity Proceeds of at least $100,000,000 from the Equity
Offering, the Term Loan Base Rate Margin and the Term Loan Eurodollar Margin
will be reduced by 0.250%. The Domestic Borrowers jointly and severally promise
to pay interest on the Term Loan or any portion thereof outstanding during each
Interest Period in arrears on each interest payment date applicable to such
Interest Period and the Term Loan Maturity Date.
Section 4A.6.2. NOTIFICATION BY DOMESTIC BORROWERS.
The Domestic Borrowers shall notify the Administrative Agent, such
notice to be irrevocable, at least three (3) Eurodollar Business Days prior to
the Drawdown Date of the Term Loan (or any portion thereof) if all or any
portion of the Term Loan is to bear interest at the Eurodollar Rate. After the
Term Loan has been made, the provisions of Sections 5.13 -- 5.14 shall apply
MUTATIS MUTANDIS with respect to all or any portion of the Term Loan so that the
Domestic Borrowers may have the same interest rate options with respect to all
or any portion of the Term Loan as they would be entitled to with respect to the
other Domestic Loans, PROVIDED, HOWEVER, the Domestic Borrowers will have no
more than eight (8) different maturities of Eurodollar Rate Loans (whether a
portion of the Term Loan or other Domestic Loans) outstanding at any time. In
the event that the Domestic Borrowers fail to give the Administrative Agent
notice with respect to the continuation of any Eurodollar Rate Loan hereunder
within three (3) days prior to the expiration of the Interest Period relating
thereto, then such Eurodollar Rate Loan shall be converted to a Base Rate Loan.
Section 4A.6.3. AMOUNTS, ETC.
Any portion of the Term Loan bearing interest at the Eurodollar Rate
relating to any Interest Period shall be in the amount of $1,000,000 or an
integral thereof. No Interest Period relating to the Term Loan or any portion
thereof bearing interest at the Eurodollar Rate shall extend beyond the date
<PAGE>
on which any regularly scheduled installment payment of the principal of the
Term Loan is to be made unless a portion of the Term Loan at least equal to
such installment payment has an Interest Period ending on such date or is
then bearing interest at the Base Rate.
Section 5. INTEREST, FEES, PAYMENTS, COMPUTATIONS; JOINT AND SEVERAL
LIABILITY; CERTAIN GENERAL PROVISIONS.
Section 5.1. INTEREST.
(a) Except as otherwise provided in Section 5.7, the
outstanding principal amount of the Loans shall bear interest at the
rate per annum equal to the Applicable Rate.
(b) Interest shall be payable (i) quarterly in arrears on the
last Business Day of each calendar quarter for the quarter ending on
such date, for Base Rate Loans, Canadian Base Rate Loans and Canadian
Prime Rate Loans, (ii) on the earlier of (A) the last day of the
applicable Interest Period, or (B) ninety (90) days after the Drawdown
Date, on Eurodollar Rate Loans, and (iii) on the applicable Maturity
Date for all Loans. Any change in the interest rate resulting from a
change in the Base Rate, the Canadian Base Rate or the Canadian Prime
Rate, as the case may be, is to be effective at the beginning of the
day of such change in the Base Rate, the Canadian Base Rate or the
Canadian Prime Rate, as the case may be.
Section 5.2. FEES.
(a) FACILITY FEE.
The Borrowers jointly and severally in accordance with Section 5.10
agree (to the fullest extent permitted by law) to pay to the
Administrative Agent for the benefit of the Revolving Credit Banks a
per annum facility fee in an amount equal to the Applicable Facility
Fee Rate of the Total Commitment (regardless of usage) during each
calendar quarter or portion thereof from the Effective Date to the
Revolving Credit Maturity Date (or to the date of termination in full
of the Total Commitment, if earlier). This facility fee shall be
payable quarterly in arrears on the first day of each calendar quarter
for the immediately preceding calendar quarter, with a final payment
on the Revolving Credit Maturity Date. The Administrative Agent agrees
to pay to the Revolving Credit Banks the facility fee received under
this Section 5.2(a) PRO-RATA in accordance with their Domestic
Commitment Percentages or Canadian Commitment Percentages, as
applicable.
(b) LETTER OF CREDIT FEES.
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(i) The Domestic Borrowers jointly and severally in the case
of Domestic Letters of Credit which are Financial L/Cs, and the
Canadian Borrowers jointly and severally, (to the fullest extent
permitted by law) in the case of Canadian Letters of Credit which are
Financial L/Cs, shall pay a fee (the "Financial L/C Fee") to the
Administrative Agent or the Canadian Agent, as applicable, for the
benefit of the applicable Revolving Credit Banks, equal to the product
of (A) the Letter of Credit Percentage multiplied by (B) the Maximum
Drawing Amount of each Letter of Credit, to be shared pro-rata by each
of such Banks in accordance with their respective Domestic Commitment
Percentages or Canadian Commitment Percentages, as applicable.
(ii) The Domestic Borrowers jointly and severally in the case
of Domestic Letters of Credit which are not Financial L/Cs, and the
Canadian Borrowers jointly and severally, (to the fullest extent
permitted by law) in the case of Canadian Letters of Credit which are
not Financial L/Cs, shall pay a fee (the "Letter of Credit Fee") to the
Administrative Agent or the Canadian Agent, as applicable, for the
benefit of the applicable Revolving Credit Banks, equal to fifty
percent (50%) of the product of (A) the Letter of Credit Percentage
multiplied by (B) the Maximum Drawing Amount of each Letter of Credit
on the date of calculation without taking into account any subsequent
reductions in the Maximum Drawing Amount, to be shared pro-rata by each
of such Banks in accordance with their respective Domestic Commitment
Percentages or Canadian Commitment Percentages, as applicable.
(iii) The Financial L/C Fee and the Letter of Credit Fee shall
be payable quarterly in advance on the first day of each calendar
quarter and on the Revolving Credit Maturity Date. In addition, an
issuing fee shall be payable to each Issuing Bank for its account in an
amount equal to one eighth of one percent (1/8%) per annum of the
Maximum Drawing Amount of each Letter of Credit issued by such Issuing
Bank, PLUS any customary administrative fees of such Issuing Bank (the
"Issuance Fee").
(c) The Borrowers shall pay to the Administrative Agent (i) for its own
benefit, an agent's administrative fee and an underwriting fee, (ii) for the
Arranger's benefit, an arranger's fee, and (iii) for the benefit of the
applicable Banks, upfront fees and ticking fees, each as set forth in a separate
letter agreement between the Borrowers and the Administrative Agent.
<PAGE>
(d) UNDRAWN TERM LOAN FEE.
The Domestic Borrowers jointly and severally agree to pay to the
Administrative Agent for the benefit of the Term Loan Lenders an undrawn term
loan fee (the "Undrawn Term Loan Fee") in an amount equal to one-half of one
percent (0.50%) of the undrawn portion of the Term Loan during each calendar
quarter or portion thereof from the Effective Date to the date of the second
draw under Section 4A.1, payable quarterly in arrears on the first day of
each calendar quarter.
Section 5.3. PAYMENTS.
(a) All payments of principal, interest, Reimbursement Obligations,
fees and any other amounts due hereunder or under any of the other Loan
Documents shall be made to the Administrative Agent or the Canadian Agent, as
the case may be, for the respective accounts of the applicable Banks ratably in
accordance with their respective Commitments and the applicable Bank Agent, to
be received at such Bank Agent's Head Office in immediately available funds by
1:00 p.m. (Boston time) on any due date.
(b) All payments by the Borrowers hereunder and under any of the other
Loan Documents shall be made without setoff or counterclaim and free and clear
of and without deduction for any taxes, levies, imposts, duties, charges, fees,
deductions, withholdings, compulsory loans, restrictions or conditions of any
nature now or hereafter imposed or levied by any jurisdiction or any political
subdivision thereof or taxing or other authority therein unless the Borrowers
are compelled by law to make such deduction or withholding. Except as otherwise
provided in this Section 5.3, if any such obligation is imposed upon the
Borrowers with respect to any amount payable by them hereunder or under any of
the other Loan Documents, the applicable Borrowers will pay to the
Administrative Agent or the Canadian Agent, as the case may be, for the account
of the applicable Banks or the Administrative Agent or the Canadian Agent (as
the case may be), on the date on which such amount is due and payable hereunder
or under such other Loan Document, such additional amount in Dollars or Canadian
Dollars, as applicable, as shall be necessary to enable the applicable Banks,
the Administrative Agent or the Canadian Agent to receive the same net amount
which such Banks, the Administrative Agent or the Canadian Agent would have
received on such due date had no such obligation been imposed upon the
Borrowers. The Borrowers will deliver promptly to the Bank certificates or other
valid vouchers for all taxes or other charges deducted from or paid with respect
to payments made by the Borrowers hereunder or under such other Loan Document.
(c) Each Domestic Bank that is not incorporated under the laws of
<PAGE>
the United States of America or a state thereof or the District of Columbia (a
"Non-U.S. Lender") agrees that, prior to the first date on which any payment is
due to it hereunder, it will deliver to the Domestic Borrowers and the
Administrative Agent (i) two duly completed copies of United States Internal
Revenue Service Form W-8BEN or W-8ECI or successor applicable form, as the case
may be, certifying in each case that such Non-U.S. Lender is entitled to receive
payments under this Agreement and the Notes payable to it, without deduction or
withholding of any United States federal income taxes, or (ii) if such Bank is
not a "bank" within the meaning of Section 881(c)(3)(A) of the Code and intends
to claim exemption from U.S. Federal withholding tax under Section 871(h) or
881(c) of the Code with respect to payments of "portfolio interest," a Form W-8,
or any subsequent versions thereof or successors thereto (and, if such Non-U.S.
Lender delivers a Form W-8, a certificate (a "Section 5.2(c)(ii) Certificate")
representing that such Non-U.S. Lender is not a bank for purposes of Section
881(c) of the Code), is not a ten-percent shareholder (within the meaning of
Section 871(h)(3)(B) of the Code) of the Borrowers and is not a controlled
foreign corporation related to the Borrowers (within the meaning of Section
864(d)(4) of the Code)), properly completed and duly executed by such Non-U.S.
Lender claiming complete exemption from, or a reduced rate of, U.S. Federal
withholding tax on payments of interest by the Domestic Borrowers under this
Agreement and the other Loan Documents. Each Non-U.S. Lender that so delivers a
Form W-8BEN or W-8ECI, or a Form W-8 and a Section 5.2(c)(ii) Certificate, as
the case may be, pursuant to the preceding sentence further undertakes to
deliver to each of the Domestic Borrowers and the Administrative Agent two
further copies of Form W-8BEN or W-8ECI, or Form W-8 and Section 5.2(c)(ii)
Certificate, as the case may be, or successor applicable form, or other manner
of certification, as the case may be, on or before the date that any such letter
or form expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form previously delivered by it to the
Domestic Borrowers, and such extensions or renewals thereof as may reasonably be
requested by the Domestic Borrowers, certifying in the case of a Form W-8BEN or
W-8ECI, or a Form W-8 and a Section 5.2(c)(ii) Certificate, as the case may be,
that such Non-U.S. Lender is entitled to receive payments under this Agreement
and the Notes without deduction or withholding of any United States federal
income taxes, unless in any such case an event (including, without limitation,
any change in treaty, law or regulation) has occurred prior to the date on which
any such delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Non-U.S. Lender from duly completing
and delivering any such form with respect to it and such Non-U.S. Lender advises
the Domestic Borrowers that it is not capable of receiving payments without any
deduction or withholding of United States federal income tax.
<PAGE>
(d) In the event that the Domestic Borrowers are required to make such
deduction or withholding as a result of the fact that a Lender is organized
outside of the United States, such Bank shall use its reasonable best efforts to
transfer its Loans to an affiliate organized within the United States if such
transfer would have no adverse effect on such Lender or the Loans.
(e) Whenever a payment or fee hereunder or under any of the other Loan
Documents becomes due on a day that is not a Business Day, the due date for such
payment or fee shall be extended to the next succeeding Business Day, and
interest shall accrue during such extension; PROVIDED THAT any Interest Period
for any Eurodollar Rate Loan which ends on a day that is not a Eurodollar
Business Day shall end on the next succeeding Eurodollar Business Day unless the
result of such extension would be to carry such Interest Period into another
calendar month, in which event such Interest Period shall end on the immediately
preceding Eurodollar Business Day.
Section 5.4. COMPUTATIONS.
(a) Except as otherwise expressly provided herein, all
computations of interest, Financial L/C Fees, Letter of Credit Fees or
other fees shall be based on a 360-day year and paid for the actual
number of days elapsed. Computations of the Facility Fees, the Undrawn
Term Loan Fees, the interest on Base Rate Loans, Canadian Prime Rate
Loans, Canadian Base Rate Loans, the Applicable BA Discount Rate and
the Acceptance Fees shall be based on a 365 or 366, as applicable, day
year and paid for the actual number of days elapsed. Whenever a payment
hereunder or under any of the other Loan Documents becomes due on a day
that is not a Business Day, the due date for such payment shall be
extended to the next succeeding Business Day, and interest shall accrue
during such extension; PROVIDED THAT for any Interest Period for any
Eurodollar Rate Loan if such next succeeding Business Day falls in the
next succeeding calendar month or after the Maturity Date, it shall be
deemed to end on the next preceding Business Day.
(b) All computations of outstanding Loans, Commitment
availability, mandatory prepayments, or other matters hereunder shall
be made in US$ or U.S. Dollar Equivalents.
Section 5.5. CAPITAL ADEQUACY.
If any Bank shall have determined that, after the date hereof, the adoption of
any applicable law, rule or regulation regarding capital adequacy, or any change
in any such law, rule, or regulation, or any change in the
<PAGE>
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on capital
of such Bank (or any corporation controlling such Bank) as a consequence of such
Bank's obligations hereunder to a level below that which such Bank (or any
corporation controlling such Bank) could have achieved but for such adoption,
change, request or directive (taking into consideration its policies with
respect to capital adequacy) by an amount deemed by such Bank to be material,
then from time to time, within 30 days after demand by such Bank, the Canadian
Borrowers, in the case of Canadian Banks, and the Domestic Borrowers in the case
of the Domestic Banks, shall pay to such Bank such additional amount or amounts
as will, in such Bank's reasonable determination, fairly compensate such Bank
(or any corporation controlling such Bank) for such reduction. Each Bank shall
allocate such cost increases among its customers in good faith and on an
equitable basis.
Section 5.6. CERTIFICATE.
A certificate setting forth any additional amounts payable pursuant to
Section 5.5 and a reasonable explanation of such amounts which are due,
submitted by any Bank or Bank Agent to the applicable Borrowers, shall be
conclusive, absent manifest error, that such amounts are due and owing.
Section 5.7. INTEREST ON OVERDUE AMOUNTS.
Overdue principal and (to the extent permitted by applicable law) interest on
the Loans and all other overdue amounts payable hereunder or under any of the
other Loan Documents shall bear interest compounded monthly and payable on
demand at a rate per annum equal to the Applicable Rate for Base Rate Loans PLUS
two percentage points (2.00%) until such amount shall be paid in full (after as
well as before judgment).
Section 5.8. INTEREST LIMITATION.
(a) Notwithstanding any other term of this Agreement or the
Notes, any other Loan Document or any other document referred to herein
or therein, the maximum amount of interest which may be charged to or
collected from any Person liable hereunder or under the Notes by any
Bank shall be absolutely limited to, and shall in no event exceed, the
maximum amount of interest which could lawfully be charged or collected
by such Bank under applicable laws (including, to the extent
applicable, the provisions of Section 5197 of the Revised Statutes of
the United States of America, as amended, 12 U.S.C. Section 85, as
amended
<PAGE>
and the Criminal Code (Canada), as amended).
(b) With respect to Canadian Loans, whenever interest is
payable hereunder on the basis of a year of 360 days, for the purposes
of the Interest Act (Canada), as amended, the yearly rate of interest
which is equivalent to the rate payable hereunder is the rate payable
hereunder multiplied by the actual number of days in the year and
divided by 360. All interest will be calculated using the nominal rate
method and not the effective rate method and the deemed reinvestment
principle shall not apply to such calculations.
Section 5.9. ADDITIONAL COSTS, ETC.
If any present or future applicable law, which expression, as used herein,
includes statutes, rules and regulations thereunder and interpretations thereof
by any competent court or by any governmental or other regulatory body or
official charged with the administration or the interpretation thereof and
requests, directives, instructions and notices at any time or from time to time
hereafter made upon or otherwise issued to any Bank by any central bank or other
fiscal, monetary or other authority (whether or not having the force of law),
shall impose on any Bank any tax, levy, impost, duty, charge, fees, deduction or
withholdings of any nature or requirements with respect to this Agreement, the
other Loan Documents, the Loans, such Bank's Commitment, the Letters of Credit
or any class of loans or commitments or letters of credit of which any of the
Loans, the Commitment or the Letters of Credit forms a part, and the result of
any of the foregoing is:
(i) to increase the cost to such Bank of making, funding,
issuing, renewing, extending or maintaining the Loans, such Bank's
Domestic Commitment or Canadian Commitment, the Letters of Credit, or
the Bankers' Acceptances; or
(ii) to reduce the amount of principal, interest, fees or
other amount payable to such Bank hereunder on account of such Bank's
Domestic Commitment or Canadian Commitment, the Loans, drawings under
the Letters of Credit or the Bankers' Acceptances, or
(iii) to require such Bank to make any payment or to forego
any interest or other sum payable hereunder, the amount of which
payment or foregone interest or other sum is calculated by reference to
the gross amount of any sum receivable or deemed received by such Bank
from the Borrowers hereunder,
then, and in each such case, the Canadian Borrowers, in the case of Canadian
Loans, Canadian Letters of Credit and Bankers' Acceptances, and the
<PAGE>
Domestic Borrowers in each other case, will, upon demand made by such Bank at
any time and from time to time and as often as the occasion therefor may arise,
pay to such Bank such additional amounts as will be sufficient to compensate
such Bank for such additional cost, reduction, payment or foregone interest or
other sum (after such Bank shall have allocated the same fairly and equitably
among all customers of any class generally affected thereby).
Section 5.10. CONCERNING JOINT AND SEVERAL LIABILITY OF THE BORROWERS.
(a) Each of the Domestic Borrowers is accepting joint and
several liability for all of the Obligations (including the Canadian
Obligations) hereunder and under the other Loan Documents in
consideration of the financial accommodations to be provided by the
Bank Agents and the Banks under this Agreement, for the mutual benefit,
directly and indirectly, of each of the Borrowers and in consideration
of the undertakings of each other Domestic Borrower to accept joint and
several liability for the Obligations of both the Domestic Borrowers
and the Canadian Borrowers. Each of the Canadian Borrowers, to the
fullest extent permitted by applicable law, is accepting joint and
several liability for the Canadian Obligations hereunder and under the
other Loan Documents in consideration of the financial accommodation to
be provided by the Bank Agents and the Banks under this Agreement, for
the mutual benefit, directly or indirectly, of each of the Canadian
Borrowers and in consideration of the undertakings of each other
Canadian Borrower to accept (to the fullest extent permitted by law)
the joint and several liability for the Canadian Obligations.
(b) Each of the Domestic Borrowers, jointly and severally,
hereby irrevocably and unconditionally accepts, not merely as a surety
but also as a co-debtor, joint and several liability with the other
Domestic Borrowers with respect to the payment and performance of all
of the Obligations of both the Domestic Borrowers and the Canadian
Borrowers (including, without limitation, any Obligations arising under
this Section 5.10), it being the intention of the parties hereto that
all of the Obligations shall be the joint and several obligations of
each of the Domestic Borrowers without preferences or distinction among
them.
(c) To the fullest extent permitted by applicable law, each of
the Canadian Borrowers, jointly and severally, hereby irrevocably and
unconditionally accepts, not merely as surety but also as co-debtor,
<PAGE>
joint and several liability with all of the other Canadian Borrowers,
with respect to the payment and performance of all of the Canadian
Obligations (including without limitation any Canadian Obligations
arising under this Section 5.10), it being the intention of the
parties hereto that all of the Canadian Obligations shall be the joint
and several obligations of each of the Canadian Borrowers without
preference or distinction among them.
(d) If and to the extent that any of the Borrowers shall fail
to make any payment with respect to any of the Obligations as and when
due or to perform any of the Obligations in accordance with the terms
thereof, then in each such event the Domestic Borrowers will make such
payment with respect to, or perform, such Obligation. If and to the
extent that any of the Canadian Borrowers shall fail to make any
payment with respect to any of the Canadian Obligations as and when due
or to perform any of such Canadian Obligations in accordance with the
terms thereof, then in each such event the other Canadian Borrowers, to
the fullest extent permitted by applicable law, will make such payment
with respect to, or perform, such Canadian Obligation.
(e) The applicable Obligations of each of the Borrowers under
the provisions of this Section 5.10 constitute full recourse
obligations of each of such Borrowers enforceable against each such
Borrower to the full extent of its properties and assets, irrespective
of the validity, regularity or enforceability of this Agreement or any
other circumstance whatsoever.
(f) Except as otherwise expressly provided in this Agreement,
each of the Borrowers, to the fullest extent permitted by applicable
law, hereby waives notice of acceptance of its joint and several
liability, notice of any Loans made under this Agreement, notice of any
action at any time taken or omitted by the Bank Agents or the Banks
under or in respect of any of the Obligations, and, generally, to the
extent permitted by applicable law, all demands, notices and other
formalities of every kind in connection with this Agreement. Each
Borrower, to the fullest extent permitted by applicable law, hereby
waives all defenses which may be available by virtue of any valuation,
stay, moratorium law or other similar law now or hereafter in effect,
any right to require the marshaling of assets of the Borrowers and any
other entity or Person primarily or secondarily liable with respect to
any of the Obligations, and all suretyship defenses generally. Each of
the Borrowers, to the fullest extent permitted by applicable law,
hereby assents to, and waives notice of, any extension or postponement
of the time for the payment of any of
<PAGE>
the Obligations, the acceptance of any payment of any of the
Obligations, the acceptance of any partial payment thereon, any
waiver, consent or other action or acquiescence by the Banks at any
time or times in respect of any default by any of the Borrowers in the
performance or satisfaction of any term, covenant, condition or
provision of this Agreement, any and all other indulgences whatsoever
by the Banks in respect of any of the Obligations, and the taking,
addition, substitution or release, in whole or in part, at any time or
times, of any security for any of the Obligations or the addition,
substitution or release, in whole or in part, of any of the Borrowers.
Without limiting the generality of the foregoing, each of the
Borrowers assents to any other action or delay in acting or failure to
act on the part of the Banks with respect to the failure by any of the
Borrowers to comply with any of its respective Obligations or Canadian
Obligations, as applicable, including, without limitation, any failure
strictly or diligently to assert any right or to pursue any remedy or
to comply fully with applicable laws or regulations thereunder, which
might, but for the provisions of this Section 5.10, afford grounds
for terminating, discharging or relieving any of the Borrowers, in
whole or in part, from any of its Obligations or Canadian Obligations,
as applicable, under this Section 5.10, it being the intention of
each of the Borrowers that, so long as any of the Obligations
hereunder remain unsatisfied, the Obligations of such Borrowers under
this Section 5.10 shall not be discharged except by performance and
then only to the extent of such performance. The Obligations or
Canadian Obligations, as applicable, of each of the Borrowers under
this Section 5.10 shall not be diminished or rendered unenforceable
by any winding up, reorganization, arrangement, liquidation,
re-construction or similar proceeding with respect to any of the
Borrowers, the Bank Agents or the Banks. The joint and several
liability of the Borrowers hereunder (to the fullest extent permitted
by law in the case of the Canadian Borrowers) shall continue in full
force and effect notwithstanding any absorption, merger, amalgamation
or any other change whatsoever in the name, membership, constitution
or place of formation of any of the Borrowers, the Bank Agents or the
Banks.
(g) Each of the Borrowers hereby agrees that it will not
enforce any of its rights of contribution or subrogation against the
other Borrowers with respect to any liability incurred by it hereunder
or under any of the other Loan Documents, any payments made by it to
any of the Banks or the Bank Agents with respect to any of the
Obligations or any collateral security therefor until such time as all
of the Obligations have been irrevocably paid in full in cash. Any
claim which any Borrower may have against any other Borrower with
<PAGE>
respect to any payments to the Banks or the Bank Agents hereunder or
under any other Loan Document are hereby expressly made subordinate and
junior in right of payment, without limitation as to any increases in
the Obligations arising hereunder or thereunder, to the prior payment
in full of the Obligations and, in the event of any insolvency,
bankruptcy, receivership, liquidation, reorganization or other similar
proceeding under the laws of any jurisdiction relating to any Borrower,
its debts or its assets, whether voluntary or involuntary, all such
Obligations shall be paid in full before any payment or distribution of
any character, whether in cash, securities or other property, shall be
made to any other Borrower therefor.
(h) Each of Borrowers hereby agrees that the payment of any
amounts due with respect to the indebtedness owing by any Borrower to
any other Borrower is hereby subordinated to the prior payment in full
in cash of the Obligations. Each Borrower hereby agrees that after the
occurrences and during the continuance of any Default or Event of
Default, such Borrower will not demand, sue for or otherwise attempt to
collect any indebtedness of any other Borrower owing to such Borrower
until the Obligations shall have been paid in full in cash. If,
notwithstanding the foregoing sentence, such Borrower shall collect,
enforce or receive any amounts in respect of such indebtedness before
payment in full in cash of the Obligations, such amounts shall be
collected, enforced, received by such Borrower as trustee for the
relevant Bank Agent and be paid over to the relevant Bank Agent for the
PRO RATA accounts of the relevant Bank (in accordance with each such
Bank's Loan Percentage) to be applied to repay (or be held as security
for the repayment of) the Obligations.
(i) The provisions of this Section 5.10 are made for the
benefit of the Bank Agents and the Banks and their successors and
assigns, and may be enforced in good faith by them from time to time
against any or all of the Borrowers as often as the occasion
therefor may arise and without requirement on the part of the Bank
Agents or the Banks first to marshal any of their claims or to
exercise any of their rights against any other Borrower or to
exhaust any remedies available to them against any other Borrower or
to resort to any other source or means of obtaining payment of any
of the Obligations hereunder or to elect any other remedy. The
provisions of this Section 5.10 shall remain in effect until all of
the Obligations shall have been paid in full or otherwise fully
satisfied. If at any time, any payment, or any part thereof, made in
respect of any of the Obligations, is rescinded or must otherwise be
restored or returned by the Bank Agents or the Banks upon the
insolvency, bankruptcy or reorganization of any of the Borrowers or
is
<PAGE>
repaid in good faith settlement of a pending or threatened avoidance
claim, or otherwise, the provisions of this Section 5.10 will forthwith
be reinstated in effect, as though such payment had not been made.
(j) Each of the Borrowers hereby appoints the Parent, and the
Parent hereby agrees, to act as its representative and authorized
signor with respect to any notices, demands, communications or requests
under this Agreement or the other Loan Documents, including, without
limitation, with respect to Loan and Letter of Credit Requests,
Canadian Loan and Letter of Credit Requests and Compliance Certificate
and pursuant to Section 21 of this Agreement.
Section 5.11 CURRENCY MATTERS.
Section 5.11.1 CURRENCY FLUCTUATIONS.
(a) Not later than 1:00 p.m. (Boston time) on the last Business Day of
each calendar month (the "Calculation Date"), the Administrative Agent shall
determine the Exchange Rate as of such date. The Exchange Rate so determined
shall become effective on the first Business Day immediately following such
determination (a "Reset Date") and shall remain effective until the next
succeeding Reset Date.
(b) Not later than 4:00 p.m. (Boston time) on each Reset Date, the
Administrative Agent shall consult with the Canadian Agent to determine the U.S.
Dollar Equivalent of the outstanding Canadian Loans, Bankers' Acceptances and
Canadian Letters of Credit denominated in Canadian Dollars.
(c) If, on any Reset Date and on the Revolving Credit Maturity Date,
the aggregate outstanding amount (expressed in U.S. Dollars) of all Canadian
Loans, the Maximum Drawing Amount with respect to Canadian Letters of Credit,
and the aggregate face amount of all outstanding Bankers' Acceptances exceeds
the Total Canadian Commitment by more than $100,000, then (i) the Canadian Agent
shall give notice thereof to the Canadian Borrowers and the Canadian Banks and
(ii) within two (2) Business Days thereafter, the Canadian Borrowers shall repay
or prepay Canadian Loans in accordance with this Agreement in an aggregate
principal amount such that, after giving effect thereto, the aggregate
outstanding amount (expressed in U.S. Dollars) of all Canadian Loans, the
Maximum Drawing Amount with respect to Canadian Letters of Credit and the
aggregate face amount of all outstanding Bankers' Acceptances no longer exceeds
the Total Canadian Commitment (expressed in U.S. Dollars).
(d) Without limiting subsection Section 5.11.1(c), if, on any day prior
to the
<PAGE>
Revolving Credit Maturity Date, the aggregate outstanding amount (expressed
in U.S. Dollars) of all Canadian Loans, the Maximum Drawing Amount with respect
to Canadian Letters of Credit and the aggregate face amount of all outstanding
Bankers' Acceptances exceeds the Total Canadian Commitment by five percent (5%)
or more, then (i) the Canadian Agent shall give notice thereof to the Canadian
Borrowers and the Canadian Banks and (ii) within two (2) Business Days
thereafter, the Canadian Borrowers shall repay or prepay Canadian Loans in
accordance with this Agreement in an aggregate principal amount such that, after
giving effect thereto, the aggregate outstanding amount (expressed in U.S.
Dollars) of all Canadian Loans, the Maximum Drawing Amount with respect to
Canadian Letters of Credit and the aggregate face amount of all outstanding
Bankers' Acceptances no longer exceeds the Total Canadian Commitment (expressed
in U.S. Dollars). Nothing set forth in this Section 5.11 shall be construed to
require any Bank Agent to calculate daily compliance under this Section 5.11
unless expressly requested to do so by a Bank.
(e) To the extent the repayments and prepayments referenced in
Section 5.11.1(c) and Section 5.11.1(d) are such that, after giving effect
thereto, the Maximum Drawing Amount with respect to Canadian Letters of
Credit and the aggregate face amount of all outstanding Bankers' Acceptances
(expressed in U.S. Dollars) still exceeds the Total Canadian Commitment
(expressed in U.S. Dollars), then the Canadian Borrowers shall within two (2)
Business Days upon demand provide to the Canadian Agent cash collateral
required to cover such remaining excess.
Section 5.11.2 CURRENCY OF ACCOUNT.
(a) No payment to either of the Bank Agents, the applicable Issuing
Bank or any Bank (whether under any judgment or court order or otherwise) shall
discharge the obligation or liability in respect of which it was made unless and
until such Bank Agent, the applicable Issuing Bank or such Bank shall have
received payment in full in the currency in which such obligation or liability
was incurred, and to the extent that the amount of any such payment shall, on
actual conversion into such currency, fall short of such obligation or liability
actual or contingent expressed in that currency, the Domestic Borrowers or, with
respect to the Canadian Obligations only, the Canadian Borrowers, shall
indemnify and reimburse such Bank Agent, the applicable Issuing Bank or such
Bank, as the case may be, with respect to the amount of the shortfall.
(b) If, for the purpose of obtaining judgment in any court it is
necessary to convert a sum due hereunder in one currency (the "first currency")
into any other currency (the "second currency") the conversion
<PAGE>
shall be made at the Spot Rate of exchange of the applicable Bank Agent (as
conclusively determined by such Bank Agent absent manifest error) on the
Business Day preceding the day on which the final judgment is given. If,
however, on the Business Day following receipt by the applicable Bank Agent in
the second currency of any sum adjudged to be due hereunder (or any proportion
thereof) such Bank Agent purchases the first currency with the amount of the
second currency so received and the first currency so purchased falls short of
the sum originally due hereunder in the first currency (or the same proportion
thereof) the applicable Borrowers, shall, as a separate obligation and
notwithstanding any judgment, pay to such Bank Agent in the first currency an
amount equal to such shortfall.
Section 5.12. NEW BORROWERS. Any newly-created or newly-acquired
Subsidiaries (other than Excluded Subsidiaries) shall become Borrowers hereunder
by signing allonges to the Notes, entering into a joinder and affirmation to
this Agreement in substantially the form of EXHIBIT G attached hereto providing
that such Subsidiary shall become a Borrower hereunder, and providing such other
documentation as the Banks or the Administrative Agent may reasonably request
including, without limitation, documentation with respect to conditions noted in
Section 10 hereof. In such event, the Administrative Agent is hereby authorized
by the parties to amend SCHEDULE 1 hereto to include such Subsidiary as a
Borrower hereunder.
Section 5.13. ELECTION OF EURODOLLAR RATE; NOTICE OF ELECTION; INTEREST
PERIODS; MINIMUM AMOUNTS.
(a) At the Domestic Borrowers' option, so long as no Default
or Event of Default has occurred and is then continuing, the Domestic
Borrowers may (i) elect to convert any Base Rate Loan or a portion
thereof to a Eurodollar Rate Loan, (ii) at the time of any Loan and
Letter of Credit Request, specify that such requested Loan shall be a
Eurodollar Rate Loan, or (iii) upon expiration of the applicable
Interest Period, elect to maintain an existing Eurodollar Rate Loan as
such, PROVIDED that the Domestic Borrowers give notice to the
Administrative Agent pursuant to Section 5.13(b) hereof. Upon
determining any Eurodollar Rate, the Administrative Agent shall
forthwith provide notice thereof to the Domestic Borrowers and each
Domestic Bank, and each such notice to the Domestic Borrowers shall be
considered PRIMA FACIE correct and binding, absent manifest error.
(b) Three (3) Eurodollar Business Days prior to the making of
any Eurodollar Rate Loan or the conversion of any Base Rate Loan to a
Eurodollar Rate Loan, or, in the case of an outstanding Eurodollar Rate
Loan, the expiration date of the applicable Interest Period, the
<PAGE>
Domestic Borrowers shall give written, telex or telecopy notice
received by the Administrative Agent not later than 11:00 a.m. (Boston
time) of their election pursuant to Section 5.13(a). Each such notice
delivered to the Administrative Agent shall specify the aggregate
principal amount of the Loans to be borrowed or maintained as or
converted to Eurodollar Rate Loans and the requested duration of the
Interest Period that will be applicable to such Eurodollar Rate Loan,
and shall be irrevocable and binding upon the Domestic Borrowers. If
the Domestic Borrowers shall fail to give the Administrative Agent
notice of their election hereunder together with all of the other
information required by this Section 5.13(b) with respect to any Loan,
whether at the end of an Interest Period or otherwise, such Loan shall
be deemed a Base Rate Loan, and, if such Loan is an existing Eurodollar
Rate Loan, shall be automatically converted to a Base Rate Loan on the
last day of the Interest Period relating thereto. No Eurodollar Rate
Loan may be continued as such when any Default or Event of Default has
occurred and is continuing, but shall be automatically converted to a
Base Rate Loan on the last day of the Interest Period relating thereto.
The Administrative Agent shall promptly notify the applicable Bank(s)
in writing (or by telephone confirmed in writing or by telecopy) of
such election by the Borrowers hereunder.
(c) Notwithstanding anything herein to the contrary, the
Borrowers may not specify an Interest Period that would extend beyond
the applicable Maturity Date.
(d) In no event shall the Borrowers have more than eight (8)
different maturities of borrowings of Eurodollar Rate Loans outstanding
at any time.
Section 5.14. EURODOLLAR INDEMNITY
The Domestic Borrowers agree to indemnify the Domestic Banks and the
Administrative Agent and to hold them harmless from and against any
reasonable loss, cost or expense that the Domestic Banks and the
Administrative Agent may sustain or incur as a consequence of (a) default by
the Domestic Borrowers in payment of the principal amount of or any interest
on any Eurodollar Rate Loans as and when due and payable, including any such
loss or expense arising from interest or fees payable by any Domestic Bank or
the Administrative Agent to lenders of funds obtained by it in order to
maintain its Eurodollar Rate Loans, (b) default by the Domestic Borrowers in
making a borrowing or conversion after the Domestic Borrowers have given (or
are deemed to have given) notice pursuant to Section 2.6 or Section 5.13, and
(c) the making of any payment of a Eurodollar Rate Loan or the making of any
conversion of any such Eurodollar Rate Loan to a Base Rate
<PAGE>
Loan on a day that is not the last day of the applicable Interest Period with
respect thereto, including interest or fees payable by such Domestic Bank to
lenders of funds obtained by it in order to maintain any such Loans.
Section 5.15. ILLEGALITY; INABILITY TO DETERMINE EURODOLLAR RATE.
Notwithstanding any other provision of this Agreement (other than Section
6.10) if (a) the introduction of, any change in, or any change in the
interpretation of, any law or regulation applicable to any Domestic Bank or
the Administrative Agent shall make it unlawful, or any central bank or other
governmental authority having jurisdiction thereof shall assert that it is
unlawful, for any Domestic Bank or the Administrative Agent to perform its
obligations in respect of any Eurodollar Rate Loans, or (b) if any Domestic
Bank or the Administrative Agent, as applicable shall reasonably determine
with respect to Eurodollar Rate Loans that (i) by reason of circumstances
affecting any Eurodollar interbank market, adequate and reasonable methods do
not exist for ascertaining the Eurodollar Rate which would otherwise be
applicable during any Interest Period, or (ii) deposits of Dollars in the
relevant amount for the relevant Interest Period are not available to such
Domestic Bank or the Administrative Agent in any Eurodollar interbank market,
or (iii) the Eurodollar Rate does not or will not accurately reflect the cost
to such Domestic Bank or the Administrative Agent of obtaining or maintaining
the applicable Eurodollar Rate Loans during any Interest Period, then such
Domestic Bank or the Administrative Agent shall promptly give telephonic,
telex or cable notice of such determination to the applicable Domestic
Borrowers (which notice shall be conclusive and binding upon such Domestic
Borrowers). Upon such notification by such Domestic Bank or the
Administrative Agent, the obligation of the Domestic Banks and the
Administrative Agent to make Eurodollar Rate Loans shall be suspended until
the Domestic Banks or the Administrative Agent, as the case may be, determine
that such circumstances no longer exist, and to the extent permitted by law
the outstanding Eurodollar Rate Loans shall continue to bear interest at the
applicable rate based on the Eurodollar Rate until the end of the applicable
Interest Period, and thereafter shall be deemed converted to Base Rate Loans
in equal principal amounts of such former Eurodollar Rate Loans.
Section 6. REPRESENTATIONS AND WARRANTIES.
The Borrowers jointly and severally represent and warrant to the Banks that on
and as of the date of this Agreement (any disclosure on a schedule pursuant to
this Section 6 shall be deemed to apply to all relevant representations and
warranties, regardless of whether such schedule is referenced in each relevant
representation):
Section 6.1. CORPORATE AUTHORITY.
<PAGE>
(a) INCORPORATION; GOOD STANDING.
Each of the Borrowers (i) is a corporation duly organized, validly
existing and in good standing or in current status under the laws of
its respective jurisdiction of incorporation, (ii) has all requisite
corporate power to own its property and conduct its business as now
conducted and as presently contemplated, and (iii) is in good standing
as a foreign corporation and is duly authorized to do business
in each jurisdiction in which its property or business as presently
conducted or contemplated makes such qualification necessary except
where a failure to be so qualified would not have a material adverse
effect on the business, assets or financial condition of such Borrower.
(b) AUTHORIZATION.
The execution, delivery and performance of its Loan Documents and the
transactions contemplated hereby and thereby (i) are within the
corporate authority of each of the Borrowers, (ii) have been duly
authorized by all necessary corporate proceedings, (iii) do not
conflict with or result in any material breach or contravention of any
provision of law, statute, rule or regulation to which any of the
Borrowers is subject or any judgment, order, writ, injunction, license
or permit applicable to any of the Borrowers so as to materially
adversely affect the assets, business or any activity of the
Borrowers, and (iv) do not conflict with any provision of the corporate
charter, articles or bylaws of the Borrowers or any agreement or other
instrument binding upon the Borrowers.
(c) ENFORCEABILITY.
The execution, delivery and performance of the Loan Documents will
result in valid and legally binding obligations of the Borrowers
enforceable against each in accordance with the respective terms and
provisions hereof and thereof, except as enforceability is limited by
bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting generally the enforcement of creditors'
rights and except to the extent that availability of the remedy of
specific performance or injunctive relief or other equitable remedy is
subject to the discretion of the court before which any proceeding
therefor may be brought.
Section 6.2. GOVERNMENTAL APPROVALS.
The execution, delivery and performance by the Borrowers of the Loan Documents
and the transactions contemplated hereby and thereby do not require any approval
or consent of, or filing with, any governmental agency or authority other than
those already obtained.
<PAGE>
Section 6.3. TITLE TO PROPERTIES; LEASES
The Borrowers and KTI and its Subsidiaries own all of the assets reflected in
the consolidated balance sheets as at the Interim Balance Sheet Date and the
Interim KTI Balance Sheet Date, respectively, or acquired since that date
(except property and assets sold or otherwise disposed of in the ordinary course
of business since that date), subject to no mortgages, Capitalized Leases,
conditional sales agreements, title retention agreements, liens or other
encumbrances except Permitted Liens.
Section 6.4. FINANCIAL STATEMENTS; SOLVENCY.
(a) There has been furnished to the Banks (i) consolidated and
consolidating balance sheets of the Parent and its Subsidiaries dated
the Balance Sheet Date and consolidated statements of operations for
the fiscal year then ended, certified by Arthur Andersen & Co. or an
independent accounting firm of national standing acceptable to the
Banks (the "Accountants"), (ii) unaudited consolidated balance sheets
of the Parent and its Subsidiaries dated the Interim Balance Sheet Date
and unaudited consolidated and consolidating statements of operations
for the period then ended, and (iii) unaudited consolidated balance
sheets of KTI and its Subsidiaries dated the Interim KTI Balance Sheet
Date and unaudited consolidated statements of operations for the period
then ended. Said balance sheets and statements of operations have been
prepared in accordance with GAAP, fairly present in all material
respects the financial condition of the Parent and its Subsidiaries, on
a consolidated basis, and KTI and its Subsidiaries, on a consolidated
basis, as at the close of business on the dates thereof and the results
of operations for the periods then ended. There are no contingent
liabilities of the Borrowers, or of KTI and its Subsidiaries, as of
such dates involving material amounts, known to the officers of the
Borrowers which have not been disclosed in said balance sheets and the
related notes thereto, as the case may be.
(b) The Borrowers (both before and after giving effect to the
transactions contemplated by this Agreement, including the KTI
Purchase) are and will be solvent (i.e., they have assets having a fair
value in excess of the amount required to pay their probable
liabilities on their existing debts as they become absolute and
matured) and have, and expect to have, the ability to pay their debts
from time to time incurred in connection therewith as such debts
mature.
Section 6.5. NO MATERIAL CHANGES, ETC.
<PAGE>
Since the Interim Balance Sheet Date and the Interim KTI Balance Sheet Date,
respectively, there have occurred no material adverse changes in the financial
condition or business of the Borrowers, or KTI and its Subsidiaries, as shown on
or reflected in the consolidated balance sheet of the Borrowers or KTI and its
Subsidiaries as at the Interim Balance Sheet Date and the Interim KTI Balance
Sheet Date, respectively, or the consolidated statements of income for the
periods then ended other than changes in the ordinary course of business which
have not had any material adverse effect either individually or in the aggregate
on the business or financial condition of the Parent, the Borrowers, or KTI and
its Subsidiaries. Since the Interim Balance Sheet Date and the Interim KTI
Balance Sheet Date, respectively, there has not been any Distribution (including
Distributions by KTI and its Subsidiaries).
Section 6.6. PERMITS, FRANCHISES, PATENTS, COPYRIGHTS, ETC.
Each of the Borrowers possesses all material franchises, patents, copyrights,
trademarks, trade names, licenses and permits, and rights in respect of the
foregoing, adequate for the conduct of its business substantially as now
conducted without known conflict with any rights of others.
Section 6.7. LITIGATION.
Except as shown on SCHEDULES 6.7 and 6.16 hereto, there are no actions, suits,
proceedings or investigations of any kind pending or, to the knowledge of the
Borrowers, threatened against any Borrower before any court, tribunal or
administrative agency or board which, if adversely determined, might, either in
any case or in the aggregate, materially adversely affect the properties,
assets, financial condition or business of the Borrowers, considered as a whole,
or materially impair the right of the Borrowers, considered as a whole, to carry
on business substantially as now conducted, or result in any substantial
liability not adequately covered by insurance, or for which adequate reserves
are not maintained on the consolidated balance sheet or which question the
validity of any of the Loan Documents, or any action taken or to be taken
pursuant hereto or thereto.
Section 6.8. NO MATERIALLY ADVERSE CONTRACTS, ETC.
None of the Borrowers is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in the
judgment of the Borrowers' officers has or is expected in the future to have a
materially adverse effect on the business, assets or financial condition of the
Borrowers as a whole. None of the Borrowers is a party to any contract or
agreement which in the judgment of the Borrowers' officers has or is expected to
have any materially adverse effect on the business of the Borrowers as a whole,
except as otherwise reflected in adequate reserves. Neither the KTI Purchase,
nor KTI and its Subsidiaries becoming parties to the Loan
<PAGE>
Documents, will create a default in any material contract of KTI and its
Subsidiaries.
Section 6.9. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC.
None of the Borrowers is violating any provision of its charter documents or
by-laws or any agreement or instrument by which any of them may be subject or by
which any of them or any of their properties may be bound or any decree, order,
judgment, or any statute, license, rule or regulation, in a manner which could
result in the imposition of substantial penalties or materially and adversely
affect the financial condition, properties or business of any of the Borrowers.
Section 6.10. TAX STATUS.
The Borrowers have made or filed all United States federal and state income and
all Canadian federal and provincial or territorial income, as applicable and all
other tax returns, reports and declarations required by any jurisdiction to
which any of them are subject (unless and only to the extent that any Borrower
has set aside on its books provisions reasonably adequate for the payment of all
unpaid and unreported taxes); and have paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be
due on such returns, reports and declarations, except those being contested in
good faith; and have set aside on their books provisions reasonably adequate for
the payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. All tax returns, report and declarations
required by any jurisdiction accurately disclose (except for discrepancies which
are not material) the amount of tax payable by the Borrowers in the relevant
jurisdiction except for the amounts being contested in good faith by the
Borrowers. There are no unpaid taxes in any material amount claimed to be due by
the taxing authority of any jurisdiction, and the officers of the Borrowers know
of no basis for any such claim.
Section 6.11. NO EVENT OF DEFAULT.
No Default or Event of Default has occurred and is continuing.
Section 6.12. HOLDING COMPANY AND INVESTMENT COMPANY ACTS.
None of the Borrowers is a "holding company", or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935; nor is any of them an
"investment company", or an "affiliated company" or a "principal underwriter" of
an "investment company", as such terms are defined in the Investment Company Act
of 1940, as amended.
Section 6.13. ABSENCE OF FINANCING STATEMENTS, ETC.
Except as contemplated by Section 8.2 of this Agreement and as set forth on
<PAGE>
SCHEDULE 8.2(f) hereto, there is no effective financing statement, security
agreement, chattel mortgage, real estate mortgage or other document filed or
recorded with any filing records, registry, or other public office, which
covers, affects or gives notice of any present or possible future lien on, or
security interest in, any assets or property of any of the Borrowers or rights
thereunder.
Section 6.14. EMPLOYEE BENEFIT PLANS.
(a) Each Employee Benefit Plan and each Guaranteed Pension
Plan has been maintained and operated in compliance in all material
respects with the provisions of ERISA and/or all Applicable Canadian
Pension Legislation, as applicable, and, to the extent applicable, the
Code, including but not limited to the provisions thereunder respecting
prohibited transactions and the bonding of fiduciaries and other
Persons handling plan funds as required by Section 412 of ERISA. All
Employee Benefit Plans maintained by the Canadian Borrowers have been
funded in accordance with Applicable Canadian Pension Legislation. Each
Borrower has heretofore delivered to the Administrative Agent the most
recently completed annual report, Form 5500, with all required
attachments, and actuarial statement required to be submitted under
Section 103(d) of ERISA, with respect to each Guaranteed Pension Plan.
(b) No Employee Benefit Plan, which is an employee welfare
benefit plan within the meaning of Section 3(1) or Section 3(2)(B) of
ERISA, provides benefit coverage subsequent to termination of
employment, except as required by Title I, Part 6 of ERISA or the
applicable state insurance laws. A Borrower may terminate each such
Plan at any time (or at any time subsequent to the expiration of any
applicable bargaining agreement) in the discretion of such Borrower
without liability to any Person other than for claims arising prior to
termination.
(c) Each contribution required to be made to a Guaranteed
Pension Plan, whether required to be made to avoid the incurrence of an
accumulated funding deficiency, the notice or lien provisions of
Section 302(f) of ERISA, or otherwise, has been timely made. No waiver
of an accumulated funding deficiency or extension of amortization
periods has been received with respect to any Guaranteed Pension Plan,
and no Borrower nor any ERISA Affiliate is obligated to or has posted
security in connection with an amendment to a Guaranteed Pension Plan
pursuant to Section 307 of ERISA or Section 401(a)(29) of the Code. No
liability to the PBGC (other than required insurance premiums, all of
which have been paid) has been incurred by any Borrower or any
<PAGE>
ERISA Affiliate with respect to any Guaranteed Pension Plan and there
has not been any ERISA Reportable Event (other than an ERISA Reportable
Event as to which the requirement of 30 days notice has been waived),
or any other event or condition which presents a material risk of
termination of any Guaranteed Pension Plan by the PBGC. Based on the
latest valuation of each Guaranteed Pension Plan (which in each case
occurred within twelve months of the date of this representation), and
on the actuarial methods and assumptions employed for that valuation,
the aggregate benefit liabilities of all such Guaranteed Pension Plans
within the meaning of Section 4001 of ERISA did not exceed the
aggregate value of the assets of all such Guaranteed Pension Plans,
disregarding for this purpose the benefit liabilities and assets of
any Guaranteed Pension Plan with assets in excess of benefit
liabilities.
(d) No Borrower nor any ERISA Affiliate has incurred any
material liability (including secondary liability) to any Multiemployer
Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan under Section 4201 of ERISA or as a result of a sale
of assets described in Section 4204 of ERISA. No Borrower nor any ERISA
Affiliate has been notified that any Multiemployer Plan is in
reorganization or insolvent under and within the meaning of Section
4241 or Section 4245 of ERISA or is at risk of entering reorganization
or becoming insolvent, or that any Multiemployer Plan intends to
terminate or has been terminated under Section 4041A of ERISA.
Section 6.15. USE OF PROCEEDS.
The proceeds of the Loans shall be used for working capital and other general
corporate purposes, to pay other indebtedness of the Borrowers, including up
to $7,000,000 of the KTI Notes (to the extent required under the indenture
relating to the KTI Notes), and to fund acquisitions permitted pursuant to
Section 8.4 hereof. No proceeds of the Loans shall be used in any way that
will violate Regulations U or X of the Board of Governors of the Federal
Reserve System.
Section 6.16. ENVIRONMENTAL COMPLIANCE.
The Borrowers have taken all necessary steps to investigate the past and present
condition and usage of the Real Properties and the operations conducted thereon
and, based upon such diligent investigation, have determined that, except as
shown on SCHEDULE 6.16:
(a) None of the Borrowers or Excluded Subsidiaries, nor any
<PAGE>
operator of their properties, is in violation, or alleged violation, of
any judgment, decree, order, law, permit, license, rule or regulation
pertaining to environmental matters, including without limitation,
those arising under RCRA, CERCLA, the Superfund Amendments and
Reauthorization Act of 1986 ("SARA"), the Federal Clean Water Act, the
Federal Clean Air Act, the Toxic Substances Control Act, or any state
or local or Canadian federal or provincial statute, regulation,
ordinance, order or decree relating to health, safety or the
environment (the "Environmental Laws"), which violation would have a
material adverse effect on the business, assets or financial condition
of the Parent and its Subsidiaries on a consolidated basis.
(b) (i) Except where it would not have a material adverse
effect on the business, assets or financial condition of the Borrowers
on a consolidated basis, (i) no portion of the Real Property has been
used for the handling, processing, storage or disposal of Hazardous
Substances; and no underground tank or other underground storage
receptacle for Hazardous Substances is located on such properties; (ii)
in the course of any activities conducted by the Borrowers, or, to the
Borrowers' knowledge by any other operators of the Real Property, no
Hazardous Substances have been generated or are being used on such
properties; and (iii) to the Borrowers' knowledge, there have been no
unpermitted Releases or threatened Releases of Hazardous Substances on,
upon, into or from the Real Property.
Section 6.17. PERFECTION OF SECURITY INTERESTS.
All filings, assignments, pledges and deposits of documents or instruments have
been made or will be made and all other actions have been taken or will be taken
that are necessary under applicable law, or reasonably requested by the
Administrative Agent or any of the Banks, to establish and perfect the
Administrative Agent's security interests (as collateral agent for the
applicable Banks) in the Collateral as described in the Security Documents. The
Collateral and the Administrative Agent's rights (as collateral agent for the
applicable Banks) with respect to the Collateral are not subject to any setoff,
claims, withholdings or other defenses, except for Permitted Liens. The
Borrowers are the owners of the Collateral free from any lien, security
interest, encumbrance and any other claim or demand, except for Permitted Liens.
Section 6.18. CERTAIN TRANSACTIONS.
Except as set forth on SCHEDUle 6.18 or as permitted in Section 8.3, and
except for arm's length transactions pursuant to which the Borrowers make
payments in the ordinary course of business upon terms no less favorable than
the Borrowers could obtain from third parties, none of the officers,
directors, or
<PAGE>
employees of the Borrowers are presently a party to any transaction with the
Borrowers (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Borrowers, any
corporation, partnership, trust or other entity in which any officer,
director, or any such employee has a substantial interest or is an officer,
director, trustee or partner, the value of such transaction, when aggregated
with all other such transactions occurring during the term of this Agreement,
exceeds $5,000,000.
Section 6.19. SUBSIDIARIES.
SCHEDUlE 1 sets forth a complete and accurate list of the Subsidiaries,
including the name of each Subsidiary and its jurisdiction of incorporation,
together with the number of authorized and outstanding shares of each
Subsidiary. Each Subsidiary, other than PERC, Timber, MERC and AAR, is directly
or indirectly wholly owned by the Parent. The Parent or a Subsidiary of the
Parent has good and marketable 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 non-assessable. Each
Subsidiary of the Parent, other than the Excluded Subsidiaries, is a Borrower
hereunder.
Section 6.20. CAPITALIZATION.
(a) CAPITAL STOCK. As of the Effective Date, the authorized
capital stock of the Parent consists of (i) 30,000,000 shares of Class A Common
stock (par value $.01 per share) of which 9,778,745 shares are outstanding, (ii)
1,000,000 shares of Class B Common Stock (par value $.01 per share) of which
1,000,000 shares are outstanding, and (iii) 1,000,000 shares of Preferred Stock
(par value $.01 per share) of which no shares are outstanding. All such
outstanding shares have been duly issued and are fully paid and non-assessable.
(b) OPTIONS, ETC. Except as set forth on SCHEDULE 6.20(b), no
Person has outstanding any rights (either pre-emptive or other) or options
(except for the options for common stock issued to management employees, in
accordance with a bona fide option plan approved by the Board of Directors of
the Parent) to subscribe for or purchase from the Parent, or any warrants or
other agreements providing for or requiring the issuance by the Parent of, any
capital stock or any securities convertible into or exchangeable for its capital
stock.
<PAGE>
Section 6.21. TRUE COPIES OF CHARTER AND OTHER DOCUMENTS.
The Borrowers have furnished the Administrative Agent copies, in each case true
and complete as of the Effective Date, of (a) all charter and other
incorporation or constating documents (together with any amendments thereto) and
(b) by-laws (together with any amendments thereto).
Section 6.22. DISCLOSURE.
No representation or warranty made by the Borrowers in this Agreement or in any
agreement, instrument, document, certificate, statement or letter furnished to
the Banks or the Administrative Agent by or on behalf of or at the request of
the Borrowers in connection with any of the transactions contemplated by the
Loan Documents contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained
therein not misleading in light of the circumstances in which they are made.
Section 6.23. GUARANTEES OF EXCLUDED SUBSIDIARIES. Except as
permitted under Sections 8.1 or 8.3, no Borrower has executed a guarantee with
respect to debt incurred by an Excluded Subsidiary.
Section 6.24. YEAR 2000 ISSUE.
The Borrowers have reviewed the areas within their business and operations which
could be adversely affected by, and have developed or are developing a program
to address on a timely basis, the Year 2000 Issue. Based on such review and
program, the Year 2000 Issue will not have a material adverse effect on their
business and operations.
Section 7. AFFIRMATIVE COVENANTS OF THE BORROWERS.
The Borrowers covenant and agree that, so long as any Obligation or any Letter
of Credit is outstanding or the Banks have any obligation to make Loans, or the
Canadian Banks have any further obligation with respect to Bankers' Acceptances,
or any Issuing Bank has any obligation to issue, extend or renew any Letters of
Credit hereunder, or the Banks have any obligations to reimburse any Issuing
Bank for drawings honored under any Letter of Credit hereunder:
Section 7.1. PUNCTUAL PAYMENT.
Each Borrower will duly and punctually pay or cause to be paid the principal and
interest on the Loans, all Reimbursement Obligations, fees and other amounts
provided for in this Agreement and the other Loan Documents for which it is
liable, all in accordance with the terms of this Agreement and such other Loan
Documents.
<PAGE>
Section 7.2. MAINTENANCE OF OFFICE.
The Borrowers will maintain their chief executive offices at the locations set
forth on SCHEDULE 1 attached hereto, or at such other place in the United States
of America or Canada as each Borrower shall designate upon 30 days prior written
notice to the applicable Bank Agent.
Section 7.3. RECORDS AND ACCOUNTS.
Each of the Borrowers will keep true and accurate records and books of account
in which full, true and correct entries will be made in accordance with GAAP and
with the requirements of all regulatory authorities and maintain adequate
accounts and reserves for all taxes (including income taxes), depreciation,
depletion, obsolescence and amortization of its properties, all other
contingencies, and all other proper reserves.
Section 7.4. FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION.
The Borrowers will deliver to the Banks the following:
(a) as soon as practicable, but, in any event not later than
90 days after the end of each fiscal year of the Borrowers and the
Excluded Subsidiaries, the (i) consolidated balance sheets of the
Borrowers and the Excluded Subsidiaries, and (ii) consolidating balance
sheets of each of the Borrowers and the Excluded Subsidiaries, as at
the end of such year, statements of cash flows, and the related
consolidated and consolidating statements of operations, each setting
forth in comparative form the figures for the previous fiscal year, all
such consolidated and consolidating financial statements to be in
reasonable detail, prepared, in accordance with GAAP and, with respect
to the consolidated financial statements, Certified by the Accountants.
In addition, simultaneously therewith, the Borrowers will and will
cause the Excluded Subsidiaries to use their best efforts to provide
the Banks with a written statement from such Accountants to the effect
that the Borrowers and the Excluded Subsidiaries are in compliance with
the covenants set forth in Section 9 hereof, and that, in making the
examination necessary to said certification, nothing has come to the
attention of such Accountants that would indicate that any Default or
Event of Default exists, or, if such accountants shall have obtained
knowledge of any then existing Default or Event of Default they shall
disclose in such statement any such Default or Event of Default;
PROVIDED, that such Accountants shall not be liable to the Banks for
failure to obtain knowledge of any Default or Event of Default;
(b) as soon as practicable, but in any event not later than 45
<PAGE>
days after the end of each fiscal quarter of the Borrowers and the
Excluded Subsidiaries, copies of (i) the consolidated balance sheets
and statement of operations of the Borrowers and the Excluded
Subsidiaries, and (ii) consolidating balance sheets and statement of
operations of each of the Borrowers and the Excluded Subsidiaries, as
at the end of such quarter including profit and loss statements by
division, subject to year end adjustments, and the related statement of
cash flows, all in reasonable detail and prepared in accordance with
GAAP with a certification by the principal financial or accounting
officer of the Borrowers and the Excluded Subsidiaries (the "CFO") that
the consolidated financial statements were prepared in accordance with
GAAP and fairly present the consolidated financial condition of the
Borrowers and the Excluded Subsidiaries as at the close of business on
the date thereof and the results of operations for the period then
ended;
(c) simultaneously with the delivery of the financial
statements referred to in (a) and (b) above, a statement in the form
of EXHIBIT D hereto (the "Compliance Certificate") certified by the
CFO that the Borrowers and the Excluded Subsidiaries are in
compliance with the covenants contained in Sections 7, 8 and 9 hereof
as of the end of the applicable period setting forth in reasonable
detail computations evidencing such compliance, PROVIDED that if the
Borrowers and the Excluded Subsidiaries shall at the time of
issuance of such certificate or at any other time obtain knowledge
of any Default or Event of Default, the Borrowers will and will
cause the Excluded Subsidiaries to include in such certificate or
otherwise deliver forthwith to the Banks a certificate specifying
the nature and period of existence thereof and what action the
Borrowers and the Excluded Subsidiaries propose to take with respect
thereto and a certificate of the Borrowers' and the Excluded
Subsidiaries' Chief Operating Officer in the form attached hereto as
EXHIBIT E with respect to environmental matters;
(d) contemporaneously with, or promptly following, the filing
or mailing thereof, copies of all material of a financial nature filed
with the Securities and Exchange Commission or sent to the stockholders
of the Parent or any of the Borrowers;
(e) as soon as practicable, but in any event not later than 15
days after the end of each fiscal quarter, copies of the Borrowers' and
the Excluded Subsidiaries' profit and loss statements by division,
subject to year end adjustments, and the related statements of cash
flows, all in reasonable detail and prepared in accordance with GAAP;
<PAGE>
(f) as soon as practicable, but in any event not later than
fifteen (15) days prior to the commencement of the next fiscal year of
the Borrowers and the Excluded Subsidiaries, a copy of the annual
budget, projections and business plan for the Borrowers and the
Excluded Subsidiaries for such fiscal year; and
(g) from time to time such other financial data and other
information (including accountants' management letters) as the Banks
may reasonably request;
The Borrowers hereby authorize the Banks to disclose any information
obtained pursuant to this Agreement to all appropriate governmental regulatory
authorities where required by law; PROVIDED, HOWEVER, that the Banks shall, to
the extent practicable and allowable under law, notify the Borrowers within a
reasonable period prior to the time any such disclosure is made; and PROVIDED
FURTHER, this authorization shall not be deemed to be a waiver of any rights to
object to the disclosure by the Banks of any such information which any Borrower
has or may have under the federal Right to Financial Privacy Act of 1978, as in
effect from time to time.
Section 7.5. CORPORATE EXISTENCE AND CONDUCT OF BUSINESS
Except where the failure of a Borrower to remain so qualified would not
materially adversely impair the financial condition of the Borrowers on a
consolidated basis, each Borrower will do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate existence,
corporate rights and franchises; effect and maintain its foreign qualifications,
licensing, domestication or authorization except as terminated by its Board of
Directors in the exercise of its reasonable judgment; use its best efforts to
comply with all applicable laws; and shall not become obligated under any
contract or binding arrangement which, at the time it was entered into would
materially adversely impair the financial condition of the Borrowers, on a
consolidated basis. Each Borrower will continue to engage primarily in the
businesses now conducted by it and in related businesses.
Section 7.6. MAINTENANCE OF PROPERTIES.
The Borrowers will cause all material properties used or useful in the conduct
of their businesses to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment and will cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Borrowers may be necessary so that the
businesses carried on in connection therewith may be properly and advantageously
conducted at all times; provided, HOWEVER, that nothing in this section shall
prevent any Borrower from discontinuing the operation and maintenance of any of
its properties if such discontinuance is,
<PAGE>
in the judgment of such Borrower, desirable in the conduct of its or their
business and which does not in the aggregate materially adversely affect the
business of the Borrowers on a consolidated basis.
Section 7.7. INSURANCE.
The Borrowers will maintain with financially sound and reputable insurance
companies, funds or underwriters' insurance of the kinds, covering the risks and
in the relative proportionate amounts usually carried by reasonable and prudent
companies conducting businesses similar to that of the Borrowers, but in no
event less than the amounts and coverages set forth in SCHEDULE 7.7 hereto. In
addition, the Borrowers will furnish from time to time, upon the Administrative
Agent's request, a summary of the insurance coverage of each of the Borrowers,
which summary shall be in form and substance satisfactory to the Administrative
Agent and, if requested by the Administrative Agent, will furnish to the
Administrative Agent copies of the applicable policies naming the Administrative
Agent as a loss payee thereunder.
Section 7.8. TAXES.
The Borrowers will each duly pay and discharge, or cause to be paid and
discharged, before the same shall become overdue, all taxes, assessments and
other governmental charges (other than taxes, assessments and other governmental
charges imposed by jurisdictions other than the United States or Canada or a
political division thereof which in the aggregate are not material to the
business or assets of any Borrower on an individual basis or of the Borrowers on
a consolidated basis) imposed upon it and its real properties, sales and
activities, or any part thereof, or upon the income or profits therefrom, as
well as all claims for labor, materials, or supplies, which if unpaid might by
law become a lien or charge upon any of its property; PROVIDED, HOWEVER, that
any such tax, assessment, charge, levy or claim need not be paid if the validity
or amount thereof shall currently be contested in good faith by appropriate
proceedings and if such Borrower shall have set aside on its books adequate
reserves with respect thereto; and PROVIDED, FURTHER, that such Borrower will
pay all such taxes, assessments, charges, levies or claims forthwith upon the
commencement of proceedings to foreclose any lien which may have attached as
security therefor.
Section 7.9. INSPECTION OF PROPERTIES, BOOKS, AND CONTRACTS.
The Borrowers shall permit the Banks, the Bank Agents or any of their designated
representatives, upon reasonable notice, to visit and inspect any of the
properties of the Borrowers, to examine the books of account of the Borrowers
(including the making of periodic accounts receivable reviews), or contracts
(and to make copies thereof and extracts therefrom), and to discuss the affairs,
finances and accounts of the Borrowers with, and to be advised as to the same
by, their officers, all at such times and intervals as the Banks
<PAGE>
may reasonably request.
Section 7.10. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES AND PERMITS;
MAINTENANCE OF MATERIAL LICENSES AND PERMITS.
Each Borrower will, and will cause the Excluded Subsidiaries to, (i) comply with
the provisions of its charter documents, articles of incorporation, other
constating documents and by-laws and all agreements and instruments by which it
or any of its properties may be bound; (ii) comply with all applicable laws and
regulations (including Environmental Laws), decrees, orders, judgments, licenses
and permits, including, without limitation, all environmental permits hereto
("Applicable Laws"), except where noncompliance with such Applicable Laws would
not have a material adverse effect in the aggregate on the consolidated
financial condition, properties or businesses of the Borrowers or the Excluded
Subsidiaries; (iii) comply in all material respects with all agreements and
instruments by which it or any of its properties may be bound; (iv) maintain all
material operating permits for all landfills now owned or hereafter acquired;
and (v) dispose of hazardous waste only at licensed disposal facilities
operating, to the best of such Borrower's knowledge after reasonable inquiry, in
compliance with Environmental Laws. If at any time while the Notes, or any Loan,
Letter of Credit or Bankers' Acceptance is outstanding or any Bank or Bank Agent
has any obligation to make Loans or issue Letters of Credit or accept and
purchase Bankers' Acceptances hereunder, any authorization, consent, approval,
permit or license from any officer, agency or instrumentality of any government
shall become necessary or required in order that any Borrower may fulfill any of
its obligations hereunder, such Borrower will immediately take or cause to be
taken all reasonable steps within the power of such Borrower to obtain such
authorization, consent, approval, permit or license and furnish the Banks with
evidence thereof.
Section 7.11. ENVIRONMENTAL INDEMNIFICATION.
The Borrowers covenant and agree that they will jointly and severally, (to
the fullest extent permitted by law) in accordance with Section 5.10,
indemnify and hold the Bank Agents and the Banks, and their respective
affiliates, agents, directors, officers and shareholders, harmless from and
against any and all claims, expense, damage, loss or liability incurred by
such indemnified parties (including all costs of legal representation
incurred by such indemnified parties) relating to (a) any Release or
threatened Release of Hazardous Substances on the Real Property; (b) any
violation of any Environmental Laws with respect to conditions at the Real
Property or the operations conducted thereon; or (c) the investigation or
remediation of offsite locations at which the Borrowers, or their
predecessors are alleged to have directly or indirectly Disposed of Hazardous
Substances. It is expressly acknowledged by the Borrowers that this covenant
of indemnification shall
<PAGE>
survive any foreclosure or any modification, release or discharge of any or all
of the Security Documents or the payment of the Loans and shall inure to the
benefit of the Bank Agents and the Banks and their respective successors and
assigns.
Section 7.12. FURTHER ASSURANCES.
The Borrowers will cooperate with the Banks and execute such further instruments
and documents as the Banks shall reasonably request to carry out to the Banks'
satisfaction the transactions contemplated by this Agreement.
Section 7.13. NOTICE OF POTENTIAL CLAIMS OR LITIGATION.
The Borrowers shall deliver to the Banks, within 30 days of receipt thereof,
written notice of the initiation of any action, claim, complaint, or any other
notice of dispute or potential litigation (including without limitation any
alleged violation of any Environmental Law), wherein the potential liability is
in excess of $500,000, together with a copy of each such notice received by any
Borrower or the Excluded Subsidiaries.
Section 7.14. NOTICE OF CERTAIN EVENTS CONCERNING INSURANCE AND
ENVIRONMENTAL CLAIMS.
(a) The Borrowers will provide the Banks with written notice
as to any material cancellation or material adverse change in any
insurance of any of the Borrowers within ten (10) Business Days after
such Borrower's receipt of any notice (whether formal or informal) of
such material cancellation or material change by any of its insurers.
(b) The Borrowers will promptly notify the Banks in writing of
any of the following events:
(i) upon any Borrower's obtaining knowledge of any
violation of any Environmental Law which violation could have
a material adverse effect on the business, financial
condition, or assets of the Borrowers on a consolidated basis;
(ii) upon any Borrower's obtaining knowledge of any
potential or known Release, or threat of Release, of any
Hazardous Substance at, from, or into the Real Property which
could materially affect the business, financial condition, or
assets of the Borrowers on a consolidated basis;
(iii) upon any Borrower's receipt of any notice of
any material violation of any Environmental Law or of any
Release or threatened Release of Hazardous Substances,
including a
<PAGE>
notice or claim of liability or potential
responsibility from any third party (including any federal,
state, provincial, territorial or local governmental
officials) and including notice of any formal inquiry,
proceeding, demand, investigation or other action with regard
to (A) any Borrower's or any Person's operation of the Real
Property, (B) the presence or Release of Hazardous Substances
on, from, or into the Real Property, or (C) investigation or
remediation of offsite locations at which any Borrower or its
predecessors are alleged to have directly or indirectly
Released Hazardous Substances, and with respect to which the
liability associated therewith could be reasonably expected to
exceed $1,000,000; or
(iv) upon any Borrower's obtaining knowledge that any
expense or loss which individually or in the aggregate exceeds
$1,000,000 has been incurred by such governmental authority in
connection with the assessment, containment, removal or
remediation of any Hazardous Substances with respect to which
any Borrower may be liable or for which a lien may be imposed
on the Real Property.
Section 7.15. NOTICE OF DEFAULT.
The Borrowers will promptly notify the Banks in writing of the occurrence of any
Default or Event of Default. If any Person shall give any notice or take any
other action in respect of a claimed default (whether or not constituting an
Event of Default) under this Agreement or any other note, evidence of
indebtedness, indenture or other obligation evidencing indebtedness in excess of
$1,000,000 as to which any Borrower is a party or obligor, whether as principal
or surety, the Borrowers shall forthwith give written notice thereof to the
Banks, describing the notice of action and the nature of the claimed default.
Section 7.16. CLOSURE AND POST CLOSURE LIABILITIES.
The Borrowers shall at all times adequately accrue, in accordance with GAAP, and
fund, as required by applicable Environmental Laws, all closure and post closure
liabilities with respect to the operations of the Borrowers.
Section 7.17. SUBSIDIARIES.
The Parent shall at all times directly or indirectly through a Subsidiary own
all of the shares of the capital stock or equivalent ownership interests of each
Subsidiary, other than PERC, Timber, MERC and AAR.
Section 7.18. INTEREST RATE PROTECTION.
The Borrowers will, prior to March 31, 2000, have an aggregate amount of not
less than 40% of the notional amount of Consolidated Funded
<PAGE>
Indebtedness as of the Effective Date (the "40% Amount") on a fixed rate long
term basis or subject to Swap Contracts on terms and conditions reasonably
acceptable to the Administrative Agent.
Section 8. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS.
The Borrowers covenant and agree that, so long as any Obligation or any Letter
of Credit is outstanding or the Banks have any obligation to make Loans, or the
Canadian Banks have any further obligation with respect to Bankers' Acceptances,
or any Issuing Bank has any obligation to issue, extend or renew any Letters of
Credit hereunder, or the Banks have any obligations to reimburse any Issuing
Bank for drawings honored under any Letter of Credit hereunder:
Section 8.1. RESTRICTIONS ON INDEBTEDNESS
None of the Borrowers or Excluded Subsidiaries shall become or be a guarantor or
surety of, or otherwise create, incur, assume, or be or remain liable,
contingently or otherwise, with respect to any Indebtedness, or become or be
responsible in any manner (whether by agreement to purchase any obligations,
stock, assets, goods or services, or to supply or advance any funds, assets,
goods or services or otherwise) with respect to any undertaking or Indebtedness
of any other Person, or incur any Indebtedness other than:
(a) Indebtedness of the Borrowers to the Banks and the
Bank Agents arising under this Agreement or the Loan Documents;
(b) Subject to Section 8.9, Seller Subordinated Debt in
addition to that listed on Schedule 8.1(c), in an aggregate outstanding
principal amount not to exceed $15,000,000;
(c) Existing Indebtedness of the Borrowers with respect to
loans and Capitalized Leases listed on SCHEDULE 8.1(c), on the terms
and conditions in effect as of the date hereof, together with any
renewals, extensions or refinancings thereof on terms which are not
materially different than those in effect as of the date hereof;
(d) endorsements for collection, deposit or negotiation and
warranties of products or services (including unsecured performance and
payment bonds ("Performance Bonds")), in each case incurred in the
ordinary course of business;
(e) indebtedness of the Borrowers incurred in connection with
the acquisition or lease of any equipment by the Borrowers under any
synthetic lease, Capitalized Lease or other lease arrangement or
purchase money financing; PROVIDED that the aggregate outstanding
<PAGE>
principal amount of such indebtedness of the Borrowers shall not exceed
$20,000,000 at any time;
(f) Indebtedness of PERC and Timber not to exceed $60,000,000;
PROVIDED that no Borrower shall guarantee or secure any such
Indebtedness;
(g) Indebtedness of the Borrowers in respect of
Swap Contracts satisfactory to the Administrative Agent;
(h) Indebtedness of the Borrowers under fuel price swaps, fuel
price caps, and fuel price collar or floor agreements, and similar
agreements or arrangements designed to protect against or manage
fluctuations in fuel prices with respect to fuel purchased in the
ordinary course of business of the Borrowers ("Fuel Derivatives
Obligations"), PROVIDED that the aggregate amount of such agreements do
not exceed $5,000,000, the maturity of such agreements do not exceed
six (6) months, the terms are consistent with past practices of the
Borrowers;
(i) Indebtedness to be incurred with respect to the guaranty
by the Parent of the obligations of, or loan by the Parent to, Oakhurst
up to $12,600,000, and Indebtedness incurred by KTI for Indebtedness of
Timber in an amount not to exceed $3,000,000;
(j) Indebtedness of MERC with respect to the ING L/C for a
period of not more than sixty (60) days from the Effective Date (unless
the Required Banks have consented in writing to a longer term) and MERC
subordinated debt listed on Schedule 8.1(c);
(k) Other unsecured Indebtedness incurred in connection with
the acquisition by the Borrowers of real or personal property,
including any Indebtedness incurred with respect to non-compete
payments in connection with such acquisition(s), PROVIDED that the
aggregate outstanding principal amount of such Indebtedness of the
Borrowers shall not exceed $15,000,000 at any time; and
(l) Intercompany Indebtedness among the Borrowers.
Section 8.2. RESTRICTIONS ON LIENS.
None of the Borrowers or Excluded Subsidiaries will create or incur or suffer to
be created or incurred or to exist any lien, encumbrance, mortgage, pledge,
negative pledge, charge, restriction or other security interest of any kind upon
any property or assets of any character, whether now owned or
<PAGE>
hereafter acquired, or upon the income or profits therefrom; or transfer any of
such property or assets or the income or profits therefrom for the purpose of
subjecting the same to the payment of Indebtedness or performance of any other
obligation in priority to payment of its general creditors; or acquire, or agree
or have an option to acquire, any property or assets upon conditional sale or
other title retention or purchase money security agreement, device or
arrangement; or suffer to exist for a period of more than 30 days after the same
shall have been incurred any Indebtedness or claim or demand against it which if
unpaid might by law or upon bankruptcy or insolvency, or otherwise, be given any
priority whatsoever over its general creditors; or sell, assign, pledge or
otherwise transfer any accounts, contract rights, general intangibles or chattel
paper, with or without recourse, EXCEPT as follows (the "Permitted Liens"):
(a) liens on property to secure Indebtedness permitted under
Section 8.1(e) hereof, provided that such Liens (i) shall encumber only
the specific equipment being financed or leased, (ii) shall not exceed
the fair market value thereof and (iii) shall not encumber property
with an aggregate value in excess of $20,000,000;
(b) Liens to secure taxes, assessments and other government
charges or claims for labor, material or supplies in respect of
obligations not overdue;
(c) Deposits or pledges made in connection with, or to secure
payment of, workmen's compensation, unemployment insurance, old age
pensions or other social security obligations;
(d) Liens of carriers, warehousemen, mechanics and
materialmen, and other like liens, in existence less than 120 days from
the date of creation thereof in respect of obligations not overdue;
(e) Encumbrances consisting of easements, rights of way,
zoning restrictions, restrictions on the use of Real Property and
defects and irregularities in the title thereto, landlord's or lessor's
liens under leases to which any Borrower is a party, and other minor
liens or encumbrances none of which in the opinion of the respective
Borrower interferes materially with the use of the property affected in
the ordinary conduct of the business of such Borrower, which defects do
not individually or in the aggregate have a material adverse effect on
the business of such Borrower individually or of the Borrowers on a
consolidated basis;
(f) Liens existing as of the date hereof securing Indebtedness
<PAGE>
permitted under Section 8.1(c) hereof and listed on SCHEDULE 8.2(f)
hereto;
(g) Liens granted pursuant to the Security Documents to secure
the Obligations (provided that secured Obligations hereunder with
respect to Fuel Derivatives Obligations with Banks shall not exceed
$4,000,000 in the aggregate);
(h) Liens on assets of PERC and Timber granted to secure the
Indebtedness permitted by Section 8.1(f) hereof, provided that such
Indebtedness is non-recourse to the Borrowers except with respect to
the stock of PERC and Timber; and
(i) ING's mortgage on the MERC facility located in Saco, Maine
for a period of not more than sixty (60) days from the Effective Date
(unless the Required Banks have consented in writing to a longer term).
Section 8.3. RESTRICTIONS ON INVESTMENTS.
None of the Borrowers shall make or permit to exist or to remain outstanding any
other Investment other than:
(a) Investments in obligations of the United States of America
or Canada and agencies thereof and obligations guaranteed by the United
States of America or Canada that are due and payable within one year
from the date of acquisition;
(b) certificates of deposit, time deposits, bankers'
acceptances or repurchase agreements which are fully insured or are
issued by commercial banks organized under the laws of the United
States of America or any state thereof or Canada and having a combined
capital, surplus, and undivided profits of not less than $500,000,000;
(c) commercial paper, maturing not more than nine months from
the date of issue, PROVIDED that, at the time of purchase, such
commercial paper is not rated lower than "P-1" by Moody's Investors
Service, Inc., or "A-1" by Standard & Poor's Corporation;
(d) Investments associated with insurance policies required or
allowed by state or provincial law to be posted as financial assurance
for landfill closure and post-closure liabilities;
(e) Investments by any Borrower in any wholly owned
Subsidiary which is also a Borrower;
<PAGE>
(f) Investments existing on the date hereof and listed on
SCHEDULE 8.3(F) hereto;
(g) any money market account, short-term asset management
account or similar investment account maintained with one of the Banks;
(h) loans made to employees in an aggregate amount not
to exceed $5,000,000 at any time outstanding;
(i) existing Investments in PERC and Timber, and additional
Investments after the Effective Date shall not exceed $5,000,000 in the
aggregate at any time;
(j) up to $5,000,000 in Investments in the Insurance
Subsidiary;
(k) Existing Investments in the De Minimis Subsidiaries;
and
(l) other Investments not to exceed $1,000,000 in the
aggregate at any time outstanding;
PROVIDED; that none of the Borrowers shall make or permit to exist or to
remain outstanding any Investment in any Subsidiary unless both before and
after giving effect thereto there does not exist a Default or Event of
Default and no Default or Event of Default would be created by the making of
such Investment.
SECTION 8.4. MERGERS, CONSOLIDATIONS, SALES.
SECTION 8.4.1. MERGERS AND ACQUISITIONS.
The Borrowers will not become a party to any merger, amalgamation, or
consolidation, or agree to or effect any asset acquisition or stock
acquisition (other than the acquisition of assets in the ordinary course of
business consistent with past practices) except the merger or consolidation
of, or asset or stock acquisitions between existing Borrowers and except as
otherwise provided in this Section 8.4.1. The Borrowers may purchase or
otherwise acquire all or substantially all of the assets or stock or other
equity interests of any other Person PROVIDED THAT:
(a) the Borrowers are in current compliance with and, giving
effect to the proposed acquisition (including any borrowings made or to
be made in connection therewith), will continue to be in compliance
<PAGE>
with all of the covenants in Section 9 hereof on a pro forma historical
combined basis as if the transaction occurred on the first day of the
period of measurement, and the Administrative Agent and the Banks shall
have received a Compliance Certificate demonstrating compliance with
Section 9 on a pro forma historical combined basis as if the
transaction occurred on the first day of the period of measurement;
(b) at the time of such acquisition, no Default or Event of
Default has occurred and is continuing, and such acquisition will not
otherwise create a Default or an Event of Default hereunder;
(c) the business to be acquired is predominantly in the same
lines of business as the Borrowers, or businesses reasonably related or
incidental thereto (e.g., non-hazardous solid waste collection,
transfer, hauling, recycling, or disposal);
(d) the business to be acquired operates predominantly
in the United States or Canada;
(e) all of the assets to be acquired shall be owned by an
existing or newly created Subsidiary of the Parent which Subsidiary
shall be a Borrower, 100% of the stock or other equity interests (and,
in the case of a Canadian acquisition, 100% of the assets) of which
have been or, simultaneously with such acquisition, will be pledged to
the Administrative Agent on behalf of the Banks or, in the case of a
stock or other equity interest acquisition, the acquired company,
simultaneously with such acquisition, shall become a Borrower or shall
be merged or amalgamated with and into a wholly owned Subsidiary that
is a Borrower and such newly acquired or created Subsidiary shall
otherwise comply with the provisions of Section 7.17 hereof;
(f) not later than seven (7) days prior to the proposed
acquisition date, a copy of the purchase agreement and financial
projections, together with audited (if available, or otherwise
unaudited) financial statements for any Subsidiary or division to be
acquired or created, for the preceding two (2) fiscal years or such
shorter period of time as such Subsidiary or division has been in
existence shall have been furnished to the Administrative Agent, if the
cash consideration in connection with any such acquisition, including
the aggregate amount of all liabilities assumed, but excluding the
payment of all fees and expenses relating to such purchase, exceeds
$10,000,000 (a "Material Acquisition");
(g) not later than seven (7) days prior to the proposed
acquisition date, (1) a summary of the Borrowers' results of their
<PAGE>
standard due diligence review, and (2) in the case of a landfill
acquisition, a review by a Consulting Engineer and a copy of the
Consulting Engineer's report shall have been furnished to the
Administrative Agent, only in cases of Material Acquisitions or upon
request by the Administrative Agent;
(h) the board of directors and (if required by applicable law)
the shareholders, or the equivalent thereof, of the business to be
acquired has approved such acquisition and written evidence of such
approval shall have been furnished to the Banks;
(i) if such acquisition is made by a merger or amalgamation, a
Borrower, or a wholly-owned Subsidiary of the Parent which shall become
a Borrower in connection with such merger, shall be the surviving
entity; and
(j) cash consideration to be paid by such Borrower in
connection with any such acquisition or series of related acquisitions
(including cash deferred payments, contingent or otherwise, and the
aggregate amount of all liabilities assumed), shall not exceed
$25,000,000 without the consent of the Administrative Agent and the
Required Banks.
SECTION 8.4.2. DISPOSITIONS OF ASSETS. Subject to Section 4A.4.1, no
Borrower will become a party to or agree to or effect any disposition of
assets in excess of 5% of Consolidated Total Assets in the aggregate (the
"Basket"), PROVIDED THAT the Borrowers may sell (a) PERC and Timber, PROVIDED
FURTHER THAT the Net Cash Proceeds of such a sale, after the repayment of any
Indebtedness of such Excluded Subsidiary, shall be applied toward repayment
of the Consolidated Funded Indebtedness, (b) Total Waste Management
Corporation, a wholly-owned Subsidiary of KTI, (c) the Bangor Warrants, and
(d) KTI Plastic; PROVIDED FURTHER THAT any sale pursuant to subsections
(b) - (d) must occur on or prior to June 30, 2000. Notwithstanding the
foregoing, the sale of inventory, the licensing of intellectual property and
the disposition of obsolete assets, in each case in the ordinary course of
business consistent with past practices, are permitted hereunder without
being charged against the Basket.
SECTION 8.5. SALE AND LEASEBACK.
None of the Borrowers shall enter into any arrangement, directly or indirectly,
whereby any Borrower shall sell or transfer any property owned by it in order
then or thereafter to lease such property or lease other property which such
Borrower intends to use for substantially the same purpose as the property being
sold or transferred, without the prior written consent of the
<PAGE>
Banks.
SECTION 8.6. RESTRICTED DISTRIBUTIONS AND REDEMPTIONS.
None of the Borrowers will declare or pay any cash Distributions; PROVIDED that
(a) any Subsidiary may declare or pay cash Distributions to the Parent and (b)
so long as no Default or Event of Default has occurred and is continuing, or
would occur after giving effect thereto, the Parent may make cash Distributions
to its shareholders in an aggregate amount, together with redemptions permitted
by the following sentence, not to exceed $500,000 during the term of this
Agreement. In addition, the Borrowers shall not redeem, convert, retire or
otherwise acquire shares of any class of capital stock of the Borrowers or
Excluded Subsidiaries in aggregate amount, together with cash Distributions by
the Parent permitted by the previous sentence, in excess of $500,000 during the
term of this Agreement.
SECTION 8.7. EMPLOYEE BENEFIT PLANS.
None of the Borrowers nor any ERISA Affiliate will:
(a) engage in any "prohibited transaction" within the meaning
of Section 406 of ERISA or Section 4975 of the Code which could result
in a material liability for any Borrower; or
(b) permit any Guaranteed Pension Plan to incur an
"accumulated funding deficiency", as such term is defined in
Section 302 of ERISA, whether or not such deficiency is or may be
waived; or
(c) fail to contribute to any Guaranteed Pension Plan to an
extent which, or terminate any Guaranteed Pension Plan in a manner
which, could result in the imposition of a lien or encumbrance on the
assets of any Borrower pursuant to Section 302(f) or Section 4068 of
ERISA; or
(d) permit or take any action which would result in the
aggregate benefit liabilities (with the meaning of Section 4001 of
ERISA) of all Guaranteed Pension Plans exceeding the value of the
aggregate assets of such Plans, disregarding for this purpose the
benefit liabilities and assets of any such Plan with assets in excess
of benefit liabilities.
The Borrowers will (i) promptly upon filing the same with the
Department of Labor or Internal Revenue Service, furnish to the Banks a copy
of the most recent actuarial statement required to be submitted under Section
103(d) of ERISA and Annual Report, Form 5500, with all required attachments,
in respect of each Guaranteed Pension Plan and (ii) promptly upon receipt or
dispatch, furnish to the Banks any notice, report or demand
<PAGE>
sent or received in respect of a Guaranteed Pension Plan under Sections 302,
4041, 4042, 4043, 4063, 4065, 4066 and 4068 of ERISA, or in respect of a
Multiemployer Plan, under Sections 4041A, 4202, 4219, or 4245 of ERISA.
SECTION 8.8. CAPITAL EXPENDITURES.
As at the end of any fiscal quarter, the Borrowers will not permit the amount
of Capital Expenditures (excluding any acquisitions permitted by Section 8.4
hereof) made by the Borrowers in the period of four (4) consecutive fiscal
quarters then ended to exceed an amount equal to 2.0 times the sum of
depreciation and landfill amortization expense for such period (calculated in
accordance with GAAP).
SECTION 8.9. PREPAYMENTS OF CERTAIN OBLIGATIONS.
None of the Borrowers will amend, supplement or otherwise modify the terms of
the Clinton Lease, prepay the Clinton Lease, terminate the Clinton Lease, or
exercise any option to purchase the landfill and related property subject to
the Clinton Lease during the term of this Agreement without the prior written
consent of the Administrative Agent. The Borrowers will not make any payments
of the Seller Subordinated Debt other than scheduled payments of principal
and interest permitted under the applicable Subordination Agreements,
PROVIDED that so long as no Default or Event of Default has occurred and is
continuing, nor would be created by the making of such payment, the Borrowers
may (a) prepay Seller Subordinated Debt in an aggregate amount not to exceed
$3,000,000, and (b) pay KTI Notes in aggregate amount not to exceed
$7,000,000, during the term of this Agreement.
SECTION 8.10. NEGATIVE PLEDGE.
The Borrowers will not enter into any agreement containing any provision
prohibiting the creation or assumption of any lien or security interest upon
its properties (other than prohibitions on liens for particular assets set
forth in a security instrument in connection with secured Indebtedness
permitted by Section 8.1(e) relating to such assets and the granting or
effect of such liens does not otherwise constitute a Default or Event of
Default), revenues or assets, whether now owned or hereafter acquired, or
restricting the ability of the Borrowers to amend or modify this Agreement or
any other Loan Document.
SECTION 9. FINANCIAL COVENANTS OF THE BORROWERS.
The Borrowers covenant and agree that, so long as any Obligation or any
Letter of Credit is outstanding or the Banks have any obligation to make
Loans, or the Canadian Banks have any further obligation with respect to
Bankers' Acceptances, or any Issuing Bank has any obligation to issue, extend
or renew any Letters of Credit hereunder, or the Banks have any obligations
to reimburse any Issuing Bank for drawings honored under any
<PAGE>
Letter of Credit hereunder:
SECTION 9.1. INTEREST COVERAGE RATIOS.
As of the end of any fiscal quarter, the ratio of EBITDA to Consolidated
Total Interest Expense shall not be less than the stated ratio for the
respective periods set forth below: <TABLE><CAPTION>
Period Ratio
------ -----
<S> <C>
Effective Date through 1/31/01 2.50:1
Thereafter 3.50:1
</TABLE>
PROVIDED, that any adjustments made pursuant to clause (e) of the definition
of EBITDA shall not be included in the calculation of this Section 9.1. For
the purposes of this Section 9.1, the ratio shall be calculated on a
cumulative quarterly basis for the fiscal quarters ending January 31, 2000
through October 31, 2000, and thereafter for the four fiscal quarters then
ending.
SECTION 9.2. PROFITABLE OPERATIONS.
The Borrowers will not permit Consolidated Net Income PLus the adjustments in
clauses (f), (g) and (h) of EBITDA, to be less than $0 in any quarter.
SECTION 9.3. BORROWERS' FUNDED DEBT TO EBITDA RATIO.
The Borrowers will not permit the ratio of (a) Consolidated Funded
Indebtedness to (b) EBITDA as at the end of any fiscal quarter to exceed the
stated ratio for the respective periods set forth below:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Effective Date through 6/30/00 4.00:1
7/31/00 through 1/31/01 3.75:1
Thereafter 3.50:1
</TABLE>
For the purposes of this Section 9.3, EBITDA (a) for the fiscal quarter
ending January 31, 2000, shall be the Combined First Quarter Amount for such
quarter multiplied by four (4), (b) for the fiscal quarter ending April 30,
2000, shall be the Combined First Quarter Amount PLUS EBITDA for the fiscal
quarter ending on such date multiplied by two (2), (c) for the fiscal quarter
ending July 31, 2000, shall be the Combined First Quarter Amount PLUS EBITDA
for the period of two consecutive fiscal quarters ending on such date
multiplied by 1.33, (d) for the fiscal quarter ending October 31, 2000, shall
be the Combined First Quarter Amount PLUS EBITDA for the period of three
fiscal quarters ending on such date, and (e) for the fiscal quarter ending
<PAGE>
January 31, 2001 and all fiscal quarters ending thereafter, shall be the EBITDA
for the period of four (4) consecutive fiscal quarters ending on such date.
SECTION 9.4. FUNDED DEBT TO CAPITALIZATION.
As of the end of any fiscal quarter, the Borrowers shall not permit the ratio of
(a) Consolidated Funded Indebtedness to (b) the sum of (i) Consolidated Funded
Indebtedness PLUS (ii) shareholder's equity in the Parent as determined in
accordance with GAAP ("Capitalization") to exceed the stated ratio for the
respective periods set forth below:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Effective Date through 1/31/01 0.70:1
Thereafter 0.65:1.
</TABLE>
SECTION 9.5. TOTAL FUNDED DEBT TO EBITDA RATIO.
As at the end of any fiscal quarter, the ratio of (a) Total Consolidated
Funded Indebtedness to (b) EBITDA shall not exceed 4.00:1. For the purposes
of this Section 9.5, EBITDA (a) for the fiscal quarter ending January 31,
2000, shall be the Combined First Quarter Amount for such quarter multiplied
by four (4), (b) for the fiscal quarter ending April 30, 2000, shall be the
Combined First Quarter Amount PLUS EBITDA for the fiscal quarter ending on
such date multiplied by two (2), (c) for the fiscal quarter ending July 31,
2000, shall be the Combined First Quarter Amount PLUS EBITDA for the period
of two consecutive fiscal quarters ending on such date multiplied by 1.33,
(d) for the fiscal quarter ending October 31, 2000, shall be the Combined
First Quarter Amount PLUS EBITDA for the period of three fiscal quarters
ending on such date, and (e) for the fiscal quarter ending January 31, 2001
and all fiscal quarters ending thereafter, shall be the EBITDA for the period
of four (4) consecutive fiscal quarters ending on such date.
SECTION 10. CLOSING CONDITIONS.
The obligations of the Banks to make the Loans and any Issuing Bank to issue
Letters of Credit or accept and purchase Bankers' Acceptances and otherwise be
bound by the terms of this Agreement shall be subject to the satisfaction of
each of the following conditions precedent, PROVIDED that each condition shall
be met on or before January 31, 2000 (the date all such conditions are met
herein being referred to as the "Effective Date"):
SECTION 10.1. CORPORATE ACTION.
All corporate action necessary for the valid execution, delivery and performance
by each Borrower of the Loan Documents shall have been duly and effectively
taken, and evidence thereof satisfactory to the Administrative
<PAGE>
Agent shall have been provided to the Administrative Agent.
SECTION 10.2. LOAN DOCUMENTS, ETC.
Each of the Loan Documents shall have been duly and properly authorized,
executed and delivered by the respective parties thereto and shall be in full
force and effect in a form satisfactory to the Banks, other than those documents
noted in the Post-Closing Letter.
SECTION 10.3. OFFICER'S CERTIFICATE; CERTIFIED COPIES OF CHARTER
DOCUMENTS.
For each Borrower that was a party to the January 1998 Credit Agreement, the
Administrative Agent shall have received a certificate of a duly authorized
officer of such Person as to the existence, good standing, status or compliance,
as applicable and lack of changes to its charter documents since last delivered
to the Administrative Agent. For each of the New Borrowers, the Administrative
Agent shall have received from the Borrowers a copy, certified by a duly
authorized officer of such Person to be true and complete on the Effective Date,
of each of (a) its charter or other incorporation or constating documents
(including certificates of merger or amalgamation and name changes) as in effect
on such date of certification, and (b) its by-laws as in effect on such date.
SECTION 10.4. INCUMBENCY CERTIFICATE.
The Administrative Agent shall have received an incumbency certificate from each
Borrower, dated as of the Effective Date, signed by duly authorized officers
giving the name and bearing a specimen signature of each individual who shall be
authorized: (a) to sign the Loan Documents on behalf of the Borrowers; (b) to
make Loan and Letter of Credit Requests or Canadian Loan and Letter of Credit
Requests, as applicable; and (c) to give notices and to take other action on the
Borrowers' behalf under the Loan Documents.
SECTION 10.5. VALIDITY OF LIENS.
The Security Documents (other than the Canadian Pledge Agreement and the
Canadian Security Agreements) shall be effective to create in favor of the
Administrative Agent (as collateral agent for the Banks) a legal, valid and
enforceable first security interest in and lien upon the Collateral, subject
only to Permitted Liens. All filings, recordings, deliveries of instruments and
other actions necessary or desirable in the opinion of the Administrative Agent
to protect and preserve such security interests, shall have been duly effected.
The Administrative Agent shall have received evidence thereof in form and
substance satisfactory to the Administrative Agent.
SECTION 10.6. KTI PURCHASE.
The Parent's purchase of KTI as described in the Agreement and Plan of Merger
dated as of January 12, 1999 (as amended to date, the "KTI
<PAGE>
Purchase"), shall be successfully completed on terms no less favorable to the
Parent than the terms set forth in the KTI Purchase documents, and evidence
thereof satisfactory to the Administrative Agent, including, without limitation,
a legal opinion as to the completion of the KTI Purchase, shall have been
furnished to the Administrative Agent.
SECTION 10.7. CERTIFICATES OF INSURANCE.
The Administrative Agent shall have received (i) a certificate of insurance from
an independent insurance broker dated as of the Effective Date, or within 15
days prior thereto, identifying insurers, types of insurance, insurance limits,
and policy terms, and otherwise describing the insurance obtained in accordance
with the provisions of the Security Documents and (ii) copies of all policies
evidencing such insurance (or certificates therefor signed by the insurer or an
agent authorized to bind the insurer).
SECTION 10.8. OPINION OF COUNSEL.
The Banks shall have received favorable opinions addressed to the Administrative
Agent, for the benefit of the Banks, dated the Effective Date, in form and
substance satisfactory to the Administrative Agent, as to (i) authorization,
enforceability of Loan Documents and other corporate matters; (ii) Vermont
security matters and (iii) such other matters as the Banks reasonably request
relating to the transactions contemplated herein, in the other Loan Documents or
in connection with the KTI Purchase.
SECTION 10.9. PAYMENT OF FEES.
The Borrowers shall have paid to the Administrative Agent for the accounts of
the Banks or its own account, as applicable, all fees and expenses that are due
and payable as of the Effective Date.
SECTION 10.10. PAYOFFS.
The Administrative Agent shall have received satisfactory evidence of the
cancellation and payment in full of (a) the $150,000,000 senior credit facility
of KTI dated as of July 13, 1998, (b) the $4,300,000 credit facility between
U.S. Bank and K-C International, Inc., (c) the January 1998 Credit Agreement,
and (d) all secured KTI letters of credit (other than the ING L/C) shall be cash
collateralized on the Effective Date and shall be replaced by a Letter of Credit
under this Agreement within thirty (30) days of the Effective Date, and any
collateral formerly securing such letters of credit shall be returned to the
Parent, to be pledged to the Administrative Agent for the benefit of the Banks.
SECTION 10.11. FINANCIAL STATEMENTS.
(a) The Banks shall have received the financial projections of
the Borrowers, and KTI and its Subsidiaries (other than PERC and
<PAGE>
Timber), in form and substance satisfactory to the Administrative Agent
and the Arranger, for the period from the Effective Date to the
Maturity Date.
(b) The Administrative Agent shall have received a
satisfactory day one balance sheet and sources and uses of funds,
showing the effects of the KTI Purchase, the financing required to
effect the KTI Purchase, compliance with all terms and conditions of
this Agreement, including the covenants in Section 9 hereof.
SECTION 10.12. EXISTING BANKS. All Domestic Revolving Credit Banks
(other than USTrust) which were party to the January 1998 Credit Agreement
shall be Domestic Revolving Credit Banks hereunder and shall maintain their
prior revolving credit commitment levels hereunder.
SECTION 11. CONDITIONS OF ALL LOANS.
The obligations of the Banks to make any Loan, of any Issuing Bank to issue,
extend or renew any Letter of Credit or of the Canadian Banks to incur any
obligations with respect to Bankers' Acceptances on and subsequent to the
Effective Date is subject to the following conditions precedent:
SECTION 11.1. REPRESENTATIONS TRUE; NO EVENT OF DEFAULT.
Each of the representations and warranties of the Borrowers contained in this
Agreement or in any document or instrument delivered pursuant to or in
connection with this Agreement shall be true as of the date as of which they
were made and shall also be true at and as of the time of the making of the
Loans, the acceptance and purchase of Bankers' Acceptances, and the issuance,
extension or renewal of Letters of Credit with the same effect as if made at and
as of that time (except to the extent of changes resulting from transactions
contemplated or permitted by this Agreement and changes occurring in the
ordinary course of business which singly or in the aggregate are not materially
adverse, and to the extent that such representations and warranties relate
expressly to an earlier date) and no Default or Event of Default shall have
occurred and be continuing.
SECTION 11.2 PERFORMANCE; NO EVENT OF DEFAULT.
The Borrowers shall have performed and complied with all terms and conditions
herein required to be performed or complied with by them prior to or at the time
of the making of any Loan, issuance, extension or renewal of any Letter of
Credit or acceptance and purchase of any Bankers' Acceptance and at the time of
the making of any Loan issuance, extension or renewal of any Letter of Credit or
acceptance and purchase of any Bankers' Acceptance, there shall exist no Event
of Default or condition which would result in an Event of Default upon
consummation of such Loan, Letter of Credit or Bankers' Acceptance). Each
request by the Borrowers for a Loan, Letter of Credit or
<PAGE>
Bankers' Acceptance subsequent to the first Loan shall constitute
certification by the Borrowers that the conditions specified in Sections 10.1
and 10.2 will be duly satisfied on the date of such Loan, Letter of Credit or
Bankers' Acceptance issuance.
SECTION 11.3. NO LEGAL IMPEDIMENT.
No change shall have occurred in any law or regulations thereunder or
interpretations thereof which in the reasonable opinion of the Banks would make
it illegal for the Banks to make Loans or issue, extend or renew Letters of
Credit or accept and purchase Bankers' Acceptance hereunder.
SECTION 11.4. GOVERNMENTAL REGULATION.
The Banks shall have received such statements in substance and form reasonably
satisfactory to the Banks as they shall require for the purpose of compliance
with any applicable regulations of the Comptroller of the Currency or the Board
of Governors of the Federal Reserve System or the Office of the Superintendent
of Financial Institutions.
SECTION 11.5. PROCEEDINGS AND DOCUMENTS.
All proceedings in connection with the transactions contemplated by this
Agreement and all documents incident thereto shall have been delivered to the
Administrative Agent as of the Effective Date in substance and in form
satisfactory to the Banks, including without limitation a Letter of Credit and
Loan Request, a Canadian Loan and Letter of Credit Request or a Bankers'
Acceptance Notice in the forms attached hereto as EXHIBIT B-1, B-2 or B-3, and
the Banks shall have received all information and such counterpart originals or
certified or other copies of such documents as the Banks may reasonably request.
SECTION 11.6. SPECIAL CANADIAN CONDITIONS. All documents,
information, or other matters which were to have been executed, delivered or
occurred, as applicable (including, without limitation, the Canadian Pledge
Agreement, the Canadian Security Agreement(s) and the delivery of opinions of
Canadian counsel to the Canadian Borrowers acceptable to the Administrative
Agent), as of the date of the requested Canadian Loan or Canadian Letter of
Credit, shall have been executed, delivered or occurred, as applicable, to
the satisfaction of the Administrative Agent.
SECTION 11.7. POST-CLOSING MATTERS. All documents, information, or
other matters which were to have been executed, delivered or occurred, as
applicable, pursuant to the Post-Closing Letter, as of the date of the
requested Loan or Letter of Credit, shall have been executed, delivered or
occurred, as applicable, to the satisfaction of the Administrative Agent.
<PAGE>
SECTION 12. COLLATERAL SECURITY.
The Obligations or Canadian Obligations, as applicable, shall be secured by (a)
a perfected first priority security interest (subject to purchase money liens or
other Permitted Liens entitled to priority under applicable law) in all assets
(other than Real Property and motor vehicle titles) of each Domestic Borrower,
whether now owned or hereafter acquired, pursuant to the terms of the Domestic
Security and Pledge Agreement to which each Domestic Borrower is a party; (b) a
perfected first priority security interest (subject to purchase money liens or
other Permitted Liens entitled to priority under applicable law) in all assets
(other than Real Property and motor vehicles) of each Canadian Borrower, whether
now owned or hereafter acquired, pursuant to the terms of a Canadian Security
Agreement to which each Canadian Borrower is a party; (c) in the case of the
Domestic Borrowers, a pledge of 100% of the capital stock or other equity
interests of such Domestic Borrowers (other than the Parent) to the
Administrative Agent on behalf of the Banks pursuant to the Domestic Pledge
Agreement to secure the Obligations; (d) in the case of the First Tier Canadian
Borrowers, a pledge of 65% of the capital stock or other equity interests of
such First Tier Canadian Borrowers to the Administrative Agent on behalf of the
Domestic Banks pursuant to the Canadian Pledge Agreement to secure the Domestic
Obligations, a pledge of 35% of the capital stock or other equity interests of
such First Tier Canadian Borrowers to the Administrative Agent for the benefit
of the Canadian Banks pursuant to the Canadian Pledge Agreement to secure the
Canadian Obligations and a pledge of 65% of the capital stock or other equity
interests of such Borrowers to the Administrative Agent for the benefit of the
Canadian Banks pursuant to the Canadian Pledge Agreement in the form of a
second-priority lien to secure the Canadian Obligations; and (e) in the case of
the Second Tier Canadian Borrowers, a pledge of 100% of the capital stock or
other equity interests of such Second Tier Canadian Borrowers to the
Administrative Agent for the benefit of the Canadian Banks to secure the
Canadian Obligations.
SECTION 13. EVENTS OF DEFAULT; ACCELERATION; TERMINATION OF
COMMITMENT.
SECTION 13.1. EVENTS OF DEFAULT AND ACCELERATION.
If any of the following events ("Events of Default" or, if the giving of notice
or the lapse of time or both is required, then, prior to such notice and/or
lapse of time, "Defaults") shall occur:
(a) if the Borrowers shall fail to pay any principal of the
Loans when the same shall become due and payable, whether at the
Revolving Credit Maturity Date, the Term Loan Maturity Date or any
<PAGE>
accelerated date of maturity or at any other date fixed for payment;
(b) if the Borrowers shall fail to pay any interest or fees or
other amounts owing hereunder within five (5) Business Days after the
same shall become due and payable whether at the Revolving Credit
Maturity Date, the Term Loan Maturity Date or any accelerated date of
maturity or at any other date fixed for payment;
(c) if the Borrowers shall fail to comply with the covenants
contained in Sections 7 (other than Sections 7.6, 7.14 and 7.16), 8
or 9 hereof;
(d) if the Borrowers shall fail to perform any term, covenant
or agreement contained herein or in any of the other Loan Documents
(other than those specified in subsections (a), (b), and (c) above)
within 30 days after written notice of such failure has been given to
the Borrowers by the Banks;
(e) if any representation or warranty contained in this
Agreement or in any document or instrument delivered pursuant to or in
connection with this Agreement shall prove to have been false in any
material respect upon the date when made or repeated;
(f) if any Borrower or Excluded Subsidiary shall fail to pay
at maturity, or within any applicable period of grace, any and all
obligations for borrowed money or any guaranty with respect thereto in
an aggregate amount greater than $1,000,000, or fail to observe or
perform any material term, covenant or agreement contained in any
agreement by which it is bound, evidencing or securing borrowed money
in an aggregate amount greater than $1,000,000 for such period of time
as would, or would have permitted (assuming the giving of appropriate
notice if required) the holder or holders thereof or of any obligations
issued thereunder to accelerate the maturity thereof; or
(g) if any Borrower or Excluded Subsidiary makes an assignment
for the benefit of creditors, or admits in writing its inability to pay
or generally fails to pay its debts as they mature or become due, or
petitions or applies for the appointment of a trustee or other
custodian, liquidator, receiver or receiver/manager of any Borrower or
Excluded Subsidiary or of any substantial part of the assets of any
Borrower or Excluded Subsidiary or commences any case or other
proceeding relating to any Borrower or Excluded Subsidiary under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation or similar law of any jurisdiction,
now or hereafter in effect, or takes any action to authorize
<PAGE>
or in furtherance of any of the foregoing, or if any such petition or
application is filed or any such case or other proceeding is commenced
against any Borrower or Excluded Subsidiary and any Borrower or
Excluded Subsidiary indicates its approval thereof, consent thereto or
acquiescence therein;
(h) a decree or order is entered appointing any such trustee,
custodian, liquidator, receiver or receiver/manager or adjudicating any
Borrower or Excluded Subsidiary bankrupt or insolvent, or approving a
petition in any such case or other proceeding, or a decree or order for
relief is entered in respect of any Borrower or Excluded Subsidiary in
an involuntary case under federal bankruptcy laws as now or hereafter
constituted, and such decree or order remains in effect for more than
sixty (60) days, whether or not consecutive;
(i) if there shall remain in force, undischarged, unsatisfied
and unstayed, for more than thirty (30) days, whether or not
consecutive, any final judgment against any Borrower or Excluded
Subsidiary which, with other outstanding final judgments, against the
Borrowers and Excluded Subsidiaries exceeds in the aggregate $1,000,000
after taking into account any undisputed insurance coverage;
(j) any Borrower or Excluded Subsidiary or any ERISA Affiliate
incurs any liability to the PBGC or similar Canadian authorities or a
Guaranteed Pension Plan (or any corresponding plan described in any
Applicable Canadian Pension Legislation) pursuant to Title IV of ERISA
in an aggregate amount exceeding $1,000,000, or any Borrower or
Excluded Subsidiary or any ERISA Affiliate is assessed withdrawal
liability pursuant to Title IV of ERISA by a Multiemployer Plan
requiring aggregate annual payments exceeding $1,000,000, or any of the
following occurs with respect to a Guaranteed Pension Plan (or any
corresponding plan described in any Applicable Canadian Pension
Legislation): (i) an ERISA Reportable Event or similar event under
Applicable Canadian Pension Legislation, or a failure to make a
required installment or other payment (within the meaning of
Section 302(f)(1) of ERISA), PROVIDeD THat the Administrative Agent
determines in its reasonable discretion that such event (A) could be
expected to result in liability of any Borrower or Excluded Subsidiary
to the PBGC, similar Canadian authorities or such Plan in an aggregate
amount exceeding $1,000,000 and (B) could constitute grounds for the
termination of such Plan by the PBGC or similar Canadian authorities,
for the appointment by the appropriate United States District Court or
Canadian Court of a trustee to administer such Plan or for the
imposition of a lien in favor of such Plan; or (ii) the appointment by
a United States District Court or Canadian Court of a trustee to
administer
<PAGE>
such Plan; or (iii) the institution by the PBGC or similar Canadian
authorities of proceedings to terminate such Plan;
(k) if a drawing in excess of $1,000,000 is made on
the MERC L/C or the ING L/C;
(l) if any of the Loan Documents shall be cancelled,
terminated, revoked or rescinded otherwise than in accordance with the
terms thereof or with the express prior written agreement, consent or
approval of the Banks, or any action at law, suit or in equity or other
legal proceeding to cancel, revoke or rescind any of the Loan Documents
shall be commenced by or on behalf of the Borrowers or any of their
respective stockholders, or any court or any other governmental or
regulatory authority or agency of competent jurisdiction shall make a
determination that, or issue a judgment, order, decree or ruling to the
effect that, any one or more of the Loan Documents is illegal, invalid
or unenforceable in accordance with the terms thereof;
(m) John Casella and James Bohlig shall cease to serve as
senior management of the Parent and shall not be replaced by other
Persons reasonably acceptable to the Banks within 90 days; or
(n) any Person or group of Persons (within the meaning of
Section 13 or 14 of the Securities Exchange Act of 1934, as amended)
shall have acquired beneficial ownership (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission under said
Act) of 25% or more of the outstanding shares of common stock of the
Parent; or, during any period of twelve consecutive calendar months,
individuals who were directors of the Parent on the first day of such
period shall cease to constitute a majority of the board of directors
of the Parent;
then, and in any such event, so long as the same may be continuing, the
Administrative Agent shall upon the request of the Required Banks, by notice in
writing to the Borrowers, declare all amounts owing with respect to this
Agreement, the Notes and the other Loan Documents and all Reimbursement
Obligations to be, and they shall thereupon forthwith become, immediately due
and payable without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived by the Borrowers; PROVIDED that in the
event of any Event of Default specified in Section 13.1(g) or 13.1(h), all such
amounts shall become immediately due and
<PAGE>
payable automatically and without any requirement of notice from the
Administrative Agent or any Bank. Upon demand by the Required Banks after the
occurrence of any Event of Default, the Borrowers shall immediately provide to
the Administrative Agent cash in an amount equal to the aggregate Maximum
Drawing Amount of all Letters of Credit outstanding, to be held by the
Administrative Agent as collateral security for the Obligations.
SECTION 13.2. TERMINATION OF COMMITMENTS.
If any Event of Default shall occur, any unused portion of the Total Commitment
hereunder shall forthwith terminate and the Banks shall be relieved of all
obligations to make Loans to, or issue Letters of Credit for the account of, or
to accept and purchase Bankers' Acceptances for any of the Borrowers; or if on
any Drawdown Date the conditions precedent to the making of the Loans to be made
on such Drawdown Date or the issuance of any Letters of Credit to be issued on
such date are not satisfied (except as a consequence of a default on the part of
the Banks), the Banks may by notice to the Borrowers, terminate the unused
portion of the Total Commitment hereunder, and upon such Notice being given,
such unused portion of the Total Commitment hereunder shall terminate
immediately and the Banks shall be relieved of all further obligations to make
Loans to, or issue Letters of Credit for, or accept and purchase Bankers'
Acceptances for, the account of the Borrowers hereunder. No termination of any
portion of the Total Commitment hereunder shall relieve the Borrowers of any of
their existing Obligations to the Banks hereunder or elsewhere.
SECTION 13.3. REMEDIES.
Subject to Section 15.8, in case any one or more of the Events of Default
shall have occurred and be continuing, and whether or not the Banks shall
have accelerated the maturity of the Loans pursuant to Section 13.1, each
Bank with the consent of the Required Banks, if owed any amount with respect
to the Loans, the Bankers' Acceptances or the Reimbursement Obligations, may
proceed to protect and enforce its rights by suit in equity, action at law or
other appropriate proceeding, whether for the specific performance of any
covenant or agreement contained in this Agreement and the other Loan
Documents or any instrument pursuant to which the Obligations to such Bank
are evidenced, including, without limitation, as permitted by applicable law,
the obtaining of the EX PARTE appointment of a receiver, and, if such amount
shall have become due, by declaration or otherwise, proceed to enforce the
payment thereof or any legal or equitable right of such Bank. No remedy
herein conferred upon any Bank or the Bank Agents or the holder of any Note
or purchaser of any Letter of Credit Participation is intended to be
exclusive of any other remedy and each and every remedy shall be cumulative
and shall be in addition to every other remedy given hereunder or
<PAGE>
now or hereafter existing at law or in equity or by statute or any other
provision of law.
SECTION 14. SETOFF.
Regardless of the adequacy of any collateral, during the continuance of an Event
of Default, any deposits or other sums credited by or due from any Bank or Bank
Agent to the Borrowers and any securities or other property of the Borrowers in
the possession of such Bank or Bank Agent may be applied to or set off against
the payment of the Obligations or, to the fullest extent permitted by law, the
Canadian Obligations, and any and all other liabilities, direct, or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising,
of the Borrowers to the Banks. Each of the Banks agrees with each other Bank
that (a) if an amount to be set off is to be applied to Indebtedness of the
Borrowers to such Bank, other than Indebtedness evidenced by the Notes held by
such Bank or constituting Reimbursement Obligations owed to such Bank, such
amount shall be applied ratably to such other Indebtedness and to the
Indebtedness evidenced by all such Notes held by such Bank or constituting
Reimbursement Obligations owed to such Bank, and (b) if such Bank shall receive
from the Borrowers any amount, whether by voluntary payment, exercise of the
right of setoff, counterclaim, cross action, enforcement of the claim evidenced
by the Notes held by, or constituting Reimbursement Obligations owed to, such
Bank by proceedings against the Borrowers at law or in equity or by proof
thereof in bankruptcy, reorganization, liquidation, receivership or similar
proceedings, or otherwise, and shall retain and apply to the payment of the Note
or Notes held by, or Reimbursement Obligations owed to, such Bank any amount in
excess of its ratable portion of the payments received by all of the Banks with
respect to the Notes held by, and Reimbursement Obligations owed to, all of the
Banks, such Bank will make such disposition and arrangements with the other
Banks with respect to such excess, either by way of distribution, PRO TANTO
assignment of claims, subrogation or otherwise as shall result in each Bank
receiving in respect of the Notes held by it or Reimbursement Obligations owed
it, such Bank's proportionate payment as contemplated by this Agreement;
PROVIDED that if all or any part of such excess payment is thereafter recovered
from such Bank, such disposition and arrangements shall be rescinded and the
amount restored to the extent of such recovery, but without interest.
SECTION 15. THE BANK AGENTS.
SECTION 15.1 APPOINTMENT, POWERS AND IMMUNITIES.
Each Bank hereby irrevocably appoints and authorizes (a) BankBoston to act as
the Administrative Agent hereunder, and (b) CIBC Canada to act as Canadian Agent
hereunder, and under the other Loan Documents. The Bank
<PAGE>
Agents hereby acknowledge that they do not have the authority to negotiate
any agreement which would bind the Banks or agree to any amendment, waiver or
modification of any of the Loan Documents or bind the Banks except as set
forth in this Agreement or the Loan Documents. Except as provided in this
Section 15 and in the other Loan Documents, the Bank Agents shall take action
or refrain from acting only upon instructions of the Banks and no action
taken or failure to act without the consent of the Banks shall be binding on
any Bank which has not consented. Each Bank irrevocably authorizes the Bank
Agents to execute the Security Documents and all other instruments relating
thereto and to take such action on behalf of each of the Banks and to
exercise all such powers as are expressly delegated to the Bank Agents
hereunder and in the Security Documents and all related documents, together
with such other powers as are reasonably incidental thereto. It is agreed
that the duties, rights, privileges and immunities of any Issuing Bank, in
its capacity as issuer of Letters of Credit hereunder, shall be identical to
its duties, rights, privileges and immunities as Bank as provided in this
Section 15. The Bank Agents shall not have any duties or responsibilities or
any fiduciary relationship with any Bank except those expressly set forth in
this Agreement. Neither the Bank Agents nor any of their affiliates shall be
responsible to the Banks for any recitals, statements, representations or
warranties made by the Borrowers or any other Person whether contained herein
or otherwise or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement, the other Loan Documents or
any other document referred to or provided for herein or therein or for any
failure by the Borrowers or any other Person to perform its obligations
hereunder or thereunder or in respect of the Notes. The Bank Agents may
employ agents and attorneys-in-fact and shall not be responsible for the
negligence or misconduct of any such agents or attorneys-in-fact selected by
it with reasonable care. Neither the Bank Agents nor any of its directors,
officers, employees or agents shall be responsible for any action taken or
omitted to be taken by it or them hereunder or in connection herewith, except
for its or their own gross negligence or willful misconduct. The Bank Agents
in their separate capacities as Banks shall have the same rights and powers
hereunder as any other Bank.
SECTION 15.2. ACTIONS BY BANK AGENTS.
Each Bank Agent shall be fully justified in failing or refusing to take any
action under this Agreement as it reasonably deems appropriate unless it shall
first have received such advice or concurrence of the Banks and shall be
indemnified to its reasonable satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Each Bank Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or any
of the Loan Documents in accordance with a request of the Banks, and
<PAGE>
such request and any action taken or failure to act pursuant thereto shall be
binding upon the Banks and all future holders of the Notes or any Letter of
Credit Participation.
SECTION 15.3. INDEMNIFICATION.
Without limiting the obligations of the Borrowers hereunder or under any other
Loan Document, the Banks agree to indemnify each Bank Agent and its affiliates,
agents, directors, officers and shareholders, and ratably in accordance with
their respective Domestic Commitment Percentages and Canadian Commitment
Percentages, as applicable, for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
or any kind or nature whatsoever which may at any time be imposed on, incurred
by or asserted against such Bank Agent in any way relating to or arising out of
this Agreement or any other Loan Document or any documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
or the enforcement of any of the terms hereof or thereof or of any such other
documents; PROVIDED, THAT no Bank shall be liable for any of the foregoing to
the extent they arise from the gross negligence or willful misconduct of the
Bank Agents (or any agent thereof).
SECTION 15.4. REIMBURSEMENT.
Without limiting the provisions of Section 15.3, the Banks and each Bank
Agent hereby agree that such Bank Agent shall not be obliged to make
available to any Person any sum which such Bank Agent is expecting to receive
for the account of that Person until such Bank Agent has determined that it
has received that sum. Each Bank Agent may, however, disburse funds prior to
determining that the sums which such Bank Agent expects to receive have been
finally and unconditionally paid to such Bank Agent, if such Bank Agent
wishes to do so. If and to the extent that such Bank Agent does disburse
funds and it later becomes apparent that such Bank Agent did not then receive
a payment in an amount equal to the sum paid out, then any Person to whom
such Bank Agent made the funds available shall, on demand from such Bank
Agent, refund to such Bank Agent the sum paid to that Person. If, in the
opinion of such Bank Agent, the distribution of any amount received by it in
such capacity hereunder or under the Loan Documents might involve it in
liability, it may refrain from making distribution until its right to make
distribution shall have been adjudicated by a court of competent
jurisdiction. If a court of competent jurisdiction shall adjudge that any
amount received and distributed by such Bank Agent is to be repaid, each
Person to whom any such distribution shall have been made shall either repay
to such Bank Agent its proportionate share of the amount so adjudged to be
repaid or shall pay over the same in such manner and to such Persons as shall
be determined by such court. <PAGE>
SECTION 15.5. DOCUMENTS.
The Bank Agents will forward to each Bank, promptly after such Bank Agent's
receipt thereof, a copy of each notice or other document furnished to such Bank
Agent for such Bank hereunder; PROVIDED, HOWEVER, that, notwithstanding the
foregoing, each Bank Agent may furnish to the Banks a monthly summary with
respect to Letters of Credit issued hereunder in lieu of copies of the related
Letter of Credit Applications.
SECTION 15.6. NON-RELIANCE ON AGENTS AND OTHER BANKS.
Each Bank represents that it has, independently and without reliance on the
Bank Agents or any other Bank, and based on such documents and information as
it has deemed appropriate, made its own appraisal of the financial condition
and affairs of the Borrowers and decision to enter into this Agreement and
the other Loan Documents and agrees that it will, independently and without
reliance upon either Bank Agent or any other Bank, and based on such
documents and information as it shall deem appropriate at the time, continue
to make its own appraisals and decisions in taking or not taking action under
this Agreement or any other Loan Document. The Bank Agents shall not be
required to keep informed as to the performance or observance by the
Borrowers of this Agreement, the other Loan Documents or any other document
referred to or provided for herein or therein or by any other Person of any
other agreement or to make inquiry of, or to inspect the properties or books
of, any Person. Except for notices, reports and other documents and
information expressly required to be furnished to the Banks by the Bank
Agents hereunder, the Bank Agents shall not have any duty or responsibility
to provide any Bank with any credit or other information concerning any
Person which may come into the possession of such Bank Agent or any of its
affiliates. Each Bank shall have access to all documents relating to each
Bank Agent's performance of its duties hereunder at such Bank's request.
Unless any Bank shall promptly object to any action taken by the Bank Agents
hereunder (other than actions to which the provisions of Section 15.8 are
applicable and other than actions which constitute gross negligence or
willful misconduct by such Bank Agent), such Bank shall conclusively be
presumed to have approved the same.
SECTION 15.7. RESIGNATION OF AGENTS.
Each Bank Agent may resign at any time by giving 60 days prior written notice
thereof to the Banks and the Borrowers. Upon any such resignation, the Banks
shall have the right to appoint a successor Bank Agent. If no successor Bank
Agent shall have been so appointed by the Banks and shall have accepted such
appointment within 30 days after the retiring Bank Agent's giving of notice of
resignation, then the retiring Bank Agent may, on behalf of the Banks, appoint a
successor Bank Agent, which shall be a
<PAGE>
financial institution having a combined capital and surplus in excess of
$150,000,000. Upon the acceptance of any appointment as Bank Agent hereunder
by a successor Bank Agent, such successor Bank Agent shall thereupon succeed
to and become vested with all the rights, powers, privileges and duties of
the retiring Bank Agent, and the retiring Bank Agent shall be discharged from
its duties and obligations hereunder. After any retiring Bank Agent's
resignation, the provisions of this Agreement shall continue in effect for
its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as Bank Agent. Any new Bank Agent appointed pursuant to
this Section 15.7 shall immediately issue new Letters of Credit in place of
Letters of Credit previously issued by the prior Bank Agent.
SECTION 15.8. ACTION BY THE BANKS, CONSENTS, AMENDMENTS, WAIVERS, ETC.
Except as otherwise expressly provided in this Section 15.8, any action to be
taken (including the giving of notice) may be taken or any consent or
approval required or permitted by the Agreement or any other Loan Document to
be given by the Banks may be given, and any term of this Agreement, any other
Loan Document or any other instrument, document or agreement related to this
Agreement or the other Loan Documents or mentioned therein may be amended and
the performance or observance by the Borrowers or any other Person of any of
the terms thereof and any Default or Event of Default (as defined in any of
the above-referenced documents or instruments) may be waived (either
generally or in a particular instance and either retroactively or
prospectively) only with the written consent of the Required Banks; PROVIDED,
however, that no such consent or amendment which affects the rights, duties
or liabilities of a Bank Agent shall be effective without the written consent
of such Bank Agent. Notwithstanding the foregoing, no amendment, waiver or
consent shall, do any of the following unless in writing and signed by ALL of
the Banks (a) increase the principal amount of the Total Commitment (or
subject the Banks to any additional obligations), (b) reduce the principal of
or interest on the Notes (including, without limitation, interest on overdue
amounts) or any fees payable hereunder, (c) postpone any date fixed for any
payment in respect of principal or interest (including, without limitation,
interest on overdue amounts) on the Notes, or any fees payable hereunder; (d)
change the definition of "Required Banks" or percentage of Banks which shall
be required for the Banks or any of them to take any action under the Loan
Documents; (e) amend Section 2.4, Section 28 or this Section 15.8; (f) change
the Loan Percentage of any Bank, except (i) as permitted under Section 2.2.2
or Section 19 hereof, or (ii) with the consent of such affected Bank; or (g)
except as otherwise permitted hereunder, release any Collateral.
SECTION 15.9. DOCUMENTATION AGENT AND SYNDICATION AGENT.
None of the Banks identified on the cover page of this Agreement as either a
<PAGE>
"Documentation Agent" or a "Syndication Agent" shall have any right, power,
obligation, liability, responsibility or duty under this Agreement other than
those applicable to all Banks as such. Without limiting the foregoing, none of
the Banks so identified as either a "Documentation Agent" or a "Syndication
Agent" shall have or be deemed to have any fiduciary relationship with any Bank.
Each Bank acknowledges that it has not relied, and will not rely, on any of the
Banks so identified in deciding to enter into this Agreement or not taking
action hereunder.
SECTION 16. EXPENSES.
Whether or not the transactions contemplated herein shall be consummated, the
Borrowers hereby promise to (a) reimburse Bank Agents as well as the Bank
Agents' affiliates for all reasonable out-of-pocket fees and disbursements
(including all reasonable attorneys' fees, collateral evaluation costs and
Consulting Engineer's fees), incurred or expended in connection with the
preparation, filing or recording, or interpretation of this Agreement, the other
Loan Documents, or any amendment, modification, approval, consent or waiver
hereof or thereof, or with the enforcement of any Obligations or the
satisfaction of any indebtedness of the Borrowers hereunder or thereunder, or in
connection with any litigation, proceeding or dispute hereunder in any way
related to the credit hereunder and (b) reimburse all reasonable out-of-pocket
fees and disbursements (including all reasonable attorneys' fees) incurred by
any Bank in connection with the enforcement of or preservation of rights under
any of the Loan Documents against the Borrowers or the administration, work-out
or restructuring thereof after the occurrence of a Default or Event of Default
and (ii) any litigation, proceeding or dispute hereunder in any way related to
the credit hereunder. The Borrowers will pay any taxes (including any interest
and penalties in respect thereof) other than the Banks' federal and state or
provincial income taxes, payable on or with respect to the transactions
contemplated by this Agreement (the Borrowers hereby agreeing to indemnify the
Banks with respect thereto).
SECTION 17. INDEMNIFICATION.
The Borrowers jointly and severally (to the fullest extent permitted by law)
agree to indemnify and hold harmless the Bank Agents and the Banks, as well as
each Bank Agent's and the Banks' shareholders, directors, agents, officers,
subsidiaries and affiliates, from and against all damages, losses, settlement
payments, obligations, liabilities, claims, suits, penalties, assessments,
citations, directives, demands, judgments, actions or causes of action, whether
statutory created or under the common law, and reasonable costs and expenses
incurred, suffered, sustained or required to be paid by an indemnified party by
reason of or resulting from the transactions contemplated hereby, except any of
the foregoing which result from the gross
<PAGE>
negligence or willful misconduct of the indemnified party. In any
investigation, proceeding or litigation, or the preparation therefor, each
Bank shall be entitled to select its own counsel and, in addition to the
foregoing indemnity, the Borrowers agree to pay promptly the reasonable fees
and expenses of such counsel. In the event of the commencement of any such
proceeding or litigation, the Borrowers shall be entitled to participate in
such proceeding or litigation with counsel of their choice at their expense,
PROVIDED that such counsel shall be reasonably satisfactory to the Banks. The
covenants of this Section 17 shall survive payment or satisfaction in full of
the Obligations.
SECTION 18. SURVIVAL OF COVENANTS, ETC
Unless otherwise stated herein, all covenants, agreements, representations and
warranties made herein, in the other Loan Documents or in any documents or other
papers delivered by or on behalf of the Borrowers pursuant hereto shall be
deemed to have been relied upon by the Banks, the Issuing Bank and the Bank
Agents, notwithstanding any investigation heretofore or hereafter made by any of
them, and shall survive the making by the Banks of the Loans, the acceptance and
purchase of Bankers' Acceptances, and the issuance, extension or renewal of any
Letters of Credit, as herein contemplated, and shall continue in full force and
effect so long as any amount due under this Agreement, any Letter of Credit, any
Bankers' Acceptance or the Notes remains outstanding and unpaid or any Bank has
any obligation to make any Loans or issue any Letters of Credit hereunder or any
Canadian Bank has any obligation to accept and purchase Bankers' Acceptances
hereunder. All statements contained in any certificate or other paper delivered
by or on behalf of the Borrowers pursuant hereto or in connection with the
transactions contemplated hereby shall constitute representations and warranties
by the Borrowers hereunder.
SECTION 19. SYNDICATION AND PARTICIPATION.
It is understood and agreed that each Bank shall have the right to assign at any
time its portion of the Total Commitment and interests in the risk relating to
any Loans, outstanding Letters of Credit, and Bankers' Acceptances in an amount
equal to or greater than $2,500,000, to additional banks, other financial
institutions or other entities whose business is to purchase and sell loan
assets in the normal course acceptable to the Administrative Agent or the
Canadian Agent and, so long as no Event of Default has occurred and is
continuing, the Parent (unless an assignment is to a Bank or to an affiliate of
a Bank (so long as such assignment would not result in increased costs to the
Borrowers hereunder), in which case acceptance by such Bank Agent and the Parent
shall not be necessary), which acceptance shall not be unreasonably withheld,
PROVIDED that a Bank may assign all or a portion of its Canadian Commitment
Percentage and
<PAGE>
Canadian Loans outstanding, Canadian Letters of Credit and Bankers'
Acceptances, only to an Eligible Canadian Assignee, and that each bank or
other financial institution which executes and delivers to the Banks and the
Borrowers hereunder a counterpart joinder in form and substance satisfactory
to the Banks and such bank or financial institution shall, on the date
specified in such counterpart joinder, become a party to this Agreement and
the other Loan Documents for all purposes of this Agreement and the other
Loan Documents, and its Commitment or portion of the Term Loan shall be as
set forth in such counterpart joinder. Upon the execution and delivery of
such counterpart joinder, (a) the Borrowers shall issue to the bank or other
financial institution applicable Notes in the amount of such bank's or other
financial institution's Domestic Commitment, portion of the Term Loan or
Canadian Commitment, as applicable, dated the Effective Date or such other
date as may be specified by the appropriate Bank Agent and otherwise
completed in substantially the form of the Notes executed and delivered on
the Effective Date; (b) the appropriate Bank Agent shall distribute to the
Borrowers, the Banks and such bank or financial institution a schedule
reflecting such changes; (c) this Agreement shall be appropriately amended to
reflect (i) the status of such bank or financial institution as a party
hereto and (ii) the status and rights of the Banks and Bank Agents hereunder;
and (d) the assignee bank or financial institution shall pay a processing and
recordation fee of $3,500 to the Administrative Agent. Each Bank shall also
have the right to grant participations to one or more banks, other financial
institutions or other entities whose business is to purchase and sell loan
assets in the normal course in or to all or any part of any Loans owing to
such Bank and the Note held by such Bank PROVIDED that (i) any such sale or
participation shall not affect the rights and duties of the selling Bank
hereunder to the Borrowers and (ii) the only rights granted to the
participant pursuant to such participation arrangements with respect to
waivers, amendments or modifications of the Loan Documents shall be the
rights to approve waivers, amendments or modifications that would require
consent by ALL Banks under Section 15.8, and any participant shall be
entitled to the benefits of Sections 5.5, 5.6, 5.9, 5.14 and 17 as if it were
a Bank hereunder, PROVIDED, however that no Borrower shall be required to pay
any amount which is greater than such amount that otherwise would have been
payable to the Bank which sold such participation. Notwithstanding the
foregoing, no syndication or assignment shall operate to increase the Total
Commitment or Term Loan hereunder or reduce the Domestic Commitment or
portion of the Term Loan of any Bank to an amount less than $2,500,000 or
otherwise alter the substantive terms of this Agreement. Anything contained
in this Section 19 to the contrary notwithstanding, any Bank may at any time
pledge all or any portion of its interest and rights under this Agreement
(including all or any portion of its Notes) to any of the twelve Federal
Reserve Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C.
Section 341. No such pledge or the
<PAGE>
enforcement thereof shall release the pledgor Bank from its obligations
hereunder or under any of the other Loan Documents.
Section 20. PARTIES IN INTEREST.
All the terms of this Agreement and the other Loan Documents shall be binding
upon and inure to the benefit of and be enforceable by the respective successors
and permitted assigns of the parties hereto and thereto; PROVIDED, that no
Borrower shall assign or transfer its rights hereunder without the prior written
consent of the Banks.
Section 21. NOTICES, ETC.
Except as otherwise expressly provided in this Agreement, all notices and other
communications made or required to be given pursuant to this Agreement or the
other Loan Documents shall be in writing and shall be delivered in hand, mailed
by United States or Canadian first-class mail, as applicable, postage prepaid,
or sent by telegraph, telex or telecopier and confirmed by letter, addressed as
follows:
(a) if to the Borrowers, at 25 Greens Hill Lane, P.O. Box 866,
Rutland, Vermont 05701, Attention: President, telecopy
number 802-775-6198;
(b) if to the Administrative Agent or BankBoston, at 100
Federal Street, Boston, Massachusetts 02110, USA, Attention: Arthur J.
Oberheim, Director, telecopy number 617-434-2160;
(c) if to the Canadian Agent or CIBC Canada, at BCE Place, 161
Bay Street, Toronto, Ontario M5J 2S8;
or such other address for notice as shall have last been furnished in writing to
the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or
made and to have become effective (a) if delivered by hand to a responsible
officer of the party to which it is directed, at the time of the receipt thereof
by such officer, (b) if sent by registered or certified first-class mail,
postage prepaid, five Business Days after the posting thereof, and (c) if sent
by telex or cable, at the time of the dispatch thereof, if in normal business
hours in the country of receipt, or otherwise at the opening of business on the
following Business Day.
Section 22. MISCELLANEOUS.
The rights and remedies herein expressed are cumulative and not exclusive of any
other rights which the Banks, the Issuing Banks or Bank Agents
<PAGE>
would otherwise have. The captions in this Agreement are for convenience of
reference only and shall not define or limit the provisions hereof. This
Agreement and any amendment hereof may be executed in several counterparts and
by each party on a separate counterpart, each of which when so executed and
delivered shall be an original, but all of which together shall constitute one
instrument. In proving this Agreement it shall not be necessary to produce or
account for more than one such counterpart signed by the party against whom
enforcement is sought.
Section 23. ENTIRE AGREEMENT, ETC.
The Loan Documents and any other documents executed in connection herewith or
therewith express the entire understanding of the parties with respect to the
transactions contemplated hereby. Neither this Agreement nor any term hereof
may be changed, waived, discharged or terminated, except as provided in
Section 15.8. No waiver shall extend to or affect any obligation not
expressly waived or impair any right consequent thereon. No course of dealing
or omission on the part of the Bank Agents or any Bank in exercising any
right shall operate as a waiver thereof or otherwise be prejudicial thereto.
No notice to or demand upon the Borrowers shall entitle the Borrowers to
other or further notice or demand in similar or other circumstances.
Section 24. WAIVER OF JURY TRIAL.
EACH OF THE BORROWERS HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO
ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS
AGREEMENT, THE NOTES OR ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR
OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS. EXCEPT AS PROHIBITED BY LAW, EACH BORROWER HEREBY WAIVES ANY RIGHT
IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THE PRECEDING
SENTENCE ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. THE BORROWERS (a) CERTIFY
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY BANK, ISSUING BANK OR ANY BANK
AGENT HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH BANK, ISSUING BANK, OR
BANK AGENT WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVERS AND (b) ACKNOWLEDGE THAT THE BANK AGENTS AND THE BANKS HAVE BEEN INDUCED
TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH IT IS A PARTY
BECAUSE OF, AMONG OTHER THINGS, THE BORROWERS'
<PAGE>
WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.
Section 25. GOVERNING LAW. THIS CREDIT AGREEMENT AND, EXCEPT AS
OTHERWISE SPECIFICALLY PROVIDED THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE
CONTRACTS UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL, PURSUANT TO NEW
YORK GENERAL OBLIGATIONS LAW SECTION 5-1401, BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK. THE BORROWERS CONSENT AND
AGREE THAT ANY SUIT FOR THE ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW
YORK OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE
JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE
UPON THE BORROWERS IN ACCORDANCE WITH LAW AT THE ADDRESS SPECIFIED IN Section
21. THE BORROWERS HEREBY WAIVE ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER
HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS
BROUGHT IN AN INCONVENIENT COURT.
Section 26. SEVERABILITY.
The provisions of this Agreement are severable and if any one clause or
provisioN hereof shall be held invalid or unenforceable in whole or in part in
any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction, and shall not
in any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision of this Agreement in any jurisdiction.
Section 27. [INTENTIONALLY OMITTED].
Section 28. PARI PASSU TREATMENT.
(a) Notwithstanding anything to the contrary set forth herein, each
payment or prepayment of principal and interest received after the occurrence of
an Event of Default hereunder shall be distributed pari passu among the Banks,
in accordance with the aggregate outstanding principal amount of the Obligations
owing to each Bank divided by the aggregate outstanding principal amount of all
Obligations.
(b) Following the occurrence and during the continuance of any Event
of Default, each Bank agrees that if it shall, through the exercise of a
right of banker's lien, setoff or counterclaim against any Borrower (pursuant
to Section 13.3 or otherwise), including a secured claim under Section 506 of
the
<PAGE>
Bankruptcy Code or other security or interest arising from or in lieu of,
such secured claim, received by such Bank under any applicable bankruptcy,
insolvency or other similar law or otherwise, obtain payment (voluntary or
involuntary) in respect of the Notes, Loans, and other Obligations held by it
as a result of which the unpaid principal portion of the Notes, Loans and the
Obligations held by it shall be proportionately less than the unpaid
principal portion of the Notes, Loans and Obligations held by any other Bank,
it shall be deemed to have simultaneously purchased from such other Bank a
participation in the Notes, Loans and Obligations held by such other Bank, so
that the aggregate unpaid principal amount of the Notes, Loans, Obligations
and participations in Notes, Loans and Obligations held by each Bank shall be
in the same proportion to the aggregate unpaid principal amount of the Notes,
Loans and Obligations then outstanding as the principal amount of the Notes,
Loans and other Obligations held by it prior to such exercise of banker's
lien, setoff or counterclaim was to the principal amount of all Notes, Loans
and other Obligations outstanding prior to such exercise of banker's lien,
setoff or counterclaim; PROVIDED, however, that if any such purchase or
purchases or adjustments shall be made pursuant to this Section 28 and the
payment giving rise thereto shall thereafter be recovered, such purchase or
purchases or adjustments shall be rescinded to the extent of such recovery
and the purchase price or prices or adjustments restored without interest.
(c) Each Borrower expressly consents to the foregoing arrangements and
agrees that any Person holding such a participation in the Notes, Loans and the
Obligations deemed to have been so purchased may exercise any and all rights of
banker's lien, setoff or counterclaim with respect to any and all moneys owing
by such Borrower to such Person as fully as if such Person had made a Loan
directly to such Borrower in the amount of such participation.
(d) Nothing contained in this Section 28 shall impair, as between the
Borrowers and any Bank, thE obligation of the applicable Borrowers to pay such
Bank all amounts payable in respect of such Bank's Notes, Loans, and other
Obligations as and when the same shall become due and payable in accordance with
the terms thereof.
<PAGE>
IN WITNESS WHEREOF, the undersigned have duly executed this Amended and
Restated Revolving Credit and Term Loan Agreement as of the date first set forth
above.
BANKBOSTON, N.A.,
individually and as Administrative Agent
By:
Name:
Title:
KEYBANK NATIONAL ASSOCIATION,
individually and as Documentation Agent
By:
Name:
Title:
BANK OF AMERICA, N.A.,
individually and as Syndication Agent
By:
Name:
Title:
COMERICA BANK
By:
Name:
Title:
CIBC INC.
By:
Name:
Title:
<PAGE>
LASALLE BANK NATIONAL
ASSOCIATION
By:
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH
By:
Name:
Title:
FIRST VERMONT BANK AND TRUST
COMPANY
By:
Name:
Title:
CANADIAN IMPERIAL BANK OF
COMMERCE, individually and as
Canadian Agent
By:
Name:
Title:
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
<PAGE>
DOMESTIC BORROWERS:
ALL CYCLE WASTE, INC.
BRISTOL WASTE MANAGEMENT, INC.
CASELLA T.I.R.E.S., INC.
CASELLA TRANSPORTATION, INC.
CASELLA WASTE MANAGEMENT, INC.
CASELLA WASTE MANAGEMENT OF N.Y., INC.
CASELLA WASTE MANAGEMENT OF PENNSYLVANIA, INC.
CASELLA WASTE SYSTEMS, INC.
GRASSLANDS INC.
HAKES C & D DISPOSAL, INC.
HIRAM HOLLOW REGENERATION CORP.
NATURAL ENVIRONMENTAL, INC.
NEWBURY WASTE MANAGEMENT, INC.
NEW ENGLAND WASTE SERVICES, INC.
NEW ENGLAND WASTE SERVICES OF MASSACHUSETTS, INC.
NEW ENGLAND WASTE SERVICES OF N.Y., INC.
NEW ENGLAND WASTE SERVICES OF VERMONT, INC.
NORTH COUNTRY ENVIRONMENTAL SERVICES, INC.
NORTHERN SANITATION, INC.
PINE TREE WASTE, INC.
RESOURCE RECOVERY OF CAPE COD, INC.
RESOURCE TRANSFER SERVICES, INC.
RESOURCE WASTE SYSTEMS, INC.
SAWYER ENVIRONMENTAL RECOVERY FACILITIES, INC.
SAWYER ENVIRONMENTAL SERVICES
SCHULTZ LANDFILL, INC.
SUNDERLAND WASTE MANAGEMENT, INC.
WASTE-STREAM INC.
WESTFIELD DISPOSAL SERVICE, INC.
WINTERS BROTHERS, INC.
By:
Name: Jerry S. Cifor
Title: Treasurer
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
ADVANCED ENTERPRISES RECYCLING, INC.
AFA GROUP, INC.
AFA PALLET, INC.
AGRO PRODUCTS, INC.
ALLIED EQUIPMENT SALES CORP., INC.
AMERICAN SUPPLIES SALES GROUP, INC.
ARTIC, INC.
ATLANTIC TRANSPORTATION TECHNOLOGIES, INC.
DATA DESTRUCTION SERVICES, INC.
FAIRFIELD COUNTY RECYCLING, INC.
FCR CAMDEN, INC.
FCR FLORIDA, INC.
FCR GEORGIA, INC.
FCR GREENSBORO, INC.
FCR GREENVILLE, INC.
FCR MORRIS, INC.
FCR PLASTICS, INC.
FCR REDEMPTION, INC.
FCR TENNESSEE, INC.
FCR VIRGINIA, INC.
FCR, INC.
KTI BIOFUELS, INC.
KTI ENERGY OF MARTINSVILLE, INC.
KTI ENERGY OF VIRGINIA, INC.
KTI ENVIRONMENTAL GROUP, INC.
KTI NEW JERSEY FIBERS, INC.
KTI OPERATIONS, INC.
KTI RECYCLING OF ILLINOIS, INC.
KTI RECYCLING OF NEW ENGLAND, INC.
KTI RECYCLING OF NEW JERSEY, INC.
KTI RECYCLING, INC.
KTI SPECIALTY WASTE SERVICES, INC.
KTI TRANSPORTATION SERVICES, INC.
KTI, INC.
MANNER RESINS, INC.
MECHLENBURG COUNTY RECYCLING, INC.
POWER SHIP TRANSPORT, INC.
TOTAL WASTE MANAGEMENT CORPORATION
U.S. FIBERS, INC.
By:
Name: Jerry S. Cifor
Title: Treasurer
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
PENOBSCOT ENERGY RECOVERY COMPANY, LIMITED PARTNERSHIP
By: ________________________, general partner
By:
Name: Jerry S. Cifor
Title: Treasurer
PERC MANAGEMENT COMPANY, LIMITED PARTNERSHIP
By: ________________________, general partner
By:
Name: Jerry S. Cifor
Title: Treasurer
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
K-C INTERNATIONAL, LTD.
By: ________________________, general partner
By:
Name: Jerry S. Cifor
Title: Treasurer
CANADIAN BORROWERS:
KTI RECYCLING OF CANADA, INC.
1316991 ONTARIO, INC.
By:
Name: Jerry S. Cifor
Title: Treasurer
<PAGE>
Exhibit 99(d)(1)
================================================================================
KTI, INC.
Issuer
8 3/4 % CONVERTIBLE SUBORDINATED NOTES DUE 2004
INDENTURE
Dated as of July 31, 1998
SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION
Trustee
================================================================================
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture Indenture Section
Act Section
<S> <C>
310(a)(1)............................................. 7.10
(a)(2)............................................ 7.10
(a)(3)............................................ N.A.
(a)(4)............................................ N.A.
(a)(5)............................................ 7.10
(b)............................................... 7.10
(c)............................................... N.A.
311(a)................................................ 7.11
(b)............................................... 7.11
(c)............................................... N.A.
312(a)................................................ 2.5
(b)............................................... 11.3
(c)............................................... 11.3
313(a)................................................ 7.6
(b)(1)............................................ 10.3
(b)(2)............................................ 7.7
(c)............................................... 7.6; 11.2
(d)............................................... 7.6
314(a)................................................ 4.3; 11.2
(b)............................................... 10.2
(c)(1)............................................ 11.4
(c)(2)............................................ 11.4
(c)(3)............................................ N.A.
(d)............................................... 10.3, 10.4, 10.5
(e)............................................... 11.5
(f)............................................... N.A.
315(a)................................................ 7.1
(b)............................................... 7.5; 11.2
(c)............................................... 7.1
(d)............................................... 7.1
(e)............................................... 6.11
316(a)(last sentence)................................. 2.9
(a)(1)(A)......................................... 6.5
(a)(1)(B)......................................... 6.4
(a)(2)............................................ N.A.
(b)............................................... 6.7
(c)............................................... 2.12
317(a)(1)............................................. 6.8
(a)(2)............................................ 6.9
(b)............................................... 2.4
318(a)................................................ 11.1
(b)............................................... N.A.
(c)............................................... 11.1
</TABLE>
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
i
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE.............................................................1
SECTION 1.1. DEFINITIONS...........................................................................1
SECTION 1.2. OTHER DEFINITIONS.....................................................................6
SECTION 1.3. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.....................................6
SECTION 1.4. RULES OF CONSTRUCTION.................................................................7
ARTICLE 2 THE NOTES..............................................................................................7
SECTION 2.1. FORM AND DATING.......................................................................7
SECTION 2.2. EXECUTION AND AUTENTICATION...........................................................8
SECTION 2.3. REGISTRAR AND PAYING AGENT............................................................9
SECTION 2.4. PAYING AGENT TO HOLD MONEY IN TRUST...................................................9
SECTION 2.5. HOLDER LISTS..........................................................................9
SECTION 2.6. TRANSFER AND EXCHANGE................................................................10
SECTION 2.7. REPLACEMENT NOTES....................................................................12
SECTION 2.8. OUTSTANDING NOTES....................................................................12
SECTION 2.9. TREASURY NOTES.......................................................................13
SECTION 2.10. TEMPORARY NOTES......................................................................13
SECTION 2.11. CANCELLATION.........................................................................13
SECTION 2.12. DEFAULTED INTEREST...................................................................13
ARTICLE 3 REDEMPTION AND PREPAYMENT.............................................................................14
SECTION 3.1. NOTICES TO TRUSTEE...................................................................14
SECTION 3.2. SELECTION OF NOTES TO BE REDEEMED....................................................14
SECTION 3.3. NOTICE OF REDEMPTION.................................................................14
SECTION 3.4. EFFECT OF NOTICE OF REDEMPTION.......................................................15
SECTION 3.5. DEPOSIT OF REDEMPTION PRICE..........................................................15
SECTION 3.6. NOTES REDEEMED IN PART...............................................................15
SECTION 3.7. OPTIONAL REDEMPTION..................................................................16
SECTION 3.8. NO MANDATORY REDEMPTION..............................................................16
ARTICLE 4 COVENANTS.............................................................................................16
SECTION 4.1. PAYMENT OF NOTES.....................................................................16
SECTION 4.2. MAINTENANCE OF OFFICE OR AGENCY......................................................17
SECTION 4.3. REPORTS..............................................................................17
SECTION 4.4. COMPLIANCE CERTIFICATE...............................................................17
SECTION 4.5. TAXES................................................................................18
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
SECTION 4.6. STAY, EXTENSION AND USURY LAWS.......................................................18
SECTION 4.7. CORPORATE EXISTENCE..................................................................18
SECTION 4.8. OFFER TO REPURCHASE UPON CHANGE OF CONTROL...........................................19
ARTICLE 5 SUCCESSORS............................................................................................20
SECTION 5.1. MERGER, CONSOLIDATION OR SALE OF ASSETS..............................................20
SECTION 5.2. SUCCESSOR CORPORATION SUBSTITUTED....................................................21
ARTICLE 6 DEFAULTS AND REMEDIES.................................................................................21
SECTION 6.1. EVENTS OF DEFAULT....................................................................21
SECTION 6.2. ACCELERATION.........................................................................22
SECTION 6.3. OTHER REMEDIES.......................................................................22
SECTION 6.4. WAIVER OF PAST DEFAULTS..............................................................22
SECTION 6.5. CONTROL BY MAJORITY..................................................................23
SECTION 6.6. LIMITATION ON SUITS..................................................................23
SECTION 6.7. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT........................................23
SECTION 6.8. COLLECTION SUIT BY TRUSTEE...........................................................24
SECTION 6.9. TRUSTEE MAY FILE PROOFS OF CLAIM.....................................................24
SECTION 6.10. PRIORITIES...........................................................................24
SECTION 6.11. UNDERTAKING FOR COSTS................................................................25
ARTICLE 7 TRUSTEE...............................................................................................25
SECTION 7.1. DUTIES OF TRUSTEE....................................................................25
SECTION 7.2. RIGHTS OF TRUSTEE....................................................................26
SECTION 7.3. INDIVIDUAL RIGHTS OF TRUSTEE.........................................................27
SECTION 7.4. TRUSTEE'S DISCLAIMER.................................................................27
SECTION 7.5. NOTICE OF DEFAULTS...................................................................27
SECTION 7.6. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES...........................................28
SECTION 7.7. COMPENSATION AND INDEMNITY...........................................................28
SECTION 7.8. REPLACEMENT OF TRUSTEE...............................................................29
SECTION 7.9. SUCCESSOR TRUSTEE BY MERGER, ETC.....................................................30
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION........................................................30
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS
AGAINST COMPANY......................................................................30
ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE..............................................................30
SECTION 8.1. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.............................30
SECTION 8.2. LEGAL DEFEASANCE AND DISCHARGE.......................................................31
SECTION 8.3. COVENANT DEFEASANCE..................................................................31
SECTION 8.4. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE...........................................31
SECTION 8.5. DEPOSITED MONEY AND GOVERNMENT SECURITIES
TO BE HELD IN TRUST; OTHER MISCELLANEOUS
PROVISIONS...........................................................................33
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
SECTION 8.6. REPAYMENT TO COMPANY.................................................................33
SECTION 8.7. REINSTATEMENT........................................................................34
ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER......................................................................34
SECTION 9.1. WITHOUT CONSENT OF HOLDERS OF NOTES..................................................34
SECTION 9.2. WITH CONSENT OF HOLDERS OF NOTES.....................................................35
SECTION 9.3. COMPLIANCE WITH TRUST INDENTURE ACT..................................................36
SECTION 9.4. REVOCATION AND EFFECT OF CONSENTS....................................................36
SECTION 9.5. NOTATION ON OR EXCHANGE OF NOTES.....................................................36
SECTION 9.6. TRUSTEE TO SIGN AMENDMENTS, ETC......................................................36
ARTICLE 10 SUBORDINATION........................................................................................36
SECTION 10.1. AGREEMENT TO SUBORDINATE.............................................................36
SECTION 10.2. LIQUIDATION; DISSOLUTION; BANKRUPTCY.................................................37
SECTION 10.3. DEFAULT ON SENIOR DEBT...............................................................37
SECTION 10.4. ACCELERATION OF NOTES................................................................38
SECTION 10.5. WHEN DISTRIBUTION MUST BE PAID OVER..................................................38
SECTION 10.6. NOTICE BY COMPANY....................................................................38
SECTION 10.7. SUBROGATION..........................................................................39
SECTION 10.8. RELATIVE RIGHTS......................................................................39
SECTION 10.9. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.........................................39
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.............................................39
SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT...................................................40
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION................................................40
SECTION 10.13. AMENDMENTS...........................................................................40
ARTICLE 11 CONVERSION OF NOTES..................................................................................40
SECTION 11.1. RIGHT TO CONVERT.....................................................................40
SECTION 11.2. EXERCISE OF CONVERSION PRIVILEGE; ISSUANCE OF COMMON
STOCK ON CONVERSION; NO ADJUSTMENT FOR INTEREST OR DIVIDENDS.........................41
SECTION 11.3. CASH PAYMENTS IN LIEU OF FRACTIONAL SHARES...........................................42
SECTION 11.4. CONVERSION PRICE.....................................................................42
SECTION 11.5. ADJUSTMENT OF CONVERSION PRICE.......................................................42
SECTION 11.6. EFFECTIVE OF RECLASSIFICATION, CONSOLIDATION,
MERGER OR SALE.......................................................................46
SECTION 11.7. TAXES ON SHARES ISSUED...............................................................46
SECTION 11.8. RESERVATION OF SHARES; SHARES TO BE FULLY PAID;
LISTING OF COMMON STOCK..............................................................47
SECTION 11.9. COMMON STOCK ISSUABLE UPON CONVERSION................................................47
SECTION 11.10. RESPONSIBILITY OF TRUSTEE............................................................47
SECTION 11.11. NOTICE TO HOLDERS PRIOR TO CERTAIN ACTIONS...........................................48
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
ARTICLE 12 MISCELLANEOUS........................................................................................48
SECTION 12.1. TRUST INDENTURE ACT CONTROLS.........................................................48
SECTION 12.2. NOTICES..............................................................................49
SECTION 12.3. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES........................50
SECTION 12.4. CERTIFICATE AND OPINION AS TO CONDITONS PRECEDENT....................................50
SECTION 12.5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION........................................50
SECTION 12.6. RULES BY TRUSTEE AND AGENTS..........................................................51
SECTION 12.7. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS,
EMPLOYEES AND SHAREHOLDERS...........................................................51
SECTION 12.8. GOVERNING LAW........................................................................51
SECTION 12.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS........................................51
SECTION 12.10. SUCCESSORS...........................................................................51
SECTION 12.11. SEVERABILITY.........................................................................51
SECTION 12.12. COUNTERPART ORIGINALS................................................................51
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.....................................................52
EXHIBITS
Exhibit A Form of Note.................................................................................A-1
</TABLE>
1. This should be included only if the Debenture is issued in global form.
iv
<PAGE>
This Indenture, dated as of July 31, 1998 is between KTI, Inc., a New
Jersey corporation (the "Company"), and SunTrust Bank, Central Florida, National
Association, as Trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the 8 3/4%
Convertible Subordinated Notes duE August 25, 2004 (the "Notes").
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.1. DEFINITIONS.
"Affiliate" of any specified Person means an "affiliate" of such
Person, as such term is defined for purposes of Rule 144 under the Securities
Act.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or exchange
of beneficial interests in a Global Note, the rules and procedures of the
Depository that apply to such transfer and exchange.
"Bankruptcy Law" means Title 11, United States Code, or any similar
federal or state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company, or
any authorized committee of the Board of Directors.
"Business Day" means any day other than a Legal Holiday.
"Capital Stock" means (a) in the case of a corporation, corporate
stock, (b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (c) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited) and (d) any
other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing
Person.
"Change of Control" means the occurrence of any of the following: (a)
the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one transaction or a series of related
transactions, of all or substantially all of the assets of the Company and its
Subsidiaries, taken as a whole, (b) the adoption of a plan relating to the
liquidation or dissolution of the Company, (c) the consummation of any
transaction (including, without limitation, any merger or consolidation) the
result of which is that any "person" or "group" (as such terms are used in
Section 13(d)(3) of the Exchange Act), other than a group including any one of
Nicholas Mennona Jr., Martin Sergi or Ross Pirasteh, becomes the "beneficial
owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange
Act), directly or indirectly through one or more intermediaries, of more than
50% of the voting
1
<PAGE>
power of the outstanding voting stock of the Company, unless the Closing Price
per share of Common Stock for any five Trading Days within the period of ten
consecutive Trading Days ending immediately after the announcement of such
Change of Control equals or exceeds 105% of the Conversion Price in effect on
each such Trading Day, or (d) the first day on which more than a majority of the
Board of Directors are not Continuing Directors; provided, however, that a
transaction in which the Company becomes a subsidiary of another entity shall
not constitute a Change of Control if (i) the shareholders of the Company
immediately prior to such transaction "beneficially own" (as such term is
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or
indirectly through one or more intermediaries, at least a majority of the voting
power of the outstanding voting stock of the Company immediately following the
consummation of such transaction and (ii) immediately following the consummation
of such transaction, no "person" or "group" (as such terms are defined above),
other than such other entity (but including holders of equity interests of such
other entity), "beneficially owns" (as such term is defined above), directly or
indirectly through one or more intermediaries, more than 50% of the voting power
of the outstanding voting stock of the Company.
"Closing Price" means, for each Trading Day, the last reported sale
price regular way on the principal exchange, including the NASDAQ National
Market, on which the applicable security is listed or quoted or, if the
applicable security is not so listed or quoted, the average of the closing bid
and asked prices in the over-the-counter market as furnished by any New York
Stock Exchange member firm selected from time to time by the Company for that
purpose. In the event that the Closing Price cannot be determined as aforesaid,
the Board of Directors of the Company shall determine the Closing Price on the
basis of such quotations as it in good faith considers appropriate.
"Common Stock" means the common stock, no par value, of the Company,
and any other capital stock of the Company into which such common stock may be
converted or reclassified or that may be issued in respect of, in exchange for,
or in substitution for such common stock by reason of any stock splits, stock
dividends, distributions, mergers, consolidations or other like events.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who (a) was a member of the
Board of Directors on the date of original issuance of the Preferred Stock or
(b) was nominated for election to the Board of Directors with the approval of,
or whose election to the Board of Directors was ratified by, at least two-thirds
of the Continuing Directors who were members of the Board of Directors at the
time of such nomination or election.
"Conversion Price" means the conversion price of the Notes as set forth
in Section 11.4 hereof.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 12.2 hereof or such other address as to which the
Trustee may give notice to the Company.
"Credit Facility" means that certain line of credit pursuant to a Loan
and Security Agreement dated as of October 29, 1996, as amended from time to
time by and between the
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Company, its Subsidiaries and KeyBank, National Association, including any
related notes, guarantees, collateral documents, instruments and agreement
executed in connection therewith, in each case as amended, restated, modified,
supplemented, extended, renewed, replaced, refinanced or restructured from time
to time, whether by the same or any other agent or agents, lender or group of
lenders, whether represented by one or more agreements and whether one or more
Subsidiaries are added or removed as borrowers or guarantors thereunder or as
parties thereto.
"Default" means any event that with the passage of time or the giving
of notice or both would be an Event of Default.
"Definitive Notes" means Notes that are in the form of Exhibit A
attached hereto (but without including the text referred to in footnotes 1 and 2
thereto).
"Depository" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.3 hereof as
the Depository with respect to the Notes until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depository" shall mean or include such successor.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means the amount that a willing buyer would pay a
willing seller in an arm's-length transaction.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of this Indenture.
"Global Note" means a permanent global debenture that contains the
paragraph referred to in footnote 1 and the additional schedule referred to in
footnote 2 to the form of the Note attached hereto as Exhibit A, and that is
deposited with the Note Custodian and registered in the name of the Depository.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" means any indebtedness, whether or not contingent, in
respect of borrowed money or evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in respect
thereof) or banker's acceptances or representing capital lease obligations or
the balance deferred and unpaid of the purchase price of any property or
representing any hedging obligations, except any such balance that constitutes
an accrued expense or trade payable if and to the extent any of the foregoing
indebtedness (other than letters
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of credit and hedging obligations) would appear as a liability upon a balance
sheet prepared in accordance with GAAP.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Indirect Participant" means a Person who holds an interest through a
Participant.
"Institutional Accredited Investor" means an "accredited investor" as
defined in Rule 501(a)(1), (2) (3) or (7) under the Securities Act.
"Junior Securities" means all classes of Common Stock of the Company
and each other class of capital stock or series of preferred stock established
after July 1, 1997 by the Board of Directors the terms of which do not expressly
provide that it ranks senior to or on a parity with the Preferred Stock as to
dividend distributions and distributions upon the liquidation, winding-up and
dissolution of the Company.
"Legal Holiday" means a Saturday, a Sunday or any day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no additional interest
shall be payable on such day for the intervening period.
"Lien" means any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind, whether or not filed, recorded or otherwise perfected
under applicable law (including any conditional sale or other title retention
agreement, any lease intended as security, any option or other agreement to sell
or give any financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction other than a financing statement covering leased
goods under lease not intended as security).
"Note Custodian" means the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering" means the offering of the Preferred Stock by the Company.
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 12.5 hereof.
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"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel at the Company's sole election
may be an employee of or counsel to the Company, any Subsidiary of the Company
or the Trustee.
"Participant" means with respect to the Depository, a Person who has an
account with the Depository.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or agency or political subdivision
thereof (including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or business).
"Preferred Stock" means the 8 3/4% Series B Convertible Exchangeable
Preferred Stock, which shall be exchanged by the Company for the Notes.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of August 7, 1997, by and between the Company and Credit
Research & Trading LLC, as such agreement may be amended, modified or
supplemented from time to time.
"Responsible Officer," when used with respect to the Trustee, means any
officer within the Corporate Trust Department of the Trustee (or any successor
group of the Trustee) or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Restated Certificate of Incorporation" means the amendment to the
restated certificate of incorporation duly filed with the Secretary of State of
the State of New Jersey on August 8, 1997 with respect to the Preferred Stock.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Debt" means (a) all obligations of the Company under the Credit
Facility, as it may be amended, modified, restated, supplemented, deferred,
extended, renewed, replaced, refunded or refinanced from time to time, and (b)
any other Indebtedness of the Company, whether outstanding on the date of
issuance of the Notes or thereafter incurred, unless the instrument under which
such Indebtedness is incurred expressly provides that it is subordinated in
right of payment to any Senior Debt; provided, however, that Senior Debt will
not include (i) any liability for federal, state, local or other taxes owed or
owing by the Company, (ii) any Indebtedness of the Company to any of its
Subsidiaries or (iii) any trade payables.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act as such Regulation is in effect on
the date hereof.
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"Subsidiary" means, with respect to any Person, (a) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (b) any partnership (i) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (ii)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"Trading Day" means any day on which the NASDAQ National Market or
other applicable stock exchange or market on which the Common Stock is listed or
quoted is open for business.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
SECTION 1.2. OTHER DEFINITIONS.
<TABLE>
<CAPTION>
Defined in
Term Section
---- -------
<S> <C>
"Change of Control Offer".................... 4.8
"Change of Control Payment".................. 4.8
"Change of Control Payment Date"............. 4.8
"Conversion Date"............................ 11.2
"Conversion Price"........................... 11.4
"Covenant Defeasance"........................ 8.3
"DTC"........................................ 2.3
"Event of Default"........................... 6.1
"Legal Defeasance"........................... 8.2
"Paying Agent"............................... 2.3
"Payment Default"............................ 6.1
"Payment Blockage Notice".................... 10.3
"Registrar".................................. 2.3
"Representative"............................. 10.5
</TABLE>
SECTION 1.3. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture. Any terms
incorporated in this Indenture that are defined by the TIA, defined by the TIA
by reference to another statute or defined by SEC rule under the TIA have the
meanings so assigned to them.
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SECTION 1.4. RULES OF CONSTRUCTION
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) the words "include", "includes", and "including" shall be
deemed to be followed by the phrase "without limitation"; and
(7) references to sections of or rules under the Securities Act
shall be deemed to include substitute, replacement of
successor sections or rules adopted by the SEC from time to
time.
ARTICLE 2
THE NOTES
SECTION 2.1. FORM AND DATING.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or usage. Each Note
shall be dated the date of its authentication. The Notes shall be issued in
denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby.
(a) Global Notes. Notes issued in exchange for the Preferred
Stock may be issued initially in the form of one or more Global Notes, which
shall be deposited on behalf of the Holders of the Notes represented thereby
with a custodian of the Depository, and registered in the name of the Depository
or a nominee of the Depository, duly executed by the Company and authenticated
by the Trustee as hereinafter provided. The aggregate principal amount of the
Global Notes may from time to time be increased or decreased by adjustments made
on the records of the Trustee and the Depository or its nominee as hereinafter
provided.
Each Global Note shall represent such of the outstanding Notes
as shall be specified therein and each shall provide that it shall represent the
aggregate amount of outstanding Notes from time to time endorsed thereon and
that the aggregate amount of outstanding Notes represented thereby may from time
to time be reduced or increased, as
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appropriate, to reflect exchanges, redemptions and transfers of interests. Any
endorsement of a Global Note to reflect the amount of any increase or decrease
in the amount of outstanding Notes represented thereby shall be made by the
Trustee or the Note Custodian, at the direction of the Trustee, in accordance
with instructions given by the Holder thereof as required by Section 2.6 hereof.
Except as set forth in Section 2.6 hereof, the Global Notes
may be transferred, in whole and not in part, only to another nominee of the
Depository or to a successor of the Depository or its nominee.
(b) Book-Entry Provisions. The Company shall execute and the
Trustee shall, in accordance with Section 2.2, authenticate and deliver the
Global Notes, if any, that (i) shall be registered in the name of the Depository
or the nominee of the Depository and (ii) shall be delivered by the Trustee to
the Depository or pursuant to the Depository's instructions or held by the
Trustee as custodian for the Depository.
Participants shall have no rights either under this Indenture
with respect to any Global Note held on their behalf by the Depository or by the
Note Custodian as custodian for the Depository or under such Global Note, and
the Depository may be treated by the Company, the Trustee and any Agent of the
Company or the Trustee as the absolute owner of such Global Note for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent
the Company, the Trustee or any Agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Depository or impair, as between the Depository and its Participants, the
operation of customary practices of such Depository governing the exercise of
the rights of an owner of a beneficial interest in any Global Note.
(c) Definitive Notes. Notes issued in certificated form shall
be substantially in the form of Exhibit A attached hereto (but without including
the text referred to in footnotes 1 and 2 thereto).
SECTION 2.2. EXECUTION AND AUTENTICATION.
Two Officers shall sign the Notes for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Notes and may
be in facsimile form.
If an Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture. The form of Trustee's certificate of
authentication to be borne by the Notes shall be substantially as set forth in
Exhibit A hereto.
The Trustee shall, upon a written order of the Company signed by two
Officers, authenticate Notes for original issue up to $21,400,000 aggregate
principal amount of the Notes. Such written order shall specify the exact
aggregate principal amount of Notes to be authenticated. The aggregate principal
amount of Notes outstanding at any time may not exceed such amount except as
provided in Section 2.7 hereof.
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The Trustees may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate of the Company.
SECTION 2.3. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency in the State of New York
where Notes may be presented for registration of transfer or for exchange
("Registrar") and an office or agency where Notes may be presented for payment
("Paying Agent"). The Registrar shall keep a register of the Notes and of their
transfer and exchange. The Company may appoint one or more co-registrars and one
or more additional paying agents. The term "Registrar" includes any co-registrar
and the term "Paying Agent" includes any additional paying agent. The Company
may change any Paying Agent or Registrar without notice to any Holder. The
Company shall notify the Trustee in writing of the name and address of any Agent
not a party to this Indenture. If the Company fails to appoint or maintain
another entity as Registrar or Paying Agent, the Trustee shall act as such. The
Company shall enter into an appropriate agency agreement with any Agent not a
party to this Indenture, and such agreement shall incorporate the TIA's
provisions of this Indenture that relate to such Agent. The Company or any
Significant Subsidiary may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depository with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
SECTION 2.4. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal of or premium or interest on the Notes, and will notify the Trustee of
any default by the Company in making any such payment. While any such default
continues, the Trustee may require a Paying Agent to pay all money held by it to
the Trustee. The Company at any time may require a Paying Agent to pay all money
held by it to the Trustee. Upon payment over to the Trust, the Paying Agent (if
other than the Company or a Subsidiary) shall have no further liability for the
money. If the Company or a Significant Subsidiary acts as Paying Agent, it shall
segregate and hold in a separate trust fund for the benefit of the Holders all
money held by it as Paying Agent. Upon any bankruptcy or reorganization
proceedings relating to the Company, the Trustee shall serve as Paying Agent for
the Notes.
SECTION 2.5. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, the Company shall furnish to the
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Trustee at least seven Business Days before each interest payment date and at
such other times as the Trustee may request in writing, a list in such form and
as of such date as the Trustee may reasonably require of the names and addresses
of the Holders of Notes and the Company shall otherwise comply with TIA Section
312(a).
SECTION 2.6. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Notes. The transfer and
exchange of Global Notes or beneficial interests therein shall be effected
through the Depository, in accordance with this Indenture and the procedures of
the Depository therefor. Beneficial interests in a Global Note may be
transferred to Persons who take delivery thereof in the form of a beneficial
interest in the same Global Note.
(b) Transfer and Exchange of Definitive Notes. When Definitive
Notes are presented by a Holder to the Registrar with a request to register the
transfer of the Definitive Notes or to exchange such Definitive Notes for an
equal principal amount of Definitive Notes of other authorized denominations,
the Registrar shall register the transfer or make the exchange as required only
if the Definitive Notes are presented or surrendered for registration of
transfer or exchange, are endorsed and contain a signature guarantee or
accompanied by a written instrument of transfer in form satisfactory to the
Registrar duly executed by such Holder or by his attorney and contains a
signature guarantee.
(c) Transfer of a Beneficial Interest in a Global Note for a
Definitive Note. Any Person having a beneficial interest in a Global Note may
upon request, subject to the Applicable Procedures, exchange such beneficial
interest for a Definitive Note, upon receipt by the Trustee of written
instructions or such other form of instructions as is customary for the
Depository, from the Depository or its nominee on behalf of any Person having a
beneficial interest in a Global Note.
(d) Restrictions on Transfer and Exchange of Global Notes.
Notwithstanding any other provision of this Indenture, a Global Note may not be
transferred as a whole except by the Depository to a nominee of the Depository
or by a nominee of the Depository to the Depository or another nominee of the
Depository or by the Depository or any such nominee to a successor Depository or
a nominee of such successor Depository.
(e) Authentication of Definitive Notes in Absence of
Depository. If at any time:
(i) the Depository for the Notes notifies the Company
that the Depository is unwilling or unable to continue as Depository
for the Global Notes and a successor Depository for the Global Notes is
not appointed by the Company within 90 days after delivery of such
notice; or
(ii) the Company, at its sole discretion, notifies
the Trustee in writing that it elects to cause the issuance of
Definitive Notes under this Indenture, then the Company shall execute,
and the Trustee shall, upon receipt of an authentication order in
accordance with Section 2.2 hereof, authenticate and deliver,
Definitive Notes in an
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aggregate principal amount equal to the principal amount of the Global
Notes in exchange for such Global Notes.
(f) Cancellation and/or Adjustment of Global Notes. At such
time as all beneficial interests in Global Notes have been exchanged for
Definitive Notes, redeemed, repurchased or cancelled, all Global Notes shall be
returned to or retained and cancelled by the Trustee in accordance with Section
2.11 hereof. At any time prior to such cancellation, if any beneficial interest
in a Global Note is exchanged for Definitive Notes, redeemed, repurchased or
cancelled, the principal amount of Notes represented by such Global Note shall
be reduced accordingly and an endorsement shall be made on such Global Note, by
the Trustee or the Note Custodian, at the direction of the Trustee to reflect
such reduction.
(g) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and
exchanges, subject to this Section 2.6 the Company shall execute and
the Trustee shall authenticate Definitive Notes and Global Notes at the
Registrar's request.
(ii) No service charge shall be made to a Holder for
any registration of transfer or exchange, but the Company or the
Trustee may require payment of a sum sufficient to cover any transfer
tax or similar governmental charge payable in connection therewith
(other than any such transfer taxes or similar governmental charge
payable upon exchange or transfer pursuant to Sections 3.7, 4.8 and 9.5
hereof).
(iii) The Registrar shall not be required to register
the transfer of or exchange any Note selected for redemption in whole
or in part, except the unredeemed portion of any Note being redeemed in
part.
(iv) All Definitive Notes and Global Notes issued
upon any registration of transfer or exchange of Definitive Notes or
Global Notes shall be the valid obligations of the Company, evidencing
the same debt, and entitled to the same benefits under this Indenture
as the Definitive Notes or Global Notes surrendered upon such
registration of transfer or exchange.
(v) The Company shall not be required:
(A) to issue, to register the transfer of or
to exchange Notes during a period beginning at the opening of business
15 days before the day of any selection of Notes for redemption under
Section 3.2 hereof and ending at the close of business on the day of
selection;
(B) to register the transfer of or to
exchange any Note so selected for redemption in whole or in part,
except the unredeemed portion of any Note being redeemed in part;
(C) to register the transfer of or to
exchange a Note between a record date and the next succeeding interest
payment date; or
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(D) to register the transfer of a Note other
than in amounts of $3,000 or multiple integrals thereof.
(vi) Prior to due presentment for the registration of
a transfer of any Note, the Trustee, any Agent and the Company may deem
and treat the Person in whose name any Note is registered as the
absolute owner of such Note for the purpose of receiving payment of
principal of and interest on such Notes, and neither the Trustee, any
Agent nor the Company shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Definitive Notes
and Global Notes in accordance with the provisions of Section 2.2
hereof.
SECTION 2.7. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the trustee or the Company or
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee, upon the written
order of the Company signed by two Officers of the Company, shall authenticate a
replacement Note if the trustee's requirements are met. If required by the
Trustee or the Company, an indemnity bond must be supplied by the Holder that is
sufficient in the judgement of the Trustee and the Company to protect the
Company, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Note is replaced. The Company or the Trustee may
charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.8. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.9 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note.
If a Note is lost, destroyed or stolen and is then replaced pursuant to
Section 2.7 hereof, it ceases to be outstanding unless the Trustee receives
proof satisfactory to it that the replaced Note is held by a bona fide
purchaser.
If the entire principal of and premium and interest on any Note is
considered paid under Section 4.1 hereof, it ceases to be outstanding and
interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary of the
Company or an Affiliate) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
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SECTION 2.9. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, a Subsidiary of the Company or an Affiliate, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that a Trustee knows are so owned shall be so disregarded.
Notwithstanding the foregoing, Notes that the Company, a Subsidiary of the
Company or an Affiliate offers to purchase or acquires pursuant to an offer,
exchange offer, tender offer or otherwise shall not be deemed to be owned by the
Company, a Subsidiary of the Company or an Affiliate until legal title to such
Notes passes to the Company, such Subsidiary or such Affiliate as the case may
be.
SECTION 2.10. TEMPORARY NOTES.
Until Definitive Notes are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Notes upon a written order of the
Company signed by two Officers of the Company. Temporary Notes shall be
substantially in the form of Definitive Notes but may have variations that the
Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate Definitive Notes in exchange for temporary
Notes. Until such exchange, Holders of temporary Notes shall be entitled to all
of the benefits of this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all cancelled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the trustee for Cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes, it shall
pay the defaulted interest in any lawful manner plus, to the extent lawful,
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.1 hereof. The Company shall notify the Trustee in writing of
the amount of defaulted interest proposed to be paid on each Note and the date
of the proposed payment. The Company shall fix or cause to be fixed each such
special record date and payment date, provided that no such special record date
shall be less than 10 days prior to the related payment date for such defaulted
interest. At least 15 days before the special record date, the Company (or, upon
the written request of the Company, the trustee in the name and at the expense
of the Company) shall mail or cause to be mailed to Holders a notice that states
the special record date, the related payment date and the amount of such
interest to be paid.
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ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.1. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.7 hereof, it shall furnish to the trustee, at
least 45 days but not more than 60 days before a redemption date, an Officers'
Certificate setting forth (i) the clause of this Indenture pursuant to which the
redemption shall occur, (ii) the redemption date, (iii) the principal amount of
Notes to be redeemed and (iv) the redemption price.
SECTION 3.2. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time, the
trustee shall select the Notes to be redeemed among the Holders of the Notes in
compliance with the requirements of the principal national securities exchange,
if any, on which the Notes are listed or, if the Notes are not so listed, on a
pro rata basis, by lot or in accordance with any other method the Trustee
considers fair and appropriate; PROVIDED that no Notes of $1,000 or less shall
be redeemed in part. In the event of partial redemption by lot, the particular
Notes to be redeemed shall be selected, unless otherwise provided herein, by the
Trustee from the outstanding Notes not previously called for redemption within
10 business days after receipt of the Officers' certificate pursuant to Section
3.1 hereof.
The Trustee shall promptly notify the company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000.
Provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
SECTION 3.3. NOTICE OF REDEMPTION.
At least 30 days but not more 60 days before a redemption date, a
public notice of the redemption shall be made and the Company shall mail or
cause to be mailed, by first class mail, a notice of redemption to each Holder
whose Notes are to be redeemed at its registered address with copies to the
Trustee.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption date
upon surrender of such Note, a new Note or Notes in a principal amount equal to
the unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
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(e) the Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such
redemption payment, interest or Notes called for redemption cease to accrue on
and after the redemption date;
(g) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes called for redemption are being redeemed;
and
(h) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed on the
Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that in
all cases, the text of such notice of redemption shall be prepared or approved
by the Company and the Trustee shall have not responsibility whatsoever with
regard to such notice being accurate or correct.
SECTION 3.4. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.3
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
SECTION 3.5. DEPOSIT OF REDEMPTION PRICE.
One Business Day prior to the redemption date, the Company shall
deposit with the Paying Agent money sufficient to pay the redemption price of
and accrued interest on all Notes to be redeemed on that date. The Paying Agent
shall promptly return to the Company any money deposited with the Paying Agent
by the Company in excess of the amounts necessary to pay the redemption price of
and accrued interest on all Notes to be redeemed.
If the Company complies with the provisions of the preceding paragraph,
on and after the redemption at, interest shall cease to accrue on the Notes or
the portions of the Notes called for redemption. If a Note is redeemed on or
after an interest record date but on or prior to the related interest payment
date, then any accrued and unpaid interest shall be paid to the Person in whose
name such Notes was registered at the close of business on such record date. If
any Note called for redemption shall not be so paid upon surrendered for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid or such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.1 hereof.
SECTION 3.6. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the Expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
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SECTION 3.7. OPTIONAL REDEMPTION.
(a) The Company shall have the option to redeem the Notes pursuant to this
Section 3.7 on or after August 15, 2000. The Company shall have the option to
redeem the Notes, in whole or from time to time in part, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest thereon, to the applicable redemption date, if
redeemed during the twelve-month period beginning on August 15 of the years
indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2000.................................... 104.4%
2001.................................... 102.9%
2002.................................... 101.5%
2003 and thereafter..................... 100.0%
</TABLE>
Notwithstanding the foregoing, on or after August 15, 1999 and
until August 15, 2000, the Company may, at its option, redeem the Notes at
105.9% of the principal amount plus accrued and unpaid interest thereof if the
Common Stock bid price has averaged not less than 1.5 times the Conversion Price
during 20 consecutive Trading Days.
(b) Any redemption pursuant to this Section 3.7 shall be made
pursuant to the provisions of Section 3.1 through 3.6 hereof.
SECTION 3.8. NO MANDATORY REDEMPTION.
Except as provided in Section 4.8, the Company shall not be required to
make mandatory redemption or sinking fund payments with respect to the Notes.
ARTICLE 4
COVENANTS
SECTION 4.1. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of and premium
and interest on the Notes on the date and in the manner provided in the Notes.
Principal, premium and interest shall be considered paid on the date due if the
Paying agent, if other than the Company or a Subsidiary thereof, holds as of
5:00 p.m. New York City time on the Business Day immediately prior to the due
date money deposited by the Company in immediately available funds and designed
for and sufficient to pay all principal, premium and interest then due.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
the interest rate on the Notes to the extent lawful; it shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest (without regard to any applicable grace period)
at the same rate to the extent lawful.
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SECTION 4.2. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain an office or agency in the state of New York
(which may be an office of the Trustee or an affiliate of the Trustee, Registrar
or co-registrar) where Notes may be surrendered for registration of transfer or
for exchange and where notices and demands to or upon the Company in respect of
the Notes and this Indenture may be served. The Company shall give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Note may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
company of its obligation to maintain an office or agency for such purposes. The
Company shall give prompt written notice tot he trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.
The Company hereby designates the Corporate Trust Officer of the
trustee as one such office or agency of the Company in accordance with Section
2.3
SECTION 4.3. REPORTS.
Whether or not the Company is required to do so by the rules and
regulations of the SEC, the Company will file with the SEC (unless the SEC will
not accept such a filing) and within 15 days of filing, or attempting to file,
the same with the SEC, furnish to the holders of the Notes and the Trustee (a)
all quarterly and annual financial and other information with respect to the
Company that would be required to be contained in a filing with the SEC on Forms
10-0 and 10-K if the Company were required to file such forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report thereon
by the Company's certified independent accountants, and (b) all current report
that would be required to be filed with the SEC on Form 8-K if the Company were
required to file such reports. The Company shall at all times comply with TIA
Section 314(a).
SECTION 4.4. COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the trustee, within 90 days
after the end of each fiscal year, an Officers' Certificate stating that a
review of the activities of the Company and its Significant Subsidiaries during
the preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under this Indenture, and further
stating, as to each such Officer signing such certificates, that to the best of
his or her knowledge the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and is not in default in the performance or
observance of any of the terms, provisions and conditions of this Indenture (or,
if a Default or Event of Default shall have occurred, describing all such
Defaults or Events of
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Defaults of which he or she may have knowledge and what act the Company is
taking or proposes to take wit respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.3 above shall be
accompanied by a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements,
nothing has come to their attention that would lead them to believe that the
Company has violated any provisions of Article 4 or Article 5 hereof or if any
such violation has occurred, specifying the nature and period of existence
thereof, it being understood that such accountants shall not be liable directly
or indirect to any Person for any failure to obtain knowledge of any such
violation.
(c) The Company shall, so long as any of the Notes are
outstanding, deliver to the Trustee, as soon as possible upon any Officer
becoming aware of any Default or Event of Default, an Officer's Certificate
specifying such Default or Event of Default and what action the Company is
taking or proposes to take with respect thereto.
SECTION 4.5. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
excerpt such as are contested in good faith and by appropriate proceedings or
whether the failure to effect such payment is not adverse in any material
respects to the Holders of the Notes.
SECTION 4.6. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
to take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or
the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
SECTION 4.7. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence, and the corporate, partnership or other existence of each of its
Significant Subsidiaries, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company or any
such Significant Subsidiary, provided, however, that the Company shall not be
required to preserve any such right, license or franchise, or the corporate,
partnership or other existence of any of its Significant Subsidiaries, if the
Board of Directors shall determine that the
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<PAGE>
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Significant Subsidiaries, takes as a whole.
SECTION 4.8. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Within 10 days of the occurrence of a Change of Control,
the Company shall give notice to the Holders and the Trustee that a Change of
Control has occurred (the "Change of Control Notice"). Subject to subparagraph
(c) below, upon the occurrence of a Change of Control, as the option of the
Holders of a majority in principal amount of Notes exercised by the giving of
notice to the Company within 20 days of receipt of the Change of Control Notice,
the company shall make an offer (a "Change of Control Offer") to repurchase all
or any part (equal to $1,000 or any integral multiple thereof) of each Holders'
Notes at an offer price in cash and/or shares of Common Stock (as valued below)
equal to 100% of the aggregate principal amount thereof, plus accrued and unpaid
interest, if any, thereon to the date of repurchase (the "Change of Control
Payment"). The Company shall deliver to the trustee copies of all notices
received from the Holders in response to the Change of Control Notice. The
Change of Control Payments shall be made at the option of the Company either in
(a) cash, (b) fully registered shares of common Stock valued at 95% of the
average closing price of the Common Stock during the 20 Trading Days prior to
such change of Control Payment if the Board of Directors of the Company
determines that the payment of the Change of Control Payment in fully registered
shares of Common Stock will not adversely affect the voting rights, preferences,
privileges or relative, participating, optional or other specified rights of the
holders of the Common Stock or (c) a combination of cash and shares of Common
Stock (as valued above). Within 10 days following the receipt by the Company
from the Holders of a sufficient number of the notices described in the second
sentence of this Section 4.8(a), the company shall mail a notice to each Holder
and the Trustee stating: (i) that the Change of Control Offer is being made
pursuant to this Section 4.8 and that all Notes validly tendered and not
withdrawn will be accepted for payment; (ii) the purchase price and the purchase
date, which shall be no earlier than 30 days but no later than 60 days from the
date such notice is mailed (the "Change of Control Payment Date"); (iii) that
any Note not tendered will continue to accrue interest; (iv) that, unless the
Company defaults in the payment of the Change of Control Payment, all Notes
accepted for payment pursuant to the Change of Control Offer shall cease to
accrue interest after the Change of Control Payment Date; (v) that Holders
electing to have any Notes purchased pursuant to a Change of Control Offer will
be required to surrender the Notes, properly endorsed for transfer together with
the form entitled "Option of Holder to Elect Purchase" on the reverse of the
Notes completed and such customary documents as the Company may reasonably
request, to the Paying agent at the address specified in the notice prior to the
close of business on the third Business Day preceding the Change of Control
Payment Date; (vi) that Holders will be entitled to withdraw their election if
the Paying Agent receives, not later than the close of business on the second
Business Day preceding the Change of Control Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of Notes delivered for purchase, and a statement that such
Holder is withdrawing his election to have the Note purchased; and (vii) that
Holders whose Notes are being purchased only in part will be issued new Notes
equal in principal amount to the unpurchased portion of the Notes surrendered,
which unpurchased portion must be equal to $1,000 in principal amount or an
integral multiple thereof. The Company shall comply with the requirements of
Rule 14e-1 under the Exchange Act and any other securities laws and
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<PAGE>
regulations thereunder to the extent such laws and regulations are applicable in
connection with the repurchase of Notes as a result of a Change of Control. In
the event of any discrepancy between this Indenture and such rules and
regulations, the requirements of Rule 14e-1 under the Exchange Act, any
successor provisions thereto, and the securities law and regulations thereunder
shall control.
(b) On or before the Business Day immediately prior to the
Change of Control Payment Date, the Company shall, to the extent lawful, (i)
accept for payment all Notes or portions thereof properly tendered pursuant to
the Change of Control Offer, (ii) deposit with the Paying Agent an amount,
whether in cash or Common Stock, equal to the Change of Control Payment in
respect of all Notes or portions thereof so tendered and (iii) delivered or
cause to be delivered to the Trustee the Notes so accepted together with an
Officers' certificate stating the aggregate principal amount of Notes or
portions thereof being purchased by the Company. The Paying Agent shall promptly
mail to each holder of Notes so tendered the Change of Control Payment for such
Notes, and the Trustee shall promptly authenticate and mail (or cause to be
transferred by book entry) to each Holder a new Note equal in principal amount
to any unpurchased portion of the Notes surrendered, if any; provided, that each
such new Note will be in a principal amount of $1,000 or an integral multiple
thereof. The Company shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date.
(c) Notwithstanding the foregoing, prior to complying with the
provisions of this Section 4.8, but in any event within 60 days following a
Change of Control, the Company shall repay all outstanding Senior Debt or obtain
the requisite consents, if any, under all agreements governing outstanding
Senior Debt to permit the repurchase the Notes required by this Section 4.8.
ARTICLE 5
SUCCESSORS
SECTION 5.1. MERGER, CONSOLIDATION OR SALE OF ASSETS.
The Company shall not consolidate or merge with or into (whether or not
the Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another corporation, Person or
entity unless (a) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia, (b) the entity or Person formed by or surviving any such consolidation
or merger (if other than the Company) or the entity or Person to which such
sale, assignment, transfer, lease conveyance other disposition shall have been
made assumes all the obligations of the Company under the Notes and this
Indenture pursuant to a supplemental indenture in a form reasonably satisfactory
to the Trustee, (c) immediately after such transaction no Default or Event of
Default exists, and (d) the Company or such other Person shall have delivered to
the Trustee an Officers' Certificate and an Opinion of Counsel stating that such
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consolidation, merger, sale, assignment, transfer, lease, conveyance or disposal
complies with this Indenture and that all conditions precedent in this Indenture
have been satisfied.
SECTION 5.2. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.1 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merger or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise very right
and power of, the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein. When a successor
corporation assumes all of the obligations of the Company hereunder and under
the Notes and agrees to be bound hereby and thereby, the predecessor Company
shall be relived form such obligations.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.1. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) the Company defaults in the payment when due of interest
on the Notes and such default continues for a period of 30 days:
(b) the Company defaults in payment when due of principal of
or premium on the Notes when the same becomes due and payable at maturity, upon
redemption (including in connection with an offer to purchase) or otherwise;
(c) the Company fails to comply with any of the provisions of
Section 4.8 hereof;
(d) the Company fails to observe or perform any other
covenant, representation, warranty or other agreement in this Indenture or the
Notes for 60 days after notice to the Company by the Trustee or the Holders of
at least 25% in principal amount of the Notes then outstanding of such failure;
(e) the Company pursuant to or within the meaning of
Bankruptcy Law:
(i) commences a voluntary case;
(ii) consents to the entry of an order for relief
against it in an involuntary case;
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(iii) consents to the appointment of a custodian of
it or for all or substantially all of its property; or
(iv) makes a general assignment for the benefit of
its creditors.
(f) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(i) is for relief against the Company in an
involuntary case;
(ii) appoints a custodian of the Company for all or
substantially all of the property of the Company, or
(iii) orders the liquidation of the Company; and the
order or decree remains unstayed and in effect for 60 consecutive days.
SECTION 6.2. ACCELERATION.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately by a notice in writing
to the Company (and to the Trustee if such written notice is given by the
Holders). Upon any such declaration, the Notes shall become due and payable
immediately. Notwithstanding the foregoing, if an Event of Default specified in
clause (3) or (f) of Section 6.1 hereof occurs, all outstanding Notes shall be
due and payable immediately without further action or notice. The Holders of a
majority in aggregate principal amount of the then outstanding Notes by written
notice to the Trustee may on behalf of all of the Holders rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default (except nonpayment of
principal, premium or interest that has become due solely because of the
acceleration) have been cured or waived.
SECTION 6.3. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal of, premium and
interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 6.4. WAIVER OF PAST DEFAULTS.
Holders of a majority in aggregate principal amount of the then
outstanding Notes by written notice to the Trustee may on behalf of the Holders
of all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or
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Event of Default in the payment of the principal of, premium or interest on the
Notes (including in connection with an offer to purchase) (provided, however,
that the Holders of a majority in aggregate principal amount of the then
outstanding Notes with written notice to the Trustee may rescind an acceleration
and its consequences, including any related payment default that resulted from
such acceleration) in accordance with Section 6.2 hereof. Upon any such waiver,
such Default shall cease to exist and any Event of Default arising therefrom
shall be deemed to have been cured for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other Default or impair any rights
of the Trustee or the Holders consequent thereon.
SECTION 6.5. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding Notes
may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture, that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
SECTION 6.6. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice
of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the
then outstanding Notes make a written request to the Trustee to pursue the
remedy;
(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(d) the Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if requested, the provision
of indemnity; and
(e) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Notes do not give the Trustee a
direction inconsistent with the request.
A holder of a Note may not use this Indenture to prejudice the rights of another
Holder of a Note or to obtain a preference or priority over another Holder of a
Note.
SECTION 6.7. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal of, premium and interest on the
Note, on or after the respective due dates expressed in the Note (including in
connection with an offer to purchase), or to bring
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suit for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of such Holder.
SECTION 6.8. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.1(a) or (b) occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Company for the whole amount of
principal of, premium and interest remaining unpaid on the Notes and interest on
overdue principal and, to the extent lawful, interest, and such further amount
as shall be sufficient to cover the costs and expenses of collection, including
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.
SECTION 6.9. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceedings is hereby authorized by each Holder to make such payments
to the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.7 hereof. To the extent that the payment of any such
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.7 hereof out
of the estate in any such proceeding, shall be denied for any reason, payment of
the same shall be secured by a Lien on, and shall be paid out of, and prior to
any and all distributions, dividends, money, securities and other properties
that the Holders may be entitled to receive in such proceeding whether in
liquidation or under any plan of reorganization or arrangement or otherwise.
Nothing herein contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder, or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article 6, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.7 hereof, including payment of all reasonable compensation, expense
and liabilities incurred, and all advances made, by the Trustee and the
Trustee's costs and expenses of collection;
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Second: to Holders of Notes for amounts due and unpaid on the Notes for
principal, premium and interest ratably, without preference or priority of any
kind, according to the amounts due and payable on the Notes for principal,
premium and interest respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.7 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
SECTION 7.1. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and power vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined
solely by the express provisions of this Indenture and the Trustee need
perform only those duties that are specifically set forth in this
Indenture and no others, and no implied covenants or obligations shall
be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements
of this Indenture.
(c) The Trustee may not be relieved from liabilities for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
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(i) this paragraph does not limit the effect of
paragraph (b) of this Section;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.5 hereof or with an
Officers' Certificate or Opinion of Counsel received by it pursuant to
Section 7.2(b).
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b) and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or incur any liability. The Trustee shall be
under no obligation to exercise any of its rights and powers under this
Indenture at the request of any Holders, unless such Holder shall have offered
to the Trustee security and indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.2. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document
believed by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with counsel and the written advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection from liability
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or within the
rights or powers conferred upon it by this Indenture.
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(e) Unless otherwise specifically provided in this Indenture,
any demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities that might be incurred by it in compliance with such request of
direction.
SECTION 7.3. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.4. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any Provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statements in the Notes
or any other document in connection with the sale of the Notes or pursuant to
this Indenture other than its certificate of authentication.
SECTION 7.5. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of principal of, premium, if any, or
interest on any Note, the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of the Holders of the Notes.
The Trustee shall not be deemed to have knowledge of any Default or
Event of Default except (i) provided that the Trustee is the Paying Agent, a
Default or Event of Default arising under Section 6.1(a) or (b), or (ii) any
Default or Event of Default of which the Trustee shall have received written
notice in accordance with the terms of this Indenture, and such notice shall not
be deemed to include receipt of information obtained in any information,
documents and reports furnished, filed or delivered to the Trustee under
Section 4.3
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SECTION 7.6. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each July 15 beginning with the July 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA Section 313(a) (but if no event described
in TIA Section 313(a) has occurred within the twelve months preceding the
reporting date, no report need be transmitted). The Trustee also shall comply
with TIA Section 313(b)(2) to the extent applicable. The Trustee shall also
transmit by mail all reports as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA Section 313(d).
The Company shall promptly notify the Trustee, in writing when the Notes are
listed on any stock exchange.
SECTION 7.7. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.
The Company shall indemnify the Trustee and its directors, officers,
agents and employees against any and all losses, liabilities or expenses
incurred by it or such director, officer, agent or employee arising out of or in
connection with the acceptance or administration of its duties under this
Indenture, including the costs and expenses of enforcing this Indenture against
the Company (including this Section 7.7) and defending itself or such director,
officer, agent or employee against any claim (whether asserted by the Company or
any Holder or any other person) or liability in connection with the exercise or
performance of any of its or their powers or duties hereunder, except to the
extent any such loss, liability or expense may be attributable to its or their
negligence, bad faith or willful misconduct. The Trustee shall notify the
Company promptly of any claim for which it or such director, officer, agent or
employee may seek indemnity. Failure by the Trustee to so notify the Company
shall not relieve the Company of its obligations hereunder. The Company shall
defend the claim and the Trustee shall cooperate in the defense. The Trustee and
such officer, director, agent or employee may have separate counsel and the
Company shall pay the reasonable fees and expenses of such counsel. The Company
need not pay for any settlement made without its consent, which consent shall
not be unreasonably withheld.
The obligations of the Company under this Section 7.7 shall survive the
satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that
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held in trust to pay principal and interest on particular Notes. Such Lien shall
survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(e) or (f) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
SECTION 7.8. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of a majority
in principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company in writing. The Company may remove the
Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any Bankruptcy
Law;
(c) a custodian or public officer takes charge of the Trustee
or its property;
(d) the Trustee becomes incapable of acting; or
(e) prior to the issuance of any Notes hereunder, the Board of
Directors determines to remove the Trustee; provided, that the Company shall
have paid all amounts owed to the Trustee pursuant to Section 7.7.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of at least 10% in principal amount of the then outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who has
been a Holder of a Note for at least six months, fails to comply with Section
7.10 hereof, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
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A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.7 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.8, the Company's obligations under Section 7.7 hereof shall
continue for the benefit of the retiring Trustee.
SECTION 7.9. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has (or is part of a bank holding company that has) a
combined capital and surplus of at least $100 million as set forth in its most
recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.1. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, exercise its
rights under either Section 8.2 or 8.3 hereof with respect to all outstanding
Notes upon compliance with the conditions set forth below in this Article 8.
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SECTION 8.2. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.1 hereof of the option
applicable to this Section 8.2, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.4 hereof, be deemed to have discharged
its obligations with respect to all outstanding Notes on the date the conditions
set forth below are satisfied (hereinafter, "Legal Defeasance"). For this
purpose, Legal Defeasance means that the Company shall be deemed to have paid
and discharged the entire Indebtedness represented by the outstanding Notes
(which shall thereafter be deemed to be "outstanding" only for the purposes of
Section 8.5 hereof and the other Sections of this Indenture referred to in (a)
and (b) below) and to have satisfied all its other obligations under such Notes
and this Indenture (and the Trustee, on demand of and at the expense of the
Company, shall execute proper instruments acknowledging the same), except for
the following provisions which shall survive until otherwise terminated or
discharged hereunder: (a) the rights of Holders of outstanding Notes to receive
solely from the trust fund described in Section 8.4 hereof, and as more fully
set forth in such Section, payments in respect of the principal of, premium and
interest on such Notes when such payments are due, (b) the Company's obligations
with respect to such Notes under Sections 2.3, 2.4, 2.7, 2.10 and 4.2 hereof,
(c) the rights, powers, trusts, duties and immunities of the Trustee hereunder
and the Company's obligations in connection therewith and (d) this Article 8.
Subject to compliance with this Article 8, the Company may exercise its option
under this Section 8.2 notwithstanding the prior exercise of its option under
Section 8.3 hereof.
SECTION 8.3. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.1 hereof of the option
applicable to this Section 8.3, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.4 hereof, be released from its
obligations under the covenants contained in Article 4 (other than those in
Sections 4.1, 4.2, 4.6 and 4.7) and Section 5.1 hereof with respect to the
outstanding Notes on and after the date the conditions set forth below are
satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter
be deemed not "outstanding" for the purposes of any direction, waiver, consent
or declaration or act of Holders (and the consequences of any thereof) in
connection with the covenant, but shall continue to be deemed "outstanding" for
all other purposes hereunder (it being understood that such Notes shall not be
deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes, the Company may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in the covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to the covenant or by
reason of any reference in the covenant to any other provision herein or in any
other document and such omission to comply shall not constitute a Default or an
Event of Default under Section 6.1 hereof, but, except as specified above, the
remainder of this Indenture and such Notes shall be unaffected thereby. In
addition, upon the Company's exercise under Section 8.1 hereof of the option
applicable to this Section 8.3, subject to the satisfaction of the conditions
set forth in Section 6.4 hereof, Sections 6.1(c) through 6.1(f) hereof shall not
constitute an Event of Default.
SECTION 8.4. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
In order to exercise either Legal Defeasance or Covenant Defeasance:
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(a) the Company must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders, cash in United States dollars,
non-callable Government Securities, or a combination thereof, in such amounts as
will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of and premium and interest
on the outstanding Notes on the stated maturity thereof or on the applicable
redemption date, as the case may be, and the Company must specify whether the
Notes are being defeased to maturity or to a particular redemption date;
(b) in the case of an election under Section 8.2 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.3 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of Default
resulting from the incurrence of Indebtedness, all or a portion of the proceeds
of which will be used to defease the Notes pursuant to this Article 8
concurrently with such incurrence);
(e) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under, any material
agreement or instrument (other than this Indenture) to which the Company is a
party or by which the Company is bound;
(f) the Company shall have delivered to the Trustee an Opinion
of Counsel (which may be based on such solvency certificates or solvency
opinions as counsel deems necessary or appropriate) to the effect that the trust
funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally;
(g) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the Company with
the intent of preferring the Holders over any other creditors of the Company or
with the intent of defeasing, hindering, delaying or defrauding creditors of the
Company or others; and
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(h) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for or relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.
SECTION 8.5. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.6 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.5, the
"Trustee") pursuant to Section 8.4 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent required
by law. The Company shall not be required to execute a separate trust agreement
to implement the trust described in this paragraph.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.4 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary withstanding, the Trustee
shall deliver or pay to the Company from time to time upon the request of the
Company any money or non-callable Government Securities held by it as provided
in Section 8.4 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
8.4(a) hereof), are in excess of the amount thereof that would then be required
to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
SECTION 8.6. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest on any Note and remaining unclaimed for two years after such
principal, premium, if any, or interest has become due and payable shall be paid
to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter, as a
secured creditor look only to the Company for payment thereof, and all liability
of the Trustee or such Paying Agent with respect to such trust money, and all
liability of the Company as trustee thereof, shall thereupon cease, provided,
however, that the Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Company cause to be published
once, in The New York Times and The Wall Street Journal (national edition),
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such notification
or publication, any unclaimed balance of such money then remaining will be
repaid to the Company.
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SECTION 8.7. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.2 or
8.3 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.2 or 8.3 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.2 or 8.3 hereof,
as the case may be; provided, however, that, if the Company makes any payment of
principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.1. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.2 of this Indenture, the Company and the
Trustee may amend or supplement this Indenture or the Notes without the consent
of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency, provided
that such action shall not adversely affect the interests of the Holders in any
material respect;
(b) to provide for uncertificated Notes in addition to or in
place of certificated Notes.
(c) to provide for the assumption of the Company's obligations
to the Holders of the Notes in the case of a merger or consolidation pursuant to
Article 5 hereof;
(d) to make any change that would provide any additional
rights or benefits to the Holders of the Notes or that does not adversely affect
the legal rights hereunder of any Holder of the Notes;
(e) to comply with requirements of the SEC in order to effect
or maintain the qualification of this Indenture under the TIA; or
(f) at any time prior to the issuance of any Notes hereunder,
to make any changes determined appropriate by the Board of Directors.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
indenture, and upon receipt by the Trustee of the documents described in Section
7.2 hereof, the Trustee shall join with the Company in the execution of any
amended or supplemental indenture authorized or permitted by the terms of this
Indenture and make any further appropriate agreements and stipulations that may
be therein contained but the Trustee shall not be obligated to enter into such
amended or
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supplemental Indenture that affects its own rights, duties or immunities under
this Indenture or otherwise.
SECTION 9.2. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.2, the Company and the
Trustee may amend or supplement this Indenture and the Notes may be amended or
supplemented with the consent of the Holders of a majority in principal amount
of the Notes then outstanding (including, without limitation, consents obtained
in connection with a purchase of, or tender offer or exchange offer for, the
Notes), and, subject to Sections 6.4 and 6.7 hereof, any existing Default or
Event of Default or compliance with any provision of this Indenture or the Notes
may be waived with the consent of the Holders of a majority in principal amount
of the then outstanding Notes (including consents obtained in connection with a
tender offer or exchange offer for the Notes).
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.2 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental indenture
unless such amended or supplemental indenture affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may in its discretion, but shall not be obligated to, enter into such
amended or supplemental indenture.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.2 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.4 and 6.7 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding may waive
compliance in a particular instance by the Company with any provision of this
Indenture or the Notes. However, without the consent of each Holder affected, an
amendment or waiver may not (with respect to any Notes held by a non-consenting
Holder):
(a) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of
any Note or alter any of the provisions with respect to the redemption of the
Notes (except as provided in Section 4.8 hereof);
(c) reduce the rate of or change the time for payment of
interest on any Note;
(d) make any Note payable in money other than that stated in
the Notes;
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(e) make any changes to Sections 6.4 or 6.7; or
(f) make any change in the foregoing amendment and waiver
provisions.
SECTION 9.3. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in an amended or supplemental Indenture that complies with the TIA as
then in effect.
SECTION 9.4. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
SECTION 9.5. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.6. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Company
may not sign an amendment or supplemental indenture until the Board of Directors
approves it. In executing any amended or supplemental indenture, the Trustee
shall be entitled to receive and (subject to Section 7.1) shall be fully
protected in relying upon an Officers' Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
ARTICLE 10
SUBORDINATION
SECTION 10.1. AGREEMENT TO SUBORDINATE.
The Company agrees, and each Holder by accepting a Note agrees, that
the Indebtedness evidenced by the Note is subordinated in right of payment, to
the extent and in the manner provided in this Article 10, to the prior payment
in full of all Senior Debt (whether outstanding
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on the date hereof or hereafter created, incurred, assumed or guaranteed), and
that the subordination is for the benefit of the holders of Senior Debt.
SECTION 10.2. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, in
an assignment for the benefit of creditors or any marshalling of the Company's
assets and liabilities:
(a) holders of Senior Debt shall be entitled to receive
payment in full of all Obligations due in respect of such Senior Debt (including
interest after the commencement of any such proceeding at the rate specified in
the applicable Senior Debt) before Holders shall be entitled to receive any
payment with respect to the Notes; and
(b) until all Obligations with respect to Senior Debt are paid
in full, any distribution to which Holders would be entitled but for this
Article 10 shall be made to holders of Senior Debt (except that Holders may
receive securities, including capital stock, that are subordinated at least to
the same extent as the Notes to Senior Debt and any securities issued in
exchange for Senior Debt).
SECTION 10.3. DEFAULT ON SENIOR DEBT.
(a) The Company may not make any payment or distribution to
the Trustee or any Holder in respect of Obligations with respect to the Notes
and may not acquire from the Trustee or any Holder any Notes for cash or
property (other than securities, including capital stock, that are subordinated
at least to the same extent as the Notes to Senior Debt and any securities
issued in exchange for Senior Debt) until all principal and other Obligations
with respect to the Senior Debt have been paid in full if:
(i) a default in the payment of any principal or
other Obligations with respect to any Senior Debt occurs and is
continuing beyond any applicable grace period in the agreement,
indenture or other document governing such Senior Debt; or
(ii) a default, other than a payment default, on
Senior Debt occurs and is continuing that then permits holders of the
Senior Debt to accelerate its maturity and the Trustee receives a
notice of the default (a "Payment Blockage Notice") from the Company.
If the Trustee receives any such payment Blockage Notice, no subsequent
Payment Blockage Notice shall be effective for purposes of this Section
unless and until (i) at least 179 days shall have elapsed since the
date of receipt by the Trustee of the immediately prior Payment
Blockage Notice or (ii) the default shall have been cured. No
nonpayment default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the Trustee shall be, or be
made, the basis for a subsequent Payment Blockage Notice (it being
understood that any subsequent action, or any breach of any covenant
during the period commencing after the date of receipt by the Trustee
of such Payment Blockage Notice, that, in either case, would give rise
to such a default pursuant to any provision under which a default
previously existed or was continuing shall constitute a new default for
this purpose).
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(b) the Company may and shall resume payments on and
distributions in respect of the Notes and may acquire them upon the earlier of:
(i) in the case of a default referred to in Section 10.3(a)(i) hereof, the date
upon which the default is cured or waived, or (ii) in the case of a default
referred to in Section 10.3(a)(ii) hereof, the earlier of (1) the date on which
such default is cured or waived or (2) 179 days after the applicable Payment
Blockage Notice is received by the Company if the maturity of such Senior Debt
has not been accelerated (or, if such Senior Debt has been accelerated, such
Senior Debt has been paid in full) and if this Article 10 otherwise permits the
payment, distribution or acquisition at the time of such payment or acquisition.
SECTION 10.4. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of Default,
the Company shall promptly notify holders of Senior Debt of the acceleration.
SECTION 10.5. WHEN DISTRIBUTION MUST BE PAID OVER.
(a) In the event that the Trustee or any holder receives any
payment of any Obligations with respect to the Notes at a time when the Trustee
or such Holder, as applicable, has actual knowledge that such payment is
prohibited by Section 10.3 hereof, such payment shall be held by the Trustee or
such Holder in trust for the benefit of, and shall be paid forthwith over and
delivered, upon written request, to, the holders of Senior Debt as their
interests may appear or their representative (the "Representative") under the
indenture or other agreement (if any) pursuant to which Senior Debt may have
been issued, as their respective interests may appear, for application to the
payment of all Obligations with respect to Senior Debt remaining unpaid to the
extent necessary to pay such Obligations in full in accordance with the terms,
after giving effect to any concurrent payment or distribution to or for the
holders of Senior Debt.
(b) With respect to the holders of Senior Debt, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article 10, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be read into this
Indenture against the Trustee. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Debt, and shall not be liable to any
such holders if the Trustee shall pay over or distribute to or on behalf of
Holders or the company or any other person money or assets to which any holders
of Senior Debt shall be entitled by virtue of this Article 10, except if such
payment is made as a result of the willful misconduct or gross negligence of the
Trustee.
SECTION 10.6. NOTICE BY COMPANY.
The company shall promptly notify the Trustee and the Paying Agent in
writing of any facts known to the Company that would cause a payment of any
Obligations with respect to the Notes to violate this Article 10, but failure to
give such notice shall not affect the subordination of the Notes to the Senior
Debt as provided in this Article 10. The Trustee or any Paying Agent shall not
be deemed to have knowledge of any facts or circumstances causing any payment of
any Obligations with respect to the Notes to violate this Article 10 unless it
shall have received written notice thereof in accordance with the terms of this
Indenture, and such notice shall not be
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deemed to include receipt of information obtained in any information, documents
and reports furnished, filed or delivered to the Trustee under Section 4.3.
SECTION 10.7. SUBROGATION.
After all Senior Debt is paid in full and until the Notes are paid in
full, Holders shall be subrogated (equally and ratably with all other
Indebtedness pari passu with the Notes) to the rights of holders of Senior Debt
to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Holders have been applied to the payment
of Senior Debt. A distribution made under this Article 10 to holders of Senior
Debt that otherwise would have been made to Holders is not, as between the
Company and Holders, a payment by the Company on the Notes.
SECTION 10.8. RELATIVE RIGHTS.
(a) This Article 10 defines the relative rights of Holders and
holders of Senior Debt. Nothing in this Indenture shall: (i) impair, as between
the Company and Holders, the obligation of the Company, which is absolute and
unconditional, to pay principal of and interest on the Notes in accordance with
their terms; (ii) affect the relative rights of Holders and creditors of the
Company other than their rights in relation to holders of Senior Debt; (iii)
prevent the Trustee or any Holder from exercising its available remedies upon a
Default or Event of Default, subject to the rights of holders and owners of
Senior Debt to receive distributions and payments otherwise payable to Holders.
(b) If the Company fails because of this Article 10 to pay
principal of, premium, if any, or interest on a Note on the due date, the
failure is still a Default or Event of Default.
SECTION 10.9. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Debt to enforce the subordination of
the Indebtedness evidenced by the Notes shall be impaired by any act or failure
to act by the Company or any Holder or by the failure of the company or any
holder to comply with this Indenture.
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Company referred to
in this Article 10, the Trustee and the Holders shall be entitled to rely upon
any order or decree made by any court of competent jurisdiction or upon any
certificate of such Representative or of the liquidating trustee or agent or
other Person making any distribution to the Trustee or to the Holders for the
purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 10.
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SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article 10. Only the Company may give
the notice. Nothing in this Article 10 shall impair the claims of, or payments
to, the Trustee under or pursuant to Section 7.7 hereof.
The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Note by the Holder's acceptance thereof authorizes and
directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as the Holder's attorney-in-fact for
any and all such purposes. If the Trustee does into file a proper proof of claim
or proof of debt in the form required in any proceeding referred to in Section
6.9 hereof at least 30 days before the expiration of the time to file such
claim, the Holders are hereby authorized to file an appropriate claim.
SECTION 10.13. AMENDMENTS.
The provisions of this Article 10 shall not be amended or modified at
any time after the issuance of any Notes hereunder without the written consent
of the holders of all Senior Debt (in accordance with the provisions thereof).
ARTICLE 11
CONVERSION OF NOTES
SECTION 11.1. RIGHT TO CONVERT.
Subject to and upon compliance with the provisions of this Indenture,
the Holder of any Note shall have the right, at the option of such Holder, at
any time (except that, with respect to any Note or portion of a Note that shall
be called for redemption or delivered for repurchase, such right shall terminate
immediately prior to close of business on the date fixed for redemption of such
Note or portion of such Note unless the Company shall default in payment due
upon redemption thereof) to convert the principal amount of any such Note, or
any portion thereof, into that number of fully paid and nonassessable shares of
Common Stock (as such shares shall then be constituted) obtained by dividing the
aggregate principal amount of the Notes or portion thereof surrendered for
conversion by the Conversion price in effect at such time, by surrender of the
Note so to be converted in whole or in part in the manner provided in Section
11.2 hereof. Immediately following such conversion, the rights of the Holders of
converted Notes shall cease and the Persons entitled to receive the Common Stock
upon the conversion of Notes shall be treated for all purposes as having become
the owners of such Common Stock.
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SECTION 11.2. EXERCISE OF CONVERSION PRIVILEGE; ISSUANCE OF COMMON STOCK ON
CONVERSION; NO ADJUSTMENT FOR INTEREST OR DIVIDENDS.
In order to exercise the conversion privilege with respect to any Note
in definitive form, a Holder must (a) surrender such Note to be converted, duly
endorsed and in a form satisfactory to the Company, at an office or agency
maintained by the Company pursuant to Section 4.2 hereof, accompanied by the
funds, if any, required by the last paragraph of this Section 11.2, (b) notify
the Company at such office that he elects to convert such Note or a portion
thereof, specifying the principal amount he wishes to convert, (c) state in
writing the name or names (with address) in which he wishes the certificate or
certificates for shares of Common Stock to be issued and (d) pay any transfer
taxes, if required pursuant to Section 11.7 hereof. The date on which the Holder
satisfies all those requirements is the "Conversion Date." Each such Note
surrendered for conversion shall, unless the shares issuable on conversion are
to be issued in the name of the Holder of such Note as it appears on the Note
register, be accompanied by instruments of transfer in form satisfactory to the
Company duly executed by the Holder or his duly authorized attorney.
In order to exercise the conversion privilege with respect to any
interest in a Global Note, the beneficial Holder must complete the appropriate
instruction form for conversion pursuant to the Depositary's book-entry
conversion program and follow the other procedures set forth in such program.
As promptly as practicable after the Conversion Date, subject to
compliance with any restrictions on transfer if shares issuable on conversion
are to be issued in a name other than that of the holder (as if such transfer
were a transfer of the note or Notes (or portion thereof) so converted), the
Company shall issue and shall deliver to such Holder at the office or agency
maintained by the Company for such purpose pursuant to Section 4.2 hereof, a
certificate or certificates for the number of full shares issuable upon the
conversion of such Note or portion thereof in accordance with the provisions of
this Article 11 and a payment in cash in respect of any fractional interest in
respect of a share of Common Stock arising upon such conversion, as provided in
Section 11.3 hereof. In case any Note shall be surrendered for partial
conversion, and subject to Section 2.3 hereof, the Company shall execute and the
Trustee shall authenticate and make available for delivery to the holder of the
Note so surrendered, without charge to him, a new Note or Notes in authorized
denominations in an aggregate principal amount equal to the unconverted portion
of the surrendered Note.
Each conversion shall be deemed to have been effected as to any note
(or portion thereof) on the Conversion Date, and the person in whose name any
certificate or certificates for shares of Common Stock shall be issuable upon
such conversion shall be deemed to have become on such date the Holder of record
of the shares represented thereby; provided that any such surrender on any date
when the stock transfer books of the Company shall be closed shall constitute
the Person in whose name the certificates are to be issued as the record holder
thereof for all purposes on the next succeeding day on which such stock transfer
books are open, but such conversion shall be at the Conversion Price in effect
on the date upon which such Note shall have been surrendered.
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The Holder of record of a Note at the close of business on a record
date with respect to the payment of interest on the Notes will be entitled to
receive such interest with respect to such Notes on the corresponding interest
payment date, notwithstanding the conversion of such Notes after such record
date and prior to such interest payment date. Notes surrendered for conversion
during the period from the close of business on any record date for the payment
of interest to the opening of business of the corresponding interest payment
date must be accompanied by a payment in cash in an amount equal to the interest
payable on such interest payment date, unless such Notes have been called for
redemption on a redemption date occurring during the period from the close of
business on any record date for the payment of interest to the close of business
on the business day immediately following the corresponding interest payment
date. The interest payment with respect to any Note called for redemption on a
date during the period from the close of business on any record date for the
payment of interest to the close of business on the business day immediately
following the corresponding interest payment date will be payable on such
interest payment date to the record Holder of such Note on such record date,
notwithstanding the conversion of such Note after such record date and prior to
such interest payment date. Except as provided in this Section 11.2, no payment
or adjustment will be made upon conversion of Notes for accrued and unpaid
interest or for dividends with respect to the Common Stock issued upon such
conversion of Notes as provided in this Article 11.
Upon the conversion of any interest in a Global Note, the Trustee, or
the Note Custodian at the direction of the Trustee, shall make a notation on
such Global Note as to the reduction in the principal amount represented
thereby.
SECTION 11.3. CASH PAYMENTS IN LIEU OF FRACTIONAL SHARES.
The Company shall not issue a fractional share of Common Stock upon
conversion of the Notes. Instead the Company shall pay a cash adjustment for the
current market value of the fractional share. The current market value of a
fraction of a share shall be determined as follows: Multiply the current market
price of a full share by the fraction. Round the result to the nearest cent. The
current market price of a share of Common Stock is the Closing Price of the
Common Stock on the last Trading Day prior to the Conversion Date.
SECTION 11.4. CONVERSION PRICE.
The "Conversion Price" shall be that amount as determined pursuant to
the company's Restated Certificate of Incorporation with respect to the 8 3/4%
Series B Convertible Exchangeable Preferred Stock, filed with the Secretary of
State of the State of New Jersey on August 8, 1997, as amended through the date
of the exchange of Preferred Stock for the Notes, on the date of exchange of the
Preferred Stock for the Notes, subject to adjustment as provided in this Article
11. Notice of the initial Conversion Price shall be set forth in the Officers'
Certificate delivered to the Trustee pursuant to Section 2.2 hereof and the
Company shall notify the Trustee of any adjustments in the Conversion Price as
soon as practicable after determination.
SECTION 11.5. ADJUSTMENT OF CONVERSION PRICE.
The Conversion Price shall be adjusted from time to time by the Company
as follows:
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(a) In case the Company shall pay or make a dividend or other
distribution on any class of capital stock of the Company in Common Stock, the
Conversion price in effect at the opening of business on the day following the
date fixed for the determination of shareholders entitled to receive such
dividend or other distribution shall be reduced by multiplying such Conversion
Price by a fraction the numerator of which shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination and the denominator of which shall be the sum of such number of
shares and the total number shares constituting such dividend or other
distribution, such reduction to become effective immediately after the opening
of business on the day following the date fixed for such determination of the
holders entitled to such dividends and distributions. For the purposes of this
Section 11.5(a), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company. The Company shall
not pay any dividend or make any distribution on shares of Common Stock held in
the treasury of the Company.
(b) In case the Company shall issue rights, options or
warrants to all holders of its Common Stock entitling them to subscribe for,
purchase or acquire shares of Common Stock at a price per share less than the
current market price per share of the Common Stock on the date fixed for the
determination of shareholders entitled to receive such rights, options or
warrants, the Conversion Price in effect at the opening of business on the day
following the date fixed for such determination shall be reduced by multiplying
such Conversion price by a fraction the numerator of which shall be the number
of shares of Common stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common Stock so
offered for subscription purchase or acquisition would purchase at such current
market price and the denominator of which shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock so offered for
subscription, purchase or acquisition, such reduction to become effective
immediately after the opening of business on the day following the date fixed
for such determination of the holders entitled to such rights, options or
warrants. However, upon the expiration of any right, option or warrant to
purchase Common Stock, the issuance of which resulted in an adjustment in the
Conversion price pursuant to this Section 11.5(b), if any such right, option or
warrant shall expire and shall not have been exercised, the Conversion Price
shall be recomputed immediately upon such expiration and effective immediately
upon such expiration shall be increased to the price it would have been (but
reflecting any other adjustments to the Conversion Price made pursuant to the
provisions of Section 11.5 hereof after the issuance of such rights, options or
warrants) had the adjustment of the Conversion Price made upon the issuance of
such rights, options or warrants been made on the basis of offering for
subscription or purchase only that number of shares of Common Stock actually
purchased upon the exercise of such rights, options or warrants. No further
adjustment shall be made upon exercise of any right, option or warrant if any
adjustment shall have been made upon the issuance of such security. For the
purposes of this Section 11.5(b), the number of shares of Common Stock at any
time outstanding shall not include shares held in the treasury of the Company.
The Company shall not issue any rights, options or warrants in respect of shares
of Common Stock held in the treasury of the Company.
(c) In case the outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the Conversion Price
in effect at the opening of
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business on the day following the day upon which such subdivision becomes
effective shall be reduced, and conversely, in case the outstanding shares of
Common Stock shall each be combined into a smaller number of shares of Common
Stock, the Conversion Price in effect at the opening of business on the day
following the day upon which such combination becomes effective shall be
increased, to equal the product of the Conversion Price in effect on such date
and a fraction the numerator of which shall be the number of shares of Common
Stock outstanding immediately prior to such subdivision or combination, as the
case may be, and the denominator of which shall be the number of shares of
Common Stock outstanding immediately after such subdivision or combination, as
the case may be. Such reduction or increase, as the case may be, shall become
effective immediately after the opening of business on the day following the day
upon which such subdivision or combination becomes effective.
(d) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock (i) evidences of its indebtedness
or (ii) shares of any class of capital stock, cash or other assets (including
securities, but excluding (1) any rights, options or warrants referred to in
Section 11.5(b) hereof, (2) any dividend or distribution referred to in Section
11.5(a) hereof, and (3) cash dividends paid from the Company's retained earnings
unless the sum of (A) all such cash dividends and distributions made within the
preceding 12 months in respect of which no adjustment has been made and (B) any
cash and the fair market value of other consideration paid in respect of any
repurchases of Common Stock by the Company or any of its subsidiaries within the
preceding 12 months in respect of which no adjustment has been made, exceeds 20%
of the Company's market capitalization (being the product of the then current
market price per share of the Common Stock times the aggregate number of shares
of Common Stock then outstanding) on the record date for such distribution),
then in each case, the Conversion Price in effect at the opening of business on
the day following the date fixed for the determination of holders of Common
Stock entitled to receive such distribution shall be adjusted by multiplying
such Conversion Price by a fraction of which the numerator shall be the current
market price per share of the Common Stock on such date of determination (or, if
earlier, on the date on which the Common stock goes "ex-dividend" in respect of
such distribution) less the then fair market value as determined by the Board of
Directors, whose determination shall be conclusive and shall be described in a
statement filed with any conversion agent) of the portion of the capital stock,
cash or other assets or evidences of indebtedness to distributed (and for which
an adjustment to the Conversion Price has not previously been made pursuant to
the terms of this Section 11.5) applicable to one share of Common Stock, and the
denominator shall be such current market price per share of the Common Stock,
such adjustment to become effective immediately after the opening of business on
the day following such date of determination of the holders entitled to such
distribution. The following transactions shall be excluded from the foregoing
clauses (A) and (B): (x) repurchases of Common Stock issued under the Company's
stock incentive programs and (y) dividends or distributions payable-in-kind in
additional shares of or warrants, rights, calls or options exercisable for or
convertible into additional shares of Junior Securities.
(e) The reclassification or change of Common Stock into
securities including securities other than Common Stock (other than any
reclassification upon a consolidation or merger to which Section 11.6 shall
apply) shall be deemed to involve (i) a distribution of such securities other
than Common stock to all holders of Common Stock (and the effective date of such
reclassification shall be deemed to be "the date fixed for the determination of
holders of
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Common Stock entitled to receive such distribution" within the meaning of
Section 11.5(d) hereof), and (ii) a subdivision or combination, as the case may
be, of the number of shares of Common Stock outstanding immediately prior to
such reclassification into the number of shares of Common Stock outstanding
immediately thereafter (and the effective date of such reclassification shall be
deemed to be "the day upon which such subdivision becomes effective" or "the day
upon which such combination becomes effective," as the case may be, and "the day
upon which such subdivision or combination becomes effective" within the meaning
of Section 11.5(c) hereof).
(f) The Company from time to time may reduce the Conversion
Price if it considers such reductions to be advisable in order that any event
treated for federal income tax purposes as a dividend of stock rights will not
be taxable to the holders of Common Stock by any amount, but in no event may the
Conversion Price be less than the par value of a share of Common Stock. Whenever
the Conversion Price is reduced, the Company shall mail to Holders of record of
Notes a notice of the reduction. The Company shall mail the notice at least 15
days before the date the reduced Conversion Price takes effect. The notice shall
state the reduced Conversion Price and the period it will be in effect. A
reduction of the Conversion Price does not change or adjust the Conversion Price
otherwise in effect for purposes of Sections 11.5(a), (b), (c), (d) and (e)
hereof.
(g) No adjustment in the Conversion Price need be made until
all cumulative adjustments amount to at least 1% in the Conversion Price, as
last adjusted; provided that any adjustments that by reason of this Section
11.5(g) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Article 11
shall be made by the Company and shall be made to the nearest cent.
(h) For the purpose of any computation under Section 11.5, the
current market price per share of Common Stock on any day shall be deemed to be
the average of the Closing Prices of the Common Stock for the 20 consecutive
Trading Days selected by the Board of Directors commencing no more than 30
Trading Days before and ending no later than the day before the day in question;
provided that, in the case of Section 11.5(d) hereof, if the period between the
date of the public announcement of the dividend or distribution and the date of
or the determination of holders of Common Stock entitled to receive such
dividend or distribution (or, if earlier, the date on which the Common Stock
goes "ex-dividend" in respect of such dividend or distribution) shall be less
than 20 Trading Days, the period shall be such lesser number of Trading Days
but, in any event not less than five Trading Days.
(i) No adjustment in the Conversion Price shall reduce the
Conversion Price below the then par value of the Common Stock. No adjustment in
the Conversion Price need be made under Section 11.5(a), (b) or (d) hereof if
the Company issues or distributes to each Holder of Notes the shares of Common
Stock, evidences of indebtedness, assets, rights, options or warrants referred
to in those paragraphs which each Holder would have been entitled to receive had
Notes been converted into Common Stock prior to the happening of such event or
the record date with respect thereto.
(j) Whenever the conversion price is adjusted as herein
provided, the Company shall promptly file with the Trustee and any conversion
agent other than the Trustee an
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Officers' Certificate setting forth the Conversion Price after such adjustment
and setting forth a brief statement of the fact requiring such adjustment.
Promptly after delivery of such certificate, the company shall prepare a notice
of such adjustment of the Conversion Price setting forth the adjusted Conversion
Price and the date on which each adjustment became effective and shall mail such
notice of such adjustment of the Conversion Price to each Holder of Notes at his
last address appearing on the Note register provided for in Section 2.5 hereof,
within 20 days after execution thereof. Failure to deliver such notice shall not
effect the legality or validity of any such adjustment.
(k) In any case in which this Section 11.5 shall require that
an adjustment as a result of any event become effective from and after a record
date, the company may elect to defer until after the occurrence of such event
(i) the issuance to the Holder of and Notes converted after such record date and
before the occurrence of such event of the additional shares of Common Stock
issuable upon such conversion over and above the shares issuable on the basis of
the Conversion Price in effect immediately prior to adjustment and (ii) a cash
payment for any remaining fractional shares of Common stock as provided in
Section 11.3 hereof; provided, however, that if such event shall not have
occurred and authorization of such event shall be rescinded by the Company, the
Conversion Price shall be recomputed immediately upon such recision to the price
that would have been in effect had such event not been authorized, provided that
such recision is permitted by and effective under applicable laws.
SECTION 11.6. EFFECTIVE OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE.
In the case of any consolidation of the Company or the merger of the
Company with or into any other entity or the sale or transfer of all or
substantially all the assets of the Company pursuant to which the Company's
Common Stock is converted into other securities, cash or assets, the Company or
the successor or purchasing corporation, as the case may be, shall execute with
the Trustee a supplemental indenture providing that the Notes shall be
convertible into the kind and amount of securities, cash or other assets
receivable upon such consolidation merger, sale or transfer by a holder of the
number of shares of Common Stock into which such Notes might have been converted
immediately prior to such consolidation, merger, transfer or sale assuming such
holder of Common Stock failed to exercise any rights of election and received
per share the kind and amount receivable per share by a plurality of
non-electing shares. Such supplemental indenture shall provide for adjustments
that shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Article 11.
The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each Holder of Notes within 20 days after execution
thereof. Failure to deliver such notice shall not affect the legality or
validity of such supplemental indenture.
The above provisions of this Section 11.6 shall similarly apply to
successive reclassifications, changes, consolidations, mergers, combinations,
sales and conveyances.
SECTION 11.7. TAXES ON SHARES ISSUED.
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If a Holder converts Notes, the Company shall pay any documentary,
stamp or similar issue or transfer tax due on the issue of shares of Common
Stock upon the conversion. However, the Holder shall pay any such tax that is
due because the shares are issued in a name other than the Holders' name.
SECTION 11.8. RESERVATION OF SHARES; SHARES TO BE FULLY PAID; LISTING OF COMMON
STOCK.
The Company has reserved and shall continue to reserve out of its
authorized but unissued Common Stock or its Common Stock held in treasury enough
shares of Common Stock to permit the conversion of the Notes in full. All shares
of Common Stock that may be issued upon conversion of Notes shall be fully paid
and nonassessable. The Company shall endeavor to comply with all securities laws
regulating the offer and delivery of shares of Common stock upon conversion of
Notes and shall endeavor to list such shares on each national securities
exchange on which the Common Stock is listed.
SECTION 11.9. COMMON STOCK ISSUABLE UPON CONVERSION.
For purposes of this Article 11, "Common Stock" includes any stock of
any class of the Company which has no preference in respect of dividends or of
amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding-up of the Company and which is not subject to redemption
by the Company. However, subject to the provisions of Section 11.5(b) hereof,
shares issuable on conversion of Notes shall include only shares of the class
designated as Common Stock of the Company on the date of issuance of the
Preferred Stock pursuant to the Offering or shares of any class or classes
resulting from any reclassification thereof and which have no preferences in
respect of dividends or amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company and which are
not subject to redemption by the Company, provided that, if at any time there
shall be more than one such resulting class, the shares of which such class then
so issuable shall be substantially in the proportions which the total number of
shares of such class resulting from all such reclassifications to the total
number of shares of all such classes resulting from all such reclassifications.
SECTION 11.10. RESPONSIBILITY OF TRUSTEE.
The Trustee and any other conversion agent shall not at any time be
under any duty or responsibility to any Holder of Notes to make a determination
whether any facts exist that may require any adjustment of the Conversion Price,
or with respect to the nature or extent or calculation of any such adjustment
when made, or with respect to the method employed, or herein or in any
supplemental indenture provided to be employed, in making the same. The Trustee
and any other conversion agent shall not be accountable with respect to the
validity or value (or the kind or amount of any shares of Common Stock, or of
any securities or property, that may at any time be issued or delivered upon the
conversion of any Note; and the Trustee and any other conversion agent make no
representations with respect thereto. Subject to the provision of Section 7.1
hereof, neither the Trustee nor any conversion agent shall be responsible for
any failure of the Company to issue, transfer or deliver any shares of Common
Stock or stock certificates or other securities or property in cash upon the
surrender of any Note for the purpose
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of conversion or to comply with any of the duties, responsibilities or covenants
of the Company contained in this Article 11. Without limiting the generality of
the foregoing, neither the Trustee nor any conversion agent shall be under any
responsibility to determine whether a supplemental indenture under Section 11.6
hereof is required to be entered into or the correctness of any provisions
contained in any supplemental indenture entered into pursuant to Section 11.6
relating either to the amount of shares receivable by Holders upon the
conversion of their Notes after any event referred to in Section 11.6 hereof or
to any adjustment to be made with respect thereto, but, subject to the
provisions of Section 7.1 hereof, may accept as conclusive evidence of the
correctness of any such provisions, and shall be protected in relying upon, the
Officers' Certificate (which the Company shall be obligated to file with the
Trustee prior to the execution of any such supplemental indenture) with respect
thereto.
SECTION 11.11. NOTICE TO HOLDERS PRIOR TO CERTAIN ACTIONS.
In case (a) the Company makes any distribution or dividend that would
require an adjustment in the Conversion Price pursuant to Section 11.5 hereof,
(b) the Company takes any action that would require a supplemental indenture
pursuant to Section 11.6 hereof or (c) of the voluntary or involuntary
dissolution, liquidating or winding-up of the Company, the Company shall cause
to be filed with the Trustee and to be mailed to each Holder of Notes as
promptly as possible but in any event at least 15 days prior to the applicable
date hereinafter specified, a notice stating (i) the date on which a record date
is to be taken for the purpose of such dividend, distribution, rights, options
or warrants, or, if a record is not to be taken, the date as of which the
holders of Common stock of record to be entitled to such dividend, distribution,
rights, options or warrants are to be determined or (ii) the date on which such
reclassification, change, consolidation, merger, sale, conveyance, transfer,
dissolution, liquidation or winding-up is expected to become effective or occur
and the date as of which it is expected that holders of record of Common Stock
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reclassification, change, consolidation, merger,
sale, conveyance, transfer, dissolution, liquidation or winding-up. Neither the
failure to give such notice nor any defect therein shall affect the legality or
validity of the proceedings referenced in clauses (a) through (c) of this
Section 11.11.
ARTICLE 12
MISCELLANEOUS
SECTION 12.1. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by Subsection (c) of Section 318 of the TIA , the imposed
duties shall control. The provisions of Section 310 and 317, inclusive, of the
TIA that impose duties on any Person (including provisions automatically deemed
included in an indenture unless the indenture provides that such provisions are
excluded) are a part of and govern this Indenture, except as, and to the extent,
expressly excluded form this Indenture, as permitted by the TIA.
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SECTION 12.2. NOTICES.
Any notice or communication shall be in writing and delivered in person
or mailed by first class mail (registered or certified, return receipt
requested), or overnight air courier guaranteeing next day delivery, addressed
as follows:
If to the Company:
KTI, INC.
7000 Boulevard East
Guttenberg, NJ 07093
Telecopier No.: (201) 854-1771
Attention: General Counsel
With a copy to:
McDermott, Will & Emery
50 Rockerfeller Plaza
New York, NY 10020
Telecopier No.: (212) 547-5444
Attention: Brian Hoffmann, Esq.
If to the Trustee:
SunTrust Bank, Central Florida, National Association
225 East Robinson Street
Suite 250
Orlando, FL 32801
Telecopier No.: (407) 237-4791
Attention: Ms. Lisa Derryberry
With a copy to:
Holland & Knight LLP
701 Brickell Avenue
Miami, FL 33131
Telecopier: (305) 789-7799
Attention: Douglas F. Darbut, Esq.
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) shall
be deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; and the next Business Day after timely delivery to the
courier, if sent by overnight air courier guaranteeing next day delivery.
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Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA Section 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails or otherwise gives a notice or communication to
Holder, it shall similarly mail or give a copy to the Trustee and each Agent at
the same time.
SECTION 12.3. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA Section 312(c).
SECTION 12.4. CERTIFICATE AND OPINION AS TO CONDITONS PRECEDENT.
Upon any request or application by the Company to the trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 12.5 hereof) stating that, in the opinion of the signers, all conditions
precedent and covenants, if any, provided for in this Indenture relating to the
proposed action have been satisfied, and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set froth in
Section 12.5 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
SECTION 12.5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance or covenant
provided for in this Indenture (other than a certificate provided pursuant to
TIA Section 314(a)(4)) shall comply with the provisions of TIA Section 314(e)
and shall include:
(a) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
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(c) a statement that, in the opinion of such Person, he or she
has made such examination or investigation as is necessary to enable him or her
to express an informed opinion as to whether or not such covenant or condition
has been satisfied; and
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been satisfied.
SECTION 12.6. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 12.7. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
SHAREHOLDERS.
No past, present or future director, officer, employee, incorporator or
shareholder of the Company, as such, shall have any liability for any
obligations of the Company under the Notes, this Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for issuances of the Notes.
SECTION 12.8. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE AND THE NOTES.
SECTION 12.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS
This indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Significant Subsidiaries or of any other
Person. Any such indenture, loan or debt agreement may not be used to interpret
this Indenture.
SECTION 12.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes shall
bind their successors. All agreements of the Trustees in this Indenture shall
bind its successors.
SECTION 12.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 12.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
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SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
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SIGNATURES
Dated as of July ___, 1998 KTI, INC.
By: _____________________________
Name:
Title:
Dated as of July ___, 1998 SUNTRUST BANK, CENTRAL FLORIDA
NATIONAL ASSOCIATION, ___________
By: _____________________________
Name:
Title:
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Exhibit 99(d)(2)
- --------------------------------------------------------------------------------
KTI, INC.
CASELLA WASTE SYSTEMS, INC.
8 3/4 Convertible Subordinated Notes Due 2004
- --------------------------------------------------------------------------------
SUPPLEMENTAL INDENTURE
Dated as of December 14, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION
- --------------------------------------------------------------------------------
Trustee
- --------------------------------------------------------------------------------
<PAGE>
SUPPLEMENTAL INDENTURE dated as of December 14, 1999, between KTI,
INC., a New Jersey corporation (the "Company"), CASELLA WASTE SYSTEMS, INC., a
Delaware corporation ("Casella"), and SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL
ASSOCIATION, as trustee (the "Trustee").
WHEREAS, the Company and the Trustee entered into an Indenture dated as
of July 31, 1998 (the "Indenture") for the equal and ratable benefit of the
holders of the 8 3/4% Convertible Subordinated Notes due August 15, 2004, issued
by the Company (the "Notes"); and
WHEREAS, in accordance with an Agreement and Plan of Merger dated as of
January 12, 1999, as amended (the "Merger Agreement"), the Company, Casella and
Rutland Acquisition Sub, Inc. have agreed to the merger of Rutland Acquisition
Sub, Inc. with and into the Company (the "Merger"), as a result of which, the
Company shall become a wholly-owned subsidiary of Casella; and
WHEREAS, the Company is permitted under the terms of Article 5 of the
Indenture to enter into and consummate the Merger upon compliance with the
conditions of said Article 5; and
WHEREAS, in accordance with Section 11.6 of the Indenture, the Company
is required to execute with the Trustee a Supplemental Indenture providing that
the Notes shall be convertible into the kind and amount of securities, cash or
other assets receivable upon the Merger by a holder of the number of Common
Shares of the Company into which such Notes might have been converted
immediately prior to such Merger;
NOW, THEREFORE, the Company, Casella and the Trustee agree as follows
for the benefit of each other and for the equal and ratable benefit of the
holders of the Notes:
1. DEFINED TERMS. All capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to them in the Indenture.
2. AMENDMENT TO DEFINITION OF COMMON STOCK. The definition of "Common
Stock" in Section 1.1 of the Indenture is hereby amended and restated in its
entirety as follows:
"Common Stock" means the Class A Common Stock, $.01 par value per
share, of Casella Waste Systems, Inc. and any other capital stock of Casella
into which such common stock may be converted or reclassified or that may be
issued in respect of, or in exchange for, or in substitution for such common
stock by reason of any stock splits, stock dividends, distributions, mergers,
consolidations or other like events.
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3. ADDITIONAL DEFINITION. The definition of "Casella" is hereby added
to Section 1.1 of the Indenture as follows:
"Casella" means Casella Waste Systems, Inc., a Delaware corporation.
4. AMENDMENT TO ARTICLE 11. Article 11 of the Indenture is hereby
amended and restated in its entirety as follows:
ARTICLE 11
CONVERSION OF NOTES
SECTION 11.1. RIGHT TO CONVERT.
Subject to and upon compliance with the provisions of this Indenture,
the Holder of any Note shall have the right, at the option of such Holder, at
any time (except that, with respect to any Note or portion of a Note that shall
be called for redemption or delivered for repurchase, such right shall terminate
immediately prior to close of business on the date fixed for redemption of such
Note or portion of such Note unless the Company shall default in payment due
upon redemption thereof) to convert the principal amount of any such Note, or
any portion thereof, into that number of fully paid and nonassessable shares of
Common Stock (as such shares shall then be constituted) obtained by dividing the
aggregate principal amount of the Notes or portion thereof surrendered for
conversion by the Conversion Price in effect at such time, by surrender of the
Note so to be converted in whole or in part in the manner provided in Section
11.2 hereof. Immediately following such conversion, the rights of the Holders of
converted Notes shall cease and the Persons entitled to receive the Common Stock
upon the conversion of Notes shall be treated for all purposes as having become
the owners of such Common Stock.
SECTION 11.2. EXERCISE OF CONVERSION PRIVILEGE; ISSUANCE OF COMMON
STOCK ON CONVERSION; NO ADJUSTMENT FOR INTEREST OR
DIVIDENDS.
In order to exercise the conversion privilege with respect to any Note
in definitive form, a Holder must (a) surrender such Note to be converted, duly
endorsed and in a form satisfactory to the Company, at an office or agency
maintained by the Company pursuant to Section 4.2 hereof, accompanied by the
funds, if any, required by the penultimate paragraph of this Section 11.2, (b)
notify the Company at such office that he elects to convert such Note or a
portion thereof, specifying the principal amount he wishes to convert, (c) state
in writing the name or names (with address) in which he wishes the certificate
or certificates for shares of Common Stock to be issued and (d) pay any transfer
taxes, if required pursuant to Section 11.7 hereof. The date on which the Holder
satisfies all those requirements is the "Conversion Date." Each such Note
surrendered for conversion shall, unless the shares issuable on conversion
are to be issued in the name of the Holder of such Note as it appears on the
Note register, be accompanied by
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instruments of transfer in form satisfactory to the Company duly executed by the
Holder or his duly authorized attorney.
In order to exercise the conversion privilege with respect to any
interest in a Global Note, the beneficial Holder must complete the appropriate
instruction form for conversion pursuant to the Depositary's book-entry
conversion program and follow the other procedures set forth in such program.
As promptly as practicable after the Conversion Date, subject to
compliance with any restrictions on transfer if shares issuable on conversion
are to be issued in a name other than that of the Holder (as if such transfer
were a transfer of the Note or Notes (or portion thereof) so converted), Casella
shall issue and shall deliver to such Holder at the office or agency maintained
by the Company for such purpose pursuant to Section 4.2 hereof, a certificate or
certificates for the number of full shares issuable upon the conversion of such
Note or portion thereof in accordance with the provisions of this Article 11 and
a payment in cash in respect of any fractional interest in respect of a share of
Common Stock arising upon such conversion, as provided in Section 11.3 hereof.
In case any Note shall be surrendered for partial conversion, and subject to
Section 2.3 hereof, the Company shall execute and the Trustee shall authenticate
and make available for delivery to the Holder of the Note so surrendered,
without charge to him, a new Note or Notes in authorized denominations in an
aggregate principal amount equal to the unconverted portion of the surrendered
Note.
Each conversion shall be deemed to have been effected as to any Note
(or portion thereof) on the Conversion Date, and the Person in whose name any
certificate or certificates for shares of Common Stock shall be issuable upon
such conversion shall be deemed to have become on such date the Holder of record
of the shares represented thereby; provided that any such surrender on any date
when the stock transfer books of Casella shall be closed shall constitute the
Person in whose name the certificates are to be issued as the record holder
thereof for all purposes on the next succeeding day on which such stock transfer
books are open, but such conversion shall be at the Conversion Price in effect
on the date upon which such Note shall have been surrendered.
The Holder of record of a Note at the close of business on a record
date with respect to the payment of interest on the Notes will be entitled to
receive such interest with respect to such Notes on the corresponding interest
payment date, notwithstanding the conversion of such Notes after such record
date and prior to such interest payment date. Notes surrendered for conversion
during the period from the close of business on any record date for the payment
of interest to the opening of business of the corresponding interest payment
date must be accompanied by a payment in cash in an amount equal to the interest
payable on such interest payment date, unless such Notes have been called for
redemption on a redemption date occurring during the period from the close of
business on any record date for the payment of interest to the close of business
on the business day immediately following the corresponding interest payment
date. The interest payment with respect to any Note called for redemption on
a date during the period from the close of business on any record date for
the payment of interest to the close of business on the
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business day immediately following the corresponding interest payment date will
be payable on such interest payment date to the record Holder of such Note on
such record date, notwithstanding the conversion of such Note after such record
date and prior to such interest payment date. Except as provided in this Section
11.2, no payment or adjustment will be made upon conversion of Notes for accrued
and unpaid interest or for dividends with respect to the Common Stock issued
upon such conversion of Notes as provided in this Article 11.
Upon the conversion of any interest in a Global Note, the Trustee, or
the Note Custodian at the direction of the Trustee, shall make a notation on
such Global Note as to the reduction in the principal amount represented
thereby.
SECTION 11.3. CASH PAYMENTS IN LIEU OF FRACTIONAL SHARES.
Casella shall not issue a fractional share of Common Stock upon
conversion of the Notes. Instead the Casella shall pay a cash adjustment for the
current market value of the fractional share. The current market value of a
fraction of a share shall be determined as follows: Multiply the current market
price of a full share by the fraction. Round the result to the nearest cent. The
current market price of a share of Common Stock is the Closing Price of the
Common Stock on the last Trading Day prior to the Conversion Date.
SECTION 11.4. CONVERSION PRICE.
The "Conversion Price" shall be $23.04. Casella shall notify the
Trustee of any adjustments in the Conversion Price as soon as practicable after
determination.
SECTION 11.5. ADJUSTMENT OF CONVERSION PRICE.
The Conversion Price shall be adjusted from time to time by Casella as
follows:
(a) In case Casella shall pay or make a dividend or other
distribution on any class of capital stock of Casella in Common Stock, the
Conversion Price in effect at the opening of business on the day following the
date fixed for the determination of shareholders entitled to receive such
dividend or other distribution shall be reduced by multiplying such Conversion
Price by a fraction the numerator of which shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination and the denominator of which shall be the sum of such number of
shares and the total number shares constituting such dividend or other
distribution, such reduction to become effective immediately after the opening
of business on the day following the date fixed for such determination of the
holders entitled to such dividends and distributions. For the purposes of this
Section 11.5(a), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of Casella. Casella shall not pay
any dividend or make any distribution on shares of Common Stock held in the
treasury of Casella.
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(b) In case Casella shall issue rights, options or warrants to all
holders of its Common Stock entitling them to subscribe for, purchase or acquire
shares of Common Stock at a price per share less than the current market price
per share of the Common Stock on the date fixed for the determination of
shareholders entitled to receive such rights, options or warrants, the
Conversion Price in effect at the opening of business on the day following the
date fixed for such determination shall be reduced by multiplying such
Conversion Price by a fraction the numerator of which shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common Stock so
offered for subscription, purchase or acquisition would purchase at such current
market price and the denominator of which shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock so offered for
subscription, purchase or acquisition, such reduction to become effective
immediately after the opening of business on the day following the date fixed
for such determination of the holders entitled to such right, options or
warrants. However, upon the expiration of any right, option or warrant to
purchase Common Stock, the issuance of which resulted in an adjustment in the
Conversion Price pursuant to this Section 11.5(b), if any such right, option or
warrant shall expire and shall not have been exercised, the Conversion Price
shall be recomputed immediately upon such expiration and effective immediately
upon such expiration shall be increased to the price it would have been (but
reflecting any other adjustments to the Conversion Price made pursuant to the
provisions of Section 11.5 hereof after the issuance of such rights, options or
warrants) had the adjustment of the Conversion Price made upon the issuance of
such rights, options or warrants been made on the basis of offering for
subscription or purchase only that number of shares of Common Stock actually
purchased upon the exercise of such rights, options or warrants. No further
adjustment shall be made upon exercise of any right, option or warrant if any
adjustment shall have been made upon the issuance of such security. For the
purposes of this Section 11.5(b), the number of shares of Common Stock at any
time outstanding shall not include shares held in the treasury of Casella.
Casella shall not issue any rights, options or warrants in respect of shares of
Common Stock held in the treasury of Casella.
(c) In case the outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the Conversion Price
in effect at the opening of business on the day following the day upon which
such subdivision becomes effective shall be reduced, and, conversely, in case
the outstanding shares of Common Stock shall each be combined into a smaller
number of shares of Common Stock, the Conversion Price in effect at the opening
of business on the day following the day upon which such combination becomes
effective shall be increased, to equal the product of the Conversion Price in
effect on such date and a fraction the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such subdivision or
combination, as the case may be, and the denominator of which shall be the
number of shares of Common Stock outstanding immediately after such subdivision
or combination, as the case may be. Such reduction or increase, as the case may
be, shall become effective immediately after the opening of business on the day
following the day upon which such subdivision or combination becomes effective.
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(d) In case Casella shall, by dividend or otherwise, distribute to all
holders of its Common Stock (i) evidences of its indebtedness or (ii) shares of
any class of capital stock, cash or other assets (including securities, but
excluding (1) any rights, options or warrants referred to in Section 11.5(b)
hereof, (2) any dividend or distribution referred to in Section 11.5(a) hereof,
and (3) cash dividends paid from Casella's retained earnings unless the sum of
(A) all such cash dividends and distributions made within the preceding 12
months in respect of which no adjustment has been made and (B) any cash and the
fair market value of other consideration paid in respect of any repurchases of
Common Stock by Casella or any of its subsidiaries within the preceding 12
months in respect of which no adjustment has been made, exceeds 20% of Casella's
market capitalization (being the product of the then current market price per
share of the Common Stock times the aggregate number of shares of Common Stock
then outstanding) on the record date for such distribution), then in each case,
the Conversion Price in effect at the opening of business on the day following
the date fixed for the determination of holders of Common Stock entitled to
receive such distribution shall be adjusted by multiplying such Conversion Price
by a fraction of which the numerator shall be the current market price per share
of the Common Stock on such date of determination (or, if earlier, on the date
on which the Common Stock goes "ex-dividend" in respect of such distribution)
less the then fair market value as determined by the Board of Directors (whose
determination shall be conclusive and shall be described in a statement filed
with any conversion agent) of the portion of the capital stock, cash or other
assets or evidences of indebtedness so distributed (and for which an adjustment
to the Conversion Price has not previously been made pursuant to the terms of
this Section 11.5) applicable to one share of Common Stock, and the denominator
shall be such current market price per share of the Common Stock, such
adjustment to become effective immediately after the opening of business on the
day following such date of determination of the holders entitled to such
distribution. The following transactions shall be excluded from the foregoing
clauses (A) and (B): (x) repurchases of Common Stock issued under Casella's
stock incentive programs and (y) dividends or distributions payable-in-kind in
additional shares of or warrants, rights, calls or options exercisable for or
convertible into additional shares of capital stock of Casella.
(e) The reclassification or change of Common Stock into securities
including securities other than Common Stock (other than any reclassification
upon a consolidation or merger to which Section 11.6 shall apply) shall be
deemed to involve (i) a distribution of such securities other than Common Stock
to all holders of Common Stock (and the effective date of such reclassification
shall be deemed to be "the date fixed for the determination of holders of Common
Stock entitled to receive such distribution" within the meaning of Section
11.5(d) hereof), and (ii) a subdivision or combination, as the case may be, of
the number of shares of Common Stock outstanding immediately prior to such
reclassification into the number of shares of Common Stock outstanding
immediately thereafter (and the effective date of such reclassification shall be
deemed to be "the day upon which such subdivision becomes effective" or "the day
upon which such combination becomes effective," as the case may be, and "the day
upon which such subdivision or combination becomes effective" within the meaning
of Section 11.5(c) hereof).
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(f) Casella from time to time may reduce the Conversion Price if it
considers such reductions to be advisable in order that any event treated for
federal income tax purposes as a dividend of stock rights will not be taxable to
the holders of Common Stock by any amount, but in no event may the Conversion
Price be less than the par value of a share of Common Stock. Whenever the
Conversion Price is reduced, the Company shall mail to Holders of record of
Notes a notice of the reduction. The Company shall mail the notice at least 15
days before the date the reduced Conversion Price takes effect. The notice shall
state the reduced Conversion Price and the period it will be in effect. A
reduction of the Conversion Price does not change or adjust the Conversion Price
otherwise in effect for purposes of Sections 11.5(a), (b), (c), (d) and (e)
hereof.
(g) No adjustment in the Conversion Price need be made until all
cumulative adjustments amount to at least 1% in the Conversion Price, as last
adjusted; provided that any adjustments that by reason of this Section 11.5(g)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Article 11 shall be made
by the Company and shall be made to the nearest cent.
(h) For the purpose of any computation under Section 11.5, the current
market price per share of Common Stock on any day shall be deemed to be the
average of the Closing Prices of the Common Stock for the 20 consecutive Trading
Days selected by the board of directors of Casella, commencing no more than 30
Trading Days before and ending no later than the day before the day in question;
provided that, in the case of Section 11.5(d) hereof, if the period between the
date of the public announcement of the dividend or distribution and the date for
the determination of holders of Common Stock entitled to receive such dividend
or distribution (or, if earlier, the date on which the Common Stock goes
"ex-dividend" in respect of such dividend or distribution) shall be less than 20
Trading Days, the period shall be such lesser number of Trading Days but, in any
event, not less than five Trading Days.
(i) No adjustment in the Conversion Price shall reduce the Conversion
Price below the then par value of the Common Stock. No adjustment in the
Conversion Price need be made under Section 11.5(a), (b) or (d) hereof if the
Company or Casella issues or distributes to each Holder of Notes the shares of
Common Stock, evidences of indebtedness, assets, rights, options or warrants
referred to in those paragraphs which each Holder would have been entitled to
receive had Notes been converted into Common Stock prior to the happening of
such event or the record date with respect thereto.
(j) Whenever the Conversion Price is adjusted as herein provided,
Casella shall promptly file with the Trustee and any conversion agent other than
the Trustee an Officers' Certificate setting forth the Conversion Price after
such adjustment and setting forth a brief statement of the fact requiring such
adjustment. Promptly after delivery of such certificate, Casella shall prepare a
notice of such adjustment of the Conversion Price setting forth the adjusted
Conversion Price and the date on which each adjustment became effective and
shall
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mail such notice of such adjustment of the Conversion Price to each Holder of
Notes at his last address appearing on the Note register provided for in Section
2.5 hereof, within 20 days after execution thereof. Failure to deliver such
notice shall not affect the legality or validity of any such adjustment.
(k) In any case in which this Section 11.5 shall require that an
adjustment as a result of any event become effective from and after a record
date, Casella may elect to defer until after the occurrence of such event (i)
the issuance to the Holder of any Notes converted after such record date and
before the occurrence of such event of the additional shares of Common Stock
issuable upon such conversion over and above the shares issuable on the basis of
the Conversion Price in effect immediately prior to adjustment and (ii) a cash
payment for any remaining fractional shares of Common Stock as provided in
Section 11.3 hereof; provided, however, that if such event shall not have
occurred and authorization of such event shall be rescinded by Casella, the
Conversion Price shall be recomputed immediately upon such recission to the
price that would have been in effect had such event not been authorized,
provided that such recission is permitted by and effective under applicable
laws.
SECTION 11.6. EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR
SALE.
In the case of any consolidation of Casella or the merger of Casella
with or into any other entity or the sale or transfer of all or substantially
all the assets of Casella pursuant to which Casella's Common Stock is converted
into other securities, cash or assets, Casella or the successor or purchasing
corporation, as the case may be, and the Company shall execute with the Trustee
a supplemental indenture providing that the Notes shall be convertible into the
kind and amount of securities, cash or other assets receivable upon such
consolidation, merger, sale or transfer by a holder of the number of shares of
Common Stock into which such Notes might have been converted immediately prior
to such consolidation, merger, transfer or sale (assuming such holder of Common
Stock failed to exercise any rights of election and received per share the kind
and amount receivable per share by a plurality of non-electing shares). Such
supplemental indenture shall provide for adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Article
11.
The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each Holder of Notes within 20 days after execution
thereof. Failure to deliver such notice shall not affect the legality or
validity of such supplemental indenture.
The above provisions of this Section 11.6 shall similarly apply to
successive reclassifications, changes, consolidations, mergers, combinations,
sales and conveyances.
SECTION 11.7. TAXES ON SHARES ISSUED.
If a Holder converts Notes, Casella shall pay any documentary, stamp or
similar issue or transfer tax due on the issue of shares of Common Stock upon
the conversion. However, the
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Holder shall pay any such tax that is due because the shares are issued in a
name other than the Holder's name.
SECTION 11.8. RESERVATION OF SHARES; SHARES TO BE FULLY PAID;
LISTING OF COMMON STOCK.
Casella has reserved and shall continue to reserve out of its
authorized but unissued Common Stock or its Common Stock held in treasury enough
shares of Common Stock to permit the conversion of the Notes in full. All shares
of Common Stock that may be issued upon conversion of Notes shall be fully paid
and nonassessable. Casella shall endeavor to comply with all securities laws
regulating the offer and delivery of shares of Common Stock upon conversion of
Notes and shall endeavor to list such shares on each national securities
exchange on which the Common Stock is listed.
SECTION 11.9. COMMON STOCK ISSUABLE UPON CONVERSION.
For purposes of this Article 11, "Common Stock" includes any stock of
any class of Casella which has no preference in respect of dividends or of
amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding-up of Casella and which is not subject to redemption by
Casella. However, subject to the provisions of Section 11.5(b) hereof, shares
issuable on conversion of Notes shall include only shares of the class
designated as Class A Common Stock of Casella or shares of any class or classes
resulting from any reclassification thereof and which have no preferences in
respect of dividends or amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of Casella and which are not
subject to redemption by Casella, provided that, if at any time there shall be
more than one such resulting class, the shares of each such class then so
issuable shall be substantially in the proportion which the total number of
shares of such class resulting from all such reclassifications bears to the
total number of shares of all such classes resulting from all such
reclassifications.
SECTION 11.10. RESPONSIBILITY OF TRUSTEE.
The Trustee and any other conversion agent shall not at any time be
under any duty or responsibility to any Holder of Notes to make a determination
whether any facts exist that may require any adjustment of the Conversion Price,
or with respect to the nature or extent or calculation of any such adjustment
when made, or with respect to the method employed, or herein or in any
supplemental indenture provided to be employed, in making the same. The Trustee
and any other conversion agent shall not be accountable with respect to the
validity or value (or the kind or amount) of any shares of Common Stock, or of
any securities or property, that may at any time be issued or delivered upon the
conversion of any Note; and the Trustee and any other conversion agent make no
representations with respect thereto. Subject to the provisions of Section
7.1 hereof, neither the Trustee nor any conversion agent shall be responsible
for any failure of Casella or the Company to issue, transfer or deliver any
shares of Common Stock or stock certificates or other securities or property
or cash upon the surrender of
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any Note for the purpose of conversion or to comply with any of the duties,
responsibilities or covenants of Casella or the Company contained in this
Article 11. Without limiting the generality of the foregoing, neither the
Trustee nor any conversion agent shall be under any responsibility to determine
whether a supplemental indenture under Section 11.6 hereof is required to be
entered into or the correctness of any provisions contained in any supplemental
indenture entered into pursuant to Section 11.6 relating either to the amount of
shares receivable by Holders upon the conversion of their Notes after any event
referred to in Section 11.6 hereof or to any adjustment to be made with respect
thereto, but, subject to the provisions of Section 7.1 hereof, may accept as
conclusive evidence of the correctness of any such provisions, and shall be
protected in relying upon, the Officers' Certificate (which the Company shall be
obligated to file with the Trustee prior to the execution of any such
supplemental indenture) with respect thereto.
SECTION 11.11. NOTICE TO HOLDERS PRIOR TO CERTAIN ACTIONS.
In case (a) Casella makes any distribution or dividend that would
require an adjustment in the Conversion Price pursuant to Section 11.5 hereof,
(b) Casella takes any action that would require a supplemental indenture
pursuant to Section 11.6 hereof or (c) of the voluntary or involuntary
dissolution, liquidation or winding-up of Casella, Casella shall cause to be
filed with the Trustee and to be mailed to each Holder of Notes as promptly as
possible but in any event at least 15 days prior to the applicable date
hereinafter specified, a notice stating (i) the date on which a record date is
to be taken for the purpose of such dividend, distribution, rights, options or
warrants, or, if a record is not to be taken, the date as of which the holders
of Common Stock of record to be entitled to such dividend, distribution, rights,
options or warrants are to be determined or (ii) the date on which such
reclassification, change, consolidation, merger, sale, conveyance, transfer,
dissolution, liquidation or winding-up is expected to become effective or occur
and the date as of which it is expected that holders of record of Common Stock
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reclassification, change, consolidation, merger,
sale, conveyance, transfer, dissolution, liquidation or winding-up. Neither the
failure to give such notice nor any defect therein shall affect the legality or
validity of the proceedings referenced in clauses (a) through (c) of this
Section 11.11.
5. AMENDMENT TO SECTION 4.7. Section 4.7 of the Indenture is
amended by adding as the last sentence thereof the following:
"Except in connection with a consolidation, merger or sale of
assets with respect to which Casella has complied, to the
extent required thereby, with Section 11.6, Casella shall do
or cause to be done all things necessary to preserve and keep
in full force and effect its corporate existence."
6. AMENDMENT TO SECTION 6.1(D). Section 6.1(d) of the Indenture
is hereby amended and restated in its entirety as follows:
"(d) the Company or Casella fails to observe or perform any
other
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covenant, representation, warranty or other agreement in this
Indenture or the Notes for 60 days after notice to the Company
by the Trustee or
the Holders of at least 25% in principal amount of the Notes
then outstanding of such failure;"
7. AMENDMENT TO SECTION 6.1(E). Section 6.1(e) of the Indenture
is hereby amended and restated in its entirety as follows:
"(e) the Company or Casella pursuant to or within the meaning
of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it
in an involuntary case,
(iii) consents to the appointment of a custodian of it or for
all or substantially all of its property, or
(iv) makes a general assignment for the benefit of its
creditors."
8. AMENDMENT TO SECTION 6.1(F). Section 6.1(f) of the Indenture is
hereby amended and restated in its entirety as follows:
"(f) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Company or Casella in an
involuntary case;
(ii) appoints a custodian of the Company or Casella for all
or substantially all of the property of the Company or
Casella, as the case may be; or
(iii) orders the liquidation of the Company or Casella; and
the order or decree remains unstayed and in effect for
60 consecutive days."
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9. AMENDMENT TO SECTION 12.2. Section 12.2 of the Indenture is
hereby amended by adding to the end of the first paragraph thereof the
following:
If to Casella:
Casella Waste Systems, Inc.
25 Greens Hill Lane
Rutland, Vermont
Telecopier: (802) 775-6198
Attention: Chief Financial Officer
With a copy to:
Hale and Dorr LLP
60 State Street
Boston, MA 02109
Telecopier: (617) 526-6730
Attention: Jeffrey Stein, Esq.
10. DELIVERY OF DOCUMENTS. Together with this Supplemental
Indenture, the Company has delivered the following:
a. OFFICERS' CERTIFICATE. An Officers' Certificate in the
form attached as EXHIBIT A .
b. OPINION OF COUNSEL. An Opinion of Counsel in the form
attached as EXHIBIT B.
11. EFFECT OF SUPPLEMENTAL INDENTURE. Except as provided in Sections 2
through 9 hereof, all of the terms, conditions and provisions of the Indenture
shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be executed as of the day and year first above written.
KTI, INC.
Attest:
_______________________(Seal) By:_________________________________
Name:
Its:
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CASELLA WASTE SYSTEMS, INC.
Attest:
_______________________(Seal) By:________________________________
Name:
Its:
SUNTRUST BANK, CENTRAL FLORIDA,
NATIONAL ASSOCIATION, as Trustee
Attest:
_______________________(Seal) By:__________________________________
Name:
Its:
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